JUDGMENT OF 24. 4. 1980 — CASE 65/69 PROCUREUR DE LA RÉPUBLIQUE ν CHATAIN
In Case 65/79 REFERENCE to the Court of Justice under Article 177 of the EEC Treaty by the Examining Magistrate at the Tribunal de Grande Instance [Regional Court], Nanterre, for a preliminary ruling in the proceedings pending before that court between
THE COURT, composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
Question 1:
Question 2:
Question 3:
Question 4:
Question 5:
Question 6:
Question 7:
Question 8:
Question 9:
Question 10:
Question 11:
II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
Observations of Mr Chatain, the accused in the main proceedings
A—) General
1. The facts
2. Background of the Sandoz group
3. Basis of the relationship between Sandoz-Switzerland and Sandoz-France
B — Consideration of the points of law raised in the questions submitted by the Examining Magistrate
1. Principal question: The reduction of the price agreed upon and actually paid is incompatible with Community law and with the agreement between the EEC and Switzerland
(a) Incompatibility of the reduction with Community law
1. Illegality of the practice of reducing the value in principle (Question 1 and supplementary question, that is to say Question 11)
1.1. The practice of reducing the value is unlawful with regard to both the spirit of economy and the objective of the Community rules on valuation for customs purposes
1.1.1. The objective of Regulation No 803/68: fair and uniform charging of customs duties under the Common Customs Tariff
1.1.2. The Convention on the valuation of goods for customs purposes signed at Brussels on 15 December 1950, which entered into force on 28 July 1953 (hereinafter referred to as the Brussels Convention)
1.1.3. The General Agreement on Tariffs and Trade (GATT)
1.2. The text of Regulation No 803/68
1.2.1. Upward adjustments
1.2.2. Specific downward adjustments (extrinsic elements included in the price)
1.3. The use of the Community concept of value for customs purposes to serve national policies is a misuse of the law which is contrary to the Community principles governing the customs union.
1.3.1. The customs authorities are ignoring the principle of the uniformity of Community rules
1.3.2. The customs authorities are undermining the principle of certainty and simplicity in Community law
2. Illegality of the practice of making reductions as regards consequences for the importer (Question 8)
2.1. Breach of the principle of proportionality
2.2. Breach of the rules governing the customs union (EEC Treaty, Articles 12 to 29)
(b) Incompatibility of the reduction with the agreement between the EEC and Switzerland
1. Incompatibility with the free movement of goods between the EEC and Switzerland (Question 9a)
1.1. The concept of measures having an effect equivalent to quantitative restrictions
1.2. The concept in application
2. Incompatibility with the free movement of capital between the EEC and Switzerland (Question 10)
Paragraph 2: subsidiary questions
(a) The purpose of and limitations on the obligations of the party making the declaration (Questions 7 and 9b)
1. Community law
1.1. Regulation No 375/69 of the Commission of 27 June 1969 (Official Journal, English Special Edition 1969 (I), p. 63)
1.2. The case-law of the Court of Justice
2. French international law
(b) Method of calculating the normal price which constitutes the value for customs purposes, where the price actually agreed upon and paid has been subject to a reduction (Questions 2, 3, 4, 5 and 6)
1. The principle of comparison with a contract of sale relating to the same product (Question 2)
1.2. Characteristics of the reference products
1.2.1. The reference products and the principle of the theoretical norm
1.2.2. The special problem of comparing active ingredients manufactured by different producers
2. Essential characteristics of the contract of sale used as a reference
2.1. Origin and destination of the product, the subject-matter of the reference contract — location of the undertakings
2.1.1. Origin of the reference products
2.1.2. Destination of the reference product
2.2. The level at which the transaction occurs
2.3. Imitation products (Question 4 b)
A. The location of the exporter and the origin of the reference product
B. The location of the importer and the destination of the reference product
3. Determination of the value for customs purposes in the absence of any reference price (Questions 5 and 6)
3.1. Unilateral recourse by a Member State to different methods
3.2. What criteria is it legitimate to use?
3.2.1. The criterion incompatible with the Community definition: calculation on the basis of the production cost (cost plus).
3.2.2. Criteria which are compatible with the Community definition
Observations of the French Government
A — The concept of value for customs purposes within the meaning of Regulation No 803/68
B — Penalties for infringement of customs legislation
Observations of the Government of the Federal Republic of Germany
A — Questions of customs law
1. First question on the possibility of reducing the value for customs purposes
2. Second question concerning the possibility of reducing the value for customs purposes on the basis of a reference price
3. Third question concerning the criteria to be used in establishing the reference price
4. Fourth question concerning the possibility of taking into consideration as reference prices the prices in force in countries with a State trading monopoly or prices for imitation products
5. Fifth question, on whether Member States may have unilateral recourse to other methods
6. Sixth question, on the criteria to be applied in establishing the value for customs purposes in this case
7. Additional question, No 11, on downward adjustments other than those referred to in paragraphs 18 to 21 of the annex to Regulation No 375/69
8. Seventh question, on whether a Member State may penalize an importer even where he has accurately supplied the particulars required by the questionnaire used uniformly throughout the Community when the customs declaration is being made
9. Eighth question, concerning the compatibility of criminal sanctions with the principles of the customs union
10. Ninth question, on the compatibility of reducing the declared value and, in particular, of the penalty, with the Agreement between the EEC and Switzerland
B — Restrictions on the free movement of goods in order to ensure the application of restrictions on the free movement of capital (tenth question)
Written observations of the United Kingdom of Great Britain
A — Questions 1 to 6 and supplementary questions
1. First question on whether a Member State may reduce the declared value
2. Second question, on whether a Member State may compare the declared value with one or more prices charged in other contracts of sale concerning the same product
3. Third and fourth questions, on the reference prices which may be adopted by a Member State
4. Fifth and sixth questions, on the methods which the French administration may use to determine the value for customs purposes
5. Supplementary question (eleventh question) on downward adjustments in the declared value other than those listed in paragraphs 18 to 21 of the Annex to Regulation No 375/69
B — Questions 7 to 10
1. Seventh question, on whether a Member State may impose customs penalties when it appears that the importer has satisfied the Community import rules and requirements
2. Eighth question, on whether the practice of reducing the declared value is compatible with the customs union established by Articles 12 to 29 of the EEC Treaty
3. Question 9 (a) on the interpretation of Article 13 of the Agreement between the EEC and Switzerland
4. Question 9 (b) on whether a Member State may inflict heavy penalties on an importer of a Member State of the EEC who has duly fulfilled his obligations
5. Tenth question, on capital transfers
Written observations of the Commission
A — General
B — Questions 1 and 11, whether the value for customs purposes may be reduced and to what extent
1. The concept of the normal price
2. The methods which may be used in order to establish the accuracy of the price
C — Questions 2, 3 and 4, methods of reducing the value by reference to other known selling prices
D — Questions 5 and 6, the use of other methods where there is no reference price
E — Questions 7 and 8, the question of penalties
F — Question 9, the special case of Switzerland
G — Question 10, capital transfers
III — Oral procedure
Decision
Costs
I —. Facts and procedure
1. Regulation No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes (Official Journal, English Special Edition 1968 (I), p. 170) excludes downward adjustments, that is to say reductions of the contract price;
2. It is impossible to compare the prices declared with the prices of goods of different origin;
3. Regulation No 375/69 of the Commission of 27 February 1969 on the declaration of particulars relating to the value of goods for customs purposes (Official Journal, English Special Edition 1969 (I), p. 63) restricts the obligations of the importer as to the declaration to be made;
4. In the present case there is no incorrect invoice;
(a). Must the sales of which the prices may be used as reference prices necessarily have been made between an exporter and an importer respectively established in the same countries as those between which the sale was made in relation to which the importer's declaration of value or the particulars furnished by him for valuation for customs purposes are disputed?
(b). If Question 3 (a) is answered in the negative: Do the aforementioned regulations and Regulation (EEC) No 603/72 of the Commission of 24 March 1972 on the buyer to be taken into consideration when determining the value of goods for customs purposes, allow regard to be had to sales:
(a). in sales of products coming from countries whose external trade is governed by a State monopoly or by public undertakings?
(b). in sales of imitations of the products forming the subject-matter of the sale in relation to which the value for customs purposes is reduced?
(a). Does not Article 13 of the Agreement between the EEC and the Swiss Confederation of 22 July 1972 (Regulation (EEC) No 2840/72 of the Council of 19 December 1972), which prohibits any measures having an effect equivalent to quantitative restrictions on imports in trade between the Community and Switzerland, thereby prohibit the competent authorities of a Member State from reducing the declared value or the value resulting from the particulars furnished by the importer?
(b). In particular does Article 13 allow heavy fines and prison sentences to be imposed upon an importer of a Member State of the EEC who has duly fulfilled his obligations by correctly and completely giving the competent national authorities the information required by Regulation No 375/69 of the Commission of 27 February 1969, where it is not disputed that the goods have actually been delivered to the purchaser in the quality and quantity stated in the invoice and that the seller has received the whole of the invoice price?
II —. Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A—). General
1. The facts
2. Background of the Sandoz group
3. Basis of the relationship between Sandoz-Switzerland and Sandoz-France
B —. Consideration of the points of law raised in the questions submitted by the Examining Magistrate
1. Principal question: The reduction of the price agreed upon and actually paid is incompatible with Community law and with the agreement between the EEC and Switzerland
(a). Incompatibility of the reduction with Community law
1. Illegality of the practice of reducing the value in principle (Question 1 and supplementary question, that is to say Question 11)
1.1. The practice of reducing the value is unlawful with regard to both the spirit of economy and the objective of the Community rules on valuation for customs purposes
1.1.1. The objective of Regulation No 803/68: fair and uniform charging of customs duties under the Common Customs Tariff
1.1.2. The Convention on the valuation of goods for customs purposes signed at Brussels on 15 December 1950, which entered into force on 28 July 1953 (hereinafter referred to as the Brussels Convention)
1.1.3. The General Agreement on Tariffs and Trade (GATT)
1.2. The text of Regulation No 803/68
1.2.1. Upward adjustments
1. If reductions in price are granted only in favour of sole agents or concessionnaires;
2. In the case of abnormal rebates and any other reduction from the ordinary competitive price.
1.2.2. Specific downward adjustments (extrinsic elements included in the price)
1.3. The use of the Community concept of value for customs purposes to serve national policies is a misuse of the law which is contrary to the Community principles governing the customs union.
1.3.1. The customs authorities are ignoring the principle of the uniformity of Community rules
1.3.2. The customs authorities are undermining the principle of certainty and simplicity in Community law
2. Illegality of the practice of making reductions as regards consequences for the importer (Question 8)
2.1. Breach of the principle of proportionality
2.2. Breach of the rules governing the customs union (EEC Treaty, Articles 12 to 29)
(b). Incompatibility of the reduction with the agreement between the EEC and Switzerland
1. Incompatibility with the free movement of goods between the EEC and Switzerland (Question 9a)
1.1. The concept of measures having an effect equivalent to quantitative restrictions
1.2. The concept in application
2. Incompatibility with the free movement of capital between the EEC and Switzerland (Question 10)
(a). The purpose of and limitations on the obligations of the party making the declaration (Questions 7 and 9b)
1. Community law
1.1. Regulation No 375/69 of the Commission of 27 June 1969 (Official Journal, English Special Edition 1969 (I), p. 63)
1.2. The case-law of the Court of Justice
2. French international law
(b). Method of calculating the normal price which constitutes the value for customs purposes, where the price actually agreed upon and paid has been subject to a reduction (Questions 2, 3, 4, 5 and 6)
1. The principle of comparison with a contract of sale relating to the same product (Question 2)
1.2. Characteristics of the reference products
1.2.1. The reference products and the principle of the theoretical norm
1.2.2. The special problem of comparing active ingredients manufactured by different producers
2. Essential characteristics of the contract of sale used as a reference
2.1. Origin and destination of the product, the subject-matter of the reference contract — location of the undertakings
2.1.1. Origin of the reference products
2.1.2. Destination of the reference product
2.2. The level at which the transaction occurs
2.3. Imitation products (Question 4 b)
A. The location of the exporter and the origin of the reference product
(a). In principle, the prices to be adopted as reference prices must have been applied by an exporter established in the same country as the person carrying out the sale in dispute.
(b). In any event it is not permissible to adopt as a reference the price of a product from:
B. The location of the importer and the destination of the reference product
3. Determination of the value for customs purposes in the absence of any reference price (Questions 5 and 6)
3.1. Unilateral recourse by a Member State to different methods
3.2. What criteria is it legitimate to use?
3.2.1. The criterion incompatible with the Community definition: calculation on the basis of the production cost (cost plus).
3.2.2. Criteria which are compatible with the Community definition
A —. The concept of value for customs purposes within the meaning of Regulation No 803/68
B —. Penalties for infringement of customs legislation
A —. Questions of customs law
1. First question on the possibility of reducing the value for customs purposes
2. Second question concerning the possibility of reducing the value for customs purposes on the basis of a reference price
3. Third question concerning the criteria to be used in establishing the reference price
4. Fourth question concerning the possibility of taking into consideration as reference prices the prices in force in countries with a State trading monopoly or prices for imitation products
5. Fifth question, on whether Member States may have unilateral recourse to other methods
6. Sixth question, on the criteria to be applied in establishing the value for customs purposes in this case
7. Additional question, No 11, on downward adjustments other than those referred to in paragraphs 18 to 21 of the annex to Regulation No 375/69
8. Seventh question, on whether a Member State may penalize an importer even where he has accurately supplied the particulars required by the questionnaire used uniformly throughout the Community when the customs declaration is being made
9. Eighth question, concerning the compatibility of criminal sanctions with the principles of the customs union
10. Ninth question, on the compatibility of reducing the declared value and, in particular, of the penalty, with the Agreement between the EEC and Switzerland
B —. Restrictions on the free movement of goods in order to ensure the application of restrictions on the free movement of capital (tenth question)
A —. Questions 1 to 6 and supplementary questions
1. First question on whether a Member State may reduce the declared value
2. Second question, on whether a Member State may compare the declared value with one or more prices charged in other contracts of sale concerning the same product
3. Third and fourth questions, on the reference prices which may be adopted by a Member State
4. Fifth and sixth questions, on the methods which the French administration may use to determine the value for customs purposes
5. Supplementary question (eleventh question) on downward adjustments in the declared value other than those listed in paragraphs 18 to 21 of the Annex to Regulation No 375/69
B —. Questions 7 to 10
1. Seventh question, on whether a Member State may impose customs penalties when it appears that the importer has satisfied the Community import rules and requirements
2. Eighth question, on whether the practice of reducing the declared value is compatible with the customs union established by Articles 12 to 29 of the EEC Treaty
3. Question 9 (a) on the interpretation of Article 13 of the Agreement between the EEC and Switzerland
4. Question 9 (b) on whether a Member State may inflict heavy penalties on an importer of a Member State of the EEC who has duly fulfilled his obligations
5. Tenth question, on capital transfers
A —. General
B —. Questions 1 and 11, whether the value for customs purposes may be reduced and to what extent
1. The concept of the normal price
2. The methods which may be used in order to establish the accuracy of the price
C —. Questions 2, 3 and 4, methods of reducing the value by reference to other known selling prices
1. The price charged by exporters from other Member States cannot, in principle, be adopted as a reference;
2. Sales made by importers established in other member countries may be taken into consideration;
3. Sales concluded by exporters established in non-member countries may be taken into consideration;
4. Sales made to importers established in non-member countries or which take place between a supplier and a buyer who are both established in a non-member country may not be taken into consideration.
1. Sales from countries whose external trade constitutes a State monopoly may not be taken into consideration;
2. Sales of imitation products may be taken into account provided that it is established that the two products are identical or comparable.
D —. Questions 5 and 6, the use of other methods where there is no reference price
E —. Questions 7 and 8, the question of penalties
F —. Question 9, the special case of Switzerland
G —. Question 10, capital transfers
1. “The Community concept of value for customs purposes may be used for purposes other than those of the customs. In that case it must be applied in accordance with the objectives for which it is being used, and with the provisions of Community law which apply in the sector concerned.
2. The declared value for customs purposes may be adjusted downwards if it does not correspond to the normal price for the goods.
3. In order to establish the accuracy of prices the responsible authorities may use any method of comparison, alone or in combination with each other, in particular those which depend on reference to other prices. They must give preference to comparative criteria which make it possible to arrive as nearly as possible at the normal price.
4. Adjustment of the value for customs purposes may not give rise to the application of disproportionate penalties, especially if the trader has fulfilled his obligations with regard to the declaration. Any such penalties must be considered as measures having equivalent effect to a quantitative restriction.
5. Article 19 of that agreement requires the competent authorities of the importing State to grant to importers the necessary exchange authorizations for an amount corresponding to the price of the goods which are imported.
III —. Oral procedure
1. As regards the first question, the German Government is of the opinion that the possibility of reducing the value for customs purposes might entail distortion of competition. It therefore submits that such powers of reduction should be limited solely to cases of abuse; that only in very special cases may a customs administration proceed to exercise them and that it is for the customs administration — upon whom the onus of proof rests — to demonstrate that the agreed price is not correct and does not correspond to the competitive price and the market price.
2. In regard to Questions 2 to 5, which are concerned with the possibility of having recourse to comparable or comparative prices, the German Government submits that great care must be taken to see that comparable deliveries are indeed understood to be deliveries from research undertakings, that is, to see that it is truly supplies coming from equivalent undertakings which are involved.
3. In regard to Question 11 on the method by which any reduction may be carried out, the Federal Government considers that transfer of capital does not fall within the other items referred to in heads of 18 to 21 of the Annex to Regulation No 375/69 on the ground that, in the case referred to by those provisions, all that is involved is the correction of invoiced prices and not the absolute rejection of the invoice price in its entirety. It adds, moreover, that Member States do not enjoy an independent power of interpreting legislation on customs matters.
4. In regard to Question 10 dealing with illegal transfers of capital, the Federal Government recalls that there exists a guarantee of the free movement óf goods and, simultaneously, of the freedom of payments relating to the movement of the goods. Although it is true that restrictions on the free movement of capital sometimes turn out to be necessary in the context of national monetary policies, in such an event the practice of the Federal Government requires that traders be consulted and that the distinctive features of a prohibition... must be drawn up in such a manner that traders and commercial circles may truly know where they stand and be prepared for such prohibitions. Thus a mere reference to value for customs purposes would be unheard of in the Federal Republic of Germany, all the more so since such a procedure would be difficult to introduce having regard to the guarantees contained in the Basic Law.
1. First, it considers that, although all the questions (other than the 10th) concern value for customs purposes, the main proceedings are concerned above all with a question of the liberalization of current payments. On that point it is open to France to prevent the export of capital to Switzerland from exceeding that which is necessary for payments relating to trade in goods. In order to exercise that power France could effect a reduction of the price provided that the general principles of Community law concerning legal certainty or proportionality are observed.
2. In regard to the concept of an identical or comparable product, the Commission submits that a price comparison must refer to the same product and that the making of such a finding would be difficult in regard to pharmaceutical products where chemical identity is perhaps not enough.
3. In regard to Question 5 on whether it is open to a Member State unilaterally to employ other methods of comparison, the Commission seems to express an opinion contrary to that expressed in its written observations by stressing that another interpretation seems possible whereby it might be said that a national authority may not employ other methods without first having carried out an exchange of information with the importer.
4. Finally, in regard to Question 9 (b) on penalties, the Commission states in supplement to its written observations that Community customs law is in some respects unsuitable for use otherwise than for customs purposes, in particular as regards the control of currency movements. Thus a right to make reductions does not automatically carry with it the right to impose penalties. In order to impose penalties Member States would have to make specific rules which must themselves... observe the fundamental principles of Community law.
1. By orders dated 7 March and 14 May 1979, which were received at the Court on 18 April and 16 May 1979, the Examining Magistrate at the Tribunal de Grande Instance, Nanterre, submitted to the Court for a preliminary ruling pursuant to Article 177 of the EEC Treaty certain questions on the interpretation of Regulations Nos 803/68 of 27 June 1968 (Official Journal, English Special Edition 1968 (I), p. 170), 375/69 of 27 February 1969 (Official Journal, English Special Edition 1969 (I), p. 63) and 1581/74 of 24 June 1974 (Official Journal L 168, p. 15) and of certain provisions of the agreement between the EEC and the Swiss Confederation concluded pursuant to Regulation No 2840/72 of the Council of 19 December 1972 (Official Journal, L 300, English Special Edition 1972, (31 December) p. 3).
2. Those questions have arisen in the context of a criminal investigation instituted against the manager of Laboratoires Sandoz, a limited liability company, (hereinafter referred to as Sandoz-France), who is accused of having made a customs declaration in respect of goods bought from the parent company, Sandoz A.G., established in Switzerland (hereinafter referred to as Sandoz-Switzerland) at a higher value than the normal price. Those purchases are spread over the period from 4 January 1971 to 9 November 1973 and amount to a total of FF 8? 929024 whereas the value recognized by the customs authorities was only FF 53142943. The customs authorities inferred from their assessment that the declared price was increased by comparison with the normal price in order to allow Sandoz-France irregularly to transfer capital to the parent company in Switzerland.
3. On the basis of those facts, the Examining Magistrate charged the manager responsible with making illegal transfers of capital abroad and with importing prohibited goods without declaration, being an offence punishable under Article 414 of the French Customs Code by imprisonment not exceeding three months and a fine equal to twice the value of the goods involved in the fraud. The accused in the main proceedings disputed the prices held by the French customs to be normal, both in regard to the principles applied and in regard to the amount actually assessed. Having regard to the fact that the matter is governed by Regulations Nos 803/78 and 375/79 as well as by the Agreement between the EEC and the Swiss Confederation, the magistrate considered an interpretation of those provisions to be necessary and submitted 11 questions, the first of which raises a point of principle. The question is framed as follows:
4. The Examining Magistrate submitted an 11th question which is complementary to the first and of which the wording is as follows:
5. Those two questions, the answers to which govern those to be given to the others, namely, Questions 2 to 8 inclusive and 10, raise the issue whether a Member State may reduce the value for customs purposes declared by the importer. This problem must be resolved in the light of the objectives, the structure and the wording of those regulations.
6. According to its preamble, Regulation No 803/68 on the valuation of goods for customs purposes, which is part of the framework of the provisions of the Treaty relating to the customs union, pursues a double aim of an economic and a fiscal nature.
7. According to the 6th recital in the preamble, the value for customs purposes must be determined in a uniform manner in Member States, so that the level of the protection given by the Common Customs Tariff is the same throughout the Community and any deflection of trade and activities and any distortion of competition which might arise from differences between national provisions is thereby prevented. According to the 7th recital in the preamble, any deflection of customs receipts should be avoided and where appropriate eliminated.
8. When both those objectives are taken into consideration it may be recognized that the regulation is directed essentially to preventing the undervaluation of goods in connexion with the application of the Common Customs Tariff, which applies almost exclusively ad valorem customs duties. That conclusion is clear in regard to safeguarding the collection in full of customs revenue. It may also be inferred from the recitals in the preamble which relate to deflection of trade and activities and distortion of competition since those economic effects may be the result only of a lowering in the relative level of customs protection in certain Member States by reason of differing criteria for assessing the value for customs purposes of imported goods.
9. It is in the light of those objectives that the relevant provisions of Regulation No 803/68 should be considered, including therewith those of Regulation No 375/69 of the Commission which, on the basis of the first regulation, lay down the rules relating to the declaration of the particulars going to make up value for customs purposes.
10. In terms of Article 1 (1) of Regulation No 803/68 value for customs purposes is determined for the purpose of applying the Common Customs Tariff. It is therefore with a view to that specific function that the definition of the value for customs purposes and the provisions which serve to determine it must be understood.
11. According to the same provision, the value for customs purposes of imported goods is the normal price, that is to say, the price which they would fetch... on a sale in the open market between a buyer and a seller independent of each other. According to Article 9, the price actually paid or payable may be regarded as being the basis to be used in determining the normal price.
12. The regulation provides for a number of adjustments which may be made to the price as thus defined. All such adjustments are specified in such a way as to prevent the declared prices being undervalued by reason of economic relations existing between the seller and the purchaser or from being reduced by the deduction of costs or charges other than those allowed by the regulation.
13. The detailed rules for the application of Regulation No 803/68 were laid down, in accordance with the procedure provided for in Article 17 thereof, by Regulation No 375/69 of the Commission. The purpose of the latter regulation is to specify the duties of importers in this regard as well as the powers of the customs administration. Under Article 1, the declarants are to furnish the particulars relating to the value for customs purposes as required by the form of questionnaire set out in the annex to the regulation. According to the paragraph (2) of that article, more detailed information must be furnished only at the request of the customs authorities, in particular where importation is effected pursuant to a transaction between a buyer and a seller who are not independent of each other. It follows from those provisions that the importer is bound to declare, in good faith, to the customs administration the particulars which may serve to determine the value for customs purposes, further checks being a matter for action by the administration.
14. The form of questionnaire referred to in Article 1 of Regulation No 375/69 specifies the particulars to be furnished by the importers:
15. It is be noted, finally, that Regulation No 1581/74, referred to in the first question from the national court, is not relevant in this case since it is subsequent in date to the facts of the case and moreover does not give rise in any way to a possibility of making a reduction.
16. Taking into consideration both the objectives of the system and the practical machinery of the two regulations which apply thus demonstrates that the detailed methods of determining value for customs purposes have been conceived with a view to fulfilling a specific function within the framework of the customs union. It follows therefrom that — except for a possible exception resulting from either the very structure of the Common Customs Tariff or Community rules pursuing special objectives other than those contemplated by the Common Customs Tariff — the adjustments to the value for customs purposes which are referred to in the regulations which have been cited are upward adjustments designed both to prevent deflection of trade or activities and distortion of competition which would be the consequence of an undervaluation of imported goods and also to ensure for the Community the full collection of customs duties. It follows also from the specific nature of the provisions in question that the determination of the value for customs purposes in accordance with the rules of Regulations No 803/68 and No 375/69 cannot have the effect of requiring the fiscal and financial authorities of the Member States to accept that valuation for purposes other than the application of the Common Customs Tariff.
17. If it were established that an undertaking which forms part of a company or a group of companies of which the centre of management is outside the Member State concerned adopts, in its relations with that centre of management or with other undertakings belonging to the same group, prices, the application of which might imply an illegal transfer of capital or profits, it would be for the Member State concerned to take appropriate measures, with a view to proving, and where necessary suppressing, such activities, under its own financial or fiscal legislation and not by applying Community rules relating to valuation for customs purposes.
18. The answer to Questions 1 and 11 should therefore be that Regulation No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes, in particular Articles 1 to 10 of that regulation, and Regulation No 375/69 of 27 February 1969 must be interpreted as meaning that the reduction by the competent authorities of a Member State of the invoice price of goods imported from a non-member country does not accord with the aims of the rules relating to the determination of the value of the goods for customs purposes.
19. It follows from the answer to Questions 1 and 11 that Question 2 to 8 inclusive and 10, which were submitted only in case the answer to Questions 1 and 11 should be in the affirmative, have no longer any purpose.
20. It remains to answer Question 9 which is framed as follows :
21. Question 9 (a) asks whether a reduction by the competent authority of a Member State of the declared value or of the value resulting from the particulars furnished by the importer, does or does not amount to a measure having an effect equivalent to a quantitative restriction, which is a measure prohibited by the Agreement between the EEC and the Swiss Confederation. It must be noted that, under Article 13 (2) of that agreement, measures having an effect equivalent to quantitative restrictions are abolished, and therefore prohibited, only as from 1 January 1975 at the latest. It is consequently for the national court to decide whether the facts alleged against the accused — which are spread over the period from 4 January 1971 to 9 November 1973 — are governed by the agreement in question.
22. In regard to the substance of Question 9 (a), it should be observed that the question envisages a case comparable to that raised by Questions 1 and 11. Consequently, in accordance with the answer given to those questions and the reasons in support of it, this question must receive the same answer in the context of the agreement between the EEC and the Swiss Confederation.
23. The issue presented by Question 9 (b) is whether, pursuant to Article 13 of the Agreement between the EEC and the Swiss Confederation, a Member State may penalize by heavy fines and imprisonment an importer who has duly fulfilled his obligations by accurately and completely furnishing the information required by Regulation No 375/69.
24. From the considerations advanced in answer to Question 1 and 11 it is apparent that where an importer has accurately and fully completed the form of questionnaire annexed to Regulation No 375/69 and it is not disputed that the goods have actually been delivered to the purchaser in the quality and quantity stated in the invoice and the seller has received the whole of the invoice price and it is not alleged against him that he has not answered more detailed inquiries which the customs authorities may have put to him, he has not failed to fulfil any of the duties imposed on him by the Community rules on the valuation of goods for customs purposes or by the Agreement between the EEC and the Swiss Confederation. On the other hand, the consequences in other respects — such as those relating to the financial or fiscal laws other than customs laws — which are not governed by Community institutions are a matter for the legal order of the Member State concerned.
25. The costs incurred by the French, German and United Kingdom Governments and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the proceedings before the national court, the decision as to costs is a matter for that court.
On those grounds, THE COURT, in answer to the questions referred to it by the Examining Magistrate at the Tribunal de Grande Instance, Nanterre, by orders of 7 March 1979 and 14 May 1979, received at the Court Registry on 18 April 1979 and 16 May 1979 respectively, hereby rules:
1 Regulation No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes, in particular Articles 1 to 10 of that regulation, and Regulation No 375/69 of 27 February 1969 must be interpreted as meaning that the reduction by the competent authorities of a Member State of the invoice price of goods imported from a non-member country does not accord with the aims of the rules relating to the determination of the value of goods for customs purposes. However, the determination of the value for customs purposes in accordance with those regulations cannot have the effect of requiring the fiscal and financial authorities of the Member States to accept that valuation for purposes other than the application of the Common Customs Tariff.
2 The same answer applies as regards Article 13 of the Agreement between the EEC and the Swiss Confederation of 22 July 1972.
3 Where an importer has accurately and fully completed the form of questionnaire annexed to Regulation No 375/69 and it is not disputed that the goods have actually been delivered to the purchaser in the quality and quantity stated in the invoice and the seller has received the whole of the invoice price and it is not alleged against him that he has not answered more detailed inquiries which the customs authorities may have put to him, he has not failed to fulfil any duties imposed on him by the Community rules on the valuation of goods for customs purposes or by Article 13 of the Agreement between the EEC and the Swiss Confederation. On the other hand, the consequences in other respects — such as those relating to the financial or fiscal laws other than customs laws — which are not governed by the Community institutions are a matter for the legal order of the Member State concerned.