Contents
In Case 147/81REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Hamburg for a preliminary ruling in the action pending before that court betweenMerkur Fleisch-Import GmbH, Hamburg,andHauptzollamt [Principal Customs Office] Hamburg-EricusTHE COURT (Third Chamber)composed of: A. Touffait, President of Chamber, Lord Mackenzie Stuart and U. Everling, Judges,Advocate General: F. CapotortiRegistrar: P. Heimgives the following
Judgment
Facts and Issues
The facts of the case and the conclusions and arguments of the parties put forward during the written procedure may be summarized as follows:
I —Facts and written procedure
On 16 October 1978 the plaintiff in the main action imported into the Federal Republic of Germany 13539.1 kg of frozen boned or boneless beef coming under tariff subheading 02.01 A 11(b) 4 (bb) of the Common Customs Tariff. In accordance with Article 1 (1) (a) of Commission Regulation No 572/78 of 21 March 1978 laying down detailed rules for the application of special import arrangements for certain types of frozen beef intended for processing the plaintiff made a written declaration at the time of importation that the frozen beef was intended for the manufacture of other products as referred to in Article 14 (1) (b) of Regulation No 805/68 of the Council. As a consequence of making that declaration the plaintiff was not required immediately to pay a levy on the goods but was required, pursuant to Article 1 (1) (b) of Regulation No 572/78, to lodge a security equal to the amount of the levy applicable on the day of importation, whilst the national authorities reserved the right to charge the levy subsequently if the plaintiff should be unable to prove at the proper time that it had processed the imported frozen beef within three months following the month of importation in the establishment specified for that purpose.In the course of an inspection of the processing establishment the German customs administration found that only 5150 kg of frozen beef had been processed within the period of three months. In accordance with the second and third subparagraphs of Article 1 (3) of Regulation No 572/78 the amount of the security proportionate to the beef processed too late was forfeited and, in accordance with Article 1 (8) of the said regulation, the additional sum to be paid in satisfaction of the levy was fixed at DM 42044.49.The plaintiff instituted proceedings before the Finanzgericht Hamburg for the annulment of that decision, claiming that the time-limit involving forfeiture laid down in Regulation No 572/78 was unlawful.By an order of 7 May 1981 the Finanzgericht Hamburg decided to stay the proceedings pending before it and to refer to the Court of Justice for a preliminary ruling the question:“Whether Article 1 (3) of Commission Regulation (EEC) No 572/78 of 21 March 1978 is invalid in so far as it provides that the security lodged by the importer shall be forfeit and retained as a levy if the period laid down in that provision for the due processing of frozen beef is exceeded, or whether the regulation is rather to be interpreted, in accordance with the Treaty, as allowing for the security not to be forfeit if the period has been exceeded by only 12 days.”In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were lodged by Merkur Fleisch-Import GmbH, represented by Mr Landry, of Modest and Partners, Rechtsanwälte, Hamburg, and by the Commission of the European Communities, represented by J. Sack, a member of its Legal Department.On hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry. By an order of 11 November 1981 the Court decided to assign the case to the Third Chamber.
