C-156/00

OPINION OF MR LÉGER — CASE C-156/00

O P I N I O N O F ADVOCATE GENERAL LÉGER delivered on 11 July 2002 1

1. By this action, based on the provisions of I — Legal background Article 230 EC, the Kingdom of the Netherlands requests the Court of Justice to annul Commission Decision C (2000) 485 final of 23 February 2000 determining in a particular case that an application for remission of import duties is inadmissible A — The relevant provisions of Regulation in a specified amount and that there is no (EEC) No 2913/92 justification for remission of import duties in a separate amount. 2

3. Regulation (EEC) No 2913/92 3 assem- bles in a code the provisions of Community customs law which were previously dis- persed amongst a large number of Com- munity regulations and directives. It sought furthermore to amend the customs legis- lation then in force in order to make it more consistent, to simplify it and to remedy certain omissions which still existed. The aim was thereby to adopt complete Community legislation in that area. 4

2. The case relates to products falling 4. According to Article 114(1)(a) of the within the inward processing customs pro- Code, the inward processing procedure cedure. 3 — Regulation of the Council of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1, 1 — Original language: French. hereinafter 'the Code'). 2 — Hereinafter 'the contested decision'. 4 — See the first and second recitals.

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7. Under Article 114(2)(e) of the Code, equivalent goods are Community goods which are used instead of the import goods for the manufacture of compensating prod- 3. Where paragraph 1 applies, the import ucts. goods shall be regarded for customs pur-

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poses as equivalent goods and the latter as 3. Communication to the debtor shall not import goods.' take place after the expiry of a period of three years from the date on which the customs debt was incurred. However, where it is as a result of an act that could give rise to criminal court proceedings that the customs authorities were unable to determine the exact amount legally due, 9. Article 220 of the Code provides for the such communication may, in so far as the possible subsequent entry in the accounts of provisions in force so allow, be made after a customs debt. According to Arti- the expiry of such three-year period.' cle 220(2)(b) of the Code, there shall be no subsequent entry in the accounts of a customs debt, save in certain situations specified in that provision, where 'the amount of duty legally owed failed to be entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been 11. Article 235(b) of the Code defines the detected by the person liable for payment, concept of the 'remission' of duties. the latter for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration'.

12. According to that provision, 'remiss- ion' means 'either a decision to waive all or part of the amount of a customs debt or a 10. Article 221 of the Code provides: decision to render void an entry in the accounts of all or part of an amount of import or export duty which has not been paid.'

B — The relevant provisions of Regulation (EEC) No 2454/93 18. Article 589 of the implementing Regu- lation relates to the payment of compensa- tory interest. It stipulates as follows: 15. Regulation (EEC) No 2454/93 5 is the implementing Regulation which seeks to bring together in a single regulation the implementing provisions of Community customs law until then scattered over a ' 1 . Where a customs debt is incurred in large number of Community regulations respect of compensating products or goods and directives. Additionally, it modifies in the unaltered state, 8 compensatory inter- those rules in order to adapt them to the est shall be paid on the import duty provisions of the Code and to extend their applicable. scope to take into account the comprehen- sive application of the Code and to formu- late certain rules more precisely in order to achieve greater legal certainty in their application. Those amendments relate mainly to the provisions on customs debt. 6 2. Paragraph 1 shall not apply:

16. Article 549 of the implementing Regu- lation defines the principal terms used in relation to the inward processing relief arrangements. 7 — That provision requires that 'where use is to be made of equivalent compensation, the equivalent goods must fall within the same eight-digit subheading of the CN code, be of the same commercial quality and have the same technical characteristics as the import goods.' 5 — Regulation of the Commission of 2 July 1993 laying down 8 — According to Article 84(3) of the Code, goods in the provisions for the implementation of [the Code) (OJ 1993 unaltered state are 'import goods which, under the inward L 253, p. 1, hereinafter 'the implementing Regulation'). processing procedure... have undergone no form of process- 6 — See the second and third recitals. ing.'

3. The request for consideration of a case under the terms of the fifth indent of paragraph 2 shall be submitted to the customs authorities indicated by the Member State which issued the authori- '[w]here the decision-making customs auth- sation. It shall be admissible only if accom- ority to which an application for... panied by all the supporting documents remission under Article 239(2) of the needed for a full examination of the case.' [Code] has been submitted cannot take a decision..., but the application is supported by evidence which might constitute a special situation resulting from circum- stances in which no deception or obvious negligence may be attributed to the person concerned, the Member State to which this authority belongs shall transmit the case to the Commission to be settled under the 19. Article 589(3) of the implementing procedure laid down in Articles 906 to Regulation states, in essence, that, above 909.' a certain sum, customs authorities which intend to grant the request shall forward the request with a complete file to the Commission. The latter shall acknowledge receipt thereof within two months. If the Commission has not informed the Member State of any objection within two months 22. Under Article 905(2) of the implement- from the date of acknowledgement of ing Regulation, the Commission may ask receipt, the Member State shall not charge for additional information to be supplied, compensatory interest. where it is found that the information supplied by the Member State is not sufficient to enable a decision to be taken 9 — According to Article 79 of the Code, '[r]elease for free on the case concerned in full knowledge of circulation shall confer on non-Community goods the customs status of Community goods.' the facts.

28. In the course of inspections carried out in 1994 and 1995, the inspection depart- ment of the Netherlands Ministry of Agri- culture, Nature Management and Fisheries found that the main compensating product 25. The Netherlands company Cargill imported by Cargill had not been obtained BV, 10 whose business activities consist of entirely from imported maize, but as to the production of starch and glucose syrup, 25% from imported maize and as to 75% holds authorisation for inward processing. from wheat of Community origin. The two That authorisation allows it to import products are not classified under the same maize from third countries free of duties tariff heading in the combined nomencla- subject to the maize being processed into ture code. glucose, the main compensating product, 11 as well as into a number of secondary 12 — According to Article 549(b) of the implementing Regu- lation, 'secondary compensating products [are] compensat- ing products other than the main compensating products 10 — Hereinafter 'Cargill'. which are a necessary by-product of the processing 11 — Under Article 549(a) of the implementing Regulation, operation'. They are, in the case under consideration, 'main compensating products' shall mean 'the compensat- residues from the starch industry under CN code 2303 10 ing products for the production of which the use of the 11 and maize gluten animal feed under CN code 2303 10 inward processing procedure was authorised'. 19.

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29. As a result of those inspections, the 17 491 244.45, corresponding to the Netherlands authorities enquired of the import duties plus compensatory interest. Commission whether it authorised equival- That sum reflects the customs debt deriving ence between the imported maize and from Cargill's erroneous application of the w h e a t of C o m m u n i t y o r i g i n . On provisions relating to the inward processing 23 November 1995, the Commission procedure over the period 1992 to 1994. responded that it could not allow such equivalence and referred, in particular, to differences in tariff protection between the two products.

36. By the contested decision, the Commis- sion determined, first, that the application for remission of import duties was inad- missible in so far as it related to com- pensatory interest in the sum of NLG 732 093.78 owing under Article 589 of the implementing Regulation. In the view 39. The Commission conceded that, with of the Commission, compensatory interest the exception of the goods which could be did not form an integral part of the customs the subject of equivalent compensation debt. It found, accordingly, that it was not under the authorisation granted, there had for it to rule on the matter, but that it fell to been compliance with the various customs the competent national authorities alone to rules involved. It also found that, for take a decision in that regard. several years and in relation to considerable quantities of goods, the competent customs authorities had not objected to the practice followed by Cargill. The Commission took the view, therefore, that all those circum- stances together were such as to give rise to 37. Second, the Commission held that the a special situation within the meaning of application in question was inadmissible Article 239 of the Code. It pointed out where it related to duties on imports made none the less that such a situation could before 3 December 1993. According to the only lead to remission of import duties if Commission, those duties were time- there was no deception or obvious negli- barred, in accordance with Article 221(3) gence attributable to the person concerned. of the Code, and could no longer be claimed from the undertaking concerned. The amount in question in the case under consideration was NLG 15 679 301.49.

