C-277/80

J U D G M E N T O F T H E C O U R T (SECOND CHAMBER) 18 FEBRUARY 1982 1

SIC — Società Italiana Cauzioni v Amministrazione delle Finanze dello Stato (reference for a preliminary ruling from the Tribunale, Milan)

(Community transit — Release of guarantor)

Case 277/80

Free movement of goods — Community transit — External Community transit — T 1 document — Discharge at the office of departure — Non-discharge — Release of guarantor — Conditions (Regulation No 542/69 of the Council, Art. 35, as amended by Regulation No 1079/71, Art. 1)

Article 35 of Regulation No 542/69 of of the non-discharge of the T 1 the Council of 18 March 1969 on declaration within the period of twelve Community transit, as supplemented by months from the date of its registration, Article 1 of Regulation No 1079/71 of the guarantor is then, in the absence of 25 May 1971, must be interpreted as any fraud of which he may be guilty, in meaning that, unless the guarantor has any event released from his obligations. been notified by the customs authorities

on the interpretation of Article 35 of Regulation (EEC) N o 542/69 of the Council of 18 March 1969 on Community transit (Official Journal, English Special Edition 1969 (I), p. 125), as supplemented by Regulation (EEC) N o 1079/71 of the Council of 25 May 1971 (Official Journal, English Special Edition 1971 (I), p. 285),

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

composed of: O. Due, President of Chamber, A. Chloros and F. Grévisse, Judges,

Advocate General: Sir Gordon Slynn Registrar: A. Van Houtte

gives the following

JUDGMENT

curazioni SpA (Italian Guarantee p. 125), as supplemented by Article 1 of Company — Insurance and Reinsurance Regulation (EEC) N o 1079/71 of 25 Company), [hereinafter referred to as May 1971 (Official Journal, English "SIC"], under Policy No 271011972 of 5 Special Edition 1971 (I), p. 285), May 1972, lodged with and accepted by according to which: "The guarantor the customs office in Turin on 5 June shall be released from his obligations 1970. towards the Member States through which goods were carried in the course The third copy of those declarations was of a Community transit operation when in each case returned stamped by the the T 1 document has been discharged at Swiss customs authorities in Geneva as

defendant in the main action, denied that 2. SIC contested that demand before Article 35 applied in the present case in the Tribunale [District Court], Milan, by so far as — with regard to its first writ served on 19 September 1977. It paragraph — the discharge documents, pleaded that the customs authorities were although in existence, subsequently out of time in exercising their right to proved to be invalid, whilst — with demand payment of the customs duties regard to the second subparagraph — from the guarantor — or more precisely those documents, although invalid and of that that right was extinguished. no effect, were nevertheless brought into being within the period of twelve months

JUDGMENT OF 18. 2. 1982 — CASE 277/80

3. The positions thus adopted before In accordance with Article 20 of the the Tribunale, Milan, are the result of a Protocol on the Statute of the Court of disagreement on the interpretation of the Justice of the EEC, written observations scope of the second paragraph of Article were submitted by the parties to the main 35 of the above-mentioned EEC Regu- action and the Commission of the lation. According to the plaintiff in the European Communities. main action, the notification of non- discharge within the compulsory time- limit of twelve months from the date of registration of the T 1 delcaration is Upon hearing the report of the Judge- always necessary for the purpose of Rapporteur and the views of the preventing the guarantor being released Advocate General, the Court decided to from his obligations. According to the open the oral procedure without any defendant, on the other hand, for the preparatory inquiry. purpose of preserving the guarantee it is sufficient for the customs office of departure to be able to discharge the declarations by a simple formal check of the third copy, on its return, without II — W r i t t e n o b s e r v a t i o n s prejudice to the possibility of later holding the discharge to be null and void where — as in the present case — sub- sequent investigations demonstrate a posteriori that the legal preconditions for 1. In its observations SIC points out such discharge are lacking. first that the Community transit procedure was introduced (a) to faci- litate the movement of goods by simplifying the formalities carried out when frontiers are crossed and (b) to guarantee, during carriage, payment of 4. By order of 9 October 1980, lodged the customs duties payable on the goods at the Court Registry on 12 December by means of an undertaking to be given 1980, the First Civil Division of the by a "principal" who is to be responsible Tribunale, Milan, stayed the proceedings for the proper conduct of the operation and requested the Court of Justice to and is obliged to provide a guarantee for give a preliminary ruling on the the purpose of guaranteeing the recovery following question: of customs duties and other taxes chargeable.

