Provisional text
OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ-BORDONA
delivered on 8 May 2024 (1)
Cases C‑717/22 and C‑372/23
SISTEM LUX OOD
and
VU
v
Teritorialna direktsia Mitnitsa Burgas
Requests for a preliminary ruling from the Rayonen sad Svilengrad (District Court, Svilengrad, Bulgaria) and from the Administrativen sad Haskovo (Administrative Court, Haskovo, Bulgaria)
(References for a preliminary ruling – Customs union and free movement of goods – Regulation (EU) No 952/2013 – Infringement of customs legislation – Administrative penalties – Effective, proportionate and dissuasive penalties – National legislation providing for the confiscation of property involved in a customs infringement – Goods belonging to a third party)
1. In these two requests for a preliminary ruling, two Bulgarian courts refer to the Court of Justice their questions regarding the interpretation of the rules on infringements and penalties laid down in Regulation (EU) No 952/2013. (2)
2. In essence, with their questions, they wish to know: (a) whether intent constitutes a necessary element of the infringement consisting in failing to provide the customs authorities with the information stated in Article 15 of the Customs Code; and (b) whether EU law precludes national legislation which, in circumstances such as those of the original disputes, provides for the confiscation of the goods as a penalty for non-compliance with customs obligations.
I. Legislative framework
A. European Union law
1. Framework Decision 2005/212/JHA (3)
3. The fourth indent of Article 1 (‘Definitions’) states that ‘“confiscation” means a penalty or measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences, resulting in the final deprivation of property’. (4)
2. The Customs Code
4. Recital 38 states:
‘It is appropriate to take account of the good faith of the person concerned in cases where a customs debt is incurred through non-compliance with the customs legislation and to minimise the impact of negligence on the part of the debtor.’
5. Recital 45 states:
‘It is appropriate to lay down at Union level the rules governing the destruction or disposal otherwise of goods by the customs authorities, since these are matters which previously required national legislation.’
6. Article 15 (‘Provision of information to the customs authorities’) states:
‘1. Any person directly or indirectly involved in the accomplishment of customs formalities or in customs controls shall, at the request of the customs authorities and within any time limit specified, provide those authorities with all the requisite documents and information, in an appropriate form, and all the assistance necessary for the completion of those formalities or controls.
2. The lodging of a customs declaration, temporary storage declaration, entry summary declaration, exit summary declaration, re-export declaration or re-export notification by a person to the customs authorities, or the submission of an application for an authorisation or any other decision, shall render the person concerned responsible for all of the following:
(a) the accuracy and completeness of the information given in the declaration, notification or application;
(b) the authenticity, accuracy and validity of any document supporting the declaration, notification or application;
(c) where applicable, compliance with all of the obligations relating to the placing of the goods in question under the customs procedure concerned, or to the conduct of the authorised operations.
The first subparagraph shall also apply to the provision of any information in any other form required by, or given to, the customs authorities.
Where the declaration or notification is lodged, the application is submitted, or information is provided, by a customs representative of the person concerned, as referred to in Article 18, that customs representative shall also be bound by the obligations set out in the first subparagraph of this paragraph.’
7. Article 42 (‘Application of penalties’) states:
‘1. Each Member State shall provide for penalties for failure to comply with the customs legislation. Such penalties shall be effective, proportionate and dissuasive.
2. Where administrative penalties are applied, they may take, inter alia, one or both of the following forms:
(a) a pecuniary charge by the customs authorities, including, where appropriate, a settlement applied in place of and in lieu of a criminal penalty;
(b) the revocation, suspension or amendment of any authorisation held by the person concerned.
…’
8. Article 79(1) (‘Customs debt incurred through non-compliance’) states:
‘For goods liable to import duty, a customs debt on import shall be incurred through non-compliance with any of the following:
(a) one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the Union, their removal from customs supervision, or the movement, processing, storage, temporary storage, temporary admission or disposal of such goods within that territory;
(b) one of the obligations laid down in the customs legislation concerning the end-use of goods within the customs territory of the Union;
(c) a condition governing the placing of non-Union goods under a customs procedure or the granting, by virtue of the end-use of the goods, of duty exemption or a reduced rate of import duty.’
9. Article 158 (‘Customs declaration of goods and customs supervision of Union goods’) provides:
‘1. All goods intended to be placed under a customs procedure, except for the free zone procedure, shall be covered by a customs declaration appropriate for the particular procedure.
2. In specific cases, other than those referred to in Article 6(3), a customs declaration may be lodged using means other than electronic data-processing techniques.
3. Union goods declared for export, internal Union transit or outward processing shall be subject to customs supervision from the time of acceptance of the declaration referred to in paragraph 1 until such time as they are taken out of the customs territory of the Union or are abandoned to the State or destroyed or the customs declaration is invalidated.’
10. In accordance with Article 198 (‘Measures to be taken by the customs authorities’):
‘1. The customs authorities shall take any necessary measures, including confiscation and sale, or destruction, to dispose of goods in the following cases:
(a) where one of the obligations laid down in the customs legislation concerning the introduction of non-Union goods into the customs territory of the Union has not been fulfilled, or the goods have been withheld from customs supervision;
…’
11. Article 233 (‘Obligations of the holder of the Union transit procedure and of the carrier and recipient of goods moving under the Union transit procedure’), paragraph 3, states:
‘A carrier or recipient of goods who accepts goods knowing that they are moving under the Union transit procedure shall also be responsible for presentation of the goods intact at the customs office of destination within the prescribed time limit and in compliance with the measures taken by the customs authorities to ensure their identification.’
B. National law. Zakon za mitnitsite (Customs Law)
12. Article 231 provides that decisions imposing administrative penalties are to be issued by the director of the Customs Agency or by officials appointed by him or her.
13. According to Article 233:
‘1. A person who moves or transports goods across the national border, or who attempts to do so, without the knowledge or authorisation of the customs authorities, shall be penalised with a fine for customs smuggling equal to between 100% and 200% of the customs value of the goods or, in the case of export, of the value of the goods, unless the act is a criminal offence.
…
6. Goods which have been smuggled shall be seized for the benefit of the State, whoever their owner may be, and where they are missing or have been stolen, [the person committing the infringement] shall be fined an amount equal to their customs value or, in the case of export, their value.
…’
II. Facts, disputes and questions referred for a preliminary ruling
14. On 28 May 2021, VU, a Serbian national who was driving an articulated lorry loaded with aluminium profiles and travelling from Türkiye to Serbia, presented himself at a Bulgarian customs control post.
15. In the course of checking the customs documents and weighing the vehicle, the presence of a quantity of goods manifestly greater than that declared in those documents was established.
16. When the relevant inspection was carried out, 13 pallets of aluminium profiles were found in the vehicle’s cargo compartment. According to the documentation, five of them related in their entirety to the load of a particular consignor. The profiles loaded on the eight remaining pallets, which had been dispatched by another consignor, had not been declared.
17. These facts have given rise to two sets of legal proceedings, in each of which the competent court has decided to request a preliminary ruling from the Court of Justice.
A. Case C‑717/22
18. On 28 May 2021, the Teritorialna direktsia ‘Juzhna morska’ (‘Juzhna morska’ Regional Directorate) initiated administrative penalty proceedings against the driver of the articulated lorry, for infringing Article 233(1) of the Customs Law. The undeclared aluminium sheets were confiscated, along with the articulated lorry.
19. The administrative penalty proceedings were suspended as a result of a criminal investigation being opened into the same facts.
20. The commission of a crime having been ruled out and the penalty proceedings having resumed, the administrative authority held that the driver’s behaviour (that is, the transportation of the aluminium sheets across the national border, without the knowledge and authorisation of the customs authority) exhibited the typical elements of the infringement provided for in Article 233(1) of the Customs Law.
21. Accordingly, the administrative authority:
– Imposed an administrative penalty on the driver in the form of a fine of 73 140.06 Bulgarian leva (BGN) (approximately EUR 37 400), equivalent to 100% of the customs value of the goods.
– Ordered pursuant to Article 233(6), read together with Article 233(1) of the Customs Law, the confiscation of the aluminium sheets and the return of the articulated lorry to its owner, a third party who was not involved in the facts.
22. The company Sistem Lux, the owner of the confiscated goods, challenged that decision before the Rayonen sad Svilengrad (District Court, Svilengrad, Bulgaria), which has decided to refer three questions to the Court of Justice for a preliminary ruling, the first two of which I transcribe below:
‘(1) Is Article 42(2) of [the Customs Code], which exhaustively specifies the administrative penalties that can be applied for breaches of customs legislation, read in conjunction with Article 17(1) of the Charter of Fundamental Rights of the European Union [“the Charter”], to be interpreted as meaning that a national provision such as that of Article 233(6) of [the Customs Law], which provides for an additional administrative penalty in the form of confiscation of the items involved in the offence (removal of property into State ownership), is unlawful? Is confiscation of the items involved in the offence lawful in those cases where the confiscated assets belong to someone other than the offender?
(2) Is Article 42(1) of [the Customs Code], read in conjunction with Article 49(3) of the Charter, to be interpreted as meaning that a national provision such as that of Article 233(6) of the Customs Law, which, alongside fines, provides for the additional penalty of confiscation (removal of property into State ownership) of the items involved in the offence, is unlawful in the following cases by reason of constituting a disproportionately punitive interference with the right to property which is not commensurate with the legitimate goal being pursued: both generally, in those cases where the confiscated asset, being the item involved in the offence, belongs to the offender, and in those cases where it belongs to a third party other than the offender, and particularly in those cases where the perpetrator committed the offence not intentionally but through negligence?’
B. Case C‑372/23
23. VU, the carrier referred to in Case C‑717/22, challenged both the fine imposed and the confiscation of the goods before the Rayonen sad Svilengrad (District Court, Svilengrad). His challenge was rejected in a judgment of 17 January 2022.
24. VU brought an appeal against the judgment at first instance before the Administrativen sad Haskovo (Administrative Court, Haskovo, Bulgaria), which has decided to refer five questions to the Court of Justice for a preliminary ruling, the first four of which I transcribe below:
‘(1) Is Article 15 of [the Customs Code], read in conjunction with Article 42(1) thereof, to be interpreted as precluding a national rule such as that laid down in Article 233(1) of [the Customs Law], read in conjunction with Article 7 of the Zakon za administrativnite narushenia i nakazania [(Law on administrative offences and administrative penalties)], which provides for the imposition of a penalty for smuggling not committed intentionally in cases where a customs offence is committed through a lack of diligence consisting in failure to comply with the prescribed form of declaration of goods transported across the national border? Is a national rule lawful which, in such cases, allows the offence to be classed as customs smuggling committed through negligence, or is intent a necessary constituent of customs smuggling?
(2) Is Article 42(1) of [the Customs Code] to be interpreted as precluding a national rule such as that laid down in Article 233(1) of [the Customs Law], read in conjunction with Article 7 of the Law on administrative offences and administrative penalties, under which a first offence falling under the heading of “smuggling”, whether committed intentionally or through negligence, is punishable by a penalty of the same nature and the same amount, namely a fine of between 100% and 200% of the customs value of the property involved in the offence?
(3) Is Article 42(2) of [the Customs Code] to be interpreted as precluding national legislation, such as that under Article 233(6) of [the Customs Law], which provides, as an additional administrative penalty, for the confiscation (removal for the benefit of the State) of the goods or property which were involved in the offence and the possession of which is not prohibited? Is confiscation of the items involved in the offence lawful in those cases where the confiscated assets belong to someone other than the offender?
(4) Is Article 42(1) of [the Customs Code], read in conjunction with Article 49(3) of [the Charter], to be interpreted as meaning that a national rule such as that of Article 233(6) of [the Customs Law], which, alongside fines, provides for the additional penalty of confiscation (removal for the benefit of the State) of the goods or property which were involved in the offence and the possession of which is not prohibited, is unlawful in the following cases by reason of constituting a disproportionately punitive interference with the right to property which is not commensurate with the legitimate goal being pursued: both generally, in those cases where the confiscated asset, being the item involved in the offence, belongs to the offender and in those cases where it belongs to a third party other than the offender, and particularly in those cases where the offender committed the offence not intentionally but through negligence?’
III. Proceedings before the Court of Justice
25. The request for a preliminary ruling giving rise to Case C‑717/22 was received at the Court on 23 November 23.
26. Sistem Lux, the Teritorialna direktsia Mitnitsa Burgas (Burgas Regional Customs Directorate, Bulgaria) and the Bulgarian, Italian and Latvian Governments have submitted observations in those proceedings, as has the European Commission.
