C-446/93

O P I N I O N O F MR COSMAS - CASE C-446/93

OPINION OF ADVOCATE GENERAL COSMAS delivered on 29 June 1995 *

1. The questions referred to the Court by 2 July 1979, 2 as amended by Council Regu- the Tribunal Tributário de Segunda Instância lation (EEC) N o 3069/86 of 7 October (Customs Court of Second Instance), Lis- 1986, 3 Article 5(2) of Commission Regu- bon, for a preliminary ruling under Article lation (EEC) N o 3799/86 of 12 December 177 of the EC Treaty arose in the context of 1986, 4 together with the validity of Article proceedings brought by the Sociedade de 4(2)(c) of aforementioned Regulation Exportação e Importação de Materiais Lda No 3799/86. (hereinafter 'SEIM') before the Tribunal Tributário de Segunda Instância, Lisbon.

I — Relevant legislation and case-law 2. The national court seeks a determination of the legal nature of a decision refusing an application for remission of import or export duties payable and for an interpretation of the provisions laying down the conditions of acceptance of such a request in the light of the general principle of equity governing the relevant legislation.

6. Title I of the regulation in question deter- mines the cases (A, B, C, D and E) and the procedure for repayment of import duties 2. Import duties shall be repaid or remitted erroneously levied on the remission thereof. for the reasons set out in paragraph 1 upon submission of an application to the appropri- ate customs office within 12 months from the date on which those duties were entered in the accounts by the authority responsible for their collection.

7. Article 13(1) and (2) of Regulation N o 1430/79, as amended by Council Regulation However, the competent authorities may N o 3069/86 of 7 October 1986 (Article 1(6)), permit that period to be exceeded in excep- lays down certain situations which may give tional cases where there is good reason for grounds for the repayment of import duties doing so.' erroneously levied or for the remission of import duties. More particularly it provides:

8. Article 13 of Regulation N o 1430/79 constitutes a general equitable provision, as the Court has emphasized on several occa- sions. 5 It has also determined the limits

' 1 . Import duties may be repaid or remitted 5 — See, for example, judgments in Case 283/82 Papierfabrik in special situations other than those referred Schoellershammer v Commission [1983] ECR 4219, para- to in Sections A to D, which result from graph 3, and in Joined Cases 244/85 and 245/85 Cereal- mangimi and ftalgrani v Commissio-.i [1987] ECR 1303, circumstances in which no deception or paragraph 10.

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referred to in that list constituted a special decide on applications for the repayment or situation within the meaning of the applica- remission of import or export duties payable: ble Community legislation. 8

'In all cases the authorities competent to 12. Article 16 of Regulation No decide on applications for the repayment or 1430/79 determines the procedure to be remission of import or export duties shall be observed on lodging an application for those of the Member States where those remission of import duties payable: duties were entered into the accounts.'

'Applications for repayment or remission of 14. Moreover, Commission Regulation import or export duties must be submitted (EEC) N o 1574/80 of 20 June 1980 lays to the customs office where the duties in down the provisions for the implementation question were entered in the accounts, unless of Articles 16 and 1 7 9 of Regulation No the competent authorities designate another 1430/79. Article 7(1) determines as follows: office for this purpose.

'When the decision-making authority pos- Applications must be accompanied by all the sesses all the necessary information, it shall evidence in the applicant's possession, so that give its decision on the application at the ear- the competent authorities may decide on the liest opportunity and notify the applicant in application taking due account of the reasons writing of that decision.' put forward by him. Where they consider it necessary, the competent authorities may lay down a time-limit for the production by the applicant of additional evidence.'

In all other cases it shall submit the case to the Commission for a decision, in accord- ance with the procedure laid down in Arti- ' 1 . ... cles 7 to 10. The relevant documents submit- ted to the Commission shall contain all the information required to enable a comprehen- sive examination of the case to be carried out.

2. Where the competent authority of a Member State establishes that the grounds on which an application is made under Arti- cle 13(2) of the basic Regulation I 0 are based solely on one of the situations described in Article 4(2) it shall not repay or remit t h e amount of import duties concerned.' As soon as it receives the relevant documents the Commission shall inform the Member State concerned accordingly.

Article 6

Should it be found that the information sup- ' 1 . Where the competent authority of a plied b y the Member State is not sufficient to Member State cannot decide, by reference to enable a decision to be taken on the case

10 — That is to say Regulation N o 1430/79. 11 — That is of Regulation N o 1430/79.

