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EU’s Highest Court Paves Way for Claiming Interest in Cases Where Duties were Levied in Breach of EU Law

On 18 January 2017, the EU’s top-most court, the Court of Justice (ECJ), delivered a judgment that will be very relevant to both customs and anti-dumping law, and therefore for Hong Kong and Chinese mainland exporters as well as their EU importers that are involved in customs proceedings. It frees the way for claiming interest on duties that have been paid in the event that the duties were levied in breach of EU law.

The background of the proceedings before the ECJ was the following: an importer had paid anti-dumping duties on imports into Germany of certain footwear with uppers of leather originating in the Chinese mainland and Vietnam. Subsequently, the EU Regulation on the basis of which the duties had been levied was annulled by a judgment of the ECJ in relation to the Chinese manufacturer from which the EU importer had imported the shoes.

The anti-dumping duties that the EU importer had previously paid were paid back to him. In this situation the question before the national court was whether, in such circumstances, interest shall be granted to the importer as from the time of payment of the duties by him. The case was brought to the ECJ by a preliminary ruling of the Finance Court of Düsseldorf, Germany, which asked for the interpretation of Art. 241 of the Community Customs Code (CCC).

Art. 241 CCC provided that:

Repayment by the competent authorities of amounts of import duties or export duties or of credit interest or interest on arrears collected on payment of such duties shall not give rise to the payment of interest by those authorities. However, interest shall be paid:
— where a decision to grant a request for repayment is not implemented within three months of the date of adoption of that decision,
— where national provisions so stipulate.

German law granted the right to claim interest accruing as a result of a tax debt only as from the time when such interest was claimed in legal proceedings but not as from the payment of the duties.

In its preliminary ruling of the abovementioned case (Wortmann KG Internationale Schuhproduktionen v. Hauptzollamt Bielefeld, case C-365/15, of 18 January 2017), the ECJ held that where import duties, including anti-dumping duties, are reimbursed on the grounds that they have been levied in breach of EU law, this being a matter for the referring court to determine, there is an obligation on Member States, arising from EU law, to pay to individuals with a right to reimbursement, the corresponding interest, which runs from the date of payment by those individuals of the duties that are being reimbursed.

The Court referred to its case-law in Zuckerfabrik Jülich, C-113/10, C-147/10 and C-234/10, to hold that where a Member State has levied charges on the basis of an EU Regulation that was declared invalid, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that State or retained by it which relate directly to that tax, i.e. interest.

The present case is interesting for Hong Kong traders, as it will give importers of goods - for example from Hong Kong or mainland China - that paid import duties or anti-dumping duties on the basis of an EU Regulation that was later declared invalid, the right not only to claim back the duties unduly levied, but also the right to claim interest as from the time of payment of such duties.

It is an interesting question whether such obligation of the national customs authorities to pay interest will also apply for future matters, under reforms introduced to EU customs law. The above case, C-365/15, arose in the context of imports carried out between 2006 and 2012 and therefore concerns the interpretation of a particular provision of the Community Customs Code (Art. 241 CCC). Hong Kong Traders will know that as from 1 May 2016 the substantive provisions of the Union Customs Code (UCC) entered into force and that therefore Article 241 CCC is no longer applicable for imports as of 1 May 2016. While the new UCC contains a provision which appears to be stricter, in the sense that it harmonises the legal position, without leaving any freedom to the EU Member States to interpret the position differently, its wording is very similar to the previous Art. 241 CCC. Based on this similarity of the wording of the provisions, it could be argued that the scope of such new provision should be the same as the one of Art. 241 CCC and that therefore also under the new rules, customs authorities shall be obliged to pay interest for duties paid in breach of EU law.

Another interesting question will be the percentage of interest that would be granted based on the present judgment of the ECJ. As the ECJ did not include any statement about the quantum of the interest, such percentage will need to be determined by the national courts.

It can be summarised that the judgment of the ECJ may give traders enough reason to revisit certain cases where claims for repayment of customs duties or anti-dumping duties were brought based on an infringement of EU law and to pursue claiming interest as from the time when duties were unduly paid to the national customs authorities. For more specific questions as to whether it is possible to extend the scope of this judgment and concerning the quantum of interest to be paid it will be interesting to further follow the case-law of the EU courts and the national courts in the EU Member States.

Content provided by Picture: HKTDC Research
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