United Kingdom VAT & Duties Tribunals (Excise) Decisions

Wilkinson v Customs & Excise [2003] UKVAT(Excise) E00425 (06 June 2003)

EXCISE DUTIES importation of excise goods above guidelines; forfeiture of goods; whether refusal to restore reasonable; Customs & Excise Management Act 1979 section152(b); Appeal relating to ancillary matter; Finance Act 1994 section 14(1)(d), 16(4)&(8), and Schedule 5 paragraph 2(1)(r);.

EDINBURGH TRIBUNAL CENTRE

WILLIAM WILKINSON Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: (Chairman) J Gordon Reid, Q.C., F.C.I.Arb.,

Sitting in Edinburgh on Friday 9 May 2003

for the Appellants Mr William Wilkinson

for the Respondents Mr Andrew Scott, Shepherd & Wedderburn, WS

© CROWN COPYRIGHT 2003.


 

DECISION

Introduction

This is an appeal against the decision by the Respondents ("Customs") to refuse to restore a quantity of cigarettes, seized on 6 July 2002. A Hearing took place on 9 May 2003. The Appellant, Mr Wilkinson, appeared in person and gave evidence on oath. Mr Andrew Scott, solicitor, Shepherd & Wedderburn, W.S., Edinburgh, appeared on behalf of Customs. He led the evidence of Simon Polatch, currently an anti-smuggling officer at Falmouth. Customs produced a bundle of documents. The authenticity and, where appropriate, the transmission and receipt of these documents were not in dispute. The grounds of appeal state that the goods were for the consumption of the Appellant and his family.

Facts

1. The Appellant resides in Airdrie with his wife and adult daughter. He is a self employed welder. In about May and June of 2002, he had not been in work.

2. On 6 July 2002, the Appellant was in London carrying out welding work on the invitation of Mr Wilson referred to below. He had been offered and accepted work in Fleet. He travelled to London with Richard Wilson where they met up with a third man named Alan Stewart. After about a week, the work having been completed, the three men decided to travel to France for the day to buy cigarettes and alcohol. The Appellant had been paid about £1,000 in cash for the work carried out.

3. The three men travelled to France in a Renault van hired by Wilson and made various purchases. The Appellant purchased 10,000 cigarettes which were contained in two boxes. Mr Wilson bought some spirits and 20 packs of cigarettes; Mr Stewart also bought 10,000 cigarettes. On their return journey, they were stopped at Cocquelles Tourist UK Control Zone. The Appellant was in the back of the van. Messrs Wilson and Stewart provided some information to Customs. The Appellant, who was in the back, did not hear the conversation. Customs Officers took them and the Appellant to separate areas for individual interview. The interviews were recorded in manuscript in Customs Officers' notebooks. These notebooks were produced [R/1-3].

4. In the course of his interview, which lasted on and off for at least some one and one half hours, the Appellant explained that he purchased the goods in cash with his own money, and that he was not a revenue trader. He had originally intended buying 800 cigarettes but was told he could by as many as he wished provided that they were for personal consumption. He said they were for himself, his wife and daughter. When at home he did not normally buy cigarettes for his wife and daughter. (His wife worked in a factory). He said he smoked about 40 a day but would like to cut down; and that his wife smoked 30-40 a day and his daughter about 30 per day. The cigarettes were to be kept at home and would last 4-6 months. He was unable to produce a receipt for the goods at that stage, but did so a little later. He further explained that he was a welder to trade and earned £3,600 per month. He was asked about his financial commitments but said his wife handled the family finances. He confirmed he was aware of the Guidance levels. He signed the interviewing Officer's notebook agreeing that it was an accurate account of his interview, although before signing it he denied that he had ever said that he had purchased only 800 cigarettes and was unhappy with the statement. He had not previously purchased a large quantity of cigarettes abroad. The cost was just over half what it would have cost in Scotland. The basis upon which the goods were seized as recorded in the notebook appear to have been that the quantity exceeded the guidelines; knowledge of the law; goods originally underdeclared; normally buys 20 at a time but has bought 10,000; planned to buy 800 but brought enough money to buy more; giving away more than keeping for own use; he did not normally buy cigarettes for his wife and daughter; did not declare goods as worried about conflicting rules; trying to cut down smoking.

5. The Appellant also signed a manuscript record of the initial discussion with Customs when all three men were still in the van. According to that record the Appellant, Wilson and Stewart each stated that they had bought 800 cigarettes.

6. The manuscript record of Richard Wilson's interview disclosed inter alia that Mr Wilson was a non smoker. The basis upon which the goods were seized as recorded in the notebook appear to have been that Mr Wilson knew the guidance levels; there was a misdeclaration; the goods were for a non entitled person, namely his girlfriend; and that he intended to buy 800 but bought 10,000.

7. The manuscript record of Alan Stewart's interview disclosed inter alia that he had borrowed £2000 from his grandmother, that he was not really a smoker and only smoked 5-10 cigarettes a day, that the majority of the cigarettes would go to his girlfriend who smoked 40-50 cigarettes a day, who would try to help him pay back the loan to his grandmother at the rate of £50 per month; and that he had originally thought of buying £2000 worth of cigarettes. The record also disclosed Mr Stewart as stating that he, Wilson and the Appellant all travelled down from Scotland on the previous day. Mr Stewart signed the manuscript record indicating that it was a true and accurate account. The basis upon which the goods were seized as recorded in the notebook appear to have been that the quantities exceeded the guidelines; there was a misdeclaration; Mr Stewart was initially unaware of the quantities of goods purchased; if he had purchased the intended goods namely £2000 worth this would have taken forty months to repay his grandmother; he was vague as regards the expected time the goods would last; and that the financial arrangements were not viable to make such a large purchase relating to his consumption.

8. Following interviews, the Appellant's cigarettes and the goods of Messrs Wilson and Stewart were seized along with the van.

9. Neither the Appellant, Wilson nor Stewart served notice requiring that condemnation proceedings be taken.

10. The Appellant, Wilson and Stewart took legal advice. By letter dated 9/8/02, their solicitors wrote to Customs applying for restoration of the seized goods. The letter noted that Mr Wilkinson was an unemployed man who had saved the sum of £1000 over a considerable period of time. There was no mention in that letter of the work carried out at Fleet. By letter dated 4/1/02 in reply Customs refused to restore the goods. By letter dated 30/10/02 a review of that decision was sought. The solicitors pointed out that the goods were not hidden and that a much larger quantity could have been stored in the van. They pointed out that Mr Wilkinson was a welder to trade and had some savings. The also said that part of the discussion between Customs and the three men was tongue in cheek banter, and that the whole matter was treated as a formal routine inspection. The Appellant gave convincing evidence to that effect before the Tribunal.

11. The decision to refuse to restore the goods was confirmed by Mr Polatch's letter dated 26/11/02. This predated the Court of Appeal's decision in Hoverspeed. In that lengthy letter, Mr Polatch reviewed the background circumstances, largely taken from the notebooks of the Customs Officers on duty at the time of seizure. He quoted various statutory provisions; and set out Customs' restoration policy for goods. He then reviewed at length the question whether the seizure of the cigarettes was correct and concluded that it was. He then proceeds to rely on these conclusions as the basis for declining to exercise his discretion to restore the goods.

Submissions

Mr Scott, for Customs, submitted that the Court of Appeal decision in Hoverspeed was not relevant to this appeal. The reviewing officer had proceeded on the basis that the onus was on Customs. He reminded the Tribunal that no condemnation proceedings had been taken. The Tribunal should reach its view on the reasonableness of the decision on review on the basis of the facts known to the reviewing officer. The Appellant's evidence was inconsistent and confused, but if the Tribunal accepted it was conceivable that the case could be sent back to Customs to carry out a further review. He drew our attention to the case of Lett v CC&E LON E00200 19/2/02 (Chairman Paul Heim) paragraph 76 which considers the question of reasonableness of decisions.

Mr Wilkinson, summing up, emphasised that he, Wilson and Stewart had been interviewed separately. He thought two boxes of cigarettes were not a large quantity. He denied ever saying that he only had 800 cigarettes and felt that the Customs officers had trapped him.

Decision

The appeal to this Tribunal arises by virtue of sections 16(4)&(8) of and paragraph 2(1)(r) of Schedule 5 to the 1994 Act. Thus, the appeal is concerned with a decision relating to an "ancillary matter". The issue before the Tribunal is whether the Appellant has established that the decision not to restore the goods was one that Customs could not reasonably have arrived at. It is important to record that this appeal is not concerned with the seizure of the goods. The question of liability to forfeiture falls to be determined in accordance with the procedure laid down in Schedule 3 to the 1979 Act. The Appellant did not serve a notice of claim under paragraph 3 of the Schedule claiming that the goods seized were not liable to forfeiture. The liability of the goods to forfeiture has been resolved against the Appellant and cannot be opened up before this Tribunal. We must therefore consider whether we are satisfied that Customs could not reasonably have arrived at the decision (to refuse to restore the goods) on the review.

The question whether goods should nevertheless be restored is a matter for Customs' discretion under section 152(b) of the Customs and Excise Management Act 1979. In exercising that discretion, Customs have developed policies and guidelines which have been reviewed from time to time in recent years to take account of decisions of tribunals and the courts. Customs are entitled to have policies and guidelines provided they are reasonable and not disproportionate. The Tribunal's jurisdiction is supervisory, although in accordance with its procedural rules, it is entitled to hear evidence and make findings of fact. Had it been our function to reassess all the evidence and form a fresh view of the circumstances of seizure and of the reliability and credibility of the Appellant's account, we would have been inclined to believe that there was no commercial purpose behind his purchase of the goods and that he acquired them for his own personal use or for gifts to members of his family. The Tribunal notes in particular that in deciding to seize the Appellant's goods, Customs appear to have relied upon statements made by the Appellant's fellow travellers outwith his presence and in relation to which he may not have been given any opportunity to comment. The Tribunal would regard that as prima facie unfair to the Appellant. However, in this type of appeal it is not our function to reopen the question whether the goods were properly seized. All these matters could, and perhaps, should have been explored in condemnation proceedings. It is surprising that more use is not made of the condemnation procedure set forth in Schedule 3 to the 1979 Act. Condemnation proceedings were raised in Hoverspeed ... see 2002 3 WLR 1219 para 57; and for a recent example see CC&E v Newbury 2003 EWHC 702 Admin Hale & Moses JJ). It is unfortunate that the Tribunal has no jurisdiction to deal with condemnation proceedings. As a specialist Tribunal, it is ideally placed to deal both with condemnation and restoration proceedings. As the Tribunal's jurisdiction here is supervisory there may often be little point in hearing evidence. Such evidence is unlikely ever to be identical to the facts and circumstances before Customs when they made their decision not to restore. Making findings in relation to so called primary facts is simply confusing and gives Appellants a false impression of the nature of the proceedings before the Tribunal. The phrase primary facts appears to be used differently in Lindsay v CC&E 2002 STC 588 para 22 and Gora & Ors v 11/4/03 Ct of Appeal EWCA 525 para38.

