CELEX: 61977CC0038
Language: en
Date: 1977-10-25
Title: Opinion of Mr Advocate General Warner delivered on 25 October 1977. # Enka BV v Inspecteur der Invoerrechten en Accijnzen Arnhem. # Reference for a preliminary ruling: Tariefcommissie - Netherlands. # Value for customs purposes - Costs of warehousing. # Case 38-77.

OPINION OF MR ADVOCATE-GENERAL WARNER
      DELIVERED ON 25 OCTOBER 1977
      
         My Lords,
      In my opinion this is a simple case, presenting in its essentials no difficulty. The points adverted to during the course of the argument have, however, been so wide-ranging that I think I must take up more of Your Lordships' time over it than perhaps it strictly warrants.
      The case comes before the Court by way of a reference for a preliminary ruling by the Tariefcommissie of the Netherlands. The plaintiff in the proceedings before the Tariefcommissie is Enka BV, formerly Enka Glanzstoff BV, which I shall call ‘Enka’. The defendant is the Inspector of Customs and Excise at Arnhem (‘de inspecteur der invoerrechten en accijnzen te Arnhem’).
      The litigation between them arises in the following circumstances.
      Enka is a member of the well-known AKZO Group. An Irish company, Ferenka Ltd., which is also a member of that Group, produces in Ireland steel cord of a kind used in the manufacture of tyres. It does so from steel wire made in the Federal Republic of Germany. The steel cord is sent from Ireland through Rotterdam to a bonded warehouse at Arnhem managed by Enka, there to await orders, which may be placed either by customers in the EEC or by customers outside it. While in the warehouse the steel cord remains the property of Ferenka Ltd.
      On 28 August 1973 Ferenka Ltd. concluded a contract with Goodyear SA for the sale to the latter of a consignment of steel cord, to be delivered to Goodyear SA's factory at Colmar-Berg in Luxembourg. The consignment was so delivered from the warehouse at Arnhem. At that time, under the transitional provisions of the Act of Accession, customs duties, albeit reduced ones, were still chargeable on imports from the new Member States into the Community as originally constituted: see Articles 32 and 46 of that Act. It is common ground that the value of that consignment of steel cord for customs purposes should be calculated from the price paid for it by Goodyear SA (DM 197261.97) but the parties are at issue, before the Tariefcommissie, on a number of aspects of that calculation. The reference to this Court from the Tariefcommissie concerns only one of those aspects, namely whether, in making the calculation, the costs of the warehousing should or should not be deducted from the price. Enka says that they should. The defendant says that they should not.
      I mentioned a moment ago that the argument in the case had been wide-ranging. To my surprise, however, no reference was made during the course of it to the Convention on the Valuation of Goods for Customs Purposes which was signed at Brussels on 15 December 1950 and which entered into force on 28 July 1953, although the provisions of that Convention are the very foundation of the relevant law.
      As Your Lordships know, all the Member States are Contracting Parties to the Convention. It contains in Annex I the ‘Definition of Value’ which, by Article II of the Convention itself, each Contracting Party undertook to introduce into its domestic law and, in Annex II, the ‘Interpretative Notes’ which, by Article III, each Contracting Party undertook to conform to in applying the Definition of Value.
      Article I of the Definition of Value reads as follows:
      ‘1.   For the purposes of levying ad valorem duties of customs, the value of any goods imported for home use shall be taken to be the normal price, that is to say, the price which they would fetch at the time when the duty becomes payable on a sale in the open market between a buyer and a seller independent of each other.
      2.   The normal price of any imported goods shall be determined on the following assumptions:
      
               (a)
            
            
               that the goods are delivered to the buyer at the port or place of introduction into the country of importation;
            
         
               (b)
            
            
               that the seller bears all costs, charges and expenses incidental to the sale and to the delivery of the goods at the port or place of introduction, which are hence included in the normal price;
            
         
               (c)
            
            
               that the buyer bears any duties or taxes applicable in the country of importation, which are hence not included in the normal price.’
            
         There are three points there which, I think, merit emphasis:
      
               (1)
            
            
               The measure of value for customs purposes is the price that the goods in question would fetch on a hypothetical sale made under the conditions prescribed by the Definition. That price is called ‘the normal price’.
            
