United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00490.html
Cite as: [2003] UKVAT(Excise) E490, [2003] UKVAT(Excise) E00490

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Jones v Customs & Excise [2003] UKVAT(Excise) E00490 (12 September 2003)

Excise duty – Personal import of tobacco – Refusal to restore motor vehicle seized – Reasonableness of Commissioners' decision – "Lindsay" and "Hoverspeed" applied – Proportionality – Effect of "commerciality statement" – Irrelevant principles considered – Appeal allowed

LONDON TRIBUNAL CENTRE

ANDREW JONES Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: PAUL HEIM CMG (Chairman)

MISS A WEST FCA

MR R CORKE FCA

Sitting in public in Cardiff on 5 March 2003

The Appellant in person

Mr M Thomas of counsel, for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. Mr Jones appeals against a decision of the Commissioners dated 6 June 2002 to refuse to restore to him a motor car number N989 0TG seized by them at Coquelles in France on 12 April 2001, just after midnight.
2. At the hearing of this appeal the Appellant represented himself. The Commissioners were represented by Mr M Thomas of counsel.
3. The facts of the matter are not in dispute. They are these.
4. On 12 April 2001 Mr Jones was driving the car in question in company with Mr Andrew John Penduck and Mr Frank Mountjoy, when they were stopped by officers of HM Customs and Excise at the UK control zone at Coquelles in France.
5. It is not disputed that the vehicle contained excise goods, namely 18 kilos of Golden Virginia hand-rolling tobacco, 580 Regal KSF cigarettes, 50 cigarillos, 84 litres of beer, 9 litres of wine and 2 litres of spirits.
6. The occupants of the car were asked questions by the officers. A "commerciality statement" was then read to the occupants of the car, recorded in the following terms in the notes of interview produced to the Tribunal:

"I informed Mr Jones and the occupants of the car at the outset that at that point I was not satisfied that goods were not for a commercial purpose. I informed that they were not under arrest and invited to stay for interview. I informed them that the goods and the vehicle would be seized if they decided not to stay. They all stayed for interview".

7. The Tribunal will return to the terms of this statement later.
8. Each of the occupants of the car was interviewed separately. Notes were taken. The Commissioners relied on the information given for the decision which they took first to seize the goods and the car, and thereafter not to return them.
9. The Appellant gave the following information.
10. The Appellant and the other two occupants of the car had left the United Kingdom earlier that night. He had booked and paid for the ticket. He was paying for the petrol but one of the other occupants was giving him £20 towards it. He went both to Eastenders in Belgium and Eastenders in Calais. He had purchased one box of tobacco, two cases of wine and two bottles of whisky for himself. He had paid both on behalf of himself and Mr Penduck who had given him the money. He had travelled to the continent before Christmas and a couple of weeks previously. He did not smoke. The 6 kilos of tobacco were a present for his father. This had cost £248. He had a receipt for £485.60 for 240 packets of Golden Virginia tobacco. The receipt was for the tobacco belonging to himself and Mr Penduck. He would not receive any money for his box of tobacco. He was not aware of the guidance level and was under the impression that one box of tobacco per person was allowed.
11. Mr Penduck gave the following information at the interview. One box of tobacco and one crate of beer belongs to him. He did not know what make of tobacco it was. He had spent £9 on beer and £149 for tobacco. This was for his father, but some was for his brother-in-law and whoever else in the family wanted it. He did not smoke himself. He would receive some money for the tobacco when he got back.
12. Mr Mountjoy gave the following information. He had bought one box of tobacco containing 120 pouches. It had cost £245 and he had paid in cash. He produced the receipt. He also purchased three sleeves of cigarettes for his wife. She smoked cigarettes, he smoked tobacco. He would receive no money for any of the excise goods. He smoked 3-4 pouches of tobacco a week. This purchase of tobacco would last 6-8 months. The Appellant had paid for the shuttle ticket. Mr Mountjoy would not be contributing either towards this ticket or the cost of petrol.
13. The excise goods and the vehicle were then seized as liable to forfeiture under sections 49, 139 and 141(1) of the Customs and Excise Management Act 1979 and article 5 of the Excise Duties (Personal Reliefs) Order 1992.
14. The grounds of seizure were recorded by the officer in his notes as follows:

"(1) Above MILs [taken to mean minimum indicative levels];

(2) Mr Penduck goods not for personal use;

(3) Mr Penduck would receive money for goods;

(4) Excessive gifts;

(5) Don't smoke."

15. In the letter of refusal of 6 June 2002 the reasons for seizure are set out as follows:

Quantity of goods in excess of guidance levels.

Goods were not for personal use/money being received for some of the goods.

6 kilos of tobacco was an excessive gift.

2 out of 3 travellers did not smoke.