II —Written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice
A —Observations submitted by the plaintiff in the main action
According to the plaintiff in the main action Commission Regulation No 572/78 is based primarily on Article 14 (4) (c) of Regulation No 805/68 of the Council, as amended by Regulation No 425/77, which authorizes the Commission to lay down detailed rules for the application of Article 14 of Regulation No 805/68 and particularly those concerning control of the end use of imported meat.On the one hand, that authorization implies that the implementing provisions adopted by the Commission must relate to, and serve to attain, the objective of Article 14 of Regulation No 805/68, namely to preserve the competitive capacities of the Community processing industry in relation to competitors established outside the Community. That objective does not require the fixing of time-limits for processing or a fortior i the fixing of time-limits involving forfeiture.On the other hand, such an authorization does not confer upon the Commission power to impose a basic restriction on the right to qualify for a suspension of the levy made available by the Council in Article 14 of Regulation No 805/68 by fixing a time-limit for processing, failure to observe which involves forfeiture. In order to confer such a power on the Commission an express, or at any rate a clear, authorization by the Council would have been necessary but, according to the plaintiff, there has been no such authorization. The need for an express authorization by the Council is furthermore established by comparison of Article 14 of Regulation No 805/68 with Article 15 of the same regulation in which the Council has expressly provided that the issue of licences for imports or exports is to be conditional on the lodging of a deposit guaranteeing that the importation or exportation will be effected during the period of validity of the licence and that the deposit will be forfeited if the importation or exportation is not effected, or is only partially effected, within that period.The plaintiff in the main action also considers that the fixing of time-limits on pain of forfeiture is in breach of the principles of equality and of proportionality. In this connection it claims first of all that the provision in question is in breach of these principles since it prescribes an identical penalty for infringements of very different degrees of gravity, ranging from a slight, and indeed minimal, failure to observe the time-limits for processing to a total failure to carry out any processing. Furthermore, since the provision in question provides for the entire forfeiture of security unless proof of processing is furnished within six months of the month of importation it is in breach of the principle of proportionality, as the Court of Justice has already decided in Cases 122/78 and 240/78 ([1979] ECR 677 and 2137). Finally, the plaintiff considers that the penalties prescribed by the provision in question are excessively severe since the principal obligation provided for in Article 14 (4) (c) of Regulation No 805/68 is to process the goods, and the fixing of a time-limit merely constitutes a means of checking, failure to comply with which should not result in withdrawal from the undertaking in default of the right to the suspension of the levy.The plaintiff in the main action concludes that, even if the Commission was entitled to prescribe time-limits for processing carrying penalties for failure to comply with them, there was no power to make such penalties entail the total loss of the right to the suspension of the levy and, in any case, they should have been graduated in accordance with the extent to which the time-limit was exceeded. According to the plaintiff, Article 1 (3) of Regulation No 572/78 is thus invalid.
B —Observations of the Commission of the European Communities
The Commission of the European Communities is concerned first of all to establish that it is impossible to provide an interpretation of Article 1 (3) of Regulation No 572/78 which could justify a failure to charge the whole of the levy when the period prescribed for processing has been only minimally exceeded. Whilst the Commission recognizes that the Court of Justice has already had occasion, in reliance on an interpretation in accordance with the Treaty, to depart from the wording of similar provisions (judgment of 21 June 1979 in Case 240/78 [1979] ECR 2137 and the judgment of 3 June 1980 in Case 135/79 [1980] ECR 1713) it nevertheless considers that an interpretation ‘in accordance with’ the Treaty may be envisaged only if it corresponds to the objective of a provision and if the legislature did not clearly intend that another construction should take precedence. In this case the provision prescribing the subsequent charging of the levy, even where the period prescribed for processing is exceeded by a relatively slight margin, is in accordance with the clear intention of the Commission and the objective of the particular arrangements regarding imports laid down by Article 14 of Regulation No 805/68 of the Council. In such conditions the Court is not entitled, by means of an interpretation, to put itself in the place of the legislature. Furthermore, according to the Commission, it is impossible to determine by way of an interpretation the cases in which failure to observe the time-limit is merely slight and what the appropriate penalty accordingly is. That too is one of the prerogatives of the legislature.The Commission next considers the question of the validity of Article 1 (3) and (8) of Commission Regulation no 572/78. With regard to the compatibility of the provision in question with the powers conferred