Case C‑506/09 P, Portugal v. Transnáutica

Lack of diligence on part of national customs authorities may give rise to special situation justifying remission of customs debt

>> Non-Community goods entering the territory of the European must be cleared upon arrival. Under the Community transit procedure, as provided by the EU Customs Code, goods may, under customs supervision, move from one point to another within the customs territory and be released for free circulation – in particular through the payment of import duties – only at the customs office of destination. The customs debt on importation is incurred if, while in transit, the goods are removed from customs supervision. However, the customs debt arising from the import of the goods may be repaid or remitted where there is a special situation resulting from circumstances in which no deception or obvious negligence may be attributed to the person concerned.

In order to ensure payment of any customs debt which may be incurred in respect of the goods benefiting from the external Community transit procedure, the holder of the procedure (for example, the carrier) must provide a guarantee. In that connection, the customs authorities may allow comprehensive security to be provided to cover two or more operations in respect of which a customs debt has been or may be incurred. Nevertheless, where the customs authorities establish that the security provided does not ensured, or is no longer certain or sufficient to ensured, payment of the customs debt, they are to require the holder, at his option, to provide additional security or to replace the original security with a new security.

Transnáutica was a Portuguese freight transportation company which had the status of authorised consignee during the period in which the operations in question, which were liable to customs duty, were carried out under the external Community transit procedure. Between 14 April 1994 and 12 October 1994, the customs authorities of Xabregas (Portugal), as the customs office of departure, processed 68 transit declarations for the benefit of that company, for the movement within the EU’s customs territory of 64 consignments of tobacco and 4 consignments of ethyl alcohol under the external Community transit procedure.

Once the transit procedure was concluded, a number of irregularities were detected. Consequently, the Portuguese authorities asked Transnáutica to provide evidence that it had acted duly and lawfully throughout the external Community transit procedure and also demanded payment of the relevant customs debts.

As it had been unaware of those transit operations, Transnáutica found that one of its employees had been acting fraudulently by signing transit declarations for smuggling operations, without the company’s knowledge. The employee in question was dismissed and subsequently found guilty of repeated breach of trust. As regards Transnáutica, the criminal investigation opened in respect of the company was closed, on the ground that it had been unaware of its employee’s actions and that its representatives had had nothing to do with the fraud in question.

Between 14 April 1994 and 12 October 1994, the customs authorities of Xabregas (Portugal), as the customs office of departure, processed 68 transit declarations (in which Transnáutica was the designated principal) for the movement within the customs territory of the European Union of 64 consignments of tobacco and 4 consignments of denatured ethyl alcohol under the external Community transit procedure. In some cases, the “Copies No 5” of the 68 T1 transit declarations were never returned to the customs office of departure while, in others, the T1 declarations were returned with stamps and signatures which were later discovered to be false.

In November 2003, Transnáutica applied for the repayment and remission of the customs debt arising from the import of the 68 consignments at issue. On 6 July 2005, the European Commission refused Transnáutica’s application2. It found that Transnáutica was not in a special situation justifying repayment and remission of the customs debt.

In October 2005, Transnáutica brought an action before the General Court for the annulment of that decision. By judgment of 23 September 2009, the General Court annulled the Commission’s decision. It found that the Portuguese customs authorities had accepted an insufficient guarantee for the 68 transit declarations at issue ( Case T-385/05 Transnáutica).

Portugal brought an appeal before the Court of Justice against this judgment, alleging infringement by the General Court of Art. 239 of the Customs Code, on the ground that it erred in finding that there was a special situation fulfilling the conditions for repayment laid down by that Article .
The Court of Justice however held that in the specific circumstances of the present case the General Court was justified in finding that the lack of diligence on the part of the Portuguese authorities, which rendered the monitoring procedures established by Transnáutica ineffective, gave rise to a special situation for the purposes of Art. 239 of the Customs Code.

The Court first of all held that, although Art. 198 of the Customs Code did not create a formal obligation to monitor the adequacy of the comprehensive guarantee, it was for the competent customs authorities to take all the necessary measures when they realise that there was a discrepancy between the amount of the guarantee provided and the total amount of the duties payable for a particular group of transit operations.
Portugal disputed the scope of the obligation laid down by Art. 198 of the Customs Code and submitted that the General Court interpreted that provision too strictly by requiring a high degree of diligence from the customs authorities when monitoring the adequacy of the comprehensive guarantee. It also disputed the General Court’s findings concerning the legislation applicable for calculating that comprehensive guarantee.

The Court however held that the General Court’s conclusion that the guarantee required by the customs authorities was inadequate was coherent. The Court of Justice held that the comprehensive guarantee actually provided never covered more than 7.29% of the duties payable, whereas the amount of that guarantee ought to have covered at least 30% of the duties.

Furthermore, the General Court did not err in law, nor did it distort any evidence submitted to it, by holding , that “[t]hat lack of diligence is the responsibility of the Portuguese customs authorities and puts [Transnáutica] in a special situation that went beyond the normal commercial risk relating to its business’.