Ministero delle Finanze v Foods Import Srl (C-38/95)

Contents

Judgment of the Court (First Chamber)12 December 1996^noteIn Case C-38/95,REFERENCE to the Court under Article 177 of the EC Treaty by the Corte d'Appello di Ancona (Italy) for a preliminary ruling in the proceedings pending before that court betweenMinistero delle FinanzeandFoods Import SriTHE COURT (First Chamber),composed of: L. Sevón, President of the Chamber (Rapporteur), P. Jann and M. Wathelet, Judges,Advocate General: N. Fennelly,Registrar: D. Louterman-Hubeau, Principal Administrator,after considering the written observations submitted on behalf of:— Foods Import Sri, by Giuseppe Celona, of the Milan Bar, and Riccardo Stecconi, of the Ancona Bar,— the Italian Government, by Professor Umberto Leanza, Head of the Department for Contentious Diplomatic Affairs of the Ministry of Foreign Affairs, acting as Agent, assisted by Ivo M. Braguglia, Avvocato dello Stato,— the Commission of the European Communities, by Antonio Aresu, of its Legal Service, acting as Agent,having regard to the Report for the Hearing,after hearing the oral observations of Foods Import Sri, represented by Giuseppe Celona, of the Italian Government, represented by Maurizio Fiorilli, Avvocato dello Stato, and of the Commission, represented by Antonio Aresu, at the hearing on 27 June 1996,after hearing the Opinion of the Advocate General at the sitting on 19 September 1996,gives the following

Judgment

1By order of 19 October 1994, received at the Court Registry on 16 February 1995, the Corte d'Appello di Ancona (Court of Appeal, Ancona) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty three questions on the interpretation of Council Regulation (EEC) No 3796/81 of 29 December 1981 on the common organization of the market in fishery products (OJ 1981 L 379, p. 1) and of Article 5(2) of Council Regulation (EEC) No 1697/79 of 24 July 1979 on the post-clearance recovery 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 (OJ 1979 L 197, p. 1).

2The questions were raised in the course of proceedings between the Ministerio delle Finanze and Foods Import Srl (hereinafter ‘Foods Import’).

3According to the documents forwarded to the Court, Foods Import specializes in the importation of klippfisch (baccalà), which is a salted fish which may also be dried by exposure to air, of the cod kind. By letter of 23 April 1985, the customs authorities at San Benedetto del Tronto informed it that a process for revision of the duties on imports of cod from Norway between June 1982 and April 1985 was being commenced. On 15 May 1985, those authorities demanded payment of duties amounting to LIT 508260820 and fines of LIT 4046331800 for customs fraud and LIT 80925900 for fiscal fraud. According to the finance administration, Regulation No 3796/81 had altered the Common Customs Tariff (‘CCT’) by limiting the suspension of duties to certain species of cod, of which the species imported by Foods Import (ling, whose scientific name is Molva molva) was not one.

4Council Regulation (EEC) No 100/76 of 19 January 1976 on the common organization of the market in fishery products (OJ 1976 L 20, p. 1), as subsequently amended and supplemented, provided, in Article 17, for the total suspension of CCT duties on certain products, including cod and cod fillets, as defined in headings 03.02 Alb) and 03.02 A II a) of the CCT, the wording of which has been modified thus in Annex V:03.02 Fish, dried, salted or in brine; smoked fish, whether or not cooked before or during the smoking process:A. Dried, salted or in brine:I. Whole, headless or in pieces:...b) Cod...II. Fillets:a) Of cod’.

5Article 20 of Regulation No 3796/81 confirmed the rules governing the suspension of duties on cod and fillets of cod referred to in headings 03.02 A I b) and 03.02 A II a) of the CCT whilst amending them at the same time, as appears from Annex VI, which is worded as follows:03.02 Fish, dried, salted or in brine; smoked fish, whether or not cooked before or during the smoking process:A. Dried, salted or in brine:I. Whole, headless or in pieces:...b) Cod (Gadus morrhua, Boreogadus saida, Gadus ogac)...II. Fillets:a) Of cod (Gadus morrhua, Boreogadus saida, Gadus ogac)’

6Those changes were included in the 1983, 1984 and 1985 versions of the CCT.

7After its administrative appeals had been dismissed, Foods Import brought an action against the Ministerio delle Finanze before the Tribunale Civile e Penale di Ancona, which, by judgment of 18 June 1991, held that the duties were not payable on the ground that the Community rules were contrary to the General Agreement on Tariffs and Trade (GATT) and, more particularly, to Schedule XXVII approved by the Annecy Protocol of 10 October 1949, which sets out the concessions granted by the Italian Republic to the other States parties to the GATT and, in particular, a total exemption from customs duties for ‘salted, dried and smoked fish: cod and similar fish (haddock, klippfisch, stockfisch)’.

8The Ministerio delle Finanze appealed against that decision to the Corte di Appello di Ancona, which stayed proceedings and referred the following questions to the Court for a preliminary ruling:1. Is the list given in Council Regulation (EEC) No 3796/81 of 29 December 1981 (and repeated in Council Regulation (EEC) No 3333/83 of 4 November 1983), Annex VI to which reproduces Chapter 3 of the Common Customs Tariff in which cod appears under heading No 03.02 A. I and fillets of cod under heading No 03.02 A. II, supplemented by the mention “Gadus morrhua, Boreogadus saida, Gadus ogac”, exhaustive or illustrative and, accordingly, is the dried cod scientifically classified as “Molva” covered by that list?2. If the Court holds that list to be exhaustive, does Article 20 of Council Regulation (EEC) No 3796/81 of 29 December 1981, suspending certain Common Customs Tariff duties, apply only to the three subspecies of cod referred to in Question 1 (“Gadus morrhua, Boreogadus saida, Gadus ogac”) to the exclusion of other subspecies such as “Molva”?3. In any event, must Article 5(2) of Council Regulation (EEC) No 1697/79 of 24 July 1979, giving debtors the right (see the Court's judgment in Case 314/85 Foto-Frost v Hauptzollamt Lübeck-Ost [1987] ECR 4199) to benefit from the fact that the competent authorities may refrain from taking action for the post-clearance recovery of duties, be applied also in the present case in which the customs authorities failed to collect the relevant duties on account of an error, having regard also to the conduct of the alleged debtor who had observed all the provisions laid down by the rules in force as far as his customs declaration was concerned?’

The first two questions

9By its first two questions, which should be examined together, the Corte d'Appello di Ancona essentially asks the Court to interpret tariff headings 03.02 A I b) and 03.02 A II a) in order to determine whether ling, the scientific name of which is Molva molva, may be classified under those headings and, consequently, whether imports of ling are exempt from import duties, in accordance with Article 20 of Regulation No 3796/81.

10Foods Import states that the terminology used in the Community legislation to designate cod is not clear, that ling belongs to the Gadidae family of fish, of which cod is the best known species and that, as far as klippfisch or baccalà is concerned, it is not so much the fish species employed which determines its quality. It also argues that, according to the Court's case-law, products should be differentiated for classification purposes in accordance with their objective characteristics and properties, which should be capable of being verified at the time when they are cleared through customs. This requirement is not satisfied in the case now before the national court in view of the difficulty in distinguishing between dried, salted fillets of different species. It concludes that, under the rules for interpreting the CCT, ling is to be classified under the headings of which an interpretation is sought because they cover the species most akin to ling. Foods Import also points out that klippfish (baccalà) has always been exempt from import duties, that only political reasons can explain the alteration of the nomenclature, that this creates discrimination between similar products, that there was a misuse of powers in so far as the manipulation carried out was designed to serve as a bargaining counter for future fisheries negotiations and, finally, that a classification entailing restoration of import duties would be contrary to the GATT.

11The Italian Government and the Commission, on the other hand, consider that Molva molva is not to be classified under tariff headings 03.02 Alb) and 03.02 A II a), which contain an exhaustive list of the species covered. Molva molva is quite a different species from those referred to in those headings and the fact that it is not classified under the same heading is consistent with scientific classifications. The Commission further points out that some of Foods Import's arguments relate to the legality of Regulation No 3796/81 and not to its interpretation.

12It should be borne in mind that the general rules for the interpretation of the CCT Nomenclature are contained in successive Council regulations which have amended Regulation (EEC) No 950/68 of 28 June 1968 on the Common Customs Tariff (OJ, English Special Edition 1968 (I), p. 275). As far as the period in question is concerned, those regulations are: Council Regulation (EEC) No 3300/81 of 16 November 1981 (OJ 1981 L 335, p. 1), Council Regulation (EEC) No 3000/82 of 19 October 1982 (OJ 1982 L 318, p. 1), Council Regulation (EEC) No 3333/83 of 4 November 1983 (OJ 1983 L 313, p. 1) and Council Regulation (EEC) No 3400/84 of 27 November 1984 (OJ 1984 L 320, p. 1).

13According to the general rule of interpretation set out in point 1 of Section I A of Part I of each of those regulations, for legal purposes classification is to be determined according to the terms of the headings and any relevant Section or Chapter Notes and, provided that such headings or Notes do not otherwise require, according to the following provisions. The general rule set out in point 3 covers the case in which goods are prima facie classifiable under two or more headings whilst the general rule mentioned in point 4 covers the case in which goods do not fall within any heading of the Tariff. In the present case, it is important to determine whether, under the rule of interpretation set out in point 1, ling may be classified under a specific heading or whether it is necessary to apply the other rules of interpretation in order to classify it.

14An examination of the headings in Chapter 3, relating to fish, crustaceans and molluscs in general, and of subchapter 03.02, relating to dried fish, salted or in brine, in particular, shows that those headings are worded according to several methods. In certain cases, only the usual name of the species is indicated whilst in other cases the usual name of the species is followed by one or more scientific names in Latin, in brackets and in italics. Sometimes, the name of the species is preceded by the words ‘Fish of the species’. Similarly, the scientific name may also be followed by the letters ‘sp. p.’ or ‘spp.’, the abbreviation for the Latin species, meaning ‘species’ (as regards the latter abbreviation, see in particular the version of the CCT in Regulation No 3333/83).

15Given those formulation variants, it must be concluded that the enumeration of three scientific names in Latin beside the name of the species ‘cod’ is to be interpreted as an exhaustive enumeration and that only fish whose scientific name in Latin is indicated between brackets may be classified under that heading. If the legislature had had a different intention, it would have used the words ‘Fish of the species’ or the letters ‘sp. p.’ or simply left the usual name of the species, without further qualification.

16That conclusion is borne out by an examination of the scientific treatises relating to the classification of fish. Like the species referred to in the heading of which an interpretation is sought, Molva molva belongs to the Gadidae family of fish. However, this is a very large family, subdivided into many subfamilies. The Molva molva species belongs to the Lotinae subfamily, which is quite distinct from the Gadidae subfamilies to which the fish whose scientific name appears in the headings in question belong. There is therefore no inconsistency between the tariff classification and the recognized scientific classifications.

17That conclusion is not in fact in contradiction with the Court's settled case-law to the effect that, in the interests of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the CCT and of the notes to the sections or chapters (see, in particular, Case C-459/93 Thyssen Haniel Logistic [1995] ECR I-1381, paragraph 8). The species to which a fish belongs is an objective property, defined by the wording of the CCT heading. Moreover, the requirement that the objective characteristics and properties of products must be ascertainable when customs clearance is obtained (Case C-233/88 Van de Kolk [1990] ECR I-265, paragraph 12) does not presuppose that differences between products are apparent. Certain characteristics of a product may be identifiable only microscopically (Case 175/82 Dinter [1983] ECR 969) or by means of sensory analysis (Van de Kolk, cited above). Indeed, a product's classification may depend on the process by which it is manufactured or the geographical origin of some of its constituents, those being characteristics which are not necessarily apparent (Case 40/88 Weber [1989] ECR 1395).

18If ling (Molva moha) cannot be classified under the heading covering cod nor under the other specific headings of subchapter 03.02 covering dried fish, salted or in brine, it must be classified under headings 03.02 Alf) and 03.02 A II d), Other'.

19Since the general rule of interpretation set out in point 1 enables ling (Molva molva) to be classified in a specific heading of the CCT, it is not necessary to apply the rules of interpretation set out in points 3 and 4, which deal with cases where more than one heading is relevant or where there is no relevant heading.

20As regards the other arguments put forward by Foods Import, these relate to the validity of Regulation No 3796/81, which is a question which has not been referred to the Court by the national court. However, these points will be relevant in the context of the third question, which is examined next.

21The answer to be given to the first two questions must therefore be that tariff headings 03.02 Alb) and 03.02 A II a) set out in Article 20 of Regulation No 3796/81 are to be interpreted as meaning that the list of species whose scientific names are indicated in brackets is exhaustive and does not include ling, whose scientific name is Molva molva, so that imports of this fish may not be exempt from customs duties.

The third question

22By its third question the national court asks whether Article 5(2) of Regulation No 1697/79 is to be applied in the present case in which the customs authorities failed to collect the relevant duties on account of an error, having regard also to the conduct of the alleged debtor who had observed all the provisions laid down by the rules in force as far as its customs declaration was concerned.

23The first sentence of Article 5(2) of Regulation No 1697/79 provides:‘The competent authorities may refrain from taking action for the post-clearance recovery of import duties or export duties which were not collected as a result of an error made by the competent authorities themselves which could not reasonably have been detected by the person liable, the latter having for his part acted in good faith and observed all the provisions laid down by the rules in force as far as his customs declaration is concerned.’

