First-tier Tribunal (Tax)

[2010] UKFTT 548 (TC)

TC00801

Appeal number:  TC/2010/01313

EXCISE DUTY – Restoration – Motor car – Car seized following attempted importation of 5,600 cigarettes and concealment of cigarettes within car – Refusal to restore – Whether reasonable – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

RAMUNAS JAKUTIS Appellant

- and -

DIRECTOR OF BORDER REVENUE (Excise Duty) Respondents

TRIBUNAL:  SIR STEPHEN OLIVER QC

MRS CAROLINE de ALBUQUERQUE

Sitting in public in London on 25 October 2010

No attendance for the Appellant

Charlotte Hadfield, counsel, for the UK Border Agency

© CROWN COPYRIGHT 2010

DECISION

1. Mr Ramunas Jakutis (“Mr Jakutis”) appeals against the decision of the Director of Border Revenue (“the Border Agency”) dated 23 December 2009.  The decision was taken on a review.  The effect of the decision was that the Border Agency would not restore a Ford Galaxy (“the vehicle”) which had been used to import 5,466 cigarettes (attracting total unpaid excise duty of £879).  The cigarettes are referred to as “the excise goods”. 

2. When the case came on for hearing there was no attendance by Mr Jakutis or anybody representing him.  We ascertained that he had been notified of the hearing on 21 September 2010 by letter.  The letter had been sent to an address in Hounslow, London.  That is the address to which previous correspondence had been sent and is the address given in the Notice of Appeal.  We can see no reason for refusing to hear the appeal on account of Mr Jakutis’ absence.  We mention in this connection that rule 33 of the Tribunal Procedure Rules 2009 entitles the Tribunal to proceed with the hearing if satisfied that the party has been notified and that it is in the interest of justice to proceed.  Mr Jakutis has the opportunity of applying to have our decision set aside in pursuance of rule 38 of the Rules; we can only do this if it is in the interest of justice to set it aside. 

Background facts

3. On 9 November 2009 the Border Agency stopped the vehicle at Dover Eastern Docks.  It was being driven by Mr Jakutis.  The officer asked some questions and in response Mr Jakutis stated that he was living in Lithuania and that he was on his way to Essex to pick up a Ford that he had bought on EBay.  Mr Jakutis said that he had owned the vehicle he was driving for one month.  When asked if he had any cigarettes or alcohol he told the officer that he had ten and when asked to clarify this he said he had “ten blocks” or 2,000 cigarettes.  He said that he did not know how many cigarettes he was allowed to bring in from Lithuania.  The officer advised him that it was 200.  He showed the officer a bag containing cigarettes and told him that there were no more in his car.  The vehicle was searched and the spare tyre removed.  An X-ray revealed a number of objects inside the tyre.  It was cut open and found to contain 3,340 cigarettes.  A further 120 cigarettes were found in the back seat pocket.

4. Mr Jakutis had travelled from Lithuania.  Lithuania is a new Member State of the European Union for which there remains a statutory allowance on the quantity of certain tobacco products imported into the UK.  The allowance for cigarettes is 200 and there is no allowance for further cigarettes or like product bought in for personal consumption.  The goods, including Mr Jakutis’ allowance, were therefore liable for forfeiture under Article 4 of the Customs and Excise Duties (Travellers’ Allowance and Personal Reliefs) Order 2004.  They were also made liable for forfeiture under Section 49(1)(a) and (f) of the Customs and Excise Management Act 1979 and under Regulation 16 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992. 

5. All the excise goods were seized under section 139(1) of the Customs and Excise Management Act (“CEMA”) as liable to forfeiture and/or under section 141(1)(b) of CEMA because they were mixed/packed/found with goods liable to forfeiture.  The vehicle was seized as liable to forfeiture under section 141(1)(a) of CEMA as it was used for the carriage of goods liable to forfeiture.  We did not understand there to be any dispute as to the effect of those statutory provisions.

6. The seizing officer did not offer to restore the cigarettes on payment of the duty because Mr Jakutis had not freely declared the full quantity.

7. Mr Jakutis did not challenge the legality of the seizure of the vehicle and the cigarettes.  Consequently the goods and the vehicle were condemned as forfeit to the Crown by passage of time under paragraph 5 of Schedule 3 of CEMA.

8. On 11 November 2009 Mr Jakutis wrote asking for the vehicle to be restored to him.  On 30 November an officer of the Border Agency wrote to Mr Jakutis refusing to restore the vehicle.  Mr Jakutis then wrote requesting a review of that decision.  In his letter he stated that he was unemployed and could not find a job without a car.  He explained that he had children at school and admitted that he had made “a big mistake”. 

9. On 18 December an officer wrote to Mr Jakutis explaining the review process and inviting him to provide any additional information. Nothing more was received.  On 23 December the reviewing officer confirmed that, having conducted a review,  the vehicle would not be restored.  On 13 January 2010 Mr Jakutis lodged a Notice of Appeal.

Mr Jakutis’ case

10. In the Notice of Appeal of 13 January 2010 Mr Jakutis stated “I am writing to ask if I can get penalty charge to get my car back.  I can do a payment for seized vehicle.  It is better than old vehicle.  I may do payment straightaway.  Thanks”.

11. We have inferred from Mr Jakutis’ case that the only argument that he is presenting is that the decision not to restore the vehicle was unreasonable. There has been no challenge to the seizure nor to any other details relied upon in reaching the decision not to restore or the review of that decision.  Our task, therefore, is to consider the reasonableness of the review decision, i.e. the decision not to restore the vehicle to Mr Jakutis.  We do not consider it necessary to set out all the statutory provisions that have some relevance to this matter. 

The case for the Border Agency

12. The Border Agency contend that the review decision was one that could reasonably have been arrived at.  They point to the fact that the review officer had examined the circumstances of the case so as to determine the relevant issues.  It was necessary to determine whether the excise goods were held for profit because in that case the vehicle would not normally be restored.  It was necessary to determine whether the excise goods were to be passed on to others on a “not for profit” remuneration basis.  It was necessary to determine whether there were any exceptional circumstances that should result in the restoration of the vehicle.  It was, finally, necessary to take into account whether the results of not allowing restoration was fair, reasonable and proportionate in all the circumstances.

13. The Border Agency say that they apply their policy on restoration of vehicles in “for profit” cases.  That general policy is that private vehicles used for improper importation or transportation of excise goods should not normally be restored.  However, vehicles may be restored at the discretion of the Border Agency subject to such conditions as may be thought proper (e.g. for a fee) in appropriate circumstances.  One appropriate circumstances is that if the excise goods were destined for supply on a “not for profit” basis then the vehicle would not normally be seized.  In aggravated cases, where more than 6kg of handrolling tobacco or 6,000 cigarettes were imported or where there had been a previous offence by the individual, the first aggravated detection would mean that the vehicle would normally be seized and restored for 100% of the revenue involved subject to a maximum of the trade buying price of the vehicle in Glass’ Guide.  But if the excise goods were destined for supply for profit and their quantity was small and it was a first occurrence then in deciding whether the vehicle should be restored the review officer would be guided by the same principles and conclusions as have just been summarised.

14. In essence, the Border Agency say that the conclusion of the review officer that the excise goods were held on a for profit basis and that this was an aggravated case was justified in the circumstances.  The conclusion that the vehicle should not be restored was therefore fair, reasonable and proportionate.

15. The Border Agency point to certain additional reasons for concluding that the excise goods were held for profit and that the importation was aggravated such that the vehicle should not be restored. The first of these reasons was that Mr Jakutis had been stopped by a Border Agency officer in uniform.  Mr Jakutis must be taken to have known that he was expected to answer questions truthfully and to disclose the full quantities of the excise goods being carried with him.  He had told the officer that he had 2,000 cigarettes, which was not the truth.  He had failed to disclose all the excise goods and consequently had misled the officer about the true quantity of them.  Secondly, Mr Jakutis’ allowance was 200 cigarettes but he had imported 5,460.  That came to 27 times his allowance.  He had failed to disclose that he was carrying a quantity in excess of 2,000 and did not offer to pay duty on them.  Thirdly, in reaching the decision not to restore, the Border Agency had taken into account the fact that Mr Jakutis had concealed 3,460 cigarettes in the spare tyre and rear pocket of the car thereby rendering them liable to seizure by virtue of CEMA section 49(1)(f).

Conclusions

16. We take into account the fact that Mr Jakutis had no time claimed that the excise goods were to be passed on to others on a “not for profit” reimburse basis.  We are satisfied with the decision of the review officer that the goods were held for profit and should therefore not normally be restored.  In those circumstances, it seems to us, non-restoration is fair, reasonable and proportionate.

17. Mr Jakutis, in his letter asking for a review and in his Notice of Appeal has drawn attention to the hardship caused by the loss of the car.  The review officer had taken that matter into account and in the review decision had sympathised with Mr Jakutis’ difficulties in taking his children to school and finding work.  In common with the Border Agency we recognise that one must expect a considerable inconvenience as a result of having a car seized by Customs coupled with the expense involved in making other transport arrangements.  Hardship is a natural consequence of having a car seized and exceptional hardship should only be considered as a reason not to apply the policy not to restore the vehicle.  Moreover, replacement of a seized vehicle with another does not necessarily require  replacement with a vehicle of equal specification and value if a more basic or cheaper vehicle will perform adequately.  The review officer did not regard either the inconvenience or expense in Mr Jakutis’ case as exceptional hardships over and above what one would expect.  He had chosen to become involved in a smuggling attempt.  If he now finds that the consequences of those actions puts him in a difficult financial position, that is something he should have considered before deciding to become involved.  The review officer concluded that there was no reason to disapply the policy of not restoring the car in those circumstances.  We have no reason to dispute the decision of the review officer.

18. In all the circumstances we think that the review officer was right in not considering that Mr Jakutis had suffered exceptional hardship by reason of the loss of a vehicle.  Consequently, and taking all the factors into account, we think that there was no reason to disapply the policy of the Border Agency.  Mr Jakutis, in line with the policy, has been treated no more harshly or leniently from anyone else in similar circumstances.  We therefore think that the Border Agency have acted reasonably in deciding that the vehicle should not be restored.

19. For those reasons we dismiss the appeal.

20. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

SIR STEPHEN OLIVER QC

RELEASE DATE: 4 November 2010