C-371/99

I - 6230

LIBEREXIM

on entry into the Community, placed under event for those Community duties occurs one of the arrangements referred to in and those duties become chargeable. Article 16(1)(B), points (a), (b), (c) and (d), under arrangements for temporary import- ation with total exemption from import duty or under external transit arrange- ments, the place of import of such goods shall be the Member State within the territory of which they cease to be covered by those arrangements.

5. Article 21 of the Sixth Directive, entitled 'Persons liable to pay tax to the auth- orities', provides that, on importation, VAT is payable by the person or persons designated or accepted as being liable by the Member State into which the goods are imported. 4. Under Article 10(3) of the Sixth Direc- tive:

'The chargeable event shall occur and the Customs provisions tax shall become chargeable when the goods are imported. Where goods are placed under one of the arrangements referred to in Article 7(3) on entry into the Community, the chargeable event shall occur and the tax shall become payable 6. Article 5(2)(a), forming part of Title II, only when the goods cease to be covered by entitled 'Scope', of Council Directive (EEC) those arrangements. No 2726/90 of 17 September 1990 on Community transit, 4provides as follows:

However, where imported goods are sub- ject to customs duties, to agricultural levies 'By way of derogation from Articles 1 and or to charges having equivalent effect 3, the Community transit procedure shall established under a common policy, the chargeable event shall occur and the tax shall become payable when the chargeable 4 — OJ 1990 L 262, p. 1.

1. The goods described on a T1 document may, without the need for a new declar- ation to be made, be transferred to another means of transport under the supervision of 3. In the event of imminent danger necess- the competent authorities of the Member itating immediate unloading of the whole State in the territory of which the transfer is load or part of the load, the carrier may to be made. In such a case, the competent take action on his own initiative. He shall authorities shall record the transfer on the record such action on the T1 document. T1 document. Paragraph 1 shall apply in such a case.

I - 6232

LIBEREXLM

4. If, as a result of accidents or other limit prescribed by the office of departure incidents arising in the course of carriage, and where this failure to comply with the the carrier is not in a position to observe time limit is due to circumstances which are the time limit referred to in Article 13, he explained to the satisfaction of the office of shall inform the competent authorities destination and are not attributable to the referred to in paragraph 1 as soon as carrier or the principal, the latter shall be possible. Those authorities shall then rec- deemed to have complied with the time ord the relevant details on the T1 docu- limit prescribed.' ment.

8. Article 34, forming part of Chapter 4, entitled 'Irregularities', of Title V of Regu- lation No 2726/90, provides as follows: Article 22

1. The goods and the T1 document shall be '1. When it is found that, in the course of a produced at the office of destination. Community transit operation, an offence or irregularity has been committed in a par- ticular Member State, the recovery of duties or other charges which may be chargeable shall be effected by that Member State in accordance with Commu- 2. The office of destination shall record on nity or national provisions, without preju- the copies of the T1 document the details of dice to the institution of criminal proceed- controls carried out and shall without delay ings. send a copy to the office of departure and retain the other copy.

unless, within a period to be determined, 9. Article 2 of the Customs Convention on the international transport of goods under proof of the regularity of the transit oper- cover of TIR carnets, concluded in Geneva ation or of the place where the offence or on 14 November 1975 ('the TIR Conven- irregularity was actually committed is fur- tion'), approved on behalf of the European nished to the satisfaction of the competent Economic Community by Council Regu- authorities. lation (EEC) No 2112/78 of 25 July 1978, 5provides as follows:

If, in the absence of such proof, the said offence or irregularity remains deemed to have been committed in the Member State of departure or in the Member State of 'This Convention shall apply to the trans- point of entry as referred to in the first port of goods without intermediate reload- subparagraph, second indent, the duties ing, in road vehicles, combinations of and other charges relating to the goods vehicles or in containers, across one or concerned shall be levied by that Member State in accordance with Community or national provisions. 5 — OJ 1978 L 252, p. 1.

I - 6234

LIBEREXIM

more frontiers between a customs office of the country where the offence was com- departure of one Contracting Party and a mitted, to the penalties prescribed by the customs office of destination of another or law of such country. the same Contracting Party, provided that some portion of the journey between the beginning and the end of the TIR operation is made by road.'

Article 37 10. Under Article 25 of the TIR Conven- tion:

OPINION OF MR MISCHO — CASE C-371/99

(c) the removal of goods liable to import (c) in the cases referred to in Article 2(1)(c), duties from the customs supervision the moment when the goods are involved in the temporary storage of removed from customs supervision; the goods or their being placed under a customs procedure which involves cus- toms supervision;

(d) in the cases referred to in Article 2(1)(d), either the moment when the obligation, non-fulfilment of which causes the (d) the non-fulfilment of one of the obli- customs debt to be incurred, ceases to gations arising, in respect of goods be met, or the moment when the goods liable to import duties, from their were placed under the customs pro- temporary storage or from the use of cedure concerned where it is estab- the customs procedure under which lished subsequently that a condition they are placed, or non-compliance governing the placing of the goods with a condition to which the placing under the said procedure was not in of the goods under that procedure is fact fulfilled.' subject, unless it is established that these failures have no significant effect on the correct operation of the tem- porary storage or customs procedure in question.'

14. One of the forms 7of 'removal from customs supervision' for the purposes of Article 2 of Regulation No 2144/87 is described in Article 1 of Commission Regu- lation (EEC) No 597/89 of 8 March 1989 13. Article 3 of the same regulation states laying down provisions for the implemen- that: tation of Regulation No 2144/87, 8which is worded as follows:

18. In accordance with the relevant provi- sions, the registration numbers of the truck 16. During October and November 1993 and semi-trailer were entered on the TIR consignments of milk powder originating in carnets and the T1 documents, which Lithuania were imported into the Nether- showed that the goods were intended for lands. On two occasions transport from delivery in Portugal. Lithuania was effected under cover of a TIR carnet, and on seven occasions it was effected under cover of a T1 document from the borders of the Community cus- toms area.

17. The consignments of milk powder were 19. Nevertheless, the goods were taken to loaded in Lithuania into means of transport the premises of Haukes Transportgesells- chaft in Wyler (Germany), near a border crossing to the Netherlands. One Mr Jan 9 — Council Regulation (EEC) No 2913/92 of 12 October 1992 Lamme, against whom, as the main sus- establishing the Community Customs Code (OJ 1992 L 302, p. 1, 'the Customs Code'). Under Article 253 of pect, criminal proceedings have been insti- the said Regulation, it applies from 1 January 1994. tuted in respect of the imports in question,

I - 6237

OPINION OF MR MISCHO — CASE C-371/99

or a member of the organisation which he was applicable because the consignments of had set up, was waiting there with a truck milk powder had 'ceased to be covered' by bearing Dutch number plates. The trailer a customs arrangement in the Netherlands. was detached from the original truck and attached to the Dutch truck without the customs authorities being informed.

I - 6238

LIBEREXIM

I I I— The questions referred (b) does such cessation occur (only) once the goods — in the present case following breaking of the seals — have been unloaded from the means of transport without compliance with the obligation to produce the goods with documen- 26. Under those circumstances, the tation at the office of destination in national court took the view that the accordance with Article 22(1) of outcome of the case depended on the Regulation [No 2726/90]; is it rel- interpretation of Article 7(3) of the Sixth evant whether in this operation Directive and decided to stay the judgment there is an intention to bring the and refer the following questions to the goods — inter alia through com- Court for a preliminary ruling: pletion of the operation — into circulation within the Community contrary to the Community provi- sions; or

'(1) What is to be understood by the words "cease to be covered" by the external transit arrangements within the mean- (c) should the words "cease to be ing of Article 7(3) of the Sixth Direc- covered" be construed as referring tive, if such cessation does not occur in to the totality of the operations a regular manner — that is to say, which result in the goods being otherwise than by the goods being brought into circulation within the declared for free circulation: Community otherwise than in a regular manner?

