COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE DIVISIONAL COURT
(BROOKE LJ & BELL J.)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MANCE
LORD JUSTICE LATHAM
| COMMISSIONERS OF CUSTOMS AND EXCISE||Appellant|
|- and -|
|THE QUEEN ON THE APPLICATION OF HOVERSPEED LIMITED AND OTHERS||Respondent|
Mr Rabinder Singh QC & Miss Jessica Simor (instructed by Richards Butler) for the Respondent
Hearing dates : 5th and 6th November 2002
Crown Copyright ©
Lord Justice Mance:
(i) it makes excise goods imported from another member state (where excise duty has been paid) additionally chargeable to UK excise duty without it being established that the goods are imported into the UK for commercial purposes; and
(ii) it places a persuasive burden of proof on the individual to prove that the goods are not held for commercial purposes, where such goods are held in excess of the minimum indicative levels laid down in the 1992 Directive and in the Schedule in the PRO.
There is no appeal in either regard.
"192. In our judgment they have failed to do so. We do not know why they stopped the car which Mr Andrews was driving and required its three occupants to explain themselves. Mr Smith (Customs' "anti-smuggling manager" who explained Customs' practices and the position, so far as it could be recalled, in relation to the stopping of the individuals on 22nd August 2001) merely states that they were stopped. He does not explain why they were stopped. In his fourth statement he explains Customs' general policy, which is to refrain from giving passengers the reasons why they are stopping them. He suggests, however, that the reasons "might include testing smuggling risk, or that the route you have travelled matches a known smuggling profile
193. Mr Anderson (leading counsel for the Commissioners) appeared to have some difficulty in explaining to us what this language meant, or how his clients could rely on these reasons for stopping individual passengers where there were no reasonable grounds for suspecting them as individuals. It seems to us that the mindset of those who were responsible for determining these policies has not embraced the world of an internal market where excise goods can move freely across internal frontiers subject only to checks made when there are reasonable grounds for suspecting that an individual traveller holds alcohol or tobacco for a commercial purpose, and not for his own use"
The Commissioners challenge this reasoning and conclusion.
"We would therefore hold that because the Commissioners have not proved that there were reasonable grounds for stopping this car and questioning its occupants, the goods in it should not have been seized. Nor should the car."
The Commissioners submit that, even if the Divisional Court was right to quash the decisions to check, it does not follow that the decisions to seize were invalid or fell to be quashed. This is, we were told, a point of general importance both in relation to other outstanding cases and for Hoverspeed, because of the impact on its customers and trade. It may have diminished practical significance for Mr and Mrs Andrews, since the Customs have, after further internal deliberation, paid to them a monetary sum in lieu of delivery up of their goods.
"Furthermore, and quite independently, we consider that the Commissioners' refusal to return the car to Miss Andrews, without even considering whether it might be restored to her on payment of an appropriately proportionate sum (given all the circumstances of the case), represented a response which was just as disproportionate as their similar response in the case of Mr Lindsay (see the principles set out in National and Provincial Building Society v. UK (1998) 25 EHRR 127 at ). To equate her position with the position of a car owner who incurs a parking fine when his car, borrowed by a third party, is found illegally parked is to rely on an utterly untenable analogy."
There is no appeal against that aspect of the Divisional Court's reasoning and conclusions. Miss Andrews' car has accordingly been returned to her.
The legal framework
"shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty".
This enshrines an objective; it does not itself have direct effect in creating an internal market: see e.g. Echirolles Distribution SA v. Association de Dauphiné  ECR I-8207, per Advocate General Alber, paragraphs 30-34 and also paragraph 40 in Wisjenbeek  I-6207, analysed below (paragraph 33).
"Every citizen of the Union [that is every person holding the nationality of a member state] shall have the right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in this Treaty and the measures adopted to give effect to it".
"The provisions of articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health …. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between member states."
Excise duties are obviously capable of having an effect on intra-Community trade. Article 93 (ex 99) supplements the objective in article 14 by providing that the Council shall, acting unanimously on a proposal from the Commission, adopt provisions for the harmonisation of inter alia excise duties
"to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time limit laid down in article 14".
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.
1. Without prejudice to Articles 6, 7 and 8, excise duty shall become chargeable where products for consumption in a Member State are held for commercial purposes in another Member State.
In this 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.
2. To establish that the products referred to in Article 8 are intended for commercial purposes, Member States must take account, inter alia, of the following:
- the commercial status of the holder of the products and his reasons for holding them,
- the place where the products are located or, if appropriate. the mode of transport used,
- any document relating to the products,
- the nature of the products,
- the quantity of the products.
For the purposes of applying the content of the fifth indent of the first subparagraph, Member States may lay down guide levels, solely as a form of evidence. These guide levels may not be lower than:
(a) Tobacco products
|Cigarillos (cigars weighing not more than 3g each||400 items|
|Smoking tobacco||1.0 kg|
(b) Alcoholic beverages
|Spirit wines||10 litres|
|Intermediate products||20 litres|
|Wines (including a maximum of 60 litres of sparking wines)||90 litres|
3. 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 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 in appropriate reserve fuel canisters and the transport of liquid heating products other than by means of tankers used on behalf of professional traders.
1. Products subject to excise duty purchased by persons who are not authorized warehousekeepers or registered or non-registered traders and dispatched or transported directly or indirectly by the vendor or on his behalf shall be liable to excise duty in the Member State of destination…"
We make this observation. Although crossing an internal frontier is no longer in principle a chargeable event, the terms of the Directive do mean that chargeability in a particular Member State can depend upon the purpose for which and transport by which goods are moved between Member States (cf e.g. article 8, 9(2) and (3)). Although not expressly provided for by the Directive, some form of proportionate checking must be permissible, if States are to operate the Directive according to its scheme and their own legitimate interests in recovering excise duty chargeable according to its terms.
"Any person entering or leaving the United Kingdom shall answer such questions as the proper officer may put to him with respect to his baggage and any thing contained therein or carried with him, and shall, if required by the proper officer, produce that baggage and any such thing for examination at such place as the Commissioners may direct."
The application of s.78 to intra-Community passengers is now limited by the Finance Act (No. 2) Act 1992, to which we shall come (in paragraph 14). S.159, containing power to examine and take account of goods, is generally only used in relation to freight. S.163 allows the searching of vehicles or vessels, in these terms:
"(1) Without prejudice to any other power conferred by the Customs and Excise Acts 1979, where there are reasonable grounds to suspect that any vehicle or vessel is or may be carrying any goods which are—
(a) chargeable with any duty which has not been paid or secured; or
(b) in the course of being unlawfully removed from or to any place; or
(c) otherwise liable to forfeiture under the customs and excise Acts,
any officer or constable or member of Her Majesty's armed forces or coast-guard may stop and search that vehicle or vessel."
Excise goods in respect of which duty has not been paid are "liable to forfeiture" under The Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 (SI 1992 No. 3135), where duty has not been paid on or before an excise point (regs. 6 and 16). Under regulation 4(1), the excise duty point in the present context was "the time when the goods [were] chargeable with duty at importation". The effect of these provisions is that duty became payable as soon as goods are imported into the United Kingdom, even though no customs entry has been or is made in respect of them under s.43 of the 1979 Act: see R v. Smith  UKHL 68, para.13. S.164 also provides a power to search any person, where there are reasonable grounds to suspect that he or she is carrying any article chargeable with duty or in respect of which the importation or exportation is prohibited or restricted. However, dutiable goods are generally of a bulk which makes that power irrelevant.
"be exercisable in relation to any person or thing entering or leaving the United Kingdom so as to prevent, restrict or delay the movement of that person or thing between different member States".
The cases listed in s.4(2) are
"those where it appears to the person on whom the power is conferred that there are reasonable grounds for believing that the movement in question is not in fact between member States or that it is necessary to exercise the power" for specified purposes.
These purposes include "the enforcement of any prohibition or restriction" with respect to, inter alia, the importation or exportation of goods into or out of the United Kingdom. But they do not include the detection of goods being smuggled with a view to avoiding paying excise duty due in the United Kingdom or any other country. Prohibited or restricted goods in relation to which the powers in ss. 78 and 164 remain unaffected include controlled drugs, obscene material, offensive weapons, firearms and explosives, endangered species and certain animals susceptible to rabies.
"require the suspect to permit a search of any article that he has with him at that place, and if the suspect is not under arrest, detain him (and any such article) for so long as may be necessary to carry out the search".
The retention unaltered of section 163 and the introduction of section 163A, both containing powers exercisable throughout the United Kingdom, marries with the view of the Commission in its communication of May 8, 1992 (COM (92) 877 final, para.7) as to what would continue to be permissible once measures to implement the then article 7A (now 14) were in place. It said that that article:
"establishes a clear and simple objective that allows no margin of discretion. But the abolition of border controls does not deprive the competent authorities of their power to act throughout their territory and up to the frontier of that territory. However as the crossing of the border may no longer give rise to controls, such intervention must form part of the internal monitoring arrangements covering the whole of the territory. Powers to impose controls or penalties which were exercised only on the occasion of, or in connection with, the crossing of an internal frontier would, therefore, be contrary to Article [7A]".
So it is under ss.163 and 163A that Custom's power to check falls to be examined in relation to the present case; and, under their provisions, such power only arose if there were reasonable grounds to suspect one of the matters mentioned in such provisions.
i) Excise duty is payable on alcohol or tobacco products on or before an excise point, which corresponds here with the point of importation (paragraph 13).
ii) Goods on which excise duty is payable and has not been paid are liable to forfeiture (paragraph 13).
iii) Where there are reasonable grounds to suspect that a person has with him, or at the place where he is, goods which are liable to forfeiture, a customs officer may search any article that the person has with him (s.163 of CEMA - paragraph 15 above).
iv) Where there are reasonable grounds to suspect that any vehicle or vessel is or may be carrying any such goods, a customs officer may stop and search that vehicle or vessel (s.163A of CEMA – paragraph 15).
"Where …. any imported goods, being goods chargeable on their importation with …. excise duty, are, without payment of that duty, (i) unshipped in any port,…. those goods shall [subject to presently immaterial exceptions] be liable to forfeiture".
We note in passing that s.49(1)(a) provides the same power of forfeiture in relation to "any goods the importation of which is for the time being prohibited or restricted by or under any enactment". We have already given examples of prohibited or restricted goods (paragraph 14). By s.141(1) any vehicle used for the carriage of, and any other thing "mixed, packed or found with, the thing so liable" shall also be liable to forfeiture. By s.139(1):
"Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer".
S.139(6) provides for Schedule 3 to have effect for the purpose of forfeiture and of proceedings for condemnation of any thing as being forfeited. Under Schedule 3, paras. 3 and 4 a person may within one month of the notice or, if there is no notice, date of seizure give notice of a claim "that any thing seized as liable to forfeiture is not so liable"; under para.5, if no such notice is given, the thing in question shall be deemed to have been duly condemned as forfeited; and under para.6:
"Where notice of claim in respect of any thing is duly given in accordance with paragraphs 3 and 4 above, the Commissioners shall take proceedings for the condemnation of that thing by the court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited".
i) First, para.16(a) of Schedule 3 provides that the Commissioners may at any time if they see fit and notwithstanding that the thing has not yet been condemned as forfeited "deliver it up to any claimant upon his paying …. such sum as they think proper, being a sum not exceeding that which in their opinion represents the value of the thing".
ii) Second, if in proceedings under Schedule 3 to CEMA, the condemnation court finds that the thing was not liable to forfeiture at the time of its seizure, the Commissioners are obliged, on demand by the claimant, to tender to him an amount equal to any sum paid by him under para.16(a), or, where they have sold the thing an amount equal to the proceeds, or, where they have destroyed the thing, an amount equal to its market value at the time of seizure (less any duty or tax chargeable on the thing and unpaid before the seizure). If a claimant accepts any amount so tendered, he is not then entitled to maintain any action on account of the seizure, detention, sale or destruction of the thing.
iii) Third, under s.152(b) of CEMA the Commissioners may, if they see fit, "restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized" under the customs and excise Acts.
iv) Fourth, s.14 read with Schedule 5 para. 2(1)(r) of the Finance Act 1994 confers on a person, in relation to whom a decision has been made under s.152(b) whether or not to restore and subject to what conditions, the right to require the Commissioners to review such decision; while s.16 gives a further right to appeal to the VAT and Duties Tribunal with respect to any decision by the Commissioners following such a review. S.16(4) provides that the relevant power of the Tribunal
"shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say-
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and
(c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future."
We note that in its decision in B S Gora and Others v. The Commissioners of Customs and Excise (2lst January 2002), not directly relevant to the issues before us, the VAT and Duties Tribunal considered the compatibility of this procedure with article 6 of the European Convention on Human Rights. The Tribunal took the view that, for the hearing before it to be article 6 compliant, it must have the capacity both to find all the primary facts and to determine the issue of reasonableness in their light.
The decision(s) to check
i) The Commissioners could not give any specific reason for checking in respect of the three individuals or their vehicle - it was at the time not their policy either to give to individual travellers or to record for their own purposes any reason which existed.
ii) Mr Smith's evidence showed that the reasons why Customs undertook checks included reasons which were not legitimate - the mantra adopted was that the reasons "might include testing smuggling risk, or that the route you have travelled matches a known smuggling profile". This strand raises a question as to the extent to which Customs can use profiles and trends, when deciding whether to check in individual cases.
i) It is for Customs to show "reasonable grounds to suspect" justifying any check made under s. 163 or 163A of CEMA (paragraph 21).
ii) In circumstances where Customs cannot now provide any positive reason for suspicion, the fact that Customs decided to check a particular individual who, on checking, proved to be in possession of cigarettes, tobacco and alcohol in excess of the quantities mentioned in Article 9 of the Directive and the Schedule to the PRO does not give rise to an inference that Customs had reasonable grounds to suspect that the individual had, or in the case of the vehicle in which he was travelling, might have with him goods liable to forfeiture (paragraph 22).
iii) The Divisional Court was therefore correct to quash the checks made in respect of the four individuals (paragraph 22).
"But the reasonable suspicion …. must be that the particular individual whom he is searching is in possession of chargeable goods, and not merely that he falls into the typical "profile" of people who have [been] found to be in possession of such goods in the past".
It supported this in paragraph 161 with reference to EC law:
"Systematic checking, on the other hand, or questioning in the absence of justification in each individual case under EC law is not permissible …."
In paragraph 180, the Divisional Court summarised the position as follows:
"They are not entitled to rely on generalities or trends: there must be reasonable grounds to suspect the person(s) whom they are checking. In the absence of such suspicion on an individualised basis, they have no right to impede Community travellers' movement at the frontier for purposes connected with the collection of excise duty. The powers they use at a frontier must be the same powers as they would use anywhere else within the state for the purpose of ensuring that duty is paid on excise goods chargeable within that territory".
"30. …. In an ideal world, Customs would have specific information warning of all major smuggling attempts and would be able to easily identify those attempts. However, in reality there are comparatively few importations where specific intelligence is available to enable officers to readily identify and select major smuggling attempts."
The Divisional Court set out the position in paragraphs 25 to 29 of its judgment as follows:
"25. Identifying the risk of smuggling among Hoverspeed passengers still leaves Customs officers with the task of identifying the actual smugglers. Mr Leslie Smith, the anti-smuggling manager covering the Dover Hoverport, calls this "targeting to risk". He says that it is "not a precise science". In reality there is specific intelligence of comparatively few smuggling attempts. What Mr Smith calls "trend intelligence" is used much more often to assist in the selection of travellers who may be of interest to Customs. Such information may be general and historic. For example, experience on the Dover-Calais route has identified trends in smuggling. For instance, the use of a recently acquired vehicle is relatively common among smugglers, presumably because they do not wish their movements to be tracked. The use of hire cars (after the tightening in Customs' policies on vehicle seizure), frequent trips abroad for short stays or, conversely, frequent short trips to the UK made by overseas residents, are among the factors which are of use in deciding which vehicles to intercept.
26. Intelligence may be more focussed. Prior knowledge from manifest intelligence of who is about to arrive on a particular ship is an important aid in the selection of travellers as a result of both specific and trend intelligence. Checks can be made by Customs against the NEDS database and recent intelligence reports. Research of this kind allows officers to try to identify patterns of travel, for instance a traveller who has made a day trip five times in the last month, or other factors which appear to fit risk profiles, for instance an individual who has previously identified himself as unemployed, but is making a cross-channel trip soon after a previous trip. In this way travellers who appear to pose a risk can be targeted, allowing Customs to concentrate their resources on those travellers identified as posing the greatest risk.
27. Risk profiles are essentially patterns of behaviour, or features, which together indicate an increased risk. They are developed from experience and recent results, which identify new or re-emerging smuggling methods. A common and long-lived risk profile is a single male in a Dutch hired car. Although apparently stereotypical, use of this profile still generates a number of drug seizures every year. Another profile is an unemployed or disabled person who is claiming benefits, but is making regular short-stay day trips and importing significant quantities of tobacco products. Experience has shown that such a profile is a clear indicator of a potential bootlegger, primarily because of the obvious question of how he can afford to make his purchases.
28. Such profiles are not written down, but they are known by all anti-smugglers. Where new factors or smuggling trends are detected, the information is shared between teams and locations by word of mouth and, where a seizure is particularly unusual or significant, details will be referred to Customs intelligence teams for them to distribute more widely as they see fit. Such a system may appear to be haphazard, but it is said to be surprisingly effective. The members of virtually every team, as they arrive for duty at the start of their shift, will ask their departing colleagues for information of any unusual seizures since they were last on duty. An example of a risk which was quickly brought to officers' attention in this way was the smuggling of HRT in giant boxes of washing powder, which is cheaper in France than in this country.
29. When a vehicle is selected for investigation, it is directed into a search area where officers speak in more detail to the driver and any passengers, covering topics such as details of travel arrangements, places visited, and length of journey. The officers assess the answers and reactions to questioning. Checks are made of the NEDS database and manifest information to see whether there are records of recent travel. A search of the vehicle is then undertaken if the officers believe this may be productive, the extent of the search being at the officer's discretion. The information provided during questioning is compared with what is found during the search."
"A reasonable cause for suspicion, in the sense of Article 3, …. must be based on concrete evidence relating to the specific carriage operation. Contrary to the argument put forward by the French Government, there are no grounds for entertaining a general suspicion with regard to all imports of Italian wine on the basis of a few irregularities or breaches which had been found in particular cases in the past. In no case may mere formal errors in the accompanying documentation justify a reasonable cause for suspicion."
"It must, however be added that prevention of fraud with regard to the quality and composition of goods qualifying for export refunds is a legitimate concern of Member States. For that reason they cannot be prevented from maintaining frontier inspections in respect of consignments intended for export, provided that such inspections take place on a random basis".
The case therefore provides no assistance to the respondents' submission that checking of individuals may not take place having regard to profiles or trends, which suggest on a reasonable basis that a particular individual may be carrying goods which are chargeable to duty. On the contrary, it suggests that, in a matter of legitimate concern, the taking of proportionate measures, which do not systematically or disproportionately interfere with freedom of movement, may be acceptable, even if they consist of random inspections.
"the realisation of an area without internal frontiers has still not led to the abolition of administrative formalities and checks, such as those under the general arrangements under the Directive and Regulation, upon crossing intra-Community national frontiers. The continuing existence of frontiers in terms of the checks that are carried out is explained by the fact that the Community legislature has still not achieved harmonisation, within the Community, of the rate of national excise duties".
However, the court was here speaking of the checks provided and permitted on movements across internal frontiers by the 1992 Directive and by Commission Regulation (EEC) No 3649/92 on a simplified accompanying document for intra-Community movement of products subject to excise duty.
"the continued existence of different and unharmonised national rules on immigration, visa and asylum policy justified the continuation of checks at national borders, and the imposition of proportionate and non-discriminatory penalties for breach of national rules".
The case raised the issue whether the requirement to present a passport or identity document, under Dutch law, was itself contrary to the principle of freedom of movement enshrined in the Treaty. The court held that it was not. In its reasoning at paragraph 40 the court said:
"That article [Article 14, formerly 7a] cannot be interpreted as meaning that, in the absence of measures adopted by the Council …. requiring the Member States to abolish controls of persons at the internal frontiers of the Community, that obligation automatically arises from expiry of that period."
