1. The reference for a preliminary ruling concerns the interpretation of the first and second subparagraphs of Article 11(1) 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 by Commission Regulation (EC) No 2945/94 of 2 December 1994 (OJ 1994 L 310, p. 57), (hereinafter ‘Regulation No 3665/87’).
2. The reference was made in the course of proceedings between Käserei Champignon Hofmeister GmbH & Co. KG (hereinafter ‘Käserei’) and the Hauptzollamt Hamburg-Jonas (Principal Customs Office, Hamburg-Jonas, hereinafter ‘the Hauptzollamt’) concerning the imposition on Käserei of the sanction prescribed by point (a) of the first subparagraph of Article 11(1) of Regulation No 3665/87. Relevant provisions
3. The first and third recitals in the preamble to Regulation No 2945/94, which amended Article 11 of Regulation No 3665/87, state as follows: ‘Whereas the Community rules provide for the granting of export refunds on the basis of solely objective criteria, in particular concerning the quantity, nature and characteristics of the product exported as well as its geographical destination; whereas in the light of experience, measures to combat irregularities and notably fraud prejudicial to the Community budget should be intensified; whereas, to that end, provision should be made for the recovery of amounts unduly paid and sanctions to encourage exporters to comply with Community rules; … Whereas, where an exporter has supplied wrong information that wrong information could lead to an undue payment of the refund if the error is not discovered, whilst where the error is discovered it is entirely proportional to sanction the exporter for an amount in proportion to the amount which he would have received unduly if the error would not have been discovered ...’.
4. Article 3 of Regulation No 3665/87 provides: ‘1. The day of export means the date on which the customs authority accepts the export declaration in which it is stated that a refund will be applied for. 2. The date of acceptance of the export declaration shall determine: (a) the rate of the refund where the refund is not fixed in advance; (b) any adjustments to be made to the rate of the refund where it is so fixed. 3. Any other act having the same effect in law as the acceptance of the export declaration shall be deemed to be equivalent to such acceptance. 4. The day of export shall be used to establish the quantity, nature and characteristics of the product exported.
5. The document used for export to enable products to qualify for a refund must include all information necessary for the calculation of the amount of the refund, and in particular: (a) a description of the products in accordance with the nomenclature used for refunds; (b) the net mass of the products or, where applicable, the unit of measurement to be taken into account in calculating the refund; and, (c) in so far as is necessary for calculating the refund, particulars of the composition of the products or the relevant reference. If the document mentioned in this paragraph is the export declaration, this document must also include these references and the reference “refund code”.
6. At the time of such acceptance, or of such equivalent act, the products shall be placed under customs control until they leave the customs territory of the Community.’ 5. Article 11(1) of Regulation No 3665/87 reads as follows: ‘Where it has been found that an exporter, with a view to the granting of an export refund, has requested a refund in excess of that applicable, the refund due for the relevant exportation shall be the refund applicable to the actual exportation reduced by an amount equivalent to: (a) half the difference between the refund requested and the refund applicable to the actual exportation; (b) twice the difference between the refund requested and the refund applicable, if the exporter has intentionally supplied false information. The refund requested is deemed to be the amount calculated from the information supplied pursuant to Article 3 or Article 25(2). Where the rate of refund varies according to destination, the differentiated part of the refund requested shall be calculated from the information supplied pursuant to Article 47. The sanction referred to under (a) shall not apply: - in the case of force majeure, - in exceptional cases characterised by circumstances beyond the control of the exporter, which occur after the acceptance by the competent authorities of the export declaration or the payment declaration, and provided that he, immediately after he took note of these circumstances but within the time‑limit referred to in Article 47(2), notifies the competent authorities, unless the competent authorities have already established that the refund requested was incorrect, ...’ 6. Article 25(1) of Regulation No 3665/87 provides: ‘Where the exporter states his intention to export the products or goods after processing or storage, and to qualify for a refund, in accordance with the provisions of Articles 4 or 5 of Regulation (EEC) No 565/80, admission under those provisions shall be subject to the lodging with the customs authorities of a declaration, hereinafter referred to as the “payment declaration”. Member States may give the payment declaration another title.’
