Flashback on ECJ Cases – C-248/09 (Pakora Pluss) – Import duties do not include the VAT to be levied on the importation of goods

On July 29, 2010, the ECJ issued its decision in the case C-248/09 (Pakora Pluss).

Context: Act of Accession to the European Union – Customs union – Transitional measures – Goods free from customs duties when entered for free circulation – Goods in transport in the enlarged Community on the date of accession of the Republic of Latvia – Export formalities – Import duties – VAT

Article in the EU VAT Directive

Articles 2(2), 7(1)(a), 11(B)(3)(a), 21 of the Sixth VAT Directive. Articles 2, 30, 86(1)(a), 201 in the EU VAT Directive

Article 2(2) of the Sixth Directive 77/388, as amended by Council Directive 91/680/EEC of 16 December 1991 (OJ 1991 L 376, p. 1) (‘the Sixth Directive’), provides that the importation of goods is to be subject to VAT.

Article 7(1)(a) of the Sixth Directive, entitled ‘Imports’, provides:

‘1. “Importation of goods” shall mean:

(a) the entry into the Community of goods which do not fulfil the conditions laid down in Articles 9 and 10 of the Treaty establishing the European Economic Community …’

Article 11(B)(3)(a) of the Sixth Directive concerning the importation of goods, provides:

‘3. The taxable amount shall include, in so far as they are not already included:

(a) taxes, duties, levies and other charges due outside the importing Member State and those due by reason of importation, excluding the VAT to be levied;

…’

Article 21 of the Sixth Directive, entitled ‘Persons liable to pay tax to the authorities’, states in subparagraph (2), that VAT is payable by the person or persons designated or accepted as being liable by the Member States into which the goods are imported.

Facts

It is clear from the order for reference that, on 30 April 2004, a cargo manifest was drawn up in Germany for the shipping of a motor vehicle to Latvia. VAT at the rate of 0% was applied to that operation in Germany.
On 3 May 2004, Pakora Pluss, as the principal, began the Community transit procedure for the vehicle. The customs procedure was not completed.
On 1 March 2006, by decision of the Valsts ieņēmumu dienesta galvenā muitas pārvalde (Customs Directorate General of the VID), Pakora Pluss was ordered to pay the Treasury a sum by way of customs duties and other taxes on the ground that it had not submitted any documents proving that it had completed the customs procedure. That decision was confirmed by the VID on 21 April 2006.
By judgment of 9 August 2007, the Administrātīvā rajona tiesa (District Administrative Court) upheld the action brought by Pakora Pluss against that decision.
By judgment of 22 July 2008, the Administrātīvā apgabaltiesa (Regional Administrative Court) set aside that decision.
Pakora Pluss brought an appeal on a point of law before the Augstākās tiesas Senāts Administratīvo lietu departaments (Administrative Affaires Division of the Senate of the Supreme Court). It submitted, in particular, that the appeal court had applied Articles 447 and 448 of the implementing regulation, relating to the transit between the Member States, whereas the cargo manifest at issue had been drawn up before the accession of the Republic of Latvia to the European Union. Furthermore, the appeal court had incorrectly applied Article 96 of the Customs Code by incorrectly designating it as the principal responsible for the payment of VAT.

Questions

1. Can export formalities be regarded as completed for the purpose of [Annex IV, Chapter 5,] paragraph 1 of the Act of Accession, if a cargo manifest has been filled in but the actions required by Article 448 of Regulation No 2454/93 have not been performed (the German customs authorities had not given the Latvian customs authorities proper notification of the shipping company’s request)?

2. If they cannot, then in circumstances such as those in question can the rules governing the customs procedure (Regulations Nos 2913/92 and 2454/93) be regarded as quite inapplicable?

3. If the answer to the first question is affirmative, must Annex IV, Chapter 5, paragraph 1, of the Act of Accession … be interpreted as meaning that, when goods moving in the enlarged Community after being the subject of export formalities are not put into free circulation, they are not free of customs duties or other customs measures, even though it is beyond doubt that those goods have the status of Community goods? In other words, is it in the circumstances of the case decisive that the customs procedure of release for free circulation has been completed?

4. Is VAT to be included in the definition of import duties laid down in Article 4(10) of Regulation No 2913/92?

5. If it is, is the obligation to pay VAT, which is charged as a customs duty on the import of goods, imposed on the principal or on the final consumer of the goods? Are there any circumstances that might permit that obligation to be shared?’

AG Opinion

None

Decision

1. Annex IV, Chapter 5, paragraph 1 of the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded must be interpreted as meaning that, in order to ascertain whether the export formalities referred to therein have been completed, it is irrelevant that the actions provided for in Article 448 of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code, as amended by Commission Regulation (EC) No 2787/2000 of 15 December 2000, were performed, even where a cargo manifest has been drawn up.

2. Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Regulation (EC) No 82/97 of the European Parliament and of the Council of 19 December 1996, and Regulation No 2454/93, as amended by Regulation No 2787/2000, are applicable in the new Member States as from 1 May 2004, but the procedure provided for in Annex IV, Chapter 5, paragraph 1 of the Act of Accession cannot be relied on where the export formalities set out therein have not been completed with respect to goods in transport in the enlarged Community at the date of accession of those new Member States of the European Union.

3. Article 4(10) of Regulation No 2913/92, as amended by Regulation No 82/97 must be interpreted as meaning that import duties do not include the value added tax to be levied on the importation of goods.

4. When goods are imported, the obligation to pay the value added tax is imposed on the person or persons designated or accepted as being liable by the Member State into which the goods are imported.

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