Opinion of Advocate General Wahl delivered on 26 October 2016

A – Introductory remarks on the incurrence of a customs debt

19. A customs debt on importation is under normal circumstances incurred upon ‘customs clearance’ or, put in terms of Article 201(1)(a) of the Customs Code, when goods liable to import duties are released for free circulation. According to Article 201(2) and (3) of the Customs Code, the incurrence of the debt is linked to the acceptance of the customs declaration in question and the debtor is held to be the declarant⁽⁴⁾ and, in the case of indirect representation,⁽⁵⁾ the person on whose behalf a customs declaration is made.

20. Where the rules governing the customs procedures are not complied with, the incurrence of a customs debt is instead linked to the breach of the customs obligations and is governed by Articles 202 to 205 of the Customs Code. In the case before the referring court, a transformer and two rollers were introduced into the EU customs territory but were never conveyed or presented to the competent customs authorities, in this case the Customs Office of Weil am Rhein-Schusterinsel, as required by Articles 38 and 40 of the Customs Code. As a result, a customs debt on importation was incurred for ‘the unlawful introduction’ of the goods into the EU customs territory pursuant to Article 202(1)(a) of the Customs Code.

21. When goods liable for customs duty are unlawfully introduced into the EU customs territory the first, second and third indents of Article 202(3) of the Customs Code identify three potential categories of debtors liable for the customs debt,⁽⁶⁾ namely (i) the person who introduced such goods unlawfully, (ii) any persons who participated in the unlawful introduction of the goods and who were aware or should reasonably have been aware that such introduction was unlawful and (iii) any persons who acquired or held the goods in question and who were aware or should reasonably have been aware at the time of acquiring or receiving the goods that they had been introduced unlawfully.

22. The three indents of Article 202(3) of the Customs Code could, to some extent, be said to set out an order of gradation in the involvement of the person held to be the debtor by virtue of his participation in the unlawful introduction of goods into the EU customs territory. While the first indent refers to the person who introduced the goods unlawfully, that is to say, the person who ought normally to have cleared the goods through customs and performed the declarant’s obligations, the second and third indents refer to persons who, although not responsible for performing the customs clearance under the Customs Code, are nonetheless involved, either before or immediately after the unlawful introduction.⁽⁷⁾ While the liability for debtors under the first indent is strict, a subjective element appears in the second and third indents, so that only persons who were aware or should reasonably have been aware that such introduction was unlawful become debtors.

B – The first question referred

23. By its first question, the referring court seeks guidance as to when a legal person becomes liable for a customs debt under the first indent of Article 202(3) of the Customs Code, that is to say, as the person who introduced the goods unlawfully into the EU customs territory. More specifically, the referring court asks if such liability arises when one of the company’s employees, who is not its statutory representative,⁽⁸⁾ brought about the unlawful introduction while acting within the scope of his responsibility. In what follows, I shall explain why that question, in principle, ought to be answered in the affirmative.

24. As a preliminary point, I note that the first indent of Article 202(3) of the Customs Code refers to the ‘person’ who introduced the goods, without specifying whether that means a natural or a legal person. Nevertheless, it follows from Article 4(1) of the Customs Code that the term ‘person’ includes both legal and natural persons. Moreover, the Court has confirmed that an employer can become a debtor of a customs debt under the first indent (either solely or jointly with its employee) if that employer can be regarded as ‘having been by its actions responsible for the unlawful introduction of the goods’,⁽⁹⁾ or, put differently, as ‘having itself unlawfully introduced the goods’.⁽¹⁰⁾ From this I draw the conclusion that Ultra-Brag, being a legal person, could in principle become a debtor under the first indent of Article 202(3) of the Customs Code.⁽¹¹⁾

25. Yet the question still remains: under what circumstances will such liability arise?

26. The referring court suggests that a legal person may become a customs debtor under the first indent of Article 202(3) of the Customs Code either if it is carrying the goods itself (through its statutory representatives) or if the unlawful introduction ‘is the direct consequence of the employer’s actions’. Since, in the view of the referring court, Ultra-Brag cannot be regarded as having carried the goods itself,⁽¹²⁾ its liability under the first indent of Article 202(3) of the Customs Code depends on whether it is sufficient that the unlawful introduction of the goods into the EU customs territory was the direct consequence of the conduct of one of its employees, in this case L, who was responsible for the transport operation and instructed the boat’s captain to sail to Strasbourg, or if it is only the conduct of its statutory representatives that may be taken into account to establish liability.

27. The Commission considers that for an employer — a legal person — to become liable under the first indent of Article 202(3) of the Customs Code, it is sufficient that the employee who has in practical terms introduced the goods into the EU customs territory — in this case the captain of the boat — has done so within the scope of the tasks entrusted to him and/or within the scope of his responsibilities and by using a means of transport owned by the employer.

28. I shall in the following give my view on this issue.

29. At the outset, it is necessary to recall the distinction between the different categories of customs debtors identified in Article 202(3) of the Customs Code (see above at points 21 and 22). Under the first indent, the debtor is the person introducing the goods unlawfully into the EU customs territory, that is to say, the person who in practical terms introduced the goods and should have presented them to the competent customs authorities.⁽¹³⁾ It is common ground that that person in the main proceedings is the captain of the boat. The relevant question is therefore whether his conduct is to be attributed to Ultra-Brag.

30. I would rule out the possibility that only conduct of statutory representatives may be taken into account to establish liability under the first indent of Article 202(3) of the Customs Code. As the Commission points out, such an interpretation would run counter to the purpose of that provision, namely to give a broad definition of the persons capable of being customs debtors.⁽¹⁴⁾ What is more, it would result in any company exceeding a certain size avoiding liability under this first indent, since it is most unlikely that any large companies would have statutory representatives — typically directors or other members of the management bodies — sailing their ships or driving their vehicles. Lastly, such an interpretation is not supported by the Court’s case-law, which clearly states that an employer can be a debtor, either solely or jointly with its employee, under the first indent of Article 202(3) of the Customs Code.⁽¹⁵⁾

31. In the same vein, it is not decisive for determining Ultra-Brag’s liability whether the instructions to the captain, causing the unlawful introduction of the transformer and its two rollers into the EU customs territory, were given by a statutory representative of Ultra-Brag. It is in my view sufficient that the employee, L, was competent to give such an instruction and that the boat’s captain was to follow it. In that respect the order for reference indicates that L was a manager in the export department of the company responsible for the transport operation at issue and that the captain always received specific directions as to what to do in relation to an impending transport operation, either from a customs agent or from someone in L’s department. Hence, although it is for the referring court to verify the facts, there is nothing in the information provided to the Court that indicates that L was acting outside the scope of his responsibilities when he gave the order to the captain of MS Aargau to perform the specific transport operation or, for that matter, that the captain was wrong to follow L’s order.

32. The Court has until now defined only in negative terms the liability of an employer under the first indent of Article 202(3) of the Customs Code. In this respect, the Court has emphasised that such liability cannot be automatic, since that would deprive the second and third indents of Article 202(3) of purpose.⁽¹⁶⁾ It has further held that the fact that ‘the employee acts in the conduct of his employer’s affairs’ is not sufficient for such liability to be established.⁽¹⁷⁾

33. In this specific case, the captain of MS Aargau, an employee of Ultra-Brag, transported the transformer and its two rollers on behalf of Ultra-Brag on a vessel operated by Ultra-Brag and on instructions from another employee of Ultra-Brag responsible for the transport of those goods. In my view that is sufficient to hold an employer, such as Ultra-Brag, liable for the customs debt under the first indent of Article 202(3) of the Customs Code.

34. I shall now explain how my conclusion is consistent with the statements of the Court set out in point 32 above.

35. First of all, it requires no further explanation that an outer limit to an employer’s liability for its employee’s actions must exist. The precise limit to that liability is not a matter which is necessary to establish in the present case. Suffice it to say that if an employee acts outside the scope of the tasks entrusted to him by, for example, not following orders or instructions, it is conceivable that an employer might escape liability under the first indent of Article 202(3) of the Customs Code. In the case before the referring court, it would appear, however, that the captain of the boat did follow instructions given by the employee entrusted with the transport operation at issue.

36. Furthermore, in cases in which an employee is involved in the smuggling of goods, an employer would normally not become a debtor under the first indent of Article 202(3) of the Customs Code, unless it can be established that the goods were smuggled on behalf of the employer.⁽¹⁸⁾

37. Lastly, holding Ultra-Brag liable for the customs debt in the main proceedings on the grounds set out in point 33 above would not, in my view, amount to making an employer automatically a debtor under the first indent of Article 202(3) of the Customs Code for any situation in which an employee acts in the conduct of his employer’s affairs. As the Commission points out, had the captain of MS Aargau transported, on the same journey, equipment or other goods of his own, alongside the transformers and rollers, he would still be seen as having acted in the conduct of Ultra-Brag’s affairs, but Ultra-Brag would escape liability under the first indent of Article 202(3) of the Customs Code for any customs debt incurred on such extra goods since the captain would, in relation to those goods, have acted outside the scope of the tasks entrusted to him and, hence, not on Ultra-Brag’s behalf.

38. In the light of the foregoing considerations, I propose that the Court answer the first question referred by the Finanzgericht Baden-Württemberg (Finance Court, Baden-Württemberg) as follows: The first indent of Article 202(3) of the Customs Code is to be interpreted as meaning that a legal person becomes a customs debtor under that indent if one of its employees, who is not a statutory representative, has introduced goods unlawfully into the EU customs territory, while acting within the scope of the tasks entrusted to him and/or within the scope of his responsibilities.

39. Having regard to the answer to the first question, it is not necessary to answer the second question, which arises only if Ultra-Brag cannot be held liable for the customs debt under the first indent of Article 202(3) of the Customs Code. For the sake of completeness, I shall nevertheless give my view on the issues raised by that second question.

C – The second question referred

40. The second question turns on the interpretation of the term ‘debtor’ under the second indent of Article 202(3) of the Customs Code. Treatment as a ‘debtor’ under that provision is subject to two cumulative conditions. The first condition, which is objective, regards participation in the unlawful introduction. The second is subjective and requires that the persons who participated did so with a certain degree of knowledge of the unlawful introduction.⁽¹⁹⁾ The referring court essentially seeks to ascertain whether an employee’s ‘participation’ in the unlawful introduction of goods can be attributed to the employer and whether the subjective condition included in the second indent can be determined by reference to that employee.

41. The objective element of ‘participation’ in the second indent of Article 202(3) of the Customs Code is to be construed broadly. It is sufficient that a person has taken some part, even indirectly, in the unlawful act.⁽²⁰⁾ An employer may, for example, become a debtor of the customs debt if the unlawful introduction was made using his resources or staff.⁽²¹⁾ As regards the attribution of an employee’s ‘participation’ to the employer, the same line of reasoning applies as in relation to the first question. Hence, if the employee acts within the scope of the tasks entrusted to him and/or within the scope of his responsibilities, the conduct of an employee should be attributed to the employer.

42. As regards the subjective element, namely that the ‘participant’ was aware or should reasonably have been aware that the introduction of the goods was unlawful, I would note the following.

43. First, limiting the attribution of knowledge to a company’s statutory representatives would in my view, as stated in my answer to the first question, place an unwelcome limit on the number of possible debtors (see above at point 30). Companies of a certain size would avoid liability by delegating responsibility for the performance of shipment and customs procedures to its employees. Furthermore, as the Commission points out, it is only rarely that the statutory representatives of a larger company are informed of a specific conveyance.

44. In this specific case, the order for reference states that L was responsible for the transport operation (see above at point 31). Accordingly, it is his knowledge that should be taken into account for the purpose of establishing whether the subjective condition is fulfilled.

45. It follows from the order for reference that L was the person instructing the captain to sail the boat, knowing that, if that instruction were followed, the transformer and its rollers would be brought into the EU customs territory without being presented to the competent German customs authorities. It is also apparent from the order for reference that L had been instructed by the Swiss customs authorities to inform the competent German customs authorities of the planned transport operation. It is for the referring court to verify if this is sufficient for the second condition to be fulfilled in the case before it. In that regard, it should however be noted, as the Commission points out, that the phrase ‘should reasonably have been aware’ relates to the conduct of a reasonably circumspect and diligent trader,⁽²²⁾ meaning, for example, that an employer could not escape liability merely because the employee in charge did not have sufficient legal knowledge in relation to the customs procedure to be followed.

46. Having regard to the above, I propose that the Court answer the second question referred by the Finanzgericht Baden-Württemberg (Finance Court, Baden-Württemberg) as follows: The second indent of Article 202(3) of the Customs Code is to be interpreted as meaning that a legal person becomes a customs debtor under that indent when one of its employees, who is not a statutory representative, has participated in the unlawful introduction of goods into the EU customs territory, while acting within the scope of the tasks entrusted to him and/or within the scope of his responsibilities, provided that the employer knew or should reasonably have known that the introduction was unlawful, which is to be determined by reference to the employee to whom the matter is entrusted.

D – The third question referred

47. The third question of the referring court arises only in the event that the first or the second questions are answered, as I propose, in the affirmative. The referring court seeks guidance as to the interpretation of Article 212a of the Customs Code, which, subject to certain conditions, allows for exemption from a customs duty incurred, inter alia, pursuant to Article 202 of the Customs Code. While the referring court considers that the requirements for an exemption from customs duty in respect of goods returned to the EU customs territory, as provided for under Article 185(1) of the Customs Code (to which Article 212a of the Customs Code refers) are met in the present case, it is uncertain whether the second condition, namely, that ‘the behaviour of the person concerned involves neither fraudulent dealing nor obvious negligence’ should be assessed solely in relation to the conduct of the debtor’s statutory representatives, or whether conduct of its employees should also be taken into account.

48. First of all, as the Commission points out, the term ‘person concerned’ (in German ‘Beteiligten’) is not to be confused with ‘persons who participated’ as referred to in the second indent of Article 202(3) of the Customs Code. While the German term used in Article 212a of the Customs Code may give rise to such confusion, many other language versions refer instead to an expression which is closer to the German phrase ‘betroffene Person’, such as ‘the person concerned’ in English, ‘l’intéressé’ in French, ‘el interesado’ in Spanish, ‘l’interessato’ in Italian and ‘den berörda parten’ in Swedish.

49. Given that Article 212a of the Customs Code allows for exemptions from customs duties, the conditions for those exemptions are to be interpreted strictly.⁽²³⁾ Accordingly the term ‘person concerned’ is to be understood broadly and comprises not only the conduct of persons who are directly involved in the unlawful introduction of the goods in question, but also any person who can be said to be behind such unlawful introduction, provided however that the conduct in question can be attributed to the debtor.⁽²⁴⁾

50. In that context it should be noted that Ultra-Brag may itself be considered to have acted negligently due to an organisational failure, that is to say, for not having acted diligently in delegating the tasks or supervising its employees. It is for the referring court to verify whether, in the present case, such negligence exists.

51. However, returning to the question of the referring court, namely whether the conduct of Ultra-Brag’s employees may be attributed to Ultra-Brag for the purpose of determining obvious negligence,⁽²⁵⁾ the principles for determining whether the conduct and/or knowledge of an employee can be attributed to its employer, as I have discussed in relation to the first and second questions, are valid here as well. Accordingly, provided that L has acted within the scope of the tasks entrusted to him and/or within the scope of his responsibilities, his conduct is to be taken into account when assessing the presence of obvious negligence.⁽²⁶⁾

52. It is for the referring court to assess whether L’s conduct involves obvious negligence. In that respect the Court has held that account should be taken, in particular, of the complexity of the provisions non-compliance with which has resulted in the customs debt being incurred, and the professional experience of, and care taken by, the trader.⁽²⁷⁾

53. Having regard to the above, I consider that the third question referred to the Court ought to be answered as follows: Article 212a of the Customs Code is to be interpreted as meaning that whether the conduct of a (legal) ‘person concerned’ involves fraudulent dealing or obvious negligence should be determined not only in relation to the company itself or its statutory representatives but also in relation to any employee acting within the scope of the tasks entrusted to him and/or within the scope of his responsibilities.