United Kingdom VAT & Duties Tribunals (Excise) Decisions

E00420

EXCISE DUTY – Seizure of Cigarettes – Admission of intention of commercial use for business promotion – Restoration denied

LONDON TRIBUNAL CENTRE

ADRIAN HIBBERT

KAREN WELLS Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: ADRIAN SHIPWRIGHT (Chairman)

MR R D CORKE

Sitting in public in Cardiff on 3 April 2003

The Appellants appeared in person

Katrine Sawyer for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

Introduction

1. These two appeals concern HM Customs & Excise decision not to restore some 16,780 cigarettes ("the Cigarettes) seized at Cardiff Airport on 28 April 2002. The reasons for not restoring the Cigarettes were set out in a letter dated 11 July 2002 and a further letter dated 24 July 2002. The two appeals were heard together with the consent of the parties.
2. The decision(s) appealed against are deemed decision(s). The Appellants' solicitors by letter of 20 May 2002 had requested a review of the Respondents' decision set out in the Respondents' letter dated 7 May 2002 not to restore the goods. The Respondents failed to carry out the review in time and the decision set out in the 7 May 2002 letter was deemed to be upheld (section 15(2)(b) Finance Act 1994).

The Issue

3. The essential issue in this case is whether the decision of the Respondents not to restore the Cigarettes was "reasonable" or more accurately whether the Tribunal is satisfied that the Commissioners or other person making that decision could not reasonably have arrived at such that it could exercise powers under section 16 FA 1994.

The Law

4. The Tribunal is given a supervisory review jurisdiction of certain decisions including those relating to forfeiture of goods by section 16 Finance Act 1994. So far as is relevant section 16 provides as follows.

"(1) Subject to the following provisions of this section, an appeal shall lie to an appeal tribunal with respect to any of the following decisions, that is to say—

(a) any decision by the Commissioners on a review under section 15 above (including a deemed confirmation under subsection (2) of that section); and

(b) any decision by the Commissioners on such review of a decision to which section 14 above applies as the Commissioners have agreed to undertake in consequence of a request made after the end of the period mentioned in section 14(3) above…

(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers 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 person 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) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future….

(8) References in this section to a decision as to an ancillary matter are references to any decision of a description specified in Schedule 5 to this Act which is not comprised in a decision falling within section 14(1)(a) to (c) above.

5. Schedule 5 FA 1994 includes reference at paragraph 2(1)(r) to "any decision under section 152(b) as to whether or not anything forfeited or seized under the customs and excise Acts is to be restored to any person or as to the conditions subject to which any such thing is so restored".
6. The Excise Duties (Personal Reliefs) Order 1992 as amended allows relief to a Community traveller from payment of excise duty on goods which he has obtained for his own use in the course of cross-border shopping and which he has transported (see Article 3).
7. Article 2(1) defines various terms. It provides:

(1) In this Order-

"Community traveller" means a person who makes a journey between a member State and the United Kingdom other than a person who makes that journey in a vessel or aircraft in which he travelled from the United Kingdom and from which he has not disembarked outside the United Kingdom;

"cross-border shopping" means the obtaining of excise goods duty and tax paid in the Economic Community provided that payment has not been, and will not be, reimbursed, refunded or otherwise dispensed with;

"excise goods" means any goods chargeable with a duty of excise other than goods chargeable by virtue of any provision of the Hydrocarbon Oil Duties Act 1979;

"own use" includes use as a personal gift provided that if the person making the gift receives in consequence any money or money's worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this Order.

8. Article 5 is headed "Relief from duty of excise-conditions". It provides:


"(1) The reliefs afforded under this Order are subject to the condition that the excise goods in question are not imported for a commercial purpose nor are held or used for such purpose whether by the Community traveller who imported them or by some other person who has possession or control of them; and if that condition is not complied with in relation to any excise goods, those goods shall, without prejudice to article 6 below, be liable to forfeiture.


(2) In determining whether or not the excise goods a person has in his possession or control were imported for a commercial purpose or, as the case may be, are held or used for such purpose regard shall be taken of—

(a) his reasons for having possession or control of those goods;

(b) whether or not he is a revenue trader;

(c) his conduct in relation to those goods and, for the purposes of this sub-paragraph, conduct includes his intentions at any time in relation to those goods;

(d) the location of those goods;

(e) the mode of transport used to convey those goods;

(f) any document or other information whatsoever relating to those goods;

(g) the nature of those goods including the nature and condition of any package or container;

(h) the quantity of those goods;

(i) whether he has personally financed the purchase of those goods; and

(j) any other circumstance which appears to be relevant.


(3) For the purpose of the determination referred to in paragraph (2) above a person shall be regarded as having imported, held or used excise goods for a commercial purpose if he has in his possession or control any excise goods in excess of any of the quantities shown in the Schedule to this Order unless, if required to do so, he satisfies the Commissioners to the contrary.

(4) No relief shall be afforded under this Order to any person under the age of 17."

Evidence

9. Oral evidence was given by Adrian John Hibbert and Rosselle Karen Wells. No oral evidence was given on behalf of the Respondent.
10. A bundle of documents was produced by the Respondent at the hearing. The Respondent asked that this should be treated as evidence. This was not objected to by the Appellants who were content that it should be treated as evidence.

Facts

11. From the evidence before us we make the following findings of fact.

(a) The Appellants returned from holiday in Palma on 28 April 2002.

(b) They returned on flight AIH 760 to Cardiff International Airport.

(c) Some 80 cartons of Lambert and Butler cigarettes were brought into the United Kingdom in the Appellants' luggage. Each carton contains 200 cigarettes. A total of 16,780 cigarettes was brought into the UK.

(d) The Appellants were intercepted by Customs officers. The Appellants were interviewed separately. Following this the Cigarettes were seized.

(e) The Appellants live together and carry on business together. Initially they carried on business as partners and now do so through a limited company. The business principally involves the sale of mobile phones.

(f) Before they went on holiday Ms Wells gave Mr Hibbert £500 in cash.

(g) She said in cross examination she gave the £500 to Mr Hibbert for "general use – here is my bit".

(h) Ms Wells explained that the £500 was intended to be her contribution towards the purchase of "gifts" by which she told us she meant cigarettes and alcohol to give to friends and family

(i) Ms Wells did this because she did "not want the hassle of foreign money".

(j) In addition Ms Wells took some £400 "emergency money" in cash on holiday.

(k) During the holiday the Cigarettes were purchased. Two "proofs of purchase" were produced by the Appellants and included in Customs Bundle. One was stated to relate to a purchase of some 30 cartons of cigarettes and the other to some 50 cartons. The "proofs of purchase" are not entirely legible but seem to be from different establishments and to have been issued around 23 April 2002.

(l) The Cigarettes were physically purchased by Mr Hibbert. He asked for and bought for the Cigarettes. He handed over cash to pay for these purchases.

(m) The Cigarettes cost in the region of £1,200.

(n) The parties did not discuss the number of cigarettes to buy or reach any agreement about this before going on holiday.

(o) Mr Hibbert said in his interview with Customs that some of the cigarettes were to be used as an incentive for the sale of mobile pones in his and Ms Wells' business.

(p) The relevant part of the notes of Interview read as follows

"Q.You have imported a large amount of cigarettes. What are they for?

A. My own use. I smoke 20 a day; my girlfriend smokes on average 15 a day.

Q. How long will these last you?

A. Nine or six months depending on the promotions

Q. What do you mean promotions?

A. A sales promotion, when I connected a customer on a mobile phone contract, that person would pay £25 month, I would get £150 commission on the deal profit so I give a packet of 200 as an incentive. It only cost me £12 -- £15 to buy".

(Mr Hibbert had signed the officers notebook as "a true and accurate account")

(q) Mr Hibbert said in his letter dated July 31st 2002 to the VAT and Duties Tribunal "... With regards to the Commercial Use of the cigarettes there was a possible future thought for giving some away to close friends and colleagues who buy at our Mobile Phone shop, but this was minimal if anything..."

(r) Mr Hibbert had been warned in connection with the marketing of duty unpaid cigarettes by a letter from the Respondents dated 20 November 2001.

(s) Ms Wells was asked in the interview "who do the cigarettes belong to?" She replied "Well Adrian [ie Mr Hibbert] bought them so I guess they belong to him".

(t) Ms Wells denied any knowledge of a promotion plan.

Contentions of the Parties

12. The Appellants contend that the Respondents exceeded their powers in what the Respondents had done. It was also contended that not all the Cigarettes were Mr Hibbert's some were Miss Wells and that even if some of the Cigarettes were for commercial use (which was not admitted) the balance should have been restored.
13. Katrine Sawyer of Counsel who appeared for the Respondents made the following submissions.

i. The jurisdiction of the Tribunal to hear these appeals arises under section 16 FA 1994 (set out above).

ii. The Tribunal's jurisdiction is supervisory and is limited to an assessment of whether the Commissioners acted reasonably in the Wednesbury sense i.e. to succeed the Appellants must show that the Respondents have acted in a way in which no reasonable body of Commissioners could have acted, that they have taken into account some irrelevant matter, or that they have taken into account some irrelevant matter, or that they had disregarded something to which they should have given weight or made some other error of law (see Bowd v CCE [1995] V&DR 212 at 224).

iii. The Respondents rely on the reasons set out in the letter of 11 July 2002 as the basis for defending the reasonableness of their decision not to restore the goods. The Respondents also rely on Alzitrans where Blackburn J ruled that the commissioners were not bound to rely only on the reasons that were given for a decision when defending a decision under challenge (see paragraph 38 of the judgment).

iv. The evidence indicates that the cigarettes were imported for a commercial purpose. In particular Mr Hibbert told the officer who interviewed him that some of the cigarettes would be used as part of a promotion for the sale of mobile phones. This coupled with Mr Hibbert's letter of 31 July 2002 amounts to an admission that the goods or at least a proportion of them were intended for a commercial use.

v. The suggestion that part of cigarettes belong to Ms Wells does not fit in with the evidence. Ms Wells stated in the interview that "I guess they [i.e. the Cigarettes] belong to him" as Mr Hibbert had purchased the cigarettes. Ms Wells did not know how many cigarettes Mr Hibbert had purchased which would be an unlikely response if she had asked him to purchase a quantity of cigarettes for her. Ms Wells did not state in her letters that any particular quantity of the cigarettes imported were hers. There was a vagueness as the number of cigarettes claimed to be hers. Was it 30 cartons or half the total?

14. The contentions of the parties raise the following questions.

(1) Who bought and had title to the Cigarettes? ("the Title Issue)

(2) What intention has been shown as the use of the Cigarettes? ("the Intention Issue")

(3) Was the decision not to restore the goods unreasonable in the sense of being a decision the Commissioners or other person making that decision could not reasonably have arrived at? ("the Reasonableness Issue").

The Title Issue

15. We have already found as a fact that Mr Hibbert physically purchased and paid for the Cigarettes (see paragraph 11(l) above). No evidence was led as to the foreign law in question. Accordingly, we assume it to be the same as English Law Sale of Goods Act. On that basis the Cigarettes were the property of Mr Hibbert and he had title to them. Ms Wells did not.
16. We consider that title and property to the Cigarettes passed to Mr Hibbert on payment. We consider that Ms Wells had no title to the Cigarettes. In our opinion no implied trust arose that Mr Hibbert held a percentage of the Cigarettes for Ms Wells. We do not see that Ms Wells could assert a proprietary right in law or equity which would allow her to trace her £500 into the Cigarettes or otherwise mount a claim to them. This accords with Ms Wells' view as to whom the Cigarettes belonged. We conclude that Ms Wells had no ownership rights in respect of the Cigarettes.

The Intention Issue

17. The admission of intention to use the Cigarettes for promotional purposes made in the interview and the letter of 31 July 2002 from Mr Hibbert to the Respondents show an intent to use the goods for a commercial purpose.
18. Mr Hibbert purported to explain this away by saying that he had said this as he was under a lot of pressure when giving his statement and "basically panicked". We find this unconvincing. It would not make sense to say such a thing and still maintain it for three months. This is particularly so when Mr Hibbert was aware of the difficulties of duty and imported cigarettes having been warned about it earlier by the Respondents.. We reject Mr Hibbert's explanation and find as a fact that he had an intention to use some at least of the Cigarettes for commercial purposes.

The Reasonableness Issue

19. In the light of the admission as to the use of at least some of the Cigarettes for commercial purposes we are not satisfied that the decision not to restore the goods was unreasonable in the sense of being a decision the Commissioners or other person making that decision could not reasonably have arrived at. For the sake of completeness we record that the Respondents have satisfied us that the decision not to restore the Cigarettes was reasonable.
20. The published general policy of the Respondents is not to restore seized goods subject to consideration of the particular circumstances of the case. The particular circumstances were considered and the basis for non-restoration set out in the letters of 11 and 24 July 20002.
21. In the light of all the circumstances we consider that it was not an unreasonable decision (in the Wednesbury sense as described at paragraph 13 ii above) on the part of the Respondents not to restore all the goods. We also consider it was not unreasonable for the Respondents to decide not to restore just those goods intended for commercial use.

Conclusion

22. As the Cigarettes belonged to Mr Hibbert and some at least of them were intended by him to be used for commercial purposes we are satisfied that the decision not to restore the Cigarettes was reasonable and that the Respondents have not exceeded their powers. Accordingly, the appeal is dismissed and the goods will not be restored.

ADRIAN SHIPWRIGHT

CHAIRMAN

RELEASED: 19 May 2003

LON/2002/8217

LON/2002/8218