Opinion of the Advocate-General
I Preliminary remarks
1. In this case the Court is asked to answer two questions referred by the Hessisches Finanzgericht (Finance Court, Hessen) for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC). Those questions concern the interpretation of the provisions of Article 7 of Regulation (EEC) No 2169/86, as amended by Regulation (EEC) No 165/89.
II Legal context
2. It is essential to describe the legal context of the proceedings pending before the national court in order to be able to understand the problems of interpretation raised by the questions referred for a preliminary ruling. Those questions concern certain provisions of Regulation No 2169/86. That regulation provides, in principle, that persons using starch for the production of approved products (manufacturers) may claim a production refund per tonne of basic starch; to that end, the Community legislature lays down detailed procedural rules and establishes a system for the control of refund applications. In outline, the procedure is as follows: manufacturers who intend to claim production refunds apply to the competent national authorities; if they satisfy the conditions laid down by Regulation No 2169/86, the authorities include them on the list of approved manufacturers. The manufacturer then submits an application in writing for a refund certificate. The issue of the certificate is subject to the lodging of a security in accordance with Article 7 (the provision at issue) of Regulation No 2169/86. Holders of such certificates are entitled to claim payment of the refund after the starch has been processed into one of the approved products as defined in Article 1 of Regulation No 2169/86, which refers to Regulation (EEC) No 1009/86. Payment of the refund and release of the security take place as soon as the holder of the certificate has provided the administrative authority with the information referred to in Article 8 of Regulation No 2169/86 and when the administrative controls provided for by the following article of that regulation have been completed.
3. However, experience showed that that mechanism for the grant and control of refunds did not allow effective prevention of certain forms of speculation in which manufacturers were engaging, especially in the case of esterified or etherified starch. That product has the characteristic of being reprocessable into a raw material, so that manufacturers can, in certain circumstances, apply (illegally and wrongfully) for more than one refund. That was the reason for the adoption of Regulation (EEC) No 3642/87, which provides that where the product indicated on the certificate is esterified or etherified starch, that is to say, where it falls under Common Customs Tariff CN code 3505 10 50, the security provided for in Article 7 of Regulation No 2169/86 shall equal 105% of the production refund to be granted for the manufacture of the product in question. That security is released if the competent authority has received proof that the product has been used to manufacture products other than those listed in Annex 1, that is to say, has been processed into a product which cannot be reprocessed into a raw material.
4. That specific set of rules for esterified or etherified starch was modified by Regulation No 165/89, which amended Article 7(4) of Regulation No 2169/86 and added a new paragraph 5 to that article. The national court is concerned with those provisions.
Article 7(4) of Regulation No 2169/86, as it applies in this case, is worded as follows:
Without prejudice to paragraph 2, the security referred to in paragraph 1, second subparagraph, shall only be released if the competent authority has received proof that the product under CN code 3505 10 50 is:
(a) used to manufacture products other than those listed in Annex I; or
(b) exported to third countries.
In the case specified under (a), this proof may be furnished by the presentation by the manufacturer to the competent authority of a declaration stating that:
in the case where the product in question is to be further processed, he will use this product only to manufacture products other than those listed in Annex I, and,
he will sell the product in question only to a party who will engage in the same requirements, and will obtain a copy of the said engagement and will keep it at the disposal of the competent authority, and,
he is aware of the provisions of Article 7(5).
...
Article 7(5) of Regulation No 2169/86, in the version which was in force at the time of the facts of this case, was worded as follows:
The competent authority shall be obliged to check by appropriate means, including a posteriori spot checks, that the declaration mentioned in paragraph 4 has been fully complied with. Where the party concerned fails to comply with the conditions specified in this Article, without prejudice to national penalties, the competent authority in the Member State concerned shall require payment by the party concerned of an amount equal to 105% of the highest production refund applicable to the product in question during the previous 12-month period.
5. Finally, it should be pointed out that Regulation No 2169/86 was repealed on the entry into force of Commission Regulation (EEC) No 1722/93, on which I shall comment in greater detail below. However, as far as the present case is concerned, Regulation No 2169/86, as amended and supplemented by Regulations Nos 3642/87 and 165/89, is applicable.
III Facts and procedure
6. The German company Döhler GmbH (hereinafter Döhler), which is the plaintiff in the main proceedings, produces and distributes foodstuffs and beverages. Following an inspection carried out by the competent German administrative authorities in respect of the period from 1 January 1988 to 31 December 1990, an inspection report was drawn up on 30 December 1992, containing the following findings.
In the period from 1988 to 1990, the plaintiff purchased a total of 916 925 kg of esterified or etherified starch under CN subheading 3505 10 50. The suppliers of that starch were the Belgian company Amylum NV (hereinafter Amylum) and the German company Cerestar Deutschland GmbH (hereinafter Cerestar). In respect of 1989, the plaintiff declared to Amylum that the esterified and etherified starches purchased from Amylum are intended for our own use and for the manufacture of end products other than those listed in Annex I to Regulation No 2169/86. Those starches will not be resold to third parties. The plaintiff states that it did not make a similar declaration to Amylum in respect of 1990. It also made the following declaration to Cerestar: We hereby certify that the processed products purchased were used for the manufacture of goods which are not listed in Annex I to Regulation (EEC) No 2169/86. It should be pointed out that, according to the plaintiff, the companies which supplied those goods to it received, on that basis, the refunds provided for by the abovementioned Community legislation.
Of the 916 925 kg of starch purchased, Döhler resold 726 860 kg unaltered within the Community. The main purchaser of those products was Döhler Food Service GmbH, a wholly-owned subsidiary of the plaintiff. That subsidiary sold the products at issue to small or very small businesses, namely individual bakeries or patisseries. The plaintiff did not require those purchasers to give it the undertakings provided for in the fourth subparagraph of Article 7(4) of Regulation No 2169/86, nor did it produce any such undertakings at the request of the administrative authorities in the course of the administrative inspection procedure.
That being the case, the competent national authorities adopted, on 7 June 1994, a decision requiring Döhler to repay a sum of DEM 181 330.71 on account of the improper use of 500.4 tonnes of esterified or etherified starch. The legal basis for that decision was Article 7(5) of Regulation No 2169/86. The reference date chosen for the calculation of the 12-month period referred to in that provision was that on which it was found that the starch had been used for purposes other than those provided for. However, the plaintiff points out in its observations that the administrative penalty in question was in fact imposed on it not because it made improper use of the product but because it did not obtain from the purchasers to which it resold that product the undertakings provided for by Article 7(4) of Regulation No 2169/86.
Döhler brought an action against the abovementioned decision before the national court, which has found it necessary to refer the following questions to the Court of Justice for a preliminary ruling.
IV The questions referred
7. 1. Is the second sentence of Article 7(5) of Commission Regulation (EEC) No 2169/86 of 10 July 1986 laying down detailed rules for the control and payment of the production refunds in the cereals and rice sectors, in the version as amended by Regulation (EEC) No 165/89 of 24 January 1989, to be interpreted as meaning that the expression "the party concerned" also includes the purchaser of a product CN 3505 10 50, who has for his part undertaken to the manufacturer and/or supplier of that product to use it exclusively for the manufacture of products other than those listed in Annex I?
2. If the answer to Question 1 is in the affirmative:
(a) Does the required payment by the purchaser of 105% of the highest production refund applicable to the product in question during the previous 12-month period apply irrespective of whether the security provided by the manufacture possibly on account of a knowingly false undertaking by the party referred to in Question 1 has been released?
(b) Is it still possible to require payment by the purchaser of 105% of the highest production refund applicable to the product in question during the previous 12-month period if it can no longer be determined whether the purchaser gave an undertaking, but it is clear that processing into a product other than one listed in Annex I has not taken place or been proved on the part of either the purchaser or a subsequent purchaser?
3. If the answers to Question 2 are in the affirmative:
As from what point in time is the "previous 12-month period" in the second sentence of Article 7(5) of Regulation (EEC) No 2169/86 to be calculated?