declaration where he has not been have been sent to him within the period notified by the office of departure of the of twelve months after the registration of non-release of that document. the T 1 document. That rule, which is laid down soleley for the protection of the guarantor, in accordance with the According to SIC, it results both from principle of "certainty in the law" — the purpose and from the wording of the which was the reason for the amendment above-mentioned provision that in this to Article 35 of Regulation N o 542/69 case it was to be released from its by means of Regulation N o 1079/71 of obligations as guarantor on 21 25 May 1971 — is to be considered as a November and 20 December 1976 and 2 penalty by way of "forfeiture" as against January 1977 respectively, owing to the the customs authorities and not just as fact that the three T 1 Community the termination of a limitation period. transit documents, completed by Molteni

and that it could not be argued that the customs authorities' right was extinguished owing to the fact that, on So far as the guarantor is concerned, the one hand, having regard to the only receipt of notification of non- provisions of Article 1 of Regulation N o discharge within twelve months from the 1079/71, the discharges were carried out date of registration is relevant. In the within the period of twelve months from absence of such notification the the date of registration and that, on the guarantor is released, but not the other, having regard to the provisions of principal, who, as the trader who Article 35 of Regulation N o 542/69, the effected the transit or as owner of the discharges, although they were indeed goods, remains liable for payment of the given, were subsequently discovered to duties. be invalid, the plaintiff in the main action puts forward the following arguments.

JUDGMENT OF 18. 2. 1982 — CASE 277/80

SIC v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

According to the Italian Government, 2. The Italian Government points out the concept of "discharge" has a double that it is impossible to grasp the full meaning in the provisions of the first extent of the problem without taking paragraph of Article 35 of Regulation into account the following factors in the No 542/69: context of this case : First it refers to the actual check which is The "discharge" of the T 1 declarations, carried out by the office of departure by in the sense of a simple check on the comparing the copy of the document basis of the document returned to the retained (under Article 17 (2) of that

JUDGMENT OF 18. 2. 1982 — CASE 277/80

destination. is an event which actually occurred and may not be treated as if it had not. On the other hand, although in law it In its view, that question must be continues to exist, the verification may answered in the negative, on the grounds later be found to be invalid or of no that, if the office of departure has made effect. the physical comparison described above and at that time everything seemed to be Moreover, the discharge in the sense of in order, it is difficult to see how it could the actual carrying out of the check be considered that that office must continues to exist even if it is based on nevertheless notify the guarantor of the falsified documents; on the other hand, non-discharge in order to preserve the verification based on falsified documents right to require enforcement of the is an invalid act, which is not capable of guarantee. resulting in the release of the guarantor. According to the Italian Government it The effect in question goes to the very might be arguable whether, in making basis of the right, that is to say the the comparison between those docu- extinguishment of the obligation under ments, the office of departure was the guarantee, and it can only result negligent, but the office in question may from an act which is in itself valid and not be required to contradict its own

It points out can arise only out of valid verification, that the comparison of the copies of the capable of producing effects, resulting T 1 declaration was made on the basis of from a positive verification of the documents which had been skilfully conformity of the document held by the falsified and the office of departure office of departure with that held by the legitimately considered the T 1 docu- office of destination. As it appears that ments as discharged. Since the fraudulent the document held by the office of nature of the documents was discovered destination was falsified, there was no more than twelve months after the valid verification, capable of producing registration of the declarations, the effects; the guarantor therefore may not Italian Government questions the justi- be considered as released from its fication for requiring the office of obligations. departure to notify the guarantor of the

non-discharge of the T 1 documents It notes that as a result no discharge within the stated period. could be carried out within the pre- scribed period, the notices of non- With regard to SIC's arguments discharge sent to guarantors would concerning the second recital in the multiply, a situation would arise contrary preamble to Regulation No 1079/71, to to the aim set out in the second recital in the effect that the period prescribed in the preamble to Regulation N o 1079/71 the second paragraph of Article 35 is inasmuch as the guarantors' obligations intended to meet the requirement of would be extended in time, and all making the guarantor's position certain transit operations would be delayed, and unassailable after the period of contrary to the aim of Regulation No twelve months from the date of 542/69.

