1. 

This is certainly not the first time that the Court of Justice has been called upon to interpret provisions under the additional milk levy system. However, despite the wealth of case-law on the subject, the Court has not often had occasion to deal with the interpretation of the provisions governing in particular the payment of the additional levy on quantities of milk sold for direct consumption. The questions referred to the Court by the Finanzgericht München for a preliminary ruling concern precisely those provisions.

2.

Article 5c of Council Regulation (EEC) No 804/68 of 27 June 1968, ( 1 ) which was inserted by Article 1 of Council Regulation (EEC) No 856/84 of 31 March 1984, ( 2 ) introduced, for the purpose of curbing the increase in milk production, an additional levy payable on quantities of milk or other milk products which were either delivered to the purchaser for treatment or processing or sold for direct consumption and exceeded a certain reference quantity.

3.

As regards payment of the levy on quantities delivered to the purchaser for treatment or processing, the system was put into operation in the Member States on the basis of one of two alternative formulas provided for in Article 5c(l). Under Formula A, the levy is payable by producers of milk or other milk products on the quantities of milk delivered to purchasers and which, for the 12 months concerned, exceed a certain reference quantity. Under Formula B, the levy is payable by purchasers of milk or other milk products on the quantities of milk delivered to them by producers which exceed a certain reference quantity; under the second formula, the levy payable by the purchaser is passed on to those producers who have contributed to exceeding the purchaser's reference quantity.

4.

In Article 5c(2) it was, moreover, laid down that the levy should also be payable by every milk producer on the quantities of milk and/or milk equivalent ‘he has sold for direct consumption’ and which, during the 12 months concerned, exceed a certain reference quantity.

5.

Special measures in respect of the additional levy on quantities of milk sold for direct consumption were introduced by Council Regulation (EEC) No 857/84 of 31 March 1984, ( 3 ) which laid down in Article 6(1) that each producer of milk and milk products was to be assigned a reference quantity corresponding, in principle, to the sales for direct consumption made by the producer during the 1981 calendar year, increased by 1%, ( 4 ) and in Article 6(2) that the total of the said reference quantities might not exceed certain quantities fixed at a different level for each Member State in the annex to the regulation. Moreover, Article 12(h) of the same regulation set out the following definition: that ‘milk or milk equivalent sold directly to consumption: milk or milk products processed into milk equivalent, sold without going through an undertaking treating or processing milk’.

6.

Further details concerning the application of the additional levy system were laid down in Commission Regulation (EEC) No 1371/84 of 16 May 1984, ( 5 ) the provisions of which, having been repeatedly amended in the meantime, were codified by Commission Regulation (EEC) No 1546/88 of 3 June 1988. ( 6 ) Article 4(1) of Regulation No 1371/84 (Article 5(1) of the codifying Regulation No 1546/88), provided that producers of milk or milk products selling milk and/or milk products for direct consumption were to send to the competent authority designated by the Member State ‘an application for registration’ accompanied by a statement listing the products and quantities of those products sold by direct sale during the reference calendar year. The ‘application for registration’ was, under that same provision, to be submitted before a date fixed by the Member State which was not, however, to be later than 31 December 1984. ( 7 ) Article 4(2) introduced special measures with regard to the content of the statement accompanying the application for registration of producers who began selling for direct consumption after 1 January 1981 or who greatly altered their operations after that date, whereas Article 4(4) laid down the method of calculating the reference quantities assigned to producers who submitted the said ‘application for registration’.

7.

The additional levy on milk was originally imposed for five 12-month periods (the first starting from 1 April 1984), which ultimately increased to nine. ( 8 ) In Article 1(3) of Council Regulation (EEC) No 2071/92 of 30 June 1992, ( 9 ) which applied from 1 April 1993, Article 5c of Regulation No 804/68 was replaced by a provision stating simply that the price system of Regulation No 804/68 ‘is established without prejudice to the implementation of the additional levy’. That system has been governed since 1 April 1993, for seven 12-month periods, by the provisions of Council Regulation (EEC) No 3950/92 of 28 December 1992. ( 10 ) That recent regulation lays down in Article 1 that the additional levy is to be imposed on quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption in excess of the corresponding reference quantities, in Article 2(1) that the levy payable on all quantities of milk or milk equivalent marketed during the 12-month period in question in excess of the total of the individual reference quantities of the same kind is to be shared between the producers who contributed to the overrun and, finally, in Article 4(1), that the individual reference quantities are to be equal in principle to the reference quantities available on 31 March 1993 (the date on which the first nine twelve-month periods applying the additional levy system ended).

