The scheme for a levy in the milk and milk products sector has been extended in accordance with Regulation (EC) No 1788/2003 for a further 11 consecutive 12-month periods from 1 April 2004. Detailed rules should be laid down to take account of the new provisions of that Regulation. Those detailed rules should also incorporate, to a great extent, provisions of Commission Regulation (EC) No 1392/2001 of 9 July 2001 laying down detailed rules for applying Council Regulation (EEC) No 3950/92 establishing an additional levy on milk and milk products. Regulation (EC) No 1392/2001 should therefore be repealed.

Rules should be laid down making it possible to divide the national quantities between deliveries and direct sales for each Member State. To that end, the new definitions of ‘deliveries’ and ‘direct sales’ in Article 5(f) and (g) of Regulation (EC) No 1788/2003 should be taken into consideration by the Member States, which should inform the producers affected by those new definitions.

This Regulation should also specify the additional factors necessary for the final calculation of the levy payable for deliveries and that for direct sales, the measures to ensure payment of the levy in good time by the Member State to the European Agricultural Guidance and Guarantee Fund (EAGGF) Guarantee Section, and lastly, the rules on checks to ensure that contributions to the payment of the levy have been correctly collected.

The way the fat content of milk is to be taken into account when drawing up the definitive statement of quantities delivered should be specified. Special provisions are needed to cover cases where the reference quantity for deliveries is amended or where reference quantities are allocated from the national reserve.

As Regulation (EC) No 1788/2003 has fixed the reference fat content rates for each Member State, rules for adjusting the individual reference rates whenever necessary should be laid down.

It is vital, on the one hand, to check that the data communicated by purchasers and producers are accurate and, on the other hand, to ensure that the burden of the levy actually falls on the producers responsible for the overrun of the national reference quantities. To that end, Member States should play a greater role in the controls and penalties they are required to introduce to ensure that contributions to the payment of the levy are collected correctly. In particular, Member States should draw up a national control plan for each 12-month period on the basis of risk analysis and should carry out controls at farm level, at transport level and at purchaser level with the aim to combat possible irregularities and frauds. It is also necessary to specify the deadlines and number of checks needed to allow verification within a given time limit that the arrangements have been complied with by all the parties involved. Penalties are also needed where those basic requirements are not met.

It is also necessary for Member States to approve the purchasers operating in their territory and for detailed rules to be laid down for cases where purchasers fail to comply with this Regulation.

Communications to the Commission play an important part in the administration of the scheme and should therefore be increased. In particular, communications on the division between deliveries and direct sales and replies to an annual questionnaire are essential for the Commission's administration of the scheme. Compliance with the dates laid down is also a factor promoting its effective management. It is also appropriate for the Commission to be informed in detail of implementation at national level so as to have a better knowledge of the various systems used in the Member States.

This Regulation should apply from the same date as Regulation (EC) No 1788/2003.

The measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Milk and Milk Products,