The Queen v Commissioners of Customs & Excise, ex parte Faroe Seafood Co. Ltd, Føroya Fiskasøla L/F (C-153/94) and Commissioners of Customs & Excise, ex parte John Smith and Celia Smith trading as Arthur Smith (a firm) (C-204/94).
Date: 1996-05-14
16 It follows from those provisions as a whole that, whilst the EUR.1 certificate issued by the competent Faroese authorities constitutes the document evidencing the Faroese origin of the goods, it remains possible nevertheless to carry out subsequent verifications, including the dispatch of a Community mission of enquiry in order to check whether the origin indicated in such a certificate is correct. As the Court has already held in Case C-12/92 Huygen and Others [1993] ECR I-6381, in paragraphs 17 and 18 of the judgment, where a subsequent verification does not confirm the origin of the goods as stated in the EUR.1 certificate, it must be concluded that the goods are of unknown origin and that the EUR.1 certificate and the preferential tariff were thus wrongly granted. In principle, therefore, the customs authorities of the importing Member State must carry out post-clearance recovery of the customs duties which were not levied on importation.
18 On that question, the Court has interpreted provisions similar to those at issue in this case in its judgments in Case 218/83 Les Rapides Savoyards and Others v Directeur des Douanes et Droits Indirects [1984] ECR 3105, in Huygen and Others, cited above, and in Case C-432/92 Anastasiou and Others [1994] ECR I-3087. Those three judgments concerned, respectively, the free-trade Agreement between the European Economic Community and the Swiss Confederation, signed at Brussels on 22 July 1972 (OJ, English Special Edition 1972 (31 December), p. 190), the free-trade Agreement between the European Economic Community and the Republic of Austria, signed at Brussels on 22 July 1972 (OJ, English Special Edition 1972 (31 December), p. 3), and the Agreement of 19 December 1972 establishing an Association between the European Economic Community and the Republic of Cyprus (OJ 1973 L 133, p. 1), each of which contains a protocol concerning the definition of the concept of "originating products" and methods of administrative cooperation, and relating in particular to the issue and subsequent verification of EUR.1 certificates.
22 The Court explained in paragraph 27 of its judgment in Les Rapides Savoyards that recognition of the decisions of the authorities of the exporting country by the customs authorities of the Member States is necessary in order that the Community can, in turn, demand that the authorities of other countries with which it has concluded free-trade agreements accept the decisions taken by the customs authorities of the Member States concerning the origin of products exported from the Community to those non-member countries. The Court also pointed out that the functioning of that system does not encroach on the fiscal autonomy of the Community and its Member States or of the non-member countries concerned, since the rules laid down in the free-trade agreement in question were established on the basis of reciprocal obligations placing the parties on an equal footing in their dealings with each other (paragraph 29).
23 In paragraph 28 of the same judgment, moreover, the Court found there was no danger that the application of those provisions might encourage abuses, since Articles 16 and 17 of the protocol in question had set out in detail the methods of cooperation between the customs authorities concerned, where the origin was contested or where the exporters or importers had acted fraudulently.
24 It follows from those considerations, first of all, that the need for the customs authorities of the Member States to recognize the assessments made by the customs authorities of the exporting country does not arise in the same way where the preferential system is established not by an international agreement binding the Community to a non-member country on the basis of reciprocal obligations, but by a unilateral Community measure.
26 Furthermore, the second factor on which the Court based its interpretation in the Rapides Savoyards judgment, namely the existence of a procedure for settling disputes concerning origin, is missing in this case.
27 As the Advocate General points out in point 63 of his Opinion, although Article 46 of Regulation No 3184/74 substantially incorporates the provisions on administrative cooperation in matters of subsequent verification set out in Article 17 of Protocol No 3 to the EEC-Switzerland Agreement, to which the Court referred in its aforesaid judgment, it does not incorporate the principle of settling disputes by a joint customs committee, as provided for by the second subparagraph of Article 17(3) of the Protocol. That subparagraph provides that disputes which cannot be settled between the customs authorities of the importing country and those of the exporting country or which raise a question as to the interpretation of the Protocol are to be submitted to the customs committee established under the Agreement.
34 Finally, as the Advocate General pointed out in point 68 of his Opinion, the interpretation whereby the customs authorities of the importing Member State may maintain a different assessment from that of the competent Faroese authorities preserves the possibility of resolving any disputes which might arise; a trader may challenge decisions taken by the customs authorities of the importing Member State in proceedings before the national courts, while the uniformity of Community law can subsequently be ensured by the Court in the context of the preliminary ruling procedure.
66 It is apparent from the Court' s case-law that, in the absence of relevant provisions of Community law, it is for the national legal system of each Member State to lay down the detailed rules and conditions for the collection of Community revenues, although such procedures and conditions may not render the system for collecting Community charges and dues less effective than that for collecting national charges and dues of the same kind, or render virtually impossible or excessively difficult the implementation of Community legislation (see the judgments in Case 265/78 Ferwerda v Produktschap voor Vee en Vlees [1980] ECR 617, paragraph 12; in Joined Cases 66/79, 127/79 and 128/79 Amministrazione delle Finanze v Salumi and Others [1980] ECR 1237, paragraphs 18 and 20; and in Case C-212/94 FMC and Others v Intervention Board for Agricultural Produce [1996] ECR I-0000, paragraph 52).
79 It appears from the Court' s case-law on Article 4 of Commission Regulation (EEC) No 1573/80 of 20 June 1980 laying down provisions for the implementation of Article 5(2) of Council Regulation (EEC) No 1697/79 (OJ 1980 L 161, p. 1), which was replaced first by Commission Regulation (EEC) No 2380/89 of 2 August 1989 (OJ 1989 L 225, p. 30) and then by Regulation No 2164/91, that the power of decision conferred on the Commission by Article 4 of the latter regulation does not cover a case in which the competent authorities are persuaded that the terms of Article 5(2) of Regulation No 1697/79 are not fulfilled and therefore consider themselves bound to effect post-clearance recovery (see the judgments in Case C-64/89 Hauptzollamt Giessen v Deutsche Fernsprecher [1990] ECR I-2535, paragraph 12, and in Case C-348/89 Mecanarte v Chefe do Serviço da Conferência Final da Alfândega, Oporto [1991] ECR I-3277, paragraph 32).
80 As the Court stated in relation to Regulation No 1573/80, that interpretation is in conformity with the purpose of Regulation No 2164/91, which is to ensure the uniform application of Community law. That is likely to be jeopardized in cases where an application to waive post-clearance recovery is allowed, since the assessment which a Member State may make in taking a favourable decision is likely, in reality, owing to the probable absence of any appeal, to escape any review by means of which the uniform application of the conditions laid down in the Community legislation may be ensured. On the other hand, that is not the case where the national authorities proceed to effect recovery, whatever the amount in issue. It is then open to the person concerned to challenge such a decision before the national courts. As a result, it will be possible for the uniformity of Community law to be ensured by the Court of Justice through the preliminary ruling procedure (see the judgments in Deutsche Fernsprecher, cited above, paragraph 13, and in Mecanarte, cited above, paragraph 33).
83 Article 5(2) of Regulation No 1697/79 lays down three cumulative conditions for waiver by the competent authorities of post-clearance recovery of import duties, namely that non-collection must have been due to an error by the authorities, that the person liable must have acted in good faith, or in other words that he must not have been reasonably able to detect the error of the authorities, and that he must have complied with all the provisions laid down by the legislation in force so far as his customs declaration is concerned.
84 The Court has consistently held that, if those three conditions are satisfied, the person liable is entitled to waiver of recovery (see, in particular, the judgments in Mecanarte, cited above, paragraph 12, and in Case C-292/91 Weis v Hauptzollamt Wuerzburg [1993] ECR I-2219, paragraph 15).
87 A preliminary point to note in answering that question is that, according to the Court' s case-law, Article 5(2) of Regulation No 1697/79 is intended to protect the legitimate expectation of the person liable that all the information and criteria on which the decision whether or not to proceed with recovery of customs duties is based are correct (see the Mecanarte judgment, cited above, paragraph 19).
88 It therefore follows, as the Court held in paragraph 22 of its judgment in Mecanarte, that since no precise and exhaustive definition of the "competent authorities" is provided in Regulation No 1697/79 or in the regulation adopted in implementation thereof, not only the authorities competent for taking action for recovery but any authority which, acting within the scope of its powers, furnishes information relevant to the recovery of customs duties and which may thus cause the person liable to entertain legitimate expectations must be regarded as a "competent authority" within the meaning of Article 5(2) of Regulation No 1697/79. The Court considered that this applied in particular to the customs authorities of the exporting Member State which deal with the customs declaration.
91 Next, it follows from the wording of Article 5(2) itself that the legitimate expectations of the person liable attract the protection provided for in that article only if it was the competent authorities "themselves" which created the basis for those expectations. Thus, only errors attributable to acts of the competent authorities confer entitlement to the waiver of post-clearance recovery of customs duties (judgment in Mecanarte, cited above, paragraph 23).
92 As the Court pointed out in paragraph 24 of Mecanarte, that condition cannot be regarded as fulfilled where the competent authorities have been misled ° in particular as to the origin of the goods ° by incorrect declarations on the part of the exporter whose validity they do not have to check or assess. In those circumstances, it is the person liable who must bear the risks arising from a commercial document which is found to be false when subsequently checked.
