JUDGMENT OF THE COURT (Fourth Chamber)

3 April 2014 ( * )

(Failure of a Member State to fulfil obligations — European Union’s own resources — Decision 2000/597/EC, Euratom — Article 8 — Regulation (EC, Euratom) No 1150/2000 — Articles 2, 6, 9, 10 and 11 — Refusal to make own resources available to the European Union — Erroneous Binding Tariff Information documents — Imports of fresh garlic as frozen garlic — Imputability of the error to the national customs authorities — Financial liability of the Member States)

In Case C‑60/13,

ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 4 February 2013,

European Commission, represented by A. Caeiros and L. Flynn, acting as Agents, with an address for service in Luxembourg,

applicant,

v

United Kingdom of Great Britain and Northern Ireland, represented by S. Brighouse and J. Beeko, acting as Agents, assisted by K. Beal, QC,

defendant,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, M. Safjan, J. Malenovský, A. Prechal and K. Jürimäe (Rapporteur), Judges,

Advocate General: N. Wahl,

Registrar: A. Calot Escobar,

having regard to the written procedure,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 By its application, the European Commission asks the Court to declare that, by refusing to make available the amount of GBP 20 061 462.11 corresponding to the duties payable on imports of fresh garlic covered by erroneous Binding Tariff Information documents (‘BTIs’), the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 4(3) TEU, Article 8 of Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities’ own resources (OJ 2000 L 253, p. 42), and Articles 2, 6, 9, 10 and 11 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 2000/597 (OJ 2000 L 130, p. 1), as amended by Council Regulation (EC, Euratom) No 2028/2004 of 16 November 2004 (OJ 2004 L 352, p. 1) (‘Regulation No 1150/2000’).

Legal context

EU law on own resources

2 Under Article 2(1)(b) of Decision 2000/597, revenue from, inter alia, ‘Common Customs Tariff duties and other duties established or to be established by the institutions [of the European Union] in respect of trade with non-member countries’ constitutes own resources entered in the budget of the European Union.

3 Article 8(1) of that decision provides:

‘The [European Union’s] own resources referred to in Article 2(1)(a) and (b) shall be collected by the Member States in accordance with the national provisions imposed by law, regulation or administrative action, which shall, where appropriate, be adapted to meet the requirements of [European Union] rules.

The Commission shall examine at regular intervals the national provisions communicated to it by the Member States, transmit to the Member States the adjustments it deems necessary in order to ensure that they comply with [European Union] rules and report to the budget authority.

Member States shall make the resources provided for in Article 2(1)(a) to (d) available to the Commission.’

4 Article 2(1) of Regulation No 1150/2000 is worded as follows:

‘For the purpose of applying this Regulation, the [European Union’s] entitlement to the own resources referred to in Article 2(1)(a) and (b) of [Decision 2000/597] shall be established as soon as the conditions provided for by the customs regulations have been met concerning the entry of the entitlement in the accounts and the notification of the debtor.’

5 Under Article 6(1) and (3)(a) and (b) of Regulation No 1150/2000:

‘1. Accounts for own resources shall be kept by the Treasury of each Member State or by the body appointed by each Member State and broken down by type of resources.

...

3. (a) Entitlements established in accordance with Article 2 shall, subject to point (b) of this paragraph, be entered in the accounts at the latest on the first working day after the 19th day of the second month following the month during which the entitlement was established.

(b) Established entitlements not entered in the accounts referred to in point (a), because they have not yet been recovered and no security has been provided shall be shown in separate accounts within the period laid down in point (a). Member States may adopt this procedure where established entitlements for which security has been provided have been challenged and might, upon settlement of the disputes which have arisen, be subject to change.’

6 Article 9(1) of that regulation provides:

‘In accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened in the name of the Commission with its Treasury or the body it has appointed.

...’

7 Under Article 10(1) of Regulation No 1150/2000:

‘After deduction of collection costs in accordance with Article 2(3) and Article 10(2)(c) of Decision [2000/597] entry of the own resources referred to in Article 2(1)(a) and (b) of that decision shall be made at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established in accordance with Article 2 of this regulation.

However, for entitlements shown in separate accounts under Article 6(3)(b) [of this regulation], the entry must be made at the latest on the first working day following the 19th day of the second month following the month in which the entitlements were recovered.’

8 Article 11(1) of Regulation No 1150/2000 provides:

‘Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the Member State concerned.’

9 Under Article 17(1) and (2) of that regulation:

‘1. Member States shall take all requisite measures to ensure that the amount corresponding to the entitlements established under Article 2 are made available to the Commission as specified in this Regulation.

2. Member States shall be released from the obligation to place at the disposal of the Commission the amounts corresponding to established entitlements which prove irrecoverable either:

(a) for reasons of force majeure ; or

(b) for other reasons which cannot be attributed to them.

Amounts of established entitlements shall be declared irrecoverable by a decision of the competent administrative authority finding that they cannot be recovered.

Amounts of established entitlements shall be deemed irrecoverable, at the latest, after a period of five years from the date on which the amount has been established in accordance with Article 2 or, in the event of an administrative or judicial appeal, the final decision has been given, notified or published.

If part payment or payments have been received, the period of five years at maximum shall start from the date of the last payment made, where this does not clear the debt.

Amounts declared or deemed irrecoverable shall be definitively removed from the separate account referred to in Article 6(3)(b). They shall be shown in an annex to the quarterly statement referred to in Article 6(4)(b) and where applicable, in the quarterly statement referred to in Article 6(5).’

The Customs Code

10 Article 12 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended by Regulation (EC) No 2700/2000 of the European Parliament and of the Council of 16 November 2000 (OJ 2000 L 311, p. 17), (‘the Customs Code’) provides:

‘1. The customs authorities shall issue binding tariff information or binding origin information on written request, acting in accordance with the committee procedure.

2. Binding tariff information or binding origin information shall be binding on the customs authorities as against the holder of the information only in respect of the tariff classification or determination of the origin of goods.

Binding tariff information or binding origin information shall be binding on the customs authorities only in respect of goods on which customs formalities are completed after the date on which the information was supplied by them.

...

3. The holder of such information must be able to prove that:

– for tariff purposes: the goods declared correspond in every respect to those described in the information,

...’

11 Under Article 217(1) of the Customs Code:

‘Each and every amount of import duty or export duty resulting from a customs debt … shall be calculated by the customs authorities as soon as they have the necessary particulars, and entered by those authorities in the accounting records or on any other equivalent medium (entry in the accounts).

The first subparagraph shall not apply:

...

(b) where the amount of duty legally due exceeds that determined on the basis of binding information;

...’

The Combined Nomenclature

12 The Combined Nomenclature (‘CN’) for the Common Customs Tariff was laid down in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1). The annex is amended each year with effect from 1 January. The version which applies to imports during 2005 is the annex as amended by Commission Regulation (EC) No 1810/2004 of 7 September 2004 (OJ 2004 L 327, p. 1), and as regards imports during 2006, it is the annex as amended by Commission Regulation (EC) No 1719/2005 of 27 October 2005 (OJ 2005 L 286, p. 1).

13 At the material time, CN tariff heading 0703 was worded as follows: ‘Onions, shallots, garlic, leeks and other alliaceous vegetables, fresh or chilled’. CN tariff heading 0710 was worded as follows: ‘Vegetables (uncooked or cooked by steaming or boiling in water), frozen’.

14 CN tariff heading 0703 attracted payment of customs duties at a rate of 9.6% plus a specific sum in the amount of EUR 1 200 per net tonne imported outside the tariff quota, while for CN tariff heading 0710 a rate of 14.4% was applied, with no additional amount being payable.

Pre-litigation procedure

15 In July 2006, as part of an investigation into imports of fresh garlic originating in China, the European Anti-Fraud Office (OLAF) carried out an inspection in the United Kingdom and informed the Commission that, in 2005, the UK customs authorities had issued four erroneous BTIs, in that garlic preserved at temperatures of ‑3 o C to ‑8 o C had been classified as ‘frozen garlic’ (‘the disputed BTIs’). Three of the disputed BTIs were used for the import of fresh garlic from China.

16 According to OLAF, the UK customs authorities had made obvious administrative errors by issuing the disputed BTIs solely on the basis of the description given by the importers and without requesting samples or documents which might have assisted them in determining the correct classification of the goods.

17 The disputed BTIs were revoked in June 2006.

18 On the basis of that information, and in view of the fact that imports of fresh garlic (CN heading 0703) originating in China outside the applicable tariff quota are subject to customs duties considerably higher than those for frozen garlic (CN heading 0710), the Commission found that the customs duties not collected as a result of that erroneous classification amounted in total to GBP 20 061 462.11. By letter of 22 March 2007, the Commission sent a request to the United Kingdom for information on the imports of garlic originating in China made between 24 January 2005 and 28 December 2006.

19 On 22 March 2010, after an exchange of correspondence with the UK authorities, the Commission sent the United Kingdom a letter of formal notice in which it stated its view that the United Kingdom was financially liable for the loss of own resources and asked the United Kingdom to submit its observations in that regard within two months.

20 In its response of 12 May 2010, the United Kingdom conceded that it had issued the disputed BTIs indicating the incorrect tariff heading, but argued that this error had not led to a loss of own resources because it had not given rise to any customs debt.

21 Unconvinced by the arguments presented by the United Kingdom, the Commission sent it a reasoned opinion on 25 November 2011, reiterating its position and asking the United Kingdom to make available to the Commission the sum of GBP 20 061 462.11 as soon as possible, together with late payment interest calculated on the basis of the date of the import declarations and the date of payment.

22 The United Kingdom responded by letter of 25 January 2012, denying liability for the sum claimed by the Commission. As it was not satisfied with that reply, the Commission decided to bring the present action.

The action

Arguments of the parties

23 The Commission submits that, by issuing the disputed BTIs, the United Kingdom caused the loss of traditional European Union own resources in so far as imports of fresh garlic originating in China had been allowed outside the authorised quota, in breach of Article 4(3) TEU, Article 8 of Decision 2000/597 and Articles 2, 6, 9, 10 and 11 of Regulation No 1150/2000.

24 The Commission submits that the United Kingdom infringed the requirements of EU law on the classification of goods, in that the UK customs authorities had regarded the garlic as frozen solely on the basis of a criterion linked to temperature, without taking into account the objective characteristics and properties of the garlic imported under the disputed BTIs. It is clear, however, from the wording of CN heading 0710 and from the explanatory notes on the harmonised system drawn up by the World Customs Organisation (WCO) that the term ‘frozen’ means that the vegetable — in this case, garlic — must be ‘deep-frozen’, a term that is not defined by reference to temperature.

25 The Commission also submits that, given a number of factors indicating that garlic is a sensitive product which requires particular attention, the UK customs authorities should have exercised particular vigilance in relation to imports of garlic in general and kept a special watch on the movements of those goods.

26 Among those factors, the Commission mentions: (i) the introduction on 1 June 2001 of an additional specific duty of EUR 1 200 per net tonne for imports of fresh garlic originating in China outside the authorised tariff quota; (ii) the fact that several mutual assistance communications had drawn the attention of the national customs authorities to deliberate misdescriptions of the origin of fresh garlic and deliberate misdescriptions of the product itself; and (iii) the import statistics sent by the United Kingdom showing that its imports of frozen garlic originating in China exceeded the annual quota for fresh garlic for the entire European Union. The Commission maintains that, if the UK customs authorities had carried out an appropriate risk analysis, they should have had full knowledge of the risks associated with the handling of that product.

27 The Commission also submits that the disputed BTIs had not been established with due diligence, despite the fact that the applications giving rise to the issuing of those BTIs contained sufficient clues to raise doubts.

28 As regards the justifications put forward by the United Kingdom in the pre-litigation procedure, the Commission argues that the initial scientific opinion of the Campden and Chorleywood Food Research Association (CCFRA), relied on by the United Kingdom when it issued the disputed BTIs, and according to which the garlic was frozen at ‑1ºC, was very brief and was not based on an in-depth analysis.

29 As regards the argument that, when such a written application is made to the customs authorities, they are required to issue BTIs within a reasonable period of time, the Commission replies that the authorities are not entitled to issue that information unless they have sufficient information and have reached an informed view enabling them to determine the classification of the goods in question. In this case, the UK customs authorities did not take any steps to verify that the goods imported actually corresponded to the description set out in the disputed BTIs.

30 Lastly, the Commission submits that the United Kingdom is financially liable for the loss of traditional own resources because the fact that it did not establish the customs debt arising from the imports and did not give the debtor notice of that debt is an error attributable to its customs authorities. If the United Kingdom were not obliged to bear the financial consequences of its errors, the budgetary cost of its failure to meet its obligations would be passed on to the other Member States. That outcome would be contrary to the principle of sincere cooperation under Article 4(3) TEU.

31 The United Kingdom contends that the action should be dismissed.

32 Primarily, the United Kingdom contends that the Commission did not establish the European Union’s entitlement to the own resources. According to the United Kingdom, the obligation to contribute to traditional own resources presupposes the existence of a customs debt, whether or not that debt is recovered from the debtor. In the present case, the holders of the disputed BTIs had been authorised to import goods under CN heading 0710, and they could rely on that authorisation for a period of six months after the revocation of the BTIs. No customs debt arose in relation to those holders, since Article 217(1)(b) of the Customs Code expressly precludes the entry in the accounts of amounts that are legally due if they are higher than the amounts determined on the basis of BTIs.

33 If, contrary to the United Kingdom’s main plea, it were to be decided that the issue of the disputed BTIs by the United Kingdom could result in its liability for the loss of European Union own resources, the United Kingdom argues, in the alternative, that such liability must be made conditional on the Commission showing that the customs authorities of that Member State were at fault or negligent in issuing the disputed BTIs. In that regard, the United Kingdom contends — relying on Article 17(2) of Regulation No 1150/2000 — that the loss of the own resources is ‘for other reasons which cannot be attributed to [it]’ for the purposes of that provision.

34 As for the Commission’s argument relating to errors made in the classification of the goods, the United Kingdom denies classifying the product by reference to temperature. The United Kingdom asserts that, on the contrary, it relied on the opinion of a scientific expert to conclude that the ‘deep-frozen’ criterion was fulfilled in the circumstances. The fact that the inaccuracy of that opinion did not become evident until after a physical examination of a consignment and in-depth analyses of the product in question had been carried out showed that the classification error was at the very least excusable.

35 As regards the risk that the garlic imports might have been linked to fraud, the United Kingdom explains that it had no knowledge of the fact that the declaration of fresh garlic as frozen garlic was a particular problem. That risk was not identified until early February 2006, when the UK customs authorities pointed it out. Furthermore, the mutual assistance communications that had been sent to the United Kingdom earlier concerned two specific types of quota circumvention through false declarations, some relating to the country of origin of the fresh garlic and others stating that the product in question was dried garlic instead of fresh garlic. As regards the import statistics, the United Kingdom contends that these were not available until after a period of three months and they reflected an increase in the import of frozen vegetables generally.

36 The United Kingdom also disputes the Commission’s argument that the UK customs authorities failed to give due care and attention to the issue of the disputed BTIs. The United Kingdom contends that there is no requirement to submit every BTI application to sampling. The UK customs authorities had no reasonable grounds for doubting the accuracy of the applications and for refusing to issue the disputed BTIs.

Findings of the Court

Costs

63 Under Article 138(1) of the Rules of Procedure of the Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the United Kingdom has been unsuccessful, the latter must be ordered to pay the costs.

On those grounds, the Court (Fourth Chamber) hereby:

1. Declares that, by refusing to make available the amount of GBP 20 061 462.11 corresponding to the duties payable on imports of fresh garlic covered by erroneous binding tariff information, the United Kingdom of Great Britain and Northern Ireland failed to fulfil its obligations under Article 8 of Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities’ own resources and Articles 2, 6, 9, 10 and 11 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 2000/597, as amended by Council Regulation (EC, Euratom) No 2028/2004 of 16 November 2004;

2. Orders the United Kingdom of Great Britain and Northern Ireland to pay the costs.

[Signatures]

* Language of the case: English.