(Accession of new Member States – Transitional measures – Agricultural products – Sugar – Regulation (EC) No60/2004

JUDGMENT OF THE COURT (Sixth Chamber)

6September 2012(*)

(Accession of new Member States – Transitional measures – Agricultural products – Sugar – Regulation (EC) No60/2004 – Basis of assessment and rate applicable for the charge on surplus stocks)

In Case C‑471/11,

REFERENCE for a preliminary ruling under Article267 TFEU from the Augstākās Tiesas Senāts (Latvia), made by decision of 9November 2010, received at the Court on 14September 2011, in the proceedings

Cido Grupa SIA

v

Valsts ieņēmumu dienests,

THE COURT (Sixth Chamber),

composed of U.Lõhmus, President of the Chamber, A.ÓCaoimh and C.G.Fernlund (Rapporteur), Judges,

Advocate General: J.Kokott,

Registrar: A.Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–Cido Grupa SIA, by I.Lielpinka, advokāte,

–the Valsts ieņēmumu dienests, by N.Jezdakova, acting as Agent,

–the Latvian Government, by I.Kalniņš and D.Pelše, acting as Agents,

–the Estonian Government, by M.Linntam, acting as Agent,

–the European Commission, by D.Triantafyllou and A.Sauka, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1This reference for a preliminary ruling concerns the interpretation of Article6(3) of Commission Regulation (EC) No60/2004 of 14January 2004 laying down transitional measures in the sugar sector by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (OJ 2004 L9, p.8, as amended by Commission Regulation (EC) No1667/2005 of 13October 2005 (OJ 2005 L269, p.3) (‘Regulation No60/2004’).

2The reference was submitted in the course of proceedings between Cido Grupa SIA (‘Cido Grupa’) and the Valsts ieņēmumu dienests (VID) (Latvian tax authorities) concerning the levying of a charge on a surplus stock of sugar syrup.

Legal context

3The first paragraph of Article41 of the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L236, p.33), allows the European Commission to adopt measures to facilitate the transition of the new Member States to the regime of the common agricultural policy during a period of three years following the date of accession. That provision was one of the legal bases for the adoption by the Commission of Regulation No60/2004.

4The preamble to Regulation No60/2004 states:

‘...

(5)There is a considerable risk of disruption on the markets in the sugar sector by products being introduced into the new Member States before their accession for speculation purposes. Provisions facilitating the transition should therefore be made to avoid such speculative movements in view of the accession of the new Member States. Similar provisions have already been taken in respect of trade in agricultural products on account of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia by Regulation (EC) No1972/2003. Separate rules are necessary in order to take into account the particularities of the sugar sector.

...

(7)Furthermore, and in accordance with the Act of Accession, quantities of stocks of sugar or isoglucose exceeding the normal carry-over stock should be eliminated from the market at the expense of the new Member States. Determination of the surplus stocks will be carried out by the Commission on the basis of trade developments, production and consumption trends in the new Member States during the period of 1May 2000 to 30April 2004. For this procedure, besides sugar and isoglucose, other products with a significant sugar equivalent content should be also considered as they could also be possible targets of speculation. In [the event that] the determined surplus quantity of sugar and isoglucose is not eliminated from the Community market by 30April 2005 at the latest, the new Member State concerned will be made financially responsible for the relevant quantity. The amount to be charged for a new Member State and payable for the Community budget in [the] case of [the] non elimination of surplus stocks should be the highest export refund applicable during the period of 1May 2004 and 30April 2005.’

5Point(1) of Article4 of Regulation No60/2004 defines the term ‘sugar’ as follows:

‘…

(a)beet sugar and cane sugar, in solid form, falling within CNcode1701;

(b)sugar syrup falling within CN codes 17026095, 17029099 and 21069059;

(c)inulin syrup falling within CN codes 17026080 and 17029080’.

6Under Article6(1) of that regulation:

‘The Commission shall determine by 31May 2005 at the latest, for each new Member State, … the quantity of sugar as such or in processed products, isoglucose and fructose exceeding the quantity considered as being normal carry-over stock at 1May 2004 and which has to be eliminated from the market at the expense of the new Member States.

To determine this surplus quantity, account is in particular taken of the development during the year preceding accession in relation to the previous years of:

(a)imported and exported quantities of sugar as such or in processed products, isoglucose and fructose;

(b)production, consumption and stocks of sugar and isoglucose;

(c)the circumstances in which stocks were built up.’

