Action brought on 13 July 2012 — European Commission v Portuguese Republic

(Case C-335/12)

2012/C 303/27

Language of the case: Portuguese

Parties

Applicant: European Commission (represented by: A. Caeiros, Agent)

Defendant: Portuguese Republic

Form of order sought

The Commission claims that the Court should:

Pleas in law and main arguments

According to the information provided by the Portuguese authorities, the undertaking William Hinton & Sons did not provide proof of having exported the surplus sugar stocks in its possession. On 3 December 1990, the Portuguese authorities notified that undertaking that it had to pay an additional sum of EUR 785 078,50. The undertaking challenged that decision before the Supreme Tribunal Administrativo (Supreme Administrative Court; ‘STA’), which referred a number of questions to the Court of Justice for a preliminary ruling. On 11 October 2001, the Court of Justice delivered an order in Case C-30/00 William Hinton & Sons, (6) in which it stated that those questions ‘arose in the context of a dispute between William Hinton & Sons Lda … and Fazenda Pública with regard to the post-clearance recovery of charges levied on surplus stocks of sugar held by William Hinton’. On 8 May 2002, the STA annulled the notice of assessment of the additional sum, because that sum was notified at a time when it was already time-barred.

Earlier case-law of the Court of Justice, namely the judgments of 7 December 2004 in Case T-240/02 Koninklijke Coöperatie Cosun v Commission, and of 26 October 2006 in Case C-68/05 P Koninklijke Coöperatie Cosun v Commission, suggests that the sum of EUR 785 078,50 referred to above could not continue to be classed as a ‘levy’ as it was in the order of the Court of Justice in Case C-30/00, but may continue to be classed as ‘own resources’ of the Communities.

Although that case-law concerns the levy of a sum under Article 3(1) of Regulation No 2670/81, (7) since a given quantity of C sugar was not exported outside of the Community, the fact remains that the chargeable event for the levying of that sum is essentially identical to the chargeable event for the levying of the sum provided for in Article 7(1)(a) of Regulation No 579/86, at issue in the present case. That provision states that a sum is levied on the quantities of sugar which exceed the carry-over stock and which have not been exported outside of the Community, since, in accordance with Article 5(2) of Regulation No 579/86, those quantities are regarded as having been disposed of on the internal market of the Community.

Pursuant to Article 2 of Decision 85/257, revenue from levies and other duties within the framework of the common organisation of the markets in sugar constitutes own resources.

It is apparent from Article 254 of the Act of Accession that the sum referred to above falls within the common organisation of the markets in sugar. That provision states that the carry-over stock which must be eliminated by and at the expense of the Portuguese Republic is that which in quantity exceeds or may be considered representative of a normal carry-over stock and that ‘the concept of normal carry-over stock shall be defined for each product on the basis of the criteria and objectives particular to each common organisation of the markets’ or, in the case of sugar, ‘the concept of normal carry-over stock’ should be defined on the basis of the criteria and objectives particular to the common organisation of the markets in sugar. Thus, the regulation at Community level of the elimination of sugar stocks forms part of the common organisation of the markets in sugar.

Regulation No 3771/85 (8) laid down, on the basis of Article 258(3) of the Act of Accession, ‘the general rules for the application of Article 254 of the Act of Accession’, defined the notion of ‘products in free circulation in Portuguese territory’, determined that ‘detailed rules for (its) application’ were to be adopted ‘in accordance with the procedure laid down … in corresponding articles in other regulations on the common organisation of the agricultural markets’, and provided that ‘(t)he detailed rules … shall relate in particular to: … the procedures for disposing of surplus products’, and that the detailed rules ‘may make provision for: … the collection of a charge in cases where a party concerned does not comply with the procedures for disposing of surplus products’.

Regulation No 579/86 which lays down detailed rules relating to stocks of products in the sugar sector in Spain and Portugal on 1 March 1986 was adopted by the Commission on the basis of Regulation No 3771/85 and on the basis of Regulation No 1785/81 on the common organisation of the markets in the sugar sector. The fact that the regulation which establishes the common organisation in the markets in the sugar sector is one of the legal bases of Regulation No 579/86 shows that the rules laid down by the latter and, consequently, the amount cited above fall within the common organisation in the markets in the sugar sector.

The sum of EUR 785 078,50, cited above, may be classed as ‘own resources’ of the Communities for the purposes of point (a) of the first paragraph of Article 2 of Decision 85/257, because it is revenue from ‘other duties provided for within the framework of the common organisation of the markets in the sugar sector’ resulting from the special regime put in place by the Portuguese Republic when it became a Member State, namely, a sum which should have been levied by the Portuguese authorities pursuant to Article 7(1)(a) of Regulation No 579/86.

Article 1 of Regulation No 3771/85 lays down ‘the general rules for the application of Article 254 of the Act of Accession’ and defines, in the second indent of Article 3(1)(b) that ‘products shall be considered as being in free circulation in Portuguese territory where: they are imported into Portugal, in respect of which import formalities have been completed and on which customs duties and equivalent charges have been collected in Portugal, without any total or partial drawback thereof’. The second indent of Article 3(1)(b) of Regulation No 3771/85 relates to ‘all products imported into Portugal’ including, thus also, those from other Member States.

Sugar from Denmark thus could and should have been taken into consideration in the calculation of the sugar stocks in free circulation in Portuguese territory on 1 March 1986. The Portuguese authorities consider that, even if, in the circumstances of the present case, Denmark were to have been considered to be a third country, the quantity of sugar imported (796 821 Kg) as ‘Bilhete de Importação no 246’ in the calculation of those stocks should not be taken into consideration, since, in their view, the sugar at issue was not in free circulation on 1 March 1986.

The Commission does not share that point of view because the tax court at second instance held, in its judgment of 26 March 1996, that there was factual evidence that that sugar had been cleared for customs purposes on 27 February 1986 and that it was authorised on that date for circulation and for consumption.

Neither Decision 85/257 and the subsequent decisions which substituted it, nor Regulation No 1552/89, which lays down the conditions in which the Communities’ ‘own resources’ are made available to the Commission, stipulate that the making available of own resources to the Commission is to form part of the Community budget. Articles 371 and 372 of the Act of Accession aim to adapt the application of Decision 85/257 to the specific situation resulting from the accession of Portugal and do not prevent revenue from the sum provided for in Article 7(1)(a) of Regulation No 579/86, namely, in the present case, the sum of EUR 785 078,50, from being classed as own resources.

The classification of a sum as own resources of the Communities results from Community legislation and, in particular, Decision 85/257; the classification given by the Member States is irrelevant.

In accordance with settled case-law, it is not necessary to show that a loss of own resources was caused by error on the part of some national authority. It is sufficient that, following a final decision of the STA, it was considered that the debtor was not taxable for payment of duties and that that fact is directly related to the late action of the Portuguese authorities in 1990. The Court of Justice confirmed this position of the Commission in its judgment of 15 November 2005 in Case C-392/02 Commission v Denmark.

The judgment of the STA of 8 May 2002 confirms that the Commission’s position is legally founded, that is, that the amount of the debt was not communicated to the debtor in good time, i.e. within three years, that the levy was thus not possible, and that, consequently, the own resources could not be made available to the Commission.

(1)  Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23).

(2)  Council Decision 85/257/EEC of 7 May 1985 on the Communities’ system of own resources (OJ 1985 L 128, p. 15).

(3)  Commission Regulation (EEC) No 579/86 of 28 February 1986 laying down detailed rules relating to stocks of products in the sugar sector in Spain and Portugal on 1 March 1986 (OJ 1986 L 57, p. 21).

(4)  Council Regulation (EEC) No 1697/79 of 24 July 1979 on the post-clearance recovery of import duties or export duties which have not been required of the person liable for payment on goods entered for a customs procedure involving the obligation to pay such duties (OJ 1979 L 197, p. 1).

(5)  Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ own resources (OJ 1989 L 155, p. 1).

(6)  Case C-30/00 William Hinton & Sons (2001) ECR I-7511.

(7)  Commission Regulation (EEC) No 2670/81 of 14 September 1981 laying down detailed implementing rules in respect of sugar production in excess of the quota (OJ 1981 L 262, p. 14).

(8)  Council Regulation (EEC) No 3771/85 of 20 December 1985 on stocks of agricultural products in Portugal (OJ 1985 L 362, p. 21).