CELEX: 61981CC0221
Language: en
Date: 1982-06-30
Title: Joined opinion of Mr Advocate General Capotorti delivered on 30 June 1982. # Wilfried Wolf v Hauptzollamt Düsseldorf. # Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany. # Case 221/81. # Senta Einberger v Hauptzollamt Freiburg. # Reference for a preliminary ruling: Finanzgericht Baden-Württemberg - Germany. # Case 240/81. # Customs duties - Smuggled drugs.

OPINION OF MR ADVOCATE GENERAL CAPOTORTI
      DELIVERED ON 30 JUNE 1982 (
            1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      
               1. 
            
            
               The problem of the customs treatment to be accorded to smuggled drugs, which is the common subject-matter of the two cases, 221/81 and 240/81, has recently been examined by the Court, giving rise to the judgment of 5 February 1981 in Case 50/80, Horváth v Hauptzollamt Hamburg-Jonas [1981] ECR 385. In that judgment it was stated that “the introduction of the Common Customs Tariff no longer leaves a Member State the power to apply customs duties to drugs which have been smuggled in and destroyed as soon as they were discovered but does leave it full freedom to take criminal proceedings in respect of offences committed, with all the attendant consequences, including fines”.
               The questions raised in these two cases call for development and expansion of the previous analysis of the Community customs tariff rules (and in particular the provisions of Article 9 (1) and Articles 18 to 29 of the EEC Treaty). The fundamental point to be established is whether the discovery and subsequent destruction of the smuggled drugs are essential preconditions for the negation of the individual Member States' authority to levy customs duties and in particular whether when drugs smuggled into the territory of a Member State are re-exported that authority is also to be regarded as negated.
               Let me briefly summarize the facts of each case.
            
         A —
      On 26 April 1976 Wilfried Wolf was sentenced by the Landgericht [Regional Court] Düsseldorf to eight years' imprisonment for wilful and continued infringement of the German Law on drugs. The court had found that between July and October 1975 he had been a party to the distribution of 742 grams of heroin and 150 grams of cocaine, having obtained the drugs not only by purchasing them in Germany but also — in one instance — by personally importing them from the Netherlands. On the basis of the facts set out in the abovementioned judgment in criminal proceedings, the Hauptzollamt [Principal Customs Office] Düsseldorf (by a notice dated 3 December 1976, which was subsequently amended) declared that Mr Wolf was liable to duty because he had failed to declare the imported drugs to the customs authorities and had purchased imported goods after the customs debt had arisen but before it was discharged. The value for customs purposes of the goods in question was determined as DM 74200 for the heroin and DM 15000 for the cocaine.
      Mr Wolf, after unsuccessfully lodging an objection through administrative channels against the assessment of duty, brought an appeal before the Finanzgericht (Finance Court) Düsseldorf, which by order of 10 June 1981 stayed the proceedings in order to refer the following questions to this Court for a preliminary ruling:
      
               “1.
            
            
               Are the provisions of the EEC Treaty on the customs union (Articles 9 (1) and 12 to 29) to be interpreted as meaning that since the introduction of the Common Customs Tariff a Member State has no longer been authorized to levy customs duties on smuggled drugs which in the event of discovery would have to be confiscated and destroyed?
            
         
               2.
            
            
               If the answer to the aforesaid question is in the negative and customs duties are to be levied, the preliminary questions set forth by the Finanzgericht Hamburg, in its order of 15 January 1980 — IV 89/78 H — making a reference for a preliminary ruling in Case 50/80, are submitted in the alternative.”
            
         B —
      The Landgericht Freiburg sentenced Senta Einberger on 27 July 1977 to one year's imprisonment, likewise for infringement of the German Law on drugs. The offence committed by Mrs Einberger consisted of travelling on several occasions between Spring and Autumn 1974 from the Federal Republic of Germany to Switzerland and selling there, at various times and in quantities varying between 30 and 100 grams, 280 grams of morphine previously imported into the Federal Republic of Germany without authority and without payment of import duties. Having regard to the abovementioned judgment in criminal proceedings, the Hauptzollamt Freiburg issued a notice of assessment against Mrs Einberger on 19 January 1978 for import duties totalling DM 10960.36.
      Mrs Einberger, after unsuccessfully lodging an objection through administrative channels, brought a legal action against the Hauptzollamt before the Finanzgericht Baden-Württemberg for annulment of the notice of assessment. By order dated 16 June 1981 the Finanzgericht stayed the proceedings in order to refer to this Court, pursuant to Article 177 of the EEC Treaty, the following question: “Since the introduction of the Common Customs Tariff, has a Member State been authorized to charge customs duties on drugs which have been smuggled into and subsequently removed from the customs territory of the Community?”
      By order of 3 February 1982 the Court ordered that the two cases be joined for the purpose of the oral procedure, in view of their related subject-matter.
      
               2.
            
            
               The questions submitted by the two German courts essentially seek from the Court an interpretation of the Horvath judgment, to which I referred at the beginning of this opinion. The Finanzgericht Düsseldorf, implicitly taking as the point of departure the principle enunciated in the Horvath case — that is to say that customs duties may not be levied on smuggled drugs which have been discovered and destroyed — raised the question whether the mere importation of contraband, without subsequent discovery and destruction, would result in the duties' not being payable if it were provided by law that smuggled drugs, if discovered, must be seized and destroyed. For its part, the Finanzgericht Baden-Württemberg adopted the same approach, raising the question whether the importation of contraband is sufficient to preclude the levying of customs duties even where the drug has subsequently been re-exported from the Community.
               In those circumstances, it seems to me that the question raised by the Finanzgericht Düsseldorf covers the other question: If in fact the answer given is that actual seizure and destruction of the drugs are not essential preconditions for non-application of the Customs Tariff and that such a result is on the contrary brought about by the mere fact of the importation of contraband (account being taken of the existence of a rule which requires seizure and destruction of the drug), the question submitted by the Finanzgericht Baden-Württemberg is thereby answered, without the need for a more detailed examination of the circumstances of the re-exportation, which needless to say followed the smuggling of the drug into the territory of the Community.
            
         
               3.
            
            
               It seems to me that a careful analysis must be made of the Horvath judgment, not merely because the courts which submitted the questions took it into consideration, but because it clearly represents the fundamental point of reference. I shall confine myself to pointing out, in that respect, that the decision contained in that judgment is a considered decision the grounds of which are adequately stated — the fact that it differs from my opinion of 27 November 1980 [1981] ECR 399) does not induce me to re-expound the view which I thought preferable but rather to endeavour to understand and to clarify fully the reasoning underlying the view adopted by the Court.
               Certainly, a reading of the operative part alone (to which I have referred above) might lead to the inference that the discovery and immediate destruction of the smuggled drugs are essential preconditions for the non-applicability of customs duties. In that regard the Finanzgericht Düsseldorf rightly observed that, if such an interpretation of the Community rules relating to the Common Customs Tariff were adopted, the result would be that the question whether or not customs duties were payable would depend upon an absolutely accidental event, such as the discovery or otherwise by the customs authorities of the smuggled goods. But that interpretation cannot be upheld. The grounds of the Horváth judgment show that the Court referred in the operative part to the destruction of drugs which had been imported and discovered only because those were the facts of that specific case and that in reality the Court intended to express a view the scope of which was different and more farreaching.
               In that regard, clarification is provided by paragraph 11 of the decision, in which it is stated that where the Common Customs Tariff includes a narcotic substance (heroin in that case) “it can only apply to imports of the product which are intended for an authorized use”. The reasons for that interpretation are given immediately afterwards: “Ad valorem customs duty cannot be determined for goods which are of such a kind that they may not be put into circulation in any Member State but must on the contrary be seized and taken out of circulation by the competent authorities as soon as they are discovered.” It is clear therefore that, according to the rationale of the Horváth judgment, the inapplicability of customs duties is not dependent upon discovery and destruction of the drugs but rather upon the fact that, in view of the harmful character and the intended unlawful use of the products, they may not be imported into the Member States and put into commercial circulation (see also in that connection paragraphs 9 and 12 of the decision).
            
