62005CC0019_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
I – Introduction
1. In this case the Court is ruling in proceedings for failure to fulfil obligations brought by the Commission of the European Communities (‘the Commission’) against the Kingdom of Denmark (‘Denmark’). In these proceedings the Commission claims that the Court should declare that, by failing to pay the Commission the sum of DKK 18 687 475 (approximately EUR 2 507 210) as own resources, together with default interest from 27 July 2000, Denmark has failed to fulfil its obligations under Community law, in particular Article 10 EC and Articles 2 and 8 of Council Decision 94/728/EC, Euratom of 31 October 1994 on the system of the European Communities’ own resources, and order Denmark to pay the costs.
2. The present case follows Case C‑392/02 Commission
v Denmark, (2) in which the Court laid down the principle that the Member States are financially liable for errors on the part of their customs authorities which have entailed a reduction in own resources for the Community.
II – Legal background
3. Under Article 10 EC, ‘Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community’s tasks.’
A – Provisions on own resources
4. Under the second paragraph of Article 269 EC, ‘[t]he Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament, shall lay down provisions relating to the system of own resources of the Community, which it shall recommend to the Member States for adoption in accordance with their respective constitutional requirements’.
5.
Although the Commission’s action is based primarily on Council Decision 94/728/EC, Euratom of 31 October 1994 on the system of the European Communities’ own resources (3) (‘Decision 94/728’), it is also necessary to examine Council Decision 88/376/EEC, Euratom of 24 June 1988 on the system of the Communities’ own resources (4) (‘Decision 88/376’) since the facts of the case relate in part to the period before 1 December 1995.
6. The system of own resources was originally governed by Decision 88/376. This decision was repealed and replaced by Decision 94/728 which, under Article 11(1) thereof, is to apply from 1 December 1995.
1. Decision 88/376
7. Article 2(1) of Decision 88/376 provides that revenue from the following are to constitute own resources entered in the budget of the Communities:
– ‘(a) levies, premiums, additional or compensatory amounts, additional amounts or factors and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries within the framework of the common agricultural policy, and also contributions and other duties provided for within the framework of the common organisation of the markets in sugar;
– (b) Common Customs Tariff duties and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries and customs duties on products coming under the Treaty establishing the European Coal and Steel Community;
– (c) the application of a uniform rate valid for all Member States to the VAT assessment base which is determined in a uniform manner for Member States according to Community rules; however, the assessment base for any Member State to be taken into account for the purposes of this Decision shall not exceed 55% of its GNP;
– (d) the application of a rate – to be determined under the budgetary procedure in the light of the total of all other revenue – to the sum of all the Member States’ GNP established in accordance with Community rules to be laid down in a Directive adopted under Article 8(2) of this Decision’.
8. Article 8(1) and (2) of Decision 88/376 provides that:
‘1. The Community own resources referred to in Article 2(1)(a) and (b) shall be collected by the Member States in accordance with the national provisions imposed by law, regulation or administrative action, which shall, where appropriate, be adapted to meet the requirements of Community rules. The Commission shall examine at regular intervals the national provisions communicated to it by the Member States, transmit to the Member States the adjustments it deems necessary in order to ensure that they comply with Community rules and report to the budget authority. Member States shall make the resources under Article 2(1)(a) to (d) available to the Commission.
2. Without prejudice to the auditing of the accounts and to checks that they are lawful and regular and as laid down in Article 206a of the Treaty establishing the European Economic Community, such auditing and checks being mainly concerned with the reliability and effectiveness of national systems and procedures for determining the base for own resources accruing from VAT and GNP and without prejudice to the inspection arrangements made pursuant to Article 209(c) of that Treaty, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, adopt the provisions necessary to apply this Decision and to make possible the inspection of the collection, the making available to the Commission and payment of the revenue referred to in Articles 2 and 5.’
2. Decision 94/728
9. Article 2(1) of Decision 94/728 provides that revenue from the following are to constitute own resources in the budget of the Communities, in particular ‘traditional’ resources:
– ‘(a) levies, premiums, additional or compensatory amounts, additional amounts or factors and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries within the framework of the common agricultural policy …;
– (b) Common Customs Tariff duties and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries …;
– (c) the application of a uniform rate valid for all Member States to the VAT assessment base …;
– (d) the application of a rate – to be determined pursuant to the budgetary procedure in the light of the total of all other revenue – to the sum of all the Member States’ GNP …’.
10. Under Article 2(3) of Decision 94/728, Member States are to retain, by way of collection costs, 10% of the amounts paid under Article 2(1)(a) and (b). Under Article 2(3) of Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the European Communities’ own resources, (5) this percentage was increased to 25% of the amounts established after 31 December 2000.
11. Article 8 of Decision 94/728 provides:
‘1. The Community own resources referred to in Article 2(1)(a) and (b) shall be collected by the Member States in accordance with the national provisions imposed by law, regulation or administrative action, which shall, where appropriate, be adapted to meet the requirements of Community rules. The Commission shall examine at regular intervals the national provisions communicated to it by the Member States, transmit to the Member States the adjustments it deems necessary in order to ensure that they comply with Community rules and report to the budget authority. Member States shall make the resources provided for in Article 2(1)(a) to (d) available to the Commission.
2. … the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, adopt the provisions necessary to apply this Decision and to make possible the inspection of the collection, the making available to the Commission and payment of the revenue referred to in Articles 2 and 5.’
3. Provisions intended to ensure monitoring of collection
12. When the facts at issue in this case occurred, the provisions intended to ensure monitoring of collection were set out in Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ own resources (‘Regulation No 1552/89’). (6) This regulation was amended by Council Regulation (Euratom, EC) No 1355/96 of 8 July 1996, (7) which took effect on 14 July 1996. Regulation No 1552/89, together with the amendments made to it, was consolidated and replaced by Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities’ own resources. (8)
13. The second recital in the preamble to Regulation No 1552/89 states that ‘the Community must have the own resources referred to in Article 2 of Decision 88/376/EEC, Euratom available in the best possible conditions and accordingly arrangements must be laid down for the States to provide the Commission with the own resources allocated to the Communities’.
14. Article 2(1) and (1a) of Regulation No 1552/89 lays down the conditions governing the existence of the Community’s entitlement to own resources arising from customs duties:
‘1. For the purpose of applying this Regulation, the Community’s entitlement to the own resources referred to in Article 2(1)(a) and (b) of Decision 88/376/EEC, Euratom shall be established as soon as the conditions provided for by the customs regulations have been met concerning the entry of the entitlement in the accounts and the notification of the debtor.
1a. The date of the establishment referred to in paragraph 1 shall be the date of entry in the accounting ledgers provided for by the customs regulations.’
15. The first paragraph of Article 9(1) of Regulation No 1552/89 provides that ‘[i]n accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened in the name of the Commission with its Treasury or the body it has appointed’.
16. Under Article 11 of Regulation No 1552/89:
‘Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the Member State concerned at the interest rate applicable on the Member State’s money market on the due date for short-term public financing operations, increased by two percentage points. This rate shall be increased by 0.25 of a percentage point for each month of delay. The increased rate shall be applied to the entire period of delay.’
17. Under Article 17(1) and (2) of that regulation:
‘1. Member States shall take all requisite measures to ensure that the amounts corresponding to the entitlements established under Article 2 are made available to the Commission as specified in this Regulation.
2. Member States shall be free from the obligation to place at the disposal of the Commission the amounts corresponding to established entitlements solely if, for reasons of force majeure, these amounts have not been collected. In addition, Member States may disregard this obligation to make such amounts available to the Commission in specific cases if, after thorough assessment of all the relevant circumstances of the individual case, it appears that recovery is impossible in the long term for reasons which cannot be attributed to them. …’
B – Customs provisions
1. Customs Code
18. Article 9(1) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (9) (‘the Customs Code’) provides:
‘1. A decision favourable to the person concerned shall be revoked or amended where, in cases other than those referred to in Article 8, one or more of the conditions laid down for its issue were not or are no longer fulfilled.’
19. Article 20 of the Customs Code provides:
‘1. Duties legally owed where a customs debt is incurred shall be based on the Customs Tariff of the European Communities.
…
3. The Customs Tariff of the European Communities shall comprise:
(a) the combined nomenclature of goods;
…
(f) autonomous suspensive measures providing for a reduction in or relief from import duties chargeable on certain goods;
…
4. Without prejudice to the rules on flat-rate charges, the measures referred to in paragraph 3(d), (e) and (f) shall apply at the declarant’s request instead of those provided for in subparagraph (c) where the goods concerned fulfil the conditions laid down by those first-mentioned measures. An application may be made after the event provided that the relevant conditions are fulfilled.
…’
20. Article 82(1) of the Customs Code provides:
‘1. Where goods are released for free circulation at a reduced or zero rate of duty on account of their end-use, they shall remain under customs supervision. Customs supervision shall end when the conditions laid down for granting such a reduced or zero rate of duty cease to apply, where the goods are exported or destroyed or where the use of the goods for purposes other than those laid down for the application of the reduced or zero rate of duty is permitted subject to payment of the duties due.’
21. Under Article 204(1) and (2) of the Customs Code:
‘1 A customs debt on importation shall be incurred through:
(a) non-fulfilment of one of the obligations arising, in respect of goods liable to import duties, from their temporary storage or from the use of the customs procedure under which they are placed,
or
(b) non-compliance with a condition governing the placing of the goods under that procedure or the granting of a reduced or zero rate of import duty by virtue of the end-use of the goods,
in cases other than those referred to in Article 203 unless it is established that those failures have no significant effect on the correct operation of the temporary storage or customs procedure in question.
2. The customs debt shall be incurred either at the moment when the obligation whose non-fulfilment gives rise to the customs debt ceases to be met or at the moment when the goods are placed under the customs procedure concerned where it is established subsequently that a condition governing the placing of the goods under the said procedure or the granting of a reduced or zero rate of import duty by virtue of the end-use of the goods was not in fact fulfilled.’
22. Article 220 of the Customs Code provides:
‘1. Where the amount of duty resulting from a customs debt has not been entered in the accounts in accordance with Articles 218 and 219 or has been entered in the accounts at a level lower than the amount legally owed, the amount of duty to be recovered or which remains to be recovered shall be entered in the accounts within two days of the date on which the customs authorities become aware of the situation and are in a position to calculate the amount legally owed and to determine the debtor (subsequent entry in the accounts). That time-limit may be extended in accordance with Article 219.
2. Except in the cases referred to in the second and third subparagraphs of Article 217(1), subsequent entry in the accounts shall not occur where:
…
(b) 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 detected by the person liable for payment, 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;
…’
23. Article 239 of the Customs Code states:
‘1. Import duties or export duties may be repaid or remitted in situations other than those referred to in Articles 236, 237, and 238:
– to be determined in accordance with the procedure of the Committee;
– resulting from circumstances in which no deception or obvious negligence may be attributed to the person concerned. The situations in which this provision may be applied and the procedures to be followed to that end shall be defined in accordance with the Committee procedure. Repayment or remission may be made subject to special conditions.
2. Duties shall be repaid or remitted for the reasons set out in paragraph 1 upon submission of an application to the appropriate customs office within 12 months from the date on which the amount of the duties was communicated to the debtor.
However, the customs authorities may permit this period to be exceeded in duly justified exceptional cases.’
2. Provisions for the implementation of the Customs Code
24. Article 291 of 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, (10) which was repealed by Commission Regulation (EC) No 1602/2000 of 24 July 2000 amending Regulation (EEC) No 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, (11) provided:
‘1. The admission of goods entered for free circulation with favourable tariff treatment by reason of their end-use shall be subject to the granting of written authorisation to the person importing the goods or having them imported for free circulation.
2. The said authorisation shall be issued at the written request of the person concerned by the customs authorities of the Member State where the goods are declared for free circulation.
…’
25. Article 869 of Regulation No 2454/93 provides:
‘The customs authorities shall themselves decide not to enter uncollected duties in the accounts:
…
(b) in cases in which they consider that the conditions laid down in Article 220(2)(b) of the Code are fulfilled, provided that the amount not collected from the operator concerned in respect of one or more import or export operations but in consequence of a single error is less than [EUR] 2 000;
…’
26. Article 871 of this regulation provides:
‘In cases other than those referred to in Article 869, where the customs authorities either consider that the conditions laid down in Article 220(2)(b) of the Code are fulfilled or are in doubt as to the precise scope of the criteria of that provision with regard to a particular case, those authorities shall submit the case to the Commission, so that a decision may be taken in accordance with the procedure laid down in Articles 872 to 876. The case submitted to the Commission shall contain all the information required for a full examination.
As soon as it receives the case the Commission shall inform the Member State concerned accordingly.
Should it be found that the information supplied by the Member State is not sufficient to enable a decision to be taken on the case concerned in full knowledge of the facts, the Commission may request that additional information be supplied.’
3. Provisions on the Combined Nomenclature
27. The Combined Nomenclature (‘the CN’) was published in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff. (12) This regulation is based on the international Harmonised Commodity Description and Coding System drawn up by the Customs Cooperation Council (now the World Customs Organisation) and established by the International Convention concluded at Brussels on 14 June 1983 and approved on behalf of the Community by Council Decision 87/369/EEC of 7 April 1987 concerning the conclusion of the International Convention on the Harmonised Commodity Description and Coding System and of the Protocol of Amendment thereto. (13) The regulation was last amended by Commission Regulation (EC) No 1789/2003 of 11 September 2003 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff. (14)
28. Section II of Annex I to Regulation No 2658/87 provides inter alia that customs duties are to be suspended in respect of goods intended for incorporation in the ships, boats or other vessels listed in the … schedule, for the purposes of their construction, repair, maintenance or conversion, and in respect of goods intended for fitting to or equipping such ships, boats or other vessels.
29. The list to which this annex refers also contained tariff subheading CN 8901 90 10 which applied to other vessels for the transport of goods and other vessels for the transport of both persons and goods.
30. Containers, including containers for the transport of fluids, specially designed and equipped for carriage by one or more modes of transport were defined under subheading CN 8609 00 90 in Annex I to Regulation No 2658/87.
III – Facts
31. In 1990 a Danish undertaking which forms part of a group of undertakings (‘the importer’) submitted an application for exemption from import duties by virtue of inward processing. The importer based this application on the argument that the imported goods (timber and synthetic materials) are goods intended for the construction of containers for maritime transport which will consequently be incorporated into container vessels of the group.
32. The Danish customs authorities authorised the importation and did not collect import duties on those goods (timber and synthetic materials), which they classified under tariff subheading CN 8901 90 10 in Annex I to Regulation No 2658/87. They treated these goods under end-use provisions (15) which apply to goods incorporated into vessels and goods intended for fitting to or equipping vessels. The Danish authorities also notified the importer that the inward processing procedure could not be applied in this case.
33. From 25 to 29 March 1996 the Commission’s representatives carried out an inspection of the collection of the Communities’ own resources, in which they drew up Report No 96-1-1. In that report they found that the Danish authorities had, in breach of Community law, authorised the importer to import free of import duties goods used for the construction of standard containers intended for transport which do not form part of vessels’ equipment. For the end-use provisions to be applied correctly, those containers would have to have been incorporated directly into those vessels or form part of the equipment of those vessels. At the same time the Commission’s representatives found that on account of this irregularity there had been an unlawful reduction in the Community’s own resources. The Commission also considered that the Danish authorities were financially liable for the errors committed in applying the end-use scheme from 1 January 1994. It was in connection with this examination that the report, which was communicated to the Danish authorities on 12 June 1996, was drawn up.
34. Denmark disputed the Commission’s report by letter of 12 February 1997 and reiterated its view on 6 June 1997 at a meeting of the Advisory Committee on Own Resources. At that meeting Denmark challenged the jurisdiction of that committee and requested that the matter be resolved by the Commission directorate-general responsible for fiscal and customs affairs. At that meeting the Commission stated that it did not concur with the interpretation of customs provisions put forward by Denmark.
35. On 25 November 1997 Denmark asked for the matter to be dealt with by the section of the Customs Code Committee responsible for favourable tariff treatment, since no customs debt had been incurred and there had been no losses in terms of the Community’s own resources.
36. On 30 December 1997 the Danish customs authorities (Toldcenter Sydjylland, South Jutland Customs Centre) communicated to the importer, without thereby approving it, the Commission’s legal opinion regarding the authorisation of imports free of import duties and informed it that they would collect import duties from 1 January 1998. The authorisation to import under the end-use scheme ceased to have effect in respect of the importer on 31 December 1997. On 3 February 1998 the importer submitted a request for inward processing relief. Authorisation to import on that basis was granted on 21 April 1998 but had retroactive effect from 3 February 1998. The Commission did not request the Danish Government to transfer the amount of import duties for the period from 1 January to 3 February 1998.
37. On 9 November 1998 the Commission requested that Denmark pay it, without interest, import duties amounting to DKK 18 687 475 which it should have collected in respect of the period from 1 January 1994 to 31 December 1997. It contended that Denmark was financially liable for all the importer’s imports from 1 January 1994 since it had incorrectly applied the end-use scheme. The customs authorities replied to this letter on 10 March 1999 by sending the Commission a list of import duties not collected between 1 January 1994 and 31 December 1997 and disputing the contention that the Community had suffered financial loss as a result of their practice.
38. On 31 January 2002 the Commission sent Denmark a letter of formal notice in which it once again pointed to the infringements relating to the tariff classification of the importer’s goods and instructed it to pay the amount of DKK 18 687 475.
39. On 2 April 2002 the Danish Government replied to the letter of formal notice and acknowledged that Section II of Annex I to Regulation No 2658/87, which contains the Combined Nomenclature, should not be interpreted so broadly as to exempt from import duties goods used for the manufacture of products intended to equip vessels.
