Case C-309/04

Fleisch-Winter GmbH & Co. KG

v

Hauptzollamt Hamburg-Jonas

(Reference for a preliminary ruling from the Bundesfinanzhof)

(Export refunds – Condition for grant – Beef and veal – Regulation (EEC) No 3665/87 – Bovine spongiform encephalopathy – Export ban – Sound and fair marketable quality – Export declaration – National application for a payment – Sanction)

Summary of the Judgment

1. Agriculture – Common organisation of the markets – Export refunds – Conditions for grant – Products of sound and fair marketable quality – Meaning – Meat which could not be marketed under normal conditions – Not included – Meat subject to an export ban from a certain Member State – National administration having evidence that the product originates in that Member State – Exporter’s obligations regarding proof

(Commission Regulation No 3665/87, Art. 13)

2. Agriculture – Common organisation of the markets – Export refunds – Information issued in accordance with the provisions for calculating the refund requested and the document used to qualify for a refund – Confirmation that the products are of sound and fair marketable quality in the request for payment – Not included – Effect of such a confirmation before the national court

(Commission Regulation No 3665/87, Arts 3, 11(1), subpara. 2, and 13, first sentence)

1. Article 13 of Regulation No 3665/87 laying down common detailed rules for the application of the system of export refunds on agricultural products, as amended by Regulation No 2945/94, must be interpreted as meaning that it precludes beef that is subject to a ban laid down by Community law on exports from one Member State to other Member States and non-member countries from being regarded as being of ‘sound and fair marketable quality’, and that it requires, for the purpose of the payment of refunds, the exporter to show that the exported product does not originate in a Member State from which exports are banned, where the national administration has evidence that the product is subject to an export ban.

First, since such meat cannot be marketed in normal conditions, it does not satisfy those quality requirements. Secondly, in so far as the exporter, by lodging an application for a refund, continues to assert either expressly or impliedly that the conditions for the grant of a refund are satisfied, including that it is of ‘sound and fair marketing quality’, it is for the exporter, according to the rules of evidence of national law, to prove that that condition is in fact satisfied if the declaration is questioned by the national authorities.

(see paras 20, 25, 32, 35, 37-38, operative part 1)

2. The assurance in a national request for payment, referred to in Article 47 of Regulation No 3665/87 laying down common detailed rules for the application of the system of export refunds on agricultural products, as amended by Regulation No 2945/94, that a product is of ‘sound and fair marketable quality’ within the meaning of the first sentence of Article 13 of Regulation No 3665/87, as amended by Regulation No 2945/94, is not part of the information provided pursuant to the combined provisions of the second subparagraph of Article 11(1) and Article 3 of that regulation, which deals with the refund requested and the document used in order to qualify for a refund. However, it may be regarded by the national court as evidence for the purpose of determining the exporter’s position.

The request for a refund, within the meaning of Article 11(1) of Regulation No 3665/87, is not submitted by lodging an application for payment, within the meaning of Article 47, because it does not constitute the legal basis of entitlement to such payment. Furthermore, it is the documents referred to in Article 3(5) of that regulation, namely the export declaration or any other document used during export, which are capable of forming the legal basis of a refund and triggering the system of checks of the request for refund which may lead to the application of a sanction, in accordance with Article 11(1).

(see paras 40-41, 43, operative part 2)

JUDGMENT OF THE COURT (First Chamber)

1 December 2005 ( )

(Export refunds – Condition for grant – Beef and veal – Regulation (EEC) No 3665/87 – Bovine spongiform encephalopathy – Export ban – Sound and fair marketable quality – Export declaration – National application for a payment – Sanction)

In Case C-309/04,

REFERENCE for a preliminary ruling under Article 234 EC from the Bundesfinanzhof (Germany), made by decision of 20 April 2004, received at the Court on 21 July 2004, in the proceedings

Fleisch-Winter GmbH & Co. KG

v

Hauptzollamt Hamburg-Jonas,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, N. Colneric, J.N. Cunha Rodrigues, E. Juhász (Rapporteur) and E. Levits, Judges,

Advocate General: P. Léger,

Registrar: K. Sztranc, Administrator,

having regard to the written procedure and further to the hearing on 7 July 2005,

after considering the observations submitted on behalf of:

– Fleisch-Winter GmbH & Co. KG, by U. Schrömbges and J. Vagt, Rechtsanwälte,

– the Hauptzollamt Hamburg-Jonas, by G. Seber, acting as Agent,

– the Commission of the European Communities, by T. van Rijn and F. Erlbacher, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Articles 3, 11 and 13 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’).

2 That reference was made in proceedings between Fleisch-Winter GmbH & Co. KG (‘Fleisch-Winter’) and the Hauptzollamt Hamburg-Jonas (German customs authority) (‘the Hauptzollamt’) concerning the claim for reimbursement of an advance payment of an export refund together with a financial penalty and the refusal of a refund requested.

Community law

3 Regulation No 3665/87 provides in the ninth and 16th recitals in the preamble:

‘Whereas products should be of a quality such that they can be marketed on normal terms;

…

… to enable exporters to finance their transactions more easily, Member States should be authorised to advance all or part of the amount of the refund as soon as the export declaration is accepted, subject to the provision of security to guarantee repayment of the amount advanced if it should later be found that the refund ought not to have been paid’.

4 Article 3 of Regulation No 3665/87 provides:

‘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.

2. The date of acceptance of the export declaration shall determine:

(a) the rate of the refund where the refund is not fixed in advance;

(b) any adjustments to be made to the rate of the refund where it is so fixed.

3. Any other act having the same effect in law as the acceptance of the export declaration shall be deemed to be equivalent to such acceptance.

4. The day of export shall be used to establish the quantity, nature and characteristics of the product exported.

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”.

6. At the time of such acceptance, or of such equivalent act, the products shall be placed under customs control until they leave the customs territory of the Community.’

5 Article 11(1) of Regulation No 3665/87 provides for sanctions where the exporter has applied for a refund in excess of that applicable. The second subparagraph provides that the refund applied for is deemed to be the amount calculated from the information supplied pursuant to Article 3 or Article 25(2).

6 Under Article 13 of Regulation No 3665/87:

‘No refund shall be granted on products which are not of sound and fair marketable quality, or on products intended for human consumption whose characteristics or condition exclude or substantially impair their use for that purpose.’

7 Article 47(1) and (2) of Regulation No 3665/87 provide:

‘1. The refund shall be paid only on application by the exporter and shall be paid only by the Member State in whose territory the export declaration was accepted.

Application for the refund shall be made either:

(a) in writing; Member States may prescribe a special form to be used for this purpose; or

(b) using computerised systems, in accordance with detailed rules to be adopted by the competent authorities and after approval by the Commission.

…

2. Except in cases of force majeure the documents relating to payment of the refund or release of the security must be submitted within 12 months following the date of acceptance of the export declaration.’

8 According to the third recital in the preamble to Regulation No 2945/94:

‘Whereas, 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 had not been discovered and that whereas in the case where the wrong information was supplied intentionally it is equally proportional to provide for a higher sanction’.

9 The first and second subparagraphs of Article 21(1) 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) state:

‘No refund shall be granted on products which are not of sound and fair marketable quality on the date on which the export declaration is accepted.

Products shall be deemed to meet the requirement laid down in the first subparagraph if they can be marketed on the Community’s territory in normal conditions under the description appearing in the refund application and if, where such products are intended for human consumption, their use for that purpose is not excluded or substantially impaired by reason of their characteristics or condition.’

10 The third subparagraph of Article 5(1) of Commission Regulation (EC) No 2221/95 of 20 September 1995 laying down detailed rules for the application of Council Regulation (EEC) No 386/90 as regards physical checks carried out at the time of export of agricultural products qualifying for refunds (OJ 1995 L 224, p. 13) provides:

‘The customs office of export must be mindful of the provisions of Article 13 of Regulation (EEC) No 3665/87.’

11 Article 13(6), (9) and (10) of Council Regulation (EEC) No 805/68 of 27 June 1968 on the common organisation of the market in beef and veal (English Special Edition 1968 (I), p. 187), as amended by Council Regulation (EC) No 3290/94 of 22 December 1994 on the adjustments and transitional arrangements required in the agriculture sector in order to implement the agreements concluded during the Uruguay Round of multilateral trade negotiations (OJ 1994 L 349, p. 105) state:

‘6. Refunds shall be granted only on application and on presentation of the relevant export licence.

…

9. The refund shall be paid upon proof that:

– the products are of Community origin, except where paragraph 10 applies,

– the products have been exported from the Community

…

…

10. In the absence of a derogation granted in accordance with the procedure laid down in Article 27, no export refund shall be granted on products which are imported from third countries and re-exported to third countries.’

12 Commission Decision 96/239/EC of 27 March 1996 on emergency measures to protect against bovine spongiform encephalopathy (OJ 1996 L 78, p. 47), as amended by Commission Decision 96/362/EC of 11 June 1996 (OJ 1996 L 139, p. 17) (‘Decision 96/239’) provides in Article 1:

‘… the United Kingdom shall not export from its territory to the other Member States or third countries:

…

– meat of bovine animals slaughtered in the United Kingdom,

– products obtained from bovine animals slaughtered in the United Kingdom which are liable to enter the human food chain …’.

13 Article 1(a) of Decision 96/239 provides:

‘1. The United Kingdom shall not dispatch:

– meat for human consumption,

…

obtained from bovine animals which were not slaughtered in the United Kingdom unless they come from establishments in the United Kingdom under official veterinary control which have put in place a system of tracing of the raw material which will guarantee the origin of the material throughout the whole production chain.

2. The United Kingdom shall forward the list of establishments which meet the conditions referred to in paragraph 1 to the Commission and the other Member States.

3. The United Kingdom shall ensure that the products mentioned in paragraph 1 dispatched to other Member States are accompanied by a health certificate issued by an official veterinarian stating that they meet the conditions referred to in paragraph 1.’

The facts in the main proceedings and the questions referred for a preliminary ruling

14 Between May and June 1997 Fleisch-Winter declared five consignments of frozen beef intended, according to the export declarations, for export to Russia. It purchased the beef from a French company which, for its part, had been supplied by a Belgian company. An investigation conducted by German customs authorities uncovered evidence suggesting that the meat might have originated in the United Kingdom and have been imported into Belgium in breach of Decision 96/239.

15 The Hauptzollamt therefore demanded repayment of the advance payment made by way of export refund and, in one case, refused to pay the refund requested. Having objected in vain, Fleisch-Winter instituted proceedings to contest the decisions in question, also without success.

16 By decision of 24 November 1997, as amended by decision of 10 September 1999, the Hauptzollamt imposed a penalty of a total of DEM 104 312.90 on Fleisch-Winter, under point (a) of the first subparagraph of Article 11(1) of Regulation No 3665/87, on the ground that, contrary to the information the latter had provided, it was not entitled to an export refund.

17 Fleisch-Winter brought an appeal before the competent Finanzgericht (Finance Court), which held that the Hauptzollamt was fully certified to impose. According to the Finanzgericht, the applicant in the main proceedings had been unable to dispel suspicions that the meat intended for export to Russia was subject to a Community export ban. It could not, therefore, claim the refund, because the meat covered by that ban was not of ‘sound and fair marketable quality’ within the meaning of Article 13 of Regulation No 3665/87.

18 In those circumstances Fleisch-Winter appealed on a point of law against that decision to the Bundesfinanzhof (Federal Finance Court), which decided to stay its proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1. Is the fact that on the basis of investigations carried out by customs authorities there is a suspicion that a product is subject to a ban under Community law which prohibits the export of a product eligible for a refund from a particular Member State to other Member States and to non-member countries sufficient of itself to exclude the existence of sound and fair marketable quality within the meaning of the first sentence of Article 13 of Regulation No 3665/87 so that the actual condition or marketability of the particular product is irrelevant?

2. Is confirmation of sound and fair marketable quality within the meaning of the first sentence of Article 13 of Regulation No 3665/87, given in a national application for payment, information for the purposes of the second subparagraph of Article 11(1) in conjunction with Article 3 of Regulation (EC) No 3665/87?’

The questions referred

Concerning the first question

19 By that question, which may be split into two parts, the national court wishes to know whether Article 13 of Regulation No 3665/87 must be interpreted as meaning, first, that it precludes beef that is subject to a ban laid down by Community law on export from one Member State to other Member States or non-member countries from being regarded as of ‘sound and fair marketable quality’ and, second, whether, for the purpose of granting refunds, the exporter must prove that the product to be exported does not originate in a Member State from which exports are banned, where the national administration has evidence that the product is subject to an export ban.

Concerning the first part of the first question

20 The Court has held, in relation to Commission Regulation No 1041/67/EEC of 21 December 1967 on detailed rules for the application of export refunds on products subject to a single price system (OJ, English Special Edition 1967, p. 323), that the requirement of ‘sound and fair marketable quality’ constitutes a general objective condition for the grant of a refund and that a product which could not be marketed within the Community under normal conditions and under the description given in the claim for the grant of a refund would not meet these requirements as to quality (see, to that effect, Case 12/73 Muras [1973] ECR 963, paragraph 12 and Case C-409/03 SEPA [2005] ECR I-0000, paragraph 22).

21 The fact that the marketability of the product in ‘normal conditions’ is an aspect inherent in the concept of ‘sound and fair marketable quality’ is indeed clearly apparent from the rules relating to export refunds for agricultural products inasmuch as, from Regulation No 1041/67 onwards, all the relevant regulations have adopted the concept of ‘sound and fair marketable quality’ as well as the criterion of the product’s marketability ‘in normal conditions’. As regards Regulation No 3665/87, it is the ninth recital which refers to that requirement (see, to that effect, SEPA, paragraphs 23 and 26).

22 It must be observed that the export of beef from the United Kingdom was banned at the time of the facts in the main proceedings by Decision 96/239.

23 Meat of which the distribution is significantly restricted cannot be regarded as being marketable ‘in normal conditions’ (see, to that effect, SEPA, paragraph 30).

24 It follows that beef which is exported contrary to a Community ban is not of ‘sound and fair marketable quality’, within the meaning of Article 13 of Regulation No 3665/87, and its export does not give rise to entitlement to refunds.

25 Accordingly, the answer to the first part of the first question must be that Article 13 of Regulation No 3665/87 must be interpreted as meaning that it precludes beef that is subject to a ban laid down by Community law on exports from one Member State to other Member States and non-member countries from being regarded as being of ‘sound and fair marketable quality’.

The second part of the first question

26 In the beef and veal sector, Article 13(9) of Regulation No 805/68 provides that export refunds are to be paid upon proof that the products are of Community origin except where Article 13(10) applies. There is no evidence in the file that the derogation referred to in Article 13(10) was applicable. There is no doubt that proof must be provided by the exporter.

27 If any doubts arise concerning the origin of one or more of the products, the Community origin may be established only by proof that the product or products originates or originate in a particular Member State or States. By that proof, it is established with certainty whether the product for which the export refund has been applied originates in a Member State from which exports are banned.

28 As regards ‘sound and fair marketable quality’, it must be observed, first of all, that Article 13 of Regulation No 3665/87 appears in Chapter 1, entitled ‘Entitlement to refund’, of Title 2, entitled ‘Exports to non-member countries’, which shows that ‘sound and fair marketable quality’ is a material condition required for the payment of refunds.

