1. This request for a preliminary ruling concerns the interpretation of Article 17(3) of Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ 1987 L 351, p. 1), as amended, as regards in particular the adjustments necessary for the implementation of the Uruguay Round Agreement on Agriculture, by Commission Regulation (EC) No 1384/95 of 19 June 1995 (OJ 1995 L 134, p. 14; hereinafter ‘Regulation No 3665/87’).
2. The reference was made in proceedings between Eichsfelder Schlachtbetrieb GmbH (‘Eichsfelder’) and Hauptzollamt Hamburg-Jonas (Hamburg-Jonas customs office, ‘the Hauptzollamt’) concerning export refunds in respect of beef exported by Eichsfelder from Germany to Poland. Legislation
3. Article 4(1) of Regulation No 3665/87 provides: ‘Without prejudice to the provisions of Articles 5 and 16, the refund shall be paid only upon proof being furnished that the products for which the export declaration was accepted have, within 60 days from the date of such acceptance of the export declaration, left the customs territory of the Community in the unaltered state.’
4. Article 5(1) of that regulation provides: ‘Payment of the differentiated or non-differentiated refund shall be conditional not only on the product having left the customs territory of the Community but also - save where it has perished in transit as a result of force majeure - on its having been imported into a non-member country and, where appropriate, into a specific non-member country within 12 months following the date of acceptance of the export declaration: (a) where there is serious doubt as to the true destination of the product, or (b) where, by reason of the difference between the amount of the refund on the exported product and the amount of the import duties applicable to an identical product on the date of acceptance of the export declaration, it is possible that the product may be reintroduced into the Community. … In the cases referred to in the first subparagraph, the provisions of Articles 17(3) and 18 shall apply. In addition, the competent authorities of the Member States may require that additional evidence be provided such as to satisfy them that the product has actually been placed on the market in the non-member country of import in the unaltered state.’
5. Articles 16 to 18 of Regulation No 3665/87 lay down additional conditions for products for which there are differentiated refunds according to destination, relating in particular to proof that they have been cleared through customs for release for consumption in the non-member country of import.
6. With respect to the payment of refunds, Article 17 of Regulation No 3665/87 provides: ‘1. The product must have been imported in the unaltered state into the non-member country or one of the non-member countries for which the refund is prescribed within 12 months following the date of acceptance of the export declaration. However, that period may be extended under the conditions laid down in Article 47. … 3. A product shall be considered to have been imported when it has been cleared through customs for release for consumption in the non-member country concerned.’
7. Pursuant to Article 11(3) of Regulation No 3665/87, where a refund is unduly paid, the beneficiary is to reimburse the amounts unduly received and pay any sanction applicable pursuant to the first subparagraph of Article 11(1), plus interest.
8. Under Article 24 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1, ‘the Customs Code’): ‘Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.’
9. Article 15(2) of Regulation No 3665/87, which was added by Commission Regulation (EC) No 313/97 of 20 February 1997 (OJ 1997 L 51, p. 31), provides: ‘Where it is found that the products exported are reimported into the Community: - after undergoing working or processing in a third country without having attained the level of processing provided for in Article 24 of Regulation (EEC) No 2913/92, and - attract a reduced or zero rate of import duty rather than the normal rate, no refund shall be paid or, if already paid, it shall be reimbursed by the exporter at the request of the paying Member State. This paragraph shall apply only to the products covered by Annex V [which include beef] exported without further processing. Member States shall notify the Commission without delay if they find that products other than those included in Annex V are likely to cause a deflection of trade. …’
10. Under Article 20(4) of Commission Regulation (EC) No 800/1999 of 15 April 1999 laying down common detailed rules for the application of the system of export refunds on agricultural products (OJ 1999 L 102, p. 11): ‘… the refund shall be deemed to be unwarranted and shall be reimbursed if the competent authorities find, even after the refund has been paid: … (d) that the products listed in Annex V are reimported into the Community: - after undergoing working or processing in a third country without having attained the level of processing provided for in Article 24 of Regulation (EEC) No 2913/92, and - attract a reduced or zero rate of import duty rather than the non-preferential rate. …’
11. The provisions mentioned in the two foregoing paragraphs of this judgment had not entered into force at the material time.
12. Article 146(1) of the Customs Code provides: ‘The outward processing procedure shall not be open to Community goods: … - whose export gives rise to the granting of export refunds or in respect of which a financial advantage other than such refunds is granted under the common agricultural policy by virtue of the export of the said goods.’
13. Article 4(3) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities’ financial interests (OJ 1995 L 312, p. 1) provides: ‘Acts which are established to have as their purpose the obtaining of an advantage contrary to the objectives of the Community law applicable in the case by artificially creating the conditions required for obtaining that advantage shall result, as the case shall be, either in failure to obtain the advantage or in its withdrawal.’ The main proceedings and the question referred to the Court of Justice
14. Eichsfelder exported 20 134 kilograms of boneless beef to Poland. The import into Poland of the goods, which were sold to Appelt GmbH, gave rise to the payment of customs duties. Eichsfelder applied to the Hauptzollamt for an export refund in respect of those goods, producing as evidence of release for free circulation in Poland a photocopy of a customs document dated 30 December 1995. By notice of 1 February 1996, the Hauptzollamt granted Eichsfelder a differentiated export refund in the sum of DEM 36 653.23.
15. In Poland, the goods were used to make cooked meat roulades and then, under a contract concluded on 3 October 1995 between the producer of those roulades and Appelt GmbH, the roulades were exported to Germany. Normal customs duties were paid on importation into the Community. Thereafter, the customs duties in respect of the meat, which had previously been imported into Poland, were refunded by the Polish customs office at the request of the producer of the roulades.
16. By an amending notice of 27 October 1999, the Hauptzollamt stated that inquiries undertaken by the Polish authorities had disclosed that the goods which had attracted export refunds had been exported to Germany after being processed in accordance with the contract of 3 October 1995. Considering that the goods had not been genuinely imported into Poland, the Hauptzollamt required Eichsfelder to repay the export refund granted to it, in the sum of EUR 18 740.50.
17. Eichsfelder lodged a complaint against that decision, which was rejected by decision of the Hauptzollamt of 21 October 2002. On 26 November 2002, Eichsfelder brought an action against the latter decision before the Finanzgericht Hamburg (Finance Court, Hamburg).
18. Before that court, Eichsfelder claimed in particular that the goods for which the export refund had been paid had undergone substantial working in Poland, within the meaning of Article 24 of the Customs Code, and that, accordingly, it had a vested right to payment of that refund, irrespective of the customs regime applicable to the working of those goods. That right could not be called in question, even in the event of processing of the goods under processing arrangements involving re-export to Germany.
19. Conversely, the Hautpzollamt contended before the Finanzgericht Hamburg that the various stages of release for free circulation of the goods concerned, namely export to Poland, conversion into roulades, then export to Germany with reimbursement of the Polish customs duties, were to be seen as constituting processing arrangements, envisaged upon conclusion of the contract of 3 October 1995. Goods covered by a processing procedure could not be regarded as being released for free circulation. The characteristic element of an export operation was therefore lacking, with the result that Eichsfelder was not entitled to the refund granted to it.
20. The Finanzgericht Hamburg considers that, in the case before it, as a result of the re-export of the goods to the Community shortly after they were imported into Poland and the reimbursement of the Polish customs duties, it cannot necessarily be accepted that the goods were imported into Poland with a view to being released for circulation there. The purpose of the export refund may not have been achieved.
21. A different assessment could, it suggests, be based on the fact that the goods for which the refund was paid underwent, in a non-member country, substantial and irreversible processing or working within the meaning of Article 24 of the Customs Code. In that event, it might be considered that the goods, as a result of that processing or working, ceased to exist as such, rendering improper re-export thereof to the Community impossible. That interpretation, adopted by the Court in its judgment in Case C-114/99 Roquette Frères [2000] ECR I-8823 concerning non-differentiated refunds, could be transposed to the present case, which is concerned with a differentiated refund.
22. That interpretation is, in its view, confirmed by the adoption, after the events at issue in this case took place, of express provisions to the effect that the refund is not payable if the competent authorities find, first, that the exported products are reimported into the Community without undergoing substantial working or processing within the meaning of Article 24 of the Customs Code and, second, that the products attracted a reduced or zero rate of import duty rather than the normal rate.