16. In the Commissioners' statement of case the same four grounds are advanced but the second ground is expressed slightly differently in the words "Mr Penduck had admitted that the goods were not for his personal use and that he would receive money for them", this clearly being a reference to the passage recorded in the interview notes as follows:

"Question Have you received or getting any money when you get back for tobacco?

Answer I'll get some when I get back it's the first time I've been over".

17. The third ground is also expressed slightly differently in the statement of case in the terms "It was not credible that the Appellant intended to give such a large quantity of tobacco to his father".
18. In the seizure document issued to the Appellant six reasons for seizure were given namely excess MILs, goods not for personal use, money would be received for some of the goods, excessive goods, two out of three travelling do not smoke, discrepancies in interviews over money given/received for petrol.
19. The `seizure of vehicle' form given to the Appellant states: "vehicle will not be restored". The "seized vehicle record" dated 12 April 2001 contains next to the title "restoration" terms the words "do not restore".
20. On 23 April Mr Jones asked for his car to be released as he depended on it for work and his family also require the use of it.
21. On 12 May Mrs S Veitch, team leader at Customs and Excise law enforcement at Dover replied stating that she had considered all the factors in this case and recommended that the goods and vehicle should not be offered for restoration giving three reasons, first, the Appellant was carrying excise goods in excess of the guideline, second, "you were to receive money for some of the goods", third, "it was considered unreasonable to be giving such an amount of goods away".
22. On 18 May 2001 the Appellant applied for this decision to be reviewed on the grounds that he was unaware that he and his companions were in excess of the guidelines, that he had been made aware at the time that the goods could be seized and he felt that this was sufficient price to pay for the mistake and that to seize a vehicle worth around £4000 was an extreme, unreasonable and harsh punishment without any justification regarding the amount of goods carried.
23. On 6 June 2002 the review officer Mr K G Harman wrote to the Appellant the letter the subject of this appeal. It contained the following statements:

"Further review of refusal to restore vehicle registration N 989 0TG

Background

On 23 May Customs accepted that your appeal to the London Tribunal Centre must succeed in light of a ruling in the case of Lindsay v Commissioners of Customs and Excise. Customs consented to carry out a further review of your case under Finance Act 1994 section 16(4)(b).

The Tribunal directed that you, the Appellant, shall supply to the review officer any further information to be considered by 31 May 2002. No further information has been provided.

I have now conducted a further review of your case. I have considered all departmental information supplied by officers involved in this case. I have considered all representations made on your behalf. I have considered the new direction and policy arising from the Lindsay ruling."

The letter goes on to set out the facts of the case as they arise from the statements made at interview, and then sets out the applicable legislation, that is to say the Excise Duties (Personal Reliefs) Order 1992, the Channel Tunnel (Alcoholic Liquor and Tobacco Products) Order 2000, the Customs and Excise Management Act 1979, and refers to the statutory two-tier system of formal review established by the Finance Act 1994.

24. The letter then sets out the Commissioners restoration policy in the following terms:

"The Commissioners' policy regarding privately owned vehicles used for the improper importation of excise goods is that they will not be restored. In the light of the Lindsay ruling however, vehicles will be considered for restoration where the traveller can demonstrate that the goods were to be supplied at purchase price and not at profit. This policy applies to the seizure of the vehicle. However, each case is considered to determine whether the affected party has substantiated that restoration should exceptionally be allowed".

25. Under the heading "Consideration" the reviewing officer said that he relied on the fact that Mr Mountjoy was the only smoker present. Mr Penduck said that the 6 kilos of tobacco which he had purchased was for his family "and for which he would receive recompense. No tobacco was for his own use. This puts his goods outside the scope for relief, in effect that he is selling them to his family and evading UK excise duty". Mr Penduck claimed that his tobacco had cost him £149 but this was not correct as the Appellant had a receipt for £485.60 half of which was Mr Penduck's tobacco. Mr Penduck did not know what brand of tobacco he had purchased.
26. Dealing with the Appellant's purchase the reviewing officer said:

"You claim to have purchased the tobacco for your father. You claim this is a gift although you do not state whether it is some sort of birthday or celebratory present. The officer consider this an excessive gift. I do not accept this would represent an unrealistic gift in monetary terms, although it's very generous. I do consider this an excessive quantity of tobacco to purchase for the use of your father especially as you have not expressed an understanding of his consumption rate or how long the goods would last him. Thereby I agree with the officer that this is an excessive gift".

The reviewing officer then goes on:

"Considering Mr Penduck's claim that he had paid £149 for his tobacco and that he had given you the money I find it likely that he did not, in fact, own the whole box. I think that it is likely you had purchased more than one box and had purchased the balance of tobacco in Mr Penduck's box. This would further discredit your assertion that your tobacco was for your father as a gift. Officers did not question this discrepancy any further. You've provided no information to account for this discrepancy. I am content that the officer was correct in being dissatisfied with your explanation regarding the goods and indeed, as already stated, the goods were liable to seizure as a consequence of Mr Penduck intending to supply his family for payment. … I view your assertion that all of the tobacco you had purchased was a gift for your father with suspicion. You have not elaborated on your father's consumption rate. 120 pouches of tobacco would represent up to two years supply for a person smoking 20 cigarettes per day. These goods would last up to 10 months for a heavy smoker as detailed in Mr Mountjoy's interview. Evidence suggests that you may have owned part of Mr Penduck's box of tobacco increasing these figures".

27. In his conclusion the reviewing officer said that Mr Mountjoy had stated a high rate of consumption and did not know exactly how long the goods would last him. He did not believe that Mr Penduck had purchased the tobacco for his father, brother-in-law and family. Mr Penduck did not know what brand he had purchased or how much tobacco he had paid for. The reviewing officer said that he did not find this a reasonable or acceptable course of action for someone to have taken if this had been the case. The reviewing officer further said that he did not believe that the Appellant was importing all the tobacco he claimed for his father. The quantity involved was between 120 and 168 pouches and this was not commensurate with an individual's personal use. Tobacco had a shelf life of 12-18 months and a considerable quantity of tobacco could have been wasted. He did not accept that the Appellant had demonstrated that the goods were to be supplied on a non-profit basis.
28. The Commissioners also relied on statements from Keith Gerald Harman and Shuna Mairi Veitch, both officers of Customs and Excise.
29. Mr Harman explained that the case was originally reviewed by another officer and the Appellant subsequently appealed. Subsequently this case was reviewed by himself in the light of the Lindsay judgment. He said that the Commissioners' restoration policy, "amended on 18 April 2002, which applies to this seizure states that vehicles used for the improper importation of excise goods will not be restored and, in the light of the Lindsay judgment, vehicles would be considered for restoration where the traveller can demonstrate that the goods were to be supplied at purchase price but not for profit".
30. Mrs Veitch stated that she had dealt with the request for restoration of the goods and vehicle. She said that she considered the reasons why the goods were seized in the first place, that is to say the large quantity, that money would be received for some of the goods that it was an excessive amount to give away, that two out of three travellers did not smoke and that the "goods were for non-entitled persons". That ground was not further explained.
31. The Commissioners further relied on a witness statement by James Anthony Simmons, officer of Customs and Excise that he had stopped the Appellant's car although he could not now recall whether the selection of that car was made using powers under section 78 or section 163 of the Customs and Excise Management Act .
32. The Commissioners also relied on a statement of an officer of Customs and Excise Mr Gerry Dolan setting out the Commissioners' policy.
33. The Appellant's case is that he thought that one box of tobacco would present no problem. It was intended as a gift to his father for looking after his children. He said that when he gave his statement he was made to feel guilty. He was perhaps naïve in thinking that he was within the limit. Mr Penduck had purchased tobacco for his family. He had given the Appellant the money, and the Appellant had also lent him £100. The penalty was harsh. It was disproportionate as the vehicle was worth £4000 and the tobacco £744.
34. Following the Commissioners' decision of refusing restoration of the seized goods and vehicle the matter came before the Tribunal for directions.
35. On 23 May 2002 the Tribunal directed that the Respondents supply the Appellant with a copy of the judgment in the appeal of Lindsay, notify them of the address of the new review officer and that the Commissioners conduct within the time limit specified a further review under section 16(4)(b), taking account of all facts and matters before the Commissioners at this new review. It is stated in the direction of that the Respondents accepted that the appeal must succeed and consented to a direction to carry out a further review under section 16(4)(b) of the Finance Act 1994. The Tribunal directed that by 21 June 2002 the Commissioners conduct further review of the decision of 4 July 2001, and that this review if adverse would give rise to a fresh right of appeal to the Tribunal.
36. In compliance with that direction the Commissioners carried out a further review and communicated the result of it to the Appellant on 6 June 2002, that being Mr Harman's review.
37. It is relevant that the review carried out by the Commissioners under the Appellant's first request for formal departmental review of the decision not to restore the vehicle was not carried out until 4 July 2001. There must be some doubt therefore whether this was a decision taken within the time accorded to the Commissioners to carry out a review or whether being out of time the Commissioners' decision must be considered to be a deemed refusal. The matter is relevant only indirectly to consider the reasoning behind the Commissioners' decision, but the decision under appeal is that of 4 June 2002.
38. There is no dispute about the provisions of law applicable to this appeal.
39. The Excise Duties (Personal Reliefs) Order 1992 as amended expresses the relief from payment of excise duty for community travellers in the following terms:

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

The term "own use" is defined as:

" "own use" includes use as a personal provided that if the person making the gift receives in consequence any money or moneys worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) its use shall not be regarded as own use for the purpose of this Order".

The conditions for relief are set out in article 5, as follows:

"5. Relief from duty of excise – conditions

(1) The reliefs afforded under this Order are subject to the condition that the excise goods in question are not held or used for a commercial purpose whether by the Community traveller who imported them or by some other person who has possession or control of them; and if that condition is not complied with in relation to any excise goods, those goods shall, without prejudice to article 6 below, be liable to forfeiture.

(2) In determining whether or not the condition imposed under paragraph (1) above has been complied with, regard shall be taken of –

(a) his reasons for having possession or control of those goods;

(b) whether or not he is a revenue trader;

(c) his conduct in relation to those goods and, for the purposes of this sub-paragraph, conduct includes his intentions at any time in relation to those goods;

(d) the location of those goods;

(e) the mode of transport used to convey those goods;

(f) any document or other information whatsoever relating to those goods;

(g) the nature of those goods including the nature and condition of any package or container;

(h) the quantity of those goods;

(i) whether he has personally financed the purchase of those goods; and

(j) any other circumstance which appears to be relevant.

(3) Paragraphs (3A) to (3C) below apply to a person who has in his possession or control any excise goods afforded relief under this Order in excess of any of the quantities shown in the Schedule to this Order.

(3A) The Commissioners may require a person to whom this paragraph applies to satisfy them that the excise goods afforded relief under this Order are not being held or used for a commercial purpose.

(3B) 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 by paragraph (1) above shall, subject to paragraph (3C) below, be treated as not being complied with.

(3C) Paragraph (3B) above shall not apply where a court or tribunal is satisfied that the condition imposed by paragraph (1) has been complied with.

(4) No relief shall be afforded under this Order to any person under the age of 17."

40. Paragraph 3 of article 5 refers to persons possessing excise goods in excess of the quantities shown in the schedule, and the schedule to the Order gives those quantities as being, for tobacco products, 800 cigarettes, 400 cigarillos, 200 cigars and 1 kilo of other tobacco products. It also gives limits for alcohol beverages.
41. Section 49 of the Customs and Excise Management Act 1979 provides:

"(a) Where –

(1) except as provided for under the Customs and Excise Acts 1979, any imported goods, being goods chargeable on their importation with customs or excise duty, are, without payment of that duty –

(a) unshipped in any port,

(b) unloaded from any aircraft in the United Kingdom,

(c) unloaded from any vehicle in or otherwise brought across the boundary into,, Northern Ireland, or

(d) removed from their place of importation or from any approved wharf, examination station or transit shed …

those goods, subject to subsection (2) below, be liable to forfeiture."

42. Section 139 of the same enactment provides:

"(1) Any thing liable to forfeiture under Customs and Excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard".

43. By virtue of section 141 of the same enactment:

"(1) Without prejudice to any other provision of the Customs and Excise Acts 1979, where anything has become liable to forfeiture under the Customs and Excise Acts – any ship, aircraft, vehicle, animal, container (including any article of passengers' baggage) or any other thing whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture, either at a time it was so liable or for the purposes of the commission of the offence which later became so liable … shall also be liable to forfeiture."

44. The particular provision relating to the Commissioners' discretion to restore forfeited items is section 152 of the same enactment which provides:

"152. Power of Commissioners to mitigate penalties, etc

The Commissioners may, as they see fit –

…

(b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those Acts".

45. The Commissioners' obligation to review their own decision is set out in section 15 of the Finance Act 1994 which provides that:

"(1) Where the Commissioners are required in accordance with this Chapter to review any decision, it shall be their duty to do so and they may, on that review, either –

(a) confirm that decision; or

(b) withdraw or vary the decision and take such further steps (if any) in consequence of the withdrawal or variation as they may consider appropriate."

46. The Commissioners' reviews are subject to an appeal to this Tribunal, but the powers of the Tribunal on appeal are limited by section 16(4) of the Finance Act 1994 which provides:

"(4) 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 directions 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."

According to Mr Harman's review letter the Commissioners' restoration policy, regarding privately owned vehicles used for the improper importation of excise goods "is that they will not be restored". In the light of the Lindsay ruling however, vehicles would be considered for restoration where the traveller can demonstrate that the goods were to be supplied at purchase price and not for profit. This policy applies to the seizure of the vehicle. However, each case is considered to determine whether the affected party has substantiated that restoration should exceptionally be allowed.

