1.

Does the concept of exportation within the meaning of Regulation No 123/67/EEC (especially Article 9), Regulation No 176/67/EEC (especially Articles 4 and 6) and Regulation No 1041/67/EEC (especially Articles 3 (1), 4 (1) and 8) presuppose that the goods were or would be put into free circulation at their destination even if the rates of refund for the goods are not varied according to the destinations?

2.

If the answer to Question 1 is in the affirmative:

must Article 9 of Regulation No 123/67/EEC, Article 6 of Regulation No 176/67/EEC and Articles 4 and 8 of Regulation No 1041/ 67/EEC in conjunction with the Protocol on German Internal Trade and connected problems be interpreted as meaning that goods coming within Article 1 of Regulation No 123/67/EEC which, after being sold to a contracting party outside the Community, having been in free circulation in the Community, left the geographical territory of the Community on 28 and 30 August 1973, were delivered to the German Democratic Republic via the territory of non-member countries without being transhipped and remaining under customs control and were declared for home use in that country, benefit from refunds on exports to non-member countries?

I —

Before considering the questions in detail I should like to make a few remarks on the formulation of the questions. I think this is necessary because the ambit and the content of both questions, but especially the first, have been interpreted differently by those taking part in the proceedings.

Thus the plaintiff is of the opinion that the first question put by the Bundesfinanzhof concerns only the interpretation of the concept of exportation, within the meaning of the regulations in question, pointing out that there was no direct contractual relationship between undertakings in the Federal Republic of Germany and in the German Democratic Republic. This is a general problem of Community law which applies to all exports from all Member States and has nothing to do with the status of the German Democratic Republic. What the Bundesfinanzhof wants to know, in fact, is whether the concept of exportation covers not merely leaving the territory of the Community but also the process of importation into the country of destination. If this question is answered in the negative the second question is no longer pertinent.

The Commission, on the other hand, points out that the first question, which is formulated in very general terms and touches on a fundamental problem in the general body of law governing refunds, goes far beyond what is required for a decision in the case in question. For in view of the Protocol on German Internal Trade the legal status of exports of agricultural products from the Federal Republic of Germany into the German Democratic Republic is to be regarded as if refunds have been fixed only in relation to non-member countries with the exception of the German Democratic Republic. Consequently only the reply to the second question will be decisive in the main action, and that reply can be given independently of the first question.

Lastly, the Federal Government is of the opinion that quite apart from German internal trade, the first question concerns whether and under what conditions there is entitlement to a refund as such, with regard to the fact of exportation within the meaning of the rules of Community law. In that case the specific problem of German internal trade in relation to transactions via intermediaries (‘Streckengeschäften’) need be examined only in the second question.

I share the view of the plaintiff and the Federal Government that the Court of Justice must tackle the first question. In that question the Bundesfinanzhof is not merely seeking an interpretation of the concept of exportation, as the plaintiff thinks, but is asking in. fact — as the Federal Government rightly remarks — what the prerequisites for entitlement to an export refund are. This is evident from the question itself, in which it is asked whether exportation within the meaning of the regulations in question presupposes, even if the rates of refund are uniform, ‘that the goods were or would be put into free circulation at their destination’. In addition the Bundesfinanzhof expressly emphasizes in its order that a ruling on the legality of the decision ordering repayment of the refunds depends primarily on the interpretation of Community law as to ‘whether the conditions for the grant of the export refund and monetary compensatory amounts were fulfilled’.

It is not disputed, however, that a condition for every claim to export refunds is that the goods have been exported out of the Community. Accordingly the only question is whether the factual requirements of ‘exportation’ within the meaning of the provisions governing refunds are satisfied solely by the goods in question being moved out of the geographical territory of the Community, or if exportation within the meaning of the provisions governing refunds does not rather presuppose that the goods in question have been put into free circulation in the country of destination.

Contrary to the Commission's opinion it is on the answer to that question that the decision in the main action turns. It is not disputed that the Protocol on German Internal Trade excludes the movement of goods between the Federal Republic of Germany and the German Democratic Republic from the scope of the provisions of Community law (see also the decision of the Court of Justice of 1 October 1974, Case 14/74 Norddeutsches Vieh- und Fleischkontor GmbH v Hauptzollamt Hamburg-Jonas [1974] 2 ECR 899). For the Protocol to apply, however, the disputed events must fall within the ambit of German internal trade. Since, pursuant to Article 239 of the EEC Treaty, the Protocol forms an integral pan of the Treaty, it is, like the Treaty itself, subject to interpretation by the Court of Justice which has the power in particular to determine the limits of its application under Community law. Transactions no longer constitute trade between the Federal Republic of Germany and the German Democratic Republic within the meaning of the Protocol — so much is already clear — if the factual requirements for ‘exportation’ within the meaning of the provisions of Community law on refunds are satisfied and the goods have been forwarded to the German Democratic Republic after the entitlement to a refund has arisen. The knowledge of the exporter and the contractual relationships are not relevant in this connexion, for exportation constitutes an objective requirement for entitlement to a refund. Accordingly I shall now consider the criterion for entitlement to the grant of export refunds within the meaning of Regulation No 123/67.

This should be distinguished from the second problem which also arises from the questions formulated, whether in certain cases even where there is a uniform refund system proof may be required that the goods in question have reached the destination for which the refund was fixed.

Finally, the second question put by the Bundesfinanzhof must also be considered.

II —

As to the first question on the conditions for entitlement to a refund the plaintiff is of the opinion that the concept of exportation does not presuppose that the goods must have been put into free circulation at their destination, independently of whether varying rates of refund have been fixed or not. The relevant provisions of Community law show that the term export is used therein in its normal meaning and in accordance with general usage. Thus the concept of export within the meaning of Article 9 of Regulation No 123/67 and Article 1 of Regulation No 176/67 amounts to physically leaving the geographical territory of the Community. The relevant provisions also draw a clear distinction between events which touch on the territory of the Community and events which extend to the territory of non-member countries. The concept of ‘export’ is, the plaintiff continues, used solely and exclusively in connexion with the territory of the Community, as may be seen in Article 6 (1) of Regulation No 176/67, in the third recital in the preamble to Regulation No 1041/67 and in Article 3 of that regulation. Those provisions that deal with the territory of non-member countries however, for example the ninth recital in the preamble to Regulation No 1041/67 and Article 4 (1) and Article 8 (1) of that regulation, refer not to exportation from the Community but to ‘arrival’, ‘reaching’ or ‘importation’. Even if, contrary to the plaintiff's view entitlement to refunds is made dependent not on exportation from the Community but on importation into a non-member country, that still does not mean that in every case importation into the country of destination must be taken to imply release into free circulation. On the contrary, Article 4 (1) and Article 8 (1) of Regulation No 1401/67 show that the regulation envisaged different import procedures, of which release into free circulation represents only one possibility.

III —

I can now turn to the other question, whether proof that the goods have been put into free circulation in the non-member country may also be required where there is a system of uniform refunds.

As we have seen the fact of simply transporting the goods to Austria, independently of whether the refunds at that time were uniform or varied, cannot found entitlement to a refund. Consequently even these general considerations are sufficient to show that Member States may make payment of the refund subject to proof that the goods have been put into free circulation in a non-member country even where a system of uniform refunds applies.

To counter that argument the plaintiff relies principally on Article 6 (1) of Regulation No 176/67 and Article 3 (1) of Regulation No 1041/67 according to which only proof of exportation can be required if the refunds are uniform. Only in the case of a system of varied refunds can proof be required, in its opinion, that the goods have reached the country of destination, and this is shown, in particular, by Article 6 (2) of Regulation No 176/67 and Articles 4 (1) and g (1) of Regulation No 1041/67.

On the other hand, I should like to remind the Court in the first place that the provisions invoked by the plaintiff in this connexion, which are set out above at II (1), relate solely to the question of detailed rules for payment. At the same time, however, under Article 4 of Regulation No 1041/67 Member States may ‘in certain cases … by reason of the nature of the exported products or of export markets, … require, as a condition for payment of the refund, proof not only that the product has left the geographical territory of the Community, but also that the product in question has been imported into a third country and, where appropriate, proof of the conditions under which it was imported’. As the Court of Just ce expressly ruled in its judgment in C. e 125/75, cited above, that provision is ‘a provision of general application and applies in all cases where there is a refund, even if the refund has been varied according to the destination’. It that case, which concerned a system of varied refunds, the Court of Justice went on to confirm that according to that provision proof may be required that the goods ‘have been cleared through customs and put into free circulation at the destination’.

I think that this statement must also apply where a system of uniform refunds applies. For the tenor and purpose of the provision, as is evident from the preamble to the regulation, are to prevent abuses which cannot be excluded under the provisions governing refunds especially where the refunds vary. This is quite obvious from the reference in Article 4 to ‘export markets’. The risk of abuse ‘by reason of the nature … of export markets’ is equally present however where goods from the Federal Republic of Germany destined for the German Democratic Republic are delivered in the German Democratic Republic after having been transported via a non-member country without having been put into free circulation there. The special feature of that ‘export market’ as regards goods from the Federal Republic of Germany according to the Protocol on German Internal Trade, is that no refunds are payable under Community law, whereas if the kind of transaction through intermediaries with which we are concerned in this case were permitted, the goods would nevertheless benefit from a refund, thereby circumventing the Protocol. Contrary to the plaintiff's view the position would be quite different if the goods had been forwarded to the German Democratic Republic after being put on the market in the normal way in the non-member country, for then cu toms duties or other charges on exports would have been encountered.

So even if the refunds are uniform, legitimate doubts may arise as to the correct way to apply the rules governing refunds. Nevertheless, in view of the wording and the logic of the refund system and the terms of the judgment in Case 125/75 Article 4 should be interpreted, as we have seen, as meaning that in general, where doubts are present, and are supported by appropriate indications, concerning the correct application of the rules governing refunds, proof of importation into another country, meaning in this case proof of release into free circulation, may be required. It also means that further investigations into the circumstances of the importation may be undertaken and the relevant proof may be required if, contrary to the normal circumstances, it is thought that an importation is not undertaken for the purpose of marketing the goods, irrespective of whether the refunds are uniform or not. That being so, I do not think that we need consider further the solution suggested by the Commission, that the Protocol on German Internal Trade justifies analogous application of the system of non-uniform refunds, a solution which — let it be said — is, in my opinion, quite feasible.

Interpreted in this way, Article 4 of Regulation No 1041/67 is also not in conflict, as the plaintiff thinks, with Regulation No 176/67 of the Council. Article 6 (3) of that regulation provides expressly that additional provisions may be adopted by the Commission in accordance with the Management Committee procedure. In fact, however, paragraph (3) does not concern the varied refunds governed by paragraph (2) of that article, but uniform refunds, so that apart from the normal conditions for the payment of refunds as laid down in paragraph (1), other conditions may be imposed, a power which was exercised by the Commission when it adopted Article 4 of Regulation No 1041/67.

IV —

As to the second question which has been put by the Bundesfinanzhof, the plaintiff is of the opinion that this no longer needs to be examined because the Protocol on German Internal Trade is not applicable to transactions of this type. In principle the German Democratic Republic is to be treated by the Community as a non-member country, for under the Protocol a different system is to apply only in respect of the treatment currently accorded to German internal trade. As it creates an exception, however, the Protocol must be interpreted strictly. If clearance into free circulation is required to found a claim for refunds, corresponding importation into the German Democratic Republic must be held to be sufficient.

The Commission has pointed out, on the other hand, that the plaintiff could only have become entitled to an export refund if the Community provisions on refunds were applicable and the plaintiff had fulfilled all the conditions of entitlement laid down therein. Whether Community law is applicable in fact depends, pursuant to the Protocol on German Internal Trade, on whether the events in question are to be counted as being pan of German internal trade. However, it is not necessary to examine this question in detail because the plaintiff has not in any case fulfilled the conditions imposed by Community law for entitlement to refunds. The Commission further submits that it may be inferred from the Protocol on German Internal Trade, which is an integral pan of the EEC Treaty, that exports of agricultural products from the Federal Republic of Germany are always to be treated as if a varied refund had been fixed, the refunds for the German Democratic Republic being set at nil, and the refund for all other non-member countries being set at the amount fixed by the Community regulations. As the poultry-meat in question was imported, marketed and consumed exclusively in the German Democratic Republic, that is, objectively, the only country of destination within the meaning of the refund rules. For that country of destination, however, no refunds should have been paid.

Although, as I have already said, I think the hypothesis of a system of nonuniform refunds is tenable I should like to suggest a different solution on the basis of what has been said above, and which has also been put forward by the Federal Government. We have seen that the factual requirements for exportation within the meaning of the provisions of Community law on export refunds are satisfied only if the goods have arrived on the open market in the country of destination. As the Court of Justice confirmed in Case 125/75, the question whether the goods have reached the market in the country of destination can only be answered on the basis of objective criteria. It must be assumed therefore that the factual requirements for exportation can be satisfied only by taking the goods in question out of the territory of the Federal Republic of Germany into the German Democratic Republic; thus for the purposes of the provisions governing refunds the circumstances must be treated as if the goods arrived in the German Democratic Republic directly from the Federal Republic of Germany.

Under paragraph 1 of the Protocol on German Internal Trade, which according to Article 239 of the EEC Treaty is an integral part of that Treaty, this kind of consignment counts as trade between the German territories subject to the Basic Law and those in which it does not apply, which remains subject to national law and is not affected by Community law (see judgment of the Court of 1 October 1974, Case 14/74 Norddeutsches Vieh- und Fleischkontor GmbH v Hauptzollamt Hamburg-Jonas [1974] 2899).

To hold that to establish entitlement to a refund it is sufficient that the goods have entered free circulation in the German Democratic Republic after passing through a non-member country would, as the Commission has pointed out, conflict with the letter and purpose of the Protocol on German Internal Trade. In every case for which Community law provides refunds, an incentive would exist for exporters to claim such refunds in the German Democratic Republic whilst avoiding direct exportation in order to circumvent the Protocol. That would not only threaten the equilibrium of German internal trade in the agricultural sector, but, as we have seen, would jeopardize the balance of trade between the Community and the German Democratic Republic, as the Court pointed out in Case 14/74.

V —

In the light of the foregoing observations, the questions asked by the Bundesfinanzhof may be answered as follows: