C-413/96

JUDGMENT OF 24. 9. 1998 — CASE C-413/96

J U D G M E N T O F T H E C O U R T (Fifth Chamber) 24 September 1998*

In Case C-413/96,

R E F E R E N C E to the Court under Article 177 of the EC Treaty by the Højesteret (Denmark) for a preliminary ruling in the proceedings pending before that court between

Skatteministeriet

and

composed of: C. Gulmann, President of the Chamber, M. Wathelet, J. C. Moitinho de Almeida, D. A. O. Edward (Rapporteur) and L. Sevón, Judges,

Advocate General: S. Alber, Registrar: R. Grass,

after considering the written observations submitted on behalf of:

— Skatteministeriet, by Karsten Hagel Sørensen, of the Copenhagen Bar, acting as Kammeradvokat,

— Sportgoods A/S, by Jan Martens and Robert Mikelsons, of the Copenhagen Bar,

— the Commission of the European Communities, by Hans Christian Støvlbæk and Fernando Castillo de la Torre, of its Legal Service, acting as Agents,

1 By decision of 20 December 1996, received at the Court on 27 December 1996, the Højesteret (Danish Supreme Court) referred for a preliminary ruling under Article 177 of the E C Treaty three questions concerning the interpretation of Article 2(1) of Council Regulation (EEC) N o 1697/79 of 24 July 1979 on the post-clearance recovery of import duties or export duties which have not been required of the person hable for payment on goods entered for a customs procedure involving the obligation to pay such duties (OJ 1979 L 197, p. 1) ('the regulation in issue') and on the legal effect of a decision delivered by the Commission following consulta- tion with the Customs Code Committee.

2 Those questions have arisen in a dispute between Skatteministeriet (the Danish Ministry of Fiscal Affairs) and Sportgoods A/S, a company incorporated under Danish law, concerning the post-clearance recovery of customs duties on imports of five consignments of football boots from Thailand.

Community law

3 Pursuant to Article 1(1) of both Council Regulation (EEC) N o 3896/89 of 18 December 1989 applying generalised tariff preferences for 1990 in respect of cer- tain industrial products originating in developing countries (OJ 1989 L 383, p. 1) and Council Regulation (EEC) N o 3831/90 of 20 December 1990 applying genera- lised tariff preferences for 1991 in respect of certain industrial products originating in developing countries (OJ 1990 L 370, p. 1) — extended, for 1992, by Council

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JUDGMENT OF 24. 9. 1998 — CASE C-413/96

2. By means of a Regulation, the Commission may, even after 31 December [1990 for Regulation N o 3896/89 and 1992 for Regulation N o 3831/90, as extended by Regulation N o 3587/91], take measures to stop quantities being charged against one or other preferential tariff limit, if, particularly as a result of régularisations of imports actually made during the period referred to in Article 1(1), these limits are exceeded.

The Member State which makes such régularisation shall communicate the figures of import charges relating to this as and when it occurs to the Commission. The Commission, on receiving these communications, shall inform the other Member States thereof.'

7 The levying of customs duties was re-established for imports of products origi- nating in Thailand and coming under tariff headings 6402 and 6403 with effect from, respectively, 3 March 1992 and 27 March 1992 by Commission Regulation (EEC) N o 513/92 of 28 February 1992 re-establishing the levying of customs duties on products falling within C N codes 6401, 6402, 6404 and 6405 90 10, originating in Thailand, to which the preferential tariff arrangements set out in Regulation N o 3831/90 apply (OJ 1992 L 55, p. 88) and Commission Regulation (EEC) N o 719/92 of 23 March 1992 re-establishing the levying of customs duties on products falling within C N code 6403, originating in Thailand, to which the preferential tariff arrangements set out in Regulation N o 3831/90 apply (OJ 1992 L 78, p. 9).

8 With regard to the post-clearance recovery of the customs duties, Article 2(1) of the regulation in issue, which was in force at the time when the goods were imported, provided as follows:

9 Over the period from 1 March 1990 to 20 January 1992, Sportgoods imported five consignments of sports boots with imitation leather uppers which ought to have been classified under tariff subheading 6402 19 00 of the Combined Nomenclature of the Common Customs Tariff in force at that time, set out in Annex I to Council Regulation (EEC) N o 2658/87 of 23 July 1987 on the tariff and statistical nomen- clature and on the Common Customs Tariff (OJ 1987 L 256, p . 1) ('the Combined Nomenclature'), as amended by Commission Regulation (EEC) N o 2886/89 of 2 August 1989 (OJ 1989 L 282, p. 1), Commission Regulation (EEC) N o 2472/90 of 31 July 1990 (OJ 1990 L 247, p. 1) and Commission Regulation (EEC) N o 2587/91 of 26 July 1991 (OJ 1991 L 259, p. 1), as O t h e r footwear with outer soles and uppers of rubber or plastics: Sports footwear: Other'.

10 However, as the result of an error by the forwarding agent acting for Sportgoods, the five consignments were classified, in the declarations for release into free cir- culation, under tariff subheading 6403 19 00 of the Combined Nomenclature as 'Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather: Sports footwear: Other'.

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JUDGMENT OF 24. 9. 1998 — CASE C-413/96

1 1 Since, at the time when the competent authorities accepted the declaration for release of the goods into free circulation, this latter tariff subheading qualified for tariff preferences within the framework of the tariff ceilings provided for under Regulations N o 3896/89 and N o 3831/90, n o customs duty was demanded or paid when the boots in question were imported.

16 By judgment of 22 September 1995, the Østre Landsret nevertheless held that the post-clearance recovery at issue had no legal basis inasmuch as Article 2(1) of the regulation in issue did not extend to incorrect declarations of tariff headings which did not have financial repercussions.

17 Skatteministeriet appealed against that judgment to the Højesteret, which, forming the view that the dispute raised issues of interpretation of Community law, decided to stay the proceedings and refer the following questions to the Court:

' 1 . Must Article 2(1) of Council Regulation (EEC) N o 1697/79 on the post- clearance recovery of import duties or export duties which have not been required of the person liable for payment on goods entered for a customs p r o - cedure involving the obligation to pay such duties (OJ 1979 L 197, p . 1) be interpreted as meaning that post-clearance recovery may be effected only in cases in which there is a difference in the amount of duty involved, but not in cases of incorrect declarations of headings which have not had any bearing o n the amount?

2. Must the words "... legally due ..." in Article 2(1) of Council Regulation N o 1697/79 be interpreted on the assumption that:

— it is the factual and legal circumstances at the time when the competent authorities receive a declaration containing an incorrect tariff heading that are conclusive for determining whether an amount is due?

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18 By its first and second questions, which should be examined together, the Højes- teret is asking in substance whether Article 2(1) of the regulation in issue, which was applicable at the time of the facts in the main proceedings, is to be construed as meaning that, where a post-clearance inspection has revealed an error in the tariff classification of goods indicated in a declaration for release into free circulation, and where the levying of customs duties o n products covered by the heading under which those goods ought to have been classified was suspended at the date on which that declaration was accepted but had been re-established when the error was

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detected, the factual and legal situation to be taken into account by the customs authorities in order to recalculate the amount of customs duty legally due is that prevailing when the declaration was accepted or when the error in tariff classifica- tion was discovered.

19 Skatteministeriet takes the view that the factual and legal situation prevailing when the competent authorities find that a declaration contained an error as to the tariff heading is conclusive with regard to the existence of a customs debt and post- clearance recovery of customs duties.

20 Sportgoods, however, argues that, since at the date on which the declaration for release into free circulation was accepted a customs exemption applied for goods originating in Thailand and coming under tariff subheading 6402 19 00 of the C o m - bined Nomenclature, no customs debt could have arisen, and there is thus no legal basis for post-clearance recovery of the customs duties.

24 Second, it is clear from Article 11(1) of Council Directive 79/695/EEC of 24 July 1979 on the harmonisation of procedures for the release of goods for free circula- tion (OJ 1979 L 205, p. 19), which was in force when the goods in question were imported, that, without prejudice to special rules applicable under general or spe- cific community legislation, import duties were to be levied in accordance with the rates and amounts in force at the date of acceptance of the declaration, and that the same date was to be the operative date for determining other particulars material to the calculation of duty on the goods and for applying any other provisions gov- erning the release of goods for free circulation.

25 It follows that, in principle, when the customs authorities discover, in the course of an inspection, an error in the tariff classification of goods indicated in a declaration of release for free circulation, they must recalculate, in the light of the new infor- mation at their disposal, the amount of customs duties legally due at the date when that declaration was accepted.

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The application of the rules governing generalised tariff preferences

26 Under Article 1(1) of both Regulation N o 3896/89 and Regulation N o 3831/90, tariff suspension was granted, at the date on which the declaration for release into free circulation was accepted, only within the framework of fixed duty-free amounts and ceilings.

heading, were entitled to a tariff suspension at the time when that declaration was accepted.

31 However, the problem should be viewed rather in the context of the overall scheme of the system of tariff suspensions in question, which requires the strictest possible adherence to the ceilings established.

32 If it were to be accepted that ceilings may be exceeded retroactively where goods are reclassified following the discovery of an error by the importer in the tariff clas- sification of goods after the ceiling provided for the subheading under which the goods should have been classified has been reached and the levying of customs duties on imports of the goods in question has been re-established, that would have to be accepted irrespective of the quantity and value of the goods in question and irrespective of whether, at the time when the declaration was accepted, a tariff sus- pension applied to both of the subheadings concerned or only to one of them.

33 S u c h a n i n t e r p r e t a t i o n w o u l d negate t h e effectiveness of b o t h t h e regulation e s t a b - lishing t h e tariff ceilings a n d t h a t re-establishing the levying of c u s t o m s duties. F u r - t h e r m o r e , the fact t h a t a r e q u e s t could be m a d e for the ceilings t o b e exceeded r e t r o a c t i v e l y c o u l d give rise t o abuse.

34 It follows that if, at the time when the amount of customs duty is being recalcu- lated, the tariff ceiling has been reached and the levying of customs duties has been re-established, the imports can no longer benefit from the tariff suspension.

38 In the light of the foregoing, the answer to the first and second questions must be that Article 2(1) of the regulation in issue, which was applicable at the time of the facts in the main proceedings, must be construed as meaning that, where a post- clearance inspection has revealed an error in the tariff classification of goods indi- cated in a declaration for release into free circulation, and where the levying of customs duties on products covered by the heading under which those goods ought to have been classified was suspended at the date on which that declaration was accepted but had been re-established when the error was detected, the customs authorities must not take account of that suspension in order to recalculate the amount of the customs duties legally due on the date on which the declaration was accepted.

The third question

39 According to Skatteministeriet, the Commission, in its decision of 18 July 1994, implicitly ruled that there was a legal basis for post-clearance recovery of the

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JUDGMENT OF 24. 9. 1998 — CASE C-413/96

customs duties in question; that decision, it claims, is binding on national courts, which cannot therefore hold that there is no such legal basis.

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import duties concerned under the regulation in issue, a national court may rule o n the latter question, having recourse, if appropriate, to the procedure under Article 177 of the Treaty.

Costs

44 The costs incurred by the Commission, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

O n those grounds,

2. When the Commission, after consultation with the Customs Code Com- mittee, has delivered a decision addressed to a Member State holding that there was, in a specific case, no justification for granting remission of import duties pursuant to the provisions of Council Regulation (EEC) N o 1430/79 of 2 July 1979 on the repayment or remission of import or export duties, and when that decision does not contain any legal or factual indication relating to the legal basis for effecting post-clearance recovery of the import duties concerned under Regulation No 1697/79, a national court may rule on the latter question, having recourse, if appropriate, to the procedure under Article 177 of the EC Treaty.

Gulmann Wathelet Moitinho de Almeida

Edward Sevón

Delivered in open court in Luxembourg on 24 September 1998.

R. Grass C. Gulmann

Registrar President of the Fifth Chamber