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United Kingdom VAT & Duties Tribunals (Excise) Decisions

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Moore v Customs & Excise [2003] UKVAT(Excise) E00494 (22 September 2003)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00494.html
Cite as: [2003] UKVAT(Excise) E494, [2003] UKVAT(Excise) E00494
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Moore v Customs & Excise [2003] UKVAT(Excise) E00494 (22 September 2003)

    EXCISE GOODS AND VEHICLE – initial substantial under declaration to the customs officer – Commissioners found no exceptional circumstances – appeal against non - restoration of the goods dismissed – in respect of vehicle consideration of Commissioners current policy affecting vehicles subject to hire purchase – unfairness of effect – appeal against decision not to restore vehicle allowed

    MANCHESTER TRIBUNAL CENTRE

    .

    LEE ANTHONY MOORE Appellant

    - and -

    THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

    Tribunal: Mrs E Gilliland (Chairman)

    Mr J Lapthorne

    Sitting in public at Birmingham on 23 July 2003.

    The Appellant in person

    Mr W Baker of counsel instructed by the Solicitors Office of HM Customs and Excise for the Respondent

    © CROWN COPYRIGHT 2003


     
    DECISION
  1. This is an appeal by Lee Anthony Moore (the Appellant) against the decision of the Commissioners not to restore excise goods and the Appellant's vehicle seized from him on 27 January 2001.

  2. The facts are that the Appellant, together with a friend and work colleague, Christopher John Wayte (Mr Wayte), travelled in the Appellant's vehicle, a Vauxhall Cavalier car, registration J692 WMT (the vehicle), on a day trip to Belgium via Calais. They had planned the trip with the intention of buying tobacco and cigarettes. They had checked on the internet and proposed to go to Eastenders Supermarket which was a 24 hour outlet. They found the experience of shopping at the tobacco outlet unnerving because of the presence of guard dogs. They purchased their items in the early hours of the morning of 27 January 2001 and, no doubt, security was then heightened. Having made their purchases, they set off for home. The Appellant and Mr Wayte both live in Leicestershire.

  3. The vehicle was stopped at Dover Eastern Docks when they arrived back in England and the Appellant and Mr Wayte were questioned. The interview notes are in the bundle of documents before the tribunal. The Appellant confirmed that he had signed the notes recording the interview with him on 27 January at 11.05 am agreeing that they were an accurate account of the interview. Mr Wayte also signed the notes of his interview.

  4. As appears from the notes of the interview with the Appellant, the Appellant when first stopped and questioned said that he had been to Calais for a day and had bought cigarettes and tobacco. He said that he had 15 cartons of cigarettes and 2 boxes of hand rolling tobacco (HRT) in total. There are 200 cigarettes in a carton. When the vehicle was searched however, it was found that there were in fact 6 boxes of HRT, weighing 36 kg., 7800 cigarettes, and 250 cigarillos in the boot of the vehicle.

  5. Article 3 of the Excise Duties (Personal Reliefs) Order 1992 SI 1992 / 3155 (the 1992 Order) which was in force at the relevant time relieved a community traveller such as the Appellant on entering the United Kingdom from payment of excise duty on tobacco and cigarettes which he had obtained elsewhere in the EU where the goods had been obtained for his own use. That relief however did not apply if the goods were held or used for a commercial purpose. (See article 5 of the 1992 Order). Article 5 of the 1992 Order also set out a number of factors to which the Commissioners were directed to have regard when determining whether the goods in question were being brought into the United kingdom for commercial purposes. Among the factors were certain "excise limits" which, if they were exceeded, were treated as being indicative of a commercial purpose. The relevant limits in January 2001 were 800 cigarettes and 1 kg. of HRT. It is clear that the quantities declared by the Appellant when first asked were over the indicative limits for cigarettes and HRT for one person although the amount of HRT would be within the indicative limits for two persons. However the quantities found in the boot were significantly over the indicative limits for two persons. The indicative limits have subsequently been increased to 3200 cigarettes and to 3 kg.of HRT for one person. The amount of cigarettes and HRT found would still exceed the current indicative limits for two persons, especially in relation to the HRT. Under Article 5 of the 1992 Order, there was a presumption in favour of commerciality if the indicative limits were exceeded. That presumption however no longer exists because it was held to infringe European law in relation to the free movement of goods between member states and the burden of showing that the goods are being brought into the United Kingdom for commercial purposes now rests squarely upon the Commissioners. It is not for the traveller to prove that the goods were for his own personal use.

