Judgment;Summary — ECLI:EU:C:2023:912
Date: 2023-11-23
Language of the case: Hungarian
Court formation: Fourth Chamber
Subject matter: Free movement of goods;Internal market - Principles
Procedure: Reference for a preliminary ruling
Origin: Hungary

Summary C-653/22 – 1 
Case C-653/22 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
18 October 2022 
Referring court: 
Fővárosi Törvényszék (Hungary) 
Date of the decision to refer: 
10 October 2022 
Applicant: 
J. P. Mali Kerékpárgyártó és Forgalmazó Kft. 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága 
  
Subject matter of the main proceedings 
Administrative appeal against an administrative decision in customs matters. 
Subject matter and legal basis of the request 
This request for a preliminary ruling seeks to determine the compatibility with the 
principle of proportionality laid down in Article 42 of the Customs Code of a 
national practice under which, where an offence of lodging a customs declaration 
containing incorrect information has been committed, the customs fine is fixed at 
50% of the resulting customs deficit, without it being possible for all the 
circumstances of the case to be examined or, in particular, for the seriousness of 
the offence or the conduct attributable to the trader to be assessed. 
Legal basis: Article 267 TFEU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-653/22 
 
2  
Question referred for a preliminary ruling 
Must Regulation (EU) No 952/2013 of the European Parliament and of the 
Council of 9 October 2013 laying down the Union Customs Code (‘the Customs 
Code’) be interpreted as meaning that the requirement of proportionality laid 
down in Article 42(1) thereof is satisfied by Article 84(8) of the az uniós vámjog 
végrehajtásáról szóló 2017. évi CLII. törvény (Law CLII of 2017 on the 
application of EU customs law; ‘the Law on customs’) which, in the case of the 
customs administrative fine which has to be imposed where a customs deficit has 
been incurred as a result of an offence relating to the correctness of information in 
the customs declaration, does not allow the customs authorities to assess all the 
circumstances of the case or the conduct attributable to the trader who lodged the 
customs declaration, but requires, as a mandatory rule, the imposition of a 
customs administrative fine equal to 50% of the established customs deficit, 
irrespective of the seriousness of the offence committed and the examination and 
assessment of the liability attributable to that trader? 
Provisions of European law and case-law relied on 
– Treaty on the Functioning of the European Union (OJ 2012 C 326, p. 47) 
(‘TFEU’): Article 4(1) and (2); Article 7; Article 26(1) and (2); and Article 288 
– Charter of Fundamental Rights of the European Union (‘the Charter’): 
Article 16 
– Regulation (EU) No 952/2013 of the European Parliament and of the Council 
of 9 October 2013 laying down the Union Customs Code (OJ 2013 L 269, p. 1; 
corrigenda OJ 2013 L 287, p. 90, and OJ 2016 L 267, p. 2) (‘the Customs 
Code’): Article 5(15); Article 15(2); Article 18(1); Article 22(1); Article 42(1) 
and (2); Article 79(1); Article 124(1)(h); Article 158(1); and Article 162 
– Case-law of the Court of Justice of the European Union: in particular, 
judgments of 10 October 1973, Variola (34/73, EU:C:1973:101); of 7 February 
1973, Commission v Italy (39/72, EU:C:1973:13); of 17 July 1997, Leur-Bloem 
(C-28/95, EU:C:1997:369, paragraphs 27 and 32); of 15 January 2002, 
Andersen og Jensen (C-43/00, EU:C:2002:15); of 18 October 1990, Dzodzi 
(C-297/88 and C-197/89, EU:C:1990:360, paragraph 37); of 11 January 2001, 
Kofisa Italia (C-1/99, EU:C:2001:10, paragraph 32); of 14 December 2006, 
Confederación Española de Empresarios de Estaciones de Servicio (C-217/05, 
EU:C:2006:784, paragraph 19); of 11 December 2007, ETI and Others 
(C-280/06, EU:C:2007:775, paragraph 21); of 20 May 2010, Zwijnenburg 
(C-352/08, EU:C:2010:282, paragraph 33); of 18 October 2012, Pelati 
(C-603/10, EU:C:2012:639, paragraph 18); of 14 March 2013, Allianz 
Hungária Biztosító and Others (C-32/11, EU:C:2013:160, paragraph 20); of 
26 October 1995, Siesse (C-36/94, EU:C:1995:351); of 15 July 2010, Pannon 
Gép Centrum (C-368/09, EU:C:2010:441, paragraph 28); of 6 October 1982, 
Cilfit and Others (283/81, EU:C:1982:335); of 27 March 2014, LCL Le Crédit 
J. P. MALI 
 
