JUDGMENT OF 13. 3. 1980 — CASE 111/79 CATERPILLAR OVERSEAS v BELGIUM

In Case 111/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal de Première Instance, Brussels, for a preliminary ruling in the action pending before that court between

THE COURT (First Chamber) composed of: A. O'Keeffe, President of Chamber, G. Bosco and T. Koopmans, Judges, Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and procedure

1. The plaintiff in the main action, a Swiss company having its registered office in Geneva, is a subsidiary of the American Caterpillar Tractor Company which is a company incorporated under the laws of the State of California and with its head office in Peoria, Illinois. The plaintiff has established a branch in Grimbergen, Belgium, having a customs warehouse and acting as a store and distribution centre for spare parts of the machines manufactured by Caterpillar Tractor and other manufacturers for Europe, Africa and the Middle East. Since what is involved is machinery basically intended for civil engineering and earth moving (hydraulic buckets, wheeled and track-laying tractors, wheeled and track-laying loaders and levellers), that is machinery subject to considerable risks of destruction and damage, the establishment of a supply centre for spare parts such as at Grimbergen is an essential factor in the economic organization of the market in the Caterpillar machinery. Since any breakdown could bring a site to a complete standstill with all the resulting financial consequences it is necessary to obtain spare parts speedily. Distribution operates as follows. The plaintiff in the main action, Caterpillar Overseas, orders parts from the American manufacturer, from one of its subsidiaries or from an undertaking outside the group through the branch in Grimbergen. The latter receives orders from buyers, executes them, delivers the goods and bills them. Payments for the parts purchased are made into accounts in the name of Caterpillar Overseas on the basis of bills drawn up by Grimbergen and sent by that branch to the buyers. The amounts received by Caterpillar Overseas are credited to Grimbergen and are included in the latter's receipts. There is the same machinery in reverse for purchasers of parts made by the branch in Grimbergen: payments are made from Caterpillar Overseas accounts and Grimbergen is debited. The branch in Grimbergen does not have legal personality but it is regarded by the Belgian revenue authorities as a “branch” within the meaning of Article 198 of the Consolidated Laws on Trading Companies and as a “permanent establishment” the income of which is taxable in Belgium (Article 148 (1) in conjunction with 140 (3) of the Tax Code). It is under this head separately accountable as if it had separate personality.

2. The case between the plaintiff in the main action and the customs authorities relates to the valuation for customs purposes of the said spare parts, the assessment of which is made on their leaving the warehouse. Previously the licence allowing the branch to open a warehouse subject to customs control provided that “the value liable to entry duties is the inter-company price”, that is to say the price charged by suppliers of the parts to the branch in Grimbergen plus a percentage for delivery charges. The system operated for eight years. In 1974 the Customs authorities gave notice that the customs duties must be calculated differently. It considered that the value for customs purposes to be taken into account must be either the “inter-company price” plus 20 % and an amount equivalent to the usual delivery costs or the price charged by the branch to its own buyer-distributors, less the costs of delivery, warehousing and storing in the customs territory of the Community. Ultimately, it was the first of those conceptions which it decided to impose. Caterpillar was unable to agree. It nevertheless applied the method but formally reserved its rights to a refund. In the present proceedings brought before the Tribunal de Première Instance, Brussels, Caterpillar Overseas is claiming the refund of Bfr 15926637 which it considers it has overpaid. By judgment of 29 June 1979 the Tribunal de Première Instance, Brussels, stayed the proceedings and referred the following questions to the Court under Article 177 of the EEC Treaty: The judgment making the reference was registered on 20 July 1979. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted by Caterpillar Overseas, the plaintiff in the main action, represented by Pierre Van Ommeslaghe, of the Brussels Bar, the Belgian Government, the defendant in the main action, represented by Emile Philippe, Regional Director of Customs and Excise, acting as Agent, and by the Commission of the European Communities, represented by Dieter Oldekop, a member of the Legal Department of the Commission, acting as Agent, assisted by Francis Herbert, of the Brussels Bar. 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. By order dated 21 November 1979 the Court, pursuant to Article 95 (1) and (2) of the Rules of Procedure, decided to assign the case to the First Chamber.

“Preamble

1. The following are hereinafter referred to by the initials: A. X: A company having its registered office in an overseas third State and governed by the law of that country. B. Y: A subsidiary company of X having its registered office in a European country not belonging to the European Economic Community and governed by the law of that State. C. Z: A branch of Y, established in Europe in a Member State of the Community, subject to the law of that State in so far as it governs the branches of companies which have their registered office and are established abroad and outside the European Economic Community.

2. X manufactures and markets under its trademark X machines and spare parts for those machines. X also obtains from independent suppliers spare parts for the machines which it manufactures and markets those spare parts.

3. Y has set up a branch in a Member State of the Community which forms a distribution centre for business transactions relating to spare parts. These spare parts are ordered through Z from X or other subsidiaries of X or companies affiliated to X. The sellers send them directly to Z which takes delivery of them when they enter the country in which Z is established. They are stocked and handled by Z and are eventually resold either to distributors which have entered into distribution agreements with Y or directly to customers. The price depends on the commercial level of the buyer. These sales take place both in the countries of the Community and in European countries outside the Community, Middle Eastern countries and African countries. Where sales are made outside the Community, the parts do not go through customs in the Community and do not affect the present case. For the rest, the import transactions are controlled by the customs authorities and Z has a customs warehouse in a Member State of the Community.

4. In carrying out its activities, Z is in particular responsible for the following at its place of business: Forecasting the requirements of all its customers, including distributors, ensuring that stocks are ordered in good time and maintained at the necessary levels and rapidly supplying its customers, the great majority of whom obtain spare parts in order to resell them to their own customers. Distributors and other customers order their spare parts from Z. Z receives the orders, fulfils them and delivers the goods and invoices to the buyers. The buyers pay the amounts shown in the invoices directly to Y which takes charge of the collection of debts from customers and credits the account of Z with the sums thus collected. Z performs numerous tasks and acts as administrator of the stock and the distribution centre. It occupies premises covering 5.4 hectares and employs more than 640 persons, 240 of whom are responsible for the management of Z. Z is very independent in its transactions although it is a branch of Y, which entered into the distribution agreements with distributors for products sold under the trademark X.

