United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E418, [2003] UKVAT(Excise) E00418

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Williams v Customs and Excise [2003] UKVAT(Excise) E00418 (16 May 2003)

RESTORATION – Vehicle – Refusal torestore – Importationby Appellant and two others of tobacco in excess of indicative level – Appellant's companions appeared not to know price paid – Disagreement as to who paid and where goods bought – Whether goods for own use or all for commercial use by Appellant – Whether refusal to restore "reasonable" – Appeal dismissed

LONDON TRIBUNAL CENTRE

KAREN WILLIAMS Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: ANGUS NICOL (Chairman)

MRS E M MACLEOD FIPM

Sitting in public in Plymouth on 28 March 2003

The Appellant in person

Valentina Sloane, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

The Appellant, Karen Williams, is appealing against a decision of the Commissioners refusing to restore certain excise goods and a motor-car in which the excise goods had been imported. The original decision was contained in a letter dated 23 January 2002. Although a review was requested, none was carried out within the 45-day period provided for by section 15(2)(b) of the Finance Act 1994. By the same section, the Commissioners are therefore assumed to have confirmed the original decision. It is therefore the original decision against which the Appellant is appealing.

The facts

The Appellant was stopped at Dover International Hoverport on 1 December 2001. With her in the car were her mother, Mrs Linda Charles, and her uncle, Mr Paul Sanders. The three of them each declared 150 pouches of tobacco. The Appellant said, when first questioned, that they had been to Ostend for the day, and that the car was hers. She also said that she was not aware of the existence of any guidelines for importing excise goods, nor had she ever had any dealings with Customs before. She also said that they were not carrying any cigarettes, but that there were some spirits in the car. The officers read the "commerciality statement" to them, which required them to satisfy the officers that the goods were for their own use and therefore eligible for relief from duty. All three were then interviewed.

The Appellant said that she had 120 pouches of Golden Virginia and 50 of Cutters Choice, for the use of herself and her partner. She herself normally smoked Cutters Choice, and Golden Virginia when she ran out. She thought that the Golden Virginia had cost £206, and could not remember what the Cutters Choice had cost. The receipts shewed that the Golden Virginia had cost £249 and the Cutters Choice £80. The Appellant said that she had last travelled across the Channel in the previous month, and before that her last trip had been in December 2000. She was not aware of any guidelines as to the amount of excise goods that could be brought into the United Kingdom and had never seen Notice 1. She did know that it was an offence to sell excise goods without paying duty on them. She told the officer that she expected the goods to last her eight or nine months; she smoked between 20 and 40 a day, and her partner smoked about the same amount. A pouch lasted them a couple of days. The Appellant said that she worked as a courier, earning between £90 and £150 a week. She also received £600 a month from her ex-husband. She was obliged to make loan repayments of £375 a month. Her partner was retired. She said that each of the travellers had paid for his or her own goods, though it was "all up together". Each traveller had, she said, paid separately.

Mrs Charles, when interviewed, said that the tobacco was "between the three of us". She had also bought some spirits. She was asked how many pouches of tobacco were hers, and she replied "About 150". She said that the Appellant had paid for all the goods in cash, and that she intended to give her some money for her share of the goods. She thought the goods had cost about £600 to £700. The Appellant had also bought her ticket for the journey. She said that she smoked sometimes, perhaps 40 a week, but not all the time. She was going to give some of the tobacco to her brother for Christmas. She said that the goods had been bought right opposite the harbour where they had come in. She had a monthly income of £1,000 as a supervisor, and was making loan repayments of £80 a month. She said that she was not intending to receive any money or favours for the tobacco. She did not know about any guidelines and had never seen Notice 1. The last time she had travelled had been three or four years before.

Mr Sanders said that he had bought half a box of Old Holborn, 200 Benson and Hedges cigarettes, and some spirits and beer. Later he said that he also had a box of Golden Virginia. He thought the goods had cost him £150 to £200, and he had bought them in Belgium. The last time Mr Sanders had travelled abroad, he said, had been in 2000. He was unemployed and received benefit of £280 a month. He said that the tobacco was for his own use, and he had no intention of giving any of it away. He usually made between 180 and 200 cigarettes out of a pouch, but thought he could stretch it to 200 to 300. A pouch would last him three days, he thought, and this tobacco would last about a year and a half. He did not know that tobacco had a shelf life. He said that he had never bought excise goods from abroad before. Mr Sanders said that the Appellant and Mrs Charles had paid for the ticket, and he had paid for his own goods. He had paid about £145 in sterling for the Golden Virginia and about £45 to £48 for the Old Holborn.

The Appellant, who appeared in person, also gave evidence. She said that when she said that when she declared 150 pouches, she had thought that there were 100 to a box and not 120. She said that she had declared everything that she brought in, and that she would hot have used a brand-new car if she had been smuggling. She had bought the goods from a place directly opposite the hoverport in Ostend, and had not driven anywhere else. She had never seen Notice 1 until she was interviewed. The trip, she said, had been made for the express purpose of buying tobacco and cigarettes. A month previously, she said, she had been across the Channel for the sole purpose of Christmas shopping, and had bought no tobacco. It was suggested to her that it made no sense to go across the Channel and not buy tobacco. She answered that it did make sense, if she did not wish to buy tobacco on that occasion. She said that the next time that she had travelled was to take her children to see their father and his mother in France. The Appellant said that her father was a heavy smoker, and her mother, at that time, was not a heavy smoker, and had bought the tobacco for the Appellant's father. She had not known the price because the Appellant had paid for the whole and they would sort it out when they got home. When she said that they had each paid for their own goods, she meant that she had paid for it all and they would reckon up. She had written a letter the next day explaining that. She herself was not importing more than one third of the goods; she had not asked her mother and uncle to say that they had paid for part of the goods to help her bring it in.

The receipts for the purchases were produced in evidence. All those for the tobacco were issued by a shop called Tobacco Dekindt, in De Panne, which, we were told, is some 17 miles from Ostend. The other goods were bought at the Hoverspeed shop. The receipts shewed that 120 pouches of Golden Virginia cost £249.60, 50 pouches of Old Holborn cost £104.00, and 50 pouches of Cutters Choice cost £80. The total expenditure on tobacco was £1,046.80, and on the other goods £56.40.

There was correspondence between the Appellant and the Commissioners. The Appellant wrote on 3 December 2001 asking for the return of the car, and saying that she and her companions had truthfully told the officers that they had 150 pouches each, and that she had no intention of breaking the law. She said that she was a courier and could not work without her car. That letter was answered on 23 January, with a refusal to restore the car. The reasons given for not departing from the Customs policy were, first, that the Appellant had been carrying goods in excess of the guidelines; secondly that there were inconsistencies between the three travellers as to who had paid for what goods; thirdly, that the Appellant had had the opportunity, when she travelled a month earlier, to buy tobacco, but said that she had not done so; and fourthly, that the Appellant had used her vehicle to transport tobacco over 26 times the guideline quantity, which was a large quantity which could damage legitimate trade.

The Appellant replied to that letter on 29 January 2002. She said that she, her mother, and her uncle had travelled to Ostend in order to buy tobacco for themselves and their partners. They did not think that they were doing anything wrong, having been told that they could bring as much back as they liked for their own use. She continued,

"As for the inconsistencies in our stories I paid for the tobacco for all of us and was going to be paid by my mother and uncle when we got home. I said we had all paid for our own but I handed the money over which was not infact untrue. My uncle is on medication and he got very flustered and paranoid in his interview."

The Commissioners did not complete the review that had been requested within the 45 days allotted. The result was that the original decision, in their letter of 23 January 2002, is assumed to have been upheld. However, Mr Rayden, the review officer, did complete a review; the copy in the trial bundle was incomplete, lacking the first page, but has a hand-written date, 17/4/02, at the end. If that was the date of the review, it was well in excess of 45 days after the second letter from the Appellant. There were, we were told by counsel for the Commissioners, certain passages in that review letter which contained facts upon which the Commissioners did not rely in this appeal. The first was, that the Appellant had declared that the three travellers had 150 pouches each rather than the 170 which they actually had, and failed to mention any of the other goods. The next was a passage in which Mr Rayden stated that the three travellers had been required to satisfy the officers that the goods were not for a commercial purpose, and referred to the Tribunal decision in Boyd v Customs and Excise Commissioners (1996) (Decision No 00000). The third related that the Appellant and Mrs Charles both said that the tobacco had been bought in Ostend, when the receipts shewed that it had been bought in De Panne, some 17 miles away.

Under the heading "Consideration", Mr Rayden began by stating that he had taken a fresh look at all information available to him and had also considered the words of Lord Lane in Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1981] AC 22, dealing with the concept of reasonableness. He then stated that because of the volume of excise goods, the travellers were required under the legislation to satisfy the officers that the goods were for their own use and to rebut the statutory presumption of commerciality.

The letter went on to say that at the rate of consumption of the Appellant and her partner, of 20 to 40 cigarettes a day, a pouch would indeed have lasted about two days, but 170 pouches would have lasted more than 21 months and not the 8 or 9 months that the appellant had said. That, Mr Rayden said, throws some doubt upon her credibility. We pause here to observe that there is something not quite right about Mr Rayden's mathematics. If one pouch lasts two days, then 170 will last 340 days, or something over 11 months, and nowhere near 21 months. Mr Rayden went on to say that "the accepted shelf life" for tobacco when kept under ideal conditions is only 18 months; it therefore did not seem plausible to him that the Appellant would spend so much money on an amount of tobacco only to allow it to go stale. We add that no evidence was called as to the shelf life of tobacco under any specific conditions. Mr Rayden also considered it unreasonable for the Appellant to buy only 50 pouches of Cutters and 150 of Golden Virginia, even allowing for her explanation that she would smoke Golden Virginia when the Cutters ran out.

