Nasir Mahmood v Director of Border Revenue [2012] UKFTT 105 (TC) (07 February 2012)
[2012] UKFTT 105 (TC)
TC01801
Appeal number
TC/2011/2615
EXCISE
DUTY – RESTORATION OF EXCISE GOODS – the Appellant failed to declare 32,000
cigarettes imported from Pakistan – the duty free allowance was
200 – was the decision not to restore the cigarettes reasonable? – Yes –
Appeal dismissed.
FIRST-TIER TRIBUNAL
TAX
NASIR
MAHMOOD Appellant
-
and -
DIRECTOR OF BORDER REVENUE Respondents
TRIBUNAL:
Michael Tildesley OBE (Tribunal Judge)
Philip
Jolly
Sitting in public at 3rd
Floor Alexandra House, 14-22 The Parsonage, Manchester M3 2JA on 30 January
2012
The Appellant appeared in
person
Alison Graham-Wells, counsel, for
the Respondents
© CROWN COPYRIGHT
2012
DECISION
The Appeal
1. The
Appellant appealed against the Respondents’ decision on review dated 8 March
2011 refusing restoration of 32,000 cigarettes.
2. The
Appellant requested return of the seized cigarettes because he did not know
that he was doing something wrong. He had purchased the cigarettes in Pakistan as presents for family and friends. On his return to the UK, the Appellant was in an agitated state. His flight to the UK had been delayed by seven
hours and on entry he had to look after his two children, aged four and six,
and two trolleys of luggage. As a result the Appellant’s attention was
elsewhere, and he did not realise that he was in the green channel. The
Appellant denied that he had deliberately misled the Customs Officer about the
cigarettes. The Appellant stated that he was unable to pay the full amount of
excise duty on the cigarettes.
3. The
Respondents disagreed with the Appellant’s version of events. The Respondents
considered that the Appellant’s actions amounted to a flagrant attempt to avoid
the payment of excise duty on an enormous quantity of cigarettes, some 160
times the permitted allowance of 200 from a third country. The Respondents
contended that the Tribunal had no power to order return of the cigarettes and
or reduce the excise duty on the cigarettes. The Tribunal was restricted to
considering whether the decision of the review officer, Mrs Hodge, to refuse
restoration of the cigarettes was reasonable.
4. The
issue for the Tribunal was whether Mrs Hodge’s refusal of restoration of the
cigarettes was a decision which no reasonable body of Commissioners could have
arrived at. In order for the decision to have been reasonable Mrs Hodge must
have considered all relevant matters and must not have taken into consideration
irrelevant matters.
5. The
Tribunal heard evidence from the Appellant and Mrs Hodge, the review officer.
The Respondents supplied a bundle of documents which were admitted in evidence.
The Tribunal had engaged the services of an interpreter, Miss Khan, because the
Appellant had a poor grasp of the English Language.
Legislation
6. Section
78 of the Customs and Excise Management Act 1979 (1979 Act) provides that
(1)Any person entering the UK, shall at such place and in such manner as the Commissioners direct, declare any such
thing contained in his baggage or carried with him which
(a) he has obtained outside the UK or
(b) Not applicable
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 (personal reliefs).
(2) Not applicable
(3)) Any person failing to declare any thing or
produce any baggage or thing as required by this section shall be liable on
summary conviction to a penalty of three times the value of the thing not
declared or of the baggage or thing not produced, as the case may be, or [level
3 on the standard scale] whichever is the greater.
(4) Any thing chargeable with any duty or tax which
is found concealed, or is not declared --- shall be liable to forfeiture.
7. The
duty free allowance for travellers entering the UK from Pakistan (referred to as a third country for the purpose of Customs and Excise duties) is
200 cigarettes.
8. Section
139 of the 1979 Act empowers a Customs Officer to seize anything liable to
forfeiture. Section 141 extends the power of seizure to any other thing, mixed,
packed or found with the thing liable to forfeiture.
The Jurisdiction of the Tribunal
9. The
Respondents’ power regarding restoration of goods and vehicles which have been
forfeited or seized is set out under section 152(b) of the 1979 Act. Once the
power is exercised whether in the form of a positive decision to restore on
terms or a refusal to restore, the person affected has a right of appeal to the
Tribunal. The powers of the Tribunal are limited in the terms set out in
section 16(4) of Finance Act 1994 which provides that:
“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;
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
that decision to have been unreasonable and to give directions to the
Commissioners as to the steps to be taken for securing that repetitions of
unreasonableness do not occur when comparable circumstances arise in future”.
10. The precondition
to the Tribunal’s exercise of one or more of its three powers, namely, that the
person making a decision could not reasonably have arrived at it, falls within
the guidance given by Lord Lane in the decision in Customs and Excise v JH
Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:
“…..if it were shown the Commissioners had acted in
a way in which no reasonable panel of commissioners could have acted; if they
had taken into account some irrelevant matter or had disregarded something to
which they should have given weight”.
11. The Tribunal is
entitled to make its own findings on the primary facts which are to be taken
into account by the Respondents when exercising their powers regarding
restoration of goods. The findings of fact include blameworthiness and the
proportionality of the penalty imposed to the policy aims pursued having full
regard to the individual circumstances of the case. The Tribunal, however, has
no fact finding jurisdiction for the purpose of challenging the legality of the
seizure and forfeiture of the goods. The Tribunal will then apply its findings
of fact to determine whether the Respondents acted reasonably in refusing
restoration.
The Facts Found
12. On 9 January
2011 at Manchester Airport the Appellant was stopped by a Customs Officer in
the green channel (nothing to declare for persons arriving from third
countries). The Appellant had arrived on a flight from Pakistan with his two children, having visited his father. The Appellant claimed he did not
speak English and was given a sheet of initial questions in Urdu dealing with
illegal goods, allowances for cigarettes and alcohol, and the powers of Customs
Officers. The Officer with the assistance of gesticulations established that
the Appellant had nothing to declare. The Officer then conducted a search of
the Appellant’s baggage and discovered 160 cartons containing 32,000 John
Player gold leaf cigarettes.
13. The Appellant
was obliged to declare the quantity of cigarettes in excess of the personal
allowance of 200 cigarettes.
14. The Officer
seized the 32,000 cigarettes, and advised the Appellant of the seizure by
pointing to the relevant paragraph in the Urdu crib sheet. The Officer provided
him with a C156 (Notification of the Seizure) and C12a which explained the
Appellant’s rights of Appeal. The purposes of these documents were described on
the Urdu crib sheet.
15. On 1 February
2011 the Appellant requested restoration of the cigarettes which was refused on
8 February 2011. On 14 February 2011 the Appellant requested a review of the
decision which was conducted by Mrs Hodge who confirmed the decision to refuse
on the 8 March 2011.
16. The Appellant
did not exercise his right of Appeal to the magistrates’ court challenging the
legality of the seizure. The Appellant made no suggestion during the course of
the proceedings that he did not understand his rights to challenge the seizure
of the excise goods by the Respondents. The Tribunal was satisfied that the
Appellant had received a copy of C12a. The fact that he had taken action to
request restoration suggested that he had understood the various options open
to him.
17. Since there was
no appeal to the magistrates’ court, the Tribunal was obliged as a matter of
law to proceed on the basis that the seizure of the cigarettes was lawful, and
that the underlying facts supporting the seizure, namely, that the Appellant
had failed to declare the 32,000 cigarettes, as a given. The Appellant for the
first time at the hearing suggested that he had been manoeuvred into the green
channel without his knowledge. The Appellant also stated that he did not know the
legal requirements associated with the importation of the cigarettes. Whatever
the truth of the Appellant’s assertions, they were not relevant to the issue
before the Tribunal. The assertions were directed at the question of the
legality of the seizure, which for the reasons given above the Tribunal was not
entitled to disentangle (see HMRC v Jones & Jones [2011] EWCA Civ 824).
18. The importation
involved an enormous quantity of cigarettes (32,000) which was 160 times the
duty free allowance of 200 cigarettes permitted to travellers from third
countries. The excise duty payable on the cigarettes was ₤6,571.26.
