CUSTOMS DUTIES – Appeal against refusal of claim for repayment of import duties because goods were stolen after the time of the relevant customs declaration but before the goods were received by the consignee – Held as a matter of law repayment was not authorised in such circumstances – Articles 201(2) and 239 of the Community Customs Code, and Article 900 of the implementation regulation (Commission Regulation 2454/93/EEC) considered – Appeal dismissed
LONDON TRIBUNAL CENTRE
RIMATEX LIMITED Appellant
- and -
HER MAJESTY'S REVENUE AND CUSTOMS Respondents
Tribunal: JOHN WALTERS QC (Chairman)
Sitting in public in London on 28 April 2005
The Appellant was represented by Mr. P. Howarth, supervisor, Fred Olsen Agencies Limited
Ben Collins, instructed by the Solicitor for HMRC, for the Respondents
- Rimatex Limited (the Appellant) appeals against the refusal of Her Majesty's Revenue and Customs (then the Commissioners of Customs and Excise) ("Customs") to repay customs duty of £1,016.62 paid in respect of the importation into the UK of a number of cartons of polyester fabric. The duty was paid on 15 August, 2003 and the goods were stolen on 17 August, 2003, while still at the port of entry (Southampton).
- In fact, the goods were stolen before they had been "devanned", that is, before they had been unloaded from the container in which they were imported. The procedure at Southampton is that Customs clearance occurs, and the duty is paid, while the goods are still en route from the dock to the warehouse (the Enhanced Remote Transit Shed where "devanning" takes place). We were told that in Felixstowe (for example) Customs clearance occurs after the goods have been "devanned". The Appellant's witness, Mr. Seth (a financial consultant), told us (and we accept) that if the procedure in this case had been that Customs clearance had been delayed until after the goods had been stolen (that is, if the procedure had been that Customs clearance was delayed until goods had been "devanned") then no payment of duty would have been made.
- Application for repayment of the duty was made on behalf of the Appellant by Mr. Howarth of Fred Olsen Agencies Limited (who represented the Appellant before us) on 10 October, 2003. The application stated that repayment of the duty was applied for under Article 236 of the Code.
- This is a reference to the Community Customs Code contained in Council Regulation 2913/92/EEC. Article 236 provides, so far as is relevant, as follows:
"1. Import duties … shall be repaid in so far as it is established that when they were paid the amount of such duties was not legally owed or that the amount has been entered in the accounts contrary to Article 220(2)."
- It was Mr. Howarth's case before us that in the circumstances of this case, the amount of duty paid was not legally owed at the time it was paid.
- Customs (the National Duty Repayment Centre) decided to reject the application for repayment on the grounds that "the goods were stolen after clearance by customs". The Appellant asked for that decision to be reviewed (see: section 14(2) Finance Act 1994). The review letter issued in response, dated 10 May 2004 and written by Miss A.R. Thomas, confirmed the decision not to make repayment. The Appellant has appealed against that decision on review (see: section 16(1) Finance Act 1994).
- Mr. Collins, for Customs, submitted that as a matter of law a customs debt is incurred "at the time of acceptance of the customs declaration in question" (see: Article 201(2) of the Code). He also referred to Commission Decision REM 13/93 of 19 October 1993, which is a finding that the repayment of import duties in a particular case involving the theft of goods after the acceptance of the customs declaration in question, but before removal of the goods by the importer, was not justified.
- Mr. Collins further submitted that the legal basis for repayment and remission of duty is to be found in Articles 235 to 242 (Chapter 5) of the Code and that of these Articles the relevant provision is Article 239, which is an enabling provision providing for the principle of repayment. Article 239, so far as relevant, reads as follows:
"Import duties … may be repaid … in situations other than those referred to in Articles 236, 237, and 238–
- to be determined in accordance with the procedure of the committee;
- resulting from circumstances in which no deception or obvious negligence may be attributed to the person concerned. The situations in which this provision may be applied and the procedure to be followed to that end shall be defined in accordance with the committee procedure. Repayment … may be made subject to special conditions."
The provisions for applying Article 239 of the Code are to be found in Chapter 2 of Title IV of Part III (Articles 899 to 912) of the general provisions for implementation of the Code in Commission Regulation 2454/93/EEC, specifically, Article 900.
