1 By order of 4 September 1987, which was received at the Court on 9 September 1987, the College van Beroep voor het Bedrijfsleven ( Administrative Court of Last Instance in matters of trade and industry ) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of certain provisions of Regulation ( EEC ) No 986/68 of the Council of 15 July 1968 laying down general rules for granting aid for skimmed milk and skimmed-milk powder for use as animal feed and of Regulation ( EEC ) No 1105/68 of the Commission of 27 July 1968 on detailed rules for granting aid for skimmed milk for use as animal feed .
2 That question was raised in the course of a dispute between a Dutch dairy, Cooeperatieve Melkverwerkingsvereniging DOC wa ( hereinafter referred to as "the Cooperative ") and the Produktschap voor Zuivel ( Dairy Board ), the Netherlands authority responsible for the grant of the said aid, as to whether the Cooperative was entitled to aid for certain quantities of buttermilk .
3 The Cooperative requested the payment of Community aid for certain quantities of buttermilk it had produced which was intended for animal feed .
4 By two decisions of 24 September 1985 and 24 October 1985 the Produktschap voor Zuivel refused to grant the aid requested and, by a third decision of 25 October 1985, demanded repayment of aid already granted to the Cooperative; the reason given for those decisions was that a condensed milk product had been added to the buttermilk in question .
5 The Cooperative lodged objections against those decisions which were rejected whereupon it applied to the College van Beroep .
6 The Cooperative stated before the national court that since buttermilk must in principle have an 8% dry-matter content in order to qualify for the aid in question it applies the following process :
"after the butter is made, the waste water remaining in the buttermilk is separated from the remaining sweet buttermilk . The condensed sweet buttermilk thus obtained is then remixed with the sour buttermilk residue remaining after the buttermaking . The sour buttermilk itself cannot be condensed ". In this respect the Cooperative maintained that that process involved no unauthorized addition, even if part of the quantity of buttermilk in question was extracted from the buttermilk and subsequently remixed with it in condensed form .
7 The College van Beroep concluded that under the Zuivelverordening ( Dairy Regulation ) 1968, no aid is to be granted for buttermilk to which something has been added . Since the Netherlands regulation was intended to implement the relevant Community provisions which are formulated in the same terms, the College van Beroep stayed proceedings and referred the following question to the Court for a preliminary ruling :
"Must Regulation ( EEC ) No 986/68 of the Council, in particular the words 'to which nothing has been added' in Article 1(a ), read in conjunction with the provisions of Regulation ( EEC ) No 1105/68 of the Commission, be interpreted as meaning that the application of a process which, in order to attain the required dry-matter content, involves removing, after the buttermaking, the water that was used in its preparation and that remained behind in the buttermilk from the sweet buttermilk residue separated for the purpose, and subsequently remixing the sweet buttermilk, thus condensed, with the sour buttermilk residue resulting from the buttermaking, constitutes the addition of a product precluding the grant of aid pursuant to Article 1 of Regulation ( EEC ) No 986/68?"
8 Reference is made to the Report for the Hearing for a fuller account of the facts and provisions at issue in the main proceedings and of the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
9 The national court' s question refers to an "addition" that might preclude the grant of the aid in question in so far as Article 1 of Regulation No 986/68 lays down as a condition for the grant of the aid that nothing has been added to the milk, and in consequence to the buttermilk . It should however be pointed out that the main proceedings are not concerned with any additional substance other than what is yielded by the milk .
10 It is apparent from the order for reference, and in the light of the documents before the Court, that in this instance the processing of milk into butter and the separation of the butter from the by-product, buttermilk, are followed by an additional process :
the butter is rinsed in water;
the resulting rinse contains approximately 4% dry-matter and 96% water, the excess water subsequently being removed;
the residue is buttermilk with a high dry-matter content;
that residue is used for mixing with the buttermilk obtained at the first stage of the processing of the milk to increase the dry-matter content to 8 %.
11 Consequently the question must be understood as essentially asking whether the buttermilk obtained following a further treatment as described above qualifies for the aid provided for by the abovementioned Community rules .
12 Before a reply is given to that question, it should be pointed out that Article 10(1 ) of Regulation ( EEC ) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products ( Official Journal, English Special Edition 1968 ( I ), p . 176 ), as amended, provides that aid shall be granted inter alia for skimmed milk and buttermilk produced in the Community and used in feedingstuffs if the products meet certain conditions .
13 Pursuant to Article 10(2 ) of that regulation, the Council adopted Regulation No 986/68, Article 1 of which, as amended, is as follows :
"For the purposes of this Regulation :
( a ) 'milk' means the milk-yield of one or more cows, to which nothing has been added and which, at the most, has been only partially skimmed;
( b ) 'buttermilk' means the by-product of the manufacture of butter from milk or cream, even though naturally or artificially soured;
( c ) 'skimmed milk' means milk or buttermilk with a maximum fat content of 1%;
...".
14 On the basis of the powers conferred on it by Article 10(3 ) of Regulation No 804/68, the Commission adopted Regulation No 1105/68, Article 1(2 ) of which provides that : "aid shall be granted only for quantities of skimmed milk mixed with feed milk ".
15 For the purposes of replying to the national court' s question it should be noted that under Article 1 of Regulation No 986/68, as amended, buttermilk means "the by-product of the manufacture of butter from milk ...". The terms of that provision therefore relate to the by-product obtained from the manufacture of butter from milk, to the exclusion of any further treatment .
16 That interpretation is borne out in particular by the terms of Article 1(4 ) of Regulation No 1105/68, as amended, under which the buttermilk resulting from the processing of milk into butter, as a product intended to qualify for aid, may not be diluted in any way which is not normally part of the production methods used .
17 That interpretation is also corroborated by Article 1(6)(a ) of Regulation No 1105/68, as amended, which provides, by way of derogation from the requirement of an 8% defatted dry-matter content in buttermilk, for the replacement of that percentage by the average of the minimum values for the product in a Member State or in a region of a Member State if that is higher . Conversely Article 1(6)(c ) provides that reduced aid is to be granted where the defatted dry-matter content is for justified technological reasons not less than 4% but less than the minimum specified . Those provisions show that alteration of the dry-matter content of the buttermilk is not permitted .
18 It is apparent from the foregoing that for the purposes of the grant of aid for buttermilk, the abovementioned Community provisions refer to the dairy product in question as obtained naturally from the initial processing of milk into butter, to the exclusion of any further treatment, even if that further treatment consists not in the actual addition of a substance not yielded by the milk but merely in the evaporation of the water content or dilution .
19 It should therefore be stated in reply to the national court' s question that the provisions of Regulation No 986/68 of the Council in conjunction with those of Regulation No 1105/68 of the Commission must be interpreted as meaning that, for the purposes of the grant of the aid provided for therein, they preclude not only the addition to the buttermilk of anything not contained in the milk, but also any process involving further treatment of the buttermilk yielded by the processing of the milk into butter .
Costs
20 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable . As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action before the national court, costs are a matter for that court .
On those grounds,
THE COURT ( Fourth Chamber ),
in answer to the question referred to it by the College van Beroep voor het Bedrijfsleven, The Hague, by order of 4 September 1987, hereby rules :
The provisions of Regulation No 986/68 of the Council in conjunction with those of Regulation No 1105/68 of the Commission must be interpreted as meaning that, for the purposes of the grant of the aid provided for therein, they preclude not only the addition to the buttermilk of anything not contained in the milk, but also any process involving further treatment of the buttermilk yielded by the processing of the milk into butter .
