The Court of Justice of the European Union has decided: some provisions of customs law violate EU law

By: Trademagazin Date: 2024. 01. 05. 10:09

The cheapest product is not always the cheapest! Or how is the price of a particular product related to its origin, how should its origin be established, and what does this mean in terms of the duty payment obligation? – The Court of Justice of the European Union recently analyzed these questions, and then in its judgment it also found that some (detailed) rules of customs law violate the Union Customs Code. The new decision is interesting for all companies that import products from outside the EU that are manufactured in several countries, as it may arise that they previously paid customs duties based on these – now invalid – rules. The judgment was handed down by the colleagues of Schönherr Hetényi Law Firm, dr. Alexandra Bognár and dr. Commented by Noémi Suller.

The origin of a product depends on the country in which it was actually produced. There are products for which the answer is clear, as they are entirely made in a plant or factory in a certain country and do not contain materials from other countries. The question becomes interesting when it comes to a product that is made in several factories located in different countries, or is produced from raw materials from different countries. This is typically the production process for industrial machines, but also for cars, which can then be sold all over the world. The dilemma is how to decide where the finished industrial machine comes from.

“If a product originates from the European Union and it is sold within the EU, there is no obligation to pay customs duties. This is because there is a customs union between the EU member states. If, on the other hand, a product does not originate from the European Union, but it is is sold within the EU, then – with some exceptions – there will be a duty to pay when imported into the EU. However, the duty to be paid depends not only on the type of product, but also on the country of origin. The same product does not necessarily have the same duty rate if it is the USA or if it comes from South Korea. In most cases, however, determining the origin of the products is a complex and complicated process, for which the tariff classification of the product, the exact process of its creation and processing, and knowledge of the governing legislation must be examined.”