         
               4.
            
            
               The fact that that is the real meaning of the Horváth judgment is confirmed by the rules referred to in it and by the manner in which they are interpreted. Paragraph 13 of the decision refers to Article 18 of the EEC Treaty, that is to say to the rule which is at the beginning of the section devoted to the “Setting up of the Common Customs Tariff”, in which “the Member States declare their readiness to contribute to the development of international trade and the lowering of barriers to trade by entering into agreements designed, on a basis of reciprocity and mutual advantage, to reduce customs duties below the general level of which they could avail themselves as a result of the establishment of a customs union between them”. In that respect the Court observes: “Since Article 18 of the EEC Treaty indicates that the setting up of the Common Customs Tariff is seen as a contribution to the develppment of international trade and the lowering of barriers to trade, it cannot relate to the importation of narcotics which are intended for unlawful use and are withdrawn from circulation as soon as they are discovered.” To the same effect, reference might also be made — as was indeed made by the representative of the Commission during the oral procedure — to Article 29 of the EEC Treaty which mentions, among the general criteria by which the Commission should be guided in carrying out its tasks in connection with the Common Customs Tariff, a number of factors which are certainly incompatible with the application of the tariff to drugs intended for unlawful purposes: the “need to promote trade between Member States and third countries” (subparagraph (a)); the “developments in conditions of competition within the Community” (subparagraph (b)); the “requirements of the Community as regards the supply of raw materials and semi-finished goods” (subparagraph (c)); and the “need to avoid serious disturbances in the economies of the Member States and to ensure rational development of production and an expansion of consumption within the Community” (subparagraph (d)).
               The Horvath judgment also referred to Regulation No 803/68 of the Council on the valuation of goods for customs purposes, noting that the provisions thereof “are based on the assumption that the imported goods are capable of being put on the market and absorbed into commercial circulation” (paragraph 12 of the decision). It seems to me that this is the most significant passage of the decision. For my part, I would point out that the sixth recital in the preamble to Regulation No 803/68 confirms the view that its provisions apply only to goods which may be put on the market. It is in fact stated in that recital that uniform determination of the value for customs purposes must serve inter alia to prevent “any deflection of trade and activities and any distortion of competition which might arise from differences between national provisions”; and it seems to me that it is incontestable that that purpose cannot be achieved in the case of goods which, like drugs, may not be imported or traded in (with the exception of course of “trade which is strictly controlled and limited to authorized use for pharmaceutical and medical purposes”, see paragraph 10 of the decision, infine).
               
               Finally, the Court referred to Articles 10 and 11 of Council Regulation No 1430/79 of 2 July 1979 on the repayment or remission of import or export duties. Although not applicable to the present cases ratione temporis, that regulation nevertheless provides useful criteria for the interpretation of the provisions of the Treaty relating to customs tariffs. According to those articles, “import duties must be repaid or remitted where goods subject to payment of such duties are destroyed under the supervision of the competent authorities” (paragraph 14 of the decision); it may be inferred therefrom that the existence of the liability to pay duties is connected with the possibility of the goods' being placed in circulation. In the same context, reference may also be made to Article- 2 of Council Directive 797623/EEC of -25 June 1979 on the harmonization of provisions laid down by law, regulation or administrative action relating to customs debt; as was observed by the Finanzgericht Düsseldorf, a customs debt arises by virtue of that provision when goods are cleared through customs in the normal way (see paragraph (a)) and in a number of cases, listed exhaustively, of infringement of specific customs rules (see paragraphs (b) to (f)), but it does not provide that a customs debt arises in the case of goods whose importation is absolutely forbidden, as in the case of drugs not intended for pharmaceutical use.
            
         
               5.
            
            
               In the course of these proceedings mention has also been made, in support of the interpretation of the Common Customs Tariff upheld in the Horváth judgment, of the consideration that it is very difficult to prove what quantity of drugs has been smuggled when it has not been possible physically to locate and confiscate them; in consequence, it is impossible to determine the total value for customs purposes of the smuggled goods in order to determine the duty to be levied on them. I do not however think that such an argument is relevant or that it is necessary. In the first place, I doubt whether reasons of mere practical expediency should be used as a basis to establish the scope of a legal provision; it has been seen that the scope of such provisions is based rather on a matter of principle, namely the function attributed to the Common Customs Tariff in the context of economic integration within the Community. Moreover, the difficulties of proof referred to do not appear to constitute an insurmountable obstacle to the levying of duties. In cases where the quantity of the goods imported cannot be reliably established, the customs authorities often have recourse to inductive methods of assessment.
            
         
               6.
            
            
               It is therefore essentially on the basis of the reasoning set out in the Horvath judgment (supplemented by further argument to the same effect, to which I have drawn attention) that the present two cases may be settled. The Court will be acting in a manner consistent with the views which it has expressed in the past if it holds that the import of smuggled drugs is not subject to customs duties, regardless of whether the drugs are discovered and destroyed or re-exported.
               Of course, it is also possible for drugs to be imported lawfully, and indeed the Common Customs Tariff includes a list of drugs and specifies the duties payable on them; the imports concerned are those made within the framework of “trade which is strictly controlled and limited to authorized use for pharmaceutical and medical purposes” (see paragraph 10 of the decision in the Horváth case cited above).
               In view of the foregoing, it may be stated in general terms that the question whether any customs debt arises in the case of the import of drugs depends upon the purpose for which the goods are intended and upon whether the import is open or clandestine. The objection may be raised that an importer's proposed use of the drug is a subjective factor, at variance with the need for certainty in customs regulations. The obvious reply seems to me however to be that a clandestine import may be presumed to be intended for an unlawful use, whereas an open import, even one which is in some way irregular (for example where one of the required authorizations has not been obtained), gives rise to the obligation to pay duty, if the purpose declared by the importer is lawful.
               Finally, it may be asked what justification there is for the different customs treatment accorded to drugs as opposed to other smuggled goods (spirits, cigarettes, arms) in respect of which there is no doubt that the customs debt arises and must be discharged when the import is discovered by the authorities. In my opinion, the justification may lie in the fact that, in contrast to other goods, nearly all traffic in drugs is contraband and is intended for an unlawful use, so that for them to be put into commercial circulation may be regarded as an exceptional event of minor importance. Moreover, once smuggled drugs are discovered and seized it is normal for them to be destroyed; on the other hand, in those rare cases where the administration decides to sell them to a pharmaceutical undertaking, it certainly appears lawful — as far as the Common Customs Tariff is concerned — that the purchaser should be asked to pay the prescribed duty for properly effected imports. In any case, the interpretation of the customs rules given by the Court with reference to drugs is specific in character and must not be extended to other products which may also be imported and released for consumption only within the framework of a system of authorizations and checks.
            
         
               7.
            
            
               In view of all the foregoing considerations, I propose that the Court, in answer to the first question submitted by the Finanzgericht Düsseldorf by order of 10 June 1981 in Case 221/81, Wolf v Hauptzollamt Düsseldorf, should rule as follows: “The provisions of the EEC Treaty relating to the customs union (Article 9 (1) and Articles 18 to 29) must be interpreted as meaning that after the introduction of the Common Customs Tariff a Member State is no longer authorized to levy customs duties on drugs in so far as the import and marketing thereof are prohibited”. It is to be noted that the Finanzgericht's second question was submitted in the alternative in the event of a negative reply to the main question. Therefore, since the reply which I suggest is affirmative, there is no need to consider the second question.
               As regards the question submitted by the Finanzgericht Baden-Württemberg by order of 16 June 1981 in Case 240/81 Einberger v Hauptzollamt Freiburg, I am of the opinion that the reply should be worded exactly as set out above, with the following addition: “Customs duties may not therefore be levied, even where the smuggled drugs are subsequently re-exported from the Community customs territory”.
            
         (
            1
         )	Translated from the Italian.