C-827/79

on the interpretation of Regulation (EEC) No 1371/71 of 30 June 1971 on the definition of the concept of originating products for the purpose of the tariff preferences granted by the EEC to certain products of developing countries (Journal Officiel L 146 of 1 July 1971, p. 1) and in particular Article 13 thereof,

T H E C O U R T (Second Chamber)

composed of: P. Pescatore, President of Chamber, A. Touffait and O. Due, Judges,

Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

radios, stated to be "originating down in that Community provision. The products" according to the certificates Amministrazione delle Finanze appealed on Form A and as such admitted by the on a point of law on a single ground, customs for import under the preferential maintaining that the subsequent veri- tariff treatment provided for by the fication might also be carried out after aforesaid Regulation (EEC) N o 1371/71 the imported goods had been placed at of the Commission. the disposal of the importer. Confronted with the question of interpretation the Corte di Cassazione referred the following question to the Court for a The Italian Customs Office asked the preliminary ruling: Hong Kong Department of Trade and Industry to carry out subsequent veri- fication pursuant to Regulation No 1371/71. The verification revealed discrepancies "since it showed that the "May an · importing State, pursuant to certificate of origin did not give Article 13 of Regulation (EEC) No entitlement to the application of the 1371/71 of 30 June 1971 — after having provisions concerning preferential tariff permitted, without reserve, the final treatment referred to in Article 1 of importation of goods in application of Regulation No 1371/71" and the the preferential tariff treatment granted customs thereupon claimed and ordered to products originating in developing the respondent to pay the duties unpaid countries — require the State benefiting on importation amounting to Lit from the exportation to verify the certi- 7 371 420 and Lit 326 375 respectively. ficate of origin on Form A relating to those goods, and then, if the outcome of that verification is negative, demand payment of the duty which was not paid Ciro Acampora brought proceedings at the time of importation?" before the Tribunale di Genova, alleging the illegality of those two orders, on the ground that the customs had investigated the origin of the goods when the latter had already been imported and were no longer at the importer's disposal. The order making the reference was registered at the Court on 21 December 1979. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations The Tribunale di Genova found for Ciro were lodged on 10 March 1980 by Acampora and the Corte d'Appello, the Commision of the European Genova, confirmed the judgment holding Communities, represented for that that the subsequent verification of the purpose by A. Marchini-Camia, acting as certificate of origin permitted by Article Agent, assisted by L. Biamonti, of the 13 of Regulation (EEC) N o 1371/71 Rome Bar; on 21 March 1980 by Ciro was subsequent not, as maintained by the Acampora, represented for that purpose Amministrazione, to the date of import- by Cesidio de Vincentiis and N . ation, but to the date of issue by the Cavasola, both of the Rome Bar; and on State of origin, and that in any event it 3 April 1980 by the Italian Government, could not be requested after the goods represented for that purpose by A. had been given customs clearance unre- Squillante, acting as Agent, assisted by servedly under the favourable system laid O. Fiumara, Avvocato dello Stato.

In the view of Ciro Acampora the Italian A — Observations of Ciro Acampora customs law and the established case-law of the Italian judicial authorities provide that when "goods have been placed unreservedly at the disposal of the Italian Ciro Acampora, the respondent in the importer they can no longer be examined main action, makes the following pre- nor be the subject of re-classification or liminary observations: re-examination for the purpose of determining duties". — First, the present case does not concern the interpretation of Article 13 of Regulation No 1371/71 but its Ciro Acampora considers the law correct application in conjunction relating to decisions in customs cases with the rules of the Italian customs (Royal Decree No 330 of 9 April 1911), in force at the time of importation the customs regulations (Royal Decree which could be inapplicable only if No 65 of 13 February 1896) and the they conflicted with Community subsequent amendments thereto (in rules; particular the Decree No 1968 of the President of the Republic of 2 August 1952, together with Circular No — Secondly, the case raises a question 392/34902, Divison 6 (a) of 24 c of a moral nature: the irregularity December 1952) and maintains that was committed "in a country some those rules contain "a clear principle" to thousands of kilometres from the the effect that "the customs authorities importer's place of business" and the must challenge the importer before the official responsible for checking the operation takes place when the goods are regularity of certificates had certified still at the disposal of the customs". the transaction, as had ultimately the Moreover, citing case-law of the Corte Italian Consul. di Cassazione it states that "the principle

