JUDGMENT OF 28. 6. 1977 - CASE 118/76 BALKAN-IMPORT-EXPORT v HAUPTZOLLAMT BERLIN-PACKHOF
In Case 118/76 Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht (Finance Court) Berlin for a preliminary ruling in the action pending before that court between
THE COURT composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A.Touffait, Judges, Advocate-General: G. Reischl Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and issues
I — Facts and written procedure
II — Written observations submitted to the Court
The first question
The other questions
The question of national powers
The question of the existence of a principle of Community law
Secondary considerations
III — Oral procedure
Decision
Costs
I —. Facts and written procedure
1. Is a national customs authority entitled and, if necessary, obliged on grounds of natural justice, to deal with applications for exemption from charges due to the Community (in this instance, monetary compensatory amounts) on the basis of national law (in this instance, on the basis of Article 131 of the Reichsabgabenordnung)?
2. If the answer to the first question is in the negative, is there any legal basis (possibly under Community law) for exemption from payment of a monetary compensatory amount on grounds of natural justice?
3. What, in relation to the case to be decided here, is the legal principle resulting from such a legal basis if any?
4. Which authority, if any, is empowered to take a decision on a question concerning an exemption on grounds of natural justice?
II —. Written observations submitted to the Court
(a). The monetary compensatory amounts imposed when the importation was made are governed by national law. It is true that in levying them the Federal Republic of Germany exercised the authority contained in Article 1 of Regulation No 974/71, but they were imposed in pursuance of the regulation of 14 May 1971 on the imposition of a compensatory amount to protect German agriculture, which was itself based on Article 21 (2) (4) (f) of the Zollgesetz (German Customs Law). As compensatory customs duties, the compensatory amounts are governed by internal legislation enacted by the Federal Republic and the federal finance administration. The fact that they were levied by virtue of the authority conferred by Regulation No 974/71 is not in itself decisive since their imposition thereunder was not mandatory but fell within the area of the discretionary power of the legislatures of the Member States.
(b). In its judgment of 16 December 1976 (Case 33/76, REWE-Zentralfinanz eG and REWE-Zentral AG v Landwirtschaftskammer fur das Saarland), the Court of Justice held in relation to charges imposed by a national government that in the absence of Community rules on that subject, it is for the domestic legal system of each Member State to determine the procedural conditions governing actions at law intended to ensure the protection of the rights which citizens have from the direct effect of Community law. That finding also applies to charges the imposition of which is provided for by Community law. The distortions which may result therefrom are inevitable in the present state of Community law.
(c). That view does not conflict with the judgment of the Court of Justice of 30 November 1972 (Case 18/72, NV Granaria Graaninkoopmaatschappij v Produktschap voor Veevoeder, [1972] ECR 1163) which held in particular that exemption from the levy granted by a Member State by national measures is contrary to the distribution of powers between the Member States and the Community. The main action differs in several respects from the case which gave rise to the judgment in Case 18/72:
(a). The rules laid down by Article 131 (1) of the Abgabenordnung constitute an essential part of the German law on taxation, which is based in particular on the principle of the highest degree of justice in fiscal matters. In cases in which, as a result of particular circumstances, the application of a law imposing taxation which was conceived in the abstract leads to a result which is contrary to natural justice and subjects the person concerned to an intolerable tax burden, Article 131 (1) enables a specific and individual measure of natural justice to be adopted, subject to stringent conditions. Over a long period, case-law and academic writing have laid down detailed criteria for the application of the provision. In particular, a distinction has been drawn between cases of taxation which is unfair on objective grounds and those where it is unfair on subjective grounds.. Where the grounds are objective the person liable to pay the charge is adversely affected in a way which is at once undesirable and contrary to the aim of the law. The factors which enable the element of unfairness to be judged with certainty are linked to the actual facts with regard to the taxation, and the effects of both substantive rules and procedural provisions are taken into account. Such cases must be individual cases of hardship which were not envisaged by the legislature; difficulties caused by the very objective of the taxation cannot in principle justify the adoption of measures of natural justice.
(b). The national authorities can apply Article 131 of the Abgabenordnung in order to grant an exemption on so-called objective grounds of natural justice from charges due to the Community only in cases in which the hardship results from the application of national rules of procedure and in which the measures of natural justice adopted modify taxation procedure alone. However, Article 131 cannot constitute the legal basis for a measure of natural justice intended to relieve hardship resulting from the objective effect of the rule in question — in this instance a rule of Community law.
(c). Since grounds of natural justice of an objective nature are concerned, that principle excludes measures of natural justice which involve a limitation on the substantive content of the rule on taxation in question. That finding applies in particular to the exemption applied for by the plaintiff in the main action. The national customs authorities could accept such an application only by modifying the substance of the Community provision. The principle of natural justice which exists in internal law does not provide any legal basis for such an interference with the scope of Community law.
(d). As regards measures adopted on objective grounds of natural justice in order to relieve individual cases of hardship caused by the procedural provisions of taxation law, in particular in the matter of time-limits or formal requirements, the national customs authority remains competent. The adoption of rules governing the procedure applying to the recovery of charges is still a matter for the Member States: to the extent to which Community law does not lay down procedural provisions in that area it does not restrict the internal law of procedure of the States. That principle has been confirmed on several occasions by the case-law of the Court of Justice.
(e). Article 131 of the Abgabenordnung is in the nature of a regulating factor, which is essential for the authorities responsible for administering the charge in question. That fact results from the particular features of German tax law which, as a general rule, requires all the circumstances of the charge to be apparent and takes considerations of natural justice into account only when a later assessment is made. The possibility of making such an assessment cannot be abandoned as long as no corresponding Community rules exist. However, the need for such rules at Community level is recognized; the Council is at present considering a proposal for a regulation which is intended to fix conditions for the post clearance collection of import duties or export duties which have not yet been claimed from the person liable to pay them.
(f). Although the main action is solely concerned with a measure based upon objective grounds of natural justice, it is, however, necessary to emphasize that Article 131 of the Abgabenordnung may also be applied to Community charges in cases of exceptional hardship which justify the adoption of measures on subjective grounds of natural justice. Such measures are governed by the general principles of the legal orders of the Member States, which form an integral part of Community law. It is current practice in the Member States to make adjustments in exceptional circumstances on the basis of natural justice.
(a). The question of the power to grant exemptions from certain compensatory charges imposed under Community law on the importation into the Community of goods from third countries is related to the problem of the distribution of legislative powers between the Community and the Member States.
(b). In the light of the terms of the first question, it must be emphasized that the essential factor cannot be that the charges are due to the Community but that their imposition is based upon a provision or authorization which forms part of Community law. The purpose of the charge at issue is not relevant to the question to what extent the national authorities are still empowered to grant an exemption in this field in an independent manner on grounds of natural justice.
(a). Certain rules of Community law make express reference to principles of natural justice. However, in every case the references occur in specific rules which are intended to apply to particular circumstances and are in most cases linked to monetary events.
(b). The area of application of the proposal for a regulation on the repayment or remission of import duties or export duties far exceeds that which, even in the Federal Republic of Germany, may be regarded as falling within the concept of a measure of natural justice and, as regards structure, it is clearly distinguishable from the potestative provision constituted by Article 131 of the Abgabenordnung. However, none of the cases envisaged by the proposal covers the situation which gave rise to the main action.
(c). The question arises whether the legal orders of the Member States contain any common principle on the basis of which Community law might recognize a similar unwritten principle of natural justice allowing exemption, in certain circumstances, from payment of a sum owed by way of tax. Analysis of the legal situation in the Member States shows that it is impossible to establish the existence of any such general legal principle common to the Member States which is comparable to the provision contained in Article 131 of the Abgabenordnung.
1. It is incompatible with Community law for national customs authorities to exercise discretionary power under provisions of internal law to authorize exemption from or repayment of charges governed by Community law on objective grounds of natural justice;
2. There is at present no general legal basis in Community law for granting an exemption on objective grounds of natural justice from charges fixed in accordance with the relevant provisions of Community law.
III —. Oral procedure
1. By order of 23 November 1976, received at the Court Registry on the following 15 December, the Finanzgericht Berlin referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty certain questions relating to the interpretation of the general scheme of the Community rules on monetary compensatory amounts and, in particular, of Regulation (EEC) No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (OJ, English Special Edition 1971 (I), p. 257), as well as of the implementing regulations adopted by the Commission.
2. The questions referred to the Court arose in the context of an action before the Finanzgericht concerning the levy of compensatory amounts on sheep's milk cheese imported from Bulgaria, during the course of which the Finanzgericht asked the Court, by an order of 19 January 1973, to give a preliminary ruling on the interpretation and validity of certain provisions of the regulations to which reference was made.
3. The first question asks whether a national customs authority is entitled and, if necessary, obliged on grounds of natural justice, to deal with applications for exemption from charges due to the Community (in this instance, monetary compensatory amounts) on the basis of national law (in this instance, on the basis of Article 131 of the Reichsabgabenordnung).
4. The solution to the question referred is related to the distribution of powers between the Community and the Member States at the period as regards the introduction and collection of the charge in dispute.
5. Monetary compensatory amounts were introduced by the Community for the purpose of regulating the Community market in agricultural products following alterations in the exchange rates of the currencies of the Member States.
6. The reply to the first question must therefore be that a national customs authority is not entitled to apply the provisions of its national law to an application for exemption, on grounds of natural justice, from charges due under Community law — in this instance, monetary compensatory amounts — in so far as to apply national law would alter the effect of the Community rules relating to the basis of assessment, the manner of imposition or the amount of the charge in question.
7. The second and third questions ask whether there is any legal basis under Community law for exemption from payment of monetary compensatory amounts on grounds of natural justice and, if such basis exists, what, in relation to the case to be decided here, would be the legal principle applicable, if any.
8. In its present state, Community law contains no provision, such as that existing in German legislation, which enables exemption from charges introduced by Community law to be granted by administrative action.
9. As regards the case under consideration, it must, however, be observed that the criticisms of the plaintiff in the main action concerning the economic repercussions of the regulations on which the charge in dispute is based have already been considered by the Court within the context of Case 5/73.
10. The reply to be given to the second and third questions must therefore be that there is no legal basis under Community law for exemption from monetary compensatory amounts on grounds of natural justice.
11. In the light of the foregoing it is unnecessary to examine the fourth question.
12. The costs incurred by the Government of the Federal Republic of Germany and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.
On those grounds, THE COURT in reply to the questions referred to it by the IIIrd Senate of the Finanzgericht Berlin by order of 23 November 1976, hereby rules:
1 A national customs authority is not entitled to apply the provisions of its national law to an application for exemption, on grounds of natural justice, from charges due under Community law — in this instance, monetary compensatory amounts — in so far as to apply national law would alter the effect of the Community rules relating to the basis of assessment, the manner of imposition or the amount of the charge in question.
2 There is no legal basis under Community law for exemption from monetary compensatory amounts on grounds of natural justice.