C-413/96

2. Essentially, the issue here is whether an undertaking which declared goods incorrectly on importation, thereby obtaining exemption II. The main proceedings from customs duties, must pay the normal duty ex post facto in the case where the goods would also have been exempt from duty had

* Original language: German. 4. According to the referring court, the facts 1 — OJ 1979 L 197, p. 1. of the case before it are as follows: over a

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2 — OJ 1987 L 256, p. 1. 3 — OJ 1989 L 282, p. 1. 9 — Commission Regulation (EEC) N o 513/92 of 28 February 4 — OJ 1990 L 247, p. 1. 1992 re-establishing the levying of customs duties on prod- 5 — OJ 1991 L 259, p. 1. ucts falling with C N codes 6401, 6402, 6404 and 6405 90 10, 6 — The full text of the subheading is: '6403: Footwear with outer originating in Thailand, to which the preferential tariff arrange- soles of rubber, plastics, leather or composition leather and ments set out in Regulation N o 3831/90 apply (OJ 1992 L 55, uppers of leather: Sports footwear ... 6403 19 00 Other'. p. 88), and Commission Regulation (EEC) N o 719/92 of 23 March 1992 re-establishing the levying of customs duties on 7 — See footnotes 2 to 5. 8 — The full text of the heading is: '6402: Other footwear with products falling within C N code 6403, originating in Thai- land, to which the preferential tariff arrangements set out in outer soles and uppers of rubber or plastics: Sports footwear Council Regulation (EEC) N o 3831/90 apply (OJ 1992 L 78, ... 6402 19 00: Other.' p. 9).

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reached and the duty accordingly Objections Committee to refer the following re-introduced. questions to the Court for a preliminary ruling:

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or that: B — Analysis

— it is the factual and legal circum- I. Questions 1 and 2 stances at the time when the compe- tent authorities establish that a dec- laration contained an incorrect tariff heading that are conclusive for deter- mining whether an amount is due?

I I . These questions seek to ascertain whether Regulation N o 1697/79, which lays down the rules governing the post-clearance recovery of import duties which have not previously been required to be paid, covers the present case, and thus requires post-clearance recovery (3) (a) What is the legal effect of a decision to be undertaken. Article 1 states that the by the European Commission, after regulation is to determine the conditions for consultation with the Customs Code undertaking post-clearance recovery of import Committee, addressed to a Member or export duties for which, 'for whatever State following a request by a reason, payment has not been required' in Member State to the Committee that respect of goods entered for a customs pro- it take a decision on whether there cedure involving the obligation to pay such was, in specified circumstances, jus- duties. Article 2 lays down the rules gov- tification for granting remission of erning such post-clearance recovery: import import duties, and in which the Com- duties 'legally due', payment of which has mission and the Committee decided not been required of the person liable for that there was no justification for payment, may be recovered. The goods in granting remission of import duties question must have been entered for a cus- referred to in the Member State's toms procedure involving the obligation to request to the Committee? pay such duties. However, it is unclear whether this case at all involves import duties which were payable, but payment of which was not required.