It concludes that part of its statement by saying that those principles have not been cited to no purpose since they are (e) Ciro Acampora further insists on given "specific reaffirmation" in Article "the importer's absolute good faith" in 13 of Regulation No 1371/71 as relying on Article 19 of Regulation N o properly interpreted. 1371/71, according to which the certi- ficate on Form A is the authority for applying the provisions on tariff pre- ferences. Repeating its argument on the (2) Discussion of Article 13 moral aspect of the matter it maintains that it "cannot suffer the consequences of the failure to verify in the country (a) Ciro Acampora maintains that benefiting from the tariff preferences Article 13 (1) means that the customs (that is to say, disregard of the law by a authorities may before giving clearance civil servant)". check the certificate of origin if they have reasonable doubts as to its authenticity or correctness or where they wish to carry out a random check. (d) Basing itself on the reasoning of the Corte d'Appello, Genova, Ciro Acampora challenges the argument of the Amministrazione to the effect that (b) Where a decision to carry out a "subsequent verification" must be subsequent verification is taken the understood to mean "verification customs authorities must "necessarily effected after the goods have been finally suspend application of the provisions imported". To support that interpret- relating to tariff preferences", as is ation the Amministrazione is obliged to apparent from Article 13 (3) which allege that "Article 13 (1) and the first provides that in that case subparagraph of Article 13 (2) refer to subsequent verification while the second subparagraph of Article 13 (2) refers to "While awaiting the result of the veri- prior verification". That argument is fication, the competent customs auth- "obviously unfounded" because orities in the Community shall offer to consideration of the article "clearly release the goods to the importer subject shows that the aim of the whole to any precautionary measures judged provision is to regulate subsequent veri- necessary". fication by laying down in the first paragraph the circumstances in which and by whom it may be decided on and It follows from that provision that when stating in the second the terms on which the customs administration orders veri- it may be carried out". It follows that fication it must stop the importation. subsequent verification must be ordered That interpretation is also dictated by the before importation and that the term

"to determine whether the disputed certi- "that the Court of Justice by way of pre- ficate of origin on Form A or the liminary ruling should adopt the disputed Form APR applies to the goods argument put forward here and answer actually exported, and whether these in the negative the question put by the goods can, in fact, qualify for the Italian Corte di Cassazione, confirming application of the tariff preferences - the principle to the effect that also under referred to in Article 1". Article 13 of Regulation (EEC) N o 1371 of 30 June 1971, once final importation has been authorized unreservedly and preferential tariff treatment has been Although in accordance with its interpret- granted to products originating in ation of the words "subsequent veri- developing countries it is no longer fication" the Amministrazione maintains possible to claim, even where a sub- that the aim of Article 30 is to allow sequent verification of the documents revocation of the benefits granted when reveals discrepancies, the payment of verification reveals the unlawfulness of customs duties unpaid on importation". the certificate of origin on the basis of which those benefits were granted, Ciro Acampora considers that the aim of the Article 30 is to reveal "before import- ation whether the benefits are or are not B — Observations of the Government of due to the importer and not to authorize the Italian Republic revocation when importation has taken place". Thus the Community provision is not incompatible with the national customs rules and avoids causing damage After examining the system under Regu- to the importer who would otherwise lation No 1371/71, the Italian have to bear an unforeseen tax burden. Government sets forth its arguments in support of an answer in the affirmative to the question put by the national court Ciro Acampora concludes its examin- and rejects the arguments of Ciro ation of the Community regulation by Acampora.

(1) The system under Regulation No The affirmative answer to that question 1371/71 follows first of all from the aim of the arrangements under Regulation N o 1371/71, which is to encourage, even as The Italian Government cites the main regards the completion of customs provisions of Regulation N o 1371/71 formalities, the importation into the and in particular Articles 6, 8, 13, 19 and Community of particular products orig- 30, maintaining that the system resulting inating in developing countries. In those from those various articles is as follows : circumstances verification can take place only after importation in order not to impede it, for if it were to take place — Importation with the benefit of the before "there would be a risk of halting tariff preferences takes place on the or at least appreciably restricting the basis of production of the certificate trade which it had been intended to of origin issued by the authority of encourage". Thus, since the general rule the exporting country benefiting from is that importation takes place upon such preferences; production of the certificate, subject to the possibility of subsequent verification, "that is to say, subsequent to import- — The customs authorities of the ation", the Community rule could not importing country may ask for veri- have provided that the request for veri- fication of the authenticity and regu- fication should be subject to a proviso as larity of the certificates, either by to the system applicable on importation. way of a random check or in the case of reasonable doubt as to the authenticity of a document; The normal result therefore of sub- sequent verification is that the customs — In the event of a request for veri- authorities of the importing country have fication the customs authorities of the the power or the duty to recover the importing Member State have the normal customs duties not levied on power to suspend application of the importation. Otherwise, there would be preferential system, provided that no reason to carry out verification if it they offer to release the goods to were to have no effect, especially as the importer subject to such Article 30 of Regulation No 1371/71 precautionary measures as may be refers particularly to all the cases of considered necessary. verification provided for in Article 13 and stipulates that verification must make it possible to determine whether the disputed certificate of origin applies (2) The Italian Government's argument to the goods actually exported and whether those goods can, in fact, qualify for the application of the preferential According to the Italian Government, it arrangements. is a question "whether the customs auth- orities may ask for verification of a certi- ficate of origin after they have allowed importation 'unreservedly" under the (3) Refutation of the argument adduced preferential system, and whether where by Ciro Acampora in such a case the verification sought has revealed discrepancies it may still require the importer to pay the increased sums (a) According to the Italian due". Government, Ciro Acampora's case is

