C-247/97

SCHOONBROODT v BELGIAN STATE

OPINION OF ADVOCATE GENERAL JACOBS delivered on 25 June 1998 *

1. In the present case the Court is asked to The facts interpret the scope of an exemption from cus­ toms duties in respect of motor fuel. That exemption is conferred by Article 112 of Council Regulation (EEC) No 918/83 of 28 March 1983 setting up a Community system of reliefs from customs duty, 1 as amended by Council Regulation (EEC) No 1315/88 of 3 May 1988, 2('the Customs Regulation' or simply 'the Regulation'). The case comes by 3. The appellants in the national proceedings way of a request for a preliminary ruling from are a Belgian company called Transport the Belgian Cour de Cassation (Court of A. M. Schoonbroodt SPRL and its two man­ Cassation). aging directors (collectively 'Schoonbroodt'). The company provides international road transport services, and specialises in the trans­ port of goods at a controlled temperature using large semi-trailers fitted with refriger­ ating units. Its vehicles travel throughout Europe, particularly to France, Spain and Italy, and, further afield, to Poland and Russia.

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on the driving unit, to which they were under Article 115 of the Regulation. The directly connected. At the oral hearing Belgian authorities considered that the fuel Schoonbroodt stated that half its vehicles were supplied by the additional 700-litre tanks did purchased ready-made with the additional not qualify for exemption from excise duty tanks already installed by the manufacturer because those tanks did not, in their view, and that the other half of its vehicles were qualify as standard tanks within the meaning fitted out or constructed at its request. of the Customs Regulation.

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SCHOONBROODT v BELGIAN STATE

9. Pursuant to those provisions, the Belgian were not 'standard tanks' within the meaning authorities brought proceedings against of Article 112 of Regulation (EEC) No 918/83. Schoonbroodt for evading special excise duty That court has requested a ruling on the fol­ on 85 848 litres of diesel fuel purchased out­ lowing question: side Belgium and brought into Belgium within the tanks of their vehicles. According to the Belgian Government the fuel was purchased in Luxembourg. Schoonbroodt was accused of failing to make the required declaration either at the first office upon entry or at any other office where such declaration should be made. The alleged offences relate to the period 'Are tanks fixed to containers equipped with between 17 February 1992 and 24 December a refrigeration system and intended for long­ 1992. distance road haulage to be regarded as "stan­ dard" tanks within the meaning of Article 112 of Regulation (EEC) No 918/83 setting up a Community system of reliefs from cus­ toms duty, as amended by Regulation (EEC) No 1315/88, where:

(c) avoid the administrative difficulties involved in the need to recover value added tax in the countries where it has been charged, and, 14. Under Article 112 of the Regulation fuel is exempted from customs duty subject to certain specific conditions. That Article reads as follows:

(d) use as few fuel supply points as pos­ sible in order to be able to negotiate the best prices with fuel companies?' '1 . Subject to the provisions of Article 113 to 115:

(a) fuel contained in the standard tanks of:

12. Written observations have been submitted by Schoonbroodt, the Belgian, Finnish and French Governments, and the Commission. At the oral hearing, Schoonbroodt, the Bel­ gian Government and the Commission were — private and commercial motor vehicles represented. and motorcycles,

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SCHOONBROODT v BELGIAN STATE

— more than nine persons including the driver, — tanks permanently fixed by the manu­ facturer to all containers of the same type as the container in question and whose permanent fitting enables fuel •—· goods, to be used directly for the operation,

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OPINION OF MR JACOBS — CASE C-247/97

during transport, of the refrigeration required to standardise, in accordance with systems and other systems with which the Directive, 'provisions regarding the duty­ special containers are equipped; free admission of fuel contained in the stan­ dard fuel tanks of commercial motor vehicles travelling across common frontiers between 9 Member States'. The definitions in the Direc­ tive of a 'commercial motor vehicle' and 'stan­ 10 dard fuel tanks' are similar to the defini­ (d) "special container" means any container fitted with specially designed apparatus tions contained in the Customs Regulation. for refrigeration systems, oxygenation sys­ The definition of standard fuel tanks in the tems, thermal insulation systems, or other Directive does not mention containers but, systems.' according to the Belgian Government, the national court erred in referring to containers since the tanks in question are affixed not to containers but to trailers, which constitute part of the vehicle. If that is so then for the purpose of these proceedings there appears to be no material difference between those defi­ 15. Although the question relates to the Cus­ nitions. toms Regulation, it should be noted that at the time of the alleged offences (17 February 1992 to 24 December 1992) a Community directive on the subject was in force. That directive standardised provisions concerning the duty-free admission of fuel contained in the fuel tanks of commercial motor vehicles travelling between Member States (Directive 5 68/297/EEC, as amended by Directive 6 85/347/EEC: 'the Directive').

