CELEX: 62001CC0152
Language: en
Date: 2003-01-23 00:00:00
Title: Opinion of Mr Advocate General Jacobs delivered on 23 January 2003. # Kyocera Electronics Europe GmbH v Hauptzollamt Krefeld. # Reference for a preliminary ruling: Bundesfinanzhof - Germany. # Common Customs Tariff - Customs value - Determination of the transaction value - Interest payable under a financing arrangement - Exclusion - Conditions - Interest distinguished from the price actually paid or payable - Declaration not mentioning the interest due or paid. # Case C-152/01.

OPINION OF ADVOCATE GENERALJACOBS delivered on 23 January 2003(1)
         Case C-152/01  Kyocera Electronics GmbHv Hauptzollamt Krefeld 
            (())
            
      
         
       1.  In this case the Bundesfinanzhof (Federal Finance Court), Germany, has asked the Court two questions concerning the effect
      on the customs value of goods of interest payments made in connection with their purchase but not disclosed in the customs
      declaration form or in the invoices submitted with that form.  Community legislation excludes interest payments from the customs
      value of the goods provided that they are ‘distinguished from the price actually paid or payable’.
      
       2.  It was decided to postpone preparation of the present Opinion until the Court had delivered its judgment in  
       Overland Footwear ,  
      
         			(2)
         		 which concerned the interpretation of similarly worded legislation  
      
         			(3)
         		 providing for the exclusion from the customs value of goods of ‘buying commissions’.  That judgment was delivered on 5 December
      2002.
       The relevant legislation
      
       3.  At the material time the customs value of goods was determined by Council Regulation (EEC) No 1224/80 of 28 May 1980 on the
      valuation of goods for customs purposes  
      
         			(4)
         		 (‘the basic regulation’).  Article 3(1) provides:‘The customs value of imported goods determined under this Article shall be the transaction value, that is, the price actually
      paid or payable for the goods when sold for export to the customs territory of the Community, adjusted in accordance with
      Article 8 …’.
      
       4.  Article 3(3)(a) provides:‘The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller
      for the imported goods and includes all payments made or to be made as a condition of sale of the imported goods by the buyer
      to the seller or by the buyer to a third party to satisfy an obligation of the seller. …’
      
       5.  Article 8(1) lists certain items to be added to the price actually paid or payable for the imported goods in determining the
      customs value under Article 3.  The list includes ‘commission and brokerage, except buying commissions’;  
      
         			(5)
         		 it does not include interest payments.  Article 8(3) states that no additions are to be made to the price actually paid or
      payable in determining the customs value except as provided in that article.
      
       6.  Article 10(1) provides:‘With a view to determining value for customs purposes … any person or undertaking directly or indirectly concerned with the
      import transactions in question shall supply all necessary information and documents to those authorities within the time-limits
      prescribed by the latter.’
      
       7.  Article 16 provides:‘The particulars and documents to be furnished to the customs authorities for the purposes of application of this Regulation
      shall, where necessary, be determined in accordance with the procedure laid down in Article 19.’
      
       8.  Article 19(1)(b) provides that provisions necessary for the implementation of  
       inter alia  Articles 3, 8 and 16 are to be adopted in accordance with a prescribed procedure.  In accordance with that procedure Commission
      Regulation (EEC) No 1495/80 implementing certain provisions of Council Regulation (EEC) No 1224/80  
      
         			(6)
         		 (‘the implementing regulation’) was adopted on 11 June 1980.
      
       9.  Article 3(2) of the implementing regulation provides:‘Charges for interest under a financing arrangement entered into by the buyer and relating to the purchase of imported goods
      shall not be included in the customs value determined under Regulation (EEC) No 1224/80 provided that:(a))the charges are distinguished from the price actually paid or payable for the goods;(b))the financing arrangement has been made in writing;(c))where required, the buyer can demonstrate that:
      
       10.  such goods are actually sold at the price declared as the price actually paid or payable, and
      
       11.  the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time
      when, the finance was provided.’
      
       12.  Commission Regulation (EEC) No 1496/80 on the declaration of particulars relating to customs value and on documents to be
      furnished  
      
         			(7)
         		 was also adopted on 11 June 1980 in accordance with Article 19 of the basic regulation.  Article 1(1) provides that where
      it is necessary to establish a customs value for the purposes of the basic regulation, a declaration of particulars relating
      to customs value in a form corresponding to the specimen (D.V.1) in the Annex thereto is to accompany the customs entry made
      in respect of the imported goods.  I shall refer to that declaration as the ‘customs declaration’.
       The facts and the questions referred
      
       13.  Kyocera Electronics Europe GmbH (‘Kyocera’) imported certain goods to be paid for within 120 days of shipment subject to interest
      payments.  The customs declaration showed the price net of the interest charges, which were discovered by customs officials
      during an audit examination of Kyocera’s imports.  The customs authorities assessed additional duty on the interest.  Kyocera
      made an unsuccessful administrative complaint and subsequently challenged the assessment before the Finanzgericht (Finance
      Court).
      
       14.  The Finanzgericht dismissed the action, taking the view that the interest formed part of the customs value of the goods. 
      Kyocera appealed on a point of law to the Bundesfinanzhof.  The parties are at odds over whether interest not shown on the
      customs declaration, either separately or as part of the purchase price, is correctly to be regarded as ‘distinguished from
      the price’ in accordance with Article 3(2)(a) of the implementing regulation.  The Bundesfinanzhof has accordingly referred
      the following questions to the Court:‘1..Must Article 3(2)(a) of Commission Regulation (EEC) No 1495/80 of 11 June 1980 implementing certain provisions of Council
      Regulation (EEC) No 1224/80 on the valuation of goods for customs purposes (OJ 1980 L 154, p. 14) as amended by Regulation
      (EEC) No 220/85 (OJ 1985 L 25, p. 7) be interpreted as meaning that payments of interest are distinguished from the price
      of the goods if at the material time, namely the acceptance of the customs declaration, only the invoice for the net price
      of the goods has been submitted to the customs office and that invoice – like the declaration of customs value – does not
      reveal either expressly or by implication that in the context of the transaction to be assessed interest was also paid by
      the buyer to the seller?2..If the answer to Question 1 is in the negative:Do the interest payments then form part of the customs value of the goods?’
       The first question referred
      
       15.  By its first question, the referring court essentially asks what is meant by ‘distinguished from the price actually paid or
      payable’ and in particular whether that condition is satisfied where both the customs declaration and the invoice submitted
      therewith mention only the net price paid with no reference to interest payments made by the buyer to the seller.
      
       16.  The Finanzgericht, whose views are set out in the order for reference, had held that, being a condition for the transaction
      taking place, interest paid by the buyer to the seller in principle formed part of the transaction value within the meaning
      of Article 3(1) and (3) of the basic regulation.  The only case in which it was not brought into the determination of the
      customs value was where the requirements of Article 3(2) of the implementing regulation were fulfilled.  In the disputed case,
      the requirement of Article 3(2)(a) of that regulation, namely that the charges are to be distinguished from the price actually
      paid or payable for the goods, was not fulfilled.  That distinction had to be made not later than the time of the acceptance
      of the customs declarations and be apparent from the documents submitted to the customs authority because only then would
      an examination of the distinction by the customs authority be possible.  The Bundesfinanzhof shares the concern that, unless
      it was apparent from the documents submitted to the customs authority that interest payments had been made, that authority
      could not check whether they were validly excluded from the customs value.
      
       17.  Only Kyocera and the Commission have submitted written observations.  No hearing was held, none having been requested.  Both
      Kyocera and the Commission consider that the referring court’s first question should be answered in the affirmative:  the
      condition that the interest payments are distinguished from the price of the goods is satisfied where both the customs declaration
      and the invoice submitted in support show only the net price of the goods and neither explicitly nor implicitly indicate that
      the buyer also paid the seller interest.
      
       18.  I agree with that interpretation, for the following reasons.
      
       19.  Article 8(3) of the basic regulation explicitly states that ‘No additions shall be made to the price actually paid or payable
      in determining the customs value except as provided in this Article’ (which makes no mention of interest payments).  Article
      3(2) of the implementing regulation is similarly explicit that ‘Charges for interest … shall not be included in the customs
      value’.  The Court has confirmed that, by laying down the principle that the transaction value is ‘the price actually paid
      or payable for the goods when sold for export to the customs territory of the Community’, Article 3(1) of the basic regulation
      indicates that that price may be adjusted only in accordance with Article 8 thereof;  
      
         			(8)
         		  it has also stated, with specific reference to the status of payments of interest by the buyer to the seller in consideration
      of deferred payment, that ‘subject to the adjustments provided for in Article 8 of [the basic regulation], payment for services
      provided to the buyer on the purchase of imported goods is not included in the customs value of the goods’.  
      
         			(9)
         		  That proposition appears to preclude the view of the Finanzgericht, as it appears from the order for reference, that the
      interest payments were a condition for the transaction taking place and hence formed part of the transaction value in accordance
      with Article 3(3)(a) of the basic regulation.  
      
         			(10)
         		
       20.  Admittedly Article 3(2) of the implementing regulation sets out a number of provisos (including that at issue in the present
      case).  All those provisos however seem to be concerned with evidence rather than the substance of legal classification, as
      the Court appears to have affirmed in the case of Article 3(2)(b) and (c).  
      
         			(11)
         		  In addition, as Kyocera points out, Advocates General Darmon, Gulmann and Fennelly have all suggested that the requirement
      that an item not included in the customs value be ‘distinguished’ seeks to regulate evidence rather than to characterise the
      item legally.  
      
         			(12)
         		
       21.  As both Kyocera and the Commission submit, the legislation seeks to ensure that the use of arbitrary or fictitious customs
      values is excluded.  
      
         			(13)
         		  Once it is accepted that interest payments are not part of the customs value of goods, that principle militates against
      the interpretation of the legislation advocated by the Finanzgericht in particular.  The Commission points out that the risk
      of an arbitrary or fictitious customs value is obviated if an importer declares to the customs authorities only the net price
      without interest while himself retaining records showing the interest payments listed separately;  the importer will then
      be in a position to supply information and documents to the customs authorities if requested pursuant to Article 10(1) of
      the basic regulation.  
      
         			(14)
         		
       22.  Several decisions of the Court, relied on by both Kyocera and the Commission, also support that view.  Mention may be made
      in particular of  
       Mainfrucht ,  
       Hepp   and  
       Wünsche .
      
       23.   Mainfrucht   
         			(15)
         		 concerned the cost of transport after importation into the customs territory of the Community, which pursuant to Article 15
      of the basic regulation is not to be included in the customs value of imported goods ‘provided that such cost is distinguished
      from the price actually paid or payable for the imported goods’.  The importer submitted a customs declaration supported by
      two invoices, one covering the price of the goods supplied and the transport costs to the German frontier and the other covering
      the transport costs from that frontier to Mainfrucht’s headquarters.  The customs authorities took the view that those latter
      transport costs constituted an integral part of the transaction value within the meaning of Article 3(1) of the basic regulation
      on the ground that they could not be verified since the invoice had been issued by the supplier.  The Court ruled in favour
      of the importer on the basis that it was clear from the history and substance of the legislation that such costs were not
      intended to form part of the customs value.
      
       24.   Hepp 
         			(16)
         		 concerned an importer who paid his agent a buying commission, excluded from the customs value of goods by Article 8(1)(a)(i)
      of the basic regulation.  The customs declaration showed only the price of the goods, net of the buying commission.  The issue
      was whether the buying commission, invoiced separately, was to be included in the customs value of the imported goods.  The
      case turned in part on whether it was of any consequence that the importer had mistakenly entered the agent’s name on the
      customs declaration under the rubric ‘seller’;  the customs authorities, having discovered the existence of the buying commission
      paid to a party described as the seller, argued that that commission formed part of the price of the goods.  The Court ruled
      that the net price disclosed constituted the customs value for the purposes of Article 3(1) of the basic regulation and that
      the buying commission was not to be included in that value.  Advocate General Mischo by implication considered that the requirement
      that the commission should be ‘distinguished from the price actually paid or payable’ was met.  
      
         			(17)
         		 25.  
      
      In
         
        Wünsche ,  
      
         			(18)
         		 the importer did not include the interest payments in its customs declarations;  that did not however prevent the Court from
      apparently regarding those payments as having been ‘distinguished from the price actually paid or payable’ for the imported
      goods.  
      
         			(19)
         		
      
      
      
      
       26.  I consider that  
       Mainfrucht  and  
       Hepp  in particular support the view that in principle an item such as interest charges paid by the buyer of imported goods to
      the seller cannot form part of the customs value of those goods.  It may be noted that Advocate General Mischo in  
       Overland Footwear   
         			(20)
         		 adopted a similar approach.
      
       27.   Wünsche   and  
       Hepp   support the view that, where a customs declaration mentions only the price actually paid or payable for imported goods with
      no reference to ancillary costs which are expressly excluded by the legislation from the customs value, the requirement that
      the ancillary costs are ‘distinguished’ is met.  Cases which might be taken to suggest the contrary have involved a different
      situation, namely where the customs declaration and/or the supporting invoices showed a composite figure comprising both the
      price element and the ancillary cost.  
      
         			(21)
         		  Clearly in such cases an importer wishing to establish that the customs value is the price alone net of the ancillary element
      must break those figures down in the customs declaration.  
      
         			(22)
         		  As Kyocera in particular submits, the need to distinguish arises only where an amount comprises two elements one of which
      is dutiable and the other not.  If the two elements are separated from the outset, there is no need to distinguish them.
      
       28.  I am not persuaded otherwise by the referring court’s concern that the customs authorities may in the absence of information
      in the customs declaration find it difficult to check whether interest was lawfully excluded from the customs value.  That
      problem has, as both Kyocera and the Commission submit, been dealt with in the Court’s case-law:  in  
       Mainfrucht ,
      
         			(23)
         		 – where problems of verification had been expressly invoked by the customs authorities – the Court indicated that those authorities
      could, if the circumstances warranted it, check the invoice relating to costs excluded from the customs value.
      
       29.  Finally I should mention the recent judgment in  
       Overland Footwear. 
         			(24)
         		  In the event that judgment was not relevant to the present case since the Court’s interpretation of the legislation at issue
      was expressly limited to a situation where the ancillary, non-dutiable item – in that case, a buying commission – was included
      in the customs value declared and not shown separately from the selling price of the goods.  
      
         			(25)
         		  As I have indicated,  
      
         			(26)
         		 I do not consider that cases concerning customs declarations showing a composite figure comprising both a dutiable and a
      non-dutiable element are of assistance in determining the lawfulness of declarations showing a dutiable figure net of non-dutiable
      ancillary costs.
      
       30.  I accordingly conclude that the requirement in Article 3(2)(a) of the implementing regulation that interest payments are distinguished
      from the price of the goods is satisfied where both the customs declaration and the invoice submitted in support show only
      the net price of the goods and neither explicitly nor implicitly indicate that the buyer also paid the seller interest.
      
       31.  The Commission in its written observations raises a further point.  It submits that, even though for the purpose of Article
      3(2) of the implementing regulation interest is sufficiently distinguished from the price of the goods in the circumstances
      set out in the preceding paragraph, the importer is none the less obliged to indicate the existence of such interest payments
      on the customs declaration referred to above.  
      
         			(27)
         		  That form includes under section C, deductions, ‘21.  Other charges  
       (specify) .’  According to the Commission, interest is to be mentioned under that rubric.  If that is correct, the interest can be treated
      as a deduction only if it has first been included in the price of the goods entered under section A, basis of calculation.
      
       32.  The Commission adds that failure to observe that formal obligation neither gives rise to a customs debt nor leads to any Community
      law sanction.
      
       33.  Since however the national court has not referred a question on that issue, I do not propose to consider it further.
       The second question referred
      
       34.  Since I consider that the national court’s first question should be answered in the affirmative, the second question, which
      is put only if the answer to the first question is in the negative, does not arise.
        Conclusion
      
       35.  I am accordingly of the view that the questions referred by the Bundesfinanzhof should be answered as follows:Payments of interest made by the buyer to the seller of imported goods are ‘distinguished from the price actually paid or
      payable’ for those goods within the meaning of Article 3(2)(a) of Commission Regulation (EEC) No 1495/80 of 11 June 1980 implementing
      certain provisions of Council Regulation (EEC) No 1224/80 on the valuation of goods for customs purposes as amended by Regulation
      (EEC) No 220/85 where both the customs declaration and the invoice submitted in support show only the net price of the goods
      and neither explicitly nor implicitly indicate that the buyer also paid the seller interest.
      
       1 –
         
           Original language: English
      
      2 –
         
         Case C-379/00.
      
      3 –
         
         Article 33(e) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, OJ 1992 L
            302, p. 1.
         
      
      4 –
         
         OJ 1980 L 134, p. 1, as amended by Council Regulation (EEC) No 3193/80 of 8 December 1980, OJ 1980 L 333, p. 1.
      
      5 –
         
         Article 8(1)(a)(i).
      
      6 –
         
         OJ 1980 L 154, p. 14, as amended by Commission Regulation (EEC) No 220/85 of 29 January 1985, OJ 1985 L 25, p. 7.
      
      7 –
         
         OJ 1980 L 154, p. 16.
      
      8 –
         
         Case 290/84 Mainfrucht Obstverwertung [1985] ECR 3909, paragraph 23 of the judgment.
      
      9 –
         
         Case C-21/91 Wünsche [1992] ECR I-3647, paragraph 16 of the judgment.
      
      10 –
         
         See paragraph 4 above.
      
      11 –
         
         See Wünsche, cited in note 9, paragraphs 19 and 20 of the judgment.
      
      12 –
         
         Paragraph 14 of the Opinion in Wünsche, cited in note 9, paragraphs 30 and 31 of the Opinion in Case C-340/93 Thierschmidt
            [1994] ECR I-3905 and paragraph 16 of the Opinion in Case C-93/96 ICT [1997] ECR I-2881 respectively.  In addition Advocate
            General Lenz in Case C-79/89 Brown Boveri [1991] ECR I-1853 described the 'distinguishing' of costs as 'an attenuated form
            of evidence':  see paragraph 87 of his Opinion.
         
      
      13 –
         
         See the sixth recital in the preamble to the basic regulation and Mainfrucht, cited in note 8, paragraph 35 of the judgment.
      
      14 –
         
         Set out in paragraph 6 above.
      
      15 –
         
         Cited in note 8.
      
      16 –
         
         Case C-299/90 [1991] ECR I-4301.
      
      17 –
         
         See paragraph 39 of the Opinion (where 'separate' is incorrectly used to translate 'distinctes' in the French).
      
      18 –
         
         Cited in note 9.
      
      19 –
         
         See paragraph 19 of the judgment.
      
      20 –
         
         Cited in note 2;  see in particular paragraphs 20 to 26 of the Opinion.
      
      21 –
         
         See in particular Brown Boveri, cited in note 12, and Overland Footwear, cited in note 2.
      
      22 –
         
         As Advocate General Mischo observes at paragraph 30 of his Opinion in Overland Footwear, 'while we are, of course, entitled
            to expect customs staff to be perspicacious, we cannot expect them to have the gift of divination'.
         
      
      23 –
         
         Cited in note 13, paragraphs 33 and 34 of the judgment.
      
      24 –
         
         Cited in note 2.
      
      25 –
         
         See paragraph 17 of the judgment.
      
      26 –
         
         See paragraph 25 above.
      
      27 –
         
         Paragraph 10.