OPINION OF ADVOCATE GENERAL

LÉGER

delivered on 20 October 2005 1( )

Joined Cases C‑23/04 to C‑25/04

Sfakianakis AEVE

v

Elliniko Dimosio

(Reference for a preliminary ruling from the Diikitiko Protodikio Athinon (Greece))

(EEC-Hungary Association Agreement – Obligation of mutual assistance between customs authorities – Imports of goods under preferential customs arrangements – Subsequent verification of origin of goods calling into question Hungarian origin – Action against findings of the subsequent verification – Customs duties recovered by customs authorities of State of import – Findings of subsequent verification annulled by courts of State of export – Customs authorities of State of import required to take account of decisions of the courts of the State of export)

1. This reference for a preliminary ruling concerns the interpretation of the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, signed on 16 December 1991. ( )

2. It arises from Sfakianakis AEVE’s ( ) challenging of decisions taken by the Athens customs office requiring it to pay customs duties on vehicles imported into Greece from Hungary. The Hungarian customs authorities had found, following a subsequent verification, that the vehicles’ certificates of Hungarian origin were inaccurate. Those findings were challenged and annulled in the Hungarian court of competent jurisdiction. In execution of the decisions of that court, the Hungarian origin of the vehicles in question was finally confirmed.

3. The main question referred to the Court by the Diikitiko Protodikio Athinon (Administrative Court of First Instance, Athens) is whether the Association Agreement, in particular its rules on administrative cooperation, requires the customs authorities of the State of import to take account of decisions given by a court of the State of export confirming the validity of the certificates under cover of which the disputed goods were imported.

I – Legal context

A – The Association Agreement and Protocol 4

4. The objectives of the Association Agreement, set out in Article 1, include the gradual establishment of a free trade area between the Community and Hungary. This was intended to contribute to the integration of the Republic of Hungary into the European Community, which was realised on 1 May 2004.

5. The Association Agreement provides, at Article 9, for the immediate or progressive abolition of all customs duties on imports into the European Community of products originating in Hungary.

6. The concept of ‘originating products’ is defined and the arrangements for administrative cooperation set out in Protocol 4 ( ) to the Association Agreement. That protocol was amended by Decision No 1/95, ( ) which entered into force on 1 October 1995, and subsequently by Decision No 3/96, ( ) which entered into force on 1 July 1997. Since the relevant articles of Protocol 4 as amended by Decision No 3/96 ( ) are essentially the same as the corresponding articles in the original 1993 version and in the version amended by Decision No 1/95, it is not necessary to identify precisely which version of each article is applicable to the various stages of the dispute in the main proceedings. The national court simply refers to the version of the relevant article in Protocol 4 and I shall do likewise.

7. According to Article 16(1)(a) of Protocol 4, imports into the Community of products originating in Hungary and imports into Hungary of products from the different Member States of the Community qualify for the preferential terms of the Association Agreement upon submission of a movement certificate EUR.1. ( )Article 17(1) and (5) of Protocol 4 provide that the EUR.1 certificate is to be issued by the customs authorities of the exporting country, which must take any steps necessary to verify the origin of the product. They may for that purpose call for any evidence and carry out any inspection of the exporter’s accounts or any other check considered appropriate. ( )

8. The provisions of Protocol 4 in relation to arrangements for administrative cooperation are contained in particular in Articles 31 to 33, which are the subject of the present reference for a preliminary ruling. They are worded as follows:

‘Article 31

Mutual assistance

…

2. In order to ensure the proper application of this Protocol, the Community and Hungary shall assist each other, through the competent customs administrations, in checking the authenticity of the movement certificates EUR.1 or the invoice declarations and the correctness of the information given in these documents.

Article 32

Verification of proofs of origin

1. Subsequent verifications of proofs of origin shall be carried out at random or whenever the customs authorities of the importing country have reasonable doubts as to the authenticity of such documents, the originating status of the products concerned or the fulfilment of the other requirements of this Protocol.

2. For the purposes of implementing the provisions of paragraph 1, the customs authorities of the importing country shall return the movement certificate EUR.1 and the invoice, if it has been submitted, the invoice declaration, or a copy of these documents, to the customs authorities of the exporting country giving, where appropriate, the reasons for the enquiry. Any documents and information obtained suggesting that the information given on the proof of origin is incorrect shall be forwarded in support of the request for verification.

3. The verification shall be carried out by the customs authorities of the exporting country. For this purpose, they shall have the right to call for any evidence and to carry out any inspection of the exporter’s accounts or any other check considered appropriate.

4. If the customs authorities of the importing country decide to suspend the granting of preferential treatment to the products concerned while awaiting the results of the verification, release of the products shall be offered to the importer subject to any precautionary measures judged necessary.

5. The customs authorities requesting the verification shall be informed of the results of this verification as soon as possible. These results must indicate clearly whether the documents are authentic and whether the products concerned can be considered as products originating in the Community [or] Hungary … and fulfil the other requirements of this Protocol.

6. If in cases of reasonable doubt there is no reply within 10 months of the date of the verification request or if the reply does not contain sufficient information to determine the authenticity of the document in question or the real origin of the products, the requesting customs authorities shall, except in exceptional circumstances, refuse entitlement to the preferences.

Article 33

Dispute settlement

Where disputes arise in relation to the verification procedures of Article 32 which cannot be settled between the customs authorities requesting a verification and the customs authorities responsible for carrying out this verification or where they raise a question as to the interpretation of this Protocol, they shall be submitted to the Association Committee.

In all cases the settlement of disputes between the importer and the customs authorities of the importing country shall be under the legislation of the said country.’ ( )

B – The Community Customs Code

9. The national court also refers to Council Regulation (EEC) No 2913/92 ( ) containing the rules and procedures which ensure the implementation of the tariff measures introduced at Community level in connection with trade in goods between the Community and third countries. ( )

10. Article 220(1) of the CCC provides that where the amount of duty resulting from a customs debt has been entered in the accounts at a level lower than the amount legally owed, the amount of duty to be recovered or which remains to be recovered is, as a rule, to be entered by the customs authorities in the accounting records or on any other equivalent medium ( ) within two days of the date on which the customs authorities become aware of the situation and are in a position to calculate the amount legally owed and to determine the debtor.

11. Article 220(2) of the CCC, however, creates an exception in relation to this subsequent entry in the accounts, and the referring court seeks an interpretation of that provision also. It provides:

‘Except in the cases referred to in the second and third subparagraphs of Article 217(1), subsequent entry in the accounts shall not occur where:

…

(b) the amount of duty legally owed failed to be entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been detected by the person liable for payment, the latter for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration;

…’

II – Facts and procedure in the main proceedings

12. During the years 1996 to 1998, at the request of the European Commission’s Anti-Fraud Coordination Unit (UCLAF), the Hungarian customs authorities conducted a subsequent verification of the origin of Suzuki vehicles manufactured in Hungary and imported into the European Union between 1995 and 1997 under cover of EUR.1 certificates.

13. As a result of that investigation, the vehicles imported into Greece by the Sfakianakis company were classified into three groups: those confirmed as being of Hungarian origin for the purposes of Protocol 4, those declared to be of foreign origin with the manufacturer’s assent, and those the origin of which has given rise to legal proceedings between the exporter and the Hungarian customs authorities.

14. By letter of 3 November 1998, the director of the Hungarian verification body notified these findings to the competent Greek customs authorities. In relation to the third group of vehicles, he requested the Greek authorities to defer ex post recovery of the customs duties pending the outcome of the legal proceedings.

15. The competent Greek customs authorities also received a list from UCLAF of vehicles imported into Greece from Hungary which were believed to have wrongly benefited from the preferential arrangements. That list included the vehicles the origin of which was at issue before the Hungarian courts.

16. On the basis of that list, the Greek customs authorities adopted decisions requiring Sfakianakis to pay import duties, taxes and penalties.

17. The Hungarian court quashed the findings of the subsequent verification carried out by the Hungarian customs authorities and ordered them to repeat the verification procedure in the light of the court’s rulings. ( )

18. By letter of 26 July 1999 the competent Hungarian authorities notified the Director‑General of the Greek customs authorities of those rulings and forwarded to it the list of the vehicles of foreign origin as well and that of the vehicles now confirmed as being of Hungarian origin. The Greek customs authorities did not revoke their decisions requiring Sfakianakis to pay import duties on the vehicles confirmed as being of Hungarian origin.

III – The questions referred for a preliminary ruling

19. The Diikitiko Protodikio Athinon, hearing the action brought by Sfakianakis against those decisions, decided to stay the proceedings and seek a preliminary ruling on the following questions:

‘1. Does the obligation of mutual assistance imposed on the customs authorities of the Member State of import by Article 31(2) of the Protocol … require them to take into account decisions of the Hungarian courts concerning the validity of the investigations carried out by the authorities of the State of export into the correctness of the EUR.1 export certificate in the light of the fact that:

(a) the Hungarian authorities duly informed the customs authorities of the State of import concerning the results of the initial investigation which established the inaccuracy of certain export certificates, stressing none the less that the validity of the investigation was the subject-matter of proceedings pending before the Hungarian courts and

(b) the Hungarian authorities officially communicated to the customs authorities of the State of import the outcome of those proceedings, that is to say, the decisions of the abovementioned courts, whereby it was found that ultimately a number of the EUR.1 certificates were accurate?