23. That is the purpose of Article 15(2) of Regulation No 3665/87, as amended by Regulation No 313/97, and of Article 20(4)(d) of Regulation No 800/1999. Since those provisions are designed to enhance protection of the financial interests of the Community, it would be difficult not to take them into consideration in interpreting the law in force when the events of the main proceedings took place. If those provisions were applied to the present dispute, it would be inappropriate to require reimbursement of the export refund, in so far as the goods concerned underwent substantial working in Poland and were reintroduced into the Community after normal import duties were levied.
24. It was in that context that the Finanzgericht Hamburg decided to stay proceedings pending a preliminary ruling from the Court of Justice on the following question: ‘Is Article 17(3) of Regulation (EEC) No 3665/87, as amended by Regulation (EC) No 1384/95, to be interpreted as meaning that a product is considered to have been imported if, after its release for free circulation in a non-member country, it undergoes substantial processing or working within the meaning of Article 24 of Regulation (EC) No 2913/92 and then is brought back into the Community upon drawback and payment of the normal import duties?’ The question referred to the Court
25. By its question, the national court seeks to ascertain whether the condition for obtaining a differentiated export refund laid down in Article 17(3) of Regulation No 3665/87, namely clearance through customs for release of the product concerned for consumption in the non-member country of destination, is fulfilled where that product, on which import duties were paid in that country, undergoes substantial processing or working there within the meaning of Article 24 of the Customs Code and is then re-exported to the Community, with reimbursement of the duties levied in that country and payment of customs import duties in the Community.
26. The system of d ifferentiated export refunds is intended to gain or to maintain access for Community exports to the markets of the non-member countries concerned, the reason for differentiated refunds being the desire to take account of the particular characteristics of each import market in which the Community wishes to play a part (see Case 125/75 Milch-, Fett- und Eier-Kontor [1976] ECR 771, paragraph 5; Case 89/83 Dimex [1984] ECR 2815, paragraph 8; and Case C‑347/93 Boterlux [1994] ECR I-3933, paragraph 18).
27. If it sufficed, in order to qualify for payment of the refund at a higher rate, for the goods simply to be unloaded, without reaching the market of the territory of destination, the raison d’être of the system of varying the refund would be disregarded. That is why Article 17(3) of Regulation No 3665/87 makes payment of the differentiated refund subject to clearance through customs for release for consumption in the non-member country, since the completion of those formalities is, in principle, sufficient to ensure that the goods have actual access to the market of the territory of destination (see, to that effect, Dimex , paragraphs 9 and 10).
28. The completion of customs import formalities for the product concerned involves in particular the payment of the applicable import duties which, when evidenced by customs import documents, constitutes a guarantee that the product has arrived at its destination. That is also apparent from the 17th recital in the preamble to Regulation No 800/1999, which was not in force at the time of the events of the main proceedings but merely confirms in that regard the scope of the requirement of clearance through customs for release for consumption laid down in Article 17(3) of Regulation No 3665/87 (see, to that effect, regarding the confirmatory scope of certain provisions of Regulation No 800/1999, Roquette Frères , paragraph 20).
29. Regulation No 3665/87 provides that the special requirement laid down in Article 17(3) may, in certain cases, also apply to non-differentiated refunds. It states, in the fourth recital in its preamble, that ‘certain export transactions can lead to abuses; … in order to prevent such abuses, payment of the refund should be subject to the condition that the product has not only left the customs territory of the Community but has also been imported into a non-member country and, where applicable, actually marketed there’.
30. Article 5(1) of that regulation thus provides for two cases in which the payment of a non-differentiated refund, like the differentiated refund, is subject to clearance through customs for release of the product concerned for consumption in the non‑member country of destination: - where serious doubts exist as to the true destination of the product, and - where, by reason of the difference between the amount of the refund on the exported product and the amount of the import duties applicable to an identical product on the date of acceptance of the export declaration, it is possible that the product may be reintroduced into the Community.
31. In a preliminary ruling on the interpretation of Article 5(1) of Regulation No 3665/87, the Court held that abuse in the sense of the reintroduction into the Community of a product previously exported cannot exist where the product has undergone substantial and irreversible processing, within the meaning of Article 24 of the Customs Code, as a result of which it has ceased to exist as such and a new product, coming under a different tariff heading, has been created. In such a situation, the payment of an export refund cannot be made conditional on fulfilment of the requirement imposed by the competent authorities of the Member States that additional evidence must be produced such as to show that the product that has undergone such processing has actually been placed on the market in the unaltered state in the non-member country of importation (see, to that effect, Roquette Frères , paragraphs 18 to 21).
