Judgment of the ECJ, C-187/14, DSV Road. Goods placed under external transit procedure that are returned and import VAT deduction by the carrier


Through this Resolution is referred to one of the suspensive procedures that the Community Customs Code provides for the movement of non-Community goods within the territory of the EU: External transit, which is seen as the movement from one point of the territory to another point of the territory, of non-Community goods, without import duties and other tax charges. This scheme ends when the goods are cleared at the customs office of destination, being at that time when the import duties and other taxes are accrued.

It is questioned to the Court about the articles 203 and 204 of the Customs Code, which provide that the customs duties become due when there is a removal of the goods subject to import duties from the customs supervision (Article 103), or when there is a breach of the requirements of the suspension arrangements (Article 104), such as the time-limit set by the customs office of departure in order to clear the goods before the customs office or free port of destination.

In this case the carrier DSV initiated an external transit with origin in Denmark and destination to Sweden, setting a date for the presentation of the goods at destination. However, the goods were rejected by the recipient in Sweden, thus DSV carried these goods back to Denmark but without having cancelled the transit documentation nor presented the goods at the customs office of departure in Sweden.

Subsequently, these goods together with other goods, were included in another shipment, starting a second external transit. However, the tax authorities considered not proved that the same goods were included in the second shipment, which made the Tax Authorities to claim DSV the import duties plus VAT on imports, without allowing the deduction of the import VAT.

In the complaint by the company, it is questioned to the EU Court if it can accrue the customs debt, according to articles 203 or 204 of the Customs Code, when the goods arrive to the customs office of origin without having been cleared in the customs office or the free port of destination.

The Court, firstly, does clarify that Articles 203 and 204 are not compatible with each other, so it must be first determined if there is a removal from the customs supervision or not to implement Article 203, and if not there, the possible causes of breach of Article 204. Moreover, the Court clarifies that must distinguish two cases:

a)      If you cannot demonstrate the identity of the goods in the first and second transit, the customs debt will be accrued since there is no proof that the goods were presented at the customs office of destination and the transit was ended correctly.

b)    If the identity of the goods is proved, this means that they were presented at the customs office of destination, so that the mistake in the execution of the output of the external transit procedure does not lead to a removal of customs supervision, as it is understood that these goods are under transit and, therefore, are subject to control by customs authorities.

However, the latter case gives rise to the second question referred to the Court, which is if the article 203 does not apply since there is no removal of customs supervision, could apply Article 204 and be a breach of the conditions of the scheme? At this point, the Court recalls that this case has been resolved by the Court itself, so that if the destination presentation took place after the deadline set by the customs office of origin in the first transit there will be a failure.

Nevertheless, continued the Court invoking Article 356 of the Customs Code where a sort of measures for avoiding import duties are listed, so that, pursuant to the provisions of this article, the deadline is not missed if the delay is due to justifiable causes or not attributable to the carrier or to the principal, so left to the national body to decide whether the deadline has been breached or not.

Furthermore, the Court also refers to Article 859 of the regulation implementing the Customs Code where some exclusions are allowed to not consider a breach of the requirements, referring to two of them: the requirements are met in a further moment or does not exist an obvious negligence, corresponding to the national body to decide.

Finally, with regard to the question raised about the denial of the deduction of import VAT paid by the carrier, the criterion of the Court is that the input VAT is linked to the economic activity of the taxpayer when the cost of goods and services purchased is incorporated into the price of goods and services forming the economic activity, which is not the case as it is not incorporated into the services provided by the carrier in its economic activity.

Attached is a copy of the judgment of the Court.

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ECJ Customs_goods under external transit procedure

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