Opinion of the Advocate General — ECLI:EU:C:2009:510
Date: 2009-09-03
Language of the case: Danish
Subject matter: Taxation;Free movement of goods;Customs Union;Excise duties
Procedure: Reference for a preliminary ruling
Origin: Denmark

summary, it therefore follows from both a teleological and a schematic interpretation of the criterion for extinction under point (d) of the first paragraph of Article 233 of the Customs Code that the destruction of seized goods by the competent authorities is to be construed as ‘confiscation’ of those goods within the meaning of that provision. 5. Conclusion 121. In the light of the foregoing, the answer to the first question must be that ‘seizure’ within the meaning of point (d) of the first paragraph of Article 233 of the Customs Code requires physical control to be acquired by the national authorities upon unlawful introduction into the Community, by which the goods are taken into possession pending their confiscation. The ‘confiscation’ of goods within the meaning of that provision requires the irrevocable forfeiture of the power of disposal of the owner or of the person holding the power of disposal, irrespective of whether this is connected with a change of ownership to the State. B – Second question 1. General remarks 122. By its second question, the referring court is essentially seeking to ascertain whether seizure with simultaneous or subsequent confiscation of smuggled goods pursuant to the first subparagraph of Article 5(2) and Article 6(1)(c) of Directive 92/12 in conjunction with Article 84(1)(a) and Article 98 of the Customs Code and Article 867a of the Implementing Regulation means that those goods are to be deemed to have been placed under excise duty suspension arrangements. 123. The referring court also asks whether the answer is affected by whether or not a customs debt incurred on unlawful importation is extinguished under point (d) of the first paragraph of Article 233 of the Customs Code. 124. In order to answer the second question, it is first necessary to clarify the distinction made by the legislature between the chargeable event for excise duty under Article 5(1) of Directive 92/12 and the chargeable event under Article 6(1) of that directive. (16) 125. Under the first subparagraph of Article 5(1) of Directive 92/12, the products coming under that directive are subject to excise duty at the time of their production within the territory of the Community or of their importation into that territory. However, the occurrence of that chargeable event for excise duty means only that an excise duty debt may arise. For such an excise duty debt actually to arise in a specific case, there must also be a chargeable event covered by Article 6(1) of Directive 92/12. Under the first subparagraph of Article 6(1), excise duty becomes chargeable at the time of release for consumption or when shortages are recorded which must be subject to excise duty in accordance with Article 14(3) of the directive. The second subparagraph of Article 6(1) then lists the various cases covered by release for consumption of products subject to excise duty. The suspension procedure provided for in Article 5(2) of Directive 92/12 means in this connection that the incurrence of the tax debt in relation to goods subject to excise duty is suspended until a chargeable event occurs. (17) 126. Against this background, it is clear that in formulating the second question the referring court focuses on the chargeable event under Article 6(1) in conjunction with Article 5(2) of Directive 92/12 and asks specifically whether unlawfully introduced cigarettes which are seized on ‘importation’ and simultaneously or subsequently confiscated are to be deemed to have been placed under ‘a suspension arrangement’, without distinguishing between ‘importation’ across an external border of the Community and the subsequent ‘importation’ across an internal border. 127. However, according to the documents before the Court, in two of the three cases in the main proceedings the cigarettes were taken into possession at – what was at the time – an external border of the Community with the result that the primary focus for those proceedings should not be the question of the consequences of those goods being taken into possession in terms of the tax debt arising under Article 6(1) of Directive 92/12, but the preliminary question of the effects of goods being taken into possession on the chargeable event for excise duty under Article 5(1) of Directive 92/12. Importation across an external border of the Community constitutes ‘importation into the Community territory’ within the meaning of Article 5(1) of Directive 92/12, with the result that in analysing the consequences, in terms of excise duty, of the seizure of smuggled goods at the external borders of the Community it must be established, first of all, whether the goods have become liable for excise duty under Article 5(1) of the directive despite seizure with simultaneous or subsequent confiscation. Only if that is the case is it possible to ask the question whether a tax debt arises pursuant to Article 6(1) and whether duty is suspended pursuant to Article 5(2) of Directive 92/12. 128. Although it is not for the Court to assess the facts of the dispute in the main proceedings, it can none the less provide the referring court with any useful guidance on the specific characteristics of those facts that will make it easier for the latter to resolve the dispute in the main proceedings. (18) Accordingly, in answering the second question, I will examine both the consequences, in terms of excise duty, of seizure with simultaneous or subsequent destruction of goods on importation across an external border of the Community and the effects of such seizure with destruction on introduction across an internal border, distinguishing between the chargeable event for excise duty under Article 5(1) of Directive 92/12 and the chargeable event under Article 6(1) of that directive. 2. Seizure at an external border of the Community with simultaneous or subsequent destruction 129. Under the second subparagraph of Article 5(1) of Directive 92/12, ‘importation of a product’ means the entry of that product into the territory of the Community. Directive 92/12 does not make any express provision regarding the exact meaning of the ‘entry’ process and the point in time from which that process is completed. Because this notion of ‘entry’ of the goods influences the incurrence of excise duty liability, the crucial factor for a teleological interpretation of the notion of importation is the point in time from which excise duty liability is to arise in the light of the objectives of Directive 92/12. 130. In this respect, it should be pointed out, first of all, that excise duty is an indirect tax on consumption which may have a dual purpose: first, to provide revenue and, second, to discourage the consumption of certain products. (19) The Court has consistently held that in this context the levying of excise duty is also intended to ensure that there is no competition between a lawful economic sector and an unlawful sector. It is thus intended to prevent smuggled goods coming under Directive 92/12 being sold much more cheaply than the legal goods. (20) The Court has also pointed out, in that context, that the cigarette market particularly lends itself to the development of unlawful trade. (21) 131. In the light of those requirements, goods should generally be regarded as subject to excise duty under Article 5(1) of Directive 92/12 at the latest from the time their entry into the economic network of the Community is immediately impending or takes place, whereby in the case of smuggling of goods across the external borders of the Community the acute threat to the lawful economic sector is to be treated in the same way as entry into the economic network. 132. The judgment in Elshani, in which the Court considered the interpretation of the expression ‘unlawful introduction’ within the meaning of the Customs Code, offers extremely useful indications for determining when that threat occurs in the case of smuggling of goods. In that judgment, the Court pointed out that the risk of smuggled goods forming part of the economic networks of the Member States increases substantially from the time that those goods have gone undiscovered beyond the area in which the first customs office inside the customs territory of the Community is situated. (22) 133. In my opinion, Article 5(1) of Directive 92/12 is also to be interpreted as meaning that ‘importation’ of smuggled goods exists from the time when those goods have gone beyond the area in which the first customs office inside the customs territory of the Community is situated. From that point in time, those goods are introduced definitively into the Community, with the result that they are subject to excise duty within the meaning of Article 5(1) of Directive 92/12. 134. It follows that ‘importation’ of smuggled goods giving rise to excise duty liability within the meaning of Article 5(1) of Directive 92/12 exists from the point in time when the goods have gone beyond the area in which the first customs office inside the customs territory of the Community is situated. If smuggled goods covered by Directive 92/12 were seized and simultaneously or subsequently destroyed by the authorities before leaving the first customs office situated inside the customs territory of the Community, it must be assumed that those goods were not imported, with the result that the chargeable event for the purposes of Article 5(1) of Directive 92/12 did not occur and the goods are not therefore subject to tax. In the absence of tax liability, a tax debt also cannot arise under Article 6(1) in such a case. 3. Seizure upon introduction across an internal border with simultaneous or subsequent confiscation a) Under point (c) of the second subparagraph of Article 6(1) of Directive 92/12, smuggled goods are to be regarded as released for consumption from the time when they are unlawfully introduced into the Community 135. If smuggled goods covered by Directive 92/12 are seized and simultaneously or subsequently confiscated at an internal border of the Community and not therefore in the first Member State into which they were imported, but in a subsequent Member State, those goods are already subject to excise duty as a result of the preceding introduction into the territory of the Community pursuant to Article 5(1) of Directive 92/12. (23) That excise duty liability applies for the entire customs territory of the Community and arises from the time when the goods were introduced into the territory of the Community, without subsequent seizure being able to cancel or suspend that excise duty liability for the goods. In such a case, it is therefore only necessary to clarify whether the seizure with simultaneous or subsequent confiscation of the goods subject to excise duty at an internal border has repercussions on tax becoming chargeable under Article 6(1) of Directive 92/12. 136. Unlike the chargeable event for excise duty arising under Article 5(1) of Directive 92/12, as a result of which the products are subject to excise duty in the entire Community, the result of the chargeable event arising under Article 6(1) of that directive is in principle only the incurrence of a tax debt in a specific Member State in accordance with the conditions in force on the date on which duty becomes chargeable in that Member State. The Member State in which the excise duty debt ultimately arises is ascertained under Directive 92/12 in principle on the basis of the country-of-destination principle. (24) As a rule, the products subject to excise duty are transported to the country of destination under a suspension arrangement, where their subsequent departure from the suspension arrangement pursuant to point (a) of the second subparagraph of Article 6(1) of Directive 92/12 results in the incurrence of the tax debt. 137. In the case of smuggled goods, in derogation from the general rule, release for consumption does not depend primarily on the country-of-destination principle. Rather under point (c) of the second subparagraph of Article 6(1) of Directive 92/12, any irregular importation of products subject to excise duty is regarded as release for consumption where those products have not been placed under a suspension arrangement. 138. In this connection, the term ‘importation’ within the meaning of point (c) of the second subparagraph of Article 6(1) of Directive 92/12 is to be construed in the same way as the notion of importation under Article 5(1) of Directive 92/12. (25) This means that irregular importation takes place once the goods go beyond the area in which the first customs office inside the territory of the Community is situated. 139. As a result of such irregular ‘importation’, the smuggled goods are released for consumption, with a result that the excise duty debt is incurred in respect of the smuggled goods subject to excise duty under point (c) of the second subparagraph of Article 6(1) of Directive 92/12. b) Under Article 7(1) of Directive 92/12, excise duty is levied in respect of products introduced unlawfully into the Community for commercial purposes in the Member State in which those products are held at the time of seizure 140. The fact that under point (c) of the second subparagraph of Article 6(1) of Directive 92/12 the excise duty debt in respect of smuggled goods subject to excise duty arises in the Member State in which the goods were introduced into the Community does not mean, however, that it is also certain in which Member State the excise duty is ultimately to be levied. Rather, pursuant to Article 7(1) of Directive 92/12, when an internal border of the Community is crossed the power to levy duty is passed on to the Member State into which the smuggled goods are further introduced, unless those goods are for the individual’s own use. 141. Article 7(1) of Directive 92/12 provides in particular that excise duty must be levied on products subject to excise duty and released for consumption in one Member State and then introduced into another Member State for commercial purposes in the Member State in which those products are held. (26) As the Court stated in Meiland Azewijn, (27) the excise duty is therefore chargeable in the Member State where the product is to be used rather than the State where it is released for consumption. 142. In Joustra, (28) the Court gave a particularly broad interpretation to the element ‘for commercial purposes’ within the meaning of Article 7 of Directive 92/12. In this connection, the Court found in particular that for the application of the directive, products which are not held for private purposes must necessarily be regarded as being held for commercial purposes. 143. In the light of this case-law, goods unlawfully introduced into the Community which are introduced across an internal border from the first Member State into another Member State in the course of an international goods transport operation are generally held ‘for commercial purposes’ in the latter Member State. However, it is for the referring court to assess, having regard to the abovementioned case-law, whether the 1 005 840 cigarettes which were seized at the German-Danish border in the third case in the main proceedings ultimately entered Denmark for commercial purposes. 