United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E428, [2003] UKVAT(Excise) E00428

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Keenan v Customs & Excise [2003] UKVAT(Excise) E00428 (12 June 2003)

EXCISE DUTIES — importation of cigarettes and tobacco — admission by traveller that goods were for Appellant and her family and that sons and daughters clubbed together with Appellant to purchase — whether goods should be restored — whether review decision was reasonable — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

ANNA KEENAN Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr I E Vellins (Chairman)

Mr R Presho

Sitting in public in York on the 9th May 2003

No attendance or appearance by Appellant

Mr M Kellet of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

DECISION

This is an appeal by the Appellant Mrs Anna Keenan against the decision of the Commissioners dated 10 September 2002 confirming a refusal to restore to the Appellant 12,000 cigarettes and 7.5 kilograms of hand rolling tobacco dated 17 July 2002, the cigarettes and tobacco having been seized on 11 May 2002. The Appellant had been stopped at the UK control zone Coquelles France on 11 May 2002 when the goods were seized.

At the hearing if the appeal at York at 9 May 2003 the Commissioners were represented by counsel Mr M Kellet. The Appellant herself did not appear at the hearing and was not represented at the hearing. She had written to the appellate authority on 30 January 2003 indicating that she did not wish to attend at the hearing, and wished the appeal to be decided on the written evidence only.

The Background

The background to this appeal is that the Appellant was travelling by coach to the United Kingdom which was passing through the UK control Zone at Coquelles France on 11 May 2002 on its journey to the United Kingdom. The Appellant who was returning to the United Kingdom had in her possession excise goods which had been imported without payment of duty consisting of 12,000 Regal cigarettes, 5 kilograms of Drum hand rolling tobacco and 2.5 kilograms of Golden Virginia hand rolling tobacco. An officer of the Commissioners, who stopped the Appellant, asked her if she was aware of the prohibitions and restrictions, and she told the officer she was aware. The officer then commented that the driver of the coach on which she travelled had given her the guidelines and asked the Appellant why she had so much excise goods. The officer read to her the commerciality statement. The Appellant replied that she thought she could bring back as much as she liked. The officer told her that the Commissioners had laid down guidelines and the goods had to be for her own consumption. He asked her if all the goods were for herself. The Appellant replied "Me and my family, sons and daughters gave me money and we clubbed together to buy it". The officer then asked who was going to smoke all of the Regal cigarettes. The Appellant replied "The cigarettes are for me, most of them". The officer asked her if she wished to stay for a full interview but the Appellant declined and told the officer that she just wanted to go. The officer seized the cigarettes and tobacco. The officer had not been satisfied that all of the excise goods were for the Appellant's own use. The goods were seized because persons who were not travelling had paid for some of the goods, and relief from duty did not apply in those circumstances, and any other goods found or packed with them were also liable to forfeiture and seizure.

On 12 May 2002 the Appellant wrote to the Commissions requesting the restoration of the goods to her. She stated "The goods seized from me were mainly cigarettes and tobacco. All these items were for my own personal use and that of my own personal immediate family. Some considerable months ago I went on a similar trip and only bought 800 cigarettes. People on the same trip told me that you were allowed to bring in a years supply for personal use. I spent a great deal of time and saved enough to buy a years supply, based on a consumption of the 40 a day I smoke. I also enclose a copy of a leaflet that I received from a UK manufacturer which stated that I am allowed to bring in anything for my own use. I did bring in a small quantity of tobacco, 5 kilo for my son-in-law who smokes Drum tobacco, and a small amount of Golden Virginia tobacco for my daughter who finds Drum too strong for her use. As I say it has taken a very long time to save the money up, to buy these items, and to say I am shocked is an understatement. I can not afford to lose all my money like this so I ask would you please return to me my cigarettes and tobacco. May I please reiterate that the cigarettes were for my own use only and the tobacco for my son-in-law and my daughter".

In a separate undated letter the Appellant wrote to the Commissioners to inform them that she was 60% deaf and wore a hearing aid whilst being questioned by the officer. She stated that she was suffering from depression and was very upset about her ordeal. She stated that it was costing her nearly £15 per day in the United Kingdom in the shops for cigarettes and requested the return of her cigarettes. The P&O job product sheet on the coach showed in respect of the appellant 6.5 kilograms of tobacco and 9,600 cigarettes. The Appellant's receipt for the purchase of the excise goods was in respect of 12,000 cigarettes and 7.5 kilograms of hand rolling tobacco costing the Appellant £1287.40.

On 17 July 2002 the Commissioners replied to the Appellant's request for the restoration of her excise goods. In that letter the officer of the post-seizure unit pointed out to the Appellant that it was the Commissioner's policy that seized excise goods were not restored, but each case was examined on its merits to determine whether or not restoration may be exceptionally offered. The officer pointed out that in conducting this examination the presence of any one of the following would mitigate against restoration, namely, any evidence of previous smuggling or failure to comply with legal requirements, any evidence that the person involved knew what they were doing was wrong, any evidence that the person was paid to make the journey, large quantities of goods which might damage legitimate trade, and any evidence that the goods were for a commercial purpose.

The officer considered the factors and confirmed that the goods were not offered for restoration. The reasons given were that the Appellant was carrying excise goods in excess of the guidelines as per Article 5 of the Excise Duties (Personal Reliefs) Order 1992. The Appellant had imported into the United Kingdom tobacco 7.5 times the guidelines and cigarettes 15 times the guidelines. She had stated that she was aware of excise guidelines and therefore should have been aware that the goods might have been seized from her. She was offered the opportunity to be interviewed regarding the goods but declined this. Consequently she failed to satisfy the officer that the goods were for personal use deeming them liable to seizure. She had stated in her answers to the officer's initial questions that she had clubbed together with her family to purchase the goods. The goods were for non-travelling persons and therefore relief under the terms of the Excise Duties (Personal Reliefs) Order 1992 was not afforded. The officer pointed out that to encourage compliance the normal policy in these cases was to refuse to restore seized goods. The officer commented that he had seen no evidence of exceptional circumstances in this case which would justify a departure from the policy. The officer pointed out to the Appellant that she could apply to have her case reviewed.

On 1 August 2002 the Appellant wrote to the Commissioners requesting a review of the decision not to restore the goods to her. In that letter she denied that she had intended to sell the goods to third parties and denied that she was a smuggler. She stated "The tobacco was bought by me on behalf of my son and daughter, however they paid me the exact money that it cost me to purchase the hand rolling tobacco…the cigarettes were bought by me for myself only and the hand rolling tobacco was bought by me on behalf of my son and daughter for their use only, none of these goods were to be sold to any third party". She asked for a review of the decision in the light of the recent Hoverspeed case.

On 10 September 2002 a review officer notified the Appellant of the review that had been carried out by the Commissioners. The officer set out in the letter full details of the background and the relevant legislation, and the restoration policy of the Commissioners. The review officer concluded that because of the volume of excise goods that she was bringing into the United Kingdom she had been questioned by an officer to whom she had admitted that the tobacco was for her family and that they had given her the money for it. She had confirmed this by letter since the date of seizure. The fact that she had purchased tobacco for her family who had given her money for it contravened the regulations, and relief from UK duty was only afforded to goods for her own use. The review officer was satisfied that the tobacco was appropriately seized and that the cigarettes were liable to forfeiture because they were found or packed with the tobacco. The officer pointed out that the Commissioners' policy was that goods were only restored in exceptional circumstances, and the officer did not consider that there were exceptional circumstances in the case of the Appellant. The review officer exercised his option to confirm the contested decision not to offer restoration of the goods.

On 23 September 2002 the Appellant wrote to the Commissioners indicating that she was appealing to the VAT and Duties Tribunal. She indicated that she believed that she was allowed to bring back into the United Kingdom goods for her own use and goods for other people for their use, as no goods were to be sold on for any profit. She stated that she brought back only cigarettes for herself, bought and paid for with her own money, and hand rolling tobacco for her son-in-law and daughter which was paid for with their money that they gave her prior to her making her trip. She stated that she understood that because they gave her the exact money for their tobacco this was allowed as it was not being sold on for profit. She denied that she was a smuggler. She stated that the tobacco had been in a separate bag from the cigarettes, and stated that she was aware of the decision in the Hoverspeed appeal.

On 7 November 2002 the Appellant appealed to the tribunal stating that the sum of money in dispute was £1287.40. In her grounds of appeal she stated that the Commissioners had acted illegally in seizing goods that she had bought and paid full duty in a member EEC country. She had told the Commissioners that the cigarettes were for her own personal use and for no one else's and that the hand rolling tobacco was for her daughter and son-in-law for their own use only. She stated that she was not a smuggler, nor have the Commissioners accused her of such. She asked for the return of her goods which she claimed were her rightful property.

On 30 January 2003 the Appellant wrote to the appellate authority stating that she did not intend to call any witnesses at the hearing and was not being represented at the hearing. She asked the tribunal to decide the case on the written evidence only. She stated that she was ill and her illness would prevent her from attending personally at a hearing at any time. She stated that she did not expect to get any better from her illness. She stated that was currently recovering from an operation and was due to have a further operation. She asked to be notified of the decision.

At the hearing of the appeal Mr Kellet on behalf of the Commissioners went through the background documents in detail. He submitted, following the court of appeal decision in the Hoverspeed appeal, that the seizure of the goods was a legitimate seizure as the goods were liable to forfeiture as goods on which duty was due and had not been paid. The Appellant had been importing a large quantity of tobacco and cigarettes in excess of the indicative levels. She had declined to remain and answer further questions from the officer of the Commissioners who had stopped her. She admitted to the officer that the goods were not all for her own use, and that members of her family had provided the money to purchase some of the goods. Accordingly the goods were not being imported for her own use and were liable to forfeiture. He submitted that the decision not to restore the goods and the further review decision not to restore were reasonable. The officers had taken into account the fact that she had a large quantity of goods which were not for her own use and were therefore being imported for commercial purposes. She had been aware of the guidelines and had failed to give a reasonable explanation for travelling with goods in excess of these guidelines.

Mr Kellet submitted that the Commissioners had acted reasonably in making adverse inferences against the Appellant's contention that she was importing the goods for her own use. She had declined to be interviewed further by the officer, she had stated that part of the goods were purchased for relatives with money provided by them, her credibility was affected by different explanations that she had made as to the purchase of the goods from time to time. When she was first stopped by the officer in question she did not say that all the cigarettes were for herself. Her reply was "The cigarettes are for me, most of them". It was only in later correspondence that she stated that the cigarettes were bought by her for herself only. At that first interview she was asked if all the goods were for her and she had replied "Me and my family, sons and daughters gave me money and we clubbed together to buy it". At that time she was not stating that this reply only related to the hand rolling tobacco, and notably she was referring to sons and daughters in the plural. Then in her letter of 12 May 2002 she indicated that the hand rolling tobacco was for her son-in-law and her daughter. Then in her letter of 1 August 2002 she stated that the tobacco was bought by her on behalf of her son and daughter who paid her the exact money it cost. Finally in her letter of 23 September 2002 she referred to the hand rolling tobacco as being brought back for her son-in-law and daughter who paid her the exact money for that tobacco prior to her making the trip. He submitted that she had not given a consistent explanation as to who had paid for what.

Mr Kellet submitted that the decisions had been reasonable and had taken into consideration all of the material facts including the need for a consistent policy, the absence of exceptional circumstances and that fact that goods had been imported without the duty being paid which duty should have been paid as the goods were not for the Appellants own use.

The Relevant Law

Section 3 of the Excise Duty (Personal Reliefs) Order 1992 states that:

"Subject to the provision of this order a community traveller entering the United Kingdom shall be relieved from payment of any duty of excise on excise goods obtained for his own use in cross-border shopping of which he transported".

"Own use" is defined in the order as …

"Own use includes use as a personal gift provided that is 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 for the purpose of this order".

Section 5(3) of the Order established that paragraphs 3a and 3c applied to a person who has in his possession or control any excise goods afforded relief under this Order in excess of any the quantities shown in the schedule to this Order.

Paragraph 3a states that the Commissioners may require a person to whom this paragraph applies to satisfy them that the excise goods afforded relief from this Order are not being held or used for a commercial purpose.

Paragraph 3b provides that where a person fails to satisfy the Commissioners that the excise goods in question are not being held or used for a commercial purpose the condition imposed shall be treated as not being complied with.

The schedule specified at the time, in connection with tobacco products 800 cigarettes, and 1 kilogram of tobacco products, as quantities above which a traveller may be required to satisfy the Commissioners in this way. The tobacco figure has since the seizure been increased to 3 kilograms and the cigarette figure to 3,200 cigarettes under Amendment Regulations 2002 No. 2692.

Paragraph 5(1) of the Order states that if this condition is not met "those goods shall without prejudice to Article 6 be liable to forfeiture".

Paragraph 5(2) sets out various factors where regard shall be taken in determining whether or not the condition in paragraph 5(1) is being complied with.

Section 141(1) of the Customs and Excise Management Act 1979 provides that:

"(b) Any other thing mixed, packed or found with a thing so liable shall also be liable to forfeiture".

Articles 8 and 9 of the EC Directive of 1992/12/EEC provide as follows:-

"8. As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty should be charged in the Member State in which there are acquired.

1. Without prejudice to Article 8 excise duty shall become chargeable where products released for consumption in a Member State are held for commercial purpose in another Member State.

2. To establish that the products referred to in Article 8 are intended for commercial purposes, Member States may take into account inter alia the following:

the commercial status of the holder of the products and his reasons for holding them,

the place where the products are located or where appropriate the mode of transport used,

any document in relation to the products,

the nature of the product,

the quantity of the products.

Member States may lay down guide levels solely as a form of evidence. These guidelines may not be lower than [specified levels]."

The quantity of the those goods specified in the United Kingdom was at the time of seizure in relation to cigarettes 800 cigarettes and in relation to tobacco 1 kilogram.

Where tobacco goods are not imported for own use excise duty becomes payable on the goods by virtue of Section 2 Tobacco Products Duty Act 1979. The duty becomes payable upon the importation by virtue of the Excise Goods (Holding Movement Warehousing and REDS) Regulations 1992.

Section 49(1) Customs and Excise Management Act 1979 enables the Commissioners to forfeit dutiable goods that have been imported or held without payment of duty.

The Court of Appeal in the Hoverspeed appeal placed the burden of proof on the Commissioners as to whether goods are being held or used for a commercial purpose.

Section 152 of the 1979 Act provides that the Commissioners may as they see fit restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under the Customs and Excise Act.

Section 15 of the Finance Act 1994 empowers the Commissioners to confirm and vary or withdraw the reviewable decision on behalf of the Commissioners.

The basis of the tribunal's jurisdiction is set out in section 16 of the Finance Act 1994, subsection (4) of which provides that:

"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 persons making their decision could not reasonably have arrived at it".

In John Dee Limited v Commissioners for Customs and Excise 1995 STC 941, Neill L J approved a principle that the tribunal could only properly review the Commissioners' decision if it was 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, and stated that the tribunal may also have to consider whether the Commissioners had erred on a point of law.

The Court of Appeal in Hoverspeed found that even if the Commissioners' stopping of a traveller was invalid, the seizure could not be regarded as invalid.

In the Hoverspeed appeal the Court of Appeal held at paragraph 65

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

Further in the Lindsay appeal 2002 the court held that if friends or family are reimbursing on a not for profit basis this is nevertheless commercial and duty is payable.

Conclusions

We have considered all of the evidence in this appeal and the provisions of the law involved. We make the following findings of fact and reach the following conclusions.

We find that on 11 May 2002 the Appellant, having purchased 12,000 cigarettes and 7.5 kilograms of hand rolling tobacco on the continent was returning by coach to the United Kingdom through the UK control zone at Coquelles France. She did not offer or pay duty on those goods that she was importing into the United Kingdom. When stopped by an officer she agreed that had been in possession of the guidelines and told the officer that the goods were for herself and her family and that her sons and daughters had given her money and they had clubbed together to buy the goods. She indicated that most of the cigarettes were for herself. She declined to stay for a full interview. The officer seized the cigarettes and tobacco on the grounds that the Appellant had admitted that she had received moneys from others to purchase the goods and that the goods were in excess of the guidelines. The Appellant had purchased the goods for £1,287.40. She subsequently entered into correspondence with the Commissioners requesting restoration of the goods, and then a review of the refusal to restore the goods.

The Appellant in correspondence gave various different explanations as to how money the goods were purchased. She had told the officer that her sons and daughters had given her money. In her letter of 12 May 2002 she stated that the tobacco was for her son-in-law and daughter. In her letter dated 1 August 2002 she stated that the tobacco was bought by her on behalf of her son and daughter who had paid her the exact money it had cost. In her letter dated 23 September she stated that the cigarettes were bought for herself with her own money and that the tobacco was bought for her son-in-law and daughter who had paid for this with their money prior to her making the trip.

Her explanations were contradictory and her suggestion in correspondence that she spent £15 a day on cigarettes did not accord with her contention that she smoked 40 cigarettes a day. We find that she could not be regarded as credible in her explanations.

The Commissioners took into account the letters from the Appellant and the relevant documentation when refusing the request for restoration of the goods on 17 July 2002, and when reviewing the decision not to restore but upholding that decision in the Commissioners letter 10 September 2002.

It is clear from the Appellant's own admissions to the officer and in correspondence that part of the goods was being brought into the United Kingdom by the Appellant for the use of members of her own family, having been purchased with money provided by those members of her family. We are satisfied that as a result of the legislation, as stated in the decision of the Court of Appeal in Hoverspeed, an individual holding or acquiring products for a purpose other than her own use results in the products being regarded as being held for commercial purposes. We are satisfied that if members of a family are reimbursing even on a not-for-profit basis, this is nevertheless commercial and duty is payable. We are satisfied that the Commissioners were entitled to seize the goods, and to come to a decision not to restore the goods. We are satisfied that the Commissioners were further entitled to uphold their decision not to restore the goods on review.

We are satisfied that the Commissioners had proof that the goods were not for the Appellant's own use, and were therefore being held for commercial purposes, from the quantity of goods, the explanation given by the Appellant that some of the goods were purchases for her family from money provided by those members of her family, and from the Appellant declining to stay for an interview. We are satisfied following the Hoverspeed decision in the Court of Appeal that the seizure of the goods was valid. We are satisfied that the Commissioners acted proportionately in refusing to restore the goods. The Appellant paid £1,287.40 for the goods. We find that there is not undue hardship to the Appellant caused by the seizure of the goods. We consider that there are no exceptional circumstances in the case of the Appellant which would justify the Commissioners restoring the goods to her. We are satisfied that the Commissioners acted reasonably in refusing to restore the cigarettes as well as the tobacco. The cigarettes were being carried together with the tobacco. She had told the officer that most of the cigarettes were for herself (not all of them). We find that not all the cigarettes were for her own use that others had contributed to their cost and that the goods were being held for a commercial purpose.

We find that the excise goods were liable to seizure and forfeiture in accordance with the legislation. We find that the Commissioners decision not the restore the goods was in accordance with that legislation. The Commissioners have reviewed the decision and the decision has been upheld. We find that the decision was reasonably arrived at. We find that the Commissioners have not acted in a way that no reasonable panel of Commissioners could have acted, that they have not taken into account irrelevant matters or disregarded something to which they should have given weight, and we further find that they made no error in law. The decision of the Commissioners was made before the Court of Appeal decision in Hoverspeed. We find on all the evidence in this appeal that even if the Commissioners had taken into account the principles set out in the Hoverspeed appeal, their decision would inevitably have been the same.

The appeal of the Appellant is dismissed. The Commissioners did not apply for costs and we make to order as to costs.

I E VELLINS

CHAIRMAN

RELEASE DATE: