C-93/96

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OPINION OF MR FENNELLY — CASE C-93/96

valuation of goods for customs purposes as (b) the financing arrangement has been made 'the transaction value, that is, the price actu­ in writing; ally paid or payable for the goods when sold for export to the customs territory of the Community'. Article 3(2) of Commission Regulation (EEC) No 1495/80 of 11 June 1980 implementing certain provisions of Articles 1, 3 and 8 of Council Regulation (EEC) No 1224/80 on the valuation of goods (c) where required, the buyer can demon­ for customs purposes 3 states, in relevant strate that: part:

— such goods are actually sold at the price declared as the price actually paid or payable, and

'2. Charges for interest under a financing arrangement entered into by the buyer and relating to the purchase of imported goods shall not be included in the customs value determined under Regulation (EEC) — the claimed rate of interest does not No 1224/80 provided that: exceed the level for such transactions prevailing in the country where, and at the time when, the finance was provided.

(a) the charges are distinguished from the price actually paid or payable for the goods;

4. Indústria e Comércio Têxtil SA (hereinaf­ the view that financial charges could be ter 'the applicant') imported two lots of cot­ excluded from the customs value only where ton yarn from Brazil in December 1991, at there was a clear separation between the prices of US $3.26/kg and US $3.94/kg amount of interest and the price paid or to respectively and with 90 days for payment. be paid. Although it acknowledged the dif­ These conditions were stated on the invoices, ference between the CAD and 90-day prices, dated 3 December 1991. It appears from the it did not consider that this difference could order for reference, and from the preceding be equated with a separately stated credit 4 contracts, dated 4 August 1991, that a lower cost. cash-against-documents (CAD) price was also agreed in both cases (US$3.18/kg and US $3.85/kg respectively), but that the appli­ cant exercised its option for a longer pay­ ment period, which choice was reflected in the invoices. The applicant states that the dif­ ference between the two possible prices for 6. The Supremo Tribunal Administrativo each lot arises from the cost of credit at the (the Portuguese Supreme Administrative Lisbon inter-bank offered rate. Court, hereinafter 'the national court') has suspended proceedings in an appeal brought by the applicant against the decision of the Tribunal Tributário de Segunda Instância, and has referred three questions for a pre­ liminary ruling by the Court pursuant to Article 177 of the Treaty establishing the European Community:

3. If the foregoing question is answered in the affirmative, must that increase be applied to the price corresponding to payment CAD or to the price agreed as payable in 90 days?'

Observations 9. Both Portugal and the Commission sub­ mit that the increase should be applied in any case where the price is paid more than 30 days after delivery in the Community. As the Commission sees it, a deferral of pay­ ment, without more, constitutes a real reduc­ tion in price. Article 1(3) of the Regulation 7. Written observations were submitted by imposes an automatic increase in the duty the applicant, the Portuguese Republic and designed to counteract a commercial advan­ the Commission. None of them having asked tage of that type, and thus to prevent the cir­ to present oral argument, the Court decided, cumvention of the anti-dumping duty. In pursuant to Article 104(4) of the Rules of Procedure, to dispense with an oral hearing. order to identify the free-at-Community- frontier price which is subject to the increase, both Portugal and the Commission seek to rely on the concept of customs value, as defined by Article 3 of Council Regu­ lation No 1224/80 and as further elaborated by Article 3(2) of Commission Regulation 8. The applicant argued before the national No 1495/80. court that the increase of 1% on the free-at- Community-frontier price for each month allowed for payment should only be applied 6 — It appears that this would be more beneficial to the applicant where the result is that the price paid by the than using even the unincreased 90-day price as the basis for Community importer where payment is calculating the anti-dumping duty, as this was, as the second

10. Portugal submits that the conditions set whenever a choice exists between immediate out in Article 3(2) of Commission Regu­ and delayed payment and both prices are lation No 1495/80 are not satisfied simply by clearly indicated, so that the customs demonstrating the existence of two distinct authorities can compute the interest rate prices the application of which depends on applied and compare it, if necessary, with the period for payment. The Commission, that prevailing for such transactions in the on the other hand, submits that the existence country in question. In this case, the agreed of two prices corresponding to a choice CAD price would constitute the proper between an immediate and a deferred pay­ price to be taken into account for determin­ ment permits the establishment of the exist­ ing the customs value of the goods in ques­ ence of a financing arrangement, in accord­ tion. In response to a question from the ance with the interpretation of Article 3(2) of Court, the Commission submitted that this Commission Regulation No 1495/80 given would be the case even if the two possible in Wünsche v Hauptzollamt Hamburg- prices were set out, not in the invoice, but in 7 Jonas. The Court stated that 'in the absence a preceding contract document, the buyer of any provision to the contrary, it must be having in the meantime exercised his option considered that where a seller of goods of paying the deferred price. The Commis­ allows the buyer time to pay, that constitutes sion argues that the increase of the net free- a "financing arrangement" within the mean­ at-Community-frontier price by 1% for ing of Article 3 of Regulation No 1495/80 as every additional month by which the period soon as the buyer accepts the deferred pay­ for payment is extended provides an objec­ 8 ment'. The Court added that 'it is not nec­ tive criterion for identifying the sum which essary for the deferred payment to be the is subject to anti-dumping duty. The increase subject of a specific agreement between the of the 90-day price by 2% would result in a seller and the buyer, separate from the agree­ double penalization, as it already contains ment relating to the sale of the imported provision for the cost of credit. goods'. 'Where charges for interest payable as consideration for the deferred payment agreed by the seller are a separate item on the invoice sent to the buyer, it must be con­ sidered that, where there is no objection on the part of the buyer, he has in effect agreed Analysis to the charges for interest relating to the 9 deferred payment'.

no indication that it is to be applied only can have little to do with the actual credit where no credit cost is imposed on the buyer terms agreed by the buyer and seller, irre­ as consideration for deferred payment. Sec­ spective of whether these reflect prevailing ondly, this is not the only conceivable form credit costs. Article 1(3) is designed to iden­ of credit-dumping, as the grant by the seller tify the notional 'real' cost to the buyer of of a very low rate of interest, relative to goods imported into the Community when those prevailing on the market, would also payment of the free-at-Community-frontier afford an advantage to the buyer. Indeed, the price is deferred. That revised cost is then the imposition of a very high interest rate, if it proper basis for the imposition of the anti­ were already agreed that payment would be dumping duty. This is an appropriate policy deferred, would permit the seller artificially choice so long as the objective criterion — a to depress the ostensible basic price of the fixed rate of 1% per additional month's goods in question, and, thus, the anti­ 10 credit — does not diverge unreasonably dumping duty payable. Thirdly, from prevailing market rates, to the detri­ Article 1(3) of the Regulation does not ment of the party responsible for paying the appear to have been designed to counter duty. credit-dumping as such, as the imposition of a 16.6% duty on the estimated monthly credit cost would be a very inadequate response to free or very cheap credit.

15. I accept the Commission's submission, in the light of the decision of the Court in Wünsche, that where two distinct prices can be identified from the invoice or some other contractual document, the one applicable in the case of immediate payment and the other in the case of deferred payment, the condi­ tions set out in Article 3(2)(a) and (b) of 16. The solution to be found requires a bal­ Commission Regulation No 1495/80 are sat­ ance to be struck between the possible use of isfied. The only potentially relevant factual delayed payment as a disguised price reduc­ differences between the circumstances of the tion and delay in payment related to a genu­ present case and those of Wünsche are that ine financing arrangement. The requirements the differences in price are expressed by of Article 3(2) of Commission Regulation absolute amounts rather than by percentages No 1495/80 are intended to strike that bal­ of the prices on immediate payment, and that ance by demanding objective evidence of an the different prices appear in the contracts of arrangement's authenticity. First, it must be sale rather than in the final invoices, the possible to distinguish the interest charges option of deferred payment having already from 'the price actually paid or payable for been exercised. The first point is not mate­ the goods' (Article 3(2)(a)). Secondly, and rial, so long as the absolute difference in closely related, the 'financing arrangement' price is not attributable to any factor other must be made in writing (Article 3(2)(b)). In the present case, the national court states that a lower cash-against-documents price could have been paid regarding both lots. The 12 — Sec, for example, Article 1(3) and (4) of Council Regulation applicant, however, chose to avail of the (EEC) No 864/87 of 23 March 1987 imposing a definitive anti-dumping duty on imports of electric motors originat- right, as agreed, to delay payment by 90 days ing in Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary, Poland and the Soviet Union, OJ 1987 and had to pay the higher prices shown on L 83, p. 1. This measure was reviewed by the Court in the invoices. Provided that the price differ­ Joined Cases C-305/86 and C-160/87 Neotype Techmashex- port v Commission and Council [1990] ECR I-2945. ence can be identified as relating to interest

The increase provided for in Article 1(3) of Council Regulation ( EEC ) No 738 / 92 of 23 March 1992 imposing a definitive anti-dumping duty on imports of cotton yarn originating in Brazil and Turkey is applicable to the free-at-Community- frontier price whenever it is agreed that the goods are to be paid for on a date fall­ ing after the 30th day after their arrival in the customs territory of the Community . In such circumstances , the increase shall be applied to the customs value of the goods , that is, the price actually paid or payable for the goods when sold for export to the customs territory of the Community , exclusive of financing charges distinguished in accordance with Article 3 of Commission Regulation ( EEC ) No 1495/80 of 11 June 1980. Such financial charges shall include the difference between the prices required by the seller upon immediate and deferred payment , where this contractual difference in prices is evidenced in writing and reflects pre­ vailing prices for the goods in question and current interest rates .

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