40. On 6 May 2002 the Danish Government sent to the Commission, outside these infringement proceedings, a letter in which it requested that it be authorised, under Article 220(2)(b) of the Customs Code, not to make a subsequent entry in the accounts since the authorisation granted under the end-use provisions was an error on the part of the customs authorities which could not have been detected by the person liable for payment.
41. Denmark’s reply to the letter of formal notice failed to convince the Commission, and therefore on 31 October 2002 it sent Denmark a reasoned opinion in which the Member State was requested to adopt all the necessary measures within two months of receiving the opinion. Denmark replied to that opinion on 28 February 2003.
42. On 19 April 2004 the working group of the Customs Code Committee found at a meeting held in connection with the procedure for adopting Decision REC 12/03 that the conditions for granting authorisation for relief from payment of customs duties by virtue of inward processing had been fulfilled by the importer as early as 1990. If the importer had requested such authorisation in 1990, it would have been granted to it. At that meeting it was also found that the errors committed by the Danish customs authorities had not affected the Community budget. On 19 May 2004 the Commission adopted Decision REC 12/03 (16) on the basis of that working group meeting. In that decision the Commission found that there should have been a subsequent entry in the accounts of the amount of import duties owed by the importer and that the application for exemption from payment of import duties in respect of the importer was well founded. By letter of 21 February 2005 the Commission informed Denmark that it was no longer considered to be financially liable for non-payment of the Communities’ own resources in respect of the period from 1 January 1998 to 3 February 1998.
43. Denmark did not comply with the reasoned opinion and therefore the Commission brought an action under Article 226 EC on 20 January 2005.
44. The Commission claims that the Court should
– declare that, by failing to pay the Commission the sum of DKK 18 687 475 as own resources, together with default interest from 27 July 2000, the Kingdom of Denmark has failed to fulfil its obligations under Community law, in particular Article 10 EC and Articles 2 and 8 of Council Decision 94/728/EC, Euratom of 31 October 1994 on the system of the European Communities’ own resources;
– order the Kingdom of Denmark to pay the costs.
45. The Kingdom of Denmark contends that the Court should
– dismiss the action;
– order the Commission to pay the costs.
IV – Arguments of the parties
46. The Commission considers that Denmark incorrectly authorised the importation free of import duties of goods intended for the manufacture of containers even though the Danish authorities had been warned that such a procedure was wrong. The use of tariff subheading CN 8609 00 90 was wrong because the goods were used for the manufacture of standard containers which had no particular special features. These containers, in respect of which Denmark authorised the importation of goods, cannot be incorporated into a vessel because they do not have the necessary characteristics and do not form part of the vessel’s equipment. They do not replace part of the vessel on which the goods are loaded and do not form part of the fittings or equipment of the vessel since they are not used to operate it. Therefore, they do not have an end-use.
47. In the view of the Commission, the Danish authorities could not grant authorisation for importation of the goods under the end-use scheme. The Danish authorities should have revoked the authorisation granted immediately after they received the communication from the Commission, that is to say within th e two-day period laid down in Article 220(1) of the Customs Code. Denmark failed to fulfil its obligations under Articles 9 and 20 of the Customs Code and under Regulation No 2658/87. That is why the Community’s own resources were reduced. The Commission further emphasises that the Community’s own resources by way of customs duties are established when the customs debt is incurred.
48. The inward processing procedure could not be applied to the imported goods. However, it is not possible to establish ex post whether the conditions laid down by Article 117(b) of the Customs Code are met in respect of the inward processing procedure.
49. The Commission contends that the Danish authorities received its interpretation of the provisions at issue but nevertheless did not make a subsequent entry of the customs debt in the accounts because they considered that the conditions laid down in Article 220(2)(b) of the Customs Code were met. Therefore, they failed to fulfil their obligations under Article 871 of Regulation No 2454/93. The Commission considers that the Danish authorities acted on their own responsibility in that they abided by their interpretation even after the Commission made Denmark aware in 1996 of the irregularities in the application of the end-use provisions which permit importation at a zero rate of duty. Since the Danish authorities failed to inform the Commission of the difficulties and irregularities – found by the Commission – in the application of these provisions, they prevented it from taking a decision on the possible application of Article 220(2)(b) of the Customs Code.
50. The Commission considers that the Danish authorities failed to act with all due diligence when authorising the importation free of import duties. They also failed to act with diligence in that they did not make a subsequent entry of the customs debt in the accounts pursuant to Article 220(2)(b) of the Customs Code and Article 871 of Regulation No 2454/93. Therefore, Denmark did not establish the Community’s own resources and is thus financially liable for the loss of own resources, which constitutes non-compliance with Article 8 of Decision 94/728. It must therefore transfer to the Community budget the sum of DKK 18 687 475 which is owed on account of the errors committed and the lack of diligence. The Community has suffered loss because this amount has not been transferred. Since Denmark is refusing to pay this sum, it is failing to fulfil its obligations under Articles 2 and 8 of Decision 94/728 and Article 10 EC.
51. As regards the period from 1 January 1994 to 31 December 1997, the Commission considers that the facts of the present case do not differ greatly from those in Case C‑392/02 Commission
v Denmark . (17)
52. Finally, the Commission takes the view that Denmark should also pay interest under Article 11 of Regulation No 1552/89.
53. The Danish Government disputes the claim that the Community has suffered financial loss on account of the non-payment of own resources. The errors of the Danish authorities had no adverse effect on the Community budget, since the importer already fulfilled the conditions for treatment under the inward processing procedure when it submitted its application in 1990, as is evident from Decision REC 12/03. Consequently, no customs debt arose. Furthermore, at the meeting on 19 April 2004 the Committee found that in respect of the period from 1 January 1998 to 3 February 1998 the Community had suffered no financial loss as a result of the exemption from customs duties.
54. The Danish Government contends that it is unclear whether or not the imported goods could be imported under the end-use scheme. The question whether the containers are classified as goods for fitting to or equipping vessels is therefore fundamental to the present case. In Pedersen
v Commission (18) the Court ruled on the question of fishing nets incorporated permanently into vessels. The status of goods incorporated into a vessel is unclear. The Danish Government therefore suggested that the competent Commission committee should determine the status of the goods. This has yet to be done.
55. With reference to Decision REC 12/03 and the minutes of the meeting of the section on 19 April 2004, the Danish Government contends that according to these documents the conditions for granting authorisation for application of the inward processing procedure had been fulfilled since 1990 and that the Community budget has sustained no losses. Since the Commission had stated in its reply that this finding applied to the period from 1 January 1998 to 3 February 1998, the decision could be interpreted as meaning that no loss was sustained before 1 January 1998. It is also evident from the decision that no loss occurred, since it is necessary to apply the legal basis laid down for inward processing which also provides for a zero rate of customs duty. Therefore, Article 239 of the Customs Code must be applied. Since the inward processing procedure applies to identical circumstances after 1 January 1998, there is no reason why this procedure could not be applied also to the period prior to 1 January 1998.
56. The Danish Government contends that the Danish authorities changed their view on the application of the end-use provisions at such a late stage on account of the conduct of the Commission, whose Customs Code Committee section responsible for customs facilities failed to raise the matter. They changed their view when drawing up a reply to the letter of formal notice on account of a telephone conversation with an unspecified official of the Directorate-General for Taxation and Customs Union who stated that Denmark should apply the inward processing procedure rather than the end-use scheme.
57. The Danish Government also expressly disputes the Commission’s contentions that it failed to inform the Commission that it did not intend to make a subsequent entry of the customs debt in the accounts, since it did so by a letter sent to the Commission on 6 May 2002.
V – Assessment of the Advocate General
A – Member States’ liability towards the Community in the field of own resources
58. Article 2(1)(b) of Decision 94/728 provides that Common Customs Tariff duties and other duties which the Community collects in connection with trade with non-member countries are to constitute Community own resources. (19) The use of customs duties as Community own resources in the Community budget is a consequence of the fact that in the customs union (20) the Member State which orders payment of the customs duties is not necessarily the Member State in which the goods are used. (21)
59. Article 2 of Regulation No 1552/89 provides that the Communities’ entitlement to own resources is established as soon as the conditions provided for by the customs regulations have been met concerning the entry of the entitlement in the accounts and the notification of the debtor. It follows from the wording of that provision that the Member State’s obligation to establish the Community’s entitlement to own resources arises as soon as the conditions provided for by the customs regulations have been met and that, accordingly, it is not necessary that the entry in the accounts has actually been made. (22) The Member States ‘are required to establish the Communities’ entitlement to own resources as soon as their customs authorities are in a position to calculate the amount of duties arising from a customs debt and determine the debtor’. (23)
60. As regards customs duties as Community own resources, the Court’s case-law has held that, in principle, ‘Member States are required to establish the Communities’ own resources as soon as their own customs authorities have the necessary particulars and, therefore, are in a position to calculate the amount of duties arising from a customs debt and determine the debtor, regardless of the issue of whether the criteria for the application of Article 220(2)(b) of the Customs Code are met and therefore whether or not it is possible to proceed with a subsequent entry in the accounts or post-clearance recovery of the customs duties in question. In those circumstances, a Member State which fails to establish the Communities’ own resources and to make the corresponding amount available to the Commission, without one of the conditions laid down in Article 17(2) of Regulation No 1552/89 being met, falls short of its obligations under Community law, in particular Articles 2 and 8 of Decision 94/728.’ (24)
B – Does the absence of clarity in the provisions of Community law release the Member States from their obligation to establish the Community’s own resources?
61. The Danish Government cannot rely on alleged imprecisions in the wording of Annex I to Regulation No 3658/87. These imprecisions do not relieve the Member States of their obligation to pay the Community’s own resources under Decision 94/728. According to the abovementioned judgment in Commission v Denmark
(Case C‑392/02), ‘although an error committed by the customs authorities of a Member State results in the debtor not having to pay the duties in question, it does not affect that Member State’s obligation to pay default interest and duties which should have been established, in the context of making available own resources’. (25) In accordance with the principle of indirect administration, (26) Member States are responsible for the implementation of Community customs provisions.
62. Although some customs provisions are unclear, this lack of clarity does not relieve the Member States of their obligation to pay the Community’s own resources. It is a principle of Community law that in general Member States may not themselves interpret any imprecisions in Community provisions. If they could interpret them themselves they would thereby infringe Article 220 EC. (27) The Danish Government’s arguments that, on account of the imprecisions in Annex I to Regulation No 3658/87, it is unclear whether or not a customs debt has been incurred are consequently unfounded. Even if a Member State disputes the existence of a customs debt, it must establish the Community’s own resources. (28) Article 2(1) of Regulation No 1552/89 must be interpreted as meaning that the Member States may not dispense with determining the claims, even where they dispute them, since the financial equilibrium of the Community is affected by the action of the Member States. (29)
C – Denmark’s obligation to make available the Community’s own resources
63. It should be stated first of all that in its letter of 2 April 2002 the Danish Government acknowledged that it had applied Community customs provisions incorrectly. In its defence the Danish Government also acknowledged that it had applied the end-use scheme incorrectly and that it had informed the importer that the inward processing procedure could not be applied in this case. Nevertheless, it disputes the contention that the Community’s system of own resources has suffered loss, since another customs procedure, namely the inward processing procedure, which is characterised by a zero rate of duty, could have been applied.
64. The Community is entitled to own resources where the substantive conditions for a customs debt to be incurred are fulfilled. (30) The Member States’ obligation to establish that the Community is entitled to the own resources arises, according to Case C‑392/02 Commission v Denmark, as soon as the conditions laid down in the customs regulations, that is to say in the customs provisions, have been met.
65. The question whether the conditions for establishing the Community’s own resources exist does not turn on the answer to the question how the person liable for the customs debt is to be treated under customs law, since the relationships are legally distinct. ‘The [provisions on own resources govern] the legal relationship between the Community and the Member States as far as the establishment and transfer of own resources is concerned. The [customs provisions govern] the legal relations between the Member States and undertakings in connection with the assessment, imposition and collection of import and export duties’. (31) Therefore, from the point of view of the relationship between the Community and Denmark as regards the Community’s own resources, it is irrelevant whether or not the Danish authorities should not only revoke the authorisation of imports at a zero rate of customs duty but also establish whether the application of a different customs procedure, namely the inward processing procedure, would be correct.
66. In respect of a number of goods Community customs law provides for a reduction in customs duties or even zero customs duty where the goods are used for a particular purpose (end-use scheme). As a rule, the application of a reduced customs duty is based on the Combined Nomenclature contained in Section II of Annex I to Regulation No 2658/87, which applies as the relevant law ratione temporis . That regulation provided that customs duties are not to be collected temporarily in respect of goods incorporated into vessels referred to in a list included in that regulation in the event of construction, repair, maintenance or conversion and in respect of goods for fitting to or equipping such vessels.
67. The Danish customs authorities treated the imported goods as if they were covered by tariff subheading CN 8901 90 10. It applied to other vessels for the transport of goods and other vessels for the transport of both persons and goods. As grounds for using this subheading, they pointed out that the Court had, in Pedersen
v Commission
in which it ruled on fishing nets, held that it was not compulsory for the goods incorporated into a vessel to be incorporated permanently. However, Denmark cannot rely on Pedersen
v Commission, because in that case the Court did not rule on goods incorporated into a vessel. The judgment in Pedersen
v Commission
contains no point of reference for classifying containers under tariff subheading CN 8901 90 10.
68. It is obvious that standard containers are not goods which are incorporated into vessels. Only objects which are incorporated into or permanently attached to a vessel, or which are at least intended for long-term use, can constitute such goods. Tariff subheading CN 8609 00 90 should be used for standard containers, as correctly stated by the Commission.
69. As regards the Danish Government’s contention that the error by the customs authorities has not caused losses of the Community’s own resources, it should be noted that the importer requested exemption by virtue of inward processing in 1990. The error by the Danish authorities lay in the fact that they applied the end-use scheme rather than the inward processing procedure. Although an application for exemption by virtue of inward processing was submitted, that fact does not in itself mean that authorisation for imports free of import duties by virtue of inward processing would have been granted on the basis of that application.
70. In inward processing, importation is effected for the purpose of exportation. For example, Article 114(1)(a) of the Customs Code provides for a f orm of inward processing where imported non-Community goods are intended for re-export from the customs territory of the Community in the form of compensating products. In its various pleadings the Danish Government contended that the containers at issue are added to container vessels and are therefore exported with the vessels. Denmark thereby sought to show that the containers at issue form part of the vessels’ equipment and are therefore exported with them. As was noted above, the containers in question are standard containers. Assuming that the Danish Government’s arguments are correct, the question then arises as to what could actually be exported.
71. If the containers remain the property of the maritime transport undertaking, it is difficult to speak of export. However, in their submissions the parties have not put forward more precise arguments on this matter. Denmark’s argument relating to a telephone conversation with an unspecified Commission official, which the Commission does not dispute, during which the Danish Government received an assurance that it could apply the provisions relating to inward processing, does not mean as such that these provisions can in fact be applied to the importer. The Danish Government’s argument that it was explained during that conversation that the provisions on inward processing should be applied in conjunction with temporary admission under Article 4(16)(f) of the Customs Code is also unfounded. Article 137 of the Customs Code provides that the temporary admission procedure is to allow the use in the customs territory of the Community, with total or partial relief from import duties, of non-Community goods intended for re-export without having undergone any change except normal depreciation due to the use made of them. (32) However, in the present case the imported goods were converted into standard containers. Therefore, in this case it is not possible to speak of temporary admission.
72. The Danish Government’s arguments that the view put forward by the Commission in Decision REC 12/03 applies to the present case are also unfounded. Decision REC 12/03 clearly states that the inward processing procedure may be applied only in respect of the period from 1 January 1998 to 3 February 1998. These arguments on the application of that decision in respect of the period before 1 January 1998 are therefore unfounded.
73. Having regard to the foregoing, the Commission was right to find that the application of the end-use scheme in respect of the containers was incorrect in the present case. Denmark applied the wrong customs procedure.
74. Under Article 17(1) and (2) of Regulation No 1552/89, ‘Member States are required to take all requisite measures to ensure that the amounts corresponding to the duties established under Article 2 thereof are made available to the Commission. Member States are to be free from that obligation solely if, for reasons of force majeure, those amounts could not be collected or if it appears that recovery is impossible in the long term for reasons which cannot be attributed to them’. (33)
75. The Court has already expressed the view that ‘it is unnecessary to distinguish between a situation in which a Member State has established the own resources without paying them and one in which it has wrongfully omitted to establish them, even in the absence of a mandatory time-limit’. (34) In the present case, the incorrect application of the end-use customs scheme means that Denmark has failed to establish the Community’s own resources.
76. Denmark’s defence plea that there has been no loss is not such as to render the Commission’s action unfounded. Academic legal writers classify such defence pleas raised by Member States claiming that there has been no loss as de minimis
defences (35) and point out that a Member State fails to fulfil its obligations regardless of the degree of the failure. (36) That is why, with regard to provisions governing the internal market, a Member State’s defence plea that a failure has had no effect on the functioning of the internal market is unfounded. (37) Failure to fulfil obligations is not contingent on damage being sustained. (38) The same reasoning should be applied to the Community’s own resources. The purpose of the procedure based on Article 226 EC is not to establish whether the Community has suffered loss, but solely to establish whether a Member State has failed to fulfil its obligations under Community law. (39) The defence plea, raised by Denmark, that the Community suffered no loss as a result of the errors committed by the Danish customs authorities cannot be accepted. The question whether or not the Danish authorities were at fault is likewise irrelevant to the present case. (40)
77. Community law requires that the Member States apply customs law correctly. ‘Member States are required to establish the Communities’ own resources as soon as their own customs authorities have the necessary particulars and, therefore, are in a position to calculate the amount of duties arising from a customs debt and determine the debtor, regardless of the issue of whether the criteria for the application of Article 220(2)(b) of the Customs Code are met and therefore whether or not it is possible to proceed with a subsequent entry in the accounts or post-clearance recovery of the customs duties in question.’ (41)
78. A Member State which fails to establish the Communities’ own resources and to make the corresponding amount available to the Commission, without one of the conditions laid down in Article 17(2) of Regulation No 1552/89 being met, falls short of its obligations under Community law, in particular Articles 2 and 8 of Decision 94/728. (42) Therefore, Denmark is required to make the own resources available.
