C-7/83

In Case 7/83,

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

OSPIG TEXTILGESELLSCHAFT KG W . AHLERS, Bremen,

and

HAUPTZOLLAMT BREMEN-OST [Principal Customs Office, Bremen East],

on the interpretation of Council Regulation (EEC) N o 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (Official Journal, L 134, p. 1),

JUDGMENT

Facts and Issues

The facts of the case, the course of the The problem which is the subject of procedure and the observations sub- the litigation arises when an exporting mitted pursuant to Article 20 of the vendor has run out of the quotas Protocol on the Statute of the Court of necessary for proceeding with his sale. Justice of the EEC may be summarized Two solutions are then possible: either as follows : the Community purchaser procures an export licence from an exporter having surplus quotas at his disposal, and gives the licence to his vendor free of charge, or else the exporting vendor himself procures an export licence from an I — Facts and p r o c e d u r e exporter holding surplus quotas, and invoices to the purchaser, with his consent, the extra costs connected with the acquisition of the licence. The Community has concluded agree- ments with a number of non-member countries limiting textile imports. The cost of the quotas is determined by Observance of the import quotas is the relationship between the demand to ensured by a system of double-checking export and the extent to which quotas whereby export licences are issued in the have been used up. exporting country and import licences within the Community. Presentation of an export licence is a precondition to On 25 November 1981 Ospig Textil- obtaining permission to import into the gesellschaft ["Ospig"] applied to the Community. Hauptzollamt Bremen-Ost [Principal

OSPIG ν HAUPTZOLLAMT BREMEN-OST

JUDGMENT OF 9. 2. 1984 — CASE 7/83

of customs valuation, introduces the payments made or to be made as a transaction value as the basis for the condition of sale of the imported goods customs valuation of goods. by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. The payment need not By the adoption of Council Regulation necessarily take the form of a transfer of (EEC) No 1224/80 of 28 May 1980 on money. Payment may be made by way of the valuation of goods for customs letters of credit or negotiable instruments purposes (Official Journal, L 134, p. 1), and may be made directly or indirectly." amending Regulation (EEC) No 803/68 of 27 June 1968 (Official Journal, English Special Edition 1968 (I), p : 170), Article 3 (4) and Article 15 of the regu- the Council decided to implement the lation exclude from the customs value provisions of the aforesaid agreement as certain charges, amongst which quota from 1 July 1980. charges are not mentioned.

Regulation No 1244/80 of 28 May 1980 was amended by Council Regulation I I I — S u m m a r y of t h e w r i t t e n (EEC) No 3193/80 of 8 December 1980 observations submitted to (Official Journal, L 333, p. 1). the C o u r t

Article 3 (1) of Regulation No 1244/80 provides as follows : Ospig states that it entirely endorses the conclusions of the report submitted for the Court's consideration on quota charges and valuation for customs "The customs value of imported goods purposes, prepared by the Verband der determined under this article shall be the Fertigwarenimporteure eV [Association transaction value, that is, the price of Importers of Finished Products] of actually paid or payable for the goods Hamburg (an association of 150 import when sold for export to the customs undertakings which operate in the territory of the Community, adjusted in textiles and clothing sector and are accordance with Article 8 . . .". engaged in importing from overseas).

(a) Export licences are designed prin the regulations. When, on the otier cipally to monitor movements in hand, the buyer holds an export trade. The grant of an export licence, he makes it available to the licence signifies no more than the exporting vendor free of charge. right to export a certain category of goods from a non-member country, Without commenting on its content, Ospig and falls within the framework appends to its observations a communi of the agreement on voluntary cation from the Bundesverband des restraint concluded by the Com

destination faster. According to the Hauptzollamt Bremen- Ost the preliminary question raised by the 2. The cost of the export licence is Finanzgericht Bremen calls for an affir- independent of the value of the goods mative answer. exported. In the opinion of the Hauptzollamt (a) The price for the purchase of textile Bremen-Ost, the provisions or Council products and clothing, generally Regulation No 1224/80 indicate that expressed in United States dollars quota charges relate to imported goods, per mercantile unit, is (the Verband since the latter cannot be delivered unless maintains) the same for all pur the quota charges are paid.

nomous, and separate from the 1224/80. purchase price of the goods. The acquisition of an export licence The Hauptzollamt Bremen-Ost takes the entails payment whenever the buyer view that breaking down that total into does not hold his own licence. The separate invoices has no effect on the cost of the licence then reflects the transaction value within the meaning of relationship between the demand Article 3 (1) of Regulation No 1224/80. for importation and the oppor According to the Hauptzollamt Bremen- tunities available for doing so under Ost, that interpretation is borne out by the

provisions of Article 3 (4) and Article 15 preamble to the Agreement on im- of the regulation, which exclude from plementation of Article VII of the the customs valuation certain charges, General Agreement on Tariffs and amongst which quota charges are not Trade. The preamble indicates that the mentioned. valuation of goods for customs purposes must be based on simple, objective The argument put forward by the criteria, so that the value may be both Hauptzollamt Bremen-Ost is, further- foreseeable and readily determined by more, confirmed by the opinion of the the persons concerned as well as by the Customs Valuation Committee quoted customs administration.

