1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 11 FEBRUARY 1982 , THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE KINGDOM OF THE NETHERLANDS HAD FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY BY AUTHORIZING THE PACKING IN SMALL PACKAGES OF BUTTER IMPORTED FROM NON-MEMBER COUNTRIES AND STORED IN CUSTOMS WAREHOUSES , CONTRARY TO THE PROVISIONS OF ARTICLE 1 OF COUNCIL DIRECTIVE 71/235/EEC OF 21 JUNE 1971 ON HARMONIZATION OF THE PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION RELATING TO THE USUAL FORMS OF HANDLING WHICH MAY BE CARRIED OUT IN CUSTOMS WAREHOUSES AND IN FREE ZONES ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1971 ( II ), P . 398 ).
2 COUNCIL DIRECTIVE 71/235 OF 21 JUNE 1971 IMPLEMENTS DIRECTIVE 69/74 OF MARCH 1969 ON THE HARMONIZATION OF THE PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION RELATING TO CUSTOMS WAREHOUSING PROCEDURE ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( I ), P . 82 ).
3 COUNCIL DIRECTIVE 69/74 , WHICH WAS ADOPTED IN ORDER TO PREVENT DISPARITIES BETWEEN NATIONAL CUSTOMS WAREHOUSING PROCEDURES FROM LEADING TO DEFLECTION OF TRADE AND DIVERSION OF CUSTOMS REVENUE , PROVIDES IN ARTICLE 9 ( 1 ) THAT IT MUST BE POSSIBLE FOR GOODS DEPOSITED IN WAREHOUSES TO UNDERGO THERE ' ' UNDER THE CONDITIONS LAID DOWN BY THE COMPETENT AUTHORITIES ' ' THE ' ' USUAL FORMS OF HANDLING ' ' SET OUT IN A COMMON LIST TO BE DRAWN UP BY THE COUNCIL ON A PROPOSAL FROM THE COMMISSION .
4 THE COMMON LIST OF USUAL FORMS OF HANDLING AUTHORIZED IN CUSTOMS WAREHOUSES , ADOPTED BY THE COUNCIL IN ACCORDANCE WITH THE AFORESAID PROVISIONS , IS SET OUT IN ARTICLE 1 ( 1 ) OF DIRECTIVE 71/235 . ACCORDING TO SUBPARAGRAPH 8 OF ARTICLE 1 ( 1 ), THOSE USUAL FORMS OF HANDLING INCLUDE ' ' PACKING , UNPACKING , CHANGE OF PACKINGS , REPAIR OF PACKINGS , DECANTING AND SIMPLE TRANSFER INTO OTHER CONTAINERS ' ' .
5 THE COMMISSION CONSIDERS THAT THE PACKING OF BUTTER IN SMALL PACKAGES , WHICH IS AUTHORIZED IN THE NETHERLANDS AS A USUAL FORM OF HANDLING WITHIN THE MEANING OF ARTICLE 1 ( 1 ) OF DIRECTIVE 71/235 , DOES NOT COME WITHIN THE CUSTOMS WAREHOUSING PROCEDURE SINCE WORKING , SHAPING AND WEIGHING , WHICH PRECEDE THE PACKING OF THE BUTTER , ARE NOT FORMS OF HANDLING REFERRED TO IN THE AFORESAID PROVISIONS . ACCORDING TO THE COMMISSION , THE FORMS OF HANDLING CARRIED OUT IN CUSTOMS WAREHOUSES ARE NECESSARILY SIMPLE OPERATIONS . THAT REQUIREMENT OF SIMPLICITY , WHICH IS REFERRED TO IN SEVERAL SUBPARAGRAPHS OF ARTICLE 1 ( 1 ) OF DIRECTIVE 71/235 , STEMS FROM THE FUNCTION OF CUSTOMS WAREHOUSES WHICH IS TO STORE GOODS AND NOT TO PROVIDE FACILITIES FOR PREPARATION OR PROCESSING .
6 THE KINGDOM OF THE NETHERLANDS CONTENDS THAT THE VARIOUS OPERATIONS WHICH PRECEDE THE PACKING OF THE BUTTER ARE SIMPLE FORMS OF HANDLING WHICH FORM PART OF A SINGLE CONTINUOUS PROCESS . ACCORDING TO THE KINGDOM OF THE NETHERLANDS , THE FORMS OF HANDLING AUTHORIZED IN CUSTOMS WAREHOUSES ARE NOT ALL CHARACTERIZED BY THEIR SIMPLICITY . IT IS CLEAR FROM THE PREPARATORY WORK CARRIED OUT PRIOR TO THE ADOPTION OF DIRECTIVE 71/235 THAT THE REQUIREMENT OF SIMPLICITY WAS MAINTAINED ONLY IN CERTAIN SPECIFIC CASES . THE KINGDOM OF THE NETHERLANDS CONTENDS , MOREOVER , THAT THE INTERPRETATION OF DIRECTIVE 71/235 PROPOSED BY THE COMMISSION ON THE BASIS OF THE FUNCTION OF CUSTOMS WAREHOUSES FAILS TO TAKE ACCOUNT OF THE MANNER IN WHICH THE LIST OF USUAL FORMS OF HANDLING WAS DRAWN UP . ACCORDING TO THE KINGDOM OF THE NETHERLANDS , IT IS CLEAR FROM THE WORDING OF ARTICLE 9 ( 1 ) OF DIRECTIVE 69/74 , QUOTED ABOVE , THAT THE COMMON LIST SET OUT IN ARTICLE 1 ( 1 ) OF DIRECTIVE 71/235 REFLECTS THE USUAL PRACTICES TRADITIONALLY APPLIED BY THE MEMBER STATES AND RECORDED BY THE COUNCIL .
