JUDGMENT OF 11. 12. 1980 — CASE 827/79 AMMINISTRAZIONE DELLE FINANZE v ACAMPORA

In Case 827/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Corte Suprema di Cassazione, First Civil Chamber, for a preliminary ruling in the action pending before that court between

THE COURT (Second Chamber) composed of: P. Pescatore, President of Chamber, A. Touffait and O. Due, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

I — Facts and procedure

II — Observations pursuant to Article 20 of the Protocol on the Statute of the Court of Justice

A — Observations of Ciro Acampora

(1) Rules of the Italian customs in force at the time of importation

(2) Discussion of Article 13

B — Observations of the Government of the Italian Republic

C — Observations of the Commission

(1) Provisions applicable

(2) The answer to the question put by the Corte di Cassazione

III — Oral procedure

Decision

Costs

I —. Facts and procedure

II —. Observations pursuant to Article 20 of the Protocol on the Statute of the Court of Justice

A —. Observations of Ciro Acampora

(1). Rules of the Italian customs in force at the time of importation

(2). Discussion of Article 13

(a). Ciro Acampora maintains that Article 13 (1) means that the customs authorities may before giving clearance check the certificate of origin if they have reasonable doubts as to its authenticity or correctness or where they wish to carry out a random check.

(b). Where a decision to carry out a subsequent verification is taken the customs authorities must necessarily suspend application of the provisions relating to tariff preferences, as is apparent from Article 13 (3) which provides that in that case

(e). Ciro Acampora further insists on the importer's absolute good faith in relying on Article 19 of Regulation No 1371/71, according to which the certificate on Form A is the authority for applying the provisions on tariff preferences. Repeating its argument on the moral aspect of the matter it maintains that it cannot suffer the consequences of the failure to verify in the country benefiting from the tariff preferences (that is to say, disregard of the law by a civil servant).

(d). Basing itself on the reasoning of the Corte d'Appello, Genova, Ciro Acampora challenges the argument of the Amministrazione to the effect that subsequent verification must be understood to mean verification effected after the goods have been finally imported. To support that interpretation the Amministrazione is obliged to allege that Article 13 (1) and the first subparagraph of Article 13 (2) refer to subsequent verification while the second subparagraph of Article 13 (2) refers to prior verification. That argument is obviously unfounded because consideration of the article clearly shows that the aim of the whole provision is to regulate subsequent verification by laying down in the first paragraph the circumstances in which and by whom it may be decided on and stating in the second the terms on which it may be carried out. It follows that subsequent verification must be ordered before importation and that the term subsequent relates, not to the time of importation, but to the time of issue of the certificate of origin. Such verification is termed subsequent in contrast to the initial verification carried out by the government authority in the exporting country on the application of the exporter himself, when the verification is obviously prior to the issue of the certificate of origin.

B —. Observations of the Government of the Italian Republic

(1). The system under Regulation No 1371/71

(2). The Italian Government's argument

(3). Refutation of the argument adduced by Ciro Acampora

C —. Observations of the Commission

(1). Provisions applicable

(a). The system of general preferences is based on the principle of the unilateral grant by the Community of tariff advantages for the benefit of products originating in certain developing countries. Consequently, verification of the origin of the goods is a fundamental factor in the system. Since it proves impossible in practice, without excessively and in an intolerable manner prolonging the time taken for customs procedures, to effect systematic and thorough verification of that origin, it is necessary to apply a system allowing for speedy customs clearance while retaining the possibility at the same time of subsequent verification and, consequent thereon, of the application of other customs rules.

(b). In the view of the Commission Regulation No 1371/71 contains a set of provisions intended to satisfy the requirements of the system considered above. The Commission insists above all upon the establishment of the subsequent verification laid down in Article 13.

(c). Although as regards the Italian customs rules the consolidated laws relating to decisions in customs cases (Royal Decree No 33G of 9 April 1911 as recently amended several times) provided that disputes between those liable for duty and the customs authorities had to be raised before customs clearance of the goods, on the other hand, Decree No 62 of the Precident of the Republic of 2 February 1970 provides that the customs authorities may review such assessments even where the goods in question have been released to the trader and that the customs authorities have the power where the review reveals inaccuracies, ommissions or errors in relation to the facts upon which the assessment was made to make the necessary corrections. The customs authorities must give notice to the importer within a period of six months, failing which the right lapses.

(2). The answer to the question put by the Corte di Cassazione

(a). The Commission states first of all that because Community law has precedence, if Article 13 had to be interpreted as meaning that there is a possibility of verification following customs clearance of the goods, any provision of national law incompatible with that article would not be applicable. On the other hand, if Article 13 did not determine the terms or time-limits for recovering duty the case would not have to be regarded as being governed by Community law and national law could therefore apply.

(b). After those preliminary remarks the Commission considers Article 13 of Regulation No 1371/71 in order to interpret its wording and purpose. The wording of that article refers to verification of the certificates; it follows that the argument to the effect that the word subsequent has reference to the time at which the certificate was delivered is not valid, for it is not possible to conceive of verification of the certificate prior to its delivery. Further, the word subsequent also implies verification subsequent to customs clearance, as distinct from that which takes place originally when the goods and the certificate on Form A are lodged together. That interpretation is confirmed by the purpose of Artide 13, which is to allow the actual origin of the goods to be established with a higher degree of certainty than that obtained merely by consideration of the certificate and the goods. Consequently, the verification established by Article 13 requires a longer lapse of time than that normally required for customs clearance and it could not be untertaken before but only after customs clearance, as is confirmed by the fact that it may not be possible at the time of the customs procedures to have well-founded doubts regarding the correctness of the particulars contained in the certificate in relation to the actual origin of the goods.

(c). Any alteration in the statement of origin appearing in the certificate involves the application of different customs rules and consequently the recovery of sums corresponding to the difference between the customs duties due and those which have in fact been levied. Thus it must also be possible to decide upon and effect the supplementary levy following customs clearance.

(d). On the other hand since Regulation No 1371/71 does not lay down the terms or time-limits for verification and for recovery of the duties which have not been levied, and since Community law did not provide until 1979 for the recovery of duties which had not been levied, national law could at the time of the events with which the present case is concernod continue to regulate as a whole the terms and time-limits for verification and for recovery, it being understood that those national rules must not impede the actual application of Regulation No 1371/71. Since the last paragraph of Article 30 of Regulation No 1371/71 provides for a period of two years for the preservation of the copy of the certificates on Form A and Article 7 of the same regulation provides for a period of five months for the production of the said certificate it appears by implication that it must be possible for the subsequent verification to be made more than one and a half years after customs clearance.

(a). In order to function correctly, the system for the verification of origin established by Regulation No 1371/71 requires that the random check or, in a case of reasonable doubt as to the authenticity of the certificate or as to the correctness of the particulars contained in it, the subsequent verification must be decided upon and carried out following customs clearance and the release of the goods to the importer.

(b). Regulation No 1371/71 nevertheless does not lay down detailed rules and time-limits for the verification and possible recovery of customs duties which have not been levied and which may be due as a result of that verification.

III —. Oral procedure

1. By order dated 27 June 1979 received at the Court on 21 December 1979 the Italian Corte Suprema di Cassazione referred a question for a preliminary ruling under Article 177 of the EEC Treaty on the interpretation of Regulation No 1371/71 of the Commission of 30 June 1971 on the definition of the concept of originating products for the purpose of the tariff preferences granted by the EEC to certain products of developing countries (Journal Officiel L 146 of 1 July 1971, p. 1) and in particular Article 13 thereof.

2. That question has been raised in proceedings between, on the one hand, an undertaking which imported into Italy from Hong Kong various lots of transistor radios between 1 July 1971 and 2 Februar 1972 and after declaring them to be originating products obtained customs clearance on payment of duties based on the tariff preferences and on the other hand the Italian Amministrazione delle Finanze which, after carrying out pursuant to Article 13 of Regulation No 1371/71 subsequent verification revealing that the products were not originating products, required the importer to pay the appropriate duties unpaid on importation.

3. The importer resisted the order to pay on the ground that the verification of origin of the goods took place after importation when it no longer had control of them. The proceedings came before the Tribunale di Genova and then the Corte d'Appello, Genova, which both found the verification could not be subsequent to customs clearance of the goods and their admission without reservation to the favourable scheme provided by the Community rules. The Amministrazione delle Finanze appealed to the Corte Suprema di Cassazione which referred the following question to the Court:

4. In order to answer that question which basically relates to the interpretation of Article 13 of Regulation No 1371/71, it is necessary first to look for the aim of the Community regulation and then examine the functioning of the system of verification of the origin of the products in question which it established for the attainment of the objectives pursued by it.

5. The system of generalized preferences such as those provided for by Regulation No 1371/71 is based on the principle of the unilateral grant by the Community of tariff advantages in favour of products originating in certain developing countries with the aim of facilitating the flow of trade with those countries. The benefit of that preferential system is thus linked to the origin of the goods and the verification of that origin is therefore a necessary element of the system. In the actual organization of that verification the regulation seeks to avoid, for practical reasons, systematic verification of the origin of products, which would excessively delay customs transactions. To that end Article 13 provides for two kinds of subsequent verification of certificates of origin namely at random or whenever the customs authorities responsible have reasonable doubt as to the authenticity of the document or the accuracy of the information regarding the true origin of the goods in question or their components. The second subparagraph of Article 13 (2) provides that if the customs authorities decide in case of doubt to suspend application of the provisions on tariff preferences while awaiting the results of the verification, they shall offer to release the goods to the importer subject to any precautionary measures judged necessary.

6. The last provision which in practice can apply only when the goods are still under customs control appears to be an exception to the general rule laid down in Article 6 of the regulation to the effect that originating products within the meaning of this regulation shall enjoy the benefits of the provisions on tariff preferences in the Community on simple production of a certificate of origin on Form A, signed by the customs authorities or by other governmental authorities in the country benefiting from the export and subject to the latter country's assisting the Community through the customs authorities of the Member States in verifying the authenticity and regularity of the certificates.

7. Normally subsequent verification at random can therefore take place only after production of the certificate and customs clearance which automatically follows such production when there has been nothing to cast initial doubt on the authenticity of the certificate. Moreover, for the purpose of subsequent verification of the certificates of origin on Form A, Article 30 of the regulation provides that the competent governmental authorities of the exporting country must keep the export documents, or copies of certificates used in place thereof, for two years, which necessarily implies the possibility of effective verification during that time.

8. It must be recognized that the possibility of checking after importation without the importer's having been previously warned may cause him difficulties when in good faith he has thought he was importing goods benefiting from tariff preferences in reliance on certificates which, unbeknown to him, were incorrect or falsified. It must however be pointed out that in the first place the Community does not have to bear the adverse consequences of the wrongful acts of the suppliers of its nationals, in the second place the importer can attempt to obtain compensation from the perpetrator of the fraud and in the third place, in calculating the benefits from trade in goods likely to enjoy tariff preferences, a prudent trader aware of the rules must be able to assess the risks inherent in the market which he is considering and accept them as normal trade risks.

9. In conclusion, the answer to the question put should be that the customs authorities of an importing Member State may, pursuant to Article 13 of Regulation No 1371/71 of the Commission of 30 June 1971 and the general structure of that regulation, after having permitted without reserve the final importation of goods and the application of the preferential tariff treatment granted to products originating in developing countries:

10. The costs incurred by the Commission of the European Communities and the Italian Government, which have submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Second Chamber), in answer to the question submitted by the Italian Cone Suprema di Cassazione, hereby rules:

1 Require the State benefiting from the exportation to verify the certificate of origin on Form A relating to those goods;

2 Then, if the outcome of that verification is negative, demand payment of the duty which was not paid at the time of importation.