C-221/81

In Case 221/81

REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht [Finance Court] Düsseldorf for a preliminary ruling in the action pending before that court between

WILFRIED WOLF, Goslar,

and

HAUPTZOLLAMT [Principal Customs Office] DÜSSELDORF

1 — Language of the Case: German.

JUDGMENT

Facts and Issues

The facts of the case, the course of most of which he had obtained in the procedure and the observations Düsseldorf and various other towns, the submitted pursuant to Article 20 of the remainder having been imported, by him Protocol on the Statute of the Court of from the Netherlands. Justice of the EEC may be summarized as follows: On the basis of Article 57 (2) of the Customs Law (Zollgesetz), the Haupt- zollamt Düsseldorf, the defendant in the I — Facts and procedure main action, considered that the plaintiff should pay import duties on the quantities of drugs referred to in the 1. By a final judgment of the Land­ judgment of the Landgericht, on the one gericht [Regional Court] Düsseldorf of hand because he had not himself 26. April 1976, Wilfried Wolf, the declared imported goods which were plaintiff in the main action, was subject to customs control and therefore committed to prison for 8 years for was the first person to have concealed unlawfully trafficking in drugs. them from the customs authorities and, According to the findings of the Land­ on the other hand, because he had gericht, Mr Wolf had operated as a purchased imported goods subject to "dealer" in the old quarter of Düsseldorf customs control after the liability to pay from mid-July 1965 until his arrest about customs duties had arisen and before it mid-October 1975. Mr Wolf had been had been extinguished, whilst he knew, involved in the sale of 742 grammes of or should have known, that the goods in heroin and 150 grammes of cocaine, question were subject to customs control.

By notice of assessment of 3 December apply customs duties to drugs which 1976, amended on 28 January 1977, the have been smuggled in and destroyed as Hauptzollamt claimed payment of those soon as they were discovered but it does duties from the plaintiff. Taking as a leave it full freedom to take criminal basis the purchase price paid by the proceedings in respect of offences plaintiff, the Hauptzollamt estimated the committed, with all the attendant dutiable value of the 742 grammes of consequences, including fines". heroin at DM 74 200 and of the 150 grammes of cocaine at DM 15 000. The Finanzgericht wishes to know whether the principle enunciated in that The objection lodged by the plaintiff in judgment extends also to those cases in the main action against the notice of which the smuggled drugs were not assessment was dismissed and he ap discovered and could not therefore be pealed to the Finanzgericht Düsseldorf. confiscated and destroyed.

In that on the following questions: respect, the Finanzgericht points out that " 1 . Are the provisions of the EEC if confiscation and destruction are of Treaty on the customs union decisive importance, the question of (Articles 9 (1) and 12 to 29) to be when the customs duties become interpreted as meaning that since the payable, and by whom, would often be introduction of the Common decided by chance. Customs Tariff a Member State has no longer been authorized to levy The Finanzgericht then points out that customs duties on smuggled drugs Regulation No 803/68 of the Council of which in the event of discovery 27 June 1968 on the valuation of goods would have to be confiscated and for customs purposes (Official Journal,

The absolute alternative." prohibition of the importation of drugs therefore falls outside the scope of 3. In the statement of grounds of the customs law and the powers to adopt order making the reference, the Finanz- rules thereunder. gericht mentions that in the judgment of 5 February 1981 cited above the Court In the event of a negative reply to the held that "the introduction of the first question, the first questions referred Common Customs Tariff no longer to the Court by the Finanzgericht leaves a Member State the power to Hamburg in its order of 15 January 1980