5. Z is entered in the commercial, register in the Member State in which it is established and is a ‘succursale’ [branch] within the meaning of the company law of that country. It has all the characteristics of a permanent establishment within the meaning of that expression in the fiscal law of the country in which it is established and in the double-taxation agreements of the OECD type as well as within the meaning of the commercial, friendship and navigation treaties concluded by the country in which it is established. It is moreover treated as a permanent establishment by that country, which levies direct taxation on the income arising from its activities as a branch of Y. For that reason it keeps separate accounts as if it had separate personality.

6. According to the plaintiffs, the price at which the spare parts are bought is determined by adding to X's production costs approximately 50 % of the consolidated profit obtained by X and Z from the sale of spare parts to independent buyers, in other words to distributors which have entered into one of the abovementioned agreements and to certain other categories of consumer. In that calculation, X's production costs include not only the cost of production of the spare parts or their cost of acquisition where the parts are obtained as finished goods but also the full amount of handling, administrative and overhead costs. The defendant states that it is not in a position to check the accounting data on which that assertion rests but the questions set out below are asked on the assumption that it is correct and the court leaves open to itself to have it checked later by means of an expert's report, if appropriate. According to the plaintiff, it corresponds at least to the prices normally paid for parts of the same kind in sales organizations at the level of similar central distribution establishments where they do not form part of the same group as the seller-suppliers.

7. According to the plaintiff's argument, the price increased by the costs of delivery to Z constitutes the value for customs purposes, whereas the customs authorities contend that that amount should be increased by 20 % or, alternatively, that the value for customs purposes should be the price charged to Z's distributors, less the costs of delivery, warehousing and preserving the goods in the customs territory. General questions First general question In so far as Article 9 of Regulation No 803/68 provides that ‘the price paid or payable may be accepted’ (on certain conditions) ‘as the value for customs purposes’, does it give a definition of the value for customs purposes that is independent of or different from the definition given in Article 1 as ‘the normal price’, or does it derogate from Article 1? Second general question If the answer to the first question is in the affirmative, does an importer have the choice between the normal price referred to in the abovementioned Article 1 and the price paid or payable referred to in the abovementioned Article 9? Third general question If the answer to the second question is in the affirmative, is the choice by an importer of the price paid or payable as the value for customs purposes binding upon the customs authorities of the importing country or, on the contrary, do those authorities nevertheless have the power, having regard to the fact that Article 9 provides that that price ‘may’ (and not ‘must’) be accepted as the value for customs purposes, to require that that value must be fixed in accordance with the provisions of Articles 1 to 8 of that regulation? More specific questions First question May the price invoiced by X (fob port of shipment) with no adjustment other than the costs of delivery to Z be treated as constituting the value for customs purposes within the meaning of Article 9 of Regulation No 803/68, having regard to the condition laid down in Regulation No 603/72, and in particular, is it possible to consider that: (a) that price corresponds, at the time it is agreed upon, to the price on a sale in the open market between a buyer and a seller independent of each other; (b) the sales are made to a buyer established in the customs territory of the Community? Second question If the answer to the first question is in the negative, may the value for customs purposes be determined, in the present case, on the basis of the prices charged to distributors or to certain other customers, it being understood that these prices may vary according to the commercial level of the buyers? Third question If the answer to the second question is in the affirmative, should there be taken into consideration with a view to their possible deduction from such prices as may be fixed upon in accordance with the reply to the second question: (a) the costs of warehousing and of preserving the goods; (b) other expenses inherent in the activities of the branch (Z) in the Member State; (c) an amount representing the trading profit attributable to the activities of the branch (Z) in the Community?”

II — Summary of the written observations submitted to the Court

General questions

The plaintiff in the main action (hereinafter referred to as “Caterpillar Overseas”) argues that Regulation No 803/68 is based on the Convention on the Valuation of Goods for Customs Purposes, which was signed at Brussels on 15 December 1950. Annex I to the Convention provides the Brussels “definition” of the value for customs purposes and the Contracting States undertook to introduce that definition into their domestic law. The contracting parties, including the Member States of the EEC, established a Customs Cooperation Council responsible for checking that the Convention was duly implemented and applied uniformly. To this end the Council drew up “Explanatory Notes” together with examples, different from “Interpretative Notes” (Annex II to the Convention) in that they are not binding on the States to the same extent since they are not included in the Convention or its annexes. The Council also made “recommendations” which have generally been followed by the contracting parties.

Pursuant to the principles of the Convention, Article 1 of Regulation No 803/68 of the Council (of the Community) of 27 June 1968 (Official Journal, English Special Edition 1968 (I), p. 170) on the valuation of goods for customs purposes provides :

“(1) For the purpose of applying the Common Customs Tariff, the value for customs purposes of goods imported shall be taken to be the normal price, that is to say, the price which they would fetch, at the time referred to in Article 5, on a sale in the open market between a buyer and a seller independent of each other. (2) The normal price of any imported goods shall be determined on the following assumptions: (a) that the goods are delivered to the buyer at the place of introduction into the customs territory of the Community; (b) that the seller bears all costs, charges and expenses incidental to the sale and to the delivery of the goods at the place of introduction, which are hence included in the normal price; (c) that the buyer bears any duties or taxes applicable in the customs territory of the Community, which are hence not included in the normal price”.

Article 2 of the same regulation defines “a sale in the open market between a buyer and seller independent of each other”. It is worded as follows:

“(1) A sale in the open market between a buyer and a seller independent of each other presupposes: (a) that the price is the sole consideration; by consideration is meant not only the fulfilment of a legal or contractual obligation but also any other form of consideration; (b) that the price is not influenced by any commercial, financial or other relationship, whether by contract or otherwise, between the seller or any natural or legal person associated in business with him and the buyer or any natural or legal person associated in business with him (other than the relationship created by the sale itself); (c) that no part of the proceeds of any subsequent resale, other disposal or use of the goods will accrue, either directly or indirectly, to the seller or any natural person or legal person associated in business with him. (2) Two persons shall be deemed to be associated in business with one another if, whether directly or indirectly, either of them has any interest in the business or property of the other or both have a common interest in any business or property or some third person has an interest in the business or property of both of them”.

In the view of Caterpillar Overseas that article does not prevent a price charged between persons “associated in business” from constituting a normal price. It provides merely that the price is normal only if it is not influenced by relations which could exist between persons associated in business and which would make the price in fact abnormal.

In general the customs authority takes as basis the price in /act paid by an importer to determine the value for customs purposes.

Interpretative Note 5 of Annex II to the Brussels Convention on the Valuation of Goods for Customs Purposes provides in this respect:

“... the application of the Definition implies an inquiry into current prices at the time of valuation. In practice, when imported goods are the subject of a bona fide sale, the price paid or payable on that sale can generally be considered as a valid indication of the normal price mentioned in the Definition. This being so, the price paid or payable can reasonably be used as a basis for valuation, and customs administrations are recommended to accept it as the value of the goods in question, subject: (a) to proper safeguards aimed at preventing evasion of duty by means of fictitious or colourable contracts or prices; and (b) to such adjustments of that price as may be considered on account of circumstances of the sale which differ from those envisaged in the Definition of Value”.

This is basically the issue in the present case. Caterpillar Overseas maintains that the price in fact paid by the branch in Grimbergen for the import into the Community of spare parts which are sold by the Caterpillar Tractor Company has all the characteristics necessary to constitute a normal price and therefore it is on that basis that the customs should calculate the duties.

In the view of Caterpillar Overseas the principle contained in Interpretative Note 5 (already cited) is embodied in Article 9 of Regulation No 803/68 :

“(1) The price paid or payable may be accepted as the value for customs purposes if: (a) the contract of sale is executed within the period specified in Article 10; (b) the price corresponds, at the time it is agreed upon, to prices on a sale in the open market between a buyer and a seller independent of each other, and (c) that price is adjusted, if necessary, to take account of circumstances of the sale which differ from those on which the normal price is based. (2) Adjustments under paragraph (1) (c) may in particular be required with reference to: (a) the costs, charges and expenses mentioned in Article 1 (2); (b) reductions in price granted in favour of sole agents or sole concessionnaires or any other person of rating in comparable circumstances; (c) abnormal rebates and any other reduction from the ordinary competitive price”.

It follows that the customs authorities have no discretion to disregard the price in fact paid and to decide the normal price in another way.

In the view of Caterpillar Overseas the reasons why the customs authorities did not wish to apply Article 9 are wrong in fact and in law. The reasons are on the one hand that Caterpillar has no establishment in Belgium and may not therefore rely on Article 9 (this question will be considered later in the answer to the first “specific question”) and on the other hand that the links between the buyer and seller do not allow the application of Article 9. However, the authorities have not carried out any check and it has not taken account of factual circumstances which, on the contrary, allow the application of Article 9.

Caterpillar Overseas considers that the customs office may not rely on an alleged discretionary power so as arbitrarily to disregard Article 9 and the fixing of the value for customs purposes by reference to the price in fact paid on the ground that Article 9 of Regulation No 803/68 does not fix a value different from that in Article 1.

To summarize, the general principles are as follows:

a) The value for customs purposes is a theoretical value; it is the normal price defined in Article 1 with the amplification given in Article 2.

b) Nevertheless, the price in fact paid is in principle regarded as representing the normal price, subject to the adjustments if necessary provided for by Article 9, in so far as the sale is to a buyer established in the customs territory of the Community. Such is the case, subject to the customs' checking that the price includes nothing abnormal or is not fictitious, even if the buyer and seller are associated in business.

In view of these considerations the answer to the first general question should be in the negative.

Consequently the second and third general questions lose their purpose.

The Belgian Government maintains that Regulation No 803/68 does not allow the importer to choose between valuation on the basis of the invoice price (Article 9) and valuation on the basis of the normal price (Article 1).

Article 9 of the regulation does not derogate from Article 1 but is intended to facilitate its application. Far from the “price paid or payable” in Article 9 conflicting with the “normal price” in Article 1, it is intended to be the same.

Why the invoice price may, and not must, be accepted as the basis for the valuation is that “in practice, when imported goods are the subject of a bona fide sale, the price paid or payable on that sale can generally be considered as a valid indication of the normal price” (the aforementioned Interpretative Note 5).

It is however solely to the extent to which it may be regarded as representative of the normal price that the “price paid or payable”, adjusted if necessary, may be accepted by the customs office as being the “normal price” constituting the value for customs purposes of the imported goods.

Finally, the Belgian Government observes that the factors which in a given sale differ from the factors constituting the normal price and must be taken into account in adjusting the price as provided for in Article 9 (1) (c) are not confined to those mentioned in Article 9(2).

The Commission observes that to consider the “price paid or payable” is only one of the methods for determining the “normal price” which is the basis of a realistic value for customs purposes. This appears very clearly from the Explanatory Notes which state when it refers to the “price paid or payable” Interpretative Note 5 “does not thereby set up an alternative standard to the normal price of the Definition. The possibility of such an alternative cannot be entertained, not only because the Definition precludes the use of a dual standard, but also because the price paid or payable on a contract entirely consistent with the conditions which the Definition prescribes is no more than the materialization of its concept”. It is therefore that price which is the best guide to the normal price constituting the basis of the value for customs purposes (Case 27/70 Edding [1970] ECR 1035, at p. 1044, paragraph 8).

Article 9 (cited above) of Regulation No 803/68 specifies the conditions upon which the “price paid or payable” may be accepted as the value for customs purposes. The aim of those conditions is to ensure that the “price paid or payable” is representative of the “normal price”. It is therefore a method which in certain circumstances allows the normal price of the goods to be determined in the same way as the price “which they would fetch ... on a sale in the open market between a buyer and a seller independent of each other”, the price specified in Article 1 of Regulation No 803/68 (Case 38/77 Enka v Inspecteur der Invoerrechten en Accijnzen, [1977] 2203, at p. 2212, paragraph 14).

Moreover, the annex to Regulation No 375/69 of the Commission of 27 February 1969 (Official Journal, English Special Edition 1969 (I), p. 63) on the declaration of particulars relating to the value of goods for customs purposes shows that the importer may refer, as a basis of calculation of the declared value, either to the invoice price or to an alternative basis of calculation such as the current price.

