Revising an incorrect customs declaration

15 January 2010

Another defeat for Customs

The European Court of Justice has issued its long-awaited judgement in the joined cases of Terex (C-430/08) and FG Wilson and Caterpillar (C-431/08).  Both cases revolved around incorrect export declarations for goods that were imported under the Inward Processing Relief (IPR) duty relief procedure.


The Two Cases

IPR allows for the import of non-EC goods that will be processed or manufactured into a product that will subsequently be re-exported outside of the EC subject to certain conditions with import duty either suspended at time of import (“IPR Suspension”) or claimed back by the importer (“IPR Drawback”).

In both cases, the freight forwarders employed by the importers had declared the incorrect Customs Procedure Code (CPC) on the export declarations of goods that had been declared to IPR, so instead of declaring that the goods were actually non-EC goods that had been processed and re-exported, they stated that the goods were in fact EC goods that had been exported.

Both cases essentially revolved around the issue whether the incorrect declarations meant that all the companies involved were liable to post-duty demands from HMRC.



Terex and Wilson & Caterpillar argument 

The companies concerned acknowledged that the incorrect CPC had been declared (albeit by their freight forwarders) but argued that the European Customs Code allowed for mistakes to be rectified regularising the situation. The crux of the argument was that under IPR, import duty was not legally owed and that a mistake in the export declarations should not convey upon them a demand for import duty that was not due in the first place.   


HMRC Argument

HMRC argued that a customs debt had arisen because of the incorrect application of the IPR procedure in that the goods had wrongly been conferred the status of EC goods and they had not been discharged from IPR correctly. Furthermore, HMRC argued that a customs debt had arisen because Terex and Wilson & Caterpillar had not notified HMRC of the export of the goods prior to their export which is obligatory under the IPR procedure. They argued that the situation could not be retrospectively regularised as the companies sought to change the customs arrangements applicable (to IPR) and moreover, the situation could not be regularised because it was impossible to present, after the event, a prior notification of re-export of goods. Finally, they argued that remission was not an option because the companies had displayed “obvious negligence” which precluded the remission of duties.


ECJ Judgement

The ECJ’s judgement can be split into two parts.

Firstly, the Court argued that the declaration of incorrect customs procedure codes on the export declarations did indeed give rise to a customs debt as the goods had been unlawfully removed from IPR preventing HMRC and that this had to be interpreted strictly.

Secondly, the ECJ rejected the argument by customs that they could not remedy the lack of the prior notification required by Article 182(3) CC. The court argued that the provisions governing the customs procedure in question were applied on the basis of incorrect or incomplete information and that the objectives of the IPR procedure were not threatened (i.e. that the goods covered by that procedure had actually been re-exported). It argued that HMRC must therefore take the necessary measures to regularise the situation.

The Court went on to state that import duties were not legally owed when they were entered into IPR, the measure necessary to regularise the situation is the remission of those duties in accordance with Article 236 of the Customs Code stating in particular that this is possible where there has been no manipulation by the declarant and that the application for remission has been submitted within the time-limit, which is in principle 3 years.


How could this judgement affect you?

This judgement has been long-awaited and provides a number of interesting highlights. The ECJ quite categorically stated that errors such as declaring the incorrect customs procedure codes does lead to a customs debt. It is therefore the responsibility of the importer to ensure that all declarations (import and export) are being completed and declared correctly. However, the court also stated that if a customs debt arises due to an error such as in the above cases, if they are not legally owed in the first place and you can prove that there was no deliberate manipulation of data or that the customs-relief procedure was not being abused to gain a benefit that would otherwise not exist and that remission of duties is allowed under EC law.


ITS Recommendations

This is a classic case of prevention rather than cure. It is your interests to ensure that all customs declarations that are made on your behalf are made correctly. You, as the importer (not your agent and/or freight forwarder) are responsible and liable for all your customs declarations.

You should have procedures in place to instruct your freight forwarders and to monitor whether declarations are being made correctly and if not to correct them as quickly as possible. A complete review of your customs procedures will provide better certainty from the outset and will prevent costly and time-consuming processes to reclaim overpaid duties.

However, if you are operating a customs relief procedure and are facing a post-clearance demand from HMRC then do not panic! There are legal provisions in place that could protect you from paying such demands.


If you would like to know more about how ITS can help you review your customs functions or if you have received a back-duty demand that you are unsure about then please give us a call on (01905) 619229 or drop us an email at:




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