The Following disagreement over the issue of level of the quota charges reflects, on the whether it was appropriate in both cases one hand, the degree to which the to include the quota charges in the import allowances under the regulations customs valuation, the members of the have been used up, and on the other Committee opted for the solution hand the importer's wish to take delivery adopted in this matter by the customs within a certain period. administration of the United States of America, whereby payment made by the In the opinion of the Commission, quota purchaser forms part of the value for charges are not regarded in commercial customs purposes in the first case alone. practice as forming an integral part of the price of the goods, wherein they differ, in particular, from the royalties In the opinion of the Hauptzollamt attaching to industrial and commercial Bremen-Ost, that solution, endorsed by property rights which, being discharged the above-mentioned opinion, has the as a condition of the sale, are included in merit of. taking into account only those the price of the goods pursuant to Article charges arising from the transaction

OSPIG ν HAUPTZOLLAMT BREMEN-OST

The Commission maintains that the According to the Commission, it was the above interpretation of Article 3 of mention of that risk which led the Regulation N o 1224/80 is supported by members of the Customs Valuation the sixth recital in the preamble thereto : Committee, at its 33rd meeting, to adopt the conclusion recorded above. ". . . the objective of this regulation is to foster world trade by introducing a fair, uniform and neutral system of customs The Commission, taking the view that valuation excluding the use of arbitrary the above conclusion should be extended or fictitious customs values; to cases where the buyer has instructed therefore, the customs value must be the vendor to obtain the export licence determined in accordance with criteria and where the latter has invoiced him which are compatible with trade practice; separately for the sum representing the quota price demanded, proposes that the following reply be given to the question raised by the Finanzgericht Bremen: According to the Commission, the charges for export licences are a consequence of the Community policy of "The charges (known as quota charges) monitoring and imposing quantitative which an exporter in Hong Kong pays to restrictions on the importation of a third party for the acquisition of free sensitive products such as textiles. (export) quotas and which he invoices Integrating those charges into the value separately to his German customer are for customs purposes would, in view of not to be included in the value for the resultant rise in customs duties, be customs, purposes (the transaction value tantamount to an extension of protec­ referred to in Article 3 of Council Regu­ tionism such as was not contemplated by lation (EEC) No 1224/80 of 28 May the system of quantitative restrictions on 1980 on the valuation of goods for imports, and would run counter to fair, customs purposes)." uniform and neutral methods of customs valuation.

3 The observance of import quotas as defined in those agreements is ensured by a double check consisting of the issue of export licences in the non- member exporting country and by the grant, on presentation of those licences, of import licences into the Community.

4 Where an exporter/vendor no longer possesses sufficient quotas to enable him to sell goods which he intends to export to the Community customs territory, in certain non-member countries there exists the possibility of buying export quotas. The quota charges are paid by the Community purchaser either direct to a person who is not a party to the contract binding that purchaser to the vendor of the goods, but who possesses surplus quotas, or to the exporter/vendor who has himself procured quotas from a third party. The price of the quotas is a function of the relationship between the demand to export and the extent to which the quotas have been exhausted.

5 On 25 November 1981, Ospig applied to the Hauptzollamt Bremen-Ost for the admission into free circulation of textile products purchased in Hong Kong, entering, as the value for customs purposes, the invoice price for the goods excluding that part relating to the quota charges, which was invoiced separately by the exporter/vendor.

OSPIG ν HAUPTZOLLAMT BREMEN-OST

6 Under a notice of assessment dated 26 November 1981, the Hauptzollamt Bremen-Ost charged customs duties calculated on the aggregate of the purchase price of the goods and the price paid for the export quotas.

7 The Hauptzollamt Bremen-Ost declined to withdraw that decision and on 28 April 1982 dismissed the objection raised by the importing company to that end.

JUDGMENT OF 9. 2. 1984 — CASE 7/83

form of a transfer of money. Payment may be made by way of letters of credit or negotiable instruments and may be made directly or indirectly."

1 1 It follows from the combined provisions of paragraphs (1) and (3) (a) of Article 3 of Regulation N o 1224/80, as amended, that the value for customs purposes includes all sums paid or payable as a condition of the sale of the goods imported by the purchaser to the vendor or by the purchaser to a third party in order to fulfil one of the vendor's obligations.

12 It may be noted, moreover, that Article 8 of Regulation N o 1224/80, to which Article 3 (1) refers, provides that "there shall be added to the price actually paid or payable for the imported goods" a number of charges ancillary to that price, from an economic point of view. Article 8 provides an exhaustive list of the charges which may thus be taken into account for the determination of the value for customs purposes and it should be noted that the "quota charges" do not appear in that list.

1 3 It should be emphasized, for the purpose of the interpretation of the aforementioned provisions, that the system of export and import licences forms part of the Community system of authorization and quantitative limitation of imports into the Community of textile products from certain non-member countries, provisionally laid down by Commission Regulation (EEC) N o 3019/77 of 30 December 1977 (Official Journal, L 357, p. 1) and Council Regulation (EEC) N o 265/78 of 7 February 1978 (Official Journal, L 42, p. 1) and definitively laid down by Council Regulation (EEC) N o 3059/78 of 21 December 1978 (Official Journal, L 365, p. 1) replaced on 23 December 1982 by Council Regulation (EEC) N o 3589/82 (Official Journal, L 374, p. 106).

17 The Court is of the opinion however that the solution suggested by the Customs Valuation Committee also applies when the exporter/vendor who no longer has any quotas obtains some himself from a third party and invoices them to the purchaser. To hold otherwise would, in fact, create an unjustified disparity between importers in the Community placed in an analogous situation and would therefore be contrary to the fair, uniform and neutral system of customs valuation established by Council Regulation N o 1224/80.

18 In the light of the foregoing, the answer to be given to the question submitted by the national court must be that quota charges relating to the acquisition of export quotas do not form an integral part of the value for customs purposes of goods imported into the Community within the meaning of the provisions of Council Regulation (EEC) N o 1224/80 of 28 May 1980 on the valuation of goods for customs purposes, as amended by Council Regulation (EEC) N o 3193/80 of 8 December 1980.

JUDGMENT OF 9. 2. 1984 — CASE 7/83

Costs

19 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since 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 as to costs is a matter for that court.

On those grounds,