United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E00477, [2003] UKVAT(Excise) E477

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Manolis v Customs & Excise [2003] UKVAT(Excise) E00477 (14 August 2003)

RESTORATION OF GOODS – reasonableness of decision not to restore – Finance Act 1994 s.16(4) – goods held for personal use – appeal allowed

MANCHESTER TRIBUNAL CENTRE

LILLIAN MANOLIS Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: MISS J WARBURTON (Chairman)

MR P WHITEHEAD

Sitting in public in Manchester on 24 July 2003

The Appellant appeared in person

Mrs L Walmisley of Counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003

DECISION

This is an appeal by Lillian Manolis against a decision to refuse to restore 1.2 kilograms of hand rolling tobacco and 10,000 Lambert and Butler cigarettes seized by the Commissioners at Manchester Airport on 14 January 2002. The decision on review not to restore is contained in a letter dated 15 July 2002.

The Commissioners were represented by Mrs L Walmisley of Counsel instructed by the solicitor for the Customs and Excise. The Commissioners put in a bundle of copy documents. The Appellant appeared in person and put in a short written statement, a copy marriage certificate and a copy contract of employment; the latter two documents having been itemised on the Appellant's List of Documents dated 1 August 2002.

We heard evidence on oath from the Appellant and Jayne Potts, an officer of Customs and Excise. There were also agreed witness statements from Jayne Potts and Gerry Dolan, an officer of HM Customs and Excise. From the oral and written evidence, including the documents submitted, we find the main facts to be as follows.

Facts

On 14 January 2002 the Appellant was returning from a four day trip to Magaluf with some friends. She had been for a holiday and to buy cigarettes. The Appellant had commenced work at Laburnum Court as a catering assistant on 23 October 2001 and could not take a longer break.

The Appellant had already passed through the Customs Hall and was waiting for her friends when she was asked to return with her luggage. The Appellant was then interviewed by an officer of Customs and Excise. She stated that she had spent £700 on cigarettes and that the goods would last about 6 months. She confirmed her income of £200 a week and that she had savings. She stated she smoked about 40 a day and that she smoked both cigarettes and hand rolling tobacco. She stated that she intended to smoke herself and give some to her husband of the 10,000 cigarettes and 1.2 kilos of tobacco which she had purchased in Magaluf. She did not have receipts for the tobacco and stated that she had been stopped at Customs about 2 years ago. The Appellant told the officer that her husband worked, smoked 30 to 40 a day and that he had not paid her for the cigarettes.

By a letter received on 7 February 2002 the Appellant requested the Commissioners to restore the goods seized. In a letter dated 15 February 2002 the Appellant confirmed she was seeking restoration and enclosed a letter from her employer, on headed notepaper, confirming that she had been given time off for a short break. She also enclosed what she described as "a copy of my bank account statement" showing a withdrawal of £700 on 10 January 2002. The statement was in the name "Mrs L Smith'.

The Commissioners confirmed the decision not to restore on 24 April 2002. The Appellant requested an independent review of that decision by a letter dated 20 May 2002 and agreed to an extension of time for the review. The review was carried out by Jayne Potts on 15 July 2002 who concluded that restoration should be refused.

The decision on review is set out in a letter dated 15 July 2002 and the grounds for refusal were that the Appellant had over 12 times the minimum indicative levels of which she was aware having been stopped previously and issued with a Customs Notice No.1; that the consumption rate for cigarettes given at interview was not consistent; that there were mixed brands of cigarettes and tobacco; that checks showed no record of the Appellant's employment; that the account details provided were in the name of Smith and that co-travellers had also imported large quantities of goods and their accounts contradicted that provided by the Appellant.

Evidence

The Appellant gave evidence that her consumption rate of cigarettes of about 40 a day included hand-rolled cigarettes which she smoked at home. The assessment by the officer at the Airport that the tobacco she had bought in Magaluf would last 250 days was wrong. Some of the cigarettes were for her husband. She had not been issued with a Customs Notice No.1 when she had been stopped on a previous occasion. She asked questions about the amount she could bring in on that occasion and was told she could have as much as she wanted provided it was for her personal consumption.

The Appellant stated that she had not sent any confirmation of her employment to the Commissioners before 15 July 2002 as she did not realise there was doubt about her position as a catering assistant. The difference in names on the bank statement was explained by her changing surname on re-marriage which her marriage certificate proved.

Jayne Potts confirmed her witness statement that she was the officer who carried out the review and that the procedure followed and matters considered were set out in her letter of 15 July 2002. She stated that when carrying out a review she relies on documents submitted by the Commissioners and the Appellant. She considered it to be the responsibility of the Appellant to submit evidence not for her to check. She had checked with the Inland Revenue who did not have a record of the Appellant's employment at Laburnum Court.

Findings of Fact

The oral evidence given by the Appellant was given clearly, albeit with some nervousness, and was consistent throughout. Her evidence was also consistent with her earlier interview at the Airport and the various documents before the Tribunal. We consider her to be a credible witness. Accordingly, we find that the Appellant funded the purchase of the cigarettes and tobacco from her savings and that she was employed at the time of the trip to Magaluf in January 2002. We also find that the cigarettes and tobacco purchased were for consumption by her and her husband.

The Law

The law as it applies in this case has been the subject of recent review by the Divisional Court in Regina (Hoverspeed Limited) v Customs and Excise Commissioners [2002] 3WLR 1219 ("the Hoverspeed case") and to a more limited extent in relation to seizure by the Court of Appeal in Commissioners of Customs and Excise v The Queen on the application of Hoverspeed Limited [2002] EWCA Civ 1804. These cases make it clear that under the Excise Directive 92/12 EEC goods are either held for personal use and subject to excise duty in the member state of acquisition, Article 8, or held for a commercial purpose and subject to excise duty in the member state in which they are held, Article 9 (see the Hoverspeed case para 105 and the Court of Appeal at para 65). The Divisional Court in Commissioners of Customs and Excise v Ian Newbury [2003] EWHC 702 (Admin) has confirmed that duty is only payable in the country of origin under Article 8 if goods are acquired by a private individual for their own use which does not include purchase as an agent (see para 32).

The Commissioners are empowered by the Customs and Excise Management Act 1979 (CEMA) section 49 to forfeit dutiable goods which have been imported or held without payment of duty. All such goods are liable to seizure pursuant to section 139 of CEMA. Such powers, must however, be exercised with due regard to proportionality as they involve the deprivation of a person's property – see Linsday v Customs and Excise Commissioners [2002] STC 588.

Section 152(b) of the 1979 Act allows the Commissioners as they think fit to restore any goods which have been seized. A review and appeal procedure from decisions of the Commissioners is set out in sections 15 and 16 of the Finance Act 1994. A holder of goods may appeal against a review decision of the Commissioners taken under section 15 to the Tribunal. The Tribunal's powers on appeal are, however, limited by Section 16(4) to directing that the Commissioners' decision shall cease to have effect, to directing that a further review be carried out or, if the latter is no longer possible, declaring the decision to have been unreasonable. On appeal it is for the Tribunal to decide de novo whether the goods were imported for a commercial purpose, the burden being on the Commissioners to prove on a balance of probabilities that the goods were imported for a commercial purpose. It is also for the Tribunal to consider that the response is proportionate in any case (see the Hoverspeed case paras. 130(10) and 196).

Submissions

The Appellant submitted that the goods were for personal use. By the documents submitted and her evidence she had proved that everything in her original statements at the airport were true. In particular, she was employed as a catering assistant and had paid for the goods from her savings. The goods would last about 6 months if account was taken of her husband's smoking habits.

Mrs Walmisley for the Commissioners submitted that the review decision was reasonable in the light of the information and documents available at 15 July 2002. The documents produced to the Tribunal by the Appellant were not available to the reviewing officer. Faced with a bank statement in the name of someone other than the Appellant it was reasonable to draw the conclusion that it was not the Appellant's bank account. The quantities of goods seized were greatly in excess of the then minimum indicative limits. It was a reasonable decision by the review officer not to restore the goods.

Mrs Walmisley finally submitted that even if irregularities were identified in the review process the overall evidence made it inevitable that the result of any further review would be the same. On the authority of John Dee Ltd v Customs and Excise Commissioners [1995] STC 941 the appeal should be dismissed.

Reasons for Decision

The Tribunal's jurisdiction under section 16(4) of the Finance Act 1994 is not one to try again the original decision to forfeit but to consider whether the decision on review not to restore goods is one that the Commissioners could not reasonably have come to.

It is generally accepted that the test of reasonableness requires the Tribunal to

ask:

Is this a decision which no reasonable panel of Commissioners could have come to?

Has some irrelevant matter been taken into account?

Has some matter which should have been taken into account been ignored?

Has there been some error of law?

(see Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1980] STC 231; Associated Provincial Houses Ltd v Wednesbury Corporation [1948] 1KB 223)

It appears from the evidence that when Ms Potts reviewed the decision not to restore the goods she did have before her all the evidence then available and did consider that evidence. However, she does appear to have considered at least one irrelevant, or non-existent, matter. A ground for the decision is stated to be that there were 'mixed brands of cigarettes'. All the cigarettes seized from the Appellant were Lambert and Butler. We also consider that faced with conflicts between information and documents submitted by the Appellant as to funds and as to employment and information from other sources it was unreasonable to make assumptions rather than to seek clarification from the Appellant; it is relatively common for women to change their surnames.

It follows that we find the decision on review was unreasonable. In accordance with section 16(4)(b) of the Finance Act 1994 we direct the Commissioners to carry out a further review taking into account the documents produced to the Tribunal by the Appellant and our findings of fact as set out in paragraph 12 of this decision.

Accordingly this appeal is allowed but we make no direction as to costs.

MISS J WARBURTON

CHAIRMAN

Release Date:

MAN/02/8175