Customs authorities must check, on their own initiative, whether the conditions for repayment of import duties are met. This view was recently expressed, with welcome clarity, by the ECJ’s Advocate General in his Opinion in case C-206/24 (YX, Logística i Gestió Caves Andorranes i Vidal SA). The ECJ’s decision in this request for a preliminary ruling has not yet been made. The requests concern a legal provision that was incorporated into the old Customs Code. The pending decision will also have an impact on the new version of this regulation in the current UCC.

 

Andorran taxable persons imported goods into Andorra in the years 1988 to 1991. In doing so, the goods passed through French territory. According to the French customs administration at the time, goods from third countries with Andorra as their country of destination, had to be released for free circulation in France. Accordingly, the taxable persons paid import duties in France. The Commission criticised this practice for violating the then current Union law. As a result, the French customs administration abandoned the requirement for release for free circulation in mid-1991.

 

In 2015, the plaintiffs, who are the legal successors of the Andorran taxable persons, brought legal action against the French customs administration. They demanded repayment of the import duties levied between 1988 and 1991, which were levied in violation of Union law. The legal action was dismissed at both first and second instance. The grounds for this were that the French customs authorities did not have all of the information that they required in order to determine the amount to be repaid and the identity of the debtors to whom the amounts were to be paid. This would only have been possible, if at all, by first carrying out extensive and disproportionate research. The plaintiffs appealed the decision at second instance. At third instance, two questions were raised, which have now been referred to the ECJ regarding the scope of the customs authorities’ obligation to carry out research.

 

The subject of the proceedings before the French courts was the interpretation of Art. 2 para. 2 of Council Regulation (EEC) No. 1430/79 on the repayment or remission of import or export duties. This regulation was incorporated into Art. 136 para. 2 subpara. 3 of the subsequently introduced CC. It follows, from the provisions, that the customs authorities must carry out the repayment on their own initiative if they determine, within the period provided, that the conditions for the repayment are met.

 

The Advocate General states in his opinion that applications for repayments can, in principle, be made within three years of the import duties being entered into the accounts. However, the repayment itself does not have to be made within those three years. Customs authorities must also carry out the repayment, on their own initiative, if they become aware of circumstances, within these three years, on the basis of which import duties were incorrectly levied, provided that the examination shows that the conditions for the repayment are met. While in the case of an application it is clear, as from when a review must take place, it is unclear what level of certainty is required to trigger the verification obligation on the customs authorities’ own initiative.

 

According to the Advocate General, the customs authorities must obtain knowledge of the essential elements giving rise to the right to repayment. This includes the customs transactions carried out, the identity of the taxable persons involved in those transactions, the amounts paid and the reasoning for the absence of customs debt. The customs authorities are, themselves, obliged to carry out proportionate research. This applies both as regards the identity of the person liable for payment and to the reasoning behind the repayment. In the present case, the French customs administration should, in any case, have carried out research because it had itself incorrectly applied Union law for several consecutive years. It only rectified this following the Commission’s complaint. However, the taxable persons themselves were. not necessarily aware of these transactions. Therefore, the customs administration could not rely on the fact that they had not submitted any applications for repayment. In any case, the Advocate General considers additional research measures to be necessary in the case of such serious infringements by the customs administration itself. However, research is not required to be carried out to a disproportionate extent.

 

The standards at issue have now been transferred to Art. 116 para. 4, 121 para. 1 of the UCC. The Advocate General points out that the content of the provisions has not changed, in terms of their normative content, over time. The ECJ’s pending decision will therefore also have an impact on transactions after the introduction of the UCC. However, it is possible that the ECJ will not follow the Advocate General and will instead strengthen the application requirement. If the ECJ does follow the Advocate General though, taxable persons can hope for refunds, even if they have not applied for repayment themselves. Future cases of particular relevance will be those in which the jurisdiction establishes the illegality of past import duty collection practices. The customs administration would then also be required to investigate, ex officio, whether repayments must be issued in similar cases. The customs authorities’ own realisation would also lead to an ex officio obligation. Such a realisation could be manifested, for example, in changes in the administrative regulations.