2. Is Article 32 of the Protocol … to be construed as meaning that the customs authorities of the Member State of import are required to take into account the decisions of the courts of the State of export overturning the outcome of investigations ordered and carried out by the Hungarian authorities after the export operation, regard being had to the fact that:

(a) the authorities of the State of import were duly informed both of the fact that proceedings were pending before the Hungarian courts and of the outcome of the relevant procedures and

(b) those authorities never asked for any investigation to be carried out?

3. If the answer to one of the above questions is affirmative, are the abovementioned provisions of Community law to be construed as not permitting the adoption of administrative acts imposing additional duties, taxes and penalties by the national authorities of the State of import after notification by the Hungarian authorities of the outcome of the investigation conducted by them but before publication of the court decisions overturning the results of the investigation, in order to ensure the effectiveness of the prohibition on the imposition of duties under the Association Agreement, in the light also of the fact that ultimately the EUR.1 certificates issued were correct?

4. In that connection are the above questions affected by the fact that neither the Greek nor the Hungarian authorities sought convocation of the Association Committee mentioned in Article 33 of the Protocol … for it to rule on the matter, which tends to demonstrate that neither of the two authorities considered that the decisions of the Hungarian courts was a matter of dispute between them which ought to have been brought before that committee for a decision?

5. In the alternative, if the answer to the foregoing questions is in the negative, that is to say, if the Greek customs authorities did not infringe the abovementioned provisions of Community law by the imposition of additional duty, VAT and a penalty, is it then possible to take the view that the ex post determination of duties as against the importer is not permitted under Article 220(2) of the Community Customs Code on the ground of error by the customs authorities of the State of import or export, regard being had in particular to the fact that the customs authorities of the State of export had available to them all the factual elements in connection with the origin of the vehicles for export on the basis of which the EUR.1 certificate ought not to have been issued, with the result that the authorities of the State of import would from the beginning have been in a position to ascertain the duty lawfully payable?’

IV – Analysis

A – The first two questions

20. The first two questions being closely linked, I propose that the Court should examine them together.

21. By these questions, the referring court asks, in substance, whether the Association Agreement and Protocol 4, in particular the latter’s provisions on the obligation of mutual assistance in Article 31(2) and on verification of proofs of origin in Article 32, are to be interpreted as meaning that the customs authorities of the State of import are bound to take heed of judicial decisions handed down in the State of export in actions challenging the findings of investigations into the validity of movement certificates conducted by the customs authorities of the State of export, if they have been notified of those proceedings and of the content of those decisions. The national court also asks the Court whether the fact that the verification of the validity of the movement certificates was not carried out at the request of the customs authorities of the State of import has any bearing on the answer to be given to that question.

22. The national court thus wishes to know whether the customs authorities of the State of import have to abide by the initial results of the subsequent verification of the validity of the movement certificates performed by the customs authorities of the State of export or whether they must also take into account judicial decisions given in the State of export in actions brought to challenge the findings of those investigations.

23. The Greek Government proposes that the answer should be that the Association Agreement and the aforementioned provisions of Protocol 4 do not require the customs authorities of the State of import to take into account decisions given by the competent national court of the State of export concerning the validity of a subsequent verification of the accuracy of the EUR.1 certificates.

24. In support of this opinion, the Greek Government points out that determining the origin of the goods is a matter for the customs authorities of the State of export and that the applicable Community rules do not require the customs authorities of the State of import to review the accuracy of that verification. It submits that a declaration by the customs authorities of the State of export that the EUR.1 certificates are incorrect is sufficient to justify the ex post recovery of customs duties.

25. It argues that, in so far as it is the customs authorities rather than the judicial authorities of the State of export that are responsible for subsequent verification of certificates establishing the origin of products and as Article 32(5) of Protocol 4 provides that such verification must be carried out as soon as possible, it was quite proper for the Hungarian customs authorities to cancel the disputed EUR.1 certificates. The Greek Government maintains that nothing in the applicable Community legislation, specifically Articles 31 and 32 of Protocol 4, requires the competent customs authorities of the State of import to await the outcome of the judicial process.

26. It adds that, if the assessments made by the customs authorities of the State of export are overturned by a court, the competent authorities of the State of import have no way of knowing whether the proceedings were conducted in accordance with natural justice and due process, or whether the court’s decision was based on examination of the legal and factual merits of the contested act or on a procedural ground, such as failure by the defendant customs authorities to appear in court.

27. I do not agree with the Greek Government’s position. Like Sfakianakis, the Hungarian Government, and the Commission, I take the view that the Association Agreement and the provisions of Protocol 4 relating to mutual assistance and verification of proof of origin of goods require the customs authorities of the State of import to take into account judicial decisions given in the State of export in an action challenging the findings of an investigation into the validity of EUR.1 certificates. Account must be taken of such decisions, the Hungarian Government and the Commission argue, in light of the objective of the Association Agreement and the system of administrative cooperation set up by Protocol 4. I also believe, like Sfakianakis, that this view is dictated by the need to uphold the fundamental right to an effective remedy before a court or tribunal.

28. In the first place, as we have seen, it is an object of the Association Agreement that goods meeting the conditions for being considered to have originated in Hungary or in a Member State of the European Community may be imported into the Community or into Hungary on the preferential terms set out in that agreement. To that end, Articles 16 and 17 of Protocol 4 provide that proof of the origin of products, which is the basis for that preferential treatment, is constituted by an EUR.1 certificate, which is issued, in accordance with Article 17(4), by the customs authorities of the State of export.

29. While according to Article 17(4) and (5), this certification of the origin of products by the customs authorities of the State of export is based as a rule on checks carried out at the time of issue of the EUR.1 certificate, it also entails subsequent verification. As set out in Protocol 4 by Article 32(3), subsequent verification is also carried out by the customs authorities of the exporting country who have the right, for this purpose, to call for any evidence and to carry out any checks considered appropriate.

30. It is therefore for the customs authorities of the State of export to verify the origin of the goods in question and to ensure that they meet the conditions for preferential treatment under the Association Agreement on being imported into a Member State of the Community or into Hungary.

31. As all of the interveners have pointed out, the system of administrative cooperation contemplated by Articles 31 to 33 of Protocol 4 is thus founded both on a division of responsibilities and on mutual trust between the customs services of the Member State concerned and those of the Republic of Hungary. As the Court has held in cases concerning other free trade agreements and protocols, similar to Protocol 4, which define the concept of ‘originating products’ and prescribe methods of administrative cooperation, such a system is justified by the fact that the authorities of the exporting country are in the best position to verify directly the facts which determine the origin of the product concerned. ( ) It has the further advantage of producing certain and uniform results regarding the identification of the origin of goods and of thereby avoiding deflections of trade and distortions of competition in trade. ( )

32. Such a system can therefore function only if the customs authorities of the importing country accept the determinations legally made by the authorities of the exporting country. ( ) As the Court held in Les Rapides Savoyards and Others, in the context of international free trade agreements entered into between the Community and a non-member State on the basis of reciprocal obligations, recognition by the customs authorities of the Member States of decisions legally made by the authorities of that non-member State is also necessary in order that the Community can, in turn, demand that the customs authorities of that State accept the decisions taken by the customs authorities of the Member States concerning the origin of products exported from the Community to the State in question. ( )

33. It follows that, under the Association Agreement, the customs authorities of the State of import cannot refuse preferential treatment to goods imported under cover of an EUR.1 certificate properly issued by the customs authorities of the State of export. If the customs authorities of the State of import have reasonable doubts as to the true origin of the goods in question, the only course open to them is to ask the customs authorities of the State of export to carry out a subsequent verification of that origin.

34. The logic of the system of cooperation and division of responsibilities contemplated by that agreement entails that those authorities are also bound by the findings of that subsequent verification, where the customs authorities of the State of export have been able to determine the origin of the goods in question. It is only in the particular case where the customs authorities of the State of export are not in a position duly to carry out the subsequent verification that, according to the Court, the customs authorities of the State of import may themselves undertake the verification of the authenticity and accuracy of the EUR.1 certificate in question by taking account of other evidence as to the origin of the goods. ( )

35. The objective of the Association Agreement and the system of administrative cooperation provided for in Protocol 4 therefore entail the requirement that the customs authorities of the State of import shall take cognisance of the results of the final verification of the origin of the products carried out by the customs authorities of the State of export. That objective dictates that all goods that meet the requirements as to origin, and those goods alone, should qualify for preferential treatment on import.

36. It follows that, when the initial results of the subsequent verification are the object of legal proceedings brought by the exporter and the customs authorities of the State of import are notified of that action and its outcome, they are bound to take cognisance of that outcome.

37. The provisions of Article 32(5) of Protocol 4, relied upon by the Greek Government, do not seem to me to contradict this view. That article provides, it will be recalled, that the customs authorities of the State of import that requested the subsequent verification of the origin of the goods concerned must be informed of the results of this verification as soon as possible and that those results must indicate clearly whether or not those goods fulfil the requirements laid down in order to qualify for the preferential arrangements.

38. Reference may also be made to Article 32(6) of Protocol 4 which, in the same way as the preceding paragraph, provides that if in cases of reasonable doubt as to the origin of the goods concerned there is no reply within 10 months of the date of the verification request or if the reply does not contain sufficient information, the requesting customs authorities must, except in exceptional circumstances, refuse entitlement to the preferences.

