C-328/85

OPINION OF SIR GORDON SLYNN — CASE 328/85

O P I N I O N OF A D V O C A T E GENERAL SIR G O R D O N SLYNN delivered o n 7 April 1987

My Lords, declaration and assessed the customs duty accordingly.

Deutsche Babcock Handel GmbH ('Deutsche Babcock') is a dealer in steel During an inspection at Deutsche Babcock's products. It entered into contracts with premises in May 1981 the customs auth­ Polish and Hungarian undertakings for the orities discovered that turnover bonuses had purchase of such products, including steel been paid. They brought proceedings sheet, structural steel and sheet products against Deutsche Babcock for breach of the other than electrical sheet. It imported the provisions of the Außenwirtschaftsgesetz goods into the Federal Republic of (Foreign Trade Law) and the Außenwirt­ Germany via the Buchen frontier post schaftsverordnung (Foreign Trade Regu­ between July and October 1980, and in one lation), which culminated in a fine of Ď M case in January 1981. In its customs 75 000. It appears that Deutsche Babcock declaration it gave as'the customs value the did not appeal against the fine. gross price agreed with the supplier, instead of the net price in the invoice currency as required in the declaration form. O n 9 July 1982 Deutsche Babcock applied for repayment, in accordance with Regu­ lation (EEC) N o 1430/79 (Official Journal 1979, L 175, p. 1) on the repayment or T h e contracts entered into by Deutsche remission of import or export duties, of Babcock with its supplier in fact provided customs duties in the amount of D M that turnover bonuses should be paid by the 4 598.26, which they claimed were paid in supplier, resulting in a reduction of the excess in view of the turnover bonus. Article gross prices indicated in the invoices. 2 (1) of Regulation N o 1430/79 provides:

The Hauptzollamt (Principal Customs European Coal and Steel Community Office) Lübeck-Ost, refused repayment on applies? the ground that the claim was contrary to the principle of good faith, since in clearing the goods for entry into free circulation (2) If the answer to Question 1 is in the Deutsche Babcock had given false infor- negative: can the Court of Justice mation in order to have the goods imported be asked, in preliminary reference under the conditions laid down in the proceedings, to rule on the interpre- import licence. tation of Regulation (EEC) No 1430/79 where that regulation applies in a Member State only by virtue of its incorporation in national legislation? The dispute came before the Finanzgericht (Finance Court) Hamburg. Deutsche Babcock argued that its claim under Article (3) If the Court of Justice holds that it has 2 (1) of Regulation (EEC) No 1430/79 for jurisdiction to give a ruling on the the repayment of customs duties which were interpretation of Regulation (EEC) N o undeniably paid in excess of the proper 1430/79 in this case: amount could not be defeated by an appeal to the principle of good faith. The Haupt- zollamt replied that Deutsche Babcock's Is the second indent of Article 2 (1) of behaviour at the time of import clearance of Regulation (EEC) No 1430/79 subject the goods disentitled it from recovering the to the principle that applicants must act excess duty. in good faith, so that import duties should not be repaid where, in clearing goods for entry into free circulation, the person liable for import duty indicates a price higher than that which The Finanzgericht found that the applica- he actually paid, taking into account bility and interpretation of Article 2 (1) of discounts and turnover bonuses, and Regulation (EEC) N o 1430/79 and the that statement was made with a view to scope of the general legal principle of good obtaining clearance for entry into free faith were uncertain, and that the outcome circulation on the basis of an export of the case depended on those questions of licence which did not take into account interpretation. Accordingly it stayed the those discounts or bonuses, although an proceedings and, by an order of 14 October import licence would have been granted 1985 which was received at the Court upon application stating the price after Registry on 6 November 1985, referred the deduction of the discounts or bonuses?' following questions to the Court of Justice for a preliminary ruling:

including those covered by the ECSC by the Council as applying to coal and steel Treaty. On the other hand, ECSC customs products, though it seems that there was no duties are still subject to national juris- such minute in this case. In other cases diction.' separate measures have been adopted under the two Treaties even if in similar terms — e. g. Council Regulation (EEC) N o 3017/79 and Commission Recommendation 3018/79/ECSC 'on protection against It also states: 'If Regulation (EEC) N o dumped or subsidized imports from 1430/79 is not directly applicable, it has in countries not members of the EEC and the any event been incorporated into German ECSC respectively*. law by Article 81 of the Zollgesetz (Customs Law)'. That article provides: 'Regulations of the EEC which govern the customs treatment of goods shall apply mutatis mutandis to the customs treatment of The question, however, is whether an EEC goods subject to the ECSC Treaty'. regulation can validly deal with coal and steel products or, as at first sight might seem to be the case, whether the two Treaties deal with distinct and separate Communities, having separate rules and T h e first question raises an important issue. requiring separate procedures. Only the Commission has dealt with it and the Commission proposes that it should be answered affirmatively. Without criticizing the parties in any way, and despite the very fair submissions of the Commission which The interaction generally between the two reveal some of the difficulties, it is unfor- Treaties was canvassed in argument in the tunate that the Court does not have the Opinion in Case 1/75 [1975] ECR 1355 benefit of the contrary argument in depth. and, more particularly, in Case 36/83 Mabanafi v Hauptzollamt Emmerich [1984] ECR 2497, but it was not necessary for the matter to be decided or commented on by the Court. In the first place it is plain that this regu- lation was made only under the EEC Treaty by reference to Articles 43 and 235, Article 10 (1) thereof being mentioned in the The Commission contends, first, that the recitals. There is no reference to the ECSC EEC Treaty does not deal with prescribed Treaty or to coal and steel products. goods. It is general in many of its provisions and there is no reason why coal and steel products should not be covered by its terms. The counter-argument, however, seems to Can a regulation under the EEC Treaty be equally tenable that since there is a deal with products falling within the ECSC specific Treaty dealing with coal and steel, Treaty? There is no doubt that regulations the EEC Treaty should be read as dealing made under the EEC Treaty have in fact with all other products. purported and been intended to cover coal and steel products, sometimes it seems backed up by a minute of the Council. In such cases, even if made under the EEC Of more importance are the terms of Article Treaty in general terms, they were accepted 232 of the EEC Treaty which provides:

'(1) The provisions of this Treaty shall not That reading seems to me to be consistent affect the provisions of the Treaty with the decisions of the Court in Joined establishing the European Coal and Cases 188 to 190/80 France, Italy and Steel Community, in particular as United Kingdom v Commission [1982] ECR regards the rights and obligations of 254-5 and in Case 239/84 Gerlach & Co. Member States, the powers of the BV v Minister for Economic Affairs institutions of that Community and the (judgment of 24 October 1985 [1985] ECR rules laid down by that Treaty for the 3507. In the former case a directive was functioning of the common market in interpreted as not applying to undertakings coal and steel. affected by the rules of the ECSC Treaty, and therefore as being valid. It would have been invalid if it had affected Member States and undertakings on* the market in coal and steel because the ECSC Treaty 'itself contains rules' affecting such Member (2) The provisions of this Treaty shall not States and undertakings. Such a decision derogate from those of the Treaty seems to me to leave open the possibility establishing the European Atomic that if there had been no such rules the Energy Community. ' EEC directive might have dealt with matters affecting coal and steel. In the latter case the Court found that rules as to anti- dumping existed under the ECSC Treaty so that an EEC regulation on anti-dumping could not be read as applying to products falling within the ambit of the ECSC Thus the provisions of the EEC Treaty, and Treaty. It followed from the provisions of a fortiori subordinate legislation made under Article 232 of the EEC Treaty that 'the it, are not to 'affect the provisions' of the rules of the ECSC Treaty and all the ECSC Treaty or to 'derogate from' the provisions adopted to implement that Treaty European Atomic Energy Treaty. Does this remain in force as regards the functioning mean that the EEC Treaty is not concerned of the common market in coal and steel, with coal and steel and that legislation made despite the adoption of the EEC Treaty'. under it may not make rules in respect of coal and steel or does it have a more limited meaning? In my view the provision has a more limited meaning. It would have been perfectly simple to provide that nothing in the EEC Treaty related to coal and steel products or to the coal and steel industry if that had been intended. That was not done. Instead the limitation imposed is that the provisions of the EEC Treaty shall not 'affect the provisions' of the earlier Treaty, in particular as regards the matters specified- I read that as meaning that the EEC Treaty may apply to coal and steel except to the In none of the four cases mentioned is it extent that matters are dealt with in the said that the EEC Treaty cannot apply to ECSC Treaty or in rules made under it; in coal and steel. Equally none of them says so far as the latter has occupied the ground that it can. The tenor of the latter two the EEC Treaty provisions are not to have decisions, however, seems to me to be that effect. the limitation on powers under the EEC

T h e Commission has drawn attention t o the financial provisions of the ECSC Treaty in Such a literal reading is not inconsistent Articles 49 et seq. and Chapter X dealing with the aims of the Treaties. Where matters with commercial policy. The latter seems to are not reserved or dealt with under the me particularly relevant since: (1) the ECSC Treaty and where Member States powers of Member States in matters of have not entered any reservations as to commercial policy are not to be affected by measures adopted, the cohesion of the the Treaty save as otherwise provided Communities and their administration are therein (Article 71) (which may be furthered by a common system of adminis- contrasted with Article 113 of the EEC tration and common rules. Treaty), and (2) the Member States have a discretion to fix customs duties on coal and steel between, but only between, the minimum and maximum rates which may be Does this EEC Regulation, however, fixed by decision of the Council (again impinge on the powers of the governments which may be contrasted with the Common of Member States in matters of commercial Customs Tariff to be set up under the EEC policy (Article 71, ECSC Treaty) or on the Treaty). rights of Member States under the ECSC Treaty (Article 232, EEC Treaty) or affect their retained fiscal powers?

It is obviously arguable that these two sets of customs provisions are to be dealt with separately under the respective Treaties and If this regulation affected the rates or that any provisions dealing with the fixing nomenclature of tariffs for coal and steel

products it seems to me prima facie (though referred to in the first question as changing in the absence of argument on the point) that position. that it would be pro tanto invalid or inap- plicable to ECSC products. It does not, however, do so. It is limited to laying down the cases in which and the conditions subject to which refunds are to be made or I would accordingly answer the first duties remitted. I am not satisfied that this question in the affirmative as the matter falls within 'commercial policy' Commission proposes. within the meaning of Article 71 of the ECSC Treaty or that it is dealt with by Article 71 of the ECSC Treaty, which is limited to the fixing of rates within a range prescribed by the Council.

I would payable. In all these situations there never accordingly answer the second question in was due, in whole or in part, a customs the negative. duty, and procedure regulating its repayment or remission does not, in any real sense, detract from fiscal sovereignty. Other provisions of the regulation define the cases in which duties either must or may be repaid. They are, as I read them, providing As to the third question, the Hauptzollamt the framework in which Member States are has submitted observations.

Treaty. I do not read the amendments of good faith does not bar its claim for repayment in either case.

On the third question the Hauptzollamt expense of the administration is of no considers, first, that the conditions for reim- importance'. bursement laid down in the second indent of Article 2 (1) of Regulation No 1430/79 are not fulfilled: as the recitals to the regu- lation show, that provision is aimed at over- payments due to bona fide mistakes, not The second indent of Article 2 (1) of Regu- where false statements are made, as here. lation No 1430/79 allows import duties to Secondly, the Hauptzollamt submits that the be repaid or remitted where the competent provision must be read subject to the authorities are satisfied that the amount of principle of good faith, and a reimbur- such duties 'exceeds for any reason the sement in the present case would be amount lawfully payable'. contrary to that principle as it would result in the plaintiffs obtaining an advantage as against honest traders. Moreover, it would prevent proper supervision of imports and the taking of effective measures to limit The words 'for any reason' are clearly very imports. If the bonuses had been declared, wide. They must, however, in my view be anti-dumping measures could have been read as meaning any lawful reason. They adopted. It is not correct that the company cannot cover the situation where a person would have received a licence if it had knowingly makes false statements as to the stated the correct price. Further, the fact price of goods, which lead to a higher that a fine may be imposed does not exclude assessment of duty than he would have been the possibility that repayment of the duty liable to pay, in order to obtain a licence can also be refused. which he knows requires a true statement of the price. Moreover, the preamble to the regulation shows that reasons such as genuine mistake or miscalculation were envisaged. The words 'for any reason' must be read in the context of the regulation as a The Commission submits that the rights and whole. There is nothing to indicate that obligations laid down by Regulation No deliberately false statement can be the basis 1430/79 must be exercised according to the for a claim that excess duty has been paid. principle of good faith, and accordingly proposes the following answer to the third question :

Accordingly, in my opinion, the answer to the national court should be on the following lines:

'(1) Council Regulation (EEC) N o 1430/79 is directly applicable to goods to which the ECSC Treaty applies.

(2) The second indent of Article 2 (1) of Regulation (EEC) N o 1430/79 is to be interpreted as meaning that import duties do not have to be repaid where, in clearing goods for entry into free circulation, the person liable for import duty indicates a price higher than that which he actually paid, taking into account discounts and turnover bonuses, and that statement was made with a view to obtaining clearance for entry into free circulation on the basis of an export licence which did not take into account those discounts ör bonuses, even though an import licence would have been granted upon application stating the price after deduction of the discounts or bonuses.'

The costs incurred by the Commission in these proceedings are not recoverable. The costs of the parties to the main action fall to be dealt with by the national court.