         
               (2)
            
            
               That hypothetical sale is to be taken to have been made ‘at the time when the duty becomes payable’.
            
         
               (3)
            
            
               It is a feature of that hypothetical sale that ‘the goods are delivered to the buyer at the port or place of introduction into the country of importation’ and that ‘the seller bears all costs, charges and expenses incidental to the sale and to the delivery of the goods at the port or place of introduction’, with the consequence that he passes them on to the buyer so that they are included in the normal price.
            
         I need not trouble Your Lordships with the other two Articles of the Definition. Article II refines on the concept of ‘a sale in the open market between a buyer and a seller independent of each other’, whilst Article III prescribes how the normal price is to be ascertained where the goods to be valued are the subject of industrial property rights. I must however read three of the Interpretative Notes in Annex II, namely Notes 1, 2 and 5 under the heading ‘Addendum to Article I’:
      ‘Note 1
      The time when the duty becomes payable, referred to in paragraph (1) of Article I shall be determined in accordance with the legislation of each country and may be, for example, the time at which the goods declaration for home use is duly lodged or registered, the time of payment of customs duty or the time of release of the goods.
      Note 2
      The “costs, charges and expenses” mentioned in Article I, paragraph (2) (b) include, inter alia, any of the. following:
      
               —
            
            
               carriage and freight;
            
         
               —
            
            
               insurance;
            
         
               —
            
            
               commission;
            
         
               —
            
            
               brokerage;
            
         
               —
            
            
               costs, charges and expenses of drawing up outside the country of importation documents incidental to the introduction of the goods into the country of importation, including consular fees;
            
         
               —
            
            
               duties and taxes applicable outside the country of importation except those from which the goods have been exempted or have been or will be relieved by means of refund;
            
         
               —
            
            
               those which are treated as separate articles for the purpose of levying duties of customs; costs of packing (whether for labour, materials or otherwise);
            
         
               —
            
            
               loading charges.
               …
            
         Note 5
      The object of the Definition of Value is to make it possible in all cases to calculate the duties payable on the basis of the price at which imported goods are freely available to any buyer on a sale in the open market at the port or place of introduction into the country of importation. It is a concept for general use and is applicable whether or not the goods are in fact imported under a contract of sale, and whatever the terms of the contract.
      But the application of the Definition implies an enquiry into current prices at the time of valuation. In practice, when imported goods are the subject of a bona fide sale, the price paid or payable on that sale can generally be considered as a valid indication of the normal price mentioned in the Definition. This being so, the price paid or payable can reasonably be used as a basis for valuation, and Customs Administrations are recommended to accept it as the value of the goods in question, subject:
      
               (a)
            
            
               to proper safeguards aimed at preventing evasion of duty by means of fictitious or colourable contracts or prices; and
            
         
               (b)
            
            
               to such adjustments of that price as may be considered necessary on account of circumstances of the sale which differ from those envisaged in the Definition of Value.
            
         Adjustment under paragraph (b) above may in particular be required with reference to freight and other expenses dealt with in paragraph (2) of Article I and Note 2 of the Addendum to Article I, or with reference to discounts or other reductions in price granted in favour of sole agents or sole concessionaires, or to any abnormal discount or any other reduction from the ordinary competitive price.’
      The Explanatory Notes issued by the Valuation Committee of the Customs Cooperation Council under Article VI of the Convention contain (at p. 28) this passage about Interpretative Note 1:
      ‘The time when the duty becomes payable is factual under all customs legislations, but may be variously expressed e.g. as the time when the goods declaration for home use is duly lodged or registered, the time of payment of customs duty or the time of release of the goods. These variants are all within the limitations of the interval between the time when the importer presents documents for clearance of the goods and the time when the goods are in fact cleared, in most cases a matter of hours or at greatest a day or two. Such small differences between the legal provisions of Member countries are conceded by Interpretative Note 1 to Article I.’
      The same Explanatory Notes contain (at pp. 32 and 41-42 respectively) these passages about Interpretative Note 5:
      ‘However, this Note, whilst stating that when imported goods are the subject of a bona fide sale the price paid or payable can reasonably be used as a basis for valuation, does not thereby set up an alternative standard to the normal price of the Definition. The possibility of such an alternative cannot be entertained, not only because the Definition precludes the use of a dual standard, but also because the price paid or payable on a contract entirely consistent with the conditions which the Definition prescribes is no more than the materialization of its concept.
      …
      Goods cleared from bonded warehouse
      Interpretative Note 5 to Article 1 may also apply when goods have to be valued for clearance for home use after a stay in bonded warehouse. The price paid or payable on the sale under which such goods are imported may thus afford a valid basis for the determination of their dutiable value. A lapse of time between the conclusion of this sale and clearance from bonded warehouse may not of itself be sufficient reason for holding the price to be invalid, but there may be special circumstances — for example, long stay in warehouse, operations in warehouse, etc. — in which the price paid or payable on this sale ceases to afford a reasonable indication of the normal price. The goods must then be valued by reference to the principles discussed in Chapter IX [i.e. the principles applicable where the basis of valuation is other than the price paid or payable]. Current prices at the time when the goods are cleared for home use may for example be used as criteria. As regards goods which have undergone operations in warehouse, in some cases it may be appropriate to establish an amount representing the increase in value due to such operations and add this to the price made on the sale under which the goods were imported.
      The application of the Interpretative Note to goods cleared from bonded warehouse does not prejudice the acceptance, for such goods, of a value based upon the price made on a sale of them between the time of their entry into warehouse and their clearance therefrom. In general the validity as a basis for valuation of such a price is however limited to the price made on the sale under which the goods are cleared for home use.’
      It is, I think, clearly implicit in those Explanatory Notes that, in the case of goods cleared from bonded warehouse, the cost of warehousing, as such, does not fall to be included in the normal price. Of course those Explanatory Notes, unlike the Definition of Value itself and the Interpretative Notes thereto, are not binding, but issued ‘as a guide to the application of the Definition’ (see Article VI (c) of the Convention). But, in my opinion, the inclusion of warehousing costs in the normal price would not be consistent with the Definition of Value, the purpose of which is to lay down a uniform measure of the value of goods at the time when duty becomes payable on them, whether they have been imported directly for home use or been the subject of some other customs procedure, such as warehousing.
      Lapse of time may of course affect the value of goods, as the Explanatory Notes acknowledge. It may do so, not only because market prices generally may fluctuate, but because some goods by their nature increase in value as time passes (e.g. certain kinds of wine) whilst others depreciate (e.g. most motor cars). But changes in the value of goods due to the lapse of time are taken care of by the requirement in the Definition of Value that they are to be valued at the time when the duty becomes payable, which, in the case of goods cleared from a bonded warehouse, is the time when they are removed from the warehouse.
      It is true also that the warehousing of goods may enable the seller of them to effect prompt delivery and so secure a better price. Needless to say, where goods are of such a nature that they cannot be sold under the conditions envisaged by the Definition of Value without prompt delivery, the Definition assumes their prompt delivery. But the Definition does not include generally, in the normal price, any premium for prompt delivery. This is because its purpose is to provide an objective measure of the value of particular goods, at a certain time and in a certain place, regardless of the nature of the circumstances giving rise to their importation. Those circumstances may not even be commercial, e.g. where the goods are the subject-matter of a gift, or form part of the purchases abroad of a tourist. Even where the circumstances are commercial, no sale may be involved. (For the diversity of such possible circumstances see Chapter IX of the Explanatory Notes). I do not overlook that in Case 27/70 Edding v Hauptzollamt Hamburg-St. Annen [1970] 2 ECR 1035 this Court decided that, where goods had been imported by air instead of by sea, which was the more usual and cheaper method, the additional cost of importing them by air must be included in their value for customs purposes. I think it enough to distinguish that case that, by the Definition of Value as amplified by the Interpretative Notes,‘carriage and freight’ to ‘the port or place of introduction’ are, expressly, to be included in the normal price. But it is to be observed that the decision of the Court in that case was in part based on an Opinion of the Valuation Committee (Opinion VIII) which has since been withdrawn.
      Article IV of the Convention provides that each Contracting Party may adapt the text of the Definition of Value (a) by inserting therein such provisions of the Interpretative Notes as it may consider necessary and (b), not only by giving the text such legal form as may be essential to render it operative in its domestic law, but also ‘by adding complementary provisions clarifying the purport of the Definition’.
      The main piece of Community legislation on the valuation of goods for customs purposes is Council Regulation (EEC) No 803/68 of 27 June 1968 (OJ L 148/6 of 28. 6. 1968).
      As the preamble to that Regulation makes abundantly clear, its object is to adapt the Definition of Value and the Interpretative Notes to the needs of the customs union created by the EEC Treaty, so as to ensure the uniform application of the Common Customs Tariff throughout the Member States.
      Articles 1 to 8 of the Regulation in part reproduce and in part complement the Definition of Value.
      Article 1 (1) provides:
      ‘For the purposes of applying the Common Customs Tariff, the value for customs purposes of the goods imported shall be taken to be the normal price, that is to say, the price which they would fetch, at the time referred to in Article 5, on a sale in the open market between a buyer and a seller independent of each other.’
      Article 1 (2) and Articles 2 to 8 are devoted to refining on the concept defined by Article 1 (1), by laying down in great detail the terms and other characteristics of the hypothetical sale there postulated.
      Thus, Article 1 (2) reproduces verbatim Article I (2) of the Definition of Value, the only differences being that it refers to ‘the Customs territory of the Community’ instead of to ‘the country of importation’ and that it refers to the ‘place of introduction’ instead of to ‘the port or place of introduction’.
      Article 2 reproduces, with minor amplifications, Article II of the Definition.
      Article 3 corresponds to Article III of the Definition, though it is somewhat more elaborate.
      Article 4 provides that, subject to exceptions in the case of goods imported in split consignments, ‘The normal price shall be determined on the assumption that the sale is a sale of the quantity to be valued’.
      Article 5 provides:
      ‘The material time for valuation for customs purposes shall be:
      
               (a)
            
            
               for goods declared for direct home use, the date of acceptance by the customs authorities of the declarant's statement of his intention that the goods should enter into home use:
            
         
               (b)
            
            
               for goods which, after another customs procedure has been applied, enter into home use, the time fixed by acts of the Council or the Commission pertaining to that customs procedure or by Member States in accordance with such acts.’
            
         Plainly that Article represents an exercise by the Community of the discretion conceded by Interpretative Note 1 as explained in the first passage that I read from the Explanatory Notes. It has not been suggested that there exists, so far as the application of paragraph (b) to the present case is concerned, any relevant act of the Council or of the Commission other than the Directive that I shall mention in a moment.
      Article 6 defines ‘the place of introduction into the customs territory of the Community’. So far as here relevant, that place is ‘for goods carried by sea, the port of unloading’, i.e. in this case Rotterdam (not Arnhem).
      Article 7 defines the ‘costs, charges and expenses’ mentioned in Article 1 (2) (b). In so doing, it reproduces Interpretative Note 2, with only immaterial variations.
      Finally Article 8 contains specific provisions, not material to the present dispute, about transport costs.
      Article 9 et seq. of the Regulation give effect to the intimation in Interpretative Note 5 that, in practice, when imported goods are the subject of a bona fide sale, the price paid or payable on that sale can generally, subject to proper safeguards and adjustments, be taken as a valid indication of the normal price, and so be used as a basis for valuation.
      Article 9 provides:
      ‘1.   The price paid or payable may be accepted as the value for customs purposes if:
      
               (a)
            
            
               the contract of sale is executed within the period specified in Article 10;
            
         
               (b)
            
            
               the price corresponds, at the time it is agreed upon, to prices on a sale in the open market between a buyer and a seller independent of each other; and
            
         
               (c)
            
            
               that price is adjusted, if necessary, to take account of circumstances of the sale which differ from those on which the normal price is based.
            
         2.   Adjustments under paragraph 1 (c) may in particular be required with reference to:
      
               (a)
            
            
               the costs, charges and expenses mentioned in Article 1 (2);
            
         
               (b)
            
            
               reductions in price granted in favour of sole agents or sole concessionaires or any other person operating in comparable circumstances;
            
         
               (c)
            
            
               abnormal rebates and any other reduction from the ordinary competitive price.’
            
         Article 10 provides, by paragraph 1, that:
      ‘For the purposes of Article 9, the price paid or payable may be accepted if the date of the contract precedes the date referred to in Article 5 (a) or (b) by not more than six months.’
      To that general rule exceptions are made by paragraphs 2 to 5 of Article 10, which allow additional ‘periods of grace’ in certain circumstances. Paragraph 6 provides for the extension of the periods of grace in a case of force majeure and paragraph 7 provides that:
      ‘The application of the periods of grace referred to in paragraphs 1 to 5 may be suspended in a period of abnormal price fluctuations, in accordance with the procedure laid down in Article 17.’
      I need not, I think, trouble Your Lordships with the details of that procedure, nor indeed with any of the subsequent provisions of the Regulation.
      On 4 March 1969 the Council adopted a Directive (69/74/EEC) (OJ L 58 of 8. 3. 1969) ‘on the harmonization of provisions laid down by law, regulation or administrative action relating to customs warehousing procedure’. One culls from the preamble to that Directive, and from its opening Articles, that, at the time of its adoption, bonded warehouses existed in all the Member States, that their common feature was that the effect of depositing goods in them was that customs duties (and other import charges and levies) were not collected until the goods were removed from them, but that, in many respects, the provisions relating to such warehouses needed to be harmonized. For present purposes it is, I think, necessary to advert only to Article 10 of the Directive.
      Paragraph 1 of that Article provides:
      ‘Subject to the provisions of paragraph 2, when goods deposited in warehouses are cleared for home use the customs duties, charges having equivalent effect and agricultural levies chargeable on importation shall be collected on the basis of the rates or amount applicable on the date of removal from the warehouse, and according to the nature of the goods, the value for customs purposes and the quantity, as ascertained or accepted for that purpose by the customs authorities.’
      It has been suggested that that paragraph allows Member States a discretion as to the time for valuation. In a limited sense perhaps it does, i.e. in the sense that it does not take away from them the narrow discretion that they have under the Brussels Convention (extending to ‘in most cases a matter of hours or at greatest a day or two’). But, leaving that aside, the time for valuation of goods cleared for home use out of a customs warehouse is indubitably the time when they are removed from the warehouse, and not e.g. the time when they are deposited in it, because the whole point of the customs warehousing procedure is that customs duties (and other import charges and levies) are not collected until the goods are removed from the warehouse. The measure of the value of such goods for customs purposes is accordingly their normal price at the time of their removal from the warehouse.
      That is not to say that, where the price paid or payable under a contract of sale is taken as the basis of valuation, such contract must necessarily have been made at the time of the removal of the goods from the warehouse. All that is necessary is that it should be a contract the price paid or payable under which can realistically be used as the starting point of a computation of the normal price of the goods at that time. Hence the provisions of paragraph 2 of Article 10 of the Directive, which reads as follows:
      ‘Where the price paid or payable is taken into account in determining the value for customs purposes, the following special provisions shall apply:
      
               (a)
            
            
               subject to the provisions of Article 9 of Council Regulation (EEC) No 803/68 … the price paid or payable may be either the price on a sale related to deposit in the warehouse or the price on resale; in either case the price shall be fixed with reference to importation into the Community;
            
         
               (b)
            
            
               where the date of deposit in the warehouse is taken as a basis, account shall be taken of abnormal price fluctuations which, during the storage period, gave rise to the suspension, provided for in Article 10 (7) of Regulation (EEC) No 803/68, of the application of periods of grace. Where the storage period exceeds two years, account shall also be taken of other price fluctuations;
            
         
               (c)
            
            
               where the date of removal from the warehouse is taken as a basis, the periods of grace provided for in Article 10 of Regulation (EEC) No 803/68 shall be extended by the storage period when that period does not exceed two years;
            
         
               (d)
            
            
               the costs of warehousing and of preserving the goods while in warehouses borne by a purchaser shall not be included in the value for customs purposes where the price paid or payable by that purchaser is taken as the basis for valuation.’
            