(a) is this the first operation which, in relation to the goods, is carried out (2) If the answer to the first question is in contrary to any provision con- accordance with heading (c), where nected with those arrangements, does this cessation occur; does it occur and is it relevant whether in this in the place where the first irregular operation there is an intention to operation is carried out, or in the place bring the goods — inter alia where a subsequent operation is carried through completion of the oper- out, in particular the place where the ation — into circulation within goods — in the present case following the Community contrary to that breaking of the seals — are unloaded provision; or from the means of transport?'

29. Consequently Liberexim proposes that 'the Court should rule that the reply to point (a) of the first question from the 32. The Netherlands Government adds Hoge Raad must be in the affirmative since, that the question whether the change of having regard to the acts described in the truck, referred to in question 1(a) from the Hoge Raad judgment, which were in national court, gives rise to a customs debt breach of the provisions of Community for the purpose of Article 2(1)(d) of Regu- law in general and those of Regulation lation No 2144/87 is irrelevant because an (EEC) No 2855/85 in particular, import act which incurred a customs debt within duties became payable.' the meaning of Article 2(1)(c) of that Regulation was detected. According to the Netherlands Government, the general scheme of those provisions has the con- sequence that the criterion of non-fulfil- ment of one of the obligations or non- compliance with one of the conditions of 30. The Netherlands Government con- Article 2(1)(d) of Regulation No 2144/87 siders that, 'to determine the place where can no longer apply.

I - 6240

LIBEREXIM

34. The Italian Government submits that 36. According to the United Kingdom only acts which indicate an unambiguous Government, when goods 'cease to be intention on the part of the operator covered' by the transit arrangements, this concerned to obtain power to dispose of coincides with the incurrence of the cus- goods subject to particular customs toms debt. The basic purpose of the arrangements, without previously carrying external transit arrangements is to suspend out the customs formalities prescribed for customs duties. Once the customs debt is that purpose, are such as undoubtedly to incurred, the goods must be considered as cause in an irregular manner the goods in having ceased to be covered by the external question to 'cease to be covered' by such transit arrangements. arrangements. Therefore defects of a purely formal nature, which by law can be rec- tified at a later date, cannot constitute conditions for a customs debt and, con- sequently, a tax liability, to arise.

37. The United Kingdom Government con- siders that the customs debt is incurred at the time of the first act which must be treated as removal of the goods from customs supervision within the meaning 35. Therefore, according to the Italian of Article 2(1)(c) of Regulation No Government, the mere change of trucks 2144/87, whether as the non-fulfilment of cannot, in the absence of unequivocal an obligation or non-compliance with a evidence of an intention to remove the condition within the meaning of goods from customs supervision and not to Article 2(1)(d) of the same regulation. If present them at the office of destination, be an act is treated in this way, a customs debt

—· either the goods placed under those 4. An irregularity can never be regarded as arrangements are removed from cus- of minor importance where it has the object toms supervision; of compromising customs supervision.'

I - 6242

LIBEREXIM

40. To sum up, it follows from the fore- interpret the phrase 'cease to be covered' in going observations that Liberexim and the Article 7(3) of the Sixth Directive, which United Kingdom Government submit that, reads as follows: 'Notwithstanding para- in substance, the goods 'ceased to be graph 2, where goods referred to in para- covered' by the external transit arrange- graph 1(a) are, on entry into the Commu- ments in Germany, while the Netherlands nity, placed under one of the arrangements and the Italian Governments consider that referred to in Article 16(1)(B), points (a), this took place in the Netherlands. The (b), (c) and (d), under arrangements for Commission, for its part, makes no com- temporary importation with total exemp- ment on the circumstances of the main tion from import duty or under external proceedings but, in my opinion, it finds transit arrangements, the place of import of that the gravity of the two successive such goods shall be the Member State offences must be compared. within the territory of which they cease to be covered by those arrangements. ' 11

