C-8/73

JUDGMENT OF THE COURT

OF 12 JULY 1973 1

Hauptzollamt Bremerhaven

v Massey-Ferguson GmbH

(preliminary ruling requested by the Bundesfinanzhof)

'Value for custom purposes'

Tune 1968, on the value of goods for payable includes credit charges. What customs purposes is to be found in must be proved is the existence of

Article 235 of the Treaty and reveals another price of a definite amount

no factor calculated to affect its which the buyer or other buyers in validity. similar circumstances are entitled to

in the event of payment before 2. Article 11 (2) (b) (second branch of settle

the of Regulation No the agreed date. It is for the national alternative) 803/68 of the Council of 27 June court to judge in every case of this

1968 must be interpreted as meaning kind whether or not proof has been that it is inadequate, as proof of the furnished of the existence of a

HAUPTZOLLAMT BREMERHAVEN supported by the Federal Minister of Finance, as intervener,

and

MASSEY-FERGUSON GmbH­ , of Kassel,

on the validity of Regulation No 803/68 of the Council on the valuation of

goods for customs purposes and, as a secondary consideration, on the

interpretation of Article 11 (2) (b) of the same Regulation,

I — Facts and procedure home use shall be the cash price

payable on the date specified in The facts and procedure may be Article 5 (a). summarized as follows: 2. The following shall, however, also be

1. Regulation No 803/68/EEC of the taken to be cash prices: Council of 27 June 1968 (OJ L 148, 28. (a) 6. 1968, p. 6) on the valuation of goods (b) a price payable later than the for customs purposes cites as its legal date specified in Article 5 (a), if basis 'the Treaty establishing the there is no provision for a European Economic Community, and in discount for cash payment, or if particular Article 235'. proof of the existence of a

Article 11 of this Regulation provides: different price for cash payment

has not been furnished to the '1. The price to be taken into account in customs authorities. determining the value for customs ' purposes of goods declared for direct 3.

HAUPTZOLLAMT BREMERHAVEN v MASSEY-FERGUSON

of discount agreement. The 2. If question 1 is answered in the any objections Massey-Ferguson GmbH affirmative: of

lodged at the Hauptzollamt Bremerha­ How is Article 11 (2) (b), second ven (Principal Customs Office) were Regulation (proof alternative, of this rejected and the company brought an of the existence of a different price action before the Finanzgericht of for cash to be interpreted? payment) Bremen. The Finanzgericht annulled the Is it necessary that another price of a decisions of the administrative authori­ definite amount has been fixed ties and recognized the company's right between seller and the buyer, or to be granted a 3 % deduction on the other buyers, for cash payment, or is value for customs purposes, correspond­ it sufficient that the price for forward ing to the credit charges. The payment includes a charge for Finanzgericht was of the opinion that credit?'

the company had proved the existence of a different price for cash payment within In the grounds of its order, the

the meaning of Article 11 by producing a Bundesfinanzhof states that the Court of letter from the supplier confirming that Tustice in its Tudgment 27/10 December the credit charges were included in the 1970 (Rec. 1970, p. 1035) has already invoice price. It was not of decisive given an interpretation of certain

importance, according to the Finanzge­ provisions of Regulation No 803/68. But

richt, that these charges were not in its opinion, as the question of the

which, because of short term credit, is amount of such cash price. There is little increased to the level of the invoice importance in the fact that if the vendor price. Moreover, the plaintiff considers includes the cost of credit in calculating that if this interpretation were not the price it does not alter either the date accepted, it would result in a rule of law of payment or the price due under the

misconceived as to its merits, on the contract of sale.'

ground that, by reason of the credit 4. The order of the Bundesfinanzhof charges which it includes, the price for was received at the Court Registry on 19 forward payment is always greater than

the price for cash payment and February 1973. In accordance with Article 20 of the consequently it is impossible to maintain the fiction that this price for forward Protocol on the Statute of the Court of

payment is deemed to constitute the cash Justice of the EEC, written observations In were lodged on 18 April 1973 on behalf price. this respect, the plaintiff refers

Judgment VII 2/61 V the of Massey-Ferguson GmbH by H. Ditges to which

price, even when no discount has been Advocate-General, the Court decided to

agreed upon. proceed without any preparatory inquiry. The Hauptzollamt and the Federal The observations of Massey-Fergu­ Minister intervened in oral of Finance, who GmbH, the allege that there can be no son the Council and the action, Commission made the hearing question invoking the case law of the of were at

on 5 June 1973. Bundesfinanzhof, on the ground that in relation to national laws the provision The Advocate-General presented his the interpretation of which is at issue opinion at the hearing on 27 June 1973. introduced innovations, establishing rules, the necessity for which arose from the divergence in the ideas of the various II — Observations submit­

Member States. In support of their ted before the Court arguments, the Hauptzollamt and the

Minister of Finance make the following The observations submitted before the

points. The simple fact that the invoice Court may be summarized as follows:

No 803/68 governs only a part of the unification of the customs system and

questions relating to the valuation of cause it to develop. This opinion is in no goods for customs purposes, and is way invalidated by the fact that Article augmented by subsequent regulations. It 113 appears in the chapter headed is advisable for other regulations to be 'Commercial Policy', because the

adopted in this area. In particular the Customs policy forms an integral part of legal procedure needs to be harmonized. the common commercial policy. For The company states that on the other example, Article 113 mentions matters of

hand there is good reason to consider customs policy and even alterations

that Regulation No 803/68 intentionally relating to tariffs. Article 235 is simply a differs somewhat from the case law of provision which gives authority to fill in the highest courts of the Member States. the lacunae in the Treaty. In the

It is the same for example in the case of company's opinion, it is necessary discounts; in this field, on the therefore to examine first of all the need Commission's proposal to the Council, a for it to be based exclusively on Article regulation was adopted which was much 113. But even if one presumes that the

particular. The stresses that Regulation No 803/68. company one must specify the provisions of the The Council of the European Treaty which serve as the legal basis for Communities observes that the first an implementing regulation and that it is question must be examined in the light not sufficient to be content with a too of each of the conditions required under

general formula. Article 235 of the EEC Treaty. The first It was also questioned whether Article condition is the need for Community 235 could constitute a proper basis in action to bring about in the actual func­ law. Massey-Ferguson GmbH points out tioning of the Common Market one of

in this respect that the harmonization of the objectives of the Community. In customs laws can and must be effected accordance with Article 2 of the Treaty by means of regulations based on Article one of those objectives is to promote a

113 of the EEC Treaty. By basing harmonious development of economic

themselves on Article 100 and Article activities by establishing a Common Mar-

JUDGMENT OF 12. 7. 1973 — CASE 8/73

As another condition required for the establishment or functioning of the

application of Article 235 is the failure Common Market. In the case of

to provide the necessary powers in other provisions relating to the value for provisions of the Treaty, the Council customs purposes, the Council considers goes on to examine Articles 27, 28, 100, that, in adopting rules in that

111 and 113. connection, it could have based itself on Article 100. But in this field the Council Article 27, second sentence, provides considers that the power to issue that the Commission shall make all Mem­ directives provided by Article 100 is appropriate recommendations to insufficient. Absolute uniformity in all ber States for harmonizing national Member States is in fact necessary for customs legislation. The Council rules

based Article determining the value for customs out the argument on 95, first ECSC purposes, failing which importers would paragraph, of the Treaty, be tempted to use the rules most according to which Article 27 excludes favorable to them, thus distorting all recourse to Article 235 because that

Article can only be used to fill 'an actual competition. Moreover, according to the lacuna in the Treaty' and because such a Council, there is still doubt, in the case of directives, whether the uniform lacuna exists only when the Treaty fails interpretation of national legislation to provide rules for a specific field. In could be fully ensured by preliminary the Council's opinion, it is obvious that rulings by the Court of Justice. The the necessary powers do not exist where Council therefore considers that Article the Treaty fully provides for the power 100 is insufficient in this case. to enact certain rules in the field in The Council contends that Articles 111 question — in this case, recommenda­

volume of goods in circulation and on the other customs regulations which are

their source. Measures which in essence based on Article 235. have other aims cannot be classed within The Commission summarizes the the common commercial policy. That objections made by legal writers against applies in particular to the provisions in Article 235 legal basis for the use of as a the Regulation on the valuation of Regulation No 803/68 as follows: goods for customs purposes. (a) This field is governed by Articles 27 As a subsidiary plea, the Council points and 28 of the Treaty; out that even assuming that the —

enactment of the provisions in question (b) To the extent that those provisions

could have been considered as a measure do not come into play, the customs

of commercial policy — Article 111 (1), laws must be based on Article 111 second paragraph, could not have (during the transitional period) and

constituted an adequate legal basis. At Article 113 (at the expiration of such the time when the Council adopted period); Regulation No 803/68, the Community (c) The general provision of Article 100 was still in the transitional period. The and — to the extent that directives objective justifying recourse to the are inadequate and that uniform measures for the standardization of Community rules which are directly commercial policy is limited by Article applicable are necessary — Article 111 (1), first paragraph: such measures 235 are only operative in the event must bring about, by the end of the of the inapplicability of Articles 111 transitional period, the conditions and 113. needed for implementing a common

In addition, the council points out that rules on the 'basis of which

the Regulation in question includes an specify the actual amount of the customs

adequate statement of the reasons on duty also form part of the

which it was based and it was adopted implementation of the common

in accordance with the procedure commercial policy and, in the absence of

provided for by Article 235. any special provisions, can therefore be The Commission of the European based on Article 113. Communities asserts that, in this case, The main objection against the use of

JUDGMENT OF 12. 7. 1973 — CASE 8/73

commercial policy. For reasons of legal forward payment than one which

certainty the Commission therefore includes a discount. This faulty logic can preferred not to base on Article 111 its be overcome by specifying that proof of proposed Community Regulation on the the existence of a different price for value for customs purposes. cash payment has to be furnished to the customs authorities. As experience has With regard to the third objection, the

Commission points out that Article 100 already shown sub-paragraph 2 (b) is difficult to understand. has in reality served as a basis for a

directives In the company 's opinion, the errors in certain number of in the Article 11 which it has brought to light customs field. The experience gained within the framework of the Convention and especially the refusal to take account

for of the price for forward payment on the valuation of goods customs

as meaning that there is a presumption The Commission consequently proposed that the seller will include in the price that the basis for the Regulation be for forward payment the interest charges Article 235 which requires consultation under the heading of credit. with Assembly and the a unanimous Massey-Ferguson GmbH considers decision by the council. therefore that proof of the existence of In the existing state of integration and of credit charges must be considered as the common commercial the policy, being supplied in the presence of a duly Commission does not deny that Article established price for forward payment. 113 can constitute an adequate basis for And even if one did not hold this uniform Community legislation on there is good reason for not opinion, customs matters. The Commission is of to making this proof subject conditions

the opinion however that this possibility which are too severe. The Federal cannot affect the validity of the Minister of Finance forgets the Regulation adopted in 1968, against the fundamentals of the problem by substance of which no plea of nullity has reference (on the invoice) for a requiring been raised. different cash price. In the company's

opinion this requirement indirectly brings one back to the idea of discount. The seller who allows a lower cash price 2. The second question could just as easily grant a discount. Nevertheless, by not doing so his Massey-Ferguson GmbH asserts that behaviour is still completely in Article 11 of Regulation No 803/68 is a accordance with usage. The company regrettable provision. For example, an wonders why the seller, under the

HAUPTZOLLAMT BREMERHAVEN v MASSEY-FERGUSON

(the difference between the price for cash purposes of 15 December 1950, such

payment and the price for forward valuation was certainly governed by the payment). said Convention before the entry into force of Regulation No 803/68, but, in Moreover, assuming that the argument

of the Hauptzollamt and the Federal practice, that did not lead to a uniform

Minister is the seller application in all respects due to the well-founded, would be bound to produce his books of powers of alteration offered by Article

account in order to put the buyer in a IV of the Convention as well as the

the practicability of the rules and the In the same way, the opinion of the tax concern for limiting adjustments to a authorities that he who allows forward minimum. payment can equally well grant a

discount, is wrong because such forward In relation to the practice followed up to payment means the waiver of an that time in Germany for 'prices for undefined interest whereas a discount forward payment', these rules contain

can be completely different. That important alterations. And so it is no

explains why numerous sellers agree to longer possible to invoke in this matter

forward payment without making any the earlier case law of the

deduction in terms of discount. That is Bundesfinanzhof.

was taken of the strict meaning of legislation on the value for customs

Article 11 (2) (b). purposes in comparison with current

The Commission the European usage and must define it so as to exclude of Communities points out that the even minute adjustments of payments in

question whether and in what advance and prices for forward circumstances the 'prices for forward payments.

payment'

by means of the time limit The Commission points out that the

by commercial usage it on the valuation of goods for customs applies to the cash price — because the

JUDGMENT OF 12. 7. 1973 — CASE 8/73

seller has granted a time-limit for the provide in similar transactions a

payment but was not prepared to grant a discount for cash payment; refund for immediate payment. The — that a discount for cash payment is seller can accept for the most varying granted at the same time to other reasons a postponement of the date of buyers. payment without on the other hand being obliged to grant a refund On the other hand, the seller's

(discount) in the case of immediate declaration according to which the credit payment. In that case there is no lower charges are contained in the invoice

cash price within the of the price is inadequate. The only thing meaning legislation on the value for customs which matters is whether, during the

payment because he pays to be interpreted as meaning that there where, immediately the buyer has only to hand must exist a different specified price

over an amount less than that specified which the buyer is entitled to discharge

and this applies even where a discount by paying cash. In the other hand it is has not in fact been agreed upon. The inadequate to furnish proof that the

is bear be­ object of the is seller to the credit charges second exception to

cover cases similar to those cause he granted a time-limit for pay­

where a

established and such price

would fix the value for customs The Commission's representative added

purposes. The proof must —

by reason that this decree, dated 1964, had been of the absence of any stipulated discount made following the judgment of the — satisfy strict requirements so as to Bundesfinanzhof of 26 October 1963 exclude the authorization of a certificate according to which the price for forward of compliance. payment should be adjusted to take

account of credit charges. This decree is The proof consists in the fact: no longer applicable since the entry into — that the general scales in force force of Regulation No 803/68.

HAUPTZOLLAMT BREMERHAVEN v MASSEY-FERGUSON

validity of the Regulation is to be found in Article 235 of the Treaty, on

which it is based, or in any other provision of the Treaty.

3 The first recital in the Preamble to the Regulation declares that it is adopted

by virtue of 'the Treaty establishing the European Economic Community, and in particular Article 235 thereof.

Thus it is proper to examine first of all whether this Article constitutes a

sufficient legal basis.

determination of the valuation for customs purposes of goods imported from third countries so that the level of protection effected by the Common Customs Tariff is the same throughout the whole Community.

Such a uniform determination does not follow to the extent necessary from the fact that the Member States are all adherents of the Brussels Convention on the valuation of goods for customs purposes signed on 15 December 1950. This is because the provisions of this convention have to give the signatory States the power to amend certain specific matters.

JUDGMENT OF 12. 7. 1973 — CASE 8/73

As the procedure prescribed by Article 100 for the approximation of

legislation by means of directives does not provide a really adequate solution, one must examine if the provisions on the implementation of the customs

union and the common commercial policy could have possibly furnished the Council with an adequate basis for action.

By reason of the specific requirements of Article 235 this course of action

cannot be criticized since, under the circumstances, the rules of the Treaty on the forming of the Council's decisions or on the division of powers between the institutions are not to be disregarded.

5 No one has disputed the fact that on the adoption of Regulation No 803/68

the procedure prescribed by Article 235 was carried out in the proper manner.

6 Consequently, as the authority for this Regulation is to be found in Article 235 of the Treaty, examination of the question raised has exposed no factor which is capable of affecting its validity.

The second question

provided or the existence of a different price for cash payment was proved at the customs department.

HAUPTZOLLAMT BREMERHAVEN v MASSEY-FERGUSON

9 To interpret this last provision, one must take account of its aim which is to establish the value of goods, expressed as a specific sum which can be taken as the basis for calculating the customs duty to be imposed on the goods.

It follows that the different price, the existence of which could be proved

if necessary, is to be expressed in figures.

That is not only because the price for forward payment includes credit

event of payment before the agreed date.

Costs

12 incurred Council The costs by the and the Commission of the European Communities which have submitted observations to the Court are not

recoverable.

As these proceedings are, insofar as the parties to the main action are

concerned, in the nature of a step in the action pending before the

Having regard to the Treaty establishing the European Economic

Community, especially Articles 3, 9, 27, 28, 100, 113, 177 and 235;

Having regard to Regulation No 803/68 EEC of the Council of 27 June 1968 on the valuation of goods for customs purposes, especially Article 11;

Having regard to the Protocol on the Statute of the Court of Justice of the European Community, especially Article 20;

Having regard to the Rules of Procedure of the Court of Justice of the

European Communities;

affecting its validity.

2. Article 11 (2) (b) (second branch of the alternative) of the said

Regulation must be interpreted as meaning that it is inadequate, as

proof of the existence of a price different from the price for forward payment, to show that the price for forward payment payable

includes credit charges. What must be proved is the existence of

another price of a definite amount which the buyer or other buyers in similar circumstances are entitled to settle in the event of payment

Registrar President