20. Moreover, it may well be that the rel­ evant Community legislation in the present proceedings is the Directive, rather than the Regulation, since the Directive was in force at Admissibility the material time and its provisions governed the duty-free admission of fuel in respect of commercial vehicles travelling between Member States. As explained above the rel­ evant definitions may well be for present pur­ poses the same in the Regulation and the 18. The Customs Regulation, which concerns Directive. Thus the reference is in any event exemptions from customs duties on goods admissible on the basis that the national court imported into the Community, does not apply may wish to apply the Directive, to the present case as a matter of Community law since the litigation concerns the imposi­ tion of excise duty. The Regulation is rel­ evant, as explained above, merely because the Belgian national law provided that exemp­ Observations submitted to the Court tions from excise duties on imports were to be granted only to the same extent and sub­ ject to the same conditions as exemptions from import duties. 21. I turn now to the arguments put before this Court. Those arguments were directed to the Regulation; the Directive was mentioned only at the hearing by the Commission, which considered that it was unnecessary to examine the Directive. Contrary to Schoonbroodt's 19. However, the Court has held that it has view, the Belgian, Finnish and French Gov­ jurisdiction under Article 177 of the Treaty to ernments and the Commission all favour a interpret Community law provisions in situ­ restrictive interpretation of the definition of ations where, as in the present case, the facts 'standard tanks' in Article 112 of the Regula­ tion.

22. It is useful to recall at this point that system. As set out above, it has explained Article 112 requires the tanks to be fixed per­ the reasons for the addition of the extra tanks manently by the manufacturer to all motor and those reasons are mentioned by the Court vehicles or containers of the same type. In the of Cassation in the question referred. case of motor vehicles the tanks must be per­ manently fitted so as to enable the fuel to be used directly, both for the purpose of propul­ sion and, where appropriate, for the opera­ tion, during transport, of refrigeration sys­ tems and other systems. In the case of containers, the fuel must be used directly for the operation, during transport, of the refrig­ eration systems and other systems with which special containers are equipped. 25. Schoonbroodt considers that the fact that some of the additional tanks were added after manufacture by coachbuilders charged with the final fitting out of the vehicles is not rel­ evant because in practice the manufacturer himself does very little: usually he merely constructs the chassis or 'skeleton', the coach- builder being left to complete the rest of the work with a view to the vehicle's final desti­ nation. Schoonbroodt explains that the instal­ 23. In Schoonbroodťs view the aim of the lation of large capacity tanks features amongst Regulation is to prevent the dangers posed by the options offered in all manufacturers' cata­ the import of inflammable substances in make­ logues and that such tanks are used very fre­ shift tanks (petrol cans and other types of quently by long distance transporters. It argues can), whilst at the same time relieving trans­ that it would be contrary to the principles of porters of formalities concerning the contents free competition and free movement of goods of their fuel tanks. Schoonbroodt thus rea­ to disallow the exemption of fuel contained sons that tanks should qualify as standard in standard tanks simply because the tanks in tanks so long as they do not pose that type question were not installed by the manufac­ of risk. turer if the coachbuilder who installed them did so safely and just as competently. In Schoonbroodťs view account should be taken of the changing practice in vehicle manufac­ ture, namely that nowadays vehicles manu­ factured according to customer specifications are necessarily not all identical. The judgment under appeal does not cast doubt on the fac­ tual circumstances described by Schoonbroodt but considers that they are not sufficient to bring the tanks within the definition of stan­ 24. Schoonbroodt stresses that the additional dard tanks in the Regulation. tanks comply with the definition of standard tanks in the Regulation in that they are affixed permanently to the vehicles and they can supply both the motor and the refrigeration 15 — At paragraph 5.

29. In the view of the Finnish Government the tanks in question clearly do not fall within 27. The Belgian Government considers that the definition of standard tanks because stan­ the meaning of the word constructeur and its dard tanks must supply only the refrigeration counterpart in other language versions ('man­ system (or other system with which the con­ ufacturer' in English, fabrikant in Dutch and tainer is equipped) and not the motor for Hersteller in German) is very clear and cannot propulsion of the vehicle, whereas in the include dealers or coachbuilders. It argues present case they can be used for both. (That moreover that the requirement in Article 112 view, however, is based on the assumption of the Regulation that the tanks be affixed to that the tanks in question are affixed to con­ all vehicles of the same type confirms that the tainers, whereas, as mentioned earlier, the reference to the manufacturer in that article Belgian Government maintains that the must be construed strictly because it is only national court erred in referring to containers the manufacturer who can ensure that a par­ since the tanks are in fact affixed to the ticular item is affixed to all vehicles of the vehicles.) same type.

34. The Commission considers that in order to qualify as 'standard tanks' within the meaning of the Customs Regulation, fuel tanks must fulfil three conditions: first, they must be fixed by the manufacturer; secondly, 32. In the view of the Commission, the they must be fixed on all containers of the starting point is the judgment of the Court in same type; and thirdly they must allow the Olasagasti and Others v Amministrazione direct use of the fuel only for the refrigera­ delle Finanze dello Stato, 19 in which, refer­ tion system of the containers and other spe­ ring to the case of Ethicon, 20 the Court stated cial use systems. that 'provisions granting suspension of cus­ toms duties are to be interpreted strictly according to their terms and may not there­ fore be applied, contrary to their wording, to products which they do not mention'.

35. The Commission argues that none of those three conditions is fulfilled for the fol­ lowing reasons: the additional tanks in ques­ tion were affixed by dealers or coachbuilders, not by the manufacturer; the fact that the addition was not made by the manufacturer suggests that such additional tanks were not 33. The Commission recognises that in sev­ fitted to every container of the same type, eral cases the Court has adopted a liberal and indeed Schoonbroodt has itself stated that interpretation of the scope of an exemption the additional tanks were an option; and the from customs duty in respect of scientific tanks did not supply only the refrigeration 21 instruments. However, it argues that those system but were used also for the propulsion cases can be distinguished because there was of the vehicles. no precise definition of the term 'scientific

39. As the Commission has observed, the wording of the definition is very clear: it Assessment requires, inter alia, that in order to qualify as 'standard tanks' within the meaning of the Regulation, fuel tanks must be affixed by the manufacturer and must be affixed on all vehi­ cles of the same type. Contrary to those requirements, at least some of the fuel tanks at issue in the present case were affixed by 37. In view of the possible relevance of the dealers or coachbuilders, not by the manu­ Directive to the facts of the present case, I facturer, and Schoonbroodt itself describes shall refer briefly to that Directive. Since, the additional tanks as an option. however, the Court of Cassation has posed its question of interpretation in terms of the Regulation and since all observations have been submitted on that basis, I shall consider first the interpretation of the Regulation.

40. It is true that it is important to have regard to the requirement of legal certainty in the interests of the taxpayer. The Court has consistently held that the principle of legal certainty is a fundamental principle of Com­ 38. In my view, the starting point in inter­ munity law which requires that rules imposing preting the Regulation is the principle, to charges on the taxpayer must be clear and which the Commission and the Belgian Gov­ precise so that he may know without any ernment refer, that 'the descriptions of goods ambiguity his rights and obligations and may on which customs duties have been suspended take steps accordingly. It follows that ambig­ must be interpreted according to objective uous measures imposing charges should be criteria derived from their wording'. That interpreted in favour of the taxpayer: see, for

