OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 30 March 2017 ( 1 )

Case C‑46/16

Valsts ieņēmumu dienests

Other party:

‘LS Customs Services’, SIA

(Request for a preliminary rulingfrom the Augstākā tiesa (Supreme Court, Latvia))

(Reference for a preliminary ruling — Customs union — Goods removed from customs supervision during the external transit procedure in the customs territory of the Union — Determination of the customs value — Conditions for the application of the transaction value method — Sale for export to a third country — Determination of the customs value on the basis of data available in the Union — Duty to make inquiries and duty to state reasons incumbent on the national customs authority)

I. Introduction

1. At a time when in many places thoughts are once again turning to isolation and the erection of new barriers, the application of customs law offers an opportunity, going beyond its technical character, to reflect on the values and aims of the free trade rules of the World Trade Organisation and the European Union. Those values and aims seek to create a fair, uniform and neutral customs system that meets the needs of global trade, economic operators and the domestic economy in equal measure.

2. The calculation of the customs value and the associated procedural safeguards are of crucial importance in that system, as a fair customs tariff system comes to nothing if the underlying customs valuation is not correct and fair.

3. The present case raises a number of questions in this regard. It concerns a situation in which goods were removed from customs supervision during the external transit procedure in the customs territory of the Union. The external transit procedure allows goods sold from one third country to another third country to be moved from one point to another within the customs territory of the Union without those goods being subject to import duties. If, however, the goods fail to reach their destination, they are considered to have been removed from customs supervision (control by the customs authorities) ( 2 ) and thus to have been imported into the customs territory of the Union, as a result of which a customs debt is incurred.

4. In this connection, the Court is asked how, in such a situation, the customs value of the goods concerned, which were originally not sold for export to the customs territory of the Union but for export to a third country, is to be calculated.

5. In addition, the referring court asks the Court about the extent of the duty to make inquiries and the duty to state reasons incumbent on the national customs authority in respect of the method used for determining the customs value.

II. Legislative framework

A. WTO rules

1. GATT 1994

6. Article VII(2)(a) and (b) of the General Agreement on Tariffs and Trade 1994 (GATT) ( 3 ) provides: (a) The value for customs purposes of imported merchandise should be based on the actual value of the imported merchandise on which duty is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values. (b) “Actual value” should be the price at which, at a time and place determined by the legislation of the country of importation, such or like merchandise is sold or offered for sale in the ordinary course of trade under fully competitive conditions. …’

2. GATT Customs Valuation Agreement

7. According to the preamble of the Agreement on Implementation of Article VII of GATT (‘the GATT Customs Valuation Agreement’), ( 4 ) the primary basis for the customs value is the transaction value as defined in Article 1 of that Agreement. The preamble further explains that where the customs value cannot be determined under the provisions of Article 1, it is to be determined on the basis of the transaction value of identical or similar imported goods. Where this is not possible either, provision is made for various other methods for determining the customs value.

8. Under Article 1(1) of the GATT Customs Valuation Agreement: ‘1. The customs value of imported goods shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to the country of importation …’.

9. Article 2(1)(a) of the GATT Customs Valuation Agreement provides: (a) If the customs value of the imported goods cannot be determined under the provisions of Article 1, the customs value shall be the transaction value of identical goods sold for export to the same country of importation …’

10. Article 3(1)(a) of the GATT Customs Valuation Agreement stipulates: (a) If the customs value of the imported goods cannot be determined under the provisions of Articles 1 and 2, the customs value shall be the transaction value of similar goods sold for export to the same country of importation …’

11. Under Article 6(1)(b) of the GATT Customs Valuation Agreement: ‘The customs value of imported goods under the provisions of this Article shall be based on a computed value. Computed value shall consist of the sum of: … (b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the country of importation; …’

12. Article 7(1) and (2)(e) and (g) of the GATT Customs Valuation Agreement provides as follows: ‘1. If the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement and of Article VII of GATT 1994 and on the basis of data available in the country of importation. 2. No customs value shall be determined under the provisions of this Article on the basis of: … (e) the price of the goods for export to a country other than the country of importation; … (g) arbitrary or fictitious values.’

B. EU law

1. Customs Code

13. Article 4(13) of the Community Customs Code (‘the [EU] Customs Code) ( 5 ) provides that ‘supervision by the customs authorities’ for the purposes of the Customs Code means ‘action taken in general by those authorities with a view to ensuring that customs rules and, where appropriate, other provisions applicable to goods subject to customs supervision are observed’.

14. Under Article 37(1) and (2) of the Customs Code, ‘goods brought into the customs territory of the Community shall, from the time of their entry, be subject to customs supervision’ and ‘may be subject to control by the customs authority’. Non-Community goods ‘remain under such supervision … until … they are re-exported …’.

15. Article 6(1) and (3) of the Customs Code provides: ‘1. Where a person requests that the customs authorities take a decision relating to the application of customs rules that person shall supply all the information and documents required by those authorities in order to take a decision. … 3. Decisions adopted by the customs authorities in writing which either reject requests or are detrimental to the persons to whom they are addressed shall set out the grounds on which they are based. They shall refer to the right of appeal provided for in Article 243.’

16. Article 12 of the Customs Code reads as follows: ‘1. The customs authorities shall issue binding tariff information or binding origin information on written request … 2. Binding tariff information or binding origin information shall be binding on the customs authorities as against the holder of the information only in respect of the tariff classification or determination of the origin of goods. … [duration of validity, conditions, invalidity]’

17. Article 14 of the Customs Code provides: ‘For the purposes of applying customs legislation, any person directly or indirectly involved in the operations concerned for the purposes of trade in goods shall provide the customs authorities with all the requisite documents and information, irrespective of the medium used, and all the requisite assistance at their request and by any time limit prescribed.’