24That provision lays down three cumulative conditions for waiver by the competent authorities of post-clearance recovery of import duties: non-collection must have been due to an error by the authorities, the person liable must have acted in good faith, or in other words he must not have been reasonably able to detect the authorities' error, and he must have complied with all the provisions laid down by the legislation in force so far as his customs declaration was concerned (Joined Cases C-153/94 and C-204/94 Faroe Seafood and Another [1996] ECR I-2465, paragraph 83).

25This Court has consistently held that, if those three conditions are satisfied, the person liable is entitled to waiver of recovery (Case C-348/89 Mecanarte [1991] ECR I-3277, paragraph 12, and Faroe Seafood, cited above, paragraph 84).

26The Italian Government considers that this question must be declared inadmissible for lack of information for determining whether the conditions for application of that provision are fulfilled.

27In this regard, it should be pointed out that it is for the national court to apply Article 5(2) of Regulation No 1697/79 by determining whether the three conditions which that provision lays down are fulfilled and therefore whether Foods Import is entitled to waiver of recovery of duties which have not been collected. However, the Court has jurisdiction to interpret that provision, taking into account all information provided to it.

28According to the findings of the national court, the duties were not collected owing to a failure by the customs authorities, although Foods Import had observed all the provisions laid down by the rules in force as regards its customs declaration. It would accordingly appear that the question referred relates to the interpretation of the second condition, namely that the error of the competent authorities ‘could not reasonably have been detected by the person liable’.

29The Court has repeatedly held that, in order to determine whether this condition is fulfilled, account must be taken, in particular, of the nature of the error, the professional experience of the trader concerned and the degree of care which he exercises.

30In the present case, the nature of the error committed may be assessed in the light of a number of circumstances. As the Advocate General points out in paragraph 40 of his Opinion, the fact that the authorities persisted in their error over a period of some three years would suggest that the issue was not a simple one. There was terminological confusion arising from the use of the usual names of the fish and, more particularly, from the fact that the terms ‘cod’, ‘stockfisch’ or ‘baccalà’ generally designate not specific species of fish but families of species or even preservation treatment applied to certain species.

31Furthermore, although a common classification has been applied for a number of years to a wide variety of subfamilies of a species, nothing in Regulation No 3796/81 points to the change of nomenclature, which is apparent only from addition of a list of scientific names in brackets beside the usual name of the species. It was in fact only after several years that the competent customs authorities realized that such a change had been made.

32In view of those circumstances, the answer to the third question must be that, in order to determine whether the error committed by the competent authorities ‘could not reasonably have been detected by the person liable’ within the meaning of Article 5(2) of Regulation No 1697/79, account must be taken, in particular, of the nature of the error, the professional experience of the trader concerned and the degree of care which he exercised. The relevant factors to be taken into consideration in assessing the nature of the error include the possibility that the terminology used may have caused confusion, the fact that a change of rule was not apparent and the time taken by the competent authorities themselves to realize that such a change had been made. It is for the national court to determine, on the basis of that interpretation, whether or not the error which led to duties not being collected was detectable by the person liable.

Costs

33The costs incurred by the Italian Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,THE COURT (First Chamber),in answer to the questions referred to it by the Corte d'Appello di Ancona, by order of 19 October 1994, hereby rules:

1.Tariff headings 03.02 A I b) and 03.02 A II a) set out in Article 20 of Council Regulation (EEC) No 3796/81 of 29 December 1981 on the common organization of the market in fishery products are to be interpreted as meaning that the list of species whose scientific names are indicated in brackets is exhaustive and does not include ling, whose scientific name is Molva molva, so that imports of this fish may not be exempt from customs duties.

2.In order to determine whether the error committed by the competent authorities ‘could not reasonably have been detected by the person liable’ within the meaning of Article 5(2) of Council Regulation (EEC) No 1697/79 of 24 July 1979, on the post-clearance recovery 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, account must be taken, in particular, of the nature of the error, the professional experience of the trader concerned and the degree of care which he exercised. The relevant factors to be taken into consideration in assessing the nature of the error include the possibility that the terminology used may have caused confusion, the fact that a change of rule was not apparent and the time taken by the competent authorities themselves to realize that such a change had been made. It is for the national court to determine, on the basis of that interpretation, whether or not the error which led to duties not being collected was detectable by the person liable.

Delivered in open court in Luxembourg on 12 December 1996.