QUEENS BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE BELL
| THE QUEEN on the application of : (1) HOVERSPEED LIMITED|
(2) ALAN CHARLES ANDREWS
(3) PAULINE ANDREWS
(4) LYNNE ANDREWS
(5) GEORGE WILKINSON
|- and -|
|COMMISSIONERS OF CUSTOMS & EXCISE||Defendants|
David Anderson QC & Thomas De La Mare (instructed by Solicitor for HM Customs & Excise) for the Defendants
Hearing dates : 8-12th July 2002
Crown Copyright ©
This case is concerned with applications for judicial review of aspects of the policies and procedures adopted by HM Customs and Excise at the Dover Hoverport in relation to the importation of alcohol, cigarettes and hand rolling tobacco bought in shops in France and Belgium. The four individual claimants challenged the lawfulness of the procedures by which the excise goods being carried by Mr and Mrs Andrews and Mr Wilkinson were seized, and their car, which belonged to Miss Andrews, was also seized because Customs officers considered that Mr Wilkinson’s cigarettes and hand rolling tobacco had not been purchased in Belgium for his own use (for the facts see paras 48-62). Hoverspeed Ltd, for its part, made a general challenge to different aspects of Customs’ policies in relation to their passengers when they landed at the Hoverport (for the nature of these complaints, see paras 32-47).
In this case reliance was placed for the first time on an English court on the terms of Council Directive 92/112/EEC (“the Excise Directive”), as opposed to the UK statutory instrument, the Excise Duty (Personal Reliefs) Order 1992 (“the PRO”) by which this country set out to implement the requirements of European Community law (for the Excise Directive, see paras 99-116, and for the PRO, see paras 120-124).
The court held:
(i) That excise duty is only chargeable on alcohol, cigarettes and tobacco purchased by an individual in another member state of the European Union when they are held in this country for commercial purposes, as opposed to being held by the individual for his own use (para 164);
(ii) That the PRO wrongly reverses the burden of proof by requiring the individual to prove that he is not holding excise goods over the minimum indicative level (“MIL”: see para 7) for a commercial purpose (para 170);
(iii) that if an individual holds goods in excess of the MIL, this fact must be used solely as a form of evidence and not as a persuasive presumption that he holds the goods for a commercial purpose, although except in a borderline case this may not make much difference in practice (para 173);
(iv) That there must be reasonable grounds for suspecting an individual of holding goods bought in another member state for commercial purposes before he may lawfully be stopped and searched (para 180);
(v) That prima facie individuals and their excise goods must be free to travel across internal frontiers of the European Community without being impeded and delayed by checks for excise duty purposes, although such checks may be made where grounds of reasonable suspicion exist on an individualised basis (para 183);
(vi) That Customs officers must follow principles of proportionality when determining whether or not to restore goods and vehicles they have seized to their owners (paras 189-190);
(vii) that because Customs and Excise did not explain to the court the reasons why they stopped Mr and Mrs Andrews and Mr Wilkinson in their car, and because they suggested in their evidence that they might stop passengers for legally inadmissible reasons (paras 192-3), they did not prove to the court that there were reasonable grounds for stopping the car and questioning the occupants. The goods in it should therefore not have been seized. Nor should the car. In any event Customs’ refusal to return the car to Miss Andrews without even considering whether it might be restored to her on payment of an appropriately proportionate sum represented a disproportionate response (para 194).
Part No Para No
Lord Justice Brooke : This is the judgment of the court, to which both its members have made substantial contributions.
3. The Commissioners’ strategies and policy guidance
(i) that the PRO is incompatible with the Excise Directive and Article 28 of the EC Treaty, by creating a presumption that goods imported to this country in excess of the MILs are held for a commercial purpose and therefore chargeable to further excise duty, and by placing a burden on the traveller to prove that tobacco products and alcohol are not held or used for a commercial purpose (draft declarations 1, 2 and 3);
(ii) that the Commissioners’ policies and practices relating to checks on individual travellers and the goods which they bring from other member countries, in particular France and Belgium, are contrary to Articles 28 and 49 of the EC Treaty, Council Directives 64/221/EEC and 73/148/EEC and Council Regulation (EEC) No 3925/91 (draft declarations 4 and 5);
(iii) that the Commissioners’ policy of seizure and non-restoration of goods presumed to be chargeable to UK excise duty, and of vehicles containing such goods, is incompatible with EC law and with the rights conferred on individuals by Article 6 and Article 1 of the First Protocol to the Convention (draft declaration 6); and
(iv) that Customs’ checks on Mr and Mrs Andrews and Mr Wilkinson and their goods, and the decision to seize their goods, and the decisions to seize and not restore Miss Andrews’ vehicle, in which they were carried, were contrary to EC law and incompatible with their Convention rights (draft declarations 7 and 8).
- “ZERO TOLERANCE
- NOTICE 1s ISSUED. IN ALL CASES WHEN EXCISE GOODS ARE ABOVE THE GUIDANCE LEVELS AND NOT SEIZED
- NED’s MUST BE COMPLETED WHEN NOTICE 1’s HAVE BEEN ISSUED INCLUDING NAME, ADDRESS AND DOB
- WHEN SUSPECTS HAVE HAD NOTICE 1 ISSUED BEFORE, THE ASSUMPTION MUST BE SEIZURE NOT SIMPLY ISSUING ANOTHER NOTICE 1
- THE OBJECTIVE IN ANY INTERCEPTION IS TO SEIZE GOODS IN EXCESS OF THE MILS. OFFICERS SHOULD ALWAYS LOOK FOR REASONS FOR SEIZING, NOT SIMPLY ISSUING A NOTICE 1
- WHEN A-J INTERVIEWS ARE CONDUCTED THE EXPECTATION IS THAT A SEIZURE WILL BE MADE
- FOR GOODS IN EXCESS OF THE MILS SEIZURES SHOULD ALWAYS BE MADE WHEN SUSPECTS HAVE HAD EXCISE GOODS SEIZED BEFORE.”
“A-J interviews” is a reference to the factors set out in Article 5(2) of the PRO (see para 122 below), of which regard was to be taken when deciding whether excise goods were not being held or used for a commercial purpose. “NEDS” is a database of travellers who are stopped and examined. “Notice 1” is a fold out leaflet: “A Customs guide for travellers entering the UK”. “DOB” means “date of birth”.
“Revised Policy – ‘No Second Chances’
8. With immediate effect, our headline policy will be that any car or light goods vehicle (other than rented) used for smuggling or for transporting smuggled or diverted excise goods within the UK will be seized and not restored. Restoration will be very much the exception, not the rule, irrespective of whether it is the first time the smuggler has been caught. This policy is to be applied vigorously both at the ports and all inland locations where it can be proved that a vehicle was used to transport goods which are liable to seizure.
Vehicles not owned by the smuggler
9. In all cases the vehicle is to be seized. If an owner of a vehicle can subsequently demonstrate to the Senior Officer or Review Officer that he was genuinely innocent of any involvement e.g. his vehicle was stolen and reported to the police prior to seizure, the vehicle should be restored to him at no charge. Restoration will only take place where an owner can demonstrate they are completely innocent/unaware of the car’s use. Any person who has consented to the use of their vehicle by others accepts a variety of risks by doing so and in future they should expect to lose their vehicle permanently.
10. The onus should be placed upon the owner of the vehicle to demonstrate why the vehicle should be restored. Staff should not restore the vehicle until they are satisfied. However, Senior Officers/Review Officers should not refuse restoration if they believe that to do so would be indefensible if challenged.
12. It is important for seizing officers to bear in mind the issues of proportionality and human rights (ECHR) when considering whether restoration is appropriate. It is not intended that restoration will be an option in any other circumstances.
17. Unless the seizure of the vehicle is the subject of condemnation proceedings, or an appeal against the decision not to restore has been received within 45 days, or the defence solicitor has confirmed that it is required as evidence in court for the defence, the vehicle is to be disposed of forthwith.”
Mr and Mrs Andrews were to benefit from this change of policy (see para 59 below).“Where it is clear goods have been individually purchased and one or more of the travellers satisfy the officer as to own use, then only the excise goods belonging to those travellers who have failed to satisfy the own use criteria are to be seized. Those goods which are identifiable to travellers who have satisfied the own use criteria should not automatically be seized under CEMA Section 141(1)(b).”
We were unimpressed by that part of the Commissioners’ evidence to this court which sought to equate the risk of automatic seizure with the risk that a registered keeper of a vehicle may be pursued for a parking fine incurred by someone to whom he has lent it.“In all cases where any excise goods are seized, the vehicle is also to be seized, regardless of who owns the vehicle (Section 141(1)(a) CEMA refers).”
“…… in cases where we are satisfied that the intention is to smuggle goods with a view to making a profit any vehicle involved is ordinarily to be seized and not offered for restoration other than in highly exceptional circumstances (e.g. humanitarian situations as per existing guidance), the Court having confirmed that in such cases those involved ‘cannot reasonably complain’. In cases where we consider that the smuggling attempt was not made with a view to making a profit or feel that we have insufficient evidence to challenge a claim to that effect then any vehicle involved is seized but will be offered for restoration on the new Lindsay restoration terms.”
“It is interesting to note that over the past two years Customs have seized in excess of 20,000 vehicles and only a small percentage of those involved have chosen to contest that seizure …. . Although each case has to be considered on its merits the overall impact of these changes to our restoration policy will be kept under close review and it is not our present expectation that they will lead to a large proportion of seized vehicles being offered for restoration.”
4. Recent events at Dover Hoverport
5. Checks and lock-ins
6. Seizure of innocent travellers’ goods and travel bans
7. Mr and Mrs Andrews: the facts
“Any other excise goods found with his were liable to forfeiture by virtue of section 141(1)(b) of the 1979 Act which I have mentioned above and the vehicle used to transport them was equally liable by virtue of section 141(1)(a) of the same Act. I am satisfied that they, too, were properly seized.
It remains for me to determine whether or not the seized item(s) should have been restored.
The crux of your disagreement with Customs is the retention of your car and I have gone through what you have written to decide whether or not the over-arching policy of non-restoration should not have been applied. In essence I take your argument to be that as you were not there and none of the goods were for you, the policy should indeed be waived. That however is not the perspective of the Commissioners.
You offered a loan of your car as your brother’s was damaged in an accident. The purpose of the loan was to go to the continent to buy excise goods. By placing your car in the charge of Mr Andrews you placed an onus upon him and those with him not to abuse your trust. One of them did. It is essentially the position of Customs in circumstances such as yours that it is to that person whom you should turn for redress. The seizure and retention of the car is due to the use which was made of it and [this is] not dependent upon any direct involvement on your part.
Given the ready access to quantities of cheap excise goods on the continent you took a risk that those using your car would not be tempted to go beyond the parameters of own-use cross-border shopping. I am satisfied that this is what Mr Wilkinson did and that the outcome in relation to your car was in line with policy and treats you no more leniently or harshly than anyone else in your circumstances. I cannot conclude that refusal to restore it was an unreasonable decision. ……..
….. I have to advise you that the decision which you are contesting has been confirmed. The car will not be restored to you.”
8. Publicity for the Commissioners’ vehicle seizure policy
This gave no real hint that Customs had been operating an almost automatic vehicle seizure policy from July 2000 onwards (see para 16 above: “No Second Chances”).“You should be very careful who you lend your vehicle to. Even if you are not responsible for the smuggling, if your vehicle has been used to commit this crime it will be seized. When a vehicle is seized and the owner is not present at the time of seizure, customs officials will want to interview the owner and may confiscate the vehicle permanently or charge a very substantial fee for its return.”
9. The effect or Customs activity on Hoverspeed’s business
10. Relevant principles of EC law up to 1992
Article 10 (ex Article 5)
Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community’s tasks.
They shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.
Article 14 (ex Article 7a)
1. The Community shall adopt measures with the aim of progressively establishing the internal market over a period expiring on 31 December 1992, in accordance with the provisions of this Article and of Articles 15, 26, 47(2), 49, 80, 93 and 95 and without prejudice to the other provisions of this Treaty.
2. The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty.
Article 17 (ex Article 8)
1. Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall complement and not replace national citizenship.
2. Citizens of the Union shall enjoy the rights conferred by this Treaty and shall be subject to the duties imposed thereby.
Article 18 (ex Article 8a)
1. Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect.
Article 23 (ex Article 9)
1. The Community shall be based upon a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.
Article 25 (ex Article 12)
Customs on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.
Article 28 (ex Article 30)
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
Article 29 (ex Article 34)
Quantitative prohibitions on exports, and all measures having equivalent effect, shall be prohibited between Member States.
Article 30 (ex Article 36)
The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and …
Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
Article 49 (ex Article 59)
Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a Sate of the Community other than that of the person for whom the services are intended.
Article 93 (ex Article 99)
The Council shall, acting unanimously on a proposal from the Commission … adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time-limit laid down in Article 14.
Article 249 (ex Article 189)
What are now Articles 14 and 93 of the EC Treaty were inserted into the Treaty by the Single European Act. What is now Article 18 was inserted by the Maastricht Treaty with effect from 1993.A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and measures.”
“Measures taken on grounds of public policy or of public security shall be based exclusively on the personal conduct of the individual concerned.”
A very similar provision is also to be seen in Article 3(1) of Council Directive 68/360/EEC (in relation to workers of member states and their families).“Member States shall grant to the persons referred to in Article 1 [the] right to enter their territory merely on production of a valid identity card or passport.”
11. Relevant principles of UK law up to 1992
12. EEC exemptions on imports of excise goods up to 1992
“(a) take place occasionally and
This directive also permitted tax-free shops on ferries and in airports to sell goods without paying excise duty (up to specified limits) when such goods were to be exported to other member states.(b) consist exclusively of goods for the personal or family use of the travellers, or of goods intended as presents; the nature or quantity of such goods must not be such as might indicate that they are being imported for commercial reasons.”
“(b) are not intended for commercial use and appear from their nature and quantity to be intended solely for the personal or family use of the recipient; and
(c) are not sent against payment of any kind by the recipient.”
13. Relevant provisions of the Customs and Excise Management Act 1979
“(1) Any person entering the United Kingdom shall, at such place and in such manner as the Commissioners may direct, declare any thing contained in his baggage or carried with him which –
(a) he has obtained outside the United Kingdom; or
(b) being dutiable goods or chargeable goods, he has obtained in the United Kingdom without payment of duty or tax,
and in respect of which he is not entitled to exemption from duty and tax by virtue of any order under section 13 of the Customs and Excise Duties (General Reliefs) Act 1979.”
“(2) any person entering … the United Kingdom shall answer such questions as the proper officer may put to him with respect to his baggage and any thing contained therein or carried with him, and shall, if required by the proper officer, produce that baggage and any such thing for examination at such place as the Commissioners may direct.”
“(1) Where there are reasonable grounds to suspect that any person to whom this section applies is carrying any article
(a) which is chargeable with any duty which has not been paid or secured; or
(b) with respect to the importation … of which any prohibition or restriction is for the time being in force under or by virtue of any enactment,
an officer … may … search him and any article he has with him.”
“(1) where –
(a) except as provided by or under the Customs and Excise Acts 1979, any imported goods, being goods chargeable on their importation with customs or excise duty are, without payment of that duty –
(i) unshipped in any port,
(ii) unloaded from any aircraft in the United Kingdom …
these goods shall … be liable to forfeiture.”
“(1) Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer …
(5) Subject of subsections (3) and (4) above and to Schedule 3 of this Act, any thing seized or detained under the customs and excise Acts shall, pending the determination as to its forfeiture or disposal, be dealt with and, if condemned or deemed to have been condemned or forfeited, shall be disposed of in such manner as the Commissioners may direct.
(6) Schedule 3 to this Act shall have effect for the purpose of forfeitures, and of proceedings for the condemnation of any thing as being forfeited, under the customs and excise Acts.”
“(1) Without prejudice to any other provision of the Customs and Excise Acts 1979, where any thing has become liable to forfeiture under the customs and excise Acts –
(a) any … vehicle … which has been used for the carriage, handling deposit or concealment of the thing so liable to forfeiture … and
(b) any other thing mixed, packed or found with the thing so liable,
shall also be liable to forfeiture.”
14. Freedom of movement of EU nationals and goods within the Community
15. The Excise Directive: the meaning of Articles 8 and 9
The only other recital we need to mention is the twenty-first, which we will consider in more detail (in paras 116-119 below) when we consider the effect of the transitional arrangements for Denmark, Finland and Sweden contained in Article 26 of the directive.“Whereas, as a result of the abolition of the principle of taxes on imports in relations between Member States, the provisions on exemptions and allowances on imports cease to apply in respect of relations between Member States; whereas these provisions shall therefore be abolished and the directives concerned adapted accordingly … ”
“6. (1) Excise duty shall become chargeable at the time of release for consumption …
Release for consumption of products subject to excise duty shall mean:
(a) any departure … from a suspension arrangement;
(b) any manufacture … of those products outside a suspension arrangement;
(c) any importation of those products [into the Community] … where those products have not been placed under a suspension arrangement.
2. The chargeability conditions and rate of excise duty to be adopted shall be those in force on the date when duty becomes chargeable in the Member State where release for consumption takes place… Excise duty shall be levied and collected according to the procedure laid down by each Member State, it being understood that Member States shall apply the same procedures for levying and collection to national products and to those from other Member States.
8. As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the Member State in which they are acquired.
9 (1) Without prejudice to Articles 6, 7 and 8, excise duty shall become chargeable where products for consumption in a Member State are held for commercial purpose in another Member State.
In this case, the duty shall be due in the Member State in whose territory the products are and shall become chargeable to the holder of the products.
(2) To establish that the products referred to in Article 8 are intended for commercial purposes, Member States must take account, inter alia, of the following:
- the commercial status of the holder of the products and his reasons for holding them,
- the place where the products are located or, if appropriate, the mode of transport used,
- any document relating to the products,
- the nature of the products,
- the quantity of the products.
For the purpose of applying the content of the fifth indent of the first sub-paragraph, Member States may lay down guide levels, solely as a form of evidence. These guide levels may not be lower than:
(a) Tobacco Products
cigarettes 800 items
cigarillos (cigars weighing not
weighing more than 3 g each) 400 items
cigars 200 items
smoking tobacco 1 kg;
(b) Alcohol beverages
spirit drinks 10 l
intermediate products 20 l
wines (including a maximum of
60 l of sparkling wines) 90 l
beers 110 l.”
“‘own use’ includes use as a personal gift provided that if the person making the gift receives in consequence any money or money’s worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this Order.”
“Article 8 of the directive provides only for action by the private individual on his own behalf.”
“It is clear … that the courts in question were careful to avoid resorting automatically to the presumption laid down in Article 392(1) of the Customs Code. As the Court of Cassation observed in its judgment of 21 February 1983, they exercised their power of ‘assessment on the basis of the evidence adduced by the parties before [them]’. They inferred from the ‘fact of possession a presumption which was not subsequently rebutted by any evidence of an event responsibility for which could not be attributed to the perpetrator of the offence or which he would have been unable to avoid’. … It follows that in this instance the French courts did not apply Article 392(1) of the Customs Code in a way which conflicted with the presumption of innocence.”
16. The effect of the transitional provisions for three Scandinavian countries
“Denmark, Finland and Sweden may collect excise duties and carry out the necessary checks with respect to the products covered by this Article.”
This is a reference to Council Regulation 3925/91/EC (“the Baggage Regulation”) which was adopted to take account of the problems posed by international air and sea ports, where passengers arrive both from other member states and from third countries, so that it was necessary to specify at what point their baggage might lawfully be checked.“Whereas Article 1(2) of the Regulation concerning the elimination of controls and formalities applicable to the cabin and hold baggage of persons taking an intra-Community flight or making an intra-Community sea-crossing states that its enforcement is without prejudice to controls relating to bans or restrictions laid down by Member States, provided that they are compatible with the three Treaties establishing the European Community; whereas in that context the verifications necessary for the enforcement of the quantitative restrictions referred to in Article 26 must be considered to be such controls and, as such, to be compatible with Community legislation …”
17. The Personal Reliefs Order and other changes in UK law since 1992
“3. Subject to the provisions of this Order a Community traveller entering … the United Kingdom shall be relieved from payment of any duty of excise on excise goods which he has obtained for his own use in the course of cross-border shopping and which he has transported.”
“(1) The reliefs afforded under this Order are subject to the condition that the excise goods in question are not held or used for a commercial purpose whether by the Community traveller who imported them or by some other person who has possession or control of them; and if that condition is not complied with in relation to any excise goods, those goods shall, without prejudice to article 6 below, be liable to forfeiture.
(2) [In determining whether or not the condition imposed under paragraph (1) above has been complied with,] regard shall be taken of –
(a) his reasons for having possession or control of those goods;
(b) whether or not he is a revenue trader;
(c) his conduct in relation to those goods and, for the purposes of this sub-paragraph, conduct includes his intentions at any time in relation to those goods;
(d) the location of those goods;
(e) the mode of transport used to convey those goods;
(f) any document or other information whatsoever relating to those goods;
(g) the nature of those goods including the nature and condition of any package or container;
(h) the quantity of those goods;
(i) whether he has personally financed the purchase of those goods; and
(j) any other circumstance which appears to be relevant.
(3) Paragraphs (3A) to (3C) below apply to a person who has in his possession or control any excise goods afforded relief under this Order in excess of any of the quantities shown in the Schedule to this Order.
(3A) The Commissioners may require a person to whom this paragraph applies to satisfy them that the excise goods afforded relief under this Order are not being held or used for a commercial purpose.
(3B) Where a person fails to satisfy the Commissioners that the excise goods in question are not being held or used for a commercial purpose the condition imposed by paragraph (1) above shall, subject to paragraph (3C) below, be treated as not being complied with.
(3C) Paragraph (3B) above shall not apply where a court or tribunal is satisfied that the condition imposed by paragraph (1) has been complied with.
(4) No relief shall be afforded under this Order to any person under the age of 17. ”
“The reliefs afforded by this Order are subject to the condition that the excise goods in question are not imported for commercial purpose nor are held or used for such purpose …”
“(3) For the purpose of the determination referred to in paragraph (2) above a person shall be regarded as having imported, held or used excise goods for a commercial purpose if he has in his possession or control any excise goods in excess of any of the quantities shown in the Schedule to this Order unless, if required to do so, he satisfies the Commissioners to the contrary.”
“An order under this section may provide, in relation to any relief which under such an order is made subject to a condition, for there to be a presumption that, in such cases as may be described in the order by reference (a) to the quantity of goods in question; or (b) to any other factor which the Commissioners consider appropriate, the condition is to be treated, unless the Commissioners are satisfied to the contrary, as not being complied with.”
“4(1) Except in a case falling within subsection (2) below, the powers to which this section applies shall not be exercisable in relation to any person or thing entering or leaving the United Kingdom so as to prevent, restrict or delay the movement of that person or thing between different member States.
(2) The cases in which a power to which this section applies may be exercised as mentioned in subsection (1) above are those where it appears to the person on whom the power is conferred that there are reasonable grounds for believing that the movement in question is not in fact between different member States or that it is necessary to exercise the power for purposes connected with –
(a) securing the collection of any Community customs duty or giving effect to any Community legislation relating to any such duty;
(b) the enforcement of any prohibition or restriction for the time being in force by virtue of any Community legislation with respect to the movement of goods into or out of the member States; or
(c) the enforcement of any prohibition or restriction for the time being in force by virtue of any enactment with respect to the importation or exportation of goods into or out of the United Kingdom.
(3) Subject to subsection 4 below, this section applies to any power which is conferred on the Commissioners of Customs and Excise or any officer or constable under any of the following provisions of the customs and Excise Management Act 1979, that is to say:
(g) section 78 (questions as to baggage of persons entering or leaving the United Kingdom);
(h) section 164 (powers of search).
The restrictions on Customs officers’ powers that are contained in this section flowed from the importation into our national law of the right of free movement within the internal market to which express reference was made in the first and tenth recitals to the Excise Directive (see paras 99 and 100 above).(5) …[F]or the purposes of this section a power shall be taken to be exercised otherwise than in relation to a person or thing entering or leaving the United Kingdom in any case where the power is exercisable irrespective of whether the person or thing in question is entering or leaving the United Kingdom.”
“(1) Without prejudice to any other power conferred by the Customs and Excise Acts 1979, where there are reasonable grounds to suspect that a person in the United Kingdom (referred to in this section as ‘the suspect’) has with him, or at the place where he is, any goods to which this section applies, an officer may:
(a) require the suspect to permit a search of any article that he has with him or at that place, and
(b) if the suspect is not under arrest, detain him (and any such article) for so long as may be necessary to carry out the search.
(2) The goods to which this section applies are dutiable alcoholic liquor, or tobacco products, which are:
(a) chargeable with any duty of excise, and
This provision complements a similar power to search vehicles which has been contained in section 163 of CEMA since its enactment.(b) liable to forfeiture under the customs and excise Acts.”
“5. Does Art 5(3) of the Personal Reliefs Order properly implement Art 9.2 of the Excise Directive? Article 9.2 must be read in the light of the background of the Excise Directive, found in the Recitals; the overall effect of the Excise Directive is to limit the charge to duty to the country of acquisition of the relevant goods; thereafter they may be moved to other member states without charge save where they are held for commercial purposes. Article 9.2 has the specific function of enabling the member state in question to establish whether the goods are intended for commercial purposes. It requires the member state to take account of the five listed criteria; and, for the purposes of applying the quantitative test (in the fifth indent), it enables the member state to set minimum guide levels ‘solely as a form of evidence’. The result achieved is to allow member states to adopt levels not falling below the prescribed amounts; where in any particular instance the quantity of goods exceeds the prescribed level, the member state is entitled to adopt the presumption that the goods are held for a commercial purpose. But the status of the presumption is limited to being an evidential one. So understood the Excise Directive does not, in our view, entitle the national authority to enact implementing legislation, such as Art 5(3) of the Personal Reliefs Order as construed in Carrier ( 4 All ER 38), that gives the decision of the Commissioners the status of an irrebuttable presumption.
6. [Counsel] for the Commissioners points out that the presumption in Art 5(3) of the Personal Reliefs Order, that more than one kilogram of tobacco has been imported for a commercial purpose, comes into operation only after a consideration of all the other relevant factors; if those other factors are sufficient to outweigh the fact of quantity, it will be accepted that no commercial purpose was intended. To that extent we agree. But Art 5(3) goes further. It purports to confine the evidential presumption to the administrative process by which the customs authority determines whether or not the tobacco is being held for a commercial purpose; and unless the authority has declared itself satisfied to the contrary. Once that determination has been made the person in question is treated as holding the tobacco for a commercial purpose, without any opportunity to establish the contrary. The guide level is not, in those circumstances, being used in the manner contemplated by Art 9.2 of the Excise Directive, ie ‘solely as a form of evidence’; it is being used to enable an irrebuttable presumption to be raised on the basis of the authority’s decision on the merits.
7. For those reasons we have concluded that Art 5.3 of the Personal Reliefs Order as construed in Carrier goes beyond the scope of Art 9.2 of the Excise Directive.”
18. Mortimer, Goldsmith and Lindsay
1. A Goods subject to excise duty may ordinarily be imported into one member state of the European Community from another.
B Goods subject to excise duty may be imported into one member state of the European Community from another without restriction.
C Goods subject to excise duty may ordinarily be imported into the United Kingdom from another member state on payment of the relevant duty at the point of entry into the United Kingdom.
D Proposition B is correct as a matter of EC law. Importation into one member state from another is not a chargeable event under the Excise Directive.
We accept that Proposition C sets out correctly the approach adopted by the UK legislators. The Alcohol Liquors Duties Act 1979 and the Tobacco Products Duty Act 1979 impose the duty mentioned in this proposition, and one then has to turn to the PRO to identify the terms of the “relief” granted in relation to imports from other member states.
2. A Excise duty is not payable if goods are imported for the personal use of the importer.
B Excise duty is chargeable on such imports if (but only if) goods are held for a commercial purpose in the member state of import.
C Excise duty is not payable only if goods are imported for the personal use of the importer.
D Proposition B is correct as a matter of EC law.
Proposition C correctly reflects the “relief” afforded by Article 3 of the PRO.
3. A Excise duty is payable if goods are so imported for a commercial purpose.
B Excise duty is to be charged on sale for goods acquired for personal use.
C Excise duty is nonetheless payable unless it is further shown that the goods are not imported for a commercial purpose.
D Proposition B correctly reflects EC law. Proposition C correctly reflects the way in which Articles 5(1) and (3C) of the PRO now place the burden of proof. A court or tribunal has to be satisfied that the condition that the goods are not held or used for a commercial purpose has been complied with. This formulation places the persuasive burden of proof wrongly on the citizen, not the State.
4. A Where goods are imported into the UK from another member state it is in the first instance for the Customs and Excise to make a judgment whether the goods are imported for a commercial purpose or for personal use.
B Where goods are imported into the UK from another member state it is in the first instance for the Customs and Excise to make a judgment whether the goods are imported for a commercial purpose.
C Where goods are imported into the UK from another member state it is in the first instance for the Customs and Excise to make a judgment whether the conditions for relief set out in 2C and 3C are satisfied.
D Proposition B correctly reflects EC law. Proposition C correctly reflects the PRO.
5. A Where the quantity of excise goods in question is below prescribed levels, Customs and Excise may not presume that the goods are imported for a commercial purpose rather than for personal use.
B Where the quantity of excise goods in question is below prescribed levels, Customs and Excise may not presume that the goods are imported for a commercial purpose but may still find that they are so imported.
C Where the quantity of excise goods in question is below prescribed levels, Customs and Excise are to grant the relief if it accepts that both conditions set out at 2C and 3C above are satisfied.
D Proposition B is correct as a matter of EC law. Proposition C correctly reflects the PRO.
6. A Where the quantity of excise goods in question is above the prescribed levels, Customs and Excise are to presume that the goods are imported for a commercial purpose rather than for personal use, but such presumption is rebutted if the importer, being required to do so, satisfies the Customs and Excise that the goods are imported for personal use rather than for a commercial purpose.
B See below.
C As A.
D. Propositions A and C correctly reflect the PRO.
7. A In considering, where the quantity of excise goods imported exceeds the prescribed levels, whether the importer has satisfied them that the goods are not imported for a commercial purpose rather than for personal use, the Customs and Excise must have regard, inter alia, to matters listed in Article 5(2) of the PRO.
B See below.
C As A.
D Propositions A and C correctly reflect the PRO.
In series B, propositions 6 and 7 are inverted, and rewritten thus:
7. B In considering whether the goods are imported for a commercial purpose, the Customs and Excise must have regard, inter alia, to matters listed in Article 9(2) of the Excise Directive.
6. B Where the quantity of excise goods in question is above the prescribed levels, Customs and Excise must not presume that the goods are imported for a commercial purpose, but may take account of the fact that the prescribed levels have been exceeded “solely as a form of evidence”.
7/6. D Proposition 7 correctly reflects EC law. So far as Proposition 6 is concerned, if the citizen affords no explanation at all about the purpose for which he holds the goods, then Customs and Excise are entitled to use the fact that the quantity is above the prescribed level as strong evidence that he holds them for a commercial purpose. We agree with the Tribunal in Hodgson at  (see para 128 above) that the possession of such a quantity raises an evidential presumption which calls for a response from the citizen, but once the citizen has responded, it is for Customs and Excise to be satisfied on all the evidence that the goods are held for a commercial purpose.
8. A If, in a case where the quantity of excise goods imported exceeds the prescribed levels, the Customs and Excise are not satisfied that the goods are imported for personal use rather than for a commercial purpose, they may seize the same as liable to forfeiture and on doing so must give written notice of such seizure to the importer unless he or his agent is present at the time of seizure.
B If the Customs and Excise find that the goods are imported for a commercial purpose, they may seize the same as liable to forfeiture, subject to the procedural and substantive requirement of Community law and of the Human Rights Act 1998.
C As A.
D Propositions A and C correctly reflect the PRO. We accept Proposition B as correctly reflecting in an English context what is permissible under the Excise Directive.
9. A If, in such a case, an importer gives timely notice in writing claiming that the goods are not liable to forfeiture, the Customs and Excise must take proceedings for the condemnation of the goods by the court.
B The decision of Customs and Excise must be subject to independent judicial scrutiny.
C As A.
D Propositions A and C correctly reflect the PRO. We accept Proposition B as a correct reflection of EC law.
10. A In such court proceedings, it is for the court to decide de novo whether the goods were imported for a commercial purpose, the proceedings being civil and the burden lying on the Customs and Excise to prove on a balance of probabilities that the goods were imported for a commercial purpose.
B In such appeal proceedings, it is for the appeal tribunal to decide de novo whether the goods were imported for a commercial purpose, the proceedings being civil and the burden lying on the Customs and Excise to prove on a balance of probabilities, and on the basis set out above, that the goods were imported for a commercial purpose.
C In such court proceedings it is for the court to decide de novo whether the conditions set out at 2C and 3C are satisfied, the proceedings being civil and the burden lying on the individual to prove on a balance of probabilities that the above conditions are satisfied, failing which no entitlement to relief arises.
D Proposition A does not correctly set out the position under the PRO. The burden of proof under the PRO clearly lies on the citizen: see our comments in 3D above. Indeed, during the course of the hearing before us Mr Anderson’s instructions were changed, following questions by the court. He originally set out to argue that the position was as stated at A, and that this was a correct reflection of the language of the PRO. He then told us, on instructions, that in practice a magistrates’ court is invited to start with a presumption that goods over the limit were held for a commercial purpose, and the citizen then has to rebut that presumption and prove that they were not, if his goods are not to be condemned.
Proposition C correctly reflects the position under the PRO. Proposition B (where the burden of proof is reversed) correctly reflects the position under the Directive, which should be followed both in condemnation proceedings and before the VAT and Duties Tribunal (for which see para 136 below).
“The issue of fact which is at the centre of condemnation proceedings is whether or not the goods are to be used for private or commercial purposes. No one is in a better position to know whether they are to be used for private or commercial purposes than someone in Mr Goldsmith’s position. Accordingly, if his evidence is not accepted by the justices or the Crown Court, there is a reflection upon his character. The reflection arises out of the fact that he has not satisfied the justices or the Crown Court on the balance of probabilities as to the truth of his account as to why the goods were brought into this country. However, in my judgment, that does not mean that the proceedings are criminal. Nor does it mean, in my judgment, that there is anything wrong with the form of the legislation which resulted in the condemnation proceedings. The form of the Order enables members of the public, under Article 5, to bring in quantities of goods specified in the Schedule without being under any risk of being proceeded against by Customs and Excise in reliance on Article 5(3) of the Order. If members of the public choose to bring in greater quantities than that, then the onus is placed upon them to satisfy the Customs and Excise Commissioners that the goods are required for private, and not commercial, purposes. The Order indicates the quantities of goods which the Commissioners have concluded can reasonably be regarded in general as being the sort of quantities that an individual would import for private purposes. If quantities in excess of those are brought into the country, they are not necessarily for commercial purposes. However, in such circumstances there is a presumption that the goods are being brought in for commercial purposes and the onus is placed upon someone in Mr Goldsmith’s position to rebut that presumption. The presumption is rebutted by giving evidence which, on the balance of probabilities, satisfies the courts that they are required for private purposes.”
