On 7 April 2022, the ECJ issued its decision in the case C-489/20 (UB vs Kauno teritorinė muitinė). This is a customs / excise case.
Context: Reference for a preliminary ruling – Union Customs Code – Extinguishment of the customs debt – Goods unlawfully introduced into the customs territory of the European Union – Seizure and confiscation – Directive 2008/118/EC – Excise duties – Directive 2006/112/EC – Value added tax – Chargeable event – Chargeability
Facts
UB, acting in a group of accomplices, organised the unlawful introduction (smuggling) of goods subject to excise duty from Belarus into the territory of Lithuania. On 22 September 2016, at a remote location, 6 000 packets of cigarettes (‘the goods concerned’) were thrown across the State border and recovered. On the same date, the vehicle transporting the goods concerned within the territory of Lithuania was stopped by border officers, who seized those goods.
UB was convicted of a criminal offence, and a fine of EUR 16 947 was imposed on him; it was also decided to confiscate the goods concerned, and the competent authorities were instructed to destroy them.
The Kaunas Customs Office recognised UB as being liable, jointly and severally with third parties, 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. As regards, on the other hand, the customs duties, the Kaunas Customs Office did not calculate and record the amount of those duties because it considered that the customs debt had been extinguished pursuant to Article 124(1)(e) of the Union Customs Code.
UB brought an action before the Vilniaus apygardos administracinis teismas (Regional Administrative Court, Vilnius). UB argued, in essence, that, since the customs debt was extinguished on the ground provided for in Article 124(1)(e) of the Union Customs Code, his obligation to pay excise duty and import VAT should also be regarded as extinguished.
The referring court harbours doubts, first, as to whether a seizure and a confiscation such as those at issue in the main proceedings constitute a ground for the extinguishment of the customs debt under Article 124(1)(e) of the Union Customs Code. It observes that the wording of that provision differs from that of point (d) of the first paragraph of Article 233 of Regulation No 2913/92, which expressly provided that the seizure of the smuggled goods had to take place ‘upon their unlawful introduction’ in order for the customs debt to be regarded as extinguished. It could therefore be held that, under the Union Customs Code, the time at which the seizure takes place is now irrelevant and the customs debt is extinguished even if the smuggled goods are seized when they have already been introduced into the customs territory of the European Union, that is to say, beyond the area in which the first customs office inside that territory is situated.
Second, the referring court is uncertain as to the effect of the extinguishment of the customs debt on the obligation to pay excise duty and import VAT. The referring court observes in that regard that, although the Court’s case-law, including the judgment of 29 April 2010, Dansk Transport og Logistik (C‑230/08, EU:C:2010:231), seems to presuppose that the extinguishment of the customs debt, on the one hand, and the extinguishment of other tax obligations such as those to pay excise duty and import VAT, on the other, ‘occur in parallel’, neither Directive 2008/118 nor the VAT Directive contains provisions providing for the extinguishment of those obligations in situations where goods are unlawfully introduced and subsequently seized and confiscated.
Questions
In those circumstances, the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Is Article 124(1)(e) of [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 [Directive 2008/118] and Articles 2(1)(d) and 70 of [the VAT Directive] 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 [the Union Customs Code]?’
Decision
On those grounds, the Court (Second Chamber) hereby rules:
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 must be interpreted as meaning that a customs debt is extinguished where goods are seized and subsequently confiscated when they have already been unlawfully introduced into the customs territory of the European Union.
2. Article 2(b) and Article 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, as well as Article 2(1)(d) and Article 70 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as meaning that the extinguishment of the customs debt on the ground provided for in Article 124(1)(e) of the Union Customs Code does not lead to the extinguishment of the debt linked, respectively, to excise duty and to value added tax in respect of goods unlawfully introduced into the customs territory of the European Union.
Summary
1. A customs debt is extinguished where goods are seized and subsequently confiscated when they have already been unlawfully introduced into the customs territory of the European Union.
2. The extinguishment of the customs debt on the ground provided for in Article 124(1)(e) of the Union Customs Code does not lead to the extinguishment of the debt linked, respectively, to excise duty and to value added tax in respect of goods unlawfully introduced into the customs territory of the European Union.
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