C-455/98
ECLI:EU:C:2000:159
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- Súdny dvor Európskej únie
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SALUMETS AND OTHERS
OPINION OF ADVOCATE GENERAL SAGGIO delivered on 23 March 2000 *
1. By order received at the Court on (EEC) No 2913/92 of 12 October 1992 14 December 1998, the Tampereen Kärä- establishing the Community Customs jäoikeus (Tampere District Court), Finland, Code 1 (hereinafter 'the Code'). Under referred to the Court — in the context of Articles 202(1)(a) and 212 of the Code, civil proceedings between the Finnish Tul- customs debts are incurred through 'the lihallitus (Customs Administration) and unlawful introduction into the Customs certain persons convicted of criminal pro- territory of the Community of goods liable ceedings for smuggling ethyl alcohol — for to import duties', even though 'no customs a preliminary ruling on customs and excise debt shall be incurred on the unlawful duties and value added tax (hereinafter introduction [...] of counterfeit currency or 'VAT') on the contraband importation into of narcotic drugs and psychotropic sub- Finnish territory (into Community terri- stances which do not enter into the eco- tory, therefore) of batches of ethyl alcohol nomic circuit strictly supervised by the from non-member countries. competent authorities with a view to their use for medical or scientific purposes'. The provisions cited apply to ethyl alcohol which has not been denatured in accor- dance with the Common Customs Tariff. 2
Relevant Community legislation
2. I shall first summarise the relevant 4. As regards excise duties, Council Direc- provisions of Community law applicable tive 92/12/EEC of 25 February 1992 on the to the matters at issue concerning respec- general arrangements for products subject tively: (a) customs duties; (b) excise duties; to excise duty 3 (hereinafter 'Directive (c) VAT. 92/12') which applies to alcohol and alco- holic beverages pursuant to Article 3(1), second indent, provides in Article 6(1 )(c) that '[E]xcise duty shall become chargeable at the time of release for consumption' of the relevant products, and covers by the 3. As regards customs duties, reference should be made to Council Regulation 1 — OJ 1992 L 302, p. 1. 2 — Codes CN 2207 and CN 2208. * Original language: Italian. 3 — OJ 1992 L 76, p. 1.
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expression 'release for consumption' also alcohol or an aqueous solution thereof in the 'unlawful' importation of the products which ethyl alcohol is more than 60% by in question. For its part, Council Directive volume and which is not denatured" (Para- 92/83/EEC of 19 October 1992 on the graph 3(2.4)), and may be imported by a harmonisation of the structures of excise trader to whom an import licence has been duties on alcohol and alcoholic beverages 4 granted, and by a person who has been (hereinafter 'Directive 92/83') requires granted a user licence, for his own use Member States, under Article 19, to apply (Paragraph 8(2)). excise duty on ethyl alcohol in accordance with harmonised rates, and, on the basis of Article 27(1)(a) and (b), allows denatured alcohol only to be exempt from the har- monised excise duty.
7. Under the Finnish Laws No 1469 of 29 December 1994 on Excise Duties ('Val- misteverotuslaki') and No 1471 of 29 December 1994 on Tax on Alcohol and Alcoholic Beverages ('Laki alkoholi ja 5. Finally, as regards VAT, Sixth Council alkoholi-juomaverosta'), ethyl alcohol and Directive 77/388/EEC of 17 May 1977 on alcoholic beverages produced in Finland, the harmonisation of the laws of the coming from another Member State or Member States relating to turnover imported from non-member countries are taxes — Common system of value added subject to excise duty, unless the alcohol is tax: uniform basis of assessment 5(herein- strongly denatured or, if slightly denatured, after 'the Sixth Directive') provides in not intended for human consumption. Article 2 that 'the importation of goods' Additionally, under the Finnish Law of any kind is subject to VAT. No 1501 of 30 December 1995 on VAT ('Arvonlisäverolaki'), goods — including ethyl alcohol — imported from non-mem- ber countries are subject to payment of VAT on importation.
Relevant national legislation
Facts in the main proceedings
6. Under Finnish Law N o 1143 of 8 December 1994 concerning alcohol ('Alkoholilaki'), alcohol is defined as "ethyl 8. Between the summer of 1996 and 4 — OJ 1992 L 316, p. 21. November 1997 Mr Kaupo Salumets, 5 — OJ 1992 L 145, p. 1. together with other persons, smuggled
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around 100 000 litres of ethyl alcohol of 8 December 1998, asked the Court to Chinese and American origin from Estonia clarify by way of a preliminary ruling into Finland. Part of the imported alcohol whether the Code, Directives 92/12 and was ready bottled for immediate sale; the 92/83, and the Sixth Directive should be rest was brought into Finland in containers interpreted as meaning that the contraband and bottled there using makeshift equip- importation of ethyl alcohol is subject to ment in a former stable in unhygienic payment of customs duties, excise duties conditions. and VAT.
11. The national court stated in that order 9. After being identified, the persons who that its difficulties on this point, which gave took part in the smuggling were convicted rise to the reference for a preliminary on 31 March 1998 by a Finnish criminal ruling, lay in the fact that ethyl alcohol in court and sentenced to imprisonment and its pure state ('pirtu'), which is not usually fines. Part of the smuggled ethyl alcohol intended for immediate consumption, (around 9 500 litres) was confiscated. The would not be in direct competition with Finnish Customs Board later brought a civil other alcoholic beverages and would have a action for damages before the Tampereen considerably restricted market because of Käräjäoikeus against Mr Salumets and the the system of authorisation in force in others involved, claiming reimbursement of Finland. As a result ethyl alcohol in its pure customs duties, excise duties and VAT not state has strong similarities to narcotic paid on the batches of ethyl imported drugs and psychotropic substances, the sale illegally into Finland, a total sum of about of which is not subject to customs duties, FMK 38 million. The action was based on excise duties and VAT. Furthermore, in this the relevant national legislation, which case, the imported alcohol involved health reflected the provisions of the Community risks to consumers because of its low legislation cited above. quality and the impurities in it, so that it would not have been possible to market it even in diluted form in aqueous solutions or as a base for other beverages.
Question referred for preliminary ruling Answer to the question
10. In the context of these proceedings, the 12. I would recall that the ethyl alcohol at Tampereen Karäjäoikeus, by order of issue in the main proceedings was smuggled
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from a non-member country (Estonia) into said to be a free commercial channel, that Community customs territory (Finland) product, according to the defendants, does without having been released into free not constitute a genuine economic activity circulation or made subject to customs for the purposes of the EC Treaty and procedures in accordance with the Code. therefore falls outside the scope of the Under those circumstances, any other Community legislation that makes the goods would be subject to payment of import of goods from non-member coun- customs duties, excise duties and VAT, in tries liable to customs duties, excise duties accordance with the relevant Community and VAT. legislation and, consequently, the national legislation which transposes it. Why then should smuggled ethyl alcohol not be subject to the same duties?
14. The Finnish, Italian and Greek Govern- ments, as well as the Commission, maintain that ethyl alcohol in its pure state cannot in any way be considered as a narcotic drug. Instead, it constitutes a product, like any 13. The submission made by the defen- others, whose importation into Community dants in the main proceedings — a submis- territory from non-member countries is sion to which the national court appears subject to the duties placed on products in not to have been insensitive — is based on general. In this respect, the principle of the premiss that ethyl alcohol in its pure fiscal neutrality and the necessity to har- state should not be considered as a bev- monise the levying of customs duties, excise erage intended for normal consumption, duties and VAT preclude any distinction but a kind of narcotic drug used by between legally imported goods and alcoholics, from which the national court goods — such as those in point here — infers that it cannot compete with other which have been smuggled. Because of their alcoholic beverages marketed freely. Fur- lower selling price, the latter are in compe- thermore, in this case, the alcohol imported tition with products imported in full com- from Estonia was of uncertain origin, of pliance with the law, which bear the poor quality and questionable purity: all corresponding fiscal charges. told, a product dangerous to the health of anyone consuming it, unsuitable as a base for the preparation of other beverages of a lower alcoholic content and, therefore, not in any way marketable. Finally, the market for alcohol is highly restricted in Finland because of the system of authorisation applicable there concerning the manufac- ture, marketing, import or export of that product. Therefore, since, in the case of 15. To equate ethyl alcohol in its pure state alcohol in its pure state, there cannot be with narcotic drugs and other psychotropic
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substances is unconvincing. Admittedly, nature as an intrinsically lawful product. A ethyl alcohol is not usually consumed in lawful product cannot be transformed into its pure state, and if consumed in excessive a narcotic drug for reasons connected with quantities may cause damage to health, its origin, quality or purity. especially if consumed by persons suffering from chronic alcoholism. However, there can be no denying that ethyl alcohol, unlike narcotic drugs, constitutes a product which is lawfully present on the market, and whose manufacture, marketing, import and export, while regulated or limited by law in some Member States, cannot be considered as prohibited by reason of the 17. In my opinion, the derogations laid intrinsic illicit nature of the product. Ethyl down for narcotic drugs as regards pay- alcohol is therefore not affected by the ment of customs duties, excise duties and Single Convention on Narcotic Drugs VAT, derogations all based on the idea that signed in New York on 30 May 1961 6 narcotic drugs are goods which, because of and ratified by all Member States of the their unlawful nature, it is prohibited to Community. It is instead considered in the market, are therefore not applicable to the context of commercial transactions as one contraband importation of ethyl alcohol. I product among others and included — as feel it is appropriate to examine these mentioned — in the Common Customs derogations separately in order to explain, Tariff (Combined Nomenclature). Ethyl given the specificity of each one, the alcohol in its pure state presents analogies reasons which lead me to find that they not so much with narcotic drugs as with are not applicable in this case. tobacco and derived products: a product recognised as dangerous to health, but which (at present) it is not unlawful to market and which (at present) is not treated as a drug.
18. As far as customs duties are concerned, since 1981 7 the Court's case-law has made it clear that they cannot be applied to narcotic drugs because these are 'goods which are of such a kind that they may not be put into circulation in any Member State but must on the contrary be seized and 16. The same applies where — as in this taken out of circulation by the competent case — the imported alcohol is of uncertain authorities as soon as they are discov- origin, of poor quality or of questionable ered', 8 except in the case of 'trade which purity. Such factors may contribute to is strictly controlled and limited to author- making consumption of such a product even more dangerous, but do not change its 7 — Case 50/80 Horvath v Hauptzollamt Hamburg-Jonas [1981] ECR 385. The narcotic drug in question in this judgment was heroin. 6 — United Nations Treaty Series, 520, No 7515. 8 — Ibid., paragraph 11.
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ised use for pharmaceutical and medical also applied to the levying of VAT: '[T]he purposes'. 9 Narcotic drugs (and, in gen- two charges display comparable essential eral, psychotropic substances) may not — features since they arise from the fact of according to the reasoning of the Court — importation of goods into the Community be classified as products 'put on the market and the subsequent distribution thereof and absorbed into commercial circula- through the economic channels of the tion', 10 and, for this reason are not subject Member States, and since each constitutes to customs regulations. This interpretation, a component of the sale price calculated by confirmed in 1982, 1 1was in 1990 12 a similar method by successive traders'. 14 extended to the importation of counterfeit This parallelism, confirmed in later devel- currency. I would point out that, on the opments of the case-law on the subject, 15 is basis of these interpretations of the customs also reflected in the wording of Arti- rules, the Code, adopted in 1992, expressly cle 10(3) of the Sixth Directive which provides in Article 212 that 'no customs authorises Member States to link the debt shall be incurred on the unlawful chargeable event and the charging of VAT introduction [...] of counterfeit currency or on imports with the similar criteria of narcotic drugs and psychotropic sub- employed for the levying of customs duties. stances which do not enter into the eco- The reasons set out above regarding cus- nomic circuit strictly supervised by the toms duties therefore lead me to consider competent authorities with a view to their that ethyl alcohol, which cannot be assimi- use for medical and scientific purposes'. lated to a narcotic drug, cannot be made Ethyl alcohol is, however, without doubt a the subject of any exceptional regime as product which is marketed in the Member regards its liability to VAT. States and therefore part of the ordinary economic circuit, for which reason the system under which narcotic drugs and counterfeit currency are exempted from customs duties cannot be applied to this product.
