Nicholson v Customs & Excise [2004] UKVAT(Excise) E00673 (09 March 2004)

	EXCISE DUTY — Appellant importing 3.7 kg hand rolling tobacco — forfeiture of goods — whether goods should be restored — whether review of decision was reasonable — whether tobacco was for own use — appeal allowed

MANCHESTER TRIBUNAL CENTRE

 
 	
	CLIFFORD NICHOLSON	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Mr I E Vellins (Chairman)

							

Sitting in public in York on 18 February 2004

The Appellant did not appear  and was not represented
Miss Piasecki, of counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

1.	In this appeal the Appellant is Mr Clifford Nicholson who resides in Lincoln.  He was stopped at Dover Hoverport as a foot passenger on 23 November 2001 when he was returning to the UK with 3.7 kg hand rolling tobacco.  This was seized by the Commissioners.  He requested restoration of the tobacco on 30 November 2001.  The Commissioners decided to refuse restoration on 11 January 2001.  The Appellant wrote a letter dated 21 January 2002 requesting a review of that decision.  Following a review the decision not to restore the tobacco was confirmed by the Commissioners on 11 March 2002, and the Appellant appeals against that decision.
2.	At the hearing of this appeal at York on 18 February 2004 the Commissioners were represented by counsel, Miss Piasecki.  The Appellant had intended to represent himself, but he did not appear at the hearing, nor did any representative of the Appellant.  The Commissioners requested that the appeal should proceed in the absence of the Appellant under rule 26(2) of the tribunal’s rules.  I decided to proceed under rule 26(2) and went on to consider the appeal.
3.	The evidence on behalf of the Commissioners was in the form of a witness statement from the review officer, Mr G Crouch, which had been served on the Appellant.  The Appellant had not made any objection to the witness statement.
4.	In the Commissioners’ bundle were also letters which the Appellant had written after the review decision which I have read and considered.
5.	From the evidence I find the following facts.
6.	On 23 November 2001 the Appellant entered Dover Hoverport as a foot passenger having in his possession 3.7 kg hand rolling tobacco consisting of 74 pouches of hand rolling tobacco which he had purchased on the continent and which he was importing to the UK without payment of duty.
7.	He was stopped and questioned by an officer of the Commissioners.  The Appellant told the officer that he had planned the trip at the beginning of the week and had been travelling with his nephew.  He had paid cash for the tobacco and had a receipt for 75 pouches hand rolling tobacco costing £156.15.  He had last travelled on the previous Saturday with his son-in-law for pleasure to Oostende.  He confirmed that he had made other trips in the previous six months but that he could not keep track of them although he went to beer festivals and carnivals.  The officer told him that he had previously made a trip on 29 September 2001.  The Appellant explained that on that occasion he had brought back 50 pouches of tobacco and 800 cigarettes and that on that trip he had been with his son-in-law and had gone over for pleasure.
8.	The Appellant told the officer who stopped him that he smoked 60 roll ups a day and also the tobacco was used by his two daughters and son-in-law.  He stated that he got through about 5 pouches a week but did not keep count of it.  He estimated that he rolled 40-50 cigarettes out of a pouch by rolling them paper-thin. 
9.	The Appellant stated that his nephew had paid for his own goods, the nephew being employed in a fertilizer factory.  The nephew had been in hospital and had come out of hospital a few days previously, having had treatment to his nose.  The Appellant stated that he had been stopped by Customs before but nothing had happened and this was the first time that he had been interviewed.  He was aware of the guidelines.  The officer asked him why he had exceeded the guidelines (at the time 1 kg hand rolling tobacco).  The Appellant replied that where he lived tobacco cost £9 a pouch and he thought that he might was well stock up when he got the chance.  He had still had some tobacco left over from the previous time on 29 September 2001.
10.	The Appellant told the officer that he  was unemployed and had been out of work for years.  He was registered as unemployed and the Child Support Agency had been “on his back for years”.  He stated that he received benefits, namely, sick benefit of £134 per fortnight.  He had to pay for gas and electricity and his mortgage payments were £34.34 per month.  He was not paying any money to the CSA as he was unemployed, but they were requesting £250 per week.  He had four dependents but lived on his own.  He did not know how much his bills totalled a month, stating that his bills were on meters.  He paid £15 per month for his mobile telephone.  He did not know how much he paid for food, council tax, water, gas and electricity.
11.	The Appellant told the officer that he had paid for the tobacco from his savings which he had put in a jar and also from money in the bank.  He stated that he had not purchased any excise goods the previous week even though he had been abroad with his son-in-law a few days previously.  On 23 November 2001 his nephew had paid for the ticket on a credit card.  
12.	The officer was not satisfied with the Appellant’s explanations and seized the tobacco.  In his notebook the officer stated that the reasons for the seizure were the excess amount of the tobacco, the Appellant’s knowledge of the guidelines, inconsistencies in his story, that it was unlikely that he had not purchased excise goods on 17 November 2001, and, in view of his financial situation, it was not reasonable for him to spend over £150 on excise goods.  The officer commented that he could not or would not clarify his disposable income and how much he spent on bills.  There were inconsistencies in his consumption rate.
13.	In his letter, received on 30 November 2001, the Appellant stated that he was a heavy smoker and that he had finished working due to a nervous breakdown.  The Appellant confirmed that on 23 November 2001 only the Appellant and his nephew had been travelling, although he claimed that the officer had questioned if there were three people travelling.  The Appellant stated that he had friends in Oostende and that he spent most of his social time there.  He stated that most times, but not every time, he stocked up with rolling tobacco, which he smoked.  He also stated that his wife smoked and two of his daughters and his son-in-law also smoked.  He considered that travelling 224 miles each way was sensible to bring back enough tobacco to last until he went again.
14.	On 11 January 2002 the Commissioners wrote to the Appellant confirming that the goods were not offered for restoration.  The reasons given in that letter were that the Appellant was carrying excise goods in excess of the guidelines, that he had travelled to France one week beforehand and so would not have had to purchase such large quantities of excise goods on 23 November 2001, that his expenditure on a regular basis was unreasonable considering his income and the fact that he was on benefits, and the fact that he been previously been issued with Customs Notice 1 before and had knowledge of the guidelines.  The officer found that there were no exceptional circumstances in the case of the Appellant which would justify a departure from the Commissioners’ policy.
15.	The Appellant wrote on 21 January 2002 to the Commissioners requesting a review.  In that letter he claimed that he was not a smuggler.  He stated that no one had paid him to go abroad.  He claimed that the amount of tobacco was not large and that it was for himself and not for a commercial purpose.  He stated that the previous week he had travelled to a social function in Belgium and had not gone to buy tobacco.  He stated that he saved every penny he possibly could so that he could go over to Belgium to see his friends and to buy tobacco to last him until he could purchase some more.
16.	On 11 March 2002 the review officer, Mr G Crouch, notified his review decision to the Appellant.  He reviewed the notes of the interview and the correspondence and legislation.
17.	The review letter was written before the decisions in Lindsay v Customs and Excise Commissioners [2002] 1WLR 1766 and the Hoverspeed appeals (R (Hoverspeed Ltd and others) v Customs and Excise Commissioners [2003] STC 1273).  The review officer stated in the review letter that the Appellant was required to satisfy the officer that the goods were for his own use and to rebut a statutory presumption of commerciality.  In so stating the review officer made an error in law.  The Divisional Court in R (Hoverspeed Ltd and others) v Customs and Excise Commissioners [2002] 3 WLR 1219 stated that the burden of proof as to commerciality lay with the Commissioners.
18.	In his review letter Mr Crouch considered that the Appellant was importing 3.7 kg hand rolling tobacco which was 3.7 times greater than the guidance level of 1 kg.  The Appellant had confirmed to the interviewing officer that he had been stopped by Customs on 29 September 2001 with 50 pouches hand rolling tobacco and 800 cigarettes and had stated that he still had a few pouches left.  As his daughters and son-in-law also smoked tobacco and his wife smoked tobacco, the officer considered it to be totally unrealistic that there would have been still any tobacco left from that trip.  The officer considered it implausible that the Appellant had made a 224 mile round trip on the Saturday prior to the seizure and had returned to the UK without excise goods, if he were a heavy smoker.  The officer considered it unlikely that the Appellant could have afforded many trips to Belgium on a state benefit of £134 per fortnight.  The officer concluded that the Appellant travelled to the continent on a regular basis with the purpose of purchasing excise goods to dispose of by other means than his own consumption.  The officer concluded that the Appellant was importing excise goods for a commercial purpose and that the Appellant had not provided any exceptional circumstances why the Commissioners’ policy of non-restoration should not be applied to the Appellant.  The officer found that the decision not to restore the goods was wholly proportionate.  The officer confirmed the contested decision not to offer restoration of the tobacco.