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17. Subsequently, the German customs authorities invalidated the certificates of ori- gin on the ground that they considered them to have been improperly issued, and notified the Portuguese authorities thereof. The definitive inspection department of the 12 — Council Regulation (EEC) N o 1697/79 of 24 July 1979 on the post-clearance of import duties or expon duties which Oporto customs authority took action for have not been required of the person liable for payment on goods entered for a customs procedure involving the obli- the post-clearance recovery of import duties gation to pay such duties (OJ 1979 L 197, p. 1). That regu- which resulted in an assessment of ESC lation was repealed by Council Regulation (EEC) N o 2913/92 of 12 October 1992 on the common customs code, 7 660 587 as the amount payable. mentioned in footnote 2 above.

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SEIM submitted therefore that the compe- — whether the criteria for the application of tent authorities were entitled not to claim Article 5(2) of Regulation N o 1697/79 post-clearance recovery of the amount are satisfied is a matter to be verified by sought to be recovered on the ground that the competent authorities of the Member the person concerned acted in good faith. It State which assessed the amount due; requested that its application be transferred to the Directorate-General for Customs so that that Directorate might refer the matter to the Commission of the European Com- munities for a decision on whether to collect the amount in question, in accordance with — the authorities which issue the EUR the provisions of Commission Regulation 1 movement certificates are entitled to (EEC) N o 1573/80 of 20 June 1980. 1 3 carry out post-clearance checks;

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— a decision of that kind, given the sum assessed which would require a decision by claimed (greater than ECU 2 000), is a the Commission. It is that measure, it matter for the Commission of the Euro- emphasized, which entailed an appeal to a pean Communities, in accordance with higher authority and which was accordingly Commission Regulation N o 1573/80; open to challenge.

— the same result would be achieved if 25. The national court observes that, recourse were had to Article 13(1) of although SEIM was requesting a decision not Council Regulation N o 1430/79 of 2 July to proceed with recovery and was not apply- 1979. ing for remission of the amount of import duties assessed, which it moreover did not pay, the Directorate-General for Customs considered that an application for remission had been made, since that was how he con- strued SEIM's request for the file to be sub- 22. In its defence to the action for annul- mitted to the Commission for a decision as ment, the defendant claimed that it was com- to whether to effect post-clearance recovery petent to effect post-clearance recovery since of the import duties. it is only in the event of a decision not to effect recovery that the Commission inter- venes, that is to say when the duty recover- able exceeds E C U 2 000. III — The preliminary questions

23. The prosecuting authority considered that SEIM's application to the Oporto Cus- 26. In order to resolve the questions which toms Directorate constituted an additional in its view arose, the national court submit- application for relief and that, consequently, ted the following four questions to the the contested decision given on its applica- Court for a preliminary ruling: tion simply confirmed the notice of assess- ment of duties. For that reason it suggested that the application be rejected.

in Council Regulation (EEC) No N o 3799/86 of 12 December 1986 to 1430/79 of 2 July 1979, does a decision assess the application for remission of of the national customs authority dis- import duties from the point of view of missing an application for remission of the general principle of equity set out in duties in accordance with Article 7(1) of Article 13(1)? Commission Regtãation (EEC) No 1574/80 of 20 June 1980 involve the application of substantive tax provisions or provisions of Community adminis- trative law, or was it adopted by the customs service acting as a tax authority (d) Is Article 4(2)(c) of Regulation N o or as an administrative authority prop- 3799/86 of 12 December 1986 invalid erly so called? What is the legal nature inasmuch as it restricted special cases of of that decision? remission of payment beyond that which is necessary in order to safeguard other Community interests, thereby infringing Article 13(1) of Regulation N o 1430/79?'

(b) Is the phrase referring to duties which IV — Replies to the preliminary questions have not yet been paid in Article l(2)(d) of Regulation N o 1430/79 to be inter- preted restrictively as meaning duties whose payment has been deferred?

A — The first question

28. In its observations to the Court the 30. As explained in part II of the order for Commission raises the question of the reference Portuguese law distinguishes admissibility of the preliminary question. It between customs duty cases which come considers that the question submitted does within the jurisdiction of the Tribunal Fiscal not seek the interpretation of the relevant Aduaneiro and administrative matters con- provision of the regulation so as to ensure cerning taxation in which the referring court the uniform application of Community law has jurisdiction. To the first category belong but that the Court is asked to rule at large on all cases concerning the assessment of taxes the legal nature of a decision rejecting an in the exercise of fiscal powers whilst the application for remission in order to deter- second category comprises all those cases mine under national law the court with juris- which although they do not concern the diction in the matter. notice of assessment itself are connected with it and concern the administrative powers of the customs authorities, that is to say relate to applications against administrative measures concerning customs matters.

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or hypothetical question unrelated to the regards national law. There is therefore some subject-matter of the main proceedings, as purpose in informing the national court of the Commission maintains in its observa­ the rules of Community law which may help tions; on the contrary, the interpretation to solve the problem of jurisdiction with 18 sought is directly linked to the solution of which it is faced.' the question pending before the national 1Ŕ court; it is therefore right for us to proceed in that direction.

18 — See also Foglia and Novello (cited above at footnote 14), 16 — See Foglia v Novello, paragraph 21, cited above in footnote paragraph 21, the Dzodzi judgment (cited above in footnote 14, and the judgments in Joined Cases C-297/88 and 16), paragraphs 39 and 40, the judgment in Gmurzymka- C-197/89 Dzodzi [1990] E C R 1-3763, paragraphs 39 and Bscher (cited above in footnote 16), paragraph 20, and the 40, and in Case C-231/89 Gmurzynska-Bscher [1990] E C R judgments in Case C-343/90 Lourenço Dias [1992] ECR 1-4003, paragraphs 22 and 23. 1-4673, and Case C-83/91 Metličke [1992] E C R 1-4871. 17 — Judgment in Case 179/84 Bozzetti [1985] ECR 2301, para­ 19 — Council Regulation (EEC) N o 2144/87 of 13 July 1987 on graphs 17 and 18. customs debt, OJ 1987 L 201, p. 15.

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'(a) the placing of goods liable to import 37. Under Article 8(l)(a) of Regulation No duties in free circulation ...; 2144/87 a customs debt is extinguished:

'by payment of the amount of the import ... duties payable on the goods in question or, where appropriate, by remission of that amount pursuant to the Community provi- (b) the unlawful introduction into the cus- sions in force'. toms territory of the Community of goods liable to import duties ...'.

38. It follows from the abovementioned pro- visions of Regulation N o 2144/87, from the provisions of Regulation N o 1697/79 on post-clearance recovery of import or export duties, and from the provisions of Regu- lation N o 1430/79 on the repayment or Article 7 of that regulation provides that the remission of import duties that, from the moment in time to be taken into account in moment of assessment of the amount of determining the amount payable is the time import duties payable, the decision in ques- when the customs debt is incurred. tion begins a life cycle which ends with the approval of the application for remission of the amount in question.

the import duties assessed, either wholly or 41. Judged by its effects, the decision to in part, as laid down in Article l(2)(c) of reject an application for remission forms part Regulation N o 1430/79 in conjunction with of the overall procedure commencing with the provisions of Regulation N o 1574/80, or the imposition of (in this case post-clearance to reject the application. All the actions recovery) customs duties which in the end taken by the deciding authority at that stage does not have any effect on and does not of the examination of the application con- alter the obligation to pay the post-clearance cern the customs duty liability itself. Nor do amount determined by the authorities. But I they differ in regard to the type of function do not believe that it is possible under the exercised (customs duty or administrative), aforementioned Community legislation to from the actions it takes when examining the differentiate according to its effects the matter with a view to the imposition of post- refusal decision from a decision approving an clearance recovery import duties. Thus in application for remission because in both both cases it is acting in the exercise of its cases the same rules of Community customs customs function under the relevant legisla- law are being applied and the deciding auth- tion, and is applying substantive customs ority is acting within the context of the func- law. tion assigned to it by the relevant provisions of Community law, that is to say customs law. 2°

42. Accordingly I suggest the following reply be given to the first question:

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the repayment or remission of import or to Regulation No 1430/79. The second export duties, rejecting an application for recital mentions that 'the amount of the repayment or remission of duties payable, is import duties paid or deferred may prove to adopted in pursuance of rules of substantive be higher than that legally due ... owing to customs law in the context of the customs the application of inaccurate or incomplete function exercised by the customs authori- tax criteria, in particular with regard to the ties. It is for the national court to draw the type, value or origin adopted for determining consequences from that finding in order to this amount ... in these cases, it is justifiable determine whether it has jurisdiction in the either to repay or remit the sums not due'. matter.'

B — The second question 46. The national court relies on one further argument in order to support the abovemen- tioned view. The national court is strength- ened in its view by the provision contained in Article 2(2) of Regulation N o 1430/79 of a three-year period for the submission of an application for remission or repayment, 43. The national court asks whether Article whereas during the relevant period in which l(2)(d) of Regulation N o 1430/79 which the dispute arose under the auspices of refers to duties which have not yet been paid Council Regulation 78/453/EEC 2 ' a grant of is to be interpreted restrictively as meaning the period for deferred payment was 30 days duties whose payment has been deferred. (Article 3) and was always subject to the provision of appropriate security by the per- son concerned (Article 2).

which is to facilitate payment of the amount wording of the provision contained in Arti- of import duties payable. cle l(2)(d) of Regulation No 1430/79 it may be observed that 'remission' means 'the com- plete or partial waiving of import or export duties which have been entered in the accounts by the authority responsible for their collection, but which have not yet been 47. The Commission maintains that the ref- paid'. Thus, on a literal construction of the erence in the second recital to 'the amount of provision laying down the conditions for the import duties ... deferred' 22 is merely a remission it would appear that it is not nec- reference to a situation provided for and essary for there to have been a prior defer- governed by Directive 78/453 and had no ment of payment in order to enable the per- other purpose than to point to an existing son liable to apply for remission. system alongside which the new system established by Regulation N o 1430/79 was to take its place, whereby deferment of pay- ment is to facilitate payment of the amount of duties payable in order to ensure equal treatment of economic operators in the levy- ing of import and export duties.

for the grant of deferment and for approval they should function independently, and nei- of an application for remission, I consider it ther should impinge on the autonomy of the necessary to examine the purposes underly- other. The provision of a brief time-limit for ing deferment and remission respectively. deferment is not in contradiction with the determination of a different period (longer in this case) for the submission of an applica- tion for remission of an amount of import duties payable. For that reason as well I can- not regard the prior grant of deferment as a precondition of remission. If it were so, the 52. When the competent authority assesses acceptance of a narrow construction of Arti- the amount of duties on the importation of cle l(2)(d) of Regulation N o 1430/79 would products and their placing in free circulation, have the consequence of frustrating the pur- the importer is as a matter of principle pose pursued by the procedure for the obliged to comply with the assessment and approval of an application for remission of to pay the amount due. Under Directive import duties, given that the submission of 78/453 deferment of payment may be the application for remission would have had granted after assessment of the amount due, to be made within the shorter period for on provision of a guarantee, as a facility for deferment of payment. the person liable so that he may pay the amount without being pressed, though the obligation to pay remains.

53. The objective of the abovementioned Article 13 of Regulation N o 1430/79, which provides for the repayment or remission of import duties under certain conditions, is to 55. Consequently, the second preliminary limit post-clearance payment of import question should be answered as follows: duties to cases in which such payment is jus- tified and compatible with a fundamental principle, such as the principle of the protec- tion of legitimate expectations. 23

56. For reasons of logic I have brought for- ward the examination of the fourth question because I consider it essential to resolve the issue raised in it by the national court before 59. In fact it may be inferred from the then proceeding to reply to the third ques- Court's case-law 24 that the principle of pro- tion. portionality demands the existence of a reasonable connection between the objectives pursued by the Community in the general interest and the measures adopted which affect the rights of citizens. Thus, the means must be necessary and appropriate and the disadvantages may not outweigh the advan- tages so that there is, with regard to the aim 57. In the fourth question raised by the pursued, a disproportionate and intolerable national court, the Court is asked to state interference, impairing the very substance of whether Article 4(2)(c) of Regulation N o those rights. 3799/86 is invalid inasmuch as it restricted the special cases of remission of payment beyond that necessary in order to safeguard other Community interests, thereby infring- ing Article 13(1) of Regulation N o 1430/79.

61. Under those circumstances, the means 63. I now turn to an examination of the final chosen by the Commission appears in prin- element of the principle of proportionality in ciple to be appropriate and necessary in order to complete the examination of the order to achieve the objective sought by the validity of Article 4(2)(c) of Commission abovementioned provision of Article 4(2)(c) Regulation 3799/86, namely whether the dis- of Regulation N o 3799/86 because the way advantages of that provision outweigh its to ensure the effectiveness of the whole sys- advantages. My examination centres on tem of post-clearance checks is in fact to whether the Commission's measure is dis- provide the competent authorities with the proportionate in relation to the enabling possibility of rejecting applications for provision contained in Council Regulation remission based on the bona fide production N o 1430/79. of documents issued unlawfully.

65. I consider that it may be inferred from the foregoing analysis that the core of the 25 — Judgment in Joined Cases 98/83 and 230/83 Van Gend & Loos v Commission [1984] ECR 3763, paragraph 13. 'right to remission' is not affected by Article

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4(2)(c) of Regulation N o 3799/86, nor is the D — The third question general rule of equity enshrined in Article 13(1) of Regulation N o 1430/79 affected, as the national court asserts; it is an implement- ing provision which prevents that article from being interpreted in too broad a man- ner which in the end would not correspond to the wishes of the Community legislature. That is borne out by the phrase 'and without prejudice to other situations to be considered 67. The Court is asked to rule whether, case by case' which prefaces Article 4 of given that SEIM relied on facts capable from Regulation N o 3799/86, and also by the a legal point of view of falling within the phrase 'the following situations shall not by special situations resulting from circum- themselves be special situations resulting stances in which there is no deception or from circumstances in which no deception or obvious negligence on its part, the national obvious negligence may be attributed to the customs authority was obliged in accordance person concerned'. Moreover, both the with Article 13(1) of Regulation N o Commission and the Portuguese Govern- 1430/79 and in accordance with Article 5(2) ment in their observations stress these points of Commission Regulation N o 3799/86 to in order to demonstrate the validity of Regu- consider the application for remission of lation N o 3799/86. import duties payable in the light of the gen- eral equitable provision contained in the abovementioned Article 13(1).

69. At the outset I would point out that as whether they are compatible with Commu- the Court has consistently held, 2b the afore- nity law. 27 mentioned Article 13 which contains a gen- eral equitable provision is intended to limit the post-clearance payment of import duties to the extent to which such payment is justi- fied and compatible with the fundamental principle of the protection of legitimate expectations. The Court does not refer to a 71. According to the submissions of the Por- general principle but simply to a general pro- tuguese Government, since the national vision and that leads me, after considering authority was not entitled to reclassify the the arguments of the Portuguese Govern- application submitted by SEIM, much less ment and of the Commission, to examine the was it obliged to examine it under Article validity of that provision in the present case 13 of Regulation No 1430/79. Even if it was with particular attention avoiding any gener- obliged to conduct that examination the alization which could create confusion. decision would be in the negative because Article 4(2)(c) of Commission Regulation N o 3799/86 does not permit the automatic acceptance of an application for remission where documents are produced, even in good faith, which are subsequently found to be forged, falsified or not valid for the pur- pose of securing preferential tariff treatment of imported goods.

76. Moreover, under the terms of Article 74. When an application for remission of 5(2) of Regulation N o 3799/86 the national import duties is submitted the national cus- authority is the sole authority competent to toms authority is entitled to examine it in the verify whether the grounds relied on corre- light of the general equitable provision con- spond without doubt to one of the situations tained in Article 13(1) of Regulation N o provided for in Article 4(2) and, in the affir- 1430/79, as amended, provided that the mative, to reject the application for remission application submitted is formulated in such a of import duties or, under Article 6(1) of the way as to clearly show that the precondi- same regulation, to submit the application to tions for the application of that article are the Commission for a decision. satisfied, including those contained in the subsequent implementing provisions of Commission regulations (principally Article 2 et seq. of Regulation N o 1574/80 in con- junction with Article 4 et seq. of Regulation N o 3799/86). 77. In conclusion I consider that the answer to the third preliminary question should be as follows:

(1) A decision under Article 7(1) of Commission Regulation (EEC) N o 1574/80 of 20 June 1980 laying down provisions for the implementation of Articles 16 and 17 of Council Regulation (EEC) N o 1430/79 on the repay- ment or remission of import or export duties, rejecting an application for repayment or remission of duties payable is adopted in pursuance of rules of substantive customs law in the context of the customs function exercised by the customs authorities. It is for the national court to draw the consequences from that finding in order to determine whether it has jurisdiction in the matter.

(2) Article 1(2)(d) of Council Regulation (EEC) N o 1430/79 of 2 July 1979 on the repayment or remission of import or export duties does not require deferment of payment to precede acceptance of an application for remission of an amount of import duties payable.

(3) Article 4(2)(c) of Commission Regulation (EEC) N o 3799/86 of 12 December 1986 laying down provisions for the implementation of Articles 4a, 6a, \\a and 13 of Council Regulation (EEC) N o 1430/79 is warranted by the terms of Article 13(1) of Council Regulation (EEC) N o 1430/79 and does not infringe the principle of proportionality.

(4) Where a company, in an application for remission of import duties, relies not only on the bona fide production of documents subsequently found to be forged, falsified or not valid for the purpose of preferential tariff treatment,

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