Report for the Hearing delivered in Case 252/87

I — Facts and proceedings before the national courts

1. Between 12 January 1979 and 9 May 1980 Wilhelm Kiwali KG, Hamburg, the plaintiff and respondent in the main proceedings, bought hosiery in Denmark which it released for consumption in the Federal Republic of Germany upon submission of a T2 form pursuant to the procedure under Council Regulation No 222/77 of 13 December 1976 on Community transit (Official Journal 1977, L 38, p. 1). Since according to the documents lodged the goods were Community goods, the company paid only import turnover tax in the Federal Republic of Germany.

2. Subsequently it was found that the goods originated in the Republic of South Korea and had been smuggled into Denmark. On that basis the Hauptzollamt Hamburg-St Annen, the defendant and appellant in the main proceedings, by decision of 19 February 1981, claimed the sum of DM 241676.76 in customs duty from the company on the basis of Paragraph 58 of the Zollgesetz (Customs Law) (as it stood before the coming into force of the Seventeenth Customs Amendment Law of 12 September 1980, Bundesgesetzblatt I, 1980, p. 1695), subparagraph 1 of which provides:

3. On 7 September 1981 the company brought an action against that decision before the Finanzgericht Hamburg, which annulled it by a judgment of 18 May 1983 essentially on the ground that for a customs debt to be incurred more than once within the Community in respect of the same goods solely on the basis of a national provision would be incompatible with the nature of a customs union according to Articles 9 and 12 of the Treaty. During the course of the proceedings the Finanzgericht was informed by the Danish authorities that proceedings were being prepared against the Danish importer seeking inter alia an order that it pay a total of DKR 3580233 in customs duties, DKR 2943278 of which related to the part of the goods despatched to the Federal Republic of Germany.

4. Previously the Danish customs authorities had, at the request of the German customs authorities in February 1981, given the following information:

5. On 5 August 1983 the Hauptzollamt appealed against that decision to the Bundesfinanzhof, which by order of 2 July 1987 stayed the proceedings and requested a preliminary ruling on the following question, which was received at the Court Registry on 20 August 1987:

6. The Bundesfinanzhof observes that it is well known that the Community is not yet a customs union since its Member States still apply different laws on the treatment of goods for customs purposes. The differences existing in customs laws in this field are inherent in the present system of the common market and do not in themselves represent any infringement of the EEC Treaty or secondary Community law.

7. The Bundesfinanzhof considers that the prohibition in Article 12 of the Treaty on the introduction of new customs duties on Community goods does not apply to goods which do not satisfy the conditions for treatment as goods in free circulation in the Community under Articles 9 and 10 of the Treaty. Article 36 (1) of Regulation No 222/77 provides:

8. As the harmonization of legislation stood during the material period and as it stood following Council Directive 79/623 of 25 June 1979 on the harmonization of provisions laid down by law, regulation or administrative action relating to customs debt (Official Journal 1979, L 179, p. 31) the Bundesfinanzhof finds that no unwritten principle was yet to be inferred from Community law according to which a customs debt could be incurred only once in respect of goods imported into the Community.

9. However, if there is such an unwritten provision the Bundesfinanzhof observes that it is necessary to determine its precise terms. In particular it is necessary to determine which national provision on the incurring of a customs debt has precedence and whether that precedence arises when the customs debt comes into being in a Member State or only when it is levied. It is also necessary to determine whether that unwritten provision applies only if it is the same person who is twice liable for a customs debt in respect of the same goods.

10. Pursuant to Article 20 of the Protocol on the Statute of the Court written observations were lodged by Kiwall, represented by H. Colombus, tax consultant, and by the Commission, represented by its Legal Adviser J. Sack, acting as Agent.

11. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to assign the case to the Sixth Chamber pursuant to Article 95 of the Rules of Procedure and to open the oral procedure without any preparatory inquiry.

II — Written observations

A — The wording of the question

1. Wilhelm Kiwall KG observes that the question put by the Bundesfinanzhof is framed in such a way as to concern the compatibility of national law with Community law and it proposes that the question should be reworded as follows:

2. On the same basis the Commission proposes that the question should be reworded as follows:

B — Substance

3. Kiwall submits that the decision in the case depends on the application of Article 36 of Regulation No 222/77. The false Community transit declaration is an offence which is closely if not inseparably linked with the previous smuggling into Denmark. There are no reasonable grounds for excluding from the scope of Article 36 an offence of this kind which is earlier in time but closely connected with a Community transit transaction.

