1 By order of 8 August 1988, which was received at the Court on 16 August 1988, the Verwaltungsgericht Frankfurt am Main referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Article 1(b ) of Commission Regulation ( EEC ) No 1821/81 of 2 July 1981 laying down the conditions for granting carry-over payments for certain cereals in stock at the end of the marketing year ( Official Journal 1981, L 182, p . 10 ).
2 The question arose in proceedings between Wilhelm-Lampe-Muehle ( hereinafter referred to as "Lampe-Muehle "), a German milling undertaking, and the Bundesanstalt fuer landwirtschaftliche Marktordnung ( Federal Office for the Organization of Agricultural Markets, hereinafter referred to as the "Federal Office "), the agency responsible in the Federal Republic of Germany for granting carry-over payments for cereals in stock, concerning Lampe-Muehle' s right to such payments in respect of certain quantities of rye .
3 It is apparent from the documents before the Court that Lampe-Muehle applied to the Federal Office, on 5 August 1985, for a carry-over payment in respect of 320.08 tonnes of bread rye owned by it on 31 July 1985, the end of the 1984/85 marketing year, and stored in its warehouse on that date . After lodging its application, Lampe-Muehle sold the rye in question to seven other milling undertakings, which carried out the milling .
4 By decision of 7 November 1985 the Federal Office refused to grant the carry-over payment on the ground that for supervision purposes the Community rules required that the undertaking applying for the carry-over payment should itself mill the quantities of rye in respect of which an application had been made .
5 Lampe-Muehle brought proceedings contesting that decision before the Verwaltungsgericht Frankfurt am Main, which stayed the proceedings and referred the following question to the Court for a preliminary ruling : "Must Article 1(b ) of Commission Regulation ( EEC ) No 1821/81 of 2 July 1981 ( Official Journal 1981, L 182, p . 10 ) be interpreted as meaning that the rye in respect of which a carry-over payment is applied for must be owned by the applicant milling undertaking not only on 31 July of the marketing year in question but also at the time when it is milled for human consumption, or is it sufficient if the rye is milled for human consumption by another milling undertaking, to which it was sold by the applicant undertaking after the application was lodged?"
6 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the rules applicable and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
7 It is apparent from the documents before the Court that, by its question, the national court seeks to ascertain not who must own the rye when it is milled but whether the rye in respect of which a carry-over payment is applied for must be milled by the milling undertaking which made the application .
8 Article 9 of Regulation ( EEC ) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals ( Official Journal 1975, L 281, p . 1 ) provides that a carry-over payment may be granted in respect of stocks remaining at the end of the marketing year of common wheat, durum wheat, rye, barley and maize harvested in the Community . According to Article 9(6 ), detailed rules for the application of Article 9 are to be adopted by the Commission in accordance with the "management committee" procedure .
9 On the basis of this provision, the Commission adopted Regulation No 1821/81, whose interpretation is the subject of the preliminary question . The third recital in the preamble to the regulation states that, on account of the connection between the arrangements for intervention and those for carry-over payments, the carry-over payments should be granted only if the cereals offered comply with the quality requirements for intervention . However, in the case of rye held by the milling industry, milling for human consumption should be accepted as proof of sufficient quality .
10 As regards the persons entitled to carry-over payments, the first recital in the preamble to Regulation No 1821/81 states that, since stocks of cereals remaining at the end of the marketing year are generally held by the trade or by the processing industry, the carry-over payment should be granted at the trade or processing industry stage in order to simplify administration, in particular as regards supervision . In the case of rye, supervision requirements are such that the payment should be made only to the milling industry .
11 On the basis of these considerations, Article 1 of the regulation provides as follows : "The carry-over payment fixed by the Council for a given marketing year shall be granted to : ( a ) trade and processing undertakings, in respect of stocks of common wheat harvested in the Community and owned by them on 31 July; ( b ) milling undertakings, in respect of stocks of rye harvested in the Community, to be milled for human consumption and owned by them on the above date; ( c ) trade and processing undertakings, in respect of stocks of maize harvested in the Community, owned by them on the above date ..."
12 Article 2 of the regulation fixes the minimum quantity required at the end of the season to enable a stock to qualify for a carry-over payment . As regards rye, the second subparagraph of Article 2(2 ) adds that, "in respect of rye held by the milling industry at the end of the season, milling for human consumption shall be accepted as proof of sufficient quality ".
13 It is clear from these provisions that the conditions for granting the carry-over payment for rye are not the same as those for other cereals . Consequently, the checks on these conditions which must be carried out by the national authorities under Article 8 of the regulation cannot be identical . In particular, the checks must ensure, as regards rye, that the quantities of rye held at the end of the season are milled for human consumption .
14 It follows from these observations that, under the scheme of the regulation, the restriction of the category of persons entitled to the carry-over payment to milling undertakings, in conjunction with the less stringent requirement regarding proof of the quality of the rye and the resulting supervision requirements, presupposes that the quantities of rye concerned should be physically located at the premises of the applicant undertaking and should be milled by that undertaking, so that the competent authorities are able to check whether the quantity of flour obtained from the milling corresponds to the quantities of rye in stock at the end of the marketing year and so as to avoid any possibility of the rye in question being mixed with rye from the new harvest .
15 This interpretation is confirmed by Annex II to Regulation No 1821/81, which requires the applicant undertaking, when applying for a carry-over payment, to supply a declaration that the rye "will be milled for human consumption ". Such an undertaking may reasonably be given only by the undertaking which will itself mill the rye in respect of which it applies for a carry-over payment .
16 It should also be noted that, as the Commission rightly stated at the hearing, if milling undertakings were permitted to dispose of the quantities of rye in question after making their application for a carry-over payment, the provisions of Regulation No 1821/81 which make the aforesaid distinction would be deprived of all meaning since there would no longer be any reason to limit, in the case of rye, the persons entitled to the payment to milling undertakings and it would be necessary to supervise all the stages in the commercial chain .
17 The plaintiff in the main proceedings claims that such an interpretation of the provisions in question would be discriminatory in relation to undertakings applying for a carry-over payment for common wheat or maize and would thus infringe Article 40(3 ) of the Treaty .
18 In that regard, it must be stated that the difference in the treatment of applications for carry-over payments according to the cereals for which such payments are sought is justified by the difference in the prescribed conditions which necessitate different methods of supervision .
19 In the light of the foregoing considerations, the answer to the question asked by the national court must be that Article 1(b ) of Commission Regulation ( EEC ) No 1821/81 must be interpreted as meaning that the rye in respect of which a carry-over payment is applied for must be milled by the milling undertaking which applied for the said payment .