Proposal for a European Parliament and Council Regulation (EC) amending Council Regulation (EEC) No 2913/92 establishing the Community Customs Code
Date: 1998-06-03
Institutions: European Commission
Subjects: codification of EU law, common tariff policy, customs duties, customs harmonisation, customs regulations

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  03.06.1998 
COM(1998) 226  final 

98/0134 (COD) 

COMMISSION  REPORT 

on the Community  Customs Code 

Proposal for a 
EUROPEAN PARLIAMENT AND COUNCIL REGULATION  (EC) 

amending Council Regulation (EEC) No 2913/92 
establishing the Community Customs Code 

(presented by the Commission) 

COMMISSION REPORT 

ON THE COMMUNITY CUSTOMS CODE 

SUMMARY 

Council  Regulation  (EEC) No  2913/92  establishing  the  Community  Customs  Code  requires 
the  Commission  to  present  a  report  before  the  end  of  1997  on  any  changes  that  may  be 
necessary, for instance in the light of internal market requirements. 

The Commission therefore  presents herewith its report on the proposed  amendments  together 
with a review of the experience gained in applying the Code during the past four years. 

The  Community  Customs  Code  has  brought  about  much  more  transparency  than  there  was 
before  it was established. It has been taken as a model by many third countries in Europe, and 
even  beyond.  Its  role  is  to  underpin  several  Community  policies  and  provide  a  common 
framework  for the operations of the national customs administrations. 

The quality  objective  of codifying  (or recasting) the  legislation  seems to have been  achieved 
for the Basic Regulation but further  work is still needed  on the implementing  provisions. The 
Customs  2000  action  programme  and  the  objective  of  simplification  represent  the  frame  of 
reference  for  a  modern  code,  whilst  the  Community's  transit  action  plan  and  the 
communication  on the  management  of the preferential  tariff  arrangements  are  also  affecting 
the Code's  development. 

Whilst  the  transposition  into  Community  law  of  the  outcome  of  the  Uruguay  Round 
dominated  the  first  set  of  amendments,  future  developments  will  concentrate  on  further 
simplification  of  the  rules,  greater  flexibility  in  the  Basic  Regulation,  improvements  to  the 
recovery  procedure  and  alignment  of  the  provisions  on  customs  representation  with  the 
principle of a single market. 

I. 

Introduction 

Council Regulation (EEC) No 2913/92 of  12 October  19921 established the  Community 
Customs Code. Its final provisions commit the Council to reviewing the Code after  four 
years  in  the  iight  of  experience  gained  from  the  practical  application  of  the  measures 
during that period. The four years was up at the end of 1997. 

Customs  legislation  has  been  codified  at  two  levels.  The  first  is  the  Basic  Regulation 
referred  to  above,  which  embodies  the  principles,  and  the  second  is the  implementing 
regulation (Commission Regulation (EEC) No 2454/93 of 2 July  1993)2 which, within a 
framework  laid  down  by  the  Basic  Regulation,  contains  the  more  detailed  provisions. 
The Council's mandate to the Commission to review the legislation will not be properly 
fulfilled  until  the  implementing  provisions have  also  been  reviewed.  However,  the 
amendments submitted with this Communication relate to the Basic Regulation only. 

II.  Community Customs Code - long-term achievement and modern impact 

With the codification  of Community customs law, the Community crossed a threshold. 

As the outcome  of a process of harmonizing  laws over a quarter of a century, the  Code 
remains a good example for  other areas of Community  law. It has brought about a level 
of transparency  and  simplification  that  can perhaps  only  be  fully  appreciated  by  those 
who, before  1994, had to apply or comply with several hundred legal texts spread  across 
a whole library of Official  Journals. 

III.  The Code's influence  beyond the Community's  frontiers 

Although  this  was  not  a deliberate  aim  when  the  Code  was  established,  it  has  aroused 
considerable  interest beyond the Community's  frontiers.  Even before  it was adopted  or 
applied, the draft  and final  forms  of the Code were regarded as a source of guidance by 
many  countries, particularly  those  which,  having  emerged  from  a  state-trading  system, 
were  in  urgent  need  of  operational  customs  legislation  that  would  enable  them  to 
integrate into the world of international trade. The interest shown in the Code by  Central 
and  Eastern  European  countries,  the  successor  states  to  the  former  Soviet  Union  and 
Yugoslavia,  and  even  by  a  group  such  as  Mercosur,  is  witness  to  a  credibility  which 
seems  to  derive  as  much  from  the  general  image  of  the  European  Union  as  from  the 
Code's  intrinsic  quality,  the  Code  being  regarded  as  the  legislative  embodiment  of 
balanced compromise between different  approaches and philosophies. 

1  OJL  302, 19.10.1992. 
2  OJL 253, 11.10.1993. 

It  goes  without  saying  that,  as  a  concise  body  of  rules,  the  Code  -  like  any  codified 
legislation  -  simplifies  preparations  for  an  exercise  such  as  Community  enlargement. 
The recent  expansion  from  12 to  15 members  demonstrated  as much, and  it is likely  to 
prove its worth again in  future. 

In  addition,  the  provisions  of  the  Community  Customs  Code  are  used  extensively  for 
the purposes  of  the  customs  unions  the  Community  has  entered  into  with  Andorra, 
San Marino and Turkey. 

IV.  The Code's role in the context of the various policies based on customs union 

The  Code's  importance  to  the  Community  derives  from  the  part  played  by  the 
instruments of the Customs Union in implementing Community policies. 

Although  the  Code's  procedural  framework  is  also  used  in  applying  restrictions  and 
prohibitions  on  imports  and  exports,  it  is  primarily  deployed  for  the  purpose  of 
collecting or waiving customs duties. 

In  connection  with  commercial  policy,  although  the  customs  tariff  is  losing  its 
importance as an instrument for the protection of certain industries, it is still used for the 
purposes  of  preferences,  and  the  importance  of  correct  management  of  preferential 
policy  was  recently  stressed  in  the  Commission's  communication  of  23 July  1997 
(COM(97)  402).  Anti-dumping  and  countervailing  duties  however,  are  trade  and 
industrial  protection  measures  which  are  applied  in  accordance  with  the  rules  and 
procedures of the Community Customs Code. 

The  agricultural  policy  uses  the  Code's  customs  procedures  for  managing  the  export 
refund  arrangements.  Since the  changes  following  the Uruguay  Round, the  agricultural 
sector also depends on the Code for  import protection. As agricultural  levies have  been 
replaced  by  customs  duties,  the  new  system  relies  on  the  basic  concept  of  customs 
value,  and,  even  if  the  Code's  flexible  rules  are  overridden  by  specific  agricultural 
mechanisms aimed at stricter application, the Code rules remain the touchstone. 

For  external  trade  statistics  the  Single  Administrative  Document  provided  for  in  the 
Code  Implementing  Provisions  remains  the  instrument  on  which  the  gathering  of 
statistics is based. 