  6. In the instant case the primary question is whether the cigarettes and tobacco were being imported as the Appellant claims for his own personal use (and that of Mr Wayte) or whether the goods were being imported for a commercial purpose. If they were being imported for a commercial purpose, the further question will arise whether the goods and/or the vehicle which are subject to forfeiture under sections 139 and 141 of the Customs and Excise Management Act 1979 (CEMA) should as a matter of discretion on the part of the Commissioners acting reasonably be restored to the Appellant. If on the other hand, the goods were being imported for the Appellant's own use, then in principle the Appellant is entitled to have his goods and the vehicle restored to him.

  7. When interviewed after the discovery of the goods in the boot, the Appellant said that one of the boxes of cigarettes (3900 cigarettes) and three of the boxes of HRT (18 kg.) were his and that he and Mr Wayte had each spent £1,000 on the goods they had purchased. He said that he smoked about 2 pouches of tobacco a week plus 60 to 80 cigarettes at the weekend and that all four of the boxes were for himself. When asked how long the goods would last him, he said, "over a year". He said that he earned about £1,000 a month as an assembly line worker and that his outgoings were about £300 a month. He did not have a wife or children. When asked where he had got the £1,000 from, he said he had saved up for about 2 weeks and had also drawn some money from his bank account. He said that he did not have any savings. He denied that anyone had given him money to buy the goods. He also denied that anyone would give him money for them. When he was asked why he had declared only 2 boxes of HRT when first stopped, the Appellant said: "I got mixed up". The Appellant also said that he had not seen the Customs notice setting out the indicative limits until he was shown a copy by the interviewing officer. When the interviewing officer put it to him that at the rate of 2 pouches a week, the HRT would last for 3.5 years, the Appellant replied: "the longer it lasts the better".

  8. The officer was not satisfied that the goods were not being brought into the United Kingdom for commercial purposes and the goods and the vehicle were seized under sections 139 and 141 of CEMA. The reasons relied on by the officer in reaching his decision were stated in his notes as being (1) that the quantities involved were 36 times over the indicative limits for HRT; (2) that there had been a misdeclaration of the amount of tobacco when first stopped; (3) that it was unreasonable for the Appellant not to be sure what goods he had purchased when asked; and (4) that the consumption rate of 2 pouches a week given by the Appellant was inconsistent with the estimate given when he had been asked how long the goods would last.

  9. On 12 February 2001 the Appellant wrote requesting the restoration of the goods and the vehicle. The Appellant in his letter said that he and Mr Wayte had gone to France and Belgium purely to purchase cigarettes and wine but that they could not find any wine outlets and had purchased a larger amount of cigarettes and tobacco than they had previously intended in order to make the visit worthwhile. The Appellant wrote that they had answered incorrectly the question about the amount of tobacco they had and said: "We believed we were buying 100 packets per box as opposed to the correct amount of 120 per box. Though we didn't buy by weight or quantity but by what we could afford". The references to 100 and to 120 per box are references to the number of pouches of HRT in a box. In this letter the Appellant also said that they had inquired both at the duty free department at the ferry before going to France and at Eastenders in Belgium where they had bought the tobacco and the cigarettes, how much they could bring back to England and had been told that there was no limit so long as the goods were for their own personal use and that the goods had been bought on this understanding. He also enclosed a copy of Eastenders' advertisement which had been given to them. The advertisement does say: "Remember: You can legally carry any amount of tobacco or cigarettes as long as it is exclusively for your own use". The letter then continued by saying that if the Appellant had known the limit of 800 cigarettes and 1 kg. of tobacco was the maximum, they would not have made the trip "knowing that purchasing more put our goods and car in jeopardy". The Appellant also pointed out that this trip had been the first time either he or Mr Wayte had purposely gone abroad to purchase duty free goods and that they had not been out of the country for several years. He also made the point that they had not hidden the fact that they had been to France and Belgium to purchase duty free goods. The goods were he said for their own personal use.

  10. By a letter from the Commissioners dated 16 March 2001, the decision to seize the goods and the vehicle was confirmed and restoration was refused. The stated reasons were that the quantities were in excess of the guidelines (the indicative limits) as per Article 5 of the 1992 Order, the misdeclaration of the amount of tobacco when first stopped, and the inconsistency between the stated consumption rate and how long he had said the goods would last. The letter also stated that there were no exceptional circumstances which would justify a departure from the Commissioners' policy not to restore seized goods as a means of deterring smuggling.

  11. On 4 April 2001 the Appellant wrote requesting a review of the decision not to restore the goods and the vehicle. In this letter the Appellant made the point that they had not been aware of the guidelines. He then said that the misdeclaration had occurred "by accident as we explained in our first letter, we thought that we had purchased 100 pouches of tobacco per box, we now know that there is 120 in each box. We did not purchase by quantity or by weight but by the amount we could afford". He then continued: "the stated consumption rate was deemed inconsistent with the amount of time the goods would last. We were asked how much tobacco we smoked per day. We were then told by Customs Officers how long it would last to consume. We did not offer a time span for consumption relating to the amount of tobacco we had purchased". He also made the point that that he would not knowingly break the law and that "they felt they had been severely punished in a situation which to us is an obviously grey area". He also referred to the traumatic effect of the whole experience and to the inconvenience which the loss of the vehicle had caused. On 21 May 2001 the decision not to restore the goods or the vehicle was confirmed.

