Special Report No 8/99 on securities and guarantees provided for in the Community Customs Code to protect the collection of traditional own resources together with the Commission's replies
Date: 1999-12-16
Institutions: European Court of Auditors
Subjects: Member States' contribution, customs duties, customs regulations, customs territory (EU), financing of the EU budget, own resources

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 8/99

on securities and guarantees provided for in the Community Customs Code to protect the
collection of traditional own resources together with the Commission(cid:146)s replies

(pursuant to Article 248(4) second subparagraph, EC)

(2000/C 70/01)

CONTENTS

Paragraph
references

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal provisions in Community legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 to 6

7 to 9

Scope and objectives of the audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 to 11

Audit findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 to 53

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54 to 55

The Commission(cid:146)s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

2

3

3

4

4

11

13

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Summary

A substantial part of the ECU 14 100 million traditional own resources (primarily customs duties) collected in
1998 on behalf of the Community by the customs administrations of the Member States will have been cov-
ered by some form of security or guarantee before finally being made available to the Commission.

This system of securities and guarantees which is put in place by Community legislation is designed to facilitate
trade by allowing operators the possibility of delaying payment of mature customs debts and suspending
potential duties on goods in customs regimes. Securities or guarantees are compulsory in some circumstances,
optional in others.

To the extent that the failure to respect the procedures relating to securities and guarantees results in the non-
collection of customs revenues due to the Community, additional GNP contributions have to be paid by the
Member States. Overall revenue remains the same, but the burden is distributed in a different way among the
taxpayers in the Member States.

The report raises questions about the responsibilities of the Member States, where in four cases the procedures
for management of securities and guarantees under national arrangements are inconsistent with the require-
ments of Community legislation. In this regard, the national authorities concerned have not assured the com-
plete protection of the Community(cid:146)s financial interests.

It also questions whether the legislation is adequate to fulfil its role in protecting the Community(cid:146)s resources
or is sufficiently clear and unambiguous to ensure its uniform application throughout the Community. It calls
on the Commission to use its powers to resolve the inadequacies and ambiguities noted.

The inability of customs authorities in some instances to monitor the deferred payment accounts of traders
using simplified procedures can sometimes result in these traders taking excessive unsecured credit.

The Community can sometimes suffer delays in receiving its income when customs authorities fail to follow
up promptly cases where customs debts are suspended while awaiting supporting documents or where trad-
ers or importers permanently retain goods which have been imported temporarily into the Community(cid:146)s cus-
toms territory.

In the transit system, long considered to be one of the customs union(cid:146)s high-risk areas, shortcomings are still
obvious (cid:151) despite undoubted improvements.

In a number of Member States the provisions on the setting and monitoring of comprehensive guarantees and
the application of these provisions in the Member States are not entirely reliable. The waiver of guarantee is
too easy to obtain in some Member States. The absence of a requirement to provide information in the single
administrative document on the nature and value of goods ties the hands of the customs authorities in their
efforts to effectively monitor Community transit traffic. Cooperation between the customs authorities in trac-
ing undischarged transit operations is still inadequate.

In three Member States, the provisions regarding appeals under national law allow many traders to bypass the
administrative appeals procedures foreseen in Community customs legislation, such that traders can avoid the
requirement to provide a security. In consequence, the Community(cid:146)s own resources may be put at risk.

A provision in the main regulation on own resources accounting, which requires secured debts to be passed
on to the Community on their establishment (i.e. when identified rather than when collected) is widely
breached by Member States, which prefer to wait until the debts are collected.

Customs debts which are supposed to be covered by guarantees in the transit system have remained outstand-
ing for a number of years because of failings in the insurance arrangements made under the Customs Inter-
national Conventions on the Transport of Goods under Cover of TIR Carnets (TIR Convention).

Finally, the report stresses the need for the Commission and the Member States to reach a consensus on the
drawing-up and enforcement of harmonised legislation and calls on the Commission if the need arises to use
its powers of initiative to propose the necessary improvements.

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Introduction

1. Under Council Decision 94/728/EC, Euratom of 31 October
1994 the Community Budget is part-financed by customs duties
and agricultural duties, collectively known as traditional own
resources. For 1998, the budget outturn amounted to ECU 14 100
million net, approximately 16,9 % of the total own resources bud-
get. The customs authorities of the Member States collect these
revenues on the basis of the Community Customs Code (1) and in
conformity with the provisions of Council Regulation (EEC, Eura-
tom) No 1552/89 of 29 May 1989 (2).

6. Customs debts are required to be entered in accounts main-
tained in each Member State (hereafter called A accounts) and
made available to the Commission. However, unsecured debts and
secured but challenged debts may be entered in separate accounts
(hereafter called B accounts). As soon as Community entitlements
that have been entered in the B accounts are settled, they are
required to be transferred within the prescribed period to the A
accounts. The consolidated balance sheet of the European Com-
munity for 1998 shows the volume of debts entered in the B
accounts at ECU 1 739 million (1 362 million in 1997). This bal-
ance comprises the unsecured debts arising from fraud and irregu-
larity and the secured but contested debts.

2. Definitive customs debts arise, in the main, on the (cid:145)release for
free circulation(cid:146) in the Community of imported goods that are
liable to these duties.

Legal provisions in Community legislation

3. To facilitate trade, Community customs legislation provides
for the collection of duties to be suspended where goods are
removed from direct customs control into customs procedures.
The most significant of these procedures are customs warehous-
ing, inward processing, temporary importation and transit.

Mandatory securities

4. Collection of duties may also be suspended or deferred where
imported goods are moved within the Community customs ter-
ritory under an approved transit scheme; in the event of an appeal
against a decision of a customs authority; to enable periodic pay-
ments to be made; to facilitate the temporary movement of goods;
and where documents supporting a lower or zero-rating of duty
are unavailable at the time of customs clearance of goods.

5. To protect the financial interests of the Community and ensure
that established entitlements of own resources are collected when
due, provisions dealing with securities and guarantees (3) have
been incorporated into Community customs legislation. While
reliable statistics are not available, the Court noted that a substan-
tial part of the ECU 14 100 million of traditional own resources
entered in the Community(cid:146)s accounts for 1998 will have been
covered by a security at least once before being made available.
Securities also cover an unquantified level of potential debts in
suspensive customs procedures.

7. Community customs legislation makes the taking of securi-
ties mandatory in the following circumstances:

(cid:151) when imported goods are released for free circulation in the
Community with approval for deferment of payment of the
duties involved (4),

(cid:151) when goods which would be the subject of customs duty are
being moved through the customs territory under a transit
procedure (5),

(cid:151) when goods are being imported temporarily into the Com-

munity (6),

(cid:151) when the declarant seeks to benefit from a reduced or zero
rate of customs duty but does not, at the time of declaration,
have all the necessary supporting documentation but wishes
none the less to have goods released for free circulation
immediately (incomplete declarations) (7), and

(1) Council Regulation (EEC) No 2913/92 of 12 October 1992 establish-
ing the Community Customs Code (OJ L 302, 19.10.1992, p. 1).
(2) Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989
implementing Decision 88/376/EEC, Euratom on the system of the
Communities(cid:146) own resources (OJ L 155, 7.6.1989, p. 1).

(3) Securities encompass many forms of surety; cash deposits; pledging
of goods; bills of exchange; charges on property, etc. while guarantees
are specific undertakings by guarantors to pay on demand.

(4) Article 224 et seq. of Council Regulation (EEC) No 2913/92.
(5) Article 94 of Council Regulation (EEC) No 2913/92.
(6) Article 88 of Council Regulation (EEC) No 2913/92 and Article 700
of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying
down provisions for the implementation of Council Regulation (EEC)
No 2913/92 establishing the Community Customs Code (OJ L 253,
11.10.1993, p. 1).

(7) Article 257 of Commission Regulation (EEC) No 2454/93.

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(cid:151) when the declarant wishes to make an appeal against a deci-
sion of the customs authority while suspending the imple-
mentation of the decision where that decision has the effect
of causing import or export duties to be charged (1).

cedures where securities or guarantees are taken to protect the
Community(cid:146)s financial interests. The audit also examined the
recovery measures that are available to the customs authorities
where securities or guarantees prove to be insufficient or inad-
equate.

Optional securities

8. The legislation also provides that securities may be taken by
customs authorities as follows:

(cid:151) when customs traders operate a suspensive procedure such as
customs warehousing (2), inward processing (3), processing
under customs control (4),

(cid:151) when goods are in temporary storage awaiting a customs

approved treatment (5),

(cid:151) for imported goods which benefit from favourable tariff treat-

ment as a result of their declared end use (6).

11. The principal objectives of the audit were to evaluate the
extent to which Member States complied with the legal require-
ments, and how these requirements and the practices surround-
ing them cover the risks facing the customs authorities in their
collection of Community own resources. The audit was conducted
in eight Member States namely Belgium, Germany, Spain, France,
Italy, the Netherlands, Austria and the United Kingdom, which
together accounted for some 90 % of the total traditional own
resources made available to the Commission in 1998.

Audit findings

Deferment of duty

Determining the amount of security

9. Where a security is mandatory the customs authorities are
required to fix its level equal to the precise amount of the customs
debt where it can be established with certainty, or if not, the maxi-
mum amount, as estimated by the customs authorities (7), of the
customs debts which have been or may be incurred. Special provi-
sions apply under the transit procedure. Where the security to be
provided is optional the customs authorities of the Member States
determine the level on the basis of their evaluation of a number
of financial and other factors relating to the individual declarants.

12. Article 74(1) and Article 192 of the Community Customs
Code (8) provide that where a customs debt has been incurred fol-
lowing the acceptance of a customs declaration, the goods in
question may only be released to the declarant when the latter
pays the import duties or provides security for the debt arising on
them. A declarant may only be granted the right to defer payment
in accordance with the Community Customs Code where he pro-
vides security corresponding to the amount of the customs debt
in question. It is generally a requirement of the granting of defer-
ral approval that the trader agrees not to exceed the authorised
limits.

Scope and objectives of the audit

10. The Court(cid:146)s audit focused primarily on the management of
securities and guarantees by the Member States(cid:146) customs admin-
istrations and concentrated on the more significant customs pro-

(1) Article 244 of Council Regulation (EEC) No 2913/92.
(2) Article 104 et seq. of Council Regulation (EEC) No 2913/92.
(3) Article 88 of Council Regulation (EEC) No 2913/92.
(4) Article 88 of Council Regulation (EEC) No 2913/92.
(5) Article 51 of Council Regulation (EEC) No 2913/92.
(6) Article 82 of Council Regulation (EEC) No 2913/92.
(7) Article 192 of Council Regulation (EEC) No 2913/92.

13.
In four of the Member States visited, the procedures in
operation are not adapted to ensure that the requirements out-
lined in paragraph 12 are adhered to. This is illustrated by the fol-
lowing examples.

(cid:151) The customs authorities in two of these Member States can-
not confirm or monitor compliance with these requirements
where release of goods for free circulation occurs under a sim-
plified scheduling arrangement. This is because they do not
receive information on goods released under the scheduling
arrangement until the beginning of the following month. The
Court observed one case where the trader had released goods
under this procedure where the customs duties exceeded the
guarantee provided by a factor of 10,5.

(8) Council Regulation (EEC) No 2913/92.

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(cid:151) In another Member State, national procedures, which allow
traders to clear goods at any customs office under an autho-
rising certificate system, sometimes cannot monitor customs
debts being incurred against authorised limits. This is because
the information on customs clearances is physically sent to a
centralised deferment office, with matching occurring days
after clearance of the goods. In addition, a recently imple-
mented computerised accounting system does not allow par-
tially secured customs debts to be entered in the A accounts
and made available to the Commission in the appropriate
manner. As a result, where there is insufficient security to
cover the whole of a customs debt, none of that debt is made
available until the total amount has been collected.

In normal circumstances, when deferral monitoring by cus-
14.
toms authorities indicates that traders may be about to exceed
their authorised limits these traders are required to increase secu-
rity or make physical payment before release of goods. It is
acknowledged that customs cannot effectively monitor adherence
to security requirements in all circumstances because of short-
comings in their systems and operational procedures. In order
that no trader is put at a disadvantage, there may be a need to
apply systematically the provisions of Article 232(1) of the Com-
munity Customs Code concerning compensatory interest in case
of late payment of customs debts in excess of the authorised lim-
its.

Temporary importation of goods

15. Goods may be imported into the Community customs ter-
ritory for exhibition, testing or other temporary purpose without
the payment of customs duties. Community customs legisla-
tion (1) lays down a maximum period of 24 months during which
goods may remain under this procedure. The customs authorities
may, however, determine shorter periods with the agreement of
the person concerned. In exceptional circumstances, the maxi-
mum time limit may be extended. In practice, the maximum
period of 24 months is normally applied. The facility may be used
on the provision of security equivalent to the amount of the duties
involved (cid:151) in practice traders are very often required to provide
a cash deposit as security. The Court found the following:

(cid:151) In one jurisdiction, a major trader that frequently uses the
temporary importation procedure had, at the time of audit,
470 temporary importation declarations uncleared after two
years. The Court noted that the customs authority frequently

(1) Article 140 of Council Regulation (EEC) No 2913/92.

terminates the temporary importation procedure by taking
the cash security to account as customs duty on expiry of the
maximum permitted period. It is not possible to determine
whether and to what extent the own resources involved in
these cases should have been made available to the Commis-
sion at an earlier date, had an effective review procedure been
in operation to determine the actual date of the creation of
the customs debt.

