1 BY ORDER DATED 21 OCTOBER 1982 , WHICH WAS RECEIVED AT THE COURT ON 16 NOVEMBER 1982 , THE FINANZGERICHT ( FINANCE COURT ) HAMBURG REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS AS TO THE VALIDITY OF ARTICLE 1 ( A ) OF COMMISSION REGULATIONS ( EEC ) NOS 2271/78 OF 29 SEPTEMBER 1978 ( OFFICIAL JOURNAL , L 275 , P . 28 ), 2555/78 OF 31 OCTOBER 1978 ( OFFICIAL JOURNAL , L 307 , P . 32 ), 2807/78 OF 30 NOVEMBER 1978 ( OFFICIAL JOURNAL , L 334 , P . 32 ), 3115/78 OF 29 DECEMBER 1978 ( OFFICIAL JOURNAL , L 370 , P . 26 ), 181/79 OF 31 JANUARY 1979 ( OFFICIAL JOURNAL , L 26 , P . 36 ), 410/79 OF 28 FEBRUARY 1979 ( OFFICIAL JOURNAL , L 50 , P . 28 ) AND 615/79 OF 30 MARCH 1979 ( OFFICIAL JOURNAL , L 79 , P . 28 ) FIXING THE RATES OF REFUNDS APPLICABLE FROM 1 OCTOBER 1978 TO 30 APRIL 1979 TO SUGAR AND MOLASSES EXPORTED IN THE FORM OF GOODS NOT COVERED BY ANNEX II TO THE EEC TREATY .
2 THOSE QUESTIONS WERE RAISED IN AN ACTION CONCERNING THE AMOUNTS OF EXPORT REFUNDS ON SUGAR EXPORTED IN THE FORM OF MANNITOL CLASSIFIED UNDER SUBHEADING 29.04 C II OF THE COMMON CUSTOMS TARIFF AND SORBITOL CLASSIFIED UNDER TARIFF SUBHEADINGS 29.04 C III AND 38.19 T . FOR ITS EXPORTS OF THOSE PRODUCTS FROM OCTOBER 1978 TO APRIL 1979 THE PLAINTIFF IN THE MAIN ACTION , FIRMA E . MERCK , DARMSTADT , OBTAINED REFUNDS ONLY AT THE REDUCED RATES SET OUT IN TABLE I OF THE ANNEX TO THE REGULATIONS CITED ABOVE . IT SUBMITTED TO THE FINANZGERICHT HAMBURG THAT THOSE RATES WERE APPLICABLE ONLY TO GOODS IN RESPECT OF WHICH PRODUCTION REFUNDS HAD ALREADY BEEN PAID . SINCE NO SUCH REFUNDS HAD BEEN PAID IN RESPECT OF THE GOODS IN QUESTION , IT THEREFORE ASKED THAT THE EXPORT REFUNDS BE GRANTED AT THE FULL RATES SET OUT IN TABLE II OF THAT ANNEX .
3 ACCORDING TO THE FILE AND ADDITIONAL INFORMATION PROVIDED BY MERCK AT THE HEARING , UNTIL 1976 IT PRODUCED MANNITOL AND SORBITOL FROM SUGAR IN CRYSTALLINE FORM , TURNING IT INTO AN INVERT SOLUTION AND THEN SUBJECTING IT TO HYDROGENATION . THOSE OPERATIONS WERE ALL CARRIED OUT ON ITS PREMISES . FOR THAT PRODUCTION MERCK AT THAT TIME OBTAINED PRODUCTION REFUNDS AND REDUCED EXPORT REFUNDS .
4 HOWEVER , AS FROM 1976 MERCK INTRODUCED CHANGES IN ITS METHOD OF MANUFACTURE FOR TECHNICAL AND ECONOMIC REASONS . OWING TO THOSE CHANGES IT STOPPED INVERTING THE SUGAR ITSELF AND PURCHASED INVERT SUGAR FROM ANOTHER PRODUCER IN THE COMMUNITY . APART FROM THOSE CHANGES THE PRODUCTION PROCESS REMAINED BASICALLY THE SAME BUT THE PLAINTIFF WAS NO LONGER ABLE TO OBTAIN PRODUCTION REFUNDS .
5 THE FINANZGERICHT HAMBURG , ASSUMING THAT THE GRANT BY THE GERMAN AUTHORITIES OF THE EXPORT REFUNDS AT THE REDUCED RATES WAS BASED ON A CORRECT INTERPRETATION OF THE REGULATIONS IN QUESTION , DECIDED TO STAY THE PROCEEDINGS AND REFERRED THE FOLLOWING QUESTIONS TO THE COURT : ' ' 1 . IS ARTICLE 1 ( A ) OF COMMISSION REGULATIONS ( EEC ) NOS 2271/78 , 2555/78 , 2807/78 , 3115/78 , 181/79 , 410/79 AND 615/79 VOID IN THE LIGHT OF ARTICLE 4 ( 3 ) OF REGULATION ( EEC ) NO 2682/72 OF THE COUNCIL , AS AMENDED BY COUNCIL REGULATION ( EEC ) NO 707/78 , IN SO FAR AS IT PROVIDES , IN THE CASE OF EXPORTS OF MANNITOL AND SORBITOL CLASSIFIED UNDER HEADINGS 29.04 C II , 29.04 C III AND 38.19 T OF THE COMMON CUSTOMS TARIFF IN RESPECT OF WHICH NO PRODUCTION REFUND HAS BEEN GRANTED , FOR THE APPLICATION OF THE RATES OF EXPORT REFUND SPECIFIED IN TABLE I INSTEAD OF THOSE SPECIFIED IN TABLE II OF THE ANNEXES TO THE AFOREMENTIONED REGULATIONS FIXING RATES OF REFUND? 2.IF THAT QUESTION IS ANSWERED IN THE AFFIRMATIVE , WHAT LEGAL CONSEQUENCES DOES THE INVALIDITY OF THOSE REGULATIONS ENTAIL? ' '
6 BEFORE THE FIRST QUESTION IS ANSWERED THE COMMUNITY RULES ON PRODUCTION AND EXPORT REFUNDS ON SUGAR MUST BE EXAMINED .
7 ARTICLE 1 ( 1 ) OF REGULATION ( EEC ) NO 3330/74 OF THE COUNCIL OF 19 DECEMBER 1974 ON THE COMMON ORGANIZATION OF THE MARKET IN SUGAR ( OFFICIAL JOURNAL , L 359 , P . 1 ), AMENDED INTER ALIA BY COUNCIL REGULATION ( EEC ) NO 705/78 OF 4 APRIL 1978 ( OFFICIAL JOURNAL , L 94 , P . 1 ), LISTS THE VARIOUS PRODUCTS GOVERNED BY THAT REGULATION . ARTICLES 9 AND 19 OF REGULATION NO 3330/74 MAKE PROVISION FOR THE FIXING OF BOTH PRODUCTION AND EXPORT REFUNDS , THE LATTER TYPE OF REFUNDS BEING PROVIDED FOR IN RESPECT OF INTER ALIA CERTAIN PRODUCTS REFERRED TO IN ARTICLE 1 ( 1 ) EXPORTED IN THE FORM OF GOODS LISTED IN ANNEX I TO THE REGULATION . THAT ANNEX INCLUDES INTER ALIA MANNITOL AND SORBITOL .
8 ARTICLE 1 OF COUNCIL REGULATION ( EEC ) NO 1400/78 OF 20 JUNE 1978 LAYING DOWN GENERAL RULES FOR THE PRODUCTION REFUND ON SUGAR USED IN THE CHEMICAL INDUSTRY ( OFFICIAL JOURNAL , L 170 , P . 9 ) PROVIDES FOR THE GRANT OF A PRODUCTION REFUND ON CERTAIN ' ' BASIC PRODUCTS ' ' REFERRED TO IN ARTICLE 1 ( 1 ) OF REGULATION NO 3330/74 , CITED ABOVE , USED IN THE MANUFACTURE OF THE PRODUCTS OF THE CHEMICAL INDUSTRY LISTED IN THE ANNEX TO REGULATION NO 1400/78 . THAT ANNEX INCLUDES MANNITOL AND SORBITOL . IT IS CLEAR HOWEVER FROM THOSE PROVISIONS THAT INVERT SUGAR DOES NOT CONSTITUTE SUCH A BASIC PRODUCT ATTRACTING THE REFUNDS IN QUESTION .
