Court of Justice 04-11-1997 ECLI:EU:C:1997:519

The distinction made by Article 13

It may appear paradoxical that the validity of a provision which has the stated object of ensuring ‘a measure of legal certainty for traders when carrying on their activities’^(*) has been questioned precisely on the basis of the principles of protection of legitimate expectations and legal certainty.

Article 13 of the 1990 regulation distinguishes between two methods for the application in time of regulations concerning the customs nomenclature. In certain situations the Community legislature may extend for a certain period the validity of binding tariff information which does not conform to the new rules whereas, in other situations, no transitional provisions are laid down.

The difference in methods of application corresponds to the conventional distinction between amending regulations and classification regulations which arises from Regulation No 2658/87.

It should be borne in mind that, in addition to its power to amend the customs nomenclature, the Community legislature, in particular the Commission, has a wide discretion in defining the subject-matter of tariff headings falling to be considered for the classification of particular goods.^(*)

Under the second paragraph of Article 13 of the 1990 regulation, classification regulations may contain transitional provisions,^(*) in contrast to regulations amending the customs nomenclature.^(*)

The 1991 regulation undoubtedly belongs to the latter category because it classifies modified whey under code NC 0404 10. The Hauptzollamt Hamburg-Jonas accordingly took the view that the binding tariff information which had been issued before that regulation came into force ceased to be valid thereafter.

Lopex states that, as it obtained authorisation to rely on the binding tariff information for a transitional period of six months, its expectations were frustrated by the application of the first paragraph of Article 13 of the 1990 regulation.

The principle of the protection of legitimate expectations

Lopex's expectation that it was entitled to an export refund could have been justified by the decision to extend the validity of the tariff information revoked on 28 October 1991, by the issue of an advance-fixing certificate on 20 December 1991 and even by the grant of an export licence on 31 December 1991, after the publication of the 1991 regulation.

However, if the precise scope of the two regulations and of Article 13 of the 1990 regulation is ascertained and the material time is established, doubts arise as to whether that expectation is legitimate.

For this purpose, it is necessary to recall the meaning and effect of the Community law principles in respect of which the national court seeks clarification.

According to the Court's case-law, the principle of the protection of legitimate expectations, considered one of the fundamental principles of the Community,^(*) is not breached where traders are in a position to foresee changes in the rules which may affect their interests. The Court has held that, in accordance with the principles of legal certainty and protection of legitimate expectations, ‘Community legislation must be clear and predictable for those who are subject to it’.^(*) In particular, they will be unable to rely on acquired rights if they have received clear information concerning proposed changes in the legal framework of their business.

The Community legislature must also be able to exercise its legislative powers, which presupposes that it is free to amend existing legislation.

In its judgment in Case C-103/96 Eridania Beghin-Say, the Court found that the Council had a substantial discretion in exercising its powers to amend the customs nomenclature.^(*)

The Court was asked to give a ruling on the validity, in the light of the principles of protection of legitimate expectations and legal certainty, of a regulation which made recourse to inward processing arrangements with equivalent compensation subject to the condition that the equivalent goods must fall within the same subheading of the Common Customs Tariff as the imported goods. However, the two products involved in equivalent compensation — cane sugar and beet sugar — had, in the space of a few years, been classified under the same tariff subheading and then under different subheadings, before being placed once again under the same subheading. The trader's obligations in relation to the customs authorities had changed in accordance with the scope of the inward processing arrangements, which at times did and at times did not cover the products concerned, depending on the amendments to the customs nomenclature.

The Court stated that the contested regulation made ‘the availability of that system [of equivalent compensation] dependent upon a criterion forming part of rules other than those relating to inward processing and liable to vary in scope, in particular as a result of periodic changes to the tariff’.^(*) The Court then concluded that the trader ‘cannot entertain any legitimate expectation other than that of being able to have recourse to equivalent compensation where the goods concerned fall under the nomenclature in force at the material time, within the same subheading’.^(*)

The Eńdania Beghin-Say judgment gives a better idea of the latitude which the Court believes the Council has in amending the combined nomenclature. The Court accordingly found, indirectly but beyond doubt, that a trader cannot base a legitimate expectation on a tariff subheading being maintained because the nomenclature is, so to speak, in a state of flux owing to the need to adapt it to changing economic circumstances.

However, the questions on which that ruling was given did not relate to the need for transitional provisions which, according to Lopex, should be added to regulations amending the customs nomenclature.

As there must be a means for flexible and rapid amendment of the tariff nomenclature, it is necessary to determine the conditions under which a trader such as Lopex may be deemed to be entitled to use the tariff information in question and thus to benefit from the arrangements applying before the 1991 regulation came into force.

The application of the principle of protection of legitimate expectations in the present case presupposes an answer to the question whether Lopex is entitled to rely on acquired rights or, at least, on ‘reasonable expectations’, to adopt the phrase used by the Court,^(*) such as to enable it to secure an extension of the validity of the tariff information relied upon in support of its claim.

It should be remembered that the binding tariff information remained provisionally valid for six months after it was revoked, and that Lopex was issued with an advance-fixing certificate eight days before the 1991 regulation was published. The complaint arising from the refusal of its application for a refund was also rejected by reason, in particular, of the amendment of the customs nomenclature by the latter regulation.^(*)

Hence the loss alleged by Lopex is not a direct result of the 1990 regulation, Article 13 of which is the subject of the question referred, but rather of the 1991 regulation, even if the absence of transitional arrangements arises from the strict application of the earlier regulation.

However — and I think this is the decisive point — even though the information available does not suggest that Lopex was aware of the imminent adoption of the 1991 regulation, it should be noted that the 1990 regulation was published in the Official Journal of the European Communities on 26 June 1990 and took effect on 1 January 1991.^(*) It must therefore be concluded that, apart from the issue of the first binding tariff information to Lopex's suppliers, each of the steps taken by Lopex with a view to carrying out the export transactions in question was taken under Community legislation indicating that the validity of binding tariff information could be called into question, without transitional measures, by the immediate application of a regulation amending the customs nomenclature.

The 1990 regulation does not, as such, adversely affect traders' interests because it provides for the future and lays down rules applying to regulations which did not exist at the date of its publication. Until such regulations were adopted, the law applying to current commercial transactions was not changed in any way. Furthermore, the rule that there are no transitional arrangements in regulations amending the customs nomenclature makes traders aware of the permanent risk that the nomenclature may be amended.

Article 13 of the 1990 regulation therefore makes it possible to foresee, if not future legislative amendments, then at least the conditions under which they will be made. It seems to me that such foreseeability precludes traders from entertaining expectations not only as to the permanence of any particular Community legislation, but also as to transitional arrangements for giving effect to such amendments, which would be capable of safeguarding their rights or expectations.^(*)

In my view, therefore, as Article 13 applied at the time when Lopex carried out its export transactions, it cannot rely on ‘administrative measures which confer subjective rights ... capable of creating a legitimate expectation’ or plead ‘factual situations already existing, in essence, at the time when new legislation came into force’, which should remain subject to the law previously in force.^(*)

Tariff information is binding on the authorities only in respect of the classification of goods in the customs nomenclature^(*) and it cannot create acquired rights which can be relied upon as against the legislature if the information is issued at a time when a particular measure permits changes to the nomenclature to take effect without a transitional period.

Similarly, I do not believe the Court's judgment in CNTA v Commission^(*) can be cited to justify a legitimate expectation which is said to arise from ‘transactions irrevocably undertaken by [a trader] because he has obtained ... export licences fixing the amount of the refund in advance’.^(*) This would disregard the other grounds of that judgment, which states that such an expectation constitutes a safeguard against any ‘unforeseeable alteration’ of the legislation.^(*) This does not apply to the relevant legislation in the present case because, as we have seen, the customs nomenclature is liable to change and amendments thereto are stated to take effect without transitional arrangements.

Moreover, a trader cannot be allowed to plead ignorance of the relevant legislation even if it merely lays down rules governing the procedure for implementing future regulations. The Court has ruled that the Community provisions constitute the sole relevant positive law as from the date of their publication and everyone is deemed to know that law,^(*) without making distinctions according to the nature of the rules laid down.

In addition, the uncertainty of the customs authorities with regard to the classification of Lopex's product, as shown by a series of binding tariff information notices placing the product under different subheadings, ought to have alerted Lopex to the risk of amendments to the nomenclature and prompted it to enquire into the likelihood of a change in the tariff classification and the way in which such a change might take effect.

In other words, from 26 June 1990 Lopex must have realised that, as from 1 January 1991, any contract conferring entitlement to an export refund was subject to the risk of a change in the tariff classification applying, without transitional measures, to current transactions and that this could call into question the anticipated refund.

Admittedly, such an exacting rule is necessary only if the measure in question conforms to the principle of legal certainty.

The principle of legal certainty

Like the protection of legitimate expectations, legal certainty is a fundamental principle of Community law.^(*) The Court has ruled that this principle ‘requires that rules imposing charges on the taxpayer must be clear and precise so that he may know without ambiguity what are his rights and obligations and may take steps accordingly’.^(*) It seems to me that what is true of rules imposing charges on a taxpayer is also true of legislation laying down the conditions for amending regulations which confer advantages on certain traders.

Article 13 of the 1990 regulation lays down special rules for regulations amending the customs nomenclature, where there can be no doubt as to their scope and content. The first paragraph of Article 13 sets out the rule that binding tariff information which is contrary to a regulation relating to the nomenclature ceases to be valid from the date on which the regulation applies, while the second paragraph distinguishes regulations amending classification regulations and states that these may, under certain conditions, provide that such information may continue to be valid for a certain period notwithstanding the new rules. As we have seen, the 1990 regulation is stated to take effect on 1 January 1991.

Legal certainty also seems to be observed in so far as the 1990 regulation clearly distinguishes Article 13, which applies only to regulations, from provisions such as Article 14(3) of the 1990 regulation which extend the effects of binding tariff information whose validity is called into question by other legal measures.

The transitional arrangements differ according to whether an import or export licence or an advance-fixing certificate is submitted during the customs formalities for the products in question or whether none of those documents accompanies the products.

In both cases, however, the wording refers expressly to Article 14(1), which applies to tariff information ‘no longer compatible with the interpretation of the customs nomenclature’,^(*) which expressly excludes the possibility of extending the validity of information inconsistent with the regulations and, a fortiori, regulations amending the customs nomenclature. Therefore the rule does not give rise to any confusion.

I conclude that Articles 13 and 14 of the 1990 regulation are sufficiently clear and precise to enable a prudent trader who takes care to ascertain the legal conditions governing the business dealings which he proposes to engage in to take account of the possibility of a change in classification by taking all the precautions which he considers appropriate when signing contracts with his trading partners.

In my view, therefore, there is no reason for the validity of the first indent of the first paragraph of Article 13 of the 1990 regulation to be called in question, with the result that the second question does not call for an answer.