Court of Justice 14-02-1984 ECLI:EU:C:1984:59

Facts

The previous history of the dispute

The order for reference relates to facts similar to those which led the same Finanzgericht to refer a question to the Court for a preliminary ruling in Case 158/80 (judgment of 7 July 1981, Rewe-Handelsgesellschaft Nord mbH and Rewe-Markt Steffen ν Hauptzollamt Kiel [1981] ECR 1805). In that case the Court gave a ruling on the question whether and to what extent the supply of goods exempt from customs duties and taxes on board “butter-selling ships” and the importation of such products duty-free in travellers' personal luggage was compatible with Community law.

That case, known as the “butter-buying cruises” case, concerned proceedings instituted before the same Finanzgericht by, once again, Rewe-Handelsgesellschaft Nord mbH, a wholesale dealer, and one of its retail outlets against the Hauptzollamt Kiel.

On 13 January 1982 the Finanzgericht Hamburg gave judgment in those proceedings taking into account the operative part of the Court's judgment.

The background to the present case

Whereas the previous dispute concerned primarily “butter-buying cruises”, that is to say sea cruises which make no or only a token call abroad, the present case relates to the purchase of goods exempt from customs duties and taxes on ships which provide regular feny services and in the course of combined boat and coach journeys.

The plaintiffs in the main action are Rewe-Handelsgesellschaft Nord mbH, which is a wholesale dealer in, inter alia, perfumes, coffee, tea, matches and foods such as butter, cheese, meats and confectionery as well as spirits, beer, wine and tobacco, and Firma Rewe-Markt Herbert Kureit, which carried on business as a retailer in Niendorf on the Bay of Lübeck and deals in the products supplied by the first plaintiff. The latter's customers are predominantly retailers established along the North Sea and Baltic coast areas of Schleswig-Holstein.

Their action is against the Hauptzollämter responsible for the North Sea and Baltic coast areas and seeks an order directing them to refrain from allowing goods brought back from sea voyages to clear customs free of duty within certain limits, contrary to the relevant provisions of Community law.

Those initial claims were extended to purchases made free of customs duties and taxes on ships operating regular routes and ferry-boats.

Furthermore, it was brought to the attention of the Finanzgericht that ships were leaving ports in the Federal Republic of Germany for Denmark where no entry duties were charged on goods obtained tax-free and from where the passengers returned by coach to the Federal Republic where concessions were also made.

The Finanzgericht states that it intends to review its case-law concerning ferry traffic and that that is the purpose of the questions referred by it to the Court for a preliminary ruling.

Finally the Finanzgericht states that the ferry traffic consisting of short trips between the Federal Republic of Germany and Denmark on which purchases may be made free of customs duties and taxes and the combined ship and coach excursions affect mainly the grocery trade along the North Sea and Baltic coasts.

Such operations have the effect of depriving local wholesale and retail traders of the benefit of a large proportion of the purchasing power of the inhabitants of the North Sea and Baltic coast areas.

The Community provisions

Regulation No 1544169, as amended by Council Regulation (EEC) No 3313/81 of 17 November 1981, grants, within certain limits as to quantity and value, exemption from duties imposed under the Common Customs Tariff for goods contained in the personal luggage of travellers coming from non-member countries provided that such importations do not have a commercial character.

Directive No 69/169, as amended by the Second Council Directive of 12 June 1972 (Official Journal, English Special Edition 1972 (II), p. 565), by the Third Council Directive of 19 December 1978 (Official Journal 1978, L 366, p. 28), by the Fourth Council Directive, of 19 December 1978 (Official Journal 1978, L 366, p. 31), by Council Directive 81/933/EEC of 17 November 1981 (Official Journal 1981, L 338, p. 24) and finally by Council Directive 82/443/EEC of 29 June 1982 (Official Journal 1982, L 206, p. 35), specifies first (in Article 1) the exemptions from turnover tax and excise duty applicable to goods contained in travellers' personal luggage coming from non-member countries and secondly (in Article 2) the limits in terms of value to such exemptions in respect of goods in travellers' personal luggage coming from Member States of the Community; thirdly it lays down (in Article 4) quantitative limits for the importation, free of turnover tax and excise duty, of the goods listed therein and finally it provides (in Article 6) the rules whereby Member States may adopt the necessary measures as regards sales at the retail trade stage to enable turnover tax on goods carried in the personal luggage of travellers leaving a Member State to be remitted under certain conditions and subject to certain reservations.

Regulation (EEC) No 1818/75 of the Council of 10 July 1975 (Official Journal 1975, L 185, p. 3) on the agricultural levies, compensatory amounts and other import charges applicable to agricultural products and to certain goods resulting from their processing, contained in travellers' personal baggage, extended the scope of Regulation No 1544/69 to levies and other agricultural charges and introduced relief from compensatory amounts and other import charges in the context of travel between two Member States, the grant of which was subject to the same limits and conditions as applied to the grant of the relief provided for by Article 2 of Directive 69/169/EEC.

Procedure and the questions referred to the Court

By order of 4 August 1982 the Fourth Chamber of the Finanzgericht Hamburg submitted the following questions to the Court for a preliminary ruling:

1. Must Regulation (EEC) No 1544/69 of the Council of 23 July 1969, as last amended by Council Regulation (EEC) No 3313/81 of 17 November 1981, Regulation No 1818/75 of the Council of 10 July 1975, as amended by Council Regulation (EEC) No 2780/78 of 27 November 1978, and Council Directive 69/169/EEC of 28 May 1969, as last amended by Directive 81/933/EEC of 17 November 1981, be construed to the effect that the tax concessions provided for therein in respect of customs duties, import charges applicable to agricultural products or goods resulting from their processing, turnover taxes and excise duties also apply to goods which are not in free circulation in the Member States or which have not borne turnover taxes or excise duties in the Member States or non-member countries and which are purchased by passengers on ferries carrying passenger traffic between a Member State and a non-member country?

2. Must the provisions mentioned in Question (1) be construed to the effect that the tax concessions in question also apply to goods which are not in free circulation in the Member States or which have not borne turnover taxes or excise duties in the Member States or non-member countries and which are purchased by passengers on ferries carrying passenger traffic between Member States?

3. Must the provisions mentioned in Question (1) be construed to the effect that the tax concessions in question also apply to goods which are not in free circulation in the Member States or which have not borne turnover taxes or excise duties in the Member States or non-member countries and which are purchased by passengers on ships sailing from a port in a Member State to the port of another Member-State where the passengers go ashore and then, without being charged duty in the country in which they arrive, return by land to the Member State in which they began their journey?”

After concluding that the defendant's objection that the main action is inadmissible is unfounded, the Finanzgericht states in its order for reference that the legal position regarding goods purchased on ferries or during combined ship and coach trips is open to doubt.

It also states that in the Federal Republic of Germany goods may be purchased by masters of ships free of customs duties and taxes and that that concession applies inter alia to ships which call at a foreign port.

Finally, it sets out the following legal considerations in its order:

1. In relation to ferry traffic between a non-member country and a Member State

   1. With regard to customs duties and agricultural levies, the Finanzgericht, taking into account the letter, the spirit and the purpose of Regulation No 1544/69, considers that the provisions could be interpreted to the effect that only goods purchased within the territory of a non-member country may be imported duty-free within the limits set out in the regulation.

      The Finanzgericht considers that support for that interpretation is to be found in Article 1 (1) of Regulation No 1544/69 and in the relationship which it is possible to establish between that regulation and the New York Convention concerning Customs Facilities for Touring, from which it follows that tax concessions are intended to facilitate tourist traffic and not the purchase on board ferries of duty-free goods for the purpose of importing them.

      Yet the Finanzgericht does admit that it is possible to take the view that the purpose of Regulation No 1544/69 is not to facilitate tourist traffic but to serve the needs of the customs authorities by enabling them to clear imports through customs swiftly.

      That purpose would not be achieved if the customs authorities had to determine at the time of importation the origin of the goods in respect of which exemption from customs duties was being claimed.

   2. With regard to agricultural levies, the Finanzgericht is of the opinion that the same considerations apply to the interpretation of Article 1 of Regulation No 1818/75.

   3. With regard to turnover taxes, the Finanzgericht considers that, in order to interpret Directive 69/169/EEC, it is necessary to refer to the fourth recital in the preamble thereto where it is stated that as a general rule goods may only be obtained in the country from which they come already taxed.

      That indicates that the directive has in view goods obtained in the country from which they come and not goods obtained on board ships.

2. In relation to ¡ntra-Community ferry traffic

   1. With regard to agricultural levies, the Finanzgericht considers that, in order to interpret Regulation No 1818/75, it is necessary to refer to the considerations which it expounded in relation to ferry traffic to and from non-member countries.

   2. With regard to turnover taxes and excise duties, the Finanzgericht concludes from the provisions of Article 4 (4) of Directive 69/169 that no tax concession may be granted on goods which were obtained free of duty solely in the course of a cruise.