— Order the Commission to pay the costs.

— second, the contested decision infringes Article 221 of the Code, in so far as the contested decision declared part of the 43. The Commission claims that the Court application in question inadmissible on should: the grounds that it was time-barred.

— Dismiss the action; — third, the contested decision infringes Article 239 of the Code and Article 905 of the implementing Regulation, the principle of proportionality and, lastly, the duty to state reasons set out in — Order the applicant to pay the costs. Article 253 EC.

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NETHERLANDS v COMMISSION

V — The first head of claim regarding 47. The Court of Justice has established the inadmissibility of the application for following principles in relation to the remission of compensatory interest statement of reasons required under Article 253 EC. 13

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by the aforementioned letter of 22 April 52. In relation to points of law, the Com- 1999, relates to the sum of NLG mission stated that the compensatory inter- 17 491 244.45. That sum includes the est at issue should be classified as taxation. compensatory interest owed under Arti- As such, it is a matter of national law and cle 62 of Regulation (EEC) No 2228/91 [14] does not form part of the customs debt. The and Article 589 of the [implementing] Commission concluded therefrom that it Regulation (NLG 732 093.78). fell to the national authorities to determine whether that application was founded.

54. I take the view, accordingly, that the 14 — Regulation of the Commission of 26 June 1991 laying contested decision does satisfy the require- down provisions for the implementation of Regulation (EEC) No 1999/85 on inward processing relief arrange- ments of Article 253 EC. The plea in law ments (OJ 1991 L 210, p. 1). That instrument was repealed alleging infringement of that provision and replaced by Article 589 of the implementing Regu- lation. must therefore be dismissed.

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NETHERLANDS v COMMISSION

60. Article 589(2) of the implementing 57. It is apparent from the wording of Regulation establishes that the exceptions Article 589(1) of the implementing Regu- to the rule that compensatory interest is lation that the compensatory interest is inseparable from the customs debt. Under that provision, '[w]here a customs debt is 15 — Emphasis added.

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OPINION OF MR LÉGER — CASE C-156/00

paid relate in essence to situations where established in the aforementioned goods or compensating products are 're- Article 589(3), the customs authorities leased for free circulation'. intend to grant the request submitted on the basis of one of the situations listed in Article 589(2) of the implementing Regu- lation, that is, where there is release for free circulation of goods or compensating prod- ucts.

16 — Under Article 1(7) of the implementing Regulation, 'com- 65. Having regard to the foregoing con- mercial policy measures' means non-tariff measures estab- siderations, I am of the view that the lished, as part of the common commercial policy, in the form of Community provisions governing the import and Commission could not, on the basis of export of goods, such as surveillance or safeguard meas- Article 589(3) of the implementing Regu- ures, quantitative restrictions or limits and import or export prohibitions. lation, rule on the application for non-

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NETHERLANDS v COMMISSION

payment of compensatory interest sub- 69. In the absence of any legal basis, it is mitted by Cargill to the Netherlands cus- therefore not for the Commission to rule on toms authorities. The Commission was the application for non-payment of com- therefore fully entitled to declare the appli- pensatory interest. cation for non-payment of compensatory interest under Articles 589(1) and 589(3) of the implementing Regulation to be inad- missible. 70. The plea in law alleging infringement of Article 589 of the implementing Regu- lation must therefore be dismissed.

66. For the sake of completeness, it should be pointed out that the national authorities have powers under the general law in relation to individual decisions on customs rules. In the present context, the Commis- VI — The second head of claim alleging sion enjoys delegated powers strictly infringement of Article 221 of the Code defined by the Code and the implementing Regulation.

