Report for the Hearing delivered in Case 212/88

I — Facts and procedure

In 1976 and 1977, Mr Levy and Mr Bazini, the accused in the main proceedings, sold textile products in France through the Belgian companies Belgium American Corporation and Incotex. The sale to French customers was made though a limited liability company incorporated under French law, called Dorotex. Between 8 March 1976 and 31 May 1977, Dorotex had 22 import declarations relating to Belgian articles with a customs value of FF 3998357 lodged with the customs authorities by its customs agent. The goods imported in reusable cardboard boxes or cardboard boxes marked ‘Belgium’ had been manufactured in South Korea, Taiwan or Pakistan and had been released for free circulation in Belgium.

It is apparent from the ‘Notice to importers of products not originating in Member States of the EEC in respect of which the benefit of the Community system is applied for (free circulation)’, published on 24 February 1974 in the Journal officiel de la République française, that at the time importation into France was conditional on submission of an AC licence in the case of ‘products for which the liberalized regime is not applicable for the country of origin’. According to the order for reference, the goods in question in this case were not liberalized. The accused were accordingly prosecuted for importing prohibited goods, contrary to Article 426(2) and (3) and Article 414 of the French Customs Code.

When the case came before it, the cour d'appel (Court of Appeal), Paris, decided to stay the proceedings, taking the view that it was appropriate to submit to the Court the following question for a preliminary ruling:

‘Do the requirements of the French legislation and rules concerning the importation into France of textile goods coming from nonmember countries and put into free circulation in one of the Member States of the EEC which, on the one hand, oblige importers of such goods in France to obtain an import licence in advance and, on the other hand, define the statements which, subject to the penalties provided for in Article 414 of the French Customs Code, must be included in declarations in respect of imports into France, constitute quantitative restrictions prohibited by Article 30 of the EEC Treaty by virtue of the general principles of Community law as they stand at present?’

The order for reference from the cour d'appel, Paris, was lodged at the Court Registry on 2 August 1988.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the Government of the French Republic, represented by M. Belliard, acting as Agent, and by the Commission of the European Communities, represented by Mrs Berardis-Kayser, a member of its Legal Department, acting as Agent.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure with any preparatory inquiry.

By order of 15 March 1989, the Court decided, pursuant to Article 95(1) and (2) of the Rules of Procedure, to assign the case to the Third Chamber.

II — Written observations submitted to the Court

1. The French Government considers that, in its question, the cour d'appel is essentially asking the Court whether Community law prohibited a Member State in 1976 to 1977, first, from making imports of textile products coming from nonmember countries and put into free circulation in another Member State subject to the issue of an import licence and, secondly, from imposing the penalties provided for in Article 414 of the Customs Code on persons who make false import declarations. According to the French Government, both those questions should be answered in the negative. (a) The French Government maintains, in particular, that, by Decision 71/202/EEC of 12 May 1971 (Official Journal, English Special Edition 1971 (I), p. 343), as amended by Decision 73/55/EEC of 9 March 1973 (Official Journal 1973, L 80, p. 22), the Commission had authorized the Member States, on the basis of Article 115 of the Treaty, to adopt interim protective measures with regard to the importation of certain products originating in nonmember countries and put into free circulation in another Member State. The French Government considers that by virtue of those decisions at the material time a Member State was justified in subjecting imports into France of products coming from nonmember countries and put into free circulation in another Member State to the issue of an import licence on condition that the products in question coming directly from the nonmember countries concerned were themselves subject to quantitative restrictions or to voluntary-restraint arrangements, in conformity with the Treaty. As for the Community provisions which were applicable to direct imports of the products in question at the material time, the French Government contends that, in so far as those products are not included in Annex I to Regulation (EEC) No 1439/74 of the Council of 4 June 1974 on common rules for imports (Official Journal 1974, L 159, p. 1), direct imports were subject to quantitative restrictions in conformity with the Treaty and that France was entitled, at the material time, to require a licence for imports of the products in question coming from nonmember countries and put into free circulation in another Member State. (b) As for the compatibility with Community law of legislation which imposes on persons who make false import declarations the penalties provided for in Article 414 of the French Customs Code, the French Government points out that, in this case, the importer was well aware of the true origin of the products in question and that he declared a Community origin which he knew was incorrect intentionally and with the evident purpose of deceiving the customs authorities. If it is accepted that a fraudulent person must be penalized much more severely than a trader acting in good faith, the customs authorities were justified in recommending the application of Article 414 of the Customs Code while the possibility remains for the national court to vary the penalties on the basis of any mitigating circumstances established. The French Government therefore asks the Court to answer the question submitted by the cour d'appel, Paris, by stating that Community law did not prohibit, at the material time, a Member State from: (i) subjecting imports of textile products coming from nonmember countries and put into free circulation in another Member State to the issue of an import licence; or (ii) imposing on persons making false import declarations penalties such as those provided for in Article 414 of the French Customs Code, where the errors or omissions at issue were made deliberately with a fraudulent purpose.

2. The Commission considers that the question submitted for a preliminary ruling seeks to ascertain whether Article 30 of the Treaty must be interpreted as precluding national rules which make the importation of textile products originating in a nonmember country and put into free circulation in another Member State of the Community to the requirement of a prior licence and a system of declarations of origin, backed by the threat of criminal penalties. (a) The Commission points out in that regard that the Court has consistently held, since its judgment of 15 December 1971 in Joined Cases 51 to 54/71 International Fruit Company [1971] ECR 1107, that Articles 30 and 34 of the Treaty preclude the application to intra-Community trade of a national provision which requires, even purely as a formality, import or export licences or any other similar procedure. This case is concerned with products put into free circulation. The Commission concludes that, in the first place, in accordance with Article 9(2) of the Treaty, measures liberalizing intra-Community trade apply to those products in the same way as to products originating in a Member State, and secondly the same article prohibits any administrative measure designed to apply different rules on the movement of products according to their place of origin (judgment of 15 December 1976 in Case 41/76 Donckerwolcke [1976] ECR 1921). The Commission contends that the position would be different only if the Member State had been authorized by the Commission on the basis of Article 115 of the Treaty to adopt during the material period supervisory or protective measures against the products in question. The Commission notes that in view of the fact that the Community's commercial policy was still incomplete on the expiry of the transitional period and in view of the risk of distortions of trade and of economic difficulties resulting for the Member States from those differences in commercial policy, it had empowered the Member States ‘to take interim protective measures with regard to the importation of certain products originating in third countries and put into free circulation in other Member States’ (Decision 71/202/EEC, cited above). The Commission points out that the system established on the basis of that decision was to be limited to supervision alone and could not give rise to a prohibition on the importation of a product that was in free circulation. However, where a Member State found that an import was capable of giving rise to deflections of trade that were likely to prevent the implementation of a measure of commercial policy taken in accordance with the Treaty, it could ask the Commission to apply the first paragraph of Article 115 of the Treaty. Genuine protective measures could then be adopted whereby the Commission could authorize a Member State to discontinue the issue of import licences. The Commission adds that from March 1976 to May 1977 (the material period) the French Republic was thus authorized to adopt protective measures against certain textile products coming from South Korea. (b) The problem of penalties should, in the Commission's view, be resolved in the light of the foregoing considerations. On the basis of the principle that a measure which may or does in fact give rise to a restriction on imports of products put into free circulation in another Member State is incompatible with Community law, any criminal penalty for failure to comply with such a measure is similarly incompatible with the same provisions of Community law. If, however, there were a derogation from that fundamental freedom (for example pursuant to Article 115 of the Treaty) the Member State concerned could not apply without distinction the penalties provided for false declarations made in order to effect prohibited imports and a mere inaccuracy in the declaration made in connection with an import which could not itself be prohibited and where the production of documents served only to ascertain the movement of goods. In the latter case, the infringement is merely administrative and any excessive penalty would thus, as the Court has consistently held, fall within the prohibition laid down by Article 30 (judgment of 15 December 1976 Donckerwolcke, cited above; judgment of 28 March 1979 in Case 179/78 Rivoira [1979] ECR 1147). The Commission therefore suggests that the question submitted for a preliminary ruling should be answered as follows:

‘Article 30 of the EEC Treaty precludes the enactment of a system entailing the issue of an import licence with a declaration of origin for products originating in a nonmember country and put into free circulation in another Member State, unless the Member State of importation has been authorized by the Commission on the basis of Article 115 of the Treaty to adopt supervisory or protective measures. If such an authorization has been given, however, the Member State cannot apply penalties which are not differentiated according to whether the trader has made false declarations in order to effect prohibited imports or there was an inaccuracy in the declaration made in connection with an importation which falls merely within the system for monitoring the movement of goods’.

M. Zuleeg

Judge-Rapporteur

1 Language of the case: French.