61981CJ0003_EN
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Parties
IN CASE 3/81
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE BUNDESFINANZHOF ( FEDERAL FINANCE COURT ) FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
LUDWIG WUNSCHE & CO ., HAMBURG,
AND
BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG ( FEDERAL OFFICE FOR THE ORGANIZATION OF AGRICULTURAL MARKETS ), FRANKFURT AM MAIN,
Subject of the case
ON THE INTERPRETATION OF THE TERMS ' ' PEARLED BARLEY ' '
OR ' ' PEARLED GRAINS OF BARLEY HAVING AN ASH CONTENT EXPRESSED AS A PERCENTAGE OF THE DRY MATTER OF LESS THAN 1% ' '
BY WEIGHT APPEARING IN THE ANNEX TO REGULATION ( EEC ) NO 19 OF THE COUNCIL OF 4 APRIL 1962 ( JOURNAL OFFICIEL NO 30, P . 933 ),
ARTICLE 5 ( 1 ) ( D ) OF REGULATION ( EEC ) NO 141/64 OF THE COUNCIL OF 21 OCTOBER 1964 ( JOURNAL OFFICIEL NO 169, P . 2666 )
AND IN REGULATION ( EEC ) NO 11/66 OF THE COMMISSION OF 3 FEBRUARY 1966 ( JOURNAL OFFICIEL NO 24, P . 393 ),
Grounds
1 BY ORDER OF 18 NOVEMBER 1980, RECEIVED AT THE COURT REGISTRY ON 12 JANUARY 1981, THE BUNDESFINANZHOF ( FEDERAL FINANCE COURT ) REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE INTERPRETATION OF THE EXPRESSION ' ' PEARLED GRAINS OF BARLEY ' '
APPEARING IN THE ANNEX TO REGULATION ( EEC ) NO 19 OF THE COUNCIL OF 4 APRIL 1962 ( JOURNAL OFFICIEL 1962, P . 933 )
AND IN ARTICLE 5 ( 1 ) ( D ) OF REGULATION ( EEC ) NO 141/64 OF THE COUNCIL OF 21 OCTOBER 1964 ( JOURNAL OFFICIEL 1964, P . 2666 )
AND IN PARTICULAR OF THE EXPRESSION ' ' PEARLED GRAINS OF BARLEY HAVING AN ASH-CONTENT EXPRESSED AS A PERCENTAGE OF THE DRY MATTER OF LESS THAN 1% AS USED PURSUANT TO REGULATION ( EEC ) NO 11/66 OF THE COMMISSION OF 3 FEBRUARY 1966 ( JOURNAL OFFICIEL 1966, P . 393 ).
2 THE ORDER WAS MADE IN PROCEEDINGS BEFORE THE BUNDESFINANZHOF BETWEEN LUDWIG WUNSCHE & CO ., HAMBURG ( HEREINAFTER REFERRED TO AS ' ' WUNSCHE ' ' ),
A GERMAN IMPORTER AND EXPORTER OF CEREALS, AND THE GERMAN AGRICULTURAL INTERVENTION AGENCY, THE BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG ( FEDERAL OFFICE FOR THE ORGANIZATION OF AGRICULTURAL MARKETS ), FRANKFURT AM MAIN ( HEREINAFTER REFERRED TO AS ' ' THE FEDERAL OFFICE ' ' ). HAVING GRANTED WUNSCHE THE MAXIMUM ENTITLEMENT TO EXPORT REFUNDS, CONSISTING IN THIS CASE IN AUTHORITY TO IMPORT, FREE OF LEVY, 220 KG OF BASIC PRODUCT ( UNPROCESSED BARLEY ) FOR 100 KG OF PROCESSED PRODUCT ( PEARLED GRAINS OF BARLEY ), THE FEDERAL OFFICE DECIDED, AFTER THE PROCESSED PRODUCT HAD BEEN EXAMINED BY TECHNICAL EXPERTS, TO WITHHOLD AUTHORIZATION FOR THE LEVY-FREE IMPORT AND, IN BOTH CASES, TO WITHDRAW THE IMPORT AUTHORIZATIONS ALREADY GRANTED . WUNSCHE LODGED AN OBJECTION AND WAS ALLOWED A REFUND ONLY AT THE REDUCED RATE OF 160 KG OF BASIC PRODUCT FOR 100 KG OF PROCESSED PRODUCT ; IT THEN APPLIED TO THE FINANZGERICHT ( FINANCE COURT ) FOR A DECLARATION : ( A ) THAT THE INTERVENTION AGENCY WAS UNDER AN OBLIGATION TO GRANT IT AUTHORITY TO IMPORT FREE OF LEVY A FURTHER QUANTITY EQUAL TO 60% OF THE EXPORTED GOODS ; ( B ) THAT, IN SO FAR AS THE DECISIONS REVOKED AUTHORIZATIONS PREVIOUSLY GRANTED, THOSE DECISIONS WERE VOID . WUNSCHE ' S APPLICATION WAS DISMISSED AND IT APPEALED ON A POINT OF LAW TO THE BUNDESFINANZHOF, WHICH, CONSIDERING THAT ANY DECLARATION AS TO THE LAWFULNESS OF THE CONTESTED DECISIONS DEPENDED ON THE INTERPRETATION TO BE GIVEN, UNDER COMMUNITY LAW, TO THE CONCEPT OF PEARLED GRAINS OF BARLEY, SUBMITTED THE FOLLOWING QUESTIONS TO THE COURT :
' ' 1 . HOW IS THE EXPRESSION ' PEARLED BARLEY '
OR ' PEARLED GRAINS OF BARLEY HAVING AN ASH-CONTENT EXPRESSED AS A PERCENTAGE OF THE DRY MATTER OF LESS THAN 1% '
BY WEIGHT APPEARING IN THE ANNEX TO REGULATION NO 19/62/EEC OF THE COUNCIL, ARTICLE 5 ( 1 ) ( D ) OF REGULATION NO 141/64/EEC OF THE COUNCIL AND IN REGULATION NO 11/66/EEC OF THE COMMISSION TO BE INTERPRETED IN RELATION TO UNDERTAKINGS IN MARCH 1966 AND ON 5 AND 13 APRIL 1966 RESPECTIVELY TO GRANT REFUNDS? IN VIEW OF THE FACT THAT ACCORDING TO THE LAST-MENTIONED REGULATION PEARLED GRAINS OF BARLEY MAY HAVE AN ASH-CONTENT OF MORE THAN 1% BY WEIGHT AND THAT THE ASH-CONTENT IS DETERMINED BY THE EXTENT TO WHICH THE PERICARP HAS BEEN REMOVED AND THE GRAINS HAVE BEEN ROUNDED AT THE ENDS, IS IT TO BE ASSUMED THAT AT LEAST WHEN THE ASH-CONTENT IS LESS THAN 1% BY WEIGHT PEARLED GRAINS OF BARLEY ARE INVARIABLY PRESENT SO THAT IT IS IMMATERIAL WHETHER IN ADDITION THEY FULFIL THE REQUIREMENTS CONTAINED IN THE EXPLANATORY NOTES TO TARIFF HEADING NO 11.02 OF THE CUSTOMS COOPERATION COUNCIL NOMENCLATURE?
2.IF AN ASH-CONTENT OF LESS THAN 1% BY WEIGHT IS NOT SUFFICIENT BY ITSELF TO FALL WITHIN THE EXPRESSION ' PEARLED BARLEY ' :
( A ) IS IT SUFFICIENT FOR MORE THAN 50% OF THE GRAINS TO HAVE PRACTICALLY THE WHOLE PERICARP REMOVED AND TO BE ROUNDED AT BOTH ENDS OR MUST ALMOST ALL THE GRAINS OF THE CONSIGNMENT IN QUESTION HAVE THESE PARTICULAR FEATURES FOR TARIFF PURPOSES?