example, Administration des Douanes v Gon- 42. However, to my mind the meaning of the drand Frères. However, I do not consider term 'manufacturer' is in itself clear. More­ that there is any such ambiguity in the present over, the Regulation provides for exemptions case. only in 'well-defined circumstances' and the Court stated in Ethicon that descriptions of goods on which customs duties have been suspended 'may not be applied contrary to their wording to other goods even if their properties and application are no different from those covered by the suspension'. It fol­ lows in my view that the fact that in practice dealers or coachbuilders now carry out part of the manufacturer's work, with the same degree of competence and the same result, cannot be taken into account unless, perhaps, they act as the manufacturer's agent in the manufacturing process. 41. It might be argued that the term 'manu­ facturer' should be interpreted widely to take into account the practice, which according to Schoonbroodt is widespread, whereby parts of the manufacturing process are carried out by dealers or coachbuilders. The Court will occasionally have regard to technical develop­ ments in interpreting the Common Customs Tariff: in Cbem-Tec v HauptzolUmt 25 Koblenz, for example, the Court held that 43. In any event, even if one were to concede the term 'packages' in one of the subheadings that there should be some leeway in inter­ had to be interpreted in the light of the par­ preting the term 'manufacturer', it appears ticularly swift pace of technical development clear that once an additional tank is listed as in the case of packages. On the other hand, an option, which Schoonbroodt admits to be in Analog Devices the Court held that, the case here, it is necessarily not affixed to all although the technical developments resulting vehicles of the same type. It seems to me that in more widespread use of integrated circuits the definition of 'standard tanks' in Article justified the drawing up of a new customs 112 of the Regulation is thus sufficiently clear classification, it was for the Community insti­ and that there is no breach of the principle of tutions to do so, failing which the interpreta­ legal certainty. tion of the Common Customs Tariff could 26 not be adapted to changing processes.

additional tanks fitted by way of an option to 47. The question of proportionality of the motor vehicles or containers. sanctions imposed has not been referred by the Court of Cassation and indeed Schoon­ broodt admits that it did not in fact raise that argument in its mémoire before that court but merely in its note de plaidoirie. Nevertheless, Schoonbroodt maintains that under Belgian law the Court of Cassation is competent to raise of its own motion a point concerning 45. I turn now to the definition of 'standard the illegality of an act of the public authori­ fuel tanks' in the Directive. As explained ear­ ties and that it should have done so. lier, that definition appears to be identical to the definition in the Regulation in so far as it may be relevant to the present case. It might be argued that different considerations should apply when interpreting a Directive con­ cerning exemption from excise duty in the context of the internal market, as opposed to a Regulation concerning exemption from cus­ toms duty in relation to imports into the 48. This Court will sometimes address issues Community from third countries. In the of Community law not raised by the national present case, however, having regard to the court if its ruling on the point will help to clear wording of the Directive, I see no reason decide the question put by the referring court. for interpreting the exemption in the Direc­ In the present case, however, the question of tive more widely than that in the Regulation. the proportionality of the sanctions imposed by the Belgian State is an ancillary question and the view of this Court as to whether or not the sanctions are objectionable under Community law will not help to decide the question referred: namely whether the fuel Proportionality of the penalties tanks in issue fall within the exemption from import duties specified in the Regulation.

the different circumstances surrounding Article 30 or Article 59 of the Treaty. If the imports (perhaps a different tax point or a case fell directly within the scope of Com­ different degree of difficulty of enforcement), munity law, then a penalty which involved that difference must not be disproportionate the confiscation of vehicles might also raise to the degree of dissimilarity between cross- an issue under Community law of respect for 27 border and wholly internal situations. More­ fundamental rights, including the right to over, even in the absence of any discrimina­ property and the right to carry on a trade or tion, if the penalties imposed for evading profession. An interference with fundamental excise tax were so excessive as to impede the rights can under certain conditions be justi­ free movement of goods or services (for fied, but in applying the principle of propor­ example, as here, by the confiscation of vehi­ tionality the national court would require a cles) to a disproportionate extent, those pen­ more compelling justification where there is alties might in my view constitute a breach of an interference with such rights.

Conclusion

50. For the reasons given above, I am of the opinion that the questions referred by the Court of Cassation should be answered as follows:

(1) The term 'standard tanks' in Article 112 of Council Regulation ( EEC ) No 918/83 of 28 March 1983 setting up a Community system of reliefs from customs duty,