61985J0392

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ECSC - PRODUCTION - QUOTA SYSTEM FOR STEEL PRODUCTION AND DELIVERY - QUOTAS EXCEEDED - CALCULATION - PRODUCTS OF CATEGORY IA - STOCKS TO BE TAKEN INTO ACCOUNT - LIMITS

( ECSC TREATY, ART . 58; DECISION NO 1696/82, ARTS 2*(1 ) AND 11*(6 )*)

IN CASE 392/85

FINSIDER, A COMPANY GOVERNED BY ITALIAN LAW AND HAVING ITS REGISTERED OFFICE IN ROME, REPRESENTED BY SERGIO M . CARBONE, OF THE GENOA BAR, AND NICO SCHAEFFER, OF THE LUXEMBOURG BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE LATTER' S CHAMBERS AT 12 AVENUE DE LA PORTE NEUVE,

APPLICANT,

V

COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY GIULIANO MARENCO, LEGAL ADVISER, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS, A MEMBER OF THE COMMISSION' S LEGAL DEPARTMENT, JEAN MONNET BUILDING, KIRCHBERG,

DEFENDANT,

APPLICATION FOR A DECLARATION THAT THE COMMISSION' S DECISION OF 9 OCTOBER 1985 RELATING TO A FINE IMPOSED ON THE APPLICANT PURSUANT TO ARTICLE 58 OF THE ECSC TREATY IS VOID,

THE COURT ( SECOND CHAMBER )

COMPOSED OF : O . DUE ( PRESIDENT OF CHAMBER ), K . BAHLMANN AND T . F . O' HIGGINS, JUDGES,

ADVOCATE GENERAL : G . F . MANCINI

REGISTRAR : D . LOUTERMAN, ADMINISTRATOR

HAVING REGARD TO THE REPORT FOR THE HEARING AND FURTHER TO THE HEARING ON 22 JANUARY 1987,

AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 4 JUNE 1987,

GIVES THE FOLLOWING

JUDGMENT

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 2 DECEMBER 1985, FINSIDER-SOCIETA FINANZIARIA SIDERURGICA PA, A STEEL COMPANY HAVING ITS REGISTERED OFFICE IN ROME, BROUGHT AN ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY FOR A DECLARATION THAT THE COMMISSION' S DECISION OF 9 OCTOBER 1985 RELATING TO A FINE OF 2*165*350*ECU IMPOSED ON THE APPLICANT PURSUANT TO ARTICLE 58 OF THE ECSC TREATY AND ARTICLE 12 OF COMMISSION DECISION NO 1696/82/ECSC OF 30 JUNE 1982 ON THE EXTENSION OF THE SYSTEM OF MONITORING AND PRODUCTION QUOTAS FOR CERTAIN PRODUCTS OF UNDERTAKINGS IN THE STEEL INDUSTRY ( OFFICIAL JOURNAL 1982, L*191, P.*1 ) WAS VOID . IN THE ALTERNATIVE, THE APPLICANT CLAIMS THAT THE FINE SHOULD BE REDUCED .

2 THE CONTESTED DECISION FINED THE APPLICANT FOR EXCEEDING IN THE SECOND QUARTER OF 1983 BY 27*613 TONNES ITS PRODUCTION QUOTA FOR PRODUCTS OF CATEGORY IA AND BY 37*785 TONNES THE PART OF THAT PRODUCTION QUOTA THAT IT COULD DELIVER IN THE COMMON MARKET . THE APPLICANT, WHICH DOES NOT DENY HAVING MADE DELIVERIES IN EXCESS OF THE QUOTAS LAID DOWN CORRESPONDING TO THE AMOUNTS STATED BY THE COMMISSION, MAINTAINS THAT THE AMOUNTS IN EXCESS ARE COVERED BY DELIVERIES MADE OUT OF STOCKS OF CATEGORY IA PRODUCTS EXISTING AS AT 30 JUNE 1982 WHICH HAD BEEN DECLARED AS SUCH TO THE COMMISSION .

3 UNTIL 1 JULY 1981 STEEL PRODUCTS OF CATEGORY I, THAT IS TO SAY, HOT-ROLLED WIDE AND NARROW STRIP ROLLED ON SPECIALIZED MILLS, WERE SUBJECT TO THE QUOTA SYSTEM . IN VIEW OF DIFFERENCES IN MARKET CONDITIONS FOR DERIVED PRODUCTS OF CATEGORY I, COMMISSION DECISION NO 1831/81/ECSC OF 24 JUNE 1981 ESTABLISHING FOR UNDERTAKINGS IN THE IRON AND STEEL INDUSTRY A MONITORING SYSTEM AND A NEW SYSTEM OF PRODUCTION QUOTAS IN RESPECT OF CERTAIN PRODUCTS ( OFFICIAL JOURNAL L*180, P.*1 ) EXEMPTED PRODUCTS OF CATEGORY I FROM THE QUOTA SYSTEM WHILE SUBJECTING DERIVED PRODUCTS OF THAT CATEGORY ( CATEGORIES IA TO ID ) THERETO .

4 DERIVED PRODUCTS OF CATEGORY IA ARE DEFINED ESSENTIALLY IN TERMS OF THEIR INTENDED USE, IN PARTICULAR DIRECT USE, EXPORT OR PROCESSING IN OTHER COMMUNITY UNDERTAKINGS . SINCE THE INTENDED USE OF PRODUCTS CANNOT BE DEFINITIVELY VERIFIED UNTIL THEY ARE DELIVERED, DECISION NO 1831/81/ECSC CONTAINS A PROVISION ( REPRODUCED IN ARTICLE 11*(6 ) OF DECISION NO 1696/82, CITED ABOVE ) TO THE EFFECT THAT AN UNDERTAKING' S PRODUCTION OF HOT-ROLLED WIDE STRIP WHICH, IN A GIVEN QUARTER, DOES NOT FALL WITHIN THE SCOPE OF THE FIRST, SECOND AND FIFTH INDENTS OF CATEGORY IA IS TO BE REGARDED AS PRODUCTION OF COILS INTENDED FOR PROCESSING WITHIN THE UNDERTAKING ITSELF . IF NEVERTHELESS THAT PRODUCTION IS ASSIGNED DURING ENSUING QUARTERS TO DIRECT USE, EXPORT OR PROCESSING IN OTHER COMMUNITY UNDERTAKINGS, IT IS TO BE CHARGED AGAINST THE PRODUCTION QUOTA FOR CATEGORY IA PERTAINING TO THE ENSUING QUARTERS IN QUESTION .

5 THE ABOVEMENTIONED GENERAL DECISIONS CONTAIN NO PROVISION RELATING TO PRE-EXISTING STOCKS . HOWEVER, UNDER THE SECOND SUBPARAGRAPH OF ARTICLE 2*(1 ) OF DECISION NO 1696/82/ECSC, COMPULSORY REPORTING BY UNDERTAKINGS EACH MONTH OF THEIR PRODUCTION AND DELIVERIES WAS SUPPLEMENTED BY THE REQUIREMENT TO REPORT THEIR STOCK POSITION AS AT 30 JUNE 1982, THAT IS TO SAY THE DAY BEFORE THAT DECISION ENTERED INTO FORCE, IN RESPECT OF PRODUCTS SUBJECT TO THE QUOTA SYSTEM .

6 UNDER THE ADMINISTRATIVE PRACTICE FOLLOWED BY THE COMMISSION, HOWEVER, DELIVERIES WERE ALLOWED TO TAKE PLACE IN EXCESS OF QUOTA OF PRODUCTS WHICH WERE IN STOCK WHEN THE QUOTA SYSTEM ENTERED INTO FORCE FOR THE CATEGORY IN QUESTION, THAT IS TO SAY, GENERALLY ON 1 JULY 1981 . SINCE SOME UNDERTAKINGS CONSTRUED THE REPORTING REQUIREMENT INTRODUCED BY DECISION NO 1696/82/ECSC AS MEANING THAT THE PRACTICE WOULD BE REPEATED AS REGARDS STOCKS AS AT 30 JUNE 1982, THE COMMISSION ALSO ALLOWED DELIVERIES TO TAKE PLACE IN EXCESS OF QUOTA IN RESPECT OF SUCH STOCKS, WITH THE EXCEPTION OF PRODUCTS OF CATEGORY IA, IN WHICH CASE IT REQUIRED PROOF THAT THE PRODUCTS DELIVERED WERE IN STOCK ON 30 JUNE 1981 AS PRODUCTS OF CATEGORY I .

7 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR A FULLER ACCOUNT OF THE FACTS OF THE CASE, THE COMMUNITY LEGISLATION AND THE SUBMISSIONS AND ARGUMENTS OF THE PARTIES, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT .

8 IN SUPPORT OF ITS APPLICATION TO HAVE THE CONTESTED DECISION DECLARED VOID, THE APPLICANT ARGUES IN THE FIRST PLACE THAT THE COMMISSION' S CHARGING OF THE DELIVERIES IN QUESTION AGAINST THE QUOTAS IS CONTRARY TO THE PROVISIONS OF DECISION NO 1696/82/ECSC, AND IN PARTICULAR THE SECOND SUBPARAGRAPH OF ARTICLE 2*(1 ) OF THAT DECISION . IT MAINTAINS THAT THE ONLY POSSIBLE AIM OF THE REQUIREMENT TO REPORT THE STOCK POSITION LAID DOWN IN THAT ARTICLE IS TO DETERMINE THE PRE-EXISTING STOCKS WHICH ARE NOT TO BE CHARGED AGAINST THE QUOTAS, AND THAT, AS A RESULT OF ARTICLE 11*(6 ), WHICH EQUATES DELIVERY AND PRODUCTION IN THE CASE OF CATEGORY IA, PRODUCTS OF THAT CATEGORY WHICH ARE IN STORE HAVE ALREADY BEEN ACCOUNTED FOR AS HAVING BEEN DELIVERED AND THEREFORE HAVE ALREADY BEEN MONITORED BY THE COMMISSION .

9 AS FAR AS THE SECOND SUBPARAGRAPH OF ARTICLE 2*(1 ) OF DECISION NO 1696/82/ECSC IS CONCERNED, IT SHOULD BE NOTED THAT ACCORDING TO THE THIRD RECITAL IN THE PREAMBLE TO THAT DECISION THE AIM OF THE COMPULSORY REPORTING OF THE STOCK POSITION IS TO ENSURE THE SOUND OPERATION OF THE SYSTEM OF PRODUCTION QUOTAS . ACCORDINGLY, THE INTENTION BEHIND THE REPORTING OF THE STOCK POSITION IS TO PREVENT QUANTITIES PRODUCED IN EXCESS OF THE QUOTAS GRANTED FROM BEING CONCEALED BY ASCRIBING THEM TO PRE-EXISTING STOCKS . CONSEQUENTLY, IT CANNOT BE INFERRED THEREFROM THAT STOCKS WHICH HAVE BEEN REPORTED ARE NOT TO BE TAKEN INTO ACCOUNT WHEN CALCULATING DELIVERY QUOTAS .

10 SECONDLY, AS FAR AS ARTICLE 11*(6 ) OF DECISION NO 1696/82/ECSC IS CONCERNED, IT MUST BE BORNE IN MIND THAT THE PRODUCTION OF HOT-ROLLED WIDE STRIP, WHICH MAY FALL WITHIN CATEGORY IA, IS IN PRINCIPLE UNRESTRICTED IN SO FAR AS IT CONSTITUTES PRODUCTION FALLING WITHIN CATEGORY I, AND IS NOT TAKEN INTO ACCOUNT AS PRODUCTION FALLING WITHIN CATEGORY IA AND CHARGED AGAINST THE PRODUCTION AND DELIVERY QUOTAS FIXED FOR THAT CATEGORY UNTIL THE PRODUCTS ARE DELIVERED FOR DIRECT USE, EXPORT OR PROCESSING IN ANOTHER COMMUNITY UNDERTAKING .

11 CONSEQUENTLY, ALTHOUGH IT IS TRUE THAT ARTICLE 11*(6 ) EQUATES PRODUCTION AND DELIVERIES OF PRODUCTS OF CATEGORY IA, IT DOES NOT FOLLOW FROM THAT THAT PRODUCTS OF CATEGORY IA WHICH ARE IN STORE HAVE ALREADY BEEN ACCOUNTED FOR AS HAVING BEEN DELIVERED; RATHER, SUCH PRODUCTS ARE NOT ACCOUNTED FOR AS HAVING BEEN MANUFACTURED UNTIL SUCH TIME AS THEY HAVE BEEN DELIVERED . AS A RESULT, THE PRODUCTS AT ISSUE IN THIS CASE WERE NOT TAKEN INTO ACCOUNT FOR THE PURPOSE OF THE CALCULATION OF QUOTAS BEFORE THE QUARTER TO WHICH THE CONTESTED DECISION RELATES .

12 CONSEQUENTLY, THE APPLICANT' S FIRST SUBMISSION MUST BE DISMISSED .

13 SECONDLY, THE APPLICANT ARGUES THAT BY CHARGING AGAINST THE QUOTAS FOR CATEGORY IA DELIVERIES MADE FROM STOCKS AS AT 30 JUNE 1982 THE COMMISSION OMITTED - ARBITRARILY AND CONTRARY TO THE PRINCIPLE OF LEGITIMATE EXPECTATION - TO TAKE INTO ACCOUNT THE DISPOSAL OF STOCKS WHICH WERE IN EXISTENCE WHEN THE QUOTA SYSTEM WAS INTRODUCED . THE APPLICANT POINTS OUT IN PARTICULAR THAT IN THE CASE OF PRODUCTS OF OTHER CATEGORIES THE COMMISSION ALLOWED DELIVERIES OF PRODUCTS IN STOCK AT THAT DATE TO BE MADE IN EXCESS OF THE QUOTA .

14 AS FAR AS THOSE ARGUMENTS ARE CONCERNED, THE COURT POINTS TO THE DIFFERENCES EXISTING BETWEEN PRODUCTS OF CATEGORY IA AND PRODUCTS OF OTHER CATEGORIES . IN THE CASE OF THE LATTER, IT IS POSSIBLE TO BUILD STOCKS AND TO CHECK THAT THEY EXIST . IN CONTRAST, PRODUCTS OF CATEGORY IA ARE DEFINED ESSENTIALLY IN TERMS OF THEIR INTENDED USE AND HENCE IT IS NOT POSSIBLE TO VERIFY THAT THEY DEFINITIVELY BELONG TO THAT CATEGORY UNTIL THEY ARE DELIVERED . IT IS PRECISELY FOR THAT REASON THAT ARTICLE 11*(6 ) OF DECISION NO 1696/82 EQUATES THE PRODUCTION OF PRODUCTS OF CATEGORY IA WITH THEIR DELIVERY, WHICH MANIFESTLY PRECLUDES THE BUILDING OF STOCKS FOR THE PURPOSES OF THE QUOTA SYSTEM .

15 IT FOLLOWS THAT THE PRODUCTS OF CATEGORY IA WHICH THE COMMISSION MAY ALLOW TO BE DELIVERED IN EXCESS OF QUOTA ARE NOT THOSE WHICH THE UNDERTAKING DECLARED AS STOCKS AS AT 30 JUNE 1982 BUT ONLY THOSE PRODUCTS WHICH WERE PRODUCED BEFORE 1 JULY 1981 AND IN STOCK ON 30 JUNE 1981 AS PRODUCTS OF CATEGORY I .

16 IN VIEW OF THE FOREGOING, THE PRACTICE FOLLOWED BY THE COMMISSION WITH REGARD TO TAKING INTO ACCOUNT PRE-EXISTING STOCKS AS FAR AS CATEGORY IA IS CONCERNED IS NOT ARBITRARY OR CONTRARY TO THE LEGITIMATE EXPECTATION OF UNDERTAKINGS PRODUCING PRODUCTS OF THAT CATEGORY .

17 ACCORDING TO THE UNCONTESTED STATEMENT OF THE COMMISSION, THE APPLICANT WAS UNABLE IN THIS CASE TO PROVIDE PROOF THAT THE DELIVERIES IN QUESTION WERE OF PRODUCTS MANUFACTURED BEFORE 30 JUNE 1981 . IT FOLLOWS THAT THE APPLICANT' S SECOND SUBMISSION MUST ALSO BE REJECTED .

18 THE APPLICANT BASES ITS CLAIM FOR A REDUCTION IN THE FINE IN PARTICULAR ON THE UNCERTAIN INTERPRETATION OF THE RELEVANT PROVISIONS . IN THAT CONNECTION IT MUST BE POINTED OUT THAT, IN COMMON WITH THE OTHER FINES IMPOSED IN RESPECT OF THE SAME QUARTER, THE AMOUNT OF THE FINE - SET BY ARTICLE 12 OF DECISION NO 1696/82/ECSC AT 75 ECU FOR EACH TONNE IN EXCESS - HAS ALREADY BEEN REDUCED BY THE CONTESTED DECISION TO 50*ECU PER TONNE IN VIEW OF THE UNCERTAINTIES RELATING TO THE EXTENSION OF THE QUOTA SYSTEM TO THE QUARTER IN QUESTION . THE FOREGOING EXAMINATION OF THE SUBMISSIONS AND ARGUMENTS PUT FORWARD IN SUPPORT OF THE APPLICATION FOR THE ANNULMENT OF THE CONTESTED DECISION HAS NOT DISCLOSED ANY UNCERTAINTY OF INTERPRETATION SUCH AS TO WARRANT AN ADDITIONAL REDUCTION .

19 THEREFORE THE APPLICATION AS A WHOLE MUST BE DISMISSED .

COSTS

20 UNDER ARTICLE 69*(2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE APPLICANT' S ACTION IS UNSUCCESSFUL, IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS,

THE COURT ( SECOND CHAMBER )

HEREBY :

( 1 ) DISMISSES THE APPLICATION;

( 2 ) ORDERS THE APPLICANT TO PAY THE COSTS .