39. By those provisions, the parties to the Association Agreement intended, I believe, that in return for the power conferred on them by Protocol 4, the customs authorities of the State of export requested to perform a verification by the customs authorities of the State of import should in fact carry out that verification and forward the results to the authorities of the State of import within a reasonable time. The objective is indeed, as the Greek Government points out, to ensure that the administrative cooperation procedure, which enables the origin of goods to be established, is implemented promptly and that the fate of the goods concerned can be resolved quickly. However, the provisions in question say nothing in relation to legal challenges to decisions taken by the customs authorities of the State of export following a subsequent verification, which continue to be governed by the legislation of that State.

40. It cannot therefore be inferred from those provisions that the customs authorities of the State of import are bound by the initial conclusions of the subsequent verification where those conclusions are the object of legal proceedings and are consequently not definitive.

41. On the other hand, it can, in my view, be inferred from those same provisions and from the whole scheme of administrative cooperation contemplated by Protocol 4 that where a subsequent verification calls into question the validity of EUR.1 certificates and those findings are the object of an action in accordance with the rules of domestic law, the customs authorities of the State of export must inform the customs authorities of the State of import of those proceedings and, subsequently, of their outcome. That obligation is also dictated by the purpose of the Association Agreement, in order that goods the origin of which is finally confirmed by the authorities of the State of export do indeed receive the benefit of the preferential treatment from the customs authorities of the State of import.

42. In the light of the purpose of the Association Agreement and of the system of administrative cooperation for determining the origin of goods, the customs authorities of the State of import must therefore indeed take account of judicial decisions given in actions challenging the initial results of a subsequent verification of that origin.

43. Contrary to what the Greek Government argues, the customs authorities of the State of import cannot refuse to take cognisance of such decisions on the ground that they had no way of knowing whether the proceedings before the courts of the State of export were conducted in accordance with natural justice and due process.

44. It is to be borne in mind that the system of administrative cooperation established by Protocol 4 is founded on mutual trust between the customs authorities of the States concerned. That means that, in setting up such a system, the Member States of the European Community, as well as the European Parliament, the Council and the Commission, took the view that the administrative authorities of the non-member State party to that free trade agreement were capable of implementing the provisions of the Association Agreement. That trust must necessarily extend to the courts of the State concerned, which are responsible, in accordance with its domestic rules on the administration objective, for adjudicating on actions challenging decisions of its customs authorities. It would be paradoxical indeed to accord that trust to the administrative authorities of the non-member State but to deny it to its courts, when it is the very function of those courts to ensure that the law, and hence the Association Agreement, is observed by the national administrative authorities. ( ) As Sfakianakis observed at the hearing, the courts of the State of export are the guarantors of the conformity of the EUR.1 certificates with the Association Agreement.

45. The taking account by the customs authorities of the State of import of judicial decisions given in the exporting non-member State in actions challenging the findings of a subsequent verification of the origin of goods is therefore inseparable, in my view, from the recognition of assessments made by the customs authorities of the State of export concerning such origin and is, accordingly, inherent in the division of responsibilities established by Protocol 4.

46. In addition, the question whether such judicial decisions are taken into account cannot vary from one Member State to another, without creating uncertainty of a kind capable of undermining the existence of a common commercial policy and the performance by the Community of its obligations under the agreement in question. ( )

47. In arguing against the taking into account of such decisions, the Greek Government also observes that, when the initial results of a subsequent verification are annulled by a court, the customs authorities of the State of import have no way of knowing whether that annulment was based on examination of the legal and factual merits of the contested act or on a procedural ground, such as failure by the defendant customs authorities to appear in court.

48. I do not believe that that argument can be upheld. As I have said, the purpose of a subsequent verification is to check the accuracy of EUR.1 certificates. ( ) When the results of a verification are challenged in accordance with the rules of domestic law, the only relevant issue is whether, at the conclusion of the proceedings, the disputed certificates are annulled or confirmed. If the results of a subsequent verification calling into question the accuracy of the EUR.1 certificates are annulled in legal proceedings and the certificates accordingly affirmed, the customs authorities of the State of import must take those certificates into account, irrespective of the grounds on which the findings of the subsequent verification were annulled.

49. Secondly, the Greek Government’s argument is in any case untenable, in my view, because it is inconsistent with the right to an effective judicial remedy.

50. It is settled case-law that the right to an effective remedy before a court or a tribunal constitutes a general principle of Community law which underlies the constitutional traditions common to the Member States. ( ) It has been enshrined in Article 47 of the Charter of Fundamental Rights of the European Union, which is based on Articles 6 and 13 of the Convention for the Protection of Human Rights and Fundamental Freedoms. It is the duty of the Court to ensure observance of fundamental rights in the field of Community law. ( ) An agreement such as the Association Agreement, concluded by the Council and the Commission pursuant to Article 228 and 238 of the EC Treaty, ( ) forms an integral part of the Community legal system. ( ) The Court is therefore bound to ensure that, in the implementation of the Association Agreement, fundamental rights, such as the right to an effective judicial remedy, are observed.

51. It is not in doubt that the decision taken by the customs authorities of the State of export following their subsequent verification of the origin of the goods must be amenable to effective judicial review. That review concerns the question whether or not the goods at issue meet the requirements laid down in the Association Agreement, which is part of the Community legal system, in order for the preferential arrangements to apply. It may result in the exporter being denied the benefits of those arrangements, since the importer may be obliged to pay customs duties on the goods, with inevitable consequences for their business relations.

52. Refusal to take account of the decisions of the State of export’s courts concerning the findings of a subsequent verification would therefore have the effect, first, of denying exporters their right under Hungarian law to challenge the results of such verifications. A second possible consequence is that the Hungarian customs authorities would likewise decide that they did not have to take account of decisions of courts of the Member States in proceedings challenging verifications of origin carried out by Member States’ customs authorities. It must be stressed that, according to the principle of reciprocity which underlies the Association Agreement and Protocol 4, the taking into account by Member States of Hungarian judicial decisions is also the quid pro quo for the Hungarian customs authorities taking account of decisions given by courts of the Member States in proceedings brought by exporters to challenge the results of subsequent verifications of the Community origin of goods imported into Hungary.

53. Refusal to take account of decisions given by the Hungarian courts in actions challenging the findings of subsequent verifications would therefore be at odds not only with the objective of the Association Agreement and with the system of cooperation contemplated by Protocol 4 but also with the right to an effective judicial remedy.

54. Finally, it also follows from the scheme of Protocol 4 and from the purpose of the Association Agreement that this obligation is imposed on the customs authorities of the State of import irrespective of whether or not the subsequent verification took place at their request.

55. It is clear from Article 32(1) of Protocol 4 that subsequent verification can be carried out by the competent authorities of the State of export either on their own initiative or at the request of the authorities of the State of import. Such verification may also, as in this case, be carried out at the request of the Commission which, under Article 155 of the EC Treaty, ( ) has the task of ensuring the proper implementation of the Association Agreement and its protocols. ( )

56. Whoever it may be who requests the subsequent verification, its purpose is the same, that is to say, to check the accuracy of the EUR.1 certificates so that, in accordance with the objective of the Association Agreement, in the case of imports into the Community, goods originating in Hungary within the meaning of that agreement should receive the benefit of the preferential arrangements it establishes. In the light of that scheme and the purpose of the agreement, the customs authorities of the State of import must therefore take account of the results of the subsequent verification and, accordingly, of judicial decisions given in the State of export in relation to the results of such verification, irrespective of the authority which initiated the verification.

57. In the light of those considerations, I propose that the Court should reply that the Association Agreement and Protocol 4, in particular the latter’s provisions on mutual assistance in Article 31(2) and on verification of proofs of origin in Article 32, are to be interpreted as meaning that the customs authorities of the State of import are bound to take into account judicial decisions handed down in the State of export in actions challenging the findings of investigations into the validity of movement certificates conducted by the customs authorities of the State of export, if they have been notified of those proceedings and if the content of those decisions, irrespective of whether or not the verification of the validity of the movement certificates was carried out at the request of the customs authorities of the State of import.

B – The third question

58. By its third question, the national court asks, in substance, whether the effectiveness of the abolition of customs duties provided for by the Association Agreement precludes administrative decisions requiring the payment of customs duties, taxes and penalties, adopted by the customs authorities of the Member State of import before the outcome of proceedings challenging the findings of a subsequent verification, when the validity of the EUR.1 certificates has been confirmed as a consequence of the judicial decisions given in those proceedings.

59. Examination of this question leads me to consider, first of all, whether the Greek customs authorities, after being notified by the Hungarian customs authorities that the EUR.1 certificates concerned were inaccurate, were entitled to take the disputed decisions before the outcome of the proceedings challenging the findings of the subsequent verification or whether they ought rather to have deferred the recovery process pending the outcome of those proceedings.

60. Sfakianakis and the Hungarian Government argued at the hearing that the Greek customs authorities ought to have deferred the recovery process because, under Hungarian law, bringing an action against administrative decisions suspends the enforcement.

61. I do not agree with that argument. I do not believe that the issue whether the customs authorities of a Member State are entitled to commence recovery of customs duties upon being notified of the results of a subsequent verification casting doubt on the origin of the disputed goods can be governed by the law of the non-member State party to the free trade agreement concerned. Protocol 4 contains no provision to that effect.