3 
Lyonnais (C-565/12, EU:C:2014:190, paragraphs 44 and 45); and of 22 March 
2017, Euro-Team and Spirál-Gép (C-497/15 and C-498/15, EU:C:2017:229) 
Provisions of national law relied on 
– Az uniós vámjog végrehajtásáról szóló 2017. évi CLII. törvény (Law CLII of 
2017 on the application of EU customs law; ‘the Law on customs’): 
explanatory memorandum; Article 2(6); Article 84(1)(a), (2)(a)(aa), (8) and 
(10); Article 85; and Article 86 
– Magyarország 2023. évi központi költségvetésének megalapozásáról szóló 
2022. évi XXIV. törvény (Law XXIV of 2022 on the bases for the 2023 State 
budget in Hungary) 
Succinct presentation of the facts and procedure in the main proceedings 
1 In 2017 and 2018, the applicant imported bicycles and bicycle parts from 
Taiwanese undertakings by means of four customs procedures and released those 
goods for free circulation with the intervention of the company ZeMeX 
Kereskedelmi és Szálítmányoó Kft. (‘ZeMeX’) as indirect customs representative. 
The imports stated that the country of origin of the goods was Taiwan. 
2 The Nemzeti Adó- és Vámhivatal Baranya Megyei Adó- és Vámigazgatósága 
(Baranya County Tax and Customs Directorate of the National Tax and Customs 
Authority, Hungary; ‘the first-tier customs authority’) found that the customs 
declarations lodged by the applicant had wrongly indicated Taiwan as the country 
of origin of the goods, when their true place of origin was the People’s Republic 
of China. In those circumstances, by four decisions delivered on 10 December 
2020, the first-tier customs authority ordered the applicant to pay an EU customs 
debt totalling 26 077 000 Hungarian forints (HUF) and also determined a tax 
difference of HUF 7 040 792 payable by the applicant. ZeMeX paid the customs 
debt in respect of anti-dumping duties on 17 and 18 December 2020. 
3 Under Article 48 of the Customs Code and Articles 108 to 118 and 120 to 128 of 
the Law on customs, the first-tier customs authority carried out a post-release 
customs inspection in respect of the applicant concerning the import customs 
formalities at issue. That authority found that the non-Union goods listed in the 
applicant’s customs declarations had been incorrectly stated as originating in 
Taiwan, when their true country of origin was the People’s Republic of China, 
which gave rise to an assessment for anti-dumping duties. The report drawn up 
following the inspection was based, inter alia, on evidence contained in the final 
report of the European Anti-Fraud Office (OLAF) demonstrating that the 
Taiwanese undertaking acting as importer in the present case was also implicated 
in the incorrect declaration of Taiwanese origin of certain Chinese bicycle parts. It 
was also found that ZeMeX had initiated the customs procedures on the basis of 
information supplied to it by the applicant. The first-tier customs authority 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-653/22 
 
