E01168

EXCISE DRAWBACK - technical failure to comply with conditions – appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

CHARLES COOPER LIMITED

		Appellant

-and-

             HER MAJESTY’S COMMISSIONERS FOR
             REVENUE AND CUSTOMS
(BEER DUTY)

			Respondents

Tribunal: Richard Barlow (Chairman)

					 	

Sitting in public in Leeds on 20 October 2008.

Derek Green, managing director, for the Appellant

Bernard Haley of the office of the Solicitor for HM Revenue and Customs for the Respondents 

© CROWN COPYRIGHT 2009

DECISION

1.	This is an appeal against a deemed confirmation of the respondents’ decision, given by a letter dated 16 October 2007, by which they ruled that the appellant was not entitled to drawback of beer duty paid when two consignments of beer were imported from Belgium.  The basis for the claim to drawback was that one of the consignments had been exported to the Republic of Ireland and one had been exported to the Netherlands.  The amount of duty involved is £654.30.

2.	It is not in doubt that where beer is imported into the United Kingdom from a Member State of the European Union, with UK duty paid at import, and the beer is subsequently exported to a Member State by an eligible claimant then, in principle, the duty paid at import may be subject to drawback.  

3.	The appellant is a revenue trader within the meaning of section 1 of the Customs and Excise Management Act 1979 and, because in the course of its business it exports eligible goods as defined by regulation 5 of the Excise Goods (Drawback) Regulations 1995, it is an eligible claimant so far as duty is concerned by reason of regulation 6 of those Regulations. 

4.	The appellant claimed drawback in respect of the two consignments of beer in two separate claims made on 12 July 2007.  On 2 August 2007 the respondents wrote to the appellant requesting that the original duty payment receipts issued by the Irish and Dutch authorities be sent to them.  The respondents contend that the basis for that demand is regulation 10(a) of the Drawback Regulations which provides that where an export is a dispatch the “document evidencing payment of the duty” in the place to which they have been exported and “the copy of the accompanying document which is endorsed with the certificate of receipt” must be produced with the drawback claim.  An export is a dispatch for those purposes by reason of regulation 4 if it is an export of goods that were consigned to a place to which Council Directive 92/12/EEC applies.  That Directive applies to the Republic of Ireland and the Netherlands.  The respondents also rely upon regulation 7 which requires the claimant to comply with the conditions imposed by the regulations and “such other conditions as the Commissioners see fit to impose by notice published by them”.  They referred to paragraph 13.9(b) of Notice 207 which requires the completed claim to be accompanied by “the duty payment receipt (original, not a copy) issued by the fiscal authority in the receiving Member State or confirmation that the goods are not liable to a positive rate of excise duty in that Member State”.      

5.	Mr Green gave evidence as well as acting as the appellant’s representative.  I accept his evidence as the truth and find the following facts based upon it.  Mr Jones, the appellant’s book keeper also confirmed Mr Green’s statements to the Tribunal and although Mr Haley cross examined him to elicit further details the veracity of the evidence was not questioned.

6.	The appellant supplies a special gluten free beer which is designed for consumption by persons with intolerance to gluten.  The company imports the beer from Belgium and although initially it traded in the UK market it has received orders from other EU countries more recently.  The appellant was unable to secure orders from other countries if it had to pay the UK duty and include it in the price as the price would then be uncompetitive, so it registered to claim drawback.  The company was instructed to use the Simplified Administrative Accompanying Document procedure (SAAD).  The company was able to show to HMRC’s satisfaction that it had paid duty at import, that it had shipped the goods and that they were received by the overseas customers but the drawback claims have been rejected on the basis that the originals of documents showing payment of duty in the countries of destination were not produced. 

7.	HMRC have refused to accept the copy documents.  The document relating to the export to the Irish Republic states “the excise duty has been paid/declared to the competent authority” and that statement is stamped with the customer’s stamp and is signed apparently on behalf of the customer.  In addition it is stamped by the Irish authorities and although the stamp is partly illegible I find that the stamp is that of the relevant authority and although the stamp does not actually say anything about payment of duty I am prepared to assume on that evidence that the Irish duty was either collected at the time of importation or would be collected later by the Irish authorities.  The Irish revenue commissioners also wrote to Mr Jones a letter dated 20 May 2008 stating inter alia: “I wish to confirm that excise duty was paid to the Revenue Commissioners … on the above beer.  Excise duty is paid on a monthly basis by [your customer] … on all alcohol released for home consumption”.

8.	The same type of document as that received from the Irish customer and stamped by the Irish authority was received back from the Dutch customer but it was not stamped by the Dutch authorities.  It was signed by the customer and a reference number is given though it is unclear whether that is the customer’s reference or that of the Dutch authorities.  The customer also provided separately a document purporting to show that it had paid the duty and producing a copy of a giro document to that effect.

9.	In both cases I find that the customers had in fact paid the duty.

10.	Mr Green explained that although the appellant had tried to obtain originals of the payment receipts required by HMRC the foreign authorities had failed to provide them and that may well have been because more than one consignment from different consignors had been dealt with by a single payment by the overseas customers.

11.	Mr Charles Dunn was called to give evidence for the respondents and he said that the duty payable in the other Member State should be paid before the goods were shipped and that they should not have gone to a tax warehouse in the other Member State, as it appeared they had done in the case of the goods dispatched to the Irish Republic.

12.	When he was cross-examined he accepted that the Irish duty had in fact been paid though he was not prepared to accept that the evidence satisfied him that the Dutch duty had been paid.

13.	The respondents’ case is that the appellant was required to produce the original document evidencing payment of the duty in the country of receipt.  The procedure the appellant should have adopted is that contained in regulations 8(2) and 10 of the Excise Goods (Drawback) Regulations 1995 which set out what the person dispatching goods must do in respect of goods which are not warehoused before export and in respect of which he intends to claim drawback after export.  Regulation 8(2) sets out what the person has to do before he dispatches the goods and regulation 10 sets out what he has to do after export to claim the drawback.

14.	Regulation 10(a)(i) requires “the document evidencing payment of duty [in the place of receipt]” to be produced and had the matter rested there it might well have been sufficient to produce a document proving that fact in such form as the claimant might choose but regulation 7 empowers the Commissioners to require the claimant to “comply with such other conditions as the Commissioners see fit to impose in a notice published by them …”.  Notice 207 imposes the condition that the document evidencing payment must be an original payment receipt and not any other.  

15.	It follows that the respondents were entitled to refuse to pay the drawback.  It should not be thought that their refusal to do so was in any sense reasonable at least in the case of the Irish dispatch in which case they admit that the Irish duty had been paid.  Even in respect of the Dutch dispatch the evidence satisfied me, though not the Commissioners’ witness, that the duty had been paid.

16.	The Commissioners have the power to waive non-compliance with the requirements in the regulations and the Notice because regulation 10 provides for compliance “save as the Commissioners may otherwise allow” but they have, so far at least, declined to do so.

17.	Regrettably, although the respondents’ case is devoid of substantive merit, so far as the claim in respect of the dispatch to the Republic of Ireland is concerned, and nearly so in respect of the dispatch to the Netherlands is concerned; I have no alternative but to dismiss the appeal because the technical requirements for the claim have not been satisfied and the respondents have not seen fit to exercise their power to allow a departure from those requirements.

Richard Barlow
CHAIRMAN

Release date: 12 February 2009

MAN/08/8003