D – Failure to fulfil obligations under Article 871 of Regulation No 2454/93
79. The Commission contends that the Danish authorities received its interpretation of the customs provisions but that they nevertheless did not make a subsequent entry of the customs debt in the accounts because they considered that the conditions laid down in Article 220(2)(b) of the Customs Code were fulfilled. They therefore failed to fulfil their obligations under Article 871 of Regulation No 2454/93 and prevented the Commission from taking a decision on the possible application of Article 220(2)(b) of the Customs Code.
80. Article 871 of Regulation No 2454/93 provides that, where the customs authorities either consider that the conditions laid down in Article 220(2)(b) of the Code are fulfilled or are in doubt as to the precise scope of the criteria of that provision with regard to a particular case, those authorities are to submit the case to the Commission, so that a decision may be taken in accordance with the procedure laid down in Articles 872 to 876. The case submitted to the Commission is to contain all the information required for a full examination.
81. The Court has already ruled that the procedure set out in Articles 871 and 873 of Regulation No 2454/93 ‘does not pertain to the Member States’ obligation to establish the Communities’ entitlement to own resources. The purpose of Articles 871 and 873 of Regulation No 2454/93 is to ensure the uniform application of Community law’. (43)
82. It is not disputed that in its letter of 6 May 2002 the Danish Government asked the Commission to authorise it, under Article 220(2)(b) of the Customs Code, not to proceed with a subsequent entry in the accounts since the authorisation granted under the end-use scheme was an error on the part of the customs authorities which could not have been detected by the person liable for payment.
83. The parties do not even contend that the Commission has already ruled on Denmark’s request.
84. The plea alleging infringement of Regulation No 2454/93 is therefore unfounded.
E – Failure to fulfil obligations under Article 10 EC
85. In its case-law relating to a simultaneous infringement of Article 10 EC and Decision 94/728, the Court has already ruled that ‘there are no grounds for holding that there has been a failure [on the part of the Kingdom of Denmark] to fulfil the general obligations contained [in Article 10 EC]’. (44)
86. The ratio of this view of the Court is that Article 10 EC is a general provision relative to Decision 94/728. Where an infringement of the special provision is established, it is not necessary also to establish the infringement of a general provision. In accordance with the principle specialia generalibus derogant, an infringement of a special rule also entails an infringement of a general provision.
F – Default interest
87. It is clear from the Court’s case-law ‘that there is an inseparable link between the obligation to establish the Communities’ own resources, the obligation to credit them to the Commission’s account within the prescribed time-limit and the obligation to pay default interest’. (45)
88. In the light of the foregoing, the Commission’s action is, in so far as it concerns the corresponding default interest from 27 July 2000, well founded.
89. Finally, it should be noted that if the Community collects revenue by way of own resources to which it is, however, not entitled, the financial equilibrium of the Community is altered to the detriment of the Member States. In that case there could be a transfer of assets with no legal basis to the benefit of the Community. Nevertheless, the question of undue enrichment of the Community is not covered by proceedings for failure to fulfil obligations under Article 226 EC.
90. It must therefore be held that, since its authorities failed to make available to the Commission the sum of DKK 18 687 475 as own resources, together with default interest from 27 July 2000, the Kingdom of Denmark has failed to fulfil its obligations under Community law and in particular failed to comply with Articles 2 and 8 of Council Decision 94/728/EC, Euratom of 31 October 1994 on the system of the European Communities’ own resources.
VI – Costs
91. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Kingdom of Denmark has been unsuccessful, the latter must be ordered to pay the costs.
VII – Conclusion
92. In the light of all the above considerations, I propose that the Court should:
(1) declare that, since its authorities failed to make available to the Commission the sum of DKK 18 687 475 as own resources, together with default interest from 27 July 2000, the Kingdom of Denmark has failed to fulfil its obligations under Community law and in particular failed to comply with Articles 2 and 8 of Council Decision 94/728/EC, Euratom of 31 October 1994 on the system of the European Communities’ own resources;
(2) order the Kingdom of Denmark to pay the costs.
(1) .
(2)  –	Case C‑392/02 [2005] ECR I‑9811.
(3)  –	OJ 1994 L 293, p. 9.
(4)  –	OJ 1988 L 185, p. 24.
(5)  –	OJ 2000 L 253, p. 42.
(6)  –	OJ 1989 L 155, p. 1.
(7)  –	OJ 1996 L 175, p. 3.
(8)  –	OJ 2000 L 130, p. 1.
(9)  –	OJ 1992 L 302, p. 1.
(10)  –	OJ 1993 L 253, p. 1.
(11)  –	OJ 2000 L 188, p. 1.
(12)  –	OJ 1987 L 256, p. 1.
(13)  –	OJ 1987 L 198, p. 1.
(14)  –	OJ 2003 L 281, p. 1.
(15)  –	This footnote is relevant only to the Slovene version.
(16)  –	This decision was not published in the Official Journal.
(17)  –	Cited above in footnote 2.
(18)  –	Case 148/87 [1988] ECR 4993.
(19)  –	The system of own resources is a fundamental characteristic of the European Communities which distinguishes it from other international and inter-State organisations. Academic legal writers describe the Community’s own resources as an expression of European integration in the budgetary field and define them as tax revenue which belongs ipso iure to the Community for funding of its budget and requires no further decision of the Member States’ national authorities for it to be established or transferred (van Raepenbusch, Sean, Droit institutionnel de l’Union européenne, Fourth edition, Brussels, 2005, p. 293).
(20)  –	First recital in the preamble to the Customs Code.