18. Article 29(1) of the Customs Code is worded as follows: ‘1. The customs value of imported goods 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, where necessary, in accordance with Articles 32 and 33, provided: (a) that there are no restrictions as to the disposal or use of the goods by the buyer, other than restrictions which: – are imposed or required by a law or by the public authorities in the Community, – limit the geographical area in which the goods may be resold, or – do not substantially affect the value of the goods; (b) that the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued; (c) that no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with Article 32; and (d) that the buyer and seller are not related, or, where the buyer and seller are related, that the transaction value is acceptable for customs purposes under paragraph 2.’

19. Article 30 of the Customs Code provides: ‘1. Where the customs value cannot be determined under Article 29, it is to be determined by proceeding sequentially through subparagraphs (a), (b), (c) and (d) of paragraph 2 to the first subparagraph under which it can be determined, subject to the proviso that the order of application of subparagraphs (c) and (d) shall be reversed if the declarant so requests; it is only when such value cannot be determined under a particular subparagraph that the provisions of the next subparagraph in a sequence established by virtue of this paragraph can be applied. 2. The customs value as determined under this Article shall be: (a) the transaction value of identical goods sold for export to the Community and exported at or about the same time as the goods being valued; (b) the transaction value of similar goods sold for export to the Community and exported at or about the same time as the goods being valued; (c) the value based on the unit price at which the imported goods for identical or similar imported goods are sold within the Community in the greatest aggregate quantity to persons not related to the sellers; (d) the computed value, consisting of the sum of: – the cost or value of materials and fabrication or other processing employed in producing the imported goods, – an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the Community, – the cost or value of the items referred to in Article 32(1)(e). …’

20. Article 31 of the Customs Code reads as follows: ‘1. Where the customs value of imported goods cannot be determined under Articles 29 or 30, it shall be determined, on the basis of data available in the Community, using reasonable means consistent with the principles and general provisions of: – the agreement on implementation of Article VII of the General Agreement on Tariffs and Trade of 1994, – Article VII of the General Agreement on Tariffs and Trade of 1994, and – the provisions of this chapter. 2. No customs value shall be determined under paragraph 1 on the basis of: (a) the selling price in the Community of goods produced in the Community; (b) a system which provides for the acceptance for customs purposes of the higher of two alternative values; (c) the price of goods on the domestic market of the country of exportation; (d) the cost of production, other than computed values which have been determined for identical or similar goods in accordance with Article 30(2)(d); (e) prices for export to a country not forming part of the customs territory of the Community; (f) minimum customs values; or (g) arbitrary or fictitious values.’

21. Under Article 91(1)(a) of the Customs Code: ‘1. The external transit procedure shall allow the movement from one point to another within the customs territory of the Community of: (a) non-Community goods, without such goods being subject to import duties and other charges or to commercial policy measures.’

22. Article 92(1) of the Customs Code provides: ‘1. The external transit procedure shall end and the obligations of the holder shall be met when the goods placed under the procedure and the required documents are produced at the customs office of destination in accordance with the provisions of the procedure in question.’

23. Article 94 of the Customs Code reads as follows: ‘1. The principal shall provide a guarantee in order to ensure payment of any customs debt or other charges which may be incurred in respect of the goods. 2. The guarantee shall be either: (a) an individual guarantee covering a single transit operation; or (b) a comprehensive guarantee covering a number of transit operations where the principal has been authorised to use such a guarantee by the customs authorities of the Member State where he is established. … 4. Persons who satisfy the customs authorities that they meet higher standards of reliability may be authorised to use a comprehensive guarantee for a reduced amount or to have a guarantee waiver. … …’

24. Article 95(1) of the Customs Code provides: ‘1. Except in cases to be determined where necessary in accordance with the committee procedure, no guarantee need be furnished for: [exceptions].’

25. Under Article 96(1) of the Customs Code: ‘1. The principal shall be the [holder] of … the external Community transit procedure. He shall be responsible for: (a) production of the goods intact at the customs office of destination by the prescribed time limit and with due observance of the measures adopted by the customs authorities to ensure identification; (b) observance of the provisions relating to the Community transit procedure.’

26. Article 192(1) of the Customs Code reads as follows: ‘1. Where customs legislation makes it compulsory for security to be provided, and subject to the specific provisions laid down for transit in accordance with the committee procedure, the customs authorities shall fix the amount of such security at a level equal to: – the precise amount of the customs debt or debts in question where that amount can be established with certainty at the time when the security is required, – in other cases the maximum amount, as estimated by the customs authorities, of the customs debt or debts which have been or may be incurred. …’

27. Under Article 203 of the Customs Code: ‘1. A customs debt on importation shall be incurred through: – the unlawful removal from customs supervision of goods liable to import duties. … 3. The debtors shall be: … – where appropriate, the person required to fulfil the obligations arising from temporary storage of the goods or from the use of the customs procedure under which those goods are placed.’

28. Article 220(2)(b) of the Customs Code provides: ‘2. Except in the cases … 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; …’

2. Regulation No 2454/93

29. Article 147(1) of Regulation No 2454/93 ( 6 ) is worded as follows: ‘1. For the purposes of Article 29 of the Code, the fact that the goods which are the subject of a sale are declared for free circulation shall be regarded as adequate indication that they were sold for export to the customs territory of the Community. In the case of successive sales before valuation, only the last sale, which led to the introduction of the goods into the customs territory of the Community, or a sale taking place in the customs territory of the Community before entry for free circulation of the goods shall constitute such indication. Where a price is declared which relates to a sale taking place before the last sale on the basis of which the goods were introduced into the customs territory of the Community, it must be demonstrated to the satisfaction of the customs authorities that this sale of goods took place for export to the customs territory in question. …’

30. Article 151 of Regulation No 2454/93 implements Article 30(2)(b) of the Customs Code; paragraph 3 thereof provides: ‘3. If, in applying this Article, more than one transaction value of similar goods is found, the lowest such value shall be used to determine the customs value for the imported goods.’

III. Facts and main proceedings

31. On 2 June 2011, SIA LS Customs Services (LSCS), acting as the principal, submitted to the Latvian customs office Rīgas brīvostas MKP a customs declaration for transit of goods (children’s bicycles and parts) in the external transit procedure from the People’s Republic of China to the Russian Federation across the territory of the European Union. In the transit declaration, the Latvian customs office Terehovas MKP was indicated to be the recipient authority.

32. However, because the goods concerned were not produced for that authority, LSCS was unable to submit evidence that the transit procedure had been completed. The Latvian tax authority therefore took the view that the transit procedure had not been completed and the obligations of the holder in that procedure had not been complied with. The goods had thus been removed from customs supervision and a customs debt had been incurred at the expense of LSCS. Accordingly, by initial decision of 12 September 2011 and final decision of 8 November 2011 (‘the contested decision’), the Latvian tax authority ordered LSCS to pay customs duties, anti-dumping duties and value added tax on the goods concerned.

33. As far as the customs value of those goods was concerned, the Latvian tax authority considered that Article 29 of the Customs Code was not applicable because the goods concerned had not been sold for export to the customs territory of the Community, but for export to the Russian Federation. In determining the customs value of the goods concerned, the Latvian tax authority did not therefore use their transaction value. Furthermore, the tax authority took the view that it did not have the necessary information to determine the customs value using the methods laid down in Article 30 of the Customs Code. It therefore fixed the customs value on the basis of Article 31 of the Customs Code, relying on data available in the Union.

34. After an action had been brought by LSCS, in its judgment of 23 August 2012 the Administratīvā rajona tiesa (District Administrative Court, Latvia) annulled the contested decision on grounds of a deficient statement of reasons. The Administratīvā apgabaltiesa (Regional Administrative Court, Latvia) confirmed that judgment on 10 June 2014, as neither the initial decision by the Latvian tax authority nor the contested decision indicated the information on the basis of which the customs value of the goods concerned had been calculated. In addition, no reason is given why it had not been possible to obtain data on the basis of which a method of customs valuation other than that laid down in Article 31 of the Customs Code could have been used. The Latvian tax authority had not therefore allowed LSCS to defend its rights in the administrative and judicial procedure.

35. The Latvian tax authority brought an appeal against that judgment at the Augstākā tiesa (Supreme Court, Latvia).

IV. Request for a preliminary ruling and procedure before the Court

36. The Augstākā tiesa (Supreme Court) considers that the outcome of the dispute in the main proceedings depends on the interpretation of EU law and, by order of 21 January 2016, referred the following questions to the Court for a preliminary ruling: ‘(1) Should Article 29(1) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code be interpreted as meaning that the method laid down in that article is also applicable when the import of the goods and their release for free circulation in the customs territory of the Community took place as a consequence of the fact that during the transit procedure the goods were removed from customs supervision, the goods concerned being goods liable to import duties, and the goods were not sold for export to the customs territory of the Community but for export outside the Community? (2) Should the expression ‘sequentially’ used in Article 30(1) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, in the light of the right to good administration enshrined in Article 41 of the Charter of Fundamental Rights of the European Union read together with the principle that reasons must be stated for administrative measures, be interpreted as meaning that, in order to be able to conclude that the applicable method is that set out in Article 31 of the regulation, the customs authorities are under an obligation to state in all administrative measures why in those specific circumstances the methods for determination of customs value of goods set out in Articles 29 and 30 cannot be used? (3) Should it be deemed to be sufficient, to exclude the application of the method in Article 30(2)(a) of the Customs Code, that the customs authority declare that it does not have in its possession the appropriate information, or is the customs authority obliged to obtain information from the producer? (4) Must the customs authority state reasons why the methods established in Article 30(2)(c) and (d) of the Customs Code are not to be used, if it determines the price of similar goods on the basis of Article 151(3) of Regulation No 2454/93? (5) Must the decision of the customs authority contain a full statement of reasons as to what information is available in the Community, within the meaning of Article 31 of the Customs Code, or can it produce that statement of reasons subsequently, in legal proceedings, submitting more complete evidence?’

37. LSCS, the Latvian Government and the European Commission submitted written observations in the proceedings before the Court.

V. Assessment

38. The five questions referred by the Augstākā tiesa (Supreme Court) concern two aspects of the obligations incumbent on the national customs authority. First, it is necessary to consider the determination of the customs value of goods, in particular the conditions for the application of the transaction value method (see below at A). Second, the question arises of the duty to make inquiries and the duty to state reasons incumbent on the customs authority in determining the customs value (see further below at B).

A. The conditions for the application of the transaction value method under Article 29 of the Customs Code

39. By its first question, the referring court is seeking to ascertain whether the transaction value method under Article 29 of the Customs Code is also to be used to determine the customs value when the goods were originally not sold for export to the Union, but for export to a third country, and were then removed from customs supervision during the external transit procedure in the customs territory of the Union.

40. In order to answer this question, it must first be clarified to what extent the application of the transaction value method requires the transaction price to be equal to a price for export to the customs territory of the Union (see below at 1). It must then be examined whether it is relevant that the customs debt is incurred through the removal of the goods concerned from customs supervision during the external transit procedure. In this connection, it is necessary to consider the argument raised by LSCS that the determination of the amount of the guarantee to be provided for the external transit procedure prejudices the subsequent determination of the customs value (see further below at 2).

1. The criterion of ‘sale for export to the customs territory of the Union’

41. Can the transaction value method laid down in Article 29 of the Customs Code also be used to determine the customs value when the transaction price is not equal to a price for export to the customs territory of the Union, but to a price for export to a third country?

42. A negative answer to this question is suggested, first, by the wording of Article 29 of the Customs Code, under which ‘the transaction value … is … the price actually paid or payable for the goods when sold for export to the customs territory of the [Union]’. ( 7 ) ( 8 ) According to the Court, it must therefore be agreed, at the time of sale, that the goods originating in a non-member country will be transported into the customs territory of the Union. ( 9 ) This principle is also established in the second subparagraph of Article 147(1) of Regulation No 2454/93, under which, where a pre-acquisition price is declared in the case of successive sales, it must be demonstrated that the relevant transaction took place for export to the customs territory of the Union.

43. It also follows, second, from the scheme and the spirit and purpose of the provisions governing the determination of the customs value in Articles 29 to 31 of the Customs Code that only a price for export to the customs territory of the Union may be used to calculate the customs value.

44. It is thus clear from those provisions and from the rules of the GATT Customs Valuation Code on which they are based that the transaction value is to be used as far as possible in calculating the customs value. ( 10 ) This is confirmed not only by the preamble to the GATT Customs Valuation Code, but also by the fact that the alternative methods of customs valuation are to be applied only if the customs value cannot be determined by reference to the transaction value. ( 11 ) The Court has made clear that, because of the priority to be given to the transaction value method, the conditions for the application of that method may not be interpreted too strictly. ( 12 )

45. However, it is also clear from the abovementioned provisions and from Article VII of GATT, on which they are in turn based, that the customs value must be equal to the ‘actual value’ of the imported goods. Accordingly, the transaction value may be used to determine the customs value only in so far as it can be considered to reflect the real economic value of imported goods and to take into account all the elements of those goods that have economic value. ( 13 )

46. That is not the case with a price which was fixed or negotiated not for export of goods to the customs territory of the Union, but for export of goods to a third country, since the price of goods in a given customs area corresponds to the market situation in that area ( 14 ) and is thus an element affecting the economic value of the goods. If a children’s bicycle, like those at issue, costs EUR 3.90 on export from China to Russia, that does not mean that it would be sold for the same price on export to the Union.

47. Consequently, the theoretical ‘normal price’ under the Brussels Convention on the Valuation of Goods for Customs Purposes, which, until the introduction of the transaction value method, was used as the basis for determining the ‘actual value’ pursuant to Article VII of GATT, ( 15 ) was also a price for the imported goods at the point of introduction into the relevant customs territory. On the other hand, it was certainly not a price for foreign goods exported to countries other than the country of destination. ( 16 ) The present system remains fully subject to this principle of the ‘normal’ or ‘real’ value in so far as the transaction value of imported goods is used in principle, but under only certain conditions, to calculate the customs value.

48. If those conditions are not met, the customs value must be determined on the basis of the transaction value of identical or similar imported goods or using various other methods. The relevant provisions confirm the centrality of the criterion of sale for export to the respective customs territory in determining the customs value. There must be identical or similar goods sold for export to the same country of importation (GATT Customs Valuation Agreement) ( 17 ) or for export to the Union (Union Customs Code). ( 18 ) Similarly, no customs value calculated in the absence of such reference values using the other possible methods may be determined on the basis of the price of the goods for export to a country other than the country of importation (GATT Customs Valuation Agreement) ( 19 ) or to a country not forming part of the customs territory of the Union (Union Customs Code). ( 20 )

49. It would therefore also run counter to the objective of the EU customs valuation legislation to accept a sales price for export to a third country as the transaction value within the meaning of Article 29 of the Customs Code, as that legislation is intended to introduce a fair, uniform and neutral system excluding the use of arbitrary or fictitious customs values. ( 21 ) This could not be ensured if a price for export to a third country were used to determine the customs value of goods in the customs territory of the Union. Since prices differ from one customs area to the next, the customs valuation can be uniform, fair and neutral only if, for an import to the area in question, a price for export to that specific area is used.

50. If that were not the case, there would be, in particular, unequal treatment and an impairment of neutrality in competition between persons who, on the basis of a sale for export to the Union, import goods into the Union and persons who, on the basis of a sale for export to a third country, import goods into the Union, for example by removing the goods from customs supervision (whether intentionally or, as is claimed in the present case, due to fault by a third party). It would also open the way to possible abuse if — as in this case — the transaction value for export to a third country is much lower than a corresponding value for export to the customs territory of the Union.

2. The manner in which the customs debt is incurred and the importance of the guarantee provided in the external transit procedure

51. It follows from the foregoing that the manner in which the customs debt on importation is incurred (by a declaration for free circulation or by the goods being removed from customs supervision in the transit procedure) is immaterial to whether or not the transaction value method is applicable. The only relevant factor is whether the imported goods were sold for export to the customs territory of the Union.

52. In ascertaining whether this is the case, the presumption made in Article 147(1) of Regulation No 2454/93 cannot hold in this instance, as the Commission rightly asserts. Under that provision, the fact that the goods which are the subject of a sale are declared for free circulation in the Union is to be regarded as adequate indication that they were sold for export to the customs territory of the Union. In the present case, however, the goods were not declared for free circulation, but for release into the transit procedure.

53. As the Commission further asserts, this does not mean that, in the absence of a declaration for free circulation, it must automatically be assumed that the goods were not sold for export to the customs territory of the Union. Rather, it falls to the customs authority or the national court to assess, on the basis of the circumstances and the available documents in the specific case, whether the goods were sold for export to the customs territory of the Union. The crucial factor is whether the sale on which the calculation of the transaction value is to be based took place for export to the customs territory of the Union. According to the information provided by LSCS and the referring court, this does not appear to be the case here.

54. In particular, LSCS does not actually dispute that the goods concerned were not sold for export to the customs territory of the Union. It also does not deny that a customs debt has been incurred and that, as the principal, it has become the customs debtor. However, it does take the view that the customs debt may not exceed the amount of the guarantee which it provided on release of the goods into the external transit procedure. Because that guarantee had been calculated on the basis of the transaction value for the sale of the goods from China to Russia, the final customs value must also therefore be calculated using the transaction value method.

