United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E00684, [2004] UKVAT(Excise) E684

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Tanner v Customs & Excise [2004] UKVAT(Excise) E00684 (26 March 2004)

RESTORATION – Goods only seized – Goods alleged to have been hidden in van – Customs evidence confused and contradictory – Whether review decision based thereon reasonable – No – Further review directed

LONDON TRIBUNAL CENTRE

JOHN TANNER Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: ANGUS NICOL (Chairman)

SHEILA WONG CHONG FRICS

Sitting in public in Cardiff on 20 January 2004

The Appellant in person

Miss Eleni Mitrophanous, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004

DECISION

This is an appeal against a decision on review upholding an earlier decision not to restore certain excise goods imported by the Appellant and others. The goods in question were tobacco products which were seized by Customs and Excise at Dover on 15 September 2001. The case was unusual in that the Appellant's vehicle, though seized, was restored to him without condition on the day of seizure, only the goods being retained by Customs. It was a case which fell under the law as it was prior to the decisions in Lindsay and Hoverspeed, but no further review was directed in the light of those decisions.

The evidence

The Appellant had travelled to Belgium, together with three companions, Miss Carol Blake, Mr Ernest Morgan, and Mr S Reynolds, in a large van belonging to the Appellant. The body of the van was, we were told, some 15 feet long, excluding the cab. The cab had a driver's seat and a passenger's seat in front, and a double passenger seat behind them. When the back of the van was opened by Mr Rowe, one of the Customs officers concerned in the matter, it was seen to be filled with garden gnomes, and, indeed, the Appellant stated that the primary purpose of the trip to Belgium was to buy these gnomes (which had cost him some £5,000), which he intended to sell, his trade being that of a garden centre. There were also 12.5 kg of tobacco, and some 5,000 cigarettes, and 500 cigarillos in the van, and there was considerable controversy as to the circumstances of those goods being found, and as to what had been said by the Appellant when stopped by Mr Rowe.

We heard evidence from the Appellant and two of his passengers, Miss Blake and Mr Morgan. The Commissioners called the review officer, Mr A Johnston, and the two officers who had intercepted the Appellant and searched his van, who were Mr Paul Rowe and Miss Roxane Masters.

We heard from Mr Rowe and Miss Masters first, so that they could be released. Mr Rowe had made a witness statement, and swore to the truth of that statement which stood as his evidence in chief. In that statement he dealt first with the interception of the Appellant and the initial conversation. Having provided identifying documents, the Appellant was asked where he had travelled to and why, and said that he had been to Belgium to buy garden gnomes for his business. He was then asked if he had any excise goods, and at first answered "No." Mr Rowe then said, "No tobacco or cigarettes?" To which the Appellant answered that he had 800 cigarettes. In his statement, Mr Rowe said, "I then commenced a search of the vehicle. I found x 2 boxes of Golden Virginia hand rolling tobacco concealed under garden gnomes." The conversation continued:

"Rowe: Why didn't you tell me about the tobacco?

Tanner: I forgot, but I didn't mean to hide it from you.

Rowe: You have a box of tobacco concealed and not declared?

Tanner: No, it was simply packed in that way."

Mr Rowe said that he then seized the excise goods and the van, and later decided to restore the van as he considered it unproportionate to seize it and the gnomes bearing in mind the amount of duty evaded.

In his oral evidence Mr Rowe said that he opened the back of the van and searched it and found a box of tobacco concealed under the gnomes. He was unable to say how many gnomes he had removed from the van. He said that when he opened the van all he could see was garden gnomes. Having said that there were two boxes of tobacco, he could not say where the other one was. He could not remember if it was possible to see into the back of the van from the cab. He said that the gnomes were piled on top of the tobacco. He also said that Officer Masters had found the two boxes of tobacco and had pointed out to him that one of them was hidden under the gnomes. He said that he must have found the receipts somewhere in the van, but he could not now remember and he had not noted it in his notebook.

Miss Masters also made a statement. In it she said that she was present when "a quantity of tobacco was found by Officer Rowe in the bottom of the van, covered over with a quantity of garden gnomes. It was not possible to remove the box that the tobacco was in and the end had to be cut and the packets of tobacco extracted." In cross-examination by Mr Tanner, she agreed that there was a wire mesh between the back of the van and the cab. She said that the back of the van was filled to the top with figurines; she did not know whether any had been taken out of the van. She said that she could see the box from the front of the van. She did not know where the other box was, but thought it was in the seating area somewhere. She said that they extracted a pouch of tobacco through the mesh, through which she was able to get her hand. She agreed that she had written "Witnessed that 6 kg HRT was concealed at back of van under packages" at the end of Officer Rowe's notes. She could not remember where the other excise goods were.

Mr Laurence Johnston was the review officer. He had made two statements. In the first, made on 22 March 2002, he listed the information which he had used in carrying out his review, and mentioned that he was aware that only restoration of the goods was sought. He concluded by saying that he was satisfied that the decision to refuse restoration of the goods was correct and reasonable, and that he had considered every relevant matter and disregarded everything that was irrelevant. With his second statement, made on 13 May 2002, he produced a document listing the reasons for non-restoration of the vehicle, not the goods. In the statement, he stated that he had reviewed the decision not to restore the seized goods and vehicle, although restoration of the vehicle was not sought. At the end of this statement he said that in his review "I considered that in view of the false declaration of the amount of tobacco given by Mr Tanner to the Customs Officer and the steps taken by Mr Tanner to conceal some of the tobacco, then it would be reasonable to assume that the tobacco was destined for a commercial destination."

In his review letter, Mr Johnston set out what he termed the background, derived from the papers available to him. He set out the initial exchange, when the Appellant said that he had 800 cigarettes and made no mention of the tobacco. He said that the officer decided to search the vehicle and found a box of tobacco concealed beneath garden gnomes. This was, he said, witnessed by "a separate, impartial officer": that would be Miss Masters. The reasons for seizure given were, goods in excess of the guidelines, false declaration, and excise goods concealed. Mr Johnston then said, "From the information available to me, of those goods seized [the Appellant] owned 12.5 kilos tobacco and 800 cigarettes." Mr Johnston then set out the law and the Commissioners' policy regarding restoration.

At the beginning of the part headed "Consideration" in his review, Mr Johnston said "It is for me to determine whether or not the decision you are contesting on behalf of your client is one that a reasonable body of Commissioners could not have reached." We pause here to observe that that is not the function of a review officer. It is his task to consider the facts and all relevant matters and come to his own decision thereon. If consideration whether the Commissioners' decision was reasonable was all that he did, then his review is flawed. We therefore looked to see whether, having said that, Mr Johnston did in fact go on to consider all the relevant circumstances and make his decision on that basis. In his oral evidence, he said that his function was to come to a decision on the facts, and that that was what he had tried to do.

Mr Johnston went on to summarise the facts relating to the finding of the tobacco, witnessed, he said, by another officer "uninvolved in the matter". In fact it was clear to us that Miss Masters was as much involved in the matter as was Mr Rowe. Mr Johnston then said that he agreed with Mr Rowe that the Appellant had made a false declaration in a deliberate attempt to deceive; he did not accept that the Appellant had forgotten the tobacco, having paid several hundred pounds for it only a few hours before.

Then Mr Johnston stated that "in the opinion of two officers" tobacco was concealed beneath garden products in the back of the vehicle. Once again he described one of the officers as "impartial": the significance of this was not clear, since it is to be hoped that all officers taking part in such a matter would be impartial. But the opinion of the officers is of no relevance. It is a matter of fact: either the tobacco was concealed or it was not. There is no room for a subjective view by the officers. Mr Johnston continued: "I understand that Mr Tanner either loaded the vehicle himself or was present when it was loaded and he told the officer that he had packed the tobacco himself. I conclude that he was responsible for concealing the tobacco."

In his oral evidence, Mr Johnston said that he had contacted Mr Rowe to ascertain that all the tobacco belonged to the Appellant and that the cigarettes and cigarillos belonged to his three companions. Mr Rowe was recalled to deal with this point, and said that he had the impression that that was the way the goods were distributed among the four of them. He also said that he had noted down all that had been said.

The Appellant said that he had been travelling back and forth between Wales and Belgium for some ten or twelve years, and must have made between 120 and 150 such trips. He had been stopped on about 50 or 60 occasions, on each of which his van was searched. On the occasion relating to this appeal, 15 September 2001, when the officer stopped his van, he opened the back but did not search inside the van. The cigarettes were in full view of anyone looking in. The body of the van was totally packed with ornaments. One box of tobacco was in the top of the cab on a shelf; it was visible as soon as anyone opened the back doors of the van, beyond the gnomes, about 13 or 14 feet from the back. The other was at the back of the cab on the driver's side, and could easily be seen by anyone looking into the cab. It was not hidden. There was a two-inch mesh at the back of the cab, to stop the goods packed in the body of the van moving forward into the cab. The box of tobacco was on the cab side of that mesh. It would not have been possible for Miss Masters to put her hand through the mesh to open the box.

The Appellant disagreed with Mr Rowe's evidence. When asked, the Appellant said that he told Mr Rowe that he had 800 cigarettes and a quantity of tobacco, and handed him a clip-board of receipts, saying "Everything is on there." Mr Rowe had not asked him questions about it, since everything was in full view. He did not ask why tobacco had been concealed. When he had opened the back doors of the van and saw the box in the top of the cab he said "You've been a bad boy", and called Miss Masters over. She went to the front of the van. He said that he had not said that he had forgotten the tobacco, nor did he say "It was simply packed that way", since it was not concealed. He had not cross-examined Mr Rowe on the basis that he had told lies, because Mr Rowe had simply said that he couldn't remember whenever asked anything. Nor had he instructed his solicitor to raise the matter in correspondence, as he wanted to get the matter to the Tribunal.

The Appellant said that he would have had 50 or 55 pouches of the tobacco. It was the intention that it would be divided among the four of them. He said he thought that Customs knew that anyway, since they had all signed a form (the seizure information) to say that it belonged to all of them. He said that he always put receipts on a clip-board, and handed them to the officers.

One of the passengers, Mr Ernest Morgan, gave evidence. He said that he had been to France and Belgium some 80 or 90 times, often with the Appellant. He had never seen him hide anything in his van. He said that one of the boxes of tobacco was just behind the seats in the cab, and the other up above in the top of the cab. There were two rows of seats in the cab, and he was sitting in the rear seat. The box was in front of the mesh behind him. He was not sure who had put the tobacco in the van, but thought that it was the Appellant. The mesh was green, he said, and small. The tobacco was to be shared among the four. Mr Morgan said that they had all chipped in for their allowances, and that Mr Tanner had gone in and bought it, and shoved it in the van. He said that he used to smoke about 80 a day, and stopped when he got cancer, which was about two years ago now.

Mr Morgan said that when they were stopped he had not heard any of the conversation. He said that the clip-board was handed out, though he did not know what was on it. They were asked to get out of the cab. Miss Masters climbed into the cab, looked around, and saw the tobacco. Mr Morgan said that he saw her pulling the cigarettes and things out. He knew that they were going to confiscate them, but he did not know why.

Miss Blake said that she had been to France or Belgium about 70 or 80 times with the Appellant. She had never hidden anything in the van nor seen the Appellant hide anything. On this occasion, she said, one box of tobacco was in the top of the cab and the other just behind her in the back of the cab, on the cab side of the mesh. Miss Blake drew a rough sketch plan of the cab. This shewed that there were two seats in the front of the cab and two in the back. The back seats were towards the passenger's side. She was sitting in the right-hand rear seat. To her right there was a space from behind the driver's seat to the back of the cab, along which there was room to walk. To the right of that again was a cupboard. To the rear of the cupboard the wine that they had bought was stacked, and beside that was one of the boxes of tobacco. Behind that again was the wire mesh dividing the back of the van from the cab. When they had bought the tobacco, she said, it had all been shoved in the back of the van. When they went to get the gnomes the tobacco was moved out into the cab so that the gnomes could occupy the back. She could not remember whether she had put one of the boxes into the cab. She said that she would normally come hack with 40 or 50 pouches for herself, and some for her boyfriend. She also had 1,000 cigarettes. She normally smoked 20 a day.

Miss Blake said that she had heard a little of the conversation, and that it was she who had handed the clip-board out to the officer. She had heard him say to the Appellant that he was going to confiscate the goods because the Appellant had lied and had not told him what was in the van. The Appellant said that he had not lied, and Mr Rowe had replied "If you don't shut up I will confiscate the van."

The law

Since the date of seizure in September 2001 the law in this area has undergone considerable changes, in the wake of two Court of Appeal decisions, those in Customs and Excise Commissioners v Lindsay [2002] STC 588, [2002] 1 WLR 1766, and Customs and Excise Commissioners v The Queen (on the application of Hoverspeed Ltd and others) [2003] STC 1729. In the Divisional Court in Hoverspeed ([2002] 3 WLR 1219) from which the case went to the Court of Appeal, it was held that the imposing upon an appellant, by the Excise Duties (Personal Reliefs) Order 1992 ("the 1992 Order") of the burden of proving that imported goods in excess of the indicative levels were not held for a commercial purpose was incompatible with the Excise Directive 92/12/EEC. Following that decision the 1992 Order was revoked. It was also held that it is for the Commissioners to prove that such goods are imported for a commercial purpose. What is meant by "a commercial purpose" was discussed in both Lindsay and Hoverspeed. In the latter case, at paragraph 65, the Court of Appeal held,

"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."

The effect is, therefore, that it is for the Commissioners to prove, on the balance of probabilities, that the goods were imported by this Appellant for a commercial purpose. In doing so they must consider paragraph (1B)(e) of the Tobacco Products Regulations 2001 (as amended) which has replaced the 1992 Order.

That subparagraph provides as follows:

"(e) Without prejudice to subparagraphs (c) and (d) above, in determining whether tobacco products are held or used for a commercial purpose by any person regard shall be taken of—

(i) that person's reasons for having possession or control of those products,

(ii) whether or not that person is a revenue trader (...),

(iii) that person's conduct, including his intended use of those products or any refusal to disclose his intended use of those products,

(iv) the location of those products,

(v) the mode of transport used to convey those products,

(vi) any document or other information whatsoever relating to those products,

(vii) the nature of those products including the nature and condition of any package or container,

(viii) the quantity of those products, and in particular, whether the quantity exceeds any of the following quantities—

3,200 cigarettes

4,000 cigarillos ...

200 cigars

3 kilogrammes of any other tobacco products

. . .

(ix) whether that person personally financed the purchase of those products,

(x) any other circumstance that appears to be relevant."

The Tribunal's jurisdiction is set out in section 16(4) of the Finance Act 1994:

"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 persons 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 a 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) . . ."

The restoration of goods (or vehicles) falls within the definition of "ancillary matter" as defined in Schedule 5 to the Act.

In order to determine whether the review decision not to restore is reasonable, the Tribunal looks at the evidence, for two reasons. First, if the evidence were to shew that the seizure was not lawful, the Commissioners would have had no power to seize and therefore the discretion to refuse restoration could not have arisen. Secondly, if the review decision is based upon evidence which has been erroneously reported to the review officer, or that evidence contains significant omissions, that will have a bearing upon the "reasonableness" of the decision against which the appeal is brought. In this context, "reasonable means reasonable in the sense in which that word was used in Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223. In that case, Lord Greene MR said, at page 229:

"A person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may be said, and often is said, to be acting 'unreasonably'."

That passage was cited in Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1981] AC 22 by Lord Lane, who then said,

"[The Tribunal] could only properly [review the discretion] if it were shown that the Commissioners had acted in a way in which no reasonable panel of Commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight."