84/79 · GlobalLawDB

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In Case 84/79REFERENCE to the Court, under Article 177 of the EEC Treaty by the Bundesfinanzhof [Federal Finance Court] for a preliminary ruling in the action pending before that court betweenRichard Meyer-Uetze KGandHauptzollamt (Principal Customs Office) Bad Reichenhall,THE COURT (Second Chamber)composed of: A. Touffait, President of Chamber, P. Pescatore and O. Due, Judges,Advocate General: G. ReischlRegistrar: A. Van Houttegives 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 Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I —Facts and procedure

1.Article 1 of Regulation (EEC) 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) provides :1. For the purpose of applying the Common Customs Tariff, the value for customs purposes of the 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;...”Article 6 (1) of the same regulation provides that [for the purposes of Article 1 (2) (b)] the place of introduction into the customs territory of the Community shall be:“...(c) for goods carried by rail, inland waterway or road, the place where the first customs office is situated;...”The costs, charges and expenses mentioned in Article 1 (2) (b) include inter alia the transport costs to which Article 8 of the said regulation, which reads as follows, applies:1. Where goods are carried by the same means of transport to a point beyond the place of introduction into the customs territory of the Community, transport costs shall be assessed in proportion to the distance covered outside and inside the customs territory of the Community, unless evidence is produced to the customs authorities to show the costs that would have been incurred under a general compulsory schedule of freight rates for the carriage of the goods to the place of introduction into the customs territory of the Community....2. Where goods are invoiced as a uniform free domicile price which corresponds to the price at the place of introduction, transport costs within the Community shall not be deducted from that price. However, such deduction shall be allowed if evidence is produced to the customs authorities that the free-frontier price would be lower than the uniform free domicile price....”

2.The firm Richard Meyer-Uetze KG, the plaintiff in the main action in this case applied between 6 March and 11 November 1972 to the customs office Freilassing-Saalbriicke, which comes under the Principal Customs Office, Bad Reichenhall, the defendant in the main action in this case, for 15 consignments of deep-frozen fruit and vegetables imported by road from Hungary to be cleared for free circulation.Meyer-Uetze declared on this occasion certain values for the free domicile price and calculated the internal transport costs in accordance with the official road transport tariff. The customs office established that the goods had been invoiced at the same price whatever their destination might be. On the basis of the first sentence of Article 8 (2) of Regulation No 803/68 it therefore considered that the transport costs within the Community were not deductible because the prices applied were uniform free domicile prices.When the plaintiff in the main action objected it produced a certificate from the general agent of the Hungarian suppliers certifying that the invoiced prices included a fixed sum of DM 62 per tonne for transport within the Federal Republic of Germany. According to the said plaintiff this is corroborated in a letter from the supplier of 30 August 1972 according to which the delivery prices included an average fixed sum of DM 62 per tonne. The defendant in the main action overruled the objection.The plaintiff in the main action appealed to the Finanzgericht [Finance Court], Munich. On this occasion it also produced documents in which a freight supervision authority (Frachtenprüfungsstelle) calculated that average internal transport costs were DM 70.30 per tonne. The Finanzgericht dismissed the action on the ground that it had been proved that uniform prices within the meaning of Article 8 (2) of Regulation No 803/68 were applied and that no evidence had been produced that a different and lower free frontier price had been charged. Statements, the accuracy of which is not susceptible of verification cannot by themselves prove the facts which have been relied upon.The plaintiff in the main action then appealed to the Bundesfinanzhof [Federal Finance Court] its principal submission being that the Finanzgericht was wrong to regard the letter of 30 August 1972 produced by the plaintiff as a statement which is not verifiable. This letter is not a vague statement but a formal certificate that the Hungarian supplier, when delivery of the goods was taken free-frontier, charged the plaintiff in the main action a price DM 62 per tonne lower than the selling price which was in fact agreed. Finally the Finanzgericht had to take into consideration the fact that this deduction corresponded to the lawful German scheduled-charges for the carriage of goods by road.

3.By an order of 24 April 1979 the Bundesfinanzhof stayed proceedings and made a reference to the Court of Justice for a preliminary ruling in accordance with Article 177 of the EEC Treaty on the following questions:1. Must the words ‘uniform free domicile price’ in Article 8 (2) of Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes be interpreted as meaning that such price must be uniform for all destinations within the customs territory of the Community?2. If the answer to Question 1 is in the affirmative, may the fact that uniform free domicile prices apply to only one Member State be taken into account, and if so how?3. How is the second sentence of Article 8 (2) of Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes to be interpreted in relation to the requirements with regard to the evidence to be produced?”

4.As far as concerns the question in the order making the reference whether the first sentence of Article 8 (2) of Regulation No 803/68 applies in this case the Bundesfinanzhof makes the following observations:“Article 8 deals specifically with the treatment for the purposes of customs valuation of the costs of transport outside and inside the customs territory of the Community. The first paragraph governs the apportionment of those costs in relation to the distances covered outside and inside the customs territory of the Community ... The second paragraph lays down the conditions on which transport costs within the Community may be deducted from a uniform free domicile price. It is therefore reasonable to apply the concept ‘uniform free domicile price’ also within the territory of the Community and to interpret it as constituting a price which is calculated uniformly for all places within the Community at the same level, without regard for the transport costs which are in fact payable. Nevertheless, the view has also been put forward that the price only has to be uniform for specific places inside a price-zone within the territory of the Community and that it may, for example, vary in the case of individual Member States, provided that it always corresponds to the price at the place of introduction ...”The Bundesfinanzhof goes on to say:“Another question arises in this connexion, namely how the evidence in both cases is to be produced. The Senate considers that the provisions in the second sentence of Article 8 (2) of Regulation No 803/68 would be superfluous if it were merely necessary to produce evidence that in calculating the uniform free domicile price an average sum in respect of transport costs had been included. It goes without saying that where there is a uniform free domicile price relating to various destinations the (various) transport costs must always be included. Accordingly, the provision can only be interpreted as meaning that evidence must be produced as to how high the price at the place of introduction would be if a specified average amount, evidence of which must be produced, were deducted from the uniform free domicile price. It would, however, be necessary to ensure with regard to such evidence that the average amount was not manipulated by acceptance of higher transport costs within the Community.”

5.The order of the Bundesfinanzhof was registered at the Court Registry on 25 May 1979.In accordance with Article 20 of the Protocol on the Statute of the Court of Justice the Commission of the European Communities, represented by its Legal Adviser, R. Wagenbauer, acting as Agent, assisted by W. Schürmann of the Frankfurt am Main Bar and H. Glashoff, tax adviser, submitted written observations.After 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 of 18 October 1979 the Court, pursuant to Article 95 (1) of the Rules of Procedure, decided to assign the case to the Second Chamber.

II —Written observations submitted by the Commission

1. The first question for a preliminary ruling

The Commission takes the view that Article 8 (2) of Regulation No 803/68 must be interpreted with reference to the basic rule contained in Article 1 of that regulation.The Commission points out that when Article 1 (2) (a) provides that for the purpose of calculating the normal price regard must be had to “the place of introduction into the customs territory of the Community” it only defines the place of delivery and not the place which is determinative for assessing value for customs purposes. From the point of view of assessing the latter two importers, one near to and the other far from the frontier, will only receive equal treatment if the conditions of sale (for example market/price zone, marketing stage, time, quantity) are the same. Consequently, if a price to be paid includes transport costs within the Community, that part of the actual costs attributable to transportation within the Community must be deducted in order to determine value for customs purposes; this follows from Article 8 (1) of Regulation No 803/68. In the case of a composite free domicile price only that part of the costs which is in fact included in the price may be taken into account for the purposes of deduction.On the other hand fictitious transport costs — those, for example, which result from a scheduled rate, but which have not in fact been charged — are not deductible. The same applies in the case of the actual transport costs, part of which the supplier charges to other purchasers and this is exactly what happens in the case of uniform prices which are obtained by a composite calculation and generally include transport costs which are too high in the case of a purchaser near the frontier and too low in the case of one far from the frontier. Since in the case of uniform prices the customs authorities do not know the transport costs actually included in that part of the price attributable to transportation within the Community the legislature has, for pragmatic reasons, provided in the first sentence of Article 8 (2) of Regulation No 803/68 that, in principle, where there is a uniform price, transport costs shall not be deducted from that price. Only if evidence is produced to the customs authorities that in the event of a free-frontier sale the free-frontier price would be lower, and this would disclose the fixed sum included in the price by way of transport costs, is it possible to deduct this amount from the uniform free domicile price by virtue of the exception contained in the second sentence of Article 8 (2).So, in order to delimit the field of application of Article 8 (2) of Regulation No 803/68, it is only necessary, in the view of the Commission, to determine whether it has been proved that, in this case, the free domicile price — the place of destination being other than the frontier — is the same as the price at the place of introduction where the goods which have to be valued for customs purposes have in fact been introduced into the customs territory of the Community. On the other hand it is irrelevant in this case to determine whether the free domicile price is the same at all the other places of destination within the customs territory of the Community or within the customs territory of the importing Member State. By reason of its definition a uniform price must be regarded as the same in all the places of destination within the same regional or supraregional market. But the boundaries of this territory do not have to be determined by the customs office if, as a result of the application of a uniform price at the place or introduction, it is proved that such uniform prices do not in principle include transport costs calculated according to the actual distance covered but include costs which are higher or lower.The Commission emphasized that Article 1 (2) (b) of Regulation No 803/68 leads to the same result in so far as it provides that under the ideal conditions of sale which are used as the criterion for determining value for customs pruposes “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.”The Commission goes on to say that although Article 8 (2) of Regulation No 803/68 mentions, on the one hand, “the price at the place of introduction” and, on the other hand, “the free-frontier price”, the fundamental reason for this is that the term “free-frontier” may be applied to a price at the place of introduction as well as at the place of destination other than the frontier. In order to determine value for customs purposes when goods are delivered to places of destination other than the frontier which may be in other Member States or in markets other than the place of introduction, it is not enough to fix a fictitious price at the place of introduction. On the contrary account must be taken of the factors which have an effect on price formation in the area where the place of destination is situated and this price is applied. The place of introduction into the Community is only taken for determining delivery costs. Consequently delivery costs within Community territory are calculated starting with the place of introduction. However, in practice, transport costs from the frontier and from the place of introduction are regarded as being the same if there is no evidence of any substantial difference.But according to the Commission it is not enough to calculate any free-frontier price of any Member State of the Community; on the contrary the declarant for customs purposes must give the free-frontier price or the price free at the place of introduction which a prospective purchaser would have had to pay for a free-frontier purchase of the goods which have to be valued, all the other conditions of sale being the same and the goods being imported through the same place of introduction.Finally, the Commission refers specifically to Opinion XXVII of the Customs Cooperation Council which is concerned with prices fixed by area: a foreign undertaking had sold the same product to importers of a certain country in three different regions at three different “free-frontier” prices. The Brussels Customs Council took these three prices as normal prices and, in the opinion of the Commission, based its decision on the following considerations: there may be several markets in an importing country; therefore there may be several “free-frontier” prices if the same goods are imported through the same place of importation; in such cases price differences do not depend upon the distance between the place of destination and of introduction and transport costs cannot be deducted from the free-frontier prices charged in an area other than that of the frontier, if the free-frontier price at the place of introduction is lower.According to this opinion it is in the view of the Commission therefore possible to envisage in the case of uniform prices applied in a price zone (market) a deduction of transport costs within the Community, if it is proved that a lower free-frontier price is applied for these deliveries on this market (price zone) under identical conditions of sale.The Commission concludes from this that the first question referred to the Court for a preliminary ruling must be answered as follows:“The expression ‘uniform free domicile price’ in Article 8 (2) of Regulation No 803/68 must not be interpreted as meaning that the price in question is necessarily uniform for all the places of destination within the customs territory of the Community”.

2. The second question for a preliminary ruling

Since the answer to the first question is in the negative the Commission does not consider that it is necessary to answer the second question.

3. The third question for a preliminary ruling

The Commission points out that Community legislation relating to value for customs purposes; does not provide for any specific procedure for the production of evidence. Consequently national rules are to be applied to the procedure for adducing evidence in connexion with the second sentence of Article 8 (2) of Regulation No 803/68.At the same time the Commission stresses that the interpretation of the expression “if evidence is produced to the customs authorities” must take account of the objective of Article 8 (2) of Regulation No 803/68 which is to prevent the deduction of transport costs which are too high and are not in fact included in the invoiced price and thus to prevent values for customs purposes being estblished which no longer tally with the normal price rule (Article 1 of Regulation No 803/68). It is simply a question of persuading the particular national customs office that the free domicile invoiced price declared in this case in fact includes transport costs which under similar conditions of sale are not included in a free-frontier price.The Commission takes the view that extracts from calculations, contracts or invoices relating to the deliveries to other purchasers, firm offers, any other relevant correspondence and also statements made by witnesses may be produced as evidence. In certain circumstances statements made a posteriori may also be accepted as evidence if they supply reliable particulars of the price situation at the time of importation.The Commission goes on to say that acceptance of evidence is a substantive question which it is for the national courts alone to decide.The Commission considers that the third question referred to the Court for a preliminary ruling should be answered as follows :a) There is no Community law provision on the production of evidence in connexion with the second sentence of Article 8 (2) of Regulation No 803/68. It is for the national court to decide whether or not evidence has been produced that the free-frontier price is lower than the uniform free domicile price.b) The fact that the importer (the person making the customs declaration) in certain circumstances may not be able to produce the evidence himself and that he has to rely on the cooperation of the supplier does not exonerate him from producing the evidence.”

III —Oral procedure

At the hearing of 15 November 1979 the Commission, represented by H. Glashoff, tax adviser, presented oral argument.The Advocate General delivered his opinion at the sitting on 13 December 1979.

Decision

1By an order of 24 April 1979, which was received at the Court on 25 May 1979, the Bundesfinanzhof, pursuant to Article 177 of the EEC Treaty, referred to the Court for a preliminary ruling, three questions on the interpretation of Article 8 (2) of Regulation (EEC) 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): This paragraph provides:“Where goods are invoiced at a uniform free domicile price which corresponds to the price at the place of introduction, transport costs within the Community shall not be deducted from that price. However, such deduction shall be allowed if evidence is produced to the customs authorities that the free-frontier price would be lower than the uniform free domicile price.”

2The questions have been raised during an action brought against the German customs authorities by a German undertaking, the plaintiff in this main action, which in 1972 was not allowed to deduct from the value for customs purposes of deep-frozen fruit and vegetables, imported from Hungary by road and invoiced at a free domicile price charged throughout the Federal Republic of Germany, the amount of the transport costs within the Community.

3The undertaking produced in support of its objection to this disallowance which it raised before the Principal Customs Office, Bad Reichenhall, the defendant in the main action, a certificate of the general agent of its Hungarian supplier and also a letter from their supplier certifying that the invoiced prices included a fixed sum of DM 62 per tonne for transportation within the Federal Republic. During its subsequent action before the Finanzgericht [Finance Court], Munich, it also produced documents in which a freight supervision authority (Frachtenprüfungsstelle) had calculated that average internal transport costs were DM 70.30 per tonne. The objection as well as the court action of the undertaking have been dismissed on the ground that the supplier had charged uniform prices within the meaning of the first sentence of Article 8 (2) of Regulation No 803/68 and that the evidence required by the second sentence of Article 8 (2) that the free-frontier price would be lower than the uniform free domicile price had not been produced.

4The undertaking then appealed to the Bundesfinanzhof. In order to be able to determine the issue the latter court has considered it necessary to refer to the Court for a preliminary ruling, the following questions :1. Must the words ‘uniform free domicile price’ in Article 8 (2) of Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes be interpreted as meaning that such price must be uniform for all destinations within the customs territory of the Community?2. If the answer to Question 1 is in the affirmative may the fact that uniform free domicile prices apply to only one Member State be taken into account, and if so how?3. How is the second sentence of Article 8 (2) of Regulation (EEC) No 803/68 of the Council of 27 June 1968 on the valuation of goods for customs purposes to be interpreted in relation to the requirements with regard to the evidence to be produced?”

5In order to be able to answer these questions it is necessary as the sixth and eighth recitals in the preamble to Regulation No 803/68 make clear, that the principal objective of the said regulation is to ensure equal treatment of importers so that the level of the protection given by the Common Customs Tariff is the same throughout the Community.

6It is to this end that Article 1 (1) of the said regulation provides that the value for customs purposes of the goods imported shall be taken to be the normal price, that is to say, the price which they would fetch on a sale in the open market between a buyer and a seller independent of each other. According to Article 1 (2) the normal price includes the costs of transport of the goods to the place of introduction within the customs territory of the Community. In principle transport costs from the place of introduction to the place of destination are therefore to be deducted from the invoice price.

7Article 8 (2), to which the questions of interpretation referred to the Court relate, contains an exception to the principle that transport costs within the customs territory of the Community are deductible from the invoice price where the goods are invoiced as a uniform free domicile price which corresponds to the price at the place of introduction.

8Such a price, which is uniform for every place of destination within the area where it is applied, includes in general a fixed sum intended to cover the average costs of transport of the goods from the place of dispatch to the various places of destination.

9It follows that where goods are invoiced at a uniform free domicile price the customs authorities do not know what are the transport costs within the Community, which are in fact a charge on the importation and are included in that price. Nor is it possible to calculate these costs by assessing them in proportion to the distance covered outside and inside the customs territory of the Community as provided for in Article 8 (1). Such a calculation would in fact lead to the establishment of different values for customs purposes in respect of the same goods, varying according to the distance between the place of introduction and the place of destination, and this would not be in keeping with the objective of ensuring equal treatment of importers which is set out in the eighth recital in the preamble to the regulation and incorporated in Article 1 thereof. These are the considerations which justify the exception provided for in the first sentence of Article 8 (2) to the general principle laid down in Article 1 that transport costs wihtin the Community are to be deducted.

10It is by considering the problem in this way that the first two questions should be answered. The difficulties which are involved, on the one hand, by calculation of the transport costs actually included in the uniform free domicile price and, on the other hand, by the need to ensure equal treatment of importers, and which explain the rule laid down in the first sentence of Article 8 (2), arise in the same way whether this price is charged throughout the whole of the customs territory of the Community or only in a part thereof. The answer to the first two questions must therefore be that the words “uniform free domicile price” mentioned in Article 8 (2) of Regulation No 803/68 must be interpreted as meaning that the price in question is not necessarily uniform for all destinations within the customs territory of the Community.

11Since the first sentence of Article 8 (2) only contains a presumption and since the main idea is still the deduction of internal transport costs there had to be an exception to cover the case where the fixed sum included in the uniform price for transport costs is satisfactorily ascertainable; this is the aim of the second sentence of Article 8 (2).

12The actual wording of this sentence, which uses the conditional mood, indicates that it is not necessary to prove that the same supplier has in fact sold the goods at a free-frontier invoice price. Moreover, as the Commission explains in its observations, it is necessary to determine the price which a prospective purchaser would have had to pay for a free-frontier purchase of the goods which have to be assessed, all the other conditions of sale being identical, in the event of importation through the same place of introduction.

13Community legislation relating to value for customs purposes does not provide for any specific procedure for the production of evidence. Consequently national rules are to be applied in this field if the importer wishes to produce evidence to the customs authorities that the free-frontier price would be lower than the free domicile price. However, the customs authorities must take account of the objectives of Article 8 (2) which, as the Commission has stressed, is to prevent the deduction of transport costs which are too high and not in fact included in the invoiced price, but also to allow, in accordance with the principle laid down in the preamble to the regulation and Article 1 thereof the deduction of transport costs in Community territory which are in fact included in this price.

14This objective of the provision in question does not appear to prevent, for example, statements made a posteriori by the supplier or by his agent being accepted as evidence, if such statements supply reliable particulars of the price situation at the time of importation, especially if they corroborate more objective information.

15The answer to the third question must therefore be that in the present state of Community law it is for the national court to decide, in accordance with its national legislation, what evidence the importer is to produce to establish, as provided for in the second sentence of Article 8 (2) of Regulation No 803/68, that the free-frontier price would be lower than the uniform free domicile price, all the other conditions of sale being identical, in the event of importation through the same place of introduction. The national court must however take into account the purpose of that Community provision which is to allow transport costs within the customs territory of the Community which are actually included in the uniform price — but only those transport costs — to be deducted from the price when the customs valuation is determined.

Costs

16The costs incurred by the Commission of the European Communities which has submitted observations to the Court are not recoverable; since the proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

Operative part

On those groundsTHE COURT (Second Chamber)in answer to the questions referred to it by the Bundesfinanzhof by order of 24 April 1979,hereby rules:

1.The words “uniform free domicile price” mentioned in Article 8 (2) of Regulation No 803/68 must be interpreted as meaning that the price in question is not necessarily uniform for all the destinations within the customs territory of the Community.

2.In the present state of Community law it is for the national court to decide, in accordance with its national legislation, what evidence the importer is to produce to establish, as provided for in the second sentence of Article 8 (2) of Regulation No 803/68, that the free-frontier price would be lower than the uniform free domicile price, all the other conditions of sale being identical, in the event of importation through the same place of introduction. The national court must however take into account the purpose of that Community provision which is to allow transport costs within the customs territory of the Community which are actually included in the uniform price — but only those transport costs — to be deducted from the price when the customs valuation is determined.

Delivered in open court in Luxembourg on 14 February 1980.