7 THE LATTER ARGUMENT , WHICH SEEKS TO ESTABLISH THAT THE CONTESTED PACKING IS ONE OF THE FORMS OF HANDLING SPECIFIED IN ARTICLE 1 ( 1 ) OF DIRECTIVE 71/235 , INASMUCH AS IT WAS TRADITIONALLY AUTHORIZED IN NETHERLANDS CUSTOMS WAREHOUSES , CANNOT BE ACCEPTED . ALTHOUGH THE INVENTORY OF NATIONAL PRACTICES WAS CARRIED OUT AT AN EARLY STAGE IN THE PREPARATORY WORK FOR THE DIRECTIVE , ITS PURPOSE WAS NOT TO MAINTAIN THEM BUT , ON THE CONTRARY , TO HARMONIZE THEM . THE AIM OF HARMONIZATION IS PRECISELY TO OBLIGE THE MEMBER STATES TO IMPLEMENT , WITHIN THE PERIODS PRESCRIBED , THE NECESSARY AMENDMENTS AND ADJUSTMENTS .
8 IT APPEARS FROM THE WRITTEN OBSERVATIONS OF THE NETHERLANDS GOVERNMENT THAT THE CONTESTED FORM OF HANDLING IS CARRIED OUT IN CUSTOMS WAREHOUSES IN THE FOLLOWING MANNER : TO BEGIN WITH , THE FROZEN BLOCKS OF BUTTER ARE ALLOWED TO THAW OUT . THEY ARE THEN UNPACKED AND PLACED BY HAND IN A MACHINE WHICH WORKS THE BUTTER INTO A HOMOGENEOUS MASS . FOLLOWING SELECTION OF THE TYPE OF PACKING DESIRED ( PACKETS OF 10 , 15 OR 250 GRAMS OR BOXES OF 1 000 GRAMS ), THE BUTTER IS TRANSPORTED BY MECHANICAL MEANS TO A PACKING MACHINE WHICH SLICES IT INTO PIECES OF THE DESIRED WEIGHT AND WRAPS IT OR PUTS IT INTO BOXES . FINALLY , A CONVEYOR BELT TAKES THE PACKETS OR BOXES TO A PACKING COUNTER WHERE THEY ARE PACKED INTO CRATES BY HAND . THE NETHERLANDS GOVERNMENT HAS POINTED OUT THAT THE PACKETS OF BUTTER - WHICH COMES , INTER ALIA , FROM FINLAND , NORWAY AND SWEDEN - ARE INTENDED FOR USE ON SEA-GOING VESSELS .
9 IN THE COURT ' S OPINION , THE QUESTION WHETHER OR NOT THE CONTESTED PACKING COMES WITHIN THE SCOPE OF THE CUSTOMS WAREHOUSING PROCEDURE LAID DOWN BY DIRECTIVE 71/235 CANNOT BE DECIDED BY REFERENCE TO THE WORDING OF SUBPARAGRAPH 8 OF ARTICLE 1 ( 1 ) OF THAT DIRECTIVE ; INSTEAD , THE OPERATION MUST BE CONSIDERED IN THE LIGHT OF THE OBJECTIVE OF THE CUSTOMS WAREHOUSING PROCEDURE .
10 IN THAT REGARD , IT IS CLEAR FROM THE FIRST SUBPARAGRAPH OF ARTICLE 9 ( 1 ) OF DIRECTIVE 69/74 , THE MEANING OF WHICH IS FURTHER CLARIFIED BY THE SIXTH RECITAL IN THE PREAMBLE TO THAT DIRECTIVE , THAT THE ESSENTIAL PURPOSE OF CUSTOMS WAREHOUSES IS TO PROVIDE FOR THE STORAGE OF GOODS . THAT IS WHY THE HANDLING AUTHORIZED DURING STORAGE IS CONFINED TO ' ' SUCH USUAL FORMS OF HANDLING AS ARE NEEDED TO ENSURE PRESERVATION OR TO IMPROVE PACKAGING OR MARKETABLE QUALITY ' ' . IT FOLLOWS , THEREFORE , THAT SUCH OPERATIONS ARE NOT INTENDED , IN PRINCIPLE , TO PERMIT THE GOODS TO PASS FROM ONE STAGE OF MARKETING TO ANOTHER AND THAT AN EXPRESS PROVISION IS REQUIRED FOR ANY EXCEPTIONS TO THAT RULE IN THE CASE OF CERTAIN OPERATIONS CONCERNING SPECIFIC PRODUCTS .
11 FURTHERMORE , ARTICLE 9 ( 2 ) OF THE SAME DIRECTIVE PROVIDES THAT : ' ' GOODS WHICH UNDERGO TREATMENT OTHER THAN THE USUAL FORMS OF HANDLING REFERRED TO IN PARAGRAPH ( 1 ) SHALL BE SUBJECT TO THE RULES IN FORCE RELATING TO INWARD PROCESSING . ' ' COUNCIL DIRECTIVE 69/73 OF 4 MARCH 1969 ON THE HARMONIZATION OF PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION IN RESPECT OF INWARD PROCESSING ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( I ), P . 75 ) PROVIDES IN ARTICLE 2 ( 1 ) THAT INWARD PROCESSING ARRANGEMENTS ARE THE CUSTOMS ARRANGEMENTS WHEREBY GOODS IMPORTED FROM NON-MEMBER COUNTRIES MAY BE RE-EXPORTED OUTSIDE THE CUSTOMS TERRITORY OF THE COMMUNITY WHOLLY OR PARTLY IN THE FORM OF COMPENSATING PRODUCTS . ACCORDING TO ARTICLE 2 ( 3 ) OF THAT DIRECTIVE , COMPENSATING PRODUCTS ARE PRODUCTS PRODUCED BY ONE OR MORE OF THE FOLLOWING PROCESSES : ' ' WORKING OF GOODS , INCLUDING FITTING OR ASSEMBLING THEM OR ADJUSTING THEM TO OTHER GOODS ; PROCESSING OF GOODS ; REPAIR OF GOODS , INCLUDING RESTORING THEM TO THEIR ORIGINAL CONDITION AND PUTTING THEM IN ORDER . ' '
12 IT APPEARS FROM THE DOCUMENTS BEFORE THE COURT THAT THE PURPOSE AND THE EFFECT OF THE CONTESTED OPERATION WAS TO PLACE THE BULK BUTTER STORED IN NETHERLANDS WAREHOUSES IN A NEW PACKING SUITED TO THE NEEDS OF THE ULTIMATE RECIPIENT OF THE PRODUCT . SINCE THE LIST SET OUT IN ARTICLE 1 ( 1 ) OF DIRECTIVE 71/235 DOES NOT CONTAIN AN EXPRESS PROVISION AUTHORIZING A FORM OF HANDLING OF THAT KIND IN RELATION TO BUTTER , THE CONCLUSION MUST BE DRAWN THAT THE OPERATION IN QUESTION DOES NOT COME WITHIN THE SCOPE OF THE CUSTOMS WAREHOUSING PROCEDURE AND IS THEREFORE COVERED BY THE INWARD PROCESSING PROCEDURE AS DEFINED IN ARTICLE 2 OF DIRECTIVE 69/73 , REFERRED TO ABOVE .
13 MOREOVER , THAT INTERPRETATION IS CONFIRMED BY REGULATION ( EEC ) NO 3066/75 OF THE COUNCIL OF 24 NOVEMBER 1975 ( OFFICIAL JOURNAL L 307 , P . 3 ) AND BY REGULATION ( EEC ) NO 3352/75 OF THE COMMISSION OF 23 DECEMBER 1975 ( OFFICIAL JOURNAL L 330 , P . 28 ) ADOPTED IN PURSUANCE OF THE FIRST-NAMED REGULATION . THE PURPOSE OF THOSE REGULATIONS WAS TO CONTRIBUTE TOWARDS THE RE-ABSORPTION OF EXCESS STOCKS OF COMMUNITY BUTTER BY OBLIGING COMMUNITY INDUSTRIES WHICH USE THE PRODUCT FOR EXPORT PURPOSE TO USE EXCLUSIVELY BUTTER PRODUCED IN THE COMMUNITY . WITH THAT END IN VIEW , THE AFOREMENTIONED REGULATIONS MERELY LAID DOWN RULES IN RESPECT OF INWARD PROCESSING ALONE AND EXPRESSLY EXCLUDED FROM THE SCOPE THEREOF , FOR A PERIOD WHICH WAS EXTENDED UNTIL 1 APRIL 1980 , ' ' THE PROCESSING OF BULK BUTTER INTO SMALL PACKAGES FOR THE RETAIL TRADE ' ' . IT IS CLEAR THAT THE EFFECT WHICH THAT PROHIBITION WAS EXPECTED TO PRODUCE COULD BE SECURED ONLY ON CONDITION THAT THE OPERATION CONCERNED COULD NOT BE CARRIED OUT UNDER THE EQUALLY ADVANTAGEOUS CUSTOMS WAREHOUSING PROCEDURE .
14 IT IS THEREFORE NECESSARY TO CONCLUDE , IN THE LIGHT OF THE FOREGOING CONSIDERATIONS , THAT BY AUTHORIZING , UNDER THE CUSTOMS WAREHOUSING PROCEDURE , THE PACKING IN SMALL PACKAGES OF BUTTER IMPORTED IN BULK FROM NON-MEMBER COUNTRIES , THE KINGDOM OF THE NETHERLANDS HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE EEC TREATY .