4  
concluded that the applicant must have been aware of the circumstances of the 
acquisition since it had participated in the transaction as a contracting party, with 
the result that it had committed an offence relating to the correctness of 
information in the customs declaration. 
4 In the light of the foregoing, the first-tier customs authority, by decision of 
29 December 2020, imposed a customs administrative fine on the applicant of 
HUF 13 039 000 for failure to comply with its obligations relating to the 
correctness of information in the customs declaration. 
5 The decision handed down at first instance was the subject of an administrative 
appeal by the applicant and was confirmed by the Nemzeti Adó- és Vámhivatal 
Fellebbviteli Igazgatósága (Appeals Directorate of the National Tax and Customs 
Authority, Hungary; ‘the defendant’), by decision of 22 April 2021. 
6 The defendant stated, with regard to the liability of the applicant, that the 
applicant had failed to comply in the customs procedure with the requirements 
laid down in Articles 15(2), 5(15), 18(1) and 22(1) of the Customs Code as 
regards the accuracy and completeness of the information provided in the customs 
declarations. It added that the applicant manufactures and sells bicycles and is 
therefore duty-bound to be familiar with the legislative provisions applicable to its 
business, including the fact that the acquisition of goods from non-EU countries is 
not risk-free owing to non-preferential places and rules of origin. The applicant is 
required to exercise due care when selecting traders with which to do business, 
including exporters. Furthermore, incorrect declarations or exporter errors are part 
and parcel of the ordinary commercial risk borne by the person liable for customs 
duties. 
7 As regards the examination of the amount and proportionality of the customs 
administrative fine, the defendant stated that, in accordance with Article 42(1) and 
(2), Article 158(1) and Article 162 of the Customs Code and Article 84(1)(a) and 
(2)(a)(aa) of the Law on customs, the first-tier customs authority had correctly 
assessed the applicant’s offence and that that offence was the basis for the 
applicant’s obligation to pay the customs administrative fine. Due to the 
misstatement of the country of origin, the applicant had not declared or paid the 
definitive anti-dumping duty on the imports of bicycles and bicycle parts 
originating in the People’s Republic of China, with the result that the customs 
value had been set significantly lower than the actual value. Consequently, when 
the anti-dumping duty was assessed by means of post-clearance recovery, an EU 
customs debt and a customs deficit were incurred. Under Articles 2(6) and 84(8) 
of the Law on customs, where a payment obligation determined by means of post-
clearance recovery also constitutes a customs deficit, the total amount of the 
obligation determined by the customs authority forms the basis for the customs 
administrative fine. Accordingly, a customs deficit which has become final 
automatically gives rise to the imposition of a customs administrative fine, so that 
the first-tier customs authority has no further obligation to conduct an inspection 
or take any other action as regards the attribution of liability. Article 84(8) of the 
J. P. MALI 
 
5 
Law on customs provides that the amount of the customs administrative fine is 
mandatory and there is no margin of discretion in that regard. 
8 The defendant added that, after the initiation of the post-release inspections, the 
applicant had the opportunity, before receiving the report setting out the findings 
made during those inspections, to request the assessment of the customs difference 
in respect of anti-dumping duties, but did not do so. Since the customs differences 
were determined automatically, it would not be appropriate in the present case to 
reduce the customs administrative fine in any way. Under Article 85(1) of the Law 
on customs, there are also no grounds for waiving the fine. Accordingly, the 
applicant’s argument that the facts were not clarified is incorrect. 
9 The defendant pointed out that the Customs Code does not specify which acts and 
failures should be punishable, but merely defines what types of penalties should 
apply, leaving Member States the power to adopt legislation in that regard, which 
Hungary did by means of Article 84(1) of the Law on customs. In that law, the 
system of penalties was defined at the outset by the assessment and evaluation of 
both the acts constituting the offence and the seriousness of its consequences. The 
most serious offences are acts and failures contrary to customs law which result in 
a reduction in customs duties or other levies and which consequently entail a 
reduction in State finances or EU revenue. That is why, in accordance with 
Article 84(8) of the Law on customs, such offences attract a customs 
administrative fine of 50% of the resulting customs deficit, without there being 
any provision for an assessment of the circumstances, so that that provision 
establishes a system of strict liability. 
10 In the defendant’s view, that penalty is consistent with the legal principles 
enshrined in Article 42(1) of the Customs Code. In addition, the defendant 
considered the applicant’s argument alleging infringement of Article 4(1) and (2), 
Article 7 and Article 26(1) and (2) TFEU and Article 16 of the Charter to be 
unfounded, since anti-dumping and trade protection measures protect the internal 
market of the European Union against non-preferential products and places of 
origin. Consequently, EU law restricts the free movement of goods in order to 
protect the internal market and breach of those restrictions cannot go unpunished. 
The essential arguments of the parties in the main proceedings 
11 According to the defendant, the customs administrative fine is a special penalty 
governed by the binding rules laid down in the Law on customs. That law 
distinguishes between two types of non-compliance leading to the imposition of 
customs penalties: offences which give rise to a customs deficit and offences of an 
administrative nature which do not give rise to a customs deficit. In the present 
case, the applicant’s wrongful conduct resulted in the lodging of a goods 
declaration the content of which was incorrect, as a consequence of which the 
applicant incurred a customs debt. Where a customs deficit arises, Article 84(8) of 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-653/22 
 