4. It cites the judgment of the Court of 27 November 1984 in Case 99/83 (Fioravanti v Amministrazione delie Finanze dello Stato [1984] ECR 3939). In that case, goods originating in Australia and temporarily imported into Belgium had been reconsigned to Italy with a consignment note equivalent to the T2 transit document which had been wrongly drawn up in Belgium. Applying the identical provision of Article 36 of the previous regulation, Regulation No 542/69 of the Council of 18 March 1969 on Community transit (Official Journal, English Special Edition 1969 (I), p. 125), the Court rejected the Commission's argument that customs duties became payable solely on the release into circulation in a Member State of non-Community goods and the simple fact of entering the symbol T2 on the consignment notes accompanying non-Community goods did not give rise to the collection of any duty or charge. Without any qualifying if or but, the Court held that Article 36 applied to an offence or irregularity committed in connection with a Community transit operation and resulting in the non-collection of the duties or other charges which should have been collected.

5. In considering, in the alternative, other relevant questions relating to the incurring of a customs debt and the levying of duty Kiwall takes the view that as Community law then stood (and even today) it did not in principle prevent a customs debt from arising twice. That is clear not only from Article 36 of Regulation No 222/77 but also from Article 9 (2) (a) of Directive 79/623, which was not yet in force at the material time. As regards the collection of duty Community law resolves the problem which arises in such cases quite clearly either by providing for payment according to the principle of the locus commissi delicti (Article 36 of Regulation No 222/77) or by providing that the customs debt which has arisen in the first Member State but has not yet been recovered should be extinguished (Article 9 of Directive 79/623).

6. With regard to the possibility that the Danish customs authorities might forgo levying customs duties in so far as they were levied by the German authorities, Kiwall observes that Community law requires every Member State to apply the Common Customs Tariff and to levy duties due as a result of blatant smuggling. Since it is not for the Member States to determine the basic conditions for levying the duties provided for at Community level (see in particular the judgment of 28 June 1977 in Case 118/76 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof [1977] ECR 1177), any statements or measures to the contrary cannot be the basis for alternatively levying the customs duties in the Federal Republic of Germany.

7. Kiwall considers that for the customs duties to be recovered in the Federal Republic of Germany without regard for any levying of the customs duties in Denmark appears to be so obviously contrary to Community law that it requires no further comment.

8. The Commission observes that the concept of a customs union under the Treaty in no way assumes that there should first be complete or even substantial harmonization of the general customs legislation. It is therefore incorrect to claim that the Community customs union had not yet been achieved in 1979 and 1980. Since the customs union had been achieved even though it was not complete, the provisions of national law which remained applicable in relation to customs matters were at the service of the customs union and their application must obviously serve to achieve the objectives of that union. One of those objectives is that duties under the common customs tariff should be levied only once.

9. The coming into being of customs debts does continue to be governed by national legislation. Directive 79/623 does not alter that legal position and contains no conflict of laws rule should a customs debt arise under the law of more than one State. The possibility that a customs debt may arise more than once is definitely excluded only from 1 January 1989, the date when Council Regulation No 2144/87 of 13 July 1987 on customs debt (Official Journal 1987, L 201, p. 15) enters into force.

10. The Commission refers, however, to Regulation No 1496/68 of the Council of 27 September 1968 on the definition of the customs territory of the Community (Official Journal, English Special Edition 1968 (II) p. 436), which indicates that the customs territory of the Community is to be regarded as an entity in itself and not simply a general concept incorporating the existing national customs territories. It follows that if a customs debt is incurred under the law of one State on the single customs territory of the Community no other customs debt can be incurred in respect of the same goods even if a fresh operative event arises under the law of another State. Although a different view is conceivable under Article 9 et seq. of the Treaty, it would conflict with the establishment of a single customs territory.

11. Should the Court not agree with that view of the law the Commission observes that in the present case the question is governed by Article 36 of Regulation No 222/77 since the fraudulent acquisition of a T2 form in Denmark undoubtedly constitutes an irregularity within the meaning of Article 36. Although the Danish authorities are therefore competent to recover the customs debt, it may be that the use of a T2 form in the Federal Republic of Germany means that an irregularity has also been committed there, and Article 36 does not determine the question of priority. Since, moreover, the same question may arise in a context other than that of the transit procedure, the Commission agrees with the Bundesfinanzhof in first disregarding Article 36 of Regulation No 222/77.

12. Since written Community law does not determine the question of priority and the Community legal system requires it the Commission proposes that the Court should fill the gap by means of interpretation. On the basis of Article 36 the Commission proposes that the national administration originally concerned should have priority.

III — Proposed answers to the question

1. Kiwali proposes the following answer:

2. The Commission proposes that the question should be answered as follows:

1 Language of the Case: German.