C-65/79

JUDGMENT OF 24. 4. 1980 — CASE 65/69

invoice price of goods imported from own financial or fiscal legislation and a non-member country does not not by applying Community rules accord with the aims of the rules relating to valuation for customs relating to the determination of the purposes. value of the. goods for customs purposes. 3. Where an importer has accurately and fully completed the form of ques- 2. The determination of the value for tionnaire annexed to Regulation No customs purposes in accordance with 375/69 and it is not disputed that the Regulations No 803/68 and No goods have actually been delivered to 375/69 cannot have the effect of the purchaser in the quality and requiring the fiscal and financial auth- quantity stated in the invoice and the orities of the Member States to accept seller has received the whole of the that valuation for purposes other than invoice price and it is not alleged the application of the Common against him that he has not answered Customs Tariff. more detailed inquiries which the Thus if it were established that an customs authorities may have put to undertaking which forms part of a him, he has not failed to fulfil any company or a group of companies of duties imposed on him by the which the centre of management is Community rules on the valuation of outside the Member State concerned goods for customs purposes or by adopted, in its relations with that Article 13 of the Agreement between centre of management or with other the EEC and the Swiss Confederation undertakings belonging to the same of 22 July 1972. On the other hand, group, prices, the application of the consequences in other respects — which might imply an illegal transfer such as those relating to the financial of capital or profits, it would be for or fiscal laws other than customs laws the Member State concerned to take — which are not governed by the appropriate measures, with a view to Community rules are a matter for the proving, and where necessary legal order of the Member State suppressing, such activities, under its concerned.

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THE COURT,

composed of: H . Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. M e r t e n s de Wilmars, P. Pescatore, Lord M a c k e n z i e Stuart, G. Bosco, T . K o o p m a n s and O . D u e , Judges,

Advocate General: F. Capotorti Registrar: A. Van H o u t t e

gives the following

JUDGMENT

and 80 Swiss francs per gram of charged with "importations sans dyhydroergotamine, the equivalent of déclarations de marchandises prohibées" between FF 102.40 and FF 115.46, [importing prohibited goods without depending on the exchange rate. declaration] and "transfert irregulier de capitaux à l'étranger" [illegal transfer of On the basis of comparisons with the capital abroad]. invoice prices charged for the same products, and the prices at which they It should be noted that making a false were being offered for importation into declaration of value for customs France, by manufacturers other than purposes is equivalent, according to Sandoz-Switzerland, the customs auth­ Article 426 (3) of the French Customs orities contested the prices fixed by the Code, to importing prohibited goods latter and took as the normal import without declaration, which is a first price FF 36.52 for ergotaminę and FF degree delict and that the unlawful 54.23 for dihydroergotamine. transfer of capital is an infringement of the provisions of Articles 1 and 3 of Thus, whereas the total value declared Decree No 68-1021 of 24 November during the period from 4 January 1971 1968 (Journal Officiel de la République to 3 November 1973 was FF 89 929 024 Française 25 November 1968, p. 11081). the value recognized by the customs authorities was only FF 53 142 943, Sandoz-France contested these two making a difference of FF 36 786 081. charges chiefly on the basis of the following arguments: Following these discoveries the customs inspectorate on 20 February 1974 drew — In the first place, as regards the false up an official report of its findings on declaration of value for customs the basis of which it filed a charge with purposes: the Procureur de la République at the Tribunal de Grande Instance, Nanterre, 1. Regulation No 803/68 of the alleging: Council of 27 June 1968 on the valuation of goods for customs — First, a false declaration of customs purposes (Official Journal, English value on importation, since Sandoz- Special Edition 1968 (I), p. 170) France had purchased the products excludes downward adjustments, mentioned above at clearly inflated that is to say reductions of the prices; and contract price; — Secondly, illegal transfer of capital abroad, since by paying higher prices 2. It is impossible to compare the Sandoz-France repatriated its profits prices declared with the prices of to Switzerland without paying tax on goods of different origin; its profits in France, 3. Regulation No 375/69 of the which are punishable offences under Commission of 27 February 1969 Articles 35, 414, 426 (3), 435, 399 and on the declaration of particulars 459 of the French Customs Code, and relating to the value of goods for Decree No 68-1021 of 24 November customs purposes (Official 1968. Journal, English Special Edition 1969 (I), p. 63) restricts the The Examining Magistrate at the obligations of the importer as to Tribunal de Grande Instance, Nanterre, the declaration to be made; to whom the matter was referred, committed René Chatin, the General 4. In the present case there is no Manager of Sandoz-France, for trial incorrect invoice;

Sandoz-France concludes its arguments If Question 2 is answered in the affir­ with a series of questions to be referred mative: What are the country or to the Court of Justice, which were countries of exportation and/or impor­ adopted by the Examining Magistrate at tation from which and/or to which sales the Tribunal de Grande Instance, must have been made in order for the Nanterre, by an order of 7 March 1979, competent authorities of a Member State and to which he added an eleventh to be empowered by the aforementioned question by an order of 14 May 1979. regulations to found, upon the prices charged in those sales, a reduction of the The questions put to the Court are as declared value or the value resulting follows: from the particulars furnished by the importer? "Question 1: In particular: Do Regulation (EEC) No 803/68 of the Council of 17 June 1968 on the valuation (a) Must the sales of which the prices of goods for customs purposes, in may be used as reference prices particular Articles 1 to 10 of that regu­ necessarily have been made between lation, and Regulation (EEC) No an exporter and an importer 1581/74 of the Commission of 24 June respectively established in the same 1974 on the price reductions to be taken countries as those between which the into account when determining value for sale was made in relation to which customs purposes, allow the competent the importer's declaration of value or authorities of a Member State to the particulars furnished by him for attribute to goods imported from a non- valuation for customs purposes are member State a value for customs disputed? purposes less than the value declared by the importer or, for imports subsequent (b) If Question 3 (a) is answered in the to the entry into force of Regulation negative: Do the aforementioned (EEC) No 375/69 of the Commission of regulations and Regulation (EEC) 27 February 1969, less than the value No 603/72 of the Commission of 24 which results from the particulars March 1972 on the buyer to be taken relating to value for customs purposes into consideration when determining declared by the importer? the value of goods for customs purposes, allow regard to be had to sales: Question 2:

