Wrongly Collected Customs Duties: ECJ Clarifies EU Rules

The dispute between Andorran importers and the French customs authority over customs duties on goods imported into Andorra between 1988 and 1991 may seem like a relic of the past. Yet, it has profound implications for EU law and the rights of taxable persons today.

At the center of this case lies the question of when and how national customs authorities must act to repay duties wrongly collected, and whether procedural or administrative hurdles can justify delays in repayment or non-repayment. In addition to this issue, the case also highlights fundamental principles of EU customs law and the requirements for national customs authorities to act proactively to ensure the protection of rights afforded to taxable persons under EU legislation.

Background of the Case 

Between 1988 and 1991, Andorra-registered companies imported goods from third countries into Andorra using Ysal, a French-based customs agent. Imported goods triggered the payment of customs duties in France, as per the French customs authorities' request that those goods be released for free circulation upon entry into France, even though they were destined for Andorra.

The European Commission considered this practice to be contrary to EU rules and regulations, and in January 1991, it issued an opinion stating that France was breaching EU law and calling on France to amend its practice within 30 days. In March 1991, the French government informed the European Commission that it would respect the request and abolish the disputed requirement, as confirmed by a notice published in the French Official Journal in June 1991.

In 2008, Ysal filed a case before the French court of first instance against the Customs Administration, claiming repayment of customs duties that had been wrongly charged on imports into Andorra between 1988 and 1991. However, the Court rejected these claims in 2010, stating that Ysal lacked both standing and interest to pursue the matter. 

This decision was upheld in 2011, leading to an appeal before the Court of Cassation, which in 2014 also confirmed the ruling. The Court of Cassation noted that Ysal had merely paid the duties on behalf of Andorran importers, who had already reimbursed Ysal, meaning only the importers themselves had the right to claim repayment.

Consequently, in 2015, the Andorran importers, whose rights later passed to Caves Andorranes and YX, brought their cases before the Toulouse Regional Court, seeking reimbursement of the customs duties they had paid. However, these claims were dismissed in 2017, and the Toulouse Court of Appeal upheld this decision in 2020. 

The main reason for such a decision was the conclusion of the Toulouse Court of Appeal that for the French customs authorities to refund the disputed duties on their initiative Regulation No 1430/79 and the Community Customs Code, they needed sufficient information to establish both the exact amount of the duties and the identity of each debtor, without being required to undertake disproportionate investigations.

Both Caves Andorranes and YX appealed against this decision before the Court of Cassation, arguing that the Court of Appeal had wrongly applied EU law, and stating that Article 2(2) of the Regulation No 1430/79 imposes only a three-year time limit from the date the duties were notified and does not require customs authorities to have prior knowledge of the sums due or the identities of the parties.

After examining all the claims and arguments from all interested parties, the Court of Cassation was uncertain whether customs authorities are prohibited from making repayments on their initiative once the three-year period has expired, even if it was established within that timeframe that the duties were unlawful. Therefore, the Court of Cassation paused the proceedings and referred questions to the European Court of Justice (ECJ) for a preliminary ruling.

Main Questions from Request For Ruling

The Court of Cassation referred two questions to the ECJ. With its first question, the Court of Cassation asked whether provisions from Regulation No 1430/79 and the Community Customs Code, should be understood as limiting repayment of wrongly collected customs duties by the authorities on their initiative to three years from the date the duties collected, or instead as requiring that the authorities establish within those three years that the duties were not legally owed.

The second question asks whether such repayment is conditional upon the customs authorities already having knowledge of both the identities of the affected parties and the precise amounts to be reimbursed to each of them, without being obliged to conduct extensive or disproportionate investigations.

Applicable EU Directive Article

In this case, the ECJ did not consider and interpret the EU VAT Directive provisions. Instead, provisions from Regulation No 1430/79, which sets out the rules for repaying or remitting import and export duties, and the Community Customs Code were interpreted.

Regarding Regulation No 1430/79, Articles 1, 2, and 15(1) were highlighted as the most essential. Notably, the ECJ noted that this Regulation was repealed by Article 251 of the Community Customs Code. Therefore, ECJ outlined Article 236 of the Community Customs Code as the one setting out the rules for repaying or remitting import and export duties. 

This Article states that duties would be refunded or remitted if it was established that they were not legally owed or had been incorrectly entered in the accounts, except when the error was caused deliberately by the taxable person. Additionally, these requests must be made within three years of the duties being communicated to the debtor, with extensions allowed for unforeseeable circumstances or force majeure.

Notably, the Community Customs Code, which came into effect on January 1, 1994, was later repealed and replaced by the Modernised Customs Code in 2008, which in turn was repealed and replaced by the Union Customs Code in 2013.

France National Rules

The ECJ did not consider any national VAT or customs rules for this case. Therefore, the decision was made solely by interpreting EU-wide rules regulating customs matters applicable to the present case.

Importance of the Case for Taxable Persons

Considering that the main point of dispute is the wrongful collection and payment of customs duties, the ECJ's interpretation of the applicable rules and regulations, as well as its decision, clarifies the rights of taxable persons to repayment of customs duties and the obligations of customs authorities under EU law.

Although the case pertains to customs duties paid between 1988 and 1991, it remains crucial in 2025 because it establishes key principles for how customs authorities must handle repayments under EU law. Moreover, it provides a legal framework that ensures the recovery of wrongly collected duties, even long after they were paid, which is crucial for both taxable persons and authorities dealing with historical, complex, or cross-border transactions.

Analysis of the Court Findings

One of the first remarks made by the ECJ was that only the provisions of Regulation No. 1430/79 (Regulation) are relevant, given the date when the alleged right to repayment arose. The ECJ noted that, under the Regulation, repayment of customs duties can occur in two ways, both of which are defined in Article 2(2). 

Under the first one, the repayment must be granted if an application is submitted to the customs office within three years from the date the duties were recorded. Additionally, the customs authorities are obliged to repay on their own initiative if they discover within that period that duties were wrongly collected. Therefore, once the authorities determine that customs duties were not legally owed or exceeded the lawful amount, they must automatically make repayment without any request from the importer.

Regarding the three-year period in question, the ECJ stated that it refers to a timeframe in which the national customs authority must make the finding that repayment is due. However, the actual repayment does not need to occur within that period and can take place at a later time.

Additionally, the ECJ noted that when customs duties are imposed based on specific amounts declared by a particular taxable person, national customs authorities that find those duties were wrongly collected automatically know who paid them, and how much exactly they paid. 

Customs authorities cannot use the lack of retained declarations or previous decisions as an excuse for failing to repay duties found to be wrongly collected within the three years. Moreover, customs authorities are required to retain all relevant documents for repayment purposes, including cases when the wrongful collection results from the authority’s error regarding duties on imports from or into a third country.

It is also important to note that EU rules and regulations do not permit authorities to cite practical, administrative, or financial difficulties as justification for failing to fulfill their obligations, even in a situation where many taxable persons are affected and identifying them requires substantial effort. 

Even in cases where national customs authorities require information they do not already have to facilitate repayment, such as the identity of a successor to the person who originally paid the duties or the details of a bank account, this does not affect the existence of the obligation to repay. This information is only relevant for determining whether the customs authority breached its obligation to repay on time or in full, and to act on its initiative.

Notably, in cases when customs authorities lack relevant information to make a repayment, through no fault of their own, they must take appropriate steps to obtain that information to fulfill their obligation. Although these steps should not require disproportionate efforts beyond what can reasonably be expected from a diligent administration, doing nothing because the information is missing is unacceptable. Moreover, the act of doing nothing violates both the repayment obligation and the general EU law principle of good administration.

The ECJ left it to the Court of Cassation to determine whether the French customs authorities had, within three years from the duties being recorded, respected the principle of good administration and determined that the duties were wrongly collected. 

Nevertheless, the ECJ provided guidance to the Court of Cassation on what to consider and how to assess whether actions by French authorities, primarily in response to the European Commission's opinion, implicitly indicate that they acknowledged the duties had been unlawfully collected. Thus, they would have been obliged to repay those duties on their own initiative, as the duties had been collected within the preceding three years.

Courts Final Decision

The ECJ concluded that a national customs authority is obliged to repay duties on its initiative only if it has, within three years from the duties being recorded, determined that they were wrongly collected. Such a determination presumes that the customs authority knows who paid the duties and how much.

Suppose the customs authorities, for some reason, do not have, and could not reasonably have, all the necessary information to repay the original payer or their legal successors. In that case, they must take appropriate and proportionate measures to obtain that information to fulfill their repayment obligation.

Conclusion

In addition to concluding that customs authorities must repay wrongly collected duties if certain conditions are met, the ECJ left it to the French Court of Cassation to determine whether customs authorities respected EU fundamental principles and were wrong when denying repayment to the Andorran companies. Nevertheless, the ruling serves as a crucial reminder that the legality of customs duties and the rights of taxable persons are the priority of the EU's lawmakers and courts.

Source: Case C‑206/24 - YX, Logística i Gestió Caves Andorranes i Vidal SA v Minister for Economic Affairs, Finance and Budget, France and Director-General of Customs and Indirect Taxes, France, Regulation No 1430/79, The Community Customs Code