62. Nor does that protocol lay down any rules respecting the course which the customs authorities of the State of import are to follow when, as here, goods imported into the Community under cover of EUR.1 certificates have been placed on the market before a subsequent verification calling into question the validity of those certificates. Article 32(4) of Protocol 4 applies only to cases where the customs authorities of the State of import have not yet released the products concerned. In the absence of any relevant provision in that protocol, it is to the CCC that we must look to discover what the customs authorities of the Member State of import must do in circumstances such as those in the case in the main proceedings.

63. In the light of the provisions of the CCC, I am of the opinion that the Greek customs authorities were not required to defer commencement of the recovery process pending the outcome of the legal challenge brought in Hungary against the findings of the subsequent verification. It is clear from examination of the relevant provisions that the CCC, while it safeguards the rights of the importer in such circumstances, also seeks to protect effectively the financial interests of the Community by requiring Member States to undertake the measures necessary to recover the customs debt which is in essence a Community resource.

64. Article 78(3) of the CCC thus provides that where a post-clearance examination indicates that the provisions governing the customs procedure concerned have been applied on the basis of incorrect or incomplete information, the customs authorities are to take the measures necessary to regularise the situation, taking account of the new information available to them. It follows then from Article 201 of the CCC that a customs debt is incurred through the release for free circulation of goods liable to import duties.

65. Similarly, once a customs debt has been incurred, Member States are required under the CCC to commence the recovery process promptly, both as regards the first stage of that process, consisting of entering the debt in the accounts, ( ) and as regards its actual recovery from the debtor. ( ) Finally, according to Article 244 of the CCC, the lodging of an appeal against decisions taken by the customs authorities of the Member States does not, subject to exceptions, cause implementation of the disputed decision to be suspended.

66. I do not believe that when a customs debt is incurred, as in this case, as a result of the invalidation of EUR.1 certificates following a subsequent verification, the fact that there is a pending action challenging that invalidation obliges the customs authorities of the Member State of import to defer commencement of the procedure described above. Since the goods at issue have already been placed on the market in the Community and the court proceedings could last several years, such deferment could seriously jeopardise recovery of the customs debt if the action should be rejected.

67. Moreover, the interests of an importer whose EUR.1 certificates are invalidated post-clearance are taken into account at both stages of the recovery procedure. Thus, under Article 220 of the CCC, the importer may be exempted from ex post payment of the debt if preferential status was applied as a result of an error on the part of the customs authorities of the State of export which could not have been detected by the person liable for payment acting in good faith and in compliance with the legislation in force. ( ) Next, if the debt has been entered in the accounts, the debtor may be granted an extension of time for payment, a deferment, or payment facilities, subject to conditions laid down in the CCC, while customs duties must of course be repaid if they should prove not to have been lawfully due.

68. Finally, with regard to the action – normally non-suspensory – that this importer is entitled to bring in the Member State of import against the decision of the customs authorities of that State requiring the payment of customs duties, Article 244 of the CCC provides that the customs authorities must suspend implementation of such decision in whole or in part where they have good reason to believe that the disputed decision is inconsistent with customs legislation or that irreparable damage is to be feared for the person concerned. A debtor so obtaining a suspension of payment of customs duties may also be relieved of the requirement to provide security where that would be likely to cause the debtor serious economic or social difficulties.

69. My view seems to be borne out also by the case-law, in relation to actions brought by importers against Commission decisions on the repayment or remission of import duties, pursuant to Article 13 of Council Regulation (EEC) No 1430/79, ( ) according to which the sole aim of Article 13 of Regulation No 1430/79 is to enable importers, when certain special conditions are satisfied and in the absence of negligence or deception, to be exempted from payment of duties due from them and not to enable them to contest the actual principle of a customs debt’s being due. ( ) In Cerealmangimi and Italgrani v Commission, the Court explained, in this regard, that the applicants ought to have referred the decision of the customs authorities of the Member State of import requesting payment of the debt to the courts of the State in question. ( ) That case-law confirms the view that initiation of the recovery procedure is not subject to the condition that it should have become unarguable that the customs debt has come into existence.

70. It follows that, in the present case, the Greek customs authorities, once notified by the Hungarian customs authorities that the subsequent verification of the EUR.1 certificates had resulted in a finding that some of them were inaccurate, were quite entitled, indeed bound, to initiate the procedure for recovery of the customs duties on the vehicles imported under cover of those certificates, even though the findings of the verification were the subject of an appeal in accordance with the rules of domestic law. ( )

71. It must now be asked what is to become of the decisions of the Greek customs authorities, at issue in the main proceedings, in relation to the vehicles whose EUR.1 certificates were ultimately confirmed in accordance with the decisions rendered by the Hungarian court.

72. The answer to this question follows directly from the answer that I have proposed should be given to the previous questions. As we have seen, the purpose of the Association Agreement is that goods meeting the requirements to be considered as having originated in Hungary should be imported into the Community under the preferential arrangements set out in that agreement. The effectiveness of the Association Agreement would thus be compromised if such goods, the Hungarian origin of which had been finally confirmed in pursuance of decisions rendered by the competent court of the State of export, were to be denied the benefit of the preferential treatment. In such a case, it is, therefore, contrary to that principle of effectiveness for the customs authorities of the State of import to carry out ex post recovery of customs duties, taxes and penalties.

73. Likewise, it would manifestly be a breach of the right to an effective judicial remedy if, after the exporter had secured a judgment annulling the findings of the subsequent verification calling into question the validity of the EUR.1 certificates, the customs authorities of the State of import were none the less to proceed to recover the customs duties from the importer on the basis of those findings.

74. It follows that, in the circumstances of the present case, the Greek customs authorities ought to annul or withdraw the contested administrative decisions in so far as they concern those vehicles the Hungarian origin of which was finally confirmed.

75. I therefore propose that the answer to be given to the third question is that the effectiveness of the abolition of customs duties provided for by the Association Agreement militates against administrative decisions requiring the payment of customs duties, taxes and penalties, taken by the customs authorities of the Member State of import before the outcome of proceedings challenging the findings of a subsequent verification, when the validity of the EUR.1 certificates has been confirmed pursuant to the judicial decisions given in those proceedings.

C – The fourth question

76. The national court asks whether the answers to the previous questions may be affected by the fact that neither the Greek customs authorities nor the Hungarian customs authorities requested the convening of the Association Committee referred to in Article 33 of Protocol 4.

77. I propose that the Court should construe this question to the effect that the national court asks whether the answers given to the previous questions can be affected by the fact that neither the Greek customs authorities nor the Hungarian customs authorities took the matter to the Association Committee following the decision given by the Hungarian courts.

78. It is my view that this question must be answered in the negative for the following reasons.

79. We have seen that the customs authorities of the State of import may not unilaterally declare invalid an EUR.1 certificate that has been properly issued by the customs authorities of the State of export. If there are reasonable doubts as to the accuracy of the certificate, their only course is to ask those authorities to carry out a subsequent verification. Likewise, they are bound by the findings of that verification if the customs authorities of the State of export have been able to determine the origin of the goods in question.

80. Under Article 33 of Protocol 4, if the customs authorities of the State of import have a disagreement with the customs authorities of the State of export in relation to the verification they must endeavour to reach an amicable settlement with them. If such a settlement cannot be reached, they must then submit their dispute to the Association Committee.

81. It follows that the fact that neither the Greek customs authorities nor the Hungarian customs authorities brought the matter before the Association Committee cannot disturb the conclusion that the Greek customs authorities must take account of the Hungarian judicial decisions and that, those decisions having confirmed the Hungarian origin of the vehicles at issue, the Greek customs authorities may not recover customs duties in relation to those vehicles.

82. I propose to reply to the national court that the answers to the previous questions are not affected by the fact that neither the Greek customs authorities nor the Hungarian customs authorities requested the convening of the Association Committee referred to in Article 33 of Protocol 4.

D – The fifth question

83. The national court’s fifth question is asked only if a negative answer should be given to the first two questions considered above. In so far as I have proposed that they should be answered in the affirmative, it is not necessary to consider this final question.

V – Conclusion

84. In the light of the foregoing considerations, I propose that the Court should answer the questions referred by the Diikitiko Protodikio Athinon in the following terms:

(1) The Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, and in particular the obligation of mutual assistance laid down in Article 31(2) of Protocol 4 concerning the definition of the concept of ‘originating products’ and methods of administrative cooperation, annexed to the Association Agreement, as amended by Decision No 3/96 of the Association Council, Association between the European Communities and their Member States, of the one part, and the Republic of Hungary, of the other part, of 28 December 1996 amending Protocol 4, as well as the provisions of Article 32 of that protocol concerning verification of proofs of origin of goods, are to be interpreted as meaning that the customs authorities of the State of export are bound to take into account judicial decisions handed down in the State of export in actions challenging the findings of investigations into the validity of movement certificates conducted by the customs authorities of the State of export, if they have been notified of those proceedings and of the content of those decisions, irrespective of whether or not the verification of the validity of the movement certificates was carried out at the request of the customs authorities of the State of import.

(2) The effectiveness of the abolition of customs duties provided for by the Association Agreement militates against administrative decisions requiring the payment of customs duties, taxes and penalties, taken by the customs authorities of the Member State of import before the outcome of proceedings challenging the findings of a subsequent verification, when the validity of the EUR.1 certificates has been confirmed pursuant to the judicial decisions given in those proceedings.

(3) The answers to the previous questions are not affected by the fact that neither the Greek customs authorities nor the Hungarian customs authorities requested the convening of the Association Committee referred to in Article 33 of Protocol 4, as amended by Decision No 3/96.