Court of Justice of the European Communities (including Court of First Instance Decisions)

OPINION OF ADVOCATE GENERAL

TANCHEV

delivered on 6 October 2021(1)

Case C‑489/20

UB

v

Kauno teritorinė muitinė,

joined parties:

Muitinės departamentas prie Lietuvos Respublikos finansų ministerijos

(Request for a preliminary ruling from the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania))

(Reference for a preliminary ruling – EU Customs Code – Smuggled merchandise seized and subsequently confiscated after entry into the EU customs territory – Extinguishment of a customs debt – Consequences for the levying of excise duty and VAT)

1.        This reference for a preliminary ruling from the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) is primarily concerned with interpretation of the judgment of the Court of 29 April 2010, Dansk Transport og Logistik. (2) More specifically, it concerns extinguishment of a customs debt with respect to goods unlawfully imported into the European Union, which were seized by customs authorities not at a customs office or in the free zone during their introduction into the Union customs territory, but while being transported by road across the Member State concerned after crossing, unlawfully, a Member State frontier at the border of the EU, (3) having gone beyond the first customs office situated inside the customs territory of the Union without having been presented there. (4)

2.        However, the ruling in Dansk Transport og Logistik concerned the conventional scenario of discovery of such goods by customs authorities during their introduction into the customs territory of the Union, at either the first customs office since entry or in the free zone. The question therefore arises as to whether the principles elaborated in Dansk Transport og Logistik on extinguishment of a customs debt in the light of seizure, and subsequent confiscation, of such goods, is applicable to the main proceedings.

3.        Secondly, and linked to this, the problem at hand is governed by Article 124(1)(e) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code, (5) whereas at the time of the ruling in Dansk Transport og Logistik, such a situation was governed by point (d) of the first paragraph of Article 233 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code. (6) The wording of Article 124(1)(e) of the EU Customs Code, is not the same as the wording of point (d) of the first paragraph of Article 233 of the Community Customs Code. This element too, therefore, is relevant when determining if the customs debt at issue in the main proceedings was extinguished by their seizure while being transported by road across the territory of a Member State.

4.        Two further questions follow from this. The levying of excise duties with respect to imported goods is governed by Article 2(b) and Article 7 of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC. (7) The charging of value added tax (‘VAT’) with respect to imported goods is governed by Articles 2(1)(d) and 70 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. (8) If the customs debt at issue in the main proceedings has in fact been distinguished under Article 124(1)(e) of the EU Customs Code, are excise duty and VAT still chargeable?

5.        I have reached the conclusion that, while the customs debt was extinguished in the main proceedings, both excise duty and VAT remain due, the reasons for which are detailed below. The ensuing analysis respects the rules established in the case-law that competence to recover customs duty, excise duty, and VAT are to be analysed separately. (9)

I.      Legal Framework

A.      EU Law

6.        Article 79 of the EU Customs Code is headed ‘Customs debt incurred through non-compliance’. It provides, inter alia, as follows in its paragraph 1(a):

‘For goods liable to import duty, a customs debt on import shall be incurred through non-compliance with …

(a)      one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the Union;’

7.        Article 124 of the EU Customs Code is headed ‘Extinguishment’ and provides as follows in its paragraph 1(e):

‘… a customs debt on import or export shall be extinguished in any of the following ways: …

(e)      where goods liable to import or export duty are confiscated or seized and simultaneously or subsequently confiscated;’

8.        Article 198 of the EU Customs Code is headed ‘Measures to be taken by the customs authorities’. It provides as follows in its paragraph 1(a):

‘The customs authorities shall take any necessary measures, including confiscation and sale, or destruction, to dispose of goods …

(a)      where one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the European Union has not been fulfilled, or the goods have been withheld from customs supervision;’

9.        Article 2(b) of the Excise Duty Directive provides as follows:

‘Excise goods shall be subject to excise duty at the time of:

…

(b)      their importation into the territory of the Community.’

10.      Article 7 of the Excise Duty Directive provides as follows:

‘1.      Excise duty shall become chargeable at the time, and in the Member State, of release for consumption.

2.      For the purposes of this Directive, “release for consumption” shall mean any of the following:

…

(d)      the importation of excise goods, including irregular importation, unless the excise goods are placed, immediately upon importation, under a duty suspension arrangement.’

11.      Article 2(1)(d) of the VAT Directive provides as follows:

‘The following [transaction] shall be subject to VAT:

…

(d)      the importation of goods.’

12.      Article 70 of the VAT Directive provides as follows:

‘The chargeable event shall occur and VAT shall become chargeable when the goods are imported.’

B.      Lithuanian law

13.      Article 93, headed ‘Cessation of the tax obligation’, of the Lietuvos Respublikos mokesčių administravimo įstatymas (Law of the Republic of Lithuania on tax administration) (as amended by Law No IX‑2112 of 13 April 2004), provided in its paragraph 2(3) that ‘any obligation with respect to the taxes administered by the Customs shall also cease … if the goods are detained at the time of their illegal entry and, at that same time or later, seized’.

14.      According to the order for reference, in order to address a change of approach on the part of the national legislature with regard to the moment at which the obligation to pay excise duty and import VAT is extinguished, it was to be noted that Article 93(2) of the Law of the Republic of Lithuania on tax administration was repealed on 1 January 2017, and the following provisions of national legislation, which were adopted, inter alia, in the light of the EU Customs Code, entered into force:

– Article 20(2) of the Lietuvos Respublikos akcizų įstatymas (Law of the Republic of Lithuania on excise duty) (as amended by Law No XII‑2696 of 3 November 2016), provides that the obligation to pay excise duty to customs shall be extinguished mutatis mutandis in the cases specified in points (d) to (g) of paragraph 1 of Article 124 of the EU Customs Code ….

– Article 121(2) of the Lietuvos Respublikos pridėtinės vertės mokesčio įstatymas (Law of the Republic of Lithuania on value added tax) (as amended by Law No XII‑2697 of 3 November 2016), provides that the obligation to pay import VAT to customs shall be extinguished mutatis mutandis in the cases specified in points (d) to (g) of paragraph 1 of Article 124 of the EU Customs Code ….

II.    Facts, procedure and the questions referred for a preliminary ruling

15.      The appellant before the referring court, acting in a group of accomplices, organised the unlawful importation (smuggling) of goods subject to excise duty from Belarus into the territory of Lithuania  on 22 September 2016, at a remote location. Six thousand packets of cigarettes (‘the goods at issue’) were thrown across the State border and recovered. On the same day, the motor vehicle transporting those goods within the territory of Lithuania was forcibly stopped by border officers, and the cigarettes found in the vehicle were seized on 22 September 2016.

16.      By penal order of 23 January 2017 adopted by the Vilniaus apygardos teismas (Regional Court, Vilnius, Lithuania) in criminal proceedings, the appellant was convicted of a criminal act under national criminal law, and a fine of EUR 16 947 was imposed on him. It was also decided to confiscate the goods at issue, and the competent authorities were instructed to destroy them. This took place one year after their seizure on 22 September 2016. (10)

17.      By the contested decision, in the light of that penal order, the Kaunas Customs Office recognised the appellant (jointly and severally with other persons) as being liable for payment of a customs debt and recorded a tax obligation consisting of EUR 10 237 in excise duty and EUR 2 679 in import VAT, together with, respectively, EUR 1 674 and EUR 438 corresponding to default interest on those taxes. In the light of Article 124(1) (e) of the EU Customs Code, that local tax administration did not calculate and record a customs debt on import in respect of the appellant having taken the view that the customs debt had been extinguished.

18.      By Decision No 1A‑199 of 9 May 2018, the decision of the Kaunas Customs Office was confirmed.

19.      The appellant brought an action before the Vilniaus apygardos administracinis teismas (Regional Administrative Court, Vilnius, Lithuania), arguing in particular, essentially, that, given the existence of the ground for the extinguishment of the customs debt under Article 124(1)(e) of the EU Customs Code, his obligation to pay excise duty and import VAT on the goods at issue which had been unlawfully introduced into the customs territory of the European Union had also been extinguished. That reasoning of the appellant was based on, inter alia, the interpretation given by the Court in its judgment in Dansk Transport og Logistik.