7Article6(2) of Regulation No60/2004 requires the new Member States concerned to eliminate from the market, by 30November 2005 at the latest, the quantities of sugar or isoglucose determined by the Commission, in relation to each of those States, as surplus quantities.

8Article6(3) of that regulation provides:

‘For the application of paragraph2, the competent authorities of the new Member States shall dispose on 1May 2004 of a system for the identification of traded or produced surplus quantities of sugar as such or in processed products, isoglucose or fructose, at the level of the main operators concerned. That system may in particular rely on import tracking, fiscal monitoring, surveys based on operators’ accounts and physical stocks, and include measures such as risk guarantees. The system of identification shall be based on risk assessment that takes due account in particular of the following criteria:

–type of activity of the operators concerned,

–capacity of storage facilities,

–level of activities.

The new Member State shall use that system to compel the operators concerned to eliminate from the market at their own expense an equivalent quantity of sugar or isoglucose of their determined individual surplus quantity. The operators concerned shall provide the proof, to the satisfaction of the new Member State, that products were eliminated from the market by 30November 2005 at the latest.

[If] such proof is not provided, the new Member State shall charge an amount equal to the quantity in question multiplied by the highest import charges applicable to the product concerned during the period from 1May 2004 to 30November 2005, increased by EUR1.21/100 kg in white sugar or dry matter equivalent.

The amount referred to in the third subparagraph shall be assigned to the national budget of the new Member State.’

9Article7(2) of Regulation No60/2004 provides:

‘If proof of elimination from the market is not provided in accordance with paragraph1, for all or part of the surplus quantity, the new Member State shall be charged an amount equal to the quantity not eliminated multiplied by the highest export refunds applicable to white sugar falling within CN code 17019910 during the period from 1May 2004 to 30November 2005 …’

The dispute in the main proceedings and the questions referred for a preliminary ruling

10By decision of 12September 2006, the VID found that Cido Grupa was holding a surplus stock of sugar syrup (CN code 21069059) and fixed the amount of the charge payable at LVL79697.88, that is to say, at approximately EUR113400. That amount was calculated on the basis of the equivalent quantity of white sugar (CN code 17019910) in the sugar syrup. For that purpose, the VID multiplied the surplus quantity of sugar syrup in stock (295857kg) by the rate of concentration of white sugar in that product (69%) to establish a surplus quantity of 204141kg. By applying to that quantity the import charge applicable to white sugar, increased by EUR1.21/100kg, the VID determined the amount of the charge payable as EUR55.55/100kg.

11Following an action brought by Cido Grupa, that decision was annulled in part at first instance. That court held that the VID had erred in applying the rate of charge for white sugar when the product at issue was sugar syrup, to which a lower rate of charge was applicable. The judgment at first instance was subsequently upheld on appeal, whereupon the VID and Cido Grupa brought an appeal before the Augstākās Tiesas Senāts, the referring court.

12In its appeal, the VID claims that the appeal court interpreted Article6 of Regulation No60/2004 incorrectly when it held that the basis of assessment for the charge at issue should be the surplus quantity of sugar syrup and that the rate of that charge should be based on the import charge applicable to sugar syrup. The referring court therefore believes that the outcome of the dispute depends on the interpretation of the words ‘quantity in question’ and ‘product concerned’ in the third subparagraph of Article6(3) of Regulation No60/2004.

13It was against that background that the Augstākās Tiesas Senāts decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1.Is the third subparagraph of Article6(3) of … Regulation (EC) No60/2004 … to be interpreted as meaning that, where an operator has been found to be in possession of an individual surplus of a product which may be classed as sugar within the meaning of Article4(1) of the regulation, that operator is required to assign to the national budget a sum which is calculated, not on the basis of the quantity of the product actually found in the operator’s possession (for example, sugar syrup), but on the basis of the quantity of white sugar (Combined Nomenclature code 1701 99 10) corresponding to the sugar content of the product found in its possession?

2.In the calculation of that payment, are the highest import charge rates applicable to white sugar to be applied, rather than those applicable to the product actually found in the operator’s possession?’

Consideration of the questions referred

14By its two questions, which should be examined together, the referring court is essentially asking whether the third subparagraph of Article6(3) of Regulation No60/2004 must be interpreted as meaning that the basis of assessment for the charge on a surplus stock of sugar syrup is the quantity of white sugar actually contained in that product and that the rate of that charge is that of the import charge applicable to white sugar, increased by EUR1.21/100kg.

15As regards the rate of the surplus stock charge, the third subparagraph of Article6(3) of Regulation No60/2004 merely refers to the highest import charge applicable to ‘the product concerned’. The issue, therefore, is whether that expression relates – as Cido Grupa claims – to the import charge on the product of which a surplus stock is held, in the present case sugar syrup, or – as the VID, the Latvian and Estonian Governments and the Commission contend – to the import charge applicable to white sugar.

16Admittedly, given the absence of details, the term ‘product concerned’ in the third subparagraph of Article6(3) of Regulation No60/2004 could be construed as relating to the product of which surplus stock is held. However, such an interpretation fails to have regard to the context of that provision and is contrary to the purpose of Regulation No60/2004, which – as stated in recital 5 in the preamble to that regulation – is to limit the risks of disruption on the markets in the sugar sector by products being introduced into the new Member States for speculation purposes.

17The second subparagraph of Article6(3) of Regulation No60/2004 provides that the operators concerned are required to eliminate from the market at their own expense the surplus quantities of sugar or isoglucose identified by the authorities of the new Member States or to pay charges if proof of the elimination of those quantities cannot be provided. Accordingly, in the light of that provision, the expression ‘product concerned’ in the third subparagraph of Article6(3) of Regulation No60/2004 must be construed as referring to sugar and to isoglucose, which are the two products referred to in the preceding subparagraph of Article6(3).

18In accordance with the objective, set out in recital 7 to Regulation No60/2004, of eliminating surplus stocks of sugar, isoglucose and other products with an equivalent sugar content, the third subparagraph of Article6(3) of that regulation provides for the application of the highest import charge applicable to ‘sugar’ or to ‘isoglucose’, those two terms being defined in Article4 of Regulation No60/2004. Under that provision, the term ‘sugar’ covers, in addition to sugar in solid form falling within CN code 1701, sugar syrup (CN codes 17026095, 17029099 and 21069059) and inulin syrup (CN codes 17026080 and 17029080). It is apparent from Annex I to Council Regulation (EEC) No2658/87 of 23July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L256, p.1) that, of those products, white sugar is subject to the highest rate of charge.

19In this connection, it should be pointed out that Regulation No60/2004 refers expressly to white sugar for the purposes of calculating the amount payable, if, for failure to eliminate a surplus of sugar and isoglucose before 30November 2005, a new Member State is held financially liable for the elimination of that surplus. In those circumstances, Article7(2) of Regulation No60/2004 provides that the new Member State is to be ‘charged an amount equal to the quantity not eliminated multiplied by the highest export refunds applicable to white sugar falling within CN code 17019910 during the period from 1May 2004 to 30November 2005’.

20Lastly, it should be stated that the interpretation argued for by Cido Grupa – to the effect that the rate to be applied is the rate of import charge applicable to the surplus product, in this case, sugar syrup – would undermine the effectiveness of Regulation No60/2004. Since sugar syrup is subject to a charge approximately 100 times lower than the charge applied to white sugar, the charge on surplus stocks would not reach a level sufficient to discourage speculative conduct and to encourage operators to eliminate surplus stocks.

21The third subparagraph of Article6(3) of Regulation No60/2004 must therefore be interpreted as meaning that the rate of the charge on a surplus stock of sugar syrup is the rate of the import charge applicable to white sugar, increased by EUR1.21/100kg.

22Consequently, both logic and equity lead to the conclusion that the basis of assessment for the charge payable on a surplus stock of sugar syrup must be the quantity of white sugar included in its composition.

23In the light of all the foregoing considerations, the answer to the questions referred is that the third subparagraph of Article6(3) of Regulation No60/2004 must be interpreted as meaning that the basis of assessment for the charge payable on a surplus stock of sugar syrup (CN code 21069059) is the quantity of white sugar (CN code 17019910) actually contained in that product and the rate of that charge is the rate of the import charge applicable to white sugar, increased by EUR1.21/100kg.

Costs

24Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Sixth Chamber) hereby rules:

The third subparagraph of Article6(3) of Commission Regulation (EC) No60/2004 of 14January 2004 laying down transitional measures in the sugar sector by reason of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, as amended by Commission Regulation (EC) No1667/2005 of 13October 2005, must be interpreted as meaning that the basis of assessment for the charge payable on a surplus stock of sugar syrup (CN code 21069059) is the quantity of white sugar (CN code 17019910) actually contained in that product and the rate of that charge is the rate of the import charge applicable to white sugar, increased by EUR1.21/100kg.

[Signatures]

* Language of the case: Latvian.