in Case 50/80 cited above become particulars of the price which he has important to determine the value for paid so that the price paid by that customs purposes of the smuggled drugs. person is the relevant value for Those questions are worded as follows : customs purposes, or do the competent national authorities, have " 1 . Are the provisions of Regulation to take the purchase price paid by (EEC) No 803/68 of the Council of the first buyer residing in 27 June 1968 and of Regulation Community territory as the basis of (EEC) No 603/72 of the the value of the smuggled goods for Commission of 24 March 1972 to be customs purposes in accordance with interpreted as meaning that, with the the rules laid down in Articles 1, 2, exception of those provisions which 4, 6, 7 and 9 of Regulation (EEC) require goods subject to customs No 803/68?" control to be formally presented, they also apply directly to the 4. The order making the reference was valuation for customs purposes of received at the Court Registry on 22 July goods smuggled into the customs 1981. territory of the Community? Pursuant to Article 20 of the Protocol on 2. Are the provisions of Regulation the Statute of the Court of Justice of the (EEC) No 803/68 of the Council, EEC, written observations were sub­ especially Articles 1, 2, 4, 6, 7 and 8 mitted by the Government of the French thereof, to be interpreted as meaning Republic, represented by Maryse that the value for customs purposes Aulagnon, a member of the Secretariat of the goods smuggled into the General of the Inter-Departmental customs territory of the Community Committee for Questions of European is fixed with reference to the time Economic Cooperation attached to the and place of their introduction into Prime Minister's Office and by the the customs territory of the Commission of the European Communi­ Community, even if according to the ties, represented by its legal adviser, Rolf national substantive legal provisions Wägenbaur, acting as Agent. from time to time applicable the liability to the customs arises at By order of 3 Februay 1982, the Court another time and is payable by a decided to join Cases 221/81 and person other than the first buyer 240/81 for the purpose of the oral residing in Community territory? procedure.

On the other hand, the illegal import­ duties arises if the drugs have been ation of products the marketing of which consumed. is not prohibited as such within national territory but which are or have been Finally, the illegal importation of drugs smuggled into that territory. does not give rise to the levying of duties in Denmark, France or the United Kingdom. However, in France, in those The information collected by the cases where illegally imported drugs are Commission from the Member States not destroyed by official order but are may be summarized as follows: sold, for example to approved labora­ tories, duties are levied upon such sale. The illegal importation of drugs the use In the United Kingdom, duties are not and marketing of which are strictly levied in any case, regardless of whether the offending importer sold, consumed prohibited gives rise to liability to pay or re-exported the drugs. customs duties and the levying of import duties in Belgium. Such imports give rise to liability to pay customs duties in the The illegal importation of products the Federal Republic of Germany, Ireland marketing of which is not per se und the Netherlands. prohibited gives rise to liability to pay customs duties in all the Member States, except in Greece where illegally However, in the Federal Republic of imported goods are confiscated. Germany, since the judgment of the Court of 5 February 1981 in Case 50/80 cited above, import duties are not levied However, import duties are not levied in after discovery of the drugs in the event Denmark in those cases where the party of their destruction, and there is liable to duty is unknown and the products are destroyed or sold. moreover a presumption that they have been destroyed. In Ireland, the liability to pay customs duties is regarded as In Ireland, import duties are regarded as extinguished by reason of the fact having been paid where a smuggled that unlawfully imported drugs product is returned to the person are confiscated and destroyed. In the concerned against payment of a sum Netherlands, import duties are levied determined by arrangement and in cases where the drugs have been consumed where the product is confiscated and and the illegal importation can be subsequently sold; on the other hand, the proved, but they are not levied in the liability to pay customs duties is regarded event of confiscation and destruction. as extinguished if the products are destroyed by official order or re­ exported. In Italy, the illegal importation of drugs gives rise to liability to pay customs In Luxembourg, products smuggled into duties, except in the case of re-export or the country are as a rule confiscated and destruction by official order. sold. Import duties are levied upon the sale if the products are sold with a view The illegal importation of drugs does not to consumption within the country; give rise to any liability to pay customs duties are also levied where the products duties in Greece or Luxembourg, where in question have been consumed. drugs which are discovered are confiscated and destroyed. In Luxem­ In the United Kingdom, duties are not bourg, however, liability to pay customs levied when the products are confiscated

That view is in harmony with the French The French Government notes that the legislation which makes no distinction terms of the operative part ("drugs between a case where drugs are which have been smuggled in and unlawfully imported, seized and destroyed as soon as they were destroyed (Case 50/80) and the present discovered") and certain paragraphs in case in which drugs were sold. With the the statement of grounds of the above- exception of a number of specific uses mentioned judgment appear to establish subject to close State supervision, the use a link between the unlawfulness of the of drugs on French territory is absolutely use of the imported product and its prohibited. Consequently, no liability to destruction. It considers however that the pay customs duties can arise and im­ Court established that link merely with a portation cannot give rise to the payment view to making a general statement of duties.

