ECJ C-72/24 & 73/24 (Keladis) – AG Opinion – Use of threshold values/fair prices to determine the customs value of imported goods

Case C-72/24 (Keladis I)

• Parties Involved: The case is between HF, a business owner importing textile products from Türkiye, and the Anexartiti Archi Dimosion Esodon (Independent Revenue Authority, Greece).
• Customs Declaration Process: In 2014, HF imported textile goods, submitting customs declarations under a simplified declaration procedure that allowed import duties to be calculated based on the highest tariff classification for the goods.
• Investigation and Findings: In 2016, customs authorities investigated HF due to allegations of undervaluation. They found evidence suggesting that the declared customs values were significantly lower than the actual market values, indicating a potential smuggling scheme involving false declarations.
• Use of Statistical Values: The customs authorities determined the customs value using a method based on “lowest acceptable prices” (LAP), derived from a risk assessment tool utilizing EU-wide data from the European Anti-Fraud Office (OLAF).
• Tax Assessment: As a result of the investigation, HF was charged with a significant amount of VAT fraudulently evaded, totaling approximately €6.2 million, and was deemed liable for the evaded VAT.
• Legal Proceedings: HF contested the tax assessments, arguing that the use of LAPs to determine customs value was unlawful and that he should not be penalized for alleged undervaluation without clear evidence of wrongdoing.

Case C-73/24 (Keladis II)

• Parties Involved: This case involves WI, an employee of a wholesale trading company dealing in textile products, who was also linked to the same smuggling investigation as HF.
• Similar Circumstances: The facts and legal issues in this case closely mirror those in Case C-72/24, with WI being implicated in the same customs declarations lodged between March 2014 and December 2016.
• Liability for VAT: Like HF, WI faced increased tax assessments based on the allegations of undervaluation of imported goods and was accused of involvement in the alleged smuggling operation.
• Legal Challenge: WI also appealed against the tax authorities’ decisions, seeking to annul the assessments based on similar arguments regarding the legality of the customs value determination methods employed by the authorities.
• Referral to CJEU: Both cases were referred to the Court of Justice of the European Union (CJEU) by the Dioikitiko Protodikeio Thessalonikis (Administrative Court of First Instance, Thessaloniki) to clarify the compatibility of the customs valuation practices with EU law.

Common Background

• Legal Framework: The cases hinge on the interpretation of the Customs Union regulations, specifically the Community Customs Code (CCC) and the Union Customs Code (UCC), concerning how customs values are determined and the use of statistical data in this process.
• Question of Legality: The central legal issue is whether the use of statistical values, such as LAPs, for determining customs values in cases of suspected undervaluation aligns with EU law and the principles of fair treatment for economic operators.
• Implications for Customs Practices: The outcomes of these cases could have significant ramifications for how customs authorities approach valuation and assessment in situations where fraud is suspected, particularly regarding the rights of taxpayers to contest the methods used by tax authorities.

Questions

Summary of Questions Raised to the ECJ

• Use of Statistical Values: Are the statistical values referred to as “threshold values” or “fair prices” available to national customs authorities compatible with EU law, specifically regarding accessibility for economic operators and whether they consist solely of aggregated data?
• Post-Release Controls: In the context of ex post controls where physical inspection of goods is impossible, can customs authorities use these statistical values to substantiate their doubts about declared customs values, and can they also be used to determine the customs value of imported goods through alternative methods?
• Minimum Values and WTO Compliance: Does the use of statistical values in determining customs value comply with the World Trade Organization’s International Agreement on the Determination of Customs Valuation, which prohibits the use of minimum values?
• Customs Value Determination: When simplification methods are used for customs declarations, can the alternative method for determining customs value be applied regardless of discrepancies between declared values and established minimum values?
• Liability for Import VAT: Are the provisions in Greek legislation regarding the determination of persons liable for payment of import VAT sufficiently clear under EU law, particularly concerning the designation of the “deemed owner of the imported goods”?

Case C‑72/24 (Keladis I)

(1)      Are the statistical values referred to as ‘threshold values’/‘fair prices’, which are based on Eurostat’s Comext statistical database and are derived from [AFIS], of which the [AMT] is an application, available to the national customs authorities through their respective electronic systems? Do they meet the requirement of accessibility for all economic operators, as referred to in the judgment of 9 June 2022, Fawkes Kft., C‑187/21? Do they contain solely aggregated data, as defined in [Regulation (EC) No 471/2009 of the European Parliament and of the Council  of 6 May 2009 on Community statistics relating to external trade with non-member countries and repealing Council Regulation (EC) No 1172/95 (OJ 2009 L 152, p. 23) and Commission Regulation (EU) No 113/2010 of 9 February 2010 implementing Regulation (EC) No 471/2009 of the European Parliament and of the Council on Community statistics relating to external trade with non-member countries, as regards trade coverage, definition of the data, compilation of statistics on trade by business characteristics and by invoicing currency, and specific goods or movements (OJ 2010 L 37, p. 1)], as in force at the relevant time?

(2)      In the context of ex post controls in which it is not possible to physically check the imported goods, may those statistical values in the Comext database, if regarded as generally accessible and as not containing aggregated data only, be used by the national customs authorities solely in order to substantiate their reasonable doubts as to whether the value declared in the declarations represents the transaction value, that is to say, the amount actually paid or payable for those goods, or may they also be used to determine the customs value of the goods, in accordance with the alternative method referred to in Article 30(2)(c) of the [CCC] [corresponding to Article 7[4](2)(c) of the [UCC]; ‘deductive method’] or possibly another alternative method? How does the fact that it cannot be established that identical or similar goods are involved in transactions at the relevant time, as defined in Article 152(1) of [the CCC implementing regulation] affect the answer to that question?

(3)      In any event, is the use of those statistical values to determine the customs value of certain imported goods, which is equivalent to the application of minimum values, consistent with the obligations arising under the World Trade Organization (WTO) International Agreement on the Determination of Customs Valuation, otherwise known as the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, to which the European Union is a party, in view of the fact that that agreement expressly prohibits the use of minimum values?

(4)      In relation to the previous question, is the reservation in favour of the principles and general provisions of the aforementioned International Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, laid down in Article 31(1) of the [CCC] concerning the fall-back method for determining the customs value and, accordingly, the exclusion of the application of minimum values laid down in Article 31(2) of the [CCC] (which does not appear in the corresponding provision of Article 74(3) of the [UCC]), valid only where that method is applied or does it govern all the alternative methods for determining customs value?

(5)      Where it is established that simplification through the grouping of headings, within the meaning of Article 81 of the [CCC] (now Article 177 of the [UCC]), was used on importation, is it possible to apply the alternative method set out in Article 30(2)(c) of the [CCC] (corresponding to Article 70(2)(c) of the [UCC]), irrespective of the disparity between the goods declared under the same TARIC code in the same declaration and the value fictitiously established as a result for those goods not belonging to that tariff classification code?

(6)      Finally, irrespective of the preceding questions, are the provisions in the Greek legislation concerning the determination of the persons liable for payment of import VAT sufficiently clear, pursuant to the requirements of EU law, in so far as they designate the “deemed owner of the imported goods” as the person liable?’

Case C‑73/24 (Keladis II)

(1)      Where reasonable doubts arise as to whether the declared customs value of imported goods is their actual transaction value, but during the post-release control it is impossible to determine the transaction value on the basis of the methods set out in Article 30(2)(a) and (b) of [the CCC] and Article 74(2)(a) and (b) of [the UCC] (transaction value of identical and similar goods) because, on the one hand, the goods have escaped seizure and therefore it is impossible to physically check them and, on the other hand, the description of the goods in the documents accompanying the import declaration is general and vague, is an administrative practice under which, in the context of the ‘deduction method’ provided for in those provisions, “threshold values”, which are defined in the [AMT] system of the [AFIS] and determined by means of statistical methods, are used as the basis for determining the transaction value of the goods, compatible with the provisions of Article 30(2)(c) of [the CCC] and of Article 74(2)(c) of [the UCC]?

(2)      If the first question is answered in the negative, is it permissible to use the aforementioned “threshold values” in the context of any of the other methods described in Articles 30 and 31 of [the CCC] and Article 74(1) to (3) of [the UCC], in view, in particular, of the reasonable flexibility that must on the one hand distinguish the application of the “fall-back method” under Article 31 of [the CCC] and Article 74(3) of [the UCC] and, on the other hand, the express prohibition on determining the customs value on the basis of minimum customs values, which is provided for in relation to that “fall-back method” (Article 31(2)(f) of [the CCC] and Article 144(2)(f) of [the UCC implementing regulation]?

(3)      If the answer to both of the preceding questions is in the negative, is it permissible under EU law not to charge VAT evaded to an importer who is subsequently found to have imported (and indeed systematically imported) goods at prices lower than those determined as the minimum commercially viable prices, where the customs authorities are unable, during the post-release control, to determine the customs value of the imported goods by any of the methods described in Articles 30 and 31 of [the CCC] and Article 74(1) to (3) of [the UCC], or is it permissible, in that case, as a last resort, to charge them on the basis of the statistically determined minimum acceptable prices, as has already been accepted in the case of charging by the Commission of loss of own resources to a Member State that did not carry out the appropriate customs checks [see judgment of the Court of Justice of 8 March 2022, Commission v United Kingdom (Action to counter undervaluation fraud), C‑213/19, EU:C:2022:167]?

(4)      If the answer to the second or third question above is in the affirmative: must the statistically determined minimum values represent imports that took place at or around the same time as the imports subject to the checks and, if so, what is the maximum permitted interval between the imports used to derive the statistical result and the imports checked? For example, may the 90 days provided for in Article 152(1)(b) of [the CCC implementing regulation] and in Article 142(2) of [the UCC implementing regulation] be applied by way of analogy?

(5)      If the answer to any of the first three questions is in the affirmative as regards the use of “threshold values” in order to determine the transaction values of imported goods: where the procedure for simplifying the drawing up of customs declarations by grouping the TARIC codes of the goods, provided for in Article 81 of [the CCC] and Article 177 of [the UCC], has been adopted on importation, is an administrative practice whereby the customs value of all goods imported under each import declaration is calculated on the basis of the “threshold value” determined for the product in question, the TARIC code of which has been recorded in the import declaration, since the customs authority considers that it is bound, on the basis of Article 222(2)(b) of [the UCC implementing regulation], by the grouping carried out by the importer, consistent with the principle prohibiting the determination of arbitrary or fictitious customs values? Or, on the contrary, must the value of each product be determined on the basis of its own tariff heading even if the code is not recorded in the import declaration, in order to avoid the risk of arbitrary customs duties being imposed?’

AG Opinion

• (1)      Article 30 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code and Article 74(2) 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 precluding aggregated statistical data compiled at EU level from being used by customs authorities for the purpose of establishing the customs value of goods by applying the secondary methods referred to in those articles.
• (2)      Article 31 of Regulation No 2913/92 and Article 74(3) of Regulation No 952/2013
• must be interpreted as not precluding customs authorities, when using the fall-back method referred to in those articles for the purpose of establishing the customs value of goods, from using aggregated statistical data compiled at EU level and from providing those data to economic operators in order to guarantee them the right to be heard, provided that the use of such data is exceptional and is limited to cases in which the customs authority, after having exhausted all the procedures laid down by the legislation, is unable to determine a customs value in accordance with any other method laid down.
• (3)      The use of aggregated statistical data compiled at EU level in the context of the fall-back method referred to in Article 31 of Regulation No 2913/92 and Article 74(3) of Regulation No 952/2013 cannot be regarded as the application of a system of minimum prices provided that the economic operator is able to provide reasons for the low prices stated in the declaration.
• (4)      The 90-day time limit laid down in Article 152(1)(b) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92, as amended by Commission Regulation (EC) No 46/1999 of 8 January 1999, and in Article 142(2) of Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013, may be applied by analogy in order to determine the maximum permitted interval between imports used to derive the statistical result and the imports checked, and that period may be made more flexible, but must not be excessive to the point of being detrimental the objective pursued by that time limit.