Customs origin: a landmark ruling by the Court of Cassation – substance matters, not form. A judgement set to impact many businesses

by Armella & Associati Law Firm

A ruling set to set a precedent and have a tangible impact on numerous Italian and European companies. The Court of Cassation has established a clear principle regarding customs origin: a formal criterion, such as a change in tariff heading, is not sufficient; rather, one must look to the country in which the product underwent its last substantial processing.

The decision, secured by Armella & Associati Law Firm, marks a shift in perspective in the interpretation of European legislation. In particular, the Supreme Court has recognised that the cold working of steel tubes constitutes a substantial transformation, sufficient to confer a new customs origin on the product.

This ruling goes beyond the approach previously followed by OLAF (the European Anti-Fraud Office), which had led to numerous investigations by the Customs Agency into companies in the steel sector.

With this ruling, the Court of Cassation affirms the primacy of the substantive criterion over the formal one, recognising the full value of industrial transformations actually carried out.

What changes in practice

• Customs origin is based on substantial processing
• Cold working is recognised as a relevant transformation
• The formal approach followed to date has been superseded
• Potential implications for numerous ongoing disputes

“One of the most significant changes in the ruling is the reversal of the formal criterion, incorporated into the European Commission’s implementing regulation on customs origin, to make way for a substantive criterion,” explains Sara Armella, managing partner at Armella & Associati.

“The Court of Cassation’s decision states that, even if the processing does not meet the requirements of Annex 22-01 of the European Commission’s Delegated Regulation 2246/2025, one must look at the substance: if the processing carried out in India is irreversible, then the product must be considered of Indian origin.”

The ruling also has significant systemic implications: the principle established may affect many similar proceedings still pending, with potentially significant economic repercussions for the companies involved.

“We are very pleased with the outcome,” concludes Armella, “which is the result of a comprehensive defence strategy and an in-depth analysis of European legislation. The ruling serves as a benchmark for operators and interpreters of customs law.”

A strong signal: in the rules of international trade, substance is back at the centre.

Translated with DeepL.com (free version)