Provisional text
OPINION OF ADVOCATE GENERAL
EMILIOU
delivered on 20January 2022(1)
Case C‑599/20
UAB ‘Baltic Master’
v
Muitinės departamentas prie Lietuvos Respublikos finansų ministerijos,
joined parties:
Vilniaus teritorinė muitinė
(Request for a preliminary ruling from the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania, Lithuania))
(Reference for a preliminary ruling– Customs union– Community Customs Code– Regulation (EEC) No2913/92– Article29(1)(d)– Determination of the customs value– Concept of ‘related persons’– De facto control– Regulation (EEC) No2454/93– Article143(1)(b), (e) and (f)– Article181a– TARIC heading)
I.Introduction
1.In his seminal work The Wealth of Nations, Adam Smith wrote that customs duties have been ‘in use for time immemorial’.(2) Indeed, it is suggested that duties on imports or exports of goods are as old as trade. That said, the origin of modern customs duties is often traced back to Hellenistic Greece, namely in the gifts that foreign merchants were expected to present to Greek rulers, in return for protection and preferential treatment in their commerce.(3)
2.Traditionally, most customs duties had ‘specific rates’, defined in terms of items or weight. However, nowadays in most jurisdictions duties are mainly imposed ‘ad valorem’, which means that imported and/or exported goods are taxed on the basis of their monetary value. In that case, customs valuation– that is, the methodology used to determine the value of goods– becomes a crucial issue for both the customs authorities and the companies declaring the value of the goods to the customs.
3.Given its importance for global trade, customs valuation is the subject of a number of international agreements.(4) The EU legislation– which transposes the relevant international instruments– follows the ad valorem method. Accordingly, in the European Union too, together with origin and classification, the customs valuation of goods provides the basis for the determination of the customs duties of importers, which is normally calculated as a percentage of the customs value.
4.The current proceedings originate in a case in which the customs authorities entertained doubts about the veracity of a declaration regarding the classification and value of certain goods being imported into the European Union. These proceedings offer the Court the opportunity to provide some clarification concerning the circumstances in which the customs authorities may, in order to determine the applicable duties, disregard the value of the goods declared by the importer and follow other methods to determine that value.
II.Legal framework
A.European Union law
1.Regulation (EEC) No2913/92
5.Article29(1) and (2) of Council Regulation (EEC) No2913/92 of 12October 1992 establishing the Community Customs Code,(5) which was applicable at the material time,(6) provided:
‘1.The customs value of imported goods 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, where necessary, in accordance with Articles32 and 33, provided:
…
(d)that the buyer and seller are not related, or, where the buyer and seller are related, that the transaction value is acceptable for customs purposes under paragraph2.
2.(a)In determining whether the transaction value is acceptable for the purposes of paragraph1, the fact that the buyer and the seller are related shall not in itself be sufficient grounds for regarding the transaction value as unacceptable. Where necessary, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted provided that the relationship did not influence the price. If, in the light of information provided by the declarant or otherwise, the customs authorities have grounds for considering that the relationship influenced the price, they shall communicate their grounds to the declarant and he shall be given a reasonable opportunity to respond. If the declarant so requests, the communication of the grounds shall be in writing.
(b)In a sale between related persons, the transaction value shall be accepted and the goods valued in accordance with paragraph1 wherever the declarant demonstrates that such value closely approximates to one of the following occurring at or about the same time:
…
(c)The tests set forth in subparagraph(b) are to be used at the initiative of the declarant and only for comparison purposes. Substitute values may not be established under the said subparagraph.’
6.Article30(1) and (2) of Regulation No2913/92 stated:
‘1.Where the customs value cannot be determined under Article29, it is to be determined by proceeding sequentially through subparagraphs(a), (b), (c) and (d) of paragraph2 to the first subparagraph under which it can be determined, subject to the proviso that the order of application of subparagraphs(c) and (d) shall be reversed if the declarant so requests; it is only when such value cannot be determined under a particular subparagraph that the provisions of the next subparagraph in a sequence established by virtue of this paragraph can be applied.
2.The customs value as determined under this Article shall be:
(a)the transaction value of identical goods sold for export to the Community and exported at or about the same time as the goods being valued;
(b)the transaction value of similar goods sold for export to the Community and exported at or about the same time as the goods being valued;
…’
7.In turn, Article31(1) of Regulation No2913/92 read:
‘Where the customs value of imported goods cannot be determined under Articles29 or 30, it shall be determined, on the basis of data available in the Community, using reasonable means consistent with the principles and general provisions of:
–the agreement on implementation of ArticleVII of the General Agreement on Tariffs and Trade of 1994
–Article VII of the General Agreement on Tariffs and Trade of 1994
–the provisions of this chapter.’