55. This argument cannot be accepted.

56. It is correct that the guarantee to be provided by the principal on the release of goods into the external transit procedure is intended to cover any customs debt which may be incurred. That guarantee is therefore to be set at a level equal to the precise amount or maximum amount, as estimated, of the customs debt to be covered. ( 22 ) According to LSCS, this clearly did not happen in the present case. By determining the customs value for the calculation of the guarantee to be provided using the transaction value method, the Latvian customs authorities failed to comply with the requirement that the guarantee to be provided must be at a level of the maximum amount of the customs debt. In particular, in the absence of clarification as to whether Article 29 of the Customs Code is applicable in a case like this, those authorities could not assume with certainty that the possible customs debt would not exceed the value calculated on that basis.

57. Nevertheless, in circumstances like those at issue, a principal cannot rely on a legitimate expectation that the amount of the customs debt will be equal to the amount of the guarantee provided on the release of the goods into the external transit procedure.

58. It is true, as the Court has held many times, that the principle of the protection of legitimate expectations is among the fundamental principles of the European Union. ( 23 ) However, that principle can be successfully invoked only by persons who have been given precise, unconditional and consistent assurances, originating from authorised, reliable sources ( 24 ) and on whose part the national authorities have promoted reasonable expectations. ( 25 )

59. That is not the case here.

60. It is clear from the relevant provisions of the Customs Code that the calculation of the guarantee to be provided by the principal for the release of goods into the transit procedure is certainly not be treated as equivalent to the calculation of the actual customs debt.

61. Thus, as far as can be seen, it is not provided anywhere, with regard to the calculation of that guarantee, that it constitutes binding information issued by the customs authorities. Under Article 12 of the Customs Code, on the other hand, this is explicitly laid down for other information. In view of the regulatory density of the Customs Code, it can therefore be assumed that if the legislature had intended to consider the determination of the guarantee provided for the transit procedure as binding for the subsequent calculation of the customs debt, it would also have expressly stipulated this.

62. The same holds for the explicit provisions of the Customs Code under which the customs authorities are generally permitted (subject to any considerations relating to protection of legitimate expectations) to conduct a post-clearance examination of a customs declaration and to fix a new customs debt. ( 26 ) In this regard too, it must be assumed that if the legislature had wished to make the guarantee fixed in the transit procedure binding for the determination of the amount of the customs debt, it would have been necessary to lay down the conditions for a post-clearance revision in the Customs Code, which did not happen.

63. Furthermore, an argument against the binding character of the determination of the guarantee for the subsequent calculation of the customs debt is that under certain conditions the deposit of such a guarantee may be waived or a reduction can be accepted, ( 27 ) without it being regulated how this would then affect the subsequent calculation of the customs debt. This also holds for the possibility of working with flat-rate amounts in calculating the guarantee if the data necessary for the calculation of a potential customs debt are not available. ( 28 ) Lastly, if the determination of the guarantee prejudiced the amount of the future customs debt, there would be no distinction in this regard between the situations affected and cases in which no guarantee needs to be furnished. ( 29 )

64. LSCS could not therefore assume that the relevant provisions of the Customs Code permitted the Latvian customs authorities, by recognising the amount of the guarantee, to give it precise and unconditional assurances in respect of a possible customs debt. This applies a fortiori because, in the absence of information to the contrary, LSCS, as the party implementing the external transit procedure, must be considered experienced in customs clearance and familiar with the rules of customs law. It cannot therefore claim that those authorities promoted reasonable expectations on its part that the customs debt would not exceed the amount of the guarantee to be provided for the transit procedure.

3. Conclusion

65. In accordance with the above considerations, I propose that the first question be answered as follows: Article 29(1) of the Customs Code should be interpreted as meaning that the method of customs valuation laid down in that article is applicable only when the transaction value of the goods concerned is equal to a price for export to the customs territory of the Union. It is irrelevant whether the customs debt is incurred because goods are removed from customs supervision during the external transit procedure.

B. The duty to make inquiries and the duty to state reasons incumbent on the customs authority in determining the customs value

1. The duties to make inquiries incumbent on the customs authority

66. In its third question, the referring court asks the Court about the duties of the customs authority in connection with the application of the method for determining the customs value laid down in Article 30(2)(a) of the Customs Code. Under that provision, the customs value is determined on the basis of the transaction value of identical goods sold for export to the Union and exported at or about the same time as the goods being valued. In this respect, the referring court wishes to know whether the customs authority may disapply that method if it does not have in its possession the appropriate information or whether it is obliged to obtain information from the producer of goods.

67. It must be stated, first, that, as far as can be seen, neither the Customs Code nor Regulation No 2454/93 provides for an obligation for the customs authority to obtain from the producer of the goods concerned the information necessary for the application of the method laid down in Article 30(2)(a) of the Customs Code (or another method). Only in applying Article 30(2)(d) of the Customs Code (‘computed value’ method based on the cost of materials, profit, etc.) is it mentioned that the customs authority may verify information supplied by the producer of the goods concerned with the agreement of that producer and the authorities of the third country in question in that country. ( 30 )

68. Nevertheless, in determining the customs value, the customs authority necessarily has certain verification duties. It is apparent from the scheme of Articles 29 to 31 of the Customs Code that the different possible methods for determining the customs value are subordinately linked to each other. ( 31 ) This means that the customs authority must verify with due care in each individual case whether the conditions for the application of one method are met before it moves on to the next method. In this regard, the Customs Code grants national customs authorities (with certain restrictions) ( 32 ) the right to obtain information from any person directly or indirectly involved in the operations concerned for the purposes of trade in goods. ( 33 )

69. The customs authorities’ obligation carefully to verify the conditions for the application of the relevant methods for determining the customs value is also consistent with the subordinate relationship between those methods intended by the EU legislature. As the legislature did not allow the authorities freely to choose the methods, they must endeavour first to use the methods applicable as a matter of priority before they have recourse to subordinate methods.

70. Conversely, however, the duties of verification and care incumbent on the customs authority correspond to duties of cooperation and information on the part of persons involved in trade in goods. Thus, Article 6(1) of the Customs Code in particular provides that, where a person requests that the customs authorities take a decision relating to the application of customs rules, that person must supply all the information and documents required by those authorities in order to take a decision. Precisely where, as in this instance, an operator wishes to benefit from a customs valuation method which is more favourable to it, it does not therefore seem disproportionate to expect it to contribute, as far as possible, to the provision of the data necessary for the application of that method.

