In Case C-299/90,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof (Federal Finance Court) for a preliminary ruling in the proceedings pending before that court between
Hauptzollamt Karlsruhe
and
Gebr. Hepp GmbH & Co. KG,
on the interpretation of Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes,
THE COURT (Fourth Chamber),
composed of: M. Díez de Velasco, President of the Chamber, C.N. Kakouris and P.J.G. Kapteyn, Judges,
Advocate General: M.J. Mischo,
Registrar: D. Louterman, Principal Administrator,
after considering the written observations submitted on behalf of
- Gebr. Hepp GmbH & Co. KG, by Dr Otto Wilser, tax adviser, Stuttgart,
- the German Government, by Ernst Roeder, Regierungsdirektor in the Federal Ministry for Economic Affairs and Clause-Dieter Quassowski, Oberregierungsrat in the Federal Ministry for Economic Affairs, acting as Agents,
- the Commission of the European Communities, by René Barents, Legal Adviser, and Roberto Hayder, an official in the Federal Ministry for Economic Affairs seconded to the Commission' s Legal Service under an exchange scheme for national civil servants, acting as Agents,
having regard to the Report for the Hearing,
after hearing the oral observations of Gebr. Hepp Gmbh & Co. KG and the Commission, at the hearing on 5 June 1991,
after hearing the Opinion of the Advocate General at the sitting on 20 June 1991,
gives the following
Judgment
1 By an order of 17 July 1990, which was received at the Court Registry on 1 October 1990, the Bundesfinanzhof referred four questions to the Court for a preliminary ruling under Article 177 of the EEC Treaty on the interpretation of Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes (Official Journal 1980 L 134, p. 1, hereinafter referred to as "the basic regulation").
2 Those questions arose in proceedings between the Hauptzollamt (Principal Customs Office) Karlsruhe and Gebr. Hepp GmbH & Co. KG, (hereinafter referred to as "Hepp"), Birkenfeld, concerning the customs value of goods which Hepp had imported from the Far East between 1983 and 1986.
3 Article 3(1) of the basic regulation provides that the customs value of imported goods is to be the transaction value, that is to say, the price actually paid or payable for the goods when sold for export to the customs territory of the Community, adjusted in accordance with Article 8.
4 Article 8(1)(a)(i) of the basic regulation provides that in determining the customs value under Article 3, there is to be added to the price actually paid or payable for the imported goods commissions and brokerage, except buying commissions to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the goods.
5 The term "buying commission" is defined in Article 8(4) as "fees paid by an importer to his agent for the service of representing him in the purchase of the goods being valued."
6 For its imports Hepp used the services of Novimex Fashion Ltd, a Swiss company established at St Gallen (hereinafter referred to as "Novimex") with which Hepp had concluded an agreement in 1982 governed by Swiss law. Under that agreement Novimex bought goods from a Korean undertaking in its own name but on behalf of Hepp. The goods were then forwarded to Hepp against payment of a buying commission of 6 or 7% and reimbursement of expenses. The prices fixed in the transactions concluded with the Korean supplier and the commissions were invoiced separately. In its customs declarations Hepp mentioned Novimex' name under the heading "seller" and submitted Novimex' invoices issued to it but did not mention the agreed commissions.
7 The issue in the main proceedings is whether the buying commissions invoiced separately by Novimex to Hepp must be included in the customs value of the goods imported by Hepp. The Bundesfinanzhof before which the case came considered that it involved the interpretation of Community law and referred the following questions for a preliminary ruling:
"(1) In the event that a buying agent, acting in his own name but on behalf of another is involved, which contract must be regarded as the 'sale' within the meaning of Article 3 of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes?
(2) If the answer to Question 1 is that both the contract between manufacturer and agent and the contract between agent and importer meet the criteria of Article 3 of Regulation No 1224/80, and the importer has specified the price in his contract with the agent as the basis for determining the value of goods for customs purposes, must the buying commission be added to the price paid?
(3) If the answer to Question 1 is that only one sale, namely that between manufacturer and importer, has occurred, must the buying commission be included in the customs value when the importer, under the heading 'Verkaeufer' (' Seller' ) in the customs value declaration, has given the agent and his invoice price (without the commission)?
(4) If the answer to Question 1 is that, although the contract between manufacturer and agent is a sale, the contract between agent and importer is not, how is the customs value to be determined under Community law when the importer has stated the customs value in the manner described in Question 3?"
8 Reference is made to the Report for the Hearing for a fuller account of the applicable regulations, the facts of the case, the course of the procedure and the pleas and arguments of the parties, which are referred to or mentioned hereinafter only in so far as is necessary for the reasoning of the Court.
9 The national court' s questions essentially raise two problems. The first problem is to know which transaction should be taken into account in determining the customs value in accordance with Article 3(1) of the basic regulation if the importer employs a buying agent who acts in his own name but on behalf of the importer. The second problem which arises once the first one is resolved concerns the method of determining the customs value if in his customs declaration the importer has entered the agent as seller and indicated the price of the goods invoiced by the agent and, more precisely, the question whether the buying commission should be included in that price.
The relevant transaction for the determination of the customs value
10 The German Government observes that where a buying agent acting in his own name is involved, two transactions may be regarded as a sale for the purposes of Article 3(1) of the basic regulation. The first is the contract concluded between the agent and the manufacturer to which the agent is a party by reason of the fact that he has acted in his own name. The second is the contract concluded between the agent and the importer because that contract has the essential feature of a sale, namely that of transferring property in goods to a person in exchange for the payment of a sum of money.
11 According to the German Government, for the purposes of the determination of the customs value the importer has the choice between the prices of those two successive sales. It follows from the judgment of the Court in Case C-11/89 Unifert Handels GmbH v Hauptzollamt Muenster [1990] ECR I-2275 that once that choice has been made it can no longer be altered after the goods have been released into free circulation.
12 That argument cannot be accepted, for it runs counter to the aim of the basic regulation, which, according to its sixth recital, is to establish a fair, uniform and neutral system of customs valuation excluding the use of arbitrary or fictitious customs values.
13 That objective, which meets the requirements of commercial practice, would not be attained if no account were taken of a buying agent' s actual function. Since such an agent acts on behalf of the importer, his function in relation to the purchase of goods is only one of representation and he bears no financial risks in the purchase. Consequently, even if he acts in his own name, his function is limited to participation as indirect representative in a contract of sale concluded in fact between his principal and the supplier.
14 The transaction to which reference must be made in order to determine the customs value in accordance with Article 3(1) of the basic regulation is accordingly the transaction between the manufacturer or supplier of the goods and the importer. The fact that that transaction is carried out through the medium of a buying agent is irrelevant in this regard since the financial risk connected with the transaction is assumed by the importer.
15 The reply to the first question must therefore be that the transaction between the manufacturer or supplier of goods, on the one hand, and the importer, on the other, is the transaction to be taken into account in the determination of the customs value in accordance with Article 3(1) of the basic regulation, if a buying agent has acted in his own name and has in fact represented the importer by acting on his behalf.
The determination of the customs value
16 Since it is established that the transaction between the manufacturer/supplier and the importer is the transaction to be taken into account in the determination of the customs value, the price in that transaction constitutes the customs value for the purposes of Article 3(1) of the basic regulation.
17 It follows that the sums paid by the importer to the buying agent for the service of representing him in the purchase of the goods in question constitute a buying commission which, according to Article 8(1)(a)(i) of the basic regulation, must not be included in the customs value.
18 The fact that the importer has entered the agent' s name as "seller" in his customs value declaration and has declared the price of the goods invoiced by the agent does not affect the customs value arising from the application of Article 3(1) of the basic regulation.
19 As the Advocate General observes in paragraphs 37 and 38 of his Opinion, the manner in which the importer actually completes the administrative formalities regarding the customs declaration in no way changes the substance of the legal situation, which is that only one transaction exists for the purposes of Article 3(1) of the basic regulation and that the importer has no choice in this regard.
20 As regards the second problem raised by the preliminary questions, the reply must therefore be that the price in the transaction between the manufacturer or supplier, on the one hand, and the importer, on the other, constitutes the customs value for the purposes of Article 3(1) of the basic regulation. The buying commission is not to be included in that value even when the importer has described the buying agent as the seller and has declared the price of the goods as invoiced by that agent.
Costs
21 The costs incurred by the German Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.
On those grounds,
THE COURT (Fourth Chamber),
in answer to the questions submitted to it by the Bundesfinanzhof, by order of 17 July 1990, hereby rules:
1. The transaction between the manufacturer or supplier of goods, on the one hand, and the importer, on the other, is the transaction to be taken into account in the determination of the customs value in accordance with Article 3(1) of Council Regulation (EEC) No 1224/80 of 28 May 1980 on the valuation of goods for customs purposes, if a buying agent has acted in his own name and has in fact represented the importer by acting on his behalf.
2. The price in the transaction between the manufacturer or supplier, on the one hand, and the importer, on the other, constitutes the customs value for the purposes of Article 3(1) of Regulation (EEC) No 1224/80. The buying commission is not to be included in that value even when the importer has described the buying agent as the seller and has declared the price of the goods as invoiced by that agent.
