OPINION OF ADVOCATE GENERAL

STIX-HACKL

delivered on 26 January 2006 1( )

Case C‑378/03

Commission of the European Communities

v

Kingdom of Belgium

(Failure of a Member State to fulfil obligations – Communities’ own resources – Customs duty debt payable in instalments by reason of a compromise agreement – Recovery – Entry)

I – Introduction

1. With this action for failure to fulfil obligations the Commission is applying for a declaration that, by making late payments of own resources following payment in instalments by the debtor, the Kingdom of Belgium has failed to fulfil its obligations under Articles 6, 10 and 11 of 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the system of the Communities’ own resources ( ) (‘the own resources regulation’) which, with effect from 31 May 2000, repealed and replaced Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ own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, ( ) which was identical in subject-matter.

2. The present action primarily concerns the question whether the own resources regulation imposes the transfer from the so-called B accounts to the A accounts of stage payments of import duty debts for which payment by instalments was agreed upon, and at what point in time those payments have to be made available to the Commission.

II – Law

A – Community law: the own resources regulation

3. In its application, the Commission relied on Regulation No 1150/2000 which repealed and replaced, with effect from 31 May 2000, Regulation No 1552/89 which was the regulation in force during the period relevant in this case. Since, first, the content of the provisions on accounts, entry and interest for late payment (Articles 6, 10 and 11) in their different versions remained essentially unchanged, from which no issues as regards the defendant’s rights of defence arise, and, second, according to the Court’s case-law, an infringement must be assessed in the light of the Community legislation in force at the close of the period prescribed by the Commission for the Member State concerned, ( ) the Commission is entitled, in the present case, to apply for a declaration of infringement of the own resources regulation on the basis of Regulation No 1150/2000. ( )

4. It should be added, however, that various provisions of Regulation No 1552/89, in particular Article 2 on the duty to establish the Community’s entitlement, ( ) were already amended by Council Regulation (Euratom, EC) No 1355/96 of 8 July 1996 ( ) with effect from 14 July 1996. For the assessment of the way that the Belgian authorities proceeded in relation to the customs debt incurred in the present case between 1990 and 1992 and established in March 1993, it is, in principle, Regulation No 1552/89 in its original form which is applicable, at least – according to the basic principle that procedural rules generally apply to all proceedings pending at the time when they enter into force ( ) – until the entry into force on 14 July 1996 of the amendment introduced by Regulation No 1355/96.

5. Since, however, as also submitted by the Belgian Government, the content of the obligations stemming from the own resources regulation was also not amended substantially by Regulation No 1355/96 in so far as those obligations are relevant in the present case, reference will be made hereinafter, in accordance with the Commission’s application, to the own resources regulation as it stood in the form of Regulation No 1150/2000, the relevant provisions of which are provided below.

6. Article 6(1) and (3)(a)(b) of the own resources regulation on accounts for own resources states:

‘1. Accounts for own resources shall be kept by the Treasury of each Member State or by the body appointed by each Member State and broken down by type of resources.

…

3. (a) Entitlements established in accordance with Article 2 shall, subject to point (b) of this paragraph, be entered in the accounts at the latest on the first working day after the 19th day of the second month following the month during which the entitlement was established.

(b) Established entitlements not entered in the accounts referred to in point (a), because they have not yet been recovered and no security has been provided, shall be shown in separate accounts within the period laid down in point (a). Member States may adopt this procedure where established entitlements for which security has been provided have been challenged and might, upon settlement of the disputes which have arisen, be subject to change.’

7. Article 10(1) of the own resources regulation states the following in relation to the deadline for making own resources available:

‘After deduction of 10% by way of collection costs in accordance with Article 2(3) of Decision 94/728/EC, Euratom, entry of the own resources referred to in Article 2(1)(a) and (b) of that Decision shall be made at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established in accordance with Article 2 of this Regulation.

However, for entitlements shown in separate accounts under Article 6(3)(b), the entry must be made at the latest on the first working day following the 19th day of the second month following the month in which the entitlements were recovered.’

8. Article 11 of the own resources regulation lays down the obligation to pay interest for late payment:

‘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.’

B – The national legislation concerning an agreement between the person liable for payment of the duty and payment of customs duty in stages

9. It is apparent from the case-file and the statements of the Belgian Government and the Commission that, under Article 281 of the General Law on Customs and Excise (loi générale sur les douanes et accises; ‘the LGDA’), it is the task of the customs authorities, which in this field have the same powers as the public prosecutor’s office, to pursue breaches of customs and excise law.

10. Article 263 of the LGDA empowers the customs authorities, under certain conditions, to come to an agreement with the person who has infringed customs and excise law in order to put an end to or avoid prosecution proceedings in return for payment of a certain sum encompassing the duty owed and the fine imposed.

11. To ensure that the agreement is fully respected, according to the practice of the Belgian authorities such agreements are made – at least as regards the transaction agreement at issue – under a ‘resolutory condition’ whereby, in the event that the person who has infringed customs and excise law fails to make the payments due, the right to prosecute subsists with the effect that the customs authorities may bring an action. Under the transaction agreement, in the event that the person owing the duty stops fulfilling his obligations and the authorities bring an action against him for payment, amounts already paid are ‘placed on deposit’ by the customs and excise authorities.

12. In the context of an agreement, it is possible to take the circumstances of the person owing the duty into account, by, for example, relieving payments or extending the deadlines for such.

III – Facts of the case and procedure

13. The Commission bases the current action primarily on the results of an own resources inspection which it carried out in Belgium in November 1996 and which, according to its statements, revealed anomalies in relation to the accounts for, and entry of, own resources stemming from import duties recovered in the form of stage payments or payment by instalments. The present case concerns import duties owed by an importer (Tefron) of textile goods (T-shirts) which were imported from Bangladesh under falsified certificates of origin.

14. It is apparent from the report of the inspection of 29 September 1997, which was sent to the Belgian authorities, that the amount of duty concerned (BEF 2 011 294) was listed in the B accounts by the customs office in Antwerp in the second quarter of 1993 after the Commission had made its fraud declaration in the first quarter of that same year.

15. On 16 November 1993 the Belgian authorities granted the debtor the facility of relieved payments in the form of payment by monthly instalments of BEF 100 000 in the framework of a transaction agreement. Under that method of payment the total duty owed amounted to BEF 2 223 710 which included the previously stated amount owed of BEF 2 011 294. The payments which were subsequently made by the debtor on a regular basis were suspended at the end of August 1997, at which point a total of BEF 1 818 710 of the customs debt had already been repaid. The debtor was then ordered by the competent court to pay the remainder of the amount due in instalments, and on 22 October 1998, payments were henceforth continued in monthly tranches of BEF 15 000. The amount of duty which had already been repaid as of August 1997 was entered as a lump sum in the A accounts on 22 January 1998.

16. By letter of 12 May 1999, the Commission informed the Belgian authorities that, in its opinion, in the case of stage payments all sums paid have to be entered, on the day of payment, in the A accounts and made available in accordance with Article 10(1) of the own resources regulation.

17. By letter of 18 November 1999, the Commission requested that the Belgian authorities pay interest for late payment in the amount of BEF 959 144.

18. In their response of 15 March 2000, the Belgian authorities rejected the Commission’s point of view and claimed that they had correctly entered the own resources in dispute in the B accounts and that the relevant sums were entered without any undue delay.

19. On 18 July 2001 the Commission sent the Belgian authorities a letter of formal notice followed, on 11 April 2002, by a reasoned opinion. Since the Belgian authorities were still of the same opinion as expressed in their replies, the Commission brought the present action.

IV – Assessment of the action

A – Main arguments of the parties

20. The Commission submits that, under Article 6(3)(b) of the own resources regulation, the B accounts relate only to entitlements which have not yet been recovered and for which no security has been provided or entitlements which, although covered by a security, are, however, disputed. In addition, B accounts do not apply to the collection of payments by instalments made by the debtor in the framework of a transaction.

21. According to the Commission, those part-payments of the customs debt, the establishment of which is not contested by the Belgian authorities in the present case, should, pursuant to Article 10(1) of the own resources regulation, have been transferred from the B to the A accounts as each payment was made – or as soon as the first payments were made – and not, as the Belgian Government claims, after settlement of the entire sum.

22. The Commission claims that stage payments do not constitute a security or guarantee; with such payments the debtor merely intends to pay back his customs debt. In addition, there is no ‘challenge’ within the meaning of Article 6(3)(b) of the own resources regulation. The interruption of the payment by instalments by the debtor cannot, at any rate, be classified as a challenge. In any case, the challenge must be submitted in writing.

23. The Commission does not contest the Belgian practice in the form of the transaction agreement as such, but it does object to the Belgian Government’s argument that, until full payment of the sum owed, the instalments already made should not be regarded as sums paid, but merely as sums ‘placed on deposit’. The Belgian practice of coming to an agreement or the question of the partial or full extinction of the Belgian authorities’ right to bring an action under Belgian law cannot have any influence on the obligations regarding accounts for entry of own resources and promptly making own resources available, as is apparent from the – directly applicable – own resources regulation.

24. Finally, the Commission asserts that the fact that the payments made towards the customs debt were wrongly entered in the B accounts over a period of several months brought about the delays in relation to the entry of own resources, with the result that interest for late payment became due under Article 11 of the own resources regulation.

25. The Belgian Government contends that B accounts were introduced so that entitlements of the Communities, which were not actually able to be paid within the deadline laid down in Article 6(3)(a) of the own resources regulation, would not have to be paid by the Member States themselves. In the present case, the customs debt was not paid off within that deadline and no security was provided to enable the corresponding amount to be entered in the B accounts. The Commission did not contest that initial entry.

26. In addition, no provision of the own resources regulation compels the Member States to transfer subsequently to the A accounts amounts paid and entered in the B accounts.

27. The Belgian Government also contends that the payments by instalments made by the person liable for payment of the duty are not to be regarded as actually ‘recovered’ but, as is apparent from the transaction agreement, merely as ‘placed on deposit’ with the customs authorities on behalf of the debtor. If that person suspends payment, the prosecution will be continued and the customs authorities may bring an action demanding payment of the sum due.

28. In that regard, the transaction agreement is subject to a ‘resolutory condition’ which is necessary in order to ensure compliance with that agreement. It must be pointed out that, on the basis of the transaction agreement, a definitive property transfer and a ‘recovery’ within the meaning of the own resources regulation first comes into play on the date on which the customs debt has been fully repaid and as a result of which the right to prosecute has also lapsed, or on the date on which the courts confirm the customs authorities’ right to the customs debt. Until that point, payments made by instalments – as in the case of fines under competition law which are made the subject of an action before the Court of First Instance or the Court of Justice – are to be regarded as provisional or conditional. If stage payments were to be regarded as definitive payments, the result would be the termination of the prosecution proceedings.

29. No security has been provided in the present case. If, however, the Court should decide that a security was actually provided, the interruption of payment should be regarded as a challenge within the meaning of the B accounts since the Belgian authorities had to gain a writ of execution. A challenge of that nature does not have to be made in any particular way.

30. The Belgian Government contends, finally, that interest for late payment cannot be demanded since recovery of the import duty within the meaning of the own resources regulation was first due as of the judgment of the (national) court of 30 September 2000 and the amounts corresponding to the amounts of import duty owed had – in order to avoid interest for late payment – already been entered on 11 January 1998.

B – Validity of the action

31. First, in the present case, the establishment by the Belgian authorities in March 1993 of the own resources in respect of the import duties at issue is not disputed by the parties.

32. Second, the Commission did not object to the initial entry of the amount of the customs debt in the B accounts which took place after that establishment.

33. Third, the Commission’s complaints do not concern, as such, the Belgian legislation or the practice of the Belgian customs authorities of coming to agreements with debtors and payment of customs duty in stages. The Commission actually objects to the Belgian authorities’ approach in relation to the charging and entry of the amounts concerned of payment by instalments as part of a transaction agreement in order to discharge the customs debt.

34. First of all, it must be established, in accordance with the Belgian Government, that the Commission’s view that payments of the duty owed should have been transferred from the B to the A accounts as each payment was made in accordance with Article 10(1) of the own resources regulation is erroneous, which is also decisive for the purposes of the framework of the assessment in the present case.

35. It is apparent from Article 6(3)(a) and (b) of the own resources regulation that established entitlements – and this is the case for both A and B accounts – must be entered in the accounts at the latest on the first working day after the 19th day of the second month following the month during which the entitlement was established.

36. Within that time-limit, which is thus connected with the establishment of the entitlement, those entitlements which are entered, under Article 6(3)(b) of the own resources regulation, in the B accounts are, on the one hand, established entitlements which have not yet been recovered and for which no security has been provided and, on the other hand, unrecovered established entitlements for which security has indeed been provided but which have been challenged and might, upon settlement of the disputes which have arisen, be subject to change. Accordingly, recovered claims are entered in the A accounts, along with unrecovered claims for which security has been provided and which have not been challenged. ( )

37. The main difference between the two types of accounts or the importance of the type of accounting in fact lies in the different consequences which they entail with regard to the entry of the amounts accounted for, which is regulated in Article 10(1) of the own resources regulation.

38. Whereas under the first subparagraph of Article 10(1) amounts entered in the A accounts are to be credited at the latest on the first working day following the 19th day of the second month following establishment of the Commission’s entitlement, the amounts listed in the B accounts are to be entered within that same time period but following recovery of the entitlements. ( )

39. Thus, Article 10(1) of the own resources regulation provides that amounts recorded in the B accounts within the time period laid down in that provision are to be entered as of their recovery, and not, as assumed by the Commission, in the A accounts as of their recovery. The amounts entered in the B accounts are in any case subject, as soon as they are recovered, to the obligation to be entered within the time period provided in such a way that a transfer of those amounts to the A accounts would appear needless and would, in addition, lead to certain contradictions with regard to the first subparagraph of Article 10(1) of the own resources regulation, since the time period for entry of amounts in the A accounts is linked to the date of establishment.

40. The Commission’s allegation that the Belgian authorities wrongly failed to transfer the paid instalments to the A accounts must therefore be rejected.

41. In the present case, in which the Commission does not object to the initial entry of the disputed amounts of customs debt in the B accounts or contend that, until that date, that amount had neither been recovered nor a security provided, the examination is thus restricted to the question whether the amounts of customs duty owed or the individually paid instalments – not until 11 January 1998 or subsequent to the judgment of 30 September 2000 – were entered too late. In that connection, it needs to be clarified from what point in a case such as the present one, in which an established entitlement is paid off in instalments, recovery within the meaning of the own resources regulation is to be presumed.

42. As regards the Belgian Government’s assertion that, in accordance with the transaction agreement and the relevant Belgian national law in relation to the recovery of customs debts and prosecuting infringements of customs legislation, the customs debt in dispute is to be regarded as recovered from the moment of establishment by the courts or full payment of that debt, it must first be noted, generally, that the obligation to make own resources available, as stipulated in the own resources regulation, is an obligation under Community law to which full effect must be given. ( )

43. Consequently, as rightly pointed out by the Commission, it is not fundamentally decisive whether the instalments of the customs debt made by the person liable for that duty to the Belgian customs authorities by virtue of the transaction agreement or the applicable Belgian legislation are be regarded as ‘placed on deposit’ or not for determining the date of recovery on which own resources have to be made available for entitlements listed in the B accounts. If it were left to the Member States to determine the point in time at which Community entitlements, which have been established and accounted for, are to be regarded as ‘recovered’ for the purposes of the own resources regulation, the financial equilibrium of the Community may be disrupted by the arbitrary conduct of a Member State. ( )

44. Nor conversely is it apparent why the classification of instalments of customs duty debt as recovered entitlements for the purposes of the own resources regulation should call into question the enforcement of national prosecution proceedings in the event that payment by instalments is interrupted, as laid down in the transaction agreement. If paid instalments under Article 10(1) of the own resources regulation are to be regarded as recovered entitlements, it does not automatically mean that those payments are to be considered to be ‘definitive’ within the meaning of Belgian law or the transaction agreement, which would put an end to the rights of the Belgian authorities to initiate proceedings.

45. The notion of recovery of entitlements under the own resources regulation in not defined in the regulation itself.

46. It must, first, be pointed out – as submitted by the Belgian Government and as already indicated in my Opinion in Case C‑105/02 Commission v Germany ( ) – that the introduction of the B accounts by Regulation No 1552/89 did not aim only to control better the actions of the Member States when recovering own resources, but also to take account of the protection of their financial interests.

47. The fact that the entry of certain entitlements, which are now specified in Article 6(3)(b), was made dependent on their recovery has the effect of reducing the risk of Member States ultimately having to pay the own resources that have been made available out of their own funds.

48. The purpose of the regulation on the making available of own resources in relation to entitlements which are to be entered in the B accounts of reducing the financial risk of the Member States speaks, in my opinion, in favour of regarding instalments of customs duty which have already been paid as recovered entitlements of the Communities, which, within the deadline laid down in the second subparagraph of Article 10(1) of the own resources regulation, are to be made available to the Commission, since with the recovery or – as the Belgian Government refers to it – ‘placement on deposit’ of the instalments paid into a bank account of the customs authorities guarantees in any case that, if the obligation for payment by the person liable for the customs debt remains unchanged, the instalments which have already been made are at the disposal of the Belgian authorities. Therefore, there is no risk in that regard that the Member State will have to pay, out of its own funds, the own resources which have been paid in instalments and made available to the Communities.

49. Second, the interpretation that payments made by instalment, such as those at issue in the present case, are to be regarded as recovered entitlements for the purposes of the second subparagraph of Article 10(1) of the own resources regulation, is also a valid one, in my opinion, in the light of the view of ensuring that Community own resources are made available efficiently and speedily, which is the purpose of the own resources regulation. ( )

50. Consequently, it must be found that, by not entering the instalments paid by the person liable for payment of the duty at the latest on the 19th day of the second month following the month during which the instalment was paid and recovered, the Kingdom of Belgium has failed to fulfil its obligations under the own resources regulation, in particular Article 10(1) thereof.

51. Under Article 11 of the own resources regulation, interest is to be paid in respect of any delay in making the entry of payments. According to settled case-law, that interest is payable in respect of any delay, regardless of the reason for the delay in making the entry in the Community’s account. ( )

52. Since the various instalments made by the person liable for payment of the duty in the framework of the transaction agreement were entered late – as illustrated by the facts laid out above – interest for late payment became due and it is undisputed that that interest has not yet been paid.

53. Consequently, the Commission’s action is also founded on that point.

V – Costs

54. 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. Under Article 69(3), the Court may order that the costs be shared or that the parties bear their own costs if the parties are successful on some heads and unsuccessful on others, or where the circumstances are exceptional.

55. Since the Commission’s complaint in relation to a transfer of the payment by instalments in question to the A accounts is unfounded, I propose that the Kingdom of Belgium, which, as for the rest, was unsuccessful with its submissions, be ordered to pay two thirds of the costs. The Commission shall thus bear the remaining third.

VI – Conclusion

56. In the light of the above, I propose that the Court should declare that:

(1) by making late payments of the own resources where debtors pay in stages, as a result of which interest for late payment has become due, the Kingdom of Belgium has failed to fulfil its obligations under Articles 10 and 11 of 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 which, with effect from 31 May 2000, repealed and replaced 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, which was identical in subject-matter;

(2) the remainder of the action is dismissed;

(3) the Kingdom of Belgium is to pay two thirds of the costs of the proceedings. The Commission of the European Communities is to pay the remaining third.