The Munich Financial Court has ruled on the falsification of accompanying administrative documents (BVD) when shipping alcohol, in this case whisky bottles in connection with the tax suspension procedure:
When exporting eaux-de-vie such as whisky leaving the EU excise territory via other EU Member States, the customs office concerned acts as consignee. The customs office must return the confirmed return receipt to the consignor.
Anyone who exchanges the accompanying administrative documents against forgeries during transport will withdraw the goods from the duty suspension procedure.
The consignor must also back-pay taxes if he has not withdrawn goods from the tax suspension procedure himself. He is responsible and liable for the proper functioning of the suspension system.
Falsified documents on whisky bottles lead to alcohol tax
The case concerned a total of 11 consignments of whisky bottles containing 40% alcohol by volume. The applicant in the proceedings had its tax warehouse in Austria and sent the consignment under suspension of excise duty in order to export it to a company in Russia via Germany.
After the customs investigation office intervened, it found that the accompanying administrative documents had been exchanged in Germany for a forgery. The forged documents now identified a Belgian company as the consignor and a British company as the consignee. However, the export from Germany was confirmed on the originals by means of a forged stamp and one copy was returned to the applicant.
On the basis of those findings, the applicant then received a tax assessment from the Hauptzollamt (Principal Customs Office), which imposed an additional payment of alcohol duty on the whisky transported. That tax assessment was also correctly issued, as the Finance Court found in the judicial proceedings.
Tax suspension procedure
In principle, under the German duty suspension arrangements, only registered consignors may transport excise goods.
Excise goods such as alcohol may then be transported untaxed to the tax warehouse, to premises of registered consignees or users within the tax territory, to other beneficiaries or to a place outside the EU excise territory.
In any event, in the present case, the whiskey was under a duty suspension arrangement because it was transported from Austria through the German tax territory.
As a consequence, the actual consignee is now replaced by the customs office where the alcohol leaves the European excise territory. The customs office must then return the confirmed advice of delivery to the consignor.
The situation would be different if the consignor knowingly indicated in the AAD a domestic consignee who was not entitled to receive the alcohol untaxed or did not exist at all. The applicant had, however, indicated in the AAD a consignee in Russia and did not effectively contest its non-existence.
The Court rejected as irrelevant the applicant’s objection that there were no plans at all to transport the whiskey to Russia but to the United Kingdom.
Falsified documents are alcohol tax fraud
Alcohol tax (or spirits tax) arises when alcohol is withdrawn from the duty suspension system during transport.
This was the case when the accompanying documents were exchanged for forged documents. It was no longer possible to clearly identify the companies actually involved. As a result, the whiskey was thus deprived of tax supervision and the necessary customs supervision was prevented.
Consignor liable for subsequent payment of alcohol duty
When it comes to the question of tax liability, the consignor has a very broad liability. It is not important whether the consignor himself has withdrawn the goods from the duty suspension arrangements.
Even if the company that dispatched the whiskey can prove that it had nothing to do with the falsification of the accompanying documents, it may be liable for the subsequent payment of alcohol duty.
According to the Court, the mere fact that the company acts as a consignor is sufficient for such a claim. This was based on the responsibility of the consignor to ensure that the suspension procedure was properly applied. That responsibility ends only when there is evidence that the goods have left the excise territory.
The fact that other companies and auxiliary persons, such as a forwarding agent, are involved in the transport does not alter the wide scope of liability. The consignor, as the person responsible for the duty suspension arrangements, must also accept responsibility for any fault on the part of any assistents to the process. Moreover, this applies irrespective of whether the latter had a significant influence on the auxiliary persons or companies involved.
EMCS prevents falsified AADs
A reform in 2011 changed the BVD’s paper system to an electronic procedure for all EU-wide uniform excise duties. This includes the tax on spirits and alcohol.
Until the end of 2010, companies that trade in and dispatch excisable goods such as beer or brandy products or other alcohol subject to excise duty had to issue an accompanying administrative document (AAD), which the transporter then had to carry with him.
With increasing harmonisation of legal and economic regulations within Europe, the AAD was then replaced by the electronic shipping document e-VD in 2011.
Since then, the e-VD has been used for all excise duties that have been harmonised and aligned throughout the EU and used in the electronic excise movement control system (EMCS).
However, for national excise duties, such as the coffee tax and the alcopop tax, which only apply to Germany, the e-VD will continue to be used.
The main purpose of EMCS is to simplify the movement of excise goods under suspension of excise duty. The electronic transmission of administrative documents reduces the amount of paperwork involved.
The electronic system is also intended to improve the security of movements, in particular by allowing prior verification of the data of the consignee of the goods and more effective monitoring and control of the movement. In addition, it will ensure a quicker and safer return of the entry and export declaration.