A. Export of products subject to excise duty or export formalities
We would like to point out some anomalies in the Union Customs Code (“UCC”), effective as of May 1, 2016, regarding products subject to excise duty or export formalities (hereafter: “excise/agri goods”).
Export using Transit
When goods are exported to, for instance, Switzerland or Norway under a common transit procedure, the customs office of exit will be the customs office of departure of the transit operation. After the barcode on the Transit Accompanying Document (TAD) is scanned at the EU border (e.g. Germany/Switzerland), the goods can then proceed to the customs office of destination, where the final formalities of the transit procedure and any import procedure are completed. According to Article 329(8) of the Commission Implementing Regulation to the UCC, this procedure does not apply to excise/agri goods. This means that the excise/agri goods have to be transported to the German/Swiss border under the export procedure. The transporter first has to complete the export procedure with German customs and then complete the formalities required by the Swiss customs authorities in order to bring the goods into Switzerland (import in free circulation or transit). For both procedures, the transporter/exporter will have to use the services of a local logistics provider, which will not only increase the time necessary for the transport but also entails additional costs. This exemption for excise/agro goods also applies to other modes of transportation (e.g. rail, water).
Export using carnet TIR
When goods are exported to, for instance, Russia under carnet TIR and part of the consignment is excise/agri goods, the carnet TIR may only be issued for the non-excise/agri goods. The excise/agri goods will be declared for export and transported under the export procedure to the Union border. The driver has to fulfill the following requirements:
- He has to notify the authorities with regard to the goods falling under carnet TIR;
- He has to complete the export procedure for the excise/agri goods;
- Customs Authorities have to issue a new document (e.g. carnet TIR) to bring the excise/agri goods to the final destination.
These formalities were to be avoided under the TIR convention.
B. Shortages in cross-border shipments of excise goods
A judgment by the Court of Justice of the European Union which, although it did not concern the UCC or export, is of interest to companies that move liquid bulk excise goods through the EU, is the judgment rendered in the BP Europa case (case C-64/15). This case concerned the delivery by BP of an amount of gas oil from the Netherlands to a tax warehouse in Germany under the excise duty suspension arrangement. Upon arrival at the destination, the holder of the tax warehouse discovered that the amount stated on the electronic administrative document (e-AD) and the actual amount received differed by 0.202%. In dispute was whether the shortage of gas oil qualified as an “irregularity” or as “goods which did not arrive”, resulting in excise duty payment.
To answer this question, the Court of Justice of the European Union (CJEU) first had to rule on two other issues:
- When does the movement of excise goods under a duty suspension arrangement end?
This is important because the chargeability of excise duty is attached to the departure from that arrangement. The CJEU ruled that the movement under suspension ends when the consignee, after all the goods are unloaded from the means of transport, finds that there are shortages compared to the amount that was declared on the e-AD and which should have been delivered.
- Does the provision for “goods, dispatched under the suspension arrangement that did not arrive” only apply to the total amount of the goods dispatched or do these rules apply to that part of the total freight that does not arrive?
The CJEU ruled that a shortage does qualify as “goods, dispatched under the suspension arrangement that did not arrive” and that article 10 (4) does not only see to a complete shipment.
What does this mean for you?
According to the CJEU, shortages detected at the tax warehouse of destination should be treated as “irregularities” and not as “goods, dispatched under the suspension arrangement that did not arrive”. This irregularity then by definition occurs in the Member State of destination. The excise duty is thus chargeable by this Member State pursuant to Article 10(2) of Council Directive 2008/118/EC concerning the general arrangements for excise duty.
Because the Member State of destination collects the excise duty, it will issue an assessment to the party in the Member State of dispatch. If this party wishes to appeal the assessment, it will have to do so according to the appeal procedures and language of the Member State of destination. We recommend that your company’s general terms and conditions for the supply of excise goods to tax warehouses in other Member States are reviewed to see whether they cover the implications of the above ruling.
Over the years Meijburg & Co’s trade and customs lawyers have gained extensive experience with EU excise and Common Agricultural Policy matters. As such we are very well-positioned to assist your company in evaluating the impact of the new provisions.