E01153

Excise – Appellant - proprietor of haulage firm – owner and driver – commercial vehicle found to contain substantial quantities of cigarettes – excise duty unpaid – seizure of goods and vehicle – decision taken not to restore – review – original decision confirmed – whether decision not to restore should be upheld – reasonableness – appeal dismissed 

BELFAST TRIBUNAL CENTRE

	                                              MARTIN O’CALLAGHAN                              Appellant

- and –

	COMMISSIONERS FOR
	HER MAJESTY’S REVENUE & CUSTOMS	Respondents

Tribunal:      Alistair F W  Devlin	 (Chairman)
                       Tony Hennessey FCA (Member)

					
Sitting in public in Belfast on 4 July 2008 

Cormack McDonnell, solicitor of Tiernans, Solicitors, Newry for the Appellant

James Puzey of counsel instructed by the solicitor for Customs and Excise for the Respondents

© CROWN COPYRIGHT 2008 

                                                          DECISION

The Appeal

1. This is an appeal by the Appellant Martin O’Callaghan against the decision arrived at by a Review Officer not to restore a vehicle previously owned by the Appellant, and seized from him. The vehicle in question was a Scania heavy goods lorry Registration Number NLZ 9900, together with a hard sided refrigeration unit attached to it. The vehicle in question was seized on 30 September 2005. The Appellant is a self employed haulier carrying on in business from premises situate at Church Street, Middletown, County Armagh under the name or style of F & M Refrigerated Transport.

Notice of Appeal

2. On foot of a Notice of Appeal dated 30 March 2007 the grounds for the appeal were stated to be as follows:

                         ‘My lorry was innocently involved in this incident and whilst
                          I understand that it is technically liable for forfeiture it should
                          be restored to me’.

Factual Background

3. The Tribunal heard evidence adduced before it by the Appellant in person who was cross examined on behalf of the Respondent. The Respondent called no evidence. On the basis of the evidence adduced before it, and the documentation placed before it, the Tribunal finds the following facts either to be agreed or established.

4. On 30 September 2005 the Appellant’s vehicle was intercepted at Bengal Mill, Manchester, whilst it was in the course of making a delivery. The vehicle was being driven by the Appellant at the time. The vehicle consisted of a heavy goods tractor unit with an attached refrigerator unit. The unit was however not refrigerated for this consignment. In the warehouse where the vehicle was found, officers of the Respondent found a pallet of 32 boxes wrapped in black plastic shrink wrap, which contained 320,000 non duty paid cigarettes. Inside the vehicle, the Respondent’s officers found a total of 14 more identically packaged pallets, each of which contained 320,000 non duty paid cigarettes. Of the 14 pallets, 9 of them contained Palace cigarettes, a total of 2,880,000 cigarettes, and the remaining 5 pallets contained Desert Gold cigarettes, a total of 1,600,000 such cigarettes. In total therefore, inside the vehicle the Respondent’s officers found a total of a total of 4,480,000 non duty paid cigarettes. At the rear of the vehicle was found a hand held truck, upon which were found a further 200,000 Palace cigarettes. In the corner of the warehouse were found two further boxes containing a total of 19,800 Sovereign cigarettes, although it was accepted by the Respondent that there was no evidence to indicate that these had previously formed part of the consignment which was in the course of being delivered to the warehouse by means of the vehicle.  In total, inside the vehicle and the warehouse, a total of 5,019,800 non duty paid cigarettes were found and were seized. Five million of these cigarettes had been inside the Appellant’s vehicle. The approximate loss of revenue in respect of these goods was just under one million pounds. A delivery note for the consignment in question was found in the Appellant’s cab. It showed the intended delivery address to be in Leigh, Lancashire.

5. The Appellant together with others found to be present at the scene was arrested on suspicion of being knowingly concerned in the fraudulent evasion of excise duty, and he was cautioned. In response to his arrest the Appellant said ‘Is there cigarettes in there?’.

6. One of the Respondent’s officers, being satisfied that the excise goods were being held for a commercial purpose rather than for own use seized them under section 139 [1] of CEMA as being liable to forfeiture. The Appellant’s vehicle was also seized under section 139[1] of CEMA as being liable to forfeiture under section 141[1][a] in that it had been used for the carriage of goods liable to forfeiture.

7. The Appellant made no challenge in respect of the legality of the seizure in the local Magistrates’ Court, and in proceedings there the seized cigarettes were duly condemned, along with the vehicle, as being forfeit to the Crown.

8. Subsequently, the Appellant’s solicitors sought restoration of the vehicle. One of the Respondent’s officers considered the representations made and concluded that there were no mitigating circumstances sufficient to justify restoration of the vehicle. The decision arrived at in that regard was communicated to the Appellant by letter dated 12 October 2006. By letter dated 13 November 2006 the Appellant’s solicitors then wrote to the Respondent requesting a review of that decision. A review Officer, Julie Wiggs, then carried out a review of the decision in question. By letter dated 11 June 2007 the Review Officer informed the Appellant that in her view the non restoration of the vehicle was fair reasonable and proportionate, and upheld the original decision not to restore the seized vehicle or trailer.

Evidence of the Appellant

9. The Appellant said that at the outset of the matter, he had received a telephone call from a man identifying himself only as ‘Paul’ from a firm called Progress Mushroom Supplies or ‘PMS’, who asked if he would be able to collect a load of mushroom crates for delivery to the Manchester area on 29 September 2005. The Appellant said that he had never worked for PMS before, that he did not know how this individual had or would have obtained his mobile number, but said that he presumed that it had simply been obtained by means of the haulage driver network. The Appellant said that he agreed, and that he subsequently arrived at the premises of PMS around lunchtime on 29 September. There, in the presence of the Appellant,  a Polish forklift driver it was claimed lifted what the Appellant estimated to have been about 12 pallets of mushroom crates onto his vehicle. The individual who had spoken to the Appellant on the telephone, and who had identified himself only as ‘Paul’ was not there. However, the Appellant further said that during the course of this loading operation, he received a further telephone call from ‘Paul’ who told him that the remaining half of the consignment was not at that time ready to be loaded. The Appellant said that he was asked to leave the chilled trailer attached to the rear of his vehicle unlocked in a lay-by on the main Dungannon to Moy road, to allow ‘Paul’ to load the remaining half of the consignment whenever it was ready. 

10. This the Appellant said he did, leaving the trailer unit he said for approximately four or five hours at such a location whilst he took the tractor unit away to have some repairs carried he said to its fridge. The Appellant accepted, both during the course of a question and answer session with officers of the Respondent, and in cross examination before the Tribunal, that he did not normally leave his half laden refrigerated trailer unit unlocked for several hours at the side of the road. He said that he did so on this occasion because he was told so to do.

11. The Appellant than said that he subsequently returned to the trailer, that he picked it up where he had left it and then drove straight to the ferry terminal at Larne so as to catch the midnight ferry to Cairnryan in Scotland. The Appellant said that whilst he noticed that there were blue mushroom crates which had been left close to the rear of the trailer unit, he did not set about any checking of the load. The Appellant said that he duly caught the ferry at Larne, with the intention of heading down the M6 motorway to Leigh in Lancashire, which had been notified to him as his intended destination.

12. The Appellant said that as he approached Manchester he received another telephone call from an individual whom he did not know, instructing him to leave the M62 motorway at junction 19 and to follow him. The caller, it was claimed, did not give his identity, but told the Appellant that he would be waiting for him in a green car in a lay-by at the exit, that the Appellant should follow him, that he would not now be going into Leigh, but would instead be going round into Manchester. Again, both in his question and answer session with officers of the Respondent, and also in cross examination during the course of the hearing, the Appellant readily accepted that he had at the time thought all of this rather strange. The Appellant said however that in spite of this, he duly left the motorway as instructed at the identified exit, observed, picked up and followed the green car which was parked there. The Appellant then said that he followed the car towards as it turned out the city centre, heading in towards Ancoats.

13. The Appellant stated that upon his arrival at, as it turned out to be, Bengal Mill in Ancoats, he again thought that what was happening was getting more and more strange. The Appellant stated that as he approached his ultimate destination, he became more and more concerned at to where he was going, He told the tribunal that the area into which he was being led was not the type of area he would have expected. He went on to tell the tribunal that where he was stopped did not appear to him to make much sense either, in that there was no depot, simply a sort of car park. He told the tribunal that he had never before been asked to deliver into a place such as this. Upon arrival, the green car and its driver disappeared, and the Appellant thought this strange also. There were a number of men available at Bengal Mill to assist with the unloading, and the Appellant told the tribunal that he assisted with it also. The Appellant told the tribunal that as he did so, he was surprised to notice that some of the pallets which were being unloaded were covered in black plastic, but he insisted that he did not know that any of them had contained cigarettes until after the Respondent’s officers had arrived on the scene, and he had been arrested.

The legal framework

12. The seized goods consisted of ‘tobacco products’ within the ambit of section 1 of the Tobacco Products Duty Act 1979. As such the goods were subject to a duty of excise, whether they were manufactured in the United Kingdom or imported into it. Where, as here, the goods in question had not been ,manufactured in the United Kingdom, the excise duty point had been as at the date of their importation. The goods seized were non duty paid excise goods. The goods were accordingly liable to seizure and forfeiture.

13. The Appellant’s vehicle and trailer had been seized under section 139[1] of the Customs and Excise Management Act 1979 [‘CEMA’] as being liable to forfeiture pursuant to section 141 of that same Act. Section 141 of CEMA provides:

14. Section 139[1] of CEMA provides:

                 ‘Any thing liable to forfeiture under the customs and excise Acts may be
                  seized or detained by any officer or constable or any member of Her 
                  Majesty’s armed forces or coastguard’

 Section 141[1] of CEMA goes on to provide:

                 ‘……..where any thing has become liable to forfeiture under the customs
                  and excise Acts – 

                 [a] any ship, aircraft, vehicle, animal, container………or other thing
                 whatsoever which has been used for the carriage, handling, deposit or
                 concealment of the thing so liable to forfeiture, either at a time when it
                 was so liable or for the purposes of the commission of the offence for
                 which it later became so liable; and

                 [b] any other thing mixed, packed or found with the things so liable,
                 shall also be liable to forfeiture.’

 Finally, section 152 of CEMA establishes that:

                 ‘The Commissioners may, as they see fit –

                  …

                  [b] restore, subject to such conditions [if any] as they think proper,
                  anything forfeited or seized under the Customs and Excise Acts.’

The Review Decision

15. A Review Officer upon request carried out a review of the decision not to restore to the Appellant either the tractor vehicle or the refrigerated trailer seized. By letter dated 11 June 2007 the Review Officer informed the Appellant that in her view the non restoration of the vehicle was fair reasonable and proportionate, and upheld the original decision not to restore the seized vehicle or trailer.

16. In that letter, the Review Officer set out in summary form the Respondent’s policy for the restoration of those freight vehicles which have been used in connection with the evasion of excise duty, in the following terms:

       ‘Commissioners’ policy for the restoration of goods vehicles that have been
        used in connection with the evasion of excise duty is intended to tackle and
        disrupt the supply of illicit excise goods to the UK market. Each case is considered 
        carefully on its individual merits so as to decide whether exceptions should be
        made and any evidence of hardship is always considered. The policy depends on 
        who is responsible/complicit in the offence.
        A: neither the haulier nor the driver are responsible or
        B: the driver, but not the haulier is responsible or
        C: the haulier is responsible.
        
        A. If the haulier provides evidence satisfying the Commissioners that neither
        The haulier nor the driver were responsible for or complicit in the offence then:

        If the haulier also provides evidence satisfying the Commissioners that both
        the haulier and the driver carried out basic reasonable checks [including
        conforming with the CMR Convention] to confirm the legitimacy of the load
        and to detect any illicit load, the vehicle will normally be restored free of charge.

        B ……………..

        C. If the haulier fails to provide evidence satisfying the Commissioners that the
        haulier was neither responsible for nor complicit in the offence then, if the revenue
        involved is less than £50,000 and it is the first occasion, the vehicle will normally
        be restored for 100% of the revenue involved [or the trade value of the vehicle if
        less].The vehicle will not normally be restored on a second or subsequent occasion
        or if the revenue involved is £50,000 or more.’

17. The Review Officer went on to state that she had considered the evidence available to her in an attempt to ascertain whether the Appellant had been involved in the offence, and/or took reasonable steps to prevent his vehicle being used to facilitate the smuggling of goods. She concluded that the evidence available to her suggested that not only did the Appellant fail to take reasonable steps but that he was more likely to have been complicit in the offence, than not.

Submissions of the parties

18. For the Respondent, Mr Puzey argued that on the evidence adduced this was as clear a case as could be envisaged as being likely to come before the tribunal. He submitted that even taking the Appellant’s case at face value, he was agreeing to undertake this haulage work on the strength of a telephone call from an unknown individual, claiming to work for a firm for whom the Appellant had never worked before, and of which he knew little or nothing. He suggested that moreover, right from the outset the transaction, as described by the Appellant in his own evidence was grossly unusual and highly suspicious. He submitted that there were, on the Appellant’s own case many aspects of the transaction which ought reasonably have led the Appellant to have seriously questioned what he was being asked to do, and having arrived at such questioning in his mind the Appellant it was submitted ought properly to have addressed that by checking his load. Basic checks, it was submitted, which could and ought to have been carried out at a number of stages during the course of the transaction would easily have revealed the presence of the illicit goods, but these were not, it was submitted, undertaken at any stage.

19. Mr Puzey cited and relied upon the decisions arrived at in a number of previously reported cases. In particular, he referred to the decision in  Eugene Crilly –v- Commissioners for Customs and Excise, Decision 19 March 2003 which was relied upon in support of the proposition that the seizure of commercial vehicles involved in smuggling can amount to a proportionate response to the threat posed to the revenue of the United Kingdom. The tribunal was also referred to the decisions in James McKenna –v- Commissioners for Customs and Excise, [2007] Decision No E01021 and in Maola-Sakwa Przewozy Krajowe Export-Import –v- Commissioners for Customs and Excise [2007] Decision No E01043.

20. For the Appellant, Mr O’Donnell submitted that on the evidence before the Tribunal, the tribunal could and it was submitted should be satisfied that the Appellant was the wholly innocent victim of an excise fraud, with which he had no personal involvement. The Appellant’s difficulties, it was submitted, had simply arisen because he had trusted those by whom he had been engaged. The Appellant, it was submitted, would not have had any cause or reason not to trust those who were seeking to make use of his services. The circumstances in which the Appellant had been engaged, it was submitted, were not at all unusual in the haulage industry, and it was submitted that there was no evidence before the tribunal to show otherwise. The Appellant, it was submitted, was a victim of these who were seeking to perpetrate this excise fraud just as much as were the Respondents, and where, as here, the Appellant was innocent of wrongdoing himself, and where, as here, he had already suffered substantially through never having paid for the haulage operation, which it was submitted he had undertaken in good faith, it would be unfair and inequitable for him to be punished further though the continued loss of his tractor and trailer unit.

Decision 

21. We have to say that we did not find the Appellant to be a convincing witness. We found his evidence completely implausible and utterly lacking in credibility. Even taking the Appellant’s own case at face value, it seems to us that for an experienced haulier such as the Appellant, right from the outset, there ought to have been many aspects of this transaction which ought reasonably to have put the Appellant on his guard. The original 
instructions came on the telephone, and from a firm and an individual with whom the Appellant had never before done any business, and of which he says he knew little or nothing. The individual from whom the Appellant claimed to have received his instructions, namely ‘Paul’ never gave his full name, nor his position of employment within the firm allegedly concerned in the transaction, and never at any stage made a physical appearance before the Appellant either at unloading or otherwise. There was perhaps little if anything in any of this which, if considered solely in isolation ought reasonably to have aroused the Appellant’s suspicions, but the same certainly in our view cannot be said of the circumstances in which the consignment subsequently came to be loaded onto the vehicle. These were that the consignment came to be loaded in two moieties: one of which was apparently loaded in the presence of the Appellant, and the other of which was loaded at an unknown location after the trailer had, so it was claimed, been asked to have been left at the side of the road. The Appellant in his evidence claimed to have done so, and to have left the partially laden and unlocked trailer in a lay-by at the side of the road, so as to enable the loading of the consignment to have been completed.

22. We consider this occurrence so inherently unlikely as to cause us to seriously doubt whether indeed it ever took place as the Appellant has claimed. The Appellant insisted that he did not normally leave his trailer, as he did here, unlocked at the side of a main road for several hours so as to enable the remainder of a partially loaded consignment to be loaded onto it, but when asked why he therefore was prepared to do so on this occasion, he simply responded by saying that he did it because he was asked to. This seem to us so inherently unlikely and implausible as to be unworthy of belief, and we do not accept that the consignment was indeed loaded in the manner which the Appellant claimed. The Appellant went on to claim that having returned to the trailer several hours later in order to pick it up, whilst he may have looked casually into the back of the trailer, he took no active steps whatsoever to check the load. Again, we consider this highly unlikely and implausible in light of all that, according to the Appellant himself had gone before.

23. Even on the Appellant’s own case then, having obtained a consignment for transportation in what we consider to have been highly irregular and suspicious circumstances, the Appellant, without checking his load in circumstances where we are satisfied it would have been reasonable for him to want so to do, the Appellant then proceeded to the Larne ferry and travelled over to South West Scotland before driving down into England. Again, on his own case, at no stage whatsoever during the course of that journey did he consider it necessary or appropriate to stop and check the load or any part of it. Nor did he do so even after, on his own case, having received a further call 
from another unknown and unidentified individual, which informed him that his destination, previously thought to be Leigh in Lancashire, was now to be changed, and that he was to head towards Manchester. Further highly suspicious circumstances then followed, such as the unexplained rendezvous with a car at a motorway junction which the Appellant was then, again without any let alone a convincing explanation asked to follow, and which he duly followed. Here, as before, on his own case, at no stage whatsoever during the course of this journey did he consider it necessary or appropriate to stop to check the load or any part of it, or to enquire from those accompanying him and to precisely what was going on. Finally, even though on his own evidence, he was by now highly bemused by the sequence of strange occurrences, he made no attempt to stop, pull in, check his load, or even make any attempt to enquire further of those who were leading him well in towards Ancoats and Manchester city centre, and in particular into an area which the Appellant himself said was nothing like the type of area where he would be expecting to be required to deliver the consignment in question.

24. In spite of Mr Cormack’s submissions to the contrary, we cannot accept that the Appellant has adduced sufficient evidence before the tribunal to enable us to be satisfied on the balance of probabilities that he was not in some way complicit in the offence of excise evasion which was here being perpetrated.

25. However, even if the tribunal were to be satisfied that the Appellant was not complicit in this offence, which it is not, there would in any event be no difference to the outcome of this appeal. The loss of revenue which would have resulted from this offence had it gone undetected would have been very substantial. Even if the Appellant were not to have been actually complicit in some way in connection with the offence, he nevertheless in our view unquestionably failed at each and every stage of the transaction to carry out such basic reasonable checks upon the load which had been placed inside the trailer attached to his vehicle as he ought properly in all the circumstances to have taken to ensure that his vehicle and trailer were not being used for the illicit smuggling of excise goods. Even taking the Appellant’s case at its full face value, the catalogue of grossly suspicious circumstances which surrounded this transaction right from the outset and thereafter at each and every turn ought reasonably to have prompted the Appellant, or any reasonable haulier, to have carried out basic checks upon the load, and further enquiries, well in advance of its arrival into Manchester city centre.

26. For the reasons set out above, we do not consider that that the decision as originally arrived at, not to restore either the seized vehicle or the seized trailer to the Appellant, was anything other than entirely fair, reasonable, proportionate and appropriate. So far as the decision not to restore as arrived at by the Review Officer on review is concerned, we similarly find that decision to be reasonable and fully sustainable.

27. For the reasons set out above, we dismiss the appeal. The tribunal was not asked to make any order for costs in favour of the Respondent, and we accordingly make no such order. 

                                             

                                              ALISTAIR F. W. DEVLIN
                                                           Chairman

Release date: 24 November 2008