8.

The Dominikanerinnen-Kloster (Dominican Convent) Altenhohenau runs an agricultural holding producing milk, butter and meat. Until the end of the school year 1991/92 it also ran a private elementary school with boarding facilities providing for approximately 120 to 135 pupils, together with those who worked in the school, the boarding facilities and the convent. After the introduction of the additional levy system on milk, a reference quantity of 68262 kg was allocated to the convent for deliveries of milk to purchasers for processing or treatment.

9.

On 2 December 1991 the convent applied to the Hauptzollamt Rosenheim (the ‘Hauptzollamt’) for the grant of a reference quantity for sales of milk to direct consumption, claiming that:

10.

By a decision of 16 January 1992 the Hauptzollamt rejected the convent's application, relying on the fact, according to the order for reference, that it had been submitted after the expiry of the time-limit provided for the submission of an ‘application for registration’ by producers who sold milk for direct consumption. ( 11 ) The convent appealed against that decision to the Finanzgericht München, which considered it necessary, before the case could be resolved, to refer the following questions to the Court for a preliminary ruling:

If so:

11.

The relevant provision, Article 12(h) of Regulation No 857/84, defines as ‘milk or milk equivalent sold directly to consumption’ milk (or milk products processed into milk equivalent) which is sold without going through an undertaking treating or processing milk. Moreover, from the information given in the order for reference, it appears quite clear that the convent, the appellant in the main proceedings, supplied its pupils boarding at the school with quantities of milk for consumption without the milk going through an undertaking for treating or processing milk. Consequently, it is apparent that the national court wishes to ascertain whether the supply of milk for consumption in the above circumstances may be regarded as a sale.

12.

I consider, and agree on this point with the Commission, that in order to deal with that question account must first and foremost be taken of the purpose of establishing the additional levy system. As the Court has repeatedly stated, ( 13 ) the purpose of imposing the additional levy is to re-establish equilibrium in the milk market, which is characterized by structural surpluses, by limiting milk production. In order to achieve that objective, which, as the Court has held, ( 14 ) complies with Article 39 of the Treaty, the Community legislature chose as a means of discouraging the production of milk the obligation to pay the levy when a quantity of milk has been exceeded (reference quantity) representing the quantity which, in the relevant reference year, had either been supplied (Formula A) or purchased (Formula B) for processing or treatment or had been sold direct for consumption.

13.

In those circumstances, and since the relevant measures do not make any distinctions, furtherance of the purpose of the additional levy system to the fullest possible extent requires the broadest possible interpretation of the phrase ‘milk ... sold directly to consumption’ so as to cover every form of transfer to a third party against payment ( 15 ) of a quantity of milk for the purpose of its consumption without undergoing treatment or processing. If those conditions are met, other factors in respect of the conditions under which the transfer takes place should be regarded as immaterial in arriving at a definition. Thus neither the fact that the transfer of the milk does not take place on the basis of independent contracts but on the basis of a contractual relationship, under which the producer is obliged to supply to the other party, besides a certain quantity of milk, products or services of another kind, nor, of course, the place where the milk is consumed can make any difference. ( 16 )

14.

The national court does not seem to have any doubts that ‘sold for direct consumption’ within the meaning of Article 5c(2) of Regulation No 804/68 and Article 12(h) of Regulation No 857/84 also covers disposal of milk under the conditions described in the order for reference, the supply, in other words, to the pupils of the private school run by the convent who board in the boarding school run by the convent, of quantities of milk from its agricultural holding, against payment which is included in the total amount paid by the pupils for the services provided in the boarding school. ( 17 ) It mentions, however, that the Hauptzollamt claimed at the hearing that, contrary to the Commission's view, the supply of milk for consumption in the circumstances set out constitutes ‘own consumption’, since on the one hand the boarders ‘consume their own production’ and on the other hand the convent cannot be regarded as a producer selling for direct consumption since its production is disposed of on the spot.

