62004CC0496_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
1. In this preliminary reference made under Article 234 EC, which follows an earlier preliminary ruling given in relation to the same national proceedings, (2) the Court is asked to give further guidance on the interpretation of Regulation No 536/93, which concerns application of the additional levy on milk and milk products. (3)
2. On this occasion, the College van Beroep voor het bedrijfsleven (Administrative Court for Trade and Industry), Netherlands, asks whether a Member State may impose accounting requirements under national law on a producer of such products which go beyond the obligations set out in Community law, in order to ensure proper payment of the additional levy which is due if production exceeds a specified quantity.
Relevant Community law
3. The regime imposing the additional levy (4) on milk and milk products was introduced in 1984. (5)
Its objective was stated to be to curb the increase in milk production while at the same time permitting the structural developments and adjustments required, having regard to the diversity of the situations among individual Member States, regions and collection areas in the Community. (6)
The conditions for imposing the levy are laid down in the base regulation.
The levy is payable by a milk producer who delivers to a purchaser or sells for direct consumption milk or milk products in excess of a determined reference quantity. (7)
The sum of the reference quantities may not exceed a guaranteed total quantity established by the Community for each Member State. (8)
4. At the time of the facts giving rise to the main proceedings, the additional levy was payable by virtue of Regulation No 3950/92, (9) which had extended the levy (due to expire on 31 March 1993) for a further seven years.
5. Article 1 of Regulation No 3950/92 provided that, for a series of 12-month periods running from 1 April in each year, the additional levy was to be payable by milk producers ‘on quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption’ in excess of the guaranteed total quantity.
Article 2(1) provided that the levy was to be shared between the producers who contributed to the overrun.
6. Article 4 contained rules on the allocation of individual reference quantities to producers.
7. Article 5 dealt with replenishment of the national reserve (10) in order to grant additional or specific reference quantities to producers.
To that end, the second paragraph of Article 5 provided for reference quantities available to producers who had not marketed milk or milk products for a 12-month period to be allocated to the national reserve with a view to their reallocation.
8. Detailed rules for the implementation of Regulation No 3950/92 were laid down by Regulation No 536/93. (11)
9. According to the second recital in the preamble, Regulation No 536/93 concerned inter alia the rules on checks permitting verification of proper collection of the levy.
10. The eighth recital stated:
‘the Member States must have suitable means of conducting ex-post checks to verify whether and to what extent the levy has been collected in accordance with the provisions in force;
… such checks must involve at least a certain number of measures which should be specified’.
11. The first subparagraph of Article 4(1) of Regulation No 536/93 provided:
‘In the case of direct sales, at the end of each of the periods referred to in Article 1 of Regulation (EEC) No 3950/92, the producer shall make a declaration summarising by product the quantities of milk and/or other milk products sold directly for consumption and/or to wholesalers, cheese maturers and the retail trade.’
12. Article 4(2) provides:
‘Before 15 May each year, the producer shall forward declarations to the competent authority of the Member State.
Where that time-limit is not observed, the producer shall be liable to the levy on all the quantities of milk and milk equivalent sold directly in excess of his reference quantity or, where there is no overrun, to a penalty equal to the amount of levy due for a 0.1% overrun of his reference quantity.
...
Where a declaration is not submitted before 1 July, the second paragraph of Article 5 of Regulation (EEC) No 3950/92 shall apply 30 days after the Member State has served notice.’
13. Article 7 of Regulation No 536/93 provided in so far as is relevant:
‘1.	Member States shall take all the verification measures necessary to ensure payment of the levy on quantities of milk and milk equivalent marketed in excess of any of the quantities referred to in … Regulation (EEC) No 3950/92.
To that end:
…
(f) producers with reference quantities for direct sales shall keep available to the competent authority of the Member State for at least three years stock accounts by 12-month period with details of the quantities, per month and per product, of milk and/or milk products sold directly for consumption and/or to wholesalers, cheese maturers and the retail trade, together with registers of livestock held on holdings and used for milk production …, and supporting documents enabling such stock accounts to be verified.
…
3.	Member States shall physically verify the accuracy of the accounting with regard to the quantities of milk and milk equivalent marketed and, to that end, shall check milk transport during collection at farms and shall, in particular, check:
…
(b) at the premises of the producers with a reference quantity for direct sales, the credibility of the declaration referred to in Article 4(1) and the stock accounts referred to in paragraph 1(f).’
14. Commission Regulation (EC) No 1392/2001 (12) repealed Regulation No 536/93 with effect from 31 March 2002 (that is, after the material time in the present case).
Article 6(1) of Regulation No 392/2001 reproduces the first subparagraph of Article 4(1) of Regulation No 536/93.
15. The second subparagraph of Article 6(2) of Regulation No 1392/2001 additionally provides:
‘The Member State may require producers with reference quantities for direct sales to declare that they have not sold any milk during the period concerned, where such is the case.’ (13)
16. It was only when Regulation No 595/2004 repealed and replaced Regulation No 1392/2001 that the Community rules imposed, for the first time, the specific requirement that producers’ records should give details ‘of any sale or transfer of milk or milk products as well as of products which have been produced but not sold or transferred ’. (14)
Relevant national law
17. Article 26 of the Regeling superheffing 1993 (Regulation of 1993 on additional levies:
‘the Regeling superheffing’), (15) which at the material time transposed the additional levy regime into Dutch law, provides that the Productschap Zuivel (the Dairy Products Board;
‘the Productschap’) is to be responsible for the setting, imposition and collection of the levy.
18. Article 29(1) provides:
‘1.	The producer … shall provide particulars to the Productschap, in accordance with the provisions of Article 4 of Regulation (EEC) No 536/93 and in accordance with the rules adopted by the Productschap in this regard, of the quantity of milk or other milk products that he has delivered directly to the consumer ... in the previous levy period, specified per product.’
19. Article 31 provides:
‘1.	The ... producer who either is or may be liable to pay [the levy] … shall be obliged to keep records in accordance with the provisions of Article 7 of Regulation (EEC) No 536/93 and in accordance with the rules adopted by the Productschap.
2.	The Productschap may, acting on its own initiative, determine the quantity delivered if the obligations laid down in the first paragraph and in … Article 29(1) are either not or, in the opinion of the Productschap, incompletely performed.’
20. Article 11(1) of the Zuivelverordening 1994, Uitvoering regeling superheffing (16) (Order of 1994 implementing the Regulation on additional levies:
‘the Zuivelverordening’), contains the rules adopted by the Productschap, as referred to in Article 31 of the Regeling superheffing.
It reads as follows:
‘The producer shall keep records of everything regarding his business or holding in such a manner as to enable the production, stock and the quantities received or delivered of processed or manufactured milk, together with the financial data relating thereto, to be ascertained at all times, and shall keep such records and data for a period of at least three years.’
National proceedings
21. Mr Slob is a milk producer in the Netherlands.
In the 1996/97 levy period he was in possession of an individual reference quantity of 647 910 kilograms for the direct sale of milk.
22. His farm was inspected by the competent Dutch authority in December 1997.
It emerged from the inspection that there was a difference of approximately 250 000 kilograms between, on the one hand, the quantity of milk produced calculated on the basis of the size of the farm’s herd for the 1996/97 levy period and, on the other, the quantity of milk sold as shown on the declaration made by Mr Slob to the Productschap. (17)
23. Mr Slob acknowledged the difference.
He explained that he had processed the excess milk into butter to obtain buttermilk which he then used to manufacture cheese.
He claimed that the butter produced in this way, 10 000 kilograms in total, (18) was destroyed immediately after production by throwing it into a manure pit.
24. Mr Slob emphasised that the butter was sold neither to a wholesale purchaser nor directly to a consumer.
25. The written observations of the Netherlands record that Mr Slob also claimed that he kept no stock accounts of the production and destruction of the butter, since such accounts were required only for manufactured cheese. (19)
26. On 1 October 1999 the Productschap made its own assessment, pursuant to Article 31(2) of the Regeling superheffing, of the quantities of milk and other milk products which Mr Slob delivered for consumption during the 1996/97 levy period.
It informed Mr Slob that he was liable for an additional levy of HFL 180 976.77 (approximately EUR 82 124) in accordance with Article 4(2) of Regulation No 536/93.
27. Mr Slob objected to that decision.
On 4 April 2000 the Productschap decided to reduce the amount of the additional levy but otherwise maintained its decision.
It determined that no stock accounts had been kept for approximately 250 000 kilograms of milk. (20)
The Productschap concluded that Mr Slob had not kept a correct and complete record for the 1996/1997 levy period of the production, stock and delivery of milk and milk products, as prescribed by Article 7 of Regulation No 536/93, read in conjunction with Article 31(1) of the Regeling superheffing and Article 11 of the Zuivelverordening.
28. On a (first) appeal to the College van Beroep voor het bedrijfsleven – which has made the present preliminary reference – against the decision of 4 April 2000, Mr Slob argued that Article 7(1)(f) of Regulation No 536/93 did not require him to maintain records in relation to products which had not been sold and had been destroyed.
29. He also contested the Productschap’s submission that, in the absence of records relating to the destruction of the butter, it could be concluded that he had sold it.
30. The Productschap argued that Mr Slob was required to keep records regarding the milk in question.
31. The referring court was uncertain as to the proper construction of Article 7(1)(f) of Regulation 536/93.
Accordingly, it referred the following question to the Court in Slob I :
‘Can it be inferred from Article 7(1)(f) of Regulation (EEC) No 536/93 that the producer is obliged to maintain accounts recording, among other things, the availability, production, storage, use, processing, and destruction of milk and/or milk products on his holding, such “stock accounts” also being required to contain declarations of the quantity per month and per product of the milk and/or milk products sold, or does that provision only lay down an obligation to record those data as to sales?’
32. On 12 February 2004, the Court answered that question as follows:
‘The first sentence of Article 7(1) and Article 7(1)(f) of Commission Regulation No 536/93 of 9 March 1993 laying down detailed rules on the application of the additional levy on milk and milk products should be interpreted as meaning that the stock accounts which producers are required to keep need state only the quantities, per month and per product, of milk and/or milk products sold.’
33. In the course of its judgment, the Court said:
‘It should be stated at the outset that it is for the national court alone to determine the subject-matter of the questions which it wishes to refer to the Court.
The Court cannot, at the request of one party to the main proceedings, examine questions which have not been submitted to it by the national court.
If, in view of developments in the proceedings, the national court were to consider it necessary to obtain further interpretations of Community law, it would be for that court to make a fresh reference to the Court …
The issue of whether the Member States are competent to enact legislation imposing reporting obligations on milk producers within their territory that go beyond those in the provision to be interpreted, which was examined at the hearing, is not the subject-matter of the question referred.’ (21)
34. Accordingly, that issue was not addressed by the Court in Slob I .
35. At a subsequent hearing before the referring court on 1 October 2004, the Productschap submitted that the assessment of the quantities of butter concerned was based not only on Article 7(1)(f) of Regulation No 536/93 but also, and separately, on the appellant’s failure to comply with Article 11(1) of the Zuivelverordening.
That provision, according to the Productschap, derives its legitimacy from the general obligation imposed on Member States by Article 7(1) and (3) of Regulation No 536/93 to take all verification measures necessary to ensure proper collection of the additional levy and to check on-site the accuracy of the sale of milk and milk equivalents, and in particular the credibility of the stock accounts.
36. The Productschap maintained that Article 11(1) of the Zuivelverordening obliged the producer to account to the administration for any butter produced and for its use, even if the butter was destroyed or used as feeding stuff.
37. The referring court had doubts as to whether, on the basis of Article 7(1) and (3) of Regulation No 536/93, a Member State was entitled to impose on the producer, in addition to the obligation to maintain stock records in accordance with Article 7(1)(f), an obligation such as that laid down in Article 11(1) of the Zuivelverordening.
38. It therefore stayed proceedings a second time and has referred two further questions to the Court:
‘(1) Is Article 7(1) and (3) of Regulation No 536/93 to be interpreted as conferring on a Member State discretion as to whether to lay down a rule imposing on producers of milk products established in its territory an obligation to keep records which is more extensive than the obligation under Article 7(1)(f)?
(2) If the answer to the first question is in the affirmative, must it then be held that a rule requiring the producer to account to the administration for the quantity of butter produced and for its use, even where the butter has been destroyed or used as feeding stuff, is within the Member State’s discretion?’
39. Written submissions have been lodged by Mr Slob, the Commission and the Netherlands, all of whom also attended the hearing.
Observations
40. The observations submitted to the Court may be summarised as follows.
41. Mr Slob submits that Regulation No 536/93 cannot be interpreted as conferring on Member States the competence to impose under national law further requirements on the keeping of stock accounts for milk products.
42. Drawing on general principles established in the early case-law of the Court, Mr Slob points to the requirement that levies must be applied with the same binding force in all Member States; (22)
and recalls that, since Community regulations are directly applicable, Member States are in general precluded from taking steps which are intended to alter the scope or supplement the provisions of such regulations. (23)
Regulations Nos 3950/92 and 536/93 do not expressly confer competence on Member States to adopt additional rules;
and the system of serious financial penalties which those regulations impose upon producers ought to be applied uniformly throughout the Community.
The obligation on Member States to apply the additional levy regime diligently does not allow an individual Member State to introduce supplementary requirements.
Member States other than the Netherlands have not imposed stricter accounting requirements for the 1996/97 levy period.
If necessary, it is for the Community to adopt more detailed rules.
43. The Netherlands submits that the Community rules applicable at the relevant time failed adequately to regulate stock accounts of milk production in the Netherlands.
The problem arises because milk production in that particular Member State includes a number of large milk herd holdings whose production is entirely or largely marketed by direct sales.
The Community system, on the other hand, is based on the premiss that only negligible quantities are sold directly for consumption.
44. The Netherlands advances two principal submissions.
First, Member States must be able to carry out adequate checks on the production of milk and milk products in order to combat fraud.
Given the particular situation in the Netherlands regarding direct sales, Article 11(1) of the Zuivelverordening is needed to ensure the accuracy of the data submitted on collection and on direct sales.
Otherwise, there might be important adverse financial consequences for the Community – which, under Article 280 EC, (24) Member States are under an obligation to counter.
In Slob I the Court did not rule out the possibility that there might be inadequacies in the verification process. (25)
Article 24(6) of Regulation No 595/2004 has now filled the lacuna at Community level.
45. Second, in order to carry out such checks Member States are competent to impose requirements that supplement those set out in Article 7(1) and (3) of Regulation No 536/93 and that enable them to discharge their obligations under those provisions, so long as they do so in conformity with the scheme and purpose of the additional levy and respect general principles of Community law.
46. Article 11(1) of the Zuivelverordening promotes the main objective of the additional levy regime, which is to penalise overproduction. (26)
Where a mechanism provided for in Regulation No 3950/92 has been frustrated, a Member State is required to take measures to ensure collection of the additional levy. (27)
47. The national provision at issue here is not contrary to general principles of Community law.
Article 11(1) of the Zuivelverordening goes no further than is necessary to ensure its legitimate objective, in accordance with the principle of proportionality;
and its requirements were known to producers, thus respecting the principles of legal certainty and protection of legitimate expectations.
48. The Commission takes the view that Article 7(1) of Regulation No 536/93 permits Member States to impose supplementary accounting requirements, such as the obligation contained in Article 11(1) of the Zuivelverordening, which go beyond those set out in Article 7(1)(f).
Such an interpretation coincides with the aim of Regulation No 536/93, because it provides the means of guaranteeing the efficiency of the additional levy regime and preventing fraud, and is in harmony with the obligation imposed on Member States under Article 7(1) to take all necessary verification measures.
It is for the Member State concerned to demonstrate that stricter rules are necessary and, if so, to formulate those rules.
That competence must be exercised subject to the prohibition on taking arbitrary measures, the rules on abuse of power and general principles of Community law such as proportionality and legal certainty.
Assessment
49. The referring court essentially wishes to know whether Article 7(1) and (3) of Regulation No 536/93 contain an exhaustive list of the obligations that may be imposed upon producers of milk or milk equivalent to keep accounts, or whether those obligations may be supplemented by requirements imposed by a national rule such as Article 11(1) of the Zuivelverordening.
50. In Penycoed (28) and Cooperativa Lattepiù (29) the Court has already considered whether, in carrying out their obligations under the additional levy regime, Member States may take measures additional to those contained in the provisions of Regulations Nos 3950/92 and 536/93.
In both cases, the Court decided that Article 10 EC obliged Member States to take such additional measures so as to ensure correct payment of the levy. (30)
51. Thus in Penycoed, the Court found that the obligation derived from Article 10 EC included the power, if necessary, to take direct action against the producer with a view to recovering the amount payable. (31)
In Cooperativa Lattepiù
the Court had to decide whether it was permissible under Regulations Nos 3950/92 and 536/93 for a Member State to make corrections a posteriori
to reference quantities allocated to milk producers and, as a result, to alter the amounts of the additional levies payable.
In answering that question affirmatively, the Court examined whether such action was compatible with the wording and purpose of those provisions, with the objectives and general scheme of the additional levy regime and with general principles of Community law, in particular, the principles of proportionality, legal certainty and the protection of legitimate expectations. (32)
52. In the present case the Court is similarly asked to consider whether, in verifying payment of the levy, a Member State may take measures which are additional to those set out in the relevant provisions of Regulations Nos 3950/92 and 536/93.
53. The same structured approach adopted by the Court in Cooperativa Lattepiù
may usefully be applied here.
54. First, does an obligation such as that contained in Article 11(1) of the Zuivelverordening comply with the wording of the relevant provisions of Regulations Nos 3950/92 and 536/93?
55. As a preliminary observation, I note that Article 19(1) of Regulation No 1546/88 (33) (the predecessor to Regulation No 536/93) provided very broadly that ‘Member States shall adopt whatever additional measures are required:
(a) to ensure collection of the levy, in particular inspection measures and measures ensuring that interested parties are aware of the penal or administrative sanctions to which they will be subject if they fail to comply with the provisions of this Regulation …’.
56. Nothing in Articles 1 and 2 of Regulation No 3950/92, or in Article 7(1) and (3) of Regulation No 536/93, expressly precludes national authorities from imposing additional measures.
On the contrary: the eighth recital to Regulation No 536/93 states in terms that Member States must have suitable means of conducting ex-post checks to verify whether and to what extent the levy has been collected in accordance with the provisions in force, and that such checks must involve ‘at least a certain number’ of measures which should be specified.
Article 7(1) requires Member States to take ‘all’ the verification measures necessary to ensure payment of the levy due, and sets out a list of requirements to facilitate such checks. (34)
Article 7(3) obliges Member States to verify physically the accuracy of the accounting with regard to the quantities of milk and milk equivalent marketed and, to that end, to make certain specified checks.
57. Article 7(1) and (3) thus specifies, at Community level, a minimum core of verification measures.
These measures may be supplemented by additional national measures to ensure payment of the levy, provided that those national measures are indeed ‘necessary’ and respect general principles of Community law.
Such a reading accords with the statement in the eighth recital that ‘at least a certain number of measures … should be specified’ in the Community legislation, whilst leaving scope for Member States to take supplementary measures so as to have ‘suitable means of conducting ex-post checks to verify whether and to what extent the levy has been collected in accordance with the provisions in force’.
58. Second, does Article 11(1) of the Zuivelverordening comply with the objectives and general scheme of the additional levy regime? The interpretation of the relevant provisions of Regulations Nos 3950/92 and 536/93 that I have just outlined accords with the objectives pursued by the additional levy regime, which naturally include establishing an effective means of collecting the levy due.
As Advocate General Geelhoed pointed out in Penycoed, (35) the purpose of conferring competence on national authorities to recover payment is to ensure that Member States apply the additional levy without financial loss to the Community, as well as to guarantee uniform application of the regime so that differences in competition do not affect milk production across the common market.
Where a Member State can show that an additional check is necessary in order to enable it to discharge its duty to the Community, and that the measure it proposes is proportionate, it is in principle competent to impose such a check.
59. Third, does Article 11(1) of the Zuivelverordening comply with the principles of proportionality, legal certainty and the protection of legitimate expectations? Although that is a question for the national court to decide, the Court can helpfully offer guidance.
60. I do not accept Mr Slob’s submission that the additional accounting measures imposed by the Netherlands are disproportionate.
That issue falls to be examined in three parts. (36)
61. First, the aim pursued by the additional check is to ensure that production of milk and milk products in the Netherlands is effectively monitored – an aim that appears legitimate.
62. Second, the question whether the additional check put in place by Article 11(1) of the Zuivelverordening is necessary can be analysed as follows.
The Netherlands has explained that Dutch dairy farming presents certain characteristics – in terms of the extent to which milk is marketed through direct sales – not shared by Community dairy farming as a whole.
Neither Mr Slob nor the Commission has challenged the veracity of that statement.
Nor has it been suggested (in the context of such direct sales) that the type of cross-check on declared milk production that is provided by a measure such as Article 11(1) of the Zuivelverordening is not
needed in order to establish whether the producer’s declaration is truthful.
Indeed, the Community legislator has since introduced precisely such an additional cross-check (37) at Community level.
On the basis of that material – which is all that is before the Court – I conclude that the Netherlands was justified in considering that such an additional check was necessary.
63. Finally, I do not think that to require accounts specifying the destination of all produce including that which is stored or destroyed goes beyond what is necessary to ensure payment of the levy.
To carry out that task effectively, Member States must be able to address any significant risk that milk is sold without record.
Member States are also required by Article 280(1) EC to counter fraud and any other illegal activities affecting the financial interests of the Community through measures to be taken in accordance with that article.
The accounting obligation imposed by Article 11(1) of the Zuivelverordening addresses those risks in an appropriate manner by requiring producers to keep records of everything regarding their business or holding ‘in such a manner as to enable the production, stock and the quantities received or delivered of processed or manufactured milk … to be ascertained at all times … ’.
64. I am similarly not convinced by Mr Slob’s argument that the additional measures are contrary to legal certainty because they undermine uniform application of Regulation No 536/93.
As I have indicated, Member States are competent to supplement the accounting requirements which that regulation imposes.
Precisely because any additional rules must supplement, rather than modify, the requirements set at Community level, it follows that the uniform application of Community rules will not be jeopardised.
65. So far as the argument based upon legitimate expectations is concerned, the order for reference states that, under national law, Article 11(1) of the Zuivelverordening obliges the producer to account to the administration for the amount of butter produced and for its use, even if the butter is destroyed or used as feeding stuff.
All milk producers subject to Dutch law should therefore expect to have to keep such records.
They are not taken by surprise at having to fulfil that requirement;
and no violation of legitimate expectations accordingly arises.
66. It follows that the requirements imposed on producers by Article 11(1) of the Zuivelverordening legitimately supplement the verification measures set out in Articles 7(1) and 7(3) of Regulation No 536/93.
67. I need finally to deal with an important argument raised by Mr Slob during the hearing.
Mr Slob sought to distinguish the present case from Penycoed
and Cooperativa Lattepiù (38) by saying that here the additional national rules do not merely fill a lacuna, but modify the actual basis for imposition of the additional levy.
That is because Article 11(1) of the Zuivelverordening imposes the levy not on the basis of accounts relating to direct sales, but by examining production data.
The effect of the Productschap’s decision was thus to impose on him an obligation to pay the additional levy on the basis of national law alone.
He maintained that, since the levy can only be imposed on the basis of Community law (specifically, Regulation No 3950/92), that was unlawful.
68. I agree with Mr Slob to this extent, that the additional levy is imposed by virtue of the conditions laid down by Regulation No 3950/92.
It cannot lawfully be imposed on the basis of additional conditions laid down by national law.
Establishing a new legal basis for liability would clearly go beyond the powers conferred on Member States by Regulation No 3950/92 and Regulation No 536/93.
69. Article 1 of Regulation No 3950/92 provides that the levy is to be payable on ‘quantities of milk delivered to a purchaser or sold directly for consumption’.
Article 2(1) further provides that the levy is to be shared between the producers who have contributed to the overrun.
70. The detailed rules in Regulation No 536/93 are there to enable Member States to check that the levy has indeed been collected in accordance with the rules in force (that is, in accordance with Regulation No 3950/92). (39)
They do not per se
constitute a basis for imposing the additional levy.
A fortiori, where a Member State (lawfully) imposes additional requirements under national law that complement the verification measures laid down by Regulation No 536/93, those additional requirements may not themselves provide the legal basis for imposing the levy.
71. What then is the consequence for a producer who has failed to comply with such additional requirements under national law?
It seems to me that two quite different scenarios may be envisaged.
72. In the first scenario, the producer in question has failed to comply with a book keeping requirement;
but, taking the evidence as a whole, the competent national authority finds that there is no basis for concluding that the producer is responsible for ‘quantities of milk delivered to a purchaser or sold directly for consumption’ in excess of the relevant individual reference quantity allocated to him by virtue of Article 4 of Regulation No 3950/92.
The checks carried out by the national authorities produce a credible picture of a dairy farmer with a level of milk production that corresponds to the producer’s declaration that that farmer has made (40) as to the ‘quantities of milk and/or other milk products sold directly for consumption and/or to wholesalers, cheese maturers and the retail trade’. (41)
The accounts relating to direct sales are also credible.
The producer is not (under this scenario) one of ‘the producers who contributed to the overrun’ (Article 2(1) of Regulation 3950/92).
There is therefore no basis under Regulation No 3950/92 for requiring him to pay an additional levy;
and I consider that it would be unlawful for him to be required to do so.
73. In such circumstances, it follows that the Productschap would not be entitled to exercise the powers conferred upon it by Article 31(2) of the Regeling superheffing to determine the quantity delivered and impose a corresponding levy if the additional national rules are not complied with. (42)
However, the Productschap would be entitled to impose an appropriate and proportionate sanction on the farmer concerned for failure to comply with the (national) book keeping requirement.
74. In the second scenario, the failure to comply with the additional book keeping requirement imposed under national law corroborates other evidence derived from the verification carried out pursuant to Article 7 of Regulation No 536/93.
Taken together, the evidence undermines the credibility of the producer’s declaration of direct sales made by that particular dairy farmer.
The production data are not used to modify the basis for collecting the additional levy (which, as I have indicated, would indeed be unlawful) but to provide an important cross-check on the veracity of the accounts relating to direct sales.
In such circumstances, the national authorities may legitimately conclude that that particular producer has been responsible for ‘quantities of milk delivered to a purchaser or sold directly for consumption’ that are in excess of his individual reference quantity under Article 4 of Regulation No 3950/92.
They may therefore consider him to be a producer who has contributed to the (presumed) overrun in milk production in that Member State.
Accordingly, they may require him to pay the additional levy.
75. If those are, on further analysis, found to be the circumstances of the present case, there would be no bar to the Productschap exercising its powers under Article 31(2) of the Regeling superheffing to determine the quantity of milk that is to be presumed to have been delivered, and to require Mr Slob to pay an additional levy calculated on that basis.
76. It is for the national court, as sole judge of fact, to review the decision of the national authority and the evidence upon which it was based, and to conclude whether the levy has been imposed unlawfully (first scenario) or lawfully (second scenario).
Conclusion
77. Accordingly, I propose that the Court should answer the questions referred by the College van Beroep voor het bedrijfsleven as follows:
(1) Article 7(1) and (3) of Commission Regulation (EEC) No 536/93 permits a Member State to lay down a rule imposing on producers of milk products established in its territory an obligation to keep records which is more extensive than the obligation under Article 7(1)(f), provided that such an additional requirement is necessary and that it respects general principles of Community law, in particular the principles of proportionality, legal certainty and legitimate expectations.
(2) On the basis of the material placed before the Court, a national measure such as Article 11(1) of the Zuivelverordening is to be considered as complying with those criteria.
In the event of failure to comply with such a national rule, the Member State may impose an appropriate sanction.
However, it is for the national court, as sole judge of fact, to ensure that any additional levy is imposed solely on the basis of Council Regulation (EEC) No 3950/92.
(1) .
(2)  –	Case C-236/02 [2004] ECR I-1861 (‘ Slob I ’).
(3)  –	Commission Regulation (EEC) No 536/93 laying down detailed rules on the application of the additional levy on milk and milk products (OJ 1993 L 57, p. 12).
(4)  –	So called since when it was first introduced there was already a ‘co-responsibility levy’ (which was subsequently abolished) on milk delivered to dairies and on certain farm sales of milk products.
(5)  –	By Council Regulation (EEC) No 856/84 of 31 March 1984 (OJ 1984 L 90, p. 10), amending Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organisation of the market in milk and milk products (‘the base regulation’) (OJ 1968 L 148, p. 13).
(6)  –	Article 5c(1) of the base regulation, as inserted by Regulation No 856/84.
(7)  –	See Article 5c(1) and (2) of the base regulation, as inserted by Regulation No 856/84.
(8)  –	In the base regulation guaranteed total quantities are set out in Article 5c(3).
(9)  –	Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector (OJ 1992 L 405, p. 1).
That regulation was, in its turn, repealed and replaced with effect from 24 October 2003 by Council Regulation (EC) No 1788/2003 of 29 September 2003 establishing a levy in the milk and milk products sector (OJ 2003 L 270, p. 123).
A series of Council Regulations have thus maintained the additional levy continuously in place since its first introduction in 1984.
(10)  –	Recital 13 explained that the national reserve accommodates quantities which, for whatever reason, have not been allocated individually.
(11)  –	Cited in footnote 3.
(12)  –	Commission Regulation (EC) No 1392/2001 of 9 July 2001 laying down detailed rules for applying Council Regulation (EEC) No 3950/92 (OJ 2001 L 187, p. 19).
Regulation No 1392/2001 was itself repealed and replaced with effect from 3 April 2004 by Commission Regulation (EC) No 595/2004 of 30 March 2004 laying down detailed rules for applying Regulation No 1788/2003 establishing a levy in the milk and milk products sector (OJ 2004 L 94, p. 22) (see footnote 9 above).
(13)  – This modification is reiterated, in similar but slightly broader terms, in the second subparagraph of Article 11(2) of Regulation No 595/2004, cited in footnote 12.
(14)  –	First subparagraph of Article 24(6) of Regulation No 595/2004, my emphasis.
(15)  –	Nederlandse Staatscourant
(Government Gazette) 1993 No 60, p. 18.
(16)  –	PBO-blad 1994, p. 26.
(17)  –	The order for reference is silent on whether the quantity of milk or milk products accounted for by Mr Slob in his declaration was less than his individual reference quantity and, if so, by how much.
The Netherlands’ observations merely indicate (at paragraph 7) that no additional levy was initially deemed to be due.
The additional assessment was raised only after Mr Slob’s farm had been inspected.
(18)  –	The plausibility of this figure as a quantity of butter derived from 250 000 kilograms of milk has not been called into question.
(19)  –	The Opinion of Advocate General Jacobs in Slob I
likewise records at point 10 that Mr Slob had kept stock accounts relating to the manufactured cheese but had made no record of either the production or the destruction of the butter.
(20)  –	On the basis of the facts set out at points 21 to 25 above, it would seem that Mr Slob both made and accounted for the cheese.
What is missing from his accounts is therefore not 250 000 kilograms of milk but the unwanted by-product of the cheese production (10 000 kilograms of butter).
It is for the national court, as sole judge of fact, to take appropriate account of this element (see furt her the discussion at point 67 et seq. below, in particular points 71 to 76).
(21)  – Paragraphs 29 and 30.
(22)
–	Case 17/67 Neumann
[1967] ECR 441, at p. 453.
(23)
–	Case 40/69 Bollmann
[1970] ECR 69, paragraph 4.
(24)  –	Under Article 280(1) EC, the Community and the Member States are required to counter fraud and any other illegal activities affecting the financial interests of the Community through measures which must act as a deterrent and be such as to afford effective protection in the Member States.
(25)  –	See the reference, in paragraph 36 of Slob I, to ‘… any inadequacies in that verification process, in a situation such as that in the main proceedings …’.
(26)  –	See Case C-230/01 Penycoed
[2004] ECR I-937, paragraph 40.
(27)  –	See Penycoed, paragraph 38.
(28)  –	Cited in footnote 26.
(29)
–	Joined Cases C-231/00, C-303/00 and C-451/00 [2004] ECR I-2869.
(30)  –	Penycoed, paragraphs 37 and 41;
Cooperativa Lattepiù, paragraphs 55 and 56.
In Case C-2/93 Exportslachterijen van Oordegem
[1994] ECR I-2283, the Court adopted a similar approach in interpreting Article 8(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (OJ, English Special Edition 1970(I), p. 218) which requires Member States to take the measures necessary inter alia to satisfy themselves that transactions financed by the European Agricultural Guidance and Guarantee Fund are actually carried out and are executed correctly.
It stated that Article 8(1) laid down in that specific area the obligations imposed on Member States by Article 5 of the EC Treaty (now Article 10 EC).
That article, the Court continued, ‘imposes on the Member States the general obligation to take the measures necessary to satisfy themselves that the transactions financed by the Fund are actually carried out and executed correctly, even if the specific Community act does not expressly provide for the adoption of particular supervisory measures …’ (paragraphs 17 and 18).
(31)  –	Paragraph 41.
(32)  –	See paragraphs 57 and 58.
(33)  –	Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12).
(34)
–	These include the obligation on producers under Article 7(1)(f) to keep stock accounts of milk and/or milk products sold directly for consumption and/or to wholesalers, cheese maturers and the retail trade.
(35)  –	See points 32 to 34 of his Opinion.
(36)  –	Rather like the structure of Gaul:
see Caesar, De Bello Gallico, I, 1.
(37)
–	Article 24(6) of Regulation No 595/2004.
(38)  –	See specifically Penycoed, paragraphs 34 and 36 to 39, and Cooperativa Lattepiù, paragraph 56 et seq.
(39)  –	See the eighth recital to Regulation No 536/93.
Indeed, since Regulation No 536/93 is merely a Commission implementing regulation, it could not in itself impose liability for payment of the levy.
(40)
–	As provided for by Article 4(1) of Regulation No 536/93.
(41)
–	The slightly more elaborate formulation, in Regulation No 536/93, of the phrase ‘quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption’ contained in Article 1 of Regulation No 3950/92.
(42)
–	Article 31(2) of the Regeling superheffing read in conjunction with Article 29(1) and Article 31(1) thereof, together with Article 11(1) of the Zuivelverordening.