46. Where an operation is carried out incorrectly, Article 34(1) of the same regu- lation provides that 'when it is found that, in the course of a Community transit — the offence was also committed in that operation, an offence or irregularity has Member State; been committed in a particular Member State, the recovery of duties or other charges which may be chargeable shall be effected by that Member State in accord- ance with Community or national provi- sions, without prejudice to the institution — it unquestionably put an end to the of criminal proceedings.' transit operation and caused the goods to 'cease to be covered' by the transit arrangements;

47. It follows that an offence must be — therefore the duties and other charges prosecuted in the Member State where it must be recovered in the Netherlands. was committed, if it is possible to deter- mine that State. If the offence is such that it must give rise to the recovery of duties or other charges, they must be recovered in that Member State. 49. However, the defendant contends that another offence was previously committed in another Member State. Could this fact be such as to remove the matter from the jurisdiction of the Netherlands authorities and courts? Is it conceivable that the goods 48. It is clear that, in a case such as that to may, in spite of everything, have 'ceased to which the main proceedings relate, all the be covered' (which can obviously take

I - 6244

LIBEREXIM

50. The United Kingdom and Netherlands Governments, like the Commission, con- sider that the solution to the problem may be found in Regulation No 2144/87. 54. As the Italian Government points out, customs duty is suspended in the situation where goods are covered by external transit arrangements. This suspension of the cus- toms debt is not a peripheral effect of those arrangements but, as the United Kingdom Government also observes, a fundamental 51. At first sight this is not an obvious characteristic, or even the reason for their approach if reference is made to existence. It is difficult to see what purpose Article 10(3) of the Sixth Directive which, the external transit arrangements could after stating that, for goods placed under have other than the suspension of customs one of the arrangements referred to in duties as far as the place of destination. Article 7(3), the chargeable event occurs and the tax becomes chargeable only when the goods cease to be covered by those arrangements, continues by providing that '[hjowever, 12... the chargeable event shall occur and the tax shall become payable when the chargeable event [for customs 55. It is clear that, although the legislation, duties and levies to which imported prod- in particular Regulation No 2144/87, pro- ucts are subject] occurs and those duties vides that in certain, specific, irregular become chargeable.' situations, a customs debt is incurred for goods subject to the external transit arrangements, it must be concluded, at 12 — Emphasis added. least in principle, that, on the same occa-

59. It is immediately apparent that the situations which give rise to a customs debt (a) the placing of goods... in free circu- and which are relevant in the present case lation; are those described in (c) and (d).

I - 6246

LIBEREXIM

60. In this particular case it cannot be ments are an exception to the general rule denied that the acts which the national that goods imported into the Community court has to consider took place in the are taxed at the time when they cross the Netherlands and that they must be treated customs border. as constituting a removal from customs supervision, that is to say, the unloading of goods after breaking of the seals and their being put into circulation without fulfil- ment of the obligation to present the goods and the T1 document at the office of destination. 64. As those arrangements are exceptional, it follows that the goods can only benefit from the legal fiction of extraterritoriality as long as all the obligations imposed by 61. Nevertheless, should the goods be the rules for external transit arrangements deemed to have 'ceased to be covered' at are strictly fulfilled. This conclusion is an earlier moment in time on the ground particularly compelling in so far as the that an act had previously taken place in goods circulate on Community territory another Member State, namely a change of without being subject to constant super- truck, which, although it may fall within vision by the customs authorities. There- the types of situation referred to in (c) and fore operators enjoy a kind of 'trust (d), appears less serious than the acts which relationship' in return for complying with took place in the Netherlands? the conditions entailed by the arrange- ments.

66. In concrete terms, if criminal proceed- court before which the case is brought, that ings are commenced in the Member State court must decline jurisdiction. where the goods were placed under exter- nal transit arrangements, it is for the competent court of that Member State to ascertain whether an offence has actually been committed under those arrangements in the territory of that State. 70. What, then, is the situation where, as in the present case, an offence was detected and proceedings were instituted in a Member State where the transit operation was continued or completed? In that case the court will, of course, examine the 67. If the offence can be treated as removal nature of the offence committed in its of the goods from customs supervision, the country. If it is informed that there was a court must uphold the decision to recover previous offence in another Member State, duties. it will have to decide which of the two offences caused the goods to 'cease to be covered' by the external transit arrange- ments.

73. This alone shows — and here I refer to point (a) of the first question from the national court — that any kind of 'first 78. In the present case, the first offence is operation which, in relation to the goods, is described as follows by the Hoge Raad: carried out contrary to any provision' because of the replacement of the original connected with the external transit arrange- truck (of which the customs authorities ments does not necessarily automatically were not informed as required by cause the goods to 'cease to be covered' by Article 20 of Regulation No 2726/90), 'the those arrangements. transport ceased to correspond to the declaration of external transit, on which the registration numbers of both the truck and trailer were shown for purposes of identification and the maintenance of cus- toms control'. These particulars are required by two regulations cited by the 74. On the other hand, no proviso of that Hoge Raad. kind is laid down in relation to the 'removal of goods from customs super- vision'. As soon as removal is established, the debt is automatically incurred.

79. The United Kingdom Government con- 75. A court faced with a situation such as siders that changing the trucks in that way that in the main proceedings must therefore is a case of removal of the goods from determine whether one of the two offences customs supervision. may be regarded as a removal of goods from the supervision of the customs auth- orities.

80. However, I consider that acts such as 76. But what happens where two successive those found in the Netherlands, far more offences appear, at first sight, to be capable than the change of trucks, conform to the of being treated as 'removal'? definition of removal which the Court gave

84. Secondly, where there are two success- ive irregularities in the course of one and the same transit operation, the first of which was not discovered in time and only 82. Therefore I reach the conclusion that, the second of which led to the goods in circumstances such as those of the main actually being put into circulation, it accords more with the spirit of the VAT system if the VAT is recovered by the 13 — Case C-66/99 [2001] ECR 1-873, paragraph 47. Although Member State where they were put into this definition was given on the basis of provisions of the circulation rather than by the Member Customs Code, I do not think that the definition of 'removal' could have been different under the regulations State through whose territory they merely preceding the Customs Code. 14 — Emphasis added. passed in transit.

I - 6250

LIBEREXLM

85. The national court also wishes to know that the court cannot conclude that an whether any importance should be attached offence has been committed solely on the to the fact that the act is connected with an basis of the presumed intention of the intention to put the goods into circulation economic operator concerned. in the Community without complying with the rules for the arrangements in question.

88. The fact that it is sufficient if 'certain objective conditions' are met also means

91. The final question, which should be 15 — See the D. Wjiulcl judgment, cited above, paragraph 48. examined for the sake of completeness, is

I - 6251

OPINION OF MR MISCHO — CASE C-371/99

whether the foregoing observations relating 92. On this point, it must be observed that to external transit arrangements also apply the provisions of Articles 36 and 37 of the to the TIR procedure to which, under TIR Convention are similar to those in Article 5(2)(a) of Regulation No 2726/90, Article 34 of Regulation No 2726/90. the rules for external transit arrangements Therefore I consider that the same criteria do not apply. should be applied to the TIR procedure as those for the external transit arrangements.

VI — Conclusion

— non-fulfilment of one of the obligations arising, in respect of goods liable to import duties, from the use of the customs procedure under which they are placed, or non-compliance with a condition to which the placing of the goods under that procedure is subject, unless it is established that these failures have no significant effect on the correct operation of the customs procedure in question, within the meaning of Article 2(1)(d) of Regulation No 2144/87.

(2) However, where, in circumstances such as those of the main proceedings, in the course of one and the same external transit operation, an irregularity occurs which is not discovered until the occasion of a subsequent irregularity consisting in the breaking of seals, the unloading of goods and their being put into circulation, without fulfilment of the obligation to present the goods and the document at the office of destination, it is the second irregularity which causes the goods to 'cease to be covered' by the external transit arrangements within the meaning of Article 7(3) of the Sixth Directive 77/388/EEC, as amended by Directive 92/111.

(3) No importance is to be attached to the intention of the person responsible for the irregularity.

I - 6253