Opinion of Mr Advocate General Sir Gordon Slynn delivered on 7 April 1987. - Deutsche Babcock Handel GmbH v Hauptzollamt Lübeck-Ost. - Reference for a preliminary ruling: Finanzgericht Hamburg - Germany. - ECSC / EEC - Repayment of import duties. - Case 328/85.
European Court reports 1987 Page 05119
Deutsche Babcock Handel GmbH (" Deutsche Babcock ") is a dealer in steel products . It entered into contracts with Polish and Hungarian undertakings for the purchase of such products, including steel sheet, structural steel and sheet products other than electrical sheet . It imported the goods into the Federal Republic of Germany via the Boechen frontier post between July and October 1980, and in one case in January 1981 . In its customs declaration it gave as the customs value the gross price agreed with the supplier, instead of the net price in the invoice currency as required in the declaration form .
The contracts entered into by Deutsche Babcock with its supplier in fact provided that turnover bonuses should be paid by the supplier, resulting in a reduction of the gross prices indicated in the invoices .
On clearing the goods through customs Deutsche Babcock presented import licences issued by the Bundesamt foer gewerbliche Wirtschaft ( Federal Office for Trade and Industry ) which showed the gross prices and bore a stamped endorsement to the effect that import clearance should not be granted if the invoice price was lower than the price indicated in the import licence .
The Customs Office cleared the goods for entry into free circulation on the basis of the price indicated in the customs declaration and assessed the customs duty accordingly .
During an inspection at Deutsche Babcock' s premises in May 1981 the customs authorities discovered that turnover bonuses had been paid . They brought proceedings against Deutsche Babcock for breach of the provisions of the Aussenwirtschaftsgesetz ( Foreign Trade Law ) and the Auçenwirtschaftsverordnung ( Foreign Trade Regulation ), which culminated in a fine of DM 75 000 . It appears that Deutsche Babcock did not appeal against the fine .
On 9 July 1982 Deutsche Babcock applied for repayment, in accordance with Regulation ( EEC ) No 1430/79 ( Official Journal 1979, L 175, p . 1 ) on the repayment or remission of import or export duties, of customs duties in the amount of DM 4 598.26, which they claimed were paid in excess in view of the turnover bonus . Article 2 ( 1 ) of Regulation No 1430/79 provides :
" Import duties shall be repaid or remitted in so far as the competent authorities are satisfied that the amount of such duties entered in the accounts :
( i ) relates to goods in respect of which a customs debt has either not arisen or has been settled other than by payment or prescription,
( ii ) exceeds for any reason the amount lawfully payable ."
The Hauptzollamt ( Principal Customs Office ) Loebeck-Ost, refused repayment on the ground that the claim was contrary to the principle of good faith, since in clearing the goods for entry into free circulation Deutsche Babcock had given false information in order to have the goods imported under the conditions laid down in the import licence .
The dispute came before the Finanzgericht ( Finance Court ) Hamburg . Deutsche Babcock argued that its claim under Article 2 ( 1 ) of Regulation ( EEC ) No 1430/79 for the repayment of customs duties which were undeniably paid in excess of the proper amount could not be defeated by an appeal to the principle of good faith . The Hauptzollamt replied that Deutsche Babcock' s behaviour at the time of import clearance of the goods disentitled it from recovering the excess duty .
The Finanzgericht found that the applicability and interpretation of Article 2 ( 1 ) of Regulation ( EEC ) No 1430/79 and the scope of the general legal principle of good faith were uncertain, and that the outcome of the case depended on those questions of interpretation . Accordingly it stayed the proceedings and, by an order of 14 October 1985 which was received at the Court Registry on 6 November 1985, referred the following questions to the Court of Justice for a preliminary ruling :
"( 1 ) Is Council Regulation ( EEC ) No 1430/79 of 2 July 1979, as most recently amended by Council Regulation ( EEC ) No 1672/82 of 24 June 1982 ( Official Journal 1982, L 186, p . 1 ), directly applicable to goods to which the Treaty establishing the European Coal and Steel Community applies?
( 2 ) If the answer to Question 1 is in the negative : can the Court of Justice be asked, in preliminary reference proceedings, to rule on the interpretation of Regulation ( EEC ) No 1430/79 where that regulation applies in a Member State only by virtue of its incorporation in national legislation?
( 3 ) If the Court of Justice holds that it has jurisdiction to give a ruling on the interpretation of Regulation ( EEC ) No 1430/79 in this case :
Is the second indent of Article 2 ( 1 ) of Regulation ( EEC ) No 1430/79 subject to the principle that applicants must act in good faith, so that import duties should not be repaid where, in clearing goods for entry into free circulation, the person liable for import duty indicates a price higher than that which he actually paid, taking into account discounts and turnover bonuses, and that statement was made with a view to obtaining clearance for entry into free circulation on the basis of an export licence which did not take into account those discounts or bonuses, although an import licence would have been granted upon application stating the price after deduction of the discounts or bonuses?"
In the order for reference, the national court states, inter alia : "It is not clear whether Regulation ( EEC ) No 1430/79 applies to goods which are subject to the ECSC Treaty . In favour of applicability, it can be said that the customs union established under Article 9 of the EEC Treaty covers all trade in goods . The regulations regarding customs procedure should therefore be applicable to all goods, including those covered by the ECSC Treaty . On the other hand, ECSC customs duties are still subject to national jurisdiction ."
It also states : "If Regulation ( EEC ) No 1430/79 is not directly applicable, it has in any event been incorporated into German law by Article 81 of the Zollgesetz ( Customs Law )". That article provides : "Regulations of the EEC which govern the customs treatment of goods shall apply mutatis mutandis to the customs treatment of goods subject to the ECSC Treaty ".
The first question raises an important issue . Only the Commission has dealt with it and the Commission proposes that it should be answered affirmatively . Without criticizing the parties in any way, and despite the very fair submissions of the Commission which reveal some of the difficulties, it is unfortunate that the Court does not have the benefit of the contrary argument in depth .
In the first place it is plain that this regulation was made only under the EEC Treaty by reference to Articles 43 and 235, Article 10 ( 1 ) thereof being mentioned in the recitals . There is no reference to the ECSC Treaty or to coal and steel products .
Can a regulation under the EEC Treaty deal with products falling within the ECSC Treaty? There is no doubt that regulations made under the EEC Treaty have in fact purported and been intended to cover coal and steel products, sometimes it seems backed up by a minute of the Council . In such cases even if made under the EEC Treaty in general terms they were accepted by the Council as applying to coal and steel products, though it seems that there was no such minute in this case . In other cases separate measures have been adopted under the two Treaties even if in similar terms - e.g . Council Regulation ( EEC ) No 3017/79 and Commission Recommendation 3018/79/ECSC "on protection against dumped or subsidized imports from countries not members of the EEC and the ECSC respectively ".
The question, however, is whether an EEC regulation can validly deal with coal and steel products or, as at first sight might seem to be the case, whether the two Treaties deal with distinct and separate Communities, having separate rules and requiring separate procedures ?.
The interaction generally between the two Treaties was canvassed in argument in the Opinion in Case 1/75 (( 1975 )) ECR 1355 and, more particularly, in Case 36/83 Mabanaft v Hauptzollamt Emmerich (( 1984 )) ECR 2497, but it was not necessary for the matter to be decided or commented on by the Court .
The Commission contends, first, that the EEC Treaty does not deal with prescribed goods . It is general in many of its provisions and there is no reason why coal and steel products should not be covered by its terms . The counter argument, however, seems to be equally tenable that since there is a specific Treaty dealing with coal and steel, the EEC Treaty should be read as dealing with all other products .
Of more importance are the terms of Article 232 of the EEC Treaty which provides :
"( 1 ) The provisions of this Treaty shall not affect the provisions of the Treaty establishing the European Coal and Steel Community, in particular as regards the rights and obligations of Member States, the powers of the institutions of that Community and the rules laid down by that Treaty for the functioning of the common market in coal and steel .
( 2 ) The provisions of this Treaty shall not derogate from those of the Treaty establishing the European Atomic Energy Community ."
Thus the provisions of the EEC Treaty, and a fortiori subordinate legislation made under it, are not to "affect the provisions" of the ECSC Treaty or to "derogate from" the European Atomic Energy Treaty . Does this mean that the EEC Treaty is not concerned with coal and steel and that legislation made under it may not make rules in respect of coal and steel or does it have a more limited meaning? In my view the provision has a more limited meaning . It would have been perfectly simple to provide that nothing in the EEC Treaty related to coal and steel products or to the coal and steel industry if that had been intended . That was not done . Instead the limitation imposed is that the provisions of the EEC Treaty shall not "affect the provisions" of the earlier Treaty, in particular as regards the matters specified . I read that as meaning that the EEC Treaty may apply to coal and steel except to the extent that matters are dealt with in the ECSC Treaty or in rules made under it; in so far as the latter has occupied the ground the EEC Treaty provisions are not to have effect .
That reading seems to me to be consistent with the decisions of the Court in Joined Cases 188 to 190/80 France, Italy and United Kingdom v Commission (( 1982 )) ECR 2545 and in Case 239/84 Gerlach & Co . BV v Minister for Economic Affairs, The Hague ( judgment 24 October 1985 (( 1985 )) ECR 3507 . In the former case a directive was interpreted as not applying to undertakings affected by the rules of the ECSC Treaty, and therefore as being valid . It would have been invalid if it had affected Member States and undertakings on the market in coal and steel because the ECSC Treaty "itself contains rules" affecting such Member States and undertakings . Such a decision seems to me to leave open the possibility that if there had been no such rules the EEC directive might have dealt with matters affecting coal and steel . In the latter case the Court found that rules as to anti-dumping existed under the ECSC Treaty so that an EEC regulation on anti-dumping could not be read as applying to products falling within the ambit of the ECSC Treaty . It followed from the provisions of Article 232 of the EEC Treaty that "the rules of the ECSC Treaty and all the provisions adopted to implement that Treaty remain in force as regards the functioning of the common market in coal and steel, despite the adoption of the EEC Treaty ".
In none of the four cases mentioned is it said that the EEC Treaty cannot apply to coal and steel . Equally none of them says that it can . The tenor of the latter two decisions, however, seems to me to be that the limitation on powers under the EEC Treaty derives from the specific provisions of the ECSC Treaty or rules made under it .
I therefore accept the Commission' s argument that the EEC Treaty can apply to coal and steel save to the extent that special rules exist in or pursuant to the ECSC Treaty .
The question is thus whether the present Council regulation affects the provisions of the ECSC Treaty, in particular as regards "the rights and obligations of Member States, the powers of the institutions of that Community and the rules laid down by that Treaty for the functioning of the common market in coal and steel ".
The Commission has drawn attention to the financial provisions of the ECSC Treaty in Articles 49 et seq . and Chapter X dealing with commercial policy . The latter seems to me particularly relevant since : ( 1 ) the powers of Member States in matters of commercial policy are not to be affected by the Treaty save as otherwise provided therein ( Article 71 ) ( which may be contrasted with Article 113 of the EEC Treaty ), and ( 2 ) the Member States have a discretion to fix customs duties on coal and steel between, but only between, the minimum and maximum rates which may be fixed by decision of the Council ( again which may be contrasted with the Common Customs Tariff to be set up under the EEC Treaty ).
It is obviously arguable that these two sets of customs provisions are to be dealt with separately under the respective Treaties and that any provisions dealing with the fixing of value or origin for customs purposes or the administration of customs are to be kept separate and that because the ECSC has provisions dealing with customs tariffs any powers relating to customs must be exercised under the ECSC Treaty in respect of coal and steel . The substantive provisions and the detailed administration - it may be said - must go together .
On the other hand, it is clear that the ECSC Treaty has very limited provisions dealing with customs tariffs and has no provisions as to such matters as value, origin or administration . Moreover, no rules have been adopted under that Treaty to deal with the repayment or remission of import or export duties, the matter in issue in the present case . In my view, these matters are thus, on a literal reading of Article 232 of the EEC Treaty, not excluded from the ambit of that Treaty .
Such a literal reading is not inconsistent with the aims of the Treaties . Where matters are not reserved or dealt with under the ECSC Treaty and where Member States have not entered any reservations as to measures adopted, the cohesion of the Communities and their administration are furthered by a common system of administration and common rules .
Does this EEC Regulation, however, impinge on the powers of the Governments of Member States in matters of commercial policy ( Article 71 ECSC Treaty ) or on the rights of Member States under the ECSC Treaty ( Article 232 EEC Treaty ) or affect their retained fiscal powers?
If this regulation affected the rates or nomenclature of tariffs for coal and steel products it seems to me prima facie ( though in the absence of argument on the point ) that it would be pro tanto invalid or inapplicable to ECSC products . It does not, however, do so . It is limited to laying down the cases in which and the conditions subject to which refunds are to be made or duties remitted . I am not satisfied that this matter falls within "commercial policy" within the meaning of Article 71 of the ECSC Treaty or that it is dealt with by Article 72 of the ECSC Treaty, which is limited to the fixing of rates within a range prescribed by the Council . Nor have any rules been made under the ECSC Treaty dealing with this aspect of the matter . Nor, though it is more debatable, does it seem to me that in reality the regulation impinges on Member States' fiscal powers . In particular Article 2, the only article in issue in the present case, provides no more than that duties shall be repaid or remitted if there never was a customs debt, or the debt has been satisfied or the amount entered in the accounts was more than that lawfully payable . In all these situations there never was due, in whole or in part, a customs duty, and procedure regulating its repayment or remission does not, in any real sense, detract from fiscal sovereignty . Other provisions of the regulation define the cases in which duties either must or may be repaid . They are, as I read them, providing the framework in which Member States are to treat duties as not being applicable, as e.g . where the goods are entered in error for free circulation, where the wrong procedures are adopted or the goods, having been entered, cannot be delivered to the consignee and are subsequently destroyed or re-exported . If these matters do not fall within "commercial policy" and are not covered by any other provision of the ECSC Treaty, then it seems to me on the arguments before the Court that the Member States have in the EEC Treaty accepted that coal and steel may be dealt with by the European Economic Community as goods covered by that Treaty . I do not read the amendments referred to in the first question as changing that position .
I would accordingly answer the first question in the affirmative as the Commission proposes .
If the first question is answered in that sense, the second question referred does not arise . If it did arise I would answer it on the lines that if an EEC regulation is not directly applicable in a Member State to goods to which the ECSC Treaty applies, but that regulation is incorporated in national legislation so as to apply to such goods ( ex hypothesi not as part of Community law ) it is not for the Court of Justice to interpret that legislation . I would accordingly answer the second question in the negative .
As to the third question, the Hauptzollamt has submitted observations . Deutsche Babcock did not submit formal observations . Instead it sent a copy of its notice of appeal against a judgment of the Finanzgericht Berlin dated 27 November 1984, which judgment is annexed to the observations of the Hauptzollamt . In that judgment the Finanzgericht upheld a decision of the customs authorities that a sum of DM 26 896.17 in respect of allegedly excess duty paid for earlier consignments was not recoverable under Article 2 of Regulation No 1430/79 because of the circumstances in which the duty was paid . The issue appears to be the same as that in the present case . Deutsche Babcock argues that the principle of good faith does not bar its claim for repayment in either case .