32. In arriving at that interpretation, the Court took account of Article 20 of Regulation No 800/1999, even though the latter had entered into force after the events of the main proceedings. Article 20(4) provides inter alia that the refund is regarded as unwarranted in particular if the product is reimported into the Community without having undergone substantial working or processing within the meaning of Article 24 of the Customs Code. The Court considered that that provision made it possible to refute the suspicion that the product in question had been reimported into the Community by showing that the product in respect of which a non-differentiated refund was paid had, after leaving the Community customs territory, undergone such working or processing ( Roquette Frères , paragraph 20).
33. It follows from the foregoing considerations that: - goods on which import duties have been paid in the non-member country of destination, as evidenced by a document from the competent customs authorities, are deemed to have been imported into that country, - the substantial working or processing of the goods within the meaning of Article 24 of the Customs Code in the non-member country makes it possible to ascertain that those goods have been put to use in the non-member country and that they have thus actually come onto the market of the territory of destination, being released for consumption there, - such working or processing, involving as it does the creation of a new product, eliminates the risk - with which Article 5(1) of Regulation No 3665/87 is concerned and which Article 17(3) of the same regulation seeks to obviate - of abusive reimportation of the initial goods into the Community, in breach of the aim pursued by the refund system, whether or not the refunds are differentiated.
34. The Commission and the Hauptzollamt, however, contend that, in the main proceedings, the beef imported into Poland was processed and then reimported into the Community, with reimbursement of the import duties by the competent Polish authorities. That reimbursement shows that the imported goods were not definitively cleared through customs and that they were not actually released for consumption in Poland. The parties to the abovementioned contract of 3 October 1995, although purporting to release the product for consumption in Poland, in reality concealed the fact that the goods were the subject of outward processing arrangements, in order to evade the application of Article 146(1) of the Customs Code, pursuant to which goods qualifying for an export refund cannot be placed under an outward processing procedure.
35. That argument cannot be accepted in so far as it seeks to show that, if import duties are reimbursed, the right to an export refund ceases to have any legal basis.
36. As Eichsfelder rightly contends, no provision of Regulation No 3665/87 supports that view. Provided that the customs formalities for release for consumption in the non-member country have been completed, including in particular the payment of import duties, it cannot be argued that the goods have not come onto the market in the non-member country under the price conditions prevailing on that market, of which account was taken when the amount of the refund was determined. If a subsequent reimbursement of those duties to an economic operator other than the exporter retroactively removed the legal basis of the export refund, the exporter would be placed in a position of uncertainty, arguably in breach of the principle of legal certainty, and his right to a refund would depend on events or commercial conduct outside his control.
37. Such a situation must, however, be distinguished from cases in which the exporter himself has participated in an abusive practice.
38. In that connection, Article 4(3) of Regulation No 2988/95 states that ‘[a]cts which are established to have as their purpose the obtaining of an advantage contrary to the objectives of the Community law applicable in the case by artificially creating the conditions required for obtaining that advantage shall result, as the case shall be, either in failure to obtain the advantage or in its withdrawal’.
39. Furthermore, the Court has already held that evidence of an abusive practice requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the Community rules, the purpose of those rules has not been achieved, and, second, a subjective element consisting in the intention to obtain an advantage from the Community rules by creating artificially the conditions laid down for obtaining it (see Case C-110/99 Emsland-Stärke [2000] ECR I-11569, paragraphs 52 and 53).
40. It is for the national court to verify in accordance with the rules of evidence of national law, provided that the effectiveness of Community law is not undermined, whether action constituting such an abusive practice has taken place in the case before it.
41. The answer to be given to the question referred to the Court must therefore be that the condition for obtaining a differentiated export refund laid down in Article 17(3) of Regulation No 3665/87, namely clearance through customs for release of the product concerned for consumption in the non-member country of destination, is fulfilled where that product, on which import duties were paid in that country, undergoes substantial processing or working there within the meaning of Article 24 of the Customs Code, even if the product deriving from such processing or working is then re-exported to the Community, with reimbursement of the duties levied in that country and payment of customs import duties in the Community.
42. In those circumstances, reimbursement of the export refund may nevertheless be required if the national court considers that evidence of an abusive practice on the part of the exporter has been produced, in accordance with the rules of national law. Costs
43. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.