— T o ensure payment of sums in fact due the customs authorities would In the view of the Italian Government have to suspend application of the that argument is not correct because the preferential system even for the provision in the last sentence of Article purpose of a simple random check, 13 would appear to be an exception to which would be contrary to the letter the general rule. The general rule is that and the spirit of the Community the preferential system applies upon regulation, since such a decision simple production of a certificate of would be a serious obstacle to the origin, subject to the result of subsequent trade which the regulation intends to verification. The provision in the last facilitate; sentence of Article 13 reflects the concern to give the customs authorities greater guarantees in certain cases where a suspicion of inauthenticity or irregu- larity appears particularly well-founded — Otherwise the customs would have to from the time of the application to resign itself to the non-payment of import. In such case the customs auth- duties in all cases where certificates orities have the power to suspend are produced which appear in order application of the preferential system but as a result of verification are while awaiting the results of the veri- revealed to be inauthentic or not in fication. The power may therefore be accordance with the facts. Such a exercised before importation and that is situation, moreover, would render why the verification appears to be "pre- verification devoid of useful purpose. liminary". In such cases, where moreover the goods may be released to the importer, subject to such precautionary - measures as may be considered necessary, the result of the verification makes the preferential system definitely Ciro Acampora had maintained that inapplicable and allows the customs verification which was not followed by authorities to recover the increased suspension of the application of the pre- duties due by means of the guarantee ferential system would, nevertheless, by given. verifiying at random the good faith of the authorities of the exporting country when they issue certificates of origin, serve to encourage the customs auth- orities to take greater care in respect In the view of the Italian Government, of future importations. The Italian however, there is no reason why that Government in answer says that such a

(b) It does not appear unjust, as Ciro Acampora claims, that where the certi- ficate of origin is not in accordance with In consequence the Italian Government the facts or is inauthentic the proposes that the question put by the consequences should fall upon the Corte di Cassazione should be answered imponer, even if he has counted on the as follows: application of the preferential system to make the importation, because not only may the importer be responsible for the irregularity of the certificate, but even "Pursuant to Article 13 of Regulation apart from that he must accept the risk No 1371/71 (and consequently the inherent in transactions which he corresponding Article 13 of Regulation negotiates, and because in any event he No 2862/71), the importing State may may pass on the loss suffered to those request verification of the certificate of responsible who have guaranteed the origin even if it has expressed no reser- origin of the goods in accordance with vations at the time of importation and in such case, where verification reveals the general rules. discrepancies, the State may claim payment of the customs duties unpaid on importation". On the other hand there is no reason why the conduct of the seller should cause the Community damage where goods are imported with the benefit of tariff preference on condition that they C — Observations of the Commission have a particular origin.

Before considering the problem of sub- (c) Although Community rules govern sequent verification with which the the present case, the Italian Government question put by the Italian Corte di nevertheless considers that it is useful to Cassazione is concerned the Commission state "that Italian law allows review of considers as a whole the provisions the assessment which has become final applicable. where the goods in question have been released to the trader" and that it is possible to ascertain the facts giving rise to the offence within the time-limits of (1) Provisions applicable the rules on prescription with reference to the offence, even outside the time- limits for the review of the assessment, so that the customs authorities have the (a) The system of general preferences is right to claim payment of unpaid duties. based on the principle of the unilateral