(21)  –	Bieber, Roland, in von den Groeben/Schwarze, Article 269, paragraph 29. The author considers therefore that customs duties and levies cannot be determined accurately at national level.
(22)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 58.
(23)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 61.
(24)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 68.
(25)  –	See Commission
v Denmark
(cited above in footnote 2), paragraph 63. In that case the Danish Government argued that Article 220(2)(b) of the Customs Code prevented the collection of customs duty and that it could not therefore be liable for the reduction in own resources on account of the errors committed by its administration in applying the Customs Code. In his Opinion in this case (Case C‑392/02 [2005] ECR I‑2613, points 62 and 63) Advocate General Geelhoed responded to this defence plea by stating that the own resources provisions govern the legal relationship between the Community and the Member States as far as the establishment and transfer of own resources is concerned. The customs provisions for their part govern the legal relations between the Member States and undertakings in connection with the assessment, imposition and collection of import and export duties. In principle, eventualities involving the relationship between the customs authorities and the debtor do not influence the movement of own resources between the Community and the Member States between which there are also customs duties which should be established. If it were otherwise, then the movement of own resources between the Member States and the Community would be exposed to the risks inherent in administrative customs procedure.
(26)  –	As regards the implementation of Community law, academic legal writers draw a fundamental distinction between direct administration, which is the responsibility of the Community institutions and other bodies, and indirect administration, which is the responsibility of the Member States. In the case of indirect administration the public administration of the Member States implements Community law. However, in the case of indirect administration, we have the direct implementation of Community law where the public administration applies decisions and regulations and directly applicable provisions of primary law and the indirect implementation of Community law where the national authorities apply provisions which they must transpose into national law (for example directives) (Jacqué, Jean-Paul, Droit institutionnel de l’Union européenne,
Third edition, Paris, 2004,
p. 446; Ziller, Jacques, L'autorité administrative dans l’Union européenne, EUI Working Paper Law No 2004/14, Florence: European University Institute, 2004, p. 11; Fischer, Hans Georg, Europarecht, pp. 131 and 132, Munich, 2001; Öhlinger, Theo and Potacs, Michael, Gemeinschaftsrecht und staatliches Recht, Third supplemented edition, Vienna, 2006, pp. 108, 137 and 138).
(27)  –	The Court of Justice has exclusive jurisdiction to rule on the validity of acts of secondary Community legislation (Case 314/85 Foto-Frost
[1987] ECR 4199, paragraphs 13 to 17). The same finding applies by virtue of Article 220 EC to the interpretation of primary and secondary Community law. The ratio legis for the exclusive jurisdiction is the uniform interpretation of the law, which is a particular expression of the principle of equal treatment.
(28)  –	Case C‑96/89 Commission v Netherlands
[1991] ECR I‑2461, p. 38.
(29)  –	See, to this effect, Commission v Netherlands
(cited above in footnote 28), paragraph 37, and Case C‑348/97 Commission v Germany
[2000] ECR I‑4429, paragraph 64.
(30)  –	See, to that effect, Commission
v Denmark
(cited above in footnote 2), paragraph 61.
(31)  –	Opinion of Advocate General Geelhoed in Commission v Denmark
(cited above in footnote 25), point 62.
(32)  –	Witte, Peter, Wolffgang, Hans-Michael and Bleihauer, Hans-Jürgen, Lehrbuch des Europäischen Zollrechts, Fifth edition, Herne, 2006, p. 272. The authors state that a typical example of a customs procedure involving temporary admission is the importation of goods displayed at trade fairs.
(33)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 66.
(34)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 67.
(35)  –	van Raepenbusch, Droit institutionnel de l’Union européenne, pp. 603 and 606. The author points out that the de minimis
defence belongs to a category of defences which the Court systematically rejects. The Latin term de minimis is an abbreviation of the general legal principle de minimis non curat praetor .
(36)  –	Rideau, Joël and Picod, Fabrice, Code des procédures juridictionnelles de l’Union européenne, Second edition, Paris, 2002, p. 167.
(37)  –	Case 95/77 Commission
v Netherlands
[1978] ECR 863, paragraph 13. In this judgment the Court rejected the Netherlands’ defence that failure to apply Council Directive 71/347/EEC of 12 October 1971 on the approximation of the laws of the Member States relating to the measuring of the standard mass per storage volume of grain (OJ, English Special Edition 1971 (III), p. 852) had had no adverse effect on the functioning of the internal market. In the view of the Court, such a defence was not consistent with the objective pursued by Directive 71/347.
(38)  –	van Raepenbusch, Droit institutionnel de l’Union européenne, p. 606.
(39)  –	Lenaerts, Koen, Arts, Dirk and Maselis, Ignace, Procedural Law of the European Union, Second edition, London, 2006, p. 128. These authors refer to Case C‑404/99 Commission v France
[2001] ECR I‑2667, paragraph 51. In that judgment the Court held that ‘an action against a Member State for failure to fulfil its obligations is objective in nature. Consequently, where a Member State fails to fulfil its obligations under the Treaty or under secondary legislation, it does so regardless of the frequency or the scale of the circumstances complained of’.
(40)  –	With reference to Case 8/70 Commission v Italy
[1970] ECR 961 and Case 52/75 Commission v Italy
[1976] ECR 277, academic legal writers point out that in infringement proceedings a defence of unimpeachable conduct is not admissible as a ground for exculpation. Infringement proceedings are about establishing a legal situation which is not consistent with Community law. Therefore, the question of a Member State’s fault is generally irrelevant (Burgi, Martin, Vertragsverletzungsverfahren, in Rengeling, Hans-Werner, Middeke, Andreas and Gellermann, Martin (editors), Handbuch des Rechtsschutzes in der Europäischen Union,
Second supplemented edition, Munich, 2003, p. 80).
(41)  –	See Commission
v Denmark
(cited above in footnote 2), paragraph 68.
(42)  –	Ibid.
(43)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 64.
(44)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 69.
(45)  –	See Commission v Denmark
(cited above in footnote 2), paragraph 67.