The wording used in Article 9 of Regulation No 803/68 shows that when the declarant chooses to take as a basis the price paid or payable rather than the normal price as defined in Article 1 such choice is in no way binding on the administration which may review and adjust the price so declared. The competent authority may even disregard the invoice price and arrive at the value for customs purposes by using other methods, for example the so-called deductive method.

The Commission therefore proposes that the three “general” questions put by the Tribunal de Première Instance, Brussels, should be answered as follows:

“The reference to the price paid or payable in Article 9 of Regulation No 803/68 does not give a definition of the value for customs purposes independent of or different from the normal price to which Article 1 of that regulation refers. The value for customs purposes is still the normal price which, in certain circumstances, in particular as regards the reference date, may be established on the basis of the price paid or payable. Article 9 does not therefore derogate from Article 1 regarding the definition of the value for customs purposes which still remains the normal price. As is apparent from Regulation (EEC) No 375/69 of the Commission of 27 February 1969 on the declaration of particulars relating to the value of goods for customs purposes it is always open to the importer to declare the value for customs purposes on the basis of the invoice price or on an alternative basis of calculation (such as the current price or hiring charge). That choice, however, is in no way binding on the customs authorities which may not only review the calculation by the importer but also challenge it and establish the price which in their opinion accords with the definition of the normal price”.

First specific question

As regards the first part of the question Caterpillar Overseas argues that the price in fact paid by the particular companies in their dealings between themselves may constitute the value for customs purposes where that price is not influenced by the commercial relationships existing between them (Article 2 (1) (b) of Regulation No 803/68).

This follows from Chapter VIII of the Explanatory Notes to the Convention:

“(c) Transactions which by their nature may not establish prices acceptable as bases for valuation. It is evident that the field of application of Interpretative Note 5 to Article I in its reference to imported goods which are the subject of a bona fide sale is not restricted to sales which conform to the terms of Article II of the Definition. A sale conforming to the terms of that article cannot be other than a bonafide sale. But if goods are imported under a sale which does not conform to the terms of Article II it has to be decided on the facts whether that sale can nevertheless be accepted as providing a price suitable as a basis for valuation. ... Associated houses: Importations by a firm associated in business with the supplier either as a subsidiary or by reason of shareholding or of any similar commercial, financial or other relationship. If, in any of the above categories, the imported goods are presented to the Customs as being the subject of a sale to the person or firm acting as importer, it has to be established whether the transaction can be accepted as providing a price suitable as a basis for valuation. If so, valuation can proceed on the lines indicated in Chapter VI and VII, i. e. by use of the price paid or payable as a starting point”.

In the present case the customs authority has omitted to carry out the necessary checking.

Caterpillar Overseas maintains in the present case that the imports have been made by an independent trader by reason of the fact that the importer enjoys no financial or commercial benefit by reason of its association with the supplier vis-à-vis a fully independent buyer (cf. the aforesaid Explanatory Notes).

The case-law in the Federal Republic of Germany contains the same principle (judgments of the Bundesfinanzhof of 13 July 1960, VII/99/59U, Bundessteuerblatt 1960, III, pp. 436 to 438 and of 26 April 1961, VII, 79/59U, Bundessteuerblatt 1961, III, pp. 329 to 332).

It is apparent from the preamble to the judgment making the reference that the branch at Grimbergen is commercially independent and is not a nonindependent agent or a simple extension of Caterpillar Tractor Company, the seller of the spare parts. This is confirmed by the experts' reports annexed to the observations of the plaintiff in the main action.

In addition it is apparent from those reports that the sale price between the companies in question must be regarded as corresponding to the prices agreed in a sale taking place between a buyer and a seller independent of each other.

The second part of the first specific question concerns the interpretation of Article 1 of Regulation No 603/72 of the Commission of 24 March 1972 (Official Journal, English Special Edition 1972 (I), p. 156) which is worded as follows :

“For the purposes of applying the provisions of Council Regulation (EEC) No 803/68 of 27 June 1968 on the valuation of goods for customs purposes, and without prejudice to the other conditions set out in that regulation, the price paid or payable shall be accepted as the value for customs purposes only if it has been made on a sale to a buyer established in the customs territory of the Community”.

Caterpillar Overseas considers that the word “established” means settled. It in no way means that the company in question must be subject to the law of one of the Member States or have its registered office there.

As regards the facts of the case Caterpillar Overseas refers to the preamble to the judgment making the reference and in particular to the paragraph numbered 5 thereof.

When the recitals to Regulation No 603/72 provide that a buyer must be regarded as established within the Community if he has his place of business therein, they have in mind the present case. The branch in Grimbergen is obviously a place of business of Caterpillar Overseas.

It also accords with the concept of establishment (see, for example, the first paragraph of Article 52 of the Treaty).

Caterpillar Overseas moreover refers to the judgment of 22 November 1978 in Case 33/78 Soma/er v Saar Ferngas [1978] ECR 2183 in which the Court defined the concept of branch within the meaning of Article 5 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters as follows :

“The concept of branch, agency or other establishment implies a place of business which has the appearance of permanency, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties so that the latter, although knowing that there will if necessary be a legal link with the parent body, the head office of which is abroad, do not have to deal directly with such parent body but may transact business at the place of business constituting the extension”.

This definition applies to the branch in Grimbergen.

There is no doubt that in Belgian law a foreign company is established in Belgium when it has a branch there.

As far as commercial law is concerned Article 198 of the Consolidated Laws on Trading Companies provides:

“The articles concerning the publishing of measures and annual accounts under Article 81 are applicable to foreign companies which establish a branch or any place of business in Belgium. Persons managing the Belgian establishment are subject to the same liability towards third parties that they would have if they were managing a Belgian company”.

The branch in Grimbergen has complied with the formalities referred to in Article 198 and is entered in the commercial register in Belgium.

From the point of view of Belgian tax law the branch in Grimbergen is a permanent establishment of the Swiss company in Belgium. This concept is defined in Article 140 (3) of the Belgian Tax Code which applies in Grimbergen; the administration has always applied it without any hesitation. That article is worded as follows:

“Even in the absence of any representation capable of binding the foreign undertaking, places of effective management, branches, works, factories, workshops, agencies, shops, offices, laboratories, buying or selling agencies, stores and all fixtures of a productive nature are to be treated as Belgian establishments”.

