First-tier Tribunal (Tax)

[2011] UKFTT 4 (TC)

TC00881

Appeal number: TC/2010/02082

EXCISE DUTY – restoration of car – 15 kilos of hand-rolling tobacco, 1,200 cigarettes and 2,050 cigars between three people – whether reasonable not to restore – yes – appeal dismissed

FIRST-TIER TRIBUNAL

TAX

JOHN MARTIN Appellant

- and -

DIRECTOR OF BORDER REVENUE Respondent

TRIBUNAL: JOHN F AVERY JONES CBE (TRIBUNAL JUDGE) RUTH WATTS DAVIES MHCIMA FCIPD

Sitting in public at 45 Bedford Square, London WC1 on 9 December 2010

The Appellant had informed the Tribunal that he would not be present or represented

Rupert Jones, counsel, instructed by the UK Border Agency Legal Team, for the Respondent

© CROWN COPYRIGHT 2010

DECISION

1.     Mr John Martin appeals against a decision on review dated 23 February 2010 not to restore a car, a Volvo S60 registration OV51 2VF (“the car”), and 15 kilograms of hand-rolling tobacco, 1,200 cigarettes and 2,050 cigars that had been seized on 5 December 2009 at Coquelles, France.  The Appellant had informed the Tribunal that he would not attend, and the Respondent was represented by Mr Rupert Jones.

2.     We find the following facts (for the avoidance of doubt when we say that a person said something we intend to find as a fact that they said it, rather than that the statement was necessarily true):

(1)  The car driven by the Appellant with Mr Simon Danes and Mrs Leanna Danes, described as the Appellant’s ex-foster daughter and her husband, as passengers was stopped at Coquelles, France on its return from Belgium.  The Appellant told officers that he had purchased “100 baccy and 6 Superkings” meaning 100 (50 gram) pouches of hand-rolling tobacco and 1,200 cigarettes.  The car was also found to contain 2,050 cigars.  The Appellant said that he was surprised that there were 40 boxes of cigars as he had only intended to purchase 20 on the internet and may have pressed the wrong key.  He gave no explanation about why he did not declare any cigars.

(2)  There were three receipts for the tobacco each for 100 pouches of hand-rolling tobacco (timed at 00:47:29, 00:47:31: 00:47:33), and one receipt for the cigarettes and no receipt was produced for the cigars.  The price of the tobacco and cigarettes was £1,422.  The duty on the tobacco was £1,866.75, on the cigarettes was £218.10, and on the cigars was £709.83.

(3)  The Appellant and Mr and Mrs Danes each said that they had purchased 100 pouches of tobacco, with the Appellant purchasing the cigarettes and cigars.  The Appellant said he purchased all the goods with the Danes contributing £400 each, but later in the interview he said “it’s my money; they just came over and split the costs.”  He said that he smoked 20 to 30 cigarettes a day, and he and his wife 70 a day or 1.5 pouches a day.  He obtained 50 cigarettes per pouch.  Mr Danes said that he smoked 40 cigarettes a day and that 100 pouches would last him 5 or 6 months.  He had paid £395 for the tobacco.  Mrs Danes said that she obtained 50 to 55 cigarettes per pouch, that a pouch would last up to two days, and that she smoked about 4 pouches a week.  The tobacco would last about 6 months.  Mr and Mrs Danes did not contest the forfeiture of the tobacco they said had cost them £790.

(4)  The three of them had travelled on 10 and 11 July 2009 when they said that they had each purchased 60 pouches of tobacco, and the Appellant also some cigarettes and cigars.  The Appellant said he had 5 pouches left. On his stated rate of consumption of 1.5 pouches a day he would have finished them in 40 days (around 20 August 2009) and would not have 5 pouches left on 5 December 2009.  Mr and Mrs Danes said they had 16 or 17 pouches left.  On their stated rate of consumption they would have smoked 126 pouches in the period between the trips leaving 54 pouches unaccounted for.

(5)  The Appellant confirmed to the officer that on a previous occasion he had 5.2 kilograms of tobacco seized from him.  He had on that occasion initially applied for condemnation proceedings and had later withdrawn.

(6)  The officer considered that the all the tobacco was the Appellant’s in view of the fact that the Danes had not asked for restoration and in the light of the conflicting statements about who paid for them.  The receipts were issued at 2-second intervals suggesting that only one person can have physically paid.  On the basis that all the tobacco (plus the cigarettes and cigars) were the Appellant’s he considered that they were held for a commercial purpose and seized the tobacco, the cigarettes, the cigars and the car.  The decision not to restore the car or the excise goods was upheld on review.

(7)  We infer and find that the excise goods were the Appellant’s and that he had paid for all of them.

(8)  The Appellant’s daughter suffers from type 1 brittle diabetes which can cause unconsciousness requiring urgent medication.  Her children would call on the Appellant at all hours of the day and night when this was required, for which he needed the use of the car that had been seized.  The Appellant offered a doctor’s certificate about this but did not provide one.  However we accept that his daughter has a serious health problem.

(9)  The Appellant is also registered as the keeper of a Peugeot car, registration number F618 LAM and another car is registered at the same address.  The Appellant stated that the other cars were used by his foster daughters but has provided no explanation of why if he is the registered keeper of the former one, this is not available to him.

