United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E693, [2004] UKVAT(Excise) E00693

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Wilberforce v Customs and Excise [2004] UKVAT(Excise) E00693 (13 April 2004)

EXCISE DUTY — Restoration of seized excise goods and Iveco van––jurisdiction of the tribunal– no jurisdiction to rule on legality of seizure and forfeiture –full fact finding jurisdiction including finding facts on commercial use – facts found do not support the findings of the review–– respondents overlook ownership of the Iveco van -- was the decision not to restore the excise goods and Iveco van reasonable – no – Appeal allowed.

MANCHESTER TRIBUNAL CENTRE

MR ANTHONY WILBERFORCE Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Michael Tildesley (Chairman)

Mr John Kippest BA (Member)

Sitting in public in Birmingham on 10 December 2003

Derek Payne of Grove Business Services for the Appellant

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

DECISION

The Appeal

1. The Appellant is appealing against the decision on review of the Respondents dated 23 January 2003:

a. not to restore excise goods: 24 kilograms of hand rolling tobacco, 10,780 cigarettes, 250 cigars, 959.5 litres of beer and 36 litres of wine.

b. not to restore the motor vehicle, Iveco Van registration number S439 VOR.

The Grounds of the Appeal

2. The grounds of Appeal were set out in the Notice dated 7 February 2003 which states that

"All the excise goods seized were for the personal use of Mr Wilberforce and his travelling companion Mr Hind or to be given away to family and friends. Enquiries had been of the Customs helpline prior to the departure and the Appellant had been advised that he could import as much as he liked as long as it was not for sale or bought using money provided by another person".

The Authorities

We were referred to the following authorities:

Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231

Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766

R (Maudie) v Dover Magistrates' Court [2003] EWCA (Civ) 237

The Commissioners of Customs and Excise v Ian Newbury [2003] EWHC 702 (Admin)

Gascoyne v Commissioners for Customs and Excise [2003] 2WLR 1711

Balbir Singh Gora and others v The Customs and Excise Commissioners [2003] 3 WLR 160

The Commissioners of Customs and Excise v Dickinson [2003] EWHC 2358 (Ch)

Our attention was drawn to the following decision of the VAT and Duties Tribunal:

William Wilkinson v The Commissioners of Customs and Excise (2003) EDN/02/8024.

The Issues

The function of the Tribunal is to determine whether the Respondents' decision not to restore the excise goods and the motor van was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable the decision maker must have considered all relevant matters and must not have taken into consideration irrelevant matters.

On 12 September 2002 the Appellant and his passenger, Mr Hind were stopped by Customs Officers at the UK Control Zone (Tourist) at Coquelles, France. The Customs Officers seized excise goods purchased equally between the Appellant and Mr Hind and the motor van driven by the Appellant. The Respondents have refused subsequently to restore the goods and the motor van to the Appellant. Mr Payne on behalf of the Appellant contended that the Respondents' refusal to restore the goods and motor van was unreasonable because the Appellant and Mr Hind had purchased the excise goods for their personal use. The issues for determination in this Appeal are:

a) Can Mr Hind be joined as an Appellant in this Appeal?

b) Does the Tribunal have jurisdiction to making findings of fact on whether the excise goods were held for personal use?

c) Whether the Respondents' decision not to restore the excise goods and the motor van was reasonable?

Can Mr Hind be joined as an Appellant in this Appeal?

Mr Payne applied to amend the Notice of Appeal to include Mr Hind as the second Appellant. He submitted that the Respondents' notice of seizure of the excise goods was in the joint names of Mr Wilberforce and Mr Hind. The seizure information document was addressed to Mr Hind at his home address. In Mr Payne's opinion it was apparent throughout that Mr Wilberforce's requests to the Respondents seeking restoration of the excise goods incorporated like requests on behalf of Mr Hind.

Mr Puzey for the Respondents opposed the Application. He was of the view that there had been no request from Mr Hind seeking restoration of the goods. Mr Puzey referred to the correspondence from Mr Payne which in his view was on behalf of Mr Wilberforce alone. The Respondents' Officers shared the same interpretation of Mr Payne's correspondence with the result that their decisions related only to Mr Wilberforce. Mr Puzey drew the Tribunal's attention to section 16(2) of the Finance Act 1994 which provides that the Tribunal can only entertain an Appeal from a person who has requested a review of the Respondents' refusal to offer restoration. As Mr Hind had not put in a request for a review, he has no right of Appeal and cannot be joined with the Appellant in the Notice of Appeal.

We agreed with Mr Puzey's analysis of the legal position and refused Mr Payne's application to amend the Notice of Appeal. We, therefore, proceeded on the basis that we were dealing with just Mr Wilberforce's Appeal against non restoration of excise goods and motor vehicle. We understand that Mr Hind was still entitled to submit a request for restoration of the excise goods, which was not contested by Mr Puzey on behalf of the Respondents.

Does the Tribunal have jurisdiction to making findings of fact on whether the excise goods were held for personal use?

The Submissions

Mr Payne for the Appellant contended that there was no evidence to support a finding of commercial intention on the part of the Appellant in respect of the excise goods brought into the United Kingdom on 12 September 2002. The Respondents, therefore, had no legal basis for seizing the excise goods. To support his contention Mr Payne called evidence which attempted to establish that the excise goods were for the personal use of the Appellant.

Mr Puzey on behalf of the Respondents submitted that the Tribunal as a matter of law did not possess jurisdiction to rule on whether goods seized from the Appellant were held by him for his own personal use as opposed to being held for commercial purposes. In his view the Tribunal's jurisdiction was entirely derived from and defined by statute. Under section 16(4) of the Finance Act 1994 the Tribunal has the power to make orders in relation to a decision of the Commissioners to refuse restoration of goods and a vehicle pursuant to section 152(b) of the Customs and Excise Management Act 1979 (hereinafter referred to as the 1979 Act), "where the Tribunal is satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it". The Magistrates' Courts have power under the 1979 Act to determine whether the goods have been lawfully seized. A person wishing to invoke the powers of the Magistrates' Courts serves a notice to that effect on the Commissioners within one month of the seizure. If no notice is served within the required time limit, the goods seized "shall be deemed to have been condemned as duly forfeited".

An aggrieved party whose goods have been seized may seek a hearing before the Magistrates' Court under the 1979 Act and or request the Commissioners to restore the goods under section 152(b) of the 1979 Act. If the Commissioners refuse restoration, the party has the right of Appeal to the Tribunal. There is no time limit for submitting a request for restoration under section 152(b).

Mr Puzey submitted that the lawfulness of the seizure of the goods must have already been determined prior to any decision by the Tribunal in a restoration Appeal. This was implicit from the regime of the time limits for the respective avenues of relief before the Magistrates and the Commissioners. Also the Commissioners have no exercise of discretion under s152(b) unless the goods have been lawfully seized. Mr Puzey's view was reinforced by the Court of Appeal decision in Gora which made clear that the Tribunal did not have jurisdiction to reconsider the legality of seizure. The decision in Gora made good sense otherwise it would allow the aggrieved party a choice of fact-finding Tribunals and effectively give the Tribunal appellate jurisdiction over Magistrates' decisions through a non-statutory route. Mr Puzey, therefore, concluded that to give the Tribunal jurisdiction to make findings of fact on personal/commercial use was in reality reopening the issue about the legality of the seizure which could not be determined by the Tribunal under Statute.

Mr Puzey in his skeleton argument referred to the decision in Dickinson, where Mr Justice Peter Smith appeared to hold that the Tribunal in restoration Appeals can examine the issue of private use. Mr Puzey considered that the decision was ambiguous because Mr Justice Peter Smith earlier in his judgment appeared to acknowledge that the Gora decision precluded the Tribunal from ruling on the question of private use. Mr Puzey challenged Mr Justice Peter Smith's analysis about whether injustice would follow where an aggrieved party who failed to issue a notice of claim to invoke the powers of the Magistrates was thereafter precluded from arguing personal use before the Tribunal. Further Mr Puzey doubted whether Mr Justice Peter Smith's reasoning regarding forum shopping countered the Court of Appeal's point in Gora that there was a division of jurisdiction between the Tribunal and the Magistrates' Courts. For these reasons Mr Puzey submitted that the decision in Gora was to be preferred to that of Dickinson. Mr Puzey suggested that the Tribunal's approach should be that adopted in the VAT and Duties Tribunal decision of Wilkinson. Here the Tribunal declined to reconsider the issue of personal versus commercial use, instead it concentrated on the reasonableness of the decision not to restore. In exercise of its supervisory function the Tribunal would with the assistance of evidence consider whether the Customs and Excise investigation was inadequate, incomplete or did not justify the conclusions reached.

The Legislative Framework for the Jurisdiction of the Tribunal and Magistrates' Court

Section 49 of the 1979 Act provides that goods which are imported without payment of duty are liable to forfeiture. Section 124 provides that where imported goods have been relieved from duty on importation and any conditions connected with the relief have not been complied with, the goods shall become liable to forfeiture. Section 141(1)(a) provides that where a thing has become liable to forfeiture, then any vehicle used for the carriage of that thing is also liable to forfeiture. Section 139(1) provides that anything liable to forfeiture may be seized by a Customs Officer.

Paragraph 1 of Schedule 3 of the 1979 Act provides that Customs and Excise shall give notice of seizure to any person who, to their knowledge, was at the time of the seizure the owner or one of the owners. Paragraph 3 provides that if a person claims that anything seized as liable to forfeiture is not so liable, he must give notice of his claim in writing to Customs and Excise within one month of the date of the seizure. Paragraph 5 provides that, if no notice has been given within one month, then the thing is deemed to be condemned as forfeited. Paragraph 6 provides that if notice has been given within that month, then Customs and Excise must take proceedings for the condemnation of the thing by the Magistrates' Court, "and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited". Paragraph 11 provides that either party may appeal against the decision of the Magistrates' court to the Crown Court.

Section 152(b) of the 1979 Act provides that Customs and Excise may, as they see fit, restore subject to such conditions if any as they think proper, anything forfeited or seized. Section 14 of the Finance Act 1994 (hereinafter referred to as the 1994 Act) sets out the framework for reviewing specific decisions of Customs and Excise as defined in section 14(1). Section 14(1)(d) includes any decision specified in schedule 5 of the 1994 Act. Paragraph 2(1)(r) of Schedule 5 includes any decision under section 152(b). Section 14(2) provides that any person who has been affected by one of the decisions specified in section 14(1) may by notice in writing to the Commissioners for Customs and Excise require them to review that decision. Section 15 describes the powers available to the Commissioners on review of a decision. Section 16(1) of the 1994 Act provides that an Appeal shall lie to the Tribunal against a decision of the Commissioners on review. Section 16(2) provides that an Appeal under section 16(1) shall not be entertained unless the Appellant is the person requesting the review.

Section 16(4) limits the Tribunal's jurisdiction on appeal in respect of reviews of decisions dealing with ancillary matters. Section 16(8) defines ancillary matters as those specified in Schedule 5 which includes decisions on restoration of goods and vehicles seized. Thus the powers of the Tribunal under section 16(4) are:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the 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;

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 that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future."

The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown 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".

The above analysis of the legislative provisions make it clear that all matters concerned with forfeiture and seizure are not matters for the Tribunal but for the Magistrates' Court and on appeal the Crown Court.

The Authorities

R (Maudie) v Dover Magistrates' Court [2003] EWCA (Civ) 237 was principally concerned with whether condemnation proceedings before the Magistrates' Court were civil or criminal proceedings. However, Lord Justice Laws made salient comments upon the limits of the jurisdiction of the Magistrates in these type of proceedings:

"The owner's blameworthiness or otherwise… is not of itself an element in what has to be proved or not proved in condemnation proceedings. Under paragraph 6 of schedule 3 of the 1979 Act, the court is only concerned to decide whether the goods were liable to seizure. Liability to seizure may arise in a whole series of circumstances, many of which will not involve blameworthy conduct at all. That was the case in AGOSI and Air Canada. ….the driver of the car in which the goods have been placed may on particular facts himself be innocent of any intention to bring in goods for commercial purposes. It is critical to concentrate on the condemnation proceedings as opposed to other powers of the Commissioners" (R (Maudie) v Dover Magistrates' Court [2003] EWCA (Civ) 237, paragraph 34)."

In paragraph 35 Lord Justice Laws referred to the Tribunal's jurisdiction on restoration appeal as "being drawn widely".

The Court of Appeal in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766 held that the policy of non-restoration was appropriate for those who smuggled excise goods in order to sell them at a profit. However, where goods were imported for social distribution to family and friends, the principle of proportionality required that each case should be considered on its own particular facts including the scale of importation, whether it was a first offence, whether there was an attempt at concealment or dissimulation, the value of the vehicle and the degree of hardship. At paragraph 71 Lord Justice Judge observed that

"There is usually a marked distinction between those who smuggle alcohol, cigarettes and tobacco for profit and those who, without profit, smuggle amounts in excess of the permitted limits for their personal use and occasional distribution to family members and close friends. The vehicles used by those whose activity falls into either category are liable to be seized".

The Lindsay decision reinforced the point that the issues before the Magistrates and the Tribunal were different and that the facts relevant to those issues may also differ. As Lord Justice Judge noted there was no difference between the car of a traveller who smuggled for profit and the car of a traveller who smuggled for social distribution for the purposes of determining the legality of the seizure before the Magistrates. However, those same facts will be critical to the jurisdiction of the Tribunal when deciding whether the Commissioners' decision to refuse restoration was reasonable or not.

We note that the view of Lord Justice Judge has been tempered by the decision in The Commissioners of Customs and Excise v Ian Newbury [2003] EWHC 702 (Admin) which was not cited before the Tribunal. That decision makes clear that the Magistrates and The Crown Court were entitled in condemnation proceedings to reach their own independent judgment about whether forfeiture would be so disproportionate as to be breach of a person's right under Article 1 of Protocol 1 in the Convention.

Lindsay is also of interest in confirming that the Tribunal has no power to order restoration and or compensation on finding that the review decision was unreasonable.

Mr Justice Neuberger expressed the opinion in Gascoyne v Commissioners for Customs and Excisel [2003] 2WLR 1711 at paragraph 117 that the Tribunal and the Magistrates have the jurisdiction to make a " judicial determination, effectively de novo, as to whether or not the goods concerned were for own use or held for commercial purposes". Mr Justice Neuberger described this as a determination of the primary liability of the Appellant, once that has been resolved the Tribunal's function was limited on the issue of restoration to that of a review based on "Wednesbury principles" Thus Mr Justice Neuberger at paragraph 126 said:

"Had the Tribunal decided that, in light of the evidence, Mr Gascoyne had imported the goods for own use…..the Tribunal could have exercised its powers under the statutory provision to require the Commissioners to carry out a fresh review, and to do so in accordance with the findings made by the Tribunal".

Mr Justice Neuberger added that the Tribunal's powers include a direction that the fresh review be carried out by a different officer from the one who conducted the original review.

Lord Justice Pil in the Court of Appeal decision of Balbir Singh Gora and others v The Customs and Excise Commissioners [2003] 3 WLR 160 at paragraphs 55-58 stated that the Tribunal had no jurisdiction to reconsider the condemnation of goods as forfeited, that was a matter for the Magistrates. Thus it was not open to the Tribunal to determine as a question of fact whether the goods were lawfully seized or whether duty has been paid on the goods. However, in paragraphs 37 –39 Lord Justice Pil considered in detail the jurisdiction of the Tribunal. The Commissioners for Customs and Excise conceded that it was proper for the Tribunal to examine the policy adopted by the Commissioners in restoration cases against the principles of proportionality. Further the Commissioners accepted that Appellants in restoration proceedings were entitled to raise the issue of blameworthiness. Counsel for the Commissioners then submitted that

"Strictly speaking it appears that under section 16(4) of the 1994 Act the Tribunal would be limited to considering whether there was sufficient evidence to support the Commissioners' finding of blameworthiness. However, in practice, given the power of the Tribunal to carry out a fact finding exercise, the Tribunal could decide for itself this primary fact. The Tribunal should then go on to decide whether in the light of its findings of fact, the decision on restoration was reasonable".

Lord Justice Pil accepted the Commissioners view of the jurisdiction of the Tribunal:

"subject to doubting whether, its fact-finding jurisdiction having been accepted, it should be limited even on the "strictly speaking" basis mentioned at the beginning. That difference is not, however, of practical importance because of the concession and statement of practice made by the Commissioners later in the sub paragraph".

Mr Justice Peter Smith in The Commissioners of Customs and Excise v Dickinson [2003] EWHC 2358 (Ch) observed that the Lindsay and Gascoyne cases were not cited to the Court of Appeal in Gora and that its decision in respect of deemed forfeiture was obiter.

Mr Justice Peter Smith considered specifically the issue about whether the Tribunal could make findings of fact on personal use of the excise goods brought in. At paragraph 45 of the judgement he said:

"Does that mean that Mr Dickinson is unable in restoration proceedings to give evidence of own use to seek the restoration remedy? It would be very odd if evidence of non-profit commercial use was capable of being received on the restoration proceedings except the one based entirely on his own use. Take this example. Mr Dickinson said he bought the goods entirely for the purposes of redistribution between friends and relatives at no profit, he would undoubtedly be able to invoke the procedure even if the forfeiture notice had not been challenged, conversely, if some were for his use and others for friends he could only challenge pro tanto presumably"

At paragraph 49 he said

"I have come to the conclusion that it is open to Mr Dickinson in the restoration proceedings to raise the issue of private use for the purposes of seeking to invoke the discretionary procedure of restoration. That does not involve a challenge to the forfeiture, which can only be done per Gora in condemnation proceedings. I see nothing difficult in that. First it enables the matters to be dealt with whichever course of action is taken by the person seeking restoration of his goods. Otherwise there would be an injustice. The failure to issue the notice would preclude Customs and Excise and the Tribunal on review from considering restoration when evidence is later produced which shows that it was an own purchase. Second of course the procedures are different………the restoration procedure is discretionary, whereas the challenge to the forfeiture is not. In the former case Mr Dickinson would be seeking a review of the decision of the Customs and Excise, and one factor in that exercise would be the fact that the transaction he establishes was not for profit".

Mr Justice Smith also noted the differing powers between the Tribunal and the Magistrates:

"The Tribunal cannot order restoration; it can only order a review. In condemnation proceedings he will, if he establishes his case, be entitled to the return of his goods (or compensation) as of right".

Conclusions on the Jurisdiction of the Tribunal

The Magistrates and the Crown Court are concerned solely with the issue of the legality of the seizure and forfeiture subject to the qualification that the forfeiture must not be disproportionate. The Tribunal's jurisdiction is drawn more widely focussing on the issue about the reasonableness of the Commissioners' decision not to restore excise goods and the vehicles carrying them or to offer restoration on terms (Maudie and Newbury).

The Tribunal has no jurisdiction to determine the legality of the seizure and forfeiture (Gora and Dickinson).

If the Tribunal finds that the Commissioners' decision is unreasonable it cannot order restoration of the goods instead it is limited to ordering a review of the decision or declaring that the decision is unreasonable. In contrast if the Magistrates or the Crown Court find that the seizure and forfeiture is unlawful the applicant is entitled to return of the goods (Dickinson, Lindsay and Gascoyne)

The Tribunal has a full fact finding jurisdiction to determine the primary facts upon which the Commissioners base their decision not to restore. The Tribunal is not limited to considering whether there is sufficient evidence to support the Commissioners' findings (Gora and Gascoyne).

The Tribunal is entitled to make findings of fact on blameworthiness (Gora), personal use (Dickinson and Gascoyne), social distribution to friends and family (Lindsay) and the proportionality of the action taken by the Commissioners against the contravention (Lindsay and Gora).

The Tribunal should then decide in the light of its findings of fact, whether the decision of the Commissioners not to restore is reasonable applying the Wednesbury principles (Gora and Gascoyne).

We are, therefore, of the view that the authorities support the proposition that the Tribunal has a fact finding jurisdiction to determine the primary facts upon which the Commissioners base their decision about restoration. As part of that jurisdiction the Tribunal is entitled to make findings of fact on personal use which is one of the factors by which the reasonableness of the Commissioners' decision can be assessed. A finding on personal use does not in our view involve a challenge to the legality of the original seizure and forfeiture. Nor does it represent a substitution by the Tribunal of its own view of the merits of whether the goods should be restored or not because the Tribunal's powers are restricted to sending the matter back to the Commissioners for them to determine in the light of the Tribunal's findings.

We are not bound by the Tribunal decision in William Wilkinson v The Commissioners of Customs and Excise (2003) EDN/02/8024. We consider that the Tribunal in that decision misinterpreted its fact finding jurisdiction.

The Evidence

The Tribunal heard evidence from Mr Wilberforce and Mr Hind for the Appellant and from Mr Polatch for the Respondents. A bundle of documents was presented to the Tribunal.

On 12 September 2002 at the UK Control Zone (Tourist), Coquelles, France Mr Redman, Customs and Excise Officer, stopped an Iveco Van registration number S439 VOR. The vehicle was being driven by the Appellant with Mr Hind as the passenger. The Appellant explained that they had been to France and Belgium and the vehicle belonged to him but registered to his business. There were two boxes of tobacco each, a box of cigarettes each and a pallet of beer consisting of about 80 cases representing one year's supply. The Appellant told the Customs Officer that he travelled abroad about a year ago to purchase excise goods, bringing in two boxes. He had been stopped by Customs but then let go. Mr Hind had not crossed the Channel before to purchase excise goods.

Mr Vowles, Customs and Excise Officer, interviewed the Appellant who stated that the excise goods were split equally between himself and Mr Hind. They purchased the cigarettes and tobacco from Eastenders, Belgium and the ale from Eastenders in France. The tobacco and the cigarettes were for himself and his wife. He intended to give five to six cartons of cigarettes and a couple of pouches of tobacco to his mother. He smoked about 40 cigarettes a day consisting of roll-ups and cigarettes. He used about five or six pouches of hand rolling tobacco a week. His wife smoked only cigarettes about 15 – 20 a day. He expected the tobacco and cigarettes to last about ten months. The Appellant explained that the beer was for himself and his wife. He also intended to give three or four cases to his mother and brother and hold a couple of parties. No parties had yet been organised but a get together would be arranged around Christmas time. The combined cost of the tobacco and cigarettes was £2,046.40 and the beer and wine cost £919. The Appellant paid for the goods in cash. He and Mr Hind paid for the goods at the same time. The Appellant handed over the money for the beer, Mr Hind had given him the money beforehand. They both handed over the money for the tobacco. The Appellant explained that they had both drawn out £1,500 to spend on excise goods. He owned a valeting company earning about £25,000 per annum. He had financial commitments of £750 a month for mortgage, £500 a month for bills and £285 a month for his car. He did not have any savings and he funded the purchase by transferring £1,000 from his credit card. The Appellant had booked the trip about four weeks ago. He crossed the Channel about 111/2 months ago, October he thought. He had travelled with his brother in a car bringing back 20 cases of Stella, about 3 boxes of tobacco, about 4,000 cigarettes and about 8 to 10 cases of wine. He did not have any of the cigarettes and tobacco left. They were stopped by Customs and Excise Officers who were satisfied that the goods were for the personal use of the Appellant and his brother. The Appellant also told them that they would be back in one year's time. He was aware of the guidelines and that it was an offence to sell imported goods without first paying duty. The Appellant told the Officer on 12 September 2002 that he had telephoned the Respondents' helpline about four weeks prior to the trip. The helpline had advised him if it is for your own use then that's fine. He asked them about giving it to relatives and the helpline said that was fine.

Another Customs and Excise Officer interviewed Mr Hind who stated that half the excise goods were his. He confirmed that they purchased the goods at Eastenders spending about £1,500 each. They paid in cash and paid for everything together, although he could not recall who actually handed over the money. Mr Hind stated that the goods were for himself and his girlfriend and he was going to smoke and drink them. He smoked both roll-ups and cigarettes about 40 a day. He expected the cigarettes and tobacco to last him one year. He had no idea how long a pouch of tobacco would last him nor how many roll-ups he got from a single pouch of tobacco. It cost him about £5.50 or something around that to buy a pouch of hand rolling tobacco in the United Kingdom. The beer would last about one year, he drank about three or four cans a night and he intended to have a party or two. Mr Hind owned property which he rented out receiving about £600-£700 a week. He had also recently sold his business for £100,000. This was Mr Hind's first cross Channel trip for the purpose of buying excise goods. He had recently been to Ibiza with two friends, bringing back 600 cigarettes and seven bottles of wine. He had been stopped by Customs and Excise Officers about nine months ago in Southampton driving back in a wagon from Lisbon. Nothing was found. Mr Hind knew Mr Wilberforce through business. Mr Wilberforce suggested the trip, made the necessary arrangements and paid for the fuel.

The Customs Officers were not satisfied that the excise goods had been imported for own use. They seized 959.5 litres of beer, 36 litres of wine, 24 kilogrammes of hand rolling tobacco, 10,780 mixed brand cigarettes and 250 cigarillos and the Iveco Van, registration number S439 VOR. The reasons for seizure were:

• Large quantity of excise goods

• Knowledge of the law

• Implausible consumption rate

• Inconsistency with previous travel

• Implausible that Mr Hind did not know his consumption rate or the cost of tobacco in the UK

On 16 September 2002 Mr Payne of Grove Business Services wrote to the Respondents' Post Seizure Unit requesting return of the excise goods and the motor van. Mr Payne confirmed that the Appellant had contacted the Respondents' helpline before travelling to explain the purpose of the trip and to find out what they were entitled to purchase. Mr Payne repeated that this was their "once a year trip" to the Continent to purchase supplies of tobacco, goods and alcohol and they were acting totally within their legal rights as EU citizens. He pointed out that the van was on lease hire from Cattles Commercial Leasing who may well be approaching the Respondents separately for restoration.

The Post Seizure Unit refused restoration on 4 December 2002 on the following grounds:

• The vehicle was used for transportation of a large quantity of excise goods

• Not considered reasonable for the Appellant to purchase a large quantity of excise goods when 12 kilograms of hand rolling tobacco had been bought in December 2001 and were expected to last until February 2003.

• Not considered reasonable for Mr Wilberforce not to know when he last travelled which was just before Christmas

• Not considered reasonable for Mr Hind not to know his consumption rate was or not to know how much he would pay for a pouch of tobacco within the UK.

• Not considered reasonable for Mr Wilberforce to transfer £1,000 cash from his credit card to pay for the tobacco.

On 6 December 2002 Mr Payne requested a formal review of the decision not to restore the excise goods. He accepted that there were significant quantities of excise goods in the vehicle but repeated that this was a "once a year trip" to buy enough goods to meet their needs for the year. The Appellant contacted the Respondents' helpline and was told categorically that he could bring back unlimited quantities provided no money was advanced by other people and none of the goods would be resold. Mr Payne considered that the Respondents were relying on flimsy inferences from the Appellant's and Mr Hind's responses to questions to justify their view that it was a commercial transaction.

On 23 January 2003 Mr Polatch conducted a review of the Commissioners' decision not to restore the excise goods and the Iveco Van. He set out the Respondents' policies on the restoration of excise goods and private motor vehicles, which were:

Restoration Policy for Excise Goods

"It is this Department's general policy that seized excise goods are not restored. However, each case is examined on its merits to determine whether or not restoration may be exceptionally offered. In conducting this examination the presence of any one of the following factors will militate against restoration:

any evidence of previous smuggling or failure to comply with legal requirements;

any evidence that the person involved knew what they were doing was wrong;

any evidence that the person was paid to make the journey;

large quantities of goods which might damage legitimate trade;

any evidence that the goods were for a commercial purpose".

Restoration Policy for Private Vehicles

"With effect from 14 July 2000 the Commissioner's normal policy regarding privately owned vehicles used for the improper importation of excise goods is that they will not be restored. However, as from the 18 April 2002, restoration of vehicles will be considered where the traveller can demonstrate that the goods were to be supplied at purchase price and not for profit and also, as from 29 October 2002, for first offence involving small quantities of excise goods. Every case is considered individually to determine whether the affected party has substantiated that restoration should exceptionally be allowed".

Mr Polatch placed weight on the following matters in reaching his decision:

The Appellant and Mr Hind were carrying a large amount of tobacco and cigarettes.

Both Mr Wilberforce and Mr Hind said that half of the goods were theirs. The cigarettes consisted of two brands: Embassy and Lambert and Butler. Smokers usually prefer a particular brand of cigarettes.

Mr Hind did not know the exact quantities of the cigarettes brought in.

Mr Hind had no idea about how many cigarettes he could roll from a pouch of tobacco and how many pouches he bought each week. He said he paid about £5.50 for a pouch of tobacco in shops, when the shop price would be nearer £8.50.

Mr Wilberforce claimed to smoke between five and six pouches a week which would amount to smoking between 57 and 85 roll-up cigarettes a day which was considerably more than the 40 a day he declared to the Customs Officer.

When Mr Wilberforce was stopped on 21 December 2001, he claimed to smoke between three and four pouches a week.

Mr Wilberforce said he had been stopped by Customs 111/2 months ago when it was 21 December 2001, four days before Christmas.

They purchased goods using cash.

Mr Wilberforce had no savings and a large amount of financial outgoings.

Mr Wilberforce and Mr Hind purchased about 844 pints of beer each which was a large quantity.

The advice obtained from the Customs helpline did not affect the considerations given to the circumstances of the seizure.

Mr Polatch concluded that the application of the Respondents' policies treated the Appellant no more harshly or leniently than anyone else in similar circumstances, and that he could find no reason to vary the policy of non-restoration in this case.

The Respondents produced the witness statement of Mr Wetherell, who was the Officer who stopped the Appellant on the 21 December 2001. At approximately 2.45 am he intercepted a white Vauxhall Astra driven by the Appellant with Mr Gary Wilberforce as a passenger. They declared they were carrying 12 kilogrammes of Golden Virginia hand rolling tobacco, 12 cases of beer, ten cases of wine and ten sleeves of cigarettes. The tobacco was said to be smoked at a rate of three to four pouches a week and would last 12 months.

The Appellant in his evidence before the Tribunal confirmed that he bought one years supply of tobacco, cigarettes and beer. Nobody had approached him to purchase excise goods on their behalf. Only his wife knew about the journey. He had no reason to think he was doing anything wrong. The goods were for himself and his wife and he intended to give some away to his mother. Because he had been stopped previously he stated very clearly to the Customs Officers on 12 September 2002 the quantity of goods brought back and about the proposed use. He was intending to have a good Christmas and have parties. The goods were in the back of the Van in full view. There was only the spare wheel in the rear of the van. He had no intention of misleading the Customs Officers about the ownership of the van. He thought the Officers were asking him who owned the van between him and Mr Hinds. The Appellant considered he was effectively the owner as he was paying the lease hire (£253.72 a month) on the van.

The Appellant could not remember precisely when he last travelled. He had it in his head that he travelled about 12 months ago. He denied that four days before Christmas would be a memorable event. He had smoked or given away the tobacco purchased in December 2001. The Appellant went with the intention of spending about £1,500 on 12 September 2002. The goods were incredibly cheap and they got carried away with their shopping and spent the lot. His wife was earning at the time £30,000 per annum and he had secured a new job from 1 October 2002 earning £50,000 per annum. The Appellant did not tell the Officers about his new job because he was worried that they would contact his new employers. He still did not have any savings and he paid in cash because he could not remember whether he could pay for the excise goods by credit card.

The Appellant smoked different brands of cigarettes. He would obtain about 40/50 roll ups from a pouch and smoke about 15/20 cigarettes. He accepted that in December 2001 he told the Customs Officer that he smoked three to four pouches of hand rolling tobacco. He also agreed that he said to the Customs Officer in September 2002 he smoked five to six pouches. The Appellant felt that the obvious explanation for the discrepancy was that he started to smoke more. In any event he had no reason to justify what he was doing. He was doing nothing wrong. He contacted the Respondents' helpline prior to the visit to seek their advice about what they could purchase. The Appellant had not told the helpline the quantity he intended to buy because he had no idea at the time.

The Appellant travelled together with Mr Hind. The goods were to be shared equally. The Appellant paid for the ticket and the fuel (£40 to £50). Mr Hind paid for the meals on the journey. Some of the cigarettes were supplied by Eastenders in a polythene bag.

Mr Hind confirmed in evidence before the Tribunal that the goods were for his own use. He was a heavy drinker and smoker. He intended to give his employees a good party to thank them for their hard work. He had been a scrap metal merchant employing six people. There were only two brands of cigarettes. He had worked all day prior to the trip. He was grilled for two hours by Customs Officers and was very tired at this point. He did not know why he gave a figure of 500 cigarettes to the Customs Officer and did not tell them about how long the tobacco would last. He was not asked by the Customs Officer about whether he intended to give away any of the goods. Mr Hind assumed that the tobacco would last for one year. He had no idea how much a pouch of tobacco cost in the United Kingdom. He just paid for it like the milk and bread he bought every day. Mr Hind had been smoking hand rolling tobacco since he was 16.

Mr Polatch stated in evidence that the factors set out in his review letter indicated a commercial purpose on the part of the Appellant. When the factors were taken together they indicated to him that the Appellant knew he was doing something wrong. He expected smokers to have a preferred brand. Mr Polatch had been informed that one pouch of tobacco would produce 80-100 roll ups. He did not find it credible that the Appellant would fund his purchase from taking £1,000 cash from his credit card. He accepted that the indicative quantities of excise goods specified in the Regulations were guidelines but he felt that the amounts brought in by the Appellant were large quantities which would damage legitimate trade. He accepted that there was no evidence that the Appellant had been paid to make the journey. He also accepted that there was no outright admission by the Appellant or Mr Hind about selling the excise goods. He did not consider the value of the van when deciding against restoration. He had not seen the correspondence with the lease hire company that owned the van, which he accepted might make a material difference to his decision about restoration of the vehicle to a third party.

The Respondents produced correspondence from Cattles Commercial Letting Company dated 11 September 2002. The letter informed the Respondents that the Iveco Van, registration number S439 VOR was subject to a finance lease with the company. Cattles requested restoration of the vehicle and an explanation of why the vehicle was stopped and seized. Mr Puzey accepted on behalf of the Respondents that this letter had been overlooked and under the policy the van should have been restored to the Company. The Appellant confirmed that he had continued to pay the monthly charge under the lease hire since the van was seized.

The Appellant did not challenge the forfeiture and seizure of the excise goods and the van before the magistrates' court.

The Tribunal's Findings of Fact

We proceeded on the basis that we were considering the non-restoration of the Appellant's half share of the excise goods and the Iveco Van.

We formed the view that the Appellant and Mr Hind were honest witnesses and gave truthful and straightforward accounts of their dealings with the excise goods. We were of the opinion that they were consistent about their purpose for purchasing the excise goods and that they gave satisfactory explanations for the inconsistencies relied upon by Mr Poltach.

The Policy for the Restoration of Excise Goods

The Respondents' policy for restoration of excise goods identified five factors, the presence of any one of which will militate against restoration. We make the following findings of fact against each of those factors.

Any evidence of previous smuggling or failure to comply with legal requirements

There was no evidence to support a finding of previous smuggling or failure to comply with legal requirements. The Appellant had travelled once before to France and Belgium to purchase excise goods for his personal use. On that occasion he had been stopped by Customs Officers who were satisfied with his explanation about personal use. Mr Hind had not travelled before to France and Belgium with the intention of purchasing excise goods.

Any evidence that the person involved knew what they were doing was wrong

The Appellant and Mr Hind had consistently stated and been open about their intention to undertake their "once a year" shopping trip to purchase excise goods for their personal use. The Appellant told the Customs Officers when stopped in December 2001 that he would be back next year. The Appellant contacted the Respondents' helpline prior to the trip to check the legal requirements and followed their advice. The Appellant and Mr Hind were relaxed about being stopped by Customs because they believed they had done nothing wrong. We agree with their view and find there is no evidence to support a finding of fact that they knew what they were doing was wrong.

Any evidence that the person was paid to make the journey

The Appellant paid for the tickets and the fuel. Mr Hind paid for the meals. They each paid for their share of the excise goods. The Appellant stated upon oath that nobody paid him to do the journey or to purchase excise goods on their behalf. Only his wife knew about the trip. We accept his evidence. We find that he was not paid to make the journey.

Large quantities of goods which might damage legitimate trade

The Appellant brought into the UK large quantities of hand rolling tobacco

(four times the indicative level), cigarettes (twice the indicative level) and beer (five times the indicative level). However, we did not consider that the goods purchased were for a commercial purpose (see below) and therefore concluded that the large quantities would not damage legitimate trade.

Any evidence that the goods were for a commercial purpose

This question needs to be considered in the context of the legislative framework. Council Directive (EEC) No. 92/12 lays down a number of rules on the holding, movement and monitoring of products subject to excise duty, in particular so as to ensure that chargeability of excise duties is identical in all the Member States. The Directive draws a distinction between, on the one hand, goods held for commercial purposes, in respect of which accompanying documents are required for transportation purposes, and, on the other hand, goods held for personal use. Under Article 8 excise duty for goods held for private use is payable in the Member State in which they are purchased. No document is required when they are transported to another Member State. For Article 8 to apply, however, a number of conditions must be satisfied. The goods on which excise duty is chargeable must have been acquired by private individuals for their own use and transported by them. Article 9.2 sets out criteria for establishing whether goods transported by private individuals are intended for commercial purposes.

The provisions of the Directive were originally implemented in the United Kingdom by The Excise Duties (Personal Reliefs) Order 1992 SI 1992 No.3155. The 1992 Order was replaced by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 SI 2002 No. 2692. Regulation 12 gives guidance on whether the goods are held for own use or commercial purposes.

The relevant provisions of Regulation 12 are as follows (note they just relate to tobacco but the same wording is incorporated in the Regulations dealing with wine and beer):

1B(b) "own use" includes use as a personal gift,

(c) if the tobacco products in question are -

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to make such a transfer,

those products are to be regarded as being held for a commercial purpose,

(d) if the products are not duty and tax paid in the member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those products are to be regarded as being held for a commercial purpose,

(e) without prejudice to sub-paragraphs (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 (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(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,

400 cigarillos (cigars weighing no more than 3 grammes each),

200 cigars,

3 kilogrammes of any other tobacco products,

110 litres of beer

90 litres of wine.

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

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

Applying the criteria set out in Regulation 12(1B)(viii) the Tribunal finds that

i. The Appellant travelled to France and Belgium to purchase one year's supply of excise goods for personal use.

ii. The Appellant was not a revenue trader.

iii. From the moment he was stopped the Appellant was open with the Customs Officer about the quantity of and the use of the excise goods. He had also sought advice from the Respondents' helpline before embarking upon the journey and followed that advice.

iv. The excise goods were in the back of the van readily visible when the doors to the van were opened. The Appellant made no attempt to conceal the quantity of goods purchased.

v. The Appellant conveyed the goods in a van which was on lease hire from Cattles Leasing Company. He paid a significant monthly sum for the use of the vehicle

vi. The excise goods were purchased from East Enders in Belgium and France. The Appellant produced the receipt for the tobacco products and declared the price for the beer and wine.

vii. The Appellant purchased two brands of cigarettes, and one brand of hand rolling tobacco. We accept his evidence that he smoked different brands of cigarettes. Some of the packets of cigarettes were supplied in a polythene bag by Eastenders.

viii. The quantity of hand rolling tobacco purchased was four times the indicative level, cigarettes twice the indicative level and the beer five times the indicative level. We accepted, however, the Appellant's explanation that the quantities represented one years supply and that he was intending to share them with his wife and give away some of the tobacco to his mother. He was also going to hold several parties at which the beer would be consumed. The quantity was dictated more by what the Appellant had to spend We considered that Mr Poltach restricted his consideration to the Appellant's rate of tobacco consumption rather than looking at the whole explanation put forward by the Appellant about the proposed use of the goods.

ix. The Appellant purchased the goods himself. He had the means to pay for the goods. The household income with his wife was in the region of £55,000 per annum. He had secured a better paid job from 1 October 2002, earning £50,000 per annum. We saw nothing unusual in his method of obtaining the £1,000 cash from his credit card. We accepted his evidence that he paid by cash because he could not remember whether the suppliers would accept credit cards. He readily disclosed the price paid for the goods and produced the receipt for the tobacco. He paid for his own share of the excise goods.

x. The Appellant had travelled once before about nine months ago to purchase excise goods. He told the Officers that he would be back in twelve months time. We did not place any weight on his failure to remember the precise time of his previous trip and accepted his explanation for his consumption rate going up.

After analysing the facts against each of the criteria in Regulation 12(1B)(e) we are satisfied that the excise goods purchased on the trip were not for a commercial purpose.

The Policy for the Restoration of the Vehicle

Article 1 of the First Protocol of the European Convention of Human Rights dealing with peaceful enjoyment of possessions was engaged when the Respondents deprived the Appellant of his excise goods and the Iveco van. The Respondents justify their interference with the Appellant's property because they are pursuing a legitimate aim of deterring those people who are intent on regularly smuggling tobacco and alcohol in the UK. This has caused a massive loss of revenue to the Government since the introduction of the Single Market. The revenue evaded for tobacco was estimated at £3.5 billion for 2000/01 and £850 million for alcohol smuggling.

The Respondents' policy for motor vehicles incorporated the principle of proportionality by relating the restoration to the degree of the contravention of the Regulations. In this Appeal we have found on the facts that the Appellant committed no breach of the Regulations. The position is more complicated in this case because the Iveco van belonged to Cattles Commercial Leasing Company. The Appellant was renting the vehicle under a lease hire agreement of 25 months starting 27 March 2002 for the purposes of his business. The terms of the lease were a payment of £587.50 for the initial rental, a second payment of £348.72 followed by 23 monthly payments of £253.72 commencing 22 May 2002. We understand from Mr Puzey that the Respondents would have considered restoration of the Iveco Van to the Company presumably on the basis that the Company was an innocent third party.

We note that Mr Payne on behalf of the Appellant informed the Respondents by letter dated 16 September that the van belonged to Cattles Commercial Leasing Company. The Company also wrote to the Complaints and Correspondence Detection South, Customs and Excise on the 30 September 2002 informing the Respondents of its interest in the vehicle. We accept that Mr Poltach was not aware of the correspondence dated 30 September 2002 but should have been aware of Mr Payne's correspondence dated 16 September 2002 because it was part of his consideration.

We note that the Appellant continued to pay the charges under the lease hire agreement whilst the Iveco van was in the Respondents' custody.

Was the Review decision of 23 January 2003 unreasonable?

We had the benefit of hearing the Appellant in person and upon oath. We have found that his account and explanations for the trip on 12 September reliable and have made findings of fact which support our conclusion. Our findings of fact differ from those relied upon by Mr Poltach. We consider that Mr Poltach placed too much weight on the large quantities of excise goods in his review decision. He supported his conclusion about the commercial nature of the transaction by relying on isolated pieces of evidence upon which he derived certain assumptions about the Appellant's intentions with respect to the goods. In our view he failed to assess the Appellant's explanation for having the excise goods against the whole evidence. There was no mention of the Appellant's explanation in his consideration and no testing of it for consistency and reliability. Further there was no analysis in the consideration of his findings against the respective policies of the Respondents dealing with restoration. He appears to have concentrated on justifying the seizure and forfeiture of the goods. Also Mr Poltach overlooked the ownership of the Iveco van which was a material fact for determining the issue of restoration of the van.

We have, therefore, decided for the reasons set out above that the review decision of 23 January 2003 was unreasonably arrived at within the meaning of section 16(4) of the Finance Act 1994. We therefore allow the Appeal.

Orders

We make the following orders pursuant to our decision to allow the Appeal and in accordance with section 16(4) of the Finance Act 1994:

a. The decision not to restore the Appellants' excise goods and the Iveco van shall cease to have effect from the date of release of this decision.

b. The Commissioners shall conduct a further review of the original decision not to restore the excise goods and Iveco van.

c. The further review shall be based on the Tribunal's findings of fact as set out in paragraphs 52 to 67 of this decision.

d. The further review shall be conducted by an Officer independent of the original decision and the review decision of 23 January 2003.

e. The further review shall be completed within 45 days from the date of release of this decision and a copy of that review decision shall be sent to the Tribunal and the Appellant.

We make an Order for the Respondents to pay the Appellant's reasonable costs for preparing and attending the hearing on 10 December 2003. Those costs, however, to exclude the element associated with Mr Hind's application to be joined as a party to the Appeal hearing. The costs to be agreed between the parties. Either party is at liberty to apply to the Tribunal for directions in respect of costs in the event of failure to agree.

MICHAEL TILDESLEY
CHAIRMAN

Release date:

MAN/03/8036