United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E723, [2004] UKVAT(Excise) E00723

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Sharon Towers and Simon Towers v Customs and Excise [2004] UKVAT(Excise) E00723 (21 May 2004)

EXCISE DUTY — imported goods concealed or packed in a manner appearing to be intended to deceive Customs officer - goods seized and forfeited for that reason on return of cross-channel shoppers to UK from France and Belgium - vehicle also seized by Customs - restoration sought on the grounds that officer's version of events unreliable and that she was not misled - review decision confirming decision not to restore goods or vehicle - result of review held to be reasonable with regard to non-restoration of goods but flawed as to non-restoration of vehicle - appeal nevertheless dismissed on ground that result of review would inevitably be the same if conducted on correct basis

MANCHESTER TRIBUNAL CENTRE

(1) Mrs SHARON TOWERS

(formerly Ms S Barber) Appellants

(2) Mr SIMON TOWERS

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Mr A E Brown (Member)

Sitting in public in York on 15th April 2004

The Appellants appeared in person

Mr C Rose, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

DECISION

This is an appeal against a review decision dated 17 January 2003 of the Commissioners of Customs and Excise ("Customs"), conducted by an officer of Customs, Mr David Harris, pursuant to a consent direction of the tribunal dated 26 September 2002. That direction was made in other appeal proceedings between the same parties ^[1] and was to take account of the decision of the Court of Appeal in R (on the application of Hoverspeed Ltd and Ors) v C & E Comrs [2003] 2 All E R 553 ("the Hoverspeed case"). The review decision under appeal ("the review decision") is of an earlier decision of Customs dated 11 June 2002 not to restore to the appellants certain excise goods ("the goods") and a Volkswagen car ("the car") Registration No E275 TYG, seized by Customs from the appellants at Eastern Docks, Dover, on 21 July 2001. The appellants were at the time returning in the car to the UK from France by cross-channel ferry, having purchased the goods at outlets in France and Belgium.

The goods and the car were condemned as forfeit pursuant to section 49(1)(f) of the Customs and Management Act 1979 ("the 1979 Act"), which provides that where any imported goods are concealed or packed in any manner appearing to be intended to deceive a Customs officer, those goods shall be liable to forfeiture.

The goods consisted of the following:

75 Kg of hand-rolling tobacco;

500 cigars;

50 litres of still wine;

75 of a litre of sparkling wine;

40 litres of spirits.

The appellants represented themselves at the hearing of their appeal. They both gave oral evidence, and were cross-examined by Mr Rose of counsel, representing Customs. Mr Rose called two witnesses to give oral evidence, namely Ms Tracy Brown, who was the officer of Customs who interviewed the appellants on 21 July 2001, and the reviewing officer, Mr Harris. They were cross-examined by the appellants. Mr Rose also helpfully provided the tribunal with a folder of documents relevant to the appeal, which included copies of Ms Brown's interview notes, the correspondence between the parties, and the review decision.

We find the facts to be slightly unusual.

At the date of the seizure, the Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155 ("the PRO") was still in force. The PRO was subsequently revoked, having regard to the decision of the Divisional Court of the Queen's Bench Division in the Hoverspeed case at first instance ^[2], in which the court held that the PRO wrongly placed the burden of proof on travellers to satisfy Customs that they were not holding or using excise goods for a commercial purpose, instead of on Customs. However, on 21 July 2001, the Hoverspeed case was all in the future. Accordingly one might have expected the interviewing officer to have required the appellants to satisfy her that the goods were not being held or used for a commercial purpose, as provided by Article 5(3A) of the PRO. She did not do that.

We find that the reason why a commerciality statement was not read by Ms Brown was that she was new to the job. She told the tribunal that the car was one of the first vehicles that she had stopped. She told us that she was not sure what she was thinking at the time, which leads us to conclude that she did not have in mind the distinction between excise goods for "own use", as defined in the PRO, and excise goods held or used for a commercial purpose. We find that this was simply through inexperience, in that she was very new to excise work. Ms Brown produced her original notebook to the tribunal, from which it is clear that, in the case of other travellers who had been interviewed, she had required them to satisfy her as to lack of commerciality pursuant to the PRO. In the case of the appellants Mr & Mrs Towers, however, she did not do this.

One might therefore ask, on what basis did Ms Brown stop and question the travellers in this case? It appears that, at the time, she did not know why – rather she told us that she acted as she did because that was what she had been trained to do, seeing that it was what her colleagues, other Customs officers, were doing. However, the tribunal has the authority of the Court of Appeal in the Hoverspeed case that the powers of seizure conferred by sections 49(1)(a), 141(1), 139(1) and Schedule 3 of the 1979 Act are not made dependent upon the exercise of any power to stop and search provided in other sections, such as sections 163 and 163A ^[3]. Moreover the Court of Appeal has, in another case, Gora & Dannatt v C & E Comrs [2003] EWCA Civ 525, held that it is not within the compass of this tribunal to decide upon the legality of the seizure – that is the province of the court within the context of condemnation proceedings, if any. So we approach the exercise of our jurisdiction under section 16(4) of the Finance Act 1994 ("the 1994 Act"), namely to decide whether the review decision was one that Customs, and in particular Mr Harris, could or could not reasonably have arrived at, on the supposition that the seizure and forfeiture were in order.

In giving evidence, Ms Brown was entirely clear why she seized the goods and the car. She said that she seized them because the goods were concealed in a manner appearing to be intended to deceive her. The goods were therefore liable to be forfeited pursuant to section 49(1)(f) of the 1979 Act, and so was the car, by reason of section 141(1)(a) of the 1979 Act. She referred to her interview notes as a true record of what was said and what happened.

Those notes were not signed by the appellants following the interview, and the appellants take issue with their contents. According to Ms Brown, she asked the appellants what quantity of alcohol and tobacco goods they had if any, and they replied that they had 14 cases of wine, and a box of tobacco each, because they smoked quite a lot. The notes say that Ms Brown then asked, "Is that all?" and the appellants replied "Yes".

The appellants, for their part, say that their replies were inaccurately recorded. They say that the actual response to the question, what quantity of alcohol and tobacco goods do you have if any, was that they had got some cases of wine and some tobacco. They also say that they did not reply "Yes" to the question, "Is that all?" The appellants say that they had taken approximately £1,000 with them to spend, but did not know what quantities of excise goods they had purchased. They say that their purpose was not specifically to fetch the goods, but rather to give the appellant Mrs Towers "a day out" on the continent.

The appellants also say that, when interviewed, Mr Towers was not able to answer Ms Brown's questions correctly as he had been drinking on the ferry. Mrs Towers, who suffered from long term illness and short term memory loss, was on that account unable to answer correctly. As we see it, however, the issue is not whether the appellants were in a position to answer questions correctly, but what answers they in fact gave.

It appears that Ms Brown's interview notes were not written up entirely contemporaneously. However, from what Ms Brown told us, we find that, on the balance of probabilities, they were written up as soon after the interview as was reasonably possible, and that Ms Brown had a clear recollection of what she had been told by the appellants. It is true, as the appellants have pointed out to the tribunal, that there are mistakes in Customs' documentation – in the notebook entries, the car is described as a Toyota, whereas it was a Volkswagen, and the quantity of hand-rolling tobacco is described as 34.75 Kg, whereas the correct quantity was 36.75 Kg; certain copies of the C156 and SEE 004C Seizure Information documents were wrongly date-stamped; and the model and registration number of the car were misspelt on the P & O collection docket. All these errors, however, seem to us to reside in the category of what are sometimes known as "silly mistakes", rather than errors of substance.

The following factors weigh with us in preferring Ms Brown's evidence to that of the appellants, and in accepting the substance of the interview notes:

Ms Brown would have no reason to make up the figure of 14 in the expression "14 cases of wine", so that it is inherently unlikely that the appellants only said "some" wine as alleged;

It is common ground that there were two boxes of tobacco in the car, on top of the wine and separate from the rest of the tobacco goods, which were bagged;

If the appellants had, as they alleged, said "some" wine and "some" tobacco, they would, we feel sure, have been pressed further to state precise quantities – they were, after all, being asked for a declaration;

There is no evidence that the appellants told Ms Brown that they did not know what quantities they had, which is the corollary of alleging, as the appellants do, that that was why they allegedly stated that they had "some" wine and "some" tobacco;

Ms Brown would not have seized the goods and the car had she not been convinced that the goods, as discovered in the car, differed from what she had already been led to believe, and that accordingly there was the appearance of deception.

Ms Brown's notes go on to say that, when she gained access to the car through the two front doors, and the seat was pulled forwards, two boxes of 6 Kg of hand-rolling tobacco were seen. Behind those and behind and under boxes of wine were several black sacks containing hand-rolling tobacco. The appellants could not explain why they had not declared the tobacco in the bags.

The appellants say that there was no attempt to hide the bags. They say that they bought the tobacco first, and then the wine, and so simply stacked the wine on top of the tobacco. They did this so as not to have to be bothered to take out the tobacco before loading the wine. The tobacco was supplied to them at the sales outlet in the very bags used to transport it.

However we find that, on the balance of probabilities, the appellants did, when questioned, only tell Ms Brown about the two boxes of tobacco on top of the wine. They omitted to mention the rest of the tobacco. It must therefore have appeared suspicious that, apparently behind and under the wine, a lot more tobacco resided. There would have been no case for seizing the goods if the travellers had mentioned the bags when first asked. We are satisfied that they did not do so. We find that the bagged tobacco was undeclared.

The remaining question is therefore, was the bagged tobacco concealed? We accept that the order in which items are put into the loading space of a car may be arbitrary, so that certain items are not really "concealed" – it is just that they happen to be under other items. But one must consider what Ms Brown thought when she caught sight of the bags. She will have noted the two boxes of tobacco on top of the pile about which she had been told. She will have had in mind that that was supposed to be the only tobacco in the car. Then she will have noted the bags, behind and under the wine. We find that she could readily, and reasonably, have come to the conclusion, as we find she did, that the bags had been deliberately concealed, seeing that they had not been mentioned. We find it understandable that she decided that the goods, in particular the bagged tobacco, were concealed or packed in a manner appearing to be intended to deceive her.

We accordingly turn to the review decision.

In the review decision, Mr Harris first referred to the factual background to the case, and then made reference to various articles of the PRO and sections of the 1979 Act, and to the jurisdiction of the tribunal under the 1994 Act. Next, Mr Harris set out Customs' policies with regard to the restoration of seized excise goods and vehicles used to transport the same.

In his consideration of Ms Brown's decision, Mr Harris began by noting that the officer would require to be satisfied that the goods were not held for a commercial purpose, in which context he referred to the Hoverspeed case. We have, however, found that Ms Brown did not in reality consider the potential commerciality of the importation.

Mr Harris then made reference to the questions and answers noted as mentioned in paragraph 10 above, and Ms Brown's discovery of the bagged tobacco as noted by her. We have found that Ms Brown's notes are accurate as to these matters. Mr Harris stated that these matters rendered the goods liable to forfeiture pursuant to section 49(1)(f) of the 1979 Act.

Mr Harris next referred to the decision in the Scottish tribunal case of Boyd v C & E Comrs ^[4], in which the tribunal was chaired by Mr Gordon Coutts QC. That was a decision in which it was found that 9.6 Kg of hand-rolling tobacco had not been imported for the traveller's own use. Mr Harris contrasted that case with the 36.75 Kg being imported in the present case. Mr Harris stated: "Taking into account all of the above, I agree with the officer in not being satisfied that the goods were for own use". We have found, however, that Ms Brown did not have in mind the question whether or not the goods were for the travellers' own use.

Accordingly, not every fact on which Mr Harris relied in formulating the review decision has been found by the tribunal to have been demonstrated. However, Mr Harris then turned to the matter of the restoration of the goods. He said this:

"Taking into account your failure to tell the officer of the correct quantity of excise goods that you were importing, especially the tobacco which was discovered in plastic bags and concealed beneath the wine boxes, leads me to believe you knew that what you were doing was wrong and provides a sufficient enough reason that will militate against restoration".

We agree that there is considerable force in that.

Two other matters relied upon by Mr Harris are in our view insignificant. The first is that the travellers did not mention that they had been to Belgium as well as France when asked, "Whereabouts have you been to now?" They mentioned only France in their reply to that question. However we think that the use of the word "now" could well exonerate the travellers from omitting to mention Belgium.

The second matter related to something that the appellant Mr Towers was said to have told Mr Harris over the telephone, namely that between him and his wife they smoked a 50 g pouch of tobacco per day. "Therefore," Mr Harris stated in the review decision, "that would mean that you would have more than two years' supply of tobacco, which is far in excess of the six months you told me". We think that this second matter goes to the question of commerciality/own use which, we have found, was not in fact investigated by Ms Brown. Mr Harris appears to rely upon this second matter in the context of what Ms Brown might or might not have decided in that regard. However, she did not consider commerciality at all, so this second matter is, as we see it, irrelevant.

Mr Harris then considered the request for restoration of the car. The car was a Volkswagen Sirocco, purchased by the appellant Mrs Towers from a relation, some six months before the seizure, for £200. The appellants maintained that that was a bargain price, and that the car was worth more than that. However, the car was accepted by the appellants to be genuinely E-registered, which means that, at the time of seizure, it would be some 13 years old. We conclude that the car cannot have been worth much more than was paid for it.

Mr Harris quoted from the judgments of Lord Phillips MR and Judge LJ in the Court of Appeal in the case of Lindsay v C & E Comrs [2002] 3 All E R 118 ("the Lindsay case"), in which the court held that a decision by Customs not to restore a seized vehicle, even where excise goods were seized as not being for the traveller's own use, could be disproportionate. Mr Harris said that there had in the present case been an improper importation of goods on which the excise duty evaded amounted to £3,777.53. We observe that that would depend upon the goods not being for the appellants' own use, as otherwise all the excise duty lawfully due would have been paid at the point of purchase ^[5].

Mr Harris then rejected any question of hardship, as the appellants had two other vehicles beside the car registered to them at their address. It emerged in evidence that one of these vehicles was off the road, but that the other, a Land Rover Discovery, was used by the appellant Mrs Towers for another trip to the continent to bring back wine. We accept that the appellants have a requirement for personal transport, not least having regard to the state of Mrs Towers' health (as to which it is unnecessary for us to elaborate for the purposes of this decision), but we find that they have not been without such transport.

On behalf of Customs, Mr Rose submitted that the seizure and forfeiture were justified by section 49(1)(f) of the 1979 Act. The seizure must, he submitted, 26 be accepted as legitimate. There had been no condemnation proceedings, and the forfeiture had taken conclusive effect.

Mr Rose said that Mr Harris had considered all the material submitted to him, and had reached a reasonable decision not to restore either the goods or the car. Mr Rose invited us to accept Ms Brown's notebook as accurate. He submitted that the circumstances of the transportation of the bagged tobacco indicated an attempt to deceive. The appellants had gone straight to Belgium, their true purpose being to buy the goods. Whilst Mr Harris had discussed commerciality, that was unnecessary to his decision – he was "home and dry" under section 49(1)(f).

The sheer amount of the goods was such that restoration of them was not justified. The most that the car might be worth was, say, £350. It was not disproportionate not to have restored the car.

The appellants submitted that they had been penalized by reason of the inexperience of Ms Brown. They submitted that this was not a premeditated attempt to bring back an excessive amount of excise goods – it was no more than a quick trip to the continent without a set plan. They submitted that Ms Brown's notes were unsatisfactory. The goods would not damage legitimate trade, the £1,000 taken with them being an insignificant amount to have in one's pocket to spend on such a trip.

Our decision in this case is influenced by certain aspects of the appellants' evidence which we find highly improbable. These are the following:

That the appellants allegedly did not know what quantities of excise goods they had bought with the £1,000 taken with them;

That the appellants could not declare the quantities of excise goods they were transporting, at least by value;

That the true purpose of their trip to the continent was to give Mrs Towers a day out;

That Ms Brown was not misled;

That the goods were not loaded in the car in such a way as to give rise to an appearance of concealment so far as the bagged tobacco was concerned.

In certain circumstances it must be reasonable for a Customs officer to take a robust view of whether an attempt is being made to deceive her. In those circumstances, it is not required of her that she should continue to question the individual whom she is convinced is engaged in deception. She would then be entitled to stop all further questioning immediately and simply rely upon the powers arising from the fact that deception appears to be in progress.

As we see it, that was the case here. The findings of fact made are such that, whatever we personally might have said or done at the time, we must find that the officer was justified in taking the line she did. One course that might have been adopted was for her to have read a commerciality statement, and then explored the means of the travellers, their respective rates of consumption (especially of the tobacco), what exactly they intended for the goods, and so forth. That is what Customs officers commonly do, but it was not done in this particular case. We hold that it was unnecessary for the officer, Ms Brown, to have done that, if she had justifiably become convinced that deception was in progress.

Whilst it is not our province to decide upon the legality of the seizure and forfeiture, we think that the circumstances of the seizure and forfeiture are relevant to the reviewing officer's decision whether or not to offer restoration. Although the review decision is not formulated quite as it might have been, having regard to our findings of fact, nevertheless it does, in our opinion, come to the right decision with regard to the goods. The reason for refusing restoration quoted at paragraph 24 above is one which, in our opinion, is entirely reasonable. Indeed, we think that anybody who appears to be practising deception on a Customs officer with regard to the importation of goods is likely to find that, when another Customs officer reviews the case for restoration of those goods, the second officer's decision will result unfavourably.

The review decision is, in our opinion, flawed when it comes to the car. Because the question of commerciality/own use had not been considered by Ms Brown, it follows that the Lindsay case is not in point. The reference in the review decision to "duty evaded" is in conflict with the principle of Community Law that UK excise duty would not be payable unless the goods were held or used in the UK for commercial purposes.

We agree that the lack of hardship to the appellants by not having the car, in that they have had the Land Rover Discovery available to them, was a proper factor to consider. However, because the refusal of restoration appears otherwise to be based upon irrelevant factors, the review letter is not in our view soundly framed with regard to the car.

We therefore think that the reviewing officer should have considered blameworthiness, or the lack of it, apart from the matters that he did consider. Had he done this, we think that, inevitably, he would not have concluded that the car was any more worthy of restoration than the goods. He would have noted the low value of the car compared to that of the goods. He would have noted that the apparent attempted deception was facilitated by the car. He would, we think, have concluded that the use of the car was ancillary to the attempted importation of the goods, rather than vice-versa, so that the proper course would be to refuse restoration of the car as well as the goods.

No purpose would therefore be served, in our view, by remitting this case for a further review, given that the result of the further review is, as we see it, inevitable. This appeal will therefore be dismissed. No application was made for costs, so none are awarded.

M S JOHNSON

CHAIRMAN

Release date:

Note 1    conducted under Reference No MAN/02/8012: Tribunal Chairman, Mr J D Demack.     [Back]

Note 2    (reported at [2002] 4 All E R 912).     [Back]

Note 3    (see [2003] 2 All E R 553 at 576f paragraph [44], where Mance LJ said: “The object in undertaking a search will be to look for unlawfully held goods, but that does not mean that the validity of any seizure of such goods is conditional upon the legitimacy of the search”).     [Back]

Note 4    (reference EDN/96/8006 – a case decided some years ago, which ought in our opinion to be considered only in conjunction with numerous other tribunal decisions, which together comprise the increasing jurisprudence in this area of the tribunal’s jurisdiction).    [Back]

Note 5    (see Article 8 of Council Directive (EEC) No 92/12 of 25 February 1992).     [Back]