Proposal for a COUNCIL REGULATION on the suspension of customs duties applicable to imports of certain heavy oils and other similar products
Date: 2015-02-02
Institutions: European Commission
Subjects: Combined Nomenclature, customs duties, flavouring, heavy oil, import (EU)













EUR-Lex - 52015PC0038 - EN











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52015PC0038

Proposal for a COUNCIL REGULATION on the suspension of customs duties applicable to imports of certain heavy oils and other similar products /* COM/2015/038 final - 2015/0024 (NLE) */









EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
The purpose of the present proposal for a
Council Regulation is the suspension of the autonomous common customs tariff
duties on certain goods contained in Chapter 27 (heavy oils), which are
currently classified under CN code 2707 99 99.
According to Note 2 to Chapter 27, oils in
which the weight of non-aromatic constituents exceeds that of the aromatic fall
under heading 2710, thus the products enjoy duty exemption, when for undergoing
some specific process. However, oils in which the weight of aromatic
constituents exceeds that of non-aromatic are to be classified since
April 2013 under heading 2707 (CN 2707 99 9) and are, thus, subject to a
duty rate of 1,7 %.
The technical characteristics of the products
concerned are listed in the Explanatory Notes to the Combined Nomenclature[1] of subheadings 2707 99
91 and 2707 99 99; those notes were amended in April 2013 in order to clarify
the scope of the products covered by heading 2710 and to remove a contradiction
between the Explanatory Notes to the Combined Nomenclature and Note 2 to
Chapter 27. Therefore, such oils are classified under different subheadings
because of the proportion of aromatic constituents they contain and,
consequently, obtain different tariff treatment. As a consequence, those oils
were subject to a duty of 1,7% since April 2013. 
However, in the interest of the economic
operators, both such oils, independently of their aromatic content, when they
are intended to undergo a 'specific process' as defined in the Additional Note
5 to Chapter 27 (vacuum distilation, cracking, reforming and etc.) and subject
to end-use procedure laid down in Commission Regulation (EEC) No 2454/93[2], should autonomously be
exempted from customs duty, provided the process has taken place. It also has
to be noted that, since 1 July 2014, a temporary suspension of the autonomous
common customs tariff duties for these products has been granted by Council
Regulation (EU) No 1387/2013 of 17 December 2013[3].

Hence, this draft aims at proposing the
same tariff treatment for the same categories of products, independently of
their respective classification at the date of the publication of the above
mentioned Explanatory Note to the Combined Nomenclature, in order to provide a fair
treatment for all economic operators and to avoid a gap in the duty free
treatment of such products which they enjoyed since 1968.
The attached proposal is considered to be a
balanced approach taking into account the legal context and the interests of the
different stakeholders, as it is providing, without any interuption, the same
tariff treatment over the times.
The proposal is in line with the Union's external trade and industry policies. 
In the light of the foregoing it is
proposed to amend Council Regulation (EEC) No 2658/87 accordingly.
2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
The Tariff and Statistical Nomenclature
Section of the Customs Code Committee (CN sector) was consulted on 23 May 2014
and on 17-18 July 2014.
The Tariff and Statistical Nomenclature
Section of the Customs Code Committee (Agriculture/Chemistry sector) was
consulted on 4-6 June 2014.
The Economic Tariff Questions Group was
consulted on 19-21 May 2014, 18 June 2014 and on 14-15 July 2014.
Stakeholders have already asked for the
suspension of the autonomous common customs tariff duties for these products which
was granted by Council Regulation (EU) No 722/2014. The aim of the present
regulation is to allow the repayment of duties paid between April 2013 and June
2014.
3.           LEGAL ELEMENTS OF THE
PROPOSAL
The legal basis of this proposal is Article
31 of the Treaty on the Functioning of the European Union.
The subsidiarity principle does not apply,
as the proposal falls under the exclusive competence of the Union.
The proposal complies with the
proportionality principle given that, as foreseen in the Treaty, it promotes
trade between Member States and third countries and balances the commercial
interests of economic operators without changing the EU WTO schedule.
By virtue of Article 31 of the Treaty on
the Functioning of the European Union the autonomous tariff rate is fixed by
the Council acting by qualified majority on the basis of a Commission proposal.

4.           BUDGETARY IMPLICATION
It is difficult to estimate the loss of own
resources involved because of the lack of detailed statistics on imports of
these products during the period when they were not exempted from duties. Loss
of revenue in Traditional Own Resources is estimated to be in the range of 29,4
Million Euros on an annual basis (based on the import statistics under the
concerned TARIC code during July-August 2014). For the period of 15 months
(between 04/04/2013 and 31/06/2014), the amount is estimated to be in a range
of 36,7 Million Euros having in mind that no duties were paid untill 04/04/2013
and that no duties are paid since 01/07/2014.
2015/0024 (NLE)
Proposal for a
COUNCIL REGULATION
on the suspension of customs duties
applicable to imports of certain heavy oils and other similar products 
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 31 thereof,
Having regard to the proposal from the
European Commission,
Whereas:
(1)       In the Combined
Nomenclature laid down in Annex I to Council Regulation (EEC) No 2658/87[4], under heading 2710,
customs duties are suspended, autonomously, on certain oils for which the
weight of non-aromatic constituents exceeds that of the aromatic constituents when
those oils are intended for undergoing specific processes, provided that those
products are subject to the end-use procedure laid down in Commission
Regulation (EEC) No 2454/93[5].
(2)       Certain oils and other
products in which the weight of the aromatic constituents exceeds that of the
non-aromatic constituents were, until April 2013, also classified under heading
2710, thus enjoying a duty free treatment for an indefinite period. 
(3)       However, since 4 April
2013, those oils and other products have been classified under heading 2707, without
any duty free treatment. With effect from 1 July 2014, Council Regulation (EU)
No 1387/2013[6]
granted them a temporary autonomous suspension of duties.
(4)       As, in the Union, there is
no supply of such oils and other products in which the weight of the aromatic
constituents exceeds that of the non-aromatic constituents, that favourable tariff
treatment should have been applied without any interruption as long as those
products were intended to undergo specific processes and the end-use procedures
were met.
(5)       Therefore, with a view to adequately
ensuring the benefit of the suspension of customs duties in respect of those
products falling under CN code 2707 99 99, the suspension should apply with
retroactive effect from 4 April 2013 to 30 June 2014, 
HAS ADOPTED THIS REGULATION:
Article 1
From 4 April 2013 to 30 June 2014, the
customs duties on goods falling under CN code 2707 99 99 destined for use as
refinery feedstock to undergo one of the specific processes described in
additional note 5 to Chapter 27 of Part Two of the Combined Nomenclature laid
down in Annex I to Regulation (EEC) No 2658/87 are autonomously suspended subject to the condition that the
end-use procedures laid down in Articles 291 to 300 of Regulation (EEC) No
2454/93 are met.
Article 2
This Regulation shall enter into force on the
twentieth day following that of its publication in the Official
Journal of the European Union. 
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE
PROPOSAL/INITIATIVE 
              1.1.    Title of the proposal/initiative 
              1.2.    Nature
of the proposal/initiative 
              1.3.    Objective(s)

              1.4.    Grounds
for the proposal/initiative 
              1.5.    Duration
and financial impact 
              1.6.    Management
mode(s) planned 
2.           MANAGEMENT MEASURES 
3.           ESTIMATED FINANCIAL
IMPACT OF THE PROPOSAL/INITIATIVE 
              Estimated impact on revenue
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE
PROPOSAL/INITIATIVE 
1.1.        Title of the
proposal/initiative 
Council Regulation amending Annex I to Council Regulation (EEC) No
2658/87 on the Tariff and Statistical Nomenclature and on the Common Customs
Tariff.
1.2.        Nature of the
proposal/initiative 
¨ The
proposal/initiative relates to a new action 
¨ The
proposal/initiative relates to a new action following a pilot
project/preparatory action[7] 
x The proposal/initiative relates to the extension of an existing
action 
¨ The
proposal/initiative relates to an action redirected towards a new action