71. Furthermore, certain provisions of the Customs Code and the relevant implementing provisions confirm that the verification duties incumbent on the customs authority are to be performed in principle in cooperation with the operators concerned. It is provided, for example, that if the customs authorities are unable to accept the transaction value without further inquiry, they should give the declarant an opportunity to supply such further detailed information. ( 34 )

72. In view of this relationship of cooperation, the Commission’s argument in this case is convincing. In its view, before the customs authority can disapply Article 30(2)(a) of the Customs Code, it must consult all the information and databases available to it and give the operators concerned an opportunity to furnish the necessary information. ( 35 ) A duty to seek information from the producer of the goods concerned must be rejected, on the other hand, as it would entail substantial expenditure and would, as a rule, affect trade secrets of undertakings which are only indirectly involved.

73. However, it is not clear why this solution proposed by the Commission should be limited to a situation like the present case, where the goods were removed from customs supervision during the transit procedure, as it is not evident why the subordinate relationship between the different methods of customs valuation and the need carefully to verify in succession whether each method is applicable would be weakened in that situation.

74. In accordance with the above considerations, I therefore suggest that the third question be answered as follows: The customs authority is not obliged to obtain from the producer of the goods concerned the information necessary for the application of Article 30(2)(a) of the Customs Code. Before the authority can disapply that provision, however, it must consult all the information sources and databases available to it and give the operators concerned an opportunity to furnish the information necessary for the application of the abovementioned provision.

2. The duties to state reasons incumbent on the customs authority

75. The second, fourth and fifth questions, which will be dealt with together, all concern the duties to state reasons incumbent on the customs authority in respect of the chosen method for determining the customs value. The referring court would like to know whether the customs authority is under an obligation to state the reasons – why it did not use the method set out in Articles 29 and 30 of the Customs Code for determining the customs value, but the method laid down in Article 31 of the Customs Code (second question); – why the methods established in Article 30(2)(c) and (d) of the Customs Code are not to be used, if it determines the price of similar goods on the basis of Article 151(3) of Regulation No 2454/93 (fourth question), – and whether the decision must contain a full statement of reasons as to what information is available in the Community within the meaning of Article 31 of the Customs Code or whether such a statement of reasons can be produced subsequently, in legal proceedings, by submitting more complete evidence (fifth question).

76. The answer to these questions is evident from Article 6(3) of the Customs Code. Under that provision, decisions adopted in writing which are detrimental to the persons to whom they are addressed must set out the grounds on which they are based.

77. Furthermore, national authorities have a general obligation to give reasons within the field of application of EU law. Article 41 of the Charter of Fundamental Rights of the European Union is not directly applicable in respect of the national implementation of EU law. ( 36 ) However, the right to good administration guaranteed therein reflects a general principle of EU law, such that the requirements pertaining to that right must be observed where a Member State implements EU law. ( 37 )

78. In addition, an adequate statement of reasons is also essential in order to safeguard the right to effective legal protection stemming from the principle of effectiveness. Only an adequate statement of reasons places the individual in a position in which he can decide in full knowledge of the circumstances whether it is worthwhile for him to bring proceedings. An adequate statement of reasons is also necessary so that the courts are able to review a decision of the authorities to refuse a right conferred by EU law. ( 38 )

79. In conformity with these requirements and on account of the abovementioned subordinate relationship between the methods of customs valuation laid down in the Customs Code, it is clear, first of all, that in its decision the customs authority must give an adequate statement of reasons why the chosen method of customs valuation is applicable and not the methods having priority. If the customs authority thus uses the method laid down in Article 31 of the Customs Code, it must state why the conditions for the applicability of the methods laid down in Articles 29 and 30 of the Customs Code were not met.

80. Second, it is also clear from the subordinate relationship between the successively listed methods of customs valuation that it is not necessary to state reasons why the subsequent methods were not used. As Article 151(3) of Regulation No 2454/93 implements Article 30(2)(b) of the Customs Code, where the customs authority determines the customs value on the basis of Article 151(3) of Regulation No 2454/93, it is not therefore required to state the reasons why the methods laid down in Article 30(2)(c) and (d) of the Customs Code are not to be used.

81. Third, the duty to state reasons incumbent on the customs authority requires that in the decision it is explained how the final customs value was calculated. Accordingly, if the customs value is determined pursuant to Article 31 of the Customs Code, it must be explained what data were available in the Union and were used to calculate the customs value.

82. Lastly, an adequate statement of reasons must necessarily appear in the decision fixing the customs value, as the duty to state reasons is also intended to document the action taken by the authority in verifying the applicability of the different methods for determining the customs value. This ensures that it is carefully verified that the conditions for the applicability of each method are met. Without the corresponding information, it would in fact be very difficult subsequently to understand whether such verification took place or whether a subsequent justification was merely being provided for a decision taken on other grounds. ( 39 ) For a customs authority which complies with Articles 29 to 31 of the Customs Code and has carefully verified in succession the conditions for the applicability of the different methods, it should therefore be simple to explain in the final decision why the chosen customs valuation method was applied and not the previous one.

83. Such self-regulation by the customs authority is possible only to a lesser extent if an adequate statement of reasons is not produced until subsequently at the request of the interested party. ( 40 ) This applies a fortiori where the statement of reasons is produced subsequently in legal proceedings. This does not allow the interested party, moreover, to decide in full knowledge of the circumstances whether it is worthwhile for him to bring proceedings.

84. The question of the duty to state reasons incumbent on national customs authorities must, however, be distinguished from the question of the legal consequences in national law of an inadequate statement of reasons and thus from the question whether it is possible to remedy defective reasoning in the course of legal proceedings. This question is not regulated by the Customs Code and EU law does not contain general rules elsewhere on the consequences of defective reasoning.

85. It is therefore for the Member States, exercising their procedural autonomy, to regulate the consequences of a failure by the customs authorities to fulfil their duty to state reasons and to determine whether and to what extent it is possible to remedy such a failure in the course of legal proceedings. In doing so, however, the Member States must have regard to the principles of equivalence and effectiveness. ( 41 )

86. In the light of the above observations, I propose that the second, fourth and fifth questions be answered as follows: It follows from Article 6(3) of the Customs Code and the general duty to state reasons incumbent on the customs authority and from the subordinate relationship between the different methods of customs valuation that in its decision the customs authority is obliged to give an adequate statement of reasons why a certain method of customs valuation was used and not a method applicable as a matter of priority. The customs authority is also obliged to explain adequately in its decision how and on the basis of what data the final customs value was calculated. The question whether and to what extent a defective statement of reasons can be remedied subsequently in legal proceedings is a matter of national law and must be regulated by the Member States having regard to the principles of equivalence and effectiveness.

VI. Conclusion

87. In the light of the above statements, I propose that the Court answer the questions referred by the Augstākā tiesa (Supreme Court, Latvia) as follows: (1) Article 29(1) of the Customs Code should be interpreted as meaning that the method of customs valuation laid down in that article is applicable only when the transaction value of the goods concerned is equal to a price for export to the customs territory of the Union. It is irrelevant whether the customs debt is incurred because goods are removed from customs supervision during the external transit procedure. (2) The customs authority is not obliged to obtain from the producer of the goods concerned the information necessary for the application of Article 30(2)(a) of the Customs Code. Before the authority can disapply that provision, however, it must consult all the information sources and databases available to it and give the operators concerned an opportunity to furnish the information necessary for the application of the abovementioned provision. (3) It follows from Article 6(3) of the Customs Code and the general duty to state reasons incumbent on the authority and from the subordinate relationship between the different methods of customs valuation that in its decision the customs authority is obliged to give an adequate statement of reasons why a certain method of customs valuation was used and not a method applicable as a matter of priority. The customs authority is also obliged to explain adequately in its decision how and on the basis of what data the final customs value was calculated. The question whether and to what extent a defective statement of reasons can be remedied subsequently in legal proceedings is a matter of national law and must be regulated by the Member States having regard to the principles of equivalence and effectiveness.

( 1 ) Original language: German.

( 2 ) With regard to the notion of removal from customs supervision as referred to in the Customs Code, see judgment of 12 June 2014, SEK Zollagentur (C‑75/13, EU:C:2014:1759, paragraph 28 and the case-law cited).

( 3 ) General Agreement on Tariffs and Trade 1994 (GATT), in Annex 1A of the Agreement Establishing the World Trade Organisation (WTO), which was signed in Marrakesh on 15 April 1994 and was approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1). The provision cited originates from the GATT principal agreement 1947, which was incorporated into GATT 1994.

( 4 ) OJ 1994 L 336, p. 119.

( 5 ) Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1) in the version as amended by Council Regulation (EC) No 1186/2009 of 16 November 2009 (OJ 2009 L 324, p. 23). Regulation No 2913/92 was originally to be replaced by Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (OJ 2008 L 145, p. 1), which never became fully valid, however, in the absence of implementing provisions. Regulation No 450/2008 was repealed by 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). However, that regulation has been valid only since 2013 or 2016, with the result that Regulation No 2913/92 is in any event still applicable in the present case.

( 6 ) Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code (OJ 1993 L 253, p. 1), as amended by Commission Regulation (EU) No 1063/2010 of 18 November 2010 (OJ 2010 L 307, p. 1).

( 7 ) Emphasis added.

( 8 ) See also to that effect Article 1(1) of the GATT Customs Valuation Agreement, under which the transaction value is ‘the price actually paid or payable for the goods when sold for export to the country of importation’ (emphasis added).

( 9 ) Judgments of 6 June 1990, Unifert (C‑11/89, EU:C:1990:237, paragraph 11), and of 28 February 2008, Carboni e derivati (C‑263/06, EU:C:2008:128, paragraph 28).

( 10 ) See also, to that effect, the Court’s judgment of 19 October 2000, Sommer (C‑15/99, EU:C:2000:574, paragraph 22), according to which in the system established by the Customs Code (at the time under Regulation No 1224/80) ‘the transaction value … forms the basis for calculating the customs value’. On the need to interpret EU customs law in accordance with the GATT, cf. my Opinion in The International Association of Independent Tanker Owners and Others (C‑308/06, EU:C:2007:689, point 107 and the case-law cited there).

( 11 ) Judgment of 12 December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraphs 41 to 43).

( 12 ) See, with regard to the term ‘sale’ in Article 29(1) of the Customs Code, judgment of 12 December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraph 45).

( 13 ) Judgments of 16 November 2006, Compaq Computer International Corporation (C‑306/04, EU:C:2006:716, paragraph 30); of 15 July 2010, Gaston Schul (C‑354/09, EU:C:2010:439, paragraph 29); and of 12 December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraph 40).

( 14 ) See Krockauer, L., Zollwert, 3rd edition, Verlag für Wirtschaft und Verwaltung, Frankfurt am Main, 1974, p. 24.

( 15 ) The Brussels Convention on the Valuation of Goods for Customs Purposes was signed on 15 December 1950 and its principles were incorporated into Community law by Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes (OJ English Special Edition 1968 (I), p. 170). The Brussels Convention on the Valuation of Goods for Customs Purposes was replaced in 1979 by the Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (OJ 1980 L 71, p. 1, 107), which was negotiated in the Tokyo Round of GATT, introduced the transaction value method as the basis for determining the customs value and was transposed into Community law by Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (OJ 1980 L 134, p. 1).

( 16 ) See Krockauer, L., Zollwert, 3rd edition, Verlag für Wirtschaft und Verwaltung, Frankfurt am Main, 1974, pp. 24 and 41.

( 17 ) Article 2(1)(a) and Article 3(1)(a) of the GATT Customs Valuation Agreement.