The  effect  of  Community  customs  legislation  on  indirect  taxation  remains  important, 
even now that the  single market has been  established.  Whilst that reduced  the  scope  of 
the  suspensive  customs  arrangements in relation to  internal  trade  considerably,  the  link 
between the Code's customs procedures and the charging of VAT on products  imported 
from third countries has been tightened. 

Apart from the Code's importance across all these policies, it has a "vertically" cohesive 
role to play  since the entity responsible  for their implementation  consists of  15 separate 
national  administrations.  Their  very  awareness  that  the  Code  provides  a  framework 
within  which  they  carry  out  their  common  activities  is  as  important  for  integration 
between  these  administrations  as  the  range  of  measures  provided  for  in  the  Customs 
2000 programme. 

And,  since  the  Code  embodies  a  number  of  concepts  pertaining 
to  general 
administrative  law  (e.g.  annulment,  repeal  of  a  decision,  protection  of  legitimate 
reliance  where  an  administrative  error  occurs),  it  has  also  played  a  part  in  creating  a 
European legal area. 

More  generally,  the  Community  Customs  Code  has  a  pivotal  place  in  the  legal 
provisions  on which  determination  of the amount  of  duty  and  of the  persons  liable  for 
payment are based. It is the legal basis for recovery. It is an essential  instrument  for  the 
protection  of  the  Community's  financial  interests  and  the  smooth  operation  of 
Community policies. 

Nevertheless,  this  is  not  to  hide  the  evolution  in  frauds  and  irregularities  uncovered. 
Since  1992  the  sums  involved  have  risen  steeply,  the  problems  of  detection  have 
multiplied  because  of  the  increasingly  sophisticated  nature  of  the  practices,  and  there 
has been increasing  involvement  by organized  crime which has clearly  chosen to  move 
into  customs  fraud  because  of  the  substantial  gains  it  can  make  without  incurring  any 
real risk. 

The  annual  reports  on the fight against  fraud  demonstrate  both the constant  increase  in 
own resources evaded and the difficulties  in recovering them and making them  available 
to  the  budget.  For  example,  this  amount  was  ECU  787  million  in  1996,  representing 
nearly  6%  of  the  sum  of  customs  duties  and  agricultural  levies,  which  came  to 
ECU  13.7 thousand million that year. 

V.  Qualitative aspects of the codification of Community customs legislation 

To discover whether this codification exercise has been a success, we have to look at the 
way  in  which  it  was  carried  out.  The  consistency  and  transparency  of  a  regulatory 
system  - the  main  objectives  of  any  codification  exercise  -  are neither  the  necessary 
outcome  nor  the  free  bonus  of  such  an  undertaking.  The  interest  the  Community 
attaches to these principles  was emphasized  in the  Council  Resolution  of  25  October 
1996 on the simplification  and rationalization of the Community's customs regulations 
and procedures3. 

Going well beyond mere consolidation or compilation of the rules, a codification  in the 
qualitative sense means major recasting. This requires, inter alia: 

separating the material  into general  rules and more detailed  stipulations,  e.g. on 
documentary  formalities: this means provisions have to be divided up between a 
Basic Regulation and a regulation containing the implementing provisions; 

linking up the material and organizing it into a rigorous, systematic structure; 

eliminating  repetitions,  inter alia by  boiling  down  groups  of  provisions  all  of 
which have a general application; 

taking the two levels of legislation - the Basic Regulation and the implementing 
provisions - as a whole, not just in the legal sense but also from the point of view 
of presentation. 

Examining the Basic Regulation  in this light, and without wishing to claim that  it is 
unimproveable, we may conclude that on the whole it meets the qualitative  codification 
criteria. It should be stressed that the legislator enabled the material to be split into the 
two  levels  of  rules  by  delegating  generous  powers  to  the  Commission,  whilst  at  the 
same time retaining the committee procedure formula which ensures participation by the 
Member States. 

3  OJC  332, 7.11.1996. 

As  regards  the  drafting  of  the  implementing  provisions  it  has  to  be  said  this 
good legislative practice was somewhat lacking. This was a more difficult  task than  the 
Basic Regulation. The work coincided with the final phase of preparations for the single 
market  and  was  accorded  a  lesser  priority.  Because  of  the  volume  involved  and  the 
pressure  of time,  work  had  to  be  limited  to  assembling  "blocks" of  legislation,  each 
finalized  by the appropriate section of the future Customs Code Committee, but without 
really recasting the material. 

The qualitative aspect of codification therefore needs to be continued. The Commission 
departments have taken the necessary coordination measures and the current revision of 
the transit procedure and the customs procedures with economic impact is providing an 
opportunity for progress. 

VI.  Reference frame for a modern Community customs code 

1.  The question whether the Code is capable of meeting present and future  challenges is 
even  more  important  than  the  qualitative  aspects  of  codification.  One  of  the  most 
important  common  objectives  underlying  the  Customs  2000  action  programme4  is to 
guarantee that "Community law is applied in such a way as to achieve equivalent results 
at every point of Community customs territory" (Article 4). 

The Community Customs Code has a dual role with regard to this programme. Firstly, it 
is  itself  part  of  the  body  of  Community  law  whose  uniform  application  has  to  be 
guaranteed and, being the beneficiary  of this requirement, it lies outside the programme 
measures. Secondly, as noted earlier, the Code in turn is a means to ensure the proper 
application  of  that  Community  law  which  embodies  policies  underpinned  by  the 
customs union. The updating and possible adaptation of the Code are therefore  among 
the measures requiring to be implemented as part of the Customs 2000 programme. As 
the programme states, the main aims to be fulfilled  by the Code are the homogeneous 
application of rules and the protection of the financial interests of the Community and 
economic operators. 

4  Decision 210/97/EC of the European Parliament and of the Council of 19.12.1996, OJ L 33,4.2.1997, p. 24. 

2.  The second benchmark for a modern customs code is that it should fulfil  the objective of 
simplification.  The importance of the idea of simplification  and the constant challenge 
it represents were highlighted in the declaration of the Directors-General of the Member 
States' customs administrations and of the Commission at Stockholm in May  1996 and 
the  subsequent  Council  resolution  of  25 October  the  same  year.  Simplification  of 
customs rules and procedures is also mentioned in the Action Plan for a Single Market 
(CSE(97)  1 of 4 June  1997) where  it  is  described  as  being  part  of  the first strategic 
objective, i.e. to make the legislation more effective. 

However,  the  scale  of  the  own  resources  being  evaded  means  that  any  advance  on 
simplification  must  inevitably  be  accompanied  by  effective  control  measures 
appropriate to the potential risks. 

3.  The Community is currently reacting firmly to two problems which have arisen in the 
context of the customs union and the policies underpinned by customs instruments. One 
problem  area  is  the  Community  transit  procedure,  which  organized  fraud  has 
undermined  and  to  some  extent  rendered  ineffective.  Amendments  to  the  Code 
Implementing  Provisions  have  already  introduced  several  security  features  into  the 
procedure but more will follow under the Commission's transit action plan5. 

The preferential  tariff arrangements are the other problem area. They have  suffered 
from  lax  management  including  on  the  part  of  third  countries  and  irregularities 
committed on a scale sufficient  to give cause for considerable concern, as underlined by 
the  Commission  in  a  recent  Communication  (COM(97)  402  of  23 July  1997).  The 
Commission clearly stated in this regard that the legitimate question of the "good faith" 
of importers must not disguise the need to deal with it in the wider political  framework 
in  all  respects  of  the  preferential  tariff  arrangements.  It  is  clear  that,  as  in  transit, 
legislation  alone  will  not  solve  all  the  problems.  The  solution  will  depend  also  on 
substantial  improvements  in  the  management  of  the  instruments  on  which  the 
procedures in question are based. 

5  OJC  176,  10.6.1997, p. 3. 

This is why, following  a global approach, the Commission has proposed a programme 
of actions, both at Community level and vis-à-vis third countries, in order to ensure the 
better application  of existing provisions  and also to establish  a number  of operational 
measures to  improve or supplement them. This could have implications  inter alia for 
certain aspect of the Customs Code in the future. 

The legislative and management structures complement each other but each has its own 
role. Not  all  the  shortcomings  which  affect  the  functioning  of the  customs  union  or 
particular policies can be blamed on the Customs Code. It is no longer the only tool we 
have to  deal  with  such operational  problems. The relationship  between  Code  and  the 
Customs 2000 instrument, too, is very important in this respect. 

The following two examples illustrate the point. 

At  Member  State  level  the  lack  of  uniformity  in  certain  simplified  and  computer 
procedures remains an unfortunate fact. However, it has to be said that the organization 
and coordination still to be undertaken in this context does not really depend on changes 
in existing legislation. 

Similarly,  the  operation  of  the  recovery  procedure  has  been  identified  as  one  of  the 
problems affecting  the management of the preferential tariff arrangements. The customs 
authorities  of  the  different  Member  States  often  enter  duty  in  the  accounts,  take 
preventive  measures,  late  or  on  an  ad hoc  basis,  showing  that  they  still  have  a 
considerable margin of discretion. 

To regulate this problem by trying to restrict the authorities'  operational  independence 
by law seems unlikely to achieve the aim. Establishing apparently stricter criteria which 
will  nevertheless  always be open to  interpretation  is a useful  way of aligning  general 
behaviour but not of underpinning common action in a given situation. As Article 7 of 
the  "Customs  2000"  Decision  confirms,  the  solution  lies  rather  in  coordination  and 
hence in the introduction of appropriate machinery based on a cooperative environment 
that may even include a quasi-hierarchical directional component. 

This  approach  to  one  specific  problem  does  not  do  away  with  the  need  to  adapt  the 
legislative  structures  of  the  recovery  procedure,  particularly  by  providing  better 
safeguards  where  deadlines  are  running  up  against  prescription  periods.  If  appropriate 
provisions  of this type  are  included  in the  Community  Customs  Code they  will  have  a 
general  effect  on  all  debts  to  be  recovered,  whether  in  transit  or  in  connection  with 
preferential  and non-preferential  imports. 

VII. Amendments  made  earlier  and  those  the  Commission  is  planning  to  submit  to 

the Council 

1.  The Community  Customs Code has been amended twice  since its entry into  application 
in  1994. The  first  set  of  amendments  arose  out  of  the  Act  of  Accession  of  19956 and 
relates to the consequent enlargement of the customs territory of the Community. 

The second  was made in Regulation  (EC) No  82/97 of the European Parliament  and  of 
the Council  of  19 December  19967 and mainly involved transposing the outcome  of the 
Uruguay Round negotiations on agricultural policy and the rules of origin. Various other 
adjustments  were  made, their  common  feature  being  that  that  they  tended  to  make  the 
Code more responsive to traders'  needs, either by making the rules more flexible  in the 
Code  itself  or  by  allowing  for  derogations  via  fine-tuning  in  the  implementing 
provisions. 

2.  The  current  round  of  amendments  set  out  in  the  annexed  proposal,  is  also  mainly 
intended to make the Basic Regulation  more flexible.  Another  set of proposals  relating 
to  the  Community  transit  procedure,  which  is not  part  of the  annexed  text, is  likewise 
intended  to  produce  greater  flexibility,  or  greater  transparency  in  respect of  existing 
de facto  flexibility,  at the level of Community transit implementing provisions. 

One issue the legislator  often  has to deal with  in this context,  at both levels of  customs 
legislation,  is that  the  rules  governing  customs  debt  and  the  conditions  in  which  it  is 
incurred  are  found  to  be  too  rigid  for  the  circumstances  in  specific  cases,  raising  the 
question  of  proportionality.  The  legislator's  attempt  to  strike  a  balance  between  the 
interests involved, already a feature  of the last set of amendments, therefore  continues in 
the Commission's present proposal. 

6  OJL  1,1.1.1995. 
7  OJ L 17, 21.1.1997, p. 1. 

10 

The provisions  recognizing  a new type  of free zone with  special  supervision  rules  aim 
to differentiate  the Code's  structure  without  affecting  competition  between  Community 
traders. 

In  the  field  of  customs  procedures  with  economic  impact,  the  reforms  intended  to 
simplify  the  various  arrangements,  as  with  the  Community  transit  procedure,  will 
mostly  be  at  the  level  of  the  implementing  provisions.  As  a number  of Articles  in  the 
Basic Regulation restrict the scope for  such reform,  the Commission proposes that  they 
be made sufficiently  flexible to achieve the aim. 

In the second set of amendments to the Code the desire to simplify  customs  formalities 
already  resulted  in the  legislator  allowing  derogations  from  the obligation  to  notify  the 
re-export  of  goods.  This  time  the  Commission  is  proposing  to  introduce  greater 
flexibility  into the obligation to present  certain accompanying  documents together  with 
the customs declaration, so as to remove one obstacle to the computerization  of customs 
clearance  procedures.  However,  the  proposal  takes  into  account  the  need  to  safeguard 
the Community's financial interests and maintain the controls this requires. 

3.  The second objective which requires adaptation of the Community  Customs code is that 
of  making  the  recovery  procedure  more  effective.  The  procedure  not  only  generates 
revenue  for  the  Community  budget but also, and  above  all, underpins  the  credibility  of 
rules  and  policy  instruments  in the prevention  of  irregularities.  In  the  second  round  of 
amendments  the  Council  did  not  adopt  a  Commission  proposal  aiming  to  allow 
extension  of  the  prescription  period  where  an  irregularity  is  suspected  and  more 
investigation  is required. Parliament  agreed that the question  of protecting  "good  faith" 
in connection with documentary proof of the preferential  status of goods imported  from 
third countries had to be clarified  first. 

As  this  was  done  in  the  Communication  of  23  July  1997  (COM(97) 402),  the 
Commission  is  now  presenting  the  proposal  again.  At  the  same  time  it  is  proposing  a 
revision  of the relationship  between  the recovery  and  appeals  procedures.  The  purpose 
of the appeals procedure  is to protect the trader  from  recovery  of amounts  not  due  but, 
where an appeal is rejected,  it must be possible to recover the amount in such as way as 
not to discriminate against debtors who have not challenged notices of payment. 

11 

4.  There  is  a  problem  of  inequality  in  the  operating  conditions  in  the  various  Member 
States  for  operators  involved  in  foreign  trade,  due  to  the  way  some  Member  States 
regulate the possibility  of having customs formalities  carried out by intermediaries. The 
current  Article  5  of  the  Code  includes  a  "reservation  clause"  through  which  the 
functioning  of  the  single  market  is  affected  and  unjustified  distortions  of  competition 
arise. There is a more detailed analysis of the effects  of this provision in the  explanatory 
memorandum  (point  1)  of  the  proposal  for  amendment  of  the  Code  in  part  II  of  this 
document.  With  effect  from  1 January  2002,  it  is  proposed  to  replace  the  reservation 
clause  by  the  option  to  reserve  indirect  representation  alone  to  customs  agents,  and  to 
lay  down  in  the  implementing  provisions  Community  criteria  for  a  framework  for  the 
service of customs declaration. 

VIII.  Consolidation and recodification  of constantly evolving rules 

As  the  last  recital  of  Regulation  (EC)  No  82/97  notes,  in  order  to  ensure  that 
the  Commission  has 
the  Customs  Code 
to  use 
stated  its  readiness  to  publish  annual  updates  of  the  Code,  together  with 
its 
implementing provisions. 

remains  easy 

in  practice, 

The  Commission  intends  to  meet  this  commitment  by  making  available  to  all 
users a data  base  established  by 
the 
European  Communities  which  contains  the  texts  of  the  Basic  Regulation  and  the 
implementing provisions in all Community  languages, updated immediately to show the 
latest amendments. This facility  is due to be set up during  1998. 

the  Office  for  Official  Publications  of 

Quite apart from this, the  implementing  provisions, which are amended  at least twice a 
year,  need  legislative  consolidation.  But this cannot  begin  until  some major  reforms  to 
the  Community  transit  and  economic  customs procedures  have  been  completed.  It  will 
therefore  follow  the creation  of the data base, which  will  have brought  transparency  to 
this area of Community  law. 

12 

IX.  Conclusions 

The Community Customs Code has brought about much more transparency than there 
was before  it was established. It has been taken as a model by many third countries in 
Europe and even beyond. Its role is to underpin several Community policies and provide 
a common framework for the operations of the national customs administrations. 

In the context of increasing fraud, we must see that the amended Customs Code does its 
job.  Everyone  must be vigilant  if the  Code is not to  be misappropriated  in  favour  of 
particular  or  illicit  interests,  and  the  risk  of  an  increase  in  economic  and/or  political 
tensions is not to be needlessly increased. 

The  quality  objective  of  codifying  (or  recasting)  the  legislation  seems  to  have  been 
achieved for the Basic Regulation but further  work is still needed on the implementing 
provisions.  The  Customs  2000  action  programme  and  the  objective  of  simplification 
represent  a reference  frame  for  a modern code, whilst the Community's  transit  action 
plan and the Communication on the management of the preferential  tariff  arrangements 
are  also  affecting  the  development  of  the  Code,  bearing  in  mind,  however,  the 
distinction to be made between the legislative and management structures. 

Whilst the transposition into Community law of the outcome of the Uruguay Round was 
the factor which dominated the first set of amendments, changes made from now on will 
concentrate on yet more simplification  of the rules, making the Basic Regulation more 
flexible, improving  the  recovery  procedure  and  bringing  the  provisions  on  customs 
representation into line with the principle of a single market. 

Proposals for amendments to the Basic Regulation are at Annex II. 

II 

Proposal for a 
EUROPEAN PARLIAMENT AND COUNCIL REGULATION (EC) 

amending Council Regulation (EEC) No 2913/92 
establishing the Community Customs Code 

EXPLANATORY MEMORANDUM 

Point 1  (Article 5) 

Importers  and  exporters  often  delegate  the  carrying  out  of  customs  formalities  to 
intermediaries. It is handled either in conjunction with the organisation of the transport of the 
goods, or  by  a  specialists  who  in  some Member  States  have  traditionally  been  a regulated 
profession. 

In principle customs rules allow intermediaries to act in two ways (Article 5 of the Code): 

by direct representation: acting in the name of and on behalf of the principal, who 
alone is liable for the customs debt, 

by indirect representation: acting in their own name and on behalf of the principal, 
thus becoming equally liable with the principal as debtor. 

Community  customs  rules  should  in  principle  refrain  from  intervening  in  the  way  the 
activities of intermediaries in this area are organised, but in 1992, by way of a "compromise", 
the Council included in Article 5 of the Code a "reservation clause" allowing Member States 
to restrict in their territory the right to make customs declarations to one of the two forms of 
representation  (either  direct  or indirect), so that the representative  must be a customs  agent 
carrying on his business in that country's territory. 

If it  is credible that  some Member States  should wish to reserve  certain  special  rights to a 
sector taking on increased risks (in the case of indirect representation), it has to be said that 
this logic and balance is no longer respected  and this reservation  is increasingly  dissociated 
from  any financial risk (France and Italy in particular). It instead becomes a means of limiting 
the supply of the service, without any customs or financial justification. 

This  is even more  clearly  demonstrated  by  the  fact  that,  for  a largely  identical  service,  legal 
changes in some Member States not only free a particular category of declarants from a shared 
liability,  but  on  the  contrary  impose  this  liability  on  persons  outside  of  this  category.  The 
functioning  of the internal market is thus affected,  the principle of freedom to provide  services 
is restricted and competition is distorted. 

This unbalanced  situation has unfavourable  effects  on the economic environment  of operators 
in foreign  trade. Indeed, given a growing demand  for  customs declarations  (a consequence  of 
growth  in  the  Community's  foreign  trade)  this  splitting  of  the  internal  market  by  the 
reservation  clause,  and  more  particularly  the  reservation  of  direct  representation,  is  an 
unjustified  brake  on economic  activity.  The result  is a loss of  competivity  and  a tendency  to 
increase the price of the service, to the detriment of SMEs. 

Given the  above, the Commission  proposes to abolish the option the  Member  States have  as 
regards the choice of the form  of representation they can reserve. It therefore  proposes to limit 
the  (optional)  application  of  the  reservation  clause  to  indirect  representation  alone.  It  also 
provides  for  the  possibility  of  laying  down,  in  the  implementing  provisions,  Community 
criteria  for  a framework  for  all  those  providing  the  service  of  customs  declarant,  in  order  to 
establish a new balance, in the light of the different  experiences. In order to allow  professional 
declarants  and  other  interested  economic  circles  to  prepare  for  this  new  situation,  it  is 
proposed that this amendment should apply from  1  January 2002. 

Point 2 (Article 35) 

There  is no problem  regarding the  Code's  compatibility  with the rules  on the introduction of 
the euro or, more particularly, with Council Regulation  (EC) No  1103/97 of  17 June  1997 on 
certain provisions relating to the introduction of the euro8. As the final decision on the powers 
of  the  national  banking  authorities  has  not  yet  been  taken,  it  would  seem  best  to  formulate 
Article 35 very generally and keep the phrase, "the competent authorities". 

OJL162,  19.6.1997, p. 1. 

Point 3 (Article 49) 

It has to be specified who is responsible for assigning a customs-approved treatment or use to 
goods in temporary storage so as to be able to determine who the debtor is when a customs 
debt is incurred under Articles 203 or 204. The concept  of the "holder",  as already  used in 
Article 51, would seem the most appropriate. 

Point 4 (Article 62) 

It has emerged that there is an increasing need in the Community for a declarant not to have to 
present the documents accompanying his declaration to the customs authorities, for  instance 
when the declaration is made electronically. As the present simplified procedures provide only 
a  partial  solution  to  the problem,  this  proposed  amendment  introduces  the  possibility  of a 
derogation,  which  would  be  subject  to  implementing  provisions  concerning  access  to  the 
documents for the customs authorities, as well as their retention. 

Point 5 (Article 115(4)) 

The  new wording  of  paragraph  4  also  allows the  introduction  of  implementing  provisions 
which will widen the scope for  equivalent  compensation  in inward  processing.  The present 
wording mentions only prohibitions and limits. 

Points 6 and 11  (Articles 117(c) and 133(e)) 

As part of the modernization  of the procedures for  inward processing  and processing  under 
customs control, these Articles make provision for drawing up lists of cases and conditions in 
which the economic conditions are deemed to have been fulfilled.  This will make it possible 
to shorten the time it takes to issue authorizations to use the procedures  as well as aligning 
practice in the Member States. The amendment is in line with the policy of simplification. 

Point 7 (Article 118) 

As part of the modernisation of the inward processing procedure it is considered desirable to 
be able to lay down a specific time-limit for all operations effected by a given trader. 

Point 8 (Article 124) 

This amendment takes account of developments in the agricultural area and allows permission 
to use the drawback system to be granted in accordance with conditions to be laid down in the 
implementing provisions. 

Point 9 (Article 128) 

Where  goods  are placed  under  the inward  processing  procedure  (drawback  system),  there is 
no justification  for regarding  their entry for the transit procedure as equivalent to export and 
therefore  as  giving  entitlement  to  repayment  or  remission  of  duty.  Hence  the proposed 
amendment eliminates the possibility of repayment or remission when compensating  products 
or goods in the unaltered state are placed under the transit procedure. 

Point  10 (Article  131) 

The wording of this Article has been aligned on that of Article  141 to allow greater  flexibility 
in  establishing  cases  and  conditions  in  which  the  procedure  for  processing  under  customs 
control may be used. 

Point  12 (Article 142) 

This wording  brings Article  142 into  line with Article  141 so as to cover all cases where the 
conditions  for  granting  total  relief  are not fulfilled.  (The current  wording  is more  restrictive 
for cases of partial relief than for cases of total relief; it requires that, in all cases, the holder of 
the  goods  must  be  established  outside  the  customs  territory  of  the  Community).  The new 
wording also allows specification  of the circumstances in which the procedure may be used. 

Point  13 (Article 144) 

The deletion of paragraph  1 of this Article makes it possible not to tax the use in accordance 
with  the  rules  of  goods  placed  under  the temporary  importation  procedure  by  applying  the 
general rule laid down in Article 214. 

The  drafting  change  to  former  paragraph  2  -  now the  sole  paragraph -  is  necessary  in the 
interests  of clarity.  When  goods  are placed  under  the temporary  importation  procedure  with 
partial  relief,  part  of  the  duty  has  already  been  paid.  When  they  are  released  for  free 
circulation, or when customs debt is incurred for other reasons, what remains to be paid is the 
difference  between the amount already paid and the amount of the customs debt. 

Points  14 and  15 (Articles  152 and  153) 

The new wording of Article  152 and the deletion of Article  153 mean that the user is  referred 
to  the  Implementing  Provisions  to  determine  when  a  charge  other  than  the  Article  151 
differential  taxation is applicable. This simplifies  the law and allows greater flexibility.  It also 
opens  the  way  for  the  possibility  of  introducing  a  value-added  charge  over  and  above  the 
options currently provided for in Article  153. 

Points  16, 17 and  18 (Articles  167(3), 168(1) and  168a) 

The  conventional  definition  of  "free  zones" used  by  the  Code  does  not  appear  to  meet  the 
foreign trade needs of some Member States. These Member  States consider free  zones need to 
be supervised using the same methods as suspensive arrangements, but their inherent  benefits 
must also be retained. 

The proposal  is to provide  for  a second type of controls in free  zones combining  some  of the 
features  of  traditional  free  zones  with  the  formalities  and  supervision  methods  used  in  the 
customs warehousing procedure. 

Point  19 (Article 212a) 

Article 212a was added  when the  Code was  last  amended  to  allow partial  or total  exemption 
from duties  in cases where  a customs  debt  is incurred  for  reasons  other  than  acceptance  of  a 
declaration  for  release  for  free  circulation.  Subject  to  the  same  conditions,  this  possibility 
should  also  cover  cases  where  a customs  debt  is incurred  for  goods  which  would  have  been 
eligible for  favourable  tariff  treatment  by reason of nature or end-use, or for  differential  rates 
of duty under the outward  processing  arrangements,  if they  had been  declared  for  release  for 
free  circulation. 

Point 20 (Article 215(5)) 

It is sometimes  found  in one Member  State that  a customs  debt has been  incurred  in  another 
the 
Member  State  (usually  under  Article  202).  Where  the  amount  does  not  justify 
administrative expense of liaison between the Member States in question it should be possible 
to  enter  the  debt  in  the  accounts  and  collect  it  in  the  Member  State  which  established  it;  in 
most cases, the debtor is located there. 

(Article 215(6)) 

The  simplified  procedures  for  release  for  free  circulation  should  be  applicable  to  goods 
presented in more than one Member State. 

If  the  simplified  declaration  procedure  is  used,  the  customs  debt  is  incurred  in  the 
Member State where the simplified  declaration (an incomplete declaration or a commercial  or 
administrative document) is accepted. 

It  would  be  more  logical  to  regard  the  debt  as  being  incurred  where  the  supplementary 
declaration  is  lodged  so  a  single  entry  in  the  accounts  can  be  made,  as  provided  for  in  the 
second  subparagraph  of  Article  218(1).  The  security  referred  to  in  that  provision  could  be 
lodged  at  the  place  where  the  person  concerned  keeps  his  main  accounts  and  where  the 
authorization  was issued.  The relevant  customs  authorities  would then have  access to  all  the 
information  they required to supervise the operation in the most effective  manner. 

It  must  also  be  stressed  that  the  simplifications  in  customs  procedures  introduced  by  this 
proposal cannot have their full  effect  as regards import VAT, because Community fiscal rules 
require taxation at destination. 

Further  coherence  and  real  simplification  in the application  of  customs  and  fiscal  provisions 
will only become possible in the framework  of the future  common system of VAT, based on a 
single place of taxation. 

Point 21 (Article 220(1)) 

In  its proposal  for  the  first  major  change  to the  Customs  Code  in  1995  (COM(95)  335)  the 
Commission  included  this  same proposal.  The  current  wording  of  Article  220(1)  means  that 
subsequent  entry of customs duties in the accounts  is partly dependent  on customs'  ability  to 
determine the amount legally due. 

Achieving  the  requisite  certainty  can  often  take  longer  than  the  period  laid  down  in 
Article 221(3), especially  if post-clearance checks involve enquiries in several Member  States 
and/or  third  countries  with  the  coordination  of the  various  activities  at  Community  level.  In 
some  cases,  what  has  happened  is  clear,  but  legal  discussions  at  various  levels  may  delay 
action  against  irregularities  beyond  the  three-year  limit,  so that  it  comes  to  nothing.  This  is 
hardly compatible with a policy  of tackling malpractice. While action may  continue  if the act 
gives  rise  to  criminal  court  proceedings,  differences  between  national  statutes  of  limitations 
(see  second  sentence  of  Article  221(3))  make  uniform  Community  treatment  of  such  cases 
difficult. 

The proposed amendment to Article 220(1) is aimed at clarifying  the legal basis for customs 
administrations  so  that  duties  may  be  entered  into  the  accounts  before  the  exact  amount 
legally  due  can  be  determined  with  full  certainty.  This  will  make  uniform  application  of 
Community legislation more effective  (see also point 23). 

When the Council discussed the  1995 proposal, delegations expressed the wish that the party 
concerned  should not remain in uncertainty for too long. The proposed second  subparagraph 
reflects  that  view by  limiting  this period  to three years  after  the  "provisional"  entry  in the 
accounts. At the same time, the normal time-bar is limited to two years (see point 22). 

Point 22 (Article 221(3)) 

It is proposed to reduce the time-limit for entry in the accounts to two years after incurrence of 
the  customs  debt,  in  order  to  maintain  a  certain  balance  between  legal  certainty  for  the 
operator  and  the  protection  of  the  Community's financial interests,  having  regard  to  the 
extension of the period  for entry in the accounts to three years in cases of reasonable doubt 
(see point 21). 

It is proposed to stop the clock on the time-limit for entry into the accounts in cases where the 
interested party lodges an appeal, to ensure that the Community's  financial  interests are not 
jeopardised by long-drawn-out judicial proceedings. 

(Article 221(4)) 

This paragraph has been added to ensure that debts can be collected when they lapse by virtue 
of being included in a communication for a time-barred debt, although their own prescription 
period has not yet expired. 

In  some  Member  States  national  law  allows  separate  notification,  but  this  is  not  the  case 
everywhere. (See grounds 65 to 71 of the Judgment by the Court of Justice of the European 
Communities  of  14  May  1996  on  Joint  Cases  C-153/94  and  C-204/94,  the "Seafood" 
Judgment). 

Point 23 (Article 222(2)) 

The proposal is to add a third and a fourth indent to this provision. 

The Transit Action Plan provides for  establishing  a hierarchy of persons whom the customs 
authorities  can pursue for  payment of customs debt  incurred  where goods placed  under the 
transit  procedure  are  removed  from  customs  supervision.  Article  203(3)  lists  the  debtors 
responsible  for  this  debt  and  it  is  now  considered  desirable  to  provide  that  the  principal, 
referred  to  in  the  last  indent,  should  only  be required to  pay  the  debt  when  it  has  proved 
impossible to recover it from the others. 

The recovery procedure  established  under the Code requires the customs debt to be paid as 
soon as it has been entered  in the accounts and communicated  to the debtor. To enable the 
customs authorities to try first to recover the debt from the other debtors, provision has to be 
made in the Implementing Provisions for suspending the principal's obligation to pay. 

The  context  for  the  fourth  indent  is  set  out  in  point  21.  The  aim  is  to  provide  for  the 
possibility of treating the post-clearance entry in the accounts of a customs debt in accordance 
with  the  second  subparagraph  of  Article  220(1)  as  a  holding  measure  so  that  the  amount 
concerned  does  not  have  to  be  paid  immediately  by  the  debtor  -  i.e.  to  provide  for  the 
possibility of suspending the obligation to pay. 

Proposal for a 
EUROPEAN PARLIAMENT AND COUNCIL REGULATION (EC) 

amending Council Regulation (EEC) No 2913/92 
establishing the Community Customs Code 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN 
UNION, 

Having regard to the Treaty establishing the European Community, and in particular Articles 
28, 100a and 113 thereof, 

Having regard to the proposal from the Commission9, 

Having regard to the opinion of the Economic and Social Committee10, 

Acting in accordance with the procedure laid down in Article 189b of the Treaty11, 

(1)  Whereas  Article  253  of  Council  Regulation  (EEC)  No  2913/92  of  12 October  1992 
establishing  the  Community  Customs  Code12,  as  last  amended  by  Regulation  (EC) 
No 82/97  of  the  European  Parliament  and  of  the  Council13,  provides  that,  before 
1 January  1998, the Council shall, on the basis of a Commission report, review the Code 
with a view to making such adaptations as may appear necessary taking into account in 
particular  the  achievement  of  the  internal  market,  and  that  the  report  may  be 
accompanied by proposals; 

(2)  Whereas the partitioning of the internal market due to the reservation of the direct form 
of  customs  representation  for  particular  groups  established  in  the  Member  State 
concerned has to be brought to an end; whereas it is appropriate to delay the application 
of this amendment until  1  January 2002, in order to allow the economic circles to adapt 
to the new situation; 

(3)  Whereas the powers of the different  authorities to establish exchange rates following the 

introduction of the euro have not yet been decided; 

9  OJC 
10  OJC 
11  OJC 
12  OJ L 302,  19.10.1992, p. 1. 
13  OJL  17, 21.1.1997, p. 1. 

(4)  Whereas  it  is  necessary  to  define  more  clearly  who  is  responsible  for  assigning  a 

customs-approved treatment or use to goods presented to customs; 

(5)  Whereas  provision  should  be  made  for  the  possibility  of  customs  declarations'  not 

having to be accompanied by certain documents; 