time-barred, but justifies its refusal to 75. In common with the Netherlands Gov- consider the application for remission of ernment, I believe that the Commission did the customs debt which arose prior to exceed its powers by finding the appli- 3 December 1993 by the fact that it is cation for remission to be inadmissible in apparent from the documents forwarded by that it was, in part, time-barred. the Netherlands authorities that those debts are clearly time-barred. It claims, further, that, in the context of the procedure for remission of a customs debt, submission of the matter to the Commission is con- ditional on the customs debt being 'effec- tively' recoverable. Since the debt is clearly time-barred, it is no longer effectively 76. The last sentence of Article 221(3) of recoverable. The application for remission the Code provides expressly that, where the is therefore, according to the Commission, customs authorities have been unable to inadmissible. determine the exact amount of duties legally due, as the result of an act that could give rise to criminal court proceed- ings, those authorities may communicate the customs debt to the debtor after expiry of the period laid down in the aforemen- tioned Article 221(1) (that is, a period of 73. A preliminary point to note is that, in three years from the date on which the debt the context of an action for annulment arose). It follows from that provision that under Article 230 EC, the sole task of the the involvement of the criminal courts may Court of Justice is to examine whether the be relevant to the time-barring of the pleas in law raised in support of that customs debt. Prescription and, in particu- application are well-founded. It is not for lar, the ability to stop time running and the the Court to substitute its own findings for manner it which it may be stopped, are the those of the maker of the decision in exclusive preserve of national law and the dispute nor to issue directions to the powers of review of the national court. Community institutions. Accordingly, only the national court, hear- ing an action contesting communication of a customs debt, is competent to determine whether the requirements are satisfied to allow the debt to be communicated after expiry of the three-year period established in the last sentence of Article 221(3) of the 74. Further, as has been seen, 19 the Code. national authorities have powers under the general law in relation to individual decisions on customs rules. In that field, the Commission enjoys delegated powers, strictly defined by the Code and the imple- menting Regulation.

81. Article 905 of the implementing Regu- lation does not set a time-limit for submit- ting the matter to the Commission, any 79. Unlike the Commission, I do not more than it defines when that submission believe that submission of the matter to must take place. One must conclude that, the Commission, in the context of the in the context of Article 905 of the remission procedure, is conditional on implementing Regulation, it is for the proving that the customs debt is 'effec- Member State to which the competent tively' recoverable. The Commission's national authority belongs to decide the stance amounts to making the right to appropriate time to bring the matter before bring a case before it, in the context of an the Commission. Accordingly, where there application for the remission of customs is an action relating to the prescription of a duties, subject to a condition not laid down customs debt, the Member State in question in Article 239 of the Code or Article 905 of must be able to submit the matter to the the implementing Regulation. 20 Commission before final disposal of that action.

ible on the grounds that it was time-barred, statement of reasons. In its view, the infringed the provisions of the last sentence contested decision does not enable it to of Article 221(3) of the Code. I therefore ascertain the reasons which led the Com- propose that the Court should annul the mission to hold that the part of the contested decision in that regard. application for remission of customs duties relating to the part of the customs debt which was not time-barred was unfounded. It charges the Commission in particular with failing to state the grounds on which it determined that the penalty complied with the principle of proportionality. VII— Third head of claim relating to the unfounded nature of the application for remission of the customs duties not forming part of the time-barred customs debt 85. As regards the statement of reasons required by Article 253 EC, the Court of Justice has, as we have seen, established a 83. The Netherlands Government submits number of principles. three pleas in law in support of this head of claim. It contends that the Commission infringed Article 905 of the implementing Regulation by finding the application for remission of the customs duties not forming part of the time-barred customs debt to be 86. According to the settled case-law of the unfounded. In the alternative, it asserts that Court, a decision complies with the the Commission infringed the principle of requirements of Article 253 EC even if it proportionality. In the further alternative, does not specify all the relevant facts and it submits that the Commission breached points of law on which the author based its the duty under Article 253 EC by failing to decision. Compliance with the require- comply with the procedural requirements ments of Article 253 EC must also be relating to the statement of reasons. assessed on the basis of the context and the legal rules governing the matter.