6  
the Law on customs provides for the mandatory imposition of a customs 
administrative fine of 50% of the deficit, without exception. 
12 With respect to the acts constituting an offence as defined in Article 84(1) of the 
Law on customs, no assessment of the circumstances is possible; the only question 
to be examined for the purposes of applying the system of penalties laid down in 
that provision is whether a customs deficit has arisen. If such a deficit does exist, 
irrespective of any other factor (even if it cannot be established that the acts 
committed are attributable to the trader), a customs administrative fine equal to 
50% of the customs deficit must be imposed. 
13 The defendant contends that, contrary to the applicant’s submissions, the Law on 
customs differentiates between wrongful conduct since, on the one hand, it 
provides for penalties of differing amounts for the various offences and, on the 
other, it distinguishes between offences which give rise to a customs deficit (in 
which case a fine equal to 50% of the deficit must be imposed) and offences 
which do not give rise to a customs deficit (in which case different penalties are to 
be imposed depending on the offence concerned). Furthermore, since the Law on 
customs – by weighting the offences according to the seriousness of the damage 
caused – allows different penalties to be imposed even for offences which give 
rise to a customs deficit and, under certain conditions, also provides for a 
reduction of the penalty, it satisfies the requirements laid down in Article 42(1) of 
the Customs Code. 
14 According to the applicant, the customs administrative fine provided for in the 
Law on customs in the event of a customs deficit, the predetermined fixed amount 
of which is equal to 50% of the deficit, does not take account of the individual 
circumstances of the offence and prevents the penalty being proportionate to the 
damage caused. 
15 The applicant states that, when determining origin, the importer has only limited 
knowledge about the production of the goods and the factors defining their origin. 
In those cases, the importer relies entirely on the information provided by the 
exporter. It should be noted that, in the present case, the Taiwanese Chamber of 
Commerce, acting as an independent public body, also provided documentary 
evidence of the goods’ origin. 
16 In the applicant’s view, the purpose of the customs administrative fine is to 
penalise the importer for having made an incorrect declaration as to the origin of 
the goods. However, the objective nature of the fine and its fixed amount do not 
allow the customs authorities to assess the seriousness of the offence or to impose 
a penalty proportionate to it. Such a legislative provision infringes the requirement 
of proportionality. In that regard, the applicant refers to Joined Cases C-497/15 
and C-498/15, in which a high fine had been imposed on the importer for an 
offence not attributable to it. A fixed penalty, the amount of which cannot be 
tailored to the seriousness of the offence, constitutes a disproportionate burden on 
undertakings and undermines the application of the criteria laid down in the 
J. P. MALI 
 
7 
Customs Code for the establishment of administrative penalties by the Member 
States. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
17 In these proceedings, the referring court has to determine whether the penalty 
provided for in Article 84(8) of the Law on Customs, adopted on the basis of 
Article 42(1) and (2) of the Customs Code, namely a customs administrative fine 
the imposition of which is mandatory where a customs deficit arises as a result of 
an offence relating to the correctness of information in the goods declaration and 
the amount of which is equal to 50% of the established deficit, is compatible with 
the principle of proportionality enshrined in Article 42(1) of the Customs Code. 
This is a penalty which, in essence, gives rise to strict liability and does not permit 
any examination of whether the acts are attributable to the applicant or, therefore, 
whether the applicant took all necessary and reasonably foreseeable measures to 
avoid the failure to comply which caused the customs deficit. 
18 According to the referring court, the dispute between the parties cannot be settled 
without an interpretation of EU law, specifically Article 42(1) and (2) of the 
Customs Code. 
19 Regulations are legal acts defined in Article 288 TFEU. They have general 
application, are binding in their entirety and are directly applicable in all Member 
States of the European Union. They create rights and obligations for natural 
persons, who may therefore rely on them directly before national courts. 
20 The referring court states that the adoption by Member States of implementing 
rules to support the objectives and provisions of a regulation is not prohibited; 
indeed, Member States are required to do so unless the regulation provides 
otherwise. For the purposes of examining the present case, it should be noted that 
paragraph 1 of Article 42 of the Customs Code governs the obligation of Member 
States to provide for penalties for failure to comply with customs legislation, 
penalties which must be effective, proportionate and dissuasive. Paragraph 2 of 
that article provides, as a legal consequence, either for the imposition of a fine or 
the revocation, suspension or amendment of any authorisation. Chapter XI of the 
Law on customs gives concrete expression to that provision of EU law in 
Hungary. 
21 The national court observes that the Law on customs is based on the provisions of 
the Customs Code and that both legal instruments are interconnected. The rules 
set out in Article 84 of the Law on customs give effect to the requirements laid 
down by the EU legislature in Article 42 of the Customs Code. Concerning the 
pecuniary charge (or settlement) provided for in Article 42(2)(a) of the Customs 
Code, the Law on customs establishes a customs administrative fine, of which 
there are two types from the point of view of legal consequences: a percentage-
based fine (Article 84(8) of the Law on customs) and a discretion-based fine 
(Article 84(10) of the Law on customs). In both cases, proper account must also 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-653/22 
 