by Regulation No 805/68 of the Council the Commission first of all claims that, in this case, it is not the arrangements regarding the security as such which adversely affect the plaintiff but the very fact that Regulación No 572/78 makes provision for a period of three months for processing and for the subsequent charging of the levy where that period is exceeded. It is irrelevant for the outcome of the case whether the system with regard to the security as such is lawful since, even if there is no security capable of being retained, an undertaking which has exceeded the prescribed period of three months remains bound to pay the levy. The Commission considers that the fixing of a time-limit for processing and the penalty attached to any failure to observe that limit fall entirely within the powers transferred by the Council to the Commission pursuant to Article 14 of Regulation No 805/68. In fact, in accordance with that provision the Commission is required to enact implementing provisions for the special arrangements for the importation of certain meat for processing provided for by Article 14 and in particular the provisions necessary for supervising the use of the meat. Supervision of the use of the meat inevitably entails fixing a time-limit for processing which the Commission was required to determine within the framework of an appropriate margin of discretion, which it did by fixing a period for processing amounting at the most to one day short of four months and at the least to three months and one day. In fact Article 14 of Regulation No 805/68 already provides for a three-monthly allocation of requirements for imported meat for processing determined for one year in the Council's estimate and it is accordingly natural that the Commission should make provision for a regular allocation not only of imports but also of processing for the year as a whole. In any case, a short period is justified by the need to avoid storing unprocessed frozen meat with a view to speculation and to ensure effective control within the undertakings.Finally, with regard to the observance of the principle of proportionality none of the provisions in question is in breach of it in any way. The Commission in fact considers it necessary to distinguish cases where forfeiture of the security takes the form of a genuine penalty from those in which, as in the present case, a trader merely loses a special advantage granted in advance provided that he complies with the conditions relating to the grant of that advantage. In cases of the latter kind, as soon as the conditions laid down are disregarded the right granted is forfeit without the authority's being required to examine in detail whether the disregard of the conditions was total or merely partial. Furthermore, the Commission considers that in Regulation No 572/78 it took sufficient account of the principle of proportionality by tolerating failure to observe the time-limit in cases of force majeure and by providing that any levy paid should be charged subsequently only on that part of the consignment of imported meat which was not processed within the prescribed period. Likewise, the judgments of the Court of Justice cited by the plaintiff are irrelevant since in the two cases referred to a slight failure to observe a mere procedural time-limit was punished by the forfeiture of a security in its entirety whilst in this case the purpose of the time-limit is a concern to ensure that the person concerned performs the main obligation binding him to the administration, which is necessitated by the objective of the system laid down. In cases of that type the Court has on the other hand held that forfeiture of a security as a penalty for exceeding the periods prescribed was in accordance with the principle of proportionality (judgment of 17 December 1970 in Case 11/70 [1970] ECR 1125, judgment of 30 January 1974 in Case 186/73 [1974] ECR 533 and judgment of 11 May 1977 in Joined Cases 99 and 100/76 [1977] ECR 861).The Commission also considers that the reasoning of the Finanzgericht Hamburg, to the effect that the interest of consumers requires that the security should not be declared forfeit for failure to comply with a time-limit for processing which was already relatively short, is unfounded. In fact, that time-limit was fixed precisely in the interest of consumers, in order to prevent delays in processing for speculative purposes. Such an advantage easily counterbalances the disadvantage resulting for the consumer, in the relatively rare cases in which processing is not carried out within the prescribed period, namely that the processor will pass on in his selling price the additional charge represented by the levy. In conclusion, the Commission proposes that the Court of Justice should give the following reply to the question submitted for a preliminary ruling by the Finanzgericht Hamburg:“Consideration of the question submitted to the Court has disclosed no factor of such a kind as to affect the validity of Article 1 (2), (3) and (8) of Regulation No 572/78 with regard to the subsequent imposition of the levy, for which provision is made where the period prescribed for processing is exceeded, or with regard to the prior lodging of a security involved in this system.”
III —Oral procedure
At the sitting on 14 January 1982 oral argument was presented by the following: Klaus Landry, of Modest and Partners, of the Hamburg Bar, for Merkur Fleisch-Import GmbH and by J. Sack, a member of the Commission's Legal Department, for the Commission of the European Communities.The Advocate General delivered his opinion at the sitting on 11 February 1982.
Decision
Costs
Operative part
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