144. If smuggled goods which are subject to excise duty have been introduced across an internal border of the Community for commercial purposes, under Article 7(1) of Directive 92/12 the Member State in which the smuggled goods were discovered and seized by the authorities is competent to levy the excise duty. 145. This interpretation is also consistent with the spirit and purpose of Directive 92/12. Article 7 of Directive 92/12 is intended to ensure that excise duty in respect of goods transported for commercial purposes is incurred in the Member State in which the end consumer resides. (29) It is not relevant in this connection whether the end consumer actually consumes the goods subject to excise duty. (30) 146. In the case of smuggled goods, it will generally be almost impossible to ascertain the place of residence of the targeted end consumers. Nevertheless, it is clear that the risk of their uncontrolled entry into economic networks and therefore of sale to end consumers becomes particularly acute once the smuggled goods go beyond the area in which the first customs office inside the territory of the Community is situated. That danger applies to the entire Community territory, but can be attributed to the first Member State into which the goods were imported before another internal border is crossed, with the result that the excise duty is chargeable in the first Member State in accordance with point (c) of the second subparagraph of Article 6(1) of Directive 92/12. If those smuggled goods are subsequently introduced into another Member State for commercial purposes across an internal border of the Community, the danger emanating from the goods subject to excise duty shifts to the next Member State into which they are imported which, on the basis of a teleological interpretation of Directive 92/12, also justifies a shift in the right to levy excise duty. 147. This shift in the power to levy duty under Article 7(1) of Directive 92/12 takes places once the smuggled goods have physically crossed the internal border. Consequently, seizure with simultaneous or subsequent confiscation at an (internal) border crossing also cannot prevent the excise duty having already become chargeable when the goods were seized, with the Member State concerned being entitled to levy the duty. 148. I therefore conclude that under Article 5(1) in conjunction with point (c) of the second subparagraph of Article 6(1) and Article 7(1) of Directive 92/12 excise duty became chargeable in respect of goods introduced unlawfully into the Community for commercial purposes – which will have to be ascertained by the referring court – which were discovered and seized by national authorities after crossing an internal border of the Community in the next Member State into which they were imported once the goods physically crossed the internal border, with the result that seizure with simultaneous or subsequent confiscation of smuggled goods after they have crossed the internal border cannot prevent excise duty becoming chargeable, with the Member State concerned being entitled to levy the duty. c) Seizure with simultaneous or subsequent confiscation of smuggled goods at an internal border of the Community does not result in duty being suspended under Article 5(2) of Directive 92/12 149. Seizure with simultaneous or subsequent confiscation of goods unlawfully introduced into the Community at an internal border of the Community cannot prevent excise duty becoming chargeable in the next Member State into which they were imported. Nevertheless, it must still be clarified whether the excise duty on the goods must be deemed to be suspended as a result of the seizure pursuant to Article 5(2) of Directive 92/12. 150. In my opinion, this question must also be answered in the negative. 151. In this connection, it is necessary to clarify in particular whether the legal fiction introduced by Article 867a of the Implementing Regulation, under which non-Community goods which have been seized or confiscated are to be considered to have been entered for the customs warehousing procedure, ultimately means that duty must always be deemed to be suspended, with the result that the excise duty debt does not arise or is extinguished as a result of the subsequent destruction of the goods. This conclusion seems reasonable to the referring court, in that the wording of its question refers expressly to the interaction of the first subparagraph of Article 5(2) and Article 6(1)(c) of Directive 92/12 in conjunction with Article 84(1)(a) and Article 98 of the Customs Code and Article 867a of the Implementing Regulation. 152. The point of reference for the question thus worded is that under the first indent of Article 5(2) of Directive 92/12 when products subject to excise duty are placed under one of the customs suspensive procedures listed in Article 84(1)(a) of the Customs Code the excise duty on them is to be deemed to be suspended. In view of the fact that customs warehousing is among the procedures listed in Article 84(1)(a) of the Customs Code and that non-Community goods which have been seized are to be considered to have been entered for the customs warehousing procedure under Article 867a of the Implementing Regulation, the referring court would like to ascertain whether smuggled goods seized by the competent authorities are necessarily placed under a customs suspensive procedure and the excise duty on them is therefore to be deemed to be suspended pursuant to the first indent of Article 5(2) of Directive 92/12. 153. Such an interpretation of the relevant provisions would fail to recognise the precedence and the relationship between the Implementing Regulation and the Customs Code and Directive 92/12. Such an interpretation cannot be adopted. 154. The Implementing Regulation was adopted by the Commission in execution of the implementing powers conferred on it by the Council in the Customs Code. It follows that the Customs Code, as the basic regulation, takes precedence over the Implementing Regulation, with the result that in the event of inconsistencies the Implementing Regulation, as the subordinate rule, is to be interpreted in the light of the provisions of the Customs Code, as the higher-ranking rule. (31) 155. In view of this basic rule of the hierarchy of Community legislation, in his Opinion in Elshani, Advocate General Mengozzi rightly rejected the argument put forward by the Polish Government that Article 867a of the Implementing Regulation means that a customs debt never arises in the case of seizure of smuggled goods upon their unlawful introduction. The Polish Government had argued in particular that under Article 867a of the Implementing Regulation non-Community goods which have been seized are to be considered to have been entered for the customs warehousing procedure and are therefore placed under a customs suspensive procedure. Because Article 867a of the Implementing Regulation is to be regarded as a lex specialis in relation to the rules contained in the Customs Code governing the creation and the extinction of a customs debt, in cases where that provision applies a customs debt does not even arise. (32) 156. This argument put forward by the Polish Government was refuted inter alia by pointing out that such an interpretation would ultimately mean attributing to an implementing provision (Article 867a) the effect of precluding the application of a ‘primary’ rule – point (d) of the first paragraph of Article 233 of the Customs Code. (33) Against this background, in Elshani (34) the Court also disregarded Article 867a of the Implementing Regulation and the relevant arguments put forward by the Polish Government in this respect. 157. In just the same way as Article 867a of the Implementing Regulation cannot cancel the chargeable customs event under Article 202 of the Customs Code in the case of seizure with simultaneous or subsequent confiscation of smuggled goods by virtue of the interaction with Article 84(1) of the Customs Code, that provision of the Implementing Regulation cannot preclude the effect of the chargeable event under point (c) of the second subparagraph of Article 6(1) in conjunction with Article 7(1) of Directive 92/12 by virtue of the interaction with Article 84(1)(a) of the Customs Code and the first subparagraph of Article 5(2) of Directive 92/12. 158. I therefore conclude that seizure with simultaneous or subsequent confiscation of goods unlawfully introduced into the Community at an internal border of the Community does not mean that duty on those goods is to be deemed to be suspended from the time of their seizure. 4. The relationship between the extinction of the customs debt under point (d) of the first paragraph of Article 233 of the Customs Code and the creation or the extinction of chargeability of excise duty 159. By its second question, the referring court is also seeking clarification as to whether the creation or the extinction of chargeability of excise duty is affected by whether or not a customs debt incurred on unlawful importation under point (d) of the first paragraph of Article 233 of Customs Code is extinguished. 160. As I explained in my examination of the consequences, in terms of excise duty, of seizure of unlawfully introduced goods at an external border of the Community, (35) in cases where the chargeable customs event arises under point (d) of the first paragraph of Article 233 of the Customs Code, no excise duty debt arises. Where the criterion for extinction under point (d) of the first paragraph of Article 233 of the Customs Code is not satisfied and the goods were therefore seized only after unlawful introduction, the goods are subject to excise duty under Article 5(1) of Directive 92/12 and duty becomes chargeable pursuant to point (c) of the second subparagraph of Article 6(1) of that directive. I cannot therefore see any case where the criterion for extinction under point (d) of the first paragraph of Article 233 of the Customs Code would be satisfied and excise duty would become chargeable. 161. There is therefore no need to give any further answer to the second part of the second question. 5. Conclusion 162. In the light of the foregoing, the answer to the second question must be that, under Article 5(1) of Directive 92/12, unlawfully introduced goods are subject to excise duty only once they have gone beyond the area in which the first customs office inside the customs territory of the Community is situated. Seizure with the destruction of the goods before that point in time precludes the creation of excise duty liability. Once they have gone beyond that area, unlawfully introduced goods are subject to excise duty and at the same time the excise duty debt arises under Article 6(1) of that directive, without subsequent confiscation with destruction being able to result in the extinction or the suspension of the tax debt. C – Third question 1. General remarks 163. By its third question, the referring court would like to ascertain, first of all, whether the legal fiction introduced by Article 867a of the Implementing Regulation, under which non-Community goods which have been seized or confiscated are to be considered to have been entered for the customs warehousing procedure, ultimately means that goods seized upon their unlawful importation are always placed under a customs warehousing arrangement, with the result that under Article 10(3) in conjunction of Article 7(3) and Article 16(1)(B) of the Sixth VAT Directive the chargeable event does not occur and tax does not become chargeable. 164. Because importation within the meaning of Article 10(3) of the Sixth VAT Directive requires ‘entry into the Community’, whilst it is clear from the documents before the Court that in one of the three cases in the main proceedings the cigarettes were taken into possession on ‘importation’ across an internal border of the Community, it is also necessary in answering the first part of the third question, in my opinion, to examine both the consequences, in terms of VAT, of seizure with simultaneous or subsequent destruction of goods on importation across an external border of the Community and the consequences of such seizure with destruction on the further introduction of the goods across an internal border. (36) 165. By its third question, the referring court would like to ascertain, secondly, whether the answer to the first part of that question is affected by whether or not a customs debt in respect of those goods is extinguished under point (d) of the first paragraph of Article 233 of the Customs Code. 2. Seizure with simultaneous or subsequent confiscation of smuggled goods at an external border of the Community 166. Under Article 2(2) of the Sixth VAT Directive, ‘importation’ is subject to VAT. According to Article 7(1)(a) of that directive, such importation means the ‘entry into the Community’ of the relevant goods. The element ‘importation’ for the purposes of the Sixth VAT Directive therefore means entry of goods into the territory of the Community. 167. In this regard, the Sixth VAT Directive contains a fairly complicated provision by which the chargeable event and chargeability of import taxes are linked to the events giving rise to the customs debt. (37) 168. This link is made, first of all, by the second sentence of the first subparagraph of Article 10(3) of the Sixth VAT Directive, which states that where the imported goods are placed under an arrangement of the kind referred to in Article 7(3) – in conjunction with Article 16(1)(B)(a), (b), (c) and (d) – the chargeable event shall occur and the tax shall become chargeable only when the goods cease to be covered by those customs arrangements. Secondly, the second subparagraph of Article 10(3) of the Sixth VAT Directive provides that where imported goods are subject to customs duties, to agricultural levies or to charges having equivalent effect established under a common policy, the chargeable event shall occur and the tax shall become chargeable when the chargeable event for those Community duties occurs and those duties become chargeable. 169. In this context, the Court has already made clear in Einberger, (38) in examining the applicability of the Sixth VAT Directive to the illegal importation of drugs, that the chargeable event for customs duty and the chargeable event for VAT are essentially the same in such cases. (39) The Court stressed the parallel purposes of the two provisions and pointed out that the two charges display comparable essential features since they arise from the fact of importation of goods into the Community and the subsequent distribution thereof through the economic channels of the Member States. (40) 170. In view of this parallel nature of the chargeability of customs duty and VAT, Article 10(3) of the Sixth VAT Directive is to be interpreted to the effect that the chargeable event for VAT occurs and the VAT becomes chargeable in respect of goods unlawfully introduced into the Community only once the goods have gone beyond the area in which the first customs office inside the territory of the Community is situated. 171. If the goods coming under the Sixth VAT Directive were seized before going beyond the first customs office situated inside the territory of the Community and were simultaneously or subsequently destroyed by the authorities, it must therefore be assumed that the chargeable event under Article 2(2) in conjunction with Article 7 and Article 10(3) of the Sixth VAT Directive does not occur and, as a result, no VAT becomes chargeable. 3. Seizure with simultaneous or subsequent confiscation of smuggled goods at an internal border of the Community 172. If smuggled goods coming under the Sixth VAT Directive are seized and simultaneously or subsequently confiscated by the authorities of the next Member State of import at an internal border of the Community, the chargeable event for VAT has already occurred and VAT has already become chargeable under Article 2(2) in conjunction with Article 7 and Article 10(3) of the Sixth VAT Directive. By its third question, the referring court is seeking clarification whether the legal fiction introduced by Article 867a of the Implementing Regulation, under which non-Community goods which have been seized or confiscated are to be considered to have been entered for the customs warehousing procedure, ultimately means that in such a case the VAT which has already become chargeable is extinguished. 173. The point of reference for this question is that under the second sentence of the first subparagraph of Article 10(3) in conjunction with Article 7(3) and Article 16(1)(B) of the Sixth VAT Directive, goods which are placed under a customs warehousing arrangement on entry into the Community are subject to VAT only when the goods cease to be covered by that arrangement. Because non-Community goods which have been seized are to be considered, under Article 867a of the Implementing Regulation, to have been entered for the customs warehousing procedure, the referring court is seeking to ascertain whether the seizure of smuggled goods and their simultaneous or subsequent destruction prevent the chargeable event for VAT from occurring and VAT becoming chargeable in respect of those goods. 174. In my opinion, this question must also be answered in the negative. 175. If goods are discovered at an external border of the Community upon their unlawful introduction and are subsequently seized and confiscated, the chargeable event for VAT does not occur and no VAT becomes chargeable. (41) In this case, the question of the possible effects of the fiction introduced in Article 867a of the Implementing Regulation on the chargeable event for VAT no longer therefore arises. 176. If, on the other hand, goods unlawfully introduced into the Community are discovered and subsequently seized and confiscated by the competent national authorities after they cross an internal border of the Community, the suspensive arrangement provided for in the second sentence of the first subparagraph of Article 10(3) of the Sixth VAT Directive can no longer apply, because according to the wording of that provision a suspension of the occurrence of the chargeable event or of tax becoming chargeable requires the goods to be subject to one of the relevant customs arrangements on entry into the Community. That is precluded in principle in the case of goods unlawfully introduced into the Community which are seized when they cross an internal border. 177. It should also be reiterated that Article 867a of the Implementing Regulation cannot cancel the chargeable customs event under Article 202 of the Customs Code in the case of seizure with simultaneous or subsequent confiscation of smuggled goods. (42) In view of the abovementioned link between the chargeable event for tax and the chargeable customs event in Article 10(3) of the Sixth VAT Directive, it is also precluded that Article 867a of the Implementing Regulation could prevent VAT becoming chargeable in a case where the customs debt has arisen. 178. I therefore conclude that seizure with simultaneous or subsequent confiscation of goods unlawfully introduced into the Community at an internal border of the Community does not result in the extinction of the chargeable event which has already occurred and the VAT which has already become chargeable. 4. The relationship between the extinction of the customs debt under point (d) of the first paragraph of Article 233 of the Customs Code and the creation or the extinction of the chargeability of VAT 179. By the second part of its third question, the referring court is also seeking clarification whether, under the conditions described above, any extinction of the chargeability of VAT is affected by whether or not a customs debt incurred on unlawful introduction is extinguished under point (d) of the first paragraph of Article 233 of the Customs Code. 180. As I explained in my analysis of the consequences, in terms of VAT, of the seizure of smuggled goods at the external border of the Community, no VAT debt arises in cases where the criterion for extinction of the customs debt under point (d) of the first paragraph of Article 233 of the Customs Code is satisfied. (43) If the criterion for extinction under point (d) of the first paragraph of Article 233 of the Customs Code is not satisfied and the goods were therefore seized only after their unlawful introduction into the Community, the chargeable event for VAT has occurred and VAT has become chargeable. 181. In the light of these findings, I cannot see any case where the criterion for extinction under point (d) of the first paragraph of Article 233 of the Customs Code would be satisfied at the same time as the chargeable event for VAT occurs and VAT becomes chargeable. There is therefore no need to give any further answer to the second part of the third question. 5. Conclusion 182. In the light of the foregoing, the answer to the third question must be that with regard to unlawfully introduced goods the chargeable event for VAT under Article 2(2) in conjunction with Article 7 and Article 10(3) of the Sixth VAT Directive occurs only once those goods have gone beyond the area in which the first customs office inside the customs territory of the Community is situated. Seizure with destruction of the goods before that point in time prevents the chargeable event from occurring. By going beyond that area, the chargeable event occurs and tax becomes chargeable without a subsequent seizure with destruction of the goods being able to result in the extinction of the chargeability. D – Fourth question 183. By its fourth question, the referring court is essentially seeking to ascertain which Member State is competent to levy customs duty, excise duty and VAT in respect of goods which have been unlawfully introduced into the Community in the course of a TIR operation but were discovered, seized and destroyed only once they had crossed an internal border of the Community, and not therefore in the first Member State into which they were imported, but in a subsequent Member State. This question concerns only the case in the main proceedings in which the cigarettes were introduced into the Community by land across the Polish-German border and were subsequently discovered and seized by the Danish authorities at the German-Danish border. 