15.

As the national court correctly points out, the view ascribed to the Commission ( 18 ) can find no support in the provisions at issue here. It is of course self-evident that the consumption of milk by the producer himself does not constitute milk ‘sold direct for consumption’, whereas, on the other hand (see above at point 13 and footnote 15), disposal of milk for consumption to third parties (for example to those working on the producer's agricultural holding) without a price being paid does not constitute a ‘sale’ within the meaning of the provisions governing the additional levy system at the relevant time. I do not, however, see how it would be possible to accept that the boarders at the convent's boarding school consume ‘their own production’ on the sole ground that the milk supplied to them (against payment, I would point out) came from the convent's agricultural holding. I have, moreover, already mentioned (see above, point 13 at footnote 16) that the place where the milk sold is disposed of does not, in my view, have any effect on the definition of the term ‘sold for direct consumption’.

16.

In summary, I would suggest the following answer to the first question: ‘Delivery against payment to persons at a boarding school of milk or milk products from a holding of an institution which is also responsible for the operation of the boarding school constitutes “milk or milk equivalent sold directly to consumption” within the meaning of Article 12(h) of Council Regulation (EEC) No 857/84.’

17.

In the order for reference it is stated that the doubts entertained by the national court with regard to the validity of Article 4(1) of Regulation No 1371/84 (Article 5(1) of the codifying Regulation No 1546/88) arise from the fact that that provision, by which a mandatory time-limit was laid down within which producers selling milk for direct consumption were bound, in order to be awarded the relevant reference quantities, to submit an ‘application for registration’ accompanied by a statement listing the products and quantities of those products sold by direct sale during the reference year, does not provide for any exception to that obligation, in particular with regard to producers whose business situation has changed after the time-limit has expired in such a way that there is a need for a reference quantity to be awarded if the undertakings are to remain viable. The national court does not explain the principle on the basis of which it would be possible, in its view, to found an obligation on the part of the Community legislature to provide for the above exception. I consider, however, that in order to give a useful reply to the second question referred to the Court for a preliminary ruling, the provision at issue must be examined in the light of the principle of proportionality, that is to say the objective sought should be identified and an assessment made as to whether the measures introduced are appropriate and necessary to achieve that objective. ( 19 )

18.

At the outset I must point out that Article 4(1) of Regulation No 1371/84 does not expressly state that, as a consequence of the possible belated submission of the ‘application for registration’ therein provided for, the producer's entitlement to claim a reference quantity for sales of milk direct to the consumer should be forfeited. An examination of Article 4(1), however, in combination with Article 4(2) and (4)(a) and (b), from which it appears that the determination of the reference quantity for the sale of milk direct to the consumer takes place on the basis of evidence which the producers are obliged to submit together with the ‘application for registration’, does not, in my view leave room for any doubt as regards the fact that the award of such reference quantities is precluded if the ‘application for registration’ is submitted after expiry of the relevant time-limit.

19.

In order to identify the objective of the measures at issue, I should point out first that the individual reference quantities, the exceeding of which gives rise to an obligation to pay the additional levy, correspond, in principle, in the case of sales of milk for direct consumption, to direct sales by the producer over the reference year, increased by a certain percentage (see Article 6(1) of Regulation No 857/84). It might, however, be necessary to correct the individual reference quantities which arise on the basis of the above facts, in order to comply with the basic principle of the system, according to which (see Article 6(2) of Regulation No 857/84), the total of the individual reference quantities may never exceed the total quantities fixed (at a level that is different for each Member State) in the annex to Regulation No 857/84. Precisely that possibility of correcting individual reference quantities on the basis of a uniform percentage was provided for in Article 4(4) of Regulation No 1371/84. In that light, the Community legislature evidently considered, on grounds of rational and effective management of the system, that there should be registration of producers selling for direct consumption and of the basic facts concerning that activity of theirs in order that their existing needs for the grant of the relevant reference quantities might be assessed in due time together with appropriate adjustment, in order that the total quantity provided for the Member State in question should not be exceeded. ( 20 ) In view of those factors, the setting of a time-limit within which producers in that category were obliged to submit the ‘application for registration’ in question, accompanied by a statement listing the products and quantities of those products sold by direct sale which took place for direct consumption in the period taken for the purposes of fixing the reference quantity and, furthermore, the provision that failure to observe that mandatory time-limit would entail forfeiture of the producers' entitlement to claim grant of a reference quantity constitute, in my opinion, measures which appear, in principle, appropriate and necessary for achieving the above objective.

20.

Those measures cannot, in any case, be regarded as disproportionate to the objective sought for the sole reason that no possibility is provided of granting a reference quantity, after expiry of the time-limit, to producers such as those referred to in the second question. It is quite clear that to make provision for such a possibility under the additional levy system would be unthinkable except in the case of a producer who, before the system was introduced, had effected sales for direct consumption and was accordingly entitled to submit an ‘application for registration’ for the purpose of obtaining a corresponding reference quantity. The second question referred to the Court must, in consequence, refer only to producers who belong to that specific category; the facts of the case before the national court moreover indicate that that is the situation. However, neither the principle of proportionality nor any other general principle of Community law required the Community legislature to provide that a producer who had freely chosen not to exercise the above right within the prescribed period should be able to exercise it after its expiry, simply because, after that point in time, the conditions under which he carried out his activities had altered. ( 21 ) That is the case a fortiori where the recognition of such a right was likely to affect the interests of third parties: the grant, after the expiry of the time-limit, of reference quantities could in fact have led, in order that the hard and fast terms of the total quantity were complied with, to subsequent reduction of the reference quantities which had been granted to producers who, in the exercise of their entitlement, had submitted their ‘application for registration’ in time, had obtained a reference quantity and structured their activities accordingly. ( 22 )

21.

I suggest, therefore, that the following reply to should be given to the second question:‘The validity of Article 4(1) of Commission Regulation (EEC) No 1371/84 of 16 May 1984 (Article 5(1) of Commission Regulation (EEC) No 1546/88 of 3 June 1988) laying down a time-limit expiring on 31 December 1984, failure to comply with which would lead to a producer forfeiting the right to apply for a reference quantity for sales of milk direct to consumption, is not affected by the fact that that provision does not provide for the possibility of the relevant application being submitted after expiry of the time-limit by a producer who had not, as he was entitled to, submitted an application, his marketing requirements having altered after expiry of the time-limit in such a way that the above reference quantity was now essential to him.’

22.

By the third question the national court poses the question whether, despite the expiry of the time-limit laid down in Article 4(1) of Regulation No 1371/84, a reference quantity may be granted to a producer for direct sale to consumption ‘by way of restoration to the status quo ante or on the basis of other general principles of Community law’, if consideration is taken of the fact that, ‘in accordance with their practice, the administrative authorities’ would still have rejected an ‘application for registration’ submitted in due time?

23.

As is made clear in the grounds of the order for reference, the question is raised because, according to the national court, even if the convent had lodged an ‘application for registration’ in due time, that application would nevertheless have been rejected in view of the fact that the competent national authorities were operating on the understanding that, in the view of the Commission, ( 23 ) the delivery of milk to the pupils in the boarding school did not constitute ‘the sale of milk direct to consumption’ within the meaning of the Community provisions in question.

24.

I should right away point out that the objective fact alone that, in view of the administrative practice followed, there was a possibility or even certainty that the competent national authority would reject an ‘application for registration’ submitted in time, believing (wrongly, as I have argued above under point III) that the producer who delivered milk for consumption in the above circumstances had not effected sales direct to consumption in the relevant reference year, would not suffice to entitle the latter to submit an application after expiry of the time-limit. The above objective fact would not in fact prevent him from submitting an application within the time-limit and subsequently having recourse to the legal remedies provided against the decision rejecting his application in order to obtain a declaration from the competent judicial body (following, if need be, submission of a reference for a preliminary ruling to the Court of Justice) that the decision of rejection was unlawful.

25.

The national court considers, however, that it might be possible, in the light of the actual facts of the case pending before it, to allow submission of an ‘application for registration’ despite expiry of the said time-limit (and perhaps also despite the time bar laid down in Paragraph 56(3) of the Finanzgerichtsordung) in application of the ‘principle of restoration to the status quo ante, which is also applicable in Community law’. The exact content of the principle invoked by the court of reference is not clear. I consider that what is meant is that the contested time-limit could possibly be waived in respect of the convent, since its failure to lodge an ‘application for registration’ in time was not due to the objective fact of the existence of an administrative practice which made it likely or certain that the application would be rejected but to the fact that, in view of that administrative practice, the convent was convinced that it was useless to submit an application.

26.

On that point it should be recalled that, in accordance with the case-law of the Court, ( 24 ) expiry of a time-limit cannot be pleaded against a person who was required to act within that time-limit if the situation was one of excusable error. Recently, moreover, the Court of Justice has accepted ( 25 ) that the concept of excusable error in relation to the point when the prescribed period within which an action may be brought begins to run concerns only exceptional circumstances in which, in particular, the conduct of the institution has been, either alone, or to a decisive extent, such as to give rise to a pardonable confusion in the mind of the party concerned. I consider that the concept of excusable error in the latter case constitutes merely a special application of the principle of protection of legitimate expectations: ( 26 ) where an individual, in order to obtain a full and accurate picture of the legal and factual aspects of a specific situation, has reasonably referred to the conduct of the competent bodies, he should not have to suffer the adverse consequences of administrative conduct which, rather than enlightening him, caused confusion. In view, however, of the foregoing, a construction by analogy of excusable error should be accepted with regard to the time-limits laid down by the Community legislature in respect of administrative procedures, and in respect of situations in which the expiry of a time-limit is not linked to the conduct of a Community body, but to that of a national body, exercising the power conferred upon it by the Community legislature. ( 27 )

27.

The question that now arises is whether the conviction engendered in the mind of a particular producer in view of the practice of the national competent authority in question that an ‘application for registration’, albeit submitted in time, would be rejected by the competent authority by reason of a mistaken interpretation and application of the substantive Community legislation could be regarded as excusable error sufficient to justify failure to comply with the time-limit prescribed by Article 4(1) of Regulation No 1371/84. That question should, in my opinion, be answered in the negative. Even if the principle were accepted that excusable error may relate not only to factors associated directly or indirectly with the commencement, length and expiry of the time-limit but also to the fate, from a substantive point of view, of the application which should have been submitted within that time-limit, I do not consider that a conviction engendered in the circumstances set out on the part of the producer constitutes pardonable confusion: I have already had the occasion to mention (see point 24 above) that there was nothing to prevent the producer, despite the existence of a certain administrative practice, from submitting an ‘application for registration’ and seeking the appropriate judicial remedy once it had been rejected.

28.

For the sake of completeness, I should, however, add that if it should be accepted that a conviction engendered in the above circumstances can, in principle, constitute ‘pardonable confusion’, it will be for the national court to assess when the confusion was due exclusively or to a determinant extent to the practice followed by the competent body. To that end it would be necessary to establish, for instance, the year when the administrative practice which led to the confusion first began, ( 28 ) the consistency with which it was followed and the extent to which it affected the outcome of applications submitted by producers who were in the same situation as the producer relying on excusable error.

29.

In summary, I suggest that the following reply should be given to the third question referred to the Court: ‘The fact that, in accordance with the administrative practice of the national authorities responsible for applying the Community provisions in question, an “application for registration” submitted within the time-limit laid down by Article 4(1) of Commission Regulation (EEC) No 1371/84 of 16 May 1984 (Article 5(1) of Commission Regulation (EEC) No 1546/88 of 3 June 1988) would have been rejected because of a misinterpretation and misapplication of the substantive Community provisions in question cannot justify, in application of the general principles of Community law, the submission of the said “application for registration” after expiry of the time-limit.’

30.

In view of the foregoing, I would propose that the Court answer the questions referred to it as follows: