Transport under excise duty suspension arrangement: major risks for carrier in good faith

However, that turned out not to be the case.

The driver was stopped on arrival at Dover Docks (United Kingdom) by UK Border Agency (‘UKBA’) officers. After consulting the Excise Movement and Control System (‘the EMCS’), which was specially developed for excise transport, the UKBA officers were able to establish that the e-AD could not be used for the transport of the pallets. This is because the e-AD had already been used for a separate delivery of beer under excise duty suspension for the same tax warehouse in the United Kingdom.

Those officers therefore took the view that the goods at issue were not being moved under an excise duty suspension arrangement and, consequently, that the excise duty relating to those goods had become chargeable when those goods arrived in the United Kingdom. In those circumstances, the UKBA officers seized the goods at issue and the vehicle carrying them. The English customs authorities then confronted the driver with a high assessment to excise duty. According to customs, the driver was holding excise goods that had not yet been included in excise tax.[2]

Excise Directive

Pursuant to Article 33 of Directive 2008/118 ('the Excise Directive'), excise goods which, after having already been released for consumption in one Member State, are held for commercial purposes in another Member State in order to be delivered or used there, are subject to excise duty and the excise duty becomes chargeable in that other Member State.

Several persons liable to pay the excise duty which has become chargeable can then be designated in that situation: the person making the delivery or holding the goods intended for delivery, or to whom the goods are delivered in the other Member State.

For the purposes of this article, in the Directive, “holding for commercial purposes” means “the holding of excise goods by a person other than a private individual or by a private individual for reasons other than his own use and transported by him”. The Excise Directive does not specify what exactly should be understood by ‘the holding of excise goods’.

Judgment Court of Justice

In the present case, the Court must assess whether Article 33(3) of Directive 2008/118 must be interpreted as meaning that a person who transports, on behalf of others, excise goods to another Member State, and who is in physical possession of those goods at the moment when they have become chargeable to the corresponding excise duty, is liable for that excise duty, under that provision, even if that person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty.

Since no definition has been given in the excise duty directive of the concept of 'person holding excise goods' and the directive has not left it to the Member States to define this concept, the Court subsequently interprets the concept itself and agrees with the usual meaning of this term in everyday language.

According to the Court, the concept of a person who ‘holds’ goods refers, in everyday language, to a person who is in physical possession of those goods. In that regard, the question whether the person concerned has a right to or any interest in the goods which that person holds is irrelevant.

Moreover, according to the Court, there is nothing in the wording of Article 33(3) of Directive 2008/118 to indicate that the status of person liable to pay the excise duty, as being ‘the person holding the goods intended for delivery’, depends on ascertaining whether that person is aware or should reasonably have been aware that the excise duty is chargeable under that provision. Otherwise, the Court continues, this condition would have been expressly included in the excise duty directive by the EU legislature.

In that regard, the intention of the EU legislature was to lay down a broad definition of the category of persons liable to pay excise duty in the event of a movement of excise goods already ‘released for consumption’ in one Member State and held, for commercial purposes, in another Member State in order to be delivered or used there, so as to ensure, so far as possible, that such duty is collected.

In short, the Court arrives at a broad interpretation of the concept 'holding of excise goods'. Even if the person has no right to or interest in those goods and is not aware that they are subject to excise duty or, if so aware, is not aware that they have become chargeable to the corresponding excise duty, the (single) transport of these excise goods results in a so-called 'strict liability' for the driver.

In practice

The transport of excise goods therefore remains a risky affair for transporters. Although the customs authorities have the option of levying the excise duty on multiple parties, in practice the customs authorities often choose the easy way and the person who has the goods on hand is addressed.

But we also identify risks in the area of excise duties in a broader context, for example in the context of the import or storage of goods (under suspension in an excise warehouse). For example, when goods are imported, discussions regularly arise with the customs authorities about whether or not goods should be regarded as 'excise goods' within the meaning of the excise legislation. We conduct several objection and appeal procedures in our practice.

Do you have questions about excise legislation or more generally about the import or export of goods? Please feel free to contact us. Ploum has a unique practice with very experienced specialists in the field of trade, customs, excise and logistics.

Arjan Wolkers