C-411/01

OPINION OF ADVOCATE GENERAL TIZZANO delivered on 26 March 2003 (1) Case C-411/01 GEFCO SA v Receveur principal des douanes (Reference for a preliminary ruling from the Tribunal d'instance de Metz (France)) ((Common commercial policy – Triangular outward processing – Export declaration – Temporary export goods – Error in indication of the tariff heading – Compensating products – Release for free circulation – Calculation of the rate of import duty)) 1. The Tribunal d'instance de Metz (District Court, Metz) (France) asks the Court to rule on the interpretation of Articles 145 to 151 of Regulation No 2913/92 of 12 October 1992 establishing the Community Customs Code ( the customs code or simply the code).  (2) The question referred was raised in proceedings regarding the determination of the customs debt resulting from a triangular outward processing operation.  (3) 2. The national court asks in essence whether an operator may deduct from the amount of import duties on compensating products released for free circulation the amount of the import duties that would be applicable to the temporary export goods on the basis of their correct tariff heading if the tariff heading declared at the time of their temporary exportation from Community territory was incorrect. Legal background 3. As can be seen from Article 4(16) of the customs code, the code lays down different customs procedures to be applied to goods entering and leaving Community customs territory. The customs declaration 4. Goods intended to be placed under one of the customs procedures laid down in the code must be covered ... for that customs procedure (Article 59 of the code) by means of a customs declaration presented to the competent customs office by the commercial operator involved. 5. Once presented, the customs declaration may be amended on the conditions set out in Article 65, under which: The [declarant] shall, at his request, be authorised to amend one or more of the particulars of the declaration after it has been accepted by customs. The amendment shall not have the effect of rendering the declaration applicable to goods other than those it originally covered. However, no amendment shall be permitted where authorisation is requested after the customs authorities: (a) have informed the declarant that they intend to examine the goods; or, (b) have established that the particulars in question are incorrect; or, (c) have released the goods. Post-clearance examination of declarations 6. Under Article 78 of the code, the customs authorities may also amend a customs declaration, on their own initiative or at the request of the declarant, after release of the goods (paragraph 1). In particular, [w]here revision of the declaration or post-clearance examination indicates that the provisions governing the customs procedure concerned have been applied on the basis of incorrect or incomplete information, the customs authorities shall, in accordance with any provisions laid down, take the measures necessary to regularise the situation, taking account of the new information available to them (paragraph 3). Authorisation of customs procedures with economic impact 7. Under Article 85, the use of certain customs procedures (so-called customs procedures with economic impact, which include outward processing) is subject to authorisation by the customs authorities. The authorisation sets out the conditions under which the procedure in question is used (Article 87(1)), which vary according to the procedure chosen. 8. So that it is possible to check that those conditions still obtain, Article 87(2) states that [t]he holder of the authorisation shall notify the customs authorities of all factors arising after the authorisation was granted which may influence its continuation or content. Subsequent entry of duty in the accounts 9. The part of Article 220 of the customs code that concerns us here provides that: 1. Where the amount of duty resulting from a customs debt ... has been entered in the accounts at a level lower than the amount legally owed, the amount of duty to be recovered or which remains to be recovered shall be entered in the accounts within two days of the date on which the customs authorities become aware of the situation and are in a position to calculate the amount legally owed and to determine the debtor (subsequent entry in the accounts). ... 2. ... subsequent entry in the accounts shall not occur where: ... (b) the amount of duty legally owed failed to be entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been detected by the person liable for payment, the latter for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration . Outward processing 10. The outward processing procedure, which is in question in the present case, is governed by Articles 145 to 160 of the customs code. 11. This procedure allow[s] Community goods to be exported temporarily from the customs territory of the Community in order to undergo processing operations and the products resulting from those operations to be released for free circulation with total or partial relief from import duties (Article 145(1)). 12. It is appropriate to point out here that, under Article 145(3), temporary export goods means goods placed under the outward processing procedure, processing operations means the operations referred to in Article 114(2)(c), first, second and third indents, in other words the working of goods, including erecting or assembling them or fitting them to other goods, the processing of goods, the repair of goods, including restoring them and putting them in order. Finally, as far as concerns us here, compensating products means all products resulting from processing operations. 13. Articles 147 and 148 of the code govern the grant of authorisation to use the outward processing procedure. For that purpose, Article 147(1) provides in particular that authorisation to use the outward processing procedure shall be issued at the request of the person who arranges for the processing operations to be carried out. 14. Article 148(1)(b) in turn provides that authorisation shall be granted only where it is considered that it will be possible to establish that the compensating products have resulted from processing of the temporary export goods. 15. Under Article 150(2) of the code:the total or partial relief from import duties provided for in Article 151[(1)] shall not be granted where one of the conditions or obligations relating to the outward processing procedure is not fulfilled, unless it is established that the failures have no significant effect on the correct operation of the said procedure. 16. Article 151(1) and (2) provides in turn that: 1. The total or partial relief from import duties provided for in Article 145 shall be effected by deducting from the amount of the import duties applicable to the compensating products released for free circulation the amount of the import duties that would be applicable on the same date to the temporary export goods if they were imported into the customs territory of the Community from the country in which they underwent the processing operation or last processing operation. 2. The amount to be deducted pursuant to paragraph 1 shall be calculated on the basis of the quantity and nature of the goods in question on the date of acceptance of the declaration placing them under the outward processing procedure and on the basis of the other items of charge applicable to them on the date of acceptance of the declaration relating to the release for free circulation of the compensating products . Triangular traffic 17. The provisions relating to triangular outward processing set out in Articles 748 to 787 of Regulation No 2454/93 of 2 July 1993 ( the implementing regulation)  (4) are also relevant to the present case. 18. Under Article 748, in particular, triangular outward processing occurs when the compensating products are released for free circulation with a customs administration other than that from which the goods were temporarily exported. 19. As far as the present case is concerned, Article 778 then provides that the goods entered for the procedure must be accompanied by an information sheet known as INF 2, which must be presented to the customs office when the declaration for release for free circulation is lodged (Article 781). The combined nomenclature 20. Finally, it should be recalled that Council Regulation No 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff  (5) introduced the combined nomenclature, classifying goods under appropriate headings ( the CN headings), primarily for the purpose of applying the rates of duty of the common customs tariff. I ─ Facts and procedure 21. The dispute in the main proceedings arises out of a triangular outward processing operation involving, in various capacities, the companies Hewlett Packard Italiana, Hewlett Packard France and Hewlett Packard Europe ( HP Italy, HP France and HP Europe respectively), the customs agent GEFCO SA ( GEFCO) and the French and Italian customs authorities. 22. In 1995 HP Italy obtained authorisation from the Italian customs authorities to use the outward processing procedure for the temporary exportation of hardware components (electronic cards), which were declared under CN heading 8473 30 90, and for the subsequent importation of laser printers as compensating products. 23. The information sheet INF 2 issued by the Italian customs authorities at the request of HP Italy gave the tariff reference for the exported components as 8473, in other words only the first four digits of the declared customs heading. 24. A detailed description of the technical design of the cards was annexed to both the outward processing authorisation and information sheet INF 2. 25. The electronic cards were exported from Italy to China and Japan. There they were fitted in printers which were reimported into France by HP France on behalf of HP Europe through the customs office of Ennery during 1996 and 1997. 26. At the time of reimportation GEFCO, which acted as customs agent for HP France, declared the cards under CN heading 8473 30 10, which was different from that declared in Italy when they were exported (CN 8473 30 90) and more advantageous for calculating the relief provided for under the outward processing procedure. 27. The discrepancy between the customs headings was noticed during subsequent examinations by the French Customs Administration. The resulting enquiry revealed that the amendment to the declaration had been made unilaterally by the agent, acting on the instructions of HP Europe. The enquiry also showed that the declaration error had been repeated several times in other operations until November 1996. 28. The French Customs Administration therefore accused GEFCO, in a first notice of 3 December 1998 and in a second of 26 September 2000, of having altered the customs headings unilaterally without obtaining the necessary customs authorisation and on 19 October 2000 ordered it to pay FRF 8 795 672 in respect of customs duties and VAT. 29. GEFCO lodged an objection before the Tribunal d'instance de Metz, producing inter alia a declaration issued on 21 December 2000 by the Italian customs authorities ─ as a result of an application presented on 29 November 2000 by HP Italy ─ confirming that the CN heading 8473 30 90, which was incorrectly declared when the goods were exported, does not correspond to the description of the exported goods.  (6) 30. As it had doubts as to the interpretation of Articles 145 to 151 of the Community customs code, the Tribunal d'instance de Metz submitted the following question to the Court for a preliminary ruling under Article 234 EC:Upon triangular outward processing, is an operator prohibited, on a proper interpretation of Articles 145 to 151 of the Community customs code, from deducting, on release of compensating products for free circulation, the amount of the import duties which would be applicable to the temporary export goods in accordance with their correct tariff heading where their tariff heading declared on their exportation was different because it was incorrect? 31. In the proceedings before the Court, observations were submitted by GEFCO, the French and Portuguese Governments and the Commission. II ─ Legal analysis Arguments of the parties 32. GEFCO maintains first that the discrepancy discovered between the customs tariff headings at the different stages in the outward processing operation was due to an administrative error by the Italian authorities, which the company had overlooked in good faith. 33. In those circumstances, GEFCO claims that Article 151(2) of the customs code should be interpreted as permitting the blameless operator to deduct from the amount of duty owed on the compensating products the amount of duty that would be applicable to the temporary export goods on the basis of the customs heading corresponding to their real nature, even if it is different from that declared when they were exported. 34. In support of its argument, GEFCO further states that in the present case the error in the declaration of the exported goods had no effect on the correct operation of the outward processing procedure, so that the conditions laid down in Article 150(2) of the code for relief from duty are fulfilled. 35. The aim of the outward processing procedure is to prevent Community goods that have been exported for processing outside the customs territory of the Community from being made subject to import duty when they are reimported to the Community. So that this can be achieved, the applicant in the main proceedings continues, it is necessary and sufficient to establish with certainty that the compensating goods are the result of the processing of the temporary export goods. 36. Finally, GEFCO contends that to follow the contrary stance adopted by the French tax administration would be to impose a penalty that was patently disproportionate to the seriousness of the infringement of the customs rules, needlessly jeopardising achievement of the objective of the customs procedure with economic impact in question. 37. The French Government, for its part, maintains that partial relief from import duties should be based, as a matter of principle, on the declaration of temporary exportation. 38. According to the French Government, this does not absolutely preclude taking account of the true nature of the temporary export goods. However, the true nature and correct tariff heading of the goods can be proved only by producing the corresponding customs documentation. If it is incorrect, because the customs declaration was incorrect, the latter must be amended, and this can be done only in the manner and on the conditions laid down in Community customs regulations. 39. In the opinion of the French Government, it flows in particular from Articles 65(1) and 87(2) of the code that an operator intending to obtain such an amendment has a duty to apply promptly to the customs authorities and to furnish them with proof of the need to change the heading. Otherwise, the customs administration would not be able to verify the nature of the goods for which a particular customs procedure had been granted. 40. Furthermore, the French Government continues, nor did GEFCO make prompt use of the further possibility of amending the customs declaration envisaged by Article 78 of the code, so that the applicant can no longer rely on the inaccuracy of the said declaration before the national court. 41. The French Government therefore suggests that the Court should reply that an operator who, in the context of an outward processing operation, indicated an incorrect customs heading in the export declaration and did not amend the declaration before its acceptance by the customs authorities, on the conditions set out in Article 65, or did not notify them of factors arising after the authorisation was granted, obtaining an amendment of the customs document in accordance with Article 78, cannot, upon release of the compensating products for free circulation, deduct the amount of import duties that would be applicable to the temporary export goods on the basis of their correct tariff heading. 42. In principle, the Portuguese Government shares the analysis made by the French Government and submits that a unilateral amendment of the tariff classification of the temporary export goods is not permissible. 43. In the opinion of the Portuguese Government, however, a different solution would have to be adopted if the conditions set out in Article 220(2) of the code applied. In particular, under a triangular processing arrangement, the customs office at the place of importation of the compensating goods should take account of the correct customs heading of the goods if the incorrect classification was the result of an error on the part of the customs authorities at the place of exportation that could not reasonably have been detected by the operator, provided that the latter had complied with all the provisions applicable to the customs declaration. In any event, the Portuguese Government concludes, it is for the national court to establish whether those conditions are fulfilled in the present case. 44. The Commission, for its part, makes the preliminary observation that the outward processing procedure is subject to an authorisation issued for a particular economic operation and a specific type of goods, so that a national court faced with a discrepancy between the declared customs heading and the true nature of the temporary export goods should first establish whether the authorisation granted is sufficient, on the basis of its literal wording, to cover the goods actually exported. 45. In the present case, the Commission observes, although the authorisation bore an incorrect customs heading, for the precise determination of the nature of the goods it referred to a detailed annexed description, from the wording of which it seems possible to deduce that it also covered the goods actually exported. 46. However, the Commission continues, even if that were so, it would still have to be established whether the discovered non-compliance with the provisions on the outward processing procedure ─ in the present case the incorrect customs declaration ─ had an effect on the correct operation of the procedure, since under Article 150(2) it is only in that situation that such non-compliance could attract a penalty. 47. According to the Commission, it must certainly be ruled out that the incorrect declaration as to the nature of the temporary export goods could compromise the operation of the customs procedure if it was subsequently amended in accordance with Article 78(3) to take account of the true nature of the exported goods. In that event, there is nothing to prevent the customs debt deriving from the importation of the compensating products from being determined on the basis of the true nature of the temporary export goods, even if that is different from the one originally declared. 48. Even if such amendment were not made, the Commission continues, it would none the less be possible for the party concerned to furnish the court with proof of the true nature of the temporary export goods and of the fact that the compensating goods genuinely resulted from the processing of those goods. In that case, however, it would obviously be necessary to adduce proof ─ such as post-clearance examination by the customs authorities or an expert opinion ─ that with absolute certainty could contradict the content of the customs document, in other words attest unequivocally that the incorrect declaration as to the nature of the temporary export goods did not compromise the operation of the customs procedure in question. 49. In the present case, as the Commission stated at the hearing, those conditions are fulfilled, since the nature of the exported goods and the identity of the goods before and after processing can easily be verified from the detailed description annexed to the original customs documents; moreover, the Italian customs authorities largely confirmed, as a result of a post-clearance examination, that GEFCO's representation of the facts was correct. 50. The Commission therefore concludes that, if the temporary export goods have been declared under an incorrect customs heading, it is for the person liable for payment of the customs debt to prove that the false declaration did not have any real effect on the correct operation of the outward processing procedure. If that proof is provided and, in particular, if post-clearance customs examination establishes with certainty the exact tariff heading of the temporary export goods, the debtor is authorised to deduct, upon release of the compensating goods for free circulation, the amount of import duties that would be applicable to the temporary export goods on the basis of their correct customs heading. Assessment 51. In assessing the positions involved, I must first observe that I do not think that, for the purpose of resolving the question at issue here, it is useful to make reference to Article 220(2) of the code, which is raised by the Portuguese Government. 52. I would point out that in accordance with that provision subsequent entry in the accounts does not occur where the amount of duty legally owed failed to be entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been detected by the person liable for payment, the latter for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration. 53. Although feasible in abstract terms, I do not think it useful to go down that road in the present case. It is true that French customs first set the amount of duty on the compensating goods at a given level in the light of the customs heading declared by GEFCO at the time of importation but subsequently recalculated it, increasing it under Article 220(1) on the basis of the different customs heading that had been declared upon exportation. However, the error that led to subsequent entry of the duty in the accounts was due to neither the French nor the Italian customs authorities but essentially to the inexperience of the exporter, HP Italy, which used the wrong customs heading in its own export declarations.  (7) In my opinion, the first of the conditions set out in Article 220(2) that prevent subsequent entry in the accounts is not fulfilled. 54. Nor can it be claimed that the abovementioned error could not reasonably have been detected by the person liable for payment (as Article 220 requires), as the facts demonstrate, on the contrary, that GEFCO realised the error and as a result unilaterally amended the customs declarations at the time of importation of the compensating goods. 55. Hence, in the present case it cannot be considered that the further condition set out in Article 220(2) was satisfied either. 56. Moving on to the crux of the debate between the parties, I note first of all that none of the parties disputes that, in the present case, the conditions of the outward processing procedure were infringed, because it is established fact that at the time of exportation an incorrect declaration was furnished and that the customs authorities were not notified of the error. 57. By the same token, no one disputes that under Article 150(2) of the code infringement of the conditions to which the customs procedure in question is subject does not necessarily lead to an increase in the rate of duty if it has been proven that it did not have a significant effect on the operation of the procedure. 58. We have already had ample evidence that the point on which positions diverge is whether such proof can also be provided where, as in the case under examination, the infringement was discovered and there was no subsequent amendment of the export declaration and of the authorisation of outward processing under Article 78(3). 59. The French Government appears to consider amendment of the customs document to be essential, because there would be a kind of absolute presumption of its authenticity, so that it would not be possible to prove otherwise that the compensating goods were actually obtained by processing the temporary export goods. GEFCO and the Commission, by contrast, maintain that, even in the absence of formal amendment of the customs declaration, the party involved could equally well furnish proof by other means. 60. For my part, I must first observe that, if the opposing positions of principle are disregarded, it may perhaps be possible to answer the question raised in the present case in a way that can be reconciled with both positions without necessarily having to choose one camp or the other. I consider, in fact, that in the specific case with which we are dealing a solution might be found by drawing directly on Article 78 of the code, in the interpretation that the Court made in the very recent Overland judgment.  (8) 61. In that judgment the Court had been asked to rule on the case of an operator who at the time of importing certain goods had erroneously declared a value higher than the real value. When it became aware of the error, it had applied for reimbursement of the part of the duty that was not owed; reimbursement had been granted, but the decision had then been rescinded. In its judgment, the Court did not consider it necessary to provide a reply as to the principle of whether the customs authorities were required to amend the customs declaration in accordance with Article 78, and on what conditions. It simply noted that the customs authorities had initially granted the application for reimbursement and that, as they could not [have done so] without ... having reviewed the customs declarations in the light of the new information submitted ... , it must be held that those authorities agreed to undertake the revision of the declarations and, following that revision and in the light of its results, adopted the decisions necessary to regularise the situation within the meaning of Article 78(3) of the Customs Code, taking account of the fact that the declarations were incomplete as a result of an inadvertent error by the declarant (paragraph 23). 62. In other words, the Court recognised that a decision by the customs authorities, the tenor of which is incompatible with that of a previous incorrect customs declaration can (more correctly, must) be considered an implicit decision to regularise that declaration within the meaning of Article 78. 63. In the present case, as a result of an application submitted under Article 78, the Italian authorities disavowed the veracity of the export declaration, stating that the nature of the exported goods did not correspond to that documented. If the case-law I have mentioned above is applied, it follows that such disavowal must be equivalent to the adoption of a decision, albeit only an implicit one, to amend the export declaration within the meaning of Article 78. 64. That having been said, I do not think it necessary to dwell on the question of principle, which, as we have seen (in points 58 and 59), deeply divides the parties, not least because in my mind the code does not offer much scope for a clear and definitive reply. In this regard I shall merely express my puzzlement at a solution that would preclude, once and for all, the possibility of providing alternative proof in the cases contemplated, because to me such a solution seems difficult to reconcile with the objectives of the system and with a fair and reasonable assessment of that system. 65. I consider, in particular, that at least in exceptional instances in which the customs authorities have disavowed the part of the relevant documents where they have found an incorrect classification of the goods, and a correct classification can easily be established by proving the real nature of the goods, the person involved cannot be denied the possibility of providing such proof, even in the absence of a formal amendment of the customs documents. 66. Otherwise, in fact, not only would Article 150(2) be devoid of meaning, but in addition there would be a risk of disregarding the objective of the customs procedure for outward processing, because operators would be charged a higher rate of duty that was not justified by the objectives of the common commercial policy pursued by means of the code as a whole and the provisions on outward processing in particular. 67. I consider that the present case represents precisely one of these exceptional instances, given that the Italian customs authorities themselves confirmed that the customs heading under which the goods had been declared and their exportation authorised was incorrect. 68. It is obviously for the national court to assess the facts and establish whether GEFCO has or has not provided the proof in question. Here I shall merely observe that, in the present case, it does not seem to me to be very difficult to ascertain the real nature of the temporary export goods and the identity between those goods and the components of the compensating products. Indeed, proof is made easier by the fact that the cards were fitted into the printers without further alteration; it can therefore be obtained either from the detailed technical description annexed to the customs authorisation and the information sheets INF 2, or from the corresponding declaration made by the Italian customs authorities in response to the application for amendment and endorsed by the Commission itself at the hearing. 69. In the light of the foregoing, I therefore propose that the Court reply to the question from the Tribunal d'instance de Metz that Articles 145 to 151 of the Community customs code should be interpreted as meaning that in cases such as the present one they do not preclude an operator who has declared goods covered by the outward processing procedure under an incorrect customs heading from being permitted to deduct, upon release of the compensating goods for free circulation, the amount of import duties that would be applicable to the temporary export goods on the basis of their correct customs heading. III ─ Conclusion 70. In the light of the above considerations, I propose that the Court rule that:Articles 145 to 151 of the Community customs code should be interpreted as meaning that in cases such as the present one they do not preclude an operator who has declared goods covered by the outward processing procedure under an incorrect customs heading from being permitted to deduct, upon release of the compensating goods for free circulation, the amount of import duties that would be applicable to the temporary export goods on the basis of their correct customs heading. – Original language: Italian. – Council Regulation (EEC) No 2913/92 of 12 October 1992 (OJ 1992 L 302, p. 1). – See points 11 and 18 below. – 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 (OJ 1993 L 253, p. 1). – Council Regulation (EEC) No 2658/87 of 23 July 1987 (OJ 1987 L 256, p. 1), as amended by Regulation (EC) No 1734/96 (OJ 1996 L 238, p. 1). – See the note from the Circoscrizione Doganale (District Customs Office) Milan I of 21 December 2000 (Annex 9 to the written observations submitted by GEFCO). – See Annexes 7 and 8 produced in court by GEFCO. – Judgment in Case C-379/00 Overland Footwear v Commissioners of Customs and Excise [2002] ECR I-11133.