47. The Tribunal will consider the effect of this statement later in this decision.
48. Mr Harman goes on in his letter to say "it is for me to reconsider if the decision of non-restoration of the vehicle is reasonable in the light of the Lindsay ruling".
49. That decision, invoked in the Tribunal's direction of 23 May 2002 and referred to by the Commissioners in their decision under appeal is that of Lindsay v Customs and Excise Commissioners (2002) EWCA CIV 267 [2002] STC 588.
50. The facts of that appeal are set out in the judgment of Lord Phillips MR in the following terms:

"In March 2000 Mr Lindsay, the appellant, bought himself a beautiful new car. … On 23 July 2000 he was about to drive on to the Shuttle in Calais to return to England after an early morning shopping expedition. When he entered the "control zone" he was stopped by a British Customs officer. She found that he was carrying a substantial quantity of cigarettes and tobacco. He said that he had purchased some of this for members of his family with money provided by them. She then said that he should have paid duty on the goods. She purported to forfeit both the dutiable goods and Mr Lindsay's car, in which those goods were being carried".

51. The judgment dealt with the provisions of EC Council Directive 92/12 of 25 February 1992 on the General Arrangements for Products subject to Excise Duty and the terms there used, in article 8 "products acquired by private individuals for their own use and transported by them" and that in article 9 "products for consumption in a Member State … held for a commercial purpose in another Member State".
52. The judgment goes on in paragraph 15:

"Thus the directive makes express provision for products acquired by private individuals for their own use and for products which are held for a commercial purpose. The directive does not expressly provide for the case of the private individual who buys goods on behalf of others but not in circumstances which would naturally be described as being "for a commercial purpose". An example is the holidaymaker who purchases some cigarettes for and at the request of a relative who has provided him with the purchase money".

The judgment goes on to consider the issue under appeal stating:

"However, the principal issue before the tribunal, was whether the commissioners' decision not to restore Mr Lindsay's car to him was one that they "could not reasonably have arrived at" – within the meaning of those words in section 16(4) of the 1994 Act. Since the coming into force of the Human Rights Act 1998, there can be no doubt that if the commissioners are to arrive reasonably at a decision, their decision must comply with the Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (as set out in Schedule 1 to the Human Rights Act 1998) (the Convention). Quite apart from this, the commissioners will not arrive reasonably at a decision if they take into account irrelevant matters, or fail to take into account all relevant matters – see Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1980] STC 231 at 239, [1981] AC 22 at 60 per Lord Lane. It was argued before the tribunal that the commissioners' decision failed at both hurdles. It violated the Convention in that it involved depriving Mr Lindsay of his rights and article 1 of the 1^st Protocol of the Convention to the peaceful enjoyment of his possessions in circumstances which were disproportionately harsh. By the same token, because of the policy which was applied, the decision ignored the relationship that the value of the car bore to duty that should have been paid, although this was a highly relevant matter."

53. In reaching his final conclusion the Master of the Rolls said:

"Having regard to these considerations, I would not have been prepared to condemn the commissioners' policy had it been one that was applied to those who were using their cars for commercial smuggling, giving that phrase the meaning that it naturally bears of smuggling goods in order to sell them at a profit. Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars would be rendered liable to forfeiture cannot reasonably be heard to complain if they lose those vehicles. Nor does it seem to me that, in such circumstances, the value of the car used need be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given new consideration.

The commissioners' policy does not, however, draw a distinction between the commercial smuggler and the driver importing goods for social distribution to family or friends in circumstances where there is no attempt to make a profit. Of course even in such a case the scale of importation, or other circumstances, may be such as to justify the 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 would include the scale of importation, whether it is an "first offence", whether there was an attempt at concealment or dissimilation, 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. The current regulation shift the burden to the driver of showing that he does not hold the goods "for commercial purposes" when these exceed the quantity in the schedule. In a case such as the present the driver importing for family or friends should be in a position to demonstrate that this is the case if called upon to do so (see the comments of Lord Woolf CJ in Goldsmith v Customs and Excise Commissioners [2001] 1 WLR 1673 at 1679-1680).

Unfortunately, in the present case, and I suspect, in others, the Customs officers have drawn no distinction between the true commercial smuggler and the driver importing goods for family and friends. Because of the confusion to which I referred at the outset, the cars of both have been treated as subject to almost automatic forfeiture. Review officer Florence appears to have understood that the commissioners' policy rendered it irrelevant whether or not Mr Lindsay's story was true and equally irrelevant the value of his car and the effect that its deprivation would have on him."

54. The judgment of Lord Justice Judge contained the following passage:

"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."

55. Similar issues were considered in the appeal of Customs and Excise Commissioners v The Queen on the application of Hoverspeed Ltd & Others (judgment of 10 December 2002) where the Court of Appeal's view on "own use" was summarised in the following way:

"Having considered the scope of the directive with the benefit of the full submissions that we have had on this topic, we can summarise the position as follows:

(i) The concepts of "products acquired by private individuals for their own use" in article 8 and "products held for commercial purposes" in article 9 of the directive are antithetical, in the sense that, if an individual acquires (or, having acquired for his own use subsequently decides to hold) products for a purpose other than his own use such products are to be regarded as held for commercial purposes (paragraph 64).

