C-105/83

JUDGMENT OF 16. 5. 1984 — CASE 105/83

In Case 105/83

REFERENCE to the Court under Article 177 of the EEC Treaty by the College van Beroep voor het Bedrijfsleven [administrative court of last instance in matters of trade and industry] for a preliminary ruling in the action pending before that court between

PAKVRIES BV (a limited liability company), carrying on business as a customs agent, which has its registered office at Rotterdam,

and

MINISTER FOR AGRICULTURE AND FISHERIES, The Hague,

Facts and Issues

The facts of the case, the course of I — Facts and written procedure the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized In December 1976 and January 1977 as follows: Pakvries BV, a limited liability company

PAKVRIES / MINISTER FOR AGRICULTURE AND FISHERIES

It is established that the goods for which Pakvries made the declarations were Article 5 of the Supplementary Protocol, never produced at the office of containing special provisions on taxation,

JUDGMENT OF 16. 5. 1984 — CASE 105/83

to the Benelux Convention of 29 April Hence by virtue of the provisions in 1969 on cooperation in administrative force within the Benelux Economic and criminal matters in the context of Union it is for the State in which the the arrangements relating to the documents were issued to commence attainment of the aims of the Benelux recovery proceedings where goods have Economic Union provides that: been put into free circulation unlawfully.

PAKVRIES / MINISTER FOR AGRICULTURE AND FISHERIES

The College van Beroep voor het On hearing the report of the Judge- Bedrijfsleven considered that in order to Rapporteur and the views of the rule upon the applications it needed to Advocate General, the Court decided to know the scope of the derogation in open the oral procedure without any favour of Benelux law contained in preparatory inquiry. It did however ask Article 59 and by order dated 20 May the Commission and the Netherlands 1983 decided pursuant to Article 177 of Government to reply in writing to a the EEC Treaty to stay the proceedings number of questions, which they did until the Court of Justice had given a within the prescribed period. preliminary ruling on the following question:

By an order of 7 December 1983 Must Article 59 of Regulation (EEC) No pursuant to Article 95 (1) and (2) of the 542/69, as worded and in force before Rules of Procedure, the Court assigned 1 July 1977, be interpreted as meaning the case to the Fourth Chamber. that the Netherlands may apply a Benelux agreement to a Community transit document, in so far as that agreement provides, in derogation from Article 36 (1) of Regulation No 542/69, that action to recover charges must be II — Written observations sub­ taken by the Benelux country in which mitted to the Court the document was issued, even if it is found that an irregularity was committed in the course of Community transit in another Benelux country?

Pakvries submits that that conclusion is (b) The T 1 documents were drawn up reinforced by the consideration that for with Italy as destination and for transit reasons related to the organization of the via the Netherlands, Belgium and Netherlands courts the arrangements laid France; their effect was not confined to down in the Protocol to the Benelux the Benelux countries. Article 36 (1) of Convention make judicial process the regulation therefore overrides Article impossible in the event of a dispute with 5 of the Supplementary Protocol which the Netherlands authorities. is by its nature confined to internal Benelux matters.

PAKVRIES / MINISTER FOR AGRICULTURE AND FISHERIES

(b) To understand the factual and legal provisions of Community law, namely background of the case it is necessary Article 233 of the EEC Treaty and to examine the relevant Benelux pro­ Articles 36 and 59 of Regulation No visions. In this regard the Netherlands 542/69, and from Article 5 of the Sup­ Government points out that the question plementary Protocol, containing special submitted to the Court concerns solely provisions on taxation, to the Agreement the applicability of Benelux law and not on cooperation in administrative and its interpretation which is exclusively a criminal matters as part of the matter for the national court or the arrangements relating to the realization Benelux Court of Justice. of the aims of the Benelux Economic Union that the proceedings to recover The Benelux Convention to which the duties payable in respect of a failure to Supplementary Protocol is annexed is an discharge Community customs docu­ agreement within the meaning of Article ments, which in this case must also be 59 of Regulation No 542/69. Con­ considered Benelux documents, must be sequently Article 5 (2) of that protocol brought in accordance with Benelux law. applies instead of Article 36 of the regu­ lation. The Commission considers that the question raised by the College van Article 5 of the Supplementary Protocol Beroep concerns the relationship contains provisions for the recovery of between Article 233 of the EEC Treaty charges and levies payable in respect and the rules of the Benelux Economic of Benelux documents. A Community Union. More specifically, the question is customs document may also be con­ whether Article 5 of the Supplementary sidered a Benelux document since any Protocol to the Benelux Convention of document valid in one or more Benelux 29 April 1969 overrides Article 59 in countries is considered a Benelux conjunction with Article 36 (1) of Regu­ document. lation No 542/69.

three member countries as regards in the rest of the Community are administrative and criminal jurisdiction unnecessary for carriage within Benelux. in several specific fields. The Convention As only one country is responsible for sets out the detailed arrangements for issuing documents for Benelux transit, that unification. it is only logical, in view of the administrative purpose of Article 59, to give that country responsibility for In the field of taxation it is accomplished recovering any charges due if irregu­ by the Supplementary Protocol, Article 5 larities are discovered. of which contains special rules for the recovery of duties, excise and other charges where customs documents are (c) The Commission suggests that the not discharged or only incompletely question submitted to the Court should discharged. It provides that where an be answered as follows: irregularity is found, recovery of the duties is a matter for the country in which the documents were issued. The Article 59 of Regulation No 542/69, as involvement of only one authority worded and in force before 1 July 1977, simplifies recovery and contributes to the must be interpreted as meaning that the territorial unification of the Benelux Netherlands may apply to a Community countries. transit document Article 5 of the Sup­ plementary Protocol, containing special provisions on taxation, to the Benelux It is illogical to allow the Benelux Convention of 29 April 1969 on coop­ countries, on the basis of Article 59 of eration in administrative and criminal the regulation, to cease to require matters as part of the arrangements production of transit documents at intra- relating to the realization of the aims Benelux frontiers in conformity with the of the Benelux Economic Union if an Benelux provisions and yet not also irregularity is found to have been empower them, when irregularities are committed in another Benelux country discovered, to recover duties in ac­ during Community transit. cordance with other Benelux provisions. Although Article 59 does not expressly empower the Benelux countries to apply Article 5 of the Protocol in derogation from Article 36 (1) of the regulation, it Ill — Answers to questions asked does, in view of Article 233 of the EEC by the Court Treaty, give them implicit authority to do so for the sake of the territorial unification and administrative simplifi­ In reply to the questions addressed to cation which the Benelux Economic them by the Court at the end of the Union seeks to achieve. written procedure, the Netherlands Government and the Commission sub­ mitted the answers summarized below. That interpretation is borne out by the rationale of Article 59 of Regulation No 542/69 itself. That provision attributes The first question concerns the view that greater importance to the documents Article 59 of Regulation No 542/69 and issued by the Benelux country of Article 5 of the Supplementary Protocol departure. Those documents suffice for to the Benelux Convention can relate the entire duration of Benelux transit only to internal Benelux matters so that and the documents required for transit when goods are for a destination in

(a) In its reply the Netherlands Government points out that for the implementation of the Benelux Economic Union, the Convention of 29 April 1969 Article 3 of Regulation No 542/69, on the unification of the Benelux under which each Member State may customs territory created, as regards provide for the application of a national import duties, a customs union in which procedure instead of the external or a common tariff of import duties is internal Community transit procedure applied and no import duties are charged during the carriage of goods within its on internal trade. territory, states that the territory of the Benelux Economic Union is to be considered the territory of one Member State. Consequently, in Community transit operations, no transit advice note Article 2 of that Convention provides is issued when an intra-Benelux frontier that for the purposes of import duty is crossed and therefore administrative the customs legislation governing the arrangements have to be adopted be­ movement of goods is to apply in the tween the Benelux countries, especially Benelux territory and at its external for the purpose of recovering duties and frontiers. The Convention of 29 April so forth in the event of irregularities. 1969 on cooperation in administrative and criminal matters as part of the arrangements relating to the realization of the aims of the Benelux Economic Union contains general provisions for that common customs territory. The aim Article 5 of the Supplementary Protocol of the Supplementary Protocol, which provides that where goods are carried is applicable to customs, excise and through one or more Benelux countries turnover-tax legislation, is to establish they must be accompanied by Benelux cooperation in administrative and crimi­ documents. Any "international" docu­ nal matters within the Benelux Customs ment valid in two or more Benelux Union. The existence of the Union was countries is considered a Benelux taken into account when the EEC Treaty document. Hence in appropriate cases a was framed; Article 19, for instance, T document also falls within the ambit of refers to four customs territories, one of the Benelux arrangements and the which is the Benelux. provisions of the Protocol apply as regards the recovery of dues within the Benelux area. This means therefore that if goods intended for a destination outside the Benelux area arc ac­ In addition, Article 233 of the EEC companied by a Community document, Treaty provides that, to the extent to that document is also considered a which the objectives of the Benelux Benelux document during the goods' regional union are not attained by passage through the territory of the application of the EEC Treaty, the Benelux countries. It therefore makes no

(b) The Commission observes that Article 233 of the EEC Treaty 'and Article 59 of Regulation No 542/69 both Basically Pakvries's argument amounts to constitute recognition in Community law the application of a test based on the of the unity of the Benelux territory with destination of the goods in order to regard to the reduction or abolition of decide whether Article 5 of the Sup­ formalities on crossing frontiers within plementary Protocol may be applied. Benelux. As the Benelux constitutes one That test is impracticable. The decisive single territory for that purpose, factor should be, not the goods' documents are no longer required for the destination, which can easily change transit of goods from one Benelux during transit, but the place where the country to another. Article 59 of the goods were actually put into circulation, regulation makes this simplification if this was done lawfully, or the place possible by allowing the application of where they are deemed in law to have Benelux agreements aimed at reducing or been put into circulation. Both the abolishing formalities on crossing Community rules and the Benelux frontiers within Benelux. provisions are based on this test. Having to investigate the destination of goods -might lead to surprises for the Benelux customs authorities in recovery : pro­ ceedings; the destination test is an open It would be unacceptable in practice to invitation to abuses. distinguish, amongst the agreements derogating from the regulation, widely defined is agreements concluded "with a view to reducing or abolishing frontier The argument that Community law formalities at the Belgo-Luxembourg and overrides Benelux law is immaterial in Belgo-Netherlands frontiers", between this case as Article 59 of Regulation provisions which strictly are intended No 542/69 specifically provides for a only to reduce or abolish formalities at derogation in the case of Benelux law. internal frontiers and provisions which regulate responsibility for recovering duties and other charges due in consequence of an infringement or irregularity. In that case Benelux Alternatively it could be argued that the unification could go no further than the provisions laid down by law, regulation application of provisions to reduce or or administrative action in accordance abolish internal frontier formalities in the with which a Member State must, as narrow sense of the word; the procedure provided for in Article 36 (1) of Regu­ within Benelux for the recovery of duties lation No 542/69, recover duties or and charges would no longer be carried other charges payable include the out in accordance with the Benelux provisions concerning the recovery of provisions, which are logically applicable, dues set out in Article 5 of the Sup­ but would have to be carried out in plementary Protocol, for Benelux law

forms part of the provisions laid down by having as their destination another law, regulation and administrative action Benelux country are regarded as goods of the Netherlands. in transit within the meaning of Regu­ lation No 542/69 and are consequently carried under cover of a T 1 document and what the situation would have been if the goods in question had been Asked to explain why it considers the imported with Belgium or Luxembourg application of the provisions contained in as their destination instead of Italy, the Article 5 of the Supplementary Protocol Netherlands Government states that in to the Benelux Convention indispensable principle such goods are to be regarded for the proper functioning of the Benelux as goods in Community transit within Economic Union and why the ap­ the meaning of Regulation No 542/69 plication in a transit case such as this of and are carried under cover of a T Article 36 of Regulation No 542/69 document. However, this also means might disturb the normal operation of that Benelux rules are applicable; a T that union, the Netherlands Government document is considered a Benelux points out that the Benelux Convention document during carriage through and the Supplementary Protocol govern Benelux territory and, for the purposes administrative cooperation within the of the arrangements for the recovery of Benelux Union. Article 5 of the Protocol dues, falls under the Benelux provisions. determines which of the three countries It makes no difference in this regard is to commence recovery proceedings whether the destination of the goods is and the national tariffs applicable. In one of the other Benelux countries or certain circumstances a Netherlands Italy. administrative authority might recover national duties and charges on the basis of the Belgian or Luxembourg tariffs, which demonstrates further-reaching cooperation and integration than that existing in the EEC. Article 59 of Regu­ lation No 542/69 recognizes Benelux IV — Oral procedure economic unification and states that, by way of derogation, Benelux arrange­ ments apply to Community documents. The necessary corollary of this is cooperation in administrative and At the sitting on 29 February 1984 the criminal matters within the Benelux Government of the Kingdom of the Union including regulation of co­ Netherlands, represented by Adriaan operation in matters of administrative Bos, Deputy Legal Adviser at the law and of supervision of compliance. Ministry of Foreign Affairs, and the In particular, close administrative Commission, represented by P. V. F. Bos, cooperation is necessary since by virtue assisted by Raymond Genette, Principal of Article 3 of Regulation No 542/69 the Administrator in the Customs Union Benelux is considered a single customs Service, presented oral argument and territory. answered questions put by the Court.

4 The Collector of Customs and Excise at Rotterdam, applying provisions of law in force in the Benelux Economic Union, namely the Convention of 29 April 1969 on cooperation in administrative and criminal matters in the context of the arrangements for the attainment of the aims of the Benelux Economic Union and, more particularly, Article 5 (2) of the Supplementary Protocol thereto, containing special provisions on taxation (Tractatenblad van het Koninkrijk der Nederlanden [Collection of Treaties and Conventions of the Kingdom of the Netherlands] 1969, No 124), took

PAKVRIES / MINISTER FOR AGRICULTURE AND FISHERIES

action to recover agricultural levies from Pakvries and sent it demands for payment amounting in total to HFL 695 945,30.

5 The plaintiff claimed that the Netherlands Customs Office had no authority to recover the levies, relying on Article 36 of Regulation No 542/69, of which paragraph (1) provides as follows:

"When it is found that, in the course of a Community transit operation, an offence or irregularity has been committed in a particular Member State, the recovery of duties or other charges which may be chargeable shall be effected by that Member State in accordance with its provisions laid down by law, regulation or administrative action, without prejudice to the institution of criminal proceedings."

Since the goods were put into free circulation in Belgium, the authorities competent to effect recovery are therefore, in Pakvries's view, the Belgian customs authorities.

(3) If it is ascertained in which country the goods have been placed in the situation of goods in respect of which the relevant dues have been paid, those goods shall, in derogation from paragraph (1), be subject to the duties, excise and other charges applicable in that country. If the document was not issued or validated in that country, the proceeds of the unconsolidated charges shall, in derogation from paragraph (2), be paid to that country.

The Netherlands authorities take the view that, according to that provision, they are therefore competent to recover the levies.

8 In Order to resolve the dispute, the College van Beroep submitted the following question to the Court for a preliminary ruling:

Must Article 59 of Regulation (EEC) No 542/69, as worded and in force before 1 July 1977, be interpreted as meaning that the Netherlands may apply to a Community transit document a Benelux agreement which provides, in derogation from Article 36 (1) of that regulation, that action to recover charges must be taken by the Benelux Country in which the document was issued, even if it is found that an irregularity was committed in the course of Community transit in another Benelux Country?

9 The plaintiff in the main proceedings believes that Article 59 of Regulation No 542/69 applies only to internal Benelux matters. The exception provided for therein cannot therefore extend to a case in which goods are in transit to another Member State, in this case Italy. Consequently, the rule in Article 36 of the regulation must be applied. Since the goods were put into circulation in Belgium, only the authorities of that State are authorized to recover the duties and other charges due, in accordance with the applicable provisions laid down by law, regulation or administrative action in that State. It is clear in any case from the very wording of Article 59 that its effect is limited to administrative formalities at intra-Benelux frontiers and cannot be extended to substantive rules governing the powers of the Member States or to legislation applicable to recovery.

12 The question whether it is justified to apply the Benelux transit rules instead of the Community rules must be examined in the light of those considerations.

13 Under Title II of Regulation No 542/69 (Article 12 et seq.), the Community transit procedure involves the completion, for all goods in transit, of a T 1 form corresponding to the specimen contained in Annex A to the regulation. That document accompanies the goods to their destination and a copy is

JUDGMENT OF 16. 5. 1984 — CASE 105/83

returned to the office of departure, which enables it to verify whether the transit operation was carried out in the proper manner. Article 21 provides that the copies of the T 1 document must be produced at each office of transit and Article 22 that the carrier must give each office of transit a "transit advice note" conforming to the model shown in Annex E. It should be noted that the T 1 document is also used as a transit document within the Benelux Economic Union.

14 The provisions of Article 36, concerning the establishment of offences or irregularities and the recovery of duties or other charges which may be chargeable if irregularities have occurred during transit, apply in the context of that procedure. The article contains a number of alternative provisions depending on whether it is possible to determine the place where the offence or irregularity was committed. It is clear from those provisions, and in particular those dealing with the case in which it is not possible to determine the place where the offence or irregularity was committed, that the division of powers between the Member States is closely linked to the customs controls carried out at the frontiers of those States and to the completion of transit advice notes at those frontiers.

Costs

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

On those grounds,

THE COURT (Fourth Chamber),

in answer to the question submitted to it by the College van Beroep voor het Bedrijfsleven by order of 20 May 1983, hereby rules:

Article 59 of Regulation (EEC) No 542/69 of the Council of 18 March 1969 on Community transit must be interpreted as meaning that the Netherlands may apply to a Community transit document a Benelux agreement which provides, in derogation from Article 36 (1) of that

Deputy Registrar President of the Fourth Chamber

OPINION OF MR ADVOCATE GENERAL LENZ 1 DELIVERED ON 28 MARCH 1984

Mr President, with the external Community transit Members of the Court, procedure then laid down in Regulation (EEC) No 542/69 of the Council The reference for a preliminary ruling on (Official Journal, English Special Edition which I shall deliver my Opinion today 1969 (I), p. 125), six consignments of concerns the relationship between the frozen boneless beef from Argentinia Benelux and Community transit rules. which were to be transported by road The facts of the case may be summarized from Rotterdam, the office of departure, as follows : to Milan, the office of destination.

A — At the end of 1976 and the The Netherlands Fiscal Intelligence and beginning of 1977 the plaintiff in the Investigation Branch later discovered main proceedings, Pakvries BV, customs that the goods had never been produced agents established in Rotterdam, de­ at the office of destination but had been clared to the Collector of Customs and put into free circulation irregularly in Excise at Rotterdam, in accordance Belgium. On 19 September 1979 the

1 — Translated from the German.