mental requirements (the fraudulent It notes that the release, which is in nature of the documents, for example), addition subject to the condition that the and that, provided that that operation guarantor has not been notified of the was carried out within the prescribed nori-discharge, was thus introduced as a period, the second paragraph of Article form of penalty for the failure of the 35 and the release therein provided for, office of departure which not only does is inapplicable. not carry out the discharge within the

to check whether the fundamental destination. conditions, which enable it to carry out a valid and effective discharge of the According to the Italian Government, transit documents, are met, even if that is there are no grounds for objecting that desirable. under that interpretation the guarantor's obligation is unlimited in time, subject to The Italian Government thus emphasizes the relevant limitation periods. It submits that, according to the view supported by that such an effect would also arise in the opposite party, before discharging the opposite case, in so far as the offices the T 1 documents every office of of departure would not fail to notify the departure would have to undertake an guarantor at regular intervals of the non- inquiry for every transit operation to discharge of the T 1 form, as they would ensure that the documents in question be forced to do, because of the were not falsified. application of the release provided for in

the second paragraph of Article 35, until actual verification the office of departure they were certain that the material may no longer be obliged to grant the requirements for a positive verification release provided for in the second were fulfilled. It adds that there would paragraph of the said Article 35." be no justification either for objecting that this interpretation is too exacting so far as the guarantor is concerned. 3. The Commission of the European Communities notes that the two events In this regard the Italian Government having as their effect the release of the notes that the paragraph added to the guarantor's obligations provided for in original text of Article 35 of Regulation Article 35 of Regulation No 542/69 took No 542/69 did not alter either the scope place in this case. or the content of the guarantee, nor did it change the duration of the latter into an unlimited duration. The objective of The T 1 declarations were discharged the above-mentioned paragraph which and more than twelve months had supplemented the original provision was elapsed since registration when the simply to penalize the office of Customs Office, Milan, requested departure's failure to act, a penalty payment of the duties from SIC. which may however be avoided by a simple notice of non-discharge, which need not even give the grounds on which The Commission notes that the Tribunale, Milan, has not asked the it is based. Court a question concerning the possible consequences as against the guarantor of Furthermore, according to the Italian an annulment of the discharge. Thus, Government it is appropriate to repeat considering only the second factor that the inevitable results of declaring leading to the extinguishment of his that the release provided for in the obligation, that is to say, release on second paragraph of Article 35 applies to expiry of the prescribed period, it points cases similar to that of the dispute in the out that according to the second recital main action would be much more severe in the preamble to Regulation N o for the guarantor. His obligation would 1079/71 the provision in question was be preserved for a long time by means introduced because "the need for of notices of non-discharge until the certainty in the law" entails "that favourable conclusion of inquiries made persons who act as guarantors be by the customs authorities. In conclusion, afforded the certainty of being released the Italian Government wishes the Court from their obligations on expiry of a of Justice to answer the question put to it fixed period which it seems appropriate by the Tribunale, Milan, in the negative, to set at twelve months calculated from by stating: the date of registration of the Community transit declaration".

is achieved in the following manner: if p. 1) contains a similar provision in the customs offices entertain doubts as to Article 11, which, however, provides for the regularity of the operation, they must a period of two years for the release of warn the guarantor of this; otherwise, the guarantor's obligation in the event of the guarantor is released from his fraud, and notes that that provision was obligations. not adopted in the Community legislation on transit. The Commission observes that the argument relating to discharges in this In conclusion, the Commission suggests case, relied upon by the Finance that the Court should give the following Administration and reproduced in the reply to the question submitted to it by order making the reference, to the effect the Tribunale, Milan : that "those documents, although invalid and of no effect, were nevertheless "The second paragraph of Article 35 of drawn up within twelve months from the Regulation N o 542/69 must be in- date of registration of the T 1 terpreted as meaning that the guarantor declarations, thus preventing the release is released from his obligations if he has provided for", is not clear. According to not been notified of the non-discharge of the Commission, the Italian adminis- the T 1 declaration upon the expiry of a tration itself admits that it is necessary to period of twelve months from the date of perform an "act" in the twelve months registration of that declaration." following registration in order to prevent forfeiture. The Commission maintains that that act may not, however, be any III — O r a l p r o c e d u r e "act", and may certainly not be a dicharge, which might have the opposite At the sitting on 8 October 1981, oral effect. It can therefore only be the argument was presented by the notification provided for in the second following: Gregorio Leone of the Milan paragraph of Article 35 of Regulation Bar, for Società Italiana Cauzioni; I. M. N o 542/69. Graguglia, acting as Agent, for the Italian Government; and M. A. The Commission points out that the Prozzillo, acting as Agent, assisted by Customs Convention on the Inter- Mr Ruah, expert, for the Commission of national Transport of goods under cover the European Communities. of TIR carnets (TIR Convention) of 14 November 1975 (approved by Council The Advocate General delivered his Regulation (EEC) N o 2112/78 of 25 opinion at the sitting on 3 December July 1978) (Official Journal 1978, L 252, 1981.