29 The fact that ‘sound and fair marketable quality’ is a material condition for the payment of refunds is not invalidated, as Fleisch-Winter maintains, by Article 3(5) of Regulation No 3665/87, since the information mentioned therein constitutes a non-exhaustive list.

30 Nor, contrary to Fleisch-Winter’s submissions, is it invalidated by Regulation No 800/1999. First, that regulation, which was repealed and replaced by Regulation No 3665/87 after the facts in the dispute in the main proceedings, is not applicable ratione temporis. Second, Article 21 of Regulation No 800/99 appears in Chapter I, Title II of the same regulation entitled ‘Entitlement to refund’, like Article 13 of Regulation No 3665/87, as was explained in paragraph 28 above. Therefore it is Chapter I which lays down the material conditions for entitlement to a refund.

31 Two features of the export refunds scheme are, first, that Community aid is granted only on condition that the exporter makes the application and, second, that the scheme is financed by the Community budget. The scheme being based on voluntary declarations, where the exporter decides on its own initiative to obtain a refund, it must provide the relevant information necessary to establish its entitlement to the refund and to determine its amount. In that connection, the Court, in the context of Regulation No 3665/87 and its sanctions scheme, has already held that, as regards a Community aid scheme, the grant of the aid is necessarily subject to the condition that the beneficiary offers all guarantees of probity and trustworthiness (see, to that effect, Case C-210/00 Käserei Champignon Hofmeister [2002] ECR I-6453, paragraph 41).

32 By declaring a product in the context of the procedure for export refunds, the exporter implies that the product satisfies all the conditions necessary for the refund. Regulation No 3665/87 does not require the exporter to make an express declaration that its products are of ‘sound and fair marketable quality’, but even if it does not make such a declaration its application for a refund still implies that it guarantees that that condition is satisfied. Fleisch-Winter’s argument that there is a legal presumption of ‘sound and fair marketable quality’ cannot be accepted.

33 The common detailed rules for the application of export refunds for agricultural products are laid down by the Commission and it is for the national authorities of the Member States to apply Community legislation on their territory and enforce it. The duty to check the conditions for the refund is more onerous in a context such as that in the main proceedings, where the export of meat from a Member State may be subject to a ban for the protection of public health from serious diseases and epidemics. In that connection, the Court has drawn attention, on several occasions, to the reality and seriousness of the risks related to bovine spongiform encephalopathy and the appropriateness of interim measures justified by the protection of human health with respect to that disease (see Case C-180/96 United Kingdom v Commission [1998] ECR I-2265; Case C-365/99 Portugal v Commission [2001] ECR I-5645; and Case C-393/01 France v Commission [2003] ECR I-5405, paragraph 42).

34 As regards verifying whether the requirements of ‘sound and fair marketable quality’ are satisfied, Fleisch-Winter’s argument that the provision contained in the third subparagraph of Article 5(1) of Regulation No 2221/95, which requires the customs office of export to be mindful of the provisions of Article 13 of Regulation (EEC) No 3665/87, places the burden of establishing whether the product in question is of ‘sound and fair marketable quality’ entirely on the national authorities must be dismissed. The subject-matter of Regulation No 2221/95 is the physical checks on products, while the verification in the main proceedings refers to a legal feature of those proceedings, which does not allow for a physical inspection.

35 On the contrary, in so far as the exporter, by lodging an application for a refund, continues to assert either expressly or impliedly that the product in question is of ‘sound and fair marketable quality’, it is for the exporter, according to the rules of evidence of national law, to prove that that condition is, in fact, satisfied if a declaration is questioned by the national authorities.

36 Furthermore, it is clear from the file that, following the disclosure of evidence showing that the beef exported might have originated in the United Kingdom and was thus subject to an export ban, the repayment of the advance payment on the refund was demanded and one of the refunds applied for was refused, which gave rise to administrative and subsequently judicial proceedings. During those proceedings, Fleisch-Winter did not provide any information relating to the origin of the meat and even declared during the hearing that it was unaware of the origin of the product in question. It is for the national court, by examining all the relevant evidence in the case, to reach a definitive conclusion.

