Ospig Textilgesellschaft KG W. Ahlers v Hauptzollamt Bremen-Ost (7/83)

I —Facts and procedure

The Community has concluded agreements with a number of non-member countries limiting textile imports. Observance of the import quotas is ensured by a system of double-checking whereby export licences are issued in the exporting country and import licences within the Community. Presentation of an export licence is a precondition to obtaining permission to import into the Community.The problem which is the subject of the litigation arises when an exporting vendor has run out of the quotas necessary for proceeding with his sale. Two solutions are then possible: either the Community purchaser procures an export licence from an exporter having surplus quotas at his disposal, and gives the licence to his vendor free of charge, or else the exporting vendor himself procures an export licence from an exporter holding surplus quotas, and invoices to the purchaser, with his consent, the extra costs connected with the acquisition of the licence.The cost of the quotas is determined by the relationship between the demand to export and the extent to which quotas have been used up.On 25 November 1981 Ospig Textilgesellschaft [“Ospig”] applied to the Hauptzollamt Bremen-Ost [Principal Customs Office, Bremen (East)] for the admission into free circulation of 600 pairs of men's jeans bought from Wan Tat Industrial Limited in Hong Kong.Apart from the shipping and insurance costs, Ospig entered as the value for customs purposes the invoice price of the goods, namely 16800 Hong Kong dollars.Under a notice of taxation dated 26 November 1981, the Hauptzollamt Bremen-Ost charged customs duties amounting to DM 1434.51, based on a value for customs purposes of 19800 Hong Kong dollars.The 3000 dollars which had been added to the amount declared by Ospig represented the “quota charges” invoiced separately by Wan Tat Industrial Limited and paid to the latter by Ospig.Relying on the provisions of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes, Ospig lodged an objection with the Hauptzollamt Bremen-Ost, claiming that the quota charges should not be included as part of the value of the goods for customs purposes. The objection was dismissed on 28 April 1982.Ospig appealed against the decision in question to the Finanzgericht [Finance Court] Bremen which, by an order dated 9 December 1982, decided to suspend the proceedings and to request the Court of Justice to give a preliminary ruling on the following question:“Are the costs (known as quota charges) which are incurred in the acquisition of free (export) quotas and are charged separately by an exporter in Hong Kong to a German customer to be included in the value for customs purposes (the transaction value referred to in Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes)?”The order making the reference was lodged at the Court Registry on 13 January 1983.In accordance with Article 20 of the Protocol on the Statute of the Court of Justice, written observations were submitted by Ospig, represented by Dirk Oelbermann of the Bremen Bar, by the Hauptzollamt Bremen-Ost, represented by its director, Mr Neideck, and by the Commission of the European Communities, represented by Christoph Bail, a member of its Legal Department, acting as Agent.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 an order dated 5 October 1983 the Court decided, pursuant to Article 95 (1) and (2) of the Rules of Procedure, to assign the case to the Third Chamber.

II —Relevant Community provisions

By Council Decision No 80/271/EEC of 10 December 1979 concerning the conclusion of the Multilateral Agreements resulting from the 1973 to 1979 trade negotiations (Official Journal 1980, L 71, p. 1) the Council approved in particular, on behalf of the Community, the Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (Official Journal 1980, L 71, p. 107).The Agreement, which lays down rules for facilitating international trade by removing barriers to such trade arising from the application of different methods of customs valuation, introduces the transaction value as the basis for the customs valuation of goods.By the adoption of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (Official Journal, L 134, p. 1), amending Regulation (EEC) No 803/68 of 27 June 1968 (Official Journal, English Special Edition 1968 (I), p. 170), the Council decided to implement the provisions of the aforesaid agreement as from 1 July 1980.Regulation No 1244/80 of 28 May 1980 was amended by Council Regulation (EEC) No 3193/80 of 8 December 1980 (Official Journal, L 333, p. 1).Article 3 (1) of Regulation No 1244/80 provides as follows :“The customs value of imported goods determined under this article shall be the transaction value, that is, the price actually paid or payable for the goods when sold for export to the customs territory of the Community, adjusted in accordance with Article 8 ...”.Article 8 lists exhaustively the items which must be added to the “price actually paid or payable” for imported goods; quota charges are not included therein.Under Article 3 (3) (a) of Regulation No 1224/80, as amended:“The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods and includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. The payment need not necessarily take the form of a transfer of money. Payment may be made by way of letters of credit or negotiable instruments and may be made directly or indirectly.”Article 3 (4) and Article 15 of the regulation exclude from the customs value certain charges, amongst which quota charges are not mentioned.

III —Summary of the written observations submitted to the Court

Ospig states that it entirely endorses the conclusions of the report submitted for the Court's consideration on quota charges and valuation for customs purposes, prepared by the Verband der Fertigwarenimporteure eV [Association of Importers of Finished Products] of Hamburg (an association of 150 import undertakings which operate in the textiles and clothing sector and are engaged in importing from overseas).The report prepared by that association explains why, in its opinion, there is no connection between export licences and the goods in question. The arguments set forth in support of that view may be summarized by the following two observations :

Without commenting on its content, Ospig appends to its observations a communication from the Bundesverband des Deutschen Groß- und Außenhandels eV [Federal Association for German Wholesale and Foreign Trade] concern.ng the opinion — reproduced in full — of the Customs Valuation Committee, which ¡sits under the auspices of the Commission pursuant to Articles 17 and 18 of Regulation No 1224/80. The opinion, drawn up on the occasion of the Committee's 33rd meeting from 19 to 21 January 1983, runs as follows :“The extra charges for the acquisition by the purchaser or his representative of an export licence may not be regarded as forming an integral part of the price paid or payable for goods in cases where the purchaser or his representative pays them to a third party who is independent of the vendor of the goods.”According to the Hauptzollamt Bremen-Ost the preliminary question raised by the Finanzgericht Bremen calls for an affirmative answer.In the opinion of the Hauptzollamt Bremen-Ost, the provisions or Council Regulation No 1224/80 indicate that quota charges relate to imported goods, since the latter cannot be delivered unless the quota charges are paid. The Hauptzollamt Bremen-Ost maintains that the two sums corresponding to the cost of purchasing the export licence and the goods respectively represents the total payment made by the purchaser to the vendor, and is equivalent to the purchase price of the goods for the purposes of Article 3 (3) (a) of Regulation No 1224/80.The Hauptzollamt Bremen-Ost takes the view that breaking down that total into separate invoices has no effect on the transaction value within the meaning of Article 3 (1) of Regulation No 1224/80.According to the Hauptzollamt Bremen-Ost, that interpretation is borne out by the provisions of Article 3 (4) and Article 15 of the regulation, which exclude from the customs valuation certain charges, amongst which quota charges are not mentioned.The argument put forward by the Hauptzollamt Bremen-Ost is, furthermore, confirmed by the opinion of the Customs Valuation Committee quoted above.In the preliminary deliberations on the opinion, both the Commission and the other members of the Customs Valuation Committee discerned two separate cases: on the one hand, the case where the vendor purchases, his export licence from a third party and then invoices the purchaser — separately or otherwise — for the resultant charges, and on the other hand, the case in which the purchaser buys the licence from a third party, pays the latter for it and makes it available to the vendor free of charge.Following disagreement over the issue of whether it was appropriate in both cases to include the quota charges in the customs valuation, the members of the Committee opted for the solution adopted in this matter by the customs administration of the United States of America, whereby payment made by the purchaser forms part of the value for customs purposes in the first case alone.In the opinion of the Hauptzollamt Bremen-Ost, that solution, endorsed by the above-mentioned opinion, has the merit of. taking into account only those charges arising from the transaction between the vendor and the purchaser of the goods, and not those incurred by the purchaser, the origins of which the vendor was powerless to control.The Hauptzollamt Bremen-Ost takes the view that the above conclusion is in keeping with the objectives of the provisions on the valuation of goods for customs purposes as expressed in the preamble to the Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade. The preamble indicates that the valuation of goods for customs purposes must be based on simple, objective criteria, so that the value may be both foreseeable and readily determined by the persons concerned as well as by the customs administration.The Commission maintains that quota charges do not form part of the transaction value within the meaning of Article 3 of Regulation No 1224/80 because the charges relate, not to the imported goods, but to the purchase of a right which exists independently of such goods. In support of that contention, the Commission sets forth a number of arguments.In the first place, the Commission argues that the quota charges relate to the purchase of a freely transmissible right whose market value is independent of that of the products themselves. The level of the quota charges reflects, on the one hand, the degree to which the import allowances under the regulations have been used up, and on the other hand the importer's wish to take delivery within a certain period.In the opinion of the Commission, quota charges are not regarded in commercial practice as forming an integral part of the price of the goods, wherein they differ, in particular, from the royalties attaching to industrial and commercial property rights which, being discharged as a condition of the sale, are included in the price of the goods pursuant to Article 8 (1) (c) of Regulation No 1224/80.The Commission argues, in the second place, that the quota charges must be excluded from the transaction value on the ground that such charges are not generally paid to the vendor, and because in any event payment thereof does not accrue to the benefit of the latter but rather to that of a third party holding unused quotas.The Commission maintains that the above interpretation of Article 3 of Regulation No 1224/80 is supported by the sixth recital in the preamble thereto :“... the objective of this regulation is to foster world trade by introducing a fair, uniform and neutral system of customs valuation excluding the use of arbitrary or fictitious customs values; therefore, the customs value must be determined in accordance with criteria which are compatible with trade practice; ...”.According to the Commission, the charges for export licences are a consequence of the Community policy of monitoring and imposing quantitative restrictions on the importation of sensitive products such as textiles. Integrating those charges into the value for customs purposes would, in view of the resultant rise in customs duties, be tantamount to an extension of protectionism such as was not contemplated by the system of quantitative restrictions on imports, and would run counter to fair, uniform and neutral methods of customs valuation.In the Commission's opinion, the interpretation proposed should not be affected by the fact that the exclusion of quota charges from the valuation for customs purposes might encourage abuse.The Commission acknowledges that in so far as the identity of the recipients of the quota charges is unknown, it would appear difficult to verify the amount invoiced by a foreign vendor, who might therefore charge a fictitious amount for the purchase of the goods so as to include his own export quota, which would lead to an artificial reduction in the price of the goods and hence in the value for customs purposes.According to the Commission, it was the mention of that risk which led the members of the Customs Valuation Committee, at its 33rd meeting, to adopt the conclusion recorded above.The Commission, taking the view that the above conclusion should be extended to cases where the buyer has instructed the vendor to obtain the export licence and where the latter has invoiced him separately for the sum representing the quota price demanded, proposes that the following reply be given to the question raised by the Finanzgericht Bremen:“The charges (known as quota charges) which an exporter in Hong Kong pays to a third party for the acquisition of free (export) quotas and which he invoices separately to his German customer are not to be included in the value for customs, purposes (the transaction value referred to in Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes).”

IV —Oral procedure

At the sitting on 10 November 1983 oral argument was presented by Ospig, represented by Dirk Oelbermann, Rechtsanwalt, and the Commission of the European Communities, represented by Christoph Bail, acting as Agent, assisted by Karl-Eugen Ahrens, expert (President of the Customs Valuation Committee of the EEC).The Advocate General delivered his opinion at the sitting on 12 January 1984.