Report for the Hearing delivered in Case 210/87
I — Facts and procedure
1. Legal background to the main proceedings
Article 15 (1) of Regulation No 120/67 of the Council of 13 June 1967 on the common organization of the market in cereals provides that
The Recommendation of the Commission of 25 May 1962 on the date to be taken into account in determining the rate of customs duty applicable to goods declared for home use states:
In Italian law, according to Article 6 (1) of the Preliminary Provisions of the Customs Tariff approved by Decree No 723 of the President of the Republic of 26 June 1965, the rate of customs duties on goods imported was that in force on the date when the declaration of importation is accepted by the customs. Article 6 (2), however, provided that in the event of a change in the tariff after the date referred to in Article 6 (1), the customs might, at the importer's request, apply the more favourable rate provided that the goods had not been released to the importer. That rule was applied by the Italian authorities both in relation to agricultural levies and customs duties.
That extension to agricultural levies of the principle of granting the more favourable rate was adopted in Community provisions, in particular in Article 12 (2) of the proposal for a Council directive on the harmonization of procedures for the release of goods into free circulation.
In its judgment in the Frecassetti case the Court, however, held that the day of importation within the meaning of Article 15 (1) of Regulation No 120/67 is the day on which the import declaration for the goods is accepted by the customs authorities. That judgment thus overturned the previous practice of the Italian authorities in so far as it accepted that the levy due is always that applicable on the day of acceptance of the import declaration, to the exclusion of the more favourable levy in force on a subsequent date.
In consequence, the Italian legislature, by Decree No 695 of the President of the Republic of 22 September 1978, ceased to apply the rule of the more favourable rate in respect of agricultural levies but only with effect from 11 September 1976, the date of publication of the judgment in the Frecassetti case in the Official Journal of the European Communities.
On 24 July 1979 the Council adopted Regulation (EEC) No 1697/79 on the post-clearance recovery of import duties or export duties which have not been required of the person liable for payment on goods entered for a customs procedure involving the obligation to pay such duties. It provides :
In its judgment in the Salumi case the Court held that Regulation No 1697/79 did not apply to payments of import or export duties made before the date of its entry into force, namely 1 July 1980.
2. Background to the case
The plaintiffs in the main action imported cereals after paying customs duties on 14 and 18 July 1972. The agricultural levies due on those imports were paid at the time by the undertaking on the basis of the rule requiring the application of the most favourable rate.
In December 1977, after the judgment in the Frecassetti case, the Amministrazione delle finanze served the first claim for payment on the plaintiffs and subsequently interrupted the limitation period. In 1986 a further demand was served for the difference between the levy applicable on the day of acceptance of the import declaration and the more favourable rate originally demanded, together with interest.
The plaintiffs in the main action then challenged the demand before the tribunale civile e penale, Venice, and submitted that the assessment and collection of additional levies was incompatible with the principle of legal certainty and the protection of the legitimate expectations of traders.
3. Preliminary questions
The national court points out in its order referring the case for a preliminary ruling that in Italian law it is not possible to apply the principle of legitimate expectations in the present case.
In Community law, the limits set by Council Regulation No 1697/79 to the post-clearance recovery of duties which have not been required of the person liable for payment do not apply in the present case since the regulation entered into force on 1 July 1980. The national court does not, however, exclude the possibility that under Community law such a principle may be relied upon by a trader who has imported goods in good faith on the basis of an incorrect but established practice of the customs authorities.
It therefore requests the Court for a preliminary ruling on the following two questions :
4. Procedure
The order making the reference was registered at the Court Registry on 3 July 1987. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were lodged by Remo Padovani and the successors of Otello Mantovani, the plaintiffs in the main action, represented by G. M. Ubertazzi and F. Capelli, Milan, and G. Simeone, and by the Commission of the European Communities, represented by A. Prozillo, a member of its Legal Department, acting as Agent.
By an order of 16 December 1987 made pursuant to Article 95 (1) and (2) of the Rules of Procedure, the Court assigned the case to the Sixth Chamber.
Upon 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.
II — Observations submitted to the Court
With regard to the first question, the Commission states that the principle of the protection of legitimate expectations has been recognized by the Court as a general legal principle and in particular as an expression of the principle of legal certainty: it is not based on any specific rule but on the general structure of the Community legal order.
That principle had been applied with regard to retroactive legislative measures and in particular legislative measures amending specific rules enabling traders to protect themselves from the effects of variations in the rules for the application of the organization of the agricultural markets.
Moreover, it goes without saying that a general principle of Community law is also applicable in Member States whose legal systems do not have corresponding principles.
With regard to the second question, the Commission observes in the first place that the plaintiffs in the main action are not challenging the lawfulness of the claim for an additional levy.
In the second place, it must be borne in mind that at the time of the events in question import levies on cereals were governed by the same regulations as those interpreted by the Court in the Frecassetti case. The Italian customs had thus at first incorrectly applied Community law and subsequently corrected their mistake and initiated the procedure for the recovery of unpaid duties.
The recovery of import duties, which include agricultural levies, is at present governed by Regulation No 1697/79 according to which duties which are not paid at the time of importation may be recovered within a period of three years. Community law thus expressly contains the principle of the rectification of the assessment of duties applicable on importation, in accordance with the principle of objectivity of the customs debt, the amount of which depends solely on objective data (the customs value of goods, the rate of the applicable duties ... ).
That regulation does not, however, apply to transactions carried out before it entered into force; national legislation applies to such transactions. The Italian authorities were thus bound, under Community law, to recover the unpaid levies within the periods and according to the modes and procedure laid down by national law.
The plaintiffs in the main proceedings are attempting to avoid that obligation of Community law by appealing to the principle of the protection of legitimate expectations; but the application of that legal principle presupposes a lawfully constituted legal situation whose effects, which should have been produced in the future, are impaired by a legislative measure adopted in the mean time. By its nature, the payment of duties which are due does not create a legal situation the effects of which extend into the future: if the payment represents the amount of duties due, the customs debt is extinguished; if it does not, the difference may be recovered subsequently. The trader who on the accounting date has escaped paying the duties payable does not thereby acquire a right not to pay them subsequently. The customs debt is not extinguished and the unpaid amount may and should be paid: the position of the person who attempts to escape paying duties that are payable is not protected by the legal system. The Court has in fact ruled on this point in the Maizena case:
No argument may therefore be derived from the practice of applying the more favourable rate allegedly followed by the Italian customs before the judgment in the Frecassetti case. It should also be pointed out in that respect that that judgment did not create law but merely declared the principles contained in the abovementioned Council regulations.
In conclusion, the Commission proposes that the Court should answer the questions put by the national court as follows:
The plaintiffs in the main proceedings point out that in Italy the collection of Community agricultural levies has always taken place on the basis of the same criteria as those adopted by the customs authorities in collecting customs duties to which the agricultural levies were basically assimilated.
The principle of applying the more favourable rate contained in the 1962 Recommendation of the Commission was extended by the Italian authorities to agricultural levies without difficulty or interruption until the judgment in the Frecassetti case.
Previously, the only judgment of the Court which, albeit in a different legal context, had dealt with a problem similar to that with which the Frecassetti case was concerned was in Schleswig-Holsteinische Hauptgenossenschaft v Hauptzollamt Itzehoe.
That judgment confirmed that in circumstances such as those referred to in the question submitted by the national court the day of importation for the purposes of Article 15 (1) of Regulation No 120/67 is that on which the goods leave the warehouse and the rate in force on that day must be applied.
Although that judgment was given with reference to a particular case, it provides a definition of the day of importation which may be understood as the day when the goods are actually marketed in the importing country.
However, a comparison with the judgment in the Frecassetti case, disregarding the special facts in Case 35/71, reveals a radical change in the case-law. That impression is reinforced by the interpretation which the Italian courts have repeatedly given to statements of the Court of Justice in Case 35/71.
Before the judgment in the Frecassetti case, Italian case-law, consistent with the Italian legislation, recognized that the agricultural levy applicable was that of the day when the importer manifested his intention of marketing the imported goods in the national territory.
That shows that the Italian traders were in no way responsible for the more favourable levy rule, which was applied continuously for a period of almost 15 years until the judgment in the Frecassetti case was delivered.
The fact that the Italian traders were completely innocent in any event entitles them to rely on the principle of legitimate expectation in resisting the payment of differences in levies.
On becoming aware of the factual and legal position, the Italian State considered it necessary to adopt the 1978 Decree of the President of the Republic, which made the rule requiring the charging of the levy applicable on the day of acceptance by the customs of the importation declaration apply retroactively only from 11 September 1976, the date of publication in the Official Journal of the European Communities of the judgment in the Frecassetti case.
The adoption of that decree does not mean that the principle of legitimate expectations did not exist in Italian law and was not generally applied in relations with the public authorities. The legislature simply considered it necessary to give concrete expression to the principle in the customs field in view of the exceptional nature of the circumstances which had arisen.
With regard to the principle of legitimate expectation the Court has stated in a similar case that Community law in its present state ... [does] not preclude the application, in proceedings concerning the recovery by the authorities of the Member States of sums paid in error as export refunds to traders, of a principle of legal certainty based on national law whereby financial benefits granted in error by the public authorities may not be recovered if the error committed was not due to incorrect information supplied by the beneficiary or if such error, despite the fact that the information supplied was incorrect though supplied in good faith, could easily have been avoided.
After the delivery of the judgment in the Frecassetti case and the adoption of the 1978 Decree the Italian Constitutional Court and the lower courts considered it necessary to determine whether the principles of Community law allowed, and if so on what basis, the new rule for collecting agricultural levies to be applied retroactively only from the date of publication of the judgment in the Frecassetti case.
Since the Constitutional Court was quite clear that Community rules had precedence over prior or subsequent national law, the lower court would infringe a superior principle implanted in Italian law if it were to apply Community law incorrectly in the present case.
The principle of legitimate expectations was defined by the Court of Justice on the basis of the rule of law and the principle of legal certainty. That principle was regarded as one of the higher-ranking rules of Community law.
It is clear from many cases of the Court that the fundamental conditions which have to be satisfied to allow application of the principle are four in number. For traders to be able to rely on their legitimate expectations it is necessary that:
All those conditions are satisfied in the present case.
With regard to the condition under (c), the plaintiffs in the main proceedings consider it is impossible to find a situation similar to theirs where the alteration in the legal position was so unforeseeable: not only have the provisions referred to in Decree No 723 of the President of the Republic of 26 June 1965 always been applied to agricultural levies by the Italian customs authorities but also in a consistent line of cases the Court of Cassation and the Italian lower courts have held that the day of importation for applying the levy was that on which the goods were released to the traders (contrary to the judgment in the Frecassetti case) and an impressive number of measures and legislative proposals originating from the Commission show that the Community authorities themselves considered that the system originally adopted by the Italian customs authorities was quite correct and lawful.
With regard to the condition under (d), the plaintiffs in the main proceedings infer from the second recital of the preamble to Regulation No 1697/79 and in particular from Article 5 thereof that the protection of legitimate expectations is always extended to the trader acting in good faith whose private interests are never regarded as conflicting with the public interests of the Community.
Since the subject-matter is fully governed by Community law, it appears clear that the principle of legitimate expectations, as interpreted by the Court, must also fully apply where all the conditions for its application are fully satisfied as in the present case.
1 Language of the Case: Italian.
2 OJ, English Special Edition 1967, p. 33.
3 Journal officiel No 51, 29.6.1962, p. 1545.
4 Suppl. ord. to the Gazzella Ufficiale, 1.7.1965, No 160.
5 OJ 1974, C 14, p. 45.
6 Judgment of 15 June 1976 in Case 113/75 Frecassetti v Amministrazione delle finanze dello Stato [1976] ECR 983.
7 Gazzetta Ufficiale della Repubblica Italiana, 15.11.1978, No 379, p. 8235.
8 OJ 1976, C 214, p. 14.
9 OJ 1979, L 197, p. 1.
10 Judgment of 12 November 1981 in Joined Cases 212 to 217/80 Amministrazione delle finanze dello Stato v Salumi and Others [1981] ECR 2735.
11 See in particular the judgment of 16 May 1979 in Case 84/78 Tomadini v Amministrazione delle finanze dello Stato [1979] ECR 1801.
12 Regulations Nos 19/62 of the Council of 4 April 1962 (Journal officiel No 30, p. 933) and 120/67/EEC of 13 June 1967 (OJ, English Special Edition 1967, p. 33).
13 Judgment of 12 November 1981 in Joined Cases 212 to 217/80 Amministrazione delle finanze dello Stato v Srl Meridionale Industria Salumi and Others [1981] ECR 2735.
14 Judgment of 27 March 1980 in Joined Cases 66, 127 and 128/79 Amministrazione delle finanze dello Stato v Srl Meridionale Industria Salumi and Others [1980] ECR 1237.
15 Judgment of 15 December 1982 in Case 5/82 Hauptzollamt Krefeld v Maïzena GmbH [1982] ECR 4601.
16 Judgment of 15 December 1971 in Case 35/71 [1971] ECR 1083.
17 Judgment of 5 March 1980 in Case 265/78 H. Ferwerda BV v Produktschap voor Vee en Vlees [1980] ECR 617.
18 In particular, judgments of 4 July 1973 in Case 1/73 West- zucker v Einfuhr- und Vorratsstelle für Zucker [1973] ECR 723; of 26 January 1978 in Joined Cases 44 to 51/77 Union Malt and Others v Commission [1978] ECR 57; and of 27 April 1978 in Case 90/77 Stimming v Commission [1978] ECR 995.