4 The external Community transit operation commences, according to Article 17 of the regulation, with the registration of the T 1 declaration at the office of departure and ends when the office of destination sends a copy of that declaration to the office of departure in accordance with Article 26.

5 On the other hand, Article 27 (1) of the regulation provides: "In order to ensure collection of the duties and other taxes which one of the Member States is authorized to charge in respect of goods passing through its territory in the course of Community transit, the principal shall furnish a guarantee, except as otherwise provided in this regulation". Article 27 (2) states: "The guarantee may be comprehensive, covering a number of Community transit operations, or individual, covering a single Community transit operation". In addition, Article 27 (3) provides: "Subject to the provisions of Article 33 (2), the guarantee shall consist of the joint and several guarantee of a natural or legal third person established in the

SIC v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

Member State in which the guarantee is provided who is approved as a guarantor by that Member State".

6 The first paragraph of Article 35 of the regulation provides: "The guarantor shall be released form his obligations towards the Member States through which goods were carried in the course of a Community transit operation when the T 1 document has been discharged at the office of departure". T o this provision, Article 1 of Regulation N o 1079/71 of the Council of 25 May 1971 added a second paragraph which is worded as follows :

JUDGMENT OF 18. 2. 1982 — CASE 277/80

9 The Italian authorities submit that the discharge, which is based on documents obtained by fraud, must be considered as invalid and ineffective and therefore of no effect as regards the release of the guarantor under the first paragraph of Article 35 of Regulation N o 542/69. Such release should be the result only of a valid verification by means of a positive check on the conformity of the office of departure's copy of the T 1 document with that of the office of destination.

10 With regard to the release of the guarantor under the conditions laid down in the second paragraph of Article 35 of Regulation N o 542/69, the Italian authorities contend that to the extent to which the discharge of the T 1 document was carried out in good time, that is to say before expiry of the period of twelve months from the date of registration of the T 1 declaration, by means of an actual verification, although the conditions determining its substantive validity are subsequently discovered not to exist, the customs authorities ought no longer to be bound to effect the release provided for by that paragraph.

1 1 According to the Italian authorities, unless the customs authorities are to be obliged to carry out lengthy inquiries and to notify the guarantor systematically of the non-discharge of the T 1 document, contrary to the objective aimed at by the adoption of Regulation N o 1079/71, the discharge later discovered to be invalid ought not to have the effect of releasing the guarantor and the second paragraph of Article 35 of Regulation N o 542/69 ought in this case to be inapplicable.

15 Without prejudice to the effects which fraud on the part of the guarantor himself might have had on his release from his obligations as guarantor, a situation which does not emerge from the question put to the Court, it therefore follows that the guarantor is automatically released upon the expiry of the period of twelve months without notification of non-discharge.

16 Therefore the reply to the question put by the Tribunale, Milan, should be that Article 35 of Regulation N o 542/69 of the Council of 18 March 1969 on Community transit, as supplemented by Article 1 of Regulation N o 1079/71 of 25 May 1971, must be interpreted as meaning that unless the guarantor is notified by the customs authorities of the non-discharge of the T 1 declaration within the period of twelve months from the date of registration of the declaration, then, in the absence of any fraud of which he may be guilty, the guarantor is in any event released from his obligations.

JUDGMENT OF 18. 2. 1982 — CASE 277/80

Costs

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

On those grounds,

H . A. Rühl O. Due Principal Administrator President of the Second Chamber