1. Competence to recover the customs debt 184. In a case like the one at issue, where a national customs authority took possession of and destroyed smuggled goods which were unlawfully introduced into the customs territory of the Community across the border of another Member State, it is relatively simple to determine the Member State competent to recover the customs debt on the basis of the provisions of the Customs Code which were applicable at the time. 185. Under the first indent of Article 215(1) of the Customs Code, a customs debt is incurred at the place where the events from which it arises occur. In the case of the unlawful introduction of goods into the customs territory of the Community, the customs debt is incurred in the first Member State into which the goods were imported pursuant to Article 202 of the Customs Code. 186. Under Article 215(3), the customs authorities referred to in Article 217(1) – which are competent for entering the customs debt in the accounts – are those of the Member State where the customs debt is incurred. (44) 187. It therefore follows directly from the first indent of Article 215(1) in conjunction with Article 202, Article 215(3) and Article 217 of the Customs Code that the authorities of the Member State in which the goods were unlawfully introduced across the border into the customs territory of the Community are competent to recover the customs debt, even if the unlawfully introduced goods were first discovered and seized in another Member State. 188. It is also clear from Article 454(2) and (3) of the Implementing Regulation that that distribution of competence also applies in connection with TIR operations. Consequently, the first Member State in which the offence or irregularity in connection with the unlawful introduction within the meaning of Article 202 of the Customs Code is committed, but not discovered, is also competent to levy customs duty in the case of smuggling of imported goods in the course of a TIR operation. 2. Competence to levy excise duty 189. As I have already explained, under Article 7 of Directive 92/12 excise duty must be levied in the Member State in which the products subject to excise duty introduced into another Member State for commercial purposes are held. (45) In the case of smuggling of imported goods in the course of an international goods transport operation, it would normally have to be assumed that the unlawfully introduced goods are held for commercial purposes in the territory of the Member State in which they were discovered and seized. Where that is the case, under Article 6(1) in conjunction with Article 7(1) of Directive 92/12 the authorities of the Member State in which the goods unlawfully introduced into the Community were discovered and seized are competent to levy excise duty. 190. If, on the other hand, the referring court concluded that the goods subject to excise duty which were smuggled in the course of an international goods transport operation were for the individual’s own use, the first Member State into which the goods were imported remains competent to levy excise duty pursuant to Article 6 of Directive 92/12, even if the unlawfully introduced goods were only discovered in a subsequent Member State. 191. In the view of the Commission, the exercise by the subsequent Member State of the competence to levy duty under Article 6(1) in conjunction with Article 7(1) of the directive in a case where the unlawfully introduced goods were held in its territory for commercial purposes and were discovered there would breach the general principle of proportionality. In this regard, the Commission observes that under Article 6(2) of Directive 92/12 excise duty is to be levied and collected according to the procedure laid down by each Member State, but in the exercise of those powers the Member States are required to observe the principle of proportionality. The Commission considers that principle to be breached if excise duty is levied on unlawfully introduced goods which were seized and subsequently destroyed even before going beyond the first customs office of the subsequent importing Member State situated at an internal border of the Community. In support of its arguments, the Commission relies in particular on Louloudakis (46) and Heintz van Landewijck. (47) 192. This argument put forward by the Commission is not convincing. 193. It should be pointed out, first of all, that in essence the Commission’s arguments are not directed primarily, as it claims, against the national rules on the levying of excise duty laid down pursuant to Article 6(2) of Directive 92/12, but against the distribution among the Member States of the competences to levy duties stipulated by Article 6(1) in conjunction with Article 7(1) of Directive 92/12 in a case like the one at issue. 194. If the competent national authorities levy excise duty on goods unlawfully introduced into the Community which were discovered and seized at an internal border of the Community, they are essentially exercising the competence to levy duty accorded to them by Directive 92/12. In so far as the Commission claims that the exercise of that competence is disproportionate, it does not therefore have in view the national legislation relating to the non-harmonised conditions for assessing and paying the duty under Article 6(2) of Directive 92/12, but the distribution of the competence to levy duty laid down on a mandatory basis under Article 6(1) in conjunction with Article 7(1) of the directive. (48) 195. In this respect, the cases in the main proceedings at issue here differ in important respects from the one which formed the basis of the judgment in Louloudakis (49) cited by the Commission. In that judgment, the Court was required to determine whether national legislation which provides for a series of non-harmonised penalties in the event of infringement of the arrangements laid down by a directive was compatible with the principle of proportionality. Louloudakis therefore concerned the assessment of the proportionality of national penalties for failure to observe the provisions of a directive, where those penalties had been freely chosen by the national legislature in the absence of Community harmonisation in that field. A provision laid down by the directive as such or the national implementing rules for such a provision were not examined, however. 196. This finding also holds for the judgment in Heintz van Landewijck (50) cited by the Commission. That judgment concerned inter alia the proportionality of the failure to reimburse excise duty where the tax stamps issued by the national authorities of a Member State had disappeared before they were used. Because Directive 2/12 did not contain any provisions relating to such a case, the provisions adopted by the Member States to determine the consequences of such a disappearance again concerned a non-harmonised area of the law relating to excise duty. 197. As I have already mentioned, in the case at issue, the Commission therefore objects to the exercise of the competences to levy duty laid down in Article 6(1) and Article 7(1) of Directive 92/12 as such. 198. As regards the exercise by the Member States of those competences laid down by Directive 92/12, the Court has consistently held that it follows from the scheme of the directive that the national authorities must ensure that the tax debt is in fact collected. (51) With respect to the interpretation of Directive 92/12, the authorities of the Member State which is competent to levy the excise duty incurred under Directive 92/12 are required in fact to collect the tax debt. 199. In view of the above arguments, I therefore conclude that the Member State in which the goods subject to excise duty which were unlawfully introduced into the Community are held for commercial purposes at the time of seizure is competent under Article 5(1) in conjunction with Article 6(1) and Article 7(1) of Directive 92/12 to levy excise duty, even if those goods were seized and simultaneously or subsequently confiscated at the first customs office in the territory of that Member State. 