United Kingdom VAT & Duties Tribunals (Excise) Decisions

Walker v Customs & Excise [2003] UKVAT(Excise) E00465 (04 August 2003)

EXCISE DUTIES — appellant seeking restoration of excise goods seized at Manchester Airport on her return from Spain - goods not proved to be held or used for a commercial purpose — tribunal satisfied that goods for own use — held that deemed decision of Customs was unreasonable and that goods should have been restored - appeal allowed and further review directed

MANCHESTER TRIBUNAL CENTRE

Mrs ANITA GRACE WALKER Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Mr R Presho

Sitting in public in Newcastle upon Tyne on the 24th June 2003

The Appellant appeared in person

Mr G Duff, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This is an appeal pursuant to section 16 of the Finance Act 1994 ("the Act") against a deemed review decision of the Commissioners of Customs and Excise ("Customs") upholding a refusal to restore certain excise goods ("the goods") to the Appellant. The goods consisted of the following:

2,320 King Size filter cigarettes

8 kilogrammes of hand-rolling tobacco.

2. The goods were seized by Customs at Manchester Airport on 30 November 2001, as the Appellant re-entered the UK from Palma, Spain together with her father, Mr Stig Thomasson.
3. The Appellant is seeking relief pursuant to section 16(4) of the Act, on the ground that the goods were imported for her own use and not, as concluded by Customs, held or used for commercial purposes.
4. The only witness who gave evidence to the tribunal was the Appellant herself. She was cross-examined on behalf of Customs by Mr Duff of counsel. Mr Duff, who called no witnesses, placed before the tribunal an unchallenged witness statement from Ms Julie Marie Logan, a reviewing officer of Customs, which the tribunal accepted in evidence. We also had the benefit of a folder of relevant documents helpfully handed in by Mr Duff.
5. Since the decision of the Court of Appeal in Gora v C & E Comrs, Dannatt v same "The Times" 23 April 2003 ("the Gora case"), it has been all the more clear that the tribunal has a fact-finding function in these appeals. Having heard the evidence, we find the following facts.
6. The Appellant Mrs Walker is a British national who lives in Thornaby, Stockton-on-Tees. She owns a pet shop business. She was an infrequent traveller to Spain, having been there in October 1999, February 2001 and November 2001. She and her partner both smoke, but he more heavily than her.
7. When she landed in Manchester, the Appellant was stopped and questioned by Customs, whereupon she at once stated that she had cigarettes and tobacco in her baggage. She was not asked what quantities. Her bags were just searched and the goods were found.
8. The legality of the Appellant having been stopped in the first place and her bags searched in the above fashion must be a question, although that is not a matter that has been relied upon by the Appellant in this appeal. We make that observation in the light of the comments made by the courts above and below in the case of R (on the application of Hoverspeed Ltd and others) v C & E Comrs [2002] 4 All E R 912; [2003] 2 All E R 553 ("the Hoverspeed case"). Having regard to our conclusion in this appeal, however, the circumstances of the selection of the Appellant for questioning are not a matter on which we need to dwell.
9. The Appellant was required by Customs to satisfy them that the goods were not being held or used for a commercial purpose. Customs were thereby following their practice of invoking article 5(3A) of the Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155 ("the Order"). The Order has since been revoked and replaced, the Hoverspeed case having decided that the burden of proof that the goods are not being imported for the traveller's own use rests on Customs.
10. On the occasion that we are dealing with, however, Customs proceeded to seize the goods, on the basis that the Appellant had not proved that the goods were for her own use. This tribunal is not concerned with the seizure, as was recently emphasized by the Court of Appeal in the Gora case. Rather, we are concerned with the reasonableness of the decision not to restore the goods, when restoration was sought.
11. The goods were seized for the following reasons:

•    The quantities of cigarettes and tobacco being imported exceeded the guidelines specified in the Schedule to the Order;

•    The Appellant produced no receipts for the goods;

•    The quantities imported did not correspond with the Appellant's stated rates of consumption, seeing in particular that quite a lot of cigarettes and tobacco had been brought into the UK by the Appellant in February 2001;

•    The Appellant ran a retail outlet (i.e. her pet shop); and

•    The person with whom she was travelling (i.e. her father) also had with him mixed brand tobacco and cigarettes.

12. As we indicate below, we are unimpressed with these reasons as grounds for seizure.
13. The Appellant wrote a long letter to Customs dated 2 December 2001, explaining in detail how the quantities of cigarettes and tobacco imported by her in October 1999 and February 2001 had lasted and satisfied the consumption rates of her partner and herself, and justifying the scale of the importation in November 2001. She also refuted the other matters relied upon for seizure of the goods, and asked for the goods to be restored to her. However on 9 January 2002, the Law Enforcement Appeals Unit of Customs wrote to the Appellant refusing restoration of the goods. On 19 January 2002, the Appellant replied to that letter, seeking an independent review of that decision.
14. A formal departmental review was then conducted of the decision not to restore the goods. Notwithstanding Mrs Walker's letter, the reviewing officer of Customs, Ms Jayne Potts, adopted all the original reasons for seizure in concluding that she was not satisfied that the goods were held in accordance with the Order (that is, for Mrs Walker's own use). Ms Potts also identified a further reason, namely that Mrs Walker had stated that she was in receipt of state benefits and that no evidence had been provided by her to show how she was able to fund this purchase and her trip abroad.
15. We are just as unimpressed with this additional reason, as we indicate below.
16. Ms Potts' decision was dated 7 May 2002. We observe that it was conducted well outside the 45-day period prescribed by section 15(2) of the Act for the review, so that Customs were in breach of their duty under that section.
17. Following the negative result of the review, Mrs Walker wrote another long letter dated 13 May 2002 – this time to the Manchester Tribunal Centre, but served by the Centre on Customs – refuting the contents of the review. She then lodged her appeal.
18. As described in her witness statement, Ms Logan then conducted a second review of the Appellant's case, dated 13 December 2002. We observe that this was over a year after the seizure. The second review was ostensibly to take into account the additional evidence submitted by Mrs Walker. However:

o The original review dated 7 May 2002 was out of time. Under the Act, this tribunal need take no account of it;

o This appeal is against the deemed confirmation of the decision of January 2002;

o Contrary to what the second review pretends, this is not a case where Mrs Walker has given a notice under section 14(5)(a) of the Act;

o The second review of December 2002 is tantamount to a usurpation of the function of this tribunal;

o The additional evidence submitted by the Appellant was (highly properly) sent to the Tribunal Centre where the appeal was lodged and not to Customs, and therefore did not fall to be reviewed by Customs.

19. Ms Logan had no place to be reviewing the original decision, at the time she did or at all. It cannot be too strongly emphasized that, once an appeal has been lodged, it is the function of this tribunal, and this tribunal only, to decide upon the reasonableness of the appealable decision not to restore. We trust that we shall not see out-of-time second reviews again, which are an interference with the statutory jurisdiction of these tribunals.
20. In the circumstances, we are scarcely minded to look at the second review. However, we note that Ms Logan, having examined the statements and explanations provided by the Appellant, concluded that the goods "were for a commercial purpose and therefore were not for own use" [sic]. She queried the method used to pay for the goods, the stated consumption rate of the Appellant, and the amount of time it would take to consume the goods. The second review then culminated in the following statement:

"Although you appear to have had sufficient funds yourself to purchase these goods I am satisfied, based on the evidence presented by you, that you did not".

21. In her evidence given to us in tribunal, the Appellant satisfied us that she had paid for the goods, and demonstrated how she did so. She conceded that her previous explanation as to how she paid for the goods was inaccurate.
22. In her letter of 2 December 2001, she had incorrectly stated that on 21 November 2001 she collected £205.80 cash from the Post Office, received £302.60 by way of a bank giro, and exchanged £500 into Spanish Pesetas to fund the goods.
23. We find that what the Appellant in fact did was to withdraw cash from her current account, pay part of it into another bank account to fund a cheque drawn by her in settlement of pet shop invoices, and combine the rest with cash already in hand in order to buy Pesetas from the Post Office. Those funds were then used to buy the goods.
24. Although the Appellant changed her explanation of the funding of the goods, she presented in tribunal as a credible witness who had genuinely become confused as to the derivation of the money used to purchase the Pesetas, and we have no hesitation in accepting her evidence.
25. The Appellant showed us that she was in possession of a substantial income, arising inter alia from her ownership of the pet shop. Customs appear to have been led astray by her admission that she was in receipt of Severe Disablement Allowance and Disability Living Allowance and did not herself work in the shop. She nevertheless had her finger on the pulse of the trading operation of the shop, and derived substantial benefits from it.
26. We also accept the explanation of the Appellant as to the consumption rates of herself and her partner and the link between these rates and the quantities of cigarettes and tobacco brought back in November 2001. It appears that Customs were influenced by a statement made by the Appellant that she could make 40 roll-up cigarettes from a 40g pouch of hand-rolling tobacco. She admitted in tribunal that she may have said this, but agreed that such a statement was unreasonable. Rather she pointed to her rate of consumption – about 35 to 40 cigarettes a day, fluctuating from one day to the next – and said that the amounts brought back to the UK were to satisfy the reasonable needs both of her partner and herself for many months.
27. We find that the Appellant's analysis of the length of time the goods might be likely to last her and her partner does not greatly differ from that of Customs, but we draw a different conclusion to Customs. Customs concluded that the importation was not for own use. However the conclusion we draw is that it was entirely understandable and reasonable that the Appellant should wish to bring back a large supply of tobacco products, on the assumption that she would not be going abroad again for quite some time, and that it is clear that the importation was for own use.
28. Having regard to the view that we had formed by the end of the hearing, Mr Duff had an uphill battle in his submissions to persuade us that Customs had approached this case fairly and reasonably. We say above that we are unimpressed by the factors evidently considered by Customs in applying the Order. If Customs had properly appreciated that the burden of proof rested upon them to prove commerciality rather than upon the traveller to prove importation for own use, we do not think that Customs could reasonably have concluded that the factors listed above satisfied the burden. However we accept that it was entirely understandable that Customs should have applied the Order at the time according to its terms.
29. Nevertheless, once it is accepted – as on behalf of Customs, Mr Duff in fairness did – that the burden of proof was on Customs, we can have no hesitation in deciding that the deemed decision of Customs was one that could not reasonably have been arrived at.
30. We therefore allow this appeal and direct that Customs are to conduct a further review of the original decision, and that, in so doing, Customs are to give due weight to the findings of fact made by the tribunal in this case. Those findings lead inexorably to the conclusion that unconditional restoration was appropriate.

M S JOHNSON

CHAIRMAN

RELEASE DATE:

MAN/02/8113