CELEX: 62003CJ0515
Agriculture
Common organisation of the markets
Export refunds
Conditions for granting them
Import of the product into the non-member country of destination
Meaning
Customs formalities for release for consumption in the non-member country
Substantial processing or working
Reimportation into the Community
Abuse of law

1       This request for a preliminary ruling concerns the interpretation of Article 17(3) of Commission Regulation (EEC) No 3665/87
of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural
products (OJ 1987 L 351, p. 1), as amended, as regards in particular the adjustments necessary for the implementation of the
Uruguay Round Agreement on Agriculture, by Commission Regulation (EC) No 1384/95 of 19 June 1995 (OJ 1995 L 134, p. 14; hereinafter
‘Regulation No 3665/87’).
2       The reference was made in proceedings between Eichsfelder Schlachtbetrieb GmbH (‘Eichsfelder’) and Hauptzollamt Hamburg-Jonas
(Hamburg-Jonas customs office, ‘the Hauptzollamt’) concerning export refunds in respect of beef exported by Eichsfelder from
Germany to Poland.

Legislation
3       Article 4(1) of Regulation No 3665/87 provides:
‘Without prejudice to the provisions of Articles 5 and 16, the refund shall be paid only upon proof being furnished that the
products for which the export declaration was accepted have, within 60 days from the date of such acceptance of the export
declaration, left the customs territory of the Community in the unaltered state.’
4       Article 5(1) of that regulation provides:
‘Payment of the differentiated or non-differentiated refund shall be conditional not only on the product having left the customs
territory of the Community but also – save where it has perished in transit as a result of force majeure – on its having been
imported into a non-member country and, where appropriate, into a specific non-member country within 12 months following the
date of acceptance of the export declaration:
(a)      where there is serious doubt as to the true destination of the product,
or
(b)      where, by reason of the difference between the amount of the refund on the exported product and the amount of the import duties
applicable to an identical product on the date of acceptance of the export declaration, it is possible that the product may
be reintroduced into the Community.
…
In the cases referred to in the first subparagraph, the provisions of Articles 17(3) and 18 shall apply.
In addition, the competent authorities of the Member States may require that additional evidence be provided such as to satisfy
them that the product has actually been placed on the market in the non-member country of import in the unaltered state.’
5       Articles 16 to 18 of Regulation No 3665/87 lay down additional conditions for products for which there are differentiated
refunds according to destination, relating in particular to proof that they have been cleared through customs for release
for consumption in the non-member country of import.
6       With respect to the payment of refunds, Article 17 of Regulation No 3665/87 provides:
‘1. The product must have been imported in the unaltered state into the non-member country or one of the non-member countries
for which the refund is prescribed within 12 months following the date of acceptance of the export declaration. However, that
period may be extended under the conditions laid down in Article 47.
…
3. A product shall be considered to have been imported when it has been cleared through customs for release for consumption
in the non-member country concerned.’
7       Pursuant to Article 11(3) of Regulation No 3665/87, where a refund is unduly paid, the beneficiary is to reimburse the amounts
unduly received and pay any sanction applicable pursuant to the first subparagraph of Article 11(1), plus interest.
8       Under Article 24 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992
L 302, p. 1, ‘the Customs Code’):
‘Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their
last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting
in the manufacture of a new product or representing an important stage of manufacture.’
9       Article 15(2) of Regulation No 3665/87, which was added by Commission Regulation (EC) No 313/97 of 20 February 1997 (OJ 1997 L 51,
p. 31), provides:
‘Where it is found that the products exported are reimported into the Community:
–      after undergoing working or processing in a third country without having attained the level of processing provided for in
Article 24 of Regulation (EEC) No 2913/92,
and
–      attract a reduced or zero rate of import duty rather than the normal rate,
no refund shall be paid or, if already paid, it shall be reimbursed by the exporter at the request of the paying Member State.
This paragraph shall apply only to the products covered by Annex V [which include beef] exported without further processing.
Member States shall notify the Commission without delay if they find that products other than those included in Annex V are
likely to cause a deflection of trade.
…’
10     Under Article 20(4) of Commission Regulation (EC) No 800/1999 of 15 April 1999 laying down common detailed rules for the application
of the system of export refunds on agricultural products (OJ 1999 L 102, p. 11):
‘… the refund shall be deemed to be unwarranted and shall be reimbursed if the competent authorities find, even after the
refund has been paid:
…
(d)      that the products listed in Annex V are reimported into the Community:
–       after undergoing working or processing in a third country without having attained the level of processing provided for in
Article 24 of Regulation (EEC) No 2913/92, and
–       attract a reduced or zero rate of import duty rather than the non-preferential rate.
…’
11     The provisions mentioned in the two foregoing paragraphs of this judgment had not entered into force at the material time.
