Advocate General Ruiz-Jarabo Colomer recommended that the Court of Justice should hold that the Community rules on excise duty do not preclude the charging of such a duty on goods in a Member State where a private individual resident in that State acquires the goods in another Member State from which the goods are transported to the State of residence through an agent who arranges for the purchase and transport of the products.
According to the Court of Appeal, London, the appellant companies had set-up and operated a scheme which enabled a UK resident, "without leaving the comfort of his armchair", to obtain, in the United Kingdom, tobacco products which he had purchased from a shop in Luxembourg. In that way he avoided payment of the excise duty applicable in the United Kingdom which is appreciably heavier than that payable in Luxembourg.
The appellant companies, EMU Tabac S.à r.l. ("the retailer") a retailer of tobacco products in Luxembourg and The Man in Black Ltd ("the agent") are subsidiaries of the Enlightened Tobacco Company. Customers, acting through the agent, order cigarettes up to maximum of 800 cigarettes per order. The agent arranges for transport of the goods from Luxembourg to the United Kingdom and for payment of both the retailer and the carrier, retaining a fee by way of commission.
The United Kingdom Customs and Excise authorities ordered the seizure, in Dover, of a quantity of tobacco imported by that system and required the payment on those goods of the United Kingdom excise duty. The appellants challenged that demand in the High Court, which dismissed their application, and on appeal, the Court of Appeal decided to stay the proceedings and to seek a preliminary ruling from the Court of Justice on the interpretation of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements of products subject to excise duty and on the holding, movement and monitoring of such products.
During the written procedure and at the hearing before the Court of Justice observations were submitted on behalf of the appellants, the United Kingdom authorities, the Governments of Germany, Denmark, France, Greece, Ireland, Italy, the Netherlands, Austria, Finland and Sweden, the European Commission and Imperial Tobacco.
The task of the Advocate General is to assist the Court by giving a reasoned Opinion on the case including a recommendation as to how the Court of Justice should answer the questions submitted by the Court of Appeal. He acts with complete impartiality and independence, however his Opinion is not binding on the Court.
By its first question the Court of Appeal essentially asked whether the provisions of the directive precluded the charging of excise duty on goods being levied in the Member State to which the goods were sent where a private individual resident in that State acquired the goods in another Member State through an agent acting on his behalf and who organized the transport of the goods.
The Advocate General found that the solution to the case depended upon, on the one hand, the meaning of the words "acquisition by private individuals" used in Article 8 of the Directive and, on the other hand, the requirement in that Article that products must be transported by the private individuals concerned. Article 8 lays down, as a general principle, that excise duty shall be charged in the Member State where the products are acquired.
In so far as "acquisition by private individuals" was concerned, the Advocate General first pointed out that terms used in the tax measure, such as the directive at issue, might have a specific meaning which did not necessarily coincide with that used in normal civil or mercantile law. In particular he considered that the concept of a private individual, with whose purchases Article 8 of the Directive was concerned, excluded the instrumentality of third parties.
Therefore, Article 8 of the Directive provided only for action by the private individual on his own behalf, actively participating in a number of successive operations (travel to another Member State, purchase of products subject to excise duty and transport to his own country) which he must carry out for himself. Transactions which did not fulfil those requirements - as they did not in this case - could not benefit from the rule contained in that Article.
As for the concept of "products transported" the Advocate General first undertook a literal interpretation of Article 8 of the Directive including a comparison between the terms used in the various language versions. In his view, a literal interpretation of the provision implied that the person who did the transporting had to be, specifically, the private individual purchaser, and not any other person. The intrinsic meaning of the term "transported by them" or "transported by themselves" used in most of the language versions referred to transport carried out - and not merely arranged - by the persons concerned.
The literal wording of the provision thus referred to transport operations carried out by the private individual and no one else. That implied, in his view, that the private individual who bought the products subject to duty had travelled to another country and carried them with him. That interpretation was confirmed by examining the same expression within the legislative context of the directive, including comparisons with Article 9 which concerns products held for commercial purposes and which would be rendered largely ineffective if a system of purchase and transport of the kind of issue in the main proceedings became general practice.
The only difference between the terms of the second question referred by the Court of Appeal and those of the first was that in the second question it was expressly stated that the scheme was "commercially devised and marketed". The Advocate General found that the answer he suggested for the first preliminary question a fortiori extended to the case described in the second one.
Finally the Advocate General examined and rejected a number of arguments set out by the appellants and concluded that the answer to the preliminary questions should uphold the chargeability of excise duty in the Member State of destination in the circumstances described by the Court of Appeal.
Following delivery of his Opinion at today's hearing the Court will deliberate on the case and will deliver its judgment at a future date which will be announced to the parties and to the public in due course.
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