(cid:151) In another, the Court noted that security of only 10 % of the
potential customs duties was taken on goods entered under
the temporary importation procedure at one customs office
visited. The Court understands that the percentage taken var-
ies from office to office and circumstance to circumstance,
but that where the goods are to be used in any other Member
State 100 % of the potential duties is taken. However, customs
legislation provides that in any circumstance where a security
is compulsory, as in the temporary imporation of goods, the
level of the security shall be set as a minimum at the amount
of the duties involved (2).

It is incumbent on the customs authorities of the Member
16.
States to treat the two-year limit allowed for temporary importa-
tion as that and to recognise that failure to carefully monitor
goods introduced into the Community under this procedure can
result in major delays in giving the Community benefit of the
duties involved. In order to protect the Community(cid:146)s financial
interests properly, the Commission should ensure that Member
States put in place appropriate monitoring procedures designed
to identify, on a timely basis, those declarations relating to tem-
porary importation which are uncleared after the time limit agreed
by the customs authorities and, at the latest, 24 months after the
initial declaration.

Incomplete declarations (3)

17. Under Community legislation (4), customs authorities may
allow traders up to one month to provide missing documents or

(2) Article 192 of Council Regulation (EEC) No 2913/92.
(3) When the declarant seeks to benefit from a reduced or zero rate of
customs duty but does not, at the time of declaration, have all the
necessary supporting documentation but wishes none the less to have
goods released for free circulation immediately, he lodges an incom-
plete declaration.

(4) Article 256 of Commission Regulation (EEC) No 2454/93.

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other particulars in support of a customs declaration. Where the
missing documents may enable a declarant to qualify for a reduced
or zero rate of duty, customs authorities may grant a further
extension of up to three months in which to produce the docu-
ments. They are, however, required to take security to cover the
difference between the full rate of duty and the reduced or zero
rate being sought. Where the missing documents or particulars
are not provided by the end of the time limit set out the amount
of the security taken shall be entered immediately in the A
accounts.

In three Member States, the Court noted cases where the
18.
maximum permitted period had elapsed but the procedures in
operation failed to ensure that the secured duties at the full rate
were entered in the A accounts to be made available to the Com-
mission at the appropriate time.

19. As Community legislation covering so-called incomplete dec-
larations is quite clear, the Court sees the delay in entering the
duties involved in the A accounts as resting with the Member
States(cid:146) administrations rather than with the traders concerned.
The use of a drawback procedure may be appropriate here.

Transit

20. The Community Customs Code (1) provides for an external
transit procedure that allows the movement from one point to
another within the customs territory of the Community of:

(cid:151) non-Community goods, without such goods being subject to
import duties and other charges or to commercial policy mea-
sures,

Monitoring and adequacy of comprehensive guarantees

21. The implementing provisions of the Community Customs
Code require that operators using the transit procedure must have
one of three forms of guarantee: individual, for a range of listed
sensitive goods; flat rate, for intermittent users of the procedure;
and comprehensive, for habitual users who satisfy certain criteria.
Article 361 of the provisions implementing the Community Cus-
toms Code sets out a procedure to evaluate the level of compre-
hensive guarantee to be provided by operators. This procedure
determines that the amount of the guarantee shall be set on the
basis of one week(cid:146)s transit operations. The adequacy of the level
of the guarantee must be reviewed and if necessary amended each
year by the customs authorities. Customs authorities are required
to use information from customs offices of departure in the review
process. However, as there are at present no procedures in place
to obtain such information from the departure offices in other
Member States, the Court sees this as implying a need to use the
commercial and accounting documentation of the operator to
achieve a meaningful result from the process (3).

22. The Court found that the arrangements for carrying out
these reviews were inadequate in a number of Member States as
the following examples illustrate.

(cid:151) In two, the customs authorities used data provided by transit
operators covering only a reference period in the year(cid:146)s activi-
ties. Although the customs authorities concerned considered
that the reference periods were representative it was not pos-
sible to confirm that those selected were typical of the trad-
ers(cid:146) activities and therefore that the comprehensive guarantees
were adequate.

(cid:151) In another, the Court noted that a review of guarantees had

not been carried out for five years.

(cid:151) Community goods, which are subject to a Community mea-
sure involving their export to third countries and in respect
of which the corresponding customs formalities for export
have been carried out.

(cid:151) While reviews are carried out in five Member States, the fre-
quency and method of the review do not conform to the
requirements of Community legislation. For instance:

The most significant movements are made under the external
Community transit procedure and under cover of a TIR carnet
issued pursuant to the TIR Convention (2).

(cid:151) In one, a computerised review process is in operation but
is such that it cannot confirm the continuing adequacy of
the level of guarantee because, in common with other
Member States, it cannot access details of transit opera-
tions commenced in other Member States (see paragraph
21).

(1) Article 91 of Council Regulation (EEC) No 2913/92.
(2) Customs Convention on the international transport of goods under
cover of TIR carnets (TIR Convention) (OJ L 252, 14.9.1978, p. 2).

(3) Article 361 of Commission Regulation (EEC) No 2454/93.

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(cid:151) In another, reviews were only carried out every two years,
while in a customs office of another reviews were only
carried out on a sample basis in 1996 and 1997.

(cid:151) In the fourth regular reviews are carried out but the global
guarantee figures suggested by operators in a number of
cases examined by the Court were accepted by customs
without reference to or verification of information con-
tained in the commercial or accounting documentation of
the operators.

(cid:151) Finally, the customs authorities of two Member States do
not make use of a central transit office. This means that
individual customs offices that issue transit certificates
cannot monitor transit operations carried out under these
certificates at other offices of departure. The national
authorities are therefore not in a position to verify that
comprehensive guarantees in place are adequate for opera-
tions commencing within its own jurisdiction.

23. The Court noted a transit case where the unlawful introduc-
tion of cigarettes into the Community gave rise to a demand for
customs duties of approximately ECU 2,8 million. The compre-
hensive guarantee, provided to the customs authority of a third
country under common transit arrangements, only amounted to
approximately ECU 200 000. The authorities of the contracting
state are responsible for monitoring the adequacy of guarantees
accepted by them. In this instance, the insufficient guarantee had
been exhausted by prior claims on it.

24. This case serves to illustrate a significant shortcoming in the
ability of the comprehensive guarantee provisions to protect the
Community(cid:146)s financial interests. Under Article 360 of the amended
provisions implementing the Community Customs Code, cus-
toms authorities may issue multiple copies of guarantee certifi-
cates, each of which may be used up to the limit of the guarantee
and from any office of departure in the customs territory. This
fact and the time lag in clearing existing transit operations effec-
tively mean that the debts supposed to be covered by a guarantee
may be many times greater than it. The inevitable consequence is
that in the event of a transit failure and subsequent default by the
operator in paying his debts, the guarantor will only be liable for
debts up to the limit set.

Waiver of comprehensive guarantee in transit

(cid:151) be established in the Member State where the waiver is granted,

(cid:151) be a regular user of the Community transit procedure,

(cid:151) be in a financial situation such that he can meet his commit-

ments,

(cid:151) not have committed any serious infringement of customs or

fiscal laws, and

(cid:151) undertake to pay, upon the first application in writing by the
customs authorities, any sums claimed in respect of his Com-
munity transit operations.

26. Community legislation (2) requires that guarantee waiver
should not be granted for the movement of goods of value in
excess of ECU 100 000.

27. The Court noted the use of the waiver provisions in a num-
ber of Member States and in two of them was unable to confirm
the use by their respective customs authorities of formal proce-
dures to verify the financial suitability of applicants for guarantee
waiver.

28. The Court was unable to confirm that procedures were in
place to monitor compliance with the requirement that move-
ments of goods of value in excess of ECU 100 000 were not
granted guarantee waiver. The fact that the single administrative
document used for transit purposes does not include information
on the value of consignments nor customs tariff number militates
against effective monitoring by Member States of this provision.
It also hampers the customs authorities in assessing risk inherent
in individual transit operations and in ensuring the adequacy of
the guarantees provided.

29. Given the tendency of Member States to enter all debts aris-
ing from undischarged transit operations in the B accounts, the
Court questions whether the undertakings required to be given as
a condition of the granting of guarantee waivers represent (cid:145)self-
guarantees(cid:146) and that the associated debts should be deemed to be
secured debts under the terms of Council Regulation (EEC, Eura-
tom) No 1552/89 and therefore made available to the Commis-
sion without delay.

25. Member States may grant a waiver of the comprehensive
guarantee to an operator under Community customs legisla-
tion (1) provided the operator meets the following conditions:

30.
In a review of outstanding transit operations in one Member
State, the Court noted four cases where the customs authorities
had established own resources debts due from operators that had
been granted guarantee waivers. At the time of audit, payment

(1) Article 95 of Council Regulation (EEC) No 2913/92.

(2) Article 95 of Council Regulation (EEC) No 2913/92.

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had not been received in any of these cases nor were the sums due
made available to the Commission on their establishment. It is
clear that the grant of a guarantee waiver should be given only to
those traders involved in transit operations who have displayed a
willingness to abide by the provisions of the scheme. The Court
noted that proposals (1) have recently been made to make the
granting of waiver dependent on traders meeting higher stan-
dards of reliability in the use of the transit procedure and in their
cooperation with the customs authorities.

Notification of potential transit debts to guarantors

31. Community customs legislation (2) provides that a guaran-
tor shall not be required to honour his guarantee covering debts
arising from undischarged transit operations if he is not notified
of the potential debt within a period of 12 months from the date
of registration of the operation. The Court noted 10 cases, entered
in the B accounts, where the customs authority failed to notify the
guarantors within the prescribed period of potential liabilities of
approximately ECU 200 000 under guarantees in place. Another
customs authority did not demand payment from a guarantor of
an established debt of approximately ECU 330 000, entered in the
B accounts, for an undischarged transit operation under a guar-
antee, because in its view although it had notified the guarantor
within the prescribed time limit it had not determined the amount
of the debt on time.

32.
In the Court(cid:146)s view the own resources involved should have
been entered in the A accounts and made available to the Com-
mission as the amounts were guaranteed and not subject to chal-
lenge within the prescribed time limit. As a consequence of this
error or failure on the part of customs, the Member States in
question should assume the financial consequences and make the
independently of
established duties available without delay,
whether or not the debts will be recovered from the debtors or
guarantors. The Commission should charge interest to compen-
sate for making payments available belatedly, which resulted from
the administrative practice described above.

Mutual assistance issues

33. A major tool in the Community(cid:146)s fight against fraud in the
context of customs union and common agricultural policy is
Council Regulation (EC) No 515/97 (3) on mutual assistance
between the administrative authorities of the Member States and
cooperation between the latter and the Commission. This Regula-
tion asserts that (cid:145)effective cooperation in this field strengthens the
protection of the financial interests of the Community(cid:146).

34. During its audit, the Court reviewed the application of mutual
assistance procedures in transit and noted one instance involving
four Member States where only ECU 99 707 had been collected
from a total debt of ECU 645 557 resulting from apparent delays
in passing on demands for payment, insufficient guarantee or
incorrect name of guarantor.

35. The Court, in its report on the 1994 financial year (4), com-
mented on inadequacies in cooperation and follow-up by Mem-
ber States and the Commission in their implementation of the
regulations on mutual assistance. The Court has also commented
in past reports that the single market has become a reality for
traders (cid:151) especially those who would evade the payment of duties
and taxes, while for the Community services it still seems to be
constrained within the national borders.

TIR (transports internationaux routiers/international road
transport))

36. Article 91(2) of the Community Customs Code (5) provides,
inter alia, that movements of non-Community goods can be made,
under certain conditions, under the TIR Convention of 14 Novem-
ber 1975 using TIR carnets. In these cases, approved guarantee-
ing associations act as guarantors up to a maximum of USD
50 000 per TIR carnet (depending on the Member State involved)
relieving the operator of the need to provide a specific transit
guarantee.

37. The guaranteeing associations are invariably road hauliers(cid:146)
associations in individual States, both Community and third coun-
tries. The Convention provides for the honouring, by the relevant
association in any State through which goods are being

(1) Opinion of the Commission pursuant to Article 189b(2)(d) of the EC
Treaty, on the European Parliament(cid:146)s amendment to the Council(cid:146)s
common position regarding the proposal for a European Parliament
and Council Regulation (EC) amending Regulation (EEC) No 2913/92
establishing the Community Customs Code (transit) (COM(1999) 47
final).

(2) Artice 374 of Commission Regulation (EEC) No 2454/93.

(3) Council Regulation (EC) No 515/97 of 13 March 1997 on mutual
assistance between the administrative authorities of the Member
States and cooperation between the latter and the Commission to
ensure the correct application of the law on customs and agricultural
matters (OJ L 82, 22.3.1997, p. 1).

(4) OJ C 303, 14.11.1995, p. 25.
(5) Council Regulation (EEC) No 2913/92.

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transported, of any debts arising from the non-discharge of a TIR
operation, even though the carnet holder(cid:146)s contract is with an
association which is incorporated and carries out its activities in
another State.

38. The guaranteeing associations have arranged (cid:151) through the
International Road Transport Union (IRU) (cid:151) insurance to cover
potential liabilities they could face from the issue of carnets under
the Convention. In the course of the audit in a number of Mem-
ber States and at the Commission the Court became aware of dif-
ficulties in relation to these insurance policies. The pool of insur-
ance companies, underwriting the potential liabilities of the IRU,
refused to honour their policies because of the magnitude of debts
arising in trade between the central and east European countries
and the Community. The bulk of these debts arose in one Mem-
ber State as a consequence of its proximity to these countries.

39. Under Community rules, the Member State responsible for
the collection of duties in undischarged TIR cases is that in which
the goods were last known to be or where the goods were first
introduced into the Community where their whereabouts is not
known. As a result of its particular geographical position, one
Member State accounts for a disproportionate amount of undis-
charged transit cases.

40. The Court noted from an internal Commission report on a
monitoring visit to this Member State that the national authority
had concluded an agreement with one of the guaranteeing asso-
ciations not to press for payment under the Convention but that
an arbitration case is in progress.

41. Community legislation (1) requires that own resource entitle-
ments not collected but covered by a guarantee should be made
available to the Commission by the 19th day of the second month
following the establishment of the debt. The Court has asked the
national authority for the legal justification not to make the debts
available at the appropriate time in this instance.

42. The Court noted that demands for payment of customs
duties to the guaranteeing association were withdrawn when it
was discovered that the demands were erroneously sent to the
guarantor before a request for payment was made to the princi-
pal. The guarantor cannot now be proceeded against for these
debts. These duties have not been made available to the Commis-
sion despite the fact that their non-collection resulted from an
error of the customs authorities. The Commission should take
steps to collect these duties and late payment interest thereon.

(1) Council Regulation (EEC, Euratom) No 1552/89.

43. The TIR Convention is an integral part of the Community(cid:146)s
facilitation of trade in moving goods through and throughout the
Community territory. The Court is of the opinion that the diffi-
culties giving rise to the failure to collect the considerable amounts
of customs duties and other taxes arising from these TIR opera-
tions indicate the consequences of not putting in place an effec-
tive monitoring system in the whole field of transit of goods.
Monitoring here means not only supervision of the adequacy of
guarantees and reliability of guarantors but also the timely clear-
ance of operations carried out.

Appeals

44. Article 244 of the Community Customs Code permits a cus-
toms authority to suspend implementation of a disputed decision
which would have given rise to a customs debt provided a secu-
rity for the debt exists or is lodged. Security need not be provided
where this requirement could have serious social or economic
consequences for the appellant. Examples of circumstances where
security has not been requested are:

(cid:151) in one customs authority, the Court noted from a review of
the B accounts that demands for payment of own resources
amounting to ECU 10 737 129 in respect of undischarged TIR
operations remained uncollected up to November 1998. The
carnet holder lodged an appeal against these demands, which
was accepted for hearing with suspension of the decision but
without the requirement to provide a security. The appeal was
rejected as unfounded in December 1998,

(cid:151) in three other Member States, the provisions of national law
allow many traders to bypass the administrative appeals pro-
cedure foreseen in Article 244 of the Community Customs
Code. By following national law, traders can avoid the require-
ment to provide a security by making their appeals direct to
the relevant courts of the respective Member States.

45. The Commission should carry out a review of the provisions
of national law relating to security on appeals to establish the
extent to which national legislation is inconsistent with the require-
ments of the Community Customs Code.

Situations where no security exists

46. Earlier in this report (see paragraph 25) the Court com-
mented on the responsibilities of the Member States where cus-
toms debts cannot be collected and the principal concerned was
granted a guarantee waiver under the transit procedure.

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47. Other circumstances exist where no security is required
although own resource debts may arise. These are:

(cid:151) Article 189 of the Community Customs Code which provides
that no security is required where the debtor or potential
debtor is a public authority, and

(cid:151) Article 94 of the Community Customs Code which provides
among other things that for transit operations no guarantee
is required from the railway companies of the Member States.

48. With regard to the Article 189 provisions, there are many
situations in the Member States where the nature of a public
authority, as used by customs authorities, is far from uniform.
There are significant numbers of arm(cid:146)s-length agencies and public
utilities where it is by no means certain the Member States will
underwrite the debts of these agencies or bodies. As regards
Article 94, in several Member States the railway companies now
constitute private enterprises.

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

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

52. These provisions are not widely respected in the Member
States, with the consequence that frequently the Community(cid:146)s
entitlements are not made available to the Commission when
required. This is illustrated by the following examples.

49. Where the customs authorities decide not to take an optional
security, such decisions are based on their assessment of the reli-
ability of the principals concerned. This implies that the Member
States assume liability for customs debts arising in cases of non-
recovery.

(cid:151) In many Member States, secured but uncollected and uncon-
tested customs debts are wrongly entered in the B accounts
until such time as they are collected when they are transferred
to the A accounts.

50. The only situation in which Community customs legislation
does not oblige customs authorities to take a security is where a
demand is made for payment of a customs debt after clearance of
goods. In all other cases customs authorities make or are deemed
to have made an assessment of the risk of not collecting debts
which may arise. The Court is of the opinion that the provisions
of Article 17(2) of Council Regulation (EEC, Euratom) No 1552/89
are sufficiently clear to deal with the problem outlined. It is
incumbent on the Commission to exercise its supervisory role to
ensure that Member States only exercise their prerogative under
the Article (cid:145)in cases of force majeure(cid:146) or where collection of cus-
toms debts cannot be effected if (cid:145)it appears that recovery is impos-
sible in the long term for reasons which cannot be attributed to
them(cid:146). The Court is of the view that failure to make a proper
assessment of risks of non-collection of customs debts does not
constitute a reason for not making available own resources in
accordance with this Article.

Making available to the Commission secured entitlements

(cid:151) In one of these, the administration argues that Member States
cannot know that the debt has been accepted until after it is
communicated to the debtor. Thus it follows logically they
should always have the possibility of entering the amount of
duties in the B accounts, since they do not know whether the
entitlements have been challenged. Furthermore, under
national legislation, failure to make payment within the time
limit is adequate evidence of contestation of the debt.

(cid:151) In another, the administration contends that Community leg-
islation does not permit the transfer of an amount from the
A accounts to B accounts and that therefore it is inappropri-
ate to enter debts that may be challenged in the A accounts.

(cid:151) Although the customs authority of one agrees that the regula-
tions require that such entitlements should be entered in the
A accounts immediately, the Court noted that in practice
where customs debts are only partly secured the whole
amounts are entered in the B accounts.

51. Article 6(2) of Council Regulation (EEC, Euratom) No1552/89
makes the following provisions regarding the making available of
Community own resources:

(cid:151) In another, the national instructions governing accounting for
uncollected debts covered by comprehensive guarantees under
the Community transit and TIR procedure, state that such
debts are to be considered unsecured for the purpose of
applying the provisions of Council Regulation (EEC, Euratom)

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No 1552/89. This view is supported by two others, which
contend that it is not possible to confirm, at the time of estab-
lishing a transit debt, that the comprehensive guarantee has
not been exhausted by prior calls on it, it is appropriate to
enter the amount in the B accounts until collected.

53. This report cites a number of circumstances where Member
States fail to make available own resources on their establishment
that are covered or partly covered by security and that do not
show evidence of being appealed by the debtors involved. The
Court is concerned that:

(cid:151) despite the fact that it has reported on this issue repeatedly

over the past number of years, and

55. The Court(cid:146)s objective was to assess the suitability of the pro-
cedures. The main conclusions are:

(a) compensatory interest should be levied on traders who effec-
tively use unauthorised credit in their defer ment accounts
to ensure that all traders receive equality of treatment (see
paragraph 14);

(b) similarly, use of a drawback procedure for incomplete dec-
lar at ions would, if implemented, ensure that the Commis-
sion and Member States receive customs duties in a timely
manner and should also reduce the current level of monitor-
ing required by the procedures (see paragraph 19);

(cid:151) despite the fact that the Commission services have also raised

the problem with the Member States over the years,

(c) concer ning t he Community t r ansi t system :

no meaningful solution has been found to ensure that the Com-
munity receives the resources to which it is entitled in good time.
This matter is of particular importance given that, at its meeting
of 24 and 25 March 1999 in Berlin (1), the European Council
agreed that the amount deducted by Member States by way of col-
lection costs (2) would be increased from 10 % to 25 % effective
from 2001.

Conclusion

54. This report highlights a number of situations where the pro-
cedures applied by the Member States in the management of secu-
rities and guarantees are either inconsistent with the requirements
of Community customs legislation or are simply ineffective (e.g.
see paragraphs 13 and 14). The customs authorities of the Mem-
ber States have a clear responsibility to remedy these deficiencies.
Equally however, the Commission must use its powers to enforce
improvements. In so far as inadequacies and ambiguities in the
legislation give rise to difficulties in assuring consistent applica-
tion of customs rules, the Commission has the possibility of rais-
ing any such problems with the Member States in the Customs
Code Committee and to seek appropriate solutions through dis-
cussion. If this forum does not resolve these problems, then the
Commission has the power of initiative to propose the necessary
improvements, although their successful implementation depends
on the willingness of the Council and the Parliament to approve
them; and of the Member States to take the necessary action on
the ground.

(1) European Council 24 and 25 March 1999, Conclusions of the Presi-
dency. Press Release: Brussels (25.3.1999) - No SN 100 (Presse).
(2) Article 10 of Council Regulation (EEC, Euratom) No 1552/89.

(cid:151) the purpose of the comprehensive guarantee and its effec-
tiveness as a financial instrument to protect Community
revenue are put in doubt by a number of system weak-
nesses,

(cid:151) the Court questions whether there is a greater emphasis
placed on goods than on the operator in the context of
comprehensive guarantee in the light of the level of undis-
charged transit operations encountered during the audit.
The system as constituted entitles the operator to take up
the facility to use multiple guarantee certificates each of
which can be used up to the limit of the guarantee render-
ing it almost ineffective for a great many operations (see
paragraph 24),

(cid:151) the priority given to the monitoring of the levels of guar-
antee set for operators up to now has been inadequate but
there are signs of improvement. To be effective the moni-
the
toring process must
accounting and commercial documents of the operator
(see paragraphs 21 to 24),

formally include review of

(cid:151) to facilitate the review and also alert customs authorities
to potential risks from high value goods the minimum
contents of the transit single administrative document
must be revised to include consignment values and tariff
code number (see paragraph 28),

(cid:151) guarantee waivers should only be granted to operators
proven to have continuing reliability and financial stand-
ing. The evaluation of reliability should be rigorously car-
ried out and documented. There should be no need for the
currently unenforceable ceiling of ECU 100 000 consign-
ment value in waiver cases (see paragraphs 27-30);

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(d) given the significant unpaid customs duties involved the Com-
mission should take steps to help bring the reported problems
in the use of TI R car net s to a speedy conclusion (see para-
graphs 36 to 43);

(e) the report highlights a far from homogenous view across the
Member States of what constitutes a secured debt or indeed
the conditions indicating that such a debt has been ch a l -
lenged. The Commission must review the legislative require-
ments to ensure their clarity, counsel the accounting depart-
ments in the Member States or issue new instructions (see
paragraphs 51 and 52);

(f)

the status of debts ostensibly covered by comprehensive guar-
antee in the tr ansit system needs to be clarified since clearly

customs authorities are put in the invidious position of not
being in a position to be satisfied if any particular transit con-
signment is in fact secured (see paragraph 52);

(g) the extent to which the Member States(cid:146) national law regard-
ing appeals is consistent with Community legislation needs
examination by the Commission. The customs authorities
may at present (under Article 244 of the Community Cus-
toms Code) waiver the requirement to take a security in cases
of greatest risk (cid:151) where it would put the appellant in a seri-
ous economic situation. However, if national law permits
traders to bypass the appeals procedure foreseen in the Cus-
toms Code, the relevant national provisions should be reas-
sessed since such circumvention of Community legislation
does not protect the Community(cid:146)s financial interests (para-
graph 44).

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 16 December 1999.

For the Court of Auditors

Jan O. KARLSSON

President

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THE COMMISSION(cid:146)S REPLIES

Summary

The Court of Auditors(cid:146) special report on securities and guarantees concerns the application of Community
legislation on guarantees. It examines the implementation of the three forms of guarantee: t he mandator y
guarantee which covers the (customs) debt incurred, in particular in cases where payment is deferred follow-
ing release of the goods; t he conditional gu ar antee which may be obligatory, partial or optional and
which covers the debt which may be incurred (the report addresses in particular the treatment of guarantees
under certain customs procedures such as the external transit procedure and temporary importation and in
cases of administrative or judicial appeal), and finally, the report analyses the implementation of legislation on
guar antee waiver. In its observations the Court criticises the way in which eight Member States apply Com-
munity provisions on guarantee and the accounting consequences which may result. More particularly, the
problems linked to the implementation of the TIR transit procedure were highlighted.

With regard to the substance, the Commission agrees with these criticisms, which do indeed confirm the
results of its own inspections, on which follow-up action is already well under way, including, in one case, steps
to launch infringement proceedings under Article 226 of the Treaty. With regard to the external transit pro-
cedure, the Commission is aware of the problem and has adopted measures to remedy it, both on the legisla-
tive and operational side and by setting up a computerised system which should be completed by 2003. The
Commission also shares the Court(cid:146)s opinion on the need to ensure that national legislation conforms with
Community law on the provision of a security in the event of an appeal (Article 244 of the Community Cus-
toms Code). Lastly, with regard to a guarantee for deferred payment, the Commission is prepared to study the
Court(cid:146)s suggestions regarding the application of compensatory interest in certain cases where the guarantee
threshold is exceeded.

However, the Commission does not share the Court(cid:146)s opinion on broader recourse to the drawback procedure
envisaged by the Community legislation in the event of incomplete declarations. The Commission considers
that the benefit which could be drawn from systematic use of this system, compared with the cost it would
involve, is not immediately apparent.

Findings

Deferment of duty

Commission is happy to study the Court(cid:146)s suggestion to apply
Article 232(1)(b) of the Community Customs Code, including in
cases where the guarantee for payment deferral is exceeded, pro-
vided that recovery of the amounts due is jeopardised.

13. The Commission considers that whenever payment of a debt
incurred is deferred, and must therefore be covered by a 100 %
guarantee, the amount of the debt must be entered in the accounts
and, if it is not contested, made available within the prescribed
time limit. The anomalies pointed out by the Court are being fol-
lowed up in an appropriate fashion by the Commission. If there
are financial consequences, the Commission will take the neces-
sary steps; in the case of Germany, demands have already been
sent for the amounts due.

Temporary importation of goods

15. For the cases notified by the Court, the Commission is exam-
ining the replies of the Member States concerned. After it has
done so it will decide on its position and any corrective measures
which may need to be taken.

14. The Member States must take the appropriate measures to
implement the Community legislation on payment deferral; a
to the Member States. The
reminder of

this will be sent

16. The Commission considers that it is for the Member States
to ensure correct application of Community legislation and to
assume the responsibility resulting from any shortcomings on

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their part in doing so. A reminder to this effect will be sent to the
Member States concerned.

Incomplete declarations

18. For the cases cited by the Court concerning Belgium and
Spain, the follow-up action already taken by the Commission
means that the financial consequences are negligible. In the case
of the United Kingdom, the Commission will undertake any
follow-up action that may be necessary once it has analysed the
United Kingdom(cid:146)s reply.

19. The Commission agrees with the Court concerning the
responsibility of the Member States to ensure correct application
of Community legislation on incomplete declarations. The draw-
back system to which the Court refers is already provided for in
the Community legislation if requested by the declarant. Under
Article 257 of the implementing provisions of the Community
Customs Code, the declarant can request that the maximum
amount to which the goods may be liable be entered in the
accounts and then ask for reimbursement on production of the
missing document. However, the Commission considers that sys-
tematic use of this procedure would not be cost effective, particu-
larly in terms of management of accounts.

Transit

Monitoring and adequacy of comprehensive guarantees

22. The Commission shares the Court(cid:146)s concerns regarding the
shortcomings found in the application of the provisions on the
comprehensive guarantee. It also considers that the level of the
guarantee that is set must take account of the operator(cid:146)s actual
economic activity. The Commission will draw the attention of the
Member States concerned to the need to adhere to the existing
provisions on guarantees and the accounting obligations which
arise from them; they will be sent a note to this effect. Verifying
guarantees is also one of the priority measures to be implemented
by the customs authorities, in line with the shared framework of
objectives for the national transit management plans.

rent procedure as soon as possible and have therefore decided to
take a step-by-step approach in order to make substantial improve-
ments in the management and verification of transit operations.
This approach will mean that the countries concerned will be
able, from the first step, to verify transit movements in real time,
considerably reduce the time needed for clearance and overcome
most shortcomings in the current paper system. The functions
developed in this way will then be extended to eventually encom-
pass computerised management of the guarantees between all the
partners in common and Community transit. In the same spirit,
the national administrations have the option of developing com-
puterised management of the guarantees at national level, in line
with the specifications of the New Computerised Transit System,
as soon as the initial implementation is started.

The Commission is also preparing a transit manual which will
give examples for determining the amount of the guarantee, and
is planning action for 2001 on monitoring implementation of the
reform, which will apply particularly to the management of guar-
antees.

23. The case highlighted by the Court and the consequences
which may arise from it are being examined by the Commission
which has, in the mean time, requested further information from
Italy. If necessary, appropriate action will be taken.

24. The Commission endorses the Court(cid:146)s comments that the
comprehensive guarantee provisions, particularly the possibility
of issuing multiple copies of certificates for a single guarantee,
should be changed. It has in fact made a number of proposals to
this end, which, unfortunately, were not supported by the Mem-
ber States in the Customs Code Committee. The Member States
consider that only the New Computerised Transit System will
provide adequate remedies.

Waiver of comprehensive guarantee in transit

27. Regarding possible shortcomings in the application of guar-
antee waivers, the Commission is currently examining the Mem-
ber States(cid:146) replies. If necessary, they will be reminded of their obli-
gations under the Community Customs Code.

As part of the transit reform, the Commission is working on the
installation of a computerised system, completion of which is
scheduled for 2003, given the constraints imposed by the subsid-
iarity principle, the scale of the project and the budgetary and
human resources requirements (at both Community and national
administration level). The Commission and the national admin-
istrations concerned are aware of the need to consolidate the cur-

28. The Commission is aware of the difficulties caused by the
lack of information on the transit document. It has made propos-
als within the competent committee and the EC-EFTA working
party on common transit with a view to ensuring that the tariff
code and value of the goods are put on the declaration for transit.
Without prejudice to the final decision, the discussion on this
point has been moving towards a limited extension of the tariff
code requirement. The Commission will have to determine, before
1 January 2003 and in collaboration with the system(cid:146)s users, the

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situations and conditions in which the obligation to provide this
code and, if necessary, other data on the goods placed under the
procedure could be extended to most transit operations.

ply, the Commission is currently examining the case with a view
to possible infringement proceedings under Article 226 of the
Treaty.

29 and 30. The Commission considers that a commitment made
under a guarantee waiver is not equivalent to a guarantee pro-
vided in due form, and that, therefore, in the case of a guarantee
waiver, the debts do not have to be entered in the A account.
However, any shortcoming in the granting of the guarantee waiver
is likely to be the responsibility of the Member State.

