JUDGMENT OF THE COURT (First Chamber)
28 April 1999 (1)
(Agriculture Common organisation of the markets Fruit and vegetables Importation of sour cherries from a third country Levy of a countervailingcharge equal to the difference between the minimum price and the importprice Applicability to spoiled goods)
In Case C-31/98,
REFERENCE to the Court under Article 177 of the EC Treaty by theFinanzgericht München (Germany) for a preliminary ruling in the proceedingspending before that court between
Peter Luksch
and
Hauptzollamt Weiden
on the interpretation of Article 1 of Commission Regulation (EC) No 1395/94 of17 June 1994 establishing a minimum import price for sour cherries (OJ 1994 L152, p. 31) and Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ1987 L 256, p. 1) as amended by Commission Regulation (EEC) No 2551/93 of 10August 1993 (OJ 1993 L 241, p. 1), and in particular Note 1 to Chapter 8 of theCombined Nomenclature,
THE COURT (First Chamber),
composed of: P. Jann (Rapporteur), President of the Chamber, D.A.O. Edwardand L. Sevón, Judges,
Advocate General: P. Léger,
Registrar: R. Grass,
after considering the written observations submitted on behalf of:
Mr Luksch, by Clemens Theil, of the Munich Bar,
the Commission of the European Communities, by Klaus-Dieter Borchardt,of its Legal Service, acting as Agent,
having regard to the report of the Judge-Rapporteur,
after hearing the Opinion of the Advocate General at the sitting on 10 December1998,
gives the following
Judgment
- 1.
- By order of 22 January 1998, received at the Court on 9 February 1998, theFinanzgericht München (Finance Court, Munich) referred to the Court for apreliminary ruling under Article 177 of the EC Treaty two questions on theinterpretation of Article 1 of Commission Regulation (EC) No 1395/94 of 17 June1994 establishing a minimum import price for sour cherries (OJ 1994 L 152, p. 31)and Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariffand statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256,p. 1) as amended by Commission Regulation (EEC) No 2551/93 of 10 August 1993(OJ 1993 L 241, p. 1), and in particular Note 1 to Chapter 8 of the CombinedNomenclature (hereinafter 'the CN).
- 2.
- Those questions were raised in proceedings between Mr Luksch and theHauptzollamt Weiden (Principal Customs Office, Weiden) concerning the paymentof a countervailing charge imposed on Mr Luksch on the ground that he had notadhered to the minimum price for the importation of several consignments of sourcherries.
Applicable legislation
- 3.
- Article 1 of Regulation No 1395/94 provides:
'1. The minimum price to be observed for imports into the Community of sourcherries shall be ECU 40 per 100 kilograms net for the product fallingwithin CN code 0809 20 20 and ECU 36 per 100 kilograms net for theproduct falling within CN code 0809 20 60.
2. If the import price is lower than the minimum price referred to inparagraph 1, a countervailing charge equal to the difference between thetwo prices shall be levied.
The first and second recitals in the preamble to that regulation state in thisconnection that:
'whereas, in the absence of a system of protection at the border, the marketing ofCommunity production could be influenced by competition from third countriesoffering prices substantially lower that the prices at which Community products canbe marketed;
...
[W]hereas, given the short marketing period for the products concerned, measuresshould be adopted forthwith in order to prevent low-price imports; whereas asystem of minimum import prices and countervailing charges for products which donot comply with that price is the most appropriate system for that purpose.
- 4.
- Article 3(2) of Council Regulation (EEC) No 2707/72 of 19 December 1972 layingdown the conditions for applying protective measures for fruit and vegetables (OJ,English Special Edition 1972 (28-30.12), p. 3) provides moreover that thosemeasures may only be taken in so far, and for as long, as they are strictly necessary.The fifth recital in the preamble to that regulation states in this connection that'the measures referred to above should be in keeping with circumstances so thatthey have none but the desired effect.
- 5.
- The CN states that sour cherries are to be classified under subheading 0809 20 20where they are imported into the Community between 1 May and 15 July andunder subheading 0809 20 60 where they are imported into the Communitybetween 16 July and 30 April.
- 6.
- Note 1 to Chapter 8 of the CN, entitled 'Edible fruit and nuts; peel of citrus fruitsor melons, states that that chapter 'does not cover inedible nuts or fruits.
The main proceedings and the questions referred for a preliminary ruling
- 7.
- It appears from the order for reference that on 4 July 1994 Mr Luksch requestedthe Hauptzollamt Weiden (the competent customs authority) to release for freecirculation three consignments of sour cherries, weighing 42 286 kg in total, fromRomania, under CN code 0809 20 20. The import price given was DM 65 per 100kg. Since that price was slightly below the minimum price of ECU 40 per 100 kglaid down in Article 1(1) of Regulation No 1395/94, the Hauptzollamt levied acountervailing charge of DM 2 414.80.
- 8.
- When the fruit was delivered on 5 July 1994, it was apparent that it was already inan advanced state of decay. The consignee therefore refused to accept delivery andMr Luksch instructed an expert to inspect the fruit. The latter confirmed that thefruit was spoiled to a great extent by the formation of mould and decay, which wereclearly attributable to storage at too high a temperature. He advised selling thegoods to a distillery, estimating the reduction in profits at 75%. Mr Luksch followedthis recommendation and sold the cherries to a distillery at a price of DM 10 per100 kg.
- 9.
- Because of the reduction in the import price, by notice of amendment of 8February 1995, the Hauptzollamt increased the countervailing charge to DM34 726.86. Mr Luksch lodged an objection against that notice, following which, bydecision of 22 May 1995, the Hauptzollamt increased the countervailing charge asecond time, raising it to DM 40 124.02, to take into account a reduction in the costof transporting the goods within the Community.
- 10.
- Mr Luksch brought an action against that decision in the court making thereference, claiming essentially that the rules in issue in the main proceedings werenot applicable to spoiled goods.
- 11.
- The national court was in some doubt as to whether the minimum price rulesapplied to the goods imported by Mr Luksch, since the objective of those rules,which is to prevent disturbances in the common market caused by abnormally lowprice offers emanating from third countries, would not be jeopardised by thepresence of spoiled goods. It therefore stayed proceedings and referred to theCourt the following questions for a preliminary ruling:
'(1) Is Article 1 of Commission Regulation No 1395/94 of 17 June 1994 to beinterpreted as meaning that a countervailing charge is to be levied on sourcherries which have deteriorated through the formation of mould andincipient fermentation to such an extent that the only economic use to whichthey can be put is distillation?
If Question 1 is answered in the affirmative:
(2) Is Annex I to Regulation No 2658/87, in the version in Regulation No2551/93 of 10 August 1993, and in particular note 1 to Chapter 8 of theCombined Nomenclature, to be interpreted as meaning that the goods
described in Question 1 are to be classified under subheading 0809 20 20 or0809 20 60?
First question
- 12.
- Mr Luksch and the Commission argue that the countervailing charge does notapply to the goods in issue. The preambles to Regulation (EEC) No 1035/72 of 18May 1972 of the Council on the common organisation of the market in fruit andvegetables (OJ, English Special Edition 1972 (II), p. 437) and Regulation No1395/94 justify the imposition of the countervailing charge only where it is necessaryto prevent disturbance in the Community market due to abnormally low priceoffers emanating from third countries. Mr Luksch and the Commission maintainthat the goods in issue in the main action were not in competition with Communityproduce since the low price at which they were eventually sold was solelyattributable to the fact that they were not fit for consumption.
- 13.
- In its judgment in Case C-81/92 Hans Dinter v Hauptzollamt Bad Reichenhall [1993]ECR I-4601, the Court held (at paragraph 19) that protective measures may onlybe taken to such extent and for such length of time as is strictly necessary and that,consequently, once the objective pursued by the protective measures is attained, thelevying of a countervailing charge is unlawful. Those findings should be transposedto the present case, in which the sale to a distillery of spoiled cherries did not affectthe Community market in fresh fruit. To levy a countervailing charge in suchcircumstances would be to offend against the principle of proportionality.
- 14.
- The Commission also points out that the deterioration of the goods, and thus alsothe considerable depreciation in their commercial value, had already occurred whenthey were released for free circulation, which is the relevant date for the purposesof levying the countervailing charge. An essential condition for applying Article 1of Regulation No 1395/94 is therefore missing, since the low price paid by theimporter is not attributable to the pricing policy of a third country but results fromcircumstances which are totally unconnected with the provenance of the goods.
- 15.
- It should be observed at the outset that it is clear from the first recital in thepreamble to Regulation No 1395/94 that the purpose of that regulation is tointroduce safeguard measures designed to protect the Community market in sourcherries which, because of imports from third countries offering prices substantiallylower than the prices at which Community products can be marketed, is at risk ofserious disturbance likely to jeopardise the objectives of Article 39 of the ECTreaty.
- 16.
- As the second recital in the preamble to that regulation states, safeguard measuresmust aim to prevent the influx of goods imported at low prices. That objective canbe attained by the introduction of a system of minimum import prices in theCommunity and the imposition of countervailing charges for goods which do not
comply with those prices. It is clear from the regulation that the countervailingcharge is in principle determined on the basis of the price originally agreedbetween the contracting parties.
- 17.
- It must therefore be considered whether, despite the apparent absence of anydisturbance of the Community market, the levying of the countervailing charge wasjustified in this case, since the low price at which the goods were sold wasessentially attributable to circumstances wholly unconnected with their origin,namely their deterioration to such an extent that the only economic use to whichthey could be put was distillation.
- 18.
- In this connection, it should be borne in mind that Article 3(2) of Regulation No2707/72 states that protective measures in the fruit and vegetables sector may onlybe taken 'in so far, and for as long, as they are strictly necessary. It follows that,as the Court already held in Dinter, cited above, at paragraph 19, a case concerningthe payment of a countervailing charge for failure to comply with the minimumimport price for Morello cherries, when the objective of protecting the Communitymarket pursued by the protective measures is attained, the levying of acountervailing charge is unlawful. The levying of such a charge must be held to beeven more unjustified when the functioning of the Community market cannot beaffected by a low price which results from circumstances unconnected with theorigin of the goods in question.
- 19.
- In light of the foregoing, it must be concluded that, in circumstances such as thosein point in the main proceedings, payment of a countervailing charge may only bedemanded if, and only in so far as, it is strictly necessary to attain the objectivespursued by Regulation No 1395/94.
- 20.
- It is for the referring court to ascertain, in the light of all the guidance oninterpretation set out above, the reasons for which, on the day the importerrequested the release for free circulation of the sour cherries, their price was belowthe minimum price and, in particular, whether that low price arose fromcircumstances wholly beyond the importer's control and totally unconnected withthe origin of the goods.
- 21.
- The answer to the first question must therefore be that Article 1 of Regulation No1395/94 must be interpreted as meaning that a countervailing charge may not belevied in respect of sour cherries released for free circulation within the Communityat a low price, where their low price is attributable to circumstances beyond thecontrol of the importer and unconnected with the origin of the goods, such as asignificant and unexpected deterioration of the fruit.
The second question
- 22.
- Since the second question was put only in the event of the first question beinganswered in the affirmative, there is no need to reply to it.
Costs
- 23.
- The costs incurred by the Commission, which has submitted observations to theCourt, are not recoverable. Since these proceedings are, for the parties to the mainproceedings, a step in the proceedings pending before the national court, thedecision on costs is a matter for that court.
On those grounds,
THE COURT (First Chamber),
in answer to the questions referred to it by the Finanzgericht München by orderof 22 January 1998, hereby rules:
Article 1 of Commission Regulation (EC) No 1395/94 of 17 June 1994 establishinga minimum import price for sour cherries must be interpreted as meaning thata countervailing charge may not be levied in respect of sour cherries released forfree circulation within the Community at a low price, where their low price isattributable to circumstances beyond the control of the importer and unconnectedwith the origin of the goods, such as a significant and unexpected deterioration ofthe fruit.
Delivered in open court in Luxembourg on 28 April 1999.
R. Grass
P. Jann
Registrar
President of the First Chamber