WOLF v HAUPTZOLLAMT DÜSSELDORF

III — Oral procedure That point of view is confirmed by the fact that the other grounds stated by the Court in relation to drugs smuggled into a country and destroyed upon discovery At the sitting on 25 May 1982 oral remain valid where, because of the argument was presented by the circumstances, destruction is out of the Government of the French Republic, question. represented for the purposes of the oral procedure by Alexandre Carnelutti, Secretary for Foreign Affairs, acting as The Commission also refers in particular Agent, and by the Commission of the to the recitals in the preamble to Council European Communities, represented by Directive 79/623 of 25 June 1979 on the its Legal Adviser, Rolf Wägenbaur, harmonization of provisions laid down acting as Agent, assisted by Ursula by law, regulation or administrative Baumann, an expert in its Customs action relating to customs debt (Official Union Department. Journal 1979, L 179, p. 31), and draws attention to the essentially economic nature of import and export duties. The Advocate General delivered his Moreover, Article 2 of that directive opinion at the sitting on 30 June 1982.

JUDGMENT OF 26. 10. 1982 — CASE 221/81

Decision

1 By order of 10 June 1981, received at the Court on 22 July 1981, the Finanz­ gericht [Finance Court] Düsseldorf referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the application of the Common Customs Tariff to smuggled drugs.

2 The dispute in the main proceedings concerns the determination of the custom duties applicable to quantities of heroin and cocaine which were purchased by the plaintiff in the main proceedings on the black market in Germany and the Netherlands and re-sold by him in contravention of the Betäubungsmittelgesetz [German Drugs Law]. For those offences he was sentenced by a German criminal court to eight years' imprisonment.

7 So phrased, the question does not concern the problem of the unlawful importation of products in general but that of the unlawful importation of drugs.

8 As the Court pointed out in the Horváth judgment cited above, drugs such as morphine, heroin and cocaine display special features in so far as their harm- fulness is generally recognized and their importation and marketing are prohibited in all the Member States, except in trade which is strictly controlled and limited to authorized use for pharmaceutical and medical purposes.

9 This legal position is in conformity with the Single Convention on Narcotic Drugs, 1961, (United Nations Treaty Series 520, No 7515), to which all the Member States are now parties. In the preamble to that Convention the parties state that addiction to narcotic drugs constitutes a serious evil for the individual and is fraught with social and economic danger to mankind; they declare that they are conscious of their duty to prevent and combat that evil, whilst recognizing that the medical use of narcotic drugs is indispensable for the relief of pain and that adequate provision must be made to ensure the availability of narcotic drugs for such purposes. Pursuant to Article 4 of the Convention the parties are to take all the measures necessary to limit exclusively to medical and scientific purposes the production, manufacture, export, import, distribution of, trade in, use and possession of drugs.

10 As a result, drugs which are not confined within channels of distribution strictly controlled by the competent authorities for use for medical and scientific purposes are subject, by definition, to a total prohibition of impor­ tation and distribution in all the Member States.

1 4 That view is confirmed by the provisions of Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes (Official Journal, English Special Edition 1968 (I), p. 170) and by those of Council Directive 79/623/EEC of 25 June 1979 on the harmonization of provisions laid down by law, regulation or administrative action relating to customs debt (Official Journal, 1979, L 179, p. 31). The preamble to that directive states specifically that the moment when the customs debt arises must be defined in the light of the economic nature of the duties on imports and in 'terms of the conditions under which the goods subject to import duties are integrated into the economy of the Community. In such circum­ stances, no customs debt can arise when drugs are imported through illegal channels of distribution, since they must be seized and destroyed upon discovery instead of being put into circulation.

15 Moreover, as the national court points out, there is no justification for making a distinction in that regard between drugs which have not been

WOLF v HAUPTZOLLAMT DÜSSELDORF

discovered and those which are destroyed under the control of the competent authorities, since if such a distinction were made the application of customs duties would be subject to the chance of discovery.

16 It is apparent from the foregoing that no customs debt arises upon the importation of drugs otherwise than through economic channels strictly controlled by the competent authorities for use for medical and scientific purposes.

17 This finding is without prejudice to the powers of Member States to take criminal proceedings in respect of contraventions of their drugs laws and to impose appropriate penalties, including fines.

OPINION OF MR CAPOTORTI — CASE 221/81

No customs debt arises upon the importation of drugs otherwise than through economic channels strictly controlled by the competent auth- orities for use for medical and scientific purposes.

Mertens de Wilmars O'Keeffe Everling Chloros

Pescatore Mackenzie Stuart Bosco Koopmans Due

Delivered in open court in Luxembourg on 26 October 1982.

P. Heim J. Mertens de Wilmars