20.      By judgment of 30 October 2018, the Vilniaus apygardos administracinis teismas (Regional Administrative Court, Vilnius) dismissed the appellant’s action as unfounded. That court took the view, inter alia, that grounds for the extinguishment of the obligation to pay excise duty and/or import VAT are not covered by the EU Customs Code, and, in refusing to assess the appellant’s arguments relating to the interpretation given in Dansk Transport og Logistik, it noted in particular that that judgment of the Court had been delivered for the purpose of interpreting the Community Customs Code, the provisions of which were not relevant to the present case, given that the measure in force was the EU Customs Code.

21.      The appellant has appealed to the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania), which has referred the following questions by way of preliminary ruling:

‘(1)      Is Article 124(1)(e) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code … to be interpreted as meaning that a customs debt is extinguished where, in a situation such as that in the present case, smuggled goods were seized and subsequently confiscated after they had already been unlawfully introduced (released for consumption) into the customs territory of the European Union?

(2)      If the first question is answered in the affirmative, are Articles 2(b) and 7(1) of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC and Articles 2(1)(d) and 70 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax to be interpreted as meaning that the obligation to pay excise duty and/or VAT is not extinguished where, as in the present case, smuggled goods are seized and subsequently confiscated after they have already been unlawfully introduced (released for consumption) into the customs territory of the European Union, even if the customs debt has been extinguished on the ground provided for in Article 124(1)(e) of Regulation (EU) No 952/2013?’

22.      Written observations were filed at the Court by the Italian Republic, the Republic of Lithuania, and the European Commission. There was no hearing.

III. Analysis

A.      The Answer to Question 1

23.      Question 1 should be answered to the effect that Article 124(1) (e) of the EU Customs Code is to be interpreted as meaning that a customs debt is extinguished in a situation in which unlawfully imported goods are seized and subsequently confiscated after they have already been unlawfully introduced into the customs territory of the European Union.

24.      This is so for the following reasons.

25.      It is undisputed that a customs debt came into being in the main proceedings. Pursuant to point (a) of the first paragraph of Article 79(1) of the EU Customs Code, ‘a customs debt on import shall be incurred through non-compliance with … one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the Union’. Article 139(1) of the EU Customs Code is headed ‘Presentation of goods to customs’ and states that ‘goods brought into the customs territory of the Union shall be presented to customs immediately upon their arrival at the designated customs office or any other place designated or approved by the customs authorities or in the free zone by one of the following persons: (a) the person who brought the goods into the customs territory of the Union; (b) the person in whose name or on whose behalf the person who brought the goods into that territory acts; (c) the person who assumed responsibility for carriage of the goods after they were brought into the customs territory of the Union’. (11)

26.      It was established under the case-law of the Court pursuant to the Community Customs Code that the aim of the ‘presentation’ obligation was ‘to ensure that the customs authorities are informed not only of the fact that the goods have arrived, but also of all relevant information about the type of article or product concerned and the quantity of those goods. It is that information which will enable the goods to be correctly identified, for the purposes of their tariff classification and, if appropriate, for the calculation of import duties’. (12) The fact that certain goods were concealed in secret compartments in the vehicle in which they were transported does not have the effect of releasing them from that obligation. (13)

27.      The presence on the customs territory of the European Union of non-Union goods carries the risk that those goods will end up forming part of the economic networks of the Member States without having been cleared through customs. (14) Thus, imposition of a customs duty is justified where, for example, the disappearance of the goods entailed risk of entry into the economic networks of the EU. (15)

28.      However, it is noteworthy that such a risk in the main proceedings is minimal, given that the goods were seized the day of their introduction, albeit after they had passed inside the customs territory of the Union without those goods having been presented there. (16) As already noted, even though this gave rise to a customs debt (see point 25 above) with the unlawful introduction and the incurrence of a debt occurring simultaneously, (17) the brevity of the period in which the goods had gone beyond the first customs office situated inside the customs territory of the Union without having been presented there, (18) and the fact that they were transported across Lithuanian territory only, meant the risk of entry into the economic networks of the European Union disappeared almost as soon the goods were unlawfully introduced. (19) Indeed, it is argued in the written observations of the Commission that only goods effectively implicated in the economic chain of the European Union give rise to the birth of a customs debt. (20)

29.      Further, Article 124(1)(e) of the EU Customs Code states that ‘a customs debt on import or export shall be extinguished in any of the following ways: … where goods liable to import or export duty are confiscated or seized and simultaneously or subsequently confiscated’.

30.      The key difference between this provision, and the provision in force at the time of the ruling in Dansk Transport og Logistik, namely point (d) of the first paragraph of Article 233 of the Community Customs Code,  is that the latter links the extinguishment of the customs debt with the time of importation, whereas Article 124(1)(e) of the EU Customs Code does not. Point (d) of the first paragraph of Article 233 of the Community Customs Code stated:

‘Without prejudice to the provisions in force relating to the time-barring of a customs debt and non-recovery of such a debt in the event of the legally established insolvency of the debtor, a customs debt shall be extinguished:

…

(d)      where goods in respect of which a customs debt is incurred in accordance with Article 202 are seized upon their unlawful introduction and are simultaneously or subsequently confiscated.’ (21)

31.      This provision was interpreted by the Court in Dansk Transport og Logistik. The Court held, first, that ‘the seizure of such goods, together with their simultaneous or subsequent confiscation within the meaning of point (d) of the first paragraph of Article 233 of the [Community] Customs Code, can only lead to the extinguishment of the customs debt if that seizure was executed before those goods went beyond the area in which the first customs office is situated inside the customs territory of the Community’. (22) It was added that the ‘detainment and destruction of those goods occurred at the crossing of the border between Germany and Denmark, namely after the “unlawful introduction” and not at the same point in time. Consequently, it would appear that the facts in that case do not fall within the situation envisaged in point (d) of the first paragraph of Article 233 of the [Community] Customs Code’. (23)

32.      Secondly, it was further held in Dansk Transport og Logistik that ‘“seizure” of the goods for the purposes of point (d) of the first paragraph of Article 233 of the [Community] Customs Code is to be understood as action by the competent authorities to assume actual physical control of the goods in order to keep them safe and prevent them from physically entering the economic networks of the Member States’. (24) In the main proceedings, this did not occur until after the unlawfully imported goods had gone beyond the first customs office situated inside the customs territory of the Union without having been presented there, (25) albeit occurring on the same day they crossed the border into EU territory.

33.      However, I am inclined to accept arguments made in the written observations of the Republic of Lithuania and the Commission to the effect that the moment at which unlawfully imported goods are seized is immaterial to determining extinguishment of the customs debt under Article 124(1)(e) of the EU Customs Code.

34.      This is clear, first, from the wording of the provision. As intimated in the written observations of the Italian Republic, although provisions of EU law which extinguish customs debts are to be interpreted strictly in order to protect the EU’s own resources, (26) Article 124(1)(e) of the EU Customs Code simply does not include the word ‘upon’, unlike point (d) of the first paragraph of Article 233 of the Community Customs Code. (27)

35.      Secondly, I am inclined to accept arguments made in the written observations of the Republic of Lithuania and the Commission (28) to the effect that the origins of Article 124(1)(e) of the EU Customs Code support the literal interpretation of that provision. The Community Customs Code represented a hardening of the law in comparison with the measure previously in place, with the EU Customs Code reverting to an earlier model, in which the touchstone for the extinguishment of the customs debt was confiscation of the unlawfully imported goods at issue. (29) Seen in this context, (30) as suggested in the written observations of the Commission, it would seem to run counter to a clear policy choice of the European Union if the moment of seizure of unlawfully imported goods were to remain relevant to extinguishment of the customs debt.

36.      Thirdly, the objective of the extinguishment of the customs debt can be taken to be the same under the EU Customs Code as it was under the Community Customs Code. The objective of point (d) of the first paragraph of Article 233 of the Community Customs Code was to avoid the imposition of duty in the case where the goods, although introduced unlawfully into the territory of the Community, could not have been placed on the market and therefore do not constitute a threat, in terms of competition, to Community goods. (31) The same purpose is discernible from the grounds of extinguishment of a customs debt listed in Article 124(1) of the EU Customs Code. As mentioned in point 28 above, the period in which the unlawfully imported goods at issue were in free circulation in Lithuania was short, having been seized on the same day as they crossed the border.

37.      For these reasons, Question 1 should be answered to the effect set out in point 23 above.

B.      The answer to Question 2

38.      Question 2 should be answered to the effect that Articles 2(b) and 7(1) of the Excise Duty Directive and Articles 2(1)(d) and 70 of the VAT Directive are to be interpreted as meaning that the obligation to pay excise duty and VAT is not extinguished where, as in the present case, smuggled goods are seized and subsequently confiscated after they have already been unlawfully introduced into the customs territory of the European Union, even if the customs debt has been extinguished on the ground provided for in Article 124(1)(e) of the EU Customs Code.

1.      Excise duty

39.      It should be recalled that it is apparent from Article 7(1) of the Excise Duty Directive that excise duty becomes chargeable at the time of release for consumption and in the Member State where this occurs. (32) Importation is a chargeable event, (33) with Article 2(b) of the Excise Duty Directive providing that ‘excise goods shall be subject to excise duty at the time of … their importation into the territory of the Community’. Under the established case-law of the Court, goods subject to excise duty must be regarded as having entered the territory of the Union as of the moment they go beyond the area in which the first customs office is situated inside the customs territory of the Union. (34) The Court held in Dansk Transport og Logistik that ‘smuggled goods which were imported unlawfully … are to be regarded as having been released for consumption’, (35) and that the obligation to pay excise duty subsists even if the goods subject to excise are seized and later destroyed. (36)

40.      This is not contradicted by Article 7(2)(d) of the Excise Duty Directive, which states that ‘“release for consumption” shall mean any of the following: … the importation of excise goods, including irregular importation, unless the excise goods are placed, immediately upon importation, under a duty suspension arrangement’. (37)

41.      As pointed out in the written observations of the Commission, recital 9 of the Excise Duty Directive provides that since ‘excise duty is a tax on the consumption of certain goods, duty should not be charged in respect of excise goods which, under certain circumstances, have been destroyed or irretrievably lost’.

42.      Thus, I agree with observations made in the written observations of the Italian and Lithuanian Governments, and those of the Commission, to the effect that excise duty in the main proceedings cannot be taken to have been suspended, particularly in the light of the definition provided by the EU legislature in Article 7(2)(d) of the Excise Duty Directive. There is no provision in the Excise Duty Directive envisaging the extinguishment of excise duty in the light irregular introduction of goods into the EU followed by their seizure and destruction, (38) or in the event of the extinguishment of the customs debt.

2.      VAT

43.      Under the established case-law of the Court, import duties do not include the VAT to be levied on the importation of goods. (39) Pursuant to Article 2(1)(d) of the VAT Directive, the importation of goods is subject to VAT. Article 70 of the VAT Directive lays down the principle that the chargeable event occurs and the tax becomes chargeable at the moment when the goods are imported. (40)

44.      VAT being a tax on consumption, it applies to goods and services that enter the economic network of the European Union and which may be the object of consumption. (41)

45.      Under the Court’s settled case-law, ‘in addition to the customs debt, there may also be a requirement to pay VAT where, on the basis of the particular unlawful conduct which gave rise to the customs debt, it can be presumed that the goods entered the economic network of the Union and, consequently, that they may have undergone consumption, that is, the act on which VAT is levied’. (42) This presumption may be rebutted where goods have been introduced into the economic network of the Union via the territory of another Member State, (43) but these facts do not arise in the main proceedings. There is only one Member State in which the unlawfully imported goods entered the economic network of the Union, namely Lithuania. (44)

46.      It has been held that ‘to the extent that goods totally destroyed or irretrievably lost while they are placed under the external Community transit procedure cannot be integrated into the economic network of the European Union and, hence, cannot exit that procedure, they cannot be regarded as “imported”, within the meaning of Article 2(1)(d) of the VAT Directive, nor subject to VAT’. (45)

47.      However, the main proceedings do not amount to an instance of destruction of unlawfully imported goods, given that this did not occur until one year after they were seized and even then only by court order.

48.      Moreover, according to settled case-law of the Court, import VAT and customs duties display comparable essential features since they arise from the fact of importation of goods into the European Union and the subsequent distribution of those goods through the economic channels of the Member States. This parallel nature is, moreover, confirmed by the fact that the second subparagraph of Article 71(1) of the VAT Directive authorises Member States to link the chargeable event and the date on which the VAT on importation becomes chargeable with those laid down for customs duties. (46) Importation is therefore the touchstone for determining whether VAT is chargeable, and importation undoubtedly occurred in the main proceedings.

49.      Further, it is established in the case-law that ‘where the goods have been seized and simultaneously or subsequently confiscated by the authorities … after going beyond the first customs office situated inside the customs territory of the Community, the chargeable event for VAT has already occurred and the VAT has become chargeable as a result’. (47)

50.      Finally, it is further established in the case-law that the mere presence on the customs territory of the European Union of non-Union goods carries the risk that those goods will end up forming part of the economic networks of the Member States without having been cleared through customs. (48) This is the imperative underpinning the levying of VAT on unlawfully imported goods. That risk materialised once the goods entered Lithuanian territory beyond the first customs zone relative to the point at which they were imported. This solution is consistent with the core aims of the EU’s common VAT regime, as pointed out in the written observations of the Republic of Lithuania, which are to guarantee free competition and fiscal neutrality without impeding free movement of goods and services, there being no provision in the VAT Directive extinguishing liability for VAT in the event of extinguishment of a customs debt.

IV.    Conclusion

51.      I therefore propose that the questions referred by the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) should be answered as follows:

(1)      Article 124(1)(e) of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code is to be interpreted as meaning that a customs debt is extinguished in a situation in which unlawfully imported goods are seized and subsequently confiscated after they have already been unlawfully introduced into the customs territory of the European Union.

(2)      Articles 2(b) and 7(1) of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC and Articles 2(1)(d) and 70 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax are to be interpreted as meaning that the obligation to pay excise duty and VAT is not extinguished where smuggled goods are seized and subsequently confiscated after they have already been unlawfully introduced into the customs territory of the European Union, even if the customs debt has been extinguished on the ground provided for in Article 124(1)(e) of Regulation No 952/2013.

1      Original language: English.

2      C‑230/08, EU:C:2010:231 (‘Dansk Transport og Logistik’).

3      See also, for example, judgment of 5 March 2015, Prankl (C‑175/14, EU:C:2015:142).

4      Judgment of 7 March 2019, Suez II (C‑643/17, EU:C:2019:179, paragraph 47 and the case-law cited). See also Dansk Transport og Logistik, paragraph 50.

5      OJ 2013 L 269, p. 1 (‘the EU Customs Code’).

6      OJ 1992 L 302, p. 1 (‘the Community Customs Code’).

7      OJ 2009 L 9 p. 12 (‘the Excise Duty Directive’). Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products (OJ 1992 L 76, p. 1), was the pertinent measure in force at the time of the ruling in Dansk Transport og Logistik. See notably Articles 4, 5(1) and (2), 6, 7, 8 and 9 of Directive 92/12.

8      OJ 2006 L 347 p. 1 (‘the VAT Directive’). At the time of the ruling in Dansk Transport og Logistik, this was governed by Articles 6(1)  7, 10(3) of  Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 1999/85/EC of 22 October 1999 (OJ 1999 L 277, p. 34) (‘the Sixth Directive’).

9      Judgment of 3 March 2021, Hauptzollamt Münster (Place where VAT is incurred) (C‑7/20, EU:C:2021:161, paragraph 23 and the case-law cited).

10      According to the written observations of the Commission.

11      Article 5, point 33, of the EU Customs Code states that ‘“presentation of goods to customs” means the notification to the customs authorities of the arrival of goods at the customs office or at any other place designated or approved by the customs authorities and the availability of those goods for customs controls’.

12      Judgment of 2 April 2009, Elshani (C‑459/07, EU:C:2009:224, paragraph 22 and the case-law cited). On conveyance to the appropriate customs office or the free zone and the calculation of duties see, recently, judgment of 7 March 2019, Suez II (C‑643/17, EU:C:2019:179, paragraphs 45 and 46).

13      Judgment of 2 April 2009, Elshani (C‑459/07, EU:C:2009:224, paragraph 23 and the case-law cited).

14      Judgment of 15 July 2010, Skatteministeriet v DSV Road A/S (C‑234/09, EU:C:2010:435, paragraph 31 and the case-law cited).

15      Judgment of 15 May 2014, X (C‑480/12, EU:C:2014:329, paragraph 35 and the case-law cited), with respect to interpretation of Article 203 of the EU Customs Code.

