Article 124 (6) UCC: the meaning of the notion ‘deception’ in customs law

Extinction of a customs debt due to non-compliance

Are you dealing with imports within your business operations? If you fail to comply with customs law obligations or conditions, a customs debt on importation may arise in respect of goods that are subject to import duties. This is stipulated by Article 79 UCC, which deals with the incurrence of a customs debt due to non-compliance. Consider, for example, the situation where non-Union goods are removed from customs supervision. A customs debt may also arise if a condition for placing non-Union goods under a customs procedure or the granting of an exemption or reduced import duty has not been complied with.

Customs debts incurred through non-compliance can be extinguished under certain circumstances. This is governed by Article 124 UCC. For example, do the goods leave the customs territory of the European Union unused or not consumed? Then the customs debt imposed by Customs is extinguished (Article 124(1)(k) UCC).

However, if the customs debtor in question has committed deception or attempted deception, Article 124(6) UCC stipulates that the customs debt with respect to that person will not be extinguished after all. So the debt will still have to be paid in that case. But when is there actually (an attempt at) 'deception'?

EU customs law

Customs law is largely based on European regulations. In this regard, the Union Customs Code (UCC) forms the basis for customs legislation.[1] This regulation, adopted by the Council of the European Union, contains the principles, basic provisions and main features of customs legislation. The UCC has been in force since May 1, 2016, replacing the previously applicable Community Customs Code (CCC).[2]

How should deception under Article 124(6) UCC be interpreted?

The state of European and Dutch case law

To date (end of 2024), the Court of Justice of the European Union (hereinafter: ‘the ECJ’) has not yet ruled on the concept of ‘deception’ as referred to in Article 124(6) UCC. Because customs law is primarily European law, the interpretation of customs law concepts is always primarily looked to by the European courts.

So far, there exists one judicial decision in which a Dutch court has interpreted 'deception'. The Customs Chamber of the District Court of Noord-Holland has ruled that deception entails deliberate and culpable conduct; there is intent to do something contrary to the customs laws and regulations. No deception is committed if Customs has pointed out to the person or legal entity in question that it is carrying out customs activities, for example, outside its authorisation, and it subsequently continues these activities.[3] In Dutch case law, deception is thus interpreted relatively narrowly; circumstances must really show that there was an intention to mislead Customs.

Literature

Van Vliet’s Customs Law also shows that Customs must be well prepared in order to prove that deception has been committed. Deception is said to involve ‘the deliberate creation of false representations’, whereby the person in question intends to ‘lead the other person astray, to mislead’.[4] A single carelessness would therefore be insufficient to be able to speak of (attempted) deception.

Guidance on Repayment and Remission

The Guidance on Repayment and Remission report issued by the European Commission seems to be based on a somewhat broader interpretation than the existing Dutch case law and the aforementioned book. This guidance states that deception may not only involve a deliberate, premeditated act in which there is knowledge and intent, but that there may also be deception in the case of repeated conduct involving ignoring rules that were known or should have been known (based on the operator's experience or the clarity of the legislation). In each case, deception must be assessed on the basis of the relevant facts and circumstances. These may, but need not always, include conduct that gives rise to criminal prosecution.[5]

The preamble to the UCC

The preamble to the UCC does not explicitly explain 'deception' under Article 124(6) UCC, but it does clarify how conduct resulting in a customs debt due to noncompliance with customs legislation should be interpreted. For example, recital 38 of the preamble states that account should be taken of ‘the good faith of the person concerned where a customs debt has been incurred through non-compliance with customs legislation, and to minimize the consequences of carelessness on the part of the debtor.’ Thus, it follows that a person can act carelessly but still be in good faith. In any case, it is clear that the intention of the EU legislator was to minimise the consequences of a carelessness on the part of an operator who acted in good faith.

In any case, with recital 38 of the UCC's preamble in mind, it is not obvious to interpret ‘deception’ ex. Article 124(6) UCC broadly; not every carelessness can be classified as (an attempt at) deception. It is still important to assume the good faith of the person concerned.

Ultimately, it will be up to the courts, especially the ECJ, to provide more clarity regarding the interpretation of the term ‘deception’.

The customs practice of Ploum

Customs law regulations are complex. It will have to be judged on a case-by-case basis whether there is deception. Litigation in this area is an art in itself. Ploum's Customs, Trade and Logistics practice group has extensive experience in conducting proceedings in the field of customs law. If you have any questions regarding the above, please feel free to contact Jikke Biermasz (j.biermasz@ploum.nl) or Arjan Wolkers (a.wolkers@ploum.nl).