3. Competence to levy VAT 200. In a situation like the one in the main proceedings, the Member State competent to recover the VAT debt can be determined on the basis of Article 7(2) in conjunction with Article 10(3) of the Sixth VAT Directive. 201. Article 7(2) of the Sixth VAT Directive provides, first of all, that the place of import is the Member State within the territory of which the goods are when they enter the Community. Secondly, the chargeable event occurring and the tax becoming chargeable are linked in Article 10(3) of the Sixth VAT Directive to the incurrence of the customs debt. (52) 202. I therefore conclude that in a case where goods unlawfully introduced into the Community are discovered and taken into possession in a Member State other than the first Member State into which they were imported, the chargeable event for VAT occurs and VAT becomes chargeable in the Member State in which the goods were unlawfully introduced into the Community. The authorities of that Member State are therefore also competent to levy VAT. 4. Conclusion 203. In the light of the foregoing, the answer to the fourth question must be that the Member State in which goods have been unlawfully introduced into the Community is competent to recover the customs debt and the VAT debt, even if those goods were introduced into another Member State and were only discovered and seized there. The Member State in which the goods unlawfully introduced into the territory of the Community are held for commercial purposes at the time of seizure is competent to recover the excise duty debt. VII – Conclusion 204. In the light of the above statements, I propose that the Court answer the questions referred by the Østre Landsret as follows: (1) ‘Seizure’ within the meaning of point (d) of the first paragraph of Article 233 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Regulation (EC) No 955/1999 of the European Parliament and of the Council of 13 April 1999, requires physical control to be acquired by the national authorities upon unlawful introduction into the Community, by which the goods are taken into possession pending their confiscation. The ‘confiscation’ of goods within the meaning of that provision requires the irrevocable forfeiture of the power of disposal of the owner or of the person holding the power of disposal, irrespective of whether this is connected with a change of ownership to the State. (2) Under Article 5(1) of 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, as amended by Council Directive 96/99/EC of 30 December 1996, unlawfully introduced goods are subject to excise duty only once they have gone beyond the area in which the first customs office inside the customs territory of the Community is situated. Seizure with the destruction of the goods before that point in time precludes the creation of excise duty liability. Once they have gone beyond that area, unlawfully introduced goods are subject to excise duty and at the same time the excise duty debt arises under Article 6(1) of that directive, without subsequent confiscation with destruction being able to result in the extinction or the suspension of the tax debt. (3) With regard to unlawfully introduced goods the chargeable event for value added tax under Article 2(2) in conjunction with Article 7 and Article 10(3) of 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 of assessment, as amended by Council Directive 2000/17/EC of 30 March 2000, occurs only once those goods have gone beyond the area in which the first customs office inside the customs territory of the Community is situated. Seizure with destruction of the goods before that point in time prevents the chargeable event from occurring. By going beyond that area, the chargeable event occurs and tax becomes chargeable without a subsequent seizure with destruction of the goods being able to result in the extinction of the chargeability. (4) The Member State in which goods have been unlawfully introduced into the Community is competent to recover the customs debt and the value added tax debt, even if those goods were introduced into another Member State and were only discovered and seized there. The Member State in which the goods unlawfully introduced into the territory of the Community are held for commercial purposes at the time of seizure is competent to recover the excise duty debt. 1 – Original language: Slovene. 2 – Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended by Regulation (EC) No 955/1999 of the European Parliament and of the Council of 13 April 1999 amending Regulation No 2913/92 with regard to the external transit procedure (OJ 1992 L 119, p. 1) (‘the Customs Code’). 3 – Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code (OJ 1993 L 253, p. 1), as amended by Commission Regulation (EC) No 1662/1999 of 28 July 1999 (OJ 1999 L 197, p. 25). 4 – 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 (OJ 1992 L 76, p. 1), as amended by Council Directive 96/99/EC of 30 December 1996 (OJ 1996 L 8, p. 12) (‘Directive 92/12’ or ‘the Excise Duty Directive’). 5 – 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 of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 2000/17/EC of 30 March 2000 amending Directive 77/388 on the common system of value added tax – transitional provisions granted to the Republic of Austria and the Portuguese Republic (OJ 2000 L 84, p. 24) (‘the Sixth VAT Directive’ or ‘the Sixth Directive’). 6 – OJ 1978 L 252, p. 1. 7 – See Case C-314/06 Société Pipeline Méditerranée et Rhône [2007] ECR I-12273, paragraph 21; Case C-103/01 Commission v Germany [2003] ECR I-5369, paragraph 33; and Case C-296/95 EMU Tabac and Others [1998] ECR I-1605, paragraph 30. 8 – Case C-459/07 [2009] ECR I-0000, paragraph 30. 9 – Ibid., paragraph 30. 10 – Ibid., paragraph 29. See also the Opinion of Advocate General Mengozzi in Case C-459/07 Elshani [2009] ECR I-0000, point 51, and the Opinion of Advocate General Tizzano in Case C‑337/01 Hamann International [2004] ECR I-1791, point 50. 11 – Elshani, cited in footnote 8, paragraph 38. 12 – In his Opinion in Elshani, cited in footnote 10, point 58, Advocate General Mengozzi rejected such a strict interpretation of the criterion of unlawful introduction as an implementation of Article 233 of the Customs Code in a ‘punitive’ spirit. In contrast, he proposed that the expression ‘upon their unlawful introduction’ in point (d) of the first paragraph of Article 233 of the Customs Code should be interpreted as covering the timespan from crossing the border to the moment when the unlawfully introduced goods reach their first destination in the Community customs territory. 13 – Elshani, cited in footnote 8, paragraph 32. 14 – Ibid., paragraph 33. 15 – See Witte, P., Zollkodex – Kommentar, 4th edition, Beck, Munich, 2006, Article 233, paragraph 15 et seq., who defines seizure as a temporary security measure and confiscation as the permanent withdrawal of the power of disposal over goods. See also Schwarz, D. and Wockenfoth, K., Zollrecht, 3rd edition, 4th supplement/November 1994, Cologne etc., § 233, paragraph 8 et seq., who define seizure as the compulsory taking into possession of property ordered by an administrative act, which results in the establishment of State control over the objects. Seizure, in contrast with confiscation, is characterised by the fact that the legal status changes. 16 – See Friedrich, K., ‘Das neue Verbrauchsteuerrecht ab 1993’, Der Betrieb 1992, p. 2000 et seq.; Birk, D. (ed.), Handbuch des Europäischen Steuer- und Abgabenrechts, Herne/Berlin, 1995, p. 731 et seq. 17 – It is a feature of the suspension arrangement that the excise duty on the products covered by it is not yet payable, although the chargeable event for taxation purposes has already taken place (see Case C-395/00 Cipriani [2002] ECR I‑11877, paragraph 42). 18 – It is settled case-law that, notwithstanding the division of jurisdiction between the national court and the Court of Justice in the preliminary ruling procedure under Article 234 EC, in the event of questions having been improperly formulated, the Court is free to extract from all the factors provided by the national court, and in particular from the statement of grounds contained in the reference, the elements of Community law requiring an interpretation having regard to the subject-matter of the dispute. See, with regard to the procedural power of the Court to clarify or reformulate questions in preliminary ruling proceedings under Article 234 EC, Case 83/78 Pigs Marketing Board [1978] ECR 2347, paragraph 26. 19 – See the Opinion of Advocate General Ruiz-Jarabo Colomer in Case C-325/99 van de Water [2001] ECR I-2729, point 25. 20 – Against this background, in Case C-455/98 Salumets and Others [2000] ECR I-4993, paragraph 19, and the case-law cited, the Court pointed out that the illegal importation of goods is not subject to taxation if, owing to the special characteristics of those goods, any competition between a lawful economic sector and an unlawful sector is precluded. 21 – See Case C-374/06 BATIG [2007] ECR I-11271, paragraph 34. 22 – Elshani, cited in footnote 8, paragraph 32. 23 – See point 134 of this Opinion. 24 – See, on this subject, Takacs, P., Das Steuerrecht der Europäischen Union, Vienna, 1998, p. 460 et seq. 25 – A different, opposite interpretation of the notion of importation under point (c) of the second subparagraph of Article 6(1) of Directive 92/12, according to which that notion of importation is primarily not geared to the introduction of the goods into the territory of the Community, but to the introduction of goods into the territory of any Member State, with the result that such ‘importation’ would take place when any internal border was crossed, is precluded by the schematic finding that importation under point (c) of the second subparagraph of Article 6(1) of Directive 92/12 is regarded as release for consumption. It would be incompatible with the overall scheme of Directive 92/12 if each time smuggled goods crossed an internal border ‘importation’ and therefore a fresh release for consumption were assumed to have taken place. 26 – Whilst Article 7 of Directive 92/12 concerns the intra-Community trade in goods subject to excise duty which are intended for delivery, Article 9 of that directive makes provision for ‘non-delivery’ cases. In this connection, in his Opinion in Case C-5/05 Joustra [2006] ECR I-11075, points 65 to 68, Advocate General Jacobs rightly pointed out that Articles 7 and 9 of Directive 92/12 overlap to the extent that they both concern goods held for commercial purposes, on which excise duty is to be charged in the Member State in which they are held. In this context Article 9 is directly relevant only to goods which would otherwise fall within Article 8, that is to say, goods acquired by private individuals and transported by them. 27 – Case C-292/02 [2004] ECR I-7905, paragraph 35. 28 – Case C-5/05 Joustra [2006] ECR I-11075, paragraph 29. 29 – That provision is consistent with the dual purpose of excise duty: first, to provide revenue and, second, to discourage the consumption of certain products (see point 130 of this Opinion). Under Article 7 of Directive 92/12, any intra-Community trade which concerns goods subject to excise duty with a commercial purpose entails the payment of excise duty in the Member State of destination (see Birk, D., cited in footnote 16, p. 722, paragraph 14). 30 – See also Advocate General Kokott in her Opinion in Case C-314/06 Société Pipeline Méditerranée et Rhône [2007] ECR I-12273, point 48, who rightly points out that the factual basis for taxation does not require that products subject to excise duty were in fact used for the purpose envisaged. 31 – Schmidt, G., Vertrag über die Europäische Union und Vertrag zur Gründung der Europäischen Gemeinschaft – Kommentar (eds H. von der Groeben and J. Schwarze), Vol. 4, 6th edition, Article 249, paragraph 24, p. 778. 32 – Opinion of Advocate General Mengozzi in Elshani, cited in footnote 10, point 28. 33 – Ibid., point 35. 34 – Cited in footnote 8. 35 – See point 129 et seq. of this Opinion. 36 – With regard to the division of jurisdiction between the national court and the Court of Justice in the preliminary ruling procedure under Article 234 EC, see point 128 of this Opinion, and the case-law cited. 37 – See Voß, R., ‘J – Steuerrecht’, Handbuch des EU-Wirtschaftsrechts (ed. M. Dauses), Vol. II, paragraph 202 (EL 23). 38 – Case 294/82 [1984] ECR 1177. See also Case C-343/89 Witzemann [1990] ECR I‑4477, paragraph 18. 39 – Einberger, cited in footnote 38, paragraph 13. 40 – Ibid., paragraph 17 et seq. 41 – See point 171 of this Opinion. 42 – See point 153 et seq. of this Opinion. 43 – See point 166 et seq. of this Opinion. 44 – Article 215(3) of the Customs Code was revised by Regulation (EC) No 955/1999 of the European Parliament and of the Council of 13 April 1999 amending Council Regulation (EEC) No 2913/92 with regard to the external transit procedure (OJ 1999 L 119, p. 1). According to recital 8 in the preamble to the regulation, that revision was carried out with the specific aim of clarifying that the place where the customs debt is incurred determines the authority responsible for the entry into the accounts of the debt. In Case C-526/06 Road Air Logistics Customs [2007] ECR I-11337, paragraph 26, the Court made clear, in this connection, that Article 215 of the Customs Code does not lay down prior conditions for the incurrence of a customs debt, but the purpose of that provision is rather to determine territorial jurisdiction to recover the amount of the customs debt. 45 – See point 141 et seq. of this Opinion. 46 – C-262/99 [2001] ECR I-5547. 47 – C-494/04 [2006] ECR I-5381. 48 – As Advocate General Ruiz-Jarabo Colomer rightly summed up in his Opinion in van de Water, cited in footnote 19, points 48 and 49, Directive 92/12 identifies the products which, under Community law, are subject to excise duty, while establishing the time at which the chargeable event occurs and that at which the excise duty becomes chargeable. It also specifies the State in which the excise duty is to be levied and the person who must pay it. The Community legislature intended that the other chargeability conditions, the duty rate and the procedure for assessing and paying the duty should be those in force on the date on which duty became chargeable in the Member State concerned. It is therefore for each Member State to establish those conditions, rates and procedures, provided it complies with the criteria laid down in the directives on the harmonisation of duty rates and structures. 49 – Cited in footnote 46. 50 – Cited in footnote 47. 51 – Cipriani, cited in footnote 17, paragraph 46; order in Case C-80/01 Michel [2001] ECR I‑9141, paragraph 21; and Case C-325/99 van de Water [2001] ECR I-2729, paragraph 41. 52 – See point 167 et seq. of this Opinion.