JUDGMENT OF 27. 5. 1982 — CASE 113/81 REICHELT v HAUPTZOLLANrr BERLIN-SÜD

In Case 113/81 REFERENCE to the Court under Article 177 of the EEC Treatv by the Finanzgericht [Finance Court] Berlin tor a preliminary ruling in the action pending before that court between

THE COURT (First Chamber) composed of: G. Bosco, President of Chamber, A. O'Keeffe and T. Koopmans, Judges, Advocate General: S. Rozes Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

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

I — Facts and written procedure

I Otto Reichelt GmbH, the plaintiff in the main action, runs a chain of retail procer. shops. I*. imports raw cofiee which it stores in its approved unbonded customs warehouse [“Offenes Zollager”] from which it then takes the quantities of coffee it requires for placing on the open market. Each month it declares to the customs authorities the quantity of coffee which it has taken out of the warehouse, calculates the impon duty chargeable thereon and pavs that duty, in the amount calculated by it, to the Hauptzollamt. the delendant in the main action, provided the defendant does not fix a different amount.

Between 1 January 1977 and 31 December 1978 the plaintiff declared the coffee, which was subject at the time to customs duty at the rate of 5%, at the rate of 7o/o and paid the defendant the corresponding amount. The defendant did not immediately notice the error, nor was it discovered during an external audit which was commenced on 31 May 1977 and which covered the period from January 1976 to 30 June 1977. It was not until January 1979 that the plaintiff was informed by the defendant that owing to a suspension of customs duty on raw coffee the rate of duty was only 5%.

The applicant therefore submitted an application on 9 February 1979 for remission of the duties, the sum concerned being DM 255027.63, as a result of which the defendant refunded part of the excess duty amounting to DM 103240.34. By a decision of 7 March 1979 the defendant refused to refund the rest of the amount claimed on the ground that the claims were timebarred pursuant to Articles 164 (2), 169(1) and 170 of the Abgabenordnung [Revenue Code]. The unsettled claims concerned some twelve amounts of duty declared and paid in the course of the period between Februarv 1977 and January 197S, totalling DM 151792.3C.

On 28 March 1979 the plaintiff lodged an application pursuant to Article 227 of the Abgabenordnung seeking the equitable remission of the amounts not reimbursed. The defendant rejected the application by a decision of 6 April 1979, relying upon the Įudgmeni given bv the Court on 28 June 1977 in Case 1Í8/76 to the effect that a national customs authority is not entitled to apply the provisions of its national law to an application for exemption, on grounds ot natural lusuce. from charges due under Communitv law. in so far as to apply national law would alter the effect of the Community rules relating to the basis of assessment, the manner of imposition or the amount of the charge in question ([1977] ECRp. 1177).

2. Subsequently the plaintiff in the main action brought an action before the Finanzgericht Berlin seeking an order compelling the defendant to reconsider its application for the remission of duty. It claimed that its application fulfilled the conditions for remission on equitable grounds of customs duty overpaid. The judgment of the Court in Case 118/76 cited by the defendant has no application in this case since the remission of duty-overpaid, which is not provided for by-Community law, cannot affect the operation of the relevant provisions of Community law. The errors in its customs declarations, which remained undetected by the defendant for 23 months, were excusable in view of the profusion of customs provisions. It was not possible for the increased duty to be passed on to consumers since sale prices on the coffee market are determined solely by the state of competition. The Customs Office, the defendant in the main action, contended that objectively it was not inequitable to maintain demands for duties finallyassessed. It conceded that the customs officials responsible for checking accounts, and the external audit, did not notice the incorrect rate of duty. However, it must be remembered that it was the plaintiff itself which was responsible for entering the wrong rate of duty in its customs declarations and that it probablv passed on the increased dut)- to consumers without itself incurring any financial loss. By an order dated 2 April 1981 the Finanzgericht referred the following question to the Court for a preliminary ruling pursuant to the second paragraph of Article 177 of the Treaty: In the grounds of the order making the reference the Finanzgericht points out that the principles which emerge from the decisions of the Court of Justice cannot be applied as they stand to the sum in dispute, which results from an overpayment of customs duties. The question of the repayment or remission of customs duties has in the meantime been made subject, as regards Community law, to the operation of Council Regulation (EEC) No 1430/79 of 2 July 1979, although that regulation by virtue of Article 27 thereof did not take effect until 1 July 1980. The Finanzgericht considers that the material question, for the purposes of the decision to be arrived at, is whether remission of duty under national law is barred in cases occurring before 1 July 1980 for accounting purposes, and is of the opinion that the question requires a preliminary ruling pursuant to the second paragraph of Article 177 of the EEC Treaty. It points out that under Article 227 of the Abgabenordnung remission of customs duty may be permissible on objective grounds if the defendant has substantially contributed to the loss of entitlement and if the plaintiff was responsible merely for an excusable error.

“Does Community law, in particular Article 27 ol Council Regulation ( EEC i No 143C/79 of 2 july 1979 (Official Journal, L 175, p. 1), prohibit the repavment under national revenue law (in this case Article 227 of the Abgabenordnung [Revenue Code] 1977; of customs duty overpaid but no longer subject to appeal, in cases entered into the accounts before 1 July 1980?”

3. The order of the Finanzgericht dated 2 April 1981 referring the matter to the Court of Justice was lodged at the Court Registry on 11 May 1981. Pursuant to Article 22 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted b\the Commission of the European Communities, represented by its Legal Adviser, Peter karpenstein On hearing the repon of the ludge-Rapponeur and the views of the Advocate General the Coun decided to open the oral procedure without any preparator.- inquin. By order of the Court of 26 October 1981 the case was assigned to the First Chamber pursuant to Article 95 (1) and (2) of the Rules of Procedure.

II — Summary of the written observations submitted to the Court

The Commission of the European Communities observes that the question which has been referred to the Coun for a preliminary ruling raises rwo distina points, namely:

a) whether Regulation No 1430/79 and its implementing regulation, Commission Regulation No 1575/80 (Official Journal 1980, L 161, p. 13) establishing equitable principles to apply at Community level from 1 July 1980, extend to cases in which the duty which is the subject of proceedings initiated to obtain its repavment was recorded in the accounts prior to the entry into force of those regulations; and

b) whether the uniform applicatoin of Community law is also affected by the application of a national equitable rule even if the repayment in question is merely that of a sum considered objectively by Community law as not due.

As to Point (a)

The Commission's view is that notwithstanding the fact that the procedure for obtaining the remission of customs durv on equitable grounds continued after 1 July 1980. neither the substantive rules contained in Article 13 of Regulation No 1430/79 nor the procedural rules contained in Commission Regulation No 1575/80 can apply in the present instance because the dunes at issue in the main action were entered in the accounts in the course of 1977 and 1978.

The Commission points out, first, that there is no provision in the regulations referred to above which justifies the assumption that they have retroactive effect, even in the sense that they may apply to events which occurred prior to their entry into force. It concedes that Regulation No 1575/80, which lays down detailed rules for the remission on equitable grounds provided for in Article 13 of Regulation No 1430/79, contains primarily rules of a procedural nature. However, the principle that in the absence of special provision new procedural rules shall apply even to events already in progress prior to their entry into force cannot be relied upon in the light of the regulations in question.

The procedural provisions contained in Regulation No 1575/80 cannot be divorced from the substantive provisions of Regulation No 1430/79. The two regulations form a new and comprehensive body of rules which is intended to be substituted at a specific date for national rules in that sphere which had hitherto differed considerably. In those circumstances the presumption that the new rules of procedure are an improvement on the old cannot apply with regard to the entirety of the new rules, in which the procedural rules are indissolubly bound up with the substantive provisions.

Furthermore, if the new rules were to be applied to duty which was determined prior to 1 July 1980 considerable uncertainty would arise as to the law, and this would affect not only national legislation under which the conditions for repayment in force before 1 July 1983 were more restrictive than those provided for under Regulation No 143C/79, but also the more liberal legislation in force in certain of the Member States.

Finally, the Commission emphasizes the parallel which exists between the aforementioned regulation and Council Regulation No 1687/79 of 24 July 1979 on the post-clearance recoven 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 (Official Journal, L 197, p. 1). It recalls that in the observations submitted by it in Joined Cases 212 to 217/80 it put forward with regard to that regulation an argument similar to that which it puts forward in the present instance. As in the case of Regulation No 1697/79 the Committee on Duty-Free Arrangements adopted a unanimous decision to the effect that Regulation No 1430/79 could not apply to duties entered in the accounts prior to 1 July 1980.

As to Point (b)

As to the conditions governing the application of a national equitable rule the Commission refers first to the recent case-law of the Court of Justice to the effect that the application of national rules is permissible where there are no appropriate provisions of Community law provided that for claims based on Community law the national rules are not less favourable than for similar claims based on infringements of national provisions (see for instance, inter alia, Case 130/79, Express Dairy Foods[l9iC] ECR 18S7).

However, the application of national law cannot result in altering the scope of anv provision of Communitv law see Case 40/69, Bollmann [1970] ECR 69 and Case 74/69, Krohn [197C] ECR 451). In Case 18/72 (Granano [1972] ECR 1163) and Case 118/76 (Balkan [1977] ECR 1177) the Court followed that principle precisely in the case of national equitable rules, although those rules were relied upon in both cases in respect of duties which had been determined by the proper application of Community law. To grant a remission of such duties on the basis of a national equitable rule would therefore have amounted to an arbitran intervention directly affecting the scope of Community law.

In the present case, by contrast, the application for remission of duty on equitable grounds concerns solely payments which may be objectively considered as overpayments which would not have been made had Community law been correctly applied. The independent nature and the supremacy of Community law are therefore in no way placed at issue.

In consequence, the Commission takes the view that there is nothing in Community law to prevent application of a national rule allowing for the remission of duties on equitable grounds in the case of customs duties fixed at a rate which was objectively too high and which were collected prior to 1 July 1980.

It points out, however, that the conditions governing the remission of such duties on equitable grounds under national law must not be more generous than those governing similiar applications for repayment of duties imposed by national law.

In the same context, the Commission observes that the amounts claimed by the plaintiff in the main action, the calculation of which is not technically open to obiection. form pan of the Community's own resources by virtue of Regulation No 2/71 of the Council of 2 January 1971 implementing the Decision of 21 April 1970 on the replacement or financial contributions from Member States by the Community's own resources (Official Journal. English Special Edition 1971 (I). p. 3). replaced with effect from 1 January 1978 bv Council Regulation No 2891/77 of 19 December 1977 (Official Journal, L 336, p. 1). That does not prevent the competent department of the Member State in question from revising, pursuant to Articles 1 and 2 of each of the abovementioned regulations, the own resources established in accordance with the relevant national provisions laid down by law, regulation or administrative action. In the present case, the rectification may be accomplished by-applying a national equitable rule.

The conclusion reached by the Commission on the basis of the foregoing is that whilst Community law does not prevent the remission of customs duties which may be considered objectively too high and which were determined prior to 1 July 1980, pursuant to a national equitable rule, the conditions governing such a remission must be applied as strictly as in comparable instances involving national law. It draws attention in that regard to the fact that the national authorities are prohibited, in the case of individual rights derived from Community law, from applying to the detriment of their citizens national rules more stringent than those applied by them to corresponding rights based on provisions of national law.

That aspect may call for consideration of whether the plaintiff has been able to pass on to its customers the customs duties overpaid by it, in which case it will have suffered no damage.

III — Oral procedure

At the sitting on 4 February 1982, the Commission of the European

Communities, represented by Peter Karpenstein, Legal Adviser to the Commission, presented oral argument.

The Advocate General delivered her opinion at the sitting on 1 March 1982.

Decision

1. By an order dated 2 April 1981, which was received at the Court on 11 May 1981, the Finanzgericht Berlin referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Community law, in particular Article 27 of Council Regulation (EEC) No 1430/79 of 2 July 1979 on the repayment or remission of impon or export duties (Official Journal 1979, L 175, p. 1).

2. The question was raised in connection with an action brought by a company specializing in the retail grocery trade against the refusal of the German customs authorities to remit on equitable grounds customs duties overpaid.

3. The order making the reference states that in 1977 and 1978 the company in question paid impon duty on raw coffee at a rate of 7 %, whereas the rate applicable at the time was only 5 % as a result of a suspension of duty. The competent customs authorities repaid pan of the amount overpaid but refused to repay the rest on the ground that the period prescribed for the repayment of customs duties under the relevant German legislation had expired. The company then claimed, under Article 227 of the Abgabenordnung [German Revenue Code] in the version in force as from 1 January 1977, the remission on equitable grounds of the amount outstanding.

4. The customs authorities refused to allow it the benefit of the German equitable rules on the ground that it was precluded from doing so by Communitv law. In that regard, thev relied on the judgment of the Coun of 2S June 1977 in Case 118/76 (Balkan Import-Export [1977] ECR 1177). In the action which it brought against that decision the company contended that the judgment cited above did not preclude the remission of customs duties overpaid.

5. The Finanzgericht found that repayment and remission, where no customs debt existed or where the assessment of customs duties lawfully due was excessive were governed bv Regulation No 143C/79. which, according to Article 27 thereof, entered into torce on 1 July 19SC.

6. In those circumstances, the Finanzgericht referred the following question to the Court of Justice for a preliminary ruling:

“Does Community law, in particular Article 27 of Council Regulation (EEC) No 1430/79, prohibit the repayment under national revenue law (in this case Article 227 of the Abgabenordnung) of customs duty overpaid but no longer subject to appeal, in cases entered into the accounts before 1 July 1980?”

7. It is clear from the aforementioned judgment of 28 June 1977 that in the absence of relevant Community legislation, the national customs authorities may apply the provisions of their national law to a claim for remission on equitable grounds of charges due under Community law, provided that the application of those provisions does not alter the effect of the rules of Community law relating to the basis of assessment, the manner of imposition or the amount of the charge in question.

8. The claim for remission on equitable grounds referred to by the national court relates to sums which should unquestionably not have been paid had Community law been correctly applied.

9. In those circumstances, the rules of Community law relating to the basis of assessment, the manner of imposition or the amount of customs duty are in no way affected by the application of a provision of national law concerning the remission of customs duty on equitable grounds, provided however that the conditions for such remission are the same as those applied to claims for the remission of charges imposed by national law.

10. That being the position in the absence of relevant provisions of Community law, it is appropriate to consider whether Regulation No 1430/79, Article 1 of which lavs down the conditions under which the competent authorities are to repay or remit impon or export duties, applies to the case referred to by the national court.

11. The contested decision whereby the customs authorities refused to apply Article 227 of the Abgabenordnung was adopted on 6 April 1979. Regulation No 1430/79 entered into force on 1 July 1980 in accordance with Article 27 thereof. It does not contain any transitional provisions.

12. Thus the question raised by the national court seeks in effect to ascertain whether Regulation No 1430/79 has retroactive effect in the sense that its provisions are applicable to a decision on the remission of customs dunadopted by the national customs authorities before 1 July 1980.

13. The purpose of Regulation No 1430/79 is to replace the relevant national legislation with Community legislation. It contains a set of rules which form an indivisible whole and the individual provisions of which may not be considered in isolation, with regard to the time at which they take effect.

14. There are no sufficiently clear indications, either in the wording of the regulation or in the objectives which may be inferred from the preamble and from the general scheme of the regulation, to justify the conclusion that it provides otherwise than for the future.

15. Thus, according to generally recognized principles of interpretation, the provisions of Regulation No 1430/79 cannot be considered to apply retroactively to decisions adopted by the competent authorities before the entry into force of the regulation.

16. Therefore the question raised should be answered as follows: In the absence of relevant Community legislation, a national customs authoritv mav apply the provisions of its national law to a claim for remission on equitable grounds of customs duties paid in excess of the amount due. The conditions for such remission must be the same as those applied to claims for the remission of charges imposed by national law. The provisions of Regulation No 1430/79 do not apply to a decision concerning the remission of customs duties adopted by the national customs authorities before the entry into force of the regulation.

Costs

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

On those grounds, THE COURT (First Chamber), in answer to the questions submitted to it by the Finanzgericht Berlin by order of 2 April 1981, hereby rules:

1 In the absence of relevant Community legislation, a national customs authority may apply the provisions of its national law to a claim for remission on equitable grounds of customs duties paid in excess of the amount due. The conditions for such remission must be the same as those applied to claims for the remission of charges imposed by national law.

2 The provisions of Regulation No 1430/79 do not apply to a decision concerning the remission of customs duties adopted by the national customs authorities before the entry into force of the regulation.