EXCISE DUTY  — seizure of vehicle carrying large quantity of beer — refusal to restore vehicle — owner not present at time — evidence of very high number and frequency of cross-channel trips — whether conclusion that vehicle used for illicit importation reasonable — yes — whether proportionate to refuse restoration — yes — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	MALKIT SINGH NAGRA	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Mr C P Bishopp (Chairman)
						Mrs M P Kostick (Member)

Sitting in public in Birmingham on 7 and 8 January 2004

Mr Patrick Darby of counsel, instructed by Glaisyers for the Appellant 
Mr William Baker of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	This is the appeal of Malkit Singh Nagra against the decision of the respondents, upheld on review, not to restore to him a Daewoo Musso car which had been seized at Dover on 14 January 2001.  The vehicle was the subject of a hire purchase agreement between the appellant’s son Jasbinder Singh Nagra and Daewoo Direct Finance Ltd, although the appellant was the registered keeper of the car.  He was driving it (and his son Jasbinder was not present) when the car was seized.  It was the appellant who sought the restoration of the car and who, when restoration was refused, sought a review of that refusal.  A letter communicating the outcome of the review, which was to uphold the refusal, was written on 22 March 2001 and it is against that decision which Mr Nagra now appeals.
2.	He was represented by Patrick Darby of counsel, while the Commissioners were represented by William Baker, also of counsel.  A little unusually, we heard the Commissioners’ witnesses first – they were Lynn Poulter, the Customs officer who intercepted Mr Nagra, Kirsty Bassil, another officer who assisted Ms Poulter, Timothy Morris who is a policy adviser to Customs & Excise and Ian McEntee, the officer who undertook the review.  We read the evidence of some other witnesses relied upon by the Commissioners who did not give oral evidence.  We then heard from the appellant and from his son.
3.	It was common ground that when the vehicle was intercepted at the Dover Hoverport by Ms Poulter, it was being driven by the appellant who was accompanied by his wife.  The vehicle contained 3,680 cigarettes, 4 litres of spirits and 590 litres of beer.  Mr and Mrs Nagra were asked by Ms Poulter to satisfy her that the goods were entirely for their own use.  They were unable to do so and, after consulting other officers, she seized the car and the excise goods it contained.
4.	Ms Poulter told us that at the time she was an inexperienced officer, having only just completed her training.  After her initial, and comparatively brief, discussion with Mr and Mrs Nagra and a fairly cursory examination of the contents of the car, she went to seek guidance from a more senior officer.  She accepted that the beer in the car had not been concealed in any way, though said that it had not been declared.  Her note book – which she did not make up as the interview proceeded but a few minutes later – does indicate that she asked whether Mr and Mrs Nagra had any excise goods with them, and was told only of the spirits and the cigarettes.  However, even if her notebook is scrupulously accurate about the conversation, it seems to us to be a rather pedantic objection that Mr Nagra did not volunteer that which, by reason of its quantity alone, was plain to be seen.
5.	Ms Bassil was the officer who assisted Ms Poulter and who imposed upon the appellant and his wife the formal requirement to satisfy her that the goods were being brought into the country for their personal use.  Her notebook, of which a copy was produced to us, shows that Mr and Mrs Nagra indicated that they did not wish to stay and answer questions, and that their goods and the vehicle were seized.  The reasons for the seizure were recorded in her personal notebook; they were that the quantities of goods were in excess of the guidelines for what was considered reasonable for personal consumption, as they were in force at that time; that Mr and Mrs Nagra had lied about their previous trips – a point to which we will return; that there had been a misdeclaration about the quantity of goods; that the beer was of various mixed brands; and what is recorded simply as “consumption rate”.
6.	In her evidence, Ms Bassil told us she had satisfied herself at the time that Mr and Mrs Nagra understood her.  While we are willing to accept that they may not altogether have understood the meaning of the commerciality statement which Ms Bassil read to them – which is, at best, ambiguous – we are satisfied that Ms Bassil did her best to explain in language of appropriate simplicity what was required of Mr and Mrs Nagra and that she correctly came to the conclusion that they understood what she had told them.  We record at this point that we are satisfied that Mr Nagra at least did understand that he had the opportunity of remaining and attempting to persuade Ms Bassil that the goods were for his and his wife’s own use and that he declined that opportunity knowing of the consequences if he did so.  We accept also Ms Bassil’s evidence that, had Mr and Mrs Nagra remained to answer questions, she would have discussed her concerns with them, and in particular the number of trips which they, or the vehicle, had made across the channel.  We accept also Ms Bassil’s evidence that she had not closed her mind to the possibility that the goods might have been for personal consumption, and that when Mr and Mrs Nagra declined to answer any further questions, she had no practical choice but to seize the goods and the car.
7.	Mr Morris spoke of Customs’ policy regarding the seizure of vehicles and goods, and regarding their subsequent restoration. At the relevant time, the policy was that vehicles used for the transport of goods brought into the country with a view to evading the payment of UK excise duty, when that duty was properly payable, would be seized (with the goods) and would not be restored save in cases of exceptional hardship or where proportionality demanded it.  Mr Morris conceded that very little guidance had been offered to review officers about the circumstances in which it might be regarded as disproportionate to refuse restoration but, he said, the relevant officers knew that they had a discretion to restore vehicles when they considered it appropriate to do so, and that little guidance was offered as it might be seen as an attempt to fetter their discretion.  He accepted too that while it was the known policy that vehicles might be restored to “innocent” owners not present at the time of the seizure, no real guidance had been offered to officers about the meaning of the word “innocent” in that context and it was, he understood, generally thought by review officers that the owners of vehicles lent them to others at their own risk.  The policy had changed on several occasions since the relevant time, and partly in consequence of decisions of the courts.  Now, an owner not present at the time of seizure might have his vehicle restored, on terms such as the payment of the duty evaded, if he was innocent of any knowing involvement in the smuggling of excise goods, and not merely (as had previously the practice) if he was completely blameless, because for example his car had been stolen.  Though we accept the force of Mr Darby’s point that the Commissioners’ attempts to discriminate between degrees of innocence lack logic, we do not need to deal with the point for the purpose of this decision.  Then, as now, vehicles might be restored for humanitarian reasons, for example if they were adapted for use by a disabled person.  
8.	Mr McEntee, the review officer, explained that he had considered all of the information then in Customs’ possession when reaching his decision.  That information consisted of the officers’ notebooks, the formal documents generated as a result of the seizure, various letters written by or on behalf of Mr Nagra, the evidence produced demonstrating that the vehicle had been purchased by his son, who had entered into the hire purchase agreement, and information provided to him by David Luckhurst, a Customs officer who is in charge of a number plate reading machine which records the registration numbers of the vehicles entering the Channel tunnel at each end.  
9.	We interpose at this point the comment that the evidence provided to us about the number of trips which this vehicle, and another previously owned by Mr Nagra junior, had made across the Channel was a great deal more extensive than that available to Mr McEntee when he undertook his review.
10.	In his brief interview at Dover, Mr Nagra was asked by Ms Poulter “when did you last go abroad shopping?” to which he is recorded to have replied “about six months ago”.  In his first letter to Customs following the seizure – the letter was in fact written by Mr Nagra junior, although his father also signed it – it was contended that Mr Nagra thought he was being asked when he had last travelled abroad in order to purchase alcoholic drinks; it was stated in that letter that while other trips had been made, and goods had been purchased, they had not included alcoholic drinks.  That contention was repeated in Mr Nagra’s second letter, which he apparently wrote himself.  The point was not repeated in Mr Nagra’s third letter, in which he asked for the review.
11.	The evidence of trips across the channel provided to us was exhibited to the statements of three witnesses, to which no objection was taken, and which were included in the bundle of documents produced at the hearing .  They were of Mr B J Rowland, an employee of P&O; of Mr Luckhurst; and of Mr J A Gray, an employee of Hoverspeed.  Mr Luckhurst’s evidence shows that the vehicle seized from Mr Nagra on 14 January 2001 had made return trips through the Channel Tunnel on five occasions in October and November 2000.  Another vehicle, a Vauxhall Frontera, which, as we were to learn, had been traded in by Mr Nagra junior in part payment for the seized car, when he acquired it in September 2000, was shown from Mr Luckhurst’s records to have made return trips through Channel Tunnel on 29 occasions between January and September 2000.  Mr Rowland’s evidence indicated that the same vehicle had made five return ferry trips between November 1999 and March 2000 and Mr Gray’s evidence was of 19 trips made by the Vauxhall Frontera between July 1999 and September 2000.  There was an additional trip made by a Ford car (Mr Nagra senior was to tell us that he owned a Ford car) in March 2000.  Mr Luckhurst’s records were of the number plate only but Mr Rowland’s and Mr Gray’s evidence also included details of the passenger making the booking.  In each case the surname given was Nagra and the address was the appellant’s address.  Altogether, including the trip on which the vehicle was seized, the documents show that there were 58 return trips in a period of about 18 months, or roughly one trip every 10 days.  Of those, 27 had been made in the six months preceding the seizure, that is, on average, one trip in each week.
12.	As we have indicated, only a small proportion of this evidence was available to Mr McEntee when he undertook his review.  He was aware of the five trips undertaken by the seized vehicle across the Channel through the Tunnel, and of three further trips by ferry which it had undertaken in October, November and December 2000; those three trips do not feature among the lists of trips exhibited to the statements of Mr Rowland, Mr Luckhurst and Mr Gray.  The fact that they were undertaken was not, however, challenged and we therefore take it that they were made.  There were, therefore, 61 trips in the 18 months, and as many as 30 in the six months, before the seizure.  Mr McEntee, however, had evidence of only eight trips undertaken within the four months before the seizure.  
13.	Although, by the time he came to make his decision, Mr McEntee had been made aware that the hire purchase agreement in respect of the car was in the name of Mr Nagra junior, he did not regard this as a conventional case in which the owner of a car which had been borrowed was seeking its restoration to himself, the owner.  At Dover, Mr Nagra senior had told Ms Poulter that the car was his (a claim repeated in the first of the letters to which we have referred) and it was he, rather than Mr Nagra junior, who had sought restoration.  He had, therefore, considered not whether the vehicle should be restored to Mr Nagra junior, but whether it should be restored to Mr Nagra senior.  
14.	The factors which influenced him in reaching his decision that the car should not be restored were, first, the number of trips which had been made in the recent past – a factor which had to be set against Mr Nagra’s claim at Dover that he had not made a trip during the preceding six months, albeit he had to some extent resiled from that contention, and had sought to justify it in a manner which Mr McEntee found implausible (and to which we will return) – and second, the quantity of beer which was found in the vehicle.  It was, however, not merely the quantity of the beer which exercised Mr McEntee’s mind, but the fact that most of it was of very high strength (about 9% alcohol).  Mr McEntee considered that it was unlikely that a middle-aged couple (as Mr and Mrs Nagra are) would buy beer of that strength for their own consumption.  He concluded, therefore, that this was a commercial importation, and that the goods were intended for resale at a profit.  It had not been suggested at the time (and has not been suggested since) that the goods were to be distributed, at cost, to friends and family.
15.	Mr McEntee recognised that he had applied a policy which, though it reflected the Commissioners’ understanding of their position at the time, had since had to be modified in the light of decisions of the Court of Appeal.  Nevertheless, he said, he would be driven to the same conclusion now, that is that the car should not be restored, not only because he remained satisfied that this was a commercial importation, but because he was now aware that Mr Nagra, or at least cars to which he had access and which were kept at his family home, had made a very large number of trips across the Channel in the 18 months before the seizure.  He did accept that he had not made active enquiries of Mr Nagra, and in particular had not sought an explanation of the eight previous trips of which he was aware but had left it to Mr Nagra to provide such information as he thought fit.  He accepted, too, that a person in Mr Nagra’s position would not know, unless an explanation was given, what factors would be regarded as material and that he had made no attempt to indicate to Mr Nagra what relevant further information he might provide.  Although he was aware, by the time he carried out his review, that it was being claimed that the car belonged to Mr Nagra junior, he did not regard that as an important factor, partly because it was Mr Nagra senior who was seeking its restoration and partly because, at that time, the Commissioners’ perception was that people were lending their cars to each other in the hope that by doing so they would lessen the risk that they would be forfeited.  Mr McEntee also told us that, although his letter did not mention it, he had, in fact, considered whether a refusal to restore the car was a proportionate response to the perceived offence and he had concluded that it was.
16.	The evidence we heard from Mr Nagra senior was that he lived at home with his wife and his children – three sons and two daughters – and with the wives of two of his sons.  He was a smoker, as were his wife and some of his children, and he drank beer, as did all the other adult members of his family.  The goods he had with him in the car were to be taken home for consumption by the family.  There was no arrangement between them by which he was to be reimbursed for any of the cost. Mr Nagra particularly liked strong beer.  
17.	He could not recall precisely how many cars had been available to the family in January 2001, but by the time of the hearing there were seven available for their use.  His own car was a Ford Fiesta but he would drive any of the vehicles which were available, including the Daewoo Musso, which was a very suitable vehicle for carrying a large load.  Mr Nagra said he had last made a trip to the continent for the purpose of buying excise goods in about July 2000 – six months before the day on which the car was seized – but he accepted that he had driven to the continent on many more occasions (he estimated that 20 or 25 of the trips of which Customs had evidence had been undertaken by him) but he did not buy excise goods on every occasion.  He quite often bought other items such as food.  In addition he visited relatives; one lived in Gravesend, less than an hour’s travel from Dover, and another lived at the time in Calais.  He had also been thinking of buying a villa in northern France, about 20 to 25 miles from Calais and he had visited the site about 10 times.  One of his sons was a student at Brighton, reading pharmacy, but he also played cricket for Hereford.  He frequently came home in order that he could play cricket or participate in training, and while he would return home by train, Nr Nagra often drove him to Brighton and, while he was there, took advantage of his proximity to Dover to make a trip to the continent.  He had not, however, made any trips between early October and late November 2000, because he was in India at the time and the trips recorded to have been made by the car in that period must therefore have been made by members of his family, who had also undertaken some of the other trips.
18.	The car had been bought by his son, Jasbinder, who had traded in the Vauxhall Frontera in part payment, and the hire purchase agreement was in Jasbinder’s name because he had a regular income from his work as an optometrist.  The car was, however, registered and insured in Mr Nagra senior’s name, since Jasbinder had a conviction for driving with excess alcohol and insurance in his own name would have been prohibitively expensive.
19.	Jasbinder Nagra told us that he had qualified as an optometrist in January 1998 and practised in his own name from premises at Smethwick and Oldbury.  He had procured several contracts with local authorities for the provision of his services in old persons’ homes and it was particularly important that he should have a large car so that he could carry his equipment with him.  The Frontera and the Musso were both suitable for the carriage of equipment.  He had been the main user of both vehicles and when the Musso was seized it had been necessary for him to engage a locum and also to use taxis in order to fulfil his contracts.  He had been obliged to carry on paying the instalments due for the purchase of the car.  He had always been the main driver of the Musso, though it was driven from time to time by his father and by his brother, Baldev.  He knew his father used the car in order to transport beer, which he brought to the house for consumption by the family.  He had not thought his father was doing anything improper and he had been happy to lend him the car in recompense for the fact that he and his wife lived, rent free, in his father’s house.  He knew that the car was being used for frequent trips, but he did not object to that or to the fact that the car was covering a considerable distance; he travelled a great deal in it himself in the course of his work.  He had not been on any of the trips to France because he was too busy working.  He was aware that the car was being used also for trips to see relatives in Gravesend and Calais, and to Brighton to take his brother back to university.  Sometimes he saw that goods other than alcohol and tobacco had been bought when the car returned from France, though he accepted that this was not the first occasion on which alcohol and tobacco had been bought.  He did not, himself, like very strong beer, and he would have drunk the weaker beer while his father and one of his brothers drank the stronger variety.
