Hauptzollamt Krefeld v Maizena GmbH (5/82)

II —Written observations submitted to the Court

Maizena observes that the purpose of the provision in Regulation No 120/67 which provides for a system of production refunds is, as the preamble thereto sutes, to ensure that manufacturers of starch obtain the basic products which they require at a lower price than would normally be the case. Similarly it is clear from the preamble to Regulation No 371/67 that the purpose of Article 1 (1) thereof, which provides the method of calculating the refund, is to bring down the price of maize intended for starch manufacture to 6.8o units of account per 100 kg, in other words to fix a supply price. The indissoluble link with the process of supply is therefore established beyond a shadow of a doubt.According to the whole corpus of provisions previously referred to, it is sufficient — as is logical in order to ensure supply of basic products at advantageous prices — that the maize be intended for the manufacture of starch for the right to a refund to arise which is both determined and quantified within the framework of the process of supply of basic products. It is true that the maize must subsequently be processed into starch and that if this is not done there is no basis for a production refund, but the obligation to process the product has no effect on the level of the refund. The relevant time is therefore that of the supply of the maize for the purpose of producing starch. For reasons of supervision, however, account is taken of the moment when the basic product arrives officially and its destination can be verified objectively, that is to say the moment when it is placed under official supervision.According to Maizena, the conclusions which it has arrived at on the basis of the provisions cited above are confirmed by the subsequent regulations.Regulation No 1060/68 is concerned only with the possibility of granting a refund advance and therefore does not contain a general restriction on the rights previously granted by Regulations Nos 120 and 371/67. The rules which it lays down are too specific to be applied beyond the system of advance payments thereby created. In particular, the regulation should not be applied by analogy to determine the amount of a production refund.Even if it were supposed that Regulation No 1060/68 applied generally to the calculation of a production refund, from its wording it would apply only to- a change in the threshold price and not to a change in the supply price. That would be logical in so far as, on the one hand, the threshold price is subject to constant change and, on the other, the Commission has no power to make any modifications to the supply price, which has to be fixed by the Council, or to the applicability of that price.The rule is therefore that the relevant time is the moment when the basic products are placed under official supervision and not the moment when they are processed.Maizena emphasizes that such a rule was introduced later by Regulation (EEC) No 2012/74 of the Commission of 30 July 1974 (Official Journal 1974, L 209, p. 44), which is not relevant to the present case since it came into force after 1 August 1974.Article 2 (1) of that regulation provides that the refund is payable provided that the person concerned furnishes proof that the basic product in question has been placed under official supervision. Paragraph 3 of the same article provides that account is to be taken of the threshold price in force on the day on which the product is placed under official supervision, subject to a limited adjustment for changes in the threshold price prior to the month during which processing takes place. There is no mention of changes in the supply price.The possibility of adjusting the amount of the production refund in the case of a change in the supply price is memioned for the first time, as is emphasized by Maizena, in Regulation (EEC) No 10/75 of the Commission of 31 December 1974 (Official Journal 1975, L 1, p. 24).With regard to that regulation, Maizena points out that it did not enter into force until 1975 and does not, therefore, provide a proper legal basis for modifications and adjustments to the production refund decided upon a posteriori in 1974. It is clear, moreover, that that regulation modified the preexisting legal situation. That it did produce changes is shown by the fact that its adoption would be incomprehensible if previously it had already been legally possible to adjust the refund in the light of an alteration in the supply price. Moreover, it is not possible to say that the measure was intended to clarify the existing situation since its title and preamble clearly show that the intention was to create a new legal situation.Maizena contends that to determine the amount of the refund by reference to the day of processing would be contrary to the meaning and intent of the refund system. The decisive moment for calculating the refund should in fact be close to the moment of purchase of the basic product if the principle of supply at a reasonable price, which is the purpose of the refund, is to be respected. That principle would be disregarded if the relevant date were taken to be that of the subsequent processing.Maizena takes the view that that conclusion is confirmed by the rules relating to production refunds for potato starch and sugar used in the chemical industry.It is evident from the preamble to Regulation No 367/67 that refunds for the manufacture of cereal starch and potato starch should be at the same level in view of the interchangeability of those two products.Since the starch manufacturer pays to the potato producer on delivery a price which includes the production refund, it follows that that refund, which can only be the refund in force at the time of delivery, cannot be at the same level as the refund for the manufacture of maize starch if the latter is calculated on the basis of rates in force at the time of processing. In the period in question the manufacturers of potato starch would have had an advantage over the manufacturers of maize starch owing to the fact that they would have benefited from the refund in force before 1 August 1974.Such inequality of treatment would not only be contrary to Regulation No 371/67 but would also be in breach of the general principle of nondiscrimination to be found in Article 40 of the EEC Treaty.According to Maizena, the same considerations apply to production refunds for sugar used in the chemical industry for products which may equally well be made of starch glucose. In order to guarantee equal conditions for the basic products the supply price of the sugar is fixed by reference to the supply price of maize. The refund envisaged for the sugar nevertheless does not vary with any changes which may occur in the supply price of maize. Consequently, if the same rule did not also apply to maize this would constitute unequal treatment.Maizena contends, furthermore, that the sudden departure from the practice which, the German authorities had followed until 9 July 1974 (a pracúce which, moreover, seems to have been considered proper by the Commission, which never thought it necessary to take action under Article 155 of the EEC Treaty) constitutes, in any event, a