CELEX: 62003CJ0515
Language: en
Date: 2005-07-21
Title: Judgment of the Court (Third Chamber) of 21 July 2005. # Eichsfelder Schlachtbetrieb GmbH v Hauptzollamt Hamburg-Jonas. # Reference for a preliminary ruling: Finanzgericht Hamburg - Germany. # Agriculture - Common organisation of the markets - Export refunds - Conditions for granting them - Import of the product into the non-member country of destination - Meaning - Customs formalities for release for consumption in the non-member country - Substantial processing or working - Reimportation into the Community - Abuse of law. # Case C-515/03.

Case C-515/03
      Eichsfelder Schlachtbetrieb GmbH
      v
      Hauptzollamt Hamburg-Jonas
      (Reference for a preliminary ruling from the Finanzgericht Hamburg)
      (Agriculture – Common organisation of the markets – Export refunds – Conditions for granting them – Import of the product into the non-member country of destination – Meaning – Customs formalities for release for consumption in the non-member country – Substantial processing or working – Re-importation into the Community – Abuse of law)
      Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 25 May 2005 
      Judgment of the Court (Third Chamber), 21 July 2005 
      Summary of the Judgment
      Agriculture — Common organisation of the markets — Export refunds — Differentiated refund — Re-export of goods to the Community
            after clearance through customs for release for consumption in a non-member country — Right to obtain a differentiated export
            refund — Condition — Substantial processing or working of the product — Exception — Presence of action constituting an abusive
            practice — Inspection incumbent on the national courts
      (Council Regulation No 2913/92, Art. 24; Commission Regulations Nos 3665/87, Art. 17(3), and 1384/95)
      The condition for obtaining a differentiated export refund laid down in Article 17(3) 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 1384/95, as regards in particular the adjustments necessary for the implementation of the Uruguay Round Agreement on Agriculture,
         namely clearance through customs for release of the product concerned for consumption in the non-member country of destination,
         is fulfilled where that product, on which import duties were paid in that country, undergoes substantial processing or working
         there within the meaning of Article 24 of Regulation No 2913/92 establishing the Community Customs Code, even if the product
         deriving from such processing or working is then re-exported to the Community, with reimbursement of the duties levied in
         that country and payment of customs import duties in the Community.
      
      If the subsequent reimbursement of duties levied on an economic operator other than the exporter retroactively removed the
         legal basis of the export refund, the exporter would be placed in a position of uncertainty, arguably in breach of the principle
         of legal certainty, and his right to a refund would depend on events or commercial conduct outside his control.
      
      That situation must, however, be distinguished from cases in which the exporter himself has participated in an abusive practice,
         in which case reimbursement of the export refund may nevertheless be required if the national court considers that evidence
         of an abusive practice has been produced, in accordance with the rules of national law.
      
      (see paras 36, 41, operative part)
JUDGMENT OF THE COURT (Third Chamber)
      21 July 2005 (*)
      
      (Agriculture – Common organisation of the markets – Export refunds – Conditions for granting them – Import of the product into the non-member country of destination – Meaning – Customs formalities for release for consumption in the non-member country – Substantial processing or working – Reimportation into the Community – Abuse of law)
      In Case C-515/03,
      REFERENCE for a preliminary ruling under Article 234 EC from the Finanzgericht Hamburg (Germany), made by decision of 12 November
         2003, received at the Court on 9 December 2003, in the proceedings
      
      Eichsfelder Schlachtbetrieb GmbH
      v
      Hauptzollamt Hamburg-Jonas,
      THE COURT (Third Chamber),
      composed of A. Rosas, President of the Chamber, J.-P. Puissochet (Rapporteur), S. von Bahr, J. Malenovský and U. Lõhmus, Judges,
      Advocate General: D. Ruiz-Jarabo Colomer,
      Registrar: K. Sztranc, Administrator,
      having regard to the written procedure and further to the hearing on 17 March 2005,
      after considering the observations submitted on behalf of:
      –       Eichsfelder Schlachtbetrieb GmbH, by U. Schrömbges and O. Wenzlaff, Rechtsanwälte,
      –       Hauptzollamt Hamburg-Jonas, by M. Blaesing, acting as Agent,
      –       the Commission of the European Communities, by G. Braun, acting as Agent,
      after hearing the Opinion of the Advocate General at the sitting on 25 May 2005,
      gives the following
      Judgment
      1       This request for a preliminary ruling concerns the interpretation of Article 17(3) of Commission Regulation (EEC) No 3665/87
         of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural
         products (OJ 1987 L 351, p. 1), as amended, as regards in particular the adjustments necessary for the implementation of the
         Uruguay Round Agreement on Agriculture, by Commission Regulation (EC) No 1384/95 of 19 June 1995 (OJ 1995 L 134, p. 14; hereinafter
         ‘Regulation No 3665/87’).
      
      2       The reference was made in proceedings between Eichsfelder Schlachtbetrieb GmbH (‘Eichsfelder’) and Hauptzollamt Hamburg-Jonas
         (Hamburg-Jonas customs office, ‘the Hauptzollamt’) concerning export refunds in respect of beef exported by Eichsfelder from
         Germany to Poland.
      
       Legislation
      3       Article 4(1) of Regulation No 3665/87 provides:
      ‘Without prejudice to the provisions of Articles 5 and 16, the refund shall be paid only upon proof being furnished that the
         products for which the export declaration was accepted have, within 60 days from the date of such acceptance of the export
         declaration, left the customs territory of the Community in the unaltered state.’
      
      4       Article 5(1) of that regulation provides:
      ‘Payment of the differentiated or non-differentiated refund shall be conditional not only on the product having left the customs
         territory of the Community but also – save where it has perished in transit as a result of force majeure – on its having been
         imported into a non-member country and, where appropriate, into a specific non-member country within 12 months following the
         date of acceptance of the export declaration:
      
      (a)      where there is serious doubt as to the true destination of the product, 
      or
      (b)      where, by reason of the difference between the amount of the refund on the exported product and the amount of the import duties
         applicable to an identical product on the date of acceptance of the export declaration, it is possible that the product may
         be reintroduced into the Community.
      
      …
      In the cases referred to in the first subparagraph, the provisions of Articles 17(3) and 18 shall apply.
      In addition, the competent authorities of the Member States may require that additional evidence be provided such as to satisfy
         them that the product has actually been placed on the market in the non-member country of import in the unaltered state.’
      
      5       Articles 16 to 18 of Regulation No 3665/87 lay down additional conditions for products for which there are differentiated
         refunds according to destination, relating in particular to proof that they have been cleared through customs for release
         for consumption in the non-member country of import.
      
      6       With respect to the payment of refunds, Article 17 of Regulation No 3665/87 provides: 
      ‘1. The product must have been imported in the unaltered state into the non-member country or one of the non-member countries
         for which the refund is prescribed within 12 months following the date of acceptance of the export declaration. However, that
         period may be extended under the conditions laid down in Article 47. 
      
      …
      3. A product shall be considered to have been imported when it has been cleared through customs for release for consumption
         in the non-member country concerned.’
      
      7       Pursuant to Article 11(3) of Regulation No 3665/87, where a refund is unduly paid, the beneficiary is to reimburse the amounts
         unduly received and pay any sanction applicable pursuant to the first subparagraph of Article 11(1), plus interest.
      
      8       Under Article 24 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992
         L 302, p. 1, ‘the Customs Code’):
      
      ‘Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their
         last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting
         in the manufacture of a new product or representing an important stage of manufacture.’
      
      9       Article 15(2) of Regulation No 3665/87, which was added by Commission Regulation (EC) No 313/97 of 20 February 1997 (OJ 1997 L 51,
         p. 31), provides:
      
      ‘Where it is found that the products exported are reimported into the Community:
      –      after undergoing working or processing in a third country without having attained the level of processing provided for in
         Article 24 of Regulation (EEC) No 2913/92, 
      
      and
      –      attract a reduced or zero rate of import duty rather than the normal rate,
      no refund shall be paid or, if already paid, it shall be reimbursed by the exporter at the request of the paying Member State.
      This paragraph shall apply only to the products covered by Annex V [which include beef] exported without further processing.
         Member States shall notify the Commission without delay if they find that products other than those included in Annex V are
         likely to cause a deflection of trade.
      
      …’
      10     Under Article 20(4) 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):
      
      ‘… the refund shall be deemed to be unwarranted and shall be reimbursed if the competent authorities find, even after the
         refund has been paid:
      
      …
      (d)      that the products listed in Annex V are reimported into the Community:
      –       after undergoing working or processing in a third country without having attained the level of processing provided for in
         Article 24 of Regulation (EEC) No 2913/92, and
      
      –       attract a reduced or zero rate of import duty rather than the non-preferential rate.
      …’
      11     The provisions mentioned in the two foregoing paragraphs of this judgment had not entered into force at the material time.
      12     Article 146(1) of the Customs Code provides:
      ‘The outward processing procedure shall not be open to Community goods: 
      …
      –      whose export gives rise to the granting of export refunds or in respect of which a financial advantage other than such refunds
         is granted under the common agricultural policy by virtue of the export of the said goods.’
      
      13     Article 4(3) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities’
         financial interests (OJ 1995 L 312, p. 1) provides:
      
      ‘Acts which are established to have as their purpose the obtaining of an advantage contrary to the objectives of the Community
         law applicable in the case by artificially creating the conditions required for obtaining that advantage shall result, as
         the case shall be, either in failure to obtain the advantage or in its withdrawal.’
      
       The main proceedings and the question referred to the Court of Justice
      14     Eichsfelder exported 20 134 kilograms of boneless beef to Poland. The import into Poland of the goods, which were sold to
         Appelt GmbH, gave rise to the payment of customs duties. Eichsfelder applied to the Hauptzollamt for an export refund in respect
         of those goods, producing as evidence of release for free circulation in Poland a photocopy of a customs document dated 30
         December 1995. By notice of 1 February 1996, the Hauptzollamt granted Eichsfelder a differentiated export refund in the sum
         of DEM 36 653.23.
      
      15     In Poland, the goods were used to make cooked meat roulades and then, under a contract concluded on 3 October 1995 between
         the producer of those roulades and Appelt GmbH, the roulades were exported to Germany. Normal customs duties were paid on
         importation into the Community. Thereafter, the customs duties in respect of the meat, which had previously been imported
         into Poland, were refunded by the Polish customs office at the request of the producer of the roulades.
      
      16     By an amending notice of 27 October 1999, the Hauptzollamt stated that inquiries undertaken by the Polish authorities had
         disclosed that the goods which had attracted export refunds had been exported to Germany after being processed in accordance
         with the contract of 3 October 1995. Considering that the goods had not been genuinely imported into Poland, the Hauptzollamt
         required Eichsfelder to repay the export refund granted to it, in the sum of EUR 18 740.50.
      
      17     Eichsfelder lodged a complaint against that decision, which was rejected by decision of the Hauptzollamt of 21 October 2002.
         On 26 November 2002, Eichsfelder brought an action against the latter decision before the Finanzgericht Hamburg (Finance Court,
         Hamburg).
      
      18     Before that court, Eichsfelder claimed in particular that the goods for which the export refund had been paid had undergone
         substantial working in Poland, within the meaning of Article 24 of the Customs Code, and that, accordingly, it had a vested
         right to payment of that refund, irrespective of the customs regime applicable to the working of those goods. That right could
         not be called in question, even in the event of processing of the goods under processing arrangements involving re-export
         to Germany.
      
      19     Conversely, the Hautpzollamt contended before the Finanzgericht Hamburg that the various stages of release for free circulation
         of the goods concerned, namely export to Poland, conversion into roulades, then export to Germany with reimbursement of the
         Polish customs duties, were to be seen as constituting processing arrangements, envisaged upon conclusion of the contract
         of 3 October 1995. Goods covered by a processing procedure could not be regarded as being released for free circulation. The
         characteristic element of an export operation was therefore lacking, with the result that Eichsfelder was not entitled to
         the refund granted to it.
      
      20     The Finanzgericht Hamburg considers that, in the case before it, as a result of the re-export of the goods to the Community
         shortly after they were imported into Poland and the reimbursement of the Polish customs duties, it cannot necessarily be
         accepted that the goods were imported into Poland with a view to being released for circulation there. The purpose of the
         export refund may not have been achieved. 
      
      21     A different assessment could, it suggests, be based on the fact that the goods for which the refund was paid underwent, in
         a non-member country, substantial and irreversible processing or working within the meaning of Article 24 of the Customs Code.
         In that event, it might be considered that the goods, as a result of that processing or working, ceased to exist as such,
         rendering improper re-export thereof to the Community impossible. That interpretation, adopted by the Court in its judgment
         in Case C-114/99 Roquette Frères [2000] ECR I-8823 concerning non-differentiated refunds, could be transposed to the present case, which is concerned with
         a differentiated refund.
      
      22     That interpretation is, in its view, confirmed by the adoption, after the events at issue in this case took place, of express
         provisions to the effect that the refund is not payable if the competent authorities find, first, that the exported products
         are reimported into the Community without undergoing substantial working or processing within the meaning of Article 24 of
         the Customs Code and, second, that the products attracted a reduced or zero rate of import duty rather than the normal rate.
         
      
      23     That is the purpose of Article 15(2) of Regulation No 3665/87, as amended by Regulation No 313/97, and of Article 20(4)(d)
         of Regulation No 800/1999. Since those provisions are designed to enhance protection of the financial interests of the Community,
         it would be difficult not to take them into consideration in interpreting the law in force when the events of the main proceedings
         took place. If those provisions were applied to the present dispute, it would be inappropriate to require reimbursement of
         the export refund, in so far as the goods concerned underwent substantial working in Poland and were reintroduced into the
         Community after normal import duties were levied.
      
      24     It was in that context that the Finanzgericht Hamburg decided to stay proceedings pending a preliminary ruling from the Court
         of Justice on the following question:
      
      ‘Is Article 17(3) of Regulation (EEC) No 3665/87, as amended by Regulation (EC) No 1384/95, to be interpreted as meaning that
         a product is considered to have been imported if, after its release for free circulation in a non-member country, it undergoes
         substantial processing or working within the meaning of Article 24 of Regulation (EC) No 2913/92 and then is brought back
         into the Community upon drawback and payment of the normal import duties?’
      
       The question referred to the Court
      25     By its question, the national court seeks to ascertain whether the condition for obtaining a differentiated export refund
         laid down in Article 17(3) of Regulation No 3665/87, namely clearance through customs for release of the product concerned
         for consumption in the non-member country of destination, is fulfilled where that product, on which import duties were paid
         in that country, undergoes substantial processing or working there within the meaning of Article 24 of the Customs Code and
         is then re-exported to the Community, with reimbursement of the duties levied in that country and payment of customs import
         duties in the Community.
      
      26     The system of differentiated export refunds is intended to gain or to maintain access for Community exports to the markets
         of the non-member countries concerned, the reason for differentiated refunds being the desire to take account of the particular
         characteristics of each import market in which the Community wishes to play a part (see Case 125/75 Milch-, Fett- und Eier-Kontor [1976] ECR 771, paragraph 5; Case 89/83 Dimex [1984] ECR 2815, paragraph 8; and Case C‑347/93 Boterlux [1994] ECR I-3933, paragraph 18). 
      
      27     If it sufficed, in order to qualify for payment of the refund at a higher rate, for the goods simply to be unloaded, without
         reaching the market of the territory of destination, the raison d’être of the system of varying the refund would be disregarded. That is why Article 17(3) of Regulation No 3665/87 makes payment
         of the differentiated refund subject to clearance through customs for release for consumption in the non-member country, since
         the completion of those formalities is, in principle, sufficient to ensure that the goods have actual access to the market
         of the territory of destination (see, to that effect, Dimex, paragraphs 9 and 10).
      
      28     The completion of customs import formalities for the product concerned involves in particular the payment of the applicable
         import duties which, when evidenced by customs import documents, constitutes a guarantee that the product has arrived at its
         destination. That is also apparent from the 17th recital in the preamble to Regulation No 800/1999, which was not in force
         at the time of the events of the main proceedings but merely confirms in that regard the scope of the requirement of clearance
         through customs for release for consumption laid down in Article 17(3) of Regulation No 3665/87 (see, to that effect, regarding
         the confirmatory scope of certain provisions of Regulation No 800/1999, Roquette Frères, paragraph 20).
      
      29     Regulation No 3665/87 provides that the special requirement laid down in Article 17(3) may, in certain cases, also apply to
         non-differentiated refunds. It states, in the fourth recital in its preamble, that ‘certain export transactions can lead to
         abuses; … in order to prevent such abuses, payment of the refund should be subject to the condition that the product has not
         only left the customs territory of the Community but has also been imported into a non-member country and, where applicable,
         actually marketed there’.
      
      30     Article 5(1) of that regulation thus provides for two cases in which the payment of a non-differentiated refund, like the
         differentiated refund, is subject to clearance through customs for release of the product concerned for consumption in the
         non‑member country of destination:
      
      –       where serious doubts exist as to the true destination of the product, and
      –       where, by reason of the difference between the amount of the refund on the exported product and the amount of the import duties
         applicable to an identical product on the date of acceptance of the export declaration, it is possible that the product may
         be reintroduced into the Community.
      
      31     In a preliminary ruling on the interpretation of Article 5(1) of Regulation No 3665/87, the Court held that abuse in the sense
         of the reintroduction into the Community of a product previously exported cannot exist where the product has undergone substantial
         and irreversible processing, within the meaning of Article 24 of the Customs Code, as a result of which it has ceased to exist
         as such and a new product, coming under a different tariff heading, has been created. In such a situation, the payment of
         an export refund cannot be made conditional on fulfilment of the requirement imposed by the competent authorities of the Member
         States that additional evidence must be produced such as to show that the product that has undergone such processing has actually
         been placed on the market in the unaltered state in the non-member country of importation (see, to that effect, Roquette Frères, paragraphs 18 to 21).
      
      32     In arriving at that interpretation, the Court took account of Article 20 of Regulation No 800/1999, even though the latter
         had entered into force after the events of the main proceedings. Article 20(4) provides inter alia that the refund is regarded
         as unwarranted in particular if the product is reimported into the Community without having undergone substantial working
         or processing within the meaning of Article 24 of the Customs Code. The Court considered that that provision made it possible
         to refute the suspicion that the product in question had been reimported into the Community by showing that the product in
         respect of which a non-differentiated refund was paid had, after leaving the Community customs territory, undergone such working
         or processing (Roquette Frères, paragraph 20). 
      
      33     It follows from the foregoing considerations that:
      –      goods on which import duties have been paid in the non-member country of destination, as evidenced by a document from the
         competent customs authorities, are deemed to have been imported into that country,
      
      –      the substantial working or processing of the goods within the meaning of Article 24 of the Customs Code in the non-member
         country makes it possible to ascertain that those goods have been put to use in the non-member country and that they have
         thus actually come onto the market of the territory of destination, being released for consumption there,
      
      –      such working or processing, involving as it does the creation of a new product, eliminates the risk – with which Article 5(1)
         of Regulation No 3665/87 is concerned and which Article 17(3) of the same regulation seeks to obviate – of abusive reimportation
         of the initial goods into the Community, in breach of the aim pursued by the refund system, whether or not the refunds are
         differentiated.
      
      34     The Commission and the Hauptzollamt, however, contend that, in the main proceedings, the beef imported into Poland was processed
         and then reimported into the Community, with reimbursement of the import duties by the competent Polish authorities. That
         reimbursement shows that the imported goods were not definitively cleared through customs and that they were not actually
         released for consumption in Poland. The parties to the abovementioned contract of 3 October 1995, although purporting to release
         the product for consumption in Poland, in reality concealed the fact that the goods were the subject of outward processing
         arrangements, in order to evade the application of Article 146(1) of the Customs Code, pursuant to which goods qualifying
         for an export refund cannot be placed under an outward processing procedure.
      
      35     That argument cannot be accepted in so far as it seeks to show that, if import duties are reimbursed, the right to an export
         refund ceases to have any legal basis.
      
      36     As Eichsfelder rightly contends, no provision of Regulation No 3665/87 supports that view. Provided that the customs formalities
         for release for consumption in the non-member country have been completed, including in particular the payment of import duties,
         it cannot be argued that the goods have not come onto the market in the non-member country under the price conditions prevailing
         on that market, of which account was taken when the amount of the refund was determined. If a subsequent reimbursement of
         those duties to an economic operator other than the exporter retroactively removed the legal basis of the export refund, the
         exporter would be placed in a position of uncertainty, arguably in breach of the principle of legal certainty, and his right
         to a refund would depend on events or commercial conduct outside his control.
      
      37     Such a situation must, however, be distinguished from cases in which the exporter himself has participated in an abusive practice.
      38     In that connection, Article 4(3) of Regulation No 2988/95 states that ‘[a]cts which are established to have as their purpose
         the obtaining of an advantage contrary to the objectives of the Community law applicable in the case by artificially creating
         the conditions required for obtaining that advantage shall result, as the case shall be, either in failure to obtain the advantage
         or in its withdrawal’.
      
      39     Furthermore, the Court has already held that evidence of an abusive practice requires, first, a combination of objective circumstances
         in which, despite formal observance of the conditions laid down by the Community rules, the purpose of those rules has not
         been achieved, and, second, a subjective element consisting in the intention to obtain an advantage from the Community rules
         by creating artificially the conditions laid down for obtaining it (see Case C-110/99 Emsland-Stärke [2000] ECR I-11569, paragraphs 52 and 53).
      
      40     It is for the national court to verify in accordance with the rules of evidence of national law, provided that the effectiveness
         of Community law is not undermined, whether action constituting such an abusive practice has taken place in the case before
         it.
      
      41     The answer to be given to the question referred to the Court must therefore be that the condition for obtaining a differentiated
         export refund laid down in Article 17(3) of Regulation No 3665/87, namely clearance through customs for release of the product
         concerned for consumption in the non-member country of destination, is fulfilled where that product, on which import duties
         were paid in that country, undergoes substantial processing or working there within the meaning of Article 24 of the Customs
         Code, even if the product deriving from such processing or working is then re-exported to the Community, with reimbursement
         of the duties levied in that country and payment of customs import duties in the Community.
      
      42     In those circumstances, reimbursement of the export refund may nevertheless be required if the national court considers that
         evidence of an abusive practice on the part of the exporter has been produced, in accordance with the rules of national law.
      
       Costs
      43     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 (Third Chamber) hereby rules:
      The condition for obtaining a differentiated export refund laid down in Article 17(3) of Commission Regulation (EEC) No 3665/87
            of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural
            products, as amended by Commission Regulation (EC) No 1384/95 of 19 June 1995, as regards in particular the adjustments necessary
            for the implementation of the Uruguay Round Agreement on Agriculture, namely clearance through customs for release of the
            product concerned for consumption in the non-member country of destination, is fulfilled where that product, on which import
            duties were paid in that country, undergoes substantial processing or working there within the meaning of Article 24 of Council
            Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, even if the product deriving from
            such processing or working is then re-exported to the Community, with reimbursement of the duties levied in that country and
            payment of customs import duties in the Community.
      In those circumstances, reimbursement of the export refund may nevertheless be required if the national court considers that
            evidence of an abusive practice on the part of the exporter has been produced, in accordance with the rules of national law.
      [Signatures]
      * Language of the case: German.