V The first question referred
8. The main issue of concern to the national court is whether purchasers of esterified or etherified starch who have given an undertaking as provided for in the fourth subparagraph of Article 7(4) of Regulation No 2169/86 fall within the category of persons who can be required to pay an amount equal to 105% of the highest production refund applicable to the product in question during the previous 12-month period pursuant to Article 7(5) of that regulation. I consider it appropriate to make three preliminary remarks.
9. It is essential to point out, first, that the provisions at issue of Article 7(5) of Regulation No 2169/86 prescribe an administrative penalty designed to prevent speculation and fraud in connection with production refunds. None of the parties which have lodged observations disputes that those provisions are in the nature of a penalty; that nature is also clear from the wording and general scheme of the rules concerned. The requirement to pay a sum equivalent to the highest possible refund plus 5% applies to persons who are found not to have complied with the rules laid down by the regulation in question and who have acted to the detriment of the system of Community production refunds; their conduct has given rise to the illegal release of the security provided for by Article 7 of Regulation No 2169/86 or to the illegal grant of a refund. Furthermore, the disputed requirement to pay is imposed without prejudice to national penalties. That phrase used by the Community legislature means, first, that the measure introduced by Article 7(5) constitutes an administrative penalty and, second, that the principle of non bis in idem does not apply in this case.
10. It is essential to emphasise also the importance of preventing speculation and fraud in connection with the sensitive issue of production refunds for esterified or etherified starch.
As Advocate General Léger points out in his Opinion in the Kyritzer Stärke case, [t]here is no doubt that since 1987 the campaign against fraud in the processing of esterified or etherified starch has been one of the Community legislature's objectives in drafting regulations and the prescribed use of processed products is its chosen method of attaining it. In the same case, the Court held that the proper-use requirement in regard to products for which a production refund is granted, in particular esterified or etherified starch, is a component part of the obligation to process the substances concerned into approved products, so as to ensure the irreversibility of the processing; that requirement is therefore a primary requirement within the meaning of Article 20(2) of Regulation (EEC) No 2220/85. Compliance with the conditions laid down by Article 7(4) of Regulation No 2169/86 in connection with the processing and distribution of etherified or esterified starch clearly falls within the scope of the abovementioned proper-use requirement. However, it should be pointed out that the Kyritzer Stärke judgment concerned a producer of starch who had lodged a security with the object of benefiting from a production refund and not a purchaser of starch like the plaintiff in the main proceedings.
11. Finally, it should be borne in mind that, when the Community legislature prescribes penalties, it must satisfy certain conditions which the Court has laid down in settled case-law. In the Könecke judgment, the Court held that a penalty, even of a non-criminal nature, cannot be imposed unless it rests on a clear and unambiguous legal basis. The Milchwerke Köln/Wuppertal judgment is also relevant with regard to the answers to be given to the questions referred in this case; in that judgment the Court held that [n]otwithstanding the need to combat fraudulent transactions, a penalty consisting in the substitution of the purchaser for the producer presupposes the existence of a legal basis laying down the conditions for, and the scope of, that penalty. For that reason, the Court did not allow a Community provision imposing penalties on milk producers for infringements committed in connection with the system for the common organisation of the market to be interpreted widely as meaning that it was also applicable as against the purchasers, even though the latter were responsible for the infringements established.
It is therefore not possible, by means of an interpretation, to circumvent the requirement for the legislature to formulate clearly any rules providing for penalties, however appropriate the application of the penalty concerned may appear for ensuring the observance of Community law. That requirement entails, at the very least, the need to define, first, the infringement for which the penalty is imposed (crimen), second, the nature and content of the penalty provided for (poena) and, third, the category of persons to which the mechanism of the administrative penalty applies.
In summary, the first question referred asks the Court to consider, first, whether the penalty provided for in Article 7(5) of Regulation No 2169/86 also applies to purchasers of esterified or etherified starch who have given the undertaking referred to in the previous paragraph of that article; second, if so, to what extent the penalty in question is compatible with the requirements laid down by the case-law of the Court with regard to administrative penalties.
A Can penalties be imposed on purchasers?
12. This question is raised by the national court and by the plaintiff in the main proceedings. They maintain that application of the penalty at issue to purchasers of starch poses problems, inasmuch as such purchasers are not eligible for production refunds and the penalty is directly linked to the release or non-release of the security which the manufacturer has been requested to lodge. Only the manufacturer can therefore be punished for any infringement of the rules concerning the security which are laid down by the regulation in question.
I cannot agree with that line of argument. The penalty provided for in Article 7(5) is certainly directly linked to the Community provisions concerning release of the security lodged by the manufacturer. However, that does not mean that the penalty cannot be imposed de jure on parties other than the manufacturer who lodged the security. The Community legislature is free to introduce, within the framework of the system of production refunds, a set of legal rules imposing certain requirements on the parties involved in that system, who include the purchasers of the products in question. If the Community legislature has in fact introduced such provisions, it is legitimate to respond to non-compliance with the abovementioned requirements by imposing penalties on the offenders, even if those parties have not benefited directly from the damage caused to the system of production refunds by their illegal conduct.
The penalty provided for in Article 7(5) of Regulation No 2169/86 is thus intended to deal with infringements connected with the wrongful and possibly fraudulent release of the security provided for by that article. The identity of the party who may be regarded as having committed the infringements in question depends on the wording and content of the legal rules which have been infringed; those rules are not precluded a priori from affecting parties other than the manufacturer who lodged the security, in particular the purchasers of the products in question.
A final remark: the argument that purchasers derive no benefit from the refunds granted to manufacturers or from release of the security is only partly correct. If those parties have cooperated with the manufacturer in such a way as to obtain the release of the security and the subsequent grant of the refund by cooperation I mean the giving of the undertaking by those parties pursuant to Article 7(4) of Regulation No 2169/86, according to which they engage in the same requirements they may, in some cases, have obtained a more favourable purchase price.
In conclusion, I am of the opinion that no superior rule of law precludes the Community legislature from introducing a mechanism under which non-compliance by purchasers of a product with undertakings which they have given, as a consequence of which the seller obtains the release of the security which he had been requested to lodge, entails the imposition of penalties on those purchasers.
It remains to be examined whether Regulation No 2169/86 did in fact introduce such a penalty mechanism which satisfies the conditions laid down by the case-law with regard to administrative penalties.
B Do the provisions of Regulation No 2169/86 prescribe penalties applicable to purchasers?
(a) The party concerned within the meaning of Article 7(5) of Regulation No 2169/86
13. On a literal reading of the provision at issue, it can be argued that the penalty instituted is also aimed at purchasers of esterified or etherified starch who purchase those products from the manufacturer and who give, with regard to their use, the undertakings provided for in Article 7(4) of Regulation No 2169/86.
In principle, in previous paragraphs of the same article, the Community legislature uses the term manufacturer to refer to the person who claims the production refund and who is required to lodge a security; however, in the disputed passage in paragraph 5, which describes the content of the administrative penalty in question, it uses the term party concerned to define persons falling within the scope of that penalty. The difference in terminology could be construed as evidence of the intention of the Community legislature not merely to punish the conduct of offending manufacturers, but also to extend the application of penalties to other categories of persons. Otherwise one would expect it to use the term manufacturer in the relevant part of Article 7(5) as well.
The question which arises is to what extent the category consisting of purchasers of the product at issue, to which Döhler belongs, can be one of the categories of persons covered by the term party concerned. In this respect, it is sufficient to point out that purchasers form the only category of persons, other than manufacturers, to which the Community legislature can logically be referring when it uses the term party concerned. It is clear from the content of Article 7 of the regulation that the only persons, other than the manufacturer, with whose conduct the legislature is concerned are purchasers who engage in the same requirements with regard to the use of the product in question. Consequently, since the relevant part of Article 7(5) uses the expression party concerned, which may include persons other than manufacturers, those persons can only be the purchasers of the product at issue.
14. That observation is not, however, a sufficient basis for a satisfactory interpretation of the provisions at issue, and it cannot be maintained that the term party concerned does not necessarily equate to manufacturer.
The first argument in favour of such equation derives from Article 7(4) of Regulation No 2169/86 itself. The last sentence of that paragraph states that, where proof that the product at issue has left the customs territory of the Community must be furnished by the production of a control copy T5, and where that copy is not returned to the competent authorities within the period laid down owing to circumstances beyond the control of the party concerned, the latter may apply to the competent authority for other documents to be accepted as equivalent .... Article 7(4) supports the conclusion that the person who is referred to as the party concerned in the provision at issue cannot be anyone other than the manufacturer, who seeks the release of the security which he himself has provided. Consequently, if, for the purposes of Article 7(4), party concerned is restricted in meaning to the manufacturer, it is not possible for exactly the same legal term to have a different (wider) scope when it is used in the very next paragraph.
Irrespective of the foregoing, in order to argue without qualification that, by using the term party concerned, the Community legislature intended to bring the purchasers of esterified or etherified starch within the scope of the penalty provided for, it will be necessary to examine the infringements for which the category of persons referred to by the term party concerned is held responsible. If they are infringements of rules which impose certain public-law obligations on purchasers, I do not see any reason why such persons should be excluded from the scope of the penalty in question.
(b) The infringement justifying the penalty at issue
15. The Community provisions in question are not particularly clear. The wording of Article 7(5) indicates that the penalty provided for by that article is imposed where the competent national authorities find, in the course of the administrative checks to ascertain whether the declaration mentioned in paragraph 4 has been fully complied with, that the party concerned fails to comply with the conditions specified in this article.
I believe that the declaration referred to must be taken to be that which the manufacturer, who lodges the security, makes to the competent national authorities, and not the undertaking by virtue of which purchasers assume the same obligations as the manufacturer with regard to the use of the esterified or etherified starch purchased by them. That interpretation is dictated by the fact that only the former is expressly described in the text of Article 7(4) as a declaration; purchasers, on the other hand, are mentioned only indirectly in that provision and are not required to present a declaration to the public authorities. It is only the manufacturer who, by the declaration which he presents, undertakes that he will sell the product in question only to a party who will engage in the same requirements, and will obtain a copy of the said engagement and will keep it at the disposal of the competent authority.
Can it nevertheless be maintained that the obligation assumed by the purchasers constitutes one of the conditions specified in this article, as referred to in Article 7(5), with the result that non-compliance by them with that obligation justifies the imposition on them of the penalty provided for in that paragraph? I do not regard that reasoning as the more satisfactory. If the manufacturer sells the product concerned, release of the security presupposes the presentation by him of a declaration stating that the purchasers engage in the same requirements as he with regard to the use of the product and that a copy of the undertaking given by the purchasers is forwarded to the administrative authorities. Yet what is the legal nature of that undertaking and to whom is it given? Despite the obscurity of the provision, I believe that the more convincing view is that it is a civil-law obligation resting on the persons purchasing the starch vis-à-vis the manufacturer and not a public-law obligation resting on such persons vis-à-vis the administrative authorities. Consequently, even where purchasers have failed to abide by the undertakings given by them with regard to the nature of the starch, their conduct does not constitute an infringement which can be penalised by means of an administrative fine, but an act in breach of the contract (binding the purchaser to the producer), from which consequences of a different kind may flow. The Community legislature appears to confine itself to obligations which it expressly and directly imposes on the manufacturer and does not lay down any corresponding obligations for the purchasers.
The validity of that interpretation of the provisions in question is not incontestable. It could be argued that the obligation to make proper use of the starch, on which the proper functioning of the production refund mechanism is based, rests not only on the manufacturer vis-à-vis the competent national authorities, but also on his assignees, who have become the owners of the product. To that effect, it may be inferred from Article 7(4), which provides that the manufacturer is not entitled to obtain the release of the security unless he has declared that he will sell the product to a party who will engage in the same requirements as he, that the obligation assumed by the purchasers is of the same nature as that of the manufacturer, and that non-compliance with that obligation is a sufficient reason to impose on them the penalty provided for in Article 7(5).
I have already explained that I cannot agree with the interpretation which I have just described; I shall put forward below certain further arguments which support that conclusion. First, however, I consider it essential to make clear that, even if one agrees with that interpretation, it is not obvious that the obligations resting on the purchaser equate to those resting on the manufacturer. In particular, the manufacturer who sells the starch must ensure that he obtains from the purchasers a document certifying that they engage in the same requirements as he. On the other hand, it is not obvious that that formal obligation rests on the purchasers vis-à-vis the administration, that is to say that they must obtain the document concerned from the subsequent purchasers when they resell the product. Their obligation assuming that an obligation exists appears to be confined to ensuring that proper use is made of the product.
(c) The scheme of the provisions at issue
16. As the basis for its argument concerning the liability of the purchaser, the Commission relies on the scheme of the provisions at issue and the logic underlying the mechanism for the grant and control of production refunds. It argues, in particular, that, since he has presented the declaration provided for in Article 7(4) of Regulation No 2169/86, which indicates that he is selling the product to a party who engages in the same requirements as he, the manufacturer, who has lodged the security, has fulfilled his basic obligation with regard to the proper use of the starch, and the penalty provided for in Article 7(5) may no longer be imposed on him. The Commission takes the view that the contrary solution would run counter to the principle of liability based on fault, which governs Community administrative penalties. Consequently, since it is impossible to impose the penalty at issue when he has complied with his obligations under Regulation No 2169/86, it is essential to afford the national administrative authorities the possibility of implementing those same provisions by providing for a penalty on purchasers who have not abided by the undertakings given with regard to the use of the product in question. The effect of a different interpretation of the provisions at issue would be to allow the release of the security and the grant of any refunds claimed even though the esterified or etherified starch may not have been put to proper use and there is no possibility of penalising those guilty of such wrongful conduct.
Döhler, on the other hand, submits that the penalty provided for in paragraph 5 can always be applied to the manufacturer, who has lodged the security, in such a way as to ensure the effectiveness of the Community mechanism for the control of production refunds. It even regards that as the most appropriate solution; indeed, it was for that very reason that the Community legislature preferred that solution when it drew up Regulation No 1722/93, which replaced the provisions of Regulation No 2169/86.
17. Personally, I incline towards the reasoning of the plaintiff in the main proceedings.
It should be pointed out, first, that it is not necessarily contrary to any superior rule of Community law to assign strict liability to a trader and to hold him responsible for unlawful conduct engaged in by third parties. Consequently, it is possible, in certain circumstances, to impose non-criminal Community penalties even where the party on whom the penalty is imposed is not personally responsible. Reference should be made to the Plange Kraftfutterwerke case, in which the Court held that, where a trader undertakes to export products which must satisfy certain conditions and the products in question do not fulfil those conditions, that trader must automatically repay the relevant refunds, even if he is not responsible for the defects in the products at issue.
Similar importance attaches to the Boterlux judgment, the effect of which is that a trader acting in good faith who exports a product to a non-Community country is not entitled to Community aid in the form of refunds where that product is fraudulently reimported into the Community, even if a third party is responsible for the fraud perpetrated. More particularly, the Court held that [e]ven if fraudulent reimportation into the Community may be a circumstance beyond the control of the exporter, it none the less represents an ordinary commercial risk.
If the conclusions of the abovementioned case-law are transposed to the regulation in question, it can been seen that the Community interest, which is safeguarded by applying the penalty laid down in Article 7(5) of Regulation No 2169/86 whenever the security referred to by that article is wrongfully released, is also preserved by the interpretation according to which the penalty in question can apply only to the manufacturer, who lodged the security. In particular, the manufacturer is required to pay the sum specified in Article 7(5) whenever the administration finds that he or one of the purchasers who have obtained esterified or etherified starch from him is not making proper use of that product. In such a case, the manufacturer, who lodged the security, is not, in my view, entitled to plead absence of liability on his part, since his liability is defined by law as strict. It is the responsibility of the manufacturer to ensure that the contract includes a clause enabling him to take action against the purchasers on account of damage caused to him by the application of the provisions at issue of the regulation, by invoking the rules of civil law relating to contractual and (where appropriate) non-contractual liability.
18. I believe that the latter solution is preferable for yet another reason. The manufacturer lodging the security is the only person who, in the context of the application of Regulation No 2169/86, has direct dealings with the competent administrative authorities; he is also presumed to be solvent since he has already been requested to lodge, and has lodged, security of an amount equal to that of the penalty provided for in Article 7(5). If, therefore, that security is wrongfully released for any reason, enabling him, although not entitled to do so, to derive a certain advantage from that release, it is probable and more convenient in practice for them to do so that the national administrative authorities will take action against him in order to punish the irregularity committed.
19. Finally, there is a decisive further argument, the effect of which seems to be that the penalty at issue provided for by Regulation No 2169/86 applies only to the manufacturer. This is the argument based on a comparative analysis of the regulation at issue and Regulation No 1722/93 which replaced it. I do not, of course, propose to interpret the former provisions of Regulation No 2169/86 contra legem by resorting to a retroactive reading of those of Regulation No 1722/93. However, since the provisions and underlying logic of those two regulations display great similarities, I do not see why Regulation No 1722/93 should not be taken into consideration in order to clarify certain obscure points in Regulation No 2169/86.
In particular, as far as the problem at issue is concerned, it can be inferred from the analysis of Regulation No 1722/93 that, in adopting that legislation, the Community legislature chose to maintain the same penalty mechanism as that already existing in Article 7(5) of Regulation No 2169/86, while making certain improvements to it and wording the relevant provisions in a clearer, more appropriate manner. The relevant provisions are those of Article 10 of Regulation No 1722/93.
Article 10(2) of Regulation No 1722/93 corresponds to Article 7(4) of Regulation No 2169/86. That provision of Regulation No 1722/93 provides that the declaration submitted by the manufacturer in order to obtain the release of the security must indicate that the product in question will be sold only to a party who will make the undertaking mentioned in the second indent, on the basis of either a contractual clause established for that purpose or a specific condition mentioned in the sales invoice. The manufacturer must also retain a copy of the sales contract or of the sales invoice, to be kept at the disposal of the competent authority.
It is thus made clear that the undertakings given by the purchaser and described in the declaration submitted by the manufacturer to the competent authorities are given vis-à-vis the manufacturer and not vis-à-vis the administration and that they are therefore contractual in nature and are governed by the law of obligations; it therefore cannot be said that the purchaser assumes, vis-à-vis the administrative authorities, obligations under public law, breach of which could, in certain circumstances, give rise to the application of an administrative penalty.
I believe that it is more appropriate to apply exactly the same interpretation to the contested provisions of Regulation No 2169/86, which are at issue; those who, like Döhler, purchase esterified or etherified starch from the manufacturer, who lodges the security, give, vis-à-vis the manufacturer, and not vis-à-vis the administration, the undertakings described in Article 7(4) of Regulation No 2169/86 with regard to the use of the product in question. If it is found that those undertakings are not abided by, the penalty provided for in Article 7(5) may be imposed only on the manufacturer, who, of course, retains the right to take action, under the law of obligations, against the purchasers for compensation for the damage suffered.
C Even if the provisions at issue provide for a penalty aimed at the purchasers of starch, is such a penalty lawful?
20. On the basis of the foregoing analysis, the answer to this question must be in the negative, regard being had to the abovementioned case-law concerning the obligation incumbent on the legislature to define non-criminal Community penalties clearly. It would be sufficient to point out that the mere fact that the search for the true meaning of the provisions of Article 7(4) and (5) of Regulation No 2169/86 requires detailed explanations and complex evaluations reveals the confused and obscure nature of those provisions. Consequently, if the Commission's interpretation concerning the existence of a penalty aimed at purchasers is adopted a view with which, as I have explained, I do not agree the penalty in question becomes inapplicable because it does not rest on a clear and unambiguous legal basis within the meaning of the Könecke judgment.
In particular, the term party concerned used in Article 7(5) does not enable the reader of that provision to answer with certainty the question as to the extent to which purchasers of the product, who have given, with regard to its use, the undertakings provided for in paragraph 4 of that article, fall within that category. However, even if that obstacle is overcome, it must be pointed out that the conditions to which application of the penalty to purchasers is subject are not clearly defined in the legislation. The components of the obligations which the regulation imposes on the purchasers if such obligations do in fact exist and breach of which justifies the exercise of the power to impose penalties, which Article 7(5) confers on the national authorities, are not properly explained.
D Conclusion
21. In the light of the foregoing, I am of the view that, correctly interpreted, the term party concerned used in Article 7(5) of Regulation No 2169/86 does not apply to the purchasers of esterified or etherified starch mentioned in paragraph 4 of that article; the provision of Article 7(5) at issue can be applied only to the manufacturer of the product, as that term is defined in Regulation No 2169/86. However, even if the contrary interpretation were adopted, the resultant penalty to which the purchasers would be subject would be contrary to the rules developed by the case-law with regard to the clear and exhaustive nature of the provisions concerned and could not, therefore, be applied. It should, however, be pointed out that if the Community legislature wishes to introduce penalties to which purchasers of starch are also subject, it can most certainly do so, but by adopting provisions appropriate for that purpose.
VI The second and third questions referred
22. If the first question is answered in the negative, there is no need to answer these questions. Purely in the alternative and for the sake of completeness, however, the following may be added.
23. In the first part of the second question referred for a preliminary ruling, the national court expresses uncertainty as to the extent to which the release or non-release of the security lodged pursuant to Article 7 of Regulation No 2169/86 affects the application of the penalty provided for by paragraph 5 of that article. I am minded, in principle, to answer this question in the affirmative, on the basis of a schematic interpretation of the provisions in question.
24. By the second part of the second question referred, the Court is asked to consider whether it is possible to impose a penalty on the purchaser of esterified or etherified starch even where it can no longer be determined whether the purchaser gave an undertaking. I have already explained, in my analysis with respect to the first question, that the penalty provided for in Article 7(5) was not intended to apply to the purchaser. However, even assuming that the penalty is intended to apply to him, it is clear that he can be liable only if he has given the undertakings provided for in Article 7(4). If, therefore, it is impossible to ascertain whether the purchaser has in fact given an undertaking, the security lodged by the manufacturer cannot be released, the production refund cannot be granted to the manufacturer and, of course, the penalty provided for in Article 7(5) cannot be imposed on the purchaser.
25. Finally, the third question referred raises the problem of the point in time from which the 12-month period provided for in Article 7(5) is to be calculated in order to determine the amount payable by the person on whom the penalty is imposed. The wording of the legislation is not particularly clear. However, in the light of the foregoing analysis, which indicates that the penalty at issue is intended to apply only to the manufacturer, the more satisfactory interpretation seems to me to be that the reference date for determining the sum payable is that on which the manufacturer presents the declaration referred to in Article 7(4). That declaration is, moreover, the event giving rise to the obligations resting on the manufacturer vis-à-vis the administration with regard to the use of the product in question. Consequently, it is logical that that event should be taken as the starting point for the previous 12-month period in which the highest refund will be ascertained in order to determine, ultimately, the amount of the administrative fine.
The other solutions for calculating the period in question, which adopt as the starting point, first, the time when improper use is made of the product in question by the manufacturer or his assignees, second, the time when the administration establishes the infringement or, third, the time when the penalty is imposed, are less convincing. The first is difficult to apply in practice since it cannot be ascertained precisely when the improper use of the product starts. The other two depend to a great extent on the diligence of the authorities responsible for carrying out the checks; I do not think that it is normal for the amount of a fine to fluctuate according to the degree of diligence shown by the administration.
VII Conclusion
26. In view of the foregoing considerations, I propose that the Court answer the questions referred for a preliminary ruling as follows:
The penalty provided for in Article 7(5) of Commission Regulation (EEC) No 2169/86 of 10 July 1986 laying down detailed rules for the control and payment of the production refunds in the cereals and rice sectors, as amended by Commission Regulation (EEC) No 165/89 of 24 January 1989, is not intended to apply to a purchaser of esterified or etherified starch who has given, vis-à-vis the manufacturer, the undertaking described in the previous paragraph of the same article.
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