Gora was mainly concerned with whether Customs' refusal to restore seized goods involved the determination of a criminal charge for the purposes of Article 6 of the Convention, the meaning of detention in the Customs & Excise Management Act 1979, and the tribunal's jurisdiction. The court makes it clear that it accepted Customs' concession that the Appellants were entitled to attack Customs' policy on the ground that it failed to take into account the alleged blameworthiness of the Appellants; that if such a challenge were successful the decision would be reconsidered by Customs; and if on further appeal an issue arose whether the Appellants were blameworthy the Tribunal could make its own findings in fact about this (paras 38-39); the Court went on to express the view that the Tribunal does not have jurisdiction to reconsider the condemnation of goods as forfeited; that was a matter for the courts under schedule 3 to the 1979 Act. However, considering an Appellant's blameworthiness is liable to open up the whole circumstances in which goods and vehicles came to be seized; In the present case the Appellant has represented herself. The Tribunal has not had the benefit of any submission attacking Customs' policy on the ground that it fails to take account of the alleged blameworthiness of the Appellant. The Tribunal also notes the recent decision of Neuburger J in Gascoyne v CC&E (High Court Chancery Division 21/2/03); this was a restoration appeal concerning cigarettes and a vehicle. The Court considered that both the reviewing officer and the Tribunal could consider the validity of any seizure or forfeiture (para 52 and 117). That view, in England would appear to be wrong in the light of Gora. In Gascoyne, the Court also reviewed Customs' restoration policy and concluded that it was reasonable.

Even if the Tribunal's findings-in-fact differ materially from the facts and circumstances taken into account by Customs in reaching their decision, there is little a Tribunal can do, as it is difficult to justify a Tribunal with a Wednesbury type jurisdiction (adjusted to take into account an Appellant's Community rights, such as the principle of proportionality, and his Human Rights such as Article 1 of the First Protocol and the fair balance test) being concerned with the assessment of the credibility and reliability of the evidence led by or on behalf of either party. However, the Tribunal does consider that it is entitled to examine with the assistance of evidence, the reasonableness of the decision not to restore. If such examination reveals that (i) Customs' investigations (a) were inadequate, (b) were incomplete in the sense that there are facts and circumstances of which Customs ought reasonably to have been aware but failed to investigate or ascertain, or (c) did not justify the conclusions reached i.e. they were unsupported by the information obtained and their own specialist knowledge of profiles and trends (cf Hoverspeed Ct of Appeal para 47), (ii) Customs misunderstood the facts, (iii) misunderstood or misapplied the law, or (iv) acted in bad faith, then the Tribunal would be entitled to conclude that the decision made by Customs was one which they could not reasonably have arrived at. It is often a difficult task identifying the relevant evidence, particularly where the Appellant is a party litigant, and gives evidence about matters which either were not before Customs when they made their decision or were before them but in less detail. This is perhaps where section 14(5)(a) of the 1994 Act comes into play. That subsection enables a further review of Customs' decision to take place when additional information is produced. Nevertheless, as the Tribunal has already noted, the evidence before the Tribunal rarely matches what was before Customs when they made their decision. This makes an examination of the reasonableness of Custom's decision particularly difficult in some cases.

In the present appeal, the Tribunal is not concerned with the exercise of discretion in relation to a motor vehicle but with the goods themselves, namely 10,000 cigarettes. Customs' general policy is not to restore seized goods. The position in relation to vehicles is more flexible. However, each case is examined on its merits. Various factors are said to militate against restoration. Mr Polatch concluded that there were no circumstances justifying departure from that policy. On the material presented to this Tribunal, we have been unable to conclude that in exercising their discretion not to restore the seized goods, Customs have taken into account irrelevant considerations or failed to take into account relevant considerations or have reached an unreasonable result which defies logic or is in any sense disproportionate or otherwise infringes the Appellant's Community or Human rights.

With some regret, therefore, we have no alternative but to dismiss this appeal.

J GORDON REID, QC., F.C.I.Arb.,

CHAIRMAN

RELEASE: 6 JUNE 2003

EDN/02/8024