20.	Some time was spent at the hearing in a discussion about the ownership of the car.  As we have mentioned when he was stopped at Dover, Mr Nagra senior said that the car was his; it was registered and insured in his name, and it also had a personalised number plate, X5MSN, which included his initials.  Only later did it emerge that it was Nr Nagra junior who was not only financing the purchase of the car but also claiming ownership of it (or, at least, the right to possession as bailee under the hire purchase agreement).
21.	It does not, however, seem to us to be a matter of great moment whether the owner (or bailee) of the car was Mr Nagra senior or Mr Nagra junior although we incline to the view that, as a matter of fact, it was the latter.  Mr Nagra senior was driving the car with his son’s consent, and he was clearly a bailee (or, pedantically, a sub-bailee) of it.  That, we consider, gives him sufficient interest in the car to seek its restoration.  There is nothing in the relevant legislation which indicates that the owner, and no one else, may seek the restoration of a vehicle which has been seized.  Mr Darby’s argument, however, was that Mr McEntee should have considered Jasbinder’s position since, he said, there was no evidence that he was in any way complicit in wrongdoing, or even that there was any wrongdoing, and, he maintained, Mr McEntee had failed to take proportionality into account.
22.	We turn to consider, first, whether there was any wrongdoing.  In January 2001, Customs applied a guideline of 800 cigarettes per traveller as the maximum number which might normally be regarded as a reasonable quantity for personal consumption.  That figure was increased in December 2002 to 3,200.  Mr Nagra and his wife had with them 3,680 cigarettes which, if divided between them, would be well within the current limit.  We are not satisfied that the number of cigarettes is suggestive of a commercial purpose or that there is any other evidence to support that conclusion so far as the cigarettes are concerned.  The guideline in respect of beer in January 2001 was 110 litres per traveller and that guideline has remained unchanged.  The quantity of beer in this case, 590 litres, easily exceeded that guideline.  One must, however, put the matter in its context.  Mr Nagra senior was the head of an extended family and, including himself, had nine adults living in his house.  It is by no means implausible that a person in Mr Nagra’s position would have thought it appropriate to buy such a large quantity of beer (at least if it was of ordinary strength) for consumption, without reimbursement, by members of his family.  We do share Mr McEntee’s doubt that Mr Nagra was in truth a drinker of very strong beer, and accept that this is a factor to be taken into account though it would perhaps not be decisive if taken alone.
23.	It is when one comes to consider the extraordinarily high number of trips that one’s credulity is strained.  We found the reasons given for the trips rather unconvincing but even if they are correct we find it difficult to believe that Mr Nagra, or a member of his family, would travel from Gravesend or Brighton to Dover and then across the channel (and we note that Mr McEntee, who is acquainted with the area, told us that the distance from Brighton to Dover is about 90 miles, and that a journey between the two must be undertaken on relatively minor roads taking at least two hours) merely to buy food and would do so at 10-day intervals.  Any saving would soon be overtaken by the additional cost of fuel, and by the cost of the crossing itself.  It is even less likely that a journey would be made from the appellant’s home in Birmingham merely for the purpose of buying food, and with such frequency.
24.	The test which we must apply is whether Mr McEntee’s decision was one at which he could reasonably have arrived; only if it was not can we allow the appeal – see Finance Act 1994, section 16(4).  He was aware, at the time he made his decision, of only eight trips undertaken in the recent past, and with only short intervals between them.  He could not have been aware that Mr Nagra senior had not made some of those trips, by reason of his absence in India, a factor which was not made known until the time of the hearing.  He had evidence that when asked about his last trip, when he was stopped at Dover, Mr Nagra placed it some six months earlier.  Mr Nagra later maintained that he meant that his last trip to buy excise goods was six months previously.  We accept that the relevant exchange is set out in Ms Poulter’s notebook, which she did not make up as the interview proceeded, but only after it was concluded.  We accept too that English is not Mr Nagra’s first language and that confusion is a possibility.  Nevertheless, we are satisfied that Ms Poulter’s record is more likely than not to represent the exchange fairly, and we are also satisfied that it was reasonable for Mr McEntee to treat Mr Nagra’s reply as an attempt to conceal the frequency of his trips.  
25.	If the owner of a car uses it himself for the purpose of bringing excise goods into the country which he intends to resell at a profit, the Commissioners’ policy, in January 2001 and now, is to seize and not to restore the car, save in exceptional circumstances which do not arise here.  That policy was approved by the Court of Appeal in R (Hoverspeed Ltd and others) v Customs and Excise Commissioners [2003] STC 1273.  In the same case, the court said also that the proportionality of the seizure would not usually arise in such circumstances.  Mr Darby’s argument was that even if it were to be concluded that Mr Nagra senior was in some way blameworthy, the same could not be said of his son, the true owner of the car, and that the proportionality of seizing the car, when measured against the gravity of the father’s offence, must be taken into account.  The duty evaded was £1,100.52; the car had been bought for £18,995 only four months before.  The proposition which Mr Darby advanced was that Jasbinder Nagra believed that the car was being used for the purchase of reasonable quantities of alcoholic drink and cigarettes, as well as for the purchase of other items.  He accepted in his evidence that he was aware that his cars – the Frontera and latterly the Musso – were making frequent trips across the Channel and, although he was not precise about the number, it was clear that he realised they were being used for the purpose at approximately fortnightly intervals.
26.	Unfortunately for him, we do not accept the evidence that the car was being used only occasionally to transport alcoholic goods and more frequently to transport other types of purchase.  In our view a family making legitimate shopping trips of this frequency and of the kind described to us by the appellant and his son would buy items such as food and, on each occasion, a moderate quantity of beer, sufficient to last the family until the next trip.  It seems to us quite implausible that such a family would buy food on the vast majority of its trips, and then, on one trip, buy a very large quantity of beer and no food at all.  We are driven to the conclusion that this was merely one of many trips whose principal, if not sole, purpose was the purchase of excise goods.  It is, at the least, impossible to say that Mr McEntee’s conclusion that this was a trip undertaken for the purpose of buying excise goods for resale was one at which he could not reasonably have arrived.
27.	Mr Nagra junior accepted that he had seen the contents of the car when it returned from France on previous occasions, and it follows that he was aware of the nature of the goods it contained.  It may well be that Mr McEntee did not think the matter through in quite the same way as we have done – he did not, after all, have the benefit of hearing evidence – and it is true that proportionality is not mentioned, in terms, in his letter communicating the outcome of his review; in fact, he seems in reality to have considered whether Mr Nagra junior was being treated in a different way from others in his position rather than whether the seizure and refusal to restore his car was a proportionate response in all the circumstances of the case.  However, had Mr McEntee been aware that 61 trips had been made by the car in about 18 months we are quite sure he would have arrived at the conclusion that it was not disproportionate to refuse to restore the car, a decision which, in our view, he could perfectly reasonably reach.  It seems to us to be a valid conclusion, if not an almost inevitable one, that the Musso and the Frontera before it were being used systematically for the importation of large quantities of alcoholic drinks and that Mr Nagra junior was aware of that fact.
28.	Despite all Mr Darby’s arguments, which were put forward with considerable skill, we are satisfied that this appeal must be dismissed.  There will be no direction in respect of costs, including those of an earlier hearing and of an application to set aside the decision given in error following that hearing.  We recognise that the parties have been put to inconvenience and expense as a result, but we do not have the power to make an appropriate direction in such circumstances.

COLIN BISHOPP
CHAIRMAN
Release date:
MAN/01/8079