1 By order of 6 April 1993, which was received at the Court on 17 May 1993, the Finanzgericht Muenchen (Finance Court Munich) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions concerning the interpretation of Article 12(h) of Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984 L 90, p. 13), and on the interpretation and validity, in particular in the light of the general principles of Community law, of Article 4(1) of Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1984 L 132, p. 11).
2 Those questions were raised in the course of proceedings between the Dominikanerinnen-Kloster (Dominican Convent) Altenhohenau and the Hauptzollamt (Principal Customs Office) Rosenheim concerning the allocation of a reference quantity for the direct sale of milk produced on the agricultural holding belonging to the convent which was previously used for consumption by the pupils of the elementary and boarding school also run by the convent.
3 After the additional milk levy system had been introduced by Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10), the general rules for the application of which are contained in Regulation No 857/84, the convent was allocated a reference quantity for delivery of 68 262 litres of milk corresponding, in accordance with Article 6(1) of Regulation No 857/84, to the direct sales which it had made in the calendar year 1981, increased by 1%.
4 In addition to those quantities, until the closure of the school and boarding facilities at the end of the school year 1991/92, the convent' s agricultural holding delivered annually between 22 000 and 26 000 litres of milk to some 120 to 135 pupils and boarders, and to a lesser extent to the convent' s employees. The price of the milk was included in the boarding fees.
5 In order to remain in existence the convent had to rely on its agricultural holding, which had become its principal source of income; hence, following the closure of the school and boarding facilities the convent enlarged the agricultural holding by acquiring more land in 1989 and extending the farm, which was completed in 1991. On 2 December 1991, in the context of that restructuring operation, the convent applied to the Hauptzollamt Rosenheim for a reference quantity for direct sales on the basis of the quantity of milk delivered to the boarding establishment in 1981. By decision of 16 January 1992 the Hauptzollamt rejected its application on the ground that it had not been lodged by the convent within the time-limit laid down in Article 4(1) of Regulation No 1371/84.
6 The convent then brought proceedings against the Hauptzollamt before the Finanzgericht Muenchen, claiming, essentially, that allocation of a reference quantity for direct sales was crucial to its livelihood.
7 The Finanzgericht Muenchen considered that the case turned on the interpretation and validity of the Community rules in question; it therefore stayed the proceedings and referred the following questions to the Court for a preliminary ruling: "1. Is Article 12(h) (direct sale) of Regulation (EEC) No 857/84 to be interpreted as also covering milk deliveries from an agricultural holding to a boarding establishment belonging to the same institution, if the milk is passed on to the boarders against payment? If so: 2. Is Article 4(1) of Commission Regulation (EEC) No 1371/84 of 16 May 1984 valid, in so far as it restricts to 1984 the time-limit for registration of reference quantities for direct sale and takes no account of changes in marketing requirements, related to operating conditions, occurring after expiry of the time-limit? 3. Can a milk producer nevertheless be allocated a reference quantity for direct sale in the event of non-compliance with the time-limit referred to in Article 4(1), by way of restoration to the status quo ante or on the basis of other general principles of Community law, having regard to the consideration that in accordance with their practice the administrative authorities would have rejected an application submitted in due time?"
8 The Finanzgericht explains, first, that even if the sale of milk to pupils was not considered to be direct sale, the requirements of Article 12(h) of Regulation No 857/84 are, nevertheless, fulfilled, inasmuch as it should make no difference, for the purposes of Article 12, whether the milk is sold directly or indirectly, that is say through incorporation in the boarding fees. It thus rejects the argument advanced by the defendant that this was a case of "own consumption" with the result that the convent could not be regarded as an agricultural producer in respect of those quantities within the meaning of the regulation.
9 The Finanzgericht then finds that since the time-limit laid down in Article 4(1) of Regulation No 1371/84 had expired, the convent' s application had to be rejected. However, because that provision does not allow for any exceptions after expiry of the time-limit and does not permit account to be taken of the convent' s changed circumstances, the Finanzgericht has doubts regarding its validity.
10 Lastly, even if Article 4(1) of Regulation No 1371/84 were accepted as valid, the Finanzgericht voices doubts as to whether the rejection of the convent' s application was well founded. Had the application in fact been made within the time-limit, it would still have been rejected by the defendant in the main proceedings on the ground that it was a case of own consumption and not direct sale. In the circumstances the national court proposes that recourse should be had to the principle of restoration to the status quo ante, a principle which it maintains is also applicable in Community law, in order to allow the convent' s claims. First question
11 The first question therefore seeks to ascertain whether Article 12(h) of Regulation No 857/84 should be interpreted as meaning that milk deliveries made by an agricultural holding to the pupils and boarders of a school against payment of the price of the milk indirectly by inclusion in the boarding fees must be described as direct sale within the meaning of that provision or as own consumption, where the agricultural holding, the school and the boarding facilities are run by the same institution.
