Industrie en Handelsonderneming Vreugdenhil BV and Gijs van der Kolk Douane Expediteur BV v Minister van Landbouw en Visserij. [1989] EUECJ R-22/88 (29 June 1989)

Judgment 1 By an order of 15 January 1988, which was received at the Court on 20 January 1988, the College van Beroep voor het Bedrijfsleven referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the validity of Article 13a of Commission Regulation No 1687/76 of 30 June 1976 laying down common detailed rules for verifying the use and/or destination of products from intervention ( Official Journal 1976, L 190, p . 1 ), as inserted in that regulation by Commission Regulation No 45/84 of 6 January 1984 amending Regulation No 1687/76 ( Official Journal 1976, L 7, p . 5 ). 2 That question was raised in proceedings between, on the one hand, Industrie - en Handelsonderneming Vreugdenhil BV ( hereinafter referred to as "Vreugdenhil ") and Gijs van der Kolk - Douane Expediteur BV ( hereinafter referred to as "Van der Kolk "), and, on the other, the Minister van Landbouw en Visserij ( Netherlands Minister for Agriculture and Fisheries, hereinafter referred to as "the Minister ") concerning the re-importation of a consignment of 211 275 kg of milk powder free of customs duty under the arrangements for goods "returned" to the customs territory of the Community . 3 Those arrangements were introduced by Council Regulation ( EEC ) No 754/76 of 25 March 1976 on the customs treatment applicable to goods returned to the customs territory of the Community ( Official Journal 1976, L 89, p . 1 ), which permits the reimportation into the Community, free of import duties, of goods which have previously been exported from that territory . 4 Article 2(1 ) of that regulation, as applicable at the material time, provides that goods which, at the time of their exportation from the customs territory of the Community, were the subject of customs export formalities with a view to obtaining refunds and other amounts granted on exportation within the framework of the common agricultural policy, could not be considered to be returned goods . 5 In addition, Commission Regulation ( EEC ) No 1687/76, which was adopted under the enabling provisions contained in the basic regulation on the common organization of agricultural markets, lays down measures for verifying the use and destination of products from intervention . This regulation was supplemented by Commission Regulation ( EEC ) No 45/84 through the addition of Article 13a providing that goods from intervention for which a security has been lodged are to be treated as goods for which the customs formalities for obtaining export refunds have been completed . Consequently, those goods are, in principle, excluded from the arrangements for returned goods provided for in Article 2(1 ) of Council Regulation No 754/76; in special circumstances, however, those arrangements may be applied to them, provided that the security lodged is forfeited or, if it has already been released, an equivalent amount is paid . 6 The consignment of milk powder involved in the main proceedings, which came from the stocks held by the intervention agency in the Federal Republic of Germany, had been exported to Jordan pursuant to Commission Regulation ( EEC ) No 3295/84 of 23 November 1984 on the supply of various lots of skimmed-milk powder as food aid ( Official Journal 1984, L 309, p . 16 ). On its arrival in Aqaba, the shipment could no longer be used as food aid because of mould and damaged packaging . 7 Vreugdenhil then purchased the consignment, first sending it back to the Federal Republic of Germany and then to the Netherlands, where the milk powder was placed in store with Van der Kolk . The two undertakings requested the Netherlands customs authorities in Amersfoort for authorization to re-import the lot in question under the arrangements for returned goods . 8 By two decisions of 5 and 8 January 1987 the Inspector of Customs and Excise in Amersfoort, on behalf of the competent minister, refused that request and required Van der Kolk to pay an import levy of HFL 848 374.80 . The reasons stated for the two decisions were in particular that by virtue of Article 13a of Regulation No 1687/76 the goods in question, coming from intervention, could not be considered to be returned goods within the meaning of Article 2 of Regulation No 754/76 unless an amount equivalent to the security released when they were re-imported was paid . Since no such amount had been paid, the exemption from customs duties for returned goods could not be applied . 9 Vreugdenhil and Van der Kolk brought an action for the annulment of those decisions before the College van Beroep voor het Bedrijfsleven . They claimed in particular that Article 13a, inserted in Regulation No 1687/76 by Regulation No 45/84, was invalid on the ground that the Commission did not have the power to derogate from the provisions of Council Regulation No 754/76 . 10 The national court decided to stay the proceedings and refer the following question to the Court for a preliminary ruling : "Is Article 13a of Commission Regulation ( EEC ) No 1786/76, inserted in that regulation by Commission Regulation No 45/84, valid?" 11 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the Community rules applicable, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court . 12 Vreugdenhil and Van der Kolk claim that Article 13a contains a de facto amendment of Council Regulation No 754/76, which is based on Articles 28, 43 and 235 of the EEC Treaty . Each of those three provisions confers on the Council an exclusive legislative power upon which the Commission encroached in adopting Regulation No 45/84 . 13 The two Netherlands undertakings acknowledge that Article 15(2 ) of Council Regulation No 754/76 authorizes the Commission to adopt provisions for the application of the rules laid down in certain articles of that regulation; however, they consider that Article 2(1 ) is not among the provisions for which implementing measures may be adopted . Moreover, the authorization conferred on the Commission does not, in their view, empower it to adopt rules contrary to the provisions adopted by the Council . Lastly, they consider that the contested regulation is not based on Article 15(2 ) of Regulation No 754/76 but covers a field which is only indirectly related to the arrangements for returned goods, namely the verification of the use and destination of products from intervention . 14 The Commission observes first of all that products from intervention are generally supplied at a price below the market price . Safeguards are therefore needed to prevent speculation and abuses consisting in particular in the exportation of the goods in question and their reimportation under the arrangements for returned goods . 15 Secondly, it states that Article 13a is not a measure of customs law and therefore does not amend Council Regulation No 754/76 in any way . On the contrary, Article 13a is designed to ensure the proper functioning of the intervention system as part of the task entrusted to the Commission by the basic regulations on agriculture . In this context, the term "implementation" used in Article 155 of the EEC Treaty should be interpreted widely where the common agricultural policy is concerned . 16 In this regard it should be noted that the Court has consistently held ( see, most recently, the judgment of 11 March 1987 in Joined Cases 279, 280, 285 and 286/84 Rau and Others v Commission (( 1987 )) ECR 1069, paragraph 14, and the judgment of 8 June 1989 in Case 167/88 Association générale des producteurs de blé et autres céréales v ONIC (( 1989 )) ECR 1653, paragraph 15 ) that it follows from the context of the Treaty in which Article 155 must be placed and also from practical requirements that the concept of implementation must be given a wide interpretation . Since only the Commission is in a position to keep track of agricultural market trends and to act quickly when necessary, the Council may confer on it wide powers in that sphere . Consequently, the limits of those powers must be determined by reference to the essential general aims of the market organization . 17 However, it must be pointed out that such a wide interpretation of the Commission' s powers can be accepted only in the specific framework of the rules on agricultural markets . It cannot be relied upon in support of provisions adopted by the Commission on the basis of its implementing powers in agricultural matters where the purpose of the provision in question lies outside that sphere but within a sector subject to an exhaustive set of rules laid down by the Council which, moreover, do not confer any implementing powers on the Commission . It is therefore necessary to examine whether that is the case as regards Article 13a of Regulation No 1687/76 . 18 By that article, the Commission sought to prevent the arrangements for returned goods from being used to commit fraud to the detriment of Community funds and in particular to re-import into the Community, free of import duties, goods from intervention stocks which are sold at prices below the Community market price . 19 For that purpose, it provided that goods from intervention were to be treated in the same way as goods which had been the subject of customs export formalities with a view to obtaining export refunds or other amounts, which are in principle excluded from the arrangements for returned goods by Article 2(1 ) of Regulation No 754/76 . The effect of the measure thus adopted is therefore to restrict the scope of that regulation . 20 In the light of that finding, it must be stated that, although the Commission has the power under Article 15(2 ) of Regulation No 754/76 to adopt the provisions necessary for the application of certain articles of that regulation, Article 2(1 ), which lists the products excluded from the arrangements for returned goods, is not among those articles . Since the Commission was not empowered to lay down the detailed rules for implementing Article 2(1 ), it was not therefore entitled to enlarge its scope . 21 Furthermore, in excluding goods previously held in intervention from the arrangements for returned goods, the Commission did not base its measure on Article 15 of Regulation No 754/76 . On the contrary, it claims that its power is derived from the basic regulations on the common organization of agricultural markets, which empower it to adopt implementing rules on goods from intervention . 22 This argument put forward by the Commission cannot be accepted . First of all, it should be noted that the Council, which has the power to introduce or amend customs duties and other import duties, also laid down the arrangements for returned goods, which derogate from the Common Customs Tariff, and a complete list of exceptions to those arrangements . 23 Secondly, it should be stressed that Article 2(1 ) of Council Regulation No 754/76 expressly excludes goods benefiting from export refunds from the arrangements for returned goods, whilst the Commission has the power, under the agricultural regulations upon which it relies, to adopt the provisions necessary for the application of the system of export refunds . 24 In any event, the influence which the application of the arrangements for returned goods may have on the functioning of the intervention machinery and the need to prevent fraud to which they might lead cannot enable the Commission, in the absence of any power to that effect, to amend the scope of a Council regulation which the Council had determined in its entirety . 25 Article 13a does not operate solely within the scope of Council Regulation No 754/76 : it amends the rules laid down by that regulation . Although it may be regretted that the Council did not envisage certain situations which may arise in practice, it must be concluded that by adopting Article 13a the Commission exceeded the limits of its powers . 26 The answer to the question submitted by the College van Beroep voor het Bedrijfsleven must therefore be that Article 13a of Commission Regulation No 1687/76 of 30 June 1976 laying down common detailed rules for verifying the use and/or destination of products from intervention, inserted in that regulation by Commission Regulation No 45/84 of 6 January 1984 amending Regulation No 1687/76, is invalid . Costs 27 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, costs are a matter for that court . On those grounds, THE COURT ( Sixth Chamber ), in answer to the question submitted to it by the College van Beroep voor het Bedrijfsleven by order of 15 January 1988, hereby rules : Article 13a of Commission Regulation No 1687/76 of 30 June 1976 laying down common detailed rules for verifying the use and/or destination of products from intervention, inserted in that regulation by Commission Regulation No 45/84 of 6 January 1984 amending Regulation No 1687/76, is invalid . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII