United Kingdom VAT & Duties Tribunals (Excise) Decisions

Peters v Customs & Excise [2003] UKVAT(Excise) E00461 (30 July 2003)

EXCISE DUTIES — traveller arriving by air — seizure of tobacco products — reimbursement for part of the purchase — incorrect burden of proof applied — appeal allowed

MANCHESTER TRIBUNAL CENTRE

GARETH DAVID PETERS Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Lady Mitting (Chairman)

Mr P Whitehead

Sitting in public in Manchester on 24 June 2003

Mrs C Peters appeared for the Appellant

Mrs L Walmsley of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This is an appeal by Mr Gareth Peters against the decision of the Commissioners, taken on review, dated 22 August 2001, not to restore to him tobacco products seized from him on 16 May 2001.
2. The documentary chronology leading to the review letter is not entirely clear from the bundle which was put before us. Mr Peters wrote to the Commissioners on 8 June 2001 requesting the return of his goods. By letter dated 26 July 2001, the Commissioners refused restoration and advised Mr Peters of his right to apply for an independent review within 45 days. There was not in the bundle any further correspondence from Mr Peters prior to the date of the review letter and indeed the review letter itself refers back to the letter of 8 June 2001. We assume however that there was at some stage a communication from Mr Peters requesting the review to be carried out.
3. On the 16 May 2001, Mr Peters and his sister-in-law, Mrs Michelle Taylor were stopped at Liverpool John Lennon Airport. They were returning from Palma and were found to be carrying 11,400 cigarettes and 1 kilogram of hand rolling tobacco. Of these, 6,600 of the cigarettes belonged to Mr Peters and the remainder to Mrs Taylor. We are concerned only with Mr Peters and those cigarettes which belonged to him. The seizing officer was Mr Kevin O'Hanlon. He did not attend the tribunal but a witness statement from him setting out the relevant contents of his notebook had not been challenged by Mr Peters. It is apparent from the notebook that Mrs Taylor had already gone through customs without being stopped when Mr Peters was stopped. Mr Peters was carrying a travel bag which contained most though not all of his cigarettes. When Mrs Taylor was called back she was found to be carrying the hand luggage of both of them and a suitcase containing the remainder of the cigarettes. The officer's notebook shows that Mr Peters was initially questioned on his own but he and Mrs Taylor were then questioned jointly after she had been brought back. In answer to the initial questions, Mr Peters is recorded as having told Mr O'Hanlon that it was his wife with whom he was travelling and in answer to the question whether his wife had any luggage with her Mr Peters is recorded as saying "no, only hand luggage".
4. In response to further questioning, Mr Peters told Mr O'Hanlon that he was in fulltime employment with Greater Manchester Fire Service with an income of £22,000 per year and his wife was a hospital worker earning £200 a month. The cigarettes were mainly for himself and his wife although 200 of them were for his wife's sister Ruth and 400 were for his mother. Mr Peters was asked whether he had been given any money towards the cigarettes to which he replied that his mother had given some money for hers.
5. Both Mr Peters and Mrs Taylor signed the officers notebook, Mr Peters writing "the above interview is a true and accurate account".
6. In her review letter, Mrs Susan Bandell upheld the decision not to restore in the following terms:-

"Community travellers carrying over the minimum indicative level of excise goods must satisfy Customs and Excise that the goods are not for a commercial purpose. In this case I am not satisfied the goods are for your own personal use for the following reasons:

1. You were 7.25 times in excess of the minimum indicative levels (MILS) the guidance for cigarettes are 800 per person.

2. You had accepted monies from you Mother for 400 cigarettes this contravenes the (Personal Relief's Order 1992.) This means you cannot accept monies for the purchase of cigarettes for a third party even if you do not make a profit, this is classed as a commercial transaction.

3. You miss-lead the officer when he asked you whom you had travelled with you said your wife but it later transpired your co-traveller was your sister-in-law. The officer asked you several questions relating to your wife and you did not make it clear to him at the time. When your sister-in-law was brought back to the customs controls you had stated that she only had hand-luggage when in fact she had a suitcase full of cigarettes these also were seized."

7. In his oral evidence to us, Mr Peters sought to challenge the contents of the officer's notebook, telling us that he had not bothered to read it before signing it. He was adamant that he had not referred to Mrs Taylor as his wife but as his "wife's sis". He believed Mr O'Hanlon had difficulty understanding what Mr Peters was telling him as Mr Peters clearly told him that he was with the Greater Manchester Fire Brigade but that has been transcribed as "Great Hodges". We were also told that Mr Peters had to spell out phonetically his address (88 Highfield Road Farnworth, Bolton) although this address does not appear to be a particularly difficult one to interpret.
8. Mr Peters explained that he told the officer that Mrs Taylor was carrying only hand luggage because he had understood Mr O'Hanlon's question to be whether Mrs Taylor was carrying any luggage of his. If the conversation has been correctly recorded this was clearly not the question put to Mr Peters.
9. Mr Peters suggested that the contents of the notebook were selective and he also said that the first part of the conversation before being joined by Mrs Taylor had not been written down at the time but was made up later after Mrs Taylor had joined them and before the interview under caution took place.
10. There was, during the interview, clear confusion as to which cigarettes belonged to whom. Mrs Taylor claimed 25 cartons (5000) with Mr Peters claiming the remainder. Mr Peters was not carrying all his cigarettes some of which were in the luggage taken through by Mrs Taylor. This was explained to us in oral evidence as being because his weekend bag was full. In his evidence in chief, in fact Mr Peters had told us that he was carrying all his own goods, none of them being carried through by Mrs Taylor which clearly was not accurate.
11. With regard to the payment given to him by his mother, this was the cost to Mr Peters for the cigarettes and he told us that it was common practice when he or his mother went away for them to bring back a couple of packs for each other and they would then reimburse the cost. He did not realise this would amount to a commercial transaction and thought he could bring back as much as he wanted for himself and his family.
12. Mrs Walmsley's submission was that the receipt of payment from Mr Peters' mother rendered the purchase a commercial transaction and those goods at least liable to forfeiture. She then referred us to section 141(1) CEMA 1979 which provides that where anything has become liable to forfeiture under the Customs and Excise Act any other thing mixed, packed or found with it is also liable to forfeiture. It was therefore Mrs Walmsley's contention that because 2 packs of the cigarettes were clearly liable to forfeiture the remainder also were. She further submitted that the answers given by Mr Peters were evasive and unclear and that as he had referred to Mrs Taylor through out his evidence as "my sister-in-law" it was most unlikely that he would have referred to her as his "wife's sis" in interview.
13. Mrs Walmsley accepted that the incorrect burden of proof had been applied but referred us to the authority of John Dee v Customs and Excise Commissioners [1995] STC 941 where Neill J said at page 993:

… "Where it is shown that, had the additional material been taken into account, the decision would inevitably have been the same, a tribunal can dismiss an appeal"

14. It was Mrs Walmsley's contention that because of the commercial nature of the transaction and the inaccurate nature of Mr Peters' responses, even had the correct burden of proof been applied, the decision would inevitably have been the same and the appeal should therefore be dismissed.
15. Given Mr Peters' current challenge to the accuracy of the interview notes, it is unfortunate that he neither read the notes before signing them nor challenged Mr O'Hanlon's witness statement. The Commissioners have thus been denied the opportunity to call Mr O'Hanlon and to counter Mr Peters' allegations which we cannot find to have been substantiated.
16. At the time of seizure and the review decision, the Excise Duty (Personal Relief's) Order 1992 provided that a traveller bringing excise goods into the UK in quantities in excess of a minimum indicative level had to satisfy the Commissioners that the goods were for own use, "own use" being defined as:

"own use includes use as a personal gift provided that if the person making the gift receives in consequence any money or monies 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"

17. If the traveller failed to so satisfy the Commissioners, the goods were treated as being held for a commercial purpose and UK duty became payable on them. At the time of the seizure the limit for cigarettes was 800.
18. This definition of "own use" has been upheld (Customs and Excise Commissioners v the Queen (Hoverspeed Limited and others)) 10 December 2002 CA. It has also been held that if family and friends are reimbursing on a not for profit basis then this is nevertheless commercial and duty is payable (Lindsay v Customs and Excise Commissioners 2002 1WLR 1766). Following the decision in Hoverspeed, the Commissioners have accepted that the burden of proof should not be upon the traveller to satisfy the Commissioners that the goods were not for commercial purpose but rather upon themselves to show that the goods were held for such a purpose.
19. The jurisdiction of the tribunal is set out in section 16(4) Finance Act1994 in the following terms:

"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 direction 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.

20. The test of reasonableness which the tribunal applies is the Wednesbury test. In this case Mrs Bandell clearly applied the incorrect burden of proof in that she was requiring Mr Peters to satisfy her that the goods were not held for a commercial purpose. This is no criticism of Mrs Bandell as she was applying what was in fact the law at the time but, as the Commissioners now accept, that was incorrect and it must therefore render her decision flawed. Mrs Walmsley accepted that applying the incorrect burden of proof would be an error of law which would of itself render the decision unreasonable. Her argument, however, was that in the light of John Dee, even had the correct burden of proof been applied the officer's decision must inevitably have been the same. This is a high threshold and one which we do not think is reached in this case. There are factors which militate against restoration. That part of the consignment which was for Mr Peters' mother was not for own use but was of a commercial nature and the officer would have been fully justified in viewing Mr Peters' answers as evasive and misleading. There are however other factors which the reviewing officer could have taken into account but upon which we were not addressed. We heard no evidence or representations on the policy of the Commissioners in respect of Section 141, the reasonableness of that policy or on proportionality in respect of the Section, when only a small portion of the goods are for a commercial purpose, and that being within the family and not for profit. These are issues to which we would have thought the reviewing officer could have given consideration and we cannot say the decision reached would inevitably have been the same.
21. For these reasons we allow the appeal and in accordance with our powers under section 16(4) Finance Act 1994, we direct the Commissioners to carry out a further review, such review to be carried out within 6 weeks of the release of this decision by an officer who has had no previous involvement with the case.
22. We make no order as to costs.

LADY MITTING

CHAIRMAN

Release Date: