United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2003] UKVAT(Excise) E00526, [2003] UKVAT(Excise) E526

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Hill v Customs and Evcise [2003] UKVAT(Excise) E00526 (31 October 2003)

E00526

EXCISE DUTY — importation of cigarettes and tobacco above guidelines — forfeiture of goods — whether refusal to restore was reasonable — Gora — appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

CHRISTOPHER HILL Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Lady Mitting (Chairman)

Mr J D Kippest (Member)

Sitting in public in Birmingham on Monday 8 September 2003

Christopher Hill appeared in person

Mr James Puzey of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

DECISION

Background to Appeal

This is an appeal by Mr Christopher Hill against the decision of the Commissioners to refuse restoration of tobacco and cigarettes seized from him at Dover Hoverport on 22 April 2001. Mr Hill was travelling in a vehicle owned by his partner, Miss Sharon Hickin, with Miss Hickin and with his sister Miss Dawn Hill and his son Jamie, aged 4. The vehicle was intercepted and following interviews with all three the vehicle was seized together with 4.5 kilograms of hand rolling tobacco, 7,560 cigarettes and 0.7 litres of spirits. Mr Hill and Miss Hickin wrote an undated letter to the Commissioners received by them on 26 April 2001 claiming the goods were purchased for personal consumption and seeking the return of their vehicle and the goods. This letter was treated by the Commissioners as a request for restoration which was refused by Mr Alan Richardson by a letter dated 4 May 2001.

All three travellers consulted Messrs Parkinson-Wright, who wrote to the Commissioners on 7 June 2001 seeking a review of the decision to refuse restoration and also seeking to appeal against seizure under Schedule 3 Customs and Excise Management Act 1979 (CEMA). By this time, the time limit for seeking condemnation proceedings had already expired and the matter therefore proceeded as a review of the decision to refuse restoration. Correspondence followed and by letter dated 15 August 2001 the Commissioners wrote to Parkinson-Wright advising them no review had been carried out within the 45 day time limit and the original decision not to restore had thus been deemed to have been upheld. It is against this decision that Mr Hill appeals.

Mr Hill's stated grounds of appeal were that the goods were held for personal use and had been purchased on advice from Euro-tunnel staff

We heard oral evidence from Mr Alan Richardson. Mr Hill gave no evidence but relied on a statement submitted on his behalf by his solicitors. He made brief closing submissions but was not of course open to cross examination.

Evidence

The following was gleaned from Mr Hill's statement. At the time of the seizure, Mr Hill lived with his partner, Miss Hickin and their three children. He was a lorry driver. He had smoked on and off for a number of years and since 1999 had been smoking up to 80 cigarettes a day. In the 12 months prior to April 2001, he had made some 10 trips to the continent looking at properties as he and Miss Hickin and their extended families were looking for a small property to purchase and renovate. He did not purchase cigarettes on every trip. The trip in question was to be an overnight trip staying in a bed and breakfast. The main reason for the journey was to look at properties but he, his partner and his sister, were all interested in buying cigarettes. Mr Hill placed the order for all the cigarettes and tobacco which were then shared out equally between them. They all took 2,400 cigarettes and 1.5 kilograms of tobacco. The car in which they were travelling had cost £6,000 when purchased two months previously and although registered in Miss Hickin's name had been financed by a £4,000 deposit from Mr Hill, the balance being repaid under a finance agreement by Miss Hickin.

When the travellers were intercepted, initially they were interviewed together and Mr Hill answered on behalf of all three of them saying they had travelled out the previous night and had brought in 2,000 cigarettes each and 1.5 kilograms of tobacco each. A few questions later he was asked for confirmation of the number of cigarettes and he answered "well 2,200". All three signed the officer's notebook at the foot of these questions and they were then interviewed separately.

In his interview Mr Hill claimed ownership of 2,400 cigarettes. He said he had been told at Euro-tunnel that he could pre-order a maximum of 2,600. All the goods had been purchased in Belgium. Mr Hill had made the purchase, paying £800 for them. He had no receipt but the cigarettes had cost him £19 for 200. His sister would pay him back for her share when they got home. He said he smoked about 70 cigarettes a day, alternating between ready made and hand rolling. He expected the goods purchased to last him a month and he got about 100 roll-ups from a pouch. His take home pay was £1,200 a month and outgoings included £820 for mortgage, a loan and food. In addition he paid for gas, electricity and council tax, the amounts of which he did not know. This purchase was financed out of money in the bank. He said he had last travelled abroad two weeks ago but had brought back no cigarettes or tobacco. He had made 8 to 12 trips over the previous 12 months. He sometimes travelled by himself, sometimes with Miss Hickin and sometimes with his parents. The last time he had brought cigarettes in had been 2000 about a month before and tobacco about a month and a half before. He bought only when needed. He had imported cigarettes and tobacco on a total of 5 occasions. He was looking to purchase a property in Calais which he had read about in a Hoverspeed magazine article.

Mr Hill then signed the interview notes but shortly afterwards was asked some further questions in reply to which he said he had made two or three trips to France in April and didn't know whether anyone else used Miss Hickin's car. The interviewing officer then referred him to a record showing the vehicle had travelled to France on 3^rd April, 7^th April, 10^th April and 20^th April. Mr Hill said that he had made the journies on 3^rd and 10^th and when asked who had made the others he said probably Miss Hickin.

The officer then seized the vehicle and goods for the stated reasons:-

(1) Unsatisfactory answers to previous trips

(2) Unable to explain receipt in handbag for tobacco purchased on 20 April

(3) Consumption rate unreasonable

(4) Misleading false declaration

(5) Economics of a pouch of tobacco unreasonable

These reasons presumably refer to all three travellers as the reference to the receipt refers to a receipt dated 20 April for tobacco purchased in Belgium. The receipt was found in Miss Hickin's handbag. Miss Hickin had been asked about it in interview but could not explain it other than to say she had not been there.

It was Mr Richardson who replied to Mr Hill's letter dated 26 April and who made the decision of 4 May 2001 not to restore which said decision was deemed upheld in the absence of a further review.

His letter of 4 May refused restoration of both the vehicle and goods. He set out the Commissioners' policy; set out the description of the goods seized and concluded that Mr Hill had failed to satisfy the officers that the goods were not being imported for a commercial purpose and he saw no grounds for a departure from policy.

In his evidence Mr Richardson told us he had had before him the seizure file which would contain all the notes of interview and the letter requesting restoration. He was unhappy about the number of trips made in the previous three weeks which he did not think supported looking for a property. He noted Mr Hill gave three figures for the number of cigarettes he held, 2000, 2200 and finally 2400. The vehicle had been abroad on 20 April and a receipt for tobacco bearing that date had been found in it. There was no evidence from either Mr Hill or Miss Hickin that anyone else had had the use of the vehicle on the 20^th. Finally the relative means of the parties would not support the purchase of a property or so many round trips.

Mr Puzey referred us to a printout taken from the Commissioners' number plate readers at Cheriton and Coquelles which had recorded the vehicle in question had made 12 trips across between 24 February and 20 April. Of these trips five showed an outward journey with the return unrecorded; one showed an overnight trip and the remaining six recorded return visits lasting between two and a quarter and five hours. On two occasions, trips were made on consecutive days, returning to England mid-afternoon on one day and leaving again early the following morning. On the latter trip (25 March 2001) the outward journey was timed as 07:51 and the return at 09:26. We ascertained that the reader at Cheriton was positioned at the ticket booth which would mean that the outward time would be recorded before queuing and travelling so a minimum of 45 minutes would have to be deducted from the visit time to ascertain the length of the stay in France. Miss Hickin in her evidence had said that she had probably been on half these trips, the others being undertaken by her partner and members of the family.

Mr Richardson could not remember whether or not he had this printout in front of him when he made his review or just the April dates put to Mr Hill in interview. Because Mr Hill did not give evidence, the printout could not be put to him for explanation during the hearing.

Mr Hill's Submission

Mr Hill contended that his and Miss Hickin's trips abroad had been to look at properties not to purchase excise goods and he produced a brochure dated February 2001 containing several pages of properties in and around Calais, Boulogne and Le Touquet. He explained that they had been carrying this brochure on them when they were stopped. They were only looking in the immediate area of the port because that would be where property would be cheapest – hence the short duration of the trips. Further, given that cigarettes could be purchased so cheaply at discount outlets in England (a pricelist from one was produced) and given the expense of the return journey from Droitwich to Calais, there would be no financial gain in travelling abroad for duty free goods.

Findings of Fact

We heard the appeals of Miss Hill and Miss Hickin at the same time as this one and our first observation concerns the proportion of the importation allotted to each traveller. It was Mr Hill in the opening questions who stated that each member of the party had one third of the consignment. Having heard evidence from both ladies, we formed the view, for reasons given in those decisions, that neither of them smoked hand rolling tobacco and that their claim to one third each of the tobacco was not credible. We do not believe the entire consignment was for Mr Hill's own consumption and have to conclude at least part was for others.

There are also inconsistencies in Mr Hill's assertion that the 2,400 cigarettes and one third of the tobacco were for him. In interview Mr Hill asserted that he had brought in tobacco on four or five occasions whereas in her evidence Miss Hickin said it was only on one other occasion. Mr Hill told the officer he got 100 cigarettes from a pouch. His claimed share of the tobacco would be 30 pouches – 3000 cigarettes. His claimed share of the importation would thus provide him with 5,400 cigarettes, just short of a three month supply at 70 per day rather then the one month's supply which was the answer he gave in interview. It would of course last for longer on his alternative figures of 40 to 50.

Looking at the importation as a whole, we do not accept that it was for the personal consumption of all three travellers in the stated shares. We do not believe any of the tobacco belonged to Miss Hill or Miss Hickin or that the entirety of it was for Mr Hill's personal use. There must in our view have been a commercial element, albeit a small one, to this purchase.

