CELEX: 62002CC0236
Language: en
Date: 2003-09-18
Title: Opinion of Mr Advocate General Jacobs delivered on 18 September 2003. # J. Slob v Productschap Zuivel. # Reference for a preliminary ruling: College van Beroep voor het bedrijfsleven - Netherlands. # Milk and milk products - Direct sales - Reference quantity - Overruns - Additional levy on milk - Obligation on producer to keep stock accounts - Contents - Interpretation of Article 7(1)(f) of Regulation (EEC) No 536/93. # Case C-236/02.

OPINION OF ADVOCATE GENERALJACOBS delivered on 18 September 2003(1)
         Case C-236/02 J. SlobvProductschap Zuivel
            ()
            
      
         
       1.  In this case, the College van Beroep voor het bedrijfsleven (Administrative court for trade and industry), of the Netherlands,
      asks for the Court's assistance in interpreting Article 7(1)(f) of Regulation (EEC) No 536/93 of 9 March 1993 laying down
      detailed rules on the application of the additional levy on milk and milk products.  
      
         			(2)
         		
       2.  The referring court wishes to know whether that provision requires a milk producer to record only the quantities of milk and/or
      milk products which he has sold directly in a given month, or whether it requires him to keep a more general account of the
      availability, production, storage, use, processing and destruction of milk and/or milk products on his holding.
       Legal framework
      
       3.  In 1984, the Community introduced a system of milk quotas in order to reduce production surpluses in the market for milk and
      milk products.  Under that system, each Member State is allocated a quota (known as the guaranteed total quantity) which is
      in turn divided amongst the milk producers active within its territory, each of whom is assigned a maximum amount of milk
      (known as the individual reference quantity) which he may sell in a given year.  If a producer exceeds his individual reference
      quantity, an additional levy must be paid on the excess sales.
      
       4.  The additional levy is established by Council Regulation (EEC) No 3950/92.  
      
         			(3)
         		  At the material time, Commission Regulation (EEC) No 536/93 (hereinafter referred to as ‘the regulation') laid down detailed
      rules on the application of the additional levy regarding, amongst other things, ‘the checks permitting verification of proper
      collection of the levy'.  
      
         			(4)
         		
       5.  Article 4(1) of the regulation, in so far as is relevant, provided as follows:‘In the case of direct sales, at the end of each period 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
      ...'
      
       6.  The relevant provisions of Article 7 of the regulation provided as follows:‘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 Article 3 of 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 … together with registers of livestock held on holdings and used for milk
      production, in accordance with Article 4(1) of Council Directive 92/102/EEC,  
      [
         			(5)
         		]   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).' 
      
      
      
       7.  The Netherlands national law relating to additional levies was at the material time partly contained in the Regeling Superheffing
      1993 (hereinafter the ‘Superlevy Regulation').  
      
         			(6)
         		  By Article 31(1), a producer selling milk or milk equivalent directly for consumption must keep records in accordance with
      the provisions of Article 7 of the regulation and ‘with the rules adopted by the Products Board'.  Should a producer fail
      to keep such records adequately or at all, Article 31(2) empowers the Products Board to determine the quantity of milk delivered
      for sale of its own initiative.
      
       4.  At the material time, the rules adopted by the Products Board, as referred to in Article 31 of the Superlevy Regulation, were
      contained in the Zuivelverordening 1994, Uitvoering regeling superheffing (1994 Milk Products Regulation, Implementation of
      the Superlevy Regulation, hereinafter referred to as ‘the Milk Products Regulation').  
      
         			(7)
         		  Article 11(1) required a producer ‘to keep records of everything regarding his business or holding in such a manner as to
      enable the production, stock and the quantities received and delivered of processed or manufactured milk, together with the
      financial data relating thereto, to be ascertained at all times …'
       The facts and the question referred
      
       5.  Mr Slob (described by the referring court, and hereinafter referred to, as the ‘appellant') is a milk producer in the Netherlands,
      who was in possession, for the 1996/97 marketing year, of an individual reference quantity for the direct sale of milk.  In
      May 1997, he made a report to the defendant, the Productschap Zuivel (Milk Products Board), setting out the amount of milk
      equivalent which he claimed to have sold directly for consumption on the basis of which the defendant informed him that he
      was not liable to pay any additional levy.  
      
       6.  Following a subsequent inspection of the appellant's farm, it emerged that the quantity of milk produced, calculated on the
      basis of the size of his dairy herd, exceeded the quantity of milk products which he claimed in his report to have sold. 
      He explained that he had processed the excess milk into butter in order to obtain buttermilk for use in the manufacture of
      cheese.  He claimed to have destroyed the butter itself immediately after production.  He had kept stock accounts relating
      to the cheese thus produced but had made no record of either the production or the destruction of the butter.
      
       7.  In October 1999, acting pursuant to Article 31(2) of the Superlevy Regulation, the defendant reached its own determination
      of the quantity of milk or milk equivalent delivered by the appellant for the 1996/97 marketing year, and held on that basis
      that the appellant was liable to pay an additional levy.
      
       8.  In April 2000, after hearing the appellant's objections, the defendant substantially confirmed its initial determination.
       It held that, for the period at issue, the appellant had failed to keep a ‘correct and complete record … of the production,
      stock and delivery of milk and milk products, as prescribed by Article 7 of [the regulation] in conjunction with Article 31(1)
      of [the Superlevy Regulation and] Article 11 of the 1994 Milk Products Regulation'.  Given that ‘no documents have been submitted
      on the basis of which it can be assumed that the quantity of butter concerned was not delivered', the appellant was liable
      to pay an additional levy in respect of the milk unaccounted for in his original report.
      
       9.  The appellant appealed to the referring court, arguing that Article 7(1)(f) did not oblige him to maintain records about the
      production or destruction of butter not offered for direct sale, and that in so far as national law purported to impose a
      more extensive reporting requirement, it conflicted with Community law and was therefore invalid.  In the absence of any obligation
      to keep records relating to the destruction of butter, the defendant could not base its conclusion that the butter in question
      had been sold on the lack of such records.
      
       10.  In its order for reference, the referring court notes that the obligation imposed upon the appellant by Article 4(1) of the
      regulation is clearly limited to reporting quantities of milk and/or milk products sold.  However, it considers it to be conceivable
      that the obligation to maintain stock accounts under Article 7(1)(f) might extend further to include the data at issue in
      the main proceedings.  It has therefore stayed the proceedings before it and has referred the following question to the Court:‘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?'
      
       11.  Written observations have been submitted by the Netherlands Government and the Commission, both of whom were represented at
      the hearing, as was the appellant.
       Assessment
      
       12.  In addition to the observations before the Court which are addressed to the question referred, the Commission and the Netherlands
      Government made submissions at the hearing on the issue whether a Member State is competent to enact legislation imposing
      reporting obligations on milk producers within its territory going beyond those specified by Article 7(1)(f) of the regulation.
       In my view, it would not be appropriate to consider that issue in the context of the present case.  It is for the referring
      court to determine the questions of Community law which require an answer in order for it to dispose of the proceedings before
      it.  Moreover, the manner in which the issue was raised for the first time at the hearing was not such as to give the appellant
      or other potential parties an adequate opportunity to address it.  I therefore propose to confine my analysis to an interpretation
      of the scope of Article 7(1)(f), as required by the question referred.
      
       13.  The Netherlands Government proposes an affirmative response to that question, advancing several arguments based on the text
      of Article 7 of the regulation in support of an extensive reading of Article 7(1)(f).
      
       14.  It notes first that Article 7(1)(f) not only requires producers to account for milk products actually sold, but also makes
      reference to their obligation under Article 4(1) of Council Directive 92/102 to maintain a register of their livestock.  The
      two obligations are juxtaposed, it is argued, because they allow a comparison to be made between a producer's declared level
      of sales and his potential level of production.
      
       15.  However, in the view of the Netherlands Government, such a comparison would not assist in verifying that all sales were properly
      declared unless producers were also required to explain what has become of any milk or milk equivalent which has been produced
      but not sold.  Article 7(1)(f) expressly requires producers to maintain ‘supporting documents enabling… stock accounts to
      be verified'.  Given that stock accounts must clearly be capable of verification, they must therefore include all the information
      needed to balance production against sales.
      
       16.  The Netherlands Government also points to the obligations imposed on Member States under the introductory paragraph of Article
      7(1) to take the verification measures necessary to ensure proper payment of the additional levy, and under Article 7(3) physically
      to verify the accuracy of the accounting relating to the sale of milk and milk equivalent, and in particular to check the
      credibility of stock accounts.  Member States, it is suggested, could properly fulfil those obligations only if producers
      were required to explain the fate of any allegedly unsold production.
      
       17.  I am not convinced by the submissions of the Netherlands Government regarding the interpretation of ‘stock accounts' as that
      term appears in Article 7(1)(f).
      
       18.  As the Commission and the appellant submit, Article 7(1)(f) on its face appears to require a producer to maintain stock accounts
      relating only to the sale of milk and/or milk products and not to their availability, production, storage, use, processing
      or destruction.
      
       19.  Nor, in my view, would it be appropriate to read into Article 7(1)(f) duties which it did not explicitly lay down.  Even if
      such duties were necessary to the proper administration of the additional levy, such an approach would run counter to the
      principle of legal certainty, especially given that severe consequences may follow for any producer found to have kept incomplete
      records.
      
       20.  I am not, in any event, persuaded that an extensive interpretation of Article 7(1)(f) is necessary in order for Member States
      to fulfil the verification tasks assigned to them under Article 7 of the regulation.  The introductory paragraph of Article
      7(1) requires and empowers Member States to take all the verification measures necessary to ensure proper payment of the additional
      levy.  Similarly, under Article 7(3) Member States are obliged to verify the accuracy of stock accounts and in order to do
      so may make checks at the premises of producers.  Those provisions are to my mind likely to prove sufficient to enable the
      competent authority of a Member State to investigate any discrepancy between the productive potential of a producer's holding
      and the quantities of milk and/or milk products recorded by that producer as having been sold.  Following such investigations,
      the competent authority may reach such conclusions as are appropriate from the evidence uncovered thereby.  To my mind, however,
      no inference can be drawn from the producer's failure to supply records which he was not under any explicit obligation to
      maintain.
        Conclusion
      
       21.  It is therefore my opinion that the Court should respond to the question referred in the following terms:Article 7(1)(f) of Commission Regulation (EEC) No 536/93 of 9 March 1993 laying down detailed rules on the application of
      the additional levy on milk and milk products does not require producers to record details of the availability, production,
      storage, use, processing and destruction of milk and/or milk products which they have produced but not sold.
      
       1 –
         
         Original language: English.
      
      2 –
         
         OJ 1993 L 57, p. 12.  That regulation has since been replaced by Commission Regulation (EC) No 1392/2001 of 9 July 2001, OJ
            2001 L 187, p. 19, Article 14(5) of which is materially identical to Article 7(1)(f) of the former regulation. 
         
      
      3 –
         
         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.
         
      
      4 –
         
         The second recital of the preamble to the regulation. 
      
      5 –
         
         OJ 1992 L 355, p. 32.
      
      6 –
         
         .Staatscourant (Government Gazette) 1993, p. 60.
         
      
      7 –
         
         PBO-blad 1994, p. 26.