OPINION OF ADVOCATE GENERAL

delivered on 13 February 2003 (1)

(Reference for a preliminary ruling from the Bundesfinanzhof, Germany)

((Free movement of goods – Trade with non-member countries – Returned goods – Reimport of compensating products re-exported subsequent to an inward processing procedure – Determination of import duties – Burden of proving the proportion of the Community value in reimported goods))

I ─ The legal framework

A ─ The provision to be interpreted

4. It will be useful to give a brief outline of the rules governing inward processing operations and the import of goods in order to appreciate the scope of Article 187.

B ─ The inward processing procedure and the reimport of compensating products

C ─ The obligations of the importer and of the customs authorities

10. The importer must provide in writing, on the prescribed official specimen form, which must be duly signed, all the particulars necessary to enable the competent authorities to calculate the customs debt. (9)

11. However, if the importer is not in a position to provide the information needed, the customs authorities must provide the documents and information at their disposal. (10)

12. In particular, where compensating products are released for free circulation under an inward processing relief arrangement, the customs office which receives the request must ask the supervising customs office to provide it with the particulars needed to calculate the debt. Under the rules governing returned goods, which, as I have stated, also apply to compensating products, the office of exportation must communicate to the customs office of reimportation, where requested to do so, all the information at its disposal to enable the latter to determine whether the goods meet the conditions necessary for entitlement to benefit under the rules. (12)

II ─ The facts, the main proceedings, and the question referred for a preliminary ruling

14. Between 13 December 1994 and 17 March 1995, IHW Rebmann GmbH (Rebmann) imported into the European Community from the Czech Republic 158 cars, which were originally from Germany, to be released for free circulation. (14) The operation was carried out in 20 consignments and, on each occasion, the cars were declared as returned goods and accompanied by the relevant invoice bearing an export note from the German customs authorities.

15. The German customs authorities declared that the vehicles had undergone inward processing in the Community and had subsequently been sent to Prague. In the absence of information which would allow the proportion of Community components contained in the products to be confirmed, the Hauptzollamt (Principal Customs Office), Weiden, demanded that Rebmann pay import duty based on the total value of the goods.

16. Rebmann challenged that calculation at first instance before the Finanzgericht (Finance Court), Munich, claiming that the customs debt should be calculated without reference to the value of the Community components contained in the cars, and stating that it did not have the particulars needed to calculate their value because the inward processing had been carried out by a different undertaking. In defence, the customs authorities contended that it was for the importer to supply all the details needed to determine the customs debt and that the principle of professional secrecy precluded the use of information provided on a confidential basis by the exporter of compensating products.

17. The Finanzgericht dismissed the action on the grounds that the import duties could not be determined under the second paragraph of Article 187 of the Community Customs Code because the particulars relating to the proportion of non-member country goods, which were required for that calculation, were not available.

19. The Bundesfinanzhof is of the view that the question whether the disputed calculation is lawful depends upon whether, as the Finanzgericht reasoned, the claimant is not only required to verify that the vehicles, which were exported under an inward processing relief arrangement and subsequently reimported, are returned goods, but is also required to declare and prove the facts which are the basis of the calculation of the amount of duty owed. Accordingly, the Bundesfinanzhof has referred the following question to the Court of Justice: Is the second paragraph of Article 187 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code to be interpreted as meaning that the factual particulars required to calculate the import duties legally owed must also be declared and proved where compensating products have been declared as returned goods, or as meaning that, where possible, it is for the customs office which releases the goods into free circulation to request those factual particulars from the supervising office using an INF 1 sheet, pursuant to the procedure established in Article 613 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, in the version in force until 30 June 2001?

III ─ The procedure before the Court of Justice

21. The Court decided to put a number of questions regarding the interpretation of certain provisions of the Community Customs Code and its implementing regulation to the participants in the written phase and to the German Government.

22. At the hearing, which was held on 23 January 2003, oral argument was presented by Rebmann and the Commission.

VI ─ Examination of the question referred for a preliminary ruling

A ─ Compensating products as returned goods

23. All goods which enter the territory of the Community and undergo certain operations, known as inward processing operations, with the aim of exporting them, are granted relief from payment of the corresponding customs duties. However, if those goods are then reimported into the European Union and released for free circulation, causing them to become Community goods, the fundamental reason for the exemption disappears and the importer must pay the customs debt which did not initially arise.

24. Community goods which, having been exported, are returned to the customs territory of the Community within a period of three years and released for free circulation are also exempt from duty. Subject to exceptions, after the three-year period has expired they are regarded as non-Community goods and are subject to the ordinary rules of customs law.

25. Normally, compensating products resulting from processing operations are, like the cars in the main proceedings, complex products which are made up of a number of components. Some are non-Community goods which were imported with the sole aim of processing them, while others are Community goods which have been incorporated by means of working, processing or repair operations.

26. In those circumstances, when the compensating product returns to the customs territory of the Community, it is important to ascertain which elements of the product are non-Community goods which were initially imported, since these are the only goods which attract duty.

27. The above is an interpretation of the provision which I set out at section I part A of this Opinion.

B ─ Who is responsible for providing the particulars on which the calculation of the import duties is based?

28. I am in no doubt at all that, in principle, the general rule is that the particulars required to calculate the amount of duty owed must be provided and verified by the person who imports the previously exported compensating product. That is apparent not only from the system established in the Community Customs Code, particularly from the wording of Article 62 thereof, but also from the logic of the system, since the importer, or the importer's representative, are the people who know the most about the goods and their attributes, and they must set out that information in the relevant declaration when they present the goods at the customs office.

30. There are a number of arguments in support of that approach. Some are based on the actual wording of the Community customs legislation. Others follow from general legal principles.

(a) The corpus of customs law

31. Under Article 6 of the Community Customs Code, which is situated in Title I, Chapter 2, containing general provisions relating to the rights and obligations of the parties in a customs relationship, the person who requests that the authorities take a decision must provide all the information and documents needed in order to take that decision. However, the implementing regulation provides for the case where a person is unable to do so, stating that in those circumstances it is for the customs authorities to supply the information and documents in their files.

32. That rule governs certain specific fields of Community customs law, particularly those fields which apply to the facts of the main proceedings.

(i) The supply of particulars under the inward processing procedure

33.Under an inward processing procedure, non-Community goods which have been imported with a view to being subsequently exported as compensating products, do not attract customs duties and are dealt with under the suspension system, (15) which is discharged, for the purposes of these proceedings, when the goods leave the customs territory of the Community. (16) However, as I have already pointed out, if, having been exported, the products concerned return to the customs territory of the Community, they are subject to duty based on the proportion of non-Community goods which they contain. To that end, the holder of the inward processing authorisation must submit to the supervising customs office a bill of discharge containing the details which will enable the amount of the duty to be determined. (17)

34.However, the implementing regulation provides that certain information may be obtained without the involvement of the person concerned, using administrative cooperation measures. Where the import and release for free circulation are dealt with by an office other than the office which discharges the suspensive arrangement, an information sheet, known as INF 1, must be issued, enabling the customs office to calculate the amount of customs duties on the basis of the particulars it contains. (18)

(ii) The supply of particulars under the returned goods procedure

35.In returned goods operations, the customs authorities which deal with the initial export must issue a document containing the information needed to identify the goods when they are reimported into the customs territory of the Community, (19) and also, at the request of the person concerned, an information sheet, known as INF 3, which serves the same purpose and must set out all the particulars required by the customs authorities. (20)

36.The presentation of one of those documents is precondition for the grant of relief from customs duties on imported goods, but the documents are not required if the authorities which deal with the operation are in a position to confirm, from the evidence available to them, which they may request from the customs office of exportation or from the person concerned, that the conditions necessary for the application of the privileged customs regime in question have been satisfied. (21)

37.In the case of returned goods, the Community legislature places the responsibility for supplying the information required for the grant of relief on the person concerned, but it also provides that the particulars may be provided by the customs office itself, either because it already has them at its disposal, or because the importer requests them. For that reason, the implementing regulation requires the authorities to issue an original and one copy of information sheet INF 3, and for the original and one of the copies to be returned to the exporter for presentation at the customs office of reimportation, while the second copy is filed in the customs office which issued it. (22)

38.Neither the Community Customs Code nor its implementing regulation provide for an arbitrary, inflexible solution whereby, in the absence of information provided by the importer, and irrespective of the circumstances of the case and of the reasons preventing the importer from providing the information needed to grant the relief, the customs duties are calculated as though the reimported goods were not returned goods.

39.With a view to calculating the customs debt, it is a requirement of the inward processing procedure that information be obtained through cooperation between the customs authorities, who, in order to grant relief in returned goods operations, must use the information at their disposal, regardless of whether it was provided by the person concerned. Accordingly, the aforementioned provisions must be taken into consideration if the returned goods are compensating products which attract the payment of customs duties in proportion to the non-Community components which they contain.

40.In short, it is my view that, as a general rule, Article 187 of the Community Customs Code places upon the person concerned the burden of declaring and verifying the particulars needed to calculate the import duty owed where compensating products are presented as returned goods. However, exceptionally, where that person is unable to provide the particulars through no fault of his own, it is for the customs office to furnish them if they are in its possession.

41.I do not agree with the strict interpretation advanced by the Commission in its written observations. In order to determine the amount of import duty legally owed, the second paragraph of Article 187 of the Community Customs Code refers to the rules applicable under the inward processing procedure. The wording of that reference is not specific. It does not refer only to the substantive rules governing the calculation of the customs debt but rather, without further clarification, to the applicable provisions, and, hence, to the procedural provisions too. There is nothing in the text of the provision to warrant the distinction claimed by the Commission.

42.Therefore, in order to determine the amount of import duty owed in respect of compensating products, regard must be had to the rules of the inward processing procedure, in so far as they apply, including the rules governing the actions which the customs authorities must take in order to obtain the evidence required for the calculation. I can find no grounds on which to derogate from those rules; nor does the Commission put forward any grounds, and instead simply rejects the application of the rules without providing any reasons. (23)

43.Clearly, to claim that compensating products have a different status depending upon whether they are released for free circulation following inward processing or, having been exported, are reimported as returned goods, is not a convincing explanation.

44.The difference posited by the Commission does not exist. First, because the Community legislature did not view the matter that way. Otherwise, the legislature would not have provided, in the second paragraph of Article 187, that, in order to calculate the customs debt, the provisions governing the inward processing procedure apply to compensating products which are imported as returned goods; in other words, the same rules which would apply had the goods been released for free circulation immediately after they were manufactured, processed or repaired, or after they had undergone an intermediate procedure.

45.The second reason why the difference claimed by the Commission does not exist is that, in both cases, the compensating products have the same status, for the purpose of calculating the import duty. They are a composite of Community and non-Community goods and, therefore, when they are released for free circulation and the dutiable event arises, it is essential to ascertain the proportions of Community and non-Community components in the resulting product, because only the latter components attract the payment of import duty. The main participant in those enquiries is the person who will be liable to pay the duty, and he must provide the necessary information in the declaration. However, if the person concerned is unable to provide that information, there is no reason why the mechanisms established under customs law should not be implemented in order to make up for the deficiency.

46.The time that has elapsed between the inward processing operations and the reimport of the compensating products, or the fact that the person importing the goods is not the same as the person who obtained the authorisation to carry out the operations and exported the goods, might lead to a different outcome, (24) but, where the necessary information is available, those factors do not, in any way, warrant determining the customs duty in an amount other than the appropriate amount, by treating the goods as though they were not compensating products.

(b) General legal principles

47.The interpretation advanced by the Commission does not take account of the rule of proportionality (25) and ignores the principle of good faith (26) which must govern relations between the administration and the people it administers.

48.It is disproportionate to make the importer pay a higher customs debt where he is unable to provide the information needed to calculate the debt for reasons beyond his control, and where the items of information concerned are held in the files of a customs office, whether it be the office responsible for calculating and collecting the duty or a different office, which is in a position to provide them through inter-office collaboration. From the point of view of the person liable for payment of the import duty, all the authorities which are involved in the application of Community customs legislation constitute the same legal personality and, in so far as they are part of the same body it is to be expected that they communicate with one other. Accordingly, the notion that information possessed by one customs office should be inaccessible to other customs offices, to the detriment of the person concerned, must be rejected.

49.To ignore that circumstance, despite having the relevant information at one's disposal, and to take advantage of the importer's inability to provide the information in order to calculate the customs debt in a higher amount than it should be clearly amounts to an infringement of the principle of good faith which must govern relations between the public authorities and individuals.

50.Furthermore, because the excess amount of duty charged is not actually owed, it becomes in nature like a penalty, as the Commission's representative acknowledged at the hearing. (27) Where the customs authorities know that the products being imported are compensatory products and they have at their disposal the evidence needed to calculate the debt, the decision to levy duty on the goods as though they did not contain Community components that are exempt from duty, based solely on the fact that the importer has not provided the particulars, constitutes, in practical terms, a penalty imposed without regard to any of the principles or restrictions to which the exercise of the power to impose penalties by the public authorities is subject.

51.That is an infringement of the principle of legality and of the principle that there must be a legal basis, pursuant to which conduct giving rise to the imposition of a penalty must be defined beforehand in legislation and the facts must be covered by the definition. It is also an infringement of the principle of fault, which proscribes the imposition of a penalty where there is no fault.

52.It amounts, therefore, to the imposition of a penalty which is not provided for; which is imposed arbitrarily, outside any procedural framework; and where the person concerned is not granted a hearing or given the opportunity to submit a defence.

53.The solution I propose does not disregard the stringent and procedural nature of customs law, nor does it introduce, as the Commission asserts, a lack of certainty into legal relationships. I believe that, on the contrary, the solution I propose strikes a fair balance between the certainty that is required in legal relationships and the safeguards which must be available to the person concerned or, as the fifth recital in the preamble to the Community Customs Code states, between the needs of the customs authorities ... and the right of traders to be treated fairly.

54.Naturally, the importer must prove that the goods in question are compensating products which are being imported as returned goods, together with the proportion of the components which is subject to duty. The importer must also prove the particulars required to calculate the customs debt. However, where the importer is unable to prove those matters, owing to circumstances beyond his control, but the customs authority either has the information or is in a position to ascertain it, for that customs authority to issue a calculation based on the goods as a whole, without taking any further steps, infringes the spirit and the letter of the provision, and imbues it with an unnecessary rigidity which is not a prerequisite for achieving the desired objectives of the Community legislature.

Information covered by professional secrecy

55.Finally, I must confess that I am at a loss to understand the obstacles which, in the opinion of the Commission, the German Government and the referring court, are presented by Article 15 of the Community Customs Code. Under Article 15, confidential information and information which is provided on a confidential basis are protected by professional secrecy, and the customs authorities may not disclose such information except where authorised in advance by whoever provided it or by a court order, or where they are obliged to do so pursuant to a legislative provision.

56.Therefore, Article 15 restricts the customs authorities' use of the data they possess, but it in no way precludes them from using non-confidential information. Consequently, it does not conflict with the interpretation which I propose. In general terms, the arguments I have put forward in this Opinion are not refuted by the obligation to safeguard professional secrecy, since, otherwise, in view of the fact that it is an abstract provision of Community customs law would mean that the rules of the corpus of customs law which I have examined, and many other rules under which the competent authorities may or must use information available to them, would be deprived of substance.

57.Accordingly, as I have indicated, it is for the person liable to pay the duty to declare and prove the particulars needed to calculate the customs duty owed where compensating products are imported as returned goods. However, where, owing to reasons beyond his control, the person concerned is unable to provide the information, it is for the customs authority to provide it, if the information is in its possession or at its disposal, provided that the information is not covered by professional secrecy and does not prejudice others.

V ─ Conclusion

58.In the light of the foregoing considerations, I propose that the Court of Justice should reply to the question referred by the Bundesfinanzhof as follows: The second paragraph of Article 187 of the Community Customs Code, established by Council Regulation (EEC) No 2913/92 of 12 October 1992, provides that, as a general rule, the person concerned is responsible for declaring and proving the particulars needed to calculate the duty owed where compensating products are imported as returned goods, but, exceptionally, where, owing to reasons beyond his control, the person liable to pay the duty is not in a position to provide that information, it is for the customs authority to provide it, if the information is in its possession or at its disposal, provided that the information is not covered by professional secrecy and does not prejudice others.

1 – Original language: Spanish.

2 – Established by Council Regulation (EEC) No 2913/92 of 12 October 1992 (OJ 1992 L 302, p. 1).

3 – Articles 79 and 201(1) of the Community Customs Code.

4 – Articles 114, 116 and 118 of the Community Customs Code.

5 – Article 185(1) of the Community Customs Code.