Article 900(1) provides ten specific circumstances where import duties shall be repaid or remitted. Mr. Collins submitted that none of them covered the circumstances of this case. He referred to the judgment of the Court of Justice in the case of Ministero delle Finanzie v Esercizio Magazzini Generali SpA and Mellina Agosta Srl (Joined cases 186 and 187/82), which was in his favour, however he submitted that the decision deals with a different situation to that in this case, namely, where an obligation to make full payment of duty has not arisen at the time of the theft.
First, the ratio of Commission Decision REM 13/93 is that the declarant's negligence in omitting to check whether the goods were in fact there when he declared the goods for release was obvious negligence debarring the declaration from establishing a special situation in which import duties may be repaid.
We find no comparable obvious negligence in this case and therefore place no reliance on Decision REM 13/93.
Secondly, we accept Mr. Collins's submission that Article 236 of the Code (on the basis of which the Appellant's application for repayment was made) does not assist the Appellant. The duties in this case were legally owed at and from the time of acceptance of the customs declaration in question, pursuant to Article 201(2) of the Code – that is, on 15 August, 2003, two days before the theft.
Thirdly, we accept Mr. Collins's submission that in these circumstances the Appellant must bring itself within the terms of Article 900 of Regulation 2454/93/EEC if it is to establish a right to repayment of the duty.
Fourthly, we also accept Mr. Collins's submission that this case is covered by none of the ten specific circumstances provided by Article 900(1). Expanding this point we mention two specific circumstances provided by Article 900(1) – paragraphs (a) and (g).
"where non-Community goods placed under a customs procedure involving total or partial relief from import duties or goods released for free circulation with favourable tariff treatment by reason of their end-use are stolen, provided that the goods are recovered promptly and placed again in their original customs situation in the state they were in when they were stolen;"
This paragraph does not cover the goods in this case, which were not placed under a procedure involving relief from import duties, but were released for free circulation, but without any favourable tariff treatment by reason of their end-use. Thus the proviso requiring the replacing of the goods in their original customs situation is inapplicable. Of course, in addition, the goods were not recovered.
However, this paragraph is the only circumstance provided by Article 900(1) which specifically mentions theft of the imported goods. The inference must be that if a case involving theft does not fall within Article 900(1)(a), repayment is not to be made.
"where the goods have been entered for a customs procedure involving the obligation to pay such duties by a declarant empowered to do so on his own initiative and, through no fault of the declarant, it has not been possible to deliver them to the consignee;"
This paragraph does prima facie cover this case in that the declarant, Fred. Olsen Agencies Limited, made the customs declaration on its own initiative, and we find that, through no fault of the declarant, it has not been possible to deliver the goods to the consignee (the Appellant).
However, Article 900(2) of Regulation 2454/93/EEC provides that repayment of import duties in the cases referred to in paragraphs 1(c) and (f) to (n) – which includes paragraph 1(g) referred to above – "shall, except where the goods are destroyed by order of a public authority or delivered free of charge to charities carrying out their activities in the Community, be conditional upon their re-export from the customs territory of the Community under the supervision of the customs authorities". (Re-export may be replaced by destruction or placement under the external Community transit procedure, under the customs warehousing arrangements, or in a free zone or free warehouse.)
In this case, of course, there is no evidence that the goods have been destroyed – certainly they have not been destroyed by order of (or by permission of) a public authority – and the conditions for the application of Article 900(1)(g) contained in Article 900(2) have not been met.
We agree with Mr. Collins that the decision of the Court of Justice in Ministero delle Finanzie v Esercizio Magazzini Generali SpA and Mellina Agosta Srl, although not on all fours with this case as a matter of fact, does establish the general principle that the theft of goods subject to customs duty in circumstances where they must be assumed to remain in free circulation does not extinguish the obligation to pay duty on them.
We must regard as irrelevant to our Decision, the fact (if it be such) that in comparable circumstances on an importation into Felixstowe no obligation on the Appellant to pay duty would have arisen because the goods would have been stolen before the time of any acceptance of a customs declaration establishing an obligation to pay import duties in accordance with Article 201(2) of the Code. In the circumstances of the case as established by the evidence before us (and there was no dispute about this), the obligation under Article 201(2) on the Appellant to pay duty had arisen before the theft.
JOHN WALTERS QC
RELEASED: 8 August 2005