breach of the principle of the protection of legitimate expectation with regard to the undertakings concerned, which were not given sufficient time to adapt themselves to the new situation.Finally, it points out that the Court has interpreted Regulation No 2012/74 in its decisions, in particular in its judgment of 12 July 1977 (Case 2/77 Hoffmann's Stärkefabriken AG v Hauptzollamt Bielefeld [1977] ECR 1375), to mean that the amount of the refund should be determined in accordance with the figures in force on the day when the basic product is placed under the official supervision of a Member Sute.Regulation No 1060/68 — on the assumption that it applies to the present case — contains a similar provision so that the interpretation of the Court of Justice also applies to this case.The Commission of the European Communities is of the opinion that, from 1967 and even before Regulation No 10/75 came into force, the refund for maize intended for the manufacture of starch had to be calculated on the basis of the supply price in force on the day on which it was processed.In its opinion the wording of Article 11 of Regulation No 120/67 and of Anide 1 of Regulation No 371/67 make it clear that the refund is given on (and for) the production of starch from maize. It is therefore perfectly logical for the right to the refund to arise at the moment of processing and for it to be determined according to the rate applicable on that day.Although it may be possible to envisage other solutions it is clear from Regulation No 1060/68 that no other solution has been adopted. That regulation contains implementing provisions which the Commission was, without any doubt, authorized to take by virtue of Article 5 of Regulation No 371/67 of the Council.It follows from the corpus of provisions contained in that regulation that the manufacturer receives only an advance on the day on which the basic product is placed under official supervision and that the right to the refund does not arise until the day on which it is processed. In those circumstances reference must be made to the supply price in force on the day of processing. Changes in the supply price are not expressly referred to in Regulation No 1060/68 principally because, by comparison with the monthly variations in the threshold price, changes in the supply price are considered to be relatively rare. However, that does not imply that account should not be taken of such changes since under the rules for Community production refunds the right to a refund does not arise until the product is processed and consequently it should clearly be determined on the basis of the supply price in force at that time.The position did not alter appreciably after 31 July 1974. Regulation No 1132/74, which modified the supply price with effect from 1 August 1974, did not in fact contain any transitional provisions aimed at subjecting cereals which were under supervision to the old supply price. Nor was any change effected by Regulation No 2012/74, although Article 2 thereof does to a certain extent seem to be at variance with the Commission's view. The conclusion might be drawn from the wording of that article that henceforth the right to a refund was to arise once the basic product was placed under supervision. The subsequent articles show, however, that the legislature did not intend to make any fundamental alterations to the system in force until that time and that the only change of any practical importance was that henceforth the refund advance was to be calculated by reference to the threshold price in force on the day on which the request that the product be placed under official supervision was accepted.The Commission then considers the Hoffmann case, cited above, and maintains that, whilst the Court stated in that case, as a subsidiary point, that the amount of the refund was determined when the person claiming it furnished proof that the basic product had been placed under official supervision, this was an incidental statement, to which was appended, moreover, the qualification that the traders concerned were therefore able to qualify in large measure for “an unreduced refund”. The Court too therefore considered that the right to a refund was not acquired once and for all at the time when the product was placed under supervision. Even if it were accepted that Regulation No 2012/74 was intended to alter the rules previously applicable, the fact remains that the regulation did not come into effect with regard to maize until 1 August 1974 and could not therefore be relied upon in relation to consignments of that product deposited in warehouses before that date without attributing to it retroactive effect not given to it by the legislature.In support of its opinion the Commission adds that the actual price at which the starch producer purchases the basic product is normally the market price, which is set approximately at the threshold price. When the Council undertakes a change in the supply price, this will necessarily take effect a little late in relation to the movement of cereal prices on the world market. At such time the starch producers will already have been receiving for some time a refund slighdy higher than is actually necessary, since competitors will already be obliged to buy the basic product at higher prices on the world market. It is certainly not necessary therefore for this advantage to be retained during the period of processing.The Commission is of the opinion that if the refund is adjusted in keeping with the threshold price it must a fortiori be adjusted in keeping with changes in the supply price, since the starch producer will normally purchase the basic product at the threshold price valid for the month during which the product is placed under supervision. If the producer cannot be certain that the refund will vary in keeping with changes in the threshold price, on which he bases his commercial decisions, a fortiori he will have no certainty regarding the movement of the supply price which alone guarantees the application to him of the principle of equal treatment as regards competition.The Commission sutes finally that, in relation to production refunds in this sector, there is no system for fixing them in advance, which means that the person claiming a refund is not sure how much it will be before his right to it actually arises.On the basis of the considerations referred to above the Commission submits that the following reply be given to the questions referred to the Court by the Bundesfinanzhof:“Article 11 of Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the market in cereals, in conjunction with Regulation No 371/67 of the Council of 25 July 1967 and Regulation No 1132/74 of the Council of 29 April 1974 and also Regulation No 1060/68 of the Commission of 24 July 1968 and Regulation No 2012/74 of the Commission of 30 July 1974, should be interpreted in such a way that, in calculating the production refund for maize starch, the increased supply price laid down by Regulation No 1132/74, in force from 1 August 1974, was to be taken into account even in relation to maize which was placed under official supervision before 1 August 1974 but was processed into starch only afterwards, yet within the time-limit laid down.”