Opinion of Mr Advocate General Mischo delivered on 20 June 1991. - Hauptzollamt Karlsruhe v Gebrüder Hepp GmbH & Co. KG. - Reference for a preliminary ruling: Bundesfinanzhof - Germany. - Customs value - Buying commission. - Case C-299/90.



European Court reports 1991 Page I-04301



Opinion of the Advocate-General

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Mr President,

Members of the Court,

1. Article 3(1) of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (Official Journal 1980 L 134, p. 1, hereinafter referred to as "the basic 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 ... "

2. Article 8(1)(a)(i) states that in determining the customs value under Article 3 there shall be added to the price actually paid or payable for the imported goods commission and brokerage, except buying commissions to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the goods.

3. The term "buying commission" is defined in Article 8(4) as "fees paid by an importer to his agent for the service of representing him in the purchase of the goods being valued".

4. In the context of the main proceedings those definitions have to be applied to the following facts. Between 1983 and 1986 the company Hepp, the plaintiff in the main proceedings, imported goods from the Far East through a Swiss company, Novimex, with which Hepp had concluded in 1982 an agreement under which the latter bought the goods in its own name but on behalf of Hepp. Novimex then delivered the goods to Hepp against payment of a buying commission of 6 or 7% and reimbursement of its expenses. For each transaction Novimex invoiced the prices of its transaction with the manufacturer and invoiced the commission separately.

5. In its customs declarations Hepp entered the name of Novimex under the heading "seller" and presented the invoices issued to it by Novimex without mentioning the commissions agreed. On the basis of those declarations the Hauptzollamt Karlsruhe, the defendant in the main proceedings, originally determined the customs value of the goods pursuant to the aforementioned Article 3. However, after investigation, it adopted the decision to include the commissions in the customs value and to levy additional customs duties. That decision is at the origin of the main proceedings.

The first question

6. The Bundesfinanzhof, before which the case came, first asks the Court the following question:

"In the event that a buying agent, acting in his own name but on behalf of another is involved, which contract must be regarded as the 'sale' within the meaning of Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes?"

7. The Bundesfinanzhof, the German Government, the Commission and the parties to the main proceedings agree that the term "sale" within the meaning of Article 3 of the basic regulation must not be interpreted on the basis of the various systems of private law applicable but, on the contrary, must be given a uniform meaning on account of the requirement that Community law should be interpreted uniformly. In their view, account must be taken of the requirements of international commercial practice.

8. Opinions diverge, however, on the question between which contractual parties a sale took place for the purposes of Article 3.

9. In the view of the German Government, the agent must be regarded as having bought from the manufacturer in his own name and thus become a party to the contract of sale made by the latter. It is irrelevant in that respect that he did not intend to act on his own behalf but for another, namely the plaintiff in the main proceedings. That amounted to a first sale within the meaning of Article 3 of the basic regulation.

10. On the other hand, the agent is also a party to an agency/service agreement which must be regarded as a "sale" for the purposes of the aforementioned provision because, upon the broad interpretation of that term which is required, that contract has the essential characteristics of a sale, namely the transfer of property in goods to a person in consideration of the payment of a sum of money; it also envisages the delivery of those goods in the territory of the Community.

11. In the present case there were thus two successive transactions satisfying the conditions of Article 3 and there was in consequence a payment of commission by the importer, in his capacity as buyer, to the seller. We are thus confronted with the same situation as that in Unifert(1) in which the Court stated that such a commission must be included in the customs value.

12. I do not propose to accept that argument, for the following reasons.

13. Although Regulation No 1224/80 does not define the term "sale", it does define the term "buying commissions". That term

"means fees paid by an importer to his agent for the service of representing him in the purchase of the goods being valued".

14. The German phrase "dass er fuer ihn taetig wird" (literally: "for acting for him") appears to me to be weaker than that used in the other eight language versions, namely "representing him", "le représenter", "rappresentarlo", and so forth which correspond more to the German "dass er ihn vertritt". I think that where only one language version uses a somewhat different term, regard should be had to the term in all the other versions, in this case "representation".

15. Since thus the agent represents the importer for the purpose of buying the goods, the sale is assumed to have taken place between the manufacturer (or supplier) and the importer.