  12. The Appellant has now appealed to this tribunal. At the hearing the Appellant has represented himself (with the assistance of a friend) and he has given evidence on oath and been cross-examined by Mr Baker, counsel for the Commissioners. The Commissioners have called Mr Cummings who was the Review Officer who had made the decision of 16 March 2001 not to restore the goods or the vehicle and also Mr Smith, a surveyor of the Quality Department at Customs headquarters.

  13. In his evidence and in his replies in cross-examination, the Appellant repeated the points he had raised in his letters dated 12 February 2001 and 4 April 2001. He confirmed that the first he had known of the indicative limits was when the customs officer had shown him the notice and he insisted that the goods had been purchased for his own personal use. He insisted that he had been honest and he produced a reference from his supervisor at work. In cross-examination he agreed that he had signed the notes of the interview with him on 17 January 2001. He said he signed because he had then considered them to be true. When he was asked about his statement that he smoked 2 pouches a week, he said that he did not say how long the HRT would last and that it was the customs officer who had told him it would last 3.5 years. When asked why he had understated the quantities of HRT and cigarettes when first stopped, he said that he had said what he had thought. The general tenor of his evidence was that he had not liked Eastenders and had just wanted to spend his £1,000 as quickly as possible and to get out and return to England. This he suggested was why he did not know exactly how many cigarettes or how much tobacco he had purchased. He had not wanted to stay there and examine what he had purchased. When it was put to him that he had said at the interview that the tobacco would last him for a year, the Appellant suggested that he had been under pressure from the customs officer. In his evidence the Appellant denied that he could get 60 cigarettes from a pouch and said that he thought he could get only 50 to 55 cigarettes from a pouch. The customs officer had based his estimate of 3.5 years on 50 cigarettes per pouch.

  14. We have listened carefully to the evidence given by the Appellant and have observed him while giving his evidence and being cross-examined. We have also considered the evidence of the Appellant's replies to the questions put to him on 27 January 2001 as recorded in the notes which the Appellant signed as being a correct record of the interview. We do not find the evidence given by the Appellant before us credible. We do not accept that the Appellant did not know how many cigarettes or how much tobacco he had purchased. If it really had been the case that the Appellant had simply purchased £1000 worth of cigarettes and HRT without counting even roughly how many cartons or boxes he had purchased, there was no reason why when he was first stopped he should not have simply said that he did not know precisely what quantities he had purchased but that he had bought a £1000 worth of cigarettes and tobacco. He did not do so. Instead he made a declaration which was very significantly understated. Even if allowance is made for the fact that the Appellant and Mr Wayte had been travelling for some time since they had set out from Leicestershire and may well have been tired, we do not understand how the Appellant could possibly have honestly thought that that only 2 boxes of HRT had been bought when there actually were 6.

  15. Likewise his estimate that the HRT would last him for "over a year" which is what he said at the interview cannot be reconciled with his stated rate of consumption. The suggested difference between 100 and 120 pouches in a box cannot account for the difference between over 3 years and the Appellant's estimate. In our view, a person who goes to Belgium to purchase tobacco and cigarettes for his own use and spends £1,000 is likely to have a very good idea of how long his purchases will be likely to last him. In the instant case the Appellant had looked up Eastenders on the internet before he left England. We do not believe that the Appellant did not know, at least in general terms, the quantities he had purchased and we are satisfied and find that he deliberately gave an incorrect account of how much he had purchased when he was first stopped, no doubt hoping that his answer would be accepted and that he would be able to go on his way back to Leicestershire. It is also not credible in our view that a person would simply ask for £1000 worth of cigarettes and tobacco without looking to see what he was being given or being satisfied with what he was getting for his money. The fact that the Appellant did not have any clear idea how long the HRT would last him points firmly in our view to the conclusion that the Appellant was not actually buying the goods for his own use. We reject the Appellant's evidence that he bought the cigarettes and HRT for his own use and we are satisfied and find that the goods were purchased for a commercial purpose, most probably for the onward sale of the goods without excise duty having been paid on them. We also reject the suggestion that pressure was put on the Appellant during his interview on 27 January 2001.

  16. In our view there was ample material before the customs officer on 27 July 2001 and before Mr Cummings on 16 March 2001 and before the reviewing officer on 21 May 2001 to justify the conclusion that the goods were being imported for commercial purposes. This is quite apart from any presumption in favour of commerciality arising from exceeding the indicative limits. The amount of the HRT involved far exceeds the rate of use given by the Appellant and his explanation that he simply bought a £1000 of goods without really knowing what he had bought is in our view merely an afterthought on the part of the Appellant to explain away the fact that he had made a significant misdeclaration when first stopped and possibly also an explanation for his inaccurate estimate of how long the HRT would last him. It is perfectly clear from the note of the interview that the Appellant did say that the tobacco would last him for over a year and he cannot have been mistaken about that when he signed the notes as a correct record. Even on the footing that there had only been 100 pouches in a box and that half of the 6 boxes belonged to the Appellant, the 3 boxes would have lasted him (at the rate of 50 cigarettes per pouch) for 3 years. In our view the Commissioners were correct in concluding that the goods were not being imported for the Appellant's own use.

  17. In relation to the decision not to restore the goods, the Commissioners were in our judgment entitled to reach the decision they did. The goods were in our opinion clearly being attempted to be imported into the United Kingdom in order to evade the payment of excise duty. The Appellant was engaged in a commercial enterprise and it is both reasonable and proportionate in our opinion that the goods should be forfeited under section 139 of CEMA.

  18. So far as the vehicle is concerned, there is power under section 141 of CEMA for the Commissioners to forfeit any vehicle in which goods which are liable to forfeiture under section 139 of CEMA are being carried. It is settled law that section 141 has to be read subject to the Human Rights Act 1998 and in particular to Article 1 of the First Protocol which provides that every person is entitled to the peaceful enjoyment of his possessions and that a person is not to be deprived of his possessions except in the public interest and subject to conditions provided for by law. In the instant case the Commissioners have deprived the Appellant not only of the goods but of the vehicle and they have not offered restoration of either the goods or the car on terms as for example the payment of the duty on the goods or of any other sum. The tribunal has to consider the effect the seizure of the vehicle has had on the Appellant. He has given evidence that he has been seriously inconvenienced by the loss of the vehicle but that has to be balanced against the fact that he was in our view seeking to evade excise duty on a significant quantity of HRT, for his own profit or that of others. He has already lost the £1000 which he has spent and the loss of the vehicle will add to that loss. The vehicle was a L registration Cavalier and although we have no evidence as to what the Appellant paid for the vehicle or when, its monetary value is likely to be relatively modest but it is not insignificant. When seized, its condition was described as "fair". The Appellant's evidence in relation to the loss of the vehicle was that it had caused "inconvenience" and he has not suggested that it has caused him significant hardship. The provisions of section 141 of CEMA are intended to discourage the use of vehicles for avoiding excise duty by enabling the Commissioners to forfeit such vehicles. This is a legitimate object for the state to seek to pursue in order to protect the public revenue and can properly be regarded as being in the public interest within the meaning of the First Protocol at any rate where the effect on the owner of the vehicle is not disproportionate in all the circumstances.

  19. However there is an aspect of the matter which has caused us concern. Since the hearing it has come to our attention that the current restoration policy of the Commissioners as it is applied to vehicles on hire purchase is that when the vehicle is restored to the hire purchase company, that company is no longer subject to any restraint on not returning the vehicle to the hirer. Previously it was the policy of the Commissioners to require the hire purchase company not to allow the hirer to have the vehicle back. The Commissioners have been advised, we understand, that they are not entitled to impose such a restriction and that accordingly the policy has been altered to omit that restriction. It seems likely that the policy to prevent the return of a vehicle on hire purchase to the hirer was in force when the decision not to restore the Appellant's vehicle was made but it would now appear that that policy was not one which can be justified in law. In the instant case it is not known whether the vehicle was on hire purchase or not but it would in our view clearly be unjust and unfairly discriminatory that a person who owned his own vehicle should be in a worse position so far as the return of the vehicle was concerned than a person who was buying the vehicle on hire purchase. It does not seem to us that the Commissioners could reasonably decide to allow a vehicle on hire purchase to be returned in circumstances where it could then be returned by the hirer to the person who was smuggling excise goods into the UK yet refuse to permit restoration to a person who owned his own car. In the circumstances we consider that the appeal against the non restoration of the vehicle should be allowed and the Commissioners be directed to carry out a further review pursuant to s. 16(4) (b) of the Finance Act 1994 of the decision not to restore the vehicle to the Appellant. In our view it was unreasonable not to consider the possibility of restoration of the vehicle on terms which do not unfairly discriminate between the owner of a vehicle and one who is purchasing the vehicle on hire purchase terms. Such discrimination would in our view infringe article 1 of the First Protocol. The appeal is accordingly allowed in relation to the vehicle.

  20. We make no direction as to costs.

    21. Mrs E Gilliland
    Chairman
    Release Date:

    MAN/2001/810

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