19. The Tribunal was
satisfied that the Appellant did not put forward exceptional grounds for such a
large importation of excise goods. The Appellant stated that he had purchased
the cigarettes to give as presents to friends and family, and that he had lost
by the seizure, his purchase monies of around ₤900. The Tribunal doubts
that the enormous quantity of cigarettes was solely for gifts. In any event the
Appellant was obliged to declare the amount of cigarettes in excess of the
₤200 allowance imported from a third country regardless of the purpose of
the purchase. The hardship caused to the Appellant by the loss of his purchase
monies was a consequence of his failure to declare. It would also appear that
he did not have the necessary wherewithal to pay the required amount of duty
(₤6,571.26) had he so declared which would have meant that he would have
lost his purchase monies whatever the outcome of his dealings with the Customs Officer
at Manchester airport.
20. The Tribunal was
circumspect about whether the Appellant consciously decided to lie to the
Customs Officer about the importation of cigarettes. Mrs Hodge acknowledged
that she had concerns about the quality of the note-book entries kept by the
Officer about his conversation with the Appellant. Mrs Hodge pointed out that
there was no record of the time of the intervention, and that the Appellant had
not signed the notebook. Also the Tribunal was bemused by the Officer’s
reference to communicating with the Appellant by means of gesticulations. On
the other hand, the Appellant’s version of events had been one of a developing
picture with new issues being raised at the hearing. Further the Appellant in
his Notice of Appeal stated that he had said “No” to the question put to him by
the Officer about whether he had cigarettes. According to the Appellant, he
gave a negative response because he and his children were very tired after
having a harrowing journey. The Appellant pointed out that the Officer asked
his son about the cigarettes who said “yes in the suitcase”. The Tribunal
concludes that the communications between the Appellant and the Officer were
hampered by language difficulties, and that the Appellant’s negative response
was not done with the intention of compounding his misdemeanour of failing to
declare the cigarettes.
Consideration
21. The Appellant’s
case was principally against the legality of the seizure, which is not a matter
for the Tribunal. As a matter of law it is not open to the Tribunal to conclude
that the cigarettes were legal imports illegally seized by the Respondents by
finding as a fact that the Appellant had done nothing wrong. The Tribunal is
obliged to proceed on the basis that the Appellant had failed to declare the
cigarettes and as a result were lawfully seized by the Respondents. The issue
for the Tribunal was whether Mrs Hodge’s decision to refuse restoration was
reasonable. The Tribunal has no power to order the Respondents to restore the
cigarettes to the Appellant. If the Tribunal decides that Mrs Hodge’s refusal
was unreasonable the Tribunal can only refer the matter back to the Respondents
for further consideration.
22. Mrs Hodge’s
starting point was the Respondent’s policy for the restoration of excise goods
which was that seized goods should not normally be restored, however, each case
was examined on its merits to determine whether or not restoration may be
offered exceptionally. Mrs Hodge decided that in the Appellant’s case there
were no exceptional circumstances to justify restoration and that there were
additional positive reasons for concluding that the cigarettes should not be
restored. The additional reasons included the enormous quantity of cigarettes,
his entry into the green channel and deliberately misleading the Officer about
the importation of cigarettes.
23. The Tribunal is
satisfied that Mrs Hodge took account of relevant considerations and
disregarded irrelevant matters in reaching her decision. The Tribunal in its
findings agreed with Mrs Hodge’s assessment that the Appellant had put forward
no exceptional circumstances to justify restoration. The Tribunal considers
that Mrs Hodge was correct to place weight on the enormous quantity of
cigarettes imported, some 160 times the allowance of 200 cigarettes. The fact
that the Appellant had failed to declare the cigarettes was a given being an
underlying fact supporting the legality of the seizure. The Tribunal’s
difference with Mrs Hodge’s interpretation of the Appellant’s negative response
to the Customs Officer was a matter of emphasis rather than one of substance.
The Tribunal considers that Mrs Hodges’ findings on the absence of exceptional
circumstances and the enormous quantity of cigarettes in the context of a
lawful seizure were more than sufficient to justify the conclusion that
non-restoration of the cigarettes was reasonable and proportionate.
Decision
24. The Tribunal is
satisfied for the reasons set out above that the Respondents’ decision on
review dated 8 March 2011 refusing restoration of 32,000 cigarettes was
reasonably arrived at within the meaning of section 16(4) of the Finance Act
1994. The Tribunal, therefore, dismisses the Appeal.
25. 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.
TRIBUNAL JUDGE
RELEASE DATE: 7 February 2012