The law

Since the date of the seizure in December 2001 the law relating to the import of excise goods has undergone considerable change, as a result of two Court of Appeal decisions. They were Lindsay v Customs and Excise Commissioners [2002] STC 588, and Customs and Excise Commissioners v The Queen (on the application of Hoverspeed Ltd and others) [2002] EWCA Civ 1804. In the Divisional Court in Hoverspeed ([2002] 3 WLR 1219) it was held that the laying upon an appellant, by the Excise Duties (Personal Reliefs) Order 1992 ("the 1992 Order"), of the burden of proving that goods in excess of the indicative levels were for his own use was incompatible with the Excise Directive 92/12/EEC. Following that, the 1992 Order was revoked. It was also held that it is for the Commissioners to prove that such goods were imported for a commercial purpose.

The 1992 Order has been replaced effectively by the Tobacco Products Regulations 2001 ("the 2001 Regulations") as amended by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002. So far as are relevant to this appeal, the 2001 Regulations provide as follows:

"12 Excise duty point

. . .

(1A) In the case of tobacco products acquired by a person in another Member State for his own use and transported by him to the United Kingdom, the excise duty point is the time when those products are held or used for a commercial purpose by any person.

(1B) For the purposes of paragraph (1A) above—

. . .

(b) 'own use' includes use as a personal gift;

(c) if the tobacco products in question are—

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to made such a transfer,

those products are to be regarded as being held for a commercial purpose.

. . .

(e) without prejudice to subparagraphs (c) and (d) above, in determining whether tobacco products are held or used for a commercial purpose by any person regard shall be taken of—

(i) that persons reasons for having possession or control of those products,

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(iii) that person's conduct, including his intended use of those products or any refusal to disclose his intended use of those products.

(iv) the location of those products,

(v) the mode of transport used to convey those products,

(vi) any document of other information whatsoever relating to those products,

(vii) the nature of those products including the nature and condition of any package or container,

(viii) the quantity of those products, and in particular, whether the quantity exceeds any of the following quantities—

3,200 cigarettes

4,000 cigarillos ...

200 cigars

3 kilogrammes of any other tobacco products

. . .

(ix) whether the person personally financed the purchase of those products,

(x) any other circumstance that appears to be relevant.

The effect is, therefore, that it is for the Commissioners to prove, on the balance of probabilities, that the goods were imported by this Appellant for a commercial purpose. In doing so, they must consider subparagraphs (i) to (x) of paragraph (1B)(e), set out above.

The Tribunal's jurisdiction is set out in section 16(4) of the Finance Act 1994:

"In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the power of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other persons making that 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, and

(c) . . ."

This case falls within the definition of "ancillary matter" as defined in Schedule 5 to that Act.

In order to determine whether the decision not to restore is reasonable, the Tribunal should look at the evidence, for two reasons. First, if the evidence shewed that the seizure was not lawful, the Commissioners would have had no power to seize, and therefore the discretion to refuse to restore could not have arisen. Secondly, if the decision is based upon evidence which has been erroneously reported to the officer making that decision, or that evidence contains significant omissions, that will have a bearing upon the "reasonableness" of the decision against which the appeal is brought.

In this context, "reasonable" means reasonable in the sense in which that word was used in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. In that case, Lord Greene MR said, at page 229,

"A person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may be said, and often is said, to be acting 'unreasonably'."

That passage was cited in Corbitt shortly before the passage quoted in the review letter (see paragraph 11 above), in which Lord Lane said,

"[The Tribunal] could only properly [review the discretion] if it were shown that 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."

The Appellant's contentions

The Appellant said that she had really nothing to add to the evidence which she had given. She stressed that she had declared everything that had been imported, and that she had not realised that a box contained 120 pouches and not 100 as she had thought. She repeated that she had bought the goods at a place immediately opposite the hoverport, and had not travelled anywhere else. She explained that her mother had not really known what the price of the tobacco was because she, the Appellant, had paid and had retained the receipts. The intention was that she would pay for all the goods and would reckon up with the others when they reached home. She herself was not importing more than one third of the goods.

The Commissioners' contentions

Miss Sloane submitted a comprehensive skeleton argument. She submitted that although the review of the decision not to restore was out of time, it was proper for the Tribunal to take into consideration the reasons given in that review in determining whether the decision assumed to have been upheld was reasonable. In Customs and Excise Commissioners v Alzitrans SL [2003] EWHC 75 (Ch) Blackburne J held that the Commissioners were entitled to advance reasons for the decision that were different from those upon which the original decision was founded. The reasons given in the statement of case were therefore good reasons for upholding the original decision.

The vehicle was properly seized, Miss Sloane contended, because, first, the Appellant and her mother and uncle at first failed to declare all the excise goods which they were importing: they declared 150 pouches each, leaving 60 pouches (3 kg of tobacco) unaccounted for. Secondly, the amount of tobacco was far in excess of the minimum indicative level. They each imported 8½ times the levels then in force under the 1992 Order, and nearly three times the new level. If, as the Commissioners contended, the Appellant was in fact the sole importer of the whole amount, that was 25.5 times the old level and 8½ times the new level. Thirdly, Mrs Charles and Mr Sanders had little idea of the amount which each had bought. Mrs Charles said that the tobacco was between the three of them, and thought that she had bought 150 pouches. Mr Sanders said, at first, that he had half a box of Old Holborn, and later remembered the box of Golden Virginia.

Fourthly, as to the cost of the goods, Mrs Charles thought that the goods cost about £600 or £700 all told, when in fact the total cost was £1,046.80. Mr Sanders said that he had paid about £60 for a box of tobacco, later correcting that to £145; it had in fact cost £249.60. For the Old Holborn, he believed that he had paid £45 to £48; in fact the Appellant had paid £104 for it.

Fifthly, the Appellant had stated that each of the travellers had paid for his or her own goods, whilst her mother asserted that the Appellant had paid and they would reckon up later. But Mr Sanders also said that he had paid for his own goods.

Miss Sloane contended that it was wholly implausible that Mrs Charles was importing 170 pouches for her own use, as that, on her stated consumption of 40 a week, would last her about six and a half years. Mr Sanders's claim that he had imported 170 pouches, from each of which he would get between 200 and 300 cigarettes was also incredible, since the amount that he had paid was not in keeping with his means, he being unemployed. That amount would, at the consumption which he claimed, of between 66 and 100 a day, would last him at the least 340 days and at most something over two years.

Miss Sloane contended that it was implausible that the Appellant had travelled a month earlier and had not imported any excise goods, because she and her partner were both heavy smokers. It was not readily believable that she would then make a further trip a month later for the purpose of buying tobacco for personal use. The Appellant had also failed to mention another trip on 13 June 2001, on which date records shewed that her car made a crossing.

Finally, Miss Sloane said that no exceptional circumstances had been shewn that would justify the Commissioners in not applying their policy of non-restoration.

Conclusions

In accordance with section 16(4) of the Finance Act 1994, it is our task to consider whether the Commissioners' decision not to restore the vehicle was reasonable in the Wednesbury sense. Since the revocation of the 1992 Order the burden of proving that goods are imported for the personal use of the importer lies upon the Commissioners and not upon the importer. We therefore look at the evidence in this case to see whether, upon that evidence, the Commissioners' decision was reasonable. We may not substitute our own decision, if we should disagree with the Commissioners, unless that evidence is such that they could not properly and lawfully have seized the vehicle in the first place.

We find that, first, the three travellers between them imported 25.5 kg of tobacco. If that was indeed intended for the personal use of each of them and their partners, it was still very considerably in excess of the minimum indicative level. The three travellers did not agree about the circumstances of the purchase. Two said that the goods were bought at a place directly opposite the hoverport, and one said that they were bought "in Belgium", while the receipts shewed that they had been bought at De Panne, some 17 miles distant. As to the prices which they had paid, the differences of opinion on what should have been a matter of simple fact were such as to suggest that Mrs Charles and Mr Sanders did not actually know what they had paid. This was less surprising when it became clear that the Appellant, who said at first that each had paid for his or her own goods, revised that and said that she had paid for the whole and her companions would repay her later. Mrs Charles and Mr Sanders appeared to have little or no idea of how long the tobacco would last. Mrs Charles said that she smoked about 40 a week. It was later mentioned that her husband was a very heavy smoker. Mr Sanders's views on the number of cigarettes that he would get from one pouch were so greatly in excess of the usually accepted number of 50 to 80 that the officers clearly did not believe him. Mr Sanders was unemployed at the time, and had, if he was going to pay, or had paid, for 170 pouches laid out a very substantial sum in comparison with his financial capability. We bear in mind that the Appellant said that Mr Sanders was schizophrenic and was confused by the interview; no evidence as to that was called, however, nor did Mr Sanders give evidence himself.

Bearing all those matters in mind, together with Miss Sloane's detailed summary of the evidence, and together with the fact that no exceptional circumstances were put forward by the Appellant at any stage, we have come to the conclusion that the decision of the Commissioners not to restore the vehicle was a reasonable one.

For the above reasons, this appeal is dismissed. No application was made at the hearing for costs, and we therefore give no direction as to costs.

ANGUS NICOL

CHAIRMAN

RELEASED:

LON/2002/8081