3.     Mr Jones contends:

(1)  The Tribunal has no jurisdiction to consider the legality of the seizure or whether the excise goods were for the Appellant’s (and the Danes’) own use.  The Appellant decided against applying for condemnation proceedings (and knew about them as he had on a previous occasion applied for them and then withdrawn).  In the latest case, Gascoyne v Customs and Excise Commissioners [2005] Ch 215 the Court of Appeal stated that while an importer was not completely shut out from raising own use before the Tribunal, the Tribunal would have to be very conscious of issues of abuse of process when deciding that this could be done.  In HMRC v Smith (17 November 2005) Lewison J stated that there must be something more than a failure on the part of the applicant to invoke condemnation proceedings before the Tribunal is empowered to question the legality of the forfeiture.  It was stated in HMRC v Dawkin [2008] EWHC 1972 (Ch) that the fact that costs can be awarded in condemnation proceedings is not an exception al reason to avoid the abuse of process doctrine.

(2)  The officer was reasonable in concluding that the excise goods were for commercial use.

(a)   The quantity of tobacco was large, 5 times the guideline amount (for one person).  The estimates of consumption did not agree with the quantities that the parties said they had left from the July 2009 trip. 

(b)  Payment in cash involved the danger of carrying large sums and meant that there was no record of the purchase.

(c)   Even though the tobacco was on three receipts, they were issued at 2-second intervals suggesting that the Appellant had paid for all of it and had requested three receipts (although this did not mean that the Danes could not have given him the cash to pay on their behalf).

(d)  The cigars were not declared and nor was a receipt for them produced.

(3)  Non-restoration of the car was reasonable and proportionate.  The value of the car did not have to be taken into account for a commercial import, see Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766. 

4.     The Appellant contends:

(1)  The excise goods were for his own use and the officer should not have concluded that they would be supplied for profit.

(2)  In view of his daughter’s medical condition he needs the car and would suffer exceptional hardship from the loss of it.

5.     We asked Mr Jones whether he had seen anything in the papers that he should bring to our attention as favouring the Appellant’s case.  He pointed to a letter from the Appellant (also referred to by Mr Danes in his interview) that on a previous occasion he had been accused of importing 52 kilos (his letter says 54 but presumably this should be 52, as in Mr Dawes’ interview) of tobacco which was changed to 5.2 kilos with an apologetic letter being received.  This relates to an earlier trip and in our view has no bearing on this case.

6.     Section 152 of the Customs and Excise Management Act 1979 provides that: “The Commissioners may, as they see fit…(b) restore, subject to such conditions (if any) as they think proper, anything forfeited or seized….”  By section 14(2) of the Finance Act 1994 a person affected by a decision of the Commissioners, which includes a decision under section 152(b), may require it to be reviewed.  The Commissioners’ powers are now vested in the Director of Border Revenue.

7.     The Tribunal’s jurisdiction is contained in section 16 of the Finance Act 1994 which applies to matters contained in Schedule 5 including decisions on restoration.  Section 16(4) provides that

“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 the 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;….”

8.     For the reasons advanced by Mr Jones and in the light of the authorities cited by him we agree that it would be an abuse of process to allow the Appellant to raise the question of own use in these proceedings.

9.     The Tribunal’s jurisdiction is therefore limited to considering the reasonableness of the decision not to restore the car and the excise goods.  The Director’s policy is not to restore excise goods in not-for-profit aggravated cases, which this is as there had been a previous offence relating to 5.2 kilos of tobacco, and also more than 6 kilos of hand-rolling tobacco was involved), and not to restore them when held for profit.  The policy is not to restore vehicles involved in smuggling on a not-for-profit basis for 100% of the duty for a first offence in aggravated cases, and not to restore vehicles involved on a profit basis involving this quantity of tobacco.  He would depart from the policy if exceptional hardship arose from the loss of the vehicle.  The review officer stated in the review letter that he was not bound by the policy and had considered the case on its merits.  His conclusion was that as there had been no claim that the excise goods were to be passed on to others on a not-for-profit basis, that they were held for profit and should not be restored.  We do not find the officer’s conclusion to be one that he could not reasonably have arrived at, and would have come to the same conclusion ourselves.

10.  The review officer also found that the Appellant would not suffer exceptional hardship from the loss of the car.  We had some concerns about the Appellant’s need for a car in view of his daughter’s medical condition which he stated, and his daughter confirmed in a letter might require him to be available to visit her urgently at any time in the day or night.  The reviewing officer referred to this but pointed out that it had not prevented the Appellant from travelling to the continent on at least three occasions.  He also pointed to the other car of which the Appellant is the registered keeper.  It may be that this is used by one of his foster daughters but he gave no explanation of why if he was the registered keeper the car was not in fact available to him.  If he had done so we might have taken a different view but on balance, although it is not clear cut, in view of these other factors we do not find that the officer‘s decision that the Appellant would not suffer exceptional hardship from the loss of the seized car to be unreasonable.

11.  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.

JOHN F AVERY JONES

TRIBUNAL JUDGE

RELEASE DATE: 14 December 2010