(c) Although as regards the Italian (b) After those preliminary remarks the customs rules the consolidated laws Commission considers Article 13 of relating to decisions in customs cases Regulation N o 1371/71 in order to (Royal Decree N o 33G of 9 April 1911 as interpret its wording and purpose. The recently amended several times) provided wording of that article refers to veri- that disputes between those liable for fication of the certificates; it follows that duty and the customs authorities had to the argument to the effect that the word be raised before customs clearance of the "subsequent" has reference to the time at goods, on the other hand, Decree N o 62 which the certificate was delivered "is of the Precident of the Republic of 2 not valid", for it is not possible to February 1970 provides that the customs conceive of verification of the certificate authorities may review such assessments "prior" to its delivery. Further, the word "even where the goods in question have "subsequent" also implies verification been released to the trader" and that the subsequent to customs clearance, as customs authorities have the power distinct from that which takes place orig- "where the review reveals inaccuracies, inally when the goods and the certificate ommissions or errors in relation t o the on Form A are lodged together. That facts upon which the assessment was interpretation is confirmed by the

AMMINISTRAZIONE DELLE FINANZE v ACAMPORA

(d) On the other hand since Regulation Consequently the Commission considers No 1371/71 does not lay down the that the answer to be given to the terms or time-limits for verification and question put by the Italian Corte di for recovery of the duties which have not Cassazione could be formulated as been levied, and since Community law follows : did not provide until 1979 for the recovery of duties which had not been levied, national law could at the time of the events with which the present case is concernod continue to regulate as a "(a) In order to function correctly, the whole the terms and time-limits for veri- system for the verification of origin fication and for recovery, it being established by Regulation No understood that those national rules 1371/71 requires that the random must not impede the actual application check or, in a case of reasonable of Regulation N o 1371/71. Since the last doubt as to the authenticity of the

JUDGMENT OF 11. 12. 1980 — CASE 827/79

2 That question has been raised in proceedings between, on the one hand, an undertaking which imported into Italy from Hong Kong various lots of

AMMINISTRAZIONE DELLE FINANZE v ACAMPORA

transistor radios between 1 July 1971 and 2 Februar 1972 and after declaring them to be "originating products" obtained customs clearance on payment of duties based on the tariff preferences and on the other hand the Italian Amministrazione delle Finanze which, after carrying out pursuant to Article 13 of Regulation N o 1371/71 subsequent verification revealing that the products were not "originating products", required the importer to pay the appropriate duties unpaid on importation.

3 The importer resisted the order to pay on the ground that the verification of origin of the goods took place after importation when it no longer had control of them. The proceedings came before the Tribunale di Genova and then the Corte d'Appello, Genova, which both found the verification could not be subsequent to customs clearance of the goods and their admission without reservation to the favourable scheme provided by the Community rules. The Amministrazione delle Finanze appealed to the Corte Suprema di Cassazione which referred the following question to the Court:

"May an importing State, pursuant to Article 13 of Regulation (EEC) N o 1371/71 of 30 June 1971 — after having permitted, without reserve, the final importation of goods in application of the preferential tariff treatment granted to products originating in developing countries — require the State benefiting from the exportation to verify the certificate of origin on Form A relating to those goods, and then, if the outcome of the verification is negative, demand payment of the duty which was not paid at the time of importation?"

Community of tariff advantages in favour of products originating in certain developing countries with the aim of facilitating the flow of trade with those countries. The benefit of that preferential system is thus linked to the origin of the goods and the verification of that origin is therefore a necessary element of the system. In the actual organization of that verification the regulation seeks to avoid, for practical reasons, systematic verification of the origin of products, which would excessively delay customs transactions. To that end Article 13 provides for two kinds of subsequent verification of certi- ficates of origin namely at random or whenever the customs authorities responsible have "reasonable doubt as to the authenticity of the document or the accuracy of the information regarding the true origin of the goods in question or their components". The second subparagraph of Article 13 (2) provides that if the customs authorities decide in case of doubt to suspend application of the provisions on tariff preferences while awaiting the results of the verification, they "shall offer to release the goods to the importer subject to any precautionary measures judged necessary".

6 The last provision which in practice can apply only when the goods are still under customs control appears to be an exception to the general rule laid down in Article 6 of the regulation to the effect that "originating products within the meaning of this regulation shall enjoy the benefits of the provisions on tariff preferences in the Community on simple production of a certificate of origin on Form A, signed by the customs authorities or by other governmental authorities in the country benefiting from the export and subject to the latter country's assisting the Community through the customs authorities of the Member States in verifying the authenticity and regularity of the certificates".

1. Require the State benefiting from the exportation to verify the certificate of origin on Form A relating to those goods;

2. Then, if the outcome of that verification is negative, demand payment of the duty which was not paid at the time of importation.

Costs

io The costs incurred by the Commission of the European Communities and the Italian Government, which have submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

JUDGMENT OF 11. 12. 1980 — CASE 827/79

On those grounds,

Delivered in open court in Luxembourg on 11 December 1980.

J. A. Pompe P. Pescatore Deputy Registrar President of the Second Chamber