— To importers established in non- forming the subject-matter of sales member States? between two companies which are not independent of one another? — Between a supplier and a purchaser both established in Question 7: non-member States? If Question 1 is answered in the affir- mative; Are the competent authorities of Question 4: a Member State entitled to charge an importer with a "false declaration of If Question 2 is answered in the affir- value for customs purposes made by mative: Do the aforementioned regu- means of a false, incomplete, inaccurate lations allow the competent authorities to or inapplicable invoice" (facts which are take as reference prices for reducing the treated by the national law in the same value declared by the importer or, in the way as "importation of prohibited goods application of Regulation No 375/69, without declaration"), an offence pun- the value resulting from the particulars ishable by heavy fines and prison furnished by the importer, prices charged sentences, even where the said importer has complied with the aforesaid Regu- (a) in sales of products coming from lation No 375/69 by correctly furnishing countries whose external trade is the particulars relating to the value of governed by a State monopoly or by goods for customs purposes which are public undertakings? the subject-matter of the questionnaire set out in the annex to the said regu- lation, and where it is not disputed that (b) in sales of imitations of the products the goods have actually been delivered to forming the subject-matter of the the purchaser in the quality and quantity sale in relation to which the value for stated in the invoice and that the seller customs purposes is reduced? has received the whole of the invoice price? Question 5: Question 8: If Question 1 is answered in the affir- mative; If either in law or in fact no Are the practice of reducing the declared reference price can be used, are the value and the serious consequences competent authorities of the importing which it entails for importers compatible country entitled unilaterally to employ with the customs union set up by Articles other methods or facts, and if so which 12 to 29 of the EEC Treaty, having ones? regard to the deflections of trade and distortions of competition to which that practice may lead? Question 6: Question 9: If and in so far as the methods applied by the French Administration to (a) Does not Article 13 of the determine the value for customs purposes Agreement between the EEC and the are not permissible, according to which Swiss Confederation of 22 July 1972 criteria is that value correctly to be (Regulation (EEC) No 2840/72 of established where no valid price is the Council of 19 December 1972), available for comparison and where the which prohibits any measures having matter concerns patented products an effect equivalent to quantitative

restrictions on imports in trade actually been delivered to the purchaser between the Community and in the quality and quantity stated in the Switzerland, thereby prohibit the invoice and that the seller has received competent authorities of a Member the whole of the invoice price? State from reducing the declared value or the value resulting from the particulars furnished by the Question 11: importer? Do Article 9 of Regulation No 803/68 of the Council and, for the imports to (b) In particular does Article 13 allow which they apply, Regulation No 375/69 heavy fines and prison sentences to of the Commission and the annex be imposed upon an importer of a thereto allow the competent authorities Member State of the EEC who has of a Member State to apply to the duly fulfilled his obligations by invoice price, in order to determine the correctly and completely giving the value for customs purposes, downward competent national authorities the adjustments other than those which are information required by Regulation listed under Nos 18 to 21 of the No 375/69 of the Commission of aforesaid annex and which are 27 February 1969, where it is not determined by items separate from the disputed that the goods have actually price of the goods but nevertheless been delivered to the purchaser in included in the invoice price?" the quality and quantity stated in the invoice and that the seller has received the whole of the invoice The two orders referring the questions to price? the Court were received at the Court Registry on 18 April and 16 May 1979. Written observations were submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the Question 10: EEC on 12 July 1979 by the Commission of the European Communities, represented for the purpose by its Legal If Question 1 is answered in the affir­ Adviser, Jean-Claude Séché, acting as mative: Does not the first paragraph of Agent; on 25 July 1979 by the accused in Article 19 of the Agreement between the the main proceedings, represented for EEC and the Swiss Confederation of the purpose by B. Baudelot, President of 22 July 1972, which prohibits any the Bar, and R. Saint-Esteben, both restrictions on payments relating to trade Advocates at the Cour de Paris; on in goods and the transfer of such 2 August 1979 by the Government of payments between the Member States the Federal Republic of Germany, of the European Community and represented for the purpose by its Agent, Switzerland, thereby prohibit the Dr Seidel; on 3 August 1979 by the competent authorities of a Member State French Government, represented for the from classifying as "unlawful transfers of purpose by its Agent, Y. Cousin, Deputy capital" (offences prohibited by its Secretary General of the Inter- exchange control rules) a transaction Ministerial Committee on European whereby a purchaser in a Member State Economic Co-operation; on 13 August of the European Community pays his 1979 by the Government of the United Swiss supplier the amount of an invoice Kingdom, represented for the purpose by relating to a sale of goods, where it is its Agent, R. D. Munrow, Treasury not disputed that those goods have Solicitor's Department.

On hearing the report of the Judge- charges invoiced was based is to be Rapporteur and the views of the found in a judgment of the Cour de Advocate General the Court decided to Cassation terminating lengthy litigation open the oral procedure without any which started in 1958 between Sandoz- preparatory inquiry. France and the customs. Following that judgment an agreement was reached between the parties which extended the effect of the decision made by the Cour II — W r i t t e n o b s e r v a t i o n s s u b - de Cassation to all imports made by m i t t e d u n d e r A r t i c l e 20 of Sandoz-France. the P r o t o c o l on the S t a t u t e of the C o u r t of J u s t i c e of In reliance on that agreement, dated the E E C 13 October 1972, Sandoz-France believed that the valuation for customs purposes would no longer be subject to Observations of Mr Chatain, the accused subsequent challenge. in the main proceedings The accused in the main proceedings Before commencing a discussion of the claims, therefore, that the practice points of law and the various questions adopted by the French administration of which have been raised, Mr Châtain making downward adjustments throws considers that he should recapitulate the into relief "the uncertainty experienced facts as viewed by him, as well as the by French subsidiaries of foreign phar- history of the Sandoz companies and the maceutical companies", especially since basis of the relationship between that uncertainty has been increased in Sandoz-Switzerland and Sandoz-France. this case by the fact that this practice of making downward adjustments results in calling in question, several years after the A — General imports concerned, customs valuations which had however been the subject of agreed increases. 1. The facts He concludes this point by stating that Sandoz recalls that the prices quoted by this serious accusation of fraud makes it Sandoz-Switzerland in Swiss francs to essential to explain the commercial Sandoz-France have not changed since relationship which exists between 1967 and it considers that that must Sandoz-France and Sandoz-Basel, and preclude any suggestion that they were especially the reasons why Sandoz- of a speculative and fraudulent nature. France obtains its supplies of the products in question from Sandoz-Basel. Sandoz France observes in addition that the general tendency of prices for active ingredients expressed in Swiss francs to 2. Background of the Sandoz group decline should be noted. Sandoz explains the background of the Sandoz-France goes on to recall that in group at great length by showing, first, application of the rules concerning the that the group was launched on the basis valuation of goods for customs purposes of important discoveries in the field of the prices invoiced had already been ergots of rye by one of its founders, Mr subjected to sizeable increases. The Stoll, and secondly, that its establishment principle on which these increases in the in France, and particularly in Alsace, has

a very long history as it dates back to that these characteristic features are of a 1911. higher level in Sandoz dihydroergo- tamine than in imitation products, as On the subject of its establishment in regards both bio-availability and France, Mr Châtain states that Sandoz- stability”. France employs 2 838 people and that Sandoz-Switzerland employs 1 832 Moreover, by obtaining its supplies from frontier workers from Alsace at Basel. Sandoz-Switzerland, Sandoz-France ensures constant quality and regularity of Sandoz-Switzerland also invests in supplies. France, either by way of increasing its capital, by granting interest-free loans to Mr Châtain considers that this refutes its subsidiary Sandoz-France, or even the argument put forward by the indirectly by writing off its debts. Mr Customs on the basis of comparisons Châtain concludes this section by main- with prices from different suppliers. taining that such conduct is inconsistent with the accusation made by the customs He goes on to claim that the statement administration. made by the customs that “Sandoz products are not consistent in quality or superior to the same products manu- 3. Basis of the relationship between factured by other companies” is Sandoz-Switzerland and Sandoz- unfounded. The customs authorities are France merely referring to a legal minimum which any manufacturer of proprietary Mr Châtain recalls that Sandoz- medicinal products must meet. Switzerland, and in particular one of its founders, Mr Stoll, were pioneers in the The qualitative analyses carried out by development of ergot of rye. Sandoz-Basel are far more elaborate than the minimum carried out by the He claims that, being a pioneer in the customs and moreover the company field, Sandoz-Switzerland was able to provides Sandoz-France with permanent perfect processes which enable it today scientific assistance; this factor was to supply “active ingredients whose overlooked by the Customs in its quality is such as fully to explain and evaluation of the price comparison. justify the preference accorded by Consequently, Mr Chatain claims, the Sandoz-France to the products sold by customs authorities are overlooking the its parent company, in which, however, very specific requirements for the the customs see ground for complaint”. conditions of supply of active ingredients by implying that a manufacturer of In fact Sandoz-France is quite at liberty proprietary medicinal products should to purchase its active ingredients try to obtain supplies at the lowest price. wherever it wishes but its choice of Sandoz-Switzerland is due to the However, the investigations which such a intrinsic quality of the products sold, a manufacturer would have to carry out quality which can be measured by both every time he changed his supplier in the bio-availability method and the order to make sure of the quality of the stability method. products “would wipe out the supposed economic advantage of a lower-price for He claims on this point that “by means his active ingredients”. of research carried out internally or entrusted to outside scientific bodies, Mr Chatain also claims that the infor- Sandoz-France has been able to establish mation on which the French customs

authorities have based their case "is not rules on valuation for customs reliable and can in no way constitute a purposes basis of comparison". 1.1.1. The objective of Regulation No In conclusion Mr Châtain states that he 803/68: fair and uniform is "convinced that his source of supply is charging of customs duties the most rational, the most reliable and, under the Common Customs in the end, the most economic one". Tariff The accused in the main proceedings recalls that the objective of customs Β — Consideration of the points of law duties within the national context is both raised in the questions submitted to protect the national economy and to by the Examining Magistrate obtain funds for the State. That being so, the sole concern of the First of all, Mr Chatain recalls the customs should be to trace the various case-law of the Court of Justice "which frauds which result in failure to pay all seems perfectly clear" and which, he or part of such duties. These two claims, makes it possible to state that the traditional functions of customs duties Court of Justice has jurisdiction to reply have in no way been modified sub­ to all the questions raised, including sequent to the application of the Questions 9 and 10 concerning the Common Customs Tariff. agreement between the EEC and Switzerland, since the latter agreement is This is borne out by the preamble to the act of one of the Community Regulation No 803/68 which expressly institutions and as such falls within the stipulates that "any deflection of customs terms of Article 177. receipts should be avoided and where appropriate eliminated". Mr Chatain re-arranges the questions raised by the Examining Magistrate and That aim was confirmed by the suggests the following plan : Commission in its Recommendation No 70/112/EEC of 23 January 1970 on the organization of the central customs 1. Principal question: The reduction of administration departments responsible the price agreed upon and actually for applying provisions on the valuation paid is incompatible with of goods for customs purposes (Official Community law and with the Journal, English Special Edition, 1965- agreement between the EEC and 1972 — Omissions from the First and Switzerland Second Series — p. 28) which stipulates that the objective adopted by Regulation (a) Incompatibility of the reduction No 803/68 is to avoid "deflections of with Community law trade, activities and customs receipts".

The Commission declared before the It may likewise be noted that it is the European Parliament that the proposed possibility of under-valuation in the rules were designed to avoid underva­ declaration which is consistently referred luation and to "protect honest importers to by the agreement. from unfair competition by means of under-valuation" (European Parliament Proceedings, Document No 162, 18 Lastly, Article 1.2 (b) of the above- December 1967, No 57). mentioned agreement on GATT concerning the conditions in which the transaction value will be accepted as the basis of the customs valuation even 1.1.2. The Convention on the though the sale has occurred between valuation of goods for customs related persons has been interpreted as purposes signed at Brussels on follows: 15 December 1950, which entered into force on 28 July Where it is proved that the price is 1953 (hereinafter referred to as sufficient to cover all costs and to ensure "the Brussels Convention") a profit in proportion to the total profit made by the undertaking, it is proved Mr Châtain claims that cases in which that the price has not been influenced by the price is higher than competitive the fact that the seller and the buyer are prices were at no time mentioned in the related. Brussels Convention. That is because in such cases there is no undesirable effect The accused in the main proceedings on the amount of duty charged. concludes from this that the only Therefore there would be no reason, on instance of an unacceptable price the basis of the objectives of the between related persons is where the Convention, to compel the declarant to price is undervalued, that is to say, inad- adjust the price downwards, or, a equate to cover the cost and the seller's fortiori, to impose penalties on him. normal margin.

2. In the case of abnormal rebates and any other reduction from the ordinary Thus the interpretation of value for competitive price. customs purposes put forward by the French customs runs counter not merely to the spirit and the objectives but also to Thus the only adjustments provided for the actual wording of Regulation No are increases. This interpretation is 803/68 and the Community customs confirmed both by the regulation ι rules. applying the Community rules: Regu­ lation No 1581/74 of the Commission of 24 June 1974 (Official Journal L 168, 25 1.3. The use of the Community June 1974), and by the provisions of the concept of value for customs Brussels Convention and the agreement purposes to serve national policies concerning GATT. is a misuse of the law which is contrary to the Community principles governing the customs 1.2.2. Specific downward adjustments union. (extrinsic elements included in the price) 1.3.1. The customs authorities are ignoring the principle of the The accused in the main proceedings uniformity of Community rules claims that Article 9 (2) of Regulation No 803/68 provides for downward The unification of customs legislation is adjustments only as regards transport the fundamental objective of the customs costs, assembly costs and reproduction union. This objective emerges directly rights and it would appear, therefore, from the Community rules as a whole that the legal nature of such adjustments and was acknowledged by the Court of is fundamentally different from that of Justice in its judgment in Massey- upward adjustments which, for their Ferguson (Case 8/73 [1973] ECR 897). part, may and must be made when the The most significant consequence of the price itself (the basic price) is abnormally principle of uniformity is that it is not low. possible to apply a Community regu- lation for national ends, a point which This interpretation is supported by the emerges from the judgment of the Court ENKA judgment of the Court of Justice of Justice in Simmentbal (Case 106/77 (Case 38/77 [1977] ECR 2203). In that [1978] ECR 629). The accused in the case the Court distinguished between, on main proceedings therefore claims that the one hand, the price of the goods the interpretation "adopted by the and, on the other hand, other elements French customs of value for customs which are included in the invoice, and purposes was not put forward in order to thus confirmed the distinction between safeguard Community interests but solely

