Luxembourg, 19/01/2007 (Agence Europe) - A Dutch company which has received EU export refunds for Italian pecorino cheese may have to pay back some of the aid it received. Some of the batches of pecorino exported by Vonk Dairy Products BV to the United States and granted EU export aid were later sent on to Canada, a destination not covered by EU direct export refunds. In Case 279/05, the European Court of Justice ruled that in proceedings for the withdrawal and recovery of export refunds, it can be demanded that the aid be partially repaid if there is evidence of abuse on the part of the exporter, and the case was therefore sent back to the Dutch court, the 'College van Beroep voor het Bedriftsleven'.
From 1988 to 1994, Vonk Dairy Products (Vonk) exported 2100 batches of pecorino to the United States, 75 of which were almost immediately re-exported to Canada by Orlando Food Corporation, Vonk's intermediary in the US. Each batch contained around 20 tonnes of cheese.
EU export refunds were granted to all these batches of cheese but the export refunds only apply to a product sold in the country it is being exported to, the United States in this case. EU export refunds should never have been granted to the large proportion of the cheese which was never put on sale in the US but was immediately sent to Canada.
The exporter's involvement in all this was investigated in several enquiries in the Netherlands. After a preliminary enquiry, the Algemene Inspectiedienst (AID) of the Dutch Ministerie van Landbouw, Natuurbeheer en Visserij (Ministry of farming, nature and fisheries) asked the United States customs authorities in New York to open an investigation into the pecorino exports.
The second investigation revealed not only the actual amounts of cheese sent on to Canada, but also the fact that Vonk was aware this was going on. The Dutch company had exchanged correspondence in this connection with the National Cheese and Food Company in Ontario, Canada, the final destination of the Italian pecorino. In April 2001, at the 'College van Beroep voor het Bedriftsleven', the Dutch authorities therefore demanded repayment of the challenged export refunds plus 15%, namely 2,795,842.72 Dutch guilders (€1,268,697.66). Before making its decision, the Dutch court (the 'College') submitted questions to the European Court of Justice about the status of payments, definition of the abuse and proceedings possible under Dutch law in virtue of EU legislation.
Vonk submitted several arguments to the Court of Justice. Firstly, the refunds at issue were not wrongly paid to it and became definitive after it furnished evidence of import and release for consumption in the US. If a crime had been committed, Vonk argues that it was neither continued nor repeated given the interruptions and tiny proportion of the shipments involved. Finally, and most importantly, while exporters have to certify the arrival of a product in the destination country in order to receive EU export refunds, they only have to prove the product was put on sale if a special request is made to this effect by the relevant EU authorities. The EU did not require this optional procedure and therefore the trader was not at fault.
The Court of Justice rejected all these arguments. Firstly, even so-called 'definitively' approved refunds can be demanded to be repaid if relevant courts discover under national law that they were wrongly granted following abuse by the beneficiary. The continuity of the crime can be demonstrated by the fact that the operations in question were similar and infringed the same provision of EU law. With regard to the defence's third argument, the Court ruled that non-verification by EU authorities of the pecorino being put on sale in the US in no way exempts the trader from meeting the conditions set out for EU export refunds, and paragraph 3, Article 17 of Regulation 3665/87 makes it abundantly clear that the produce must be sold in the country of destination.
The Dutch court may now take action against Vonk. If it manages to prove Vonk's involvement in the re-export of the pecorino in question, Vonk may be required to refund some of the EU export refunds it received. (cd)