8  
be taken of the requirements (effectiveness, proportionality and dissuasive effect) 
set out in Article 42(1) of the Customs Code, which is directly applicable. 
Consequently, the legal concept of the customs administrative fine introduced in 
Hungary has an undeniable impact on EU law and, therefore, it is clearly of 
interest to the European Union to ensure the uniform interpretation of provisions 
or concepts taken from EU law, irrespective of the circumstances in which they 
are applied, in order to avoid divergent interpretations in the future. 
22 In the light of the foregoing, the referring court considers that the Court of Justice 
has jurisdiction to adjudicate on the request for a preliminary ruling. 
23 It cites the Court’s findings in Siesse, namely that where EU legislation does not 
specifically provide any penalty for an infringement or refers for that purpose to 
national legislation, it is for the Member States to take all measures necessary to 
guarantee the application and effectiveness of EU law. Member States retain 
discretion as to the choice of penalties applicable in the event of an infringement 
of customs legislation, but those penalties must comply with EU law and its 
principles, including the principle of proportionality. 
24 The referring court points out that, under national legislation, the body applying 
the law has no discretion as regards the penalty at issue in the main proceedings, 
even though that body is required to comply with the requirement of 
proportionality laid down in Article 42(1) of the Customs Code. Since, in those 
cases, the customs authority does not take account of the individual circumstances 
of the offence, the penalty imposed is disproportionately severe, in breach of 
Article 42(1) of the Customs Code. 
25 As regards the proportionality of the penalty, the referring court cites 
paragraphs 44 and 45 of the judgment in LCL Le Crédit Lyonnais, according to 
which Member States must ensure that infringements of EU law are penalised 
under conditions, both procedural and substantive, which are analogous to those 
applicable to infringements of national law of a similar nature and importance and 
which, in any event, make the penalty effective, proportionate and dissuasive. 
Moreover, the severity of penalties must be commensurate with the seriousness of 
the infringements for which they are imposed, in particular by ensuring a 
genuinely dissuasive effect, while respecting the general principle of 
proportionality. 
26 The referring court considers it relevant that, subsequent to the facts in the main 
proceedings, the national legislature itself amended the concept of customs deficit 
set out in Article 2(6) of the Law on customs with effect from 28 July 2022, 
adding the following text to the existing definition: ‘however, neither customs 
debts which have been extinguished in accordance with Article 124(1)(h) or (k) of 
the Customs Code nor customs debts of less than EUR 10 incurred as a result of 
an offence relating to customs supervision or the acts of customs administrations 
shall be classified as customs deficits’. 
J. P. MALI 
 
9 
27 According to the explanatory memorandum to the law which inserted that 
amendment, the amount of customs duties and other levies incurred but not 
declared constitutes in all cases a customs deficit, even if the failure to comply 
which gave rise to the customs debt is not significant and EU law provides for 
consequences in that regard in the event of extinguishment of the customs debt. 
However, when determining the amount of the fine, the actions leading to the 
infringement of the obligation concerning the presentation of goods to customs or 
their removal from customs supervision cannot be given the same weight as other, 
less serious failures to comply following which the customs debt is extinguished. 
That amended concept of customs deficit must also apply to cases pending when it 
entered into force. 
28 That amendment to the Law on customs opened up the possibility of imposing a 
customs fine for non-compliance based on the customs authority’s discretion, 
instead of a (fixed-amount) customs fine equal to 50% of the customs debt, since 
the legislature recognised that, when determining the amount of the fine, actions 
leading to the infringement of the obligation concerning the presentation of goods 
to customs or their removal from customs supervision cannot be treated in the 
same way as other less serious failures to comply following which the customs 
debt is extinguished. 
29 The referring court enquires whether, if the applicant proves before the national 
courts, in connection with the failure to comply which gave rise to the customs 
deficit, that the inaccuracy of the information provided in the customs declarations 
cannot be attributed to it, the customs fine at issue may be regarded as an 
effective, proportionate and dissuasive penalty meeting the requirements laid 
down in Article 42(1) of the Customs Code.