(6)  Whereas, in order to make it easier to take advantage of the arrangements  for  inward 
processing,  processing  under  customs  control  and  temporary  importation,  the  rules 
should be made more flexible; 

(7)  Whereas it is preferable  to use the committee procedure to establish certain alternative 
methods of calculating the charges due under the outward processing arrangements; 

(8)  Whereas  in  some  free  zones,  where  there  are  economic  reasons  for  doing  so,  it 
is appropriate  to  permit  completion  of  the  formalities  attaching  to  the  customs 
warehousing  procedure,  and 
the 
customs authorities; 

the  carrying  out  of  customs  checks  by 

(9)  Whereas, in certain circumstances, the benefit  of favourable  tariff treatment granted by 
reason of the nature or end-use of goods or of differential  charges under the outward 
processing  procedure  should  also  be  available  where  a  customs  debt  is  incurred  for 
reasons other than the release of goods into free circulation; 

(10)  Whereas the provisions  relating to the place where a customs debt  is  incurred  should 
include  special  rules  for  particular  cases  where  the  sum  involved  is  below  a  given 
threshold  and  cases  where  simplified  procedures  for  release  into  free  circulation  are 
authorized;  whereas the implementing provisions  should  be established  in  accordance 
with the committee procedure, taking into account in particular the possible dissociation 
of  the  place  where  the  customs  debt  is  incurred  and  the  place  where  VAT  on 
importation is incurred; 

(11)  Whereas  in  some  cases  it  is  not  immediately  possible  to  calculate  the  exact  amount 
legally due, with the result that the prescribed three-year limit could lead to failure of a 
post-clearance  recovery  action; whereas  in  such  circumstances  the  sum probably  due 
should be entered in the accounts in good time; whereas the party concerned should not 
in any circumstances remain in uncertainty for more than five years in total; 

(12)  Whereas provision  should be made for  suspending the obligation to pay a customs  debt 
incurred  where  goods  have  been  removed  from  customs  supervision  and  there  is  more 
than  one  debtor,  so  as  to  allow  customs  authorities  to  initiate  recovery  proceedings 
against one particular debtor, giving priority over other debtors; 

(13)  Whereas the  Community's  financial  interests must  be protected  against  unduly  lengthy 
legal  proceedings,  and  against  the total  invalidation  of a communication  where  part  of 
the debt is time-barred; 

(14)  Whereas Regulation (EEC) No 2913/92 should therefore  be amended  accordingly, 

HAVE ADOPTED THIS REGULATION: 

Article 1 

Regulation (EEC) No 2913/92 is hereby amended as follows: 

1. 

The second subparagraph of Article 5(2) is replaced by the following: 

"Member  States  may  reserve  the  right,  on their  territory,  to  make  customs  declarations 
by indirect representation to customs agents. 

Implementing  provisions  may  be  laid  down  in  accordance  with  the  Committee 
procedure,  in  particular  to  ensure  equitable  conditions  of  access  to  the  two  types  of 
representation." 

2. 

In Article 35, the first paragraph is replaced by the following: 

"Where  factors  used  to  determine  the  customs  value  of  goods  are  expressed  in  a 
currency  other  than  that  of the  Member  State  where  the  valuation  is made, the  rate  of 
exchange to be used shall be that duly published by the competent authorities." 

3. 

In Article 49(1), the introductory phrase is replaced by the following: 

" 1.  Where goods are covered by a summary declaration, the person who is the  holder 
of  the  goods  shall  complete  the  formalities  necessary  for  them  to  be  assigned  a 
customs-approved treatment or use within:" 

4. 

The following paragraph is added to Article 62: 

"3.  Exceptions  to  the  requirement  established  in  paragraph  2  may  be  laid  down  in 
accordance  with  the  committee  procedure,  in  particular  where  the  declaration  is 
made electronically. 

However,  the right  of access  without prior  warning  of the national  authorities  or, 
where  appropriate,  of Community  authorities, together  with the  obligation  on the 
part  of the  operator  to  keep the proof  for  a minimum  period  shall  be  guaranteed. 
Implementing  measures  shall  also  be  defined  in  accordance  with  the  committee 
procedure." 

5.  Article 115(4) is replaced by the following: 

"4.  Specific  provisions  for  the  application  of  paragraph  1  may  be  adopted  in 

accordance with the committee procedure." 

6. 

The following sentence is added to Article 117(c): 

"The cases in which the economic conditions are deemed to have been fulfilled  may  be 
determined in accordance with the committee procedure." 

7.  Article 118(4) is replaced by the following: 

"4.  Specific 

time-limits  may  be 

laid  down 

in 

accordance  with 

the 

committee procedure." 

8.  Article 124 is replaced by the following: 

"Article 124 

1. 

2. 

3. 

The  drawback  system  may  be  used  for  all  goods,  with  the  exception  of  those 
which,  at  the  time  when  they  are  declared  for  free  circulation,  are  subject 
to quantitative 
import  or 
export  certificate. 

to  presentation  of  an 

restrictions  or 

import 

The  drawback  system  may  be used  only  if no  export refund  has  been  set  for  the 
compensating  products  at the time the  declaration  for  release  for  free  circulation 
of the import goods is accepted. 

Permission to use the  drawback  system  may be granted  only  if,  at the time  when 
the export declaration for the compensating products is accepted, no export  refund 
or tax has been set for the compensating products. 

4.  Derogations from  paragraphs  1, 2 and 3 may be laid down in accordance with the 

committee procedure". 

9. 

The second indent of Article 128(1) is replaced by the following: 

"- 

placed,  with  a  view  to  being  subsequently  re-exported,  under  the  customs 
the 
warehousing  procedure, 
inward-processing  procedure  (suspensive  arrangement),  or  in  a  free  zone  or  free 
warehouse." 

importation  procedure  or 

temporary 

the 

10.  Article 131 is replaced by the following: 

"Article 131 

The  cases  in  which,  and  the  specific  conditions  upon  which,  the  procedure  for 
processing  under  customs  control  may  be used  shall  be determined  in  accordance  with 
the committee procedure." 

11. 

In point (e) of Article 133, the following sentence is added: 

"The cases in which the economic conditions are deemed to have been fulfilled  may be 
determined in accordance with the committee procedure." 

12.  Article 142 is replaced by the following: 

"Article 142 

1.  Use of the temporary  importation procedure with partial relief from  import  duties 
shall  be  granted  in  respect  of  goods  which  are  not  covered  by  the  provisions 
adopted  in  accordance  with  Article  141 or which  are covered  by  such  provisions 
but  do  not  fulfil  all  the  conditions  laid  down  therein  for  the  grant  of  temporary 
importation with total relief. 

2. 

The  list  of  goods  in  respect  of  which  the  temporary  importation  procedure  with 
partial  relief  from  import  duties  may  not  be  used,  and  the  conditions  subject  to 
which  the  procedure  may  be  used,  shall  be  determined  in  accordance  with  the 
committee procedure." 

13.  Article 144 is replaced by the following: 

"Article 144 

Where  a  customs  debt  is  incurred  under  point  (a)  of  Article  201(1),  or  under  Articles 
203  or  204,  for  goods  placed  under  the  temporary  importation  procedure  with  partial 
relief  from  import  duties,  the  amount  of  that  debt  shall  be  equal  to  the  difference 
between  the  amount  of  duties  calculated  pursuant  to  Article  214  and  that  payable 
pursuant to Article 143." 

14.  Article 152 is replaced by the following: 

"Article 152 

By  way  of  derogation  from  Article  151,  the  committee  procedure  may  be  used  to 
determine  the  cases  in  which  and  the  specific  conditions  upon  which  goods  may  be 
released  for  free  circulation  following  an outward processing  operation either with total 
relief  from  import  duties, or by taking  the cost of the processing  operation  as the  basis 
for  assessment  for  the  purpose  of  applying  the  customs  tariff  of  the  European 
Communities." 

15.  Article 153 is deleted. 

16.  Article 167 is amended as follows: 

(a) 

In paragraphs  1, 2 and  3, the term  "Member  States"  is replaced  by  the term  "the 
customs authorities". 

(b)  The first sentence of paragraph 3 is replaced by the  following: 

"3.  Without prejudice to Article  168a, free zones shall be enclosed." 

17.  Article 168(1) is replaced by the following: 

" 1.  The perimeter and the entry and exit points of free zones, where they are enclosed, 
and of free  warehouses  shall be subject  to supervision by the customs  authorities. 

18.  The  following  Article  is  inserted  between  Article  168  and  heading  B  ("Placing  of 

goods in free zones or free warehouses"): 

"Article 168a 

1. 

The  customs  authorities  may  designate  free  zones  where  customs  checks  and 
formalities  shall  be  carried  out,  and  in  which  the  provisions  concerning  customs 
debt shall apply, in accordance with the requirements of the customs  warehousing 
procedure. 

Articles  170, 176 and  180 shall not apply to the free zones thereby  designated. 

2. 

The free  zones designated  in accordance with paragraph  1 shall not be regarded  as 
free zones within the meaning of Articles 37, 38 and 205. 

References  to  free  zones  in  other  sections  of the  legislation  shall  not  be taken  to 
refer to the free zones governed by this Article. " 

19.  Article 212a is replaced by the following: 

"Article 212a 

Where customs legislation provides  for  favourable  tariff  treatment  for  goods by  reason 
of their nature or end-use, or provides exemption or total or partial relief from import or 
export duties pursuant to Articles 21, 145 or  184 to  187, such exemption  or relief  shall 
also  apply  in  cases  where  a  customs  debt  is  incurred  pursuant  to  Articles 202  to  205, 
210 or 211, on condition that the behaviour  of the declarant  involves neither  fraudulent 
dealing  nor  obvious  negligence  and  he produces  evidence  that the  other  conditions  for 
the application of favourable treatment, relief or exemption have been  satisfied." 

20.  The following paragraphs 5 and 6 are added to Article 215: 

"5. 

If  a  customs  authority  finds  that  a customs  debt  has  been  incurred  under  Article 
202  in  another  Member  State,  and  the  amount  of  the  said  debt  is  lower  than 
ECU 5 000, the  debt  shall  be deemed to have been  incurred  in the  Member  State 
where the finding was reached. 

6.  Where a customs debt is incurred following  acceptance of a simplified  declaration 
or some other document  for  release for free circulation  as referred  to  in points  (a) 
or  (b)  of  Article  76(1),  and  where  the  second  subparagraph  of  Article  218(1)  is 
applied,  the  customs  debt  shall  be  deemed  to  have  been  incurred  in the  Member 
State where the supplementary declaration under Article 76(2) was lodged." 

21.  The following second and third subparagraphs are added to Article 220(1): 

"Where checks carried  out by the customs  authorities  are liable to  lead to the  detection 
of a customs debt or an amount of duty higher than that already entered in the accounts, 
but  the  authorities  are  unable  to  determine  the  exact  amount  legally due,  the  said 
authorities shall enter in the accounts the amount that may eventually be payable on the 
goods,  allowing  enough  time  for  that  provisional  amount  to  be  communicated  to  the 
debtor before the expiry of the period laid down in Article 221 (3). 

However,  entry  in  the  accounts  of  the  amount  that  may  eventually  be  payable  on  the 
goods  shall be considered  null  if the customs  authorities prove unable to  determine  the 
exact amount legally due, within three years of the date of communication  to the debtor 
of the provisional amount as defined  in the second  subparagraph." 

22.  Article 221(3) is amended as follows: 

(a) 

paragraph 3 is replaced by the following: 

"3.  Communication to the debtor shall not take place after the expiry of a period 
of  two  years  from  the  date  on  which  the  customs  debt  was  incurred. 
Calculation  of  this  period  shall  be  suspended  from  the  time  an  appeal 
within the  meaning  of  Article  243  is  lodged,  for  the  duration  of  the 
appeal proceedings." 

(b) 

the following paragraphs 4 and 5 are added: 

"4. 

If it is found  that the two-year period referred  to in paragraph  3 has  expired 
in respect  of  part  of  the  customs  debt,  the  communication  to  the  debtor 
shall remain valid in respect of the remaining amount of the duties to  which 
it pertains. 

5.  Where  the  customs  authorities  have  been  unable  to  determine  the  exact 
amount legally due as a result of an act which, at the time it was  committed, 
was liable to give rise to criminal  court proceedings, the amount may, upon 
the  conditions  set  out  in  the  provisions  in  force,  be  communicated  to  the 
debtor after the expiry of the two-year period referred to in paragraph 3." 

23. 

In Article 222, paragraph 2 is replaced by the following: 

"2. 

The  cases  and  conditions  in  which  the  debtor's  obligation  to  pay  duty  shall 
be suspended  may 
the 
committee procedure: 

also  be  provided 

accordance  with 

for 

in 

where  an  application  for  remission  of  duty  is  made  in  accordance  with 
Article 236, 238 or 239, 

or 

in 
where  goods  are  seized  with  a  view  to  subsequent  confiscation 
accordance  with  the  second  indent  of point  (c)  or  with  point  (d)  of  Article 
233, 

or 

where the customs debt was incurred  under Article  203 and there  is more 
than one debtor, 

or 

in the cases provided for in the second subparagraph of Article 220(1)." 

Article 2 

This Regulation shall enter into force on 1 January 1999. 

Point 1  of Article 1  shall apply from  1  January 2002. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 

For the Council 

The President 

The President 

ISSN 0254-1475 

COM(98) 226 final 

DOCUMENTS 

EN 

02  10 

Catalogue  number  :  CB-CO-98-239-EN-C 

ISBN 92-78-33163-5 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

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