Report for the Hearing delivered in Case 328/85

I — Facts and procedure

Deutsche Babcock Handel GmbH, the plaintiff in the main proceedings (hereinafter referred to as the plaintiff) is a dealer in metallurgical products. It entered into contracts with Polish and Hungarian undertakings for the delivery of products such as steel sheet, structural steel and sheet products other than those known as electrical products. The plaintiff imported the goods into the territory of the Community via the Buchen frontier post between July and October 1980 and in one case in January 1981. In its customs declaration, instead of indicating the net price in the invoice currency, as required by the customs declaration form (price actually paid or price payable at the material time), it gave the gross price agreed with the supplier.

When the purchase contracts were entered into, the plaintiff had in fact agreed with the supplier that turnover bonuses granted by the suppliers and resulting in a reduction of the prices indicated in the invoices should be paid.

On clearing the goods through customs, the plaintiff presented import licences issued by the Bundesamt für 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 — in this case the gross price.

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 a tax inspection at the plaintiff's premises in May 1981 the customs authorities discovered that turnover bonuses had been paid. They instituted proceedings against the plaintiff for the imposition of administrative penalties for infringement of the Außenwirtschaftsgesetz (Foreign Trade Law) and the Außenwirtschaftsverordnung (Foreign Trade Regulation) which culminated in a fine of DM 75000. The plaintiff did not appeal against the fine.

On 9 July 1982 the plaintiff applied to the Finanzgericht Hamburg, under Council Regulation 1430/79 of 2 July 1979 on the repayment or remission of import or export duties (Official Journal 1979, L 175, p. 1), for the repayment of DM 4598.26 in respect of custom duties improperly collected in respect of the turnover bonus granted. The Hauptzollamt (Principal Customs Office) Lübeck-Ost, the defendant in the main proceedings (hereinafter referred to as the defendant), refused repayment on the ground that the claim was contrary to the principle of good faith since, at the time of entry for free circulation, the plaintiff had made false declarations in order to have the goods imported in conformity with the conditions laid down in the import licence.

According to the order for reference, referred to below, Regulation No 1430/79 was transposed into German law by Article 1 of the Deutsche Zollgesetz (German Customs Code).

By order of its. Fourth Senate dated 14 October 1985, the Finanzgericht Hamburg decided, pursuant to Article 177 of the EEC Treaty, to stay the proceedings until the Court of Justice had given a preliminary ruling on the following questions:

The order made by the Finanzgericht was received at the Court Registry on 6 November 1985.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by the defendant, represented by the director of the Hauptzollamt Lübeck-Ost and by the Commission of the European Communities, represented by Jörn Sack, a member of its Legal Department, acting as Agent.

After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. However, it put a number of questions to the Commission.

II — Written observations submitted to the Court

The defendant submitted observations only with respect to the third question. The Commission submitted observations on all three questions.

A — The first question

The Commission considers that Regulation No 1430/79, although apparently limited in its scope by virtue of its title and legal basis, extends to goods covered by the ECSC Treaty.

By contrast with the ECSC Treaty, the EEC Treaty does not contain any list of goods restricting its scope ratione materiae. Moreover, Article 232 of the EEC Treaty does not declare that, as a matter of principle, that Treaty is inapplicable to ECSC goods. That provision is merely worded so as to classify the provisions of the ECSC Treaty as special legal provisions which may take precedence over those of the EEC Treaty, as the provisions of the ECSC Treaty are not amended, but rather are maintained, by the EEC Treaty. It follows that the provisions of the EEC Treaty apply to goods covered by the ECSC Treaty where the latter does not lay down any special rules and in that connection the Commission refers to the judgment of the Court of 6 July 1982 in Joined Cases 188 to 190/80 (France, Italy and United Kingdom v Commission [1982] ECR 2545, particularly at p. 2580) and the judgment of the Court of 24 October 1985 in Case 239/84 (Gerlach v Minister for Economic Affairs [1985] ECR 3507). In the latter case, special rules were found to exist in the sphere of antidumping provisions.

That finding is of considerable importance with respect to general customs law as a whole. The ECSC Treaty and the secondary legislation adopted thereunder contain provisions concerning customs tariff law and the appropriation of customs duties (see Articles 49 et seq. and 71 et seq. of the ECSC Treaty). On the other hand, they contain no rule concerning general customs law (customs debt, value for customs purposes, origin, customs procedures and so on). The general provisions of the EEC Treaty and the secondary legislation adopted thereunder may therefore be applied where they do not affect the special rules of the ECSC Treaty.

Consequently, since the ECSC and EEC Treaties overlap in their application, the fact that Regulation No 1430/79 is an EEC regulation and is based solely on the provisions of the EEC Treaty is not incompatible with the view to which the Commission adheres. That does not prevent it from extending to products covered by the ECSC Treaty even if, for the purposes of tariff law, those products are subject to different rules from those of the EEC Treaty.

Considerable problems of delimitation arise in legal practice. In the area of general customs law, the practice followed by the Council is not consistent. Most provisions are, as in the case of Article 1 of Regulation No 1430/79, worded so as to deal with all customs duties and not only those under the Common Customs Tariff. Their very wording therefore militates in favour of their application to ECSC products. Likewise, the fact that certain of those rules have been made applicable to ECSC products merely by a declaration included in the Council minutes supports the view that a clarification was considered adequate, that there was no need for recourse to legislative action, and therefore that the general customs law provisions apply in principle to ECSC products as well.

Clarifications of that kind by means of a declaration in the minutes are resorted to above all in the case of customs measures adopted on the basis of Article 113 of the EEC Treaty which fall within the ambit of the commercial policy of the Community such as, for example, Council Regulation No 1224 of 28 May 1980 on the valuation of goods for customs purposes (Official Journal 1980, L 134, p. 1). According to Article 71 of the ECSC Treaty, it is the Member States which in principle have powers regarding commercial policy. A clarification therefore removes any doubts as to the question whether a given provision may also apply to ECSC goods, by virtue of Article 232 of the EEC Treaty. Since the legal basis of Regulation No 1430/79 is not Article 113, no problem arises in that respect.

Accordingly, even if the Council's legal practice is not entirely transparent, it nevertheless allows the conclusion to be drawn that general customs law provisions should also apply to ECSC goods, on condition that their wording so provides, that the Member States have not expressed any reservation in that behalf and that none of the provisions affects the positive law of the ECSC Treaty.

According to the Commission, there remains to be resolved the question whether Regulation No 1430/79 encroaches upon the rights reserved to the Member States regarding the fixing of tariffs and their powers in respect of customs duties levied on ECSC goods, with the result that under Article 232 of the EEC Treaty it could not be extended to ECSC goods. The Commission maintains that since that regulation contains no provision on customs nomenclature or on customs duty rates, the only question which arises is that of taxation powers.

In the Commission's opinion, the regulation in question does not affect the powers of Member States with respect to customs duties levied on ECSC goods; it merely deals with certain procedures regarding customs debt. Most of the provisions of the regulation have been accepted as applying to ECSC goods by reason either of their wording or as a result of a non-legislative measure.

The Commission states that Paragraph 81 of the German Customs Code, to which the national court refers with regard to the possible indirect application of Regulation No 1430/79, appears to conflict with the interpretation supported by the Commission, in so far as that paragraph deals with application by analogy to ECSC goods of the rules on custom treatment adopted on the basis of the EEC Treaty. The question may however be left unresolved since national law is not decisive where the relationship between the two Treaties is concerned.

The Commission proposes that the Court should give the following reply to the first question:

B — The second question

In the Commission's view, Article 177 of the EEC Treaty does not authorize the Court to rule as to the interpretation of provisions of national law, even if they are analogous with provisions of Community law or are taken from Community law. The Commission proposes that the Court should, if necessary, reply as follows to the second question:

C — The third question

The defendant maintains that the claim for repayment is improper. In its view it is doubtful whether the situation envisaged in the second indent of Article 2 (1) of the regulation exists in this case and consequently this question should be answered in the negative. A broad interpretation of the contested provision would admittedly enable a repayment to be made where it was proved that the amount... entered in the accounts exceeds for any reason the amount lawfully payable'. However, according to the defendant, it cannot be inferred from that wording that it is also appropriate to repay duties levied where — as in the present case — the trader responsible for paying the duties intentionally made false statements as to the amount to be entered in the accounts.

The defendant argues that the purpose of the second indent of Article 2 (1) of the regulation in question is not solely to ensure that the declarant does not pay more customs duties than are due according to the substantive provisions. By virtue of the second recital in the preamble to the regulation, repayment is due only if there is an error of calculation or transcription or if the customs debt is determined incorrectly to the detriment of the person liable to make the payment.

The terms error of calculation or transcription and owing to an error show that the legislature clearly wished to rectify ex post facto the levying of excessive duties as a result of negligence on the part of the administration, to the detriment of the person liable to make payment, the duties having on most occasions been levied without detailed examination in consequence of the volume of goods produced to the customs authorities for importation. The imprecise terms of the provision in question cannot therefore be understood and interpreted otherwise than on the basis of the recitals in the preamble to the regulation and recourse must be had to them for the interpretation of matters of fact which are imprecisely described. It follows that only errors or faults committed negligently in the collection of duties justify repayment.

If a declarant intentionally makes a declaration which is incorrect by overstating the customs value, there is no fault for which the administration could agree to bear the responsibility. If the amount of duties assessed is based on such information, which the declarant knew to be incorrect, there is no error for which repayment would be justified by virtue of the aims of the regulation on repayment of duties. If the Court were to consider that the general conditions for repayment were satisfied, the repayment in this case would — contrary to the opinion of the national court — be unlawful by reason of the principle of good faith and by reason of the conduct of the plaintiff, which constitutes an abuse of the law. The considerations put forward by the Finanzgericht on this question are incorrect as a matter of fact and open to challenge as a matter of law. In the first place, it is not correct that the plaintiff would have received an import licence even if it had stated the actual price.

By giving incorrect information, the plaintiff prevented proper supervision of the imports and prevented the Commission or the Federal Government from rapidly taking effective measures to limit imports with a view to protecting Community steel producers. If the bonuses granted had been properly disclosed, the Community would have been in a position to avoid disturbances on the market by imposing short-term antidumping duties, which is probably what it would have done. In order to be effective, the antidumping duties would have had to be higher than the amount of the customs duty of which repayment was requested and would have had to cover not only the difference in the amount of duties resulting from the price difference but also the price difference itself.

The Finanzgericht considers that the customs authorities were not entitled to rely on the customs declaration as being correct and thus in this case there was no expectation deserving of protection. According to the defendant, however, the customs legislation and the foreign trade legislation. encroach upon each other. The expectation regarding the correctness of the import declaration therefore necessarily implied an expectation as to the accuracy of the customs declaration.

A fine in respect of an unauthorized import is imposed regardless of the question of repayment; the imposition of a fine provides no basis for any conclusion as to how a matter is to be dealt with from the point of view of the right to repayment. A fine is a penalty for an unauthorized import and not a way of compensating for the absence of a licence. A fine cannot cancel the unauthorized import or eliminate any adverse consequences of unlawful low-priced imports into the protected market. Even if the pecuniary penalty were to cancel out the financial advantage obtained by the plaintiff from its misconduct, the repayment would in practice have the opposite effect of subsequently restoring the advantage enjoyed by the plaintiff over its competitors. The latter would at least have had to pay the minimum price and the customs duties calculated on that minimum price for authorized imports. The plaintiff would also have to make those two payments, if it had complied with the provisions in force. Even if the advantage which it obtained from the lower price was nugatory, the same could not be said of the advantage which would subsequently accrue to the plaintiff from a lower payment of customs duties.

If the defendant customs office were to be ordered to make a repayment, the defendant would have obtained, by its dishonest action, an unlawful competitive advantage. Such conduct is in breach of the principle of good faith since the plaintiff would obtain, in legal terms, an advantage deriving from an infringement. By virtue of the principle of good faith, which also applies in Community law, a person is specifically barred from enjoying advantages obtained by him as a result of a legal situation which has been brought about in an unlawful manner. It would be inequitable to allow the plaintiff to defeat the public authorities and obtain rights which it could never have acquired by acting lawfully.

The Commission observes that in Article 2 (1) of Regulation No 1430/79 the right to repayment is not expressly subject to any reservation regarding good faith. However, other provisions of that regulation (in particular Article 13) and Article 5 of Council Regulation No 1697/79 of 24 July 1979 on the post-clearance recovery of import duties or export duties (Official Journal 1979, L 197, p. 1) lay down reservations which, as a matter of principle, exclude any right to repayment in certain cases of fraudulent conduct or, in the case of post-clearance recovery, preclude any reliance upon the principle of the protection of legitimate expectation.

The Commission then goes on to examine the question whether it is possible, irrespective of the actual text of the regulation, to rely on general principles of law, including the principle of good faith, in applying the system of repayments. In its view those principles always apply where the law which would otherwise be applicable does not already expressly govern the factual situation in point, because either a specific legal consequence is provided for or an otherwise normal consequence is expressly ruled out. In the present case, neither of those two conditions is met.

The Commission concedes that in its judgments of 14 November 1985 in Case 299/84 Neumann v BALM [1985] ECR 3663 and of 28 June 1977 in Case 118/76 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof [l977] ECR 1177, the Court held that in Community law no general principle existed to the effect that in a case of flagrant misconduct a special rule should not be applied. However, according to the Commission, the Court considers a priori that such principles are, applicable. The Court only sought to ensure that national authorities and courts did not, within their respective areas of responsibility, declare provisions of Community law to be inapplicable by relying upon general principles of law without first submitting a question to the Court for a preliminary ruling under Article 177 of the EEC Treaty. As the Court emphasized in its abovementioned judgment of 14 November 1985, such a possibility would seriously jeopardize the uniform application of Community law throughout the Community. Consequently, although general principles of law normally apply in Community law, the national courts are not thereby authorized to rely upon such principles in order not to apply Community law. However, in the circumstances of the present case, there is no reason to fear that Community law will not be applied uniformly if the national authorities or courts rely directly upon the principle of good faith. If anyone has any objection to that course of action, he may make an application to the competent courts and, as a last resort, have the matter brought before the Court under Article 177 of the EEC Treaty.

In conclusion, the Commission proposes that the Court should reply as follows to the third question:

HI — Questions put by the Court

By letter of 23 July 1986 the Court requested the Commission, pursuant to the first paragraph of Article 21 on the Protocol on the Statute of the Court of Justice of the EEC, to reply to the following questions:

On 29 September 1986, the Commission replied as follows to the questions put to it by the Court.

As regards the first question, the Commission states that the special regime applicable in the case of antidumping measures for goods falling within the scope of the ECSC Treaty (Commission Recommendation No 3018/79/ECSC of 21 December 1979, Official Journal 1979, L 339, p. 15) is justified by its nature, in so far as it is indubitably a matter of commercial policy, and is provided for in a special provision of the ECSC Treaty (subparagraph (1) of the first paragraph of Article 74). By reason of the powers which are in principle vested in the Member States (Article 71), the adoption of a Community legal measure based on the ECSC Treaty would have been necessary in this case in order to establish Community powers. The fact that the measures involved are measures of commercial policy follows in this case not only from the legal basis which was chosen but also from the nature of those measures.

It is clear that by virtue of its legal basis and its purpose, Regulation No 1430/79 does not come within the field of commercial policy. Furthermore, since no special provision of the ECSC Treaty prevents its application to the products falling within the scope of that Treaty, the regulation is also applicable to such goods, particularly by reason of the terms in which it is formulated, without its having been necessary for the Council to adopt a special legal measure for that purpose.

As regards the second question, the only legal basis which could possibly be relied upon is the first paragraph of Article 95 of the ECSC Treaty (in conjunction with Articles 3 (f) and 4 (b) in particular). Nothing can be inferred from those provisions — at least in the present case — which might prevent the application of a legal measure based on Article 235 of the EEC Treaty to goods falling within the scope of the ECSC Treaty.

Finally, the Commission's reply to the third question is in the negative.

1 Language of the Case: German.