Federal Republic of Germany v Commission of the European Communities.
Date: 1999-01-21
9 It should be pointed out in this connection that, under the procedure for the clearance of accounts, the Commission is required to audit the accounts submitted by a Member State for a given financial year. That procedure is governed by the principle according to which only expenditure incurred in conformity with the Community rules is to be charged to the Community budget (Case C-55/91 Italy v Commission [1993] ECR I-4813, paragraph 67).
12 It cannot be objected in this regard that, because of the dispute that had been referred to the Court of Justice, during the 1988 to 1990 financial years the Commission had confined itself, in similar circumstances, to making a 5% correction in respect of expenditure on such refunds. In point of fact, according to the case-law of the Court of Justice, where the Commission has tolerated irregularities on grounds of fairness, the Member State concerned does not acquire any right to demand that the same position be taken with regard to irregularities with respect to the following financial year by virtue of the principle of legal certainty or the principle of protection of legitimate expectations (Case C-55/91 Italy v Commission, cited above, paragraph 67).
28 It should first be pointed out that, in accordance with the first subparagraph of Article 42(2) of the Rules of Procedure of the Court of Justice, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.
35 It should be borne in mind here that where the Commission refuses to charge certain expenditure to the EAGGF on the ground that it was incurred as a result of breaches of Community rules for which a Member State can be held responsible, the Commission is required not to demonstrate exhaustively that there are irregularities in the data submitted by the Member States but to adduce evidence of serious and reasonable doubt on its part regarding the figures submitted by the national authorities. The reason for this mitigation of the burden of proof on the Commission is that it is the State which is best placed to collect and verify the data required for the clearance of EAGGF accounts; consequently, it is for the State to adduce the most detailed and comprehensive evidence that its figures are accurate and, if appropriate, that the Commission's calculations are incorrect (Case C-48/91 Netherlands v Commission [1993] ECR I-5611, paragraphs 16 and 17).
45 An interpretation of that nature would, however, run counter to the objective of Article 5(1) of Regulation No 3665/87 which, according to the fourth recital, is specifically to prevent abuses in relation to refunds. The refunds are designed to cover the difference between the higher Community price for the product in question and the lower price on the market of the third country to which it is exported. In the case of a product whose price, and therefore rate of refund, depends on the qualitative nature of its use, abuses could also occur where its actual use, that is to say its true destination in functional terms, is not the same as the specific product use for which the refund is requested. It follows that the term `destination' in Article 5(1)(a) of Regulation No 3665/87 must be construed in not only a geographical but also a functional sense.
46 As regards the situation addressed by Article 5(1)(b) of Regulation No 3665/87, it should be emphasised that this concerns the risk that the exported product may be re-introduced into the Community but does not further require that this risk should have in fact materialised.
49 Finally, the duty of the German authorities to verify that the animals in question were actually being used for breeding purposes also derives from Article 13 of Regulation No 3665/87, according to which: `No refund shall be granted on products which are not of sound and fair marketable quality'. An animal described as a `pure-bred breeding animal' cannot be considered to be of sound and fair marketable quality if it does not possess the qualities that enable it to be used specifically for breeding purposes.
66 Indeed, according to the case-law of the Court of Justice, Article 8(1) of Regulation No 729/70, which expressly lays down the obligations incumbent on Member States pursuant to Article 5 of the EC Treaty, imposes on the latter the general obligation to take the measures necessary to satisfy themselves that the transactions financed by the EAGGF are actually carried out and are executed correctly, even if the specific Community act does not expressly provide for the adoption of particular supervisory measures (Case C-2/93 Exportslachterijen van Oordegem BVBA v Belgische Dienst voor Bedrijfsleven en Landbouw and Generale Bank NV [1994] ECR I-2283, paragraphs 17 and 18).
77 It follows that it would have been possible to take into account refunds disbursed up to the level of the rate for slaughter cattle only if the customs declarations relating to the export of pure-bred breeding animals of the bovine species had been rectified post-clearance, on presentation of the documents required by the Community rules for the export of animals for slaughter (veterinary certificates, transport documents and Polish customs documents, etc.).
91 As regards, first, the plea alleging insufficient reasoning for the contested decision, according to the case-law of the Court of Justice, decisions concerning the clearance of accounts do not require detailed reasons if the government concerned was closely involved in the process by which the decision came about and is therefore aware of the reason for which the Commission considers that it must not charge the sums in dispute to the EAGGF (Case C-50/94 Greece v Commission [1996] ECR I-3331, paragraph 9).
95 Furthermore, in the case of supervisory measures adopted at the national level in order to implement Community rules regarding the common agricultural policy, the national authorities must act with the same degree of care as they exercise in implementing the corresponding national legislation, in order to prevent any erosion of the effectiveness of Community law (Case C-2/93 Exportslachterijen van Oordegem, cited above, paragraph 19).
96 It should be made clear in this connection that while the national authorities remain free to select the measures they consider appropriate to safeguard the Community's financial interests, that freedom may not in any way jeopardise the speed, the sound organisation or the comprehensiveness of the requisite controls and inquiries.
105 It should be noted that, as the Commission is right to emphasise, the aim of the procedure for the clearance of accounts is to establish whether the credits made available to the Member States have been disbursed in accordance with the Community rules in force in the context of the common organisation of the markets. As pointed out at paragraph 35 of this judgment, where the Commission refuses to charge certain expenditure to the EAGGF on the ground that it was incurred as a result of breaches of Community rules for which a Member State can be held responsible, the Commission is required not to demonstrate exhaustively that there are irregularities in the data submitted by the Member States but to adduce evidence of serious and reasonable doubt on its part regarding the figures submitted by the national authorities (Case C-48/91 Netherlands v Commission, cited above, paragraphs 16 and 17).
146 It should be borne in mind in this regard that Article 47(4) of Regulation No 3665/87 accords the national authorities the possibility of granting the exporter an extension of the deadline for the submission of the documents required, that is to say the proof that the goods exported have arrived at their destination, if the exporter has been unable to submit them within the statutory 12-month period, despite having acted with diligence in seeking to obtain and communicate them within that period.
148 However, the exercise of the discretion thus conferred on the national authorities cannot exceed the limits dictated by the purpose of that rule, which is to ensure that exporters who, despite having made every effort required of them, have been prevented, as a result of circumstances beyond their control, from producing the requisite documents within the 12-month period, are not automatically deprived of the refunds provided for under the Community rules.
177 It should be recalled here that, according to the case-law of the Court of Justice, the Member States must, in the first place, respect the obligation of general diligence in Article 5 of the Treaty, as specifically embodied in Article 8(1) and (2) of Regulation No 729/70 with regard to the financing of the common agricultural policy. That obligation implies that the Member States must take steps to rectify irregularities promptly. With the passage of time, recovery of sums wrongly paid is likely to become complicated or impossible for reasons such as the fact that undertakings may have ceased trading or accounting documents may have been lost (Case C-34/89 Italy v Commission [1990] ECR I-3603, paragraph 12).
178 Furthermore, national authorities cannot justify a failure to fulfil their obligations to rectify irregularities quickly by relying on the length of administrative or judicial proceedings commenced by an economic agent (Case C-28/89 Germany v Commission [1991] ECR I-581, paragraph 32).
179 It should also be pointed out that while, pursuant to Article 8(1) of Regulation No 729/70, recovery procedures undertaken at national level are carried out in accordance with the rules of national law, including those allocating the burden of proof (see, to that effect, Joined Cases 205/82 to 215/82 Deutsche Milchkontor and Others [1983] ECR 2633, paragraph 36), it is also settled case-law that recourse to rules of national law is possible only in so far as it is necessary for the implementation of provisions of Community law and in so far as the application of those rules of national law does not jeopardise the scope and effectiveness of that Community law (Cases 146/81, 192/81 and 193/81 BayWa and Others v Bundesanstalt für Landwirtschaftliche Marktordnung [1982] ECR 1503, paragraph 29).
182 It should be pointed out here that, according to the case-law of the Court of Justice, proof of completion of customs formalities in the country of destination amounts only to rebuttable evidence that the objective of the variable export refunds has in fact been attained (see, to that effect, the abovementioned judgments Dimex, paragraph 11, and Möllmann-Fleisch, paragraph 13). More particularly, the probative force which normally attaches to the customs entry certificate may be disregarded where there is reason to doubt the actual access of the goods to the market of the territory of destination in order to be marketed there (Möllmann-Fleisch, cited above, paragraph 15). In circumstances of that kind, the actual access of the goods to the market of the country of destination may be proved by producing other documents provided for under the Community rules (see, to that effect, Möllmann-Fleisch, cited above, paragraph 14), such as the documents confirming that the goods were unloaded in the country of destination.