United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E00462, [2003] UKVAT(Excise) E462

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Lamb & Anor v Customs & Excise [2003] UKVAT(Excise) E00462 (30 July 2003)

EXCISE DUTIES - appellants seeking restoration of forfeited excise goods acquired in Belgium and forfeited vehicle used to transport goods from Calais to Dover - goods found to be held or used for a commercial purpose - held that review decision not to restore goods was reasonable and no exceptional circumstances existed why vehicle should be restored - appeal dismissed

MANCHESTER TRIBUNAL CENTRE

DAVID LAMB and MAUREEN LAMB Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Sitting in Newcastle upon Tyne on the 30th November 2001 and 17th June 2003

The Appellant Mr Lamb appeared in person on 30 November 2001 and both Appellants in person on 17 June 2003

Miss A Graham-Wells and Mr R Toone, counsel instructed by the Solicitor for the Customs and Excise, appeared for the Respondents on 30 November 2001 and 17 June 2003 respectively

© CROWN COPYRIGHT 2003


 


DECISION

Nature of the appeal

1. This is an appeal against a review decision by the Commissioners of Customs and Excise ("Customs") which upheld a decision not to restore to the Appellants certain excise goods ("the goods") and the vehicle in which the goods were being transported, namely a Nissan Spacewagon Registration No N955 CEM ("the vehicle"). The goods and the vehicle were seized on 22 February 2001 in Dover, at which time the Appellants and a Mr Staveley ("the travellers") were travelling in the vehicle in the course of re-entering the UK from France. The goods consisted of the following:

9 kgs hand-rolling tobacco

8,740 mixed brand cigarettes

18 litres beer

7 litres spirits.

2. The goods and the vehicle were seized on the basis that it appeared to Customs that they were being imported for a commercial purpose, and that it had not been demonstrated to the satisfaction of Customs that the goods were for the travellers' own use.
3. The grounds of appeal are stated as follows in the notice of appeal:

"I believe [sic] that the seizure of my Nissan Spacewagon No N955 CEM was excessive. The tobacco and alcohol which were imported were for personal use as demonstrated by the amounts involved notwithstanding that these were over the guidelines for personal consumption. We did not realize that the guidelines had been exceeded".

4. The guidelines referred to were those in the Schedule to the Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155 ("the Order"). They were as follows:

Tobacco products

(a) 800 cigarettes;

(b) 400 cigarillos (that is to say cigars weighing not more than 3 grammes each);

(c) 200 cigars;

(d) 1 kilogramme of tobacco products other than in a form mentioned in (a), (b) and (c) above;

Alcoholic beverages

(e) 10 litres of spirits;

(f) 20 litres of intermediate products (that is to say products defined as intermediate products in Article 17(1) of the Council Directive 92/83/EEC);

(g) 90 litres of wines (but only 60 litres may be sparkling wines);

(h) 110 litres of beer.

5. These guidelines (they have since been increased) were the lowest authorised by Article 9 of Council Directive 21/12/EEC ("the Excise Directive"), which has since 1992 regulated the charging of excise duties within the European Economic Community.

Effect of the Excise Directive

6. Article 8 of the Excise Directive establishes that, as regards products acquired by private individuals for their own use and transported by them – which is what the Appellants contend in this appeal – excise duty is chargeable only in the member state of the Community where the products are acquired.
7. Article 9 of the Excise Directive provides for excise duty nevertheless to become chargeable where products for consumption in one member state are held for a commercial purpose in another. That article lays down criteria, which member states must take into account in determining whether or not products are held for a commercial purpose in another member state.
8. Those criteria were reflected in article 5 of the Order. Unfortunately, the Order incorrectly placed the burden for demonstrating that the importation was for own use on the transporting individuals. This was successfully contended to be incorrect before the Divisional Court of the Queen's Bench Division in R (on the application of Hoverspeed Ltd and others) v C & E Comrs [2002] 4 All E R 912 ("the Hoverspeed case") ^[1]. In consequence the Order has been revoked and replaced.
9. However at the time with which the present appeal is concerned, the Order remained in force. It provided that, for the travellers to be afforded relief under the Order, Customs might require the travellers to satisfy them that the goods were not being held or used for a commercial purpose. As mentioned in paragraph 2 above, it was on the basis of the travellers' failure to do this that the goods and the vehicle were seized in this case.

The approach of the tribunal to this appeal

10. Fortunately, the courts have given assistance to tribunals as to the correct approach to be adopted in pre-Hoverspeed cases such as the present. The Divisional Court in the Hoverspeed case indicated that it is for the tribunal to decide de novo whether the goods were imported for a commercial purpose, the proceedings being civil and the burden lying on Customs to prove on a balance of probabilities, and on the basis referred to above, that the goods were imported for a commercial purpose: see [2002] 4 All E R 950d, paragraph [132]10(B). The courts have also assisted on the all-important matter, so far as the Appellants are concerned, of the proportionality of the seizure of vehicles, as mentioned in paragraph 39 below.
11. So it is that successive counsel appearing for Customs have indicated to the tribunal in this case that they accept that this appeal must be decided according to the principles mentioned, and in accordance with more recent decisions of the courts, in particular the Hoverspeed case on appeal to the Court of Appeal, reported at the reference given in the first footnote to this decision, and the Court of Appeal in Gora and others v C & E Comrs, Dannatt v Same "The Times" 23 April 2003 ("the Gora case").

Progress of this appeal

12. This appeal first came on for hearing on 30 November 2001. On that occasion the Appellant Mr Lamb, who was unrepresented, gave oral evidence before the tribunal and was cross-examined by Miss Graham-Wells, appearing for Customs. The Appellant Mrs Lamb was prevented from being present on that occasion. However the reviewing officer of Customs, Mr Paul Arthur Devlin, was present. He gave oral evidence, based on his witness statement before the tribunal, and was cross-examined by Mr Lamb. The hearing was then adjourned to a future date, to enable Mrs Lamb to attend and put her case.
13. For various reasons, the appeal was not further listed for over 18 months. At the resumed hearing, on 17 June 2003, Mr Toone of counsel represented Customs, Miss Graham-Wells being prevented from attending. Mrs Lamb was present as well as Mr Lamb. Mr Devlin was not present, but the tribunal accepted that the totality of his evidence had been given on the previous occasion.
14. The tribunal also had before it an unchallenged witness statement from Mr Robert Ian Pennington, officer of Customs, detailing Customs' then blanket policy for the seizure of vehicles, and copies of interview records, correspondence and other relevant documentation contained in folders handed in by Customs' representatives on each occasion.

The facts of this case

It is now well established that the tribunal regards it as part of its function to examine the underlying and primary facts relevant to its particular role: see the Gora case at first instance, at [2002] V & DR 49, page 69F - 70E, paragraph 59; and on appeal, where this was expressly accepted by Customs.

15. The facts that I find are as follows.
16. The Appellants were frequent travellers to Belgium, via Calais, for the purpose of purchasing tobacco and cigarettes. They had been there 4 or 5 times in the 6 months preceding 22 February 2001. On each occasion they brought back thousands of cigarettes, and usually dozens of packets of hand-rolling tobacco as well.
17. As such, the Appellants were familiar faces to Customs. They had been stopped on returning to the UK from France on a previous occasion to be questioned about their purchases of tobacco products. It was therefore natural for Customs to stop them on the occasion with which the tribunal is dealing, namely on their return to Dover on 22 February 2001.
18. Contrary to what is stated in the notice of appeal, I find that the Appellants were well aware of the guidelines in the Order and that the amounts contained in the Schedule to the Order were intentionally being greatly exceeded by the level of their importations of cigarettes and tobacco. However Mr and Mrs Lamb claimed, in their separate interviews, to be heavy smokers. Their case is that frequent trips abroad for large purchases of cigarettes and tobacco were necessary to feed their heavy smoking habits at affordable prices. Mr Lamb's habit was said to be 60 cigarettes a day, and his wife's about 20 a day. Their additional consumption of hand-rolling tobacco is unclear.
19. Mr Lamb had been made redundant from his job in January 2001. He and his wife were about to open a shop. Whilst they no longer had an earned income, they had substantial savings.
20. The information given to Customs by Mr and Mrs Lamb and by Mr Staveley as to how many of the cigarettes and how much of the tobacco discovered in the vehicle belonged to each of them respectively were as follows. Mr Lamb claimed ownership of 3,000 Regal cigarettes, 50 packets of hand-rolling tobacco and 400 Lambert and Butler lights. Mrs Lamb claimed ownership of 2,000 Lambert and Butler cigarettes and 100 packets of hand-rolling tobacco. Mr Staveley claimed that he was importing 3,000 cigarettes and 50 packets of tobacco. Yet only 4 to 5 weeks previously Mr and Mrs Lamb had been to Belgium and had, on their own version of events, brought back 5,000 to 7,000 cigarettes plus hand-rolling tobacco as well.
21. I find that it is a fair conclusion from the above figures, having regard to the Appellants' frequent trips to the continent, that they were steadily importing at least twice, if not three times, their personal consumption of tobacco products. Customs were offered no explanation of what might have been done with the surplus, and neither Mr Lamb nor Mrs Lamb has justified the high level of importations before the tribunal. This is not a case in which the Appellants have sought to explain the quantities imported as gifts for other persons. It remains a wholly unanswered question why the Appellants should, out of precious financial resources, buy so very many more cigarettes, and so much more tobacco, than they could, on their own version of events, reasonably consume.
22. The quantity of the goods being transported was one of the criteria under the Order for Customs to take into account in determining whether the goods were held or used for a commercial purpose - see article 5(2)(h) of the Order. In that respect the Order correctly reflected the Excise Directive - see article 2 of the Directive.
23. It was this aspect of the importations, in particular, that struck Mr Devlin when he came to review Customs' original decision not to restore the goods. Mr Staveley was not concerned to dispute the seizure of the part of the goods said to relate to him. According to Mr Lamb, he was "putting it down to experience". With regard to the Appellants' parts of the goods, Mr Devlin concluded:

"Looking at the overall level of importations over the previous six months and Mr & Mrs Lamb's circumstances I did not find it credible that the goods were for own use and I was satisfied that they were properly seized, as was the vehicle used to import them".

24. As mentioned above, he upheld the original decision not to restore the goods or the vehicle, on the basis that the goods could not have been for own use. I am satisfied that he did not simply consider whether the original decision to seize was reasonable or unreasonable; Mr Devlin made an independent decision of his own in that regard.

Submissions of the parties

25. This tribunal should not be, and is not, concerned with the matter of seizure, as was recently emphasized by the Court of Appeal in the Gora case. What this tribunal is concerned with is whether the decision of Customs not to restore the goods and the vehicle was reasonably arrived at. In other words, should the tribunal exercise its powers mentioned in section 16(4) of the Finance Act 1994?
26. For Customs, Mr Toone submits that the tribunal should not substitute its own decision as to whether restoration would be appropriate for that of the Commissioners, so long as the Commissioners' decision was not unreasonable. It is clear from the wording of section 16(4), Mr Toone submits, that the tribunal should not do that. However it is difficult to see how the tribunal, in a given case, could adequately address the issue of the proportionality of the seizure (particularly relevant in the case of the vehicle but also, in the light of Lindsay v C & E Comrs [2002] 3 All E R 118 ("the Lindsay case") and the Hoverspeed case in the Court of Appeal, sometimes the goods themselves) by confining itself to the kind of approach referred to by Lord Lane in C & E Comrs v J H Corbitt (Numismatists) Ltd [1980] 2 All E R 72 at 80b, being that for which Mr Toone contends.. The function of the tribunal must extend beyond a Wednesbury-type consideration of the circumstances of the case ^[2].
27. Mr Toone further submits that Customs do not have to give reasons for their decision, it being a feature of this case that Customs have not, until the appeal stage, "unpacked" their reasons for not offering restoration, over and beyond the justification for the seizure. But if Mr Toone is right, it is difficult to see how a prospective appellant can challenge the decision - either the decision on review, or in the absence of a review within 45 days, the original decision, deemed to have been confirmed by section 15(2)(b) of the Finance Act 1994 - from an informed standpoint. It is also difficult to see how the tribunal can fairly try the case. As it happens, I have found that Mr Devlin did have his reasons for confirming the original decision on review, being those expressed to the tribunal in evidence. Those reasons have been available to the Appellants via his witness statement, served in good time before the first hearing of the appeal, so that justice has been served.
28. Mr Toone's principal submission, however, is that the tribunal should dismiss the appeal on the basis that, on the facts of the case, Customs have proved that, on a balance of probabilities, the Appellants' importations were not for own use. In that case, of course, the importations must have partaken of a commercial character, as there is no third possibility: see the Hoverspeed case on appeal, [2003] 2 All E R 553 at 582h - 583e, paragraphs [63] and [64]. Either goods are held for private use within article 8 of the Excise Directive or they are held for commercial purposes within article 9 of that Directive.
29. Mr and Mrs Lamb of course, urge that the appeal should be allowed. On behalf of himself and his wife, Mr Lamb fairly makes the point that the vehicle is of much more significance to them than the goods. That indeed appears from the grounds expressed in the notice of appeal.
30. Customs have not, Mr Lamb submits, shown why, even if the goods are not to be restored, the vehicle should not be. Rightly, in the light of the Hoverspeed case, Mr Lamb discounts the policy spoken of by Mr Pennington in his witness statement. He reiterates his position that both the goods and the vehicle should be restored, but if not the goods, then at any rate the vehicle. He relies by implication on the many recent cases in these tribunals in which, principally on the ground of lack of proportionality, the appeal has succeeded in relation to seized vehicles.

Decision with reasons

31. I deal firstly with the matter of the restoration of the goods. Although the burden of proof is upon Customs to show that the goods imported by the Appellants were not on a balance of probabilities so imported for the Appellants' own use, that burden has in my opinion been discharged. I say this bearing in mind that the Appellants have simply not explained why they would need to import so many cigarettes, and so much tobacco, if the importations were for their own use.
32. In the Hoverspeed case, at [2002] 4 All E R 943c, paragraph [115], the Divisional Court said:

"[I]f an individual is found in possession of goods in excess of the guide levels ... this creates at most an evidential burden on the holder of the goods to provide an explanation. If no satisfactory explanation is forthcoming, then the [Customs] official may well conclude that the goods were indeed held for 'commercial purposes'".

33. As I see it, that is the position in the present appeal. As indicated by Mr Devlin in his evidence given to the tribunal in the present case, it was implausible that the goods were held otherwise than for commercial purposes. I agree with that conclusion. It is and was entirely reasonable that the goods should not be restored.
34. It may be said: what of the beer and spirits imported, the amounts of which were within the guidelines? Those items, like the cigarettes and tobacco, were liable to forfeiture, because section 141(1) of the Customs and Excise Management Act 1979 allows the forfeiture of any thing found with goods liable to forfeiture. So far as restoration is concerned, once a view is formed that the bulk of the goods were not imported for own use, there would need to be a reason for separating out, as it were, the rest of the goods as being for own use. No such reason was put forward to Customs originally, on review or in tribunal.
35. I therefore turn secondly to the more important question, at least to the Appellants, of the restoration of the vehicle. In the Hoverspeed case, the Divisional Court had occasion to consider the decision of the Court of Appeal in the Lindsay case. The question in that case had been whether it was disproportionate not to restore the vehicle in which the seized goods had been transported, even though it might be inappropriate to restore the goods themselves.
36. In the Lindsay case, at [2002] 3 All E R 137j – 138b, paragraphs [64] and [65], Lord Phillips MR indicated the importance of making a distinction between, on the one hand, commercial smugglers, and on the other hand, travellers importing goods for social distribution to family or friends in circumstances where there is no attempt to make a profit. He said:

" ... Of course even in [the latter] case the scale of importation, or other circumstances, may be such as to justify forfeiture of the car. But where the importation is not for the purpose of making a profit, I consider that the principle of proportionality requires that each case should be considered on its particular facts, which will include the scale of importation, whether it is a 'first offence', whether there was an attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship that will be caused by forfeiture. There is open to the Commissioners a wide range of lesser sanctions that will enable them to impose a sanction that is proportionate where forfeiture of the vehicle is not justified.

"I do not think that it would be impractical to distinguish between the truly commercial smuggler and others. ... In a case such as the present the driver importing for family or friends should be in a position to demonstrate that that is the case if called upon to do so (see the comments of Lord Woolf CJ in Goldsmith v C & E Comrs [2001] 1 WLR 1673 at 1679-1680)".

37. The comments just mentioned are echoed by those of the Divisional Court in the Hoverspeed case referred to in paragraph 33 above.
38. In the Lindsay case, the court drew a clear distinction between the kind of traveller who, without intending a profit, brings in excise goods which are not for him but are (say) paid for by a relative or friend, and the traveller who intends to sell the goods at a profit. Indeed, one of the other members of the court in the Lindsay case, Judge LJ, said at [2003] 3 All E R 139a - d, paragraphs [71] and [72]:

" ... There is usually a marked distinction between those who smuggle alcohol, cigarettes and tobacco for profit and those who, without profit, smuggle amounts in excess of the permitted limits for their personal use and occasional distribution to family members and close friends. The vehicles used by those whose activity falls into either category are liable to be seized.

"Given the extent of the damage caused to the public interest, it is, in my judgment, acceptable and proportionate that, subject to exceptional individual considerations, whatever they are worth, the vehicles of those who smuggle for profit, even for a small profit, should be seized as a matter of policy. However the equal application of the same stringent policy to those who are not importing for profit fails adequately to recognise the distinction between them and those who are trading in smuggled goods. Accordingly the policy is flawed".

39. The learned Lord Justice then dealt with considerations of proportionality in relation to the second of the two categories of case identified by him.
40. The conclusion of the reviewing officer in this case, and my own conclusion, is that the importation in this case falls within the first of the two categories identified by Judge LJ. One looks in vain, I think, for exceptional circumstances justifying the restoration of the vehicle in this case, where the vehicle was the tool employed for bringing into the UK excise goods which were, on a balance of probabilities, destined for resale. The evidence before this tribunal has not been that the Appellants are dependent upon the vehicle for some altruistic purpose, or that for some other reason, exceptionally, the vehicle should be considered for restoration. On the contrary, the Appellants have fought an "all or nothing" appeal in which their case has been that both the goods and the vehicle should be restored.
41. Seeing that the Appellants have neither advanced to Customs nor to this tribunal reasons why the vehicle should be restored, the stance adopted by Customs in this case appears to the tribunal to be fully justified.
42. In these circumstances the appeal is dismissed, both as to the goods and as to the vehicle.

M S JOHNSON

CHAIRMAN

RELEASE DATE:

MAN/01/8118

Note 1   (appealed in relation to other matters to the Court of Appeal: see [2003] 2 All E R 553).    [Back]

Note 2    (see Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223 at 229).    [Back]