7. The information which must be set out in the payment declaration is specified in Article 25(2) of that regulation.
8. Article 47(1) and (2) of Regulation No 3665/87 provide: ‘1. The refund shall be paid only on written application by the exporter and shall be paid by the Member State in whose territory the export declaration was accepted. Application for the refund shall be made either: (a) in writing: Member States may prescribe a special form to be used for this purpose; (b) by using computer systems ... . 2. Except in cases of force majeure, the documents relating to payment of the refund or release of the security must be submitted within 12 months following the date of acceptance of the export declaration.’ The main proceedings and the question referred for a preliminary ruling
9. On 29 July 1996, Käserei filed, in accordance with Article 3 of Regulation No 3665/87, an export declaration relating to a consignment of cheese, comprising, among others, cheese spread and falling under various codes of the nomenclature used for refunds from the common organisation of the market.
10. On 12 August 1996, Käserei applied to the Hauptzollamt for payment in advance of the export refunds for that consignment. However, it expressly excluded the cheese spread from that application. Boxes 4 and 5 in the form relating to cheese spread were crossed out, with a handwritten note. In a letter annexed to the application for payment, Käserei informed the Hauptzollamt that it was not seeking a refund for that product.
11. The Hauptzollamt made payment of the amount of the export refund for the boxes which had not been crossed out, but, by decision of 26 March 1997, imposed a sanction on Käserei, on the ground that the cheese spread mentioned in the export declaration at issue in the main proceedings was ineligible for a refund, because of the addition of vegetable fats. As a result, it considered that Käserei had requested refunds in excess of those applicable.
12. Käserei lodged an objection, which did not succeed, against that decision. By contrast, its action was upheld by the Finanzgericht Hamburg (Finance Court, Hamburg), which held that Käserei had not requested refund in respect of boxes 4 and 5 in the form, since the filing of the export declaration could not be regarded as such a request and that, as a result, the system of sanctions did not apply.
13. The Hauptzollamt has appealed on a point of law to the Bundesfinanzhof (Federal Finance Court). That court observes that the decision in the main proceedings depends on whether the request for a refund for the purposes of Article 11(1) of Regulation No 3665/87 corresponds to the filing of the export declaration under Article 3 of that regulation, or, on the other hand, to the filing of the application for payment required by Article 47(1) thereof.
14. Since it considers that the reply to that question cannot be clearly deduced from the wording of Article 11(1) of Regulation No 3665/87, the Bundesfinanzhof decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: ‘Must the first and second subparagraphs of Article 11(1) of Regulation ... No 3665/87 … be interpreted - including in the light of the principle of proportionality - as meaning that false information relating to individual items listed in the export declaration, which could result in the exporter receiving an export refund in excess of that applicable, is sufficient to give rise to a punitive reduction in the export refund in the amount set out in those provisions, even though the exporter expressly stated in connection with the separate application for payment which must be submitted under national law that it would not be applying for an export refund in respect of the relevant items in the export declaration?’ The question referred for a preliminary ruling Observations submitted to the Court
15. Käserei submits that it is not the export declaration, but the application for payment required by Article 47(1) of Regulation No 3665/87 which constitutes the request for refund for the purposes of Article 11(1) of that regulation. It follows, in its submission, that the system of sanctions provided for by Article 11(1) does not apply when it is the export declaration alone which contains erroneous data relating to export refunds.
16. Käserei observes that, under the first subparagraph of Article 11(1) of Regulation No 3665/87, a sanction is prescribed if an exporter requests an export refund in excess of that applicable. That provision does not specify what constitutes such a request. Käserei submits that in the absence of such specification the application for the refund required by Article 47 of that regulation is alone decisive.
17. Käserei explains that under Article 47(1) payment of the export refund is subject to a written application by the exporter and that the Member States may, in that regard, prescribe a special form. In German law, such a form is prescribed by Paragraph 15 of the Ausfuhrerstattungsverordnung (Export Refunds Regulations) of 24 May 1996 (BGBl. 1996 I, p. 766). In the model form prescribed by those regulations, it is expressly pointed out to the applicant that it is seeking payment of export refunds for all the products listed in that application. The export declaration is clearly distinct from the application for payment of the refund and it is by the submission of that application that, in German law, the exporter expressly seeks an export refund. At the hearing, Käserei submitted that in German law the export declaration is merely a declaration of intention and does not trigger any refund procedure at the competent German customs office.
18. The Commission submits that the request for refund referred to in the first subparagraph of Article 11(1) of Regulation No 3655/87 is made on the filing of the export declaration under Article 3 of that regulation. It points out, in that regard, that, under Article 11(1), ‘the refund requested is deemed to be the amount calculated from the information supplied pursuant to Article 3 or Article 25(2)’ of that regulation.