It also said in the same paragraph that
"as long as Community provisions on controls at the external borders of the Community, which also imply common or harmonised rules on, in particular, conditions of access, visas and asylum, have not been adopted, the exercise of those rights presupposes that the person concerned is able to establish that he or she has the nationality of the Member State" .
So, the court went on in paragraph 43:
"even if nationals of Member States had an unconditional right to move freely within the territory of the Member States, the Member States retained the right to carry out identity checks at the internal frontiers of the Community, requiring persons to present a valid identity card or passport, as provided for by Directives 68/360, 73/148, 90/364, 90/365 and 93/96, in order to be able to establish whether the person concerned is a national of a Member State, thus having the right to move freely within the territory of the Member States, or a national of a non-member country, not having that right."
The court then said in paragraph 44:
"In the absence of Community rules governing the matter, the Member States remain competent to impose penalties for breach of such an obligation, provided the penalties applicable are comparable to those which apply to similar national infringements. However, Member States may not lay down a penalty so disproportionate as to create an obstacle to the free movement of persons, such as a term of imprisonment. …. The same considerations apply as regards breach of the obligation to present an identity card or a passport upon entry into the territory of a Member State.
"(a) Powers requiring reasonable suspicion
1.6 Whether a reasonable ground for suspicion exists will depend on the circumstances in each case, but there must be some objective basis for it. An officer will need to consider the nature of the article suspected of being carried in the context of other factors such as the time and the place, and the behaviour of the person concerned or those with him. Reasonable suspicion may exist, for example, where information has been received such as a description of an article being carried or of a suspected offender; a person is seen acting covertly or warily or attempting to hide something; or a person is carrying a certain type of article at an unusual time or in a place where a number of burglaries or thefts are known to have taken place recently. But the decision to stop and search must be based on all the facts which bear on the likelihood that an article of a certain kind will be found.
1.6A For example, reasonable suspicion may be based upon reliable information or intelligence which indicates that members of a particular group or gang, or their associates, habitually carry knives unlawfully or weapons or controlled drugs.
1.7 Subject to the provision in paragraph 1.7A below, reasonable suspicion can never be supported on the basis of personal factors alone without supporting intelligence or information. For example, a person's colour, age, hairstyle or manner of dress, or the fact that he is known to have a previous conviction for possession of an unlawful article cannot be used alone or in combination with each other as the sole basis on which to search that person. Nor may it be founded on the basis of stereotyped images of certain persons or groups as more likely to be committing offences.
1.7A However, where there is reliable information or intelligence that members of a group or gang who habitually carry knives unlawfully or weapons or controlled drugs, and wear a distinctive item of clothing or other means of identification to indicate membership of it, the members may be identified by means of that distinctive item of clothing or other means of identification. [See Note 1H]"
i) Neither European Community law nor domestic law permits a "blanket" or automatic approach to checking.
ii) European law permits the exercise at or near the frontier of powers of stop and search, such as ss. 163 and 163A of CEMA, which are exercisable throughout the United Kingdom, provided that the manner, scale and effect of their actual exercise at or near the frontier is not such as to involve an unjustified or disproportionate obstacle to the free movement of persons between member states.
iii) Subject always to this proviso, European Community law permits both checking on a random basis and the use of profiles and trends to identify particular individuals in relation to whom a power to check might be exercised. In the latter case, the individual cannot in our view be said to be checked without evidence of "particular circumstances", or "concrete evidence". On the contrary, a particular individual is selected for checking, because his or her particular circumstances match an established profile or trend.
iv) The domestic law of the United Kingdom is in one respect more restrictive than the position under European Community law. It does not allow random spot checks. There must under s. 163 be "reasonable grounds to suspect that a vehicle or vessel is or may be carrying any goods chargeable" with unpaid duty, or, in the case of s.163A, "reasonable grounds to suspect that a person …. has with him, or at the place where he is, any goods to which the section applies". But there is nothing to limit the basis on which such grounds may arise or the nature of the matters that may be taken into account. There is nothing to exclude reliance on profiles and trends to establish "reasonable grounds" to suspect one of the matters stated. Customs must always be careful not to succumb to sterile and unfounded stereotypes. But the nature and legitimate practicalities of their work make profiles and trends an understandable and in our view important part of it. The Divisional Court's own findings, in its paragraphs 25-29, underline and underlie this conclusion. The dichotomy which the Divisional Court seems to have considered to exist between reliance on "generalities or trends" and "reasonable grounds to suspect the person(s) whom they are checking" is, in short, a false dichotomy.
The decisions to seize
"22(1) Subject to subsection (4) below, anything which has been seized by a constable or taken away by a constable following a requirement made by virtue of section 19 or 20 above may be retained as long as is necessary in all the circumstances.
(2) Without prejudice to the generality of subsection (1) above-
(a) anything seized for the purposes of a criminal investigation may be retained, except as provided by subsection (4) below,-
(i) for use as evidence at a trial for an offence; or
(ii) for forensic examination or for investigation in connection with an offence …."
S.19(1) (although not the provision under which the police had purported to act in ex p. Parker) provides general powers of seizure by "a constable who is lawfully on the premises". The court in ex p. Parker held, unsurprisingly, that s.22(2)(a) did not give an entirely independent power to retain, irrespective of the legality of the original search. On the contrary, it contained no more than a specific example of the general power to retain provided by s.22(1) in cases of lawful search.
i) The seizure of the cigarettes, tobacco and alcohol from the three individuals in this case cannot be regarded as axiomatically invalid, merely because it occurred as a result of a check which was invalid.
ii) The Divisional Court was in our judgment wrong to conclude that, if the check was invalid, then so, necessarily, was the ensuing seizure.
Respondents' notice – suggested alternative grounds for quashing the seizures:
"We have set out the relevant principles of law in this judgment and it will be for magistrates' courts (or the High Court) in condemnation proceedings or the VAT and Duties Tribunal in appeals brought under section 16 of the Finance Act 1994 to apply these principles to the facts of individual cases"
In paragraph 189 the Divisional Court went on:
"Provided that the Commissioners confine their checks to those individuals about whom there are reasonable grounds for suspicion, such grounds being relevant to those individuals, we see nothing unlawful about their policy of seizing goods or vehicles until such time as an independent court or tribunal can adjudicate on the matter. It is their present policy on restoration which concerns us. They do not purport to treat all absentee owners equally, and they do not purport to give a proportionate response in every case ….."
To that extent, Mr Singh's present submissions regarding Customs' policy on seizure appear not so much to seek to uphold the Divisional Court's conclusions by a different route, as to challenge them. However, we note that at paragraph 195 the Divisional Court also said this:
"It is unnecessary for us to determine in this case whether the implementation of the automatic vehicle seizure policy in the case of an innocent third party owner like Miss Andrews could be said to be "provided for by law" within the meaning of Article 1 of the First Protocol to the ECHR. We did not hear sufficient argument on this point, which it is unnecessary for us to decide on this occasion. We note that in the Strasbourg caselaw we were shown, the availability of judicial supervision appeared to point to a willingness to overlook the inaccessibility or unpredictability of the governing law in a case involving wide executive discretion so long as an independent tribunal has power to substitute a proportionate response".
The aspect mentioned in the first sentence of this paragraph was not the subject of any submissions before us. The third sentence links with the primary theme in paragraph 189.
i) The Divisional Court's decisions to quash the Customs' seizures cannot be upheld on the first alternative ground of general misapprehension of law proposed by Mr Singh (paragraphs 50 and 52-56).
ii) Nor do we consider that they should be upheld on the basis that the seizures involved, on their particular facts, disproportionate interferences with freedom of movement and/or property (paragraphs 57-58). The appropriate course for anyone aggrieved by seizure of his goods is, normally, to take advantage of the framework of remedies provided by statute (paragraphs 18 and 57).
iii) The appeal against the Divisional Court's decisions quashing the seizures is accordingly allowed (paragraphs 49 and 59(i) and (ii)).
iv) This will however be without prejudice to any claim for damages, which any of the individuals may have but be unable to maintain before either the compensation court or the VAT and Duties Tribunal, to the effect that the seizures constituted an actionable breach in relation to them of either Community law or the Convention on Human Rights (paragraph 58).
v) We will hear counsel as to what directions should be made for remission to the Divisional Court and under CPR 54.20 or otherwise to give effect to this conclusion.
Respondents' notice – articles 8 and 9 of the 1992 Directive and "products held for commercial purpose"
""own use" includes use as a personal gift provided that if the person making the gift receives in consequence any money or money's worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this Order".
"Mr McKay may be right about the Directive, although the only authority that bears on the point to which we were referred lends no support to his thesis (see R v Customs and Excise Comrs, ex parte EMU Tabac Sarl (Case C-296/95)  QB 791. So far as the 1992 order is concerned, I cannot accept that a holidaymaker who is bringing back some cigarettes for his sister, in anticipation that she will reimburse him the purchase price, can properly be said to be holding the cigarettes 'for a commercial purpose'. The holidaymaker will be liable to pay duty on the cigarettes by reason of the provisions of the Tobacco Products Duty Act 1979. He will not be entitled to relief because he has not obtained the cigarettes for his own use. It does violence to the English language, however, to say that he is holding the goods 'for a commercial purpose'."
It was not argued in that case that the Directive had direct effect, a proposition that Hoverspeed and the four individuals have now successfully maintained. Once that is accepted, the Directive has priority, if there is any difference between its and the PRO's apparent effect.
"Whereas any delivery, holding with a view to delivery or supply for the purposes of a trader carrying out an economic activity independently or for the purposes of a body governed by public law, taking place in a Member State other than that in which the product is released for consumption gives rise to chargeability of the excise duty in that other Member State;
Whereas in the case of products subject to excise duty acquired by private individuals for their own use and transported by them, the duty must be charged in the country where they were acquired;
Whereas to establish that products subject to excise duty are not held for private but for commercial purposes, Member States must take account of a number of criteria"
Taken on its own, the first of these recitals might support Mr Singh's case, but the third recital, to which effect is given by article 9, assumes that there are only the two possibilities mentioned in the first two recitals. Either goods are held for private use within article 8 or they are held for commercial purposes within article 9.
i) The concepts of "products acquired by private individuals for their own use" in article 8 and "products held for commercial purposes" in article 9 of the Directive are antithetical, in the sense that, if an individual acquires (or having acquired for his own use subsequently decides to hold) products for a purpose other than his own use, such products are to be regarded as held for commercial purposes (paragraph 64).
ii) The Divisional Court's reasoning and conclusion regarding the scope of articles 8 and 9 were therefore correct; and there is no room for a conclusion that United Kingdom excise duty was not chargeable in respect of goods, because, although the individual(s) importing them was or were not doing so "for their own use", they still were, or may have been, holding the goods for supply to others on a non-commercial basis (paragraph 60)
iii) We record that we are not concerned with the precise scope of the concept "for his own use". The Commissioners accept that it must receive a sensible interpretation. They accept, in particular, that it is not confined to situations where the private individual himself intends to consume the goods. So, for example, they accept that a private individual who travels abroad in order to stock up for his or her dinner table or a party which he or she is giving is acquiring for his own use. Likewise, we would suppose, in the case of an acquisition destined as a present for a relative or friend.
i) We uphold the Divisional Court's decision to quash Custom's decision to make checks in respect of Mr and Mrs Andrews and Mr Wilkinson on 22nd August 2001 (paragraph 2.1.1 of the Divisional Court's order; paragraph 23 of this judgment).
ii) We consider that "reasonable grounds to suspect" within the meaning of ss.163 and 163A of CEMA may, in appropriate circumstances, derive from information by way of profiles or trends (paragraph 39).
iii) We set aside the Divisional Court's decisions quashing Custom's decisions to seize the cigarettes, tobacco and alcohol being carried with them by Mr and Mrs Andrews and Mr Wilkinson on 22nd August 2001 as well as Miss Andrews' car (paragraphs 49, 59 and 65).
iv) We remit to the Divisional Court for further consideration any claim that any of the individuals may have under European Community law or the Convention on Human Rights, arising out of the particular facts of their particular cases (paragraph 58 and 59(iv) and (v)).
v) We will, if necessary, hear counsel as to whether it is appropriate to make any further order or declaration.