United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E394, [2003] UKVAT(Excise) E00394

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Thomas Morton v Customs and Excise [2003] UKVAT(Excise) E00394 (19 March 2003)

E00394

EXCISE DUTY — goods imported for commercial purpose — seizure of vehicle — confirmation upon review — whether decision reasonably arrived at — proportionality — FA 1994 Section 16(4) — Article 1, First Protocol to ECHR

MANCHESTER TRIBUNAL CENTRE

THOMAS MORTON

Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE

Respondents

Tribunal: Mr J H Fryer-Spedding CBE (Chairman)

Mr John Davison

Sitting in public in Newcastle upon Tyne on Monday 13 January 2003

Mr T A W Gregory, solicitor, for the Appellant

Mr R Toone, of counsel, for the Respondents

DECISION

This is an appeal against a decision of the Respondents, made by a Review Officer, Mr L W Johnston, by a letter dated 26 February 2002, confirming a decision of the Respondents to refuse restoration of certain excise goods and a vehicle of the Appellant, seized on 11 July 2001. At the hearing, Mr Gregory stated that the facts set out in the amended statement of case of the respondents and in two notebooks of the Respondents, included in the Respondents' bundle of documents, were agreed. The facts set out below appear from these documents.

Officers of the Respondents stopped a Ford Escort Estate car registration number N982 CWE, the property of the Appellant, at the UK Customs control zone at Coquelles, France on 11 July 2001. The Appellant was driving the vehicle and a Mr Alan Mullen was a passenger. The officers found in the car excise goods, imported without payment of duty, 15 kg tobacco, 2,400 cigarettes, 100 cigarillos and 18 litres of wine. These were chargeable with excise duty under the Alcoholic Liquor Duties Act 1979 and the Tobacco Products Duty Act 1979.

The officers questioned the Appellant and Mr Mullen. The Appellant said that he had been to Belgium for a few hours to purchase 15 kg of tobacco. It was his vehicle which he had owned for three years. He had not had any dealings with UK Customs before. He had last crossed two months before and had made about three cross-channel trips in the last six months. On the last occasion he had purchased about the same amount of tobacco. He said that he and Mr Mullen each had 7½ kg of tobacco. He had paid for all the tobacco and Mr Mullen had given him just under £300 for his share. He said that his own tobacco was entirely for himself as well as 1,200 cigarettes. He smoked about 30 cigarettes per day. He said that on his last visit to France he had purchased some wine and a couple of boxes of tobacco. He said that he had sold some of the tobacco around pubs where he lived. He said that he was not aware that this was illegal. He had a pension of £77 per week and other part-time income of £40 per week.

Mr Mullen confirmed that 7½ kg of the tobacco was his. He would sell some to his brother and his nephew. He smoked 20 cigarettes a day. He was aware of the Respondents guidelines on the matter and that it was an offence to sell tobacco but he only sold to close friends and family and did not make a profit. He was unemployed and received income support.

The officers were not satisfied that the above goods had been imported for the use of the Appellant and Mr Mullen themselves and had not been imported or held for a commercial purpose. Accordingly the goods and the vehicle were seized by the Respondents, who gave the following reasons for seizure, namely that the goods were in excess of the guidelines, that money was received for the goods, that the consumption rates stated were not credible and that the expenditure was not consistent with income.

By letter dated 14 August 2001 the Appellant requested the return of the vehicle upon the grounds that he needed it for work and was still paying the finance company for it.

By a letter dated 26 November 2001 the Respondents informed the Appellant's solicitor that they had decided to refuse restoration of the vehicle. By a letter dated 8 January 2002 the Appellant's solicitors requested a review of the forfeiture decision. They enclosed a copy of a letter of Dr E P Kinnan, the Appellant's general practitioner. This stated that the Appellant suffered from an irregular heart rhythm and hypertension. He was on medication to control his heart rhythm and blood pressure and moderate exertion such as walking made him breathless. The Appellant also had osteoarthritis, especially in his right knee and might require knee replacement surgery. Further, the Appellant suffered from anxiety and depression and was currently being treated with an anti-depressant. In general, because of the osteoarthritis and heart problems, the Appellant had suffered moderate impairment of his mobility.

The Appellant's solicitors also relied upon the principle of proportionality. They said that they believed the amount of unpaid duty was less than £1,000, but they believed the current value of the vehicle was then £3,500. They relied upon the provision of Article 1 of Protocol 1 of the European Convention on Human Rights.

In his letter dated 26 February 2002 the review officer, Mr Johnston, set out the material facts which we have mentioned above. In relation to the two specific points mentioned by the Appellant's solicitors in their letter of 8 January 2002, the review officer wrote:

"I am sorry to hear of your client's medical condition, which I hope will improve with time. I am of the opinion that any difficulties suffered by your client, as a result of the loss of his car, was for him to consider at the time of its use to improperly import excise goods, and not for the Commissioners to take into account now. I would go further and say that Morton was in possession of all the facts relating to the risk of losing his car when he was given Public Notice No.1 on 15 June 2000. He chose to ignore this information and continued to import excise goods that he intended to sell.

In your letter dated 2002 you say that that has been a breach of your client's right to property under Protocol 1 of ECHR. I would deny that the Commissioners have infringed any community law or human right of your client. The Commissioners contend that, any right to "peaceful enjoyment of possessions" is always subject to the right of the State "to enforce such laws as it deems necessary, to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

The review officer's letter concluded by referring to the Respondents' restoration policy for private vehicles, which was that they would not be restored, even on the first occasion they were used although each case was considered to determine whether the affected party had substantiated restoration should exceptionally be allowed.

Article 3 of the Excise Duties (Personal Reliefs) Order 1992 as amended by the Excise Duties (Personal Reliefs) Amendment Order 1999 and the Channel Tunnel (Alcoholic Liquor & Tobacco Products) Order 2000 provides:

"Subject to the provisions of this Order a community traveller entering [a control zone or] the United Kingdom shall be relieved from payment of any duty of excise on excise goods which he has obtained for his own use in the course of cross-border shopping and which he has transported."

Article 3A(2) provides:

"No relief shall be treated as having been afforded if the goods are held for a commercial purpose."

In R v Customs & Excise Commissioners ex parte Hoverspeed, Court of Appeal case C/2002/1743 at paragraph 65 Mance LJ giving the judgment of the court at paragraph 65 said:

" … if an individual acquires (or having acquired for his own use subsequently decides to hold) products for a purpose other than his own use, such products are to be regarded as held for commercial purposes."

We consider that it is clear from the agreed evidence that the Appellant had used his vehicle for transporting products which would be held for commercial purposes.

Section 49 of the Customs & Excise Management Act 1979 provides that goods which are imported without payment of duty chargeable on them are subject to forfeiture. Section 141 of that Act provides that where anything becomes liable to forfeiture, any vehicle which has been used for its carriage also becomes liable to forfeiture. Section 152 provides that the Commissioners may, as they see fit, restore subject to such conditions they think proper, anything forfeited or seized under the Act.

Provision is made for the review of an appeal from the decision to forfeit them under Sections 14 to 16 of Finance Act 1994. Sections 15 and 16 deal with the review by the Review Officer. Under Section 16(4) the tribunal is given certain powers where it is satisfied that the Commissioners "could not reasonably have arrived at" their decision on a review.

If the Commissioners are "to arrive reasonably" at a decision, their decision must comply with the Convention on Human Rights: see Lindsay v C&E Commissioners Court of Appeal decision No.A3/02/0047 per Lord Phillips MR at paragraph 40. Further the Commissioners will not arrive reasonably at a decision if they take into account irrelevant matters, or fail to take into account relevant matters: C&E Commissioners v JH Corbitt (Numismatists) Ltd 1981 AC22 at p 60 per Lord Lane.

Article 1 of the First Protocol of the Convention provides:

"Every person is entitled to the peaceful enjoyment of his possessions. No-one should be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provision shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

In R Canada v UK 1995 20 EHRR 150 at para 36 the European Court of Human Rights held:

"According with the Court's well established case law, the second paragraph of Article 1 must be construed in the light of the principle laid down in the Article's first sentence. Consequently, an interference must achieve a "fair balance" between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights."

The concern to achieve this balance is reflected in the structure of Article 1, including the second paragraph. There must therefore be a reasonable relationship of proportionality between the means employed and the aim pursued. In Lindsay v C&E Commissioners (above) at para 72, Judge LJ having expressed his agreement with the judgment of Lord Phillips MR said:

"Given the extent of the damage caused to the public interest, it is, in my judgment, acceptable and proportionate that, subject to exceptional individual considerations, whatever they are worth, the vehicles of those who smuggle for profit, even for a small profit, should be seized as a matter of policy."

In the present case we consider that the Respondents did not fail to take into account all relevant matters, including the hardship point raised by Mr Gregory, relating to the health of the Appellant, and they did not take into account irrelevant matters. We do not consider that there were the "exceptional individual considerations" mentioned in Lindsay v C&E Commissioners (above). In the circumstances of the present case, their policy was one which led them to a decision at which they could reasonably have arrived.

For the above reasons, the appeal is dismissed.

J H FRYER-SPEDDING

CHAIRMAN

RELEASE DATE: 19 March 2003

MAN/02/8097