40. The Commission is aware of the substantive features of the
agreement mentioned by the Court. It has already contacted the
German authorities on several occasions in order to obtain the
document in question. Although Germany has not yet replied
favourably, the consequences of the agreement will be handled by
the Commission under the infringement proceedings referred to
in the reply to paragraph 39.

Notification of potential transit debts to guarantors

41. See the replies to paragraphs 39 and 40.

31. The Commission is currently studying the cases noted by the
Court in the light of the replies given by the Member States con-
cerned. Once it has further information, and after in-depth exam-
ination, the Commission will adopt a position and draw the
appropriate financial and other consequences.

42. The Commission shares the Court(cid:146)s concerns regarding the
anomaly indicated. As soon as the reply from the Member State
concerned has been received, it will take the appropriate meas-
ures and will ask, where appropriate, for default interest.

32. The Commission wholly agrees with the Court(cid:146)s assessment
on the consequences of entering guaranteed and uncontested
amounts in the B accounts. If the basic facts are confirmed, it will
make sure that the Member States concerned take responsibility
for it, both for the principal amounts and for the default interest.

43. The Commission is aware of the difficulties which have
arisen in the past over application of the TIR Convention. In
cooperation with the Member States, it is taking steps to improve
this situation which, in the international context, will lead to revi-
sion of the TIR Convention.

Mutual assistance issues

Appeals

34. The Commission is studying the anomalies highlighted by
the Court. As soon as the answers are analysed, it will draw the
appropriate conclusions. In any case, in the event of failure to
provide a compulsory guarantee, consideration should be given
to invoking the financial liability of the Member State concerned.

35. The remarks made by the Court have been incorporated in
the recasting of the system of mutual assistance which resulted in
Council Regulation (EC) No 515/97 of 13 March 1997. The Regu-
lation modernised and improved the institutional framework for
mutual assistance considerably. Its application should correct the
shortcomings encountered in the past.

44 and 45. With regard to the case raised by the Court concern-
ing Germany, the Commission will ask the German authorities to
explain why they did not require a guarantee. As to the other
cases mentioned, the Commission is aware of the problems raised
by the Court (cid:151) it too had identified them during its own inspec-
tion visits. The Commission will conduct a survey in all the Mem-
ber States of guarantee practices in cases where appeals are lodged.
It would seem that in some Member States there are national laws
which conflict with Article 244 of the Community Customs Code.
Once this analysis has been confirmed, the Commission will take
the necessary corrective measures.

TIR (international road transport)

Situations where no security exists

39. The Commission considers that guaranteed, uncontested
amounts should be entered in the A account and made available.
These obligations, which derive from the regulations in force,
were drawn to Germany(cid:146)s attention and a letter calling for funds
was sent to that Member State. Given Germany(cid:146)s refusal to com-

48. The Commission realises that the liberalisation of the rail-
ways must lead to a review of the guarantee waiver in the case of
operations carried out by the railway companies of the Member
States. This work has already started in the competent bodies
(Customs Code Committee and the EC-EFTA working group on
common transit). New provisions will be incorporated in the
rules.

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49. The Commission can confirm that in the case of the optional
guarantee, if the part not covered by the guarantee cannot be
recovered, the Member State must assume liability. This principle
was applied in the past, and the amounts in question were made
available.

50. See the reply to paragraph 49.

Making available to the Commission secured entitlements

52. The Commission shares the Court(cid:146)s concerns about the cases
of erroneous entry in the accounts reported by the Court.

(cid:151) As regards Belgium, the Commission was already aware of
these from its own inspections and is taking the appropriate
follow-up action.

(cid:151) As regards the reasons put forward by Austria, they undeni-
ably contradict the rule that guaranteed, uncontested amounts
should be entered in the A account; if, after the time limit for
making the amounts available has expired, an appeal is lodged,
the only possibility for correcting the A account would be fol-
lowing a refund or remission procedure as laid down by the
Community Customs Code.

(cid:151) Suitable follow-up action will be taken regarding the cases
reported in Italy so as to identify the financial consequences
for the Community budget, if any.

(cid:151) The situation in Germany concerning the entry in the accounts
of guaranteed amounts is currently being investigated by the
Commission in connection with infringement proceedings
(see also the reply to paragraph 39).

53. The Commission can confirm that the accounting pro-
cedures for traditional own resources can be a source of mistakes,
which are sometimes specific and sometimes structural. For this
reason, the accounting system in Member States(cid:146) administrations
is always checked by the Commission. If the rules are not obeyed,
the Commission does not hesitate to take the requisite measures,
including starting infringement proceedings where necessary. In
all cases reported by the Court, if the practice objected to means
that the resources are made available late, the Commission asks
that the financial interests of the Union be protected by payment
of default interest.

Conclusion

55.

(a) Concerning guarantees in cases of deferred payment, the
Commission is prepared to study the Court(cid:146)s suggestions

regarding the levying of compensatory interest in certain
cases where the amount of the guarantee granted is
exceeded.

(b) Community legislation already provides for a drawback
procedure, which must be requested by the declarant, in
cases of incomplete declarations. The Commission can,
however, see no justification in cost-benefit terms for
making such a procedure systematic.

(c) The Commission is aware of the difficulties with the
transit system. The proposals made by the Commission
in certain fields (use of several copies of guarantee cer-
tificates) have not been taken up by the Member States,
but the Commission is working on introducing a new
computerised system which will provide general solu-
tions to the problems encountered. In the present set-up,
the emphasis is on the sensitivity of the goods. In the
new set-up created by Regulation (EC) No 955/1999, the
approach will take account of both the status of the
operator and the nature of the goods transported, by
incorporating criteria for the reduction of the compre-
hensive guarantee or the guarantee waiver.

(d) In cooperation with the Member States, the Commission
is taking action to improve the situation and involving a
revision of the TIR Convention at international level.

(e) In all cases, the Commission notifies the Member States
of the problems encountered and the solutions it pro-
vides. These items are discussed at meetings of the Advi-
sory Committee on own resources, and the Commission
follows up each anomaly detected.

(f) Given that a guaranteed, uncontested customs debt must
be entered in the A account within the time limit stipu-
lated in the Community rules, any failure by a Member
State to comply with this provision renders that State
liable. The Commission is monitoring this matter closely.

(g) To ensure that national provisions comply with Article
244 of the Community Customs Code as far as provision
of a guarantee in the event of an appeal is concerned, the
Commission will carry out a survey of the Member
States. Depending on the results, it will take the neces-
sary measures to remedy any shortcomings.