By FWi staff

BRITISH Sugar appears to have won its battle over a 6.6 million export penalty, which the Intervention Board maintains should have been paid on a quantity of C sugar sold to the EU market.

The case dates back to the 1992/93 season when BS, faced with a bumper harvest, exported 16,650t of C sugar before it had met all its A and B quota.

This C sugar was shipped out under licence from the Intervention Board. But the IB then decided these exports were “irregular” and should not have been allowed until all the A and B quota had been met.

It argued that the sugar actually exported was A/B quota and therefore the equivalent amount sold in the EU as A/B quota must have been C sugar.

This effective “swapping” meant that BS could not prove it had exported all of its C sugar and so it attracted the export penalty, equivalent to the highest import duty in the EU that year.

The matter was taken to the High Court, with BS arguing there was nothing in EU law to prevent it exporting C sugar before it had met its A and B quota.

The case was referred to the European Court.

The advocate general concluded that A and B quotas must be filled before any C quota can be exported, and he said the IB can charge a levy retrospectively.

But the IB has been deemed “out of time” in making its claim for the 6.6m.

An invoice was only sent in May 1997 – more than four years after the infringement.

“I propose that, in the light of the circumstances, [British Sugar] is relieved of any obligation to pay the charge demanded of it,” said the advocate general.

His opinion has yet to be ratified as a court judgement, but this is usually a formality.

BS declined to comment before completion of the legal process.

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