19. The Commission also relies on the purpose of Regulation No 3665/87. It maintains that the deterrent effect of that regulation will in large part be undermined if the interpretation favoured by the Finanzgericht Hamburg is upheld. It submits that acceptance of the export declaration means that the products pass into the control of the customs authorities and are subject to checks. Such checks would be of little value and their deterrent effect would be nil if the sanction was based not on the information in the export declaration, but on the application for payment which can be submitted much later. The Finanzgericht Hamburg’s interpretation could lead to situations in which the exporter will file an export declaration containing wrong information and will file the specific application for refund only later, when it is certain that the errors will not be discovered. The Court’s reply
20. By its question, the national court is asking, in essence, whether the document in respect of which the sanction prescribed by Article 11(1) of Regulation No 3665/87 is applicable is the export declaration referred to in Article 3 or the specific application for payment required by Article 47(1) of that regulation.
21. The first subparagraph of Article 11(1) of Regulation No 3665/87 provides for the application of a sanction to a trader who requests an export refund greater than that to which he is entitled. The second subparagraph of Article 11(1) of that regulation provides that the refund requested is deemed to be the amount calculated from the information supplied pursuant to Article 3 or Article 25(2) of the regulation. The second sentence of that second subparagraph provides also that the information supplied pursuant to Article 47 of the regulation is to be taken into account in the calculation of the refund requested ‘where the rate of refund varies according to destination’.
22. It follows that, where the rate of refund does not vary, the calculation of the amount of the refund requested under Article 11(1) of Regulation No 3665/87 must be based solely on Article 3 or, if appropriate, on Article 25(2) thereof. It follows also that the document or documents containing the information required by Article 3 or Article 25(2), on the basis of which the amount of the refund is calculated, constitute the request which, if that information is erroneous, triggers the application of the sanction prescribed by Article 11(1) of Regulation No 3665/87.
23. As regards the interpretation of Article 3 of that regulation, it is appropriate to note, as the Advocate General stated in paragraph 38 of her Opinion, that it does not ne cessarily follow from that article that the amount of the refund requested is to be calculated from the information provided in the export declaration alone. More particularly, Article 3(5) does not specify the title of the document which must be filed to qualify for an export refund. It refers only to ‘the document used for export’. In addition, the second subparagraph of Article 3(5) provides for the situation in which ‘the document mentioned in this paragraph is the export declaration’. It follows that the document which must be submitted in order to obtain a refund is not necessarily the export declaration.
24. In fact, it is for each Member State to establish, in its domestic law, the forms necessary to comply with the provisions of Article 3 of Regulation No 3665/87. Either the document used for export to obtain a refund is incorporated in a single export declaration or there may be various separate forms.
25. Whatever the document used in domestic law to qualify for a refund is called, Article 3(5) of Regulation No 3665/87 requires that that document is lodged ‘for export’ (‘lors de l’exportation’, at the time of export) and not later. The result is that that document cannot be the application for payment referred to in Article 47(1) of Regulation No 3665/87, since that document can be submitted within 12 months following the date of acceptance of the declaration, that is, well after the export takes place.
26. The foregoing analysis complies with the scheme as well as with the spirit and purpose of Regulation No 3665/87. As regards its scheme, it is appropriate to point out that the regulation contains substantive and procedural rules concerning the obtaining of export refunds. As the Advocate General pointed out in paragraphs 48 and 50 of her Opinion, Articles 3 and 11 of the regulation enact substantive rules and are set out in Title 2, Chapter 1, entitled ‘Entitlement to Refund’. By contrast, Article 47(1) of the regulation, which is set out in Title 4, entitled ‘Procedure for payment of the refund’, provides solely for the administrative formalities which the exporter must complete in order to obtain payment of the refund. The extent of the refund depends on the information contained in the document which establishes entitlement to the refund and not in the technical document, which constitutes, admittedly, a condition precedent to the payment of the refund, but not the legal basis of entitlement to such payment. It follows that, in accordance with the scheme of Regulation No 3665/87 and with the system which it establishes, the request for refund for the purposes of Article 11(1) of that regulation is filed under Article 3, or, if appropriate, under Article 25(2) of the same regulation, but not by the submission of the application for payment required by Article 47(1).
27. As regards the purpose of Regulation No 3665/87, it is clear from the first recital in the preamble to Regulation No 2945/94 that its aim is to combat irregularities and fraud detected in the area of export refunds (see Case C-210/00 Käserei Champignon Hofmeister [2002] ECR I‑6453, paragraph 60). The interpretation by which it would be possible validly to make a request for refund concerning products which have already been exported undermines that aim, because the competent authorities would not be in a position to carry out physical checks on those products, checks which are nevertheless necessary to enable Regulation No 3665/87 to achieve its aim. It cannot therefore be accepted that the application for refund referred to in Article 47(1) of Regulation No 3665/87, which can be submitted within 12 months after the acceptance of the export declaration, could constitute the request for refund for the purposes of Article 11(1) of that regulation.
28. Physical checks on products for which refunds have been requested are an important tool with which to combat irregularities and fraud in the area of export refunds. In that regard, it must be observed that, in order to ensure that the object of the checks is fully secured, it is imperative that they take place after the filing by the exporter of a binding request for refund. As the Commission stated in its written observations, the deterrent effect of the sanctions prescribed by Article 11(1) of Regulation No 3665/87 is in large part lost if it is possible to submit the request for refund after the checks on the products have been carried out. The exporter would be in a position to adapt his request for refund according to the result of any check which might take place.
29. It follows that the process of checking requests for refunds must be regarded as an integral part of the system of export refunds provided for by Regulation No 3665/87. In order to determine which document constitutes the request for refund, the document which must be taken into consideration is not that which seeks the payment of the refund, but that which triggers the system of checks of the request for refund.
30. The national court, referring to the principle of proportionality, asks whether it cannot be regarded as disproportionate to impose the sanction prescribed by Article 11(1) of Regulation No 3665/87 if payment of a refund is neither sought by the exporter nor granted to it by the competent authorities.
31. In that regard, it must be recalled, first of all, that in paragraphs 59 to 68 of the judgment in Käserei Champignon Hofmeister , cited above, the Court has already accepted that the sanction is proportionate. In paragraph 68, the Court held that the sanction prescribed in point (a) of the first subparagraph of Article 11(1) of Regulation No 3665/87 does not breach the principle of proportionality, since it cannot be considered either to be inappropriate for attaining the objective pursued by Community law, namely to combat irregularities and fraud, or to go beyond what is necessary to achieve that objective.
32. Next, it is appropriate to note that Regulation No 3665/87 provides for well-defined circumstances in which an exporter who requests a refund in excess of that applicable may none the less avoid the imposition of the sanction prescribed by Article 11(1) of that regulation. The second indent of the third subparagraph of that provision provides that the sanction in question is not to be applied ‘in exceptional cases characterised by circumstances beyond the control of the exporter, which occur after the acceptance by the competent authorities of the export declaration or the payment declaration, and provided that he, immediately after he took note of these circumstances but within the time‑limit referred to in Article 47(2), notifies the competent authorities, unless the competent authorities have already established that the refund requested was incorrect’.
33. However, it must be made clear that the alteration of a request for refund constitutes a substantive and not a procedural alteration. Such an alteration must be brought to the attention of the competent authorities by the filing of a separate document, stating reasons, and not merely by submitting a form such as the application for payment required by Article 47(1) of Regulation No 3665/87.
34. Finally, it must be pointed out that it is clear from the wording as well as from the purpose of Regulation No 3665/87 that the Community legislature intended the sanction prescribed by Article 11(1) of that regulation to be imposed, not after the Community budget has suffered a financial loss resulting from the undue payment of an export refund, but at an earlier stage, when the exporter includes wrong information, be it only unintentionally, in the request for refund.
35. The third recital in the preamble to Regulation No 2945/94 states that, ‘where an exporter has supplied wrong information that wrong information could lead to an undue payment of the refund if the error is not discovered, whilst where the error is discovered it is entirely proportional to sanction the exporter ...’. Consequently, it does not matter in that regard whether the exporter, following the discovery of the wrong information in the export declaration, has neither requested nor obtained payment of the refund in question. In the system put in place by Regulation No 3665/87, the mere possibility that wrong information could lead to the undue payment of refunds suffices for the imposition of the sanction prescribed by Article 11(1) of that regulation.
36. Having regard to the foregoing considerations, the reply to the question referred must be that the first and second subparagraphs of Article 11(1) of Regulation No 3665/87 are to be interpreted as meaning that wrong information contained in a document referred to in Article 3(5) of that regulation, that is, the export declaration or another document used for export, and capable of leading to a refund in excess of the refund applicable, gives rise to the imposition of the sanction prescribed by Article 11. That rule applies even if, in connection with the application for payment referred to in Article 47 of that regulation, it is expressly stated that payment of the export refund is not sought for certain products covered by that document. Costs
37. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. The costs incurred in submitting observations to the Court, other than those of those parties, are not recoverable.