(ii) The divisional court's reasoning and conclusions regarding the scope of articles 8 and 9 were therefore correct; there is no room for a conclusion that United Kingdom excise duty was not chargeable in respect of goods, because, although the individual(s) importing them was or were not doing so "for their own use", they still were, or may have been, holding the goods for supply to others on a non-commercial basis (paragraph 60).

(iii) We record that we are not concerned with the precise scope of the concept "for his own use". The commissioners accept that it must receive a sensible interpretation. They accept, in particular, that it is not confined to situations where the private individual himself intends to consume the goods. So, for example, they accept that a private individual who travels abroad in order to stock up for his or her dinner table or a party which he or she is giving is acquiring for his own use. Likewise, we would suppose, in the case of an acquisition destined as a present for a relative or friend".

56. The issue in this case is whether the Commissioners' refusal to restore the motor vehicle to the Appellant taken under the review procedure provided for in section 15 of the Finance Act 1994 can be invalidated under section 16 of the same enactment by an appeal to this Tribunal. The powers of the Tribunal in a decision on such a review are limited 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 directions 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."

In relation to other powers however it is specified that an appeal or tribunal on appeal may quash or vary any decision and substitute their own decision for any decision quashed on appeal.

57. The Tribunal takes the examination of the reasonableness or unreasonableness of the Commissioners' decision to be that quoted in the appeal of Lindsay by the Master of the Rolls that is to say the tests set out in Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd that the Commissioners have not arrived reasonably at a decision if they take into account irrelevant matters, or fail to take into account all relevant matters, or make a mistake of law.
58. The relevant matters which require to be taken into consideration include, as the Commissioners by implication admit, the distinctions drawn in the appeals of Lindsay and Hoverspeed, and the questions of proportionality, and of Human Rights in relation to the right to property set out in article 1 of Protocol 1 to the European Convention on Human Rights and Fundamental Freedoms.
59. First with regard to the facts, Mr Jones and his passengers were obviously engaged on a shopping trip of brief duration to buy a considerable amount of excise goods for importation into this country.
60. The Commissioners agree that the reviewing officer, and thus the Tribunal, are entitled to look at the circumstances of the seizure of the vehicle and goods in deciding whether the Commissioners' decision under appeal can be impugned.
61. The first point which the Tribunal considers is the evidence available to the officers at the time of seizure. There is no doubt that the Appellant and his companions were carrying a large quantity of tobacco goods. Apart from that fact the evidence before the officers consisted of the evidence which the Appellant and his companions produced, in the first place in the statements which they gave at interview. Mr Jones' interview was completed before the interviewing officer decided to read the commerciality statement to Mr Jones and the other occupants of the car. The Tribunal is aware that this commerciality statement is general use and that it has a purpose in explaining the procedure and the obligation to satisfy the officers. However in the way in which it is recorded here it was used differently. With regard to Mr Jones he was not informed before his interview was complete that he had the obligation to satisfy the officers that the goods were for personal use and not for commercial purposes. Further in the way it was put the commerciality statement was used to persuade, and a stronger word might be appropriate, the occupants of the car to stay and submit to immediate interview, on pain of losing the car and the goods. The matter was not fully argued, but it is clear to the Tribunal that the commerciality statement was used not only to inform the occupants of the car of their obligation to satisfy the officers about the importation of excise goods but also in effect to ensure that they stayed for interview. It is not suggested that the interview was improper, but this is a fact that may have weighed on the persons interviewed and affected the fullness of their answers.
62. The Tribunal considers the reasonableness of the Commissioners' decisions in the light of the criteria set out in the appeal of Corbitt and the comments thereon earlier quoted in the judgment in the appeal of Lindsay. The Commissioners appear to have taken four separate decisions to refuse to restore the goods and vehicle. The first was the comment made in the seizure notice, the second was in the refusal to restore of 12 May, the third in the review of July 2001, and the fourth in the refusal to restore of 6 June 2002 now under appeal. The grounds for refusal have been broadly similar, although the decision of officer Veitch does contain a fifth ground that the goods were for non-entitled persons. That ground is easy to understand but not further explained. If it means that the goods are for members of the family who were not travelling then it is not a good ground. If it means that the goods were to be imported for commercial purposes that is equally clear, although it is not stated. However the Commissioners say in their argument that they concluded that this was a commercial importation.
63. While it is clear that the occupants of the car were attempting to import tobacco goods very much above the minimum indicative levels, and that this was a ground for the original seizure and for the conclusion that this was a commercial importation. The other grounds are matters of deduction by the officers.
