Keywords
Summary

Keywords

1. Agriculture - EAGGF - Clearance of accounts - Disallowance of expenditure arising from irregularities in the application of the Community rules - Disputed by the Member State concerned - Burden of proof

(Council Regulation No 729/70)

2. Agriculture - Common organisation of the markets - Export refunds - Products covered by the advance payment system - Replaced by equivalent products - Conditions - Products at the same processing stage

(Commission Regulation No 3665/87, Art.27(3))

3. Agriculture - Common organisation of the markets - Export refunds - Products covered by the advance payment system - Constant customs control from the time of acceptance of the payment declaration

(Commission Regulation No 3665/87, Art. 26(1))

4. Acts of the institutions - Statement of reasons - Obligation - Scope - Decision relating to the clearance of accounts in respect of expenditure financed by the EAGGF

(EC Treaty, Art. 190 (now, after amendment, Art. 253 EC))

5. Agriculture - Common agricultural policy - EAGGF financing - Principles - Member States' obligations - Establishment of supervisory and control measures - Finding of shortcomings in the control system implemented by a Member State - Flat-rate correction of 10% of expenditure - Whether permissible - Conditions - Investigations sufficiently representative of the system as a whole

(Council Regulation No 729/70, Art. 8(1))

6. Agriculture - Common agricultural policy - EAGGF financing - Principles - Irregular expenditure disallowed - Finding of shortcomings in the control system implemented by a Member State - Flat-rate correction of 10% of expenditure - Whether permissible - Conditions - Shortcomings concerning fundamental elements of the system and corresponding high risk of losses for the EAGGF

(Council Regulation No 729/70)

Summary

1. Where the Commission refuses to charge certain expenditure to the EAGGF on the ground that it was incurred as a result of breach of Community rules for which a Member State can be held responsible, it is for that State to show that the conditions for obtaining the financing refused are fulfilled. The Commission is not required to demonstrate exhaustively that there are irregularities in the data submitted by Member States; it is sufficient for it to put forward evidence in support of the serious and reasonable doubt which it entertains concerning the figures supplied by the national authorities. The reason for this mitigation of the burden of proof on the Commission is that it is the State which is best placed to collect and check the data required for the clearance of EAGGF accounts, and which is consequently required to adduce the most detailed and comprehensive evidence that its figures are accurate and, if appropriate, that the Commission's calculations are incorrect. In the event of a dispute, it is for the Commission to prove that the rules of the common organisation of the agricultural markets have been infringed and, once it has established such an infringement, the Member State concerned must then, if appropriate, demonstrate that the Commission committed an error as to the financial consequences to be inferred from that infringement.

( see paras 33-34 )

2. According to Article 27(3) of Regulation No 3665/87 laying down common detailed rules for the application of the system of export refunds on agricultural products, the basic products covered by the advance payment system provided by Regulation No 565/80 on the advance payment of refunds may be replaced by equivalent products, falling within the same subheading of the Combined Nomenclature, of the same commercial quality, having the same technical characteristics and meeting the requirements for the granting of an export refund. It follows that only products at the same processing stage as the basic products may be regarded as having the same commercial quality and the same technical characteristics as the latter.

( see paras 79-80 )

3. Under Article 26(1) of Regulation No 3665/87, products or goods covered by the Community advance-payment system are placed under customs control from the time of acceptance of the payment declaration until they leave the customs territory of the Community or reach their destination. It follows that the customs authorities must be kept constantly informed of the quantities of goods in stock so that non-existent goods cannot be declared and in order thereby to reveal any possible fraud at or after the declaration stage.

( see paras 84-85 )

4. In the particular context of the preparation of decisions relating to the clearance of accounts concerning expenditure financed by the EAGGF, the statement of reasons for a decision must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the EAGGF.

( see para. 95 )

5. The object of the procedure for clearing EAGGF accounts is to ensure that the appropriations made available to the Member States have been used in accordance with the Community rules in force within the framework of the common organisation of markets. Article 8(1) of Regulation No 729/70 on the financing of the common agricultural policy, which in this field constitutes a manifestation of the obligations imposed on the Member States by Article 5 of the Treaty (now Article 10 EC), imposes on the Member States an obligation to take the measures necessary to satisfy themselves that the operations financed by the EAGGF are actually carried out and are executed correctly.

Shortcomings in the control system put in place by a Member State, found by the Commission after checks carried out at the premises of customs offices and undertakings representing the system as a whole, are sufficient to justify a flat-rate correction of 10%. Moreover, the Commission_s Belle Group Report which lays down the guidelines to be followed when financial corrections must be applied in relation to a Member State, does not prohibit the application of a flat-rate correction to a budget heading other than that under which the expenditure has been checked by the Commission, provided that the two headings fall within the same sector.

( see paras 102-103, 106, 113 )

6. In the context of clearance of EAGGF accounts, the Commission may refuse to charge to the EAGGF the whole of the expenditure in question if it finds that there are no adequate control procedures in the Member State. If, first, the shortcomings found concern fundamental elements of both the control system put in place by the Member State and the carrying-out of checks which play an essential part in ensuring that expenditure is properly incurred and, second, the Commission can show that, in view of the extent of the shortcomings found to exist, there is a corresponding risk of high losses for the EAGG, then it is entitled to conclude that there is a considerable risk such as to justify a flat-rate correction of 10%.

( see paras 122, 125-126 )

7. When decisions relating to the clearance of EAGGF accounts are being drafted, the case of each Member State must be assessed separately to determine whether, when the Member State in question carried out operations financed by the EAGGF, it acted in accordance with the requirements of Community law and, if it failed to do so, to what extent. A Member State may plead breach of the principle of equal treatment only if the cases it cites are at least comparable as regards all the elements which characterise them, including, in particular, the period during which the expenditure was incurred, the sectors concerned and the nature of the irregularities complained of. Prohibited discrimination can arise only in cases where comparable situations are treated differently, unless such treatment is objectively justified.

( see paras 129-131 )