We also find it very difficult to accept Mr Hill's and Miss Hickin's explanation for their frequent trips abroad. Mr Hill's means were extremely limited. Miss Hickin had take home pay of £140 per week with saving of "not a lot". Their combined means were hardly going to support the purchase of a property (however run down) in France or even to make much of a contribution to a family funded purchase. Apart from production of the brochure, we were shown no evidence of property prices of any particular properties which they had in fact viewed. In fact no evidence in support of the assertion was tendered. We find it even more unlikely, on their limited budget that they would make so many trips just to look at properties. There was no explanation from Mr Hill of the very short duration of the trips or of the two back to back trips. We also find it inconsistent that Mr Hill in his evidence should say that he had travelled abroad between eight and ten times in the previous twelve months when in fact the vehicle had made thirteen crossings in less than two months. Miss Hickin had her own vehicle before this one and Mr Hill also owned a vehicle. We would have thought it more than likely that Mr Hill had made considerably more trips than the eight to ten he estimated. The short duration of the trips are not consistent with finding a property, looking at it and travelling back to the port. It is also most unlikely, given the long distances involved, they would make such frequent trips of such short duration. Surely they would wait until there were a number of properties to visit and then make one longer trip. We believe these trips must in the main have been shopping trips.

The Appeal Decision

At the time of seizure and the review decision, the Excise Duty (Personal Reliefs) Order 1992 provided that a traveller bringing excise goods into the UK in quantities in excess of a minimum indicative level had to satisfy the Commissioners that the goods were for own use, "own use" being defined as:

"own use includes use as a personal gift 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) his use shall not be regarded as own use for the purpose of this Order"

If the traveller failed to so satisfy the Commissioners the goods were treated as being held for a commercial purpose and UK duty became payable on them. At the time of seizure the limit for cigarettes was 800 and for tobacco 1 kilogram.

The definition of "own use" has been upheld (Customs and Excise Commissioners against the Queen (Hoverspeed Limited and Others)) 2002 EWCA Civ 1804. Following the decision in Hoverspeed, the Commissioners have now accepted that the burden of proof should not be upon the traveller to satisfy the Commissioners that the goods were not for commercial purposes but rather upon themselves to show that the goods were held for such a purpose.

The Commissioners are empowered by Section 49 CEMA to forfeit dutiable goods which have been imported or held without payment of duty and under Section 141(1)(b) any goods mixed, packed or found with the goods liable to forfeiture shall also be liable to forfeiture.

Section 152(b) CEMA 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 Finance Act 1994.

Against the above findings of fact we therefore now consider the appeal decision. Our jurisdiction is strictly circumscribed by Section 16(4) Finance Act 1994 which gives us only the power to review the reasonableness of the Commissioners' decision. Subject to the burden of proof to which we refer below, having heard Mr Richardson's evidence, we find that he has taken all relevant matters into account and not considered any irrelevancies and, subject again to the burden of proof, in no sense could it be said that his decision was one which no reasonable body of Commissioners could have reached. Mr Richardson, through no fault of his own, applied the incorrect burden of proof. This is an error of law which would normally render a decision unreasonable and thus fatally flawed. However, in the light of John Dee Limited v Customs and Excise Commissioners 1995 STC 941, if the decision, applying the correct burden of proof, would inevitably have been the same, the Tribunal can still dismiss the appeal. In this case we believe the outcome or the outcome on a rereview would be just the same. Our findings of fact were that at least a part of Mr Hill's goods were not for his own personal consumption. He has never argued that any part of it was a gift and it must therefore be assumed to have had a commercial purpose, albeit probably to a minor extent. Those goods which were not for personal use were liable to UK duty which was not paid. Those goods were therefore liable to forfeiture. The remainder of the consignment would become equally liable to forfeiture under Section 141(1)(b) CEMA.

Mr Hill's case throughout has been that the goods were for his own use. Mr Puzey submitted that in the light of Gora and Others v Customs and Excise Commissioners (Court of Appeal 2003 EWCA 525) it was not open to the Tribunal to consider this question. We accept Mr Puzey's interpretation of Gora. If a traveller does not serve a notice of claim under Schedule 3 CEMA within the statutory time limit or if condemnation proceedings do take place but the result goes against the traveller, the goods "shall be deemed to have been duly condemned as forfeited". It follows from this that the goods must have been deemed not to have been for personal use and this is not therefore an issue which can be reopened before the Tribunal. The Tribunal is not therefore concerned with the seizure of the goods, the only issue before the Tribunal being whether the Appellant has established that the decision not to restore the goods was one which the Commissioners could not have reasonably arrived at. As we have already said, although flawed because of the application of the incorrect burden of proof, any rereview would in our view arrive at exactly the same position. There was no challenge to the reasonableness of the Commissioners' policy which we do believe to be reasonable and correctly applied.

The appeal is therefore dismissed. We make no order as to costs.

LADY MITTING

CHAIRMAN

Release Date: 31/10/2003

Man/01/8195