2.The Implementing rules
8.TitleV of Commission Regulation (EEC) No2454/93 of 2July 1993 laying down provisions for the implementation of Council Regulation (EEC) No2913/92 establishing the Community Customs Code,(7) as applicable at the material time,(8) concerned the ‘Customs value’. Article142(1) of Regulation No2454/93 stated:
‘For the purposes of this title:
…
(c)“identical goods” means goods produced in the same country which are the same in all respects, including physical characteristics, quality and reputation. Minor differences in appearance shall not preclude goods otherwise conforming to the definition from being regarded as identical;
(d)“similar goods” means goods produced in the same country which, although not alike in all respects, have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable; the quality of the goods, their reputation and the existence of a trademark are among the factors to be considered in determining whether goods are similar;
…’
9.Article143(1) of Regulation No2454/93 provided:
‘1.For the purposes of TitleII, Chapter3 of the Code and of this Title, persons shall be deemed to be related only if:
(a)they are officers or directors of one another’s businesses;
(b)they are legally recognised partners in business;
(c)they are employer and employee;
(d)any person directly or indirectly owns, controls or holds 5% or more of the outstanding voting stock or shares of both of them;
(e)one of them directly or indirectly controls the other;
(f)both of them are directly or indirectly controlled by a third person;
(g)together they directly or indirectly control a third person; or
(h)they are members of the same family. Persons shall be deemed to be members of the same family only if they stand in any of the following relationships to one another:
…’
10.Article181a of Regulation No2454/93 provided:
‘1.The customs authorities need not determine the customs valuation of imported goods on the basis of the transaction value method if, in accordance with the procedure set out in paragraph2, they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable as referred to in Article29 of the Code.
2.Where the customs authorities have the doubts described in paragraph1 they may ask for additional information in accordance with Article178(4). If those doubts continue, the customs authorities must, before reaching a final decision, notify the person concerned, in writing if requested, of the grounds for those doubts and provide him with a reasonable opportunity to respond. A final decision and the grounds therefor shall be communicated in writing to the person concerned.’
11.Annex23 to Regulation No2454/93, entitled ‘Interpretative notes on customs value’, includes the interpretative notes with regard to, inter alia, Article29(2) and (3) and Article31(1) of Regulation No2913/92, and Article143(1)(e) of Regulation No2454/93.
12.The interpretative notes with regard to Article29(2) read:
‘1.Paragraphs2(a) and (b) provide different means of establishing the acceptability of a transaction value.
2.Paragraph2(a) provides that where the buyer and the seller are related, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted as the customs value provided that the relationship did not influence the price. It is not intended that there should be an examination of the circumstances in all cases where the buyer and the seller are related. Such examination will only be required where there are doubts about the acceptability of the price. Where the customs authorities have no doubts about the acceptability of the price, it should be accepted without requesting further information from the declarant.…
3.Where the customs authorities are unable to accept the transaction value without further inquiry, they should give the declarant an opportunity to supply such further detailed information as may be necessary to enable it to examine the circumstances surrounding the sale, in this context, the customs authorities should be prepared to examine relevant aspects of the transaction, including the way in which the buyer and seller organize their commercial relations and the way in which the price in question was arrived at, in order to determine whether the relationship influenced the price. Where it can be shown that the buyer and seller, although related under the provisions of Article143 of this Regulation, buy from and sell to each other as if they were not related, this would demonstrate that the price had not been influenced by the relationship.…’
13.The interpretative notes with regard to Article31(1) stated:
‘1.Customs values determined under the provisions of Article31(1) should, to the greatest extent possible, be based on previously determined customs values.
2.The methods of valuation to be employed under Article31(1) should be those laid down in Articles29 and 30(2), but a reasonable flexibility in the application of such methods would be in conformity with the aims and provisions of Article31(1).
3.Some examples of reasonable flexibility are as follows:
(a)identical goods– the requirement that the identical goods should be exported at or about the same time as the goods being valued could be flexibly interpreted; identical imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for customs valuation; customs values of identical imported goods already determined under the provisions of Articles30(2)(c) and (d) could be used;
(b)similar goods– the requirement that the similar goods should be exported at or about the same time as the goods being valued could be flexibly interpreted; similar imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for customs valuation; customs values of similar imported goods already determined under the provisions of Articles30(2)(c) and (d) could be used;
…’
14.The interpretative notes with regard to Article143(1)(e) read:
‘One person shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter.’
B.National law
15.Point12 of the Rules for the application of Regulation No2913/92 and Regulation No2454/93 in the Republic of Lithuania, approved by Resolution No1332 of the Government of the Republic of Lithuania of 27October 2004, reads:
‘In applying the methods for determining the customs value by reference to the transaction value of identical or similar goods and Article31 of the Community Customs Code, the customs authorities shall use the data on the customs value of goods collected in the database for the valuation of goods for customs purposes operated by the Customs Department. The procedure for the selection of data from that database, use of those data and formalisation of the decision to determine the customs value of the goods in accordance with the data collected in the specified database shall be established by the General Director of the Customs Department.’
16.Point7 of the Rules governing control of the customs valuation of imported goods, approved by Order No1B431 of the Director of the Customs Department attached to the Ministry of Finance of the Republic of Lithuania of 28April 2004 (‘the Rules of the Customs Department’), states:
‘Customs officers shall use the database for the customs valuation of goods for customs purposes, which is to be compiled in accordance with the procedure established by the Customs Department, for the following purposes:
7.1. to compare the customs value of the goods being imported and that of previously imported goods and to verify the reality of the customs value of the goods;
7.2. to choose information about the values and prices of the goods for the application of other methods of customs valuation or for the calculation of any additional guarantee or security.’
17.In turn, Point24 of the Rules of the Customs Department states:
‘If the decision referred to in Point20.4 of the Rules [of the Customs Department] is adopted (to apply the method for determining the customs value by reference to the transaction value of identical or similar goods), it is mandatory to follow Article150 of the provisions implementing the Community Customs Code. If it is impossible to give effect to the requirements of Article150 of the provisions implementing the Community Customs Code during customs clearance, the customs value of the goods shall be determined in accordance with Article31 of the Community Customs Code (Method6). When determining the customs value of the goods using Method6, the applicable price of the goods shall be close to the price of identical or similar goods; however, more flexible application of the requirements established for these methods is permissible (for example, the “90 days” requirement could be applied more flexibly, the goods may also be manufactured in a country other than that of the goods for which the customs value is being determined, the price of the export country may be applied, and so forth).’
III.Facts, national proceedings and the questions referred
18.Between 2009 and 2012, the applicant in the main proceedings (UAB ‘Baltic Master’) imported into Lithuania various quantities of goods of Malaysian origin bought from Gus Group LLC. Those goods were described in the customs declarations as air-conditioning machines and parts thereof, and were declared under various TARIC(9) codes,(10) indicating the total weight of those parts in kilograms. In those declarations, the applicant indicated the transaction value, that is to say, the price indicated in the invoices issued to the applicant, as being the customs value of the disputed goods.
19.After carrying out some checks on the applicant’s activities concerning the import of those goods, the Vilniaus teritorinė muitinė (Vilnius Regional Customs Authority) decided that the goods should have been described as ‘parts of air-conditioning machines’ and declared under another TARIC code.(11) The Vilnius Regional Customs Authority also took the view that the transaction value declared could not be accepted– since the applicant and the seller had to be treated as being related persons for the purposes of customs valuation– and that value of the disputed goods could not be determined by any of the methods indicated in Articles29 and 30 of Regulation No2913/92.
20.Accordingly, the Vilnius Regional Customs Authority determined the customs value of the goods in accordance with Article31 of Regulation No2913/92, referring for this purpose to the data available in the customs information system for determining the value of goods for customs purposes (‘the PREMI database’). In particular, the Lithuanian authorities determined the customs value of the goods imported by the applicant by using the transaction data for goods imported by another company from the same manufacturer, under the same designation and TARIC code. This was the only case of exports from Malaysia under the same TARIC code recorded in the national PREMI database in 2010. The customs authorities applied the transaction value of that case to the values of the goods declared by the applicant during the period from 2009 to 2011.
21.The applicant appealed against the decision of the Vilnius Regional Customs Authority to the Muitinės departamentas prie Lietuvos Respublikos Vyriausybės (Customs Department attached to the Ministry of Finance of the Republic of Lithuania). Having examined the applicant’s complaint, that customs department upheld the decision of the Vilnius Regional Customs Authority. The applicant appealed the decision of the customs department to the Mokestinių ginčų komisja prie Lietuvos Respublikos Vyriausybės (Tax Disputes Commission attached to the Government of the Republic of Lithuania). That body upheld the contested decision of the Customs Department attached to the Ministry of Finance of the Republic of Lithuania.
22.The applicant brought an appeal against the decision of the Tax Disputes Commission attached to the Government of the Republic of Lithuania before the Vilniaus apygardos administracinis teismas (Regional Administrative Court, Vilnius, Lithuania), and also asked for a request to be submitted to the Court of Justice of the European Union for a preliminary ruling on the interpretation of certain provisions of Regulation No2913/92 and of the Implementing Regulation No 2454/93.
23.The Vilniaus apygardos administracinis teismas (Regional Administrative Court, Vilnius) rejected the applicant’s complaint. Following an examination of the applicant’s appeal, the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania, Lithuania) upheld the judgment delivered at first instance.
24.Following a ruling by the European Court of Human Rights, which stated that the courts of the Republic of Lithuania had failed to provide adequate reasons for their refusal to refer a question to the Court of Justice for a preliminary ruling and had, consequently, breached Article6(1) of the Convention for the Protection of Human Rights and Fundamental Freedoms,(12) the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) re-opened the procedure in the administrative proceedings. However, harbouring doubts as to correct interpretation of the relevant provisions of EU law, that court decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1)Must Article29(1)(d) of [Regulation No2913/92] and Article143(1)(b), (e) or (f) of [Regulation No2454/93] be interpreted as meaning that the buyer and the seller are deemed to be related persons in cases where, as in the present case, in the absence of documents (official data) proving business partnership or control, the circumstances surrounding the conclusion of transactions are, however, on the basis of objective evidence, characteristic, not of the performance of economic activities under normal conditions, but rather of cases in which (1) there are particularly close business relations based on a high level of mutual trust between the parties to the transaction, or (2) one party to the transaction controls the other or both parties to the transaction are controlled by a third party?
(2)Must Article31(1) of [Regulation No2913/92] be interpreted as prohibiting determination of the customs value on the basis of information contained in a national database relating to one customs value of goods which have the same origin and which, although not similar, within the meaning of Article142(1)(d) of [Regulation No2454/93], are ascribed to the same TARIC heading?’
25.Written observations have been submitted by Baltic Master, the Czech, Estonian, Spanish, French and Lithuanian Governments, as well as the European Commission. Those parties, as well as the Government of the Netherlands, also presented oral argument at the hearing on 17November 2021.
IV.Analysis
A.First question
26.By its first question, the referring court asks whether Article29(1)(d) of Regulation No2913/92 and Article143(1)(b), (e) or (f) of Regulation No2454/93 are to be interpreted as meaning that the buyer and the seller are deemed to be ‘related persons’ where, despite the absence of evidence proving business partnership or control, the circumstances surrounding the conclusion of transactions are not indicative of the performance of economic activities under normal conditions, but of particularly close business relations or of de facto control between those persons.
27.In order to provide an answer to the referring court, I shall first recall the basic tenets of the EU system of customs valuation (1). Subsequently, I shall address the interpretative issues raised by the referring court, and suggest how the framework described above may be applied to cases such as that at issue in the main proceedings (2).
1.The EU system of customs valuation
28.At the outset, it may be useful to recall that, according to settled case-law, the objective of the EU legislation on customs valuation is ‘to introduce a fair, uniform and neutral system excluding the use of arbitrary or fictitious customs values’.(13) Article29(1) of Regulation No2913/92 lays down the principle that the customs value of the goods is their transaction value, that is, the price actually paid or payable, adjusted where necessary.(14)
29.That principle is, however, subject to some conditions, one of those conditions being– pursuant to point(d) of the same provision– that the buyer and seller are not related or, if they are, that the transaction value is acceptable for customs purposes.(15) The scope of that condition is clarified, in particular, by Article143(1) of Regulation No2454/93 and Article29(2)(a) of Regulation No2913/92.
30.On the one hand, Article143(1) of Regulation No2454/93 lists the situations in which the economic operators are deemed to be ‘related’ for the purposes of the customs valuation rules.
31.On the other hand, Article29(2)(a) of Regulation No2913/92 makes it clear that the fact that the buyer and seller are related is not a sufficient element for assuming that the price of the goods– and, therefore, the transaction value– might have been influenced by the special relationship between those parties.(16) Indeed, despite them being related, the transaction value declared is acceptable, if their relationship did not influence the price of the goods.
32.In order to verify that, Article29(2)(a) of Regulation No2913/92 indicates that the ‘circumstances surrounding the sale’ must be examined, in the light of the information provided by the declarant. It should not be forgotten, in that regard, that the transaction value must reflect the real economic value of the goods in question, and take into account ‘all the elements of those goods that have economic value’.(17)
33.It is against this background that I shall now address the interpretative question raised by the referring court.
2.The present case
34.In its request for a preliminary ruling, the referring court states that, in the case before it, there is no evidence proving the existence of any legal relationship between the seller and the buyer of the kind set out in Article143(1) of Regulation No2454/93.
35.Nevertheless, the referring court indicates that a number of factual elements provide grounds for taking the view that the seller and the buyer enjoy a particularly close connection, as a result of which the transactions between those persons were concluded and executed under conditions that are not characteristic of the ordinary course of business. In the referring court’s view, there does not appear to be any objective conditions capable of justifying the economic logic of such transactions.
36.In that regard, the referring court points to the following facts: (i) the seller and the applicant are linked by a long-term commercial relationship; (ii) the goods were supplied without the conclusion of any contracts of sale that would provide for the delivery, payment or return of the goods and other conditions specific to such transactions; (iii) the fact that goods were delivered without any advance payment and despite the fact that the applicant owed significant amounts to the seller in respect of previous supplies; (iv) no provision was made for enforcement or risk-mitigation measures (advance payments, sureties, guarantees, default interest, and so forth) that are normal in the ordinary course of business, notwithstanding the particularly high value of the disputed transactions; (v) there was no evidence to suggest that the seller in general exercised any control over payment and other obligations; (vi) cases were identified in which persons working for the applicant’s company acted on behalf of the seller under an authorisation and used its corporate stamp.
37.The referring court adds that, in its view, patterns of conduct of economic entities similar to those mentioned are generally typical in cases where one party to the transaction controls the other or both are controlled by a third party. Therefore, although there is no evidence as to the de jure existence of such control, the referring court is of the opinion that the circumstances of the case at issue may possibly justify the seller and the applicant being regarded as de facto related for the purposes of Article29(1)(d) of Regulation No2913/92 and Article143(1)(e) and/or (f) of Regulation No2454/93.
38.At the heart of the present question, therefore, lies the issue of whether the customs authorities are able to conclude that two parties are ‘related’ for the purposes of customs valuation, despite the lack of any legal links between them, on the basis of elements suggesting that, de facto, one party controls the other or a third party controls both of them.
39.In the next sections, I shall explain why I take the view that the answer to this question must be in the affirmative. However, I shall also suggest that the relevant provisions of EU law (in particular, Article29(1)(d) of Regulation No2913/92 and Article143(1)(e) and (f) of Regulation No2454/93) require a relatively cautious approach from the authorities in purely de facto situations. Finally, in order to provide a useful answer to the referring court, I will briefly examine another provision (Article181a of Regulation No2454/93) that– although not mentioned by the referring court– may also be of some relevance in the present case.
(a)Article143(1) of Regulation No2454/93
40.From the outset, it may be worth emphasising that the situations in which two operators are deemed to be ‘related’, for the purposes of customs valuation, are listed exhaustively (‘only if’)(18) in Article143(1) of Regulation No2454/93.
41.That being said, as was pointed out by some of the parties that submitted observations in the present proceedings, the Court has stated that the situations listed therein need not be interpreted restrictively, when to do so would undermine the effectiveness of Article29 of Regulation No2913/92.(19) On that basis, those parties have argued that the case at hand in the main proceedings may be subsumed under points(b), (e) or (f) of Article143(1) of Regulation No2454/93.
42.As far as point(b) of Article143(1) of Regulation No2454/93 is concerned, it appears hardly disputable that mere de facto situations are not caught by that provision. Indeed, only persons that are ‘legally recognised partners in business’,(20) are considered ‘related’ under that provision. An examination of the various language versions of the regulation confirms that reading.(21)
43.Since the referring court states that, on the basis of the evidence available, no legal connection between the two operators may be detected, I am of the view that point(b) of Article143(1) of Regulation No2454/93 is not applicable in the case at hand.
44.The situation may, however, be different with regard to points(e) and (f) of Article143(1) of Regulation No2454/93. Indeed, these provisions allow the authorities to consider two operators to be ‘related’ in situations of mere de facto control. That is so when one of the operators ‘directly or indirectly controls the other’ (point(e)), and when both operators are ‘directly or indirectly controlled by a third person’ (point(f)). The interpretative notes included in Annex23 to Regulation No2454/93 state that, for the purposes of Article143(1)(e), (22) ‘one person shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter’.(23)
45.The disjunctive conjunction ‘or’ indicates that situations of de facto control are also relevant for the purposes of those provisions, in the alternative to purely de jure control. In summary, I would say that two operators are ‘related’ for the purposes of customs valuation when– because of legal, contractual or simply factual links existing between them– the transactions in question (as declared to the authorities) cannot possibly be the result of the dealings of two independent market operators, each of them taking the most economically rational or profit-maximising conduct.
46. It is obviously for the referring court– which alone has jurisdiction to assess the facts of the dispute before it– to determine whether the buyer and the seller are ‘related’ because one of them is capable of exercising restraint or direction over the other, or a third person can exercise a similar form of control over both companies.(24)
47.That said, in order to assist the referring court, I would observe the following.
48.The elements which, according to the referring court, point to the possible links between the two market operators undoubtedly show the existence of a high level of trust between them. However, I wonder whether those elements– both when assessed individually and when considered together– are sufficient to establish a case of de facto control under point(e) or (f) of Article143(1) of Regulation No2454/93.
49.It seems to me that those elements are mostly indicia or, in any case, have led the authorities to rely on certain presumptions.
50.In that regard, I can certainly agree that customs authorities should be able to consider certain facts to be established in the presence of a number of indicia and/or on the basis of some presumptions. Given the sheer number of operations that must be processed by those authorities on a daily basis, clearly one cannot expect them to base their findings on standards of proof which are, for example, as high as those imposed upon authorities investigating crime.
51.At the same time, however, market operators must be able to have confidence that those authorities follow predictable and reliable methods for the verification of their declarations. In particular, indicia must be relevant and consistent, and presumptions based on established experience, so that the risk of false positives is minimised.(25) Indeed, as the preamble to Regulation No2913/92 states, the Customs Code aims at ‘secur[ing] a balance between the needs of the customs authorities in regard to ensuring the correct application of customs legislation, on the one hand, and the right of traders to be treated fairly, on the other…’.
52.Consistent with that principle, Article29(2) of Regulation N2913/92 lays down an ad hoc procedure designed to enable the authorities to clarify whether or not Article29(1)(d) of Regulation No2913/92 is applicable to a given situation, whilst protecting the rights of the declarant. The customs authorities are required to communicate their doubts to the declarant so that the latter has the opportunity to provide more information in an attempt to demonstrate that the transaction value declared is acceptable for customs purposes. From my point of view, although mainly there to examine the acceptability of the price declared, nothing precludes the authorities and/or the operators to make use of that procedure in order to clarify the relationship between the buyer and the seller.
53.Without going so far as to establish a presumption according to which the price agreed between related parties generally does not reflect the real economic value of the goods, Article29 of Regulation No2913/92 eases, to a certain extent, the standard of proof required of the authorities. It does so by laying down certain burdens of allegation for the declarant(26) and, in some circumstances, by also placing upon him or her part of the burden of proof.(27)
54.However, the placing of such burdens upon the declarants cannot have the effect of relieving the authorities of their duty to base their findings on the existence of de facto control on specific elements which indicate that one party was capable of determining or influencing the conduct of the other party, or that a third party could exercise a similar power vis-à-vis both parties.
55.In my view, the mere fact that a transaction lacks certain features that normally characterise similar transactions– for example, existence of a written sale contract, provision of securities or guarantees, advance payments– does not automatically reveal the existence of a structural or organic link between the two operators. As Baltic Master points out, it cannot be excluded that two long-standing business partners, who have entertained regular and fruitful business dealings, might carry out their transactions in a simplified and speedy manner. Similarly, an unusually low price is not necessarily an indication that the transaction took place between related persons. In fact, a party may have been able to extract a particularly good price because of, for example, the financial difficulties of the other party or due to a particularly favourable market situation.(28) Those are not situations of de facto control but rather the result of normal market forces at play.
56.In my view, to prove de facto control, the authorities cannot limit themselves to observing and recording the effect of the alleged control (the unusually low price), but must actually identify the possible cause of the alleged control. What comes to mind, for example, is the existence of interlocking directorates, cross-shareholdings, or situations of proximity between the shareholders of the two parties. Those are elements that, where appropriate, may provide the authorities with a solid basis for presuming de facto control. Otherwise, the authorities’ reasoning becomes circular: the element that triggers an in-depth investigation into the relationship between the two parties (the unusually low price) becomes also the proof of the existence of a ‘too close’ relationship between them.
57.Having said that, for the sake of completeness, it may be useful to remind the referring court that the fact that the buyer and the seller are ‘related’ within the meaning of Article29(1)(d) of Regulation No2913/92 is by no means the only situation(29) that permits the customs authorities to discard the value of the goods declared on import. Indeed, the applicable EU framework includes other provisions that allow the authorities to estimate that value on the basis of other methods of valuation. One of those provisions seems, at first sight, to be potentially relevant in the present case.
(b)Article181a of Regulation No2454/93
58.Pursuant to Article181a of Regulation No2454/93, ‘the customs authorities need not determine the customs valuation of imported goods on the basis of the transaction value method if… they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable as referred to in Article29 of the Code’.
59.Article181a of Regulation No2454/93 covers the situations in which the price declared does not correspond to the price actually paid or payable. That provision– which is applicable regardless of whether the buyer and the seller are (de jure or de facto) related– catches, in particular, instances of fraud, false declarations and other misrepresentations.(30) It may be the case, for example, that there are forged documents or declarations that do not accurately reflect the actual transaction. It may also be the case that there are errors in the determination or adjustment of the ‘price actually paid or payable’, on the basis of the criteria provided for in Articles29, 32 and 33 of Regulation No2913/92, or more simply that there are material errors in the filling of the documents required for customs clearance.
60.Article181a of Regulation No2454/93 is, therefore, a provision that is largely complementary to Article29(1) of Regulation No2913/92. Indeed, as the Commission stated at the hearing, the former provision was introduced, in the EU framework, only at a later stage, in order to fill certain gaps.
61.As I see it, Article181a of Regulation No2454/93 applies when the price declared does not correspond to the price actually paid or payable. Article29(1) of Regulation No2913/92 applies when the price declared does correspond to that actually paid or payable, but its amount was influenced by the relationship between the buyer and the seller. As such, in both cases the value declared to the customs authorities does not reflect the real economic value of the goods, therefore appearing arbitrary or fictitious.
62.As the Spanish Government stated at the hearing, despite their different scope, Article181a of Regulation No2454/93 and Article29(1) of Regulation No2913/92 pursue the same objective (permit the correct valuation of the goods) and follow a broadly similar logic.
63.Both provisions require a relatively careful approach by the customs authorities: they must have ‘grounds’ to consider that the price agreed between related operators has been influenced by their relationship (Article29(2) of Regulation No2913/92)(31), and they must have ‘reasonable doubts’ that the price declared is not the price actually paid or payable (Article181a of Regulation No2454/93).
64.Moreover, both provisions require the authorities to hear the operator(s) concerned before deciding to disregard the value declared and proceed to making their own evaluation of the value of the goods.
65.That said, whether Article181a of Regulation No2454/93 is relevant in the case at hand– as an alternative to Article29(1) of Regulation No2913/92– is, once again, for the referring court to decide.
3.Conclusion on the first question
66.In the light of the foregoing, the answer to the first question should, in my view, be that Article29(1)(d) of Regulation No2913/92 and Article143(1)(e) and (f) of Regulation No2454/93 are to be interpreted as meaning that the buyer and the seller are deemed to be ‘related persons’ where, despite the absence of elements proving business partnership or control, on the basis of the circumstances surrounding the conclusion of transactions, it can be reasonably inferred that, de facto, one person controls the other or that both persons are controlled by a third person.
B.Second question
67.By its second question, the referring court essentially asks whether Article31(1) of Regulation No2913/92 precludes the customs value being determined based on information contained in a national database relating to a customs value of goods which have the same origin and which, although not similar, are ascribed to the same TARIC heading.
68.In that regard, it should be recalled that Articles30 and 31 of Regulation No2913/92 provide for methods of customs valuation, in circumstances where it is not possible to determine the actual transaction value, and thus the default method for customs valuation set out in Article29 of the same code cannot be used.
69.These ‘subsidiary’ valuation methods are set up in a strict hierarchical order and are subordinately linked to each other. Therefore, they are applicable sequentially: when the customs value cannot be determined by applying a given method, the method which comes immediately after it in the order established by the Customs Code should be used, where feasible.(32)
70.Article30 of Regulation No2913/92 lists four specific, rule-based, methods of evaluation. For its part, Article31 of Regulation No2913/92 provides for a valuation method of last resort– which can only be used if no other option is possible– permitting the value to be determined, ‘on the basis of data available in the Community, using reasonable means’, provided that those means are ‘consistent with the principles and general provisions’ of the EU customs legislation and of the General Agreement on Tariffs and Trade (‘the GATT’).
71.Given its rather open-ended wording and its nature of extrema ratio, Article31 of Regulation No2913/92 leaves it to the authorities to identify, in each set of circumstances, the methods that can be used in order to determine the value of the goods in question. Those methods should, in principle, be those set out in Articles29 and 30 of the same regulation, applied with a certain degree of flexibility.(33)
72.What matters, under Article31 of Regulation No2913/92, is that the means chosen are (i) ‘reasonable’, (ii) based on available data, and (iii) consistent with the relevant (EU and international) legal framework.
73.These requirements imply, in my view, the following. First, the means chosen must be adequate under the circumstances (that is, capable of producing a fair and sound valuation) and practical for the authorities (that is, not overly complicated and time-consuming). Second, the means chosen must be based on actual data– where possible, ‘based on previously determined customs values’(34)– that are verifiable by the declarants and, if need be, by the competent jurisdictions. Third, the means must fit harmoniously in the EU system of customs valuation and not be at odds with the relevant international instruments.
74.In the present case, as mentioned in point19 above, the customs authorities took the view that neither the default method of valuation set out in Article29 of Regulation No2913/92, nor the subsidiary methods set out in Article30 of the same regulation could be applied. They thus decided that the customs value of the goods in question had to be determined in accordance with the ‘fall-back’ method set out in Article31 of Regulation No2913/92. To that end, those authorities determined the customs value of the goods imported by the applicant using the transaction data for goods imported by a different company under the same designation (‘parts of air-conditioning machines’) and TARIC code (8415900090), with the same origin (Malaysia) and originating from the same manufacturer. The referring court notes that the transaction taken as the reference was the only case of exports from Malaysia under the same TARIC code recorded in the national database in 2010.
75.It is obviously not for this Court to consider whether, in the case at hand, the customs authorities were correct in resorting to the method of customs valuation set out in Article31(1) of Regulation No2913/92, on the ground that neither Article29 nor Article30 of that code could be applied.
76.That said– coming back to the issue raised by the referring court– I take the view that Article31 of Regulation No2913/92, in principle, does not preclude the determination of the value of goods on the basis of the transaction data, recorded in a national database, relating to an import of goods, classified under the same TARIC code, with the same origin and having taken place in the previous years.
77.Although the shipment used as reference did not necessarily concern ‘identical goods’ or ‘similar goods’, within the meaning of Article30(2)(a) and (b) of Regulation No2913/92, the fact that both shipments concerned goods classified under the same TARIC code is indicative of a reasonable degree of commonality between those goods. In my view, such commonality may well be sufficient when some goods are valuated under Article31 of Regulation No2913/92, if no other characteristics of the products in question are known. In practice, the authorities applied the method of determination of the customs value on the basis of the transaction value of similar goods,(35) interpreting the concept of ‘similar goods’ in a flexible manner.(36)
78.I hardly need to recall, in this context, that the TARIC is ‘based on the combined nomenclature’ which, building on the World Customs Organization’s Harmonized System (‘the HS’), constitutes the main tool for classifying goods in the European Union. TARIC codes are thus meant to reflect the manner in which a product is classified in all countries that adopt the HS.(37) With the digitalisation of the customs, the TARIC is also easily accessible to both traders and authorities via a public database, thereby enhancing transparency and legal certainty.
79.It is true that the relevant TARIC code used in the present case is residual and generic.(38) However, the attribution of the specific TARIC code by the customs authorities was based on the information provided by the importer itself. In this regard, it must be borne in mind that the system of EU customs valuation is based on the premiss that the information necessary for the application of customs rules to goods is mainly determined on the basis of the information provided by the declarant, and not on the basis of the customs authorities’ findings.(39) More generally, self-assessment of the liabilities in relation to the goods covered by a declaration submitted to the customs authorities is generally considered to be one of the principles underpinning the EU legislation in this field. In this context, the role of the authorities is mostly confined to checking and verifying the declarations and, if necessary, rectifying them.(40) The authorities cannot be expected to carry out time-consuming tasks in order to ‘do the job’ of the declarants and re-calculate their dues on the basis of information and data that is not readily available.
80.In this regard, it should also be added that the Court has already held that the price indicated in a single sale which took place before that sale, on the basis of which the customs declaration was made in a case, may constitute ‘data available’ in the European Union which Article31(1) of Regulation No2913/92 allows to be used as a basis for determining customs value. The Court has found that reference to that price constitutes a means of determining a customs value which is both ‘reasonable’ within the meaning of Article31(1) and consistent with the principles and general provisions of the international agreements and the provisions referred to in Article31(1).(41)
81.I do not see any reason why those findings could not also be applicable in the case at hand.
82.That said, I agree with Baltic Master that the examination of EU-wide data, relating to imports of the relevant goods in the relevant period, would have been preferable.(42) It is, however, for the referring court to ascertain whether any such data was available and, if so, whether that data may cast doubt on the customs authorities’ findings.
83.In the light of the foregoing, the second question should, in my view, be answered to the effect that Article31(1) of Regulation No2913/92 does not preclude the determination of the customs value on the basis of information contained in a national database relating to a customs value of goods which have the same origin and which, although not identical or similar, are ascribed to the same TARIC heading.
V.Conclusion
84.In conclusion, I propose that the Court answer the questions referred for a preliminary ruling by the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania, Lithuania) as follows:
–Under Article29(1)(d) of Regulation No2913/92 and Article143(1)(e) and (f) of Regulation No2454/93, the buyer and the seller are deemed to be ‘related persons’ where, despite the absence of elements proving business partnership or control, on the basis of the circumstances surrounding the conclusion of transactions, it can be reasonably inferred that, de facto, one person controls the other or that both persons are controlled by a third person;
–Article31(1) of Regulation No2913/92 does not preclude the determination of the customs value on the basis of information contained in a national database relating to a customs value of goods which have the same origin and which, although not identical or similar, are ascribed to the same TARIC heading.
1Original language: English.
2Smith, A., An Inquiry into the Nature and Causes of the Wealth of Nations, 1776, BookV, ChapterII, PartII.
3See Asakura, H., ‘World History of the Customs and Tariffs’, World Customs Organization, 2003, pp.19-20; and Wolffgang, H-M., ‘Emerging Issues In European Customs Law’, World Customs Journal, Vol.1, No. 1, 2007, pp.3-4.
4The Agreement on Implementation of ArticleVII of the GATT (or WTO Customs Valuation Agreement) to name just one of those agreements. Generally, on this topic, see Rosenow, S., O’Shea, B.J., A Handbook on the WTO Customs Valuation Agreement, World Trade Organization and Cambridge University Press, 2010.
5OJ 1992 L302, p.1.
6Regulation No2913/92 ceased to have effect on 30April 2016, having been repealed and replaced by Regulation (EC) No450/2008 of the European Parliament and of the Council of 23April 2008 laying down the Community Customs Code (Modernised Customs Code) (OJ 2008 L145, p.1). In turn, the latter regulation was repealed and replaced by Regulation (EU) No952/2013 of the European Parliament and of the Council of 9October 2013 laying down the Union Customs Code (OJ 2013 L269, p.1), which is currently in force.
7OJ 1993 L253, p.1.
8That regulation has been repealed by Commission Implementing Regulation (EU) 2016/481 of 1April 2016 repealing Commission Regulation (EEC) No2454/93 laying down provisions for the implementation of Council Regulation (EEC) No2913/92 establishing the Community Customs Code (OJ 2016 L87, p.24).
9The term TARIC stands for the ‘Integrated Tariff of the European Union’; see Article2 of Council Regulation (EEC) No2658/87 of 23July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L256, p.1), as amended.
10According to Baltic Master, those codes were 8415200090, 8415820090, and 8415101000.
11Code 8415900090.
12ECtHR, 16April 2019, Baltic Master Ltd. v. Lithuania, CE:ECHR:2019:0416JUD005509216.
13Judgment of 12December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraph36 and the case-law cited).
14The price may be adjusted in accordance with Articles32 and 33 of the same code. Those provisions set out elements whose value should, or should not, be added to the price actually paid or payable for the goods in question.
15Point(d) of Article29(1) of Regulation No2913/92.
16See also, similarly, Opinion of Advocate General Mengozzi in Stretinskis (C‑430/14, EU:C:2015:701, point15).
17Judgment of 12December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraph40 and the case-law cited).
18To that effect, Opinion of Advocate General Mengozzi in Stretinskis (C‑430/14, EU:C:2015:701, point18).
19See judgment of 21January 2016, Stretinskis (C‑430/14, EU:C:2016:43, paragraph27).
20My emphasis.
21See, among others, the French version (‘juridiquement’), the Italian version (‘veste giuridica’), the Spanish version (‘jurídicamente’), the Swedish version (‘juridiskt’) and the Greek version (‘νομική άποψη’).
22Although the note mentioned refers to point(e) of Article143(1) only, I consider the principle set out therein to be, mutatis mutandis, applicable also with regard to point(f) of the same provision.
23My emphasis. As concerns the term ‘operationally’, other language versions of the regulation confirm unequivocally that that term refers to situations of de facto control: see, inter alia, the French version (‘en droit ou en fait’), the Italian version (‘di diritto o di fatto’) and the Greek version (‘de jure ή de facto’).
24See, to that effect, judgment of 9July 2020, Direktor na Teritorialna direktsiya Yugozapadna Agentsiya ‘Mitnitsi’ (C‑76/19, EU:C:2020:543, paragraphs67 and 68).
25In this context, I hardly need to add that, in any event, market operators have the right to challenge the authorities’ assessment before the national courts, as Baltic Master did in the present case. See, to that effect, judgment of 13March 2014, Global Trans Lodzhistik (C‑29/13 and C‑30/13, EU:C:2014:140), and Opinion of Advocate General Cruz Villalón in DP grup (C‑138/10, EU:C:2011:378, point44).
26See Article29(2)(a) (‘If the declarant so requests’), and Article2982)(c) (‘at the initiative of the declarant’).
27See Article29(2)(b) (‘wherever the declarant demonstrates’).
28Consider, for example, that the sale of crude oil in spring 2020, during the peak of the COVID-19 pandemic, recorded negative prices for the first time in history.
29Provided, as mentioned, that their relationship did have an influence on the price of goods (see supra, point31 of the Opinion).
30See, to that effect, judgment of 9March 2017, GE Healthcare (C‑173/15, EU:C:2017:195, paragraphs38 to 40). See also Opinion of Advocate General Mazák in Carboni e derivati (C‑263/06, EU:C:2007:501, points61 to 65).
31In that respect, the interpretative note with regard to Article29(2) states that the examination of the circumstance surrounding the sale is only required where ‘there are doubts about the acceptability of the price’ (my emphasis).
32See, to that effect, judgments of 12December 2013, Christodoulou and Others (C‑116/12, EU:C:2013:825, paragraphs41 to 43), and of 9November 2017, LS Customs Services (C‑46/16, EU:C:2017:839, paragraph43). See also Opinion of Advocate General Wahl in Oribalt Rīga (C‑1/18, EU:C:2019:64, points28 to 30).
33See Interpretative note to Article31(1), supra point13 of this Opinion. To that effect, see also Opinion of Advocate General Wahl in Oribalt Rīga (C‑1/18, EU:C:2019:64, points28 to 30).
34Ibid.
35Article30(2)(b) of Regulation No2913/92.
36Article142(1)(d) of Regulation No2454/93 and interpretative notes to Article31(1).
37For that reason, the Commission– which is responsible for managing and publishing the TARIC– although enjoying some latitude in defining the scope of the customs headings established on the basis of the HS, is not authorised to alter their subject matter. See, to that effect, Opinion of Advocate General Tizzano in CBA Computer (C‑479/99, EU:C:2001:119, point40 and the case-law cited).
38See above, point19 of this Opinion.
39See, to that effect, judgment of 15September 2011, DP grup (C‑138/10, EU:C:2011:587, paragraphs33 and 34).
40On this point, see extensively Walsh, T., European Union Customs Code, Wolters Kluwer, 2015, pp.67 to 73.
41See, for example, judgment of 28February 2008, Carboni e derivati (C‑263/06, EU:C:2008:128).
42In passing, I note that the relevant provisions refer to identical and similar products sold for export ‘to the Community’ (Article30(2) of Regulation No2913/92), and to ‘data available in the Community’ (Article31(1) of the same regulation).