19.	The Appellant appealed.  
20.	In correspondence, since the review decision, the Appellant stated again that he purchased the tobacco for his own use.  He stated that no one would buy only 74 pouches for commercial purposes.  He claimed never to have smuggled goods into the UK and that he had been doing nothing wrong.  He had not been paid to make the journey.  He did not think the amount of tobacco was a large quantity.  On occasions when he had gone to Belgium he had not purchased tobacco because he had not had the money to do so.  When he had the money he brought back as much tobacco as he could afford.  He stated that he had had a breakdown and suffered with his nerves and that his only social life was in Belgium.  He stated that his sister had given him £100 for his birthday in September 2001 and that at Christmas 2001 she had also given him £100 as a present.  His nephew had asked him to show him around Belgium after his nose operation, and his nephew thought to buy tobacco cheaply.  It was the only time that the nephew had travelled.
21.	I have considered all the evidence in this appeal and the legal principles involved.
22.	The seizure of the excise goods was not invalid.  I have to consider whether the Appellant has established any grounds for me to hold that the officer’s decision to refuse restoration or the review decision concerning the original decision was unreasonable in the terms of section 16(4) Finance Act 1994.
23.	It is clear that the review decision was made at a time when the officer had concluded that the burden was on the Appellant to rebut a presumption of commerciality.  However, the Hoverspeed decisions have clarified that the burden of proof as to commerciality is on the Commissioners.  In John Dee Ltd v Customs & Excise Commissioners 1995 STC 941, Neill LJ said at page 953: 
“… where it is shown that, had the additional material been taken into account, the decision would inevitably have been the same, a tribunal can dismiss an appeal”.
24.	The Appellant has not appeared at the hearing of this appeal, and his absence places this tribunal in the difficulty of attempting to assess the credibility of his claims.  The Appellant has never given a proper and satisfactory breakdown of his income and expenditure, nor a satisfactory explanation has to how he was able to fund his stated smoking habit and social expenditure abroad from an income consisting of sickness benefit of £134 per fortnight.  There is no evidence that the Appellant received any further income.  It was the smallness of this income that led the officers to the conclusion that the most probable explanation for the Appellant’s trips abroad was the commercial importation of tobacco, namely that he intended to sell tobacco obtained abroad in the UK for profit.  On the other hand, however, the Appellant when stopped on 23 November 2001 was carrying only 3.7 kg hand rolling tobacco, which had cost him only a little over £150.  The relatively small amount of tobacco would not normally suggest a commercial importation, without other evidence of commerciality.
25.	I have concluded from all the evidence that I cannot decide that the decision of the review officer would inevitably have been the same if the review officer had applied the correct legal principles.
26.	I accordingly conclude that the review officer has reacted in a way in which no reasonable panel of Commissioners could have acted and that he has erred on the point of law.  
27.	I accordingly allow the appeal and I direct under section 16(4)(b) Finance Act 1994 that the Commissioners conduct a further review of the decision to refuse restoration of the goods and serve the same on both Appellant and the tribunal within 30 days of the release of this decision and direction.  I further direct that the review be conducted by an officer who has not previously been involved.  I direct that the review officer shall take account of any further material or representations made by the Appellant within 14 days of the release of this decision and direction to the Manchester Tribunal Centre.  I further direct that, if the Appellant is dissatisfied with the review, he will have a further right of appeal to the tribunal.
28.	Appeal allowed

I E VELLINS
CHAIRMAN
Release date:
MAN/02/8077