         That paragraph does not purport to contain an exhaustive code as to the methods to be applied in computing, on the basis of the price paid or payable, the value for customs purposes of goods cleared for home use out of a bonded warehouse. It merely modifies and supplements in certain specific respects the provisions of Articles 9 and 10 of Regulation No 803/68. The subparagraph that is particularly material in the present case is of course subparagraph (d), of which the purpose is to ensure that the costs of warehousing and of preserving the goods while in warehouse are not included in their value for customs purposes.
      Among the questions on which the Court invited submissions at the hearing was that of the significance of the words ‘borne by a purchaser’ in that subparagraph. In my opinion their significance is simply that, if, under the terms and in the circumstances of the sale taken into account, the costs in question are borne by the seller and not reflected in the price paid or payable by the purchaser, no adjustment of that price in respect of those costs is required in order to make it correspond to the normal price. It is only where those costs are passed on to the purchaser that such an adjustment may be required.
      It appears that, in order to give effect to Article 10 (2) (d), the relevant Dutch legislation, the Tariefbesluit (Customs Order) 1960, was amended in 1969 by the insertion of a new Article 16g which, as itself amended in 1970, reads as follows:
      ‘For the purpose of determining the value of goods released from bonded warehouses and places of provisional or temporary storage, where the price paid or payable is taken into account, the following special provisions shall apply:
      …
      
               (c)
            
            
               the price paid or payable taken as the basis for valuation need not be adjusted in respect of costs of warehousing and of preserving the goods while in warehouses or stores.’
            
         ‘Voor de waardebepaling van goederen welke worden uitgeslagen uit entrepots en uit inrichtingen voor voorlopige of tijdelijke opslag, gelden bij het in aanmerking nemen van de betaalde of te betalen prijs, de volgende bijzondere bepalingen:
      
               (c)
            
            
               de betaalde of te betalen prijs die basis voor de waardebepaling is, dient niet te worden aangepast in verband met de kosten voor opslag en bewaring van de goederen tijdens hun verblijf in de entrepots of inrichtingen.’
            
         Before the Tariefcommissie there seems to have been some disagreement between the parties as to the correct interpretation both of that provision and of Article 10 (2) (d) of the Directive. In the upshot the Tariefcommissie has referred to this Court the following questions (which I set out in slightly abbreviated form):
      
               ‘1.
            
            
               Is the provision in Article 10 (2) (d) of Council Directive No 69/74 of 4 March 1969 of such a specific nature that it must be regarded as directly binding, that is to say, as having direct effect?
            
         
               2.
            
            
               If the answer to that question is in the affirmative, does the wording of Article 16g of the Tariefbesluit 1960 adequately reflect the wording of Article 10 of the Directive?
            
         
               3.
            
            
               If the answer to the first question is in the affirmative and that to the second in the negative, is Article 10 (2) (d) of the Directive to be interpreted as meaning that the price paid or payable taken as the basis for valuation is to be reduced by the costs of warehousing the goods?’
            
         Of those questions the second clearly involves the interpretation of Article 16g of the Tariefbesluit, so that this Court cannot answer it. The Court can however, in answer to the third question, give sufficient guidance to the Tariefcommissie as to the meaning of Article 10 (2) (d) of the Directive to enable that Court to determine itself to what extent Article 16g accords with it. I think it convenient to deal with the third question at once, leaving till last the question of the direct effect of Article 10 (2) (d).
      Before this Court it was, to put it shortly, submitted on behalf of Enka and of the Commission that Article 10 (2) (d) meant what it said.
      On behalf of the Dutch Government, however, it was submitted, as I understood it, that the true purpose of Article 10 (2) (d) was a very limited one, namely to exclude any adjustment, up or down, of the price paid or payable under a contract of sale, in respect of warehousing costs, in those rare cases where warehousing costs were separately invoiced or were paid directly by the purchaser.
      That submission was based on the following reasoning. The measure of the value of goods for customs purposes is their normal price, i.e. the price that they would fetch on a sale in the open market between a buyer and a seller independent of each other. Valuation by reference to the price paid or payable under an actual contract for sale is no more than an administratively convenient method of ascertaining the normal price. The price that goods will fetch in the open market as between a buyer and a seller independent of each other is determined by the law of supply and demand, not by an analysis of items of cost. The buyer is not concerned with what costs may have been incurred by the seller. In particular he is not concerned with whether he is getting delivery from a bonded warehouse or directly from a ship. So warehousing costs cannot affect the normal price and therefore should not affect the customs valuation.
      That argument, as Your Lordships see, rests largely on economic theory. I suspect that, even to an economist, it would appear over-simple, because, in practice, costs do affect prices. Nothing is more common than for a trader to fix his prices by adding what he considers to be an appropriate profit margin to his costs. We are however concerned here, not with economic theory, but with the interpretation of the relevant customs legislation, and, unquestionably, that legislation does deal, in detail, with items of cost.
      The Dutch Government accepted that a trader with goods available in a warehouse, and thereby able to give immediate delivery, could often for that reason obtain a higher price. And, as I understood it, it accepted that, that being so, if its view were adopted, identical goods might, on the same day, have different values for customs purposes according to whether they were cleared for home use directly or from a bonded warehouse. The difference would, generally, reflect a difference in the terms as to delivery in actual contracts as a result of which the goods were cleared, in other words, all other things being equal, a difference in the dates of those contracts. That seems to me, with all respect, to demonstrate that that view cannot be correct, for there could be no such difference between the terms of the hypothetical sales determining the normal price of such goods. The Dutch Government also accepted . that the adoption of its view would entail reading the words ‘borne by a purchaser’ in Article 10 (2) (d) as if they were ‘charged to a purchaser’. I can see no reason for thus doing violence to the language of that provision.
      That is not to say that, in my opinion, Article 10 (2) (d) can be interpreted to mean that, wherever goods have been in a bonded warehouse, the costs of warehousing them are, where the price paid or payable is used as the basis of valuation, automatically and to their full amount deductible from that price. The extent to which they are to be deducted must depend on the circumstances. Essentially they are to be deducted if and to the extent to which the fact that they were incurred has resulted in that price being higher than it would otherwise have been, for it is only then that they can be said to have been passed on to the purchaser or ‘borne’ by him. That is the view of the Commission, which seems to me plainly right.
      So I turn to the question of the direct effect of Article 10 of the Directive, on which only the Commission submitted observations, so that I can be relatively brief.
      I need not rehearse what the Court has said on the subject of the direct effect of directives in previous Judgments, notably those in Case 41/74 Van Duyn v Home Office [1974] II ECR 1337 and in Case 51/76 Verbond van Nederlandse Ondernemingen v Inspecteur der Invoerrechten en Accijnzen [1977] ECR 113. Nor need I elaborate on the point made by the Commission that the Article here in question is in reality nothing more than a supplement to Regulation No 803/68. The crucial consideration seems to me to be this. Article 189 of the Treaty, although it leaves to each Member State the choice of the ‘form and methods’ whereby it is to give effect to a directive, does not allow it the choice of not giving effect to the directive at all, or of giving effect to it only in part. On the contrary Article 189 says in terms that a directive ‘shall be binding, as to the result to be achieved, upon each Member State to which it is addressed’. A Member State that fails fully to give effect to a directive is in breach of the Treaty, so that to allow it (through its executive or administrative authorities) to rely upon that fact as against a private person in proceedings in its own Courts would be to allow it to plead its own wrong. For that reason, in my opinion, if for no other, the defendant in the present case cannot, if Article 16g of the Tariefbesluit does not fully give effect to Article 10 of the Directive, rely upon that fact to exact from Enka a higher duty than the Directive permits.
      In the result I am of the opinion that, in answer to the questions referred to the Court by the Tariefcommissie, Your Lordships should rule that:
      
               (1)
            
            
               Article 10 (2) (d) of Council Directive No 69/74 of 4 March 1969 has direct effect in that a Member State whose own law does not give full effect to it may not rely on that fact as against private persons in its own Courts;
            
         
               (2)
            
            
               Article 10 (2) (d) is to be interpreted as meaning that the price paid or payable taken as the basis of valuation is to be reduced by the costs of warehousing the goods if and to the extent that the circumstance that those costs were incurred has made that price higher than it would otherwise have been.