1.3.        Objective(s)
1.3.1.     The Commission's
multiannual strategic objective(s) targeted by the proposal/initiative 
To provide, on an autonomous basis, duty free treatment for certain
oils in which the weight of non-aromatic constituents do not exceed that of the
aromatic, which is destined for undergoing a specific process.
1.3.2.     Expected result(s) and
impact
Specify the effects
which the proposal/initiative should have on the beneficiaries/groups targeted.
Autonomous duty suspension for certain products
(heavy oils) falling under CN code 2707 99 99 of Annex I to Council Regulation
(EEC) No 2658/87 of 23 July 1987 on the Tariff and Statistical Nomenclature and
on the Common Customs Tariff, as it was untill 4 April 2013.
1.4.        Grounds for the
proposal/initiative 
1.4.1.     Requirement(s) to be met in
the short or long term 
Duty suspension for oils regardless of their aromatic content,
provided that those products were intended to undergo specific processes and
the end-use procedures were met.
1.4.2.     Added value of EU
involvement
The legal basis of this proposal is Article 31 of the Treaty on the
Functioning of the European Union.
The subsidiarity principle does not apply, as the proposal falls
under the exclusive competence of the Union.
1.4.3.     Lessons learned from
similar experiences in the past
The classification of the heavy oils according to the weight of
aromatic constituents should not impact its tariff treatment.
1.5.        Duration and financial
impact 
¨ Proposal/initiative of limited
duration 
–     
X  Proposal/initiative in effect from 04/04/2013
to 30/06/2014
–     
¨  Financial impact from YYYY to YYYY 
¨ Proposal/initiative
of unlimited duration
–     
Implementation with a start-up period from 2013,
–     
followed by full-scale operation.
1.6.        Management mode(s) planned[8] 
¨ Direct management by the Commission
–     
¨ by its departments, including by its staff in the Union
delegations; 
–     
¨  by the executive agencies 
¨ Shared management with the Member States 
¨ Indirect management by entrusting budget implementation tasks to:
–     
¨ third countries or the bodies they have designated;
–     
¨ international organisations and their agencies (to be specified);
–     
¨the EIB and the European Investment Fund;
–     
¨ bodies referred to in Articles 208 and 209 of the Financial
Regulation;
–     
¨ public law bodies;
–     
¨ bodies governed by private law with a public service mission to the
extent that they provide adequate financial guarantees;
–     
¨ bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that
provide adequate financial guarantees;
–     
¨ persons entrusted with the implementation of specific actions in
the CFSP pursuant to Title V of the TEU, and identified in the relevant basic
act.
–       If more than one management mode is
indicated, please provide details in the ‘Comments’ section.
Comments 
By Member States Customs authorities by application of the
provisions of the Customs Code ("end-use" procedure).
2.           MANAGEMENT MEASURES 
Measures subject to Customs Control ("end-use") (Art.291
to 300 of Commission Regulation (EEC) No 2454/93 (OJ L 253, 11.10.1993)).
3.           ESTIMATED FINANCIAL
IMPACT OF THE PROPOSAL/INITIATIVE 
3.1.        Estimated impact on
revenue 
–     
¨  The proposal/initiative has no financial impact on revenue.
–     
x   The proposal/initiative has the following
financial impact:
–                   
x           on own resources 
–                   
¨         on miscellaneous revenue 
EUR
million (to three decimal places)
 Budget revenue line: || Appropriations available for the current financial year || Impact of the proposal/initiative[9] 
 Year N 
 Article 120 ||   || 29,396 MEUR 
Specify the method for
calculating the impact on revenue.
The calculation of the loss of revenue in Traditional Own Resources
is based on the value of imports into the EU during the period of 2 months
since 1 July 2014 of products under TARIC code 2707 99 99 10. 
It has to be pointed out that the products targeted by this draft 
were not paying any duties until the publication of the Explanatory Note to the
Combined Nomenclature (OJ C96/23 of 4.4.2013).
As said, such a tariff suspension is in force since 01/07/2014.
Imports under the concerned TARIC code of 192 128 522, 445 € for 1 month
without taking into account tariff preferences.
The estimated total loss of revenue in Traditional Own Resources on
an annual basis should therefore be calculated as follows:
192 128 522, 445 € × 12 = 2 305 542 269,46 €; 
2 305 542 269,46 € x 1,7 % = 39 194 248,58082 €; 
39 194 248,58082 € x 75 % = 29 395 663,935615 €;
[1]               Explanatory
Notes to the Combined Nomenclature (OJ C 96, 4.4.2013, p. 23).
[2]               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).
[3]               Council
Regulation (EU) No 1387/2013 of 17 December 2013 suspending the autonomous
Common Customs Tariff duties on certain agricultural and industrial products
(OJ L 354, 28.12.2013, p. 201).
[4]               Council
Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical
nomenclature and on the Common Customs Tariff (OJ L 256, 7.9.1987, p. 1).
[5]               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). 
[6]               Council
Regulation (EU) No 1387/2013 of 17 December 2013 suspending the autonomous
Common Customs Tariff duties on certain agricultural and industrial products
(OJ L 354, 28.12.2013, p. 201).
[7]               As
referred to in Article 54(2)(a) or (b) of the Financial Regulation.
[8]               Details
of management modes and references to the Financial Regulation may be found on
the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
[9]               As
regards traditional own resources (customs duties, sugar levies), the amounts
indicated must be net amounts, i.e. gross amounts after deduction of 25 %
for collection costs.