When is customs debt extinguished if goods are unlawfully introduced into the EC?

22 April 2009

The ECJ recently made a decision regarding customs debt in respect of goods unlawfully introduced and later seized and destroyed by the customs authorities into the EC ( Elshani v Hauptzollamt Linz (C-459/07).

The Facts

The case concerned a cigarette smuggling operation using two tourist coaches involving Mr Elshani and his brother from Kosovo to Austria. The regional police for the Land of Upper Austria carried out telephone surveillance in the Eferding area in connection with this operation. As a result of the surveillance, Mr Elshani was stopped near the town of Wels (Austria) in one of the coaches in which 150 cartons of cigarettes had been concealed in the central aisle. The coach had not yet reached its destination of Eferding (Austria).

The cigarettes were seized by the Austrian customs authorities then confiscated and destroyed under official supervision. Mr Elshani was responsible for the customs debt incurred in the course of the period between 19 and 21 May 2001. Austrian Customs claimed import duties of EUR 961.46 by decision on 13 November 2002 for the seized cartons which Mr Elshani challenged on 13 December 2002. Austrian Customs rejected the challenge by decision of 7 July 2003 as unfounded and subsequently Mr Elshani appealed to the the Independent Tax Tribunal, Graz Division which decided to stay the rulings and refer to the ECJ.

What was referred?

The question was essentially whether Article 202 and para 1(d) of Article 233 of Council Regulation (EEC) 2913/92 (establishing the Community Customs Code) were to be interpreted as meaning that the seizure of goods unlawfully introduced into the customs territory of the Community led to the extinction of the customs debt only when it took place before those goods left the customs office or whether it still led to such an extinction when it occurred later, during transport, but before the goods reached their first destination.

Article 202.1(a) states that:

“… A customs debt on importation shall be incurred through: (a) the unlawful introduction into the customs territory of the Community of goods liable to import duties…”

Article 233 states that:

“…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…

(1)(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… In the event of seizure and confiscation, the customs debt shall, nonetheless for the purposes of the criminal law applicable to customs offences, be deemed not to have been extinguished where, under a Member State’s criminal law, customs duties provide the basis for determining penalties or the existence of a customs debt is grounds for taking criminal proceedings…”

The Decision

The Court ruled:

Article 202 and Article 233(1)(d) has to be interpreted as meaning that, in order to lead to the extinction of the customs debt, the seizure of goods unlawfully introduced into the customs territory of the Community had to take place before those goods went beyond the first customs office situated inside that territory.

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 Regulation which took place beyond the first customs office situated inside that territory and which occurred practically at random was not capable of leading to the extinction of the customs debt for the purposes of Article 233 (1)(d) of the Regulation. The unlawful introduction of goods was completed at the moment at which those goods went beyond the first customs office situated inside the customs territory of the Community without those goods having been presented there.


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