FIRST INSPECTION IN WHICH IT IS ESTABLISHED THAT THE UNDERTAKING IS ONCE AGAIN COMPLYING WITH THE PROVISIONS OF REGULATION NO 1725/79 . IN THIS CASE, HOWEVER, THE REFUSAL OF FINANCING BY THE EAGGF IS BASED ON THE FINDING THAT THE KINGDOM OF THE NETHERLANDS FAILED TO APPLY THE REQUISITE INSPECTION MEASURES DURING THE PERIODS IN QUESTION . ACCORDINGLY, THIS PART OF THE APPLICANT' S SUBMISSION CANNOT BE ACCEPTED .
23 IT FOLLOWS FROM THE FOREGOING THAT EACH LIMB OF THE SECOND SUBMISSION IS UNFOUNDED AND THAT THE INTERVENTION IN QUESTION WAS NOT UNDERTAKEN ACCORDING TO COMMUNITY RULES WITHIN THE FRAMEWORK OF THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS, AS REQUIRED BY ARTICLE 3 OF REGULATION NO 729/70 .
BREACH OF THE PRINCIPLE OF PROPORTIONALITY
24 IN ITS THIRD SUBMISSION, THE KINGDOM OF THE NETHERLANDS COMPLAINS THAT THE COMMISSION ACTED IN BREACH OF THE PRINCIPLE OF PROPORTIONALITY BY DECIDING ON A REDUCTION OF EXPENDITURE THAT WAS DISPROPORTIONATE TO THE FAULTS COMMITTED . THE COMMISSION FOUND A NUMBER OF PROCEDURAL IRREGULARITIES BUT IN THE MEAN TIME SHOULD HAVE REALIZED, FROM THE SCRUTINY OF THE COMMERCIAL DOCUMENTS, THAT THERE WERE NO GROUNDS FOR ASSUMING THAT SUBSTANTIVE IRREGULARITIES HAD TAKEN PLACE .
25 WITH REGARD TO THE ASSESSMENT OF THIS SUBMISSION, IT MUST BE POINTED OUT THAT THE COURT HAS CONSISTENTLY HELD ( JUDGMENT OF 7 FEBRUARY 1979 IN CASE 11/76 NETHERLANDS V COMMISSION (( 1979 )) ECR 245 ) THAT THE PROVISIONS OF ARTICLES 2 AND 3 OF REGULATION NO 729/70 PERMIT THE COMMISSION TO CHARGE TO THE EAGGF ONLY SUMS PAID IN ACCORDANCE WITH THE RULES LAID DOWN IN THE VARIOUS SECTORS OF AGRICULTURAL PRODUCTION WHILE LEAVING THE MEMBER STATES TO BEAR THE BURDEN OF ANY OTHER SUM PAID, AND IN PARTICULAR ANY AMOUNTS WHICH THE NATIONAL AUTHORITIES WRONGLY BELIEVED THEMSELVES AUTHORIZED TO PAY IN THE CONTEXT OF THE COMMON ORGANIZATION OF THE MARKETS .
26 IN ITS JUDGMENT OF 14 JANUARY 1981 IN CASE 819/79 FEDERAL REPUBLIC OF GERMANY V COMMISSION (( 1981 )) ECR 21, THE COURT EMPHASIZED THAT THE FUNCTION OF A COMMISSION DECISION RELATING TO THE CLEARANCE OF ACCOUNTS IN RESPECT OF EXPENDITURE FINANCED BY THE EAGGF IS TO ESTABLISH WHETHER THE EXPENDITURE WAS INCURRED BY THE NATIONAL AUTHORITIES IN ACCORDANCE WITH COMMUNITY PROVISIONS . IN CASES WHERE COMMUNITY RULES AUTHORIZE PAYMENT OF AID ONLY ON CONDITION THAT CERTAIN FORMALITIES RELATING TO PROOF OR SUPERVISION ARE OBSERVED, AID PAID IN DISREGARD OF THAT CONDITION IS NOT IN ACCORDANCE WITH COMMUNITY LAW AND THE EXPENDITURE INCURRED THEREIN MAY NOT THEREFORE BE CHARGED TO THE EAGGF, EVEN IF IT WERE ESTABLISHED THAT NO SUBSTANTIVE IRREGULARITY HAS BEEN COMMITTED .
27 IN THIS CASE, STRICT OBSERVANCE OF THE REQUIREMENT REGARDING THE INSPECTION OF THE UNDERTAKINGS CONCERNED IS AN ESSENTIAL CONDITION FOR THE GRANT OF THE AID IN QUESTION SINCE THE REINFORCEMENT OF THE INSPECTION MEASURES IS, ACCORDING TO THE SECOND AND FOURTH RECITALS IN THE PREAMBLE TO REGULATION NO 1725/79, ONE OF THE PRINCIPAL OBJECTIVES OF THAT REGULATION .
28 IT FOLLOWS