CELEX: 62004CJ0274
Agriculture
Regulation (EEC) No 3665/87
Export refunds
Sanction applied following a decision to recover a refund that has become final
Possibility of re-examining the decision imposing a sanction

This reference for a preliminary ruling concerns the interpretation of Article 11(1) and (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 by Commission Regulation (EC) No 2945/94 of 2 December 1994 (OJ 1994 L 310, p.
57) (‘Regulation No 3665/87’).
The reference was made in the course of proceedings between ED & F Man Sugar Ltd (‘ED & F Man Sugar’) and the Hauptzollamt
(Principal Customs Office) Hamburg-Jonas (‘the Hauptzollamt’) concerning the sanction imposed by the latter on ED & F Man
Sugar, as provided for in the first subparagraph of Article 11(1)(a) of Regulation No 3665/87, following decisions to recover
refunds granted in accordance with Article 11(3).

Legal background

Community law
The first, second, third and fifth recitals in the preamble to Regulation No 2945/94 are worded as follows:
‘… the Community rules provide for the granting of export refunds on the basis of solely objective criteria, in particular
concerning the quantity, nature and characteristics of the product exported as well as its geographical destination; … in
the light of experience, measures to combat irregularities and notably fraud prejudicial to the Community budget should be
intensified; … to that end, provision should be made for the recovery of amounts unduly paid and sanctions to encourage exporters
to comply with Community rules;
… to ensure the correct functioning of the system of export refunds, sanctions should be applied regardless of the subjective
element of fault; … it is nevertheless appropriate to waive the application of sanctions in certain cases notably in cases
of an obvious error recognised by the competent authority and to provide for a higher sanction in cases of intent;
… where an exporter has supplied wrong information that wrong information could lead to an undue payment of the refund if
the error is not discovered, whilst where the error is discovered it is entirely proportional to sanction the exporter for
an amount in proportion to the amount which he would have received unduly if the error would not have been discovered ...’
…
… past experience and irregularities and notably fraud recorded in this context show that this measure is necessary and appropriate,
that it will act as an adequate deterrent and that it is to be uniformly applied throughout the Member States’.
Article 3(1) and (5) of Regulation No 3665/87 provide:
‘1.      The day of export means the date on which the customs authority accepts the export declaration in which it is stated that
a refund will be applied for.
…
5.      The document used for export to enable products to qualify for a refund must include all information necessary for the calculation
of the amount of the refund, and in particular:
(a)      a description of the products in accordance with the nomenclature used for refunds;
(b)      the net mass of the products or, where applicable, the unit of measurement to be taken into account in calculating the refund;
and,
(c)      in so far as is necessary for calculating the refund, particulars of the composition of the products or the relevant reference.
If the document mentioned in this paragraph is the export declaration, this document must also include these references and
the reference refund code.’
The first subparagraph of Article 5(1) of Regulation No 3665/87 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.’
The first, second, third and fourth subparagraphs and the first sentence of the fifth subparagraph of Article 11(1) and Article
11(3) of Regulation No 3665/87 are worded as follows:
‘1.      Where it has been found that an exporter, with a view to the granting of an export refund, has requested a refund in excess
of that applicable, the refund due for the relevant exportation shall be the refund applicable to the actual exportation reduced
by an amount equivalent to:
(a)      half the difference between the refund requested and the refund applicable to the actual exportation;
(b)      twice the difference between the refund requested and the refund applicable, if the exporter has intentionally supplied false
information.
The refund requested is deemed to be the amount calculated from the information supplied pursuant to Article 3 or Article
25(2). Where the rate of refund varies according to destination, the differentiated part of the refund requested shall be
calculated from the information supplied pursuant to Article 47.
The sanction referred to under (a) shall not apply:
–        in the case of force majeure,
–        in exceptional cases characterised by circumstances beyond the control of the exporter, which occur after the acceptance by
the competent authorities of the export declaration or the payment declaration, and provided that he, immediately after he
took note of these circumstances but within the time-limit referred to in Article 47(2), notifies the competent authorities,
unless the competent authorities have already established that the refund requested was incorrect,
–        in cases of obvious error as to the refund requested, recognised by the competent authority,
–        in cases where the request for the refund is in accordance with ... Regulation (EC) No 1222/94 ... and in particular Article
3(2) thereof, and has been calculated on the basis of the average quantities used over a specified period,
–        in case of adjustment of the weight in so far as the deviation in the weight is due to a difference in the weighing method
applied.
Where the reduction referred to under (a) or (b) results in a negative amount, the exporter shall pay that negative amount.
Where the competent authorities have established that the refund requested was incorrect and the exportation has not been
effected and consequently no reduction of refund is possible, the exporter shall pay the amount equivalent to the sanction
referred to under (a) or (b). …
…
3.      Without prejudice to the obligation to pay any negative amount as referred to in the fourth subparagraph of paragraph 1, where
a refund is unduly paid, the beneficiary shall reimburse the amounts unduly received – which includes any sanction applicable
pursuant to the first subparagraph of paragraph 1, – plus the interest calculated on the basis of the time elapsing between
payment and reimbursement. …
…’

National law
Paragraph 48 of the Law on Administrative Procedure (Verwaltungsverfahrensgesetz) of 25 May 1976 (BGBl. 1976 I, p. 1253),
provides:
‘Withdrawal of unlawful administrative acts
An unlawful administrative act may, even after it can no longer be challenged, be withdrawn either wholly or in part with
prospective or retroactive effect. An administrative act by which a right or a legally significant advantage has been either
conferred or confirmed (an administrative act conferring a benefit) may only be withdrawn under the conditions set out in
subparagraphs 2 to 4.
…’.
Paragraph 51 of the Law on Administrative Procedure is worded as follows:
‘Reopening of the procedure
An administrative body shall consider an application from an individual concerned requesting that an administrative act which
is longer open to challenge be set aside or declared void, if:
1.      the factual or legal circumstances on which the administrative act was based have changed in favour of the individual concerned;
or
2.      new evidence has come to light which would have led to a more favourable decision for the individual concerned; or
3.      in accordance with Paragraph 580 of the Zivilprozessordnung (Rules on Civil Procedure) reasons exist to reopen the procedure.
…’

The main proceedings and the questions referred for a preliminary ruling
In February 1998 ED & F Man Sugar lodged four declarations with the competent customs office concerning the export to Poland
of 100 tonnes of white sugar, in respect of which it applied for export refunds. By four decisions of 6 April 1998 the Hauptzollamt
granted ED & F Man Sugar those refunds.
After enquiries carried out by the Zollkriminalamt Köln (Cologne Customs Investigation Service) uncovered evidence to show
that white sugar which should have been exported to Poland, the Czech Republic and Switzerland had not reached the non-Member
countries of destination, the Hauptzollamt concluded, from an examination of the documents produced by ED & F Man Sugar as
proof of arrival, that the documents relating to the commercial transaction referred to in the preceding paragraph did not
show that the goods exported to Poland had been placed in free circulation, but only that they had been placed under processing
arrangements. ED & F Man Sugar stated that it was unable to provide further information as to the whereabouts of the consignment,
since it could not obtain that information from the other contracting party. By four rectification decisions of 17 April 2000,
the Hauptzollamt demanded, on the basis of the first subparagraph of Article 11(3) of Regulation No 3665/87, in conjunction
with the first subparagraph of Article 5(1)(a) thereof, reimbursement of the refunds paid to ED & F Man Sugar (‘the reimbursement
decisions’) who repaid the amount claimed without appealing against those decisions.
Subsequently, pursuant to point (a) of the first subparagraph of Article 11(1) of Regulation No 3665/87, the Hauptzollamt,
by four decisions of 5 June 2000 (‘the decisions imposing a sanction’), imposed a sanction in respect of each decision on
ED & F Man Sugar. The Hauptzollamt considered that because reimbursement decisions are final it was clear that ED & F Man
Sugar had claimed a refund in excess of that applicable.
Following rejection by the Hautpzollamt of the notice of objection given by ED & F Man Sugar against the decisions imposing
a sanction, the latter brought an action before the Finanzgericht (Finance Court) Hamburg, claiming that the Hauptzollamt
was not entitled to impose a sanction on it since it should not have demanded reimbursement of the export refunds. In its
judgment in Case C-110/99
Emsland-Stärke
[2000] ECR I-11569, the Court of Justice held that, according to Article 5(1) of Regulation No 3665/87, proof that the goods
have been released for home use in the non-Member country of destination can be required only prior to the payment of the
export refund. In those circumstances the national court decided that an interpretation of Community law, in particular of
Article 11(1) and (3) of Regulation No 3665/87, was necessary in the case before it.
The Finanzgericht Hamburg accordingly decided to stay proceedings and to refer the following questions to the Court of Justice
for a preliminary ruling:
‘1.      In an appeal against a decision imposing a sanction on the basis of the first subparagraph of Article 11(1) of Regulation
No 3665/87, are national authorities and courts entitled to examine whether an exporter requested a refund in excess of that
applicable if the reimbursement decision under the first subparagraph of Article 11(3) of Regulation No 3665/87 became final
before the decision imposing the sanction was issued?
2.      If the first question is answered in the negative: in an action challenging a decision imposing a sanction pursuant to the
first subparagraph of Article 11(1) of Regulation No 3665/87 in the circumstances set out in [the order for reference], for
the purpose of giving effect to an interpretation of Community law adopted in the meanwhile, may the question be examined
whether the exporter requested an export refund in excess of that applicable?’
First question
As the Advocate General pointed out, in point 41 of his Opinion, unlike a reimbursement decision which is intended merely
to withdraw a financial advantage that has been unduly obtained, a decision imposing a sanction leads to a significant reduction
in the amount of refund applicable and, in some circumstances, where that reduction results in a negative amount, in the payment
of a financial penalty.
In that connection, the Court has held on numerous occasions that a penalty, even of a non-criminal nature, cannot be imposed
unless it rests on a clear and unambiguous legal basis (Case 117/83
Könecke
[1984] ECR 3291, paragraph 11;
Emsland-Stärke
, paragraph 56; and Case C-210/00
Käserei Champignon Hofmeister
[2002] ECR I-6453, paragraph 52).
The first subparagraph of Article 11(1) of Regulation No 3665/87 provides for the imposition of a sanction where it has been
found that an exporter, with a view to the granting of an export refund, has requested a refund in excess of that applicable.
It does not follow from that provision that that necessary condition for the application of a sanction decision can be deemed
to be established by reason of the mere existence of a reimbursement decision issued on the basis of the first subparagraph
of Article 11(3) of Regulation No 3665/87 or that it can be inferred from the mere fact that the economic operator has not
contested the reimbursement decision.
The principles of legality and legal certainty require that, in the context of a review of the legality of a decision imposing
a sanction adopted under the first subparagraph of Article 11(1) of Regulation No 3665/87, the national authorities and courts
are able to examine whether the exporter has in fact requested a refund in excess of that applicable within the meaning of
Article 11(1), regardless of the fact that a prior reimbursement decision issued on the basis of the first subparagraph of
Article 11(3) has become final.
Having regard to the foregoing considerations, the answer to the first question must be that the first subparagraph of Article
11(1) of Regulation No 3665/87 must be interpreted as meaning that, in an appeal against a decision imposing a sanction on
the basis of that provision, the national authorities and courts are entitled to examine whether the exporter requested a
refund in excess of that applicable within the meaning of that provision, notwithstanding the fact that a reimbursement decision
provided for in the first subparagraph of Article 11(3) of that regulation has become final before the decision imposing a
sanction was issued.
Second question
In view of the answer given by the Court to the first question, there is no need to reply to the second question.

Costs
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 (First Chamber) hereby rules:
The first subparagraph of Article 11(1) 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 No
2945/94 of 2 December 1994, must be interpreted as meaning that, in an appeal against a decision imposing a sanction on the
basis of that provision, the national authorities and courts are entitled to examine whether the exporter requested a refund
in excess of that applicable within the meaning of that provision, notwithstanding the fact that a reimbursement decision
provided for in the first subparagraph of Article 11(3) of that Regulation has become final before the decision imposing a
sanction was issued.
[Signatures]
*
Language of the case: German.