16. That is also the reasoning to be found in Explanatory Note 2.1 drafted by the Technical Committee on Customs Valuation,(2) which I think should carry a lot of weight. The Technical Committee was set up by Article 18 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade, signed at Geneva on 12 April 1979 and approved by the Decision of the Council of the European Communities of 10 December 1979 concerning the conclusion of the Multilateral Agreements resulting from the 1973 to 1979 trade negotiations (Official Journal 1980 L 71, p. 1). The Technical Committee on Customs Valuation is placed under the auspices of the Customs Cooperation Council and includes representatives of all the countries which are parties to the abovementioned Geneva Agreement. Pursuant to Annex II to that agreement the Technical Committee was established "with a view, at the technical level, towards uniformity in interpretation and application" of the agreement. Its opinions, which may take various forms including explanatory notes, are adopted by a majority of at least two thirds of the members present. Even if the opinions are only of an advisory nature, nevertheless they represent the opinion of the experts of the majority of countries engaged in world trade. If the Community were to adopt an interpretation contrary to such an opinion, it would risk creating quite considerable problems and the Community should do so only for very serious reasons.

17. Annex I to the Geneva Agreement contains an interpretation note on Article 8 of that agreement which gives an identical definition of buying commissions to that in Article 8(4) of Regulation No 1224/80.

18. Let us now see what Explanatory Note 2.1 of the Technical Committee says. First of all, it gives a general definition according to which

"commissions and brokerage are payments made to intermediaries for their participation in the conclusion of a contract of sale" (point 2).

It subsequently states

"[t]he agent (also referred to as an 'intermediary' ) is a person who buys or sells goods, possibly in his own name, but always for the account of a principal. He participates in the conclusion of a contract of sale, representing either the seller or the buyer."

19. After stating that the agent' s remuneration takes the form of a commission, generally expressed as a percentage of the price of the goods, the note then draws a distinction between selling agents and buying agents. It declares in relation to the latter, that

"[a] selling agent is a person who acts for the account of a seller; he seeks customers and collects orders, and in some cases he may arrange for storage and delivery of the goods" (point 7).

"The buying agent' s remuneration which is usually termed 'buying commission' is paid by the importer, apart from the payment for the goods" (point 10).

"In this case, under the terms of paragraph 1(a)(i) of Article 8, the commission paid by the buyer of the imported goods must not be added to the price actually paid or payable" (point 11).

In conclusion the Committee states:

"when determining the transaction value of imported goods it would be necessary to include in that value commissions and brokerage incurred by the buyer, except buying commissions. Accordingly, the question of whether or not payments made to intermediaries by the buyer and not included in the price actually paid or payable should be added to that price will depend, in the final analysis, on the role played by the intermediary and not on the term (' agent' or 'broker' ) by which he is known" (point 15).

20. That explanatory note defines the applicable rules perfectly and I see no reason why Community law should require the Court to come to different conclusions. In the present case, the applicable provisions of Community law, namely Council Regulation No 1224/80 and the implementing Commission regulations, are expressly intended to meet the obligation of the Community "to ensure ... that its rules concerning customs valuation conform with the provisions of the Agreement" on implementation of Article VII of GATT (see the fifth recital in the preamble to Regulation No 1224/80).

21. The note confirms first of all what Mr Advocate General Tesauro had already stated at point 10 of his Opinion in the Unifert case ([1990] ECR I-2287), namely that it is necessary above all to establish what was the real function of the agent. If he acted solely on behalf of the buyer he participated in the conclusion of the contract of sale by representing the buyer and the contract is concluded in substance between the manufacturer/supplier and importer/buyer.

22. It follows also from the technical note that that is so even if the agent buys in his own name.

23. For the purposes of applying Article 3 of the basic regulation it is therefore not possible to make a distinction between representation in the strict sense, which is open representation, and indirect or "undisclosed"(3) representation which is the subject of the main proceedings. Both kinds of such legal relations are essentially similar from the point of view of their economic characteristics and the second seems quite frequent in international trade, the smooth conduct of which must be facilitated by the provisions requiring interpretation. The preamble to the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade states that the "customs value should be based on simple and equitable criteria consistent with commercial practice".

24. The sixth recital to the basic regulation states that its objective is "to foster world trade by introducing a fair, uniform and neutral system of customs valuation excluding the use of arbitrary or fictitious customs values" and "the customs value must be determined in accordance with criteria which are compatible with trade practice".

25. It is clear that such an objective cannot be achieved if a purely formal distinction is drawn between two kinds of legal status, namely that of the "disclosed" representative and the "undisclosed" representative, which are basically similar from the economic point of view. The position of those two kinds of representatives is fundamentally different from that of a buyer in that they assume none of the transaction risks.

26. It follows from all the foregoing that, as the Commission - supported at the hearing by Hepp - argues, neither the transaction between Novimex and Hepp nor that between Novimex and the manufacturer must be regarded as sales for the purposes of Article 3 of the basic regulation. On the contrary, for the purposes of applying that provision, the relevant transaction is that which took place, through the mediation of Novimex, between Hepp and the manufacturer.

27. The German Government, however, contends that there is no contractual relationship between Hepp and the manufacturer. Strictly speaking, that is undeniable. However, the German Government itself emphasizes the need to avoid excessive formalism and to adopt a broad interpretation of the term "transaction value". From that point of view, it seems to me that there is no other course than to accept that for the purposes of the basic regulation the transaction took place between Hepp and the manufacturer and that Novimex was only an intermediary.

28. That approach is perfectly consistent with one of the marked tendencies of the case-law of the Court which always seeks to ascertain the economic reality behind the sometimes purely formal legal characterizations.(4)

29. I therefore propose that the first question should be answered as follows:

"Where it is established that the agent who acted in his own name in fact represented the importer and acted on his behalf, there is only one sale, namely that between the manufacturer/supplier and the importer of the goods, for the purposes of Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes."

Second question

30. The second question is worded as follows:

"If the answer to Question 1 is that both the contract between manufacturer and agent and the contract between agent and importer meet the criteria of Article 3 of Regulation No 1224/80, and the importer has specified the price in his contract with the agent as the basis for determining the value of goods for customs purposes, must the buying commission be added to the price paid?"

31. In view of the answer I have proposed to the first question, the second question does not call for an answer. However, if the Court were to consider, as the German Government does, that there are here two contracts of sale within the meaning of Article 3 of the basic regulation, it would be necessary to apply the decision in Unifert, which concerns an identical case, namely that of two successive sales of the same goods. It would follow that the importer has a choice between the sale by the manufacturer to the agent or that between himself and the agent but once he made that choice he would be bound by it (see paragraph 21 of the Unifert judgment).

32. The German Government considers that in the present case the importer made the second choice and that he must bear the consequences, namely that the relevant price is that which his agent invoiced to him, the commission being included because according to the aforementioned judgment a payment made by the buyer to the seller, separately invoiced and described as a "buying commission" is part of the price actually paid or payable for the imported goods within the meaning of Article 3(1) of Regulation No 1224/80. Like the Bundesfinanzhof I consider that that conclusion follows inevitably from the Unifert judgment but only if there were in fact two successive sales, that is to say if Novimex was a buyer and not a buying agent.

33. The Commission proposes a different solution. It accepts that the importer in the present case opted for the second transaction but considers that it does not necessarily follow that the buying commission must be included in the price. The Unifert judgment must be applied taking into account the special role played by Novimex and excluding the amount of its commission for it is quite clear that it is a buying commission within the meaning of Article 8(4) of the basic regulation and such commissions are excluded from the customs value under Article 8(1).

34. I cannot accept that reasoning for it seems to me to contain a contradiction. Either we have two successive sales and Novimex is then a "normal" seller in the second transaction; according to Unifert, the amount which it receives in that case must be included in the customs value. Or Novimex is only an agent and there is not a series of sales. On the other hand, it seems to me to be contradictory to regard first of all Novimex as a "normal" buyer/seller intervening in two sales and then to treat it as an agent in order to exclude an amount which should not even be a commission since it was a "normal" seller.

Third question

35. The third question reads as follows:

"If the answer to Question 1 is that only one sale, namely that between manufacturer and importer, has occurred, must the buying commission be included in the customs value when the importer, under the heading "Verkaeufer" [Seller"] in the customs value declaration, has given the agent and his invoice price (without the commission)?"

36. The assumption underlying that question is the answer which I have proposed to the first question. It accordingly calls for an answer. I fully share the Commission' s view that the way in which the importer filled in the declaration on the customs value should not affect the answer to the question.

37. It is clear that if there is only one relevant transaction from the point of view of Article 3 of the basic regulation the importer cannot have any choice. The fact that he gave the agent' s name under the heading "seller" of his declaration on customs value cannot alter the legal position under the provisions of the basic regulation. The same is true of the fact that he annexed to the declaration the invoice sent to him by the agent rather than that sent by the manufacturer to the agent. They are two problems concerning the proper fulfilment of the formalities which are not capable of affecting the substance of the legal position, which is that only one transaction exists for the purposes of Article 3 and that the importer has no choice in this regard.

38. The Commission also rightly observes that the standard form of declaration of customs value, as set out in Annex I to Regulation No 1496/80,(5) contains only a box for "seller" and therefore does not allow the person making the declaration to explain the specific situation of the agent who, although he dispatched the goods, played only the part of intermediary. In the Commission' s view, such an administrative practice ought not to be held against the person making the declaration.

39. Accordingly, if the Bundesfinanzhof is persuaded that Novimex was not a buyer but an agent who represented Hepp "in the purchase of the goods being valued", then the amounts which were paid to Novimex constitute a buying commission within the meaning of Article 8(4) of the basic regulation and cannot be included in the customs value by virtue of Article 8(1), confirmed by Article 3 of Regulation No 1495/80,(6) which excludes from the customs value buying commissions which are separate from the price actually paid or payable.

40. Contrary to the opinion of the German Government but in accordance with the view of the Commission, I consider that in its Conclusion No 14 the Community Committee on Customs Valuation(7) examined a factual situation identical to that of the main proceedings. It concluded that "where the price paid to the manufacturer/supplier is the basis for the transaction value under Article 3 of Regulation (EEC) No 1224/80" - which, according to the wording of the questions from the Bundesfinanzhof, is the case in the main proceedings - "the declarant, pursuant to Article 4 of Regulation (EEC) No 1496/80, is normally required to present the customs authorities with the invoice issued by the manufacture/supplier. However in the light of the abovementioned facts, the customs authorities may accept the invoice (net of buying commission) issued by agent X, subject to the possibility of checks."

41. In view of the foregoing, and like the Commission, I propose that the following answer should be given to the third question:

"Even where the importer has put the agent' s name in the box headed "seller" in the customs value declaration and has also declared the price invoiced by the agent (without commission), the buying commission should not be included in the customs value."

Fourth question

42. The fourth question is worded as follows:

"If the answer to Question 1 is that, although the contract between manufacturer and agent is a sale, the contract between agent and importer is not, how is the customs value to be determined under Community law when the importer has stated the customs value in the manner described in Question 3?"

43. In view of the reply which I have proposed should be given to the first question, the fourth question does not call for an answer. It is therefore only in the alternative that I make the following observations.

44. Assuming that the relevant transaction from the point of view of Article 3 of the basic regulation is that between the manufacturer and the agent, the price at which it took place must obviously be the basis of the customs value.

45. In those circumstances, amounts paid to the agent may not in any event be regarded as anything other than buying commissions within the meaning of Article 8(1)(a) and (4) of the basic regulation.

46. For the reasons which I have set forth in my observations in relation to the third question, the fact that the importer has filled in his declaration in the manner described above cannot lead to any different conclusion.

Conclusion

47. In view of all the foregoing, I propose that the questions submitted by the Bundesfinanzhof should be answered as follows:

"(1) Where it is established that the agent, who acted in his own name, in fact represented the importer and acted on his behalf, there is only one sale, namely that between the manufacturer/supplier and the importer of the goods, for the purposes of Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes.

(2) Even where the importer has entered the agent' s name in the box headed 'seller' in the customs value declaration and has also declared the price invoiced by the agent (without commission), the buying commission is not to be included in the customs value."

(*) Original language: French.

(1) Case C-11/89 Unifert Handels GmbH v Hauptzollamt Muenster [1990]

ECR I-2275.

(2) See Annex II to the Commission' s observations: Explanatory Note 2.1 "Commissions and brokerage under Article 8 of the Agreement".

(3) According to the terminology used by Hepp in its observations.

(4) See, for example, the case-law of the Court of Justice on taxes having an effect equivalent to customs duties or on discriminatory internal taxation in which the Court has always used as the decisive criterion the effect of the tax on trade between Member States whatever its formal description, its method of levy or the legal status of the body for which it is levied.

(5) Commission Regulation (EEC) No 1496/80 of 11 June 1980 on the declaration of particulars relating to customs value and on documents to be furnished (OJ 1980 L 154, p. 16).

(6) Commission Regulation (EEC) No 1495/80 of 11 June 1980 implementing certain provisions of Articles 1, 3 and 8 of Council Regulation (EEC) No 1224/80 on the valuation of goods for customs purposes (OJ 1980 L 154, p. 14).

(7) Conclusion No 14, Customs Valuation, of the Commission of the European Communities, 1989, p. 364.

Translation