in order to promote purely national cannot be used outside this domain, policies: monetary policy, fiscal policy particularly for national ends, however and even the policy relating to the prices legitimate the latter may be. of drugs." Thus France is diverting the Community concept of value for customs purposes from its normal function, which Lastly, the accused in the main is that of achieving customs union. proceedings claims that even though it is not possible to employ the concept of value for customs purposes for national Acceptance of the French interpretation ends relating to fiscal and monetary would deal a death blow to the principle controls, this does not prevent recourse of uniformity. The fact is, to apply a to specific instruments which exist to Community rule in order to satisfy the protect the national interests in question. needs of national policy suffices to sow the seed of divergence, since downward adjustments of value for customs In fact the tax authorities have at their purposes must depend on various factors disposal Article 57 of the Code Général which necessarily differ from one des Impôts [General Tax Code] and Member State to another. It is therefore Order No 45/1483 of 30 July 1945 on impossible to challenge the uniform prices, two provisions which enable application of Community law on the genuine fraudulent infringements of the ground of national rules or purposes. price rules to be suppressed. The Court of Justice itself excluded the possibility in its judgment in Balkan Import-Export (Case 118/76 [1977] ECR 1177) on the question of monetary 1.3.2. The customs authorities are compensatory amounts. undermining the principle of certainty and simplicity in Community law To take account of the purposes of national policy would open the door to Several principles underlie the definition deflection of trade and to disparities in of value for customs purposes adopted at the conditions of competition, a fact to Brussels in 1950; simplicity, ease of which the Court of Justice made interpretation, fairness an legal certainty reference in its judgment in the Enka are the chief of these. case, mentioned above, when it declared in relation to a provision concerning the implementation of Regulation No The French customs system "abounds in 803/68 that "if it is not to cause complexity and uncertainty for importers distortions and deflections of trade, that as to both its substantive and procedural provision must . . . be given an identical rules". application in all the Member States". In fact, in so far as the substantive rules Confirmation of this vital uniformity of are concerned, they exist only for interpretation and application of the upward adjustments, not for downward concept of value for customs purposes is adjustments. Moreover, to accept the likewise to be found in the agreement on French interpretation would mean that the interpretation of Article VII of doubt would constantly be cast on the GATT of April 1979 which recalls the price paid and the good faith of the fundamental principle regarding the importer. That suspicion would run neutrality of this concept which, being counter to the development of inter- an instrument of customs legislation, national relations which is one of the

objectives of the Common Customs to in paragraphs 18 to 21 of the Annex Tariff and of the Community. to the last-mentioned regulation, which are determined by items which do not go Next, as to the procedural rules, the to make up the price of the goods but accused in the main proceedings recalls which are included in the invoice price." that the price declared, which was at first adjusted upwards, is to be subject, a number of years later, to downward 2. Illegality of the practice of making

not lodged until 1977. Thus the customs portionality if it exceeds "the degree authorities allowed "a nine-year period" necessary taking into account the aim to elapse before questioning the declared and objectives of the obligation which value. has been disregarded and, consequently, the interests thus prejudiced". This principle is considered by the Court of As a result, Mr Chatain requests the Justice to be a general principle of Court to rule, in reply to Question 1 and Community law and, therefore, a source the supplementary question, that:

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Thirdly, in French law it is well In conclusion the accused in the main established that pecuniary penalties are proceedings requests the Court of Justice compensatory in nature. In the present to rule in reply to Question 8 that: case, however, enormous penalties would be incurred without any damage having "The practice of reducing the declared been caused to the public finances or to value as described in the reply to the Community budget, which is Question 1, above, and the great contrary to this aim of the repressive difficulties resulting therefrom for measures. importers, are incompatible with the customs union established by Articles 12 Thus it is "clear that such sanctions bear to 29 of the EEC Treaty, regard being no relation to the aims of the had in particular to the disproportionate Community legislation in question and, nature of the penalties and the deflection

JUDGMENT OF 24. 4. 1980 — CASE 65/69

1.1. The concept of measures having The accused in the main proceedings an effect equivalent to maintains that the alleged unlawful quantitative restrictions transfer of capital which the customs authorities believe they can infer from The accused in the main proceedings the so-called over-valuation of the starts with a review of the case-law of declared price disregards Article 19 of the Court of Justice leading to a the agreement between the EEC and definition of measures having an effect Switzerland which provides that: equivalent to a quantitative restriction "Payments relating to trade in goods and

1.2. The concept in application theoretical standard which the value for On this point, the accused in the main customs purposes naturally constitutes proceedings refers to the observations for the calculation of customs duties". submitted under the above paragraph (a) Thus the only factors relevant in as a whole, and goes on to maintain that applying Article 19 are the actual the prices applied by Sandoz-Switzerland existence of the contract of sale and the are normal and in accordance with reality of the price, and this is all the industrial and commercial practice and more so when the features characterizing management concerning the products in a fraud are not present, since the price

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These parti of the exchange control regulations the culars are furnished by the party making customs authorities have failed to have the declaration to the customs in the regard to Article 19 of the Agreement form of a questionnaire which appears in between the EEC and Switzerland. the annex to Regulation No 375/69 and the accused in the main proceedings In conclusion the accused in the main maintains that he scrupulously complied proceedings requests the Court to with the obligations imposed on him by declare in reply to Question 10 that: Regulation No 375/69 and that this has "Article 19 (1) of the Agreement never been contested during the whole of between the EEC and Switzerland, the proceedings. referred to above, which prohibits any restriction on payments relating to trade In consequence he considers that he "did in goods and on the transfer of such not assume responsibility for calculating payments between the Member States of values for customs purposes which from the Community and Switzerland, that point onwards is a task for the prohibits the responsible authorities of a Customs on the basis of the particulars Member State of the EEC from char supplied by the importer".

1.2. The case-law of the Court of Justice Paragraph 2: subsidiary questions (a) The purpose of and limitations on The accused in the main proceedings the obligations of the party claims that in the judgments in making the declaration (Questions Donckerwolcke (Case 41/76 [1976] ECR 7 and 9b) 1921) and Cayrol (Case 52/77 [1977] ECR 2261) the Court of Justice declared 1.

JUDGMENT OF 24. 4. 1980 — CASE 65/69

characteristics and the specific nature of the value for customs purposes, the products. where the price actually agreed upon and paid has been subject to a reduction (Questions 2, 3, 4, 5 2. French international law and 6) According to the accused in the main 1. The principle of comparison with a proceedings Article 35 of the Customs contract of sale relating to the same Code, as interpreted by learned French product (Question 2) writers on administrative law, supports his interpretation of Regulation No The accused in the main proceedings 375/69. recalls, first, that the definition in the Brussels Convention of the value for In fact, according to French academic customs purposes employs a theoretical writers, if the declaration of particulars

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JUDGMENT OF 24. 4. 1980 — CASE 65/69

have not been imported may not be 2.3. Imitation products (Question 4 b) used".

The accused in the main proceedings 2.1.2. Destination of the reference claims that this question touches on one product of the essential points in the dispute because it affects the future of the European pharmaceutical industry. He The accused in the main proceedings claims that to require a uniform selling maintains, first, that as the Customs Co- price for active ingredients form labora- operation Council stated in its Expla- tories such as Sandoz-Basel and from natory Notes: "The price on the internal mere imitators would put an end to markets in the exporting country cannot research and strike a critical blow at the be taken as the basis for determining development of this industry, of which what is the normal price". the European consumer will effectively be the first victim.

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established in the same country as value which may always be used, since the person carrying out the sale the value to be referred to is a theoretical in dispute". price. Thus in this case, it is wrong to say that there is a lacuna in the rules. In In the event of the Court's not the circumstances the accused in the accepting this principle, however, it is main proceedings is of the opinion that a suggested that it should rule that: Member State may not decide unilat­ erally which method to employ as this would be to ignore Regulation No (b) "In any event it is not permissible 803/68 and the principle of uniform to adopt as a reference the price interpretation and application. of a product from:

— A country whose external In the circumstances it would appear that trade is subject to a State the procedure in Article 17 of Regulation monopoly; No 803/68 alone must be followed in order to establish the criteria according to which the value for customs purposes — A Member State of the EEC; is to be determined. or

— An imitator or an ordinary 3.2. What criteria is it legitimate to dealer." use?

JUDGMENT OF 24. 4. 1980 — CASE 65/69

Observations of the French Government Although the cases covered by these provisions concern upward adjustments, The French Government states that this the French Government is of the opinion case has been submitted to the Court by that these adjustments do not constitute common agreement between the Swiss an exhaustive list and that from the and French authorities. Community provisions as a whole it may

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be seen that the aim paramount in the goods, applied by other suppliers mind of the Community legislature as established in the exporting country regards valuation for customs purposes in relation to independent buyers was the attempt to establish the correct established in the importing country price. This point of view was confirmed (Recommendations of 1 June 1965 by the Court of Justice in its judgment in and Report No 5/1979 of the Case 27/70 Edding (cited above). Customs Co-operation Council);

In the case of dihydroergotamine 'there are no other French importers, but a — "Either by attempting to establish the comparative technical study and German normal price for identical or similar tariffs enabled the French customs to

JUDGMENT OF 24. 4. 1980 — CASE 65/79

establish that the product invoiced at and that such a "distortion may be approximately FF 120 should not have considered as false and inapplicable, a been sold for more than FF 54. factor which aggravates the seriousness of the infringement".

In consequence the Federal Government The French Government adds, however, proposes that the reply to the first that in this case there is very good reason question should be as follows: to suspect fraud on the part of the Manager of Sandoz-France because the "Regulation (EEC) No 803/68 of the valuation which appeared on the invoice Council of 27 June 1968 on the valuation produced differed considerably from the of goods for customs purposes, especially normal price current on the open market the first ten articles thereof, and Regu-

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2. Second question concerning the used as a reference must have been possibility of reducing the value for carried out on the same market as that of customs purposes on the basis of a the country for which the goods to be reference price valued are destined, but that on the other hand it is possible to compare prices concerning deliveries originating in The German Government recalls that countries other than that from which the this procedure is only possible if there is goods to be valued have come. But, here clearly a substantial difference in relation too, the special circumstances which may to the invoice price and this difference exist in those other countries should be has been proved by the customs taken into account.

JUDGMENT OF 24. 4. 1980 — CASE 65/79

In consequence it claims that "unilateral action on the part of a 8. Seventh question, on whether a Member State such as that described in Member State may penalize an the question is not permissible". importer even where he has accurately supplied the particulars 6. Sixth question, on the criteria to be required by the questionnaire used applied in establishing the value for uniformly throughout the Com- customs purposes in this case munity when the customs declar- ation is being made This, in the opinion of the German Government, is the crux of the problem. The Federal Government considers that It observes that it is only possible to use it is impossible to give a clear reply to criteria other than the invoice price if the this question since the hypothetical latter was obviously not the price based situation referred to in the question does on conditions of competition and if the not make it clear whether or not the administration proves that fact. customs authorities have required the If claims, moreover, that the mere importer to supply additional infor- existence of a relationship between the mation as referred to in Article 1 (2) of supplier and the buyer does not justify Regulation No 375/69.

7. Additional question, No 11, on does not apply to the Community's downward adjustments other than external trade relations. If the EEC those referred to in paragraphs 18 to agreed to a prohibition corresponding to 21 of the annex to Regulation No that of Article 30 of the EEC Treaty in 375/69 the context of an international agreement it was acting in the exercise of According to the German Government it its powers relating to commercial policy is not possible to make any additional and not, for instance, on the basis of an

obligation imposed on it by the EEC interpretation of Articles 13 and 20 of Treaty. the Agreement between the EEC and In those circumstances "the rules in the Switzerland, according to which a field of external commercial relations Member State may indeed ignore the which are under consideration here do particulars supplied for the purpose of not restrict the Member States in any fixing the value for customs purposes way as regards customs law imposing when goods are imported from sanctions going beyond what has been Switzerland, but only on condition that described" above.

on trade." the customs union, do not include any prohibition in respect of the In those circumstances, in the opinion of Community's external trade against the Federal Government, Question 9 (a) measures having equivalent effect, such must be answered in the affirmative. as that imposed in respect of trade within As to Question 9 (b) the Federal the Community. Government considers that the reply to it should be in the negative. In fact, it says, Of course in those circumstances to fix in order to justify a penalty there must the value for customs purposes at a lower have been disregard of an obligation level might bring about deflection of under customs law provided for at the trade, and hence distortion in Community level and the criminal competition, but this would be the result sanction applicable must not be dispro of the lack of harmonization in the field portionate. of the law concerning sanctions for infringement of customs rules. In this case, however, the Federal The Federal Government also observes Government says that the penalty is in that a reduction of this kind can only be the first place unlawful because the envisaged in exceptional cases which are importer has fulfilled his obligations, and strictly limited and clear, as it has in the second place incompatible with already pointed out in its reply to Community law because it is dispro Question 1. portionate inasmuch as the penalty laid down is the same as that for palpable

relations. contain a prohibition against restrictions As a result, it claims that the reply to on the freedom of payments relating to Question 9 (a) can only depend on the trade in goods; but on the other hand it

does not contain any corresponding the introduction of Regulation No guarantee as to the freedom of payments 1581/74 appears to have no bearing on relating to a transaction involving the the issue as it gives no scope for allowing movement of capital. the competent authorities of a Member State to impose administratively a value However, just like Article 30 of the EEC lower than the declared value. Treaty, Article 13 of the Agreement between the EEC and Switzerland must be interpreted as meaning that State 2. Second question, on whether a intervention in the field of freedom of Member State may compare the payments relating to trade in goods is declared value with one or more authorized in so far as it is limited to prices charged in other contracts of what is indispensable and where its sale concerning the same product content and scope are foreseeable by individuals, that is to say, expressly According to the United Kingdom regulated and delimited in fact. Government H. M. Customs and Excise would not reduce the declared value In consequence Article 19 of the simply because of the existence of lower Agreement between the EEC and prices charged in other contracts Switzerland should be interpreted as involving the same product. As a result it meaning "that a penalty for unlawful claims that the price actually charged on transfer of capital is under no circum- a sale in the open market is the nearest stances compatible with the agreement, to the normal price. and in particular with Article 13 thereof, unless the conditions under which part of the payment intended to cover a sale 3. Third and fourth questions, on the price may be considered as an reference prices which may be infringement of a prohibition with regard adopted by a Member State to exchange control in the field of the movement of capital have been fixed in The United Kingdom Government advance, in detail and in a manner emphasizes that the use of comparative recognized by the parties concerned. prices for identical or similar goods may lead to considerable difficulties and it Consequently the question which has considers that "whether such evidence been referred to the Court may be would usually be used by the competent answered in the affirmative, subject to authorities to substitute a lower value is certain restrictions. . . . extremely doubtful, particularly where imitation, patented or State Written observations of the United monopoly products are concerned". Kingdom of Great Britain 4. Fifth and sixth questions, on the A — Questions 1 to 6 and sup- methods which the French plementary questions administration may use to determine the value for customs purposes 1. First question on whether a Member State may reduce the declared value The United Kingdom Government observes that there is nothing to prevent In the opinion of the United Kingdom the competent authorities from using Government this question should be whatever methods may help them to answered in the affirmative, provided determine the value required under that the definition in Article 1 of Regu- Article 1 of Regulation No 803/68. In lation No 803/68 is respected. However this respect it points out that one method

commonly used is that known as the However, the case-law of the Court of deductive method. Lastly, it observes Justice on measures having equivalent that the draft Agreement on the effect does not apply to external trade. Implementation of Article VII of GATT Nevertheless, there are general principles also provides for valuation methods to be of Community law which may be applied in a strict order of precedence. relevant to trade with non-member countries and among these are the principles of legal certainty and pro­ 5. Supplementary question (eleventh portionality. question) on downward adjustments in the declared value other than those listed in paragraphs 18 to 21 of the Thus the principle of legal certainty Annex to Regulation No 375/69 clearly requires that an importer should know in advance how goods are going to be valued for customs purposes. The United Kingdom Government considers that the list of adjustments in Article 9, whether upwards or As a result the United Kingdom downwards, is not, and does not purport Government considers that Question 7 to be, exhaustive. Therefore the reply to should be answered in the negative: the question should be in the affirmative. "Member States are not entitled to charge an importer with 'false declaration of value for customs purposes' where the terms of the regu­ Β — Questions 7 to 10 lation have been complied with" and where the use by a Member State of the 1. Seventh question, on whether a customs value for exchange control Member State may impose customs purposes would impair the application of penalties when it appears that the Regulations Nos 803/68 and 375/69. importer has satisfied the Community import rules and requirements 2. Eighth question, on whether the In the opinion of the United Kingdom practice of reducing the declared Government "there is . . . no scope for a value is compatible with the customs charge of false declaration of value for union established by Articles 12 to 29 customs purposes if the importer has met of the EEC Treaty the requirements of Regulation (EEC) No 375/69, whether in filling out the According to the United Kingdom questionnaire, or in supplying the Government, the reply to this question, additional information which may be which relates to a specific aspect of the called for." preceding question, should be the same as that to Question 7. However, as In addition, in the absence of bad faith, customs enforcement has not yet been negligence or recklessness in filling out harmonized, Articles 12 to 29 of the the questionnaire it is difficult to see how Treaty do not apply to reductions of a charge of making a false declaration customs value and attendant penalties. could arise; and the United Kingdom Government maintains that in intra- The United Kingdom Government Community trade "any arbitrary emphasizes moreover that "this question downward adjustment of a declaration of is tendentious in so far as it. suggests that value would be contrary to Article 30 at a reduction of declared value of itself least in so far as it was coupled with leads to deflections of trade and penalties for making a false declaration". distortions of competition".

It also recalls that H. M. Customs and Court on Article 30 et seq. of the Treaty Excise do not use their powers to effect to trade with Switzerland, the principles downward valuations. However, for the are nevertheless similar having regard to purposes of direct taxation the Inland the rules of international law on the Revenue may substitute a different price interpretation of Treaties." for the invoice price for imports in calcu- lating taxable profits. 4. Question 9 (b) on whether a Member State may inflict heavy penalties on The British Government adds that the an importer of a Member State of the use of artificial transfer prices between EEC who has duly fulfilled his associated persons is a serious problem obligations which is being studied in the OECD and the EEC. The Government of the United Kingdom is of the opinion that "penalties imposed although Regulation (EEC) No 375/69 3. Question 9 (a) on the interpretation has been complied with would appear to of Article 13 of the Agreement be contrary to Article 13 of the EEC/ between the EEC and Switzerland Switzerland Agreement except in so far as the penalties are directed to In view of numerous decisions made by remedying some other problem, the Court of Justice, the United compatibly with Community law" that is Kingdom Government considers that the to say, observing the principles of legal agreement between the EEC and certainty and proportionality. Switzerland, being an agreement under international law, is subject to interpret- ation in accordance with the rules of that 5. Tenth question, on capital transfers law even though the Court of Justice has jurisdiction to rule on the interpretation The United Kingdom Government of the agreement. However, it maintains maintains that there is nothing in Article that Article 13 of the Agreement does 19 to prevent Member States controlling not have the same content as Article 30 capital movements provided that the use of the EEC Treaty. of the relevant powers is not designed to "circumvent that provision", that is to As a result the Government of the say, in this case, Articles 13 and 20. United Kingdom proposes that the reply to Question 9 (a) should be: According to the United Kingdom Government "there can therefore be no "There is nothing in Article 13 of the question of Community rules precluding EEC/Switzerland Agreement which national action. Nevertheless, the same prohibits a Member State from reducing principles relating to legal certainty and the declared value or the value resulting proportionality apply". from the particulars furnished by the importers provided this does not Written observations of the Commission represent a means of arbitrary discrimi- nation or a disguised restriction on trade, contrary to Articles 13 to 20 of the A — General EEC/Switzerland Agreement. While the conditions of intra-Community trade are not sufficiently similar to admit of direct First, as regards the procedure, the application of the jurisprudence of the Commission considers that the function

Secondly, as regards the sphere of The Commission explains its views by application of the Community regu­ maintaining that the principal aim of the lations concerning valuation for customs valuation for customs purposes is to purposes, this Community concept of attempt to establish the accuracy of value for customs purposes need be prices and not to levy the maximum . followed only to the extent to which it is amount of customs duty. being applied for the purposes of Regu­ lation Nos 803/68, 1736/75 of 24 June 2. The methods which may be used in 1975 (Official Journal L 183/1 of 14 order to establish the accuracy of the July 1975) and the Sixth Directive, No price 77/388/EEC of 17 May 1977 on the harmonization of the legislations of The Commission claims that no method Member States concerning turnover tax need be excluded which enables the (Official Journal L 145 of 13 June 1977, accurate price to be established, even page 1). though Regulation No 803/68 only mentions two. It also maintains that It is therefore permissible for Member according to Article 9 of that regulation States to use different concepts of value the adjustments may relate to both for other purposes. Member States may intrinsic and extrinsic features of the even, in this regard, take as their price. reference the Community concept of value for customs purposes. But if they That applies particularly in the case of a do so that concept "must be interpreted transaction between associated under­ in the light of the specific objectives of takings. This conclusion is confirmed by its own rules and without prejudice to the recommendation made by the compliance with the provisions of Customs Co-operation Council on the Community law which apply in the field application of the value for customs under consideration". purposes of 1 June 1965, which the Commission attaches to its observations. Thirdly as to the questions submitted, the Commission has found it convenient to C — Questions 2, 3 and 4, methods of re-group them to a certain extent. reducing the value by reference to other known selling prices

First, the Commission claims that it is 4. Sales made to importers established in not clear that penalties may be applied non-member countries or which take under the French rules. Even if it were place between a supplier and a buyer possible, that is to say, if the penalties who are both established in a non- provided for in Article 426 of the member country may not be taken Customs Code were applicable, it would into consideration. also be necessary for them to be compatible with Community law and in particular with the principle of pro- In reply to Question 4 it maintains that: portionality.

G — Question 10, capital transfers the declaration. Any such penalties must be considered as measures having equivalent effect to a According to the Commission, Article 19 quantitative restriction. of the agreement between the EEC and Switzerland admittedly compels the The same principles apply as far as importing State to grant the exchange the application of Article 13 of the authorizations required for the amount Agreement between the European of the price of the goods which are Economic Community and the Swiss imported. But Member States may Confederation is concerned. reduce that price by following the methods used for establishing the value for customs purposes provided that 5. Article 19 of that agreement requires adjustments are not accompanied by the competent authorities of the unreasonable penalties. importing State to grant to importers the necessary exchange authorizations for an amount corresponding to the In conclusion the Commission considers price of the goods which are that the questions which have been imported. submitted should be answered as follows: For that purpose, they may make a downward adjustment of price, using, 1. "The Community concept of value for example, methods such as those for customs purposes may be used for used to establish the value for customs purposes other than those of the purposes. customs. In that case it must be However, they may not accompany applied in accordance with the such adjustments with dispro­ objectives for which it is being used, portionate penalties. and with the provisions of Community law which apply in the sector concerned.

1. As regards the first question, the movement of capital sometimes turn German Government is of the opinion out to be necessary in the context of that the possibility of reducing the national monetary policies, in such an value for customs purposes might event the practice of the Federal entail distortion of competition. It Government requires that traders be therefore submits "that such powers consulted and that "the distinctive of reduction should be limited solely features of a prohibition . . . must be to cases of abuse; that only in very drawn up in such a manner that special cases may a customs traders and commercial circles may administration proceed to exercise truly know where they stand and be them and that it is for the customs prepared for such prohibitions".

3. In regard to Question 11 on the prevent "the export of capital to method by which any reduction may Switzerland from exceeding that be carried out, the Federal which is necessary for payments Government considers that transfer of relating to trade in goods". In order capital does not fall within the "other to exercise that power France could items" referred to in heads of 18 to effect a reduction of the price 21 of the Annex to Regulation No provided that "the general principles 375/69 on the ground that, in the of Community law concerning legal case referred to by those provisions, certainty or proportionality are all that is involved is the "correction" observed". of invoiced prices and not the Such a practice is very rare but lawful "absolute rejection of the invoice and the Court should answer the price in its entirety". It adds, various questions by giving "the moreover, that Member States do not replies which it would give in a case enjoy an independent power of falling strictly within the field of interpreting legislation on customs customs law".

Although it 2. In regard to the concept of an is true that restrictions on the free identical or comparable product, the

2 Those questions have arisen in the context of a criminal investigation instituted against the manager of Laboratoires Sandoz, a limited liability company, (hereinafter referred to as "Sandoz-France"), who is accused of having made a customs declaration in respect of goods bought from the parent company, Sandoz A.G., established in Switzerland (hereinafter referred to as "Sandoz-Switzerland") at a higher value than the normal

JUDGMENT OP 24. 4. 1980 — CASE 65/79

price. Those purchases are spread over the period from 4 January 1971 to 9 November 1973 and amount to a total of FF 8? 929 024 whereas the value recognized by the customs authorities was only FF 53 142 943. The customs authorities inferred from their assessment that the declared price was increased by comparison with the normal price in order to allow Sandoz- France irregularly to transfer capital to the parent company in Switzerland.

3 On the basis of those facts, the Examining Magistrate charged the manager responsible with making illegal transfers of capital abroad and with importing prohibited goods without declaration, being an offence punishable under Article 414 of the French Customs Code by imprisonment not exceeding three months and a fine equal to twice the value of the goods involved in the fraud. The accused in the main proceedings disputed the prices held by the French customs to be normal, both in regard to the principles applied and in regard to the amount actually assessed. Having regard to the fact that the matter is governed by Regulations Nos 803/78 and 375/79 as well as by the Agreement between the EEC and the Swiss Confederation, the magistrate considered an interpretation of those provisions to be necessary and submitted 11 questions, the first of which raises a point of principle. The question is framed as follows:

6 According to its preamble, Regulation No 803/68 on the valuation of goods for customs purposes, which is part of the framework of the provisions of the Treaty relating to the customs union, pursues a double aim of an economic and a fiscal nature.

7 According to the 6th recital in the preamble, "the value for customs purposes must be determined in a uniform manner in Member States, so that the level of the protection given by the Common Customs Tariff is the same throughout the Community and any deflection of trade and activities and any distortion of competition which might arise from differences between national provisions is thereby prevented". According to the 7th recital in the preamble, "any deflection of customs receipts should be avoided and where appropriate eliminated".

8 When both those objectives are taken into consideration it may be recognized that the regulation is directed essentially to preventing the under­ valuation of goods in connexion with the application of the Common Customs Tariff, which applies almost exclusively ad valorem customs duties. That conclusion is clear in regard to safeguarding the collection in full of customs revenue. It may also be inferred from the recitals in the preamble which relate to deflection of trade and activities and distortion of competition since those economic effects may be the result only of a lowering in the relative level of customs protection in certain Member States by reason of differing criteria for assessing the value for customs purposes of imported goods.

JUDGMENT OF 24. 4. 1980 — CASE 65/79

13 The detailed rules for the application of Regulation No 803/68 were laid down, in accordance with the procedure provided for in Article 17 thereof, by Regulation No 375/69 of the Commission. The purpose of the latter regulation is to specify the duties of importers in this regard as well as the powers of the customs administration. Under Article 1, the declarants are to furnish "the particulars relating to the value for customs purposes" as required by the form of questionnaire set out in the annex to the regulation. According to the paragraph (2) of that article, more detailed information must be furnished only at the request of the customs authorities, in particular where importation is effected pursuant to a transaction between a buyer and a seller who are not independent of each other. It follows from those provisions that the importer is bound to declare, in good faith, to the customs administration the particulars which may serve to determine the value for customs purposes, further checks being a matter for action by the administration.

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14 The form of questionnaire referred to in Article 1 of Regulation N o 375/69 specifies the particulars to be furnished by the importers:

A. The invoice price, as a basis of calculation;

B. Items which go to make up the value for customs purposes but are not included in the invoice price and which are to be borne by the seller;

C. Items which do not go to make up the value for customs purposes but are included in the invoice price and which are to be borne by the importer;

JUDGMENT OF 24. 4. 1980 — CASE 65/79

of trade or activities and distortion of competition which would be the consequence of an undervaluation of imported goods and also to ensure for the Community the full collection of customs duties. It follows also from the specific nature of the provisions in question that the determination of the value for customs purposes in accordance with the rules of Regulations No 803/68 and No 375/69 cannot have the effect of requiring the fiscal and . financial authorities of the Member States to accept that valuation for purposes other than the application of the Common Customs Tariff.

17 If it were established that an undertaking which forms part of a company or a group of companies of which the centre of management is outside the Member State concerned adopts, in its relations with that centre of management or with other undertakings belonging to the same group, prices, the application of which might imply an illegal transfer of capital or profits, it would be for the Member State concerned to take appropriate measures, with a view to proving, and where necessary suppressing, such activities, under its own financial or fiscal legislation and not by applying Community rules relating to valuation for customs purposes.

18 The answer to Questions 1 and 11 should therefore be that Regulation No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes, in particular Articles 1 to 10 of that regulation, and Regu- lation No 375/69 of 27 February 1969 must be interpreted as meaning that the reduction by the competent authorities of a Member State of the invoice price of goods imported from a non-member country does not accord with the aims of the rules relating to the determination of the value of the goods for customs purposes.

21 Question 9 (a) asks whether a reduction by the competent authority of a Member State of the declared value or of the value resulting from the parti­ culars furnished by the importer, does or does not amount to a measure having an effect equivalent to a quantitative restriction, which is a measure prohibited by the Agreement between the EEC and the Swiss Confederation. It must be noted that, under Article 13 (2) of that agreement, measures having an effect equivalent to quantitative restrictions are abolished, and therefore prohibited, only as from 1 January 1975 at the latest. It is consequently for the national court to decide whether the facts alleged against the accused — which are spread over the period from 4 January 1971 to 9 November 1973 — are governed by the agreement in question.

22 In regard to the substance of Question 9 (a), it should be observed that the question envisages a case comparable to that raised by Questions 1 and 11. Consequently, in accordance with the answer given to those questions and the reasons in support of it, this question must receive the same answer in the context of the agreement between the EEC and the Swiss Confederation.

23 The issue presented by Question 9 (b) is whether, pursuant to Article 13 of the Agreement between the EEC and the Swiss Confederation, a Member State may penalize by heavy fines and imprisonment an importer who has duly fulfilled his obligations by accurately and completely furnishing the information required by Regulation No 375/69.

JUDGMENT OF 24. 4. 1980 — CASE 65/79

1. Regulation No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes, in particular Articles 1 to 10 of that regulation, and Regulation No 375/69 of 27 February 1969

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must be interpreted as meaning that the reduction by the competent authorities of a Member State of the invoice price of goods imported from a non-member country does not accord with the aims of the rules relating to the determination of the value of goods for customs purposes. However, the determination of the value for customs purposes in accordance with those regulations cannot have the effect of requiring the fiscal and financial authorities of the Member States to accept that valuation for purposes other than the application of the Common Customs Tariff.

2. The same answer applies as regards Article 13 of the Agreement between the EEC and the Swiss Confederation of 22 July 1972.

3. Where an importer has accurately and fully completed the form of questionnaire annexed to Regulation No 375/69 and it is not disputed that the goods have actually been delivered to the purchaser in the quality and quantity stated in the invoice and the seller has received the whole of the invoice price and it is not alleged against him that he has not answered more detailed inquiries which the customs auth­ orities may have put to him, he has not failed to fulfil any duties imposed on him by the Community rules on the valuation of goods for customs purposes or by Article 13 of the Agreement between the EEC and the Swiss Confederation. On the other hand, the consequences in other respects — such as those relating to the financial or fiscal laws other than customs laws — which are not governed by the Community institutions are a matter for the legal order of the Member State concerned.

Facts and Issues

I — Facts and procedure 1347

Summary of the facts 1349

II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community 1352 Observations of Mr Chatain 1352 A — General 1352 Β — Consideration of the points of law raised in the questions submitted by the Examining Magistrate 1354

Observations of the French Government 1366

A — The concept of value for customs purposes within the meaning of Regu­ lation N o 803/68 1366

III — Oral procedure 1377

Oral argument for the Government of the Federal Republic of Germany 1377

Oral argument for the Commission of the European Communities 1378

Decision

Decision 1379

Costs 1386