27. The request for a preliminary ruling giving rise to Case C‑372/23 was received at the Court on 13 June 2023.
28. The Teritorialna direktsia Mitnitsa Burgas (Burgas Regional Customs Directorate) and the Belgian, Bulgarian, Spanish and Italian Governments, as well as the Commission, have submitted observations in those second proceedings.
29. Given the connection between them, the two cases were joined for the purposes of the oral part of the procedure.
30. The Court, which did not consider it essential to hold a public hearing, has directed that this Opinion should focus on the first two questions referred in Case C‑717/22 (which are substantially the same as the third and fourth questions in Case C‑372/23) and on the first two questions referred in Case C‑372/23.
IV. Analysis
31. The first two questions referred in Case C‑717/22 concern the compatibility with EU law of national legislation which, in specific cases of customs infringement, provides that the goods involved should be confiscated.
32. The first two questions referred in Case C‑372/23 relate to the compatibility with EU law of national legislation which provides for the imposition of a particular penalty for customs smuggling offences.
33. I shall first analyse the questions referred concerning the principal penalty (Case C‑372/23) and shall then deal with those relating to confiscation (Cases C‑717/22 and C‑372/23).
34. I shall not address the impact of Article 17(1) and Article 49(3) of the Charter, as the referring courts do not put forward reasons which lead them, specifically, to request an interpretation of those provisions.
A. Penalty for non-compliance with the obligation to provide customs information (first and second questions referred in Case C‑372/23)
35. The referring court enquires regarding the compatibility with EU law (in particular, with Article 15, read together with Article (42)(1), of the Customs Code) of national legislation which punishes a customs infringement committed negligently, which it classifies as unintentional smuggling.
36. In particular, it wishes to know:
– whether intent constitutes a necessary element of the customs smuggling offence (first question);
– whether customs smuggling is punishable ‘by a penalty of the same nature and the same amount’ in cases of offences committed intentionally and in cases of offences committed through negligence (second question).
37. I reiterate that VU has received a penalty for infringing Article 233(1) of the Customs Law. That provision covers, in Bulgaria, the transportation of goods across the national border without the knowledge or authorisation of the customs authorities. It deals with non-compliance with the obligation to provide the customs authorities with the information provided for in Article 15 of the Customs Code. (5) That obligation is not complied with if the information provided is false in that it does not reflect the actual content of the goods.
38. While it is not specified in the order for reference, it seems that the transported goods, coming from Türkiye, were destined for Serbia, with Bulgaria being merely a transit country. In such a case, the European legislation primarily applicable would be Article 158 of the Customs Code.
39. Under that article, goods intended to be placed under a customs procedure (except for the free zone procedure) must be covered by an appropriate customs declaration (paragraph 1) and must be subject to customs supervision from the time of acceptance of that declaration until they leave the customs territory of the Union or are abandoned to the State or destroyed or the customs declaration is invalidated (paragraph 3).
40. In accordance with Article 233(3) of the Customs Code, a carrier of goods in transit is responsible for presenting them intact at the customs office of destination, within the prescribed time limit and in compliance with the measures taken by the customs authorities to ensure their identification. (6)
41. In the opinion of the referring court – an opinion which no one disputes and which falls outside the scope of these proceedings – non-compliance with the obligation to provide a reliable declaration of the goods which VU was transporting under the transit procedure constituted an infringement, by that person, of Article 15 of the Customs Code. (7)
42. In accordance with Article 15(1) of the Customs Code, any person directly or indirectly involved in carrying out customs formalities or in customs controls is obliged to provide the information and documents required by the customs authorities, in an appropriate form, as well as the assistance necessary for the completion of those formalities or controls.
43. Under Article 15(2) of the Customs Code, any person who lodges a customs declaration with the customs authorities is rendered responsible for its accuracy and completeness, as well as the authenticity, accuracy and validity of any document supporting the declaration.
44. Under Article 42 of the Customs Code, any failure to comply with the customs legislation must be penalised by the Member States in an effective, proportionate and dissuasive manner.
45. The referring court is strictly interested in the Court of Justice determining whether the penalty imposed is compatible, as regards the intentionality of the infringement, with Article 15 of the Customs Code and, as regards the proportionality of the penalty itself, with Article 42(1) of the same Code.
46. In order to respond to the first of those questions, it must be borne in mind that, according to the Court of Justice:
– failure to comply with the obligation laid down in Article 15(1) of the Customs Code constitutes ‘failure to comply with the customs legislation’, within the meaning of Article 42(1) of that code;
– ‘That concept [failure to comply with the customs legislation] does not cover only fraudulent activities, but includes any failure to comply with EU customs legislation, irrespective of whether the non-compliance was intentional or negligent or, even, in the absence of any wrongful conduct on the part of the operator concerned.’ (8)
47. As the Commission has observed, the same applies, in particular, with regard to non-compliance with the obligation, established in Article 158 of the Customs Code, to lodge a customs declaration appropriate for the particular procedure.
48. From that premiss, it may be inferred that intent does not constitute a necessary element of the customs smuggling offence. In the event of an infringement of Article 15(1) of the Customs Code committed as a result of negligence, the Member States must impose a penalty in accordance with Article 42 of the same Code.
49. For the purposes of these proceedings, the penalty must, in any event, be proportionate, as laid down in Article 42(1) of the Customs Code.
50. What the referring court raises with the second question referred in Case C‑372/23 is not so much a problem of proportionality, strictly speaking, as, once again, the relevance of intentionality for the purposes of setting the penalty.
51. The referring court emphasises intentionality, now raised in relation to Article 42(1) of the Customs Code; that is, from the perspective of the penalty and no longer from that of the definition of the facts constituting the infringement.
52. The underlying problem remains the same, namely, the compatibility with the Customs Code of national legislation which classes negligent behaviour as a customs infringement (first question), to which it attaches a penalty which does not discriminate between negligent and intentional behaviour (second question).
53. It is not, therefore, a question of determining whether the penalty at issue in the main proceedings was, or was not, proportionate on account of its specific amount or other factors, but rather whether it was so in view of the intentional or negligent nature of the infringement.
54. In fact, the referring court emphasises the fact that the infringement, ‘whether committed intentionally or through negligence, is punishable by a penalty of the same nature and the same amount’. For that court, what would be truly ‘disproportionate’ would be not to distinguish between an intentional and a negligent infringement.
55. The purely tangential reference to the proportionality of the penalty imposed should not divert attention from what is at issue. What, in fact, is raised by these questions is, I repeat, whether the customs smuggling offence may only attract a penalty – and under what conditions – when it is the result of intentional behaviour.
56. It is settled case-law of the Court of Justice that the penalties permitted under the national legislation must not go beyond what is necessary in order to attain the objectives legitimately pursued by that legislation, nor must they be disproportionate to those objectives. (9)
57. Consequently, ‘the customs authorities … must take into account, both in making the legal classification of any offence committed and in determining, where appropriate, the penalties, relating to non-compliance with the customs legislation, to be imposed, all the relevant information, including, if necessary, the good faith of the declarant, in order to ensure that those penalties are effective, proportionate and dissuasive’. (10)
58. The relevance of good faith when considering the scope of the penalties does not imply that those penalties are only admissible for intentional infringements. As has already been noted, the notion of ‘failure to comply with the customs legislation’, within the meaning of Article 42(1) of the Customs Code, includes any infringement of that legislation, irrespective of whether the non-compliance was intentional or negligent.
59. In summary, I am of the opinion that the second question referred in Case C‑372/23 should be answered in the same way as the first: as intent is not a necessary element of the customs smuggling offence and the mere infringement of Article 15(1) of the Customs Code is sufficient for the behaviour to be classified as punishable under Article 42 of that code, EU law does not exclude the imposition of penalties for unintentional infringements.
60. The Court of Justice has confirmed such an interpretation of Article 42(1) of the Customs Code, ruling that, in cases where incorrect information is provided in a customs declaration, an administrative fine may be imposed, notwithstanding the good faith of the operator concerned. (11)
61. That response should not, when determining the appropriate penalty, prevent all of the relevant elements being taken into account (including, where it exists, the good faith of the person committing the infringement) within the scale established by the national legislature, according to which the penalty imposed may be made more or less severe. (12)
B. Confiscation in cases of non-compliance with the obligation to inform the customs authorities (first and second questions referred in Case C‑717/22, coinciding with the third and fourth questions in Case C‑372/23)
62. With those questions, the referring courts wish to know, in short:
– whether confiscation is acceptable as an additional administrative penalty in cases of ‘customs smuggling’;
– if so, if property belonging to a third party other than the offender may be confiscated, in particular where the offender has not acted intentionally.
63. Article 42(2) of the Customs Code does not provide an exhaustive list of the ‘forms’ which the administrative penalties established by the Member States may take. That may be gathered from the wording of the provision, which uses the expression inter alia, (13) or other similar expressions, when listing those forms by way of example.
64. As the Court of Justice has said repeatedly, ‘in the absence of harmonisation of EU legislation in the field of penalties applicable where conditions laid down by the rules imposed by such legislation are not complied with, Member States are empowered to choose the penalties which seem to them to be appropriate.’ Logically, the Member States ‘must, however, exercise that power in accordance with EU law and its general principles’. (14)
65. That having been established, I do not see any reason why confiscation should not be provided for as an additional administrative penalty in circumstances such as those at issue here; that is, where Article 15(1) of the Customs Code has been infringed. (15)
66. The Customs Code itself (Article 198) imposes on national authorities the obligation to take any necessary measures to dispose of goods in cases where the obligations laid down in the customs legislation have not been complied with. Among those measures, it expressly mentions the confiscation, sale and destruction of the goods in question.
67. So, whether as an administrative penalty (Article 42 of the Customs Code) or as a necessary measure in the event of non-compliance with a customs obligation (Article 198 of the Customs Code), the confiscation of the seized goods, in cases such as the present case, is allowed under EU law. (16)
68. In what circumstances confiscation in concreto is lawful may be debatable, but whether it is a measure compatible, as such, with EU law certainly is not.
69. With regard to the confiscation of property belonging to an honest third party other than the offender, the Court of Justice has already ruled unequivocally: ‘Given that the confiscation of property, that is to say, the definitive deprivation of the right of ownership in respect of that property, substantially affects the rights of persons, it must be noted that as regards a third party acting in good faith, who did not know and could not have known that his or her property was used to commit an offence, such confiscation constitutes, in the light of the objective pursued, a disproportionate and intolerable interference impairing the very substance of his or her right to property.’ (17)
70. From the information provided by the referring courts, it is not possible to deduce with certainty whether the confiscated goods actually belonged to a third party acting in good faith, in the terms which I have just transcribed.
71. Everything appears to indicate that those goods do not belong to VU (that is, the carrier in receipt of the penalty), even though there is no record of his fulfilment of the criteria necessary for confiscating the goods having been questioned. Rather, they would be the property of Sistem Lux, the claimant in the dispute giving rise to the request in Case C‑717/22.
72. However, according to the observations of the customs authorities (18) and the Bulgarian Government, (19) Sistem Lux would be the principal party in respect of the transit procedure to which the confiscated goods would be subject. If that were so – and that is something for the referring courts to establish – Sistem Lux could not strictly speaking be described as a ‘third party’.
73. The arguments of the customs authority transcribed in the order for reference in Case C‑717/22 (20) show that the administrative decision to confiscate the goods would flow from the failure on the part of Sistem Lux to comply with its customs obligations in respect of the goods seized. If the referring court accepted that view, such non-compliance, in accordance with Article 198 of the Customs Code, could lead to the confiscation measure being taken.
74. In short, even if Sistem Lux had not committed the specific infringement imputed to VU, it would have failed to comply with an obligation of its own, such that the confiscation could be justified.
V. Conclusion
75. Accordingly, I suggest that the Court of Justice should respond to the Rayonen sad Svilengrad (District Court, Svilengrad, Bulgaria) and to the Administrativen sad Haskovo (Administrative Court, Haskovo, Bulgaria) as follows:
Article 15 of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code, read together with Article 42(1) and (2) of that regulation,
must be interpreted as meaning that:
(1) Intent does not constitute a necessary element of the customs smuggling offence.
(2) National legislation may provide for the confiscation of goods, as an additional penalty imposed on those committing an administrative infringement by failing to comply with the obligations laid down in the customs legislation.