64. The first of these grounds stated by Mr Harman relies on the fact that of the three occupants of the car only one, Mr Mountjoy was a smoker. The others were not. The Commissioners rely on this fact to support their conclusion that this was a commercial importation and that therefore the goods were not intended as gifts for family members or for distribution to them without profit. The conclusion that only smokers may be able to import tobacco goods creates a limitation on the possibilities of duty free imports which is not warranted by the text. It is not reasonable to establish such a limitation, or to rely on it. It is not part of the Commissioners stated policy. It is not part of the extended definition of "own use" given in the Excise Duties (Personal Reliefs) Order. It would be reasonable for the Commissioners to rely on the fact that a traveller was a non-smoker if he said that the goods were for his own consumption. It is not reasonable where the goods are intended as a gift to another person who does smoke, and thus within the extended definition of "own use".
65. The next conclusion which the Commissioners reached is that Mr Penduck, having said that he would receive recompense, was in effect selling tobacco to his family. That conclusion is not clear from the answers which Mr Penduck gave at interview. It is not clear whether he would sell at a profit, whether he would obtain reimbursement of expenses or whether he would pass them on at cost. Paragraph 2 of the Excise Duties (Personal Reliefs) Order 1992 does define "own use" to include a personal gift but excludes from personal gifts those cases where the person making the gift receives in consequence any money or moneys worth, including reimbursement of expenses. The Commissioners may therefore have had grounds for considering that Mr Penduck's purchases would not represent a true gift, but it would nevertheless have been relevant to the question of restoration whether he was seeking to dispose of the goods at a profit in a commercial way or whether he would only be receiving reimbursement of costs. His answer "some money" was not explored. In the statement of case the qualification "some" is not mentioned. This selectivity is not explained. The Tribunal thinks that it is not warranted.
66. With regard to Mr Penduck the Commissioners also conclude that the fact that he seemed not to know precisely what the cost of the tobacco was nor indeed what brand of tobacco his family would use were reasons for disbelieving his story that he intended the goods for members of his family. The Tribunal does not intend to substitute its own views of the evidence for those of the officers, but thinks that it would have been reasonable for the Commissioners to consider whether Mr Penduck's explanations were true, even though he appears to have taken no active part in the purchase or selection of the tobacco.
67. The Commissioners conclude that the Appellant's explanation that he would give his purchased tobacco to his father as a gift in return for past help was not acceptable. The decision under appeal says that the Review Officer does not accept that the 6 kilos of tobacco would represent an unrealistic gift in monetary terms, although it was very generous but thought that it was an excessive quantity of tobacco to purchase for the use of the Appellant's father. The conclusion is that this was an excessive gift, especially as the Appellant had not expressed an understanding of his father's consumption rate or how long the goods would last him. These were of course questions which were not put to him. The only question on this point was "its an expensive present" to which the Appellant replied at interview "yes, but my father is good to me though". The Review Officer stated in his letter that the Appellant had not said whether the gift was for a birthday or celebratory present. However, the Appellant had explained the nature of the present, by saying that his father was good to him. The Tribunal sees no ground why that explanation was neglected.
68. The Commissioners conclude that this is an excessive gift, that the fact that Mr Penduck did not immediately pay the totality of the purchase price for his tobacco meant that the remainder of the tobacco allegedly to be attributed to Mr Penduck's purchase should nevertheless be attributed to the Appellant and that this further discredited the Appellant's assertion that the tobacco attributed to him was for his father as a gift. The Tribunal does not think that this is a reasonable chain of reasoning. The concept of "excessive gift" is not one which can be deduced from the legislation. All that the legislation says is that "own use" "includes use as a personal gift", provided that there is no receipt in consequence of money or moneys worth. The burden of proof is on the Appellant, but in the circumstances of the interview it is not clear to the Tribunal that he could have been aware at the time that he should have justified his assertion that the tobacco was for his father by stating what tobacco his father smoked and what his father's consumption of tobacco was. The Commissioners' view the Appellant's assertion that all of the tobacco which the Appellant had purchased was a gift for his father, with suspicion. They do not accept that the Appellant has demonstrated that the goods were to be supplied on a non-profit basis. They support that conclusion with the assertion that the box of tobacco which Mr Penduck claim was not entirely his and that some of it was for the Appellant so that this made the Appellant's suggestion that his box of tobacco was a gift even more unlikely. The Tribunal understands that the duty on Customs officers trying to suppress illegal imports of dutiable goods is a difficult one but nevertheless has some difficulty in following the reasoning that rejects the Appellant's claim that his box of tobacco is for his own father on the one statement made by Mr Penduck that his box of tobacco cost £149 instead of about £240 , especially given the circumstances of the interview. The Tribunal here recall the reference in the appeal of Hoverspeed (para 168 of the judgment) to the general proposition of law reflected in the European Courts judgment in Commission v Italy that national implementing rule must:

"Give the persons concerned a clear and precise understanding of their rights and obligations and enable national courts to ensure that those rights and obligations are observed."

69. The Commissioners say that these tobacco products were "held for commercial purposes" as it has not been shown that they were for "own use". They based that conclusion on a rejection of the explanations given by the occupants of the motor car. The Appellant's alleged gift to his father was excessive in quantity; Mr Penduck's claim that the tobacco had cost him £149 was not correct so that it was deduced that the Appellant owned part of Mr Penduck's tobacco. The Appellant and Mr Penduck were non-smokers. It was not believed that Mr Penduck had purchased tobacco for his family because he did not know what tobacco he had purchased or how much he had paid. None of the tobacco allegedly purchased by Mr Penduck was for his own use because he was in effect selling them to his family.
70. Thus, the explanations which the Appellant and his passengers gave were not accepted as satisfactory explanations, either at the moment of seizure, or during the process of refusal to restore the car.
71. In maintaining these conclusions the Commissioners relied on the summary of the judgment of the Court of Appeal in the application of Hoverspeed that the concepts of "products acquired by private individuals for their own use" in article 8 and "products held for commercial purposes" in article 9 of the Directive are antithetical so that products acquired for a purpose other than own use were to be regarded as held for commercial purposes. The occupants of the car having failed to satisfy the officers that the goods were for own use the only conclusion to be drawn was that they were held for commercial purposes.
72. However, while the Commissioners had an answer from Mr Penduck, which they did not investigate further, that "I'll get some [money] when I get back", they had no such evidence in regard to the other two occupants of the car. They proceeded as far as they were concerned on two principles neither of which has a foundation in law, the first being that importation of tobacco goods by a non-smoker is an indication that the importation is for commercial purposes and the second that goods above a certain quantity represented an excessive gift and could therefore not be a gift within the definition of "own use". These are propositions for which the Commissioners supplied no foundation, and no matter how justifiable they may seem to an officer whose suspicion has been aroused by the importation of a large quantity of tobacco goods, they are not in the view of the Tribunal reasonable grounds upon which to proceed to a measure as important as the refusal to restore a traveller's car. The Commissioners own policy, post-Lindsay, distinguishes between goods to be supplied at purchase price, and those to be supplied for profit. The Tribunal looks for the evidence that the refusal to restore considered this distinction, and finds none, or that there was evidence of supply for profit, and finds none. The Commissioners appear to have overlooked the word "some" in Mr Penduck's answer. It does not necessarily imply a commercial intent, rather the contrary.
73. The Commissioners' policy on non-restoration is a rigorous one. It is mitigated by the fact that they may be obliged to review it. A review must take into account all the individual circumstances of the matter. Here, this appears not to have been done. The Commissioners concluded that as one of the occupants of the car would be getting money for his tobacco goods the importation was not for own use. That does not in the view of the Tribunal mean that the Appellant, in the words used in the judgment in Lindsay was one of those "who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars would be rendered liable to forfeiture and cannot reasonably be heard to complain if they lose those vehicles". In those circumstances the court held that the value of the car need not be taken into consideration. "Those circumstances", said the court "will normally take the case beyond the threshold where that factor can carry significant weight in the balance". This however is not a case where the Commissioners could reasonably conclude that this was a case where the Appellant was using his car to further a fraudulent commercial venture. The explanations given by the occupants tended to the contrary. The only solid evidence was the quantity of goods, and Mr Penduck's admission about receiving money. The quantity of goods, although enough to raise suspicion is not in itself conclusive precisely because even a large quantity of goods may be imported for own use. The admission by Mr Penduck relates to himself and not to the other occupants. It was unclear as to the commercial element. These are relevant facts. They appear not to have been considered by the Commissioners in deciding to refuse to restore the vehicle. In effect the occupants of the car, and Mr Jones in particular, bear the burden of the Commissioners' decision based on the quantity of the goods and the one admission made in the circumstances to which reference is being made, by Mr Penduck about payment. These are supported by the addition of the two principles to which the Tribunal has referred, upon which the Commissioners relied, but upon which in the view of the Tribunal it was not reasonable for them so to do.
74. The Tribunal relies also on the confirmation of the need to treat commercial smugglers, and "not-for-profit" smugglers differently as far as the proportionality of the Commissioners' response is concerned (para 187 of the judgment in "Hoverspeed"). This is particularly so in the case of the review of a decision not to restore a vehicle seized. Proportionality must be considered where unless it was a case of commercial smuggling.
75. It follows that the Commissioners' decision on review cannot stand and that this appeal must be allowed. Accordingly the Tribunal directs, under article 16(4)(a) of the Finance Act 1994 that the Commissioners' decision to refuse to restore the vehicle shall cease to have effect from the date of the review decision invalidated by this decision.

PAUL HEIM CMG

CHAIRMAN

RELEASED:

LON/02/8167