“(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say:
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and
We were told that virtually all the appeals to VAT and Duties Tribunals that relate to Customs seizures in respect of alcohol and tobacco are now concerned with complaints about seized vehicles, and not about seized goods.(c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in the future.”
“Later, when explaining why there was no entitlement to duty relief, she said:
‘Relief from the payment of any excise duty afforded under the 1992 Order is only if the goods are for own use and that the individual has transported them. This is not the case here. You had entered into a commercial transaction with your family to purchase excise goods on their behalf. They are deemed not to be for ‘own use’ under the legal definition quoted earlier, therefore there is no relief from the payment of excise duty on these goods and this rendered them liable to forfeiture.’”
“Having regard to these considerations, I would not have been prepared to condemn the commissioners’ policy had it been one that was applied to those who were using their cars for commercial smuggling, giving that phrase the meaning that it naturally bears of smuggling goods in order to sell them at a profit. Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture cannot reasonably be heard to complain if they lose those vehicles. Nor does it seem to me that, in such circumstances, the value of the car used need be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given due consideration.”
“The commissioners’ policy does not, however, draw a distinction between the commercial smuggler and the driver importing goods for social distribution to family or friends in circumstances where there is no attempt to make a profit. Of course even in such a case the scale of importation, or other circumstances, may be such as to justify forfeiture of the car. But where the importation is not for the purpose of making a profit, I consider that the principle of proportionality requires that each case should be considered on its particular facts, which will include the scale of importation, whether it is a ‘first offence’, whether there was an attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship that will be caused by forfeiture. There is open to the commissioners a wide range of lesser sanctions that will enable them to impose a sanction that is proportionate where forfeiture of the vehicle is not justified.
I do not think that it would be impractical to distinguish between the truly commercial smuggler and others. The current regulations shift the burden to the driver of showing that he does not hold the goods ‘for commercial purposes’ when these exceed the quantity in the Schedule. In a case such as the present the driver importing for family or friends should be in a position to demonstrate that that is the case if called upon to do so: see the comments of Lord Woolf CJ in Goldsmith v Customs and Excise Comrs  1 WLR 1673, 1679-1680.”
19. Some ECHR arguments
“… none of the usual consequences of a criminal conviction follow from condemnation and forfeiture proceedings. There is no conviction or finding of guilt. Under domestic law the person concerned is not treated as having a conviction. The person concerned is not subject to any other penalty, apart from the consequences of the forfeiture and loss of the goods.”
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.” (Emphasis added).
“(i) The law must be adequately accessible: the citizen must be able to have an indication that is adequate in the circumstances of the legal rules applicable to a given case;
(ii) A norm cannot be regarded as a ‘law’ unless it is formulated with sufficient precision to enable the citizen to regulate his conduct: he must be able – if need be with appropriate advice – to foresee, to a degree that is reasonable in the circumstances, the consequences which a given action may entail.”
“42. … [T]he Court considers it necessary to rule on the lawfulness of the interference.
While the system of the right of pre-emption does not lend itself to criticism as an attribute of the State’s sovereignty, the same is not true where the exercise of it is discretionary and at the same time the procedure is not fair.
In the instant case the pre-emption operated arbitrarily and selectively and was scarcely foreseeable, and it was not attended by the basic procedural safeguards. In particular, Article 668 of the General Tax Code, as interpreted up to that time by the Court of Cassation and as applied to the applicant, did not sufficiently satisfy the requirements of precision and foreseeability implied by the concept of law within the meaning of the Convention.” (Emphasis added)
“… gives practically unfettered discretion to the Commissioners with regard to both the seizure and the measures to be taken following it. Is this type of legal provision sufficiently precise to satisfy the criterion of ‘foreseeability’ required by the Convention according to the Court’s case law? In the case of Anderson v Sweden (1992) 14 EHRR 615 this requirement, in so far as it concerns the exercise of discretion, was described as follows: ‘A law which confers a discretion is not in itself inconsistent with this requirement, provided that the scope of the discretion and the manner of its exercise are indicated with sufficient clarity, having regard to the legitimate aim in question, to give the individual adequate protection against arbitrary interference’. In my opinion the law in question does not fulfil this criterion of foreseeability.”
20. Reasonable grounds for suspicion
“The statutory power does not require that the constable who exercises the power must be in possession of all the information which has led to a decision, perhaps taken by others, that the time has come for it to be exercised. What it does require is that the constable who exercises the power must first have equipped himself with sufficient information so that he has reasonable cause to suspect before the power is exercised.”
21. Hoverspeed’s six claims: our conclusions
“give the persons concerned a clear and precise understanding of their rights and obligations and enable national courts to ensure that those rights and obligations are observed.”
“… [T]he abolition of border controls does not deprive the competent authorities of the power to act throughout their territory and up to the frontier of that territory. However as the crossing of the frontier may no longer give rise to controls, such intervention must form part of internal monitoring arrangements covering the whole of the territory.”
22. The four individual claims: our conclusions