( B)IF A PROPORTION OF MORE THAN 50% SUFFICES DOES THE DETERMINATION OF THE PROPORTIONS DEPEND ON THE PERCENTAGE BY WEIGHT OR BY NUMBER OF THE GRAINS?
' '
FIRST QUESTION
3 THE FIRST QUESTION SEEKS ESSENTIALLY TO DETERMINE WHETHER THE CONCEPT OF ' ' PEARLED GRAINS OF BARLEY ' '
MAY BE DEFINED ACCORDING TO THE SOLE CRITERION OF ASH-CONTENT WHERE SUCH CONTENT IS LESS THAN 1% OR WHETHER, ON THE CONTRARY, OTHER FACTORS AND IN PARTICULAR THE CONDITIONS SET OUT IN THE EXPLANATORY NOTES TO THE CUSTOMS COOPERATION COUNCIL NOMENCLATURE MUST BE TAKEN INTO CONSIDERATION .
4 IT IS IMPORTANT TO EMPHASIZE IN THE FIRST PLACE THAT REGULATION NO 19 OF THE COUNCIL AND REGULATIONS NOS 141/64 AND 11/66 OF THE COMMISSION PROVIDE NO DEFINITION WHATSOEVER OF ' ' PEARLED GRAINS OF BARLEY ' ' . THE TWO FIRST-MENTIONED REGULATIONS REFER ONLY TO ' ' PEARLED ' '
GRAINS OF CEREALS ; THE THIRD REGULATION DOES NOT REFER TO ' ' GRAINS OF PEARLED BARLEY HAVING AN ASH-CONTENT EXPRESSED AS A PERCENTAGE OF THE DRY MATTER OF LESS THAN 1% ' '
BUT LIMITS THE EXPORT REFUND GRANTED IN RESPECT OF ' ' GRAINS OF PEARLED BARLEY HAVING AN ASH-CONTENT EXPRESSED AS A PERCENTAGE OF THE DRY MATTER EXCEEDING 1% ' '
TO AN AMOUNT EQUAL TO 70% OF THE REFUND AVAILABLE PURSUANT TO REGULATION NO 164/64 OF THE COMMISSION OF 29 OCTOBER 1964 ( JOURNAL OFFICIEL 1964, P . 2743 ); NEITHER DOES IT CONTAIN A DEFINITION OF THE CONCEPT OF ' ' PEARLED GRAINS OF BARLEY ' ' .
5 IN SO FAR AS NO DEFINITION OF ' ' PEARLED GRAINS OF BARLEY ' '
CAN BE OBTAINED EITHER FROM THE ABOVE-MENTIONED REGULATIONS OR FROM HEADING 11.02 OF THE COMMON CUSTOMS TARIFF, TO WHICH THE ANNEX TO REGULATION NO 19 EXPRESSLY REFERS, OR FROM THE EXPLANATORY NOTES TO THE COMMON CUSTOMS TARIFF, IT IS APPROPRIATE, IN VIEW OF THE FACT THAT HEADING 11.02 OF THE COMMON CUSTOMS TARIFF HAS EXACTLY THE SAME WORDING AS A HEADING IN THE CUSTOMS COOPERATION COUNCIL NOMENCLATURE, TO REFER TO THE EXPLANATORY NOTES TO THAT NOMENCLATURE ( HEREINAFTER REFERRED TO AS ' ' THE EXPLANATORY NOTES ' ' ).
6 THE EXPLANATORY NOTES CONTAIN THE FOLLOWING DEFINITIONS WITH REGARD TO HEADING 11.02 :
' ' . . . THE PRODUCTS COVERED BY THE PRESENT HEADING ARE :
. . .
( 3 ) GRAIN WHICH HAS BEEN HULLED OR OTHERWISE WORKED TO REMOVE WHOLLY OR PARTIALLY THE PERICARP ( THE SKIN BENEATH THE HUSK ). GRAINS OF THE BRACTEIFEROUS VARIETIES OF BARLEY ARE ALSO CLASSIFIED IN THIS HEADING IF THEIR HUSKS ( OR HULLS ) HAVE BEEN REMOVED ; GENERALLY THE FLOURY KERNEL IS THEN VISIBLE . ( THE HUSKS CAN BE REMOVED ONLY BY GRINDING SINCE THEY ADHERE TOO FIRMLY TO THE GRAIN KERNEL TO BE SEPARATED BY MERE THRESHING OR WINNOWING ) . . .
( 4)PEARLED GRAINS ( PRINCIPALLY BARLEY ); THAT IS, GRAIN FROM WHICH PRACTICALLY THE WHOLE PERICARP HAS BEEN REMOVED ; THESE ARE MORE ROUNDED AT THE ENDS . ' '
THEY MAKE NO REFERENCE WHATSOEVER TO THE CRITERION OF ASH-CONTENT .
7 WUNSCHE MAINTAINS THAT PARAGRAPH ( 3 ) OF THAT NOTE IS VITIATED BY A GROSS ERROR, BY REASON OF THE FACT THAT, HAVING STATED THAT HULLING CONSISTS, IN THE CASE OF BRACTEIFEROUS VARIETIES OF BARLEY, OF REMOVAL OF THE HUSKS OR HULLS, IT GOES ON TO SAY THAT ' ' GENERALLY THE FLOURY KERNEL IS THEN VISIBLE ' ' . SUCH A STATEMENT IS INCORRECT SINCE, IN THE CASE OF A BRACTEIFEROUS VARIETY OF CEREAL, REMOVAL OF THE BRACTS ALWAYS LEAVES THE PERICARP INTACT, WHICH PREVENTS THE FLOURY KERNEL FROM BEING VISIBLE . THAT MISTAKE, WHICH RENDERS PARAGRAPH ( 3 ) OF THE EXPLANATORY NOTES ON HEADING 11.02 INAPPLICABLE, HAS THE SAME CONSEQUENCES WITH REGARD TO PARAGRAPH ( 4 ), IN WHICH THE DEFINITION OF ' ' PEARLED ' '
GRAINS RELIES UPON THE CONCEPT OF ' ' HULLED ' '
GRAINS .
8 THAT ARGUMENT IS UNTENABLE . IN FACT, THE STATEMENT THAT THE FLOURY KERNEL IS VISIBLE AFTER HULLING, CONTAINED IN THE ABOVE-MENTIONED EXPLANATORY NOTES REFERS TO ALL CEREALS IN GENERAL, THE GREAT MAJORITY OF WHICH ARE NAKED CEREALS . THAT DOES NOT MEAN, AS IS ACKNOWLEDGED IN THE EXPLANATORY NOTE ITSELF, THAT BRACTEIFEROUS VARIETIES OF BARLEY MAY NOT CONSTITUTE A SPECIAL CASE WHICH IS AN EXCEPTION TO THE GENERAL RULE . IN FACT, THAT RULE ITSELF PROVIDES FOR THE POSSIBILITY OF EXCEPTIONS, BY USING THE WORD ' ' GENERALLY ' ' . THE STATEMENT
CHALLENGED BY WUNSCHE IS NOT THEREFORE OF SUCH A NATURE AS TO RENDER THE EXPLANATORY NOTES INAPPLICABLE TO BRACTEIFEROUS VARIETIES OF BARLEY .
9 WUNSCHE ALSO STATES THAT, IN THIS CASE, THE EXPLANATORY NOTES ARE INCOMPATIBLE WITH REGULATION NO 11/66 . THE INCOMBUSTIBLE MINERALS WHICH GIVE RISE TO THE ASH-CONTENT OF THE CEREAL GRAINS ARE IN FACT CONCENTRATED AT THE EXTREMITIES OF THE GRAIN, WHILST THE ASH-CONTENT OF THE FLOURY KERNEL NEVER EXCEEDS 0.6% OF THE GRAIN BY WEIGHT . CONSEQUENTLY, IF THE ONLY METHOD OF OBTAINING PEARLED BARLEY CONSISTS, AS APPEARS FROM THE EXPLANATORY NOTES, IN REMOVING PRACTICALLY THE WHOLE OF THE PERICARP FROM THE GRAIN, THE ASH-CONTENT OF PEARLED BARLEY COULD NEVER EXCEED 1% BY WEIGHT .
10 THAT ARGUMENT, HOWEVER, DISREGARDS THE FACT THAT THE ASH-CONTENT OF A CEREAL MAY VARY CONSIDERABLY ACCORDING TO THE SPECIES AND VARIETY OF THE CEREAL, THE GROWING CONDITIONS, THE NATURE OF THE SOIL, THE FERTILIZERS AND OTHER FACTORS . MOREOVER, NEW AGRICULTURAL TECHNIQUES ARE, AS THE COMMISSION HAS RIGHTLY EMPHASIZED, LIKELY TO PROMOTE THE PRODUCTION OF NEW VEGETABLE VARIETIES OF WHICH THE BIOLOGICAL CHARACTERISTICS MAY VARY .
11 IT SHOULD ALSO BE EMPHASIZED THAT THE COMMUNITY PROVISIONS ON AGRICULTURE, AS POINTED OUT BY THE NATIONAL COURT, ACKNOWLEDGE THE EXISTENCE OF PEARLED GRAINS OF BARLEY WHOSE ASH-CONTENT EXCEEDS 1%, A FACT WHICH PREVENTS THE CONCEPT OF PEARLED BARLEY FROM BEING DEFINED ACCORDING TO THE SOLE CRITERION OF ASH-CONTENT .
12 IN VIEW OF THE FOREGOING CONSIDERATIONS, IT IS APPROPRIATE TO STATE IN ANSWER TO THE FIRST QUESTION SUBMITTED BY THE BUNDESFINANZHOF THAT ' ' PEARLED GRAINS OF BARLEY ' ', AS REFERRED TO IN THE ANNEX TO REGULATION NO 19, IN ARTICLE 5 ( 1 ) ( D ) OF REGULATION NO 141/64 AND IN REGULATION NO 11/66, MUST BE TAKEN TO MEAN GRAINS OF BARLEY WHICH SATISFY, AS A MINIMUM, THE CONDITIONS LAID DOWN IN THE EXPLANATORY NOTES ON HEADING 11.02 OF THE CUSTOMS COOPERATION COUNCIL NOMENCLATURE .
SECOND QUESTION
13 IN VIEW OF THE FACT THAT NO TECHNICAL PROCESS EXISTS WHICH ENSURES THAT ALL OR PRACTICALLY ALL THE GRAINS CONTAINED IN A CONSIGNMENT OF BARLEY DISPLAY ALL THE
CHARACTERISTICS OF PEARLED BARLEY, IT IS IMPORTANT TO ESTABLISH THE MINIMUM PERCENTAGE OF PEARLED GRAINS DISPLAYING SUCH CHARACTERISTICS WHICH MUST BE COMPRISED IN A CONSIGNMENT OF BARLEY TO ENABLE IT TO BE REGARDED AS A CONSIGNMENT OF PEARLED BARLEY, AND WHETHER THAT PERCENTAGE MUST BE CALCULATED BY REFERENCE TO THE WEIGHT OR TO THE NUMBER OF GRAINS .
14 THE ANSWER MUST TAKE INTO ACCOUNT THE OBJECTIVES PURSUED BY THE COMMUNITY PROVISIONS IN QUESTION WHICH GRANT IN RESPECT OF EXPORTS OF PEARLED BARLEY MUCH HIGHER REFUNDS THAN THOSE AVAILABLE FOR HULLED BARLEY, IN ORDER TO PRECLUDE A SITUATION IN WHICH A PRODUCT WHICH HAS UNDERGONE LESS PROCESSING, AND THEREFORE HAS A LOWER COST PRICE, COULD, IF ACCORDED THE SAME REFUND AS THE MORE COSTLY PRODUCT, BE SOLD IN NON-MEMBER COUNTRIES AT A PRICE LOWER THAN THAT APPLIED ON THE WORLD MARKET .
15 IN VIEW OF THAT FACT, THE NUMBER OF GRAINS CANNOT BE TAKEN AS A REFERENCE BASIS . IF IN FACT IT WERE, THE GREATER REFUNDS AVAILABLE FOR PEARLED BARLEY, WHICH HAS UNDERGONE AN ADDITIONAL OPERATION AFTER HULLING OF THE GRAINS, MIGHT, IN VIEW OF THE VARYING WIDTHS AND WEIGHT OF THE GRAINS, BE GRANTED FOR A PRODUCT NOT DISPLAYING THE CHARACTERISTICS OF PEARLED BARLEY .
16 MOREOVER, THE CRITERION OF PERCENTAGE BY WEIGHT COULD LIKEWISE NOT BE REGARDED AS SATISFACTORY IF IT LED TO THE GRANT OF THE MAXIMUM REFUND FOR A CONSIGNMENT OF BARLEY IN WHICH THE WEIGHT OF THE PEARLED GRAINS HARDLY EXCEEDED THAT OF THE MERELY HULLED GRAINS . SUCH A RESULT WOULD NOT IN FACT BE IN HARMONY WITH THE OBJECTIVES OF THE REGULATIONS DETERMINING THE EXPORT REFUNDS . THE ONLY WAY TO SAFEGUARD THOSE OBJECTIVES IS TO TREAT A CONSIGNMENT OF BARLEY AS A CONSIGNMENT OF PEARLED BARLEY ONLY IF THE PROPORTION OF PEARLED GRAINS CONSIDERABLY EXCEEDS 50% BY WEIGHT .
17 IT MUST THEREFORE BE STATED IN REPLY TO THE SECOND QUESTION SUBMITTED BY THE BUNDESFINANZHOF THAT IN MARCH AND APRIL 1966, PURSUANT TO COMMUNITY LAW AS THEN IN FORCE REGARDING THE EXPORT TO NON-MEMBER COUNTRIES OF CEREAL-BASED PROCESSED PRODUCTS, MEMBER STATES WERE PERMITTED TO TREAT AS CONSIGNMENTS OF PEARLED BARLEY ONLY CONSIGNMENTS OF BARLEY IN WHICH THE PROPORTION OF PEARLED GRAINS CONSIDERABLY EXCEEDED 50% BY WEIGHT OF THE DRY MATTER .
Decision on costs
COSTS
18 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, IN THE NATURE OF A STEP IN THE PROCEEDINGS PENDING BEFORE THE NATIONAL COURT, THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS,
THE COURT ( FIRST CHAMBER )
IN REPLY TO THE QUESTIONS SUBMITTED TO IT BY THE BUNDESFINANZHOF BY ORDER OF 18 NOVEMBER 1980, HEREBY RULES :
1 . ' ' PEARLED GRAINS OF BARLEY ' ', WITHIN THE MEANING OF THE ANNEX TO REGULATION NO 19, ARTICLE 5 ( 1 ) ( D ) OF REGULATION NO 141/64 AND REGULATION NO 11/66, MUST BE TAKEN TO MEAN GRAINS OF BARLEY WHICH SATISFY, AS A MINIMUM, THE CONDITIONS LAID DOWN IN THE EXPLANATORY NOTES TO THE CUSTOMS COOPERATION COUNCIL NOMENCLATURE CONCERNING HEADING 11.02 .
2.IN MARCH AND APRIL 1966, PURSUANT TO COMMUNITY LAW AS THEN IN FORCE REGARDING THE EXPORT TO NON-MEMBER COUNTRIES OF CEREAL-BASED PROCESSED PRODUCTS, MEMBER STATES WERE PERMITTED TO TREAT AS CONSIGNMENTS OF PEARLED BARLEY ONLY CONSIGNMENTS OF BARLEY IN WHICH THE PROPORTION OF PEARLED GRAINS CONSIDERABLY EXCEEDED 50% BY WEIGHT OF THE DRY MATTER .