12 Consideration must be given not only to the wording of Article 12(h) but also to that of Article 12(c) of Regulation No 857/84. Article 12(c) and (h) of Regulation No 857/84 provide as follows: "For the purposes of this regulation the following meanings shall apply: ... (c) producer: a natural or legal person or group of natural or legal persons farming a holding located within the geographical territory of the Community: ° selling milk or other milk products directly to the consumer, and/or ° supplying the purchaser;" "(h) milk or milk equivalent sold directly to consumption: milk or milk products processed into milk equivalent, sold without going through an undertaking treating or processing milk."
13 It is clear from the wording of Article 12(h) of Regulation No 857/84, read in conjunction with Article 12(c), that there is direct sale to consumption whenever milk is sold by the producer to a third party without going through an undertaking treating or processing milk. Hence direct sale to consumption, within the meaning of Article 12(h) of Regulation No 857/84, requires only a transfer of milk, for consideration, from the producer to a third party, the mode of payment being immaterial.
14 Thus the argument put forward by the defendant in the main proceedings that this is a case of own consumption, so that the convent is not a producer within the meaning of Article 12(c) of Regulation No 857/84, has no basis in the additional milk levy system. If "own consumption" indicates that the milk is sold on the spot, it should be noted that that reqirement does not feature in Article 12(h) of Regulation No 857/84. Similarly, on the assumption that "own consumption" implies consumption of own production, it need merely be pointed out that the milk consumed by the pupils was produced not by them but by the agricultural holding belonging to the convent.
15 That interpretation of the definition of direct sale in Article 12(h) of Regulation No 857/84 is in harmony with the purpose of the additional milk levy scheme. The Court has consistently held that the scheme seeks to re-establish, by limiting milk production, the balance between supply and demand in the milk market, which is characterized by structural surpluses (see in particular Case 84/87 Erpelding [1988] ECR 2647, at paragraph 26). That purpose can only be achieved if all production entering the commercial circuit in one way or another and thus influencing supply and demand is taken into account.
16 The reply to the first question must therefore be that Article 12(h) of Council Regulation No 857/84 must be interpreted as meaning that milk deliveries made by an agricultural holding to the pupils and boarders of a school against payment of the price of the milk indirectly by inclusion in the boarding fees must be described as direct sale within the meaning of that provision where the agricultural holding, the school and the boarding facilities are run by the same institution. Second question
17 By its second question the Finanzgericht asks whether Article 4(1) of Commission Regulation No 1371/84 discloses any factor of such a kind as to affect its validity, in so far as it does not allow for account to be taken of changes in the financial needs of the producer which are linked to the holding after expiry of the time-limit for registration for the purpose of obtaining a reference quantity for direct sales.
18 The national court proceeds on the assumption that the Community scheme in question does not allow producers to claim reference quantities for direct milk sales during the reference year after the time-limit laid down in Article 4(1) of Regulation No 1371/84.
19 The rules indicate that a milk producer may only be granted such an individual reference quantity pursuant to Article 6(1) of Regulation No 857/84 if he has put in an application for registration accompanied by a statement listing the products and quantities of those products sold by direct sale within the time allowed, as required by the first subparagraph of Article 4(1) of Regulation No 1371/84. Thus even though the Member States have a certain discretion in fixing the time-limit for applications, any application lodged after the date laid down in the second subparagraph of Article 4(1) of Regulation No 1371/84, that is to say, 1 September 1984, which as regards the application made by the convent on 2 December 1991 was postponed to 31 December 1984 by the second subparagraph of Article 5(1) of Commission Regulation No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation No 804/68 (OJ 1988 L 139, p. 12), repealing Regulation No 1371/84, must perforce be rejected. Consequently, the allocation of a reference quantity for direct sales is excluded even if the producer can subsequently demonstrate a financial need for the grant of a reference quantity which he could have claimed before expiry of the time-limit in question.
20 The fact that it is impossible to be allocated a reference quantity after the time-limit laid down in Article 4(1) of Regulation No 1371/84 is, moreover, in harmony with the purpose of the scheme. The requirement that the application be lodged within the time-limit is intended to ensure, at the level of the total quantity allocated to each Member State pursuant to Article 6(2) of Regulation No 857/84 and the annex thereto, rational and effective management of the scheme in order to anticipate requirements in respect of the allocation of reference quantities and to assess the need for adjustment pursuant to Article 4(4)(a) of Regulation No 1371/84, in order to keep within the total quantity. At the individual level, that condition enables the competent authority to establish the exact reference quantity which a producer can claim by reason of his direct sales during the reference year.
21 That interpretation of the rules in question is in conformity with the requirements ensuing from the general principles of Community law, in particular the principle of proportionality.
22 As regards the latter principle in particular, it would appear that the system of application for registration is appropriate and was reasonably judged by the Commission to be necessary in order to achieve the legitimate aims described in paragraph 20, namely anticipation of the total reference quantity requirements for direct sales and ensuring by way of the uniform percentage mechanism provided for in Article 4(4)(a) of Regulation No 1371/84 that that quantity is not exceeded.
23 Moreover, it should be pointed out that a retroactive change in the reference quantity after expiry of the time-limits could prejudice the interests of producers who had applied for reference quantities within the time-limit as in order not to exceed the total reference quantity Member States might be constrained to reduce, with retroactive effect, reference quantities already allocated.
24 In view of the foregoing, it must be held that consideration of Article 4(1) of Regulation No 1371/84 has disclosed no factor of such a kind as to affect its validity in so far as it does not allow for account to be taken of changes in the financial needs of the producer which are linked to the holding after expiry of the time-limit for registration for the purpose of obtaining a reference quantity for direct sales. Third question
25 By this question the national court wishes to ascertain whether Article 4(1) of Regulation No 1371/84 should be interpreted as meaning that a producer who has not complied with the time-limit laid down in that provision may be allocated a reference quantity after the expiry of that time-limit in application of the principle of restoration to the status quo ante on the ground that an application submitted within the time-limit would in any case have been rejected by reason of an erroneous administrative practice followed by the competent authority.
26 It should, first, be recalled that in Case C-290/91 Peter v Hauptzollamt Regensburg [1993] ECR I-2981, the Court held (at paragraph 8) that "according to the general principles on which the Community is based and which govern the relations between the Community and the Member States, it is for the Member States, by virtue of Article 5 of the Treaty, to ensure that Community regulations are implemented within their territory. In so far as Community law, including its general principles, does not include common rules to this effect, the national authorities when implementing Community regulations act in accordance with the procedural and substantive rules of their own national law; however, these national rules must be reconciled with the need to apply Community law uniformly so as to avoid unequal treatment of producers and traders. Furthermore, such rules must not have the effect of making it virtually impossible to implement Community regulations (see the judgment in Joined Cases 205/82 to 215/82 Deutsche Milch-Kontor v Germany [1983] ECR 2633, at paragraphs 17 and 19).
27 In application of that case-law, it must be held that Community law recognizes the concept of excusable error, which permits restoration to the status quo ante if the error committed as regards time-limits is excusable (for the most recent cases see the judgment of the Court of First Instance in Case T-514/93 Cobrecaf v Commission [1995] ECR II-0000, at paragraph 40, and that of the Court of Justice in Case C-195/91 P Bayer v Commission [1994] ECR I-5619, at paragraph 26). That concept applies in exceptional circumstances in which, in particular, the conduct of the institution concerned has been, either alone or to a decisive extent, such as to give rise to understandable confusion on the part of the party concerned. However, that rule has only been applied in areas of Community law ° such as the European civil service or competition ° in which implementation of Community rules was a matter for the Community institutions alone.
28 Implementation of the milk quota scheme is a matter for the national authorities, however, and Community law does not lay down, for their implementation, specific provisions dealing with failure to comply with a time-limit due to excusable error. The second subparagraph of Article 4(1) of Regulation No 1371/84 and the second subparagraph of Article 5(1) of Regulation No 1546/88, cited above, authorize the Member States to fix the respective dates but impose a time-limit that must not be exceeded. In consequence it is for the national authorities to decide, according to their own rules, questions concerning failure to comply with the time-limit for an application for registration.
29 The Peter judgment cited above indicates, however, that restoration to the status quo ante is nevertheless subject to two conditions in order to reduce the differences between Member States' laws when applying the Community rules and thus to ensure uniformity in the implementation of the levy scheme. The first of those conditions is that application of the principle must not undermine the purposes of the milk quota scheme introduced by Regulation No 856/84.
30 Accordingly, it is in the light of the objectives set out in paragraph 15 that the national court should examine the circumstances of the case in the main proceedings. In that connection it is worth pointing out that the producer appears to have been discouraged by the administrative practice of the competent authority from submitting an application for registration under Article 4(1) of Regulation No 1371/84 within the time-limit. However, despite the lack of a milk quota, the producer continued, after introduction of the quota scheme and until its belated application for registration which gave rise to the main proceedings, to sell those milk quantities to pupils and to draw a profit therefrom without any interference from the competent authority. The producer thus conducted itself on the assumption that everything was in order.
31 The reply to the third question must therefore be that Article 4(1) of Regulation No 1371/84, cited above, must be interpreted as meaning that a producer who has not complied with the time-limit laid down by that provision may be allocated a reference quantity in application of the principle of restoration to the status quo ante under the rules of national law, provided, however, that there is no discrimination in applying the national rule in comparison with the way in which cases of non-compliance with national time-limits are treated and that it is not applied in a way that would undermine the purposes of the milk quota scheme.