37 Having regard to the foregoing considerations, the answer to the second part of the first question must be that Article 13 of Regulation No 3665/87 requires, for the purpose of the payment of refunds, the exporter to show that the product exported does not originate from a Member State from which exports are banned, where the national administration has evidence that the product is subject to an export ban.

38 Therefore, the answer to the first question must be that Article 13 of Regulation No 3665/87 must be interpreted as meaning that it precludes beef which is subject to a ban, laid down by Community law, on export from one Member State to other Member States and non-member countries from being regarded as being of ‘sound and fair marketable quality’ for the purpose of the payment of refunds, and that the exporter must show that the exported product does not originate in a Member State from which exports are banned, where the national administration has evidence that the product is subject to an export ban.

The second question

39 By this question, the national court asks whether an assurance made in a national application for payment that a product is of sound and fair marketable quality, within the meaning of the first sentence of Article 13 of Regulation No 3665/87, is part of the information provided in accordance with the combined provisions of the second subparagraph of Article 11(1) and Article 3 of Regulation No 3665/87.

40 As regards the application for a refund, referred to in Article 47(1) of Regulation No 3665/87, the Court has already held that it is only a technical procedural document. Since that application may be submitted in the 12 months after acceptance of the export declaration, that is long after the export, it does not constitute the legal basis of entitlement to a payment, even though it is a condition precedent to the payment of the refund. Therefore, the request for a refund, within the meaning of Article 11(1) of that regulation, is not submitted by lodging the application for payment within the meaning of Article 47 (see, to that effect, Case C-385/03 Käserei ChampignonHofmeister [2005] ECR I-2997, paragraphs 26 and 27).

41 It is also clear from the case-law that it is the documents referred to in Article 3(5) of Regulation No 3665/87, namely, the export declaration or any other document used during export, which are capable of forming the legal basis of a refund and triggering the system of checks of the request for refund which may lead to the application of a sanction in accordance with Article 11(1) (see, to that effect, Case C-385/03 Käserei ChampignonHofmeister, cited above, paragraphs 23, 29 and 36).

42 As stated in paragraphs 32 and 35 above, lodging a request for refund guarantees either explicitly or implicitly that the conditions for granting the refund are satisfied, including requirement that the product is of ‘sound and fair marketable quality’. In this case, the request for payment, referred to in Article 47 of Regulation No 3665/87, cannot be regarded as decisive for establishing entitlement of a substantive right to a refund.

43 Having regard to the foregoing, the answer to the second question must be that the assurance in a national request for payment that a product is of ‘sound and fair marketable quality’, within the meaning of the first sentence of Article 13 of Regulation No 3665/87, is not part of the information provided pursuant to the combined provisions of the second subparagraph of Article 11(1) and Article 3. However, it may be regarded by the national court as evidence for the purpose of determining the exporter’s position.

Costs

44 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:

1. Article 13 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 2945/94 of 2 December 1994 must be interpreted as meaning that it precludes beef that is subject to a ban, laid down by Community law, on export from one Member State to other Member States and non-member countries from being regarded as being of ‘sound and fair marketable quality’ for the purpose of the payment of refunds, and that the exporter must show that the exported product does not originate in a Member State from which exports are banned, where the national administration has evidence that the product is subject to an export ban.

2. The assurance in a national request for payment that a product is of ‘sound and fair marketable quality’, within the meaning of the first sentence of Article 13 of Regulation No 3665/87, as amended by Regulation No 2945/94, is not part of the information provided pursuant to the combined provisions of the second subparagraph of Article 11(1) and Article 3 of that regulation. However, it may be regarded by the national court as evidence for the purpose of determining the exporter’s position.

[Signatures]