On the third question the Hauptzollamt considers, first, that the conditions for reimbursement laid down in the second indent of Article 2 ( 1 ) of Regulation No 1430/79 are not fulfilled : as the recitals to the regulation show, that provision is aimed at overpayments due to bona fide mistakes not where false statements are made, as here . Secondly, the Hauptzollamt submits that the provision must be read subject to the principle of good faith, and a reimbursement in the present case would be contrary to that principle as it would result in the plaintiff' s obtaining an advantage as against honest traders . Moreover, it would prevent proper supervision of imports and the taking of effective measures to limit imports . If the bonuses had been declared, anti-dumping measures could have been adopted . It is not correct that the company would have received a licence if it had stated the correct price . Further the fact that a fine may be imposed does not exclude the possibility that repayment of the duty can also be refused .
The Commission submits that the rights and obligations laid down by Regulation No 1430/79 must be exercised according to the principle of good faith, and accordingly proposes the following answer to the third question :
"The exercise of a right to repayment under Article 2(1 ) of Regulation ( EEC ) No 1430/79 may be refused where the exercise of that right is improper by virtue of the fact that the person seeking repayment, with intent to deceive, himself allowed duty to be collected in excess of the legally prescribed amount . In that connection, the fact that importation of the goods would not have been possible otherwise than by deceit at the expense of the administration is of no importance ".
The second indent of Article 2 ( 1 ) of Regulation No 1430/79 allows import duties to be repaid or remitted where the competent authorities are satisfied that the amount of such duties "exceeds for any reason the amount lawfully payable ".
The words "for any reason" are clearly very wide . They must, however, in my view be read as meaning any lawful reason . They cannot cover the situation where a person knowingly makes false statements as to the price of goods, which lead to a higher assessment of duty than he would have been liable to pay, in order to obtain a licence which he knows requires a true statement of the price . Moreover, the preamble to the Regulation shows that reasons such as genuine mistake or miscalculation were envisaged . The words "for any reason" must be read in the context of the regulation as a whole . There is nothing to indicate that deliberately false statement can be the basis for a claim that excess duty has been paid .
I would thus hold that, as a matter of interpretation, Article 2 does not permit such a claim .
That makes it unnecessary to decide whether any broader principle applies . If I had not come to that view then I would accept that where duty is paid on a price which is higher than the true price, as a result of a mala fide declaration, the person making the declaration is disentitled, or estopped, from recovering the money .
In any event I reject the argument that there is a clear separation between making a false declaration for the purposes of an import licence and liability for customs duties . A false statement in respect of the import licence which causes higher duty to be payable disentitles recovery . He who plays with fire must not complain if he gets burned .
I do not consider that the fact that an import licence might have been granted if the true figure had been stated ( if it is a fact ) affects the position, if the statement was, for whatever reason, fraudulently made .
I do not of course express or imply any view as to whether there was here fraud or dishonesty . That is a matter for the national court .
Accordingly, in my opinion, the answer to the national court should be on the following lines :
"( 1 ) Council Regulation ( EEC ) No 1430/79 is directly applicable to goods to which the ECSC Treaty applies .
( 2 ) The second indent of Article 2 ( 1 ) of Regulation ( EEC ) No 1430/79 is to be interpreted as meaning that import duties do not have to be repaid where, in clearing goods for entry into free circulation, the person liable for import duty indicates a price higher than that which he actually paid, taking into account discounts and turnover bonuses, and that statement was made with a view to obtaining clearance for entry into free circulation on the basis of an export licence which did not take into account those discounts or bonuses, even though an import licence would have been granted upon application stating the price after deduction of the discounts or bonuses . "
The costs incurred by the Commission in these proceedings are not recoverable . The costs of the parties to the main action fall to be dealt with by the national court .