have professional expertise in the field. to conclude that, as a result of that experi- Likewise, in paragraph 27, it stated in what ence, Cargill should have realised that it respects the customs rule which gave rise to could not use wheat in place of maize for the error was not complex. Cargill's lack of the manufacture of the exported glucose. It diligence was also set out in detail in submits three arguments seeking to estab- paragraphs 30 to 35. The Netherlands lish that the Commission was wrong to find Government was therefore in a position to Cargill had been obviously negligent. know the grounds in fact and law on the basis of which the Commission found to be ill-founded the application for remission of customs duties in relation to the part of the debt which was not time-barred and drew the consequences of that finding laid down by the Code, namely that it should require 90. First, it contends that the contested payment of the customs duties due irre- decision shows that the Commission spective of the advantage the infringer imposed more stringent requirements on actually obtained. the party concerned than those which the competent authorities were capable of satisfying. As the Commission itself stated, the competent customs authorities raised no objection to the transactions of the party concerned, even though they had been carried out for many years. 88. The plea in law alleging infringement of Article 253 EC should therefore be dismissed.

mixed with standard quality maize, may be whilst, for the whole of the period in accepted to the extent that the quality question, the company made a relatively benefits, as regards part at least, even if not modest profit estimated at NLG 710 700. entirely, have been waived.' Under those circumstances, and bearing in mind the facts of the case, the Government argues that it would be disproportionate not to remit the customs debt, that debt being higher than the advantage obtained by the party concerned, as Cargill stated in its application to the customs authorities. 92. According to the Netherlands Govern- ment, the Commission accepts that various varieties of maize are equivalent in so far as the maize is processed into a number of categories of compensating products. Pur- suing that line of argument, the Nether- lands Government maintains that it was 95. The Netherlands Government adds permissible to deem maize and wheat to be that the Commission did not formally rule interchangeable raw materials for the pur- on the aforementioned claim and that, for poses of the manufacture of an identical that reason also, the contested decision compensating product, that is, glucose. cannot stand.

96. As the Commission quite rightly indi- 93. Third, the Netherlands Government cated, the concept of 'obvious negligence' draws attention to the fact that the practice within the meaning of the Code and the adopted by the party concerned is a com- implementing Regulation has been mon practice in Europe. In view of the addressed in abundant case-law of this circumstances one cannot therefore, it Court. That case-law delineates the follow- asserts, describe the conduct of the party ing principles. concerned as 'negligent' and even less charge it with obvious negligence.

under certain conditions and in cases of Justice has held that this amounts in fact specifically provided for, constitutes an to assessing the complexity of the provi- exception to the normal import and export sions non-compliance with which resulted procedure and, consequently, the provi- in the customs debt being incurred. 24 sions which provide for such repayment or remission are to be interpreted strictly. Since a lack of "obvious negligence" is an essential condition of being able to claim repayment or remission of import or export duties, it follows that that term must be interpreted in such a way that the number 101. As regards the second criterion relat- of cases of repayment or remission remains ing to the professional experience of the limited'. 22 It is in the light of the foregoing trader, it is necessary to examine whether considerations that one must interpret the or not he is a trader whose business concept of obvious negligence. activities consist mainly in import and export transactions and whether he had already gained some experience in the conduct of such transactions. 25

98. Second, in order to assess whether there is Obvious negligence' within the meaning of Article 239 of the Code and Article 905 of the implementing Regulation, regard 102. Further, in relation to the third cri- must be had to the precise nature of the terion of the care taken by the trader, the error and the professional experience of, Court of Justice has held that, wherever he and the care taken by, the trader. 23 has doubts as to the exact application of the provisions non-compliance with which may result in a customs debt being incurred, the onus is on the trader to make inquiries and seek all possible clarification to ensure that he does not infringe the provisions in question. 26 99. Those three cumulative criteria have likewise been the subject of abundant case- law which can be summarised in outline as follows.

104. In the context of an action under Article 230 EC, the Court of Justice must examine whether the Commission erred in its assessment of the facts, having regard to the evidence produced. In any event, the 107. In the case under consideration, Car- party alleging it must prove any such gill had to ascertain whether the wheat erroneous assessment. could be treated as goods equivalent to the maize intended for processing for which the inward processing authorisation had been granted. To do so, Cargill had only to check whether the two products fell within the same eight-digit subheading of the CN 105. The second criterion presents no dif- code. In fact, that condition is not satisfied, ficulty. The Netherlands Government since the two products in question are not acknowledges that Cargill is a major under- within the same subheading of the CN taking with extensive experience in the field code. of inward processing. It is common ground that it participates in, or has participated in, numerous procedures, including cus- toms procedures, in connection with the common agricultural policy. Cargill was therefore adjudged, rightly, to be a trader whose activities consist, mainly, in import 108. It is apparent from the foregoing that and export transactions and which had the Commission did not commit an error of acquired undisputed experience in the con- assessment in finding that the rules which duct of such transactions. Cargill failed to apply, and which gave rise to the customs debt, were not complex. The Code's definition of equivalent goods is, in fact, clear and simple.

maize and standard quality maize does not required to have more extensive knowledge seem to me such as to justify Cargill's error. than the customs officials. This Court has In contrast to the terms of that letter, the in fact explicitly rejected such a view on the issue, in the present case, is not one of grounds that to establish any such principle assessing the equivalence between two 'would have the consequence that it would types of maize, but of ascertaining the be practically impossible to effect post- equivalence between maize and wheat clearance recovery since the error will which are, intrinsically, different products. inevitably always have been committed by As regards the concept of 'equivalence', one the official concerned failing to examine all should note that the equivalence between the aspects of a factual or legal situation'. 27 two products is determined on the basis of It has accepted none the less that it was the import goods and not of the finished necessary to look specifically at all the product. Article 115(1) of the Code and circumstances of the case in order to Article 549(g) of the implementing Regu- determine whether or not the error was lation leave no room for ambiguity on that detectable by the trader in question. 2 8 In point. According to those provisions, there that regard, the competent authority can only be equivalent compensation where charged with assessing the circumstances the compensating products are obtained had to take into account the nature of the 'from equivalent goods'. The fact that the error and the professional experience of, products once processed may have the same and the care taken by, the trader. 29 characteristics and be interchangeable is therefore irrelevant for the purposes of their classification as 'equivalent products'. Furthermore, it seems to me surprising, to say the least, given its experience and knowledge of the customs procedure in question, that a trader such as Cargill, in 111. Having regard to the fact that the doubt as to the interpretation of the con- applicable rules were not complex and cept of 'equivalent goods' in Article 115(1) Cargill's experience in the field, I take the of the Code and Article 549(g) and 569 of view that the Commission did not err in the implementing Regulation, did not see finding that such a trader was unjustified in fit to dispel that purported ambiguity by treating maize and wheat as equivalent making more specific enquiries of the products. competent authorities. Cargill's failure to do so thus indicates that it did not act with the diligence which this Court requires in that regard.

117. Under Article 69(2) of the Rules of 115. In that regard, the Court of Justice has Procedure, the unsuccessful party is to be invariably held that Article 859 of the ordered to pay the costs, if they have been implementing Regulation establishes an applied for in the successful party's plead- exhaustive set of rules on failures to fulfil ings. obligations, within the meaning of Article 204(1)(a) of the Customs Code, which 'have no significant effect on the correct operation of the... customs pro- cedure in question'. 30 It is apparent from that case-law that failure to perform one of 118. Since the Kingdom of the Netherlands the obligations laid down by the customs has been unsuccessful in the essential procedure under which the goods are aspects of its submissions and the Commis- sion has applied for an order for costs against that Member State, I take the view 30 — Söhl & Söhlke, cited above (paragraph 43). that the Court should make such an order. I - 2552

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IX — Conclusion

119. In view of the foregoing, I therefore propose that the Court should:

— annul Commission Decision C (2000) 485 final of 23 February 2000 determining in a particular case that an application for remission of import duties was inadmissible in a specific amount and that there was no justification for remission of import duties in another amount, in that it finds the application for remission to be inadmissible in so far as it relates to duties in connection with imports made prior to 3 December 1993, in the sum of NLG 15 679 301.49, which duties it found to be time-barred, under Article 221(3) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, and no longer recoverable from the Netherlands company Cargill BV;