1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 5 FEBRUARY 1982 , THE GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS BROUGHT AN ACTION UNDER THE FIRST PARAGRAPH OF ARTICLE 173 OF THE EEC TREATY FOR A DECLARATION THAT COMMISSION DECISION 81/1047/EEC OF 16 NOVEMBER 1981 CONCERNING THE CLEARANCE OF THE ACCOUNTS PRESENTED BY THE KINGDOM OF THE NETHERLANDS IN RESPECT OF THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND , GUARANTEE SECTION , EXPENDITURE FOR 1974 ( OFFICIAL JOURNAL 1981 , L 375 , P . 33 ), WAS VOID INASMUCH AS THE COMMISSION HAD FAILED TO CLEAR AN ITEM OF HFL 4 255 409.86 REPRESENTING AID FOR THE PROCESSING OF SKIMMED-MILK POWDER INTO ANIMAL FEED .
2 IT APPEARS FROM THE FILE THAT AT THE RELEVANT TIME THE NETHERLANDS UNDERTAKING , TROUW EN CO ., WAS USING SKIMMED-MILK POWDER IN THE MANUFACTURE OF COMPOUND FEED FOR CALVES AND RECEIVING COMMUNITY AID IN RESPECT OF THAT MANUFACTURE UNDER REGULATIONS NOS 804/68 OF THE COUNCIL OF 27 JUNE 1968 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 176 ), 986/68 OF THE COUNCIL OF 15 JULY 1968 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1968 ( I ), P . 260 ) AND 990/72 OF THE COMMISSION OF 15 MAY 1972 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( II ), P . 428 ).
3 IN MANUFACTURING ITS PRODUCT TROUW EN CO . ADDED TO IT , UNDER ARTICLE 4 ( 1 ) ( A ) OF REGULATION NO 990/72 , CITED ABOVE , WHICH PROVIDES THAT FOR COMPOUND ANIMAL FEED MADE FROM SKIMMED MILK TO BE ELIGIBLE FOR COMMUNITY AID IT MUST CONTAIN AT LEAST 2% OF STARCH , BETWEEN 2% AND 2.5% OF GELATINIZED MAIZE STARCH PURCHASED FROM ITS USUAL SUPPLIERS .
4 OWING TO AN ERROR ON THE PART OF A SUPPLIER WHO DELIVERED MAIZE STARCH INTENDED FOR INDUSTRIAL USE OTHER THAN THE MANUFACTURE OF FEED AND CONTAINING A TOXIC SUBSTANCE , NAMELY PHENYL ACETATE OF MERCURY , TROUW EN CO . USED , DURING THE PERIOD BETWEEN 28 MAY AND 13 JULY 1974 , 60 000 KG OF STARCH SO CONTAMINATED AND 173 000 KG OF UNCONTAMINATED STARCH IN THE MANUFACTURE OF 7 385 300 KG OF FEED FOR CALVES .
5 ON THE DISCOVERY OF THAT FACT THE MANUFACTURE OF THE CALF FEED WAS TERMINATED AND THOSE CONSIGNMENTS WHICH HAD NOT BEEN USED WERE WITHDRAWN FROM THE MARKET . CRIMINAL PROCEEDINGS FOR BREACH OF THE NATIONAL RULES REGARDING ANIMAL FEED WERE BROUGHT AGAINST TROUW EN CO . AND THOSE QUANTITIES OF FEED WHICH WERE STILL IN STORAGE WERE SEIZED . HOWEVER , THE PROCEEDINGS WERE WITHDRAWN BECAUSE THE PUBLIC PROSECUTOR CONSIDERED THAT TROUW EN CO . HAD ACTED IN GOOD FAITH AND THAT THERE HAD BEEN NO NEGLIGENCE ON ITS PART .
6 FOR THEIR PART THE NETHERLANDS ADMINISTRATIVE AUTHORITIES TOOK PREVENTIVE VETERINARY MEASURES TO LIMIT THE DANGEROUS EFFECTS OF PUTTING CONTAMINATED FEED ON TO THE MARKET BUT DID NOT CONSIDER IT NECESSARY TO REQUIRE REIMBURSEMENT OF THE COMMUNITY AID ALREADY PAID TO TROUW EN CO .
7 THE COMMISSION , RELYING ON THE PROVISIONS OF REGULATION NO 990/72 WHICH PROVIDE THAT A CONDITION FOR THE GRANT OF COMMUNITY AID IS THAT THE ANIMAL FEED MADE WITH SKIMMED MILK SHALL HAVE A COMPOSITION WHICH IS TYPICAL OF ANIMAL FEEDINGSTUFFS AND SHALL BE CAPABLE OF USE DIRECTLY AS FEED , CONSIDERED THAT THOSE REQUIREMENTS HAD NOT BEEN COMPLIED WITH IN THIS CASE IN VIEW OF THE PRESENCE OF A TOXIC SUBSTANCE IN THE FEED , AND THEREFORE REFUSED TO CLEAR THE ITEM IN THE ACCOUNTS RELATING TO THAT AID .
8 THE NETHERLANDS GOVERNMENT BASES ON THE FOLLOWING ARGUMENTS ITS APPLICATION FOR A DECLARATION THAT THAT DECISION TO REFUSE CLEARANCE IS VOID : ( A ) THE PROVISIONS OF THE RELEVANT REGULATIONS ARE AMBIGUOUS AND SOMETIMES CONTRADICTORY SO THAT IT IS IMPOSSIBLE TO DEDUCE FROM THEIR WORDING A PRINCIPLE THAT ANIMAL FEED MADE WITH SKIMMED MILK MUST IN ORDER TO BE ELIGIBLE FOR COMMUNITY AID , COMPLY WITH CERTAIN REQUIREMENTS AS TO ITS QUALITY AND COMPOSITION . ( B)THE SAID PROVISIONS SHOULD THEREFORE BE INTERPRETED IN THE LIGHT OF THE AIMS OF THE COMMUNITY LEGISLATURE . THOSE WERE NOT TO ENSURE THAT CATTLE RECEIVED THE CORRECT NOURISHMENT BUT , IN PRINCIPLE , TO RELIEVE THE MARKET IN MILK AND TO DISPOSE OF SURPLUS PRODUCE . ( C)THE SAID PURPOSE WAS ACHIEVED IN THIS CASE , SINCE THE SKIMMED MILK WAS USED IN THE MANUFACTURE OF ANIMAL FEED IN SUCH A WAY THAT IT WAS NO LONGER POSSIBLE TO USE IT FOR HUMAN CONSUMPTION AND THE COMMUNITY AID WAS THEREFORE PROPERLY PAID . ( D)EQUALLY THE AID COULD NOT BE REFUSED TO TROUW EN CO . BECAUSE IT ACTED IN GOOD FAITH AND WITHOUT NEGLIGENCE , SINCE IT HAD BECOME APPARENT THAT THE ACCIDENT WAS DUE SOLELY TO THE FAULT OF THE SUPPLIER .
9 AS A SUBSIDIARY POINT THE NETHERLANDS GOVERNMENT MAINTAINS THAT THE FEED WHICH WAS MANUFACTURED DURING THE PERIOD IN QUESTION WAS ONLY PARTLY CONTAMINATED SINCE ONLY ONE-THIRD OF THE STARCH USED IN ITS MANUFACTURE HAD BEEN TREATED WITH MERCURY . THE PROPORTION OF THE COMMUNITY AID CORRESPONDING TO THE UNCONTAMINATED PORTION OF FEED WAS THEREFORE PROPERLY PAID AND CONSEQUENTLY THE RELEVANT ITEM IN THE ACCOUNTS SHOULD HAVE BEEN CLEARED AT LEAST IN PART .
10 THE APPLICANT ' S FIRST ARGUMENT IS BASED ON THE DIFFERENCES IN WORDING BETWEEN CERTAIN PROVISIONS IN THE REGULATIONS GOVERNING THE MATTER AT ISSUE . REGULATIONS NOS 804/68 AND 986/68 CONTAIN THE EXPRESSION SKIMMED MILK ' ' USED IN ' ' OR ' ' FOR USE AS ' ' ANIMAL FEED , OR EVEN ' ' USED IN THE MANUFACTURE OF COMPOUND FEEDINGSTUFFS ' ' ( FOR ANIMALS ); FURTHERMORE ARTICLE 4 ( 1 ) ( C ) OF REGULATION NO 990/72 PROVIDES THAT IN ORDER TO BE REGARDED AS COMPOUND ANIMAL FEED IT IS NECESSARY THAT THE PRODUCT ' ' CAN BE USED DIRECTLY AS FEED ' ' . THE APPLICANT CONSIDERS THAT SINCE THOSE PROVISIONS ARE CONTRADICTORY , IT IS IMPOSSIBLE TO DECIDE WHETHER , IN ORDER TO BE ELIGIBLE FOR AID , THE SKIMMED MILK MUST SOLELY BE ' ' FOR USE ' ' AS ANIMAL FEED OR WHETHER IT MUST ALSO ACTUALLY BE USED AS SUCH FEED .
11 IN THAT CONNECTION IT MUST BE POINTED OUT THAT THE PROVISIONS QUOTED BY THE NETHERLANDS , FAR FROM EXCLUDING THE CONCEPT OF THE QUALITY OF FEED MADE WITH SKIMMED MILK , CONTAIN NO CONTRADICTIONS OR DIFFERENCES IN RELATION TO THE REQUIREMENT THAT FEED MADE WITH SKIMMED MILK MUST SATISFY CERTAIN CONDITIONS AS REGARDS ITS QUALITY AND COMPOSITION AND , IN PARTICULAR , AS REGARDS ITS INTENDED USE AS CATTLE FEED .
12 IN FACT REGULATION NO 986/68 , WHICH LAYS DOWN GENERAL RULES FOR GRANTING THE AID IN QUESTION , PROVIDES , IN ARTICLE 2 ( 4 ), THAT COMPOUND FEEDINGSTUFFS IN WHICH SKIMMED MILK IS USED MUST MEET ' ' MINIMUM STANDARDS AS TO COMPOSITION ' ' IN ORDER TO BE ELIGIBLE FOR AID . THE SAME PRINCIPLE IS LAID DOWN IN THE THIRD AND FIFTH RECITALS IN THE PREAMBLE TO REGULATION NO 990/72 .
13 FURTHERMORE ARTICLE 1 ( 1 ) AND ( 2 ) OF REGULATION NO 990/72 PROVIDES THAT SKIMMED MILK WHICH HAS BEEN USED IN THE MANUFACTURE OF COMPOUND ANIMAL FEEDINGSTUFFS SHALL NOT BE ELIGIBLE FOR AID UNLESS THE FEED COMPLIES WITH THE CONDITIONS LAID DOWN IN ARTICLE 4 . THAT PROVISION , IN LAYING DOWN MINIMUM REQUIREMENTS AS REGARDS THE COMPOSITION AND QUALITY OF THE FEED IN QUESTION , PROVIDES , INTER ALIA , THAT IT MUST BE FEED ' ' WHOSE COMPOSITION IS TYPICAL OF ANIMAL FEEDINGSTUFFS ' ' AND ' ' WHICH CAN BE USED DIRECTLY AS FEED ' ' .
14 IT FOLLOWS THAT THE AFOREMENTIONED REGULATIONS LAY DOWN REQUIREMENTS AS TO QUALITY AND COMPOSITION WHICH ARE NOT COMPLIED WITH IN THE CASE OF FEED WHICH IS UNFIT FOR ANIMAL CONSUMPTION BECAUSE IT CONTAINS A TOXIC SUBSTANCE IN THE PROPORTIONS MENTIONED ABOVE .
15 THAT FINDING IS IN AGREEMENT WITH NATIONAL LEGISLATION TO WHICH ARTICLE 4 ( 3 ) OF REGULATION NO 990/72 REFERS IN CONNECTION WITH COMPOSITION CONSIDERED ' ' TO BE TYPICAL OF COMPOUND FEEDINGSTUFFS ' ' . IN FACT , THE LEGISLATION IN FORCE IN THE NETHERLANDS AT THE MATERIAL TIME , THAT IS TO SAY ARTICLE 5 ( 1 ) OF THE VERORDENING VEEVOEDER 1970 ( ANIMAL FEED ORDER ) OF THE PRODUKTSCHAP VOOR VEEVOEDER ( PRODUCTION BOARD FOR ANIMAL FEED ), EXPRESSLY PROHIBITED THE ADDITION OF ANY MERCURY TO ANIMAL FEED .
16 CONSEQUENTLY THE ARGUMENT RELATING TO THE ALLEGEDLY AMBIGUOUS WORDING OF THE RELEVANT PROVISIONS CANNOT BE ACCEPTED .
17 NOR CAN THE ARGUMENT AS TO THE PURPOSE OF THE SYSTEM OF AIDS IN QUESTION BE ACCEPTED . THE FOREGOING CONSIDERATIONS INDICATE THAT ACHIEVING THE AIM OF DISPOSING OF SURPLUS SKIMMED MILK IS NOT , OF ITSELF , SUFFICIENT TO SATISFY THE CONDITIONS LAID DOWN FOR THE GRANT OF COMMUNITY AID . IT MAY BE SEEN FROM THE WHOLE CORPUS OF THE RELEVANT RULES AND IN PARTICULAR FROM THE SECOND AND THIRD RECITALS IN THE PREAMBLE TO REGULATION NO 986/68 THAT THE PURPOSE OF THOSE RULES IS NOT SOLELY THE MARKETING OF A PRODUCT AND THE RELIEF OF THE MARKET IN MILK BUT ALSO THE EMPLOYMENT OF THE PRODUCT FOR USEFUL ECONOMIC ENDS , THAT IS TO SAY TO MAKE AVAILABLE TO BREEDERS COMPOUND FEED WHICH IS RICH IN HIGH-QUALITY PROTEIN AND IS REASONABLY PRICED .
18 THE APPLICANT ALSO CONTENDS THAT BY VIRTUE OF THE AFOREMENTIONED REGULATIONS THE DENATURING OF SKIMMED MILK , WHICH IS PROVIDED FOR AS AN ALTERNATIVE TO ITS USE IN THE MANUFACTURE OF COMPOUND FEED , IS SUFFICIENT , OF ITSELF , TO GIVE RISE TO THE ENTITLEMENT TO AID ON THE GROUND THAT IT IS NOT NECESSARY FOR THE DENATURED MILK ALSO TO BE CAPABLE OF USE IN THE FEEDING OF ANIMALS . THE APPLICANT DEDUCES FROM THAT THAT IF OTHER CONDITIONS WERE TO BE IMPOSED IN RESPECT OF THE MANUFACTURE OF COMPOUND FEED THAT WOULD LEAD TO AN UNACCEPTABLE DIFFERENCE IN TREATMENT AS BETWEEN DENATURED MILK AND MILK USED IN THE MANUFACTURE OF COMPOUND FEED .
19 IN THAT CONNECTION IT MUST BE STATED THAT ARTICLE 2 ( 5 ) OF REGULATION NO 986/68 , WHICH WAS INSERTED BY REGULATION NO 1038/72 OF THE COUNCIL OF 18 MAY 1972 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( II ), P . 456 ), AND ACCORDING TO WHICH ' ' ANY PRODUCT REFERRED TO IN PARAGRAPH ( 1 ) IN RESPECT OF WHICH AID IS GRANTED MAY BE USED ONLY AS FEED ' ' APPLIES EQUALLY TO ' ' SKIMMED-MILK POWDER WHICH HAS BEEN DENATURED ' ' WHICH IS REFERRED TO IN PARAGRAPH ( 1 ) ( C ) OF THE SAME ARTICLE . THUS THE ALLEGED DIFFERENCE BETWEEN DENATURED SKIMMED-MILK POWDER AND SKIMMED-MILK POWDER USED FOR ANIMAL FEED DOES NOT EXIST , SINCE BOTH PRODUCTS MUST BE CAPABLE OF USE AS ANIMAL FEED IN ORDER TO BE ELIGIBLE FOR COMMUNITY AID .
20 THE APPLICANT ' S FINAL ARGUMENT CONCERNING ITS GOOD FAITH AND THE ABSENCE OF NEGLIGENCE ON THE PART OF THE UNDERTAKING CONCERNED IS EQUALLY IRRELEVANT , SINCE THE QUESTION IS WHETHER OR NOT CERTAIN STANDARDS NECESSARY FOR THE GRANT OF AID HAVE BEEN COMPLIED WITH . IN THAT REGARD IT IS SUFFICIENT TO STATE THAT THE NETHERLANDS GOVERNMENT HAS NOT SHOWN THAT THE GOOD FAITH OF THE UNDERTAKING RELIEVES THE STATE CONCERNED OF THE NEED TO COMPLY WITH THE REQUIREMENTS FOR THE GRANT OF AID .
21 AS THE REQUIREMENTS LAID DOWN BY THE RELEVANT REGULATIONS HAVE NOT BEEN COMPLIED WITH IN THIS CASE IT FOLLOWS THAT THE APPLICANT ' S PRINCIPAL CLAIM MUST BE DISMISSED .
22 AS REGARDS THE ALTERNATIVE CLAIM SEEKING AT LEAST A PARTIAL CLEARANCE OF THE DISPUTED ITEM IN THE ACCOUNTS IT SHOULD BE NOTED THAT THE LETTER OF 20 NOVEMBER 1974 SENT BY THE DIRECTORATE OF THE ALGEMENE INSPECTIE DIENST ( GENERAL INSPECTION DEPARTMENT ) OF THE NETHERLANDS MINISTRY OF AGRICULTURE AND FISHERIES TO THE PRODUKTSCHAP VOOR VEEVOEDER AND PRODUCED PRIOR TO THE HEARING BY THE COMMISSION IN RESPONSE TO THE COURT ' S QUESTIONS , REFERS TO THE FACT THAT 60 000 KG OF CONTAMINATED STARCH WERE MIXED WITH 173 000 KG OF STARCH OBTAINED ELSEWHERE . IN FACT IN THAT DOCUMENT THE MINISTRY EXPRESSES THE POSITION AS FOLLOWS : ' ' THE 60 000 KG OF AMIJEL MAIZE STARCH ( CONTAMINATED STARCH ) WERE MIXED WITH 173 000 KG OF STARCH OBTAINED ELSEWHERE AND USED AT THE SAME TIME BETWEEN 28 MAY 1974 AND 13 JULY 1974 IN THREE PRODUCTION CYCLES TO BE PROCESSED INTO : COMPLETE ANIMAL FEED 7 385 300 KG ' ' PREMIXTURE 16 700 KG ' ' FEED FOR FUR-BEARING ANIMALS 42 000 KG ' ' 7 444 400 KG ' '
23 THE CONTENTS OF THAT DOCUMENT ARE CONFIRMED BY ANOTHER LETTER DATED 27 NOVEMBER 1974 WHICH WAS SENT TO THE PRODUKTSCHAP VOOR VEEVOEDER BY THE HOOFPRODUKTSCHAP VOOR AKKERBOUWPRODUKTEN ( CENTRAL BOARD FOR AGRICULTURAL PRODUCTS ) IN WHICH REFERENCE IS MADE TO THE UNDERTAKING ' S DECLARATION THAT THE CONSIGNMENT OF AMIJEL MAIZE STARCH CONTAINING MERCURY ' ' WAS INCORPORATED INTO 7 385 300 KG OF MILK FEED DURING THE PERIOD FROM 28 MAY 1974 TO 13 JULY 1974 ' ' . FURTHERMORE , DURING THE ORAL PROCEDURE THE PARTIES ADMITTED THAT ACCORDING TO ANALYSES OF 24 SAMPLES TAKEN FROM THE PRODUCTS WHICH WERE SEIZED 21 OF THEM CONTAINED PHENYL ACETATE OF MERCURY .
24 IT MAY BE DEDUCED FROM THOSE CIRCUMSTANCES THAT AS A RESULT OF THE MIXING OF THE TWO CONSIGNMENTS OF STARCH THE WHOLE OF THE COMPOUND FEED MANUFACTURED DURING THE RELEVANT PERIOD WAS CONTAMINATED . IN ANY CASE , AS IS RIGHTLY STATED BY THE COMMISSION , IT IS NOT POSSIBLE IN THIS CASE TO DISTINGUISH BETWEEN THE CONTAMINATED AND THE UNCONTAMINATED PRODUCTS IN SUCH A WAY AS TO DETERMINE PRECISELY THE QUANTITIES OF EACH .
25 IT MUST THEREFORE BE CONCLUDED THAT THE APPLICANT ' S ALTERNATIVE CLAIM MUST BE DISMISSED .