Masterson v. D.P.P. [2002] IEHC 30 (13th May, 2002)

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1. The first issue which arise is whether the prohibition on importation contained in Regulation 12 (a) of the Hydrocarbon (Heavy) Oil Regulations, 1991 paragraph (a) contravenes Article 30 of the Treaty of Rome. Article 30 prohibits quantitative restrictions on imports and all measures having equivalent effect between member States. A second issue arises as to whether paragraph (b) contravenes Council Directive 92/12/EEC having regard in particular to Article 21 (4) of the said Directive.

2. By way of consultative case stated by Judge Gerard Haughton this Court is asked if either of the two issues is affirmative, whether it is an offence to import kerosene containing coumarin into the State from Northern Ireland and whether such are prohibited goods as defined for by Section 42 of the Customs Consolidation Act, 1876, as amended by Section 2 of the Customs Act, 1956.

3. On the 5th November, 1999 the Applicant imported 1000 litres of kerosene containing coumarin, the estimated value of which was £280.00. On the 14th August, 2000 two summonses issued alleging that the Applicant was knowingly concerned in dealing with those goods which were prohibited goods specified in Regulation 12 of the 1991 Regulations, the importation of which was prohibited by Section 42 of the Customs Consolidation Act, 1876 as amended as aforesaid with intent to evade such prohibition contrary to Section 186 of the Customs Consolidation Act as amended.

4. On the 11th October, 2000 at Belturbet District Court evidence was given by officers of Customs & Excise that when the Applicant was stopped at Clontygrigny, Ballyconnell in the County of Cavan on the 5th November, 1999 at approximately 3.40 pm, there was a tank in a closed trailer being towed by the Applicant’s vehicle which contained approximately 1000 litres of kerosene oil which had been purchased at a filling station north of the border in Northern Ireland for a sum of £175.000. The kerosene oil was seized, a sample was taken, labelled, sealed and retained. The Applicant was offered a sealed sample but declined. The car-trailer, tank and contents were subsequently returned to the Applicant on payment of the sum of £250.00 on condition that the kerosene oil was re-exported out of the jurisdiction.

5. A certificate from the State Laboratory confirmed the analysis of the kerosene oil as containing coumarin was handed into the District Court.

6. The Applicant said he had purchased the kerosene oil in Northern Ireland for his own personal use. He understood that there had been free movement of trade between the two States. At an adjourned hearing in Monaghan District Court the charge related to dealing in certain prohibited goods was dismissed and the second charge in relation to importing certain goods is the subject of the case stated herein.

As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the member State in which they are acquired.

9.1 Without prejudice to Articles 6, 7, and 8 excise duty shall become chargeable where products released for consumption in a Member State are held for commercial purpose in another Member State.

3. Member States may also decide that excise duty shall become chargeable in the Member State of consumption on the acquisition of Mineral Oils already released for consumption in another Member State if such products are transported using atypical modes of transport by private individuals or on their behalf. Atypical transport shall mean the transport of fuels other than in the tanks of vehicles or inappropriate reserved fuel canisters and the transport of liquid heating products other than by means of tankers used on behalf of professional traders.

11. Article 21.1 provides that Member States may require that products released for consumption in their territory shall carry tax markings or national identification marks used for fiscal purposes .

2. “Any Member State which requires the use of tax marking or national identification marks as set out in paragraph 1 shall be required to make them available to authorised warehousekeepers of other Member States. However, each Member State may require that fiscal marks be made available to a tax representative authorised by the Tax Authority of that Member State.

Without prejudice to any provisions they may lay down in order to ensure that this Article is implemented properly and to prevent such fraud, evasion or abuse, Member States should ensure that these marks or markings do not create obstacles in the free movement of products subject to excise duty.

4. Mineral Oils may be held, transported or used in Ireland, other than in the running tanks of vehicles permitted to use rebated fuel, only where they comply with that State’s control and marking requirements.”

“... No Member State should impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.”

“The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning ... Excise Duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and functioning of the internal market within the time limit laid down in Article 14.”

7.1 Directive 92/12, enacted as a precursor to the coming into force of the internal market in January, 1993, established general arrangements for products subject to excise duty and distinguish between the treatment of commercial cross-border trade (Articles 9 and 10) and the activities of private consumers (Article 8).

18. Article 21 (4) might very well create an offence of holding, transporting or using mineral oils in the State which did not comply with domestic control and marking requirements. It does not justify or contemplate the prohibition of the importation of the oil.

19. The effect of Article 12 (a) of the regulation is to prohibit the importation of kerosene oil containing coumarin and is, prima facie , a quantitative restriction prohibited by Article 28 of the Treaty. A “quantitative restriction of imports” is a total or partial restraint on imports.

7.2 The classical decision in Dassonville, (case 8/74) (1974) ECR 837 laid down the following test of what constitutes measures of equivalent effect to quantitative restrictions:-

7.3 The Applicant further submits that a ban on imports is directly contrary to Article 28 and could only be saved by reference to the special exceptions contained in Article 30 (Ex Article 36) as occurred in Meijer v. Dept. of Trade (case 118/78) (1979) E.C.R. 1387 and in Hann v. Darby (case 34/79) (1979) ECR 3795. In the applicant’s submission there is no question of any reliance on Article 30.

7.4 The Applicant concludes that the ban on the importation of kerosene containing coumarin constitutes, in an obvious way, a direct import ban and, accordingly, is prima facie contrary to Article 28. Moreover, there is no question of any exception, coming within the scope of Article 30.

20. So far as Article 21 (4) of directive 92/12/EEC, it simply enables the State to prohibit the holding, transporting or using mineral oils in the State which did not comply with domestic control and marking requirements. In particular, it does not justify or contemplate the prohibition of the importation of the kerosene oil in the present case.

7.5 In those circumstances the Applicant submits that the questions contained in the case stated should be answered in the affirmative (a), (b), and (d) and in the negative in (c).

8.1 The background to excise duties enforcement is contained in Section 42 of the Customs Consolidation Act, 1876 as amended by Section 2 of the Customs Act 1956. The provision prohibits and restricts importation and bringing in of enumerated goods and their forfeiture.

22. Kerosene containing the colour marker coumarin became a prohibited good pursuant to Regulation 12 of the Hydrocarbon (Heavy) Oil Regulations, 1991 (see 4 above).

8.2 Section 186 of the Customs Consolidation Act, 1876 as subsequently amended provided that it is an offence to import or bring in prohibited goods or any goods the importation of which is restricted or to knowingly acquire possession of any such goods or to be in any way knowingly concerned in carrying, removing, depositing, concealing, or in any manner dealing with any such goods with intent to defraud or evade any duties of customs.

8.3 Articles 95 - 99 of the Treaty of Rome deals with these tax provisions. No Member State may impose, directly or indirectly, on, the products of other Member States, any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. The Respondent submits that the prohibition on the importation of kerosene containing coumarin does not impinge on the safeguards provided by Article 95 as there are similar domestic products which are subject to the same rates of excise duty.

8.4 Council Directive 92/12 EEC established general arrangements for products subject to excise duty and provided for the holding, movement and monitoring of such products. Article 9 (3) deals specifically with heating-fuel products. (see 5. above)

8.5 Section 106 of the Finance Act, 1992 provides for restrictions on the importation of certain Mineral Oils which are defined in Sections 104 (f), (g) and (h). Kerosene containing the colour marker coumarin is not covered under paragraph (g) because it is prohibited.

“Subject to sub-Section (2), the duties of excise imposed by the provision referred to in Section 104 on exciseable products shall apply and have effect in relation to exciseable products, released for consumption in another Member State, and imported into this State.”

26. Accordingly, unmarked kerosene purchased in Northern Ireland and imported into the State is chargeable to Irish excise duty.

8.6 Directive 92/12 established general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products. Article 21 of that directive provides that Member States:-

27. Without such a system of identification for excise duty purposes it would be impossible to properly control the indirect taxation of fuel within the Union.

28. Article 21 (4) of the same directive provides in relation to Ireland that only where mineral oils comply with control and marking requirements can they be held, transported or used other than in running tanks of vehicles permitted to use the so-called “rebated fuel ”.

29. The effect of Article 21 (4) is that individuals are prohibited from having or using in Ireland, a fuel oil which does not comply with such control and marking requirements such as coumarin. The method of ensuring that the obligation imposed by the directive is to forbid or prevent the importation into Ireland of kerosene containing coumarin. In the Respondent’s submission Regulation 12 (a) of the 1991 Regulations achieves this objective and is consistent with the implementation within the State of the subsequent Article 21 (4) of the Directive. Alternatively the Article envisages or, in the further alternative, permits a prohibition on importation into Ireland of kerosene containing coumarin.

8.7 Article 28 of the consolidated version of the treaty establishing the European Community (previously Article 30 of the Treaty of Rome) prohibits quantitative restrictions on imports and all measures having equivalent effect.

30. It is submitted on behalf of the Respondents that there is no basis for the contention of the Applicant that the Irish regulation, which prohibits kerosene containing coumarin, is in breach of the Treaty on the basis that it is a quantitative restriction. The concept of measures of equivalent effect is not so wide as to cover restrictions on movement of goods falling under other provisions of the Treaty.

8.8 In Iannelli v. Meroni (1977) E.C.R. 557, the Court held that Customs Duties and charges of equivalent effect do not fall under Article 28. The Court so held that in the following term:-

“However wide the field of application of Article 30 may be, it nevertheless does not include obstacles to trade covered by other provisions of the Treaty. In fact, since the legal consequences of the application or of a possible infringement of these various provisions have to be determined having regard to their particular purpose in the context of all the obstacles of the Treaty, they may be of a different kind and this implies that their respective fields of application must be distinguished, except in those cases which may resolve simultaneously within the field of application of two or more provisions of community law.”

31. Even if it were a measure restricting trade, the restriction is justified and therefore falls outside the scope of Article 28.

“It is only where rules, which apply without discrimination to both domestic and imported products, may be justified as necessary in order to satisfy imperative requirements ... that they may constitute an exception to the requirements arising under Article 30.”

32. Consequently, the Respondent says, excise duties and matters of internal taxation covered by Articles 95 - 99 on the Treaty fall outside the scope of Article 28.

In Queen v. Commissioners of Customs & Excise (E.C.J. 1998) it was found that individuals purchasing goods in another State for their personal use through a purchasing agent would be charged duty in the Member State of destination.

33. The Respondent submits that in order to facilitate persons wishing to purchase goods in another Member State an individual may make a declaration to purchase goods in accordance with Section 106 (4) of the Finance Act, 1992 and pay the Irish excise duty.

34. For these reasons the prohibition on the importation of kerosene oil containing coumarin contained in Regulation 12 (a) of the 1991 Regulations does not contravene Article 28 of the Treaty.

8.9 The Respondent submits that it is an offence under Section 186 of the Custom Consolidation Act, 1876 (as amended) to import prohibited goods such as kerosene containing coumarin. Article 20 of the Directive 92/12 provides that:-

35. The prohibition on the importation of kerosene containing coumarin by the regulation results in that product being a prohibited good within the meaning of Section 42 of the Custom Consolidation Act, 1876 as amended by Section 2 of the Customs Act 1956.

36. The Respondent submits that the Court should answer the questions raised in the case stated in respect of (a) and (b) in the negative and (c) and (d) in the affirmative.

37. The first asks whether the prohibition on the importation of kerosene with coumarin contravenes Article 30; the second question asks whether it contravenes Council Directive 92/12/EEC and in particular Article 21 (4) thereof. The third and fourth follow consequentially.

9.2.1 Article 30, now Article 28, is short and simple; quantitative restrictions on imports and all measures having equal effect shall be prohibited between Member States.

38. Article 36 (now Article 30) states that the provisions of, inter alia , of the above Article shall not preclude prohibitions or restrictions on imports etc. justified on the grounds, inter alia , of public policy so long as such prohibition or restriction does not constitute a means of arbitrary discrimination or disguised restriction on trade.

9.2.2 It is clear from the Articles in the Treaty dealing with tax provisions (90 - 95, now 95 - 100) need to be considered. In particular Article 95 (now 90) provides that no Member State shall impose, directly or indirectly on the products on other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. It is common case that there is no difference with regard to excise duty on products of other Member States and that of similar domestic products.

39. Article 99, now 93, provide that the Council shall, acting unanimously as provided in that Article shall adopt provisions for the harmonisation of legislation concerning, inter alia , excise duties.

40. Article 30 concerns trading rules as distinct from tax rules. Regulations 12 (8) is part of the harmonisation provision in the excise duty area envisaged by Article 99. The regulations provide that tax be administered, supervised and controlled where necessary. The directive is the key legal instrument and it is in the context of irregularities and offences (Regulation 20) that Regulation 21 deals with tax and national identification marks.

41. Moreover, Article 13 prohibits the delivery for use within the State or the acceptance of delivery or, other than with the consent of the Commissioners and subject to such conditions as they may impose, the keeping for sale, selling or transport or delivery of any kerosene containing coumarin.

“That you ... were knowingly concerned in importing certain goods to wit, 1000 litres of kerosene containing coumarin being prohibited goods specified in Regulation 12 of the Hydrocarbon (Heavy) Oil Regulations, 1991, the importation of which was prohibited etc.”

42. Mr. Hogan says that the Applicant was charged with importation not with the failure to pay duties and that this very wording offends against Article 30 of the Treaty of Rome and is not saved by the provisions relating to taxation.

9.2.4 The importation of kerosene containing coumarin, a marker used by a Member State other than Ireland would seem to me to be prohibited, not for the purpose of trade but for the purpose of administration, supervision and control of taxation. The fact that the Applicant was charged with importation does not to my mind offend against the wording of Article 30.

43. The directive deals with general arrangements of products subject to excise duty and on the holding, moving and monitoring of such products. It recites the establishment and functioning of the internal market which requires the free movement of goods, including those subject to excise duties. It further recites that only goods which are treated as subject to excise duty as such in all the Member States may be the subject of community provisions. Moreover, it refers to Member States providing that products released for consumption should carry fiscal or national identification marks and states that the use of these marks should not place any obstacle in the way of intra - community trade.

9.3.2 Article 9 provides generally that excise duty should become chargeable when products released for consumption in a Member State are held for commercial purposes in another Member State. In that case the duty shall be due in the Member State in whose territory the products are and shall become chargeable to the holder of the products.

“Member States may also provide that excise duty shall become chargeable in the Member State of consumption on the acquisition of Mineral Oils already released for consumption in another Member State if such products are transported using atypical mode of transport by private individuals or on their behalf.”

9.3.3 In relation to markings Article 21 (2) provides that Member States shall ensure that these marks or markings do not create obstacles to the free movement of products subject to excise duty.

45. Article 21 (4), already cited above, deals with holding, transporting or using Mineral Oils in Ireland. Mr. Hogan on behalf of the Applicant says that this does not extend to importation. Mr. Fitzsimons on behalf of the Respondent says that, by implication, it includes importation.

46. There is no doubt that Article 21 (4) of the Directive may offend Article 30 of the Treaty - Article 21 (2) already refers to such markings as are necessary not creating obstacles to the free movement of products subject to excise duty.

47. However, Article 21 (4) of the Directive is made in particular having regard to Article 99 of the Treaty of Rome and would seem to this Court to be consistent with that Article.

9.4 Ianelli v. Meroni (1977) E. C. R. 557 was a reference for a preliminary ruling in respect of State Aid where it was held that the aids referred to in Articles 92 and 93 of the Treaty do not as such fall within the field of application of the prohibition of quantitative restrictions on imports and measures having equal effect laid down by Article 30. However, the aspects of aid which are not necessary for the attainment of its object or for its proper functioning and which contravene this prohibition may, for that reason, be held to be incompatible with its provision.

In fact since the legal consequences of the application of a possible infringement of these various provisions have to be determined having regard to their particular purpose in the context of all the objectives of the Treaty, they may be of a different kind, this implies that their respective fields of application must be distinguished, except in those cases which may fall simultaneously within the field of application of two or more provisions of Community Law.

Thus obstacles which are of a fiscal nature or have equivalent effect and are covered by Articles 9 - 16 and 95 of the Treaty do not fall within the prohibition of Article 30.”

“The effect of an interpretation of Article 30 which is so wide as to treat an aid as such within the meaning of Article 92 as being similar to a quantitative restriction referred to in Article 30 would be to alter the scope of Articles 92 and 93 of the Treaty and to interfere with the system adopted in the Treaty for the division of powers by means of the procedure for keeping aids under constant review as described in Article 93.”

50. It seems to this Court that there are no aspects of the Regulations that are unnecessary for the attainment of its object or for its proper functioning.

9.5 In relation to the effectiveness of fiscal administration certain provisions are necessary. Gilli .v. Andres referred to these as imperative requirements that may constitute an exemption to Article 30. Cassis de Dijon referred to mandatory requirements relating in particular to fiscal supervision as being acceptable insofar as the provisions are recognised as being necessary.

53. The third question depends on an affirmative answer to question (a) or to question (b) or to both. It seems to me to follow that if Regulation 12 (a) of the 1991 Regulations do not contravene Article 30 of the Treaty of Rome nor Council Directive 92/12/EEC then it is an offence to import kerosene containing coumarin into the State from Northern Ireland.

54. Finally, it would seem to follow that the goods to which the two summonses refer are prohibited goods, the importation of which is prohibited by Section 42 of the Customs Consolidation Act, 1876 as amended. I would accordingly answer this fourth question in the affirmative.

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Masterson v. D.P.P. [2002] IEHC 30 (13th May, 2002) URL: http://www.bailii.org/ie/cases/IEHC/2002/30.html Cite as: [2003] Eu LR 25, [2002] IEHC 30

High Court of Ireland Decisions

Masterson v. D.P.P. [2002] IEHC 30 (13th May, 2002)