19. As regards VAT, Community case-law has since 1984 13 made it clear that the 20. The reasoning set out with regard to interpretation employed to remove narcotic customs duties and VAT can also apply to drugs from the sphere of customs duties excise duties, under which the tax on manufacture and the tax on alcohol, both in point in this case, fall. In the absence of 9 — Ibid., paragraph 10. 10 — Ibid., paragraph 12. 11 — Case 221/81 Wolf v Hauptzollamt Düsseldorf [1982] ECR 14 — Ibid., paragraph 18. 3681, and Case 240/81 Einberger v Hauptzollamt Freiburg [1982] ECR 3699. The narcotic drugs under consideration 15 — Case 269/86 Mol v Inspecteur der Invoerrechten en here were cocaine and morphine. Accijnzen [1988] ECR 3627 concerning the distribution of amphetamines and Case 289/86 Happy Family v 12 — Case C-343/89 Witzemann v Hauptzollamt München- Inspecteur der Omzetbelasting [1988] which concerns Mitte [1990] ECR I-4477. the sale of hashish; Case C-158/98 Staatssecretaris van 13 — Case 294/82 Einberger v Hauptzollamt Freiburg [1984] Financiën v Coffeeshop Siberië [1999] ECR I-3971, ECR 1177. The judgment was concerned with the import concerning the provision of a counter for the sale of soft of a number of batches of morphine into Germany. drugs.
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any specific case-law relating to the applic- were introduced unlawfully into the Com- ability of excise duties to narcotic drugs, munity customs territory. 17 An interpreta- the orientatations developed in the case- tion to this effect is also valid where — as law with regard to customs duties and VAT in this case — ethyl alcohol in its pure state can also apply to excise duties. It is true is subject in one Member State to a special that Member States must exempt denatured system of authorisation concerning produc- alcohol from harmonised excise duty under tion, marketing, importation and export. Directive 92/83 as well as alcohol imported The Court's case-law has already made it for medical purposes or for scientific clear that any prohibition on the export of research. In the present case, however, the particular goods 'cannot, therefore, be ethyl alcohol imported from Estonia was sufficient to remove those products from not subjected to a denaturing process to the scope of the Sixth Directive' 18 and make it unfit for consumption, but simply there is no reason not to extend this had blue food-colouring added to it inten- reasoning also to the importation, subject ded to make it look like anti-freeze, and to any administrative restrictions, of goods was not intended for use for any medical or on which not only VAT, but also customs scientific purpose. duties and excise duties, are chargeable. Furthermore, subsequent Community case- law has taken this direction with regard to the sale of counterfeit perfumes 19 and the unlawful operation of games of chance. 20
21. In conclusion, I consider that ethyl alcohol imported unlawfully from a non- member country into Community territory must be subject to payment of customs duties, excise duties and VAT, in accor- dance with the system in force at the time of the unlawful importation. The principle of fiscal neutrality does not permit any distinction to be made between lawful and unlawful operations, 16 for which reason the obligation to pay customs duties, excise duties and VAT applies even if the goods 17 — For customs duties see Article 202(1)(a) of the Code. For excise duties see Article 6(1)(c) of Directive 92/12. subject to the fiscal charges in question 18 — Case C-111/92 Lange [1993] ECR I-4677, paragraph 17, which concerns the export to certain countries of eastern Europe of computer systems considered as sensitive. 19 — Case C-3/97 Goodwin and Unstead (19981 ECR I-3257. 16 — See Mol cited above, paragraph 18. 20 — Case C-283/95 Fischer [19981 ECR I-3369.
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Conclusions
22. On the basis of the foregoing considerations, I propose that the Court should answer the question put by the national court as follows:
Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products, Council Directive 92/83/ EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages and the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis for assessment, must be interpreted as meaning that the contraband importation into the Community customs territory of ethyl alcohol from non-member countries is subject to customs duties, excise duties and value added tax, in accordance with the provisions in force at the time of the unlawful importation.
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