15. That conclusion is also supported by the Court's case-law, such as Pascoal & Filhos, 11 a case involving imports of cod into Portugal. Since the imports carried a certificate of origin 13. But should one take account of this late in Greenland, no duty was initially levied. position in order to decide whether post- However, the authorities of the exporting clearance recovery is permissible? To resolve State subsequendy reported that the certifi- that issue one must first establish which import cate in question 'was not valid. The Court duties are 'legally due' within the meaning of accordingly held that post-clearance recovery Article 2(1). of the customs duties was permissible. 12 It proceeded from the premiss that a customs debt arises when the competent authorities accept the declaration of goods for free cir- culation, basing itself on Directive 79/623/EEC on the harmonisation of provi- sions laid down by law, regulation or admin- istrative action relating to customs debt, 13 14. The Respondent's view is that the term and in particular on Article 3(a) thereof. 14 denotes the import duties due at the time of the declaration. Article 3(a) of Council Regu- lation (EEC) N o 2144/87 of 13 July 1987 on customs debt 1 0 provides that the moment when a customs debt on importation is incurred is deemed to be, inter alia, the moment when the competent authorities accept the entry of the goods for free circula- tion or the time of any other act which, in 16. The Respondent derives further guidance accordance with the provisions in force, has for the interpretation of the term 'import the same effect in law as such acceptance. Accordingly, for a customs debt it is the time of acceptance of the customs declaration that is conclusive, not the time of any subsequent 11 — Case C-97/95 Pascoal & Filhos v Fazenda Pública [1997] ECR I-4209. event such as an inspection; what counts is 12 — Case 97/95, cited in footnote.11, paragraph 36 et seq. 13 — Council Directive 79/623/EEC of 25 June 1979 on the har- monisation of provisions laid down by law, regulation or administrative action relating to customs debt (OJ 1979 L 179, p. 31). 10 — OJ 1987 L 201, p. 15. 14 — Case C-97/95, cited in footnote 11; paragraph 10.

17. Of course, Council Regulation (EEC) 18. That is why, even if Regulation N o 1430/79 of 2 July 1979 on the repayment or 1430/79 does not apply to the present case of remission of import or export duties 16 does (putative) post-clearance recovery, the not bear directly on the present case. It deals, regulation implementing it (Regulation not with the post-clearance recovery of duties N o 3040/83) may none the less provide some not previously required to be paid, but rather guidance as to how the term 'import duties or with the refund or remission of duties. Article export duties legally due' should be inter- preted. The import duties in question are, it provides, those which would have been pay- 15 — OJ 1983 L 297 p. 13. able under the rules in force at the time when 16 — OJ 1979 L 175 p. 1. the goods were accepted for entry.

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21. Here, too, the sole criterion is whether the facts declared when the goods were entered were or were not correct at that time. There is no requirement that account be taken of 20. In principle, of course, that proposition is any subsequent changes. Rather, it is the errors irrefutable. It should, indeed, be borne in subsequently discovered in the original dec- mind that the possibility of post-clearance larations which must be considered. recovery was introduced because the compe- tent authorities' first inspection is effected solely on the basis of the importer's declara- tion. Should those details subsequently prove to have been incorrect, it must be possible for any underpaid duty to be recovered retroac- tively. Moreover, the same conclusion follows from the recitals in the preamble to Regu- 22. This becomes clear if one considers the lation N o 1697/79. It is stated there that the following situation: an importer imports a amount of duties required to be paid may product free of duty on the basis of an incor- prove to be lower than the amount which rect declaration, even though no customs was legally due, either as a result of an error exemption exists in respect of the product in of, inter alia, calculation on the part of the question. Later, the customs authorities dis- competent authorities, or because those authorities used inaccurate or incomplete information, particularly as regards the nature, 17 — First recital in the preamble to Regulation No 1697/79.

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Indeed, it follows from Article 201(2) of the Customs Code that it, too, treats the time of 23. I must also disagree with Skatteminis- acceptance of the entry as the material time. teriet when it cites Article 220(1) of Council Regulation (EEC) N o 2913/92 of 12 October 1992 establishing the Community Customs Code 18 and reads it as requiring circum- stances which arise subsequently to be taken into account. First, that regulation partially replaced the regulation at issue here, and con- 24. It is thus not apparent from the provi- sequently cannot apply to the present case. 19 sions of Regulation N o 1697/79 alone that Second, Article 220(1) in no way requires cir- there is any requirement to undertake post- cumstances which arise subsequently to be clearance recovery in the circumstances of the taken into account. It lays down rules gov- present case. It is not disputed that at the erning the case in which the amount of duties material time, when the customs declaration was accepted (which was formally in order but inaccurate as to the facts), the product in question enjoyed exemption from customs 18 — OJ 1992 L 302, p. 1. duty under the customs quota for tariff 19 — Article 251 of Regulation No 2913/92. heading 6402 ('Shoes with plastic uppers'),

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27. That is why even the judgment in Wün- sche, 20 cited by the Commission, argues rather against the latter's view. The case in question concerned protective measures applicable to 26. I cannot, however, accept that approach, imports of preserved mushrooms which stipu- which separates the declaration of the goods lated that an additional amount be levied on from the granting of the tariff preference. imports exceeding a certain quantity. In the Post-clearance recovery involves determining case before the national court, wild mush- what would have been payable had the goods rooms were imported accompanied by the been declared correctly at the time of entry. appropriate licences, with the result that no In the present case, nothing would have had additional amount was levied. However, to be paid. It is not permissible to ask, as the experts' reports subsequently established that Commission does, whether exemption from the goods were cultivated mushrooms, not duty would have had to have been granted in wild ones. Although the importer thereupon the case of an inaccurate declaration. The question is rather what the situation would have been had the importer or transport 20 — Case C-26/90 Hauptzollamt Hamburg-Jonas v Wünsche undertaking declared the goods correctly. Of [1991] ECR I-4961.

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28. Although the circumstances of Wünsche are not direcdy comparable with the present case, it is apparent from that judgment that the time of the customs declaration was taken to be the material time. It was the fact that no valid licences had been produced at that time 31. Skatteministeriet contends, finally, that it that made post-clearance recovery possible. is also apparent from Regulation N o 3040/83 In the present case, however, the exemption that where quotas exist it is not only the time existed at the time of declaration, and hence when the customs declaration was accepted no duty would have been payable. There was that can be "regarded as being the material no need to submit a licence subsequently in time. It follows from Article 1(2) of that order to obtain exemption from duty. regulation that even if an exemption was in force at the time of acceptance of the entry of the goods into free circulation, such an exemp- tion could be granted only if the maximum quantities for entry into free circulation of the goods in question had not been reached.

29. The fact thus remains that, taking the time of acceptance of the customs declaration as the material time, no customs debt arose. The 32. The Respondent, too, considers that in Commission itself does not dispute that that interpreting Regulation N o 1697/79 it is is the material time. There is no need to con- appropriate to take account of whether a sider the possibility further mooted by the preference scheme exists. It focuses on the Commission of recovery being waived or the purpose of such a scheme: where — as here duties being remitted, since no customs debt — it is for the benefit of developing coun- can be deemed to have arisen. tries, the purpose is to contribute to their

36. A different result might possibly be reached by considering what customs duties the Community waives in the two situations. 34. I shall consider the latter argument first. The amount waived would depend on the As is apparent from the recitals in the pre- level of the normal rate of duty. Where the amble to Regulation N o 1697/79, the justifi- rate for the goods actually exempt is lower cation for post-clearance recovery lies pre- than that for the goods wrongly entered cisely in the fact that inadequate recovery of against that quota, the Community might duty has an adverse affect on the economy of the Community. The dual function of cus- sustain a loss, having waived an amount greater toms duties should be borne in mind when than that provided for. Looking to the amount considering this: they protect the Commu- of duty waived creates no problems in the nity economy and also represent a source of case of a single quota. However, if, as in the revenue for it. Granting exemptions from present case, two parallel quotas are involved, customs duty in order to protect developing each of which provides for complete exemp- countries entails renouncing some of that rev- tion, it is not apparent how an amount to be enue. When a set quota is exceeded, a further paid retroactively could be determined. If one loss of customs revenue may be sustained. applies the provisions of Regulation N o 1697/79, which, as I have demonstrated, takes the time of acceptance of the customs decla- ration as the material time, one reaches the conclusion that in both cases the rate of duty payable was zero. Regulation N o 1697/79 does not provide for the difference between the two rates of duty to be collected or 35. However, the question that arises in the recovered post-clearance. It merely refers to present case is whether, as a result of the amounts of duty that are due but have not incorrect details in the customs declaration, been collected.

37. Were one to follow Skattesministeriet and recalculated. However, it is apparent from refuse exemption from duty altogether pur- Regulation N o 3040/83 that, far from being suant to the provisions of Regulation N o adjusted retroactively, quotas are, if anything, 3040/83, the Community might possibly actually increased — see Article 1(2), third receive an amount of duty greater than it was subparagraph, which provides that in the event entided to. It is questionable whether that of an error on the part of the competent would be a desirable outcome under Regu- authority the duty is to be remitted even if lation N o 3040/83. That regulation is admit- the quota has by then been exhausted. tedly not directly in point; none the less, it may furnish guidance on how to conduct post-clearance recovery where a tariff prefer- ence exists. However, it, too, is predicated on the existence of a single tariff preference, rather than the situation obtaining in the present case, where a preference would have existed even if the declaration had been cor- rect. In the former situation, the Community clearly sustains an easily quantifiable loss if a customs debt is remitted following re-introduction of the normal Community rate of duty; disallowing the 'retroactive' exemption obviates this. 39. That the quota is increased in such cir- cumstances follows from Council Regulation (EEC) N o 3896/89 of 18 December 1989 applying generalised tariff preferences for 1990 in respect of certain industrial products origi- nating in developing countries, 21 the regu- lation which established the preferences at issue here. They were extended by Council Regulation (EEC) N o 3 831 /90 of 20 December 38. Moreover, the issue in Regulation N o 1990 applying generalised tariff preferences 3040/83 is whether an entitlement — exemp- for 1991 in respect of certain industrial prod- tion from duty — may still be allowed after ucts originating in developing countries 22 and the quota has been exhausted. In the present by Council Regulation (EEC) N o 3587/91 of case, however, the exemption has in principle 3 December 1991 extending into 1992 the already been granted. Here, too, it is a moot application of Regulations (EEC) N o 3831/90, point whether the person liable to pay the N o 3832/90, N o 3833/90 and N o 3835/90 duties in question can be excluded from one applying generalised tariff preferences for 1991 quota simply in order to cover the difference in respect of certain products originating in between the amounts of unpaid duty, where developing countries. 23 Thus, the 25th recital the consequence is that he cannot be granted in the preamble to Regulation N o 3896/89, access retroactively to what would have been which corresponds to the 30th recital in the the appropriate quota for him. As I have preamble to Regulation N o 3831/90, provides already shown, he would then have to pay the full amount of duty, and the Community would receive more than it was entitled to. 21 — OJ 1989 L 383, p. 1. The only circumstances in which that would 22 — OJ 1990 L 370, p. 1. not occur are if both quotas were completely 23 — OJ 1991 L 341, p. 1.

40. In the light of the above considerations 43. It remains to consider whether the pur- there is no apparent justification for retroac- pose served by the tariff preferences might tively depriving the Respondent of the exemp- make post-clearance recovery necessary. The tion already granted solely in order to make exemption applied to sports footwear with good a possible loss arising from the differ- leather uppers and to sports footwear with ence in the amounts of duty not collected. It plastic uppers. The incorrect declaration led should be remembered that the Respondent to sports footwear with plastic uppers being was already entitled to an exemption when imported against the quota for sports foot- the declaration was made. wear with leather uppers. It is unclear whether

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that ran counter to the purpose served by the plastic uppers would be imported at the pref­ preferences accorded. erential rate of duty than was provided for under the regulation.

46. Against this, Skatteministeriet points out that such a preferential rate of duty for devel­ 48. Thus, it follows, inter alia, from the pre­ oping countries was the outcome of lengthy amble to Regulation N o 3896/89 2 4 that the negotiations. The level of the maximum import purpose of generalised tariff preferences is to amount thereby set was in no way fortuitous. improve access for developing countries to Community law must be interpreted and the markets of the preference-giving coun­ applied in such a way as to ensure that the tries. 2 5 In order to give the beneficiary coun­ quantity of goods imported at the preferential tries a more equitable access to the preferen­ rate of duty does not exceed the precise quan­ tial advantages, the Community decided to tity agreed on and specified in the regulations in question. Were post-clearance recovery of the duty to be waived in the present case, the 24 — Cited in footnote 21. result would be that more football boots with 25 — Second recital.

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51. Admittedly, as Skatteministeriet submits, a waiver of post-clearance recovery will entail more footwear with plastic uppers being imported than •was intended, and less foot- 49. In that connection, Skatteministeriet refers wear with leather uppers (the case-file does to the Commission decision on the possibility not indicate that the quota for footwear with of remitting the customs debt in this case. In leather uppers was re-opened and further that decision the Commission established that duty-free imports allowed). Thus, the quota the two quotas pursued different economic for footwear with leather uppers was not fully objectives and consequently could not be exhausted, while that for footwear with plastic interchanged. It concluded that the customs uppers was exceeded. Even if the intention debt could therefore not be remitted. that a particular quantity of leather footwear be supplied was not complied with in this case, the differences between the two quotas are so small as to preclude any presumption that Thailand suffered any harm. The quotas concerned the same category of products (in 26 — Fifth recital. 27 — Under Regulation N o 3896/89, for instance, the tariff ceiling both cases, [sports] footwear, the only differ- for heading 6402 ('Other footwear with outer soles and ences concerning some of the material); the uppers of rubber or plastic') was ECU 1 100 000, while the ceiling for heading 6403 ("Footwear with outer soles of quotas expired practically simultaneously, and rubber, plastic, leather or composition leather') was ECU 4 000 000. the same — total — exemption from customs

53. There are also considerations of fairness and proportionality to be borne in mind. At most, a loss might be sustained by a leather footwear supplier denied retroactive access to the quota by a decision not to re-allocate. However, one may assume that he will have already sold the footwear which he imported, 56. The final matters to be considered in with the duty he paid being added to the regard to Questions 1 and 2 concern two price; he will probably have sustained virtu- arguments raised by the Respondent. First, ally no loss at all. there is the argument that post-clearance recovery in the present case would infringe the principle of the prohibition of unjust enrichment. Here I should point out that it is only by 'way of exception — on the basis of considerations of fairness and proportionality, given the slight differences between the rel- evant quotas — that it is possible for goods 54. Conversely, if the quota were re-allocated to be imported against a quota for other and the duty recovered post-clearance, the goods. In a case where it is not possible for Respondent would suffer a loss. Here, too, it such a facility to be granted, and where both must be assumed that the imported footwear quotas have been exhausted, it may well be has already been sold, in which case it is no that it is no longer possible to grant the longer possible to add the duty — paid much exemption from duty. In that case there would later — to the price of the goods. Even if that surely be no instance of unjust enrichment,

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57. The Respondent also points out that the circumstances obtaining at the time of the subsequent fiscal inspection may not be taken into account, since the time at which it occurred was purely a matter of chance. How- 61. The Commission, however, in its written ever, since the incorrect declaration and the observations, concludes that the difference discovery of the error in the course of the between the amounts is immaterial. My view inspection must be attributed to the Respon- is that the Commission's reasoning is predi- dent, the latter must, if appropriate, also accept cated on the assumption that a customs debt the consequences arising from the point in arose at the time •when the customs declara- time at which the inspection took place. tion was accepted. It does not therefore address the issue of whether post-clearance recovery should likewise be undertaken where, as here, there was no difference in the amount, because no customs debt arose.

58. Finally, there is the fact that in the present case, exceptionally, post-clearance recovery may be waived.

63. The purpose of this question is to ascer- tain the legal effect of a decision addressed to a Member State by the Commission of the European Communities following consulta- tion with the Customs Code Committee, in which the Commission and the Committee have decided that the Member State is not entitled to remit import duties. The second part of the question, related to the first, asks whether a court in the Member State con- 65. Skatteministeriet, however, submits that cerned may still, despite that decision, con- under Article 189 of the EC Treaty a decision clude that there was no legal basis for post- addressed to the Kingdom of Denmark is clearance recovery of the import duties. binding on Denmark. The decision to dis- allow remission naturally presupposed as a matter of law that post-clearance recovery was possible. The Commission's decision implied a finding that there was a legal basis for post-clearance recovery. Skatteministeriet further claims that a national court may not assume that the necessary connection between 64. The Respondent's view is that the Com- E C provisions and the decision of a Commu- mission's decision is immaterial to the issue nity institution does not exist. If that were of post-clearance recovery. The Committee's not the case, the Danish customs and fiscal decision concerned the question of remission; authorities would be under a legal duty vis- it expressed no view on post-clearance à-vis the Communities to refuse remission of recovery. If a procedure is submitted to the the import duties, but would have no legal Commission for a decision on whether import basis on which their post-clearance recovery duties should be remitted in certain specified could be effected.

66. Skatteministeriet finally points out that to 68. The Commission also states that national presume that a national court might find that courts may not declare acts of the Communi- in a situation such as the present there was no ties to be invalid. However, it rightly points legal basis for post-clearance recovery would out that the Court's case-law distinguishes in fact be tantamount to the Commission between the fact of an amount (of duty) being decision being declared invalid and devoid of owed and the question of remission. The legal effects. That, it argues, is manifestly Commission refers on that point to the judg- incompatible with the decision in Foto-Frost,2S ment in Cerealmangimi and Italgrani, in in which the Court held that there were no which the Court drew a distinction between circumstances in which a national court might the possibility of releasing economic opera- ex proprio motu declare a Community legal tors from the payment of duties owed and measure to be invalid. the actual principle that the debt is payable. The Commission had refused remission of duties in a decision, but, as the Court went on to hold, it remained possible for the issue of the obligation to pay to be raised before the competent (Italian) court. 29 Accordingly, the Commission is correct when it states that, if a court interpreting Regulation N o 1697/79 concludes that in a specific case there is n o legal basis for post-clearance recovery, that does not necessarily mean that it is at the same time declaring invalid a Commission 67. The Commission, too, has cited Article decision refusing remission of an (existing) 189 of the EC Treaty. However, it also con- customs debt; in such a case, however, the tends that it is a precondition for the refund Commission's decision would be devoid of or remission of any import duties that post- purpose. That view is correct. clearance recovery of those duties must be possible. Hence, a request that the Commis- sion examine whether remission would be possible was meaningful only if post-clearance recovery could indeed be effected. It was nec- essary to resolve that issue before addressing the question of remission. In its decision of 18 July 1994, the Commission had not adopted a position on whether post-clearance recovery was possible. It had proceeded from the pre- miss that remission was only sought where a debt existed. Had the Commission been asked 69. Accordingly, the answer to the third ques- in addition for an opinion on the question of tion from the referring court should be that a post-clearance recovery, and had it concluded decision, such as that in the present case, that recovery was not possible, it would have addressed by the Commission to a Member rejected the request for remission as State following consultation with the Cus- unfounded. toms Code Committee, produces legal effects

(1) Post-clearance recovery under Article 2(1) of Council Regulation (EEC) N o 1697/79 is possible only where a loss has been sustained by reason of the fact that an amount requiring to be levied has not been paid.

(2) The words 'legally due' (referring to import duties and export duties) in Article 2(1) of Regulation N o 1697/79 are to be interpreted as meaning that, in deter- mining whether or not a customs debt has arisen, the material circumstances of fact and law are those obtaining at the time when the competent authority accepted the customs declaration.

(3) The decision addressed to a Member State by the Commission of the European Communities following consultation with the Customs Code Committee, in which the Commission decides that there is no entitlement to remission of import duties — the Member State having asked the Committee to decide whether such remission was justified under more precisely defined circum- stances — is binding only where the legal and factual circumstances are such

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that it is possible for import duties to be levied. It does not oblige a court to take, or refrain from taking, a decision on whether any legal basis subsists at all, save only in those cases where the decision itself expressly provides other- wise. If the Commission decision addresses neither the question of post- clearance recovery nor that of the legal basis, it is open to a court in the Member State concerned to decide that there is no legal basis for post-clearance recovery of the import duties.