Certificate of Origin: No protection of trust in cases of doubt about authenticity

In a judgement in principle of the European Court of Justice (judgment of 8 November 2012, Ref.: C-438/11 – Lagura), the European Court of Justice clarified that in certain cases there is no protection of legitimate expectations if certificates of origin are wrongly issued abroad.

The case was based on imports of footwear from Macau. For such footwear, a preferential duty rate of only 3.5% was applied compared to the standard duty rate. The importer presented a certificate of origin proving that the goods originated in Macau. The main customs office then only levied the preferential duty. After there were indications that the shoes actually came from China, the main customs office wanted it checked by the authorities in Macau. Such a check is also possible in principle, since the main customs offices can access the authorities in the exporting country through administrative cooperation.

The authorities in Macau then announced that they could no longer verify the certificates of origin because the companies mentioned in the certificates of origin had ceased their operations. The main customs office had then initiated a subsequent collection procedure and now wanted to claim the difference between the preferential and regular customs duty rate in accordance with Art. 220 (1) of the Customs Code.

The importer relied on Article 220(2) of the Customs Code, according to which retrospective entry in the accounts must be ruled out if this was not entered in the accounts due to an error by the customs authorities, provided that this error could not reasonably be detected by the debtor and that he acted in good faith. In the context of inaccurate certificates of origin in the system of administrative cooperation, errors are also recorded by the authorities abroad. Even if the certificate of origin was erroneously issued, a subsequent survey will still take place if the certificate is based on an incorrect presentation of the facts by the exporter.

In principle, the Authority has the burden of proving that the facts have been misrepresented. If they wish to recover import duties, they must prove that the exporter has provided false information. The new case law of the European Court of Justice does not change this in principle.

However, the ECJ has clarified that there will be an exception in the event that there is no longer any evidence of the secure preference of the goods. In these cases, the tax debtor bears the risk of being charged with a subsequent levy. In this respect, the parties must sufficiently secure themselves with their contractual partners in the exporting country. The European Court of Justice has consistently continued its jurisprudence in that it has also given a similar judgment for the erroneously issued EUR.1 movement certificate in the case in which documentation obligations were violated.

This judgement is important for all parties involved in international business. It shows that sufficient documentation of the origin of the goods is necessary. The mere certificate of origin alone may not be sufficient. However, it is much more important to note that certain documentation obligations are imposed on the contractual partner when drafting the sales contract.

Please do not hesitate to contact us, we will advise you on the topics of contract design, origin of goods and preferences.

 

Lawyer Dr. Tristan Wegner

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