Flashback on ECJ Cases – C-187/14 (DSV Road) – No deduction of VAT on import by the carrier

On June 25, 2015, the ECJ issued its decision in the case C-187/14 (DSV Road).

Context: Reference for a preliminary ruling — Community Customs Code — Regulation (EEC) No 2913/92 — Articles 203 and 204 — Regulation (EEC) No 2454/93 — Article 859 — External transit procedure — Incurrence of a customs debt — Removal or not from customs supervision — Failure to perform an obligation — Late submission of the goods at the office of destination — Goods refused by the consignee and returned without having been submitted to the customs office — Goods again placed under the external transit procedure via a fresh declaration — Directive 2006/112/EC — Article 168(e) — Deduction of VAT on import by the carrier

Article in the EU VAT Directive

Article 168(e) of the EU VAT Directive 2006/112/EC

Article 168 (Origin and Scope of Right of Deduction)
In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(e) the VAT due or paid in respect of the importation of goods into that Member State.

Facts

On 23 April 2007 and 10 April 2008, DSV, a Danish transport and logistics undertaking, initiated, as the principal, two external Community transit procedures (‘the transit procedures’) for the transport of 148 and 703 packages, respectively, of electronic goods between the customs office of departure located in the free port of Copenhagen (Denmark) and the customs office of destination in Jönköping (Sweden). Without carrying out a physical check of the goods, the Danish customs office of departure authorities ordered their release with time-limits for their presentation at the customs office of destination until 31 August 2007 and 13 April 2008 respectively.
In both cases, DSV transported the goods to Jönköping, where, however, the consignee refused to accept the goods. Consequently, on 4 September 207 and 14 April 2008 respectively, DSV brought those goods back to the free port of Copenhagen without their having been presented to the Jönköping or Copenhagen free port customs offices and without the transit documents having been cancelled.
DSV argues that the same 148 and 703 packages of electronic goods were dispatched a second time to Jönköping on 13 September 2007 and 17 April 2008 respectively with other electronic goods. DSV had initiated a new transit procedure and a new transit document in respect of each of those deliveries, of a total of 573 and 939 packages of electronic goods respectively. Those second transit procedures were correctly discharged on 13 September 2007 and 23 April 2008 respectively. However, Skatteministeriet disputes the fact that the 148 and 703 packages of electronic goods covered by the first transit procedures were also included in the second transit procedures.
In respect of each of the first undischarged transit procedures, Den danske told- og skatteforvaltning (the Danish Tax and Customs Authority) demanded payment from DSV for customs duties under Article 203 of the Customs Code and, in the alternative, under Article 204 of that Code. In addition, Den danske told- og skatteforvaltning demanded payment of VAT on the import of the goods which were subject to those procedures, on the basis of Paragraph 39(1)(4) of the Customs Law, in the version codified by Law No 867 of 13 September 2005. It is apparent from the file before the Court that DSV paid the VAT on import but that its right to deduct that VAT was refused. Since DSV contested those decisions, the case is presently pending before the Østre Landsret (Eastern Regional Court of Appeal).

Questions

Is Article 203(1) of the Customs Code ¹ to be interpreted as meaning that there is removal from customs supervision in a situation such as that of the main proceedings, if it is assumed that (a) each of the two generated transits in 2007 and 2008 respectively concerned the same goods, or (b) it cannot be documented that they were the same goods?

Is the Article 204 of the Customs Code ² to be interpreted as meaning that customs debt arises in a situation such as that of the main proceedings, if it is assumed that (a) each of the two generated transits in 2007 and 2008 respectively concerned the same goods, or (b) it cannot be documented that they were the same goods?

Is Article 859 of the implementing provisions ³ to be interpreted as meaning that, in the circumstances of the main proceedings, there is an infringement of obligations which has had no significant effect on the proper course of the customs procedure, if it is assumed that (a) each of the two generated transits in 2007 and 2008 respectively concerned the same goods, or (b) it cannot be documented that they were the same goods?

Can the first Member State into which the goods were imported refuse the taxable person designated by the Member State a deduction of the import VAT pursuant to Article 168(e) of the VAT Directive, ⁴ where the import VAT is charged to a carrier of the goods in question who is not the importer and owner of the goods but has simply transported and been in charge of the customs dispatch of the consignment as part of its freight forwarding operations, which are subject to VAT?

AG Opinion

None

Decision

1. Article 203 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Council Regulation (EC) No 1791/2006 of 20 November 2006 must be interpreted as meaning that a customs debt is not incurred on the basis of the sole fact that the goods placed under an External Community transit procedure are, after an unsuccessful delivery attempt, brought back to the free port of departure without having been presented to either the customs office of destination or the customs of the free port if it is established that the same goods were subsequently transported again to their destination under a second correctly discharged External Community transit procedure. However, if it is not possible to establish that the goods covered by the first and second External Community transit procedures are the same goods, a customs debt is incurred under that provision.

2. Article 204 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Council Regulation (EC) No 1791/2006 of 20 November 2006, read in conjunction with Article 859 of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92, as amended by Commission Regulation (EC) No 214/2007 of 28 February 2007, must be interpreted as meaning that the late presentation at the customs office of destination under a second External Community transit procedure of goods placed under a first External Community transit procedure constitutes an omission which leads to a customs debt being incurred, unless the conditions laid down in Article 356(3) or the second indent of Article 859 and point 2(c) thereof of that regulation are satisfied, which it is for the referring court to ascertain.

3. Article 168(e) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not precluding national legislation which excludes the deduction of VAT on import which the carrier, who is neither the importer nor the owner of the goods in question and has merely carried out the transport and customs formalities as part of its activity as a transporter of freight subject to VAT, is required to pay.

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