CELEX: 62007CC0256
Language: en
Date: 2008-10-21
Title: Opinion of Mr Advocate General Mazák delivered on 21 October 2008. # Mitsui & Co. Deutschland GmbH v Hauptzollamt Düsseldorf. # Reference for a preliminary ruling: Finanzgericht Düsseldorf - Germany. # Community Customs Code - Repayment of customs duties - Article 29(1) and (3)(a) - Value for customs purposes - Regulation (EEC) No 2454/93 - Article 145(2) and (3) - Taking into account, for customs valuation purposes, of payments made by the seller in performance of a warranty obligation provided for in the contract of sale - Temporal application - Substantive rules - Procedural rules - Retroactive application of a rule - Validity. # Case C-256/07.

OPINION OF ADVOCATE GENERAL
      MAZÁK
      delivered on 21 October 2008 1(1)
      
      Case C‑256/07
      Mitsui & Co. Deutschland GmbH
      v
      Hauptzollamt Düsseldorf
      (Reference for a preliminary ruling from the Finanzgericht Düsseldorf (Germany))
      (Value for customs purposes – Transaction value – Interpretation of Article 29(1) and (3)(a) of the Customs Code – Interpretation of Article 145(2) and (3) of the Implementing Regulation, as amended by Regulation No 444/2002 – Retroactive effect of a rule – Validity)I –  Introduction, facts and procedure before the referring court
      1.        The questions referred by the Finanzgericht Düsseldorf (Finance Court, Düsseldorf) provide the Court with the opportunity
         to define the effect of the defective nature of goods on their transaction value, and consequently also their customs value.
      
      2.        The referring court requires the Court’s answers in order to rule in the action brought by Mitsui & Co. Deutschland GmbH (‘Mitsui
         & Co.’) brought against the Hauptzollamt Düsseldorf (Principal Customs Office, Düsseldorf, ‘Hauptzollamt’) with respect to
         a decision concerning a request for a reimbursement of customs duties made by Mitsui & Co.
      
      3.        Mitsui & Co. purchases and imports Subaru motor vehicles for which the Japanese seller, which is also their manufacturer,
         grants a three-year guarantee. The seller and manufacturer reimbursed Mitsui & Co. its costs under that guarantee, that is
         to say, the expenditure on repairs invoiced to it by its own customers. As a result, Mitsui & Co. applied to the Hauptzollamt
         for a reimbursement of the relative customs duties.
      
      4.        The contested decision of the Hauptzollamt concerns motor vehicles released for free circulation in July 2000. By decision
         of 27 May 2004, the Hauptzollamt partially granted Mitsui & Co.’s application of 13 June 2003 for reimbursement of the customs
         duties in respect of the services provided under the guarantee. It took into consideration only the price adjustments effected
         prior to February 2002 and declined to allow the price adjustments effected between March 2002 and June 2003. In so doing,
         it relied on Article 145(2) and (3) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the
         implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, (2) as amended by Commission Regulation (EC) No 444/2002 of 11 March 2002. (3)
      
      5.        The Hauptzollamt confirmed its position by a decision of 30 March 2005 given in response to an application of Mitsui & Co.
         by which the latter stated that Article 145 of the Implementing Regulation did not apply to its application since, in the
         case of a guarantee, it did not involve a subsequent price adjustment, but rather the quantified recognition of a warranty
         obligation, and, moreover, that since the general principle of non-retroactivity applies, Article 145 was not applicable to
         goods imported and released for free circulation before 19 March 2002.
      
      II –  Legal framework 
      6.        At the time of the facts of the main proceedings, customs values were covered by Chapter 3 of Council Regulation (EEC) No
         2913/92 of 12 October 1992 establishing the Community Customs Code (‘the Customs Code’). (4)
      
      7.        Article 29(1) of the Customs Code defines the ‘customs value of imported goods’ as their transaction value, that is, the price
         actually paid or payable for the goods when sold for export to the customs territory of the Community. (5)
      
      8.        Article 29(3)(a) of the Customs Code also defines ‘the price actually paid or payable’ as 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.
      
      9.        In pursuance of Article 249 of the Customs Code, the Commission of the European Communities adopted Regulation No 2454/93.
      
      10.      That regulation has been amended on several occasions. Regulation No 444/2002, which entered into force on 19 March 2002,
         is one of these amendments.
      
      11.      As is pointed out in the fifth and sixth recitals in the preamble to Regulation No 444/2002, after release of the goods for
         free circulation, the price agreed between buyer and seller can be subject in certain cases to adjustment in order to take
         account of the defective nature of goods. Consequently, the rules in force should expressly provide for a transaction value
         under Article 29 of the Code to be able to take account of those special circumstances, with appropriate safeguards and subject
         to the application of reasonable time‑limits.
      
      12.      As a result, Regulation No 444/2002 introduced the new wording of Article 145 of the Implementing Regulation. In paragraphs
         2 and 3, that article provides for the possibility that, after release of the goods for free circulation, an adjustment made
         by the seller, to the benefit of the buyer, of the price actually paid or payable for the goods may be taken into consideration.
      
      13.      Article 145(2) and (3) of the Implementing Regulation set out the substantive conditions which govern that possibility. First,
         the relevant goods must be defective at the date on which the customs authorities accepted the declaration. Secondly, the
         seller must have made the adjustment in performance of a warranty obligation provided for in the contract of sale, concluded
         before release for free circulation of the goods. Thirdly, the defective nature of the goods must not have already been taken
         into account in the relevant sales contract. Fourthly, the price adjustment may be taken into account only if that adjustment
         was made within a period of 12 months following the date of acceptance of the declaration for entry to free circulation of
         the goods.
      
      III –  Questions referred and procedure before the Court of Justice
      14.      The Finanzgericht Düsseldorf has decided to stay proceedings and to refer the following four questions to the Court for a
         preliminary ruling:
      
      ‘(1)      Do payments of the seller/manufacturer to the buyer which are made in the context of a guarantee agreement and by which the
         buyer is reimbursed the expenditure on repairs invoiced to him by his customers reduce the customs value under Article 29(1)
         and (3)(a) of [the Customs Code] which was declared on the basis of the price agreed between the seller/manufacturer and the
         buyer?
      
      (2)      Do the payments referred to in question 1 of the seller/manufacturer to the buyer for the reimbursement of expenses incurred
         under a guarantee constitute an adjustment of the transaction value under Article 145(2) of [the Implementing Regulation],
         as amended by [Regulation No 444/2002]?
      
      (3)      Should either of the first two questions be answered in the affirmative: is Article 145(2) and (3) of [the Implementing Regulation],
         as amended by [Regulation No 444/2002], to be applied to imports in respect of which the customs declarations were accepted
         before entry into force of [Regulation No 444/2002]?
      
      (4)      Should question 3 be answered in the affirmative: is Article 145(2) and (3) of [the Implementing Regulation], as amended by
         [Regulation No 444/2002], valid?’
      
      15.      Mitsui & Co., the German Government and the Commission have lodged written observations.
      
      16.      Both Mitsui & Co. and the Commission applied to the Court for a hearing, which took place on 12 June 2008.
      
      IV –  Assessment
      A –    The first question
      17.      The first question of the referring court seeks to determine whether Article 29(1) and (3)(a) of the Customs Code can be interpreted
         as meaning that the payments made, after the release of the goods for free circulation, by the seller to the buyer in the
         context of a guarantee agreement reduce the customs value of the goods, which is calculated on the basis of the transaction
         value.
      
      18.      All the parties who lodged observations agreed that payments made by the seller to the buyer, such as those in the main proceedings,
         reduce the customs value of the goods in the main proceedings.
      
      19.      First, it should be borne in mind that the Court has declared on several occasions that the Community regulation of customs
         valuation was intended to establish a fair, uniform and neutral system excluding the use of arbitrary or fictitious customs
         values. (6)
      
      20.      It is also evident from the case-law of the Court that the customs value must reflect their real economic value of an imported
         product and, therefore, take into account all of the elements of that product that have an economic value. (7)
      
      21.      In the present case, as a result of a latent defect in the imported motor vehicles, the real economic value was lower than
         the transaction value declared at the time of their release for free circulation.
      
      22.      As the Commission rightly pointed out in its observations, Article 29(1) to (3) of the Customs Code does not expressly specify
         how to deal with later adjustments to the transaction value which forms a basis for the calculation of the customs value.
      
      23.      In this respect, I consider that it should be possible to look to the case-law of the Court for guidance concerning the adjustment
         of the price actually paid or payable after the purchase of a product, but before its release for free circulation, due to
         loss or damage of such a product.
      
      24.      In the Repenning (8) judgment, the Court recognised that the transaction value was a factor that must potentially be adjusted where necessary
         in order to avoid the setting of an arbitrary or fictitious customs value.
      
      25.      On this point, I share the view of Advocate General Darmon in the opinion delivered in Ebbe Sönnichsen, point 20, (9) that the value for customs purposes must be assessed on the day on which the goods are released for free circulation in the
         Community. Since their actual value must be taken into account, the state of the goods at the time of entry into the Community
         is what is relevant.
      
      26.      In light of those factors, it must be accepted that the payments made, after the release of the goods for free circulation,
         by the seller to the buyer in the context of a guarantee agreement should reduce the customs value of the goods, provided
         that those goods were defective at the time they were released for free circulation.
      
      27.      A different interpretation of Article 29(1) and (3)(a) of the customs code would lead to the setting of a fictitious customs
         value, which would be contrary to the aims of the Community rules concerning customs assessment.
      
      B –    The second question
      28.      By this question, the referring court would like to know, in essence, whether payments made by a seller to a buyer under a
         guarantee agreement by which the buyer is compensated for repair costs invoiced to him by his own customers entail an adjustment
         of the transaction value for the purposes of Article 145(2) of the Implementing Regulation, as amended by Regulation No 444/2002.
         
      
      29.      The parties which have made observations are divided on this point.
      
      30.      According to the German Government and the Commission, such payments constitute an adjustment of the price actually paid or
         payable for goods which, under Article 145(2) of the Implementing Regulation, can be taken into account in order to determine
         their customs value for the purposes of Article 29 of the Customs Code.
      
      31.      Mitsui & Co. is of the contrary opinion. It proposes that the Court should answer the second question to the effect that those
         payments do not constitute an adjustment of the transaction value within the meaning of Article 145(2) of the Implementing
         Regulation.
      
      32.      Mitsui & Co. stated during the hearing that Article 145(2) applies, in its view, only in cases where the seller and the buyer
         agree to a reduction of the price of the goods due to their defective nature.
      
      33.      If one were to accept the interpretation of Article 145(2) of the Implementing Regulation proposed by Mitsui & Co., that would
         mean, having regard to my proposed answer to the referring court’s first question, that the payments made by the seller to
         the buyer under a guarantee agreement reduce the customs value of the goods, but not according to the conditions laid down
         in Article 145(2).
      
      34.      I would like to state that, in my opinion, the wording of Article 145(2) confirms the interpretation of Article 29(1) and
         (3)(a) of the Customs Code proposed in the answer to the referring court’s first question.
      
      35.      Article 145(2) of the Implementing Regulation does not provide a basis for the possibility of taking account of the subsequent
         adjustment, after import, of the price actually paid or payable for the goods for the purpose of determining their customs
         value due to their defective nature. That possibility, flows directly from Article 29(1) and (3)(a) of the Customs Code and
         Article 145(2) serves only to confirm its existence and to specify the conditions of its application.
      
      36.      The question therefore arises whether the payments made by a seller to a buyer under a guarantee agreement according to which
         the buyer is compensated for repair costs invoiced to him by his own customers constitute an ‘adjustment’ of the price actually
         paid or payable.
      
      37.      My answer to this question is based on the assumption that the Community legislature did not intend to limit the scope of
         Article 145(2) of the Implementing Regulation only to situations where there is a price reduction of the goods due to their
         defective nature. In this respect, I refer to the use in this provision of the word ‘adjustment’ instead of the narrower concept
         of ‘reduction’ of the price.
      
      38.      This assumption is also confirmed by commentary No 2 of the Customs Code Committee concerning the scope of Article 145(2)
         of the Implementing Regulation, which describes a situation comparable to that at issue before the referring court. In my
         opinion, the commentary is similar to, and has the same value as, the explanatory notes to the Combined Nomenclature, which
         the Court has held constitute an important means of interpreting Community customs law. (10)
      
      39.      I am, therefore, of the opinion that Article 145(2) of the Implementing Regulation also covers an approach of a seller to
         the defective nature of goods of the kind which arises in the present case, that is to say, the compensation of the repair
         costs of a buyer invoiced by his own customers.
      
      C –    The third question
      40.      The referring court’s third question seeks to elucidate the effects ratione temporae of Article 145(2) and (3) of the Implementing Regulation, inserted by Regulation No 444/2002, which entered into force on
         19 March 2002.
      
      41.      The views of the parties who have lodged observations differ on this point.
      
      42.      Mitsui & Co. and the Commission are in agreement concerning the answer to this question. They suggest that the Court’s answer
         should be that Article 145(2) and (3) of the Implementing Regulation should not apply to imports whose customs declarations
         were accepted before the entry into force of Regulation No 444/2002, which inserted those provisions.
      
      43.      By contrast, the German Government considers that Article 145 does not lay down any rules of substantive law, but rather clarifies
         or defines Article 29 of the Customs Code. For this reason, customs declarations made before the entry into force of Regulation
         No 444/2002, which amended Article 145 of the Implementing Regulation, must from the outset be assessed in the light of the
         criteria contained in that provision. As a result, the rule in Article 145(3) of the Implementing Regulation, whereby only
         price adjustments made within a period of 12 months following the date of the declaration may be taken into account for the
         purposes of the calculation of the customs value, also applies to declarations made before the entry into force of Regulation
         No 444/2002.
      
      44.      It is important to point out that, as the Court has already stated in Beemsterboer Coldstore Services, (11) although procedural rules are generally deemed to apply to all proceedings pending at the time when they enter into force,
         substantive rules may not, in principle, apply to situations arising prior to their entry into force.
      
      45.      Therefore, in order to answer the question whether Article 145(2) and (3) of the Implementing Regulation applies to the future
         consequences of a situation which commenced before the entry into force of Regulation No 444/2002, it is necessary to determine
         whether Article 145(2) and (3) are substantive or procedural provisions.
      
      46.      As I have already stated, (12) Article 145(2) and (3) does not create new rules. It confirms the existence of the right to adjust the transaction value
         of the goods subsequently, after importation, for the purposes of determining their customs value on account of their defective
         nature, and it sets out the conditions for the application of that right.
      
      47.      That does not, however, mean that those provisions could not be substantive provisions. On the contrary, their substantive
         nature results from the fact that the provisions define the conditions for the application of the right to adjust the transaction
         value.
      
      48.      It is apparent from the case-law that, in certain situations, the retroactive effect of substantive provisions of Community
         law is, nevertheless, possible. That possibility is subject to the requirement that it should clearly follow from the terms,
         objectives or general scheme of the substantive provisions that such an effect must be given to them. (13)
      
      49.      However, the Court has stated at the same time that the retroactive effect of a substantive provision must not jeopardise
         the fundamental principles of the Community, in particular the principles of legal certainty and the protection of legitimate
         expectations, which require that the effect of Community legislation be clear and predictable for those who are subject to
         it. (14)
      
      50.      Before the entry into force of Regulation No 444/2002, which amended the regulation, the German customs authorities, acting
         in accordance with established administrative practice, applied the general deadline of three years to subsequent adjustments
         of the transaction value, after importation, for the purposes of determining the customs value of goods on account of their
         defective nature. In my opinion, it is, therefore, precisely the principle of the protection of legitimate expectations which
         precludes the retroactive effect of Article 145(2) and (3) of the Implementing Regulation.
      
      51.      It must, therefore, be held that Article 145(2) and (3) of the Implementing Regulation, as amended by Regulation No 444/2002,
         does not apply to situations arising prior to its entry into force, that is to say, to imports for which customs declarations
         were accepted before the entry into force of that provision.
      
      D –    The fourth question 
      52.      In the light of the suggested answer to the third question, I share the opinion expressed by the Commission in its written
         observations, namely that there are no circumstances calling into question the validity of Article 145(2) and (3) of the Implementing
         Regulation, as amended by Regulation No 444/2002.
      
      V –  Conclusion
      53.      In the light of the above, I therefore propose that the Court should answer the questions referred by the referring court
         for a preliminary ruling as follows:
      
      (1)      Article 29(1) and (3)(a) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code
         must be interpreted as meaning that the payments made, after the release of the goods for free circulation, by the seller
         to the buyer under a guarantee agreement reduce the customs value of the goods, which is calculated with reference to the
         transaction value, provided that those goods were defective at the time of their respective release for free circulation.
      
      (2)      Article 145(2) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Regulation
         No 2913/92, as amended by Commission Regulation (EC) No 444/2002 of 11 March 2002, must be interpreted as meaning that the
         payments made, after the release of the goods for free circulation, by the seller to the buyer under a guarantee agreement,
         constitute an adjustment of the transaction value within the meaning of Article 145(2) of Regulation No 2454/93, as amended
         by Regulation No 444/2002.
      
      (3)      Article 145(2) and (3) of Regulation No 2454/93, as amended by Regulation No 444/2002, does not apply to situations arising
         before its entry into force.
      
      (4)      There are no circumstances which call into question the validity of Article 145(2) and (3) of Regulation No 2454/93, as amended
         by Regulation No 444/2002.
      
      1 –	Original language: French.
      
      2 –	OJ 1993 L 253, p. 1 (‘the Implementing Regulation’).
      
      3 –	OJ 2002 L 68, p. 11.
      
      4 –	OJ 1992 L 302, p. 1. That code has since been repealed by Regulation (EC) No 450/2008 of the European Parliament and of
         the Council of 23 April 2008 (OJ 2008 L 145, p. 1).
      
      5 –	This definition adopts in full the terms of Article 1 of the Agreement on Implementation of Article VII of the General
         Agreement on Tariffs and Trade and the protocol annexed to it, approved on behalf of the European Economic Community by Council
         Decision 80/271/EEC of 10 December 1979 concerning the conclusion of the Multilateral Agreements resulting from the 1973 to
         1979 trade negotiations (OJ 1980 L 71, p. 1).
      
      6 –	See, for example, Case C‑11/89 Unifert [1990] ECR I‑2275, paragraph 35; Case C‑306/04 Compaq Computer International Corporation [2006] ECR I‑10991, paragraph 30; and Case C‑263/06 Carboni e derivati [2008] ECR I‑1077, paragraph 60. The Court took guidance from the sixth recital in the preamble to Council Regulation (EEC)
         No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (OJ 1980 L 134, p. 1), which was repealed by the
         Customs Code.
      
      7 –	Compaq Computer International Corporation, paragraph 30.
      
      8 –	Case 183/85 [1986] ECR 1873, paragraph 16.
      
      9 –	Case C‑59/92 [1993] ECR I‑2193, point 20.
      
      10 –	See, to that effect, Case C‑35/93 Develop Dr. Eisbein [1994] ECR 2655, paragraph 21; Case C‑495/03 Intermodal Transports [2005] ECR I‑8151, paragraph 48; and Case C‑500/04 Proxxon [2006] ECR I‑1545, paragraph 22.
      
      11 –	Case C‑293/04 [2006] ECR I‑2263, paragraphs 19 and 20.
      
      12 –	See point 35 of this Opinion.
      
      13 –	Joined Cases 212/80 to 217/80 Meridionale IndustriaSalumi and Others [1981] ECR 2735, paragraph 9; Case C‑34/92 GruSa Fleich [1993] ECR I‑4147, paragraph 22; Joined Cases C‑74/00 P and C‑75/00 P Falck and Acciaierie di Bolzano v Commission [2002] ECR I‑7869, paragraph 119; and Beemsterboer Coldstore Services, paragraph 21.
      
      14 –	Beemsterboer Coldstore Services, paragraph 24.