Opinion of Mr Advocate General Gulmann delivered on 28 April 1994. - Klaus Thierschmidt GmbH v Hauptzollamt Essen. - Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany. - Value of goods for customs purposes - Inclusion of charges for "own" quotas issued free of charge - No separate declaration of quota charges excluded from customs value - Arrangements for imports of textile products from Taiwan. - Case C-340/93.



European Court reports 1994 Page I-03905



Opinion of the Advocate-General

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Mr President,

Members of the Court,

1. The Finanzgericht Duesseldorf has referred to the Court for a preliminary ruling questions which arose in the course of a dispute between the German company Klaus Thierschmidt GmbH and the Hauptzollamt Essen. The dispute arose as a result of the customs authorities' decision to include in the customs value of textiles which Thierschmidt had imported from Hongkong and Taiwan amounts invoiced by the exporters to cover so-called "quota charges".

2. In two previous cases questions have been referred to the Court concerning the customs treatment of quota charges. The first was Case 7/83 Ospig v Hauptzollamt Bremen-Ost on which the Court delivered judgment on 9 February 1984, (1) and the second was Case C-29/93 Ospig v Hauptzollamt Bremen-Freihafen, on which I delivered my Opinion on 2 February 1994 and the Court has not yet delivered judgment.

3. The Court is thus well aware of the background to the questions referred here. It will therefore suffice if I give a brief summary as follows.

4. Within the framework of the so-called GATT-Multifibre Agreements the Community has entered into agreements with a number of textile-producing countries (as far as Taiwan is concerned the agreement was concluded, however, with the "Taiwan Textile Organization"). The purpose of the agreements is to lay down the quantities of the various categories of textile products which may be imported into the Community from the countries in question. The Community' s partners in these agreements themselves decide how to divide up the quotas among exporters. In some countries the quotas are divided up after a tendering procedure, in others on the basis of quantities exported in the reference year. In some countries the authorities require payment for the allocation of export quotas and in others the quotas are allocated free of charge. In some countries quotas are allocated throughout the year and in others quotas are allocated once a year.

5. There is usually nothing to prevent traders who have obtained a quota from transferring it to others. There is an actual trade in quotas and the price for transferring quotas depends on supply and demand. It appears from the first Ospig case that at the end of the year, when export quotas are almost used up, the price can be high, whereas in earlier months it can be low.

6. Importation into the Community cannot take place without documentation to show that the quantities of goods imported are covered by an export quota. If the exporter has been allocated a quota and it is not yet exhausted, exportation will take place under that quota. If the exporter does not have, or no longer has, a quota available, a quota will have to be purchased from a third-party. It can be the importer who buys the necessary quota and puts it at the disposal of the exporter or it can be the exporter himself who buys the quota.

In both cases, alonside the actual purchase of the textile products, there are separate transactions involving expenses. Whether it is the importer who has himself bought the export quota directly from a third-party or the exporter who has bought the quota, the question arises whether the customs value of the imported textiles includes the costs of obtaining the export quota ("quota charges") or whether the customs value should comprise only the invoiced price of the textiles themselves.

7. That question was originally discussed in the Committee set up to advise on the administration of the customs value regulation. (2) After lengthy discussions it was decided by the Committee to treat quota charges in the same way as the American customs authorities did, that is to say that charges paid by the importer direct to a third-party could be left out of the customs value. The first Ospig case concerned the question whether charges which the exporter incurs in order to obtain export quotas from third-parties can also be left out of the customs value. In its judgment the Court held that the two situations should be treated in the same way. Quota charges, whether incurred by the importer or the exporter, should not be included in the customs value. The Court based that result inter alia on the fact that "to hold otherwise would, in fact, create an unjustified disparity between importers in the Community placed in an analogous situation and would therefore be contrary to the fair, uniform and neutral system of customs valuation established by Council Regulation No 1224/80." (paragraph 17)

8. The second Ospig case concerns the question whether it is significant with regard to the inclusion of quota charges in the customs value that the acquisition of export quotas took place in a country where trade in export quotas is not lawful. In my Opinion I proposed that the Court should reply to the question to the effect that it was not significant that the quotas had been acquired in a country where they could not lawfully be traded provided it was proved that the charges were in fact incurred in the acquisition of export quotas.

9. The present case arose from the fact that the German authorities have administered the customs value regulation on the basis that the result of the first Ospig judgment only applies if the importer or exporter incurred charges on the acquisition from a third-party of export quotas, in other words, only if so-called "outside" quota charges are involved. The German authorities do not accept that the result can be extended to apply to so-called "own" quota charges, that is to say "expenses" which the exporter who effected the exportation using quotas directly allocated to him in fact had to incur to obtain his quotas or which he has calculated to cover the generally applicable market value of the export quotas.

10. The present case gives the Court the opportunity to state its view on whether that interpretation of the customs value regulation is correct.

The background to the case is as follows: between 1987 and 1989 Thierschmidt arranged for textile products to be manufactured in Hongkong and Taiwan and subsequently imported them into the Community. In Hongkong the exporter was the firm of J. Wong and Co, which also obtained the necessary export quotas. The company invoiced separately the quota charges, some of which related to its own export quotas, some to export quotas acquired by purchase from a third-party. Thierschmidt did not declare those quota charges in connection with the importation of the goods.

11. The German authorities subsequently carried out an investigation on Thierschmidt' s premises. With regard to imports from Hongkong the investigation established that quota charges were not indicated in the customs value declaration and that it was not possible to determine for individual consignments whether the quota charges invoiced were for Wong' s "own" quotas or charges in connection with the acquisition of "outside" quotas. The German authorities considered that all the quota charges should have been included in the customs value and decided to issue a significantly higher revised demand.

The customs authorities arrived at a similar finding with regard to the imports from Taiwan, since it was assumed that trade in quotas was not lawful in Taiwan and the judgment in the Ospig case, in the customs authorities view, only allowed for quota charges not to be included in the customs value if the quotas were obtained lawfully.

12. Thierschmidt appealed against the customs authorities' decision to the Finanzgericht Duesseldorf, which referred three questions to the Court for a preliminary ruling. The first concerns quota charges for the exporter' s "own" quotas, the third concerns quota charges on exports from Taiwan, and the second concerns the extent of the importer' s duty to make a separate declaration of quota charges. Thierschmidt, the United Kingdom and the Commission have submitted observations to the Court.

Question 1

13. The first question is worded as follows: "Are payments by the buyer to the seller for export licences allocated to the seller (export quotas) part of the customs value?"

14. The United Kingdom and the Commission have expressed the view that, subject to the reservation discussed below, the question should be answered in the affirmative, whereas Thierschmidt has claimed that it should be answered in the negative.

15. The reply calls for an interpretation of Council Regulation No 1224/80 on the valuation of goods for customs purposes.

16. Article 3(1) of the regulation provides "The customs value of imported goods determined under this Article shall be the transaction value, that is, the price actually paid or payable for the goods when sold for export to the customs territory of the Community, adjusted in accordance with Article 8, provided ...". Article 3(3)(a) states: "The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods and includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller."

17. Article 8, to which Article 3(1) refers, provides for the addition to "the price actually paid or payable" for the imported goods of various expenses which, in the economic sense, are ancillary to the price. Article 8 contains an exhaustive list of the expenses which may be taken into account in the determinination of the customs value, and quota charges are not included in that list. That means that the "own" quota charges referred to in the question, if they are to be regarded as included in the customs value, must be considered to comprise an integral part of the transaction value dealt with in Article 3, on which see the judgment of the Court in Case C-219/88 Malt. (3)

18. Since, according to the evidence, in this case there were no charges connected with the actual allocation of export quotas to the traders, the term "own" quota charges which is material here covers an amount calculated by the exporter in question, which in principle corresponds to the amount which the export quota in question is worth, that is to say the amount which the buyer or seller would have had to pay for the purchase of the export quota from a third party. "Own" quota charges is thus a term made up by traders, the aim of which is that it be used for customs value purposes for the purpose of achieving a legal situation where it makes no difference to the determination of the customs value whether the seller has available export quotas at the time of export or whether he does not have them available, that is to say he has to buy the export quota from a third party.

19. It is that consideration of equal treatment which is the essential argument in favour of "own" quota charges, like "outside" quota charges, not being included in the customs value. There are, however, many reasons for rejecting the view that the two types of "charges" should be treated in the same way.

20. "Own" quota charges are fictitious charges. The seller has not incurred expenses in acquiring the necessary export quotas. If it is possible for him in fact to increase the price paid by the buyer for the goods because there is a greater demand for the goods in question than can be satisfied within the available quotas, that means that as a result of the quota system he is in a position to increase his profit and not that as a result of the quota system he has had to incur costs in order to carry out the export, since he has the necessary quotas available himself.

21. In my view the Bundesfinanzhof was right in its judgment of 24 April 1990 (VII R 55/89) when it stated "According to Article 3(3)(a) in the 1980 regulation on the valuation of goods for customs purposes, the price actually paid or payable is the total payment made or to be made by the buyer to the seller ...; that price includes all amounts which the buyer, under the sales conditions, in fact pays or is to pay to the seller. In addition the price also includes amounts which the buyer of the imported goods has paid to the seller for the latter' s own quotas. That amount is ° in contrast to charges relating to the acquisition of outside quotas ° directly linked to the actual transaction and is not consideration for benefits acquired in another way. The amounts accrue to the seller himself and not to a third party via the seller ... A fictitious amount may not be fixed for the seller' s own quotas since the price of the goods and thus the customs value should not be artificially reduced ...".

22. The judgment of the Court in the Ospig case did not deal directly or indirectly with the question at issue here. The Court dealt with the question whether "charges for the acquisition of free quotas" should be included in the customs value and the Court dealt expressly with that question alone when it held that "quota charges incurred in the acquisition of export quotas" are not to be included in the customs value.

23. Thierschmidt has claimed, and the Finanzgericht Duesseldorf stated, that the grounds given by the Court for that result also apply in connection with "own" quota charges. That cannot be correct. The Court attached particular weight to the fact that the quota regulation, the aim of which is to control the level of imports of textile products from certain non-member countries, has an aim different from that of the customs value regulation which seeks to introduce a fair, uniform and neutral system of customs valuation for the purpose of application of the Common Customs Tariff. Those grounds can only relate to "own" quota charges if the fictitious "own" quota charges can be regarded as a natural consequence of the quota regulation. That is, as stated, not the case. The term "own" quota charges does not cover charges which the seller has incurred as a consequence of the quota regulation.

24. The question referred to the Court must accordingly in my view be answered to the effect that so-called "own" quota charges should be included in the customs value.

25. In the foregoing it is assumed that the term "own" quota charges does not mean positive expenses incurred in the acquisition of quotas. As mentioned, on the evidence that is correct as far as Hongkong and Taiwan are concerned. The evidence shows, however, that in other places payment is demanded for the allocation of quotas. The question arises whether such expenses should be treated as "own" or "outside" quota charges.

26. It seems to me most appropriate to treat them as "outside" quota charges since they in fact represent an expense for the seller and moreover can be documented in the same way as the quota charges which the buyer or the seller incurs when export quotas are bought from a third-party since the expenses involved can be documented by the production of invoices for the purchase of export quotas.

Question 2

27. The Finanzgericht' s second question is "Must quota charges be 'distinguished?' "

28. The background to the question is that in the customs declaration Thierschmidt omitted to state the quota charges since the company took the view that neither "own" nor "outside" quota charges should be included in the customs value. It appears that on the basis of the documents available at Thierschmidt' s premises it might be difficult to decide whether the quota charges paid relate to "own" or "outside" quotas.

29. The German customs authorities administer the customs value regulation as meaning that in all circumstances it is necessary for the importer to state quota charges, whether "own" or "outside", and that if no such statement is given quota charges are to be included in the customs value in connection with the customs declaration. That practice was upheld by the Bundesfinanzhof in its judgment of 12 June 1991 (VII R 98/89).

The United Kingdom expresses the same view in its observations.

30. If the Court agrees with the view I have expressed in connection with my suggested answer to Question 1, the importer is in any case bound to include "own" quota charges in connection with his customs declaration. Those charges form an integral part of the price of the goods and must therefore be given as part of the customs value.

In contrast, according to the case-law of the Court, "outside" quota charges need not be included in the customs value. The question is whether they should nevertheless be declared separately.

The customs value regulation contains in Articles 3(4) and 15 a list of certain charges which are not to be included in the customs value, even if they are in fact paid or payable for the imported goods, but that non-inclusion is nevertheless conditional on the charges in question being "distinguished". The customs value regulation thus contains provisions which expressly require separate declaration before charges can be omitted from the customs value. Quota charges are mentioned neither in Article 3(4) nor Article 15. It seems to me in those circumstances that it is not possible to infer from the customs value regulation a duty for importers to declare separately "outside" quota charges with the consequence that those charges, if the duty is not complied with, should be included. A duty to distinguish entailing such consequences would require an express basis in the regulation.