      Furthermore, the preamble to the directive supports that point of view since all the objectives set out therein are unrelated to the right to receive concessions in the course of cruises between Member States. In addition, the tax exemption on imports does not serve to avoid double taxation.

      Nevertheless the Finanzgericht admits that, if it is correct to interpret that directive by analogy, the goods purchased on board might benefit from the tax exemptions intended for travellers from non-member countries.

3. In relation to combined ship and coach excursions, the Finanzgericht states that it is almost certain that goods purchased on board ship may not benefit from any exemption on importation if the goods were cleared without any formality for the purpose of transit through another Member State, nor may that other Member State clear the goods free of duty.

   The order for reference was lodged at the Court Registry on 18 October 1982.

   In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities written observations were submitted by Rewe-Handelsgesellschaft Nord and Firma Rewe-Markt Herbert Kureit, represented by Gert Meier, Senior Legal Adviser to Rewe-Central AG, by the Government of the Federal Republic of Germany, represented by Deringer, Tessin, Hermann and Sedemund, Rechtsanwälte before the Oberlandesgericht Köln [Higher Regional Court, Cologne], by the United Kingdom, represented by G. Dagtoglou, Treasury Solicitor's Department, acting as Agent, by Ireland, represented by Louis J. Dockery, Chief State Solicitor, acting as Agent, and by the Commission of the European Communities, represented by its Legal Adviser, Erich Zimmerman.

   Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

   Nevertheless the Court requested the Commission to produce, prior to the oral procedure, the recent proposals for directives on exemptions from customs duties and taxes for goods contained in travellers' personal luggage and on the rules relating to sales in shops under customs control.

The admissibility of the questions referred to the Court

The plaintiffs in the main action, relying on the order of the Court made on 28 March 1980 in Joined Cases 24 and 97/80R Commission of the European Communities ν French Republic [1980] ECR 1319, express doubts as to the admissibility of the request for a preliminary ruling.

They consider that the Court has already, in the aforementioned judgment of 7 July 1981 in Case 158/80, given an unequivocal ruling that “butter-buying cruises” are incompatible with Community law and did so not only in relation to exemptions from customs duties but also in relation to exemptions from excise duties. The plaintiffs in the main action consider that it follows from the Court's case-law that the duty to take all necessary measures to comply with a judgment of the Court applies to all the institutions of a Member State, not only when the Court gives judgment pursuant to the combined provisions of Articles 161, 170 and 171 of the Treaty but also when it gives a ruling based on Article 177.

According to the plaintiffs, the Federal Republic of Germany has decided not to comply with certain essential elements of the Court's judgment in Case 158/80.

Thus it is possible to take the view that the Federal Republic and the German customs authorities would, once again, fail to comply with any further ruling of the Court, such as that sought by the Finanzgericht Hamburg by its order of 4 August 1982, whatever that ruling might be.

Since the conclusions of the parties to the main action in Case 158/80 were the same as those of the parties to the main action in this case and since the national court seeks a ruling the subject of which is essentially the same as that of the judgment of 7 July 1981, the preliminary ruling sought by the order for reference is not necessary within the meaning of Article 177 of the Treaty.

Introductory comments made in certain observations

Introductory comments made by the United Kingdom

The United Kingdom states first that it will only submit observations on the first and second questions referred to the Court since they raise issues of far-reaching importance concerning the structure and costs of intra-Community travel.

Secondly, having traced the historical development of special shops for the sale of duty-free goods to passengers on ships, aeroplanes and hovercraft, it states that a formal endorsement of what had become a well-established international custom was provided by the international Convention concerning Customs Facilities for Touring (the New York Convention), which was signed on 4 June 1954 and to which all Member States of the EEC are parties.

It states that such benefits have always been granted to tourists by the Member States and that such a practice is in conformity with Article 234 of the Treaty.

Thirdly, the United Kingdom emphasizes that the abolition of exemption from turnover tax and excise duty on goods sold to intra-Community travellers in duty-free shops, whether they are at airports or on aircraft or ships, would have serious economic and political implications.

In particular such action would have immediate repercussions on the financial basis of all those United Kingdom undertakings involved in the transport of passengers and freight within the Community, it would have serious social effects both for transport undertakings and for certain producer industries, it would result in an immediate and relatively large increase in the cost of crossing the Channel because an essential source of revenue would have to be replaced and finally it would be a direct threat to the survival of certain transport lines and companies.

The United Kingdom emphasizes, finally, that the questions posed in the present case raise the issue whether the Council intended to enact legislation altering the regimes for duty-free s.ales in the circumstances raised or whether the Member States retain their independent power to continue to apply their own rules in that area.

Introductory comments made by Ireland

Ireland also emphasizes the importance of the status of duty-free shops on regular ferry routes, which, in Ireland's case, are exclusively engaged in intra-Community trade.

In an annex to its observations Ireland sets out the serious consequences which the abolition of duty-free facilities would have for industry, employment and the financial position of the transport undertakings concerned.

Finally it contends that as an island Member State all its intra-Commumty trade is conducted by sea or- by air and that therefore particular account must be taken of the financial contribution made by duty-free shops on ferry routes.

Introductory comments made by the Commission

After analyzing the judgment given by the Court on 7 July 1981 in Case 158/80, the judgment given by the Finanzgericht Hamburg on 13 January 1982 and the considerations which it added to the questions which it referred to the Court by the present order, the Commission is anxious to describe first the steps which it itself took following the Court's judgment of 7 July 1981.

First, it requested the governments of the Member States to take all measures necessary to ensure that administrative practice conformed to that judgment by 1 April 1982 at the latest. Subsequently, by a letter dated 2 April 1982, the Commission initiated the procedure provided for by Article 169 of the Treaty against the Member States and on 11 June 1982 delivered its reasoned opinions to them all. All the Member States then stated that they would take the necessary measures to ensure that from 1 January 1983 goods originating in non-member countries and agricultural products were no longer sold to travellers free of customs duties and agricultural levies in duty-free shops at airports and on board aircraft and ships on international routes.

Subsequently the Commission commenced a further procedure against the Federal Republic of Germany with the purpose of ensuring that action was taken against the “butter-buying cruises” and the duty-free importation following such cruises of goods in travellers' personal luggage.

That procedure culminated in the Commission's bringing an action under Article 169 of the Treaty for a declaration that the State had failed to fulfil its obligations under the Treaty. That action was registered at the Court on 20 December 1982 (Case 325/82).

Finally the Commission is concerned to emphasize the difference between the present case and that relating to the so-called “butter-buying cruises”.

Whereas the case which resulted in the judgment of 7 July 1981 concerned sea cruises including no call at a foreign port or only a token call, the present case relates to purchases made free of customs duties and taxes on board ships providing regular services, on board ferry-boats and in the course of combined ship and coach journeys.

Observations on the actual questions referred to the Court

Proposed replies submitted to the Court

The plaintiffs in the main action propose that the following reply be given to the questions referred to the Court by the Finanzgericht:

“Regulations Nos 1544/69 and 1818/75 of the Council of 10 July 1975 and Council Directive 69/169/EEC, as last amended in each case, are to be construed to the effect that the tax concessions provided for therein in respect of customs duty, import charges applicable to agricultural products or goods resulting from the processing thereof, turnover taxes and excise duties do not apply to goods which are purchased on ferry-boats and which are not in free circulation in the Member States or which have not been subject to turnover tax or excise duties in the Member States or non-member countries, regardless of whether the ferry-boats operate between a Member State and a non-member country or between Member States.”

The Government of the Federal Republic of Germany proposes that the following reply be given to the questions referred to the Court by the Finanzgericht:

1. The first question:

   “Regulation No 1544/69 of the Council of 23 July 1969 and Council Directive 69/169/EEC of 28 May 1969, as amended at the relevant time, are to be construed to the effect that the exemptions from customs duties and taxes applicable to goods contained in the personal luggage of travellers coming from a non-member country also apply, subject to other requirements, to products purchased on board ferry-boats carrying passengers between a Member State and a non-member country. In that respect it is irrelevant whether or not the goods have been subject to duties imposed under the Common Customs Tariff, agricultural charges or charges having equivalent effect governed by-Community law, turnover taxes or excise duties imposed by a Member State or duties imposed by a non-member country or whether or not the goods have benefited from any assistance for their exportation under the common agricultural policy.”

2. The second and third questions:

   “Council Directive 69/169/EEC of 28 May 1969, as amended at the relevant time, permits the tax concessions applicable to goods contained in the personal luggage of travellers coming from a non-member country to be granted where the goods have been purchased on board ferry-boats carrying passengers between Member States, are imported in travellers' personal luggage and have been put into free circulation for customs purposes in a Member State but have borne the turnover taxes or excise duties of a Member State. The same will apply to products which have received customs clearance and have been put into free circulation not in the Member State in one of whose ports the journey ends but solely in another Member State. It is irrelevant whether or not the goods have borne the duties imposed by a non-member country.”

3. The United Kingdom proposes that the following reply be given to the question referred to the Court by the Finanzgericht:

   “Council Regulation No 1544/69 of 23 July 1969, as amended by Council Regulation No 3313/81 of 17 November 1981, Council Regulation No 1818/75 of 10 July 1975, as amended by Council Directive 2780/78 of 27 November 1978 and Council Directive 69/169 of 28 May 1969, as last amended by Directive 81/933 of 17 November 1981, are to be interpreted as meaning that the specified exemptions from customs duties, agricultural levies, turnover taxes and excise duties are also valid for goods which are not in free circulation in the Member States or which have not borne turnover tax or excise duty in the Member States or in third countries which have been purchased by travellers on ferries operating between a Member State and a third country.”

   With regard to the second question:

   “The provisions mentioned in Question 2 should be construed to the effect that goods which are not in free circulation in Member States which are purchased by passengers on ferries carrying passenger traffic on journeys between Member States may not benefit from exemption from customs duties and levies on agricultural products.

   Where such goods are in free circulation and all customs duties and levies on agricultural produce have been paid, Member States may continue the practice of granting exemptions from turnover taxes and excise duties in relation to the importation of goods sold to passengers on ferries carrying passengers between Member States.”

4. Ireland proposes that the following reply be given to the questions referred to the Court by the Finanzgericht:

   “Duty-free shops on regular ferry routes in intra-Community travel are outside the scope of application of Directive 69/169/EEC, as amended, simply because the Community institutions have not succeeded in adopting the relevant measures as yet.”

5. The Commission proposes that the following reply be given to the questions referred to the Court by the Finanzgericht:

   1. “The provisions of Community law concerning the tax concessions to be granted in respect of goods contained in travellers' luggage (Regulation No 1544/69 of the Council, Regulation No 1818/75 of the Council and Council Directive 69/169/EEC) are to be construed to the effect that tax concessions in respect of customs duties, import charges applicable to agricultural products or certain products resulting from the processing thereof, turnover taxes and excise duties also apply to goods which are not in free circulation in the Member States or on which the turnover taxes or excise duties applicable in the Member States have not been paid and which have been purchased by passengers on ferries carrying traffic between a Member State and a non-member country.”

   2. “The provisions mentioned in Question 1 must be construed to the effect that, in relation to passenger traffic between Member States, the sale of goods free of customs duties and agricultural levies to travellers on board ferries and the importation of those goods tax-free into the State where the journey ends are unlawful.

      With regard to exemptions from valueaded tax and excise duties and their compatibility with Community law, the reply to the question depends, in the Commission's opinion, on the interpretation of Article 6 (2) of Directive No 69/169/EEC and in relation to such interpretation the Commission defers to the Court's wisdom.”

   3. “With regard to combined sea and land excursions and exemption from customs duties and agricultural levies in that context, the Commission refers to its observations on the second question.

      The Commission replies in the negative to the question whether exemption from turnover tax and excise duty is compatible with Community law.”

The first question: transport by sea between a non-member country and a Member State

The Finanzgericht's first question asks, in substance, whether, in the case of passenger transport between a non-member country and a Member State, goods contained in travellers' personal luggage which have not been put into free circulation and on which turnover tax and excise duty have not been levied, may benefit on their importation into the Member State from the exemptions from customs duties, agricultural levies and other import charges applicable to agricultural products, on the one hand, and from turnover tax and excise duties, on the other hand, provided for in the aforementioned regulations and directives.

The second question: intra-Community transport by ferry

The Finanzgericht's second question asks, in substance, whether, in the case of intra-Community transport by ferry, goods contained in travellers' personal luggage which have not been put into free circulation or borne turnover tax or excise duties may benefit, on their importation into the State to which the travellers are going, from exemptions from:

customs duties;

turnover tax and excise duties;

other import charges applicable to agricultural products and referred to in Article 2 of Regulation No 1818/75.

The third question: intra-Community transport by combined ferry and coach services

The situation postulated in the Finanzgericht's third question concerns ships sailing from a port in one Member State (in this case the Federal Republic of Germany) to a port in another Member State (in this case Denmark) on board which travellers purchase free of customs duties, turnover tax and excise duty goods which are not in free circulation and which have not been charged to any turnover tax or excise duties; the travellers disembark in the port of the latter Member State and return by land to the Member State of departure.

This question asks, in substance, whether such goods acquired in the course of such journeys may benefit, on their importation into the Member State in which the journey begins and ends, from exemption from customs duties, on the one hand, and from exemption from turnover tax, excise duties and other charges applicable to agricultural products and referred to in Article 2 of Regulation No 1818/75, on the other hand.