In conclusion Caterpillar Overseas maintains that on the basis of the facts duly submitted to the Court by the Tribunal de Première Instance, Brussels, and cited during the procedure before that court, the price effectively paid to Caterpillar Tractor by the branch in Grimbergen of Caterpillar Overseas constitutes the normal price which must serve as a basis in determining the value for customs purposes without adjustment other than that, which is not contested, for the delivery costs since the price is fob, port of shipment. The customs cannot arbitrarily disregard it. In particular it must be concluded that the sales are in the present case made to a buyer established within the customs territory of the Community within the meaning of Regulation No 603/72. It must also be concluded that the price charged as between the aforesaid companies accords with the price charged in the open market between a buyer and seller independent of each other.

The Belgian Government considers that “the price paid or payable” does not constitute the value for customs purposes pursuant to Article 1 of Regulation No 803/68 for the following reasons.

First of all there is no evidence of the existence in the present case of open market conditions or similar conditions and mutual independence between the seller and buyer.

Finally, in its “particulars of the way in which the price is fixed” Caterpillar Overseas does not mention “the value of the right to use the patent, design or trademark in respect of the goods”, which Article 3 of Regulation No 803/68 stipulates should be taken into account in determining the normal price of which it constitutes a factor.

Finally, there is no possibility of checking the facts and figures put forward by Caterpillar Overseas or the manner in which the price is calculated within the commercial apparatus of Caterpillar Tractor Company. The Belgian Government maintains that there is no sale by Caterpillar Tractor Company to the branch in Grimbergen at “inter-company” prices: Grimbergen is not the buyer even if it is responsible for ordering supplies which are sent to it directly without going through Caterpillar Overseas in Geneva. The “inter-company” price is in fact the responsibility of and is paid by Caterpillar Overseas in Geneva and not by the branch in Grimbergen.

As distinct from the warehouse which, like Grimbergen, does not buy, the buyer is the one who acquires the goods, becomes owner and takes possession of them for himself, that is to say, who ultimately bears all the commercial risks of the transaction.

The seller and buyer are not independent of each other because the branch in Grimbergen has no power to discuss the prices decided by Caterpillar Tractor Company.

Regarding the second part of the first specific question the Belgian Government considers that it is not sufficient for Caterpillar Overseas to have a branch (Grimbergen) in a country of the Community to be established there as a buyer within the meaning of Regulation No 603/72.

The Commission considers that certain of the specific questions concern the application rather than the interpretation of Community law and therefore suggests that the wording should be changed. It would reword the first question as follows:

a) Where the condition laid down in Article 1 of Regulation No 603/72 is satisfied how is it to be shown that the price paid or payable corresponds to the price charged in the open market between a buyer and seller independent of each other?

b) What interpretation must be given to the requirement laid down in Article 1 of Regulation No 603/72 that the sale must be made “to a buyer established in the customs territory of the Community” for the price paid or payable to be accepted?

As regards Question 1 (a) (as reworded) the Commission observes that a sale between associated companies does not preclude the invoiced price from corresponding to the price in the open market providing that the “special relationship” has not influenced the price (Article 2 (1) (b) of Regulation No 803/68).

It further observes that for the “price paid or payable” where a sale is between associated companies to be acceptable, it is necessary to check whether there are any adjustments to be made, if necessary, in relation to transactions on which the normal price is based (Article 9 (1) (b) and Article 2 of the same regulation).

In reply to the question put the Commission refers to the Recommendation of the Customs Cooperation Council concerning the application of the value for customs purposes of 1 June 1965 which recommends recourse to several methods of comparison, namely:

Comparison of the prices of identical foods from the same seller available, at the same time and in the same quantities, to any buyer in the territory of importation at the same commercial level as the actual buyer;

Comparison with the price of identical goods freely sold by other sellers in the same country, at the same time and in the same quantities, to any buyer in the country of importation at the same commercial level as the actual buyer;

Comparison with the price of similar goods freely sold, at the same time and in the same quantities, by sellers in the same country to any buyer in the country of importation at the same commercial level as the actual. buyer;

Comparison with the price of identical or, failing this, similar goods freely sold, at the same time and in the same quantities, by sellers in other countries to any buyer in the country of importation at the same commercial level as the actual buyer.

The recommendation then stipulates the order in which the methods are to be applied.

In this respect comparison with the prices charged for identical goods to independent buyers in the country of importation is the best basis for determining the value for customs purposes; there can be comparison with prices charged for similar goods in the case of products of a well-known brand only where the goods in question are of a brand enjoying a similar reputation (Article 3 of Regulation No 803/68).

As regards Question 1 (b) (as reworded) the Commission argues that the requirement that the buyer must be established in the customs territory of the Community involves two factors:

(1). he must be a buyer and not a simple intermediary;

(2). such buyer must be established in the customs territory of the Community.

The problem in the present case is

a) whether the branch in Grimbergen can be regarded as a buyer and if not

b) whether Caterpillar Overseas, the plaintiff in the main action, can be regarded as “established in the Community” by reason of the fact that its branch is so established.

The necessity for uniform interpretation of the Community provisions prevents an interpretation from being exclusively determined by the legislation of a single Member State. The fact referred to in the judgment making the reference that from the point of view of Belgian tax law the branch of the plaintiff in the main action is to be regarded as a “permanent establishment” is therefore not decisive with regard to the concept of buyer established in the customs territory of the Community.

The Commission considers that a branch without any legal personality can in any event not itself be regarded as a buyer within the meaning of Article 1 of Regulation No 603/72. Irrespective of the volume of business conducted by the branch established in Belgium all that takes place between the plaintiff in the main action and the branch are transfers of goods from one section to another of the same undertaking.

To adopt the words used by the Court of Justice in its judgment of 22 November 1978 (the aforementioned Case 33/78) business may be transacted at the branch but any legal link will be with the parent body. If for the resale to the distributors the legal link is with the plaintiff in the main action it is not possible to see how, from the legal point of view, it can be the branch which acts as buyer of the goods intended for resale.

The question, therefore, is whether Caterpillar Overseas can be regarded as being “established in the Community”.

The wording of Article 1 of Regulation No 603/72 refers only to a “buyer established in the customs territory of the Community”. That concept is however explained in the penultimate recital to the regulation: “a buyer should be so regarded if he had his residence or place of business therein”, that is to say, an establishment transacting business capable of being carried on by an independent undertaking in the same sector and having permanently available the necessary documents and vouchers for checking by the customs authorities. That concept does not, therefore, include fictitious establishments or establishments acting as a simple extension of the commercial activities of the parent company the registered office of which is outside the customs territory of the Community.

The Commission observes that the definition of “branch” which the Court of Justice gave in its judgment of 22 November 1978 (the aforementioned Case 33/78 Somafer-Saar Ferngas [1978] ECR 2183) was given only in the context of Article 5 of the Convention of 1968. It is not capable of being applied to the role of a branch in the customs legislation of the Community.

In conclusion the Commission proposes that 1 (b) (as reworded) of the specific questions should be answered as follows:

Article 1 of Regulation No 603/72 must be interpreted as meaning that “a buyer established in the customs territory of the Community” is a natural or legal person acting as buyer and having in the customs territory of the Community a residence or place of business and conducting business capable of being carried on in the same sector by an independent undertaking and having permanently available the necessary documents and vouchers allowing the customs authority to check the price paid or payable as declared by the buyer.

Second and third specific questions

Caterpillar Overseas observes in the alternative that the second question means regarding the buyers in Grimbergen as in fact being the first importers into the Common Market. In that case the price paid by the buyers must be adjusted to take account of all the transactions carried out subsequent to the entry of the goods into the customs territory and prior to the delivery to the buyers.

Since the warehousing and storage charges and other costs inherent in the activities of the branch in Grimbergen are transactions “prior” to the entry of the goods into the customs territory of the Community, they must be deducted from that price.

The price charged to customers and concessionnaires incorporates in the view of Caterpillar Overseas not only the costs of the transactions carried out by the branch in Grimbergen but also a profit margin. That margin should also be deducted.

The Belgian Government maintains that there is no alternative but to refer to the prices charged to the customers of Caterpillar Overseas.

The commercial status of the branch in Grimbergen is in fact that of Caterpillar Overseas itself. The warehouse in Grimbergen is nothing other than the branch and physical centre for the distribution.

As a result the Belgian administration does not accept that there should be deducted any costs, expenses and profits other than the costs which the branch in Grimbergen incurs by storing and keeping the goods.

The Commission rewords the second and third specific questions as follows:

2. Do the provisions of Regulation No 803/68 allow the value for customs purposes to be established on the basis of prices charged to the distributors or to certain other customers of the person making the declaration?

3. In such a case must the calculation allow the deductions referred to in the judgment making the reference?

It considers that the reference in Regulation No 803/68 to the price paid or payable as a possible basis for valuation does not preclude the possibility of using other methods to calculate the value.

Recourse to the price charged to customers by the importer is had by the customs authorities both to fix the basis of valuation and to check the basis for valuation proposed by the importer, for example, between associated companies to check to what extent links between the seller and buyer have influenced the terms of the transaction.

The principle of this so-called deductive method is that the delivery charges within the customs territory of the Community will be deducted from the price charged to the independent distributor (see Artide 1 (2) and Article 7 of Regulation No 803/68).

The fact referred to in the second specific question, namely that the commercial level of the buyers may vary, affects the margin which is, if necessary, deducted from the price charged to the distributor.

Regarding the third specific question the Commission maintains that the principle of deduction must largely be looked for in Article 1 (2) of Regulation No 803/68 from which it appears:

that the goods are delivered to the buyer at the place of introduction into the customs territory of the Community;

that the seller bears all costs, charges and expenses incidental to the sale and to the delivery of the goods at the place of introduction, which are hence included in the normal price;

that the buyer bears any duties or taxes applicable in the customs territory of the Community, which are hence not included in the normal price.

The same principles must apply to the price paid or payable (Case 38/77 Enka [1977] ECR 2203, at p. 2214, paragraph 27) as appears from the adjustment provided for in Article 9 of Regulation No 803/68.

The price charged to distributors or to certain other buyers must therefore be reduced by the items relating to handling or similar operations which take place within the customs territory of the Community.

Since the costs of warehousing and preservation are not part of the value for customs purposes, they must be deducted from the price invoiced to distributors to the extent to which they constitute a factor in that price (Article 10 (2) (d) of Directive No 69/74/EEC of 4 March 1969 (Official Journal, English Special Edition 1969 (I), p. 82), judgment of 23 November 1977 in the aforesaid Case 38/77 Enka).

Other expenses appertaining to the activities of the branch in the Member State: this question is governed by Council Directive No 71/235/EEC of 21 June 1971 on harmonization of the provisions laid down by law, regulation or administrative action relating to the usual forms of handling which may be carried out in customs warehouses and in free zones (Official Journal, English Special Edition 1971 (II), p. 398), which in Article 1 lists the usual forms of handling needed to ensure preservation or to improve packaging or marketable quality.

The costs relating thereto are deductible to the extent provided for in Article 10 (2) (d) of the aforesaid Directive No 69/74/EEC.

Should the branch as described in the preamble to the questions not be able to make the parent body a buyer established within the customs territory of the Community, no profit margin connected with the activity of that branch should be deducted from the price invoiced to the distributors or to the buyers.

Should the plaintiff in the main action fall to be regarded through its branch as a “buyer established in the customs territory of the Community” a profit margin may be deducted.

This may be determined by reference to the margin known of independent traders of the same level or an average margin.

In view of these observations the Commission proposes that the second and third questions (as reworded) should be answered as follows:

“Since the costs of warehousing and the usual forms of handling needed to ensure preservation of goods or to improve packaging or marketable quality are not included in the value for customs purposes, they are deductible from the price paid or payable to the extent provided for in Article 10 (2) (d) of Council Directive No 69/74/EEC of 4 March 1969 and to the extent to which they are borne by the buyer. The profit margin attributable to the activities of the branch established in the customs territory of the Community and managed by a subsidiary established outside that customs territory is deductible from the prices charged to distributors or to certain other customers to the extent to which the subsidiary can through the branch be regarded as a ‘buyer established in the customs territory of the Community’within the meaning of Article 1 of Regulation No 603/72.”

III — Oral procedure

At the sitting on 17 January 1980 Caterpillar Overseas, the plaintiff in the main action, represented by Pierre van Ommeslaghe of the Brussels Bar, the Belgian State, the defendant in the main action, represented by D. Derveaux of the Brussels Bar and the Commission of the European Communities, represented by D. Oldekop, acting as Agent, assisted by Francis Herbert of the Brussels Bar, presented oral observations.

The Advocate General delivered his opinion at the sitting on 7 February 1980.

Decision

1. By judgment of 29 June 1979, received at the Court on 20 July 1979, the Tribunal de Première Instance, Brussels, referred to the Court under Article 177 of the EEC Treaty six questions on the interpretation of 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) and Regulation 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 (Official Journal, English Special Edition 1972 (I), p. 156).

2. Those questions have been raised in an action brought by Caterpillar Overseas, a Swiss company, against the Belgian State for an order that the latter refund the customs duties which it is alleged to have levied wrongly on the import into the customs territory of the Community of spare parts for Caterpillar machines and which the plaintiff in the main action paid under protest to avoid legal proceedings.

3. The action concerns the question of the value to be taken as basis for calculating the customs duties on the entry into the EEC of spare parts marketed by Caterpillar Overseas. That company, which is a subsidiary of the American Caterpillar Tractor Company, has its registered office in Switzerland and a branch in Grimbergen, Belgium. According to the judgment making the reference it maintains in substance that the customs long accepted, and rightly so, that the customs duties in question had to be calculated on the prices actually charged to the branch in Belgium by the companies which supplied its spare parts; the spare parts were ordered through the branch from Caterpillar Tractor in the United States or from other subsidiaries of Caterpillar Tractor or even from companies associated with the latter. On the other hand the Belgian customs maintains that the value for customs purposes of the spare parts must be established on another basis which would lead to an increase of 20 % on the price charged.

The concept of value for customs purposes

4. The court first of all puts three questions which it describes as “general” and which concern the relationship between the concept of “normal price”, which constitutes the value for customs purposes of imported goods according to Article 1 of Regulation No 803/68 and that of the “price paid or payable” which in certain circumstances may be accepted as the value for customs purposes according to Article 9 of the same regulation. The first of those general questions is worded as follows:

“In so far as Article 9 of Regulation No 803/68 provides that ‘the price paid or payable may be accepted’(on certain conditions) ‘as the value for customs purposes’, does it give a definition of the value for customs purposes that is independent of or different from the definition given in Article 1 as ‘the normal price’, or does it derogate from Article 1 ?”

5. The aim of Regulation No 803/68 is to ensure the uniform application of the Common Customs Tariff. To this end its provisions aim to avoid arbitrary or fictitious values and to base the value for customs purposes of imported goods on their real value. Article 1 of the regulation translates that idea by providing that the value for customs purposes shall be the normal price, that is to say, the price which the goods imported would fetch on a sale in the open market between a buyer and a seller independent of each other.

6. The main aim of the concept of normal price is to allow the customs authorities to establish, in the interests of the proper levying of customs duties, the true prices of goods where the terms of the transactions to which they relate have been influenced by factors affecting the terms obtaining between contracting parties in the open market.

7. Although Article 9 of Regulation No 803/68 provides that the price paid or payable may be accepted as the value for customs purposes, it is merely accepting a method for calculating the normal price of the goods. It is apparent from Article 9 (1) that the price paid or payable may be accepted only if it corresponds, at the time it is agreed upon, to prices on a sale in the open market between a buyer and a seller independent of each other, and that price is to be adjusted, if necessary, to take account of circumstances of the sale which differ from those on which the normal price is based.

8. It is therefore right to reply to the first general question put by the national court that when Article 9 of Regulation No 803/68 provides that in certain circumstances and subject to certain adjustments the price paid or payable may be accepted as the value for customs purposes, it does not give a definition independent of, or different from, the value for customs purposes by reference to the normal price to which Article 1 of that regulation refers.

9. It follows from that answer that the second and third general questions which are put in the event of the first question's being answered in the affirmative have lost their purpose.

Interpretation of Regulation No 603/72

10. The Tribunal de Première Instance is seeking in the first question referred to as “more specific” clarification on the calculation of the value for customs purposes on the basis of the price paid or payable. Thus the question at (b), which the Court will examine first, asks for an interpretation of Article 1 of Regulation No 603/72, according to which the price paid or payable shall be accepted as the value for customs purposes only if it has been made on a sale to a buyer established in the customs territory of the Community. The court wishes in particular to know whether there is such a sale where the sale is between two companies established outside the customs territory of the Community but where the buyer, a subsidiary of the seller, has a branch established in that territory responsible for ordering the goods from the seller, managing the stock and distributing the goods to customers and in particular to distributors of the goods sold under the trademark of the parent body.

11. In the preamble to the questions the court stresses that it is assuming that the branch is established in the customs territory of the Community and has a large measure of independence in its operations; that it is entered in the commercial register in the Member State in which it is established and constitutes a branch within the meaning of the company law of that country; that it has all the characteristics of a permanent establishment within the meaning of the fiscal law of the country where it is established and the double taxation agreements of the OECD type. It is moreover treated as a permanent establishment by that country, which levies direct taxation on the income arising from its activities as a branch. For that reason it keeps separate accounts as if it had separate personality.

12. According to its recitals Regulation No 603/72 assumes that the concept of the normal price implies a sale concluded with a view to the importation of the goods into the customs territory of the Community and their integration in the economy of that territory and that accordingly the facts necessary for the practical application of such principles can be established only if the price paid or payable which is declared as a basis for determining the value for customs purposes is made to a buyer established in the customs territory of the Community, that is to say, a buyer who has his residence or place of business therein.

13. It follows that the aim of Article 1 of Regulation No 603/72 is to allow the customs authorities to carry out the necessary inspections and checks for applying Regulation No 803/68. That provision takes as basis the sale to a buyer established in the customs territory of the Community and therefore contemplates the position in which the buyer has a genuine place of business in that territory.

14. To meet that requirement it is not necessary that the registered office of the buyer in the case of a company should be in the customs territory of the Community. It suffices that the buyer has an establishment there which carries on activities such as may be exercised by an independent undertaking in the same sector and has its own accounts allowing the customs authorities to carry out the necessary inspections and checks.

15. The appropriate answer to the first question at (b) is therefore that Article 1 of Regulation No 603/72 must be interpreted as meaning that a buyer is established in the customs territory of the Community when he has a genuine place of business there. A company whose registered office is outside that territory meets the requirement when it has inside that territory an establishment which carries on activities such as may be exercised by an independent undertaking in the same sector and has its own accounts allowing the customs authorities to carry out the necessary inspections and checks.

The interpretation of Article 9 of Regulation No 803/68

16. The national court asks in the first specific question at (a) in what circumstances the price paid or payable, to which Article 9 of Regulation No 803/68 refers, corresponds, at the time it is agreed upon, to the price on a sale in the open market between a buyer and a seller independent of each other.

17. According to the plaintiff in the main action a sale to an importer of goods or to its branch by a supplier with which that importer and its branch are associated must be treated as a sale in the open market in every case in which the importer or its branch is acting as an independent trader by reason of the fact that it is not enjoying any financial or commercial advantage in relation to a fully independent buyer because of its association with the supplier.

18. That view is untenable. Although the commercial independence of the buyer in relation to the seller constitutes a necessary condition for treating the price paid or payable as the price charged in a sale in the open market, it is not a sufficient condition. It is apparent from Article 2 (1) of Regulation No 803/68 that for a sale to be treated as a sale in the open market the price agreed must not be influenced by any commercial, financial or other relationship, whether by contract or otherwise, between the seller and the buyer other than the relationship created by the sale itself. Such an influence does not only depend on relationships within an organization of undertakings containing a parent body which supplies goods to a subsidiary which buys them through its branch, but may also arise from a comparison made with the price of identical or similar goods paid by any buyer operating in the territory of importation.

19. That interpretation is in accord, moreover, with the guidelines furnished by the Recommendation of the Customs Cooperation Council of 1 June 1965 concerning the application of the Brussels definition of value for customs purposes. According to the recommendation a sale cannot be treated as a sale in the open market between a buyer and seller independent of each other if the price agreed upon is considerably lower than those at which identical or, failing that, similar goods are being freely sold by other sellers in the same country, at the same time and in the same quantities, to any buyer in the country of importation at the same commercial level as the actual buyer.

20. It is necessary, therefore, to answer the first specific question at (a) to the effect that the price paid or payable within the meaning of Article 9 of Regulation No 803/68 corresponds, at the time it is agreed upon, to prices on a sale in the open market only if the price is not influenced by commercial, financial or other relationships between the seller and buyer other than the relationship created by the sale itself. To determine whether such influence exists it is necessary to consider whether the buyer is commercially independent of the seller and whether the price agreed between them is not appreciably lower than the prices at which identical or similar goods are freely sold at the same time to any buyer in the customs territory of the Community at the same commercial level.

The so-called deductive method

21. The second and third specific questions are put by the court in the event of its declining to base the value for customs purposes of the Caterpillar spare parts on the price paid or payable. They concern possible recourse to another method of calculation and they ask in substance whether the value for customs purposes may be determined on the basis of the prices charged to distributors or to certain other customers, it being understood that those prices may vary according to the commercial level of the buyers, and if so whether it is necessary to take into consideration with a view to their possible deduction from such prices as may be fixed upon in accordance with that method: (a) the costs of warehousing and of preserving the goods; (b) other expenses inherent in the activities of the branch in the Member State; (c) an amount representing the trading profit attributable to the activities of the branch in the Community.

22. It is apparent from the abovementioned considerations that the possibility allowed by Article 9 of Regulation No 803/68 of accepting the price paid or payable as the value for customs purposes, subject to certain adjustments, in no way precludes recourse to other methods of calculating the true value of the imported goods.

23. Thus it is in accordance with that regulation, and in particular Articles 1 and 7 thereof, to calculate the value for customs purposes on the basis of the price at which the goods are resold in unaltered state. Such method nevertheless implies that to obtain the value for customs purposes the price of resale should be reduced by the costs incurred by the buyer-reseller in respect of transactions within the customs territory of the Community.

24. It follows that the costs of warehousing and preserving and the other expenses inherent in the activities of the buyer in the customs territory must be deducted from the resale price to arrive at a value for customs purposes which corresponds to the true value of the goods.

25. For the same reason an amount representing the profit margin attributable to the activities of the buyer-reseller may be deducted where the buyer has a certain commercial independence of the seller and where the profit margin corresponds to the average profit margin observed at the same commercial level in the same trade.

26. Therefore the second and third specific questions put by the national court call for an answer to the effect that it is in accordance with Regulation No 803/68 to calculate the value for customs purposes on the basis of the price at which the goods are resold in unaltered state after deduction of all the costs incurred by the buyer-reseller in respect of transactions within the customs territory of the Community and, where necessary, an appropriate profit margin.

Costs

27. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and as the 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 (First Chamber), in answer to the questions referred to it by the Tribunal de Première Instance, Brussels, by judgment of 29 June 1979, hereby rules:

1 When Article 9 of Regulation No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes provides that in certain circumstances and subject to certain adjustments the price paid or payable may be accepted as the value for customs purposes, it does not give a definition independent of, or different from, the value for customs purposes by reference to the normal price to which Article 1 of that regulation refers.

2 Article 1 of Regulation 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 must be interpreted as meaning that a buyer is established in the customs territory of the Community when he has a genuine place of business there. A company whose registered office is outside that territory meets the requirement when it has inside that territory an establishment which carries on activities such as may be exercised by an independent undertaking in the same sector and has its own accounts allowing the customs authorities to carry out the necessary inspections and checks.

3 The price paid or payable within the meaning of Article 9 of Regulation No 803/68 corresponds, at the time it is agreed upon, to prices on a sale in the open market only if the price is not influenced by commercial, financial or other relationships between the seller and the buyer other than the relationship created by the sale itself. To determine whether such influence exists it is necessary to consider whether the buyer is commercially independent of the seller and whether the price agreed between them is not appreciably lower than the prices at which identical or similar goods are freely sold at the same time to any buyer in the customs territory of the Community at the same commercial level.

4 It is in accordance with Regulation No 803/68 to calculate the value for customs purposes on the basis of the price at which the goods are resold in unaltered state after deduction of all the costs incurred by the buyer-reseller in respect of transactions within the customs territory of the Community and, where necessary, an appropriate profit margin.