( 18 ) Article 30(2)(a) and (b) of the Customs Code.

( 19 ) Article 7(2)(e) of the GATT Customs Valuation Agreement. See also Article 6(1)(b) of the GATT Customs Valuation Agreement, under which, if the customs value is based on a computed value consisting of the sum of various factors, the amount for profit and general expenses must be equal to that usually reflected in sales by producers in the country of exportation for export to the country of importation.

( 20 ) Article 31(2)(e) of the Customs Code. See also the second indent of Article 30(2)(d) of the Customs Code, under which, if the customs value is based on a computed value consisting of the sum of various factors, the amount for profit and general expenses must be equal to that usually reflected in sales by producers in the country of exportation for export to the Union.

( 21 ) Judgments of 6 June 1990, Unifert (C‑11/89, EU:C:1990:237, paragraph 35); of 19 October 2000, Sommer (C‑15/99, EU:C:2000:574, paragraph 25); of 16 November 2006, Compaq Computer International Corporation (C‑306/04, EU:C:2006:716, paragraph 30); and of 19 March 2009, Mitsui & Co. Deutschland (C‑256/07, EU:C:2009:167, paragraph 20).

( 22 ) See Article 192(1) of the Customs Code and also the rules governing the provision of a comprehensive guarantee in Article 379 of Regulation No 2454/93. Under that provision, the principal must, if necessary, deposit a reference amount and ensure that possible customs debts from current operations do not exceed that reference amount. The reference amounts can also be monitored by the customs authorities for each individual operation.

( 23 ) Judgments of 5 May 1981, Dürbeck (112/80, EU:C:1981:94, paragraph 48), and of 24 March 2011, ISD Polska and Others (C‑369/09 P, EU:C:2011:175, paragraph 122).

( 24 ) Judgments of 14 June 2016, Marchiani v Parliament (C‑566/14 P, EU:C:2016:437, paragraph 77), and of 19 July 2016, Kotnik and Others (C‑526/14, EU:C:2016:570, paragraph 62); see also judgments of 22 June 2006, Belgium and Forum 187 v Commission (C‑182/03 and C‑217/03, EU:C:2006:416, paragraph 147), and of 16 December 2008, Masdar (UK) v Commission (C‑47/07 P, EU:C:2008:726, paragraphs 81 and 86).

( 25 ) Judgment of 10 December 2015, Veloserviss (C‑427/14, EU:C:2015:803, paragraph 39).

( 26 ) See Article 78 and Article 220(2)(b) of the Customs Code, and judgment of 10 December 2015, Veloserviss (C‑427/14, EU:C:2015:803, paragraph 17 et seq., in particular paragraphs 28, 43 and 44).

( 27 ) See Article 94(4) of the Customs Code and Article 372(1)(a) and Article 380(2) and (3) of Regulation No 2454/93.

( 28 ) See the third subparagraph of Article 379(2) of Regulation No 2454/93.

( 29 ) See Article 95 of the Customs Code.

( 30 ) See Article 153(1) of Regulation No 2454/93. Point 1 of the Explanatory notes on Article 30(2)(d) of the Customs Code in Annex 23 (‘Interpretative notes on customs value’) of Regulation No 2454/93 adds: ‘1. As a general rule, customs value is determined under these provisions on the basis of information readily available in the Community. In order to determine a computed value, however, it may be necessary to examine the cost of producing the goods being valued and other information which has to be obtained from outside the Community. Furthermore, in most cases the producer of the goods will be outside the jurisdiction of the authorities of the Member States. The use of the computed value method will generally be limited to those cases where the buyer and seller are related, and the producer is prepared to supply to the authorities of the country of importation the necessary costings and to provide facilities for any subsequent verification which may be necessary’ (emphasis added).

( 31 ) Judgments of 12 December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraphs 41 to 43); of 16 June 2016, EURO 2004. Hungry (C‑291/15, EU:C:2016:455, paragraphs 27 to 29); and of 9 March 2017, GE Healthcare (C‑173/15, EU:C:2017:195, paragraphs 75 to 77).

( 32 ) See Article 153(1) of Regulation No 2454/93.

( 33 ) See Article 14 of the Customs Code.

( 34 ) See, for example, Article 29(2) of the Customs Code and point 3 of the Explanatory notes on that provision in Annex 23 (‘Interpretative notes on customs value’) of Regulation No 2454/93.

( 35 ) See, with regard to the need to give operators an opportunity effectively to make known their views in good time, judgments of 18 December 2008, Sopropé (C‑349/07, EU:C:2008:746, paragraph 36 et seq.), and of 3 July 2014, Kamino International Logistics (C‑129/13 and C‑130/13, EU:C:2014:2041, paragraph 38).

( 36 ) See my Opinion in Mellor (C‑75/08, EU:C:2009:32, point 25).

( 37 ) Judgment of 8 May 2014, N. (C‑604/12, EU:C:2014:302, paragraphs 49 and 50); see also my Opinion in Mellor (C‑75/08, EU:C:2009:32, point 33 and the case-law cited).

( 38 ) See my Opinion in Mellor (C‑75/08, EU:C:2009:32, points 28 and 31 and the case-law cited). See also judgment of 23 February 2006, Molenbergnatie (C‑201/04, EU:C:2006:136, paragraph 54).

( 39 ) See also in this regard the statements made in my Opinion in Mellor (C‑75/08, EU:C:2009:32, points 29 and 30).

( 40 ) This possibility envisaged in paragraphs 59 to 61 and point 1 of the operative part of the judgment of 30 April 2009, Mellor (C‑75/08, EU:C:2009:279) must be rejected in the present case, in particular because the Customs Code — unlike the directive to which that judgment relates — expressly lays down a duty to state reasons for detrimental decisions.

( 41 ) See, with regard to the limits of the possibilities for remedying infringements of EU law, judgment of 3 July 2008, Commission v Ireland (C‑215/06, EU:C:2008:380, paragraph 57 et seq.).