31. The Commission also denies the existence of a duty to declare "outside" quotas separately. The Commission' s view appears to me, moreover, to be correct. The Commission refers to the fact that the problem is one of proof. The starting point is that the transaction value and thus the customs value includes all payments obtained for the goods and therefore also the payments which the buyer has made to the seller in order to obtain export quotas, unless the quotas are allocated to the seller against payment. The onus is thus on the buyer to show that the payment concerns "outside" quota charges, since it is to his advantage if they are not taken into account.

The Commission mentions in addition that that result tallies with the basic division of responsibilities between the importer and the customs authorities. The importer is under a duty to submit the necessary evidence in support of his declarations, whereas the task of the authorities is to monitor the evidence submitted. Article 10 of the customs value regulation confirms that general division of responsibilities as concerns the determination of customs value. Under Article 10(1) the importer is to supply all necessary information and documents to the customs authorities with a view to determining customs value.

32. I therefore agree with the Commission that the question should be answered to the effect that a buyer who claims that his payment to the seller for export quotas should not be included in the customs value of the goods must prove that the seller has obtained the export quota against payment, but that answer assumes that there is no duty to declare "outside" quotas separately.

Question 3

33. The Finanzgericht' s third question is worded as follows: "Are quota charges which have been incurred on the basis of the Community rules in Regulation (EEC) No 4134/86 to be treated in the same way as quota charges arising under Regulation (EEC) No 4136/86?"

34. The question arises as a result of Thierschmidt' s importation of goods from Taiwan. As already mentioned, the Community' s agreement on import restrictions was, as regards Taiwan concluded with the "Taiwan Textile Organisation" and the rules on imports thereunder are to be found in Council Regulation No 4134/86, (4) whereas the Community' s general import rules are to be found in Council Regulation No 4136/86 on common rules for imports of certain textile products originating in third countries. (5)

35. The question of "outside" quota charges on imports from Taiwan was, as stated, the subject of the reference in Case C-29/93 Ospig, on which I delivered my Opinion on 2 February 1994.

36. It appears from the order for reference in the present case that the Finanzgericht Duesseldorf is assuming that export quotas can lawfully be traded in Taiwan and that the reason for its question is that it wishes to obtain a ruling on whether the differences between the import arrangements as far as Taiwan is concerned and the general import arrangements are of significance as regards the treatment of "outside" quota charges in connection with customs value. It points out that the most significant difference between the two regulations is that the regulation concerning Taiwan does not contain rules on the so-called double control which apply under the general arrangements, that is to say control consisting in the fact that the export country' s authorities first issue an export licence and the customs authorities in the Community then issue an import licence on the basis of submission of the export licence does not exist as far as Taiwan is concerned. In the order for reference the Finanzgericht expresses the view that it does not find that to be a material difference and that there is therefore no reason to treat quota charges in a way different from that in which they are treated under the general arrangements because they relate to Taiwan. Thierschmidt and the Commission express the same view. The United Kingdom did not put forward a view on that question.

37. There is evidence in the case to show that in practice the German authorities administer the import arrangements in relation to Taiwan in the same way as they administer the general import arrangements, that is to say that in connection with imports for Taiwan there is a double control.

38. In my view there can be no reasonable doubt but that quota charges arising as a consequence of Council Regulation No 4134/86 should be treated like quota charges based on Council Regulation No 4136/86.

Conclusion

On the basis of the foregoing, I would suggest that the Court answer the questions referred by the Finanzgericht Duesseldorf as follows:

1. Payment made by the buyer to the seller for export licences (export quotas) which the seller has been allocated free of charge should be included in the customs value.

2. A buyer who claims that his payment to the seller for export quotas should not be included in the customs value of the goods must prove that the seller acquired the export quota against payment.

3. Quota charges which have arisen as a result of Council Regulation No 4134/86 must be treated in the same way as quota charges based on Council Regulation No 4136/86.

(*) Original language: Danish.

(1) ° [1984] ECR 609.

(2) ° Council Regulation No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (OJ 1980 L 134, p. 1), as amended by Regulation No 3193/80 of 8 December 1980 (OJ 1980 L 333, p. 1).

(3) ° [1990] ECR I-1481, in which the Court held:

It should further be noted that Article 8 of Regulation No 1224/80, to which Article 3(1) refers, contains an exhaustive list of the ancillary costs which must be added to the price actually paid or payable for the purpose of determining the customs value. Since the costs of acquiring certificates of authenticity are not included, it follows that such costs can be taken into account for the purpose of determining the customs value only if they are regarded as an integral part of the price of the goods. (paragraph 11)

(4) ° OJ 1986 L 386, p. 1.

(5) ° OJ 1986 L 387, p. 42.