United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2002] UKVAT(Excise) E00357, [2002] UKVAT(Excise) E357

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Alan Wragg v The Commissioners of Customs and Excise [2002] UKVAT(Excise) E00357 (11 November 2002)

E00357

EXCISE DUTIES — 216 kg of hand-rolling tobacco allegedly purchased as gifts to reward large group of relatives and friends for standing by appellant during his grave illness — tobacco sought to be imported to UK as for "own use" — evidence demonstrating commercial importation — Customs and reviewing officer justifiably concluding that excise goods properly seized — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

ALAN WRAGG

Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE

Respondents

Tribunal: Mr M S Johnson (Chairman)

Mr R Presho

Sitting in public in York on 20 September 2002

The Appellant appeared in person

Mr J Puzey, of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

DECISION

This is an appeal under section 16 of the Finance Act 1994 ("the Act") against a review decision upholding the seizure by the Commissioners of Customs and Excise ("Customs") of quantities of tobacco products ("the goods") sought to be imported into the UK by the Appellant. The goods consisted of the following:

216 kilograms of hand-rolling tobacco;

1000 cigarillos.

The circumstances of the attempted importation were that the Appellant, as he told us in evidence and as we accept, had been to the continent specifically for the purpose of acquiring the hand-rolling tobacco and bringing it back to the UK. The Appellant lives in Barnsley, South Yorkshire. He took with him a large sum of money in cash - at least £9,500 - to be able to fund the purchase. The Appellant travelled on the cross-Channel ferry in the company of a Mr Craig Harper, in a van hired from a Mr David Green, a friend of the Appellant. They travelled to France via Dover on 28 or 29 January 2001, landing at Calais, and driving the short distance from France to Belgium to obtain the goods. On their way back to Calais from Belgium, they were stopped by officers of the French Customs and fined for transporting goods without the documentation required by Article 302 M II of the French General Tax Code. Late on 29 January 2001 they returned to Dover, where they were detained by UK Customs and questioned about the goods.

Customs were not satisfied that the goods were not being held for a commercial purpose and formed the view that they were dutiable in the UK, as well as in Belgium, as excise goods, as laid down by Article 9 of Council Directive 92/12/EEC ("the Excise Directive"). Customs applied Article 5 of the Excise Duties (Personal Reliefs) Order 1992 ("the PRO"), which is the instrument whereby domestic effect is given in the UK to the Excise Directive, in deciding that the goods should be subject to excise duty in this country, notwithstanding that duty had been paid on them in Belgium, the community country of purchase. They seized the goods, despite the Appellant's protestations that he was importing the goods entirely for his own use. By European law, excise goods transported from one member state to another for one's own use are not further dutiable, over and above the duty paid in the country of purchase. But that, of course, begs the question whether the goods are really for the traveller's own use.

The Appellant is evidently, as we accept, a very unwell man. Some years ago, he informed us, he had an operation to have a kidney removed. Three weeks after the operation he was diagnosed with a malignant tumour and underwent another operation. The cancer recurred and he was operated on again in 1999. Over many months his condition responded to radiotherapy, and his health stabilized. He described himself to us as currently in remission.

The Appellant told us that by the beginning of 2001 he was anxious to reward his many relatives and friends who had stood by him and helped him during his long illness. The Appellant is and was in business as a self-employed roofer, carrying out many jobs for cash, and saving many thousands of pounds put aside and not banked. In giving evidence, the Appellant made no bones about how he conducts his business: whether the accounts of his business are complete is very much a question of how much by way of cash receipts he declares to his accountant. It is not part of the function of this tribunal to look into the completeness of his accounting; suffice it to say that we find the amount of the Appellant's declared takings from his business to be a "grey area".

So it was that the Appellant had in his house a large sum of cash that he might spend as he chose. He told us that he chose to spend it on tobacco products. He put before us a written statement with a list attached, containing the names of relatives and friends, all said to be smokers, for whom he decided to buy quantities of hand-rolling tobacco. This list was as follows:

Named Person Description of Person

Jackie Beighton The Appellant's partner

Nicola Beighton Her daughter

Tracy Beighton Also her daughter

Kevin Bligh Tracy's partner

Lee Wragg Son of the Appellant

Adèle Wragg Daughter of the Appellant

Trevor Wragg Brother of the Appellant

Bryan Wragg Another brother of the Appellant

Josie Wragg Sister of the Appellant

David Loy Her partner

Mark Wragg Another son of the Appellant

Sarah Loy Daughter of the Appellant's sister

Carla Loy Another daughter of the sister

Chris Wragg Son of the Appellant's brother

Emma Wragg Daughter of the Appellant's brother

Gunter Bergmart Adèle's partner

Ann Wragg Trevor's wife

Steve Scott Friend of the Appellant

David Green Another friend of the Appellant

Jamie Smith Another friend of the Appellant

Chris Hunt Jackie's brother

Diane Hunt His wife

Anna Lee's partner

Sheila Wragg Bryan's wife

plus "4 neighbours who were very good to me at the time".

It seemed to the Appellant, so he informed us, that the best way to express his thanks to all these people, relatives and friends, for their kindness during his illness was to make a special trip to Belgium and bring back enough tobacco to give them all a large present. The definition of "own use" in the PRO caters for gifts brought back without prospect of recompense and without contribution towards the expenses of travel. The Appellant assured us that there was none such here.

The journey had distinctive features. In the first place, the Appellant told us that none of the hand-rolling tobacco was for his own consumption. He only smoked cigars and cigarillos. The 1000 cigarillos brought back by him were what is colloquially known as a "freebie" given to him by the shop selling him the tobacco, in recognition of the size of the purchase. Secondly, the attempted importation in this case was one of the largest ever met with by these tribunals in a case in which it is alleged that the purchase was for "own use". 216 kg of tobacco is, on any reckoning, a huge amount to bring back in one go, on the basis that the goods are not used or held for a commercial purpose. Thirdly, it seems that the Appellant's travelling companion, Mr Harper, brought back no excise goods for himself. Fourthly, the van used to transport the goods was hired from the Appellant's friend Mr Green, listed as one of those intended to benefit from the trip. Accordingly this appeal does not relate to the van as well as the goods: we understand that the van, whilst seized along with the goods, has since been restored on payment of an appropriate sum. Finally, although the trip in this case was one of many made by UK residents specifically for the purpose of bringing back excise goods, this trip was allegedly a "one-off" with a particular object in view, and only that object - namely to reward the large group of persons selected by the Appellant to benefit from his bounty.

We found the Appellant's story to be plausible and not without attractive features. The picture presented was one of great generosity on the part of the Appellant, a recognition of how seriously ill he has been for a good number of years, and as underlining the closeness between him and his relatives and friends. Nevertheless we have decided that we cannot allow this appeal. This is having regard to the scope of our jurisdiction, whereby, in order to allow the appeal, we are required to be satisfied that the reviewing officer of Customs could not reasonably have arrived at the decision he reached. It is only if we are so satisfied that our powers under the Act arise: see section 16(4) of the Act.

The first reason for dismissing the appeal is that we are gravely troubled about the discrepancies between what we are satisfied that the Appellant told the officers of Customs who interviewed him at the port and what he told the tribunal. The records of interview were admitted by the Appellant to have been signed by him at the time as being correct. The matters troubling us include the following:

10.1 The Appellant stating to Customs that he smoked hand-rolling tobacco - "Golden Virginia" - and that a pouch lasted him just under 2 weeks. The Appellant told the tribunal that he never smoked hand-rolling tobacco.

10.2 His stating that he earned roughly £300 a week, and had savings of about £1500, which he had used for the trip. We are satisfied from what the Appellant told us that his income and savings from his business were much greater than those figures.

10.3 His stating that he had spent £8000 on the goods, towards which members of his family were contributing £1000 each. To the tribunal, the Appellant maintained that none of his family or friends would be paying for any of the tobacco; but no satisfactory explanation of the record of £1000 contributions was forthcoming, and we do not think that that figure can have been invented.

10.4 Moreover the £1000 contributions figured in two separate places in the record of questions and answers: once in connection with the composition of the £8000, and then again at the end of the interview, viz

"Q. Have your family members given you a £1000 each before you travelled?

"A. No, I was going to give it to them [referring apparently to the tobacco] and then they give it to me [referring apparently to the contributions]".

10.5 The fact that, immediately after that last answer, the Appellant signed the record, "I agree with the above", as he accepts. For that reason it beggars belief that he did not accept the truth of the record. So far as this tribunal is concerned, he cannot be heard to say that he did not accept the record, for the purpose of the exercise by Customs of their duty on that occasion.

It is also relevant that, when asked how much of the tobacco being imported was for each member of his family respectively, the Appellant replied that it was "just to be shared between us", from which we take it that he had taken no decision as to exactly how much of the importation each family member was to get. In other words, this was an undivided quantity of tobacco to be shared in a way that had yet to be resolved.

Our first reason for rejecting the appeal is therefore that the evidence presented orally by the Appellant to the tribunal bears no resemblance, in crucial respects, to that presented to Customs at the relevant time. It is for the Appellant to satisfy us as to why there should be two such different stories, both apparently emanating from him, and to demonstrate why we should find that what he is now saying is to be preferred to what he said then. He has entirely failed to do this. There is, in other words, no reason to treat the earlier version - that presented to Customs - as the inaccurate one.

Our second reason for rejecting the appeal is that Customs had to exercise their duty according to the responses made by the Appellant at the time and the appreciation by the officers of Customs of the nature of the importation. They had to apply a "check-list" of matters, contained in Article 5(2) of the PRO. That list corresponds with the criteria specified by Article 9 of the Excise Directive for determining the difference between "own use" and "commerciality". It seems to us that the evidence before Customs was clear. There was a very large quantity of goods - far more than one would normally expect to see on an "own use" importation. There was clear acceptance by the traveller himself that he would be receiving payment for large parts of the goods - which parts, he was unable to say, despite being invited to do so. There was, in other words, in practice no difference between this being a "commercial" importation and any other species of importation.

Finally, and in our view decisively, one looks in vain for any explanation given to Customs at the time dealing with what was presented to us as the "sheet anchor" of the Appellant's case before the tribunal, that is, that the goods were purchased as presents to reward those persons who had stood by the Appellant during his illness. Not only is no mention made in the records of interview of any intention to reward anyone underlying the purchase, his illness is not adverted to or hinted at in the questions and answers.

Mr Puzey of counsel, appearing for Customs, had prepared a detailed case on behalf of Customs, both in writing and for oral submissions. It is to his credit, when we indicated the way our minds were moving in deciding this appeal, that he did not unnecessarily elaborate his submissions, but confirmed that they were in essence as mentioned by us above. The tribunal is most grateful to Mr Puzey for his considerable assistance.

The Appellant, in his closing remarks, reiterated that his case was that all the goods were imported for "own use". He was adamant that he intended no profit from the importation, and that all the hand-rolling tobacco was intended for gifts.

Despite the Appellant's best efforts, we have no hesitation in dismissing the appeal. We conclude that the plausible case put forward by him at tribunal is an afterthought that in no way featured in the matrix of the circumstances in which the goods came to be seized. Exercising as we do the jurisdiction given to this tribunal by section 16(4) of the Act, we hold as follows:

17.1 that there was nothing before the reviewing officer of Customs, Mr Devlin, or which might or should have been before him, corresponding to the case now put forward by the Appellant;

17.2 that it was reasonable for the reviewing officer to find, on the basis of the signed interview records, and any other information that might or should have been available to him, that the importation was not for "own use" and had about it the hallmarks of commerciality;

17.3 that the officers of Customs at the port did nor err in their application of the criteria in Article 5(2) of the PRO;

17.4 that the attempted importation on its face fell within Article 9(1) of the Excise Directive; and

17.5 that the seizure was justified on the evidence and that the reviewing officer correctly so found.

In these circumstances we dismiss the appeal. Mr Puzey indicated that there was no application by Customs for costs; accordingly none are awarded.

M S JOHNSON

CHAIRMAN

RELEASE DATE: 11October 2002

MAN/01/8127