12     Article 146(1) of the Customs Code provides:
‘The outward processing procedure shall not be open to Community goods:
…
–      whose export gives rise to the granting of export refunds or in respect of which a financial advantage other than such refunds
is granted under the common agricultural policy by virtue of the export of the said goods.’
13     Article 4(3) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities’
financial interests (OJ 1995 L 312, p. 1) provides:
‘Acts which are established to have as their purpose the obtaining of an advantage contrary to the objectives of the Community
law applicable in the case by artificially creating the conditions required for obtaining that advantage shall result, as
the case shall be, either in failure to obtain the advantage or in its withdrawal.’

The main proceedings and the question referred to the Court of Justice
14     Eichsfelder exported 20 134 kilograms of boneless beef to Poland. The import into Poland of the goods, which were sold to
Appelt GmbH, gave rise to the payment of customs duties. Eichsfelder applied to the Hauptzollamt for an export refund in respect
of those goods, producing as evidence of release for free circulation in Poland a photocopy of a customs document dated 30
December 1995. By notice of 1 February 1996, the Hauptzollamt granted Eichsfelder a differentiated export refund in the sum
of DEM 36 653.23.
15     In Poland, the goods were used to make cooked meat roulades and then, under a contract concluded on 3 October 1995 between
the producer of those roulades and Appelt GmbH, the roulades were exported to Germany. Normal customs duties were paid on
importation into the Community. Thereafter, the customs duties in respect of the meat, which had previously been imported
into Poland, were refunded by the Polish customs office at the request of the producer of the roulades.
16     By an amending notice of 27 October 1999, the Hauptzollamt stated that inquiries undertaken by the Polish authorities had
disclosed that the goods which had attracted export refunds had been exported to Germany after being processed in accordance
with the contract of 3 October 1995. Considering that the goods had not been genuinely imported into Poland, the Hauptzollamt
required Eichsfelder to repay the export refund granted to it, in the sum of EUR 18 740.50.
17     Eichsfelder lodged a complaint against that decision, which was rejected by decision of the Hauptzollamt of 21 October 2002.
On 26 November 2002, Eichsfelder brought an action against the latter decision before the Finanzgericht Hamburg (Finance Court,
Hamburg).
18     Before that court, Eichsfelder claimed in particular that the goods for which the export refund had been paid had undergone
substantial working in Poland, within the meaning of Article 24 of the Customs Code, and that, accordingly, it had a vested
right to payment of that refund, irrespective of the customs regime applicable to the working of those goods. That right could
not be called in question, even in the event of processing of the goods under processing arrangements involving re-export
to Germany.
19     Conversely, the Hautpzollamt contended before the Finanzgericht Hamburg that the various stages of release for free circulation
of the goods concerned, namely export to Poland, conversion into roulades, then export to Germany with reimbursement of the
Polish customs duties, were to be seen as constituting processing arrangements, envisaged upon conclusion of the contract
of 3 October 1995. Goods covered by a processing procedure could not be regarded as being released for free circulation. The
characteristic element of an export operation was therefore lacking, with the result that Eichsfelder was not entitled to
the refund granted to it.
20     The Finanzgericht Hamburg considers that, in the case before it, as a result of the re-export of the goods to the Community
shortly after they were imported into Poland and the reimbursement of the Polish customs duties, it cannot necessarily be
accepted that the goods were imported into Poland with a view to being released for circulation there. The purpose of the
export refund may not have been achieved.
21     A different assessment could, it suggests, be based on the fact that the goods for which the refund was paid underwent, in
a non-member country, substantial and irreversible processing or working within the meaning of Article 24 of the Customs Code.
In that event, it might be considered that the goods, as a result of that processing or working, ceased to exist as such,
rendering improper re-export thereof to the Community impossible. That interpretation, adopted by the Court in its judgment
in Case C-114/99
Roquette Frères
[2000] ECR I-8823 concerning non-differentiated refunds, could be transposed to the present case, which is concerned with
a differentiated refund.
22     That interpretation is, in its view, confirmed by the adoption, after the events at issue in this case took place, of express
provisions to the effect that the refund is not payable if the competent authorities find, first, that the exported products
are reimported into the Community without undergoing substantial working or processing within the meaning of Article 24 of
the Customs Code and, second, that the products attracted a reduced or zero rate of import duty rather than the normal rate.
23     That is the purpose of Article 15(2) of Regulation No 3665/87, as amended by Regulation No 313/97, and of Article 20(4)(d)
of Regulation No 800/1999. Since those provisions are designed to enhance protection of the financial interests of the Community,
it would be difficult not to take them into consideration in interpreting the law in force when the events of the main proceedings
took place. If those provisions were applied to the present dispute, it would be inappropriate to require reimbursement of
the export refund, in so far as the goods concerned underwent substantial working in Poland and were reintroduced into the
Community after normal import duties were levied.
24     It was in that context that the Finanzgericht Hamburg decided to stay proceedings pending a preliminary ruling from the Court
of Justice on the following question:
‘Is Article 17(3) of Regulation (EEC) No 3665/87, as amended by Regulation (EC) No 1384/95, to be interpreted as meaning that
a product is considered to have been imported if, after its release for free circulation in a non-member country, it undergoes
substantial processing or working within the meaning of Article 24 of Regulation (EC) No 2913/92 and then is brought back
into the Community upon drawback and payment of the normal import duties?’

The question referred to the Court
25     By its question, the national court seeks to ascertain whether the condition for obtaining a differentiated export refund
laid down in Article 17(3) of Regulation No 3665/87, namely clearance through customs for release of the product concerned
for consumption in the non-member country of destination, is fulfilled where that product, on which import duties were paid
in that country, undergoes substantial processing or working there within the meaning of Article 24 of the Customs Code and
is then re-exported to the Community, with reimbursement of the duties levied in that country and payment of customs import
duties in the Community.
26     The system of differentiated export refunds is intended to gain or to maintain access for Community exports to the markets
of the non-member countries concerned, the reason for differentiated refunds being the desire to take account of the particular
characteristics of each import market in which the Community wishes to play a part (see Case 125/75
Milch-, Fett- und Eier-Kontor
[1976] ECR 771, paragraph 5; Case 89/83
Dimex
[1984] ECR 2815, paragraph 8; and Case C‑347/93
Boterlux
[1994] ECR I-3933, paragraph 18).
27     If it sufficed, in order to qualify for payment of the refund at a higher rate, for the goods simply to be unloaded, without
reaching the market of the territory of destination, the
raison d’être
of the system of varying the refund would be disregarded. That is why Article 17(3) of Regulation No 3665/87 makes payment
of the differentiated refund subject to clearance through customs for release for consumption in the non-member country, since
the completion of those formalities is, in principle, sufficient to ensure that the goods have actual access to the market
of the territory of destination (see, to that effect,
Dimex
, paragraphs 9 and 10).
28     The completion of customs import formalities for the product concerned involves in particular the payment of the applicable
import duties which, when evidenced by customs import documents, constitutes a guarantee that the product has arrived at its
destination. That is also apparent from the 17th recital in the preamble to Regulation No 800/1999, which was not in force
at the time of the events of the main proceedings but merely confirms in that regard the scope of the requirement of clearance
through customs for release for consumption laid down in Article 17(3) of Regulation No 3665/87 (see, to that effect, regarding
the confirmatory scope of certain provisions of Regulation No 800/1999,
Roquette Frères
, paragraph 20).
29     Regulation No 3665/87 provides that the special requirement laid down in Article 17(3) may, in certain cases, also apply to
non-differentiated refunds. It states, in the fourth recital in its preamble, that ‘certain export transactions can lead to
abuses; … in order to prevent such abuses, payment of the refund should be subject to the condition that the product has not
only left the customs territory of the Community but has also been imported into a non-member country and, where applicable,
actually marketed there’.
30     Article 5(1) of that regulation thus provides for two cases in which the payment of a non-differentiated refund, like the
differentiated refund, is subject to clearance through customs for release of the product concerned for consumption in the
non‑member country of destination:
–       where serious doubts exist as to the true destination of the product, and
–       where, by reason of the difference between the amount of the refund on the exported product and the amount of the import duties
applicable to an identical product on the date of acceptance of the export declaration, it is possible that the product may
be reintroduced into the Community.
31     In a preliminary ruling on the interpretation of Article 5(1) of Regulation No 3665/87, the Court held that abuse in the sense
of the reintroduction into the Community of a product previously exported cannot exist where the product has undergone substantial
and irreversible processing, within the meaning of Article 24 of the Customs Code, as a result of which it has ceased to exist
as such and a new product, coming under a different tariff heading, has been created. In such a situation, the payment of
an export refund cannot be made conditional on fulfilment of the requirement imposed by the competent authorities of the Member
States that additional evidence must be produced such as to show that the product that has undergone such processing has actually
been placed on the market in the unaltered state in the non-member country of importation (see, to that effect,
Roquette Frères
, paragraphs 18 to 21).
32     In arriving at that interpretation, the Court took account of Article 20 of Regulation No 800/1999, even though the latter
had entered into force after the events of the main proceedings. Article 20(4) provides inter alia that the refund is regarded
as unwarranted in particular if the product is reimported into the Community without having undergone substantial working
or processing within the meaning of Article 24 of the Customs Code. The Court considered that that provision made it possible
to refute the suspicion that the product in question had been reimported into the Community by showing that the product in
respect of which a non-differentiated refund was paid had, after leaving the Community customs territory, undergone such working
or processing (
Roquette Frères
, paragraph 20).
33     It follows from the foregoing considerations that:
–      goods on which import duties have been paid in the non-member country of destination, as evidenced by a document from the
competent customs authorities, are deemed to have been imported into that country,
–      the substantial working or processing of the goods within the meaning of Article 24 of the Customs Code in the non-member
country makes it possible to ascertain that those goods have been put to use in the non-member country and that they have
thus actually come onto the market of the territory of destination, being released for consumption there,
–      such working or processing, involving as it does the creation of a new product, eliminates the risk – with which Article 5(1)
of Regulation No 3665/87 is concerned and which Article 17(3) of the same regulation seeks to obviate – of abusive reimportation
of the initial goods into the Community, in breach of the aim pursued by the refund system, whether or not the refunds are
differentiated.
34     The Commission and the Hauptzollamt, however, contend that, in the main proceedings, the beef imported into Poland was processed
and then reimported into the Community, with reimbursement of the import duties by the competent Polish authorities. That
reimbursement shows that the imported goods were not definitively cleared through customs and that they were not actually
released for consumption in Poland. The parties to the abovementioned contract of 3 October 1995, although purporting to release
the product for consumption in Poland, in reality concealed the fact that the goods were the subject of outward processing
arrangements, in order to evade the application of Article 146(1) of the Customs Code, pursuant to which goods qualifying
for an export refund cannot be placed under an outward processing procedure.
35     That argument cannot be accepted in so far as it seeks to show that, if import duties are reimbursed, the right to an export
refund ceases to have any legal basis.
36     As Eichsfelder rightly contends, no provision of Regulation No 3665/87 supports that view. Provided that the customs formalities
for release for consumption in the non-member country have been completed, including in particular the payment of import duties,
it cannot be argued that the goods have not come onto the market in the non-member country under the price conditions prevailing
on that market, of which account was taken when the amount of the refund was determined. If a subsequent reimbursement of
those duties to an economic operator other than the exporter retroactively removed the legal basis of the export refund, the
exporter would be placed in a position of uncertainty, arguably in breach of the principle of legal certainty, and his right
to a refund would depend on events or commercial conduct outside his control.
37     Such a situation must, however, be distinguished from cases in which the exporter himself has participated in an abusive practice.
38     In that connection, Article 4(3) of Regulation No 2988/95 states that ‘[a]cts which are established to have as their purpose
the obtaining of an advantage contrary to the objectives of the Community law applicable in the case by artificially creating
the conditions required for obtaining that advantage shall result, as the case shall be, either in failure to obtain the advantage
or in its withdrawal’.
39     Furthermore, the Court has already held that evidence of an abusive practice requires, first, a combination of objective circumstances
in which, despite formal observance of the conditions laid down by the Community rules, the purpose of those rules has not
been achieved, and, second, a subjective element consisting in the intention to obtain an advantage from the Community rules
by creating artificially the conditions laid down for obtaining it (see Case C-110/99
Emsland-Stärke
[2000] ECR I-11569, paragraphs 52 and 53).
40     It is for the national court to verify in accordance with the rules of evidence of national law, provided that the effectiveness
of Community law is not undermined, whether action constituting such an abusive practice has taken place in the case before
it.
41     The answer to be given to the question referred to the Court must therefore be that the condition for obtaining a differentiated
export refund laid down in Article 17(3) of Regulation No 3665/87, namely clearance through customs for release of the product
concerned for consumption in the non-member country of destination, is fulfilled where that product, on which import duties
were paid in that country, undergoes substantial processing or working there within the meaning of Article 24 of the Customs
Code, even if the product deriving from such processing or working is then re-exported to the Community, with reimbursement
of the duties levied in that country and payment of customs import duties in the Community.
42     In those circumstances, reimbursement of the export refund may nevertheless be required if the national court considers that
evidence of an abusive practice on the part of the exporter has been produced, in accordance with the rules of national law.

Costs
43     Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
The condition for obtaining a differentiated export refund laid down in Article 17(3) of Commission Regulation (EEC) No 3665/87
of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural
products, as amended by Commission Regulation (EC) No 1384/95 of 19 June 1995, as regards in particular the adjustments necessary
for the implementation of the Uruguay Round Agreement on Agriculture, namely clearance through customs for release of the
product concerned for consumption in the non-member country of destination, is fulfilled where that product, on which import
duties were paid in that country, undergoes substantial processing or working there within the meaning of Article 24 of Council
Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, even if the product deriving from
such processing or working is then re-exported to the Community, with reimbursement of the duties levied in that country and
payment of customs import duties in the Community.
In those circumstances, reimbursement of the export refund may nevertheless be required if the national court considers that
evidence of an abusive practice on the part of the exporter has been produced, in accordance with the rules of national law.
[Signatures]
*
Language of the case: German.