United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2007] UKVAT(Customs) C244, [2007] UKVAT(Customs) C00244

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Catering Services (GB) Ltd v Revenue & Customs [2007] UKSPC (15 October 2007)

C00244

CUSTOMS DUTY – failure to comply with documentary requirements for preferential rate – whether duty can be remitted – no – appeal dismissed

LONDON TRIBUNAL CENTRE

CATERING SERVICES (GB) LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

PRAFUL DAVDA FCA

Sitting in public in London on 11 October 2007

Ernesto Corelli, director, with Mr C Wilde, for the Appellant

Mario Angiolini, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

Catering Services Limited appeals against two post-clearance demands for customs duty on 19 March 2003 for £20,737.25 and 1 December 2004 for £86,856.60. The Appellant was represented by its managing director Mr Ernesto Corelli and a friend Mr C Wilde; and Customs were represented by Mr Mario Angiolini.

At the time of the first consignment for which the first post-clearance demand was made, Commission Regulation No 2782/76 was applicable. Article 7(2) provides:

"The importer of preferential sugar originating in India shall, in addition, submit to the customs authorities of the Community a voucher duly endorsed by the competent authority of India.

This voucher shall:

– bear one of the following endorsements:

'Regulation (EEC) No 2782/76 refers'"

At the time of the other three consignments for which post-clearance demands were made, Commission Regulation No 1159/2003 was applicable. Article 13 provides:

"Import licence applications and licences shall contain the following entries:

…

(c) in box 20, at least one of the following entries:

Application of Regulation (EC) No 1159/2003, No… (ACP-India preferential sugar: No 09.4321)."

Article 15 also provides for a supplementary document to be provided containing the same wording.

We find the following facts:

(1) The imports in question were of sugar from India for which there is a preferential duty rate.

(2) The Appellant tried to obtain from India an endorsement as required by Regulation No 2782/76 and wrote to Customs on 30 April 2003 saying that they had applied for it. This was never received and on 28 August 2003 Customs said that they could not allow more time but that if it were produced the duty would be refunded. It was never obtained.

(3) The entries for the remaining three consignments did not contain the words required by Regulation No 1159/2003 in box 20, which was left blank. Nor did the licence application or the licence contain the necessary wording.

(4) Mr Corelli informed us (and we accept) that Customs dealt with the entries manually and did not point out the error.

(5) The Appellant's solicitors in a letter to Customs of 26 August 2005 state that the Appellant had read leaflet ET3. Although the solicitors contend otherwise, such leaflet contains the requirements for completing preferential import licence applications and quotes the words to be included in box 20 in relation to the consignments other than the first. The letter also states that the Appellants relied on the Rural Payments agency notice to traders 54/03, which sets out the wording to be included in box 20.

Mr Corelli contends that Customs inspected the entries and should have discovered any error at the time of the first consignment. The Appellant would not have imported other consignments if they had known that the duty was payable. It was unreasonable to claim the duty after the goods had been sold.

Mr Angiolini contends that:

(1) In neither case has the Appellant complied with the applicable Regulation.

(2) In relation to article 220(2) Customs have not made any error because they did not consider the entries, but even if they did the error could reasonably have been detected by the Appellant on reading the Official Journal, and the Appellant has not complied with all the provisions laid down by the legislation in force as regards the customs declaration. As Buxton LJ said in Customs and Excise Commissioners v Invicta Poultry [1998] V&DR 128 "The first question was whether the error could have been detected by simple reading of the Journal?" Here it could have been so detected.

(3) There are no special circumstances to make article 239 of the Customs Code applicable. Also in not complying with the Regulations the Appellant has been negligent.

(4) The situation is identical to the Tribunal's decisions in Della Corporation Ltd (2006) Customs Decision 231 (which relates to the same legislation) and Masoud Yarash (2006) Customs Decision 230.

We have considerable sympathy for the Appellants but, quite apart from being deemed to know the contents of the Official Journal, they were aware of the need to obtain the necessary endorsement from the Indian authorities in relation to the first consignment, which they tried and failed to obtain; and they had two sources of information in relation to the remaining consignments (leaflet ET3 and the Rural Payments Agency Notice 57/03) that set out the wording required to be included in box 20 in relation to the other consignments. It is clear from the above that the first consignment did not have a certificate from the Indian authorities containing the necessary endorsement, and the entries for the remaining three consignments did not contain the necessary wording in box 20 and nor did the licence contain the necessary wording. Accordingly the preferential rate is not applicable and the duty is properly demanded.

We have considered whether article 220(2) of the Customs Code can assist the Appellant. This provides:

"2. Except in the cases referred to in the second and third subparagraphs of Article 217(1), subsequent entry in the accounts shall not occur where:

…

(b) the amount of duty legally owed was not entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been detected by the person liable for payment, the latter for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration."

We consider that Customs did make an error since we have accepted that the entries were processed manually and were therefore seen by Customs. However, that error was reasonably detectable by a person reading the Official Journal, which is the test to be applied in accordance with Invicta Poultry. We also agree that the Appellant has not complied with all the provisions laid down by the legislation in force as regards the customs declaration. Accordingly the Appellant cannot rely on article 220(2).

We also considered Article 239 of the Customs code which provides:

"1. Import duties or export duties may be repaid or remitted in situations other than those referred to in Articles 236, 237, and 238:

- to be determined in accordance with the procedure of the committee;

- resulting from circumstances in which no deception or obvious negligence may be attributed to the person concerned. The situations in which this provision may be applied and the procedures to be followed to that end shall be defined in accordance with the Committee procedure. Repayment or remission may be made subject to special conditions.

We agree with Mr Angiolini that this provision is not applicable because there is obvious negligence by the Appellant in not complying with the Regulations.

Accordingly we dismiss the appeal. In a letter of 30 April 2007 Customs warned the Appellant that, if successful, they would ask for costs, which Mr Angiolini duly did. We award Customs the costs of, incidental to, and consequent upon, the appeal on the standard basis to be determined in default of agreement between the parties by a Tribunal Chairman.

JOHN F. AVERY JONES

CHAIRMAN

RELEASE DATE: 15 October 2007

LON/05/7087