93 Moreover, it is apparent from the Court' s case-law that the person liable cannot entertain a legitimate expectation with regard to the validity of certificates by virtue of the fact that they were initially accepted by the customs authorities of a Member State, since the role of those authorities in regard to the initial acceptance of declarations in no way prevents subsequent checks from being carried out (see the judgment in Joined Cases 98/83 and 230/83 Van Gend & Loos and Expeditiebedrijf Wim Bosman v Commission [1984] ECR 3763, paragraph 20).
95 However, where the exporter has declared that the goods are of Faroese origin in reliance on the actual knowledge by the competent Faroese authorities of all the facts necessary for applying the customs rules in question, and where, notwithstanding such knowledge, those authorities have raised no objection concerning the statements made in the exporter' s declarations, thereby basing their certification of the Faroese origin of the goods on a misinterpretation of the rules on origin, it must be considered to be the result of an error on the part of the competent authorities themselves in initially applying the relevant rules that no duty was charged when the goods were imported (see, in that respect, the judgments in Case 314/85 Foto-Frost v Hauptzollamt Luebeck Ost [1987] ECR 4199, paragraph 24, and in Case C-250/91 Hewlett Packard France v Directeur Général des Douanes [1993] ECR I-1819, paragraph 21).
97 As for the first condition, therefore, the answer to the question must be that the fact that the competent Faroese authorities certified in the EUR.1 certificates that the goods originated there or the fact that the competent authorities of the importing Member State initially accepted that the origin of the goods was as declared on those certificates does not constitute an "error made by the competent authorities" within the meaning of Article 5(2) of Regulation No 1697/79. It is otherwise, however, where the exporter has declared that the goods are of Faroese origin in reliance on the actual knowledge by the competent Faroese authorities of all the facts necessary for applying the customs rules in question, and where, notwithstanding such knowledge, those authorities have raised no objection concerning the statements made in the exporter' s declarations, thereby basing their certification of the Faroese origin of the goods on a misinterpretation of the rules on origin.
Whether the error on the part of the competent authorities could have been detected by the person liable
99 Nevertheless, the Court has consistently held that the condition in question implies that the national court must enquire whether the persons liable might not reasonably have been able to detect the error made by the competent customs authorities, having regard to the nature of the error, the professional experience of the traders concerned and the degree of care which they exercised (see the judgments in Deutsche Fernsprecher, cited above, paragraph 24; in Case C-371/90 Beirafrio v Alfândega do Porto [1992] ECR I-2715, paragraph 21; in Case C-187/91 Belovo [1992] ECR I-4937, paragraph 17; and in Hewlett Packard France, cited above, paragraph 22).
100 As regards the nature of the error, the Court pointed out in the above cases that it is necessary to consider in each case whether the rules concerned are complex or simple enough for an examination of the facts to make an error easily detectable. As regards the degree of care shown, if the traders concerned have doubts as to the definition of the origin of the goods, they must make inquiries and seek the greatest clarification possible in order to ascertain whether those doubts are well founded.
108 It is settled case-law that the person making the declaration must supply the competent customs authorities with all the necessary information as required by the Community rules, and by any national rules supplementing or transposing them, in relation to the customs treatment requested for the goods in question (see the judgment in Case 378/87 Top Hit Holzvertrieb v Commission [1989] ECR 1359, paragraph 26).
109 The Court has held, however, that this obligation may not go beyond production of the information that the person making the declaration may reasonably be expected to possess and obtain, with the result that it is sufficient for such information, even if incorrect, to have been provided in good faith (see the judgments in Mecanarte, cited above, paragraph 29, and in Hewlett Packard France, cited above, paragraph 29).
111 In case the national court should consider that the conditions for applying Article 5(2) of Regulation No 1697/79 are not fulfilled in this case, it is necessary to examine the argument put forward by the plaintiffs in the main proceedings that post-clearance recovery of import duties in this case would constitute an infringement of the right to property laid down by Article 1 of Protocol No 1 to the European Convention on Human Rights and Fundamental Freedoms of 4 November 1950, as interpreted by the European Commission and Court of Human Rights, and which is guaranteed in the Community legal order (see the judgment in Case 44/79 Hauer v Land Rheinland-Pfalz [1979] ECR 3727, paragraph 17).
114 However, where the conditions for applying Article 5(2) of Regulation No 1697/79 are not fulfilled, the fact that action for post-clearance recovery is taken does not constitute an infringement of the principle of proportionality, even if the duties claimed are no longer recoverable from the buyer of the imported products. It is the responsibility of professional traders to make the necessary arrangements in their contractual relations in order to guard against such risks.