9 AS FAR AS EXPORT REFUNDS ARE CONCERNED , ARTICLE 4 ( 3 ) OF REGULATION ( EEC ) NO 2682/72 OF THE COUNCIL OF 12 DECEMBER 1972 LAYING DOWN GENERAL RULES FOR GRANTING EXPORT REFUNDS ON CERTAIN AGRICULTURAL PRODUCTS EXPORTED IN THE FORM OF GOODS NOT COVERED BY ANNEX II TO THE TREATY AND THE CRITERIA FOR FIXING THE AMOUNT OF SUCH REFUNDS ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1972 ( 9-28 DECEMBER ), P . 42 ), AS AMENDED IN PARTICULAR BY COUNCIL REGULATION ( EEC ) NO 707/78 OF 4 APRIL 1978 ( OFFICIAL JOURNAL , L 94 , P . 7 ), PROVIDES THAT : ' ' IN FIXING THE RATE OF THE REFUND ACCOUNT SHALL BE TAKEN , WHERE APPROPRIATE , OF PRODUCTION REFUNDS , AIDS OR OTHER MEASURES HAVING EQUIVALENT EFFECT APPLICABLE IN ALL MEMBER STATES , IN ACCORDANCE WITH THE REGULATION ON THE COMMON ORGANIZATION OF THE MARKET IN THE PRODUCT IN QUESTION , TO BASIC PRODUCTS . . . ' ' . THAT REGULATION IS APPLICABLE INTER ALIA TO THE BASIC PRODUCTS LISTED IN ANNEX A THERETO EXPORTED IN THE FORM OF THE GOODS LISTED IN ANNEX C . ANNEX A TO THE REGULATION COVERS INTER ALIA CERTAIN SUGAR SYRUPS , INCLUDING INVERT SUGAR . ANNEX C INCLUDES MANNITOL AND SORBITOL .
10 THE RATES OF EXPORT REFUNDS FOR THE PERIOD IN QUESTION , NAMELY 1 OCTOBER 1978 TO 30 APRIL 1979 , WERE FIXED BY THE COMMISSION IN THE CONTESTED REGULATIONS . IN EACH CASE THE FOURTH RECITAL IN THE PREAMBLE TO THOSE REGULATIONS REFERS TO ARTICLE 4 ( 3 ), CITED ABOVE , OF REGULATION NO 2682/72 AND ARTICLE 1 IS WORDED AS FOLLOWS : ' ' THE RATES OF THE REFUNDS APPLICABLE . . . TO THE BASIC PRODUCTS APPEARING IN ANNEX A TO REGULATION ( EEC ) NO 2682/72 AND LISTED IN ARTICLE 1 ( 1 ) OF REGULATION ( EEC ) NO 3330/74 , EXPORTED IN THE FORM OF GOODS LISTED IN ANNEX I TO REGULATION ( EEC ) NO 3330/74 , ARE FIXED AS SHOWN : ( A ) IN TABLE I OF THE ANNEX HERETO FOR THOSE SAME GOODS , IN SO FAR AS THEY ARE SHOWN IN THE ANNEX TO REGULATION ( EEC ) NO 1400/78 ; ( B)IN TABLE II OF THE ANNEX HERETO FOR GOODS OTHER THAN THOSE MENTIONED UNDER ( A ). ' '
11 THE SAME WORDING WAS USED IN THE REGULATIONS FIXING THE RATES FOR THE PERIOD FROM 1 MAY 1979 TO 30 JUNE 1980 . HOWEVER , SINCE THE ADOPTION OF COMMISSION REGULATION NO 1678/80 OF 27 JUNE 1980 FIXING THE RATES OF THE REFUNDS APPLICABLE FROM 1 JULY 1980 TO SUGAR AND MOLASSES EXPORTED IN THE FORM OF GOODS NOT COVERED BY ANNEX II TO THE TREATY ( OFFICIAL JOURNAL , L 166 , P . 34 ) THE RATES ARE FIXED AS SHOWN IN TABLE I OF THE ANNEX FOR THOSE GOODS ONLY ' ' IN SO FAR AS THEY ARE SHOWN IN THE ANNEX TO REGULATION ( EEC ) NO 1400/78 AND HAVE BENEFITED FROM THE GRANTING OF A PRODUCTION REFUND ' ' .
12 IF THE WORDING OF THE CONTESTED REGULATIONS , READ TOGETHER WITH THE ANNEX TO REGULATION NO 1400/78 ONLY , IS REFERRED TO , THEN , AS THE FINANZGERICHT POINTS OUT , THE EXPORT REFUNDS ON MANNITOL AND SORBITOL SHOULD IN ANY EVENT BE GRANTED FOR THE PERIOD IN QUESTION AT THE REDUCED RATES SET OUT IN TABLE I OF THE ANNEX TO THE CONTESTED REGULATIONS . HOWEVER , AS THE COURT HAS EMPHASIZED IN PREVIOUS DECISIONS , IN INTERPRETING A PROVISION OF COMMUNITY LAW IT IS NECESSARY TO CONSIDER NOT ONLY ITS WORDING BUT ALSO THE CONTEXT IN WHICH IT OCCURS AND THE OBJECTS OF THE RULES OF WHICH IT IS PART .
13 THE PURPOSE OF THE REFUNDS ON EXPORTS TO NON-MEMBER COUNTRIES OF GOODS WHICH ARE NOT COVERED BY ANNEX II TO THE TREATY BUT WHICH ARE MADE FROM AGRICULTURAL PRODUCTS ORIGINATING IN THE COMMUNITY IS TO OFFSET THE PRODUCTION COSTS OF THE COMMUNITY PROCESSING INDUSTRY IN SO FAR AS THESE ARE CAUSED BY THE FACT THAT AGRICULTURAL PRICES ARE HIGHER IN THE COMMUNITY THAN ON THE WORLD MARKET . THE GRANT OF THE REFUNDS IS THEREFORE MEANT TO ENSURE THAT THE COMMUNITY INDUSTRY AND THE INDUSTRIES OF NON-MEMBER COUNTRIES WHICH OBTAIN SUPPLIES OF AGRICULTURAL PRODUCTS ON THE WORLD MARKET COMPETE UNDER EQUAL CONDIDITONS .
14 IN CREATING SUCH EQUAL CONDITIONS OF COMPETITION IT IS NECESSARY HOWEVER TO AVOID OVER-COMPENSATION DUE TO THE FACT THAT EXPORT REFUNDS MAY BE GRANTED IN ADDITION TO OTHER AID RECEIVED BY THE COMMUNITY INDUSTRY CONCERNED , IN PARTICULAR IN THE FORM OF PRODUCTION REFUNDS . FOR THIS REASON ARTICLE 4 ( 3 ), CITED ABOVE OF REGULATION NO 2682/72 PROVIDES THAT IN FIXING THE RATE OF THE EXPORT REFUND ACCOUNT IS TO BE TAKEN , WHERE APPROPRIATE , OF PRODUCTION REFUNDS AS REGARDS THE BASIC PRODUCTS USED .
15 IT WAS PRECISELY IN ORDER TO ACHIEVE THAT BALANCE INTENDED BY THE COUNCIL REGULATIONS THAT THE COMMISSION INCLUDED TWO TABLES OF RATES IN THE CONTESTED REGULATIONS , ONE FOR GOODS IN RESPECT OF WHICH PRODUCTION REFUNDS HAVE BEEN PAID AND THE OTHER FOR GOODS IN RESPECT OF WHICH SUCH REFUNDS CANNOT BE PAID . IN THEIR PREAMBLES ALL THOSE REGULATIONS EXPRESSLY REFER TO ARTICLE 4 ( 3 ) OF REGULATION NO 2682/72 AND ARTICLE 1 OF EACH REGULATION PROVIDES THAT , IN THE CASE OF PRODUCTS WHICH ARE LISTED IN THE ANNEX TO REGULATION NO 1400/78 IN RESPECT OF WHICH THEREFORE A PRODUCTION REFUND MAY WHERE APPROPRIATE BE GRANTED , A REDUCED EXPORT REFUND IS TO BE GRANTED . IN THE CASE OF ALL THE OTHER PRODUCTS , HOWEVER , PROVISION IS MADE FOR THE GRANT OF AN UNREDUCED EXPORT REFUND .
16 IN THE OBSERVATIONS WHICH IT SUBMITTED TO THE COURT THE COMMISSION EXPLAINED THAT ITS INFORMATION AT THE TIME AT WHICH THE CONTESTED RULES WERE ADOPTED WAS THAT ONLY BASIC PRODUCTS ATTRACTING A PRODUCTION REFUND WERE USED TO MAKE MANNITOL AND SORBITOL . IN MAKING ARTICLE 1 OF THE CONTESTED REGULATIONS REFER TO THE ANNEX TO REGULATION NO 1400/78 IT THUS HAD NO INTENTION TO REDUCE EXPORT REFUNDS ON COMMODITIES NOT ATTRACTING PRODUCTION REFUNDS . ITS INTENTION WAS MERELY TO SIMPLIFY ADMINISTRATION AND AVOID UNNECESSARY AND COSTLY INVESTIGATIONS INTO WHETHER PRODUCERS HAD IN EACH CASE ACTUALLY EXERCISED THEIR RIGHT TO SUCH A REFUND . WHEN IN JUNE 1979 MERCK INFORMED THE COMMISSION THAT IT WAS MAKING MANNITOL AND SORBITOL FROM A COMMODITY NOT ATTRACTING A PRODUCTION REFUND THE COMMISSION ADAPTED ITS RULES TO THE NEW SITUATION AS QUICKLY AS POSSIBLE BY ADOPTING REGULATION NO 1678/80 , CITED ABOVE .
17 IN VIEW OF THOSE CIRCUMSTANCES AND IN ORDER TO GIVE PRACTICAL EFFECT TO THE PROVISIONS IN QUESTION IN KEEPING WITH THE PURPOSES OF THE COMMUNITY RULES OF WHICH THEY FORM PART THEY MUST BE CONSTRUED AS PROVIDING FOR THE GRANT OF EXPORT REFUNDS AT THE FULL RATE ON COMMODITIES FULFILLING THE CONDITIONS EXPRESSLY LAID DOWN BY THOSE PROVISIONS BUT WHOSE MANUFACTURE DID NOT ATTRACT A PRODUCTION REFUND UNDER REGULATION NO 1400/78 , CITED ABOVE .
18 IN VIEW OF THAT INTERPRETATION OF THE PROVISIONS AT ISSUE THE QUESTIONS CONCERNING THEIR VALIDITY HAVE NO PURPOSE .
19 IN REPLY TO THE QUESTIONS OF THE FINANZGERICHT HAMBURG IT MUST THEREFORE BE STATED THAT ARTICLE 1 OF COMMISSION REGULATIONS NOS 2271/78 , 2555/78 , 2807/78 , 3115/78 , 181/79 , 410/79 AND 615/79 MUST BE INTERPRETED AS MAKING PROVISION , IN THE CASE OF EXPORTS OF MANNITOL AND SORBITOL CLASSIFIED UNDER HEADINGS 29.04 C II , 29.04 C III AND 38.19 T OF THE COMMON CUSTOMS TARIFF WHICH FULFIL THE CONDITIONS EXPRESSLY LAID DOWN BY THOSE PROVISIONS BUT IN RESPECT OF WHICH IT HAS NOT BEEN POSSIBLE FOR ANY PRODUCTION REFUND TO BE GRANTED , FOR THE APPLICATION OF THE RATES OF EXPORT REFUND SPECIFIED IN TABLE II OF THE ANNEX TO THE AFOREMENTIONED REGULATIONS AND THAT CONSIDERATION OF THE QUESTIONS RAISED HAS DISCLOSED NO FACTOR OF SUCH A KIND AS TO AFFECT THE VALIDITY OF THOSE REGULATIONS AS SO CONSTRUED .