1 By order of 7 May 1998, received at the Court on 5 January 1999, the Hessisches Finanzgericht (Finance Court, Hessen), Kassel, referred for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) three questions on the interpretation of Article 7(5) of Commission Regulation (EEC) No 2169/86 of 10 July 1986 laying down detailed rules for the control and payment of the production refunds in the cereals and rice sectors (OJ 1986 L 189, p. 12), as amended by Commission Regulation (EEC) No 165/89 of 24 January 1989 (OJ 1989 L 20, p. 14, hereinafter Regulation No 2169/86, as amended).
2 Those questions were raised in proceedings between Döhler GmbH (hereinafter Döhler) and the Hauptzollamt Darmstadt (Principal Customs Office, Darmstadt, hereinafter the Hauptzollamt) concerning the payment, by way of a penalty, of an amount calculated on the basis of the production refunds made to producers of esterified or etherified starch. The Community legislation
3 Undertakings using starch in the manufacture of certain goods may be eligible in that capacity for production refunds. Regulation No 2169/86
4 Regulation No 2169/86 confers on the manufacturer, who is defined in Article 1 as the user of the starch for the production of the approved products, the right to claim a production refund.
5 Article 4 provides that a manufacturer wishing to claim a production refund must obtain a refund certificate.
6 Article 7 provides: 1. The issue of a certificate shall be subject to the lodging of a security by the manufacturer with the competent authority, equal to 25 ECU per tonne of basic starch, where appropriate multiplied by the coefficient relating to the type of starch to be used as shown in the Annex. 2. The primary requirement within the meaning of Article 20 of Regulation (EEC) No 2220/85 shall be the processing of the quantity of starch stated on the application into the approved products so stated within the period of validity of the certificate. However, where a manufacturer has processed a minimum of 95% of the quantity of starch stated on the application he shall be considered to have fulfilled the aforesaid primary requirement. 3. The security shall also be released in cases of force majeure. Regulation (EEC) No 3642/87
7 Commission Regulation (EEC) No 3642/87 of 2 December 1987 amending Regulation (EEC) No 2169/86 (OJ 1987 L 342, p. 10) added a second subparagraph to Article 7(1) of Regulation No 2169/86, worded as follows: However, where the product indicated on the certificate falls within Common Customs Tariff subheading No 39.06 B I (CN 3505 10 50), the security shall equal 105% of the production refund to be granted for the manufacture of the product in question.
8 Regulation No 3642/87 also added a new paragraph 4 to Article 7 of Regulation No 2169/86, which provides that the security referred to in paragraph 1, second subparagraph, of that same article is to be released only if the competent authority has received proof that the product under CN code 3505 10 50, namely esterified or etherified starch, has been used to manufacture products other than those listed in Annex I to Regulation No 2169/86.
9 According to the first recital in the preamble to Regulation No 3642/87, those additions were justified by the fact that experience had shown that the particular nature of esterified or etherified starch (having the potential for processing into an eligible raw material) can lead to certain speculative processing in order to benefit more than once from the refund for the source quantity. Regulation No 165/89
10 Regulation No 165/89 again amended Article 7 of Regulation No 2169/86. First, paragraph 4 was replaced by the following: Without prejudice to paragraph 2, the security referred to in paragraph 1, second subparagraph, shall only be released if the competent authority has received proof that the product under CN code 3505 10 50 is: (a) used to manufacture products other than those listed in Annex I; or (b) exported to third countries. In the case specified under (a), this proof may be furnished by the presentation by the manufacturer to the competent authority of a declaration stating that: in the case where the product in question is to be further processed, he will use this product only to manufacture products other than those listed in Annex I, and, he will sell the product in question only to a party who will engage in the same requirements, and will obtain a copy of the said engagement and will keep it at the disposal of the competent authority, and, he is aware of the provisions of Article 7(5). In the case of Community exports directly to third countries, the security shall be released if the competent authority has received proof that the product in question has left the customs territory of the Community. In the case of intra-Community trade or export to third countries via the territory of another Member State, the proof shall be furnished by the production of a control copy T5 ... Where the control copy T5 is not returned to the originating customs office or competent authority within a period of 150 days following its initial delivery owing to circumstances beyond the control of the party concerned, the latter may apply to the competent authority for other documents to be accepted as equivalent ....
11 Second, a new paragraph 5 was added: The competent authority shall be obliged to check by appropriate means, including a posteriori spot checks, that the declaration mentioned in paragraph 4 has been fully complied with. Where the party concerned fails to comply with the conditions specified in this Article, without prejudice to national penalties, the competent authority in the Member State concerned shall require payment by the party concerned of an amount equal to 105% of the highest production refund applicable to the product in question during the previous 12-month period. The main proceedings
12 Döhler manufactures and markets various products for the food industry.
13 According to an inspection report drawn up by the competent German authority in December 1992, the plaintiff purchased, between 1 January 1988 and 31 December 1990, 916 925 kg of esterified or etherified starch under CN code 3505 10 50 from the Belgian manufacturer Amylum NV (hereinafter Amylum) and from Cerestar Deutschland GmbH (hereinafter Cerestar), the German distributor of the Netherlands manufacturer Cerestar Benelux BV.
14 Döhler declared to Amylum, in respect of the calendar year 1989 that the starches it had purchased were intended for its own use and for the manufacture of end products other than those listed in Annex I to Regulation No 2169/86, as amended, and that those starches would not be resold to third parties. Döhler declared to Cerestar, on a delivery note, that the products purchased had been used to manufacture products other than those listed in Annex I to Regulation No 2169/86, as amended.
15 According to Döhler, Amylum and Cerestar received production refunds pursuant to Regulation No 2169/86, as amended.
16 Of the 916 925 kg of esterified or etherified starch purchased by it, Döhler sold 726 860 kg unaltered within the Community, in particular to Döhler Food Service GmbH, its wholly-owned subsidiary, which in turn supplied those products to bakeries and patisseries.
17 Döhler did not require its purchasers to present a declaration within the meaning of the second subparagraph of Article 7(4) of Regulation No 2169/86, as amended.
18 By decision of 7 June 1994, based, in particular, on Article 7(5) of Regulation No 2169/86, as amended, the Hauptzollamt required payment by Döhler of an amount of DEM 181 330.71. The point in time taken as the basis for calculating the 12-month period referred to in Article 7(5) was the date of the determination of improper use, and the period fixed was therefore from May 1991 to April 1992.
19 Following the dismissal of the objection which it had lodged against that decision, Döhler brought proceedings before the Hessisches Finanzgericht. The latter, considering that a point of interpretation of Community law had arisen, decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling: 1. Is the second sentence of Article 7(5) of Commission Regulation (EEC) No 2169/86 of 10 July 1986 laying down detailed rules for the control and payment of the production refunds in the cereals and rice sectors, in the version as amended by Regulation (EEC) No 165/89 of 24 January 1989, to be interpreted as meaning that the expression "the party concerned" also includes the purchaser of a product CN 3505 10 50, who has for his part undertaken to the manufacturer and/or supplier of that product to use it exclusively for the manufacture of products other than those listed in Annex I? 2. If the answer to Question 1 is in the affirmative: (a) Does the required payment by the purchaser of 105% of the highest production refund applicable to the product in question during the previous 12-month period apply irrespective of whether the security provided by the manufacturer possibly on account of a knowingly false undertaking by the party referred to in Question 1 has been released? (b) Is it still possible to require payment by the purchaser of 105% of the highest production refund applicable to the product in question during the previous 12-month period if it can no longer be determined whether the purchaser gave an undertaking, but it is clear that processing into a product other than one listed in Annex I has not taken place or been proved on the part of either the purchaser or a subsequent purchaser? 3. If the answers to Question 2 are in the affirmative: As from what point in time is the "previous 12-month period" in the second sentence of Article 7(5) of Regulation (EEC) No 2169/86 to be calculated? The first question
20 By this question, the national court is essentially asking whether the term party concerned used in Article 7(5) of Regulation No 2169/86, as amended, must be interpreted as also including a purchaser of esterified or etherified starch who has undertaken to his supplier to use the product purchased exclusively for the manufacture of products other than those listed in Annex I of that regulation. The consequence of such an interpretation would be that, where the purchaser did not abide by that undertaking, the penalty provided for in Article 7(5) of that regulation could be imposed on him, namely, payment of an amount equal to 105% of the highest production refund applicable to the product in question during the previous 12-month period.
21 That question arises from the fact that, whereas Regulation No 2169/86, as amended, consistently uses the term manufacturer in its other provisions, the term party concerned appears in Article 7(4) and (5), the wording of which stems from Regulation No 165/89.
22 Döhler maintains that the term party concerned can refer only to the manufacturer. According to Döhler, it is clear from the wording of Article 7(5) of Regulation No 2169/86, as amended, that penalties can be imposed only if a posteriori spot checks show that the declaration mentioned in paragraph 4 has not been fully complied with. The term declaration, which is used in the singular, clearly refers, according to the plaintiff, to the declaration to be made by the manufacturer to the competent authority, and excludes the undertaking to be given by the purchaser to the manufacturer.
23 Döhler adds that the objective of Regulation No 2169/86, as amended, which is to prevent any possibility of esterified or etherified starch benefiting unduly from more than one production refund, remains safeguarded. Since, according to Döhler, proper use constitutes a primary requirement to be fulfilled by the manufacturer, the latter should bear the responsibility for any improper use of his products by the purchaser as if it were he who had made such improper use of them (Case C-347/93 Belgian State v Boterlux [1994] ECR I-3933).
24 The Commission supports a contrary analysis. While also basing its view on the wording of the relevant provisions, it argues that the difference in terminology between Article 7(4) and (5) of Regulation No 2169/86, as amended, in which the term party concerned is used, and the previous articles of the same regulation, in which the term manufacturer is used, indicates the intention of the Community legislature not to restrict the penalty provided for in Article 7(5) to the manufacturer alone. According to the Commission, the use of the term party concerned is clearly designed to enable a penalty to be imposed on the contracting party at whose premises checks have made it possible to establish non-compliance with the undertaking provided in accordance with the second subparagraph of Article 7(4). That party may be either the manufacturer or the purchaser.
25 The Commission adds that considerations arising from the scheme of Regulation No 2169/86, as amended, support that interpretation. According to the Commission, the wording of the second subparagraph of Article 7(4) of that regulation requires the manufacturer to transfer to the purchaser his own undertaking relating to proper use of the product. There is not, it submits, the slightest evidence that the manufacturer bears primary or secondary responsibility for non-compliance by the purchaser with his undertaking. The fact of precluding the imposition of a penalty on the purchaser would thus mean that no action would be taken concerning the breach of the proper-use undertaking entered into.
26 With regard, first, to the argument based on a literal interpretation of the provisions in question, it should be noted that, under the last subparagraph of Article 7(4) of Regulation No 2169/86, as amended, where the control copy T5, production of which proves that the product in question has left the customs territory of the Community, is not returned to the competent authorities within the period laid down owing to circumstances beyond the control of the party concerned, the latter may apply to the competent authority for other documents to be accepted as equivalent. As was noted by the Advocate General in point 14 of his Opinion, the party concerned within the meaning of Article 7(4) of Regulation No 2169/86, as amended, cannot be anyone other than the manufacturer, who seeks the release of the security which he himself has provided. It follows that if, within the meaning of Article 7(4) of that regulation, the term party concerned must be understood as referring exclusively to the manufacturer, there can be no question of the same legal term having a wider scope when it is used in the following paragraph.
27 Second, that interpretation is in accordance with the underlying logic and purpose of the system established, in that it safeguards the Community interest. That interest requires that the penalty provided for in Article 7(5) of Regulation No 2169/86, as amended, be applied whenever the security referred to in that article is released wrongfully. An interpretation of that provision to the effect that the manufacturer, and he alone, is required to pay the amount laid down in Article 7(5) whenever he himself or one of the purchasers who have acquired esterified or etherified starch from him have not made proper use of those products helps to ensure the effective application of the penalty provided for. Under the procedure established by Regulation No 2169/86, as amended, the manufacturer is the only person who has had direct dealings with the competent administrative authorities and whose solvency is certified by the fact that he has lodged a security equal in amount to the penalty provided for. The manufacturer's interest, on the other hand, is safeguarded by the possibility afforded to him if, in accordance with the requirements of Regulation No 2169/86, as amended, he has asked his purchasers to give an undertaking that they will make proper use of the products purchased, to bring proceedings against them, on the basis of the rules on contractual liability, for compensation for the damage which their conduct has caused him.
28 In the light of the foregoing considerations, the answer to the first question must be that the term the party concerned used in Article 7(5) of Regulation No 2169/86, as amended, is to be construed as meaning that it does not refer to a purchaser of esterified or etherified starch who has undertaken to his supplier to use that product exclusively for the manufacture of products other than those listed in Annex I to that regulation. Such a purchaser cannot therefore have imposed on him the penalty provided for in Article 7(5) of that regulation, namely, payment of an amount equal to 105% of the highest production refund applicable to the product in question during the previous 12-month period. The second and third questions
29 In view of the answer given to the first question, there is no need to answer the second and third questions.