E001097

EXCISE DUTY- seizure of vehicle – concealment in modification of tractor unit hard to get to – whether unreasonable to refuse restoration? No in circumstances – appeal dismissed

LONDON TRIBUNAL CENTRE 					               

	PRIVATE COMPANY “SEMGIDA” LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

			Tribunal:	Adrian Shipwright (Chairman)
					John N Brown CBE FCA CTA

Sitting in public in London on 11 December 2007

The Appellant did not appear

Sarabjit Singh, Counsel, instructed by the General Counsel and Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

Introduction
1.	This is an appeal by Private Company “Semgida” Limited (“the Appellant”) against a refusal on review to restore two Mercedes Actros vehicles registration numbers CDZ 706 and KLM 024.  The decision is contained in a letter dated 14 March 2007.
2.	The Appellant did not appear when the case was called on or at any time after.  We decided to proceed under Rule 26 and to hear the case in the Appellant's absence.
The Issue 	 
3.	The issue in this appeal is whether the Respondents “could not reasonably have arrived at” the disputed decision.
The Law 
4.	 The relevant law is well-known and is contained in sections 88, 139 and 152 CEMA and sections 14 to 16 Finance Act 1994.
The Evidence 
5.	The Respondents produced a bundle of documents which were all admitted in evidence...  No connection to any of these documents is made by the Appellant as the Appellant did not appear.  
Findings of Fact 
6.	 From the evidence we make the following findings of fact 
7.	The appellant is a Lithuanian transport services company.
8.	On 17 November 2006 at Eastern docks in Dover vehicle CDZ 706 and a trailer was stopped by officers of HMRC.
9.	The vehicle was examined and more than 49,000 cigarettes were found concealed within the tractor unit.  The vehicle was seized.  No challenge is made as to the legality of the seizure.
10.	On 20 November 2006 at Eastern Docks in Dover vehicle KLM 024 and a trailer was stopped by officers of HMRC.
11.	The vehicle was examined and again a substantial number of cigarettes were found concealed within the tractor unit.  The vehicle was seized.  No challenges made as the legality of the seizure.
12.	 Vehicles CDZ 706 and KLM 024 had been welded, sealed and repainted in order to accommodate the concealments and the floors in both vehicles were built down to create concealments of three to four inches in depth.  The modification physically altered the external structure of the vehicles and access to the concealed spaces was obtained after seats and lockers were removed and through three cut-out metal hatches on the floor inside the vehicles.
13.	These extensive alterations were in all probability carried out professionally by individuals with knowledge of the vehicles and with sufficient unsupervised access to the vehicles.  
14.	The alterations would have taken time and necessitated the vehicles being taken out of service for a period due to the location of the concealments basis. Their removal would have seriously weakened the floor of the vehicles and made the vehicles unsafe.  It is highly unlikely that such work could have been carried out without the knowledge and involvement in the vehicles, ie the Appellant.  
15.	The Appellant knows or ought to know about the day-to-day running of its business and it is unlikely that its vehicles were extensively adapted behind its back.
Submissions of the Parties  
16.	 The Appellant's grounds of appeal can be paraphrased as follows;
“The Appellant disagrees with the decision of the Respondents not to restore the seized vehicle, but agrees to pay the excise duty of £7,998.14 and all other applicable duties related to the restoration of the seized vehicle, as the Appellant did not properly manage supervision so as to eliminate the possibility of smuggling occurring.”
17.	Mr Singh, on behalf of the respondents, submitted:
(1)	Over a period of just three days, two of the Appellant’s vehicles were intercepted and found to contain virtually identical concealments.  One of the vehicles CDZ 706 had been welded, sealed and repainted in order to accommodate the concealments, and the floors are both vehicles were built down to create concealments of three to four inches in depth.  The modification physically altered the external structure of the vehicles and access to the concealed spaces was obtained after seats and lockers were removed and through three cut out metal hatches on the floor inside the vehicles.
(2)	These extensive alterations were in all probability carried out professionally by individuals with knowledge of the vehicles and with sufficient unsupervised access to the vehicles.  The alterations would have taken time and necessitated the vehicles being taken out of service for a period due to the location of the concealments basis, their removal would have seriously weakened the floor of the vehicles made the vehicles are unsafe.  It is highly unlikely that such work could have been carried out without the knowledge and involvement in the vehicles, ie the Appellant.  The Appellant knows or ought to know about the day-to-day running of its business and it is unlikely that its vehicles were extensively adapted behind its back.
(3)	It is also unlikely to be coincidence that two vehicles belonging to the Appellant would be adapted with two very similar concealment devices. 
(4)	It is likely that the Appellant was complicit in the attempt to smuggle excise goods into the UK using the Appellant's vehicles.
(5)	The Respondents considered whether the vehicles could be offered for restoration under the terms of the Respondents’ restoration policy for freight vehicles, but restoration was deemed inappropriate as the policy provided that vehicles seized would not normally be restored, unless the Respondents were satisfied that the owner of the vehicle had no knowledge of the adaptation.
(6)	It was also to be noted that two of the vehicles had been adapted and both sent to the UK. The Respondents were entitled to act to protect the interests of legitimate trade and the protection of the revenue and therefore it was reasonable and proportionate not to offer the vehicles for restoration.
Discussion 
18.	We have found that the vehicles were altered in such a way that the Appellant must have been aware of such alteration or had failed to exercise proper supervision as is admitted in its notice of appeal.  In those circumstances we accept the Respondents' submission in full.  We consider that it was reasonable and proportionate not to offer the vehicles for restoration.
19.	In these circumstances, it cannot be said that the Respondents “could not reasonably have arrived at” the disputed decision.  We do not see that they could have reached any other decision
20.	Accordingly the appeal is dismissed.

ADRIAN SHIPWRIGHT

CHAIRMAN
RELEASE DATE: 17 March 2008

LON/2007/8044