16      Judgment of 2 April 2009, Elshani (C‑459/07, EU:C:2009:224, paragraphs 24 and 25). See also Dansk Transport og Logistik, paragraph 48 and judgment of 7 March 2019, Suez II (C‑643/17, EU:C:2019:179, paragraph 47).

17      Judgment of 2 April 2009, Elshani (C‑459/07, EU:C:2009:224, paragraph 27). This principle was developed in interpreting Article 202 of the Community Customs Code.

18      Judgment of 7 March 2019, Suez II (C‑643/17, EU:C:2019:179, paragraph 47 and the case-law cited). Dansk Transport og Logistik, paragraph 50.

19      Cf. the factual situation arising in the judgment of 15 May 2014, X (C‑480/12, EU:C:2014:329). That case concerned interpretation of Article 203 of the EU Customs Code.

20      Indeed, it is argued in the written observations of the Italian Republic that the only reason the customs debt might be viewed as being extinguished in the main proceedings was because there was no opportunity to commercialise them. Otherwise, the customs debt stands.

21      Emphasis added.

22      Dansk Transport og Logistik, paragraph 53.

23      Ibid., paragraph 59. See also notably paragraphs 33 and 34 of the judgment of 2 April 2009, Elshani (C‑459/07, EU:C:2009:224): ‘It is at the customs offices, strategically located at the entry points along the external borders, that the authorities are best placed to exercise a strict level of control over goods entering the customs territory of the Community, in order to avoid both unfair competition affecting Community producers and the loss of tax revenues which results from fraudulent importations. It follows that the seizure of goods introduced into the customs territory of the Community in violation of the formalities laid down in Articles 38 to 41 of the [Community] Customs Code which takes place beyond the first customs office situated inside that territory and which occurs practically at random is not capable of leading to the extinguishment of the customs debt for the purposes of point (d) of the first paragraph of Article 233 of the [Community] Customs Code.’

24      Dansk Transport og Logistik, paragraph 61.

25      Judgment of 7 March 2019, Suez II (C‑643/17, EU:C:2019:179, paragraph 47 and the case-law cited).See also Dansk Transport og Logistik, paragraph 50.

26      Judgment of 17 February 2011, Berel and Others (C‑78/10, EU:C:2011:93, paragraph 46 and the case-law cited).

27      There is no linguistic divergence between the English-language version of Article 124(1)(e) of the EU Customs Code and, for example, the French-, Bulgarian-, Italian-, Spanish-, Swedish-, Portuguese-, German-, Polish-, Czech- and Slovak-language versions.

28      The Commission refers, in addition to the legislative history, to the introductory explanation to the modernised customs code of 23 February 2005 (TAXUD/447/2004 Rev 2), which states that the objective of the revision of Article 233 of the Community Customs Code was to suppress the supplemental condition ‘avant qu’il en ait été donné mainlevée’ (before it has been released) so that the customs debt is extinguished, inter alia, when the goods concerned are seized.

29      This is set out in detail in the Opinion of Advocate General Mengozzi in Elshani (C‑459/07, EU:C:2008:596, points 64 to 66): ‘The rules on the extinction of the customs debt following seizure and confiscation of smuggled goods, as laid down in point (d) of the first paragraph of Article 233 of the [Community] Customs Code, represent a harsher version of the earlier rules governing that question, which, until the entry into force of the [Community] Customs Code, were laid down in [Council] Regulation [(EEC)] No 2144/87 [of 13 July 1987 on customs debt (OJ 1987 L 201, p. 15)]. Under Article (8)(1)(b) of Regulation No 2144/87, the customs debt was to be extinguished in all cases where goods were confiscated. On the other hand, Article 86 of Regulation [(EC)] No 450/2008 [of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (OJ 2008 L 145, p. 1),] which contains the new Customs Code that is to enter into force shortly, revives the “soft” line already taken in Regulation No 2144/87, specifying in particular that a customs debt is to be extinguished “where goods liable to import or export duties are confiscated” (paragraph 1(d)), “where goods liable to import or export duties are seized and simultaneously or subsequently confiscated” (paragraph 1(e)), and “where goods liable to import or export duties are destroyed under customs supervision or abandoned to the State” (paragraph 1(f)). Thus, even under the new Customs Code, the moment when goods are seized and/or confiscated is irrelevant for the purposes of the extinction of the customs debt. As the Customs Code currently in force thus represents, with respect to the extinction of the customs debt on smuggled goods, a particularly severe measure falling, in chronological terms, between two measures that are much less severe, it seems to me that to interpret point (d) of the first paragraph of Article 233 of the [Community] Customs Code very strictly would, in all probability, be to strain the internal logic of the Community legal order and the presumed intention of the legislature.’

30      See further on the role of context in interpreting provisions of EU law, my Opinion in Pinckernelle (C‑535/15,  EU:C:2016:996, points 40 to 59).

31      Judgment of 2 April 2009, Elshani (C‑459/07, EU:C:2009:224, paragraph 29).

32      Judgment of 8 February 2018, Commission v Greece (C‑590/16, EU:C:2018:77, paragraph 40).

33      Judgment of 28 January 2016, BP Europa (C‑64/15, EU:C:2016:62, paragraph 21). See also Dansk Transport og Logistik, paragraph 70.

34      Dansk Transport og Logistik, paragraph 72 and the case-law cited. This finding was made with respect to Article 5(1) of Directive 92/12. However, as pointed out in the written observations of the Commission, such findings are applicable to the Excise Duty Directive currently in force.

35      Ibid., paragraph 81.

36      Ibid., paragraphs 80, 81 and 85.

37      Judgment of 8 February 2018, Commission v Greece (C‑590/16, EU:C:2018:77, paragraph 40).

38      As pointed out in the written observations of the Commission, Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty (OJ 2020 L 58, p. 4) aligns extinguishment of the customs debt with extinguishment of excise duty, but this provision is not yet in force.

39      See, for example, judgment of 2 June 2016, Eurogate Distribution (C‑226/14 and C‑228/14, EU:C:2016:405, paragraph 81 and the case-law cited). This case concerned interpretation of the Sixth Directive but the same principle applies in the main proceedings.

40      Judgment of 18 May 2017, Latvijas Dzelzceļš (C‑154/16, EU:C:2017:392, paragraph 67 and the case-law cited). See also judgment of 10 July 2019, Federal Express Corporation Deutsche Niederlassung (C‑26/18, EU:C:2019:579, paragraph 40).

41      Judgment of 18 May 2017, Latvijas Dzelzceļš (C‑154/16, EU:C:2017:392, paragraph 69 and the case-law cited). Consumption is the act on which VAT is levied. See, for example, judgment of 2 June 2016, Eurogate Distribution (C‑226/14 and C‑228/14, EU:C:2016:405, paragraph 65). See more recently judgments of 1 June 2017, Wallenborn Transports (C‑571/15, EU:C:2017:417, paragraph 54), and of 10 July 2019, Federal Express Corporation Deutsche Niederlassung (C‑26/18, EU:C:2019:579, paragraph 44).

42      Judgment of 3 March 2021, Hauptzollamt Münster (Place where VAT is incurred) (C‑7/20, EU:C:2021:161, paragraph 30 and the case-law cited).

43      Ibid. paragraph 31 and the case-law cited.

44      Cf. judgment of 3 March 2021, Hauptzollamt Münster (Place where VAT is incurred) (C‑7/20, EU:C:2021:161).

45      Judgment of 18 May 2017, Latvijas Dzelzceļš (C‑154/16, EU:C:2017:392, paragraph 71).

46      Judgment of 3 March 2021, Hauptzollamt Münster (Place where VAT is incurred) (C‑7/20, EU:C:2021:161, paragraph 29 and the case-law cited).

47      Dansk Transport og Logistik, paragraph 94. See also judgment of 1 June 2017, Wallenborn Transports (C‑571/15, EU:C:2017:417, paragraph 54), along with judgment of 2 June 2016, Eurogate Distribution (C‑226/14 and C‑228/14, EU:C:2016:405, paragraph 65). While this finding was made in the context of the Sixth Directive, it is equally pertinent to the main proceedings and the VAT Directive.

48      Judgment of 15 May 2014, X (C‑480/12, EU:C:2014:329, paragraph 36 and the case-law cited). Emphasis added.

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