United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00385.html
Cite as: [2003] UKVAT(Excise) E00385, [2003] UKVAT(Excise) E385

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Morton v Customs and Excise [2003] UKVAT(Excise) E00385 (17 February 2003)

E00385

EXCISE – Restoration refusal – Own use – Concealment – 12 kg tobacco and 8600 cigarettes – Five travellers in vehicle – Untruthful answers – Commerciality not proved – Concealment not intended – CEMA 1979 s.49(1)(f) – ECHR Protocol 1, Art 1 – New review directed within 21 days

LONDON TRIBUNAL CENTRE

BRIAN SCOTT MORTON Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: THEODORE WALLACE (Chairman)

LYNNETH SALISBURY JP

RUTH WATTS-DAVIES MHCIMA, FCIPD

Sitting in public in London on 31 January 2003

The Appellant in person

Mr Christopher Mellor, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This appeal concerns the non-restoration of a Peugeot 406 car and excise goods seized from the Appellant on 17 November 2001 at Coquelles.
2. The Appellant was with four others. Between them they had 12 kilograms of hand-rolling tobacco and 8.600 cigarettes, an amount which was over the old guidelines. When stopped they gave untruthful answers as to the amount. The officer took the view that the tobacco and most of the cigarettes were deliberately concealed in the boot by crates of beer and seized both the goods and the vehicle. He asked no questions as to the purpose of the imports.
3. Two issues of fact arise which are to a considerable extent interlinked. The first is whether the Commissioners can show that the goods were held for commercial purposes. The second is whether the tobacco and cigarettes were concealed with intent to deceive within section 49(1)(f) of the Customs and Excise Management Act 1979.
4. Since the burden of proof is on the Commissioners to establish that the excise goods were held for a commercial purpose, it is convenient to set out their evidence on this first.
5. Trevor Mulligan, a uniformed Customs officer, was on duty at 9.25pm at Coquilles when the Appellant's vehicle which had been selected for inspection by another officer was referred to him. The car was driven by the Appellant and had four other passengers. The Appellant told him that he had been to Calais and Belgium and that they had brought 3,000 cigarettes in total between them. Asked about any other cigarettes and tobacco goods, the Appellant said "No" and the front seat passenger said that he had a pack of 10 pouches of Drum. The Appellant told him that it was his car and he had had it since February.
6. They were all still in the car at this stage. Mr Mulligan asked whether they were all sure they had no more cigarettes and tobacco. The Appellant said, "That's all we've got." And the others said, "No."
7. Mr Mulligan then asked the Appellant to open the boot. He got out of the car and did so. Mr Mulligan saw cases of beer and wine with cigarette cartons between them and a pack of 10 pouches of Drum on top. Mr Mulligan said that he asked if there was any more tobacco in the boot and that the Appellant said that there was not. There were 158 cans of beer and cider, six cases of 24 cans and three of 8 cans; there were 22 bottles of wine and seven bottles of spirits. These quantities are taken from the Job Product Sheet for which P&O signed after the seizure. The cans and the bottles were immediately inside the boot in two rows and two layers one on top of the other. Mr Mulligan asked the Appellant to remove some of the cases so that he could see behind. The Appellant did so and Mr Mulligan asked him to move some more. When the Appellant did so, Mr Mulligan saw a 5 kg box of tobacco behind. Mr Mulligan asked the Appellant to move the rest and he saw a 6 kg box and more cigarettes in black carrier bags further into the boot. Mr Mulligan said, "There's a lot more in there than you told me about, isn't there?" The Appellant replied, "Not much."
8. Allen Peter Mossman, the front passenger, then got out and started remonstrating that there was no problem as they could bring back what they liked and that Mr Mulligan was infringing their human rights. He was carrying an open bottle of Jack Daniels and was swigging from it throughout; he was loud and overbearing. The three passengers in the rear of the car got out when Mr Mulligan asked them. Mr Mulligan looked into the back and saw a black bag with cigarettes under the front passenger seat; it almost snagged as he pulled it out; he described it as "wedged under the seat". He said that there were four cartons of 200, measuring in all about a foot by six inches by four inches high.
9. Mr Mulligan considered that the tobacco was packed in the boot was packed in a manner intended to deceive and that the cigarettes in the car had been hidden. He noted that he asked why the extra cigarettes and tobacco had been hidden from view and why he had not been told about them and that the Appellant said, "We didn't know how much we could bring back." Mr Mulligan said that he told them that this did not explain why they had all failed to tell him about it when he gave them ample opportunity to do so but none of them replied.
10. He noted that at 9.30pm, which is just five minutes after he first spoke to the Appellant, he told him that he was seizing the car and all the goods under section 49 of the Customs and Excise Management Act 1979 because the goods behind the beer were packed in a manner to deceive and they had all denied having extra goods on several occasions. The Appellant pleaded with him not to take his car. Mr Mossman said, "You ain't having my stuff." Mr Mulligan told him that it had already been seized. Mr Mossman drank most of the contents of his bottle and threw the rest away.
11. Mr Mulligan said that he was concerned about Mr Mossman's behaviour and did not want to get too close to him. He focussed on speaking to the Appellant only who was still pleading for his car saying that he still had ten thousand pounds to pay on it.
12. Mr Mulligan then prepared Form C156 headed "Seizure Information". This listed the following:

"8300 Mixed brands cigarettes

12kg Hand-rolling tobacco (mixed brands)

A quantity of beer

A quantity of wines

A quantity of spirits

One motor car Peugeot 406 V320 XRP"

He recorded the following names on the seizure information : Brian Scott Morton, Allen Peter Mossman, Dean Francis Young, JMK Watford, T J Whiston. He obtained the Appellant's signature acknowledging the description of the goods to be correct. Mr Mulligan said that this was on a quick count which was not exact because he was concerned at Mr Mossman's behaviour.

13. The goods were later tallied by another officer before being handed over to P&O Trans European for carriage to the United Kingdom. Three days later Mr Mulligan recorded the quantities in his notebook as : 65.76 litres of beer, 10.56 litres of cider, 34.5 litres of wine, 8.7 litres of spirits, 12 kgs of hand-rolling tobacco and 8,600 mixed cigarettes.
14. Mr Mulligan also prepared a "Seizure of Vehicle" form which the Appellant signed. He explained the paperwork and told the Appellant that the decision to seize the car would not be overturned that night. He then explained the procedure to get back to the UK by minibus. Mr Mossman became loud again and said that he would write to his MP about his human rights. Mr Mulligan replied that he would note this in his notebook. Mr Mulligan said that the Appellant and the other passengers were well behaved. At 10.00pm Mr Mulligan passed the Appellant and his passengers to Chubb Security and the car and goods to Operational Support.
15. Mr Mulligan said that he wrote his notes immediately after they had left; he had not regarded it as safe to do so before. There was therefore no opportunity for countersignature by the Appellant. He did not record the time when he wrote the notes but did put the date.
16. In fact the first of the eleven pages in his notebook must have been written when they were still there because it contained the names, dates of birth and passport numbers of all five, the vehicle number and rough amount seized. It is clear that Mr Mulligan must have obtained the passports of all five and taken the details.
17. In another search of the car a list was found on a scrap of paper in one person's handwriting with the following:

" 1 Box GV 240

1 Box O/H 200

1000 SKL 100

2000 SK 200

1000 BH 100

400 BH 40

600 EM 60

200 M/L 20

960"

Mr Mulligan's evidence as to when this was found was contradictory. He first said that it was found after they had left. Then he said that he found it when they were there. Then he said that he found it inside the car after the decision to seize but could not remember where. His note said, "In another search of the car it was found," which suggests that someone else found it. His note said that he asked what the list was for and received no explanation. Mr Mulligan told the Tribunal that the concluded from the list that there may well have been a commercial intent. He did not ask whether there was a commercial purpose nor did he ask who had written the list. His decision to seize was made because he found the tobacco hidden.

18. Mr Mulligan said that he considered the concealment to be both physical and what was said. He said that the beer and other drink took up more space in the boot than the tobacco and cigarettes. The boxes of drink stretched completely across the boot and were piled to a height which meant that you could not see behind. The tobacco was in two boxes on their end behind the drink. He agreed that the boot was full and that its contents would not have been liable to slide around. He felt that the cigarettes could have been put under the seat to avoid being found.
19. He estimated the cost of 12 kg of tobacco in Belgium as £480 and 8,600 cigarettes as £279.50. The excise duty on 12 kgs of tobacco is £1,161.73; that on 8,600 cigarettes is £1,186.53.
20. The evidence of Laurence Johnston, the Review officer, contained no direct evidence in relation to the factual issue of commerciality. He referred to three previous trips by the Appellant in his Review but produced no evidence of this and referred to one previous trip in evidence. The Appellant accepted that he had made two other trips in 2001 with the same passengers.
21. The Appellant told the Tribunal that he had gone on a day trip with his four friends using the tunnel on 17 November, a Saturday. They went to get cigarettes, tobacco, beer, spirits and wine for Christmas. He said that on the train going out he made a list of what they were all going to buy. They knew it was going to be over the limit but it was for their own use and they were led to believe they were only guidelines. The figures on the right of the list were the rough cost. The list was for all of them.
22. On arrival they went to Belgium where he had been before. They bought the cigarettes and tobacco first; each paid for what they bought. He bought 60 pouches of 50 grammes of Golden Virginia, 600 Embassy No.1 and 200 Marlborough Light. The tobacco was for himself, the Embassy for his wife and the Marlborough for his son who lived at home. Including the drink which he bought later, he paid about £250 in cash. The tobacco and cigarettes were in two shops next to each other. Mr Whiston asked if he could get some more, the question being whether they would fit in the car; they were over the limit anyhow. He did not know how much Mr Whiston bought. He did not bring the list in : they each made their own purchases. The boxes of tobacco were to be split. The shop put the cigarettes into black carrier bags.
23. After a meal in a pub, they went to Eastenders in Calais where they bought the drink. He bought two crates of Foster's lager, 12 bottles of cheap white wine, a bottle of red wine and a bottle of whisky. The drink was for family use at Christmas. They put the drink into the boot where the tobacco and cigarettes were already. It completely filled the boot up and they took out a bag of cigarettes to make room for beer. They split one of a bag of cigarettes and fitted it between the gaps. One of the rear passengers had a bag of cigarettes on his lap.
24. The Appellant said that they arrived back at Coquelles at around 9.00pm local time, he was driving. He said that broadly speaking the officer's notes were correct. He was not aware of him making any notes apart from the seizure form.
25. He said that he had bought the car in the previous February for £10,250 and including interest still owed £10,250 at the time when the car was seized. He told us that he is still paying for it.
26. The Appellant told us that in November 2001 he was a transport manager in Dagenham, 24 miles from his home and he used his car to get to work; the early shift started at 4.00am, two hours before the first train. They had stopped giving him early starts, but he left after seven months because he was not doing proper shifts. He is now driving for Tesco.
27. In cross-examination the Appellant agreed that he had said that they had bought 3000 cigarettes in total and no other tobacco goods, which was not correct. He accepted that he and the others had failed to declare all the goods. He had said, "That's all we've got." He said that they knew they were over the limit and that there were guidelines for personal use; they did not declare what they had initially because of this. He agreed that he said, "We didn't know how much we could bring back." He said that he still found the guidelines confusing.
28. The Appellant denied concealing cigarettes and tobacco in the boot, saying that they were in the back of the boot because they were bought first. He accepted that the tobacco was not visible. He disputed that a bag of cigarettes could be wedged under the front seat but said that he did not see what had happened.
29. When Mr Mellor put it to him that he was bringing back the goods to sell them on, he denied it. He said that he did not know why the cost was totalled on the list and denied the suggestion that he was personally going to buy all the goods.
30. Asked why his letter of 7 December 2001 said that four wives smoked but his letter of 19 February 2002 said that all wives smoked, he said that all wives smoked; he said that the first letter was wrong.
31. He said that Mr Mossman got quite worked up and was a bit loud and annoyed but said that he was not aggressive.
32. He said that they had thrown the receipts away.
33. He told the Tribunal that a box of tobacco has a hundred 50 gramme pouches and that he rolled about 100 cigarettes from a pouch.
34. In a letter of 19 February 2002, the Appellant listed what they had bought as 8,600. This was the amount tallied by Customs, the only difference being that Customs recorded 600 more Benson and Hedges and no Embassy. It was also close to the quantities on the list with the addition of 3,000 Benson and Hedges for Mr Whiston and another 400 Super Kings. It is to be noted that at that stage the Appellant did not have either the List or the tally for P&O.

Submissions on Commercial purpose

35. Mr Mellor submitted that the cigarettes and tobacco were held for a commercial purpose.
36. He relied first on the false declarations or answers given of which he counted five. He said that most of the notebook had not been disputed. Although the Appellant had said that they did not know how much they could bring, he did know the guidelines and know that he could bring more for his own use. He admitted to having travelled before.
37. He relied on physical concealment of the tobacco and cigarettes in the boot. He said that the cigarettes visible squared with what was declared and that this supported the conclusion that the rest was concealed. He relied also on the cigarettes wedged under the front seat.
38. Finally he relied on the list. He asked why the Appellant had totalled the cost if it was for individual purchases. He submitted that the list was written by the Appellant and was of goods to be bought by himself. He commented that none of the other four passengers had come to give evidence.
39. The Appellant said that he had been misled into thinking that the other passengers were not needed. Right from the start he was the only person who was given a notice and it was his car. They could have come to the appeal. He said that his goods were purely and simply for his own and his family's use. He denied that the goods were concealed.

Conclusions

40. It has been clearly established by the Divisional Court in R (Hoverspeed Ltd) v Customs and Excise Commissioners [2002] 3 WLR 1219 that the burden of proof is on Customs to establish that goods imported in circumstances such as these are held for a commercial purpose. The incompatibility of the previous provision in the Excise Duty (Personal Reliefs) Order 1992 with European Community law has been accepted and the provision repealed.
41. The issue is therefore whether Customs have proved the allegation that the importation was for resale at a profit. There was no suggestion that it was for sale to family and friends.
42. When the Appellant and his passengers were stopped not one question was put to any of them as to why the goods were being imported. This was apparently because Mr Mulligan considered that it was sufficient that the goods were packed in a manner intended to deceive him. Because he regarded this as enough to justify seizure by reason of section 49(1)(f) of the Customs and Excise Management Act 1979, he did not interview them as to commerciality. The letter from the Team Leader dated 29 January 2002 was wrong in stating that the Appellant was interviewed as to his intentions for the goods. While the behaviour of one of the passengers was clearly difficult, it should not have prevented the Appellant from being interviewed.
43. While Mr Johnston stressed that 12kg is a considerable amount of tobacco, it is less so if divided between five people, indeed it is within the new guidelines of 3 kg per person. An importation by one person of 12 kgs of tobacco is much more suggestive of commerciality than one fifth of that amount. The same goes for 8,600 cigarettes, especially approaching Christmas. This is why Mr Mellor relied so much on the list. There is force in his question as to why the Appellant should total the cost if the goods were to be split. We note however that the costs estimates were far from accurate if Mr Morton was a commercial smuggler. While the estimate on the list for hand-rolling tobacco is close to Mr Mulligan's estimate, the cost figures for cigarettes were seriously different. Mr Mulligan estimated a cost of £279.50 for 8,600 cigarettes whereas the list showed £520 for only 5,200 cigarettes, or £10 for a hundred: the list showed the cost abroad of cigarettes at 3 times Mr Mulligan's figure. The quantities on the list, however, correlate closely to what was seized if an extra 3,000 for Mr Whiston are added. The Appellant's letter of 19 February 2002 was remarkably close to the quantities seized given that he no longer had the list and had not been given the P&O tally. Indeed his letter equated with the correct total seized rather than the incorrect figure on the Form 156.
44. At the hearing the Appellant did not dispute that he had given incorrect answers. He was clearly confused as to the legal distinctions between limits, guidelines and the right to bring in the goods for his own use. Unfortunately many travellers are similarly confused, in part due to the different reliefs under the Travellers' Allowances Order 1994 from third countries. We found his responses when questioned as to this by Mr Mellor to be credible.
45. Having considered all the evidence before us we do not consider that the beer in the boot was intended to conceal the tobacco and cigarettes. Given the time when the Appellant was stopped, we have no doubt that he had not come direct from Belgium but had bought the tobacco and cigarettes first. Since the heavy crates of beer were put into the boot after the tobacco and cigarettes, we would not have expected the crates to be at the back of the boot. The natural place was where they were : at the front. Inevitably this had the result that what was behind was obscured. As it happens the beer was within the guideline, however it was over half the guideline and Customs could easily have taken the beer out to count it, as in the event they did. It would have been another matter if the tobacco had been behind soap powder or suitcases.
46. In relation to the cigarettes under the seat, the Appellant clearly thought that it was being said that they were wedged under the seat from the front and said that this was impossible; we shared that impression. In fact it was apparently pushed under from the back, which we did not find particularly surprising or sinister. The Appellant did not see this. If he was asked about it by Mr Mulligan, we are not satisfied that he realised what he was being asked about.
47. Inevitably a case such as this depends primarily on the impression which the Appellant gives as a witness. In our judgment he was giving truthful evidence. We accept that the goods bought by him were for his own use and were not for resale. It follows that the Commissioners have not established that the goods were held for a commercial purpose. The Commissioners did not seek to show that any of the other passengers were importing goods for a commercial purpose; indeed that would be contrary to the suggestion that the whole list was for the Appellant. Since the goods imported by the Appellant were for his own use he was entitled to import them free of excise duty under the Excise Directive.
48. On our finding of fact it is very doubtful whether seizure and forfeiture under section 49(1)(f) and section 139 of CEMA would be compatible with the Excise Directive and Community Law generally.
49. We also find as a fact that the Appellant did not intend to conceal the goods within section 49(1)(f). We do accept that they were "concealed" in the sense that they could not be seen. We also accept Mr Mulligan's evidence that it appeared to him that it was intended to deceive although we have concluded that he was mistaken. We observe that he only asked brief questions as to this and did not know that the cigarettes and tobacco had been bought first.
50. We did not ask Mr Mellor to address us as to the interpretation of section 49(1)(f). However, a construction of section 49(1)(f) as applying when it appeared to the Commissioners that it is intended to deceive rather than to the Court (or here the Tribunal), would in our view be incompatible not only with Article 1 of Protocol 1 to the European Convention on Human Rights but to Community Law. We consider that it is for the Tribunal to decide whether it was intended to deceive and we have decided that it was not. We also consider that section 49(1)(f) refers to physical concealment not to incorrect answers to questions.
51. Even if we are incorrect as to the interpretation of section 49(1)(f) and the test is whether it appeared to the Commissioners that the concealment was intended to deceive, the refusal to restore a vehicle seized from a person importing goods for his own use could not be proportionate or reasonable.
52. The decision to refuse restoration was essentially fact based. On the above findings the decision cannot stand because it was based on intention to deceive. It was not only legally defective but, to adapt the words of section 16(4)(b) of the Finance Act 1994, was a decision which on the basis of the facts as found by the Tribunal "could not reasonably have [been] arrived at". On our findings of fact the Appellant was entitled to bring in the goods and therefore there was only one possible decision which could reasonably have been arrived at and that was the opposite decision. The Tribunal has no power to direct restoration. That is a matter for the Commissioners. It is already nearly 15 months since the seizure which on our finding was unfounded. A further review on the basis of this decision should be conducted as a matter of urgency. We direct that this be carried out immediately and that within 21 days of the release of this decision the Review shall be served both on the Appellant and on the Tribunal. As is standard practice, the Review should be by an officer not previously concerned in the case. If the Appellant is dissatisfied with the result of that review, he will have a further right of appeal to the Tribunal.

THEODORE WALLACE

CHAIRMAN

RELEASED: 17 February 2003

LON/02/8133