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United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00745.html
Cite as: [2004] UKVAT(Excise) E00745, [2004] UKVAT(Excise) E745
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Evans & Ors v Customs and Excise [2004] UKVAT(Excise) E00745 (14 June 2004)
    RESTORATION – Excise goods seized – Whether for a commercial purpose – Reviewing officer misdirected himself – Premises searched after seizure nothing found – Appeal allowed

    LONDON TRIBUNAL CENTRE

    JONATHAN EVANS
    R J NELSON
    M JEROVSHEK AND H E JEROVSHEK Appellants
    • and –

    THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

    Tribunal: MISS J C GORT (Chairman)

    MR G MILES

    Sitting in public in Bristol on 20 April 2004

    Mr Mark Spackman of counsel, for the Appellant

    Mr R Smith of counsel, for the Respondents

    © CROWN COPYRIGHT 2004

     
    DECISION
  1. This was listed as the appeal of Jonathan Evans; however in the course of the hearing it became clear that, despite Mr Evans being the only name which appeared on the notice of appeal, nonetheless Mr R J Nelson, Miss M Jerovshek and Miss H E Jerovshek should also properly have been considered Appellants. There was no objection by the Respondents to the amendment of the notice of appeal to include the other three names.

  2. The appeal was against the Respondents' decision on re-review to refuse to restore the Appellants' goods following their seizure on 16 April 2001.

  3. The legality of the seizure had not been contested by the Appellants by way of condemnation proceedings and the goods were deemed forfeit 30 days after their seizure.

  4. The Appellants were stopped at about 17.10 hours on 16 April 2001 in a vehicle which was owned by Miss H Jerovshek. After interviews with the Appellants together and separately the Respondents seized 25.75 kilogrammes of hand-rolling tobacco and 4,400 cigarettes.

    5. The issue
  5. The question for the Tribunal is whether the decision contained in a letter dated 14 April 2003 from Mr J F M Tooke, the review officer, to the Appellants was one that he could not reasonably have arrived at in all the circumstances.

    6. The law
  6. At the time of the seizure the Excise Duties (Personal Reliefs) Order 1992 ("the Order") was in force, but it has since been revoked.

  7. It was admitted by the Respondents that the Order failed properly to implement the 1992 directive in that the burden of proof was on the Commissioners to establish the purpose for which the Appellant was holding the goods.

  8. Article 2 of the Order provides the following definition of "own use":

    9. " 'own' includes use of a personal gift provided that if the person making the gift receives in consequence any money or moneys worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purposes of this Order".
  9. Article 5(1) of the Order provides that:

    10. "The reliefs afforded under this Order are subject to the condition that the excise goods in question are not … held or used for a commercial purpose whether by the community traveller who imported them or by some other person who has possession or control of them; and if that condition is not complied with in relation to any excise goods, those goods shall, without prejudice to article 6 below, be liable to forfeiture."
  10. At the time the Schedule to the Order specified 1 kilogramme of tobacco and 800 cigarettes inter alia as quantities above which the Commissioners may treat as evidence for commercial purpose under the directive. These amounts have since been increased.

  11. The Customs and Excise Management Act 1979 (CEMA) provides by section 49 that any goods upon which duty is payable on importation are liable to forfeiture if they are imported without duty being paid.

  12. Section 139 of CEMA provides that:

    13. "Any thing liable to forfeiture under Customs and Excise Acts may be detained or seized by any officer or constable or member of Her Majesty's armed forces or coastguard."
  13. Section 141(1)(a) of CEMA provides that goods which are mixed, packed or found with goods that are liable to forfeiture are also so liable.

  14. Section 142(b) of CEMA provides that the Respondents may, as they see fit, restore any thing forfeited or seized.

    15. The facts
  15. When the vehicle in which the Appellants were travelling on 16 April 2001 was stopped Mr Evans told the officers who stopped them that the Appellants had bought a box each of tobacco and about 3000 cigarettes between them. When asked whether he had had any previous dealings with HM Customs and Excise he replied that around Christmas time they were stopped, they had a box each and a Customs officer had told them that as they had three months supply he did not want to see them again for three months. Mr Evans also stated that the purchases made at Christmas time had now run out.

  16. In the course of a later interview with the officer Mr Evans stated that he worked as a railway signalman earning £21,000 a year His wife, Heidi Jerovshek, also worked as a credit controller and that, between the two of them, they had spent £600. He had bought a box of hand-rolling tobacco and 1,200 cigarettes, his wife had a box of hand-rolling tobacco and 400 cigarettes. He normally smoked Golden Virginia and achieved approximately 50 cigarettes out of each pouch.

  17. Mr Evans also said that he was aware of the then current guidelines and had brought in excess of those guidelines because it was an 18-hour round trip there and back, and on the last occasion the Customs officer had said they could bring over a similar amount. He had not been over since the occasion when they were stopped that first week in January, and prior to that the last time that he had travelled had been in the summer of 2000 when they had gone for holiday. Mr Nelson had not travelled with them before as Mr Nelson had only just got his passport.

  18. Miss Heidi Jerovshek when interviewed said that she had purchased 100 pouches of tobacco and 600 cigarettes. From earnings and family allowance etc she obtained about £1,200 a month and was left with about £200-£300 months per month after expenditure. She had last travelled in January and, prior to that, the previous August or September. She expected the tobacco to last about three months and obtained about 50 cigarettes from a pouch.

  19. Miss Michelle Jerovshek stated that she had purchased one box of tobacco and 600 cigarettes. The tobacco would last her ten to twelve weeks and she used one pouch every two days. She obtained about 51 cigarettes from each pouch. In reply to a question as to how many she smoked per day she said: "On a works day about 25, but when I am socialising I smoke 30-40." She had last been on a trip to buy tobacco the week before Christmas when she had bought one box. She had not given any tobacco to anyone else. When asked who she normally travelled with, she replied that Robert Nelson did not normally come, but she usually came with her sister and brother-in-law (Mr Evans).

  20. Robert Nelson stated that he had purchased 120 pouches of tobacco and 1000 cigarettes. He obtained about 51 cigarettes from a pouch and he expected the tobacco to last about 3-4 months. He smoked 40+ a day. He said this was the first time he had brought any tobacco back from abroad. He was asked whether he had travelled with the other three Appellants before and he said he had but he had bought nothing. That journey was the week before last when, Mr Nelson said, "He hired a car." It was apparent that by 'he' he meant Mr Evans. He also said that the others had bought nothing on that occasion. He was asked why, if he had bought no tobacco on the last occasion, had he bought so much on this occasion and he replied: "Because I never want to do the trip again." He had spent about £300; his gross annual income was £11,000 plus a bonus depending on sales. He had a monthly disposable income of about £600-£650.

  21. The Tribunal heard evidence from Mr Jonathan Evans and from Mr J Tooke. A bundle of documents was provided.

  22. We found Mr Evans to be a credible witness and we accepted the evidence that he gave to us. It was his evidence that he had made regular trips over the previous ten years travelling three to four times a year to buy cigarettes. He had been stopped on some four to five occasions over those ten years but had never had goods seized previously. He had always purchased a similar quantity. When he had been stopped on the previous occasion which was round about Christmas 2000, he had purchased a similar quantity which was enough to last for some three to four months until the next journey. The goods had not been seized on that occasion.

  23. On the present occasion he had paid in cash, he had in the past paid by credit card but stopped doing so when he found that he was charged for the exchange. He and his wife shared a current account. At the time of the hearing they had a savings account which was used by his wife and into which the family allowance and child support was paid. At the time they were stopped in April 2001 the savings account was unused. In April he had not seen the quantity that each person had bought. He knew that his wife had bought 400 cigarettes in Belgium but she had also bought some on the ferry because she had not been able to obtain the brand she wanted in Belgium.

  24. On 30 April 2001, shortly after they had been stopped, his house was searched by officers of Customs and Excise but nothing was taken. It was searched again on 29 November 2003 and in between those two dates his work premises were searched. On neither of those latter two occasions was anything seized by the officers.

  25. At the time he was stopped he was aware of the guidelines, and was aware that they had more than the guidelines, but as they had always bought approximately the same amount, and as they had been stopped on several occasions before, and never had any problem he had thought it was permissible to exceed the guidelines when the goods were for own use. The trip was 750 miles and took them some 14 to 18 hours, which is why they bought more so they would not have to make the journey too often. They had children and it was difficult to get baby-sitters and to take the time to travel very often.

  26. Mr Evans was unable to explain how it was Mr Nelson had claimed that they had made a trip together in a hired car only a week or two prior to this occasion. He accepted that he had on previous occasions hired a car if the children were coming, because more space was needed as the children brought a lot of luggage with them. However, he was adamant that Mr Nelson was mistaken in claiming that he had been on a trip recently with them. The Tribunal was told that Mr Nelson had not come to give evidence to the Tribunal because he had since moved away from Wales and was working in Birmingham and had heavy work commitments. In addition Mr Evans believed that the hearing had been scheduled on several previous occasions which had been cancelled and Mr Nelson was not willing to give up his work commitments in the circumstances. In fact the case had not previously been set down, but there had been a lot of correspondence from the Tribunal asking for dates to avoid at various different times.

  27. Mr Philip Thomas, an officer of Customs and Excise, had been working as team leader on the day in question. He submitted a witness statement setting out his reasons for restoring to Mrs H Jerovshek the vehicle which had been seized at the time. He referred to the effect the loss of the vehicle would have on family, given that there were three children and recalled being told by Mrs Jerovshek that she had no funds and an empty bank account. He refers to Mrs Jerovshek appearing agitated and anxious and that she and Mr Evans between them only had £40 in cash and no driving licences. He exceptionally returned the vehicle to them free of charge on humanitarian grounds. He refers to subsequently receiving a solicitor's letter on behalf of the Appellants inviting reconsideration of the seizure of the excise goods. Having considered the interviews and seeing the financial statements made by Mrs H Jerovshek and Mr Evans, he concluded that he had been misled as to their financial position.

  28. When Mr Evans was asked about the conversation with Mr Thomas (which is not recorded verbatim) he stated that they had said they had no funds to get home because it was a bank holiday weekend and his wife was in a terribly upset state. He said the account was not being used at all at the time. He was much more concerned with his wife's state as she was 'border-line hysterical', being concerned to get back to her children. He had been asked if he had money for the train fare because they were going to be dropped at the station, but, as a railwayman, he knew there would be no trains running at that time.

  29. Mr Tooke, the reviewing officer, had since retired. We did not find him a consistent witness. In his review letter under the section headed "consideration" he stated: "Taking the foregoing into account I am satisfied that on the balance of probabilities all or some of the excise goods were for a commercial purpose." In cross-examination when asked what his role was he replied that it was to see if exceptional circumstances warranted restoration. Subsequently when asked what the test was, he said it was: "Just to see if it was reasonable, or if exceptional circumstances." He then followed this up by saying that he was just seeing if there were any exceptional circumstances, he looked to see if the seizure was in accordance with the Commissioners' policy and if there were anything untoward then he would restore the goods. He said that he had reviewed all the circumstances and had come to the decision that there was nothing exceptional in the circumstances. He specifically said that it was not the purpose of the review to decide if the goods were bought in for a commercial purpose. It was his opinion that commerciality had been established by the time it came to him to review the decision by the fact that the goods had been condemned. He believed that his review had no bearing on the issue of commerciality.

  30. In his review Mr Tooke had not referred to the fact that Maria Jerovshek had later said that she smoked 30-40 cigarettes a day when she was socialising; he accepted that he had in fact ignored this.

  31. Mr Tooke said he had not given any weight to the fact that the parties all lived in West Wales. He had not considered that they would be likely to travel less frequently than if they lived in Dover. He accepted that this would give more credibility to the suggestion that they would only travel every 3-4 months. He accepted that Mr Nelson's statement that he had travelled with the others a week or two before and had bought no excise goods had not been put to the others, but considered that it did affect their credibility as they had denied having been with him on that occasion. He said in evidence that the first time Mr Nelson's statement had been challenged was in court before the Tribunal. He did not accept that they would have made the trip and not bought anything, and he could not understand why Mr Nelson would invent a story about going. He did not accept that it was possible that when Mr Evans had been asked about previous trips he was being asked about trips when he had bought excise goods. It was Mr Tooke's opinion that a story had been pre-arranged between the parties as to the amount they had.

  32. Mr Tooke accepted that the vehicle was an ordinary saloon car and that the goods had not been concealed. Mr Tooke had been influenced by Mr Thomas' evidence as to what Mrs H Jerovshek had said about her finances. He had accepted the statement as it was written, namely that she had said that she had no funds.

  33. In respect of the searches, he had been aware of one of the searches which had been brought to his attention by the Appellants' solicitor. He did not consider that it took the matter any further forward. However he would have taken it into consideration if boxes of hand-rolling tobacco had been found because that would have contradicted one of the reasons given for the journey.

  34. At the end of his evidence in response to questions from the Tribunal Mr Tooke said that he had to satisfy himself that the goods were properly seized and that there was a good reason to seize the goods.

    35. The Respondents' case
  35. Mr Smith submitted that Mr Tooke had satisfied himself that the goods were properly seized before considering restoration. In his review letter he had referred to being satisfied that the goods were for a commercial purpose. He had considered the inconsistency in the evidence.

  36. At least 2.75 kilogrammes of goods were unclaimed by the Appellants. 1000 cigarettes were unclaimed and there was no satisfactory explanation for this. Whilst it was accepted that the burden of proof was on the Respondents, in the absence of any explanation from the Appellants as to these quantities, then the Commissioners were entitled to take account of that very fact.

  37. There was a significant discrepancy between the statement of Mr Nelson and that of the other three as regards previous travel. Mr Nelson had failed to attend to rebut the evidence. It might be expected that he would have attended if he had been misrepresented, or provided a letter. This threw the other appellants' credibility into doubt. It was not relevant that they had made no purchases according to Mr Nelson on that previous visit.

  38. Mr Evans and Mrs Heidi Jerovshek's credibility was damaged by their misleading Mr Thomas as to their means.

  39. It was submitted that the visit to the house was irrelevant since no goods were seized and it could not be taken as evidence that they were not selling the goods.

  40. In conclusion there was sufficient evidence before Mr Tooke to prove that the goods were held for a commercial purpose on the balance of probabilities. There were no exceptional circumstances which would warrant departing from the policy of non-restoration where goods were held for a commercial purpose. In all the circumstances it was proportionate to deprive the Appellants of the goods. The policy of non-restoration itself was proportionate.

    41. The Appellants' case
  41. On behalf of the Appellant it was submitted that the Respondents' approach had been to look first of all to see whether there were any exceptional circumstances which warranted restoration of the goods, and then to pay lip service to the necessity to be satisfied that they were held for a commercial purpose. Whilst Mr Tooke in his decision letter refers to whether or not the goods were held for a commercial purpose, he failed to review the decision reached by the officers as to this.

  42. The Respondents' case was predicated first of all on the quantities held and secondly on the alleged inconsistencies. As far as inconsistencies are concerned, they could occur for a variety of reasons, it was only if the Respondents could say that because of the inconsistencies they were satisfied that inconsistencies could be relied on by them.

  43. The Respondents had not referred to several of the factors in article 5(2) of the Order which was the matters which might help decide whether or not a traveller holds excise goods for a commercial purpose.

    44. (a) The reason for holding the goods was not contradicted by the Respondents. They had a database on which they could check if there had been journeys as stated. It was perfectly reasonable to travel to buy cheaper goods for own use.
    (b) The Appellants obviously were not revenue traders.
    (c) The location of goods was relevant in the present case; they were all in the boot, and there was no evidence of concealment.
    (d) The mode of transport was relevant; the Appellants were not travelling in a commercial vehicle but in their own car.
    (e) There were no relevant documents.
    (f) The quantity was relevant and was relied on by the Respondents
    (g) All the Appellants were able to finance their own purchases which were of relatively modest amounts. The Appellant had spent £400 and his wife had spent £200. Michelle Jerovshek had spent £290 and Mr Nelson £400.
  44. The review decision ignored the whole context when considering the matter of consistency. Mr Evans' account that on the previous occasion in January when he had been stopped had been told not to come back for 3-4 months had a ring of truth. Heidi Jerovshek supported Mr Evans' statement that they each bought a box. The other goods that they had which were subject to duty were all within the guidelines.

  45. Mr Evans had been frank in his evidence that he was aware of the guidelines. It was important to consider where the Appellants lived, and whether it was cost-effective to travel from West Wales. This had not been taken into account by Mr Tooke.

  46. Even if the parties had been misleading about the quantity purchased, that did not mean that it was for a commercial purpose. It would be perfectly possible to underestimate the quantity for reasons other than an intention to sell. The underestimate was only approximately 10% of the total brought in. This was not a significant quantity.

  47. With regard to Mr Nelson's statement it would have been simple for the officers to have gone back to Mr Evans and put to him what Mr Nelson had said. The Respondents accepted Mr Nelson's evidence that he had made the previous visit but did not accept his evidence that no purchases had been made. Had Mr Nelson given evidence of making purchases on that occasion then the inconsistency might be important, but as he had not, then it was not important. It was not credible that the other three appellants would have concocted a story, as Mr Tooke believed, without including Mr Nelson.

  48. The Respondents relied on the consumption rate of Michelle Jerovshek, but the totality of her evidence had to be looked at and as there was an internal contradiction in her own evidence as to her consumption, that should have been considered.

  49. There is no verbatim record of what Heidi Jerovshek had said to Mr Thomas. It should be put into the context of a frightening situation. It would be quite extraordinary to attempt to deceive one Customs officer when she just told another something different about her finances. The Tribunal was invited to accept Mr Evans' evidence as to the circumstances.

  50. With regard to the search, the Commissioners again wanted this matter to be taken both ways, saying it was irrelevant because nothing was found, but it could not be coincidence that the first search took place only 14 days after the parties had been stopped. It was significant that nothing was found, because it supported the Appellants' case that they were not selling commercially.

    51. Reasons for decision
  51. We find as a fact that none of these Appellants were attempting to bring in excise goods for a commercial purpose. We accept Mr Evans' evidence that his previous trip had been around about Christmas time 2000 and that on that occasion they had been stopped with similar amounts of goods and had been allowed to bring them into the country having been told not to make the journey again for some time.

  52. We accept that it is reasonable for people who live in West Wales to buy quantities in excess of the guidelines, which are only guidelines, given the length of the journey, and the difficulty of making it.

  53. We consider that the search of Mr Evans' premises such a short while after the trip in April is relevant for two reasons: first of all because it shows that Mr Evans and Mrs Heidi Jerovshek had need to travel at that time because they had no quantity of hand-rolling tobacco available to them, and secondly it shows that no purchase was likely to have been made only a week or two earlier at the time Mr Nelson claimed a journey had been made. These are significant factors with regard to any allegation of commerciality, and are matters which a reasonable reviewing officer should have taken into consideration.

  54. None of the above matters were taken into account by Mr Tooke when he reviewed the decision. Furthermore it was quite clear to us that although Mr Tooke refers in his letter to commerciality, we find that this was not a matter he had in fact taken into account at all. In this he had misdirected himself. There were four people travelling, he should have considered all the relevant evidence in respect of each of them and not concluded that the condemnation proceedings of themselves were sufficient to show a commercial purpose in respect of each of them and to absolve him from the need to consider the degree of commerciality involved.

  55. With regard to Mr Thomas' statement that he felt he had been misled with regard to Mrs Jerovshek's finances, we accept Mr Evans' evidence as to the circumstances and that what was being referred to was the immediate situation in terms of their ability to get home. As a railwayman he knew that no trains were running at that time, it being a bank holiday weekend. It was also noted by Mr Thomas that none of the parties had a driving licence with them, therefore they would have been unable to hire a car to get back. It is clear from Mr Thomas' statement that Mrs Jerovshek was in a very distressed state, and we accept that this might have affected her understanding of what was being said to her.

  56. Whilst Mr Nelson's statement about the earlier trip remains inexplicable, from the fact of the search we conclude that this confirms Mr Evans' evidence that no purchases were made by the Appellants immediately prior to this occasion.

  57. With regard to the unexplained quantities, we do not consider that the Appellants were given a proper opportunity to explain this discrepancy. It would have been a simple matter to confront the Appellants with the items and to ask them whose was which. This was not done. It would have been simple to have put to any of them that the others had not accounted for all the quantities. This was not done. We do not consider it appropriate for the Respondents to draw adverse conclusions in circumstances in which travellers have not been given sufficient opportunity to explain any of the matters which the Respondents themselves later rely on.

  58. In all the circumstances we are not satisfied that the reviewing officer properly took account of all the relevant matters and this case is referred back to the Respondents for a further review to be carried out by an officer not previously concerned in the case, and to be carried out on the basis of our finding that these goods were not purchased for a commercial purpose, but were for own use.

  59. There was no application for costs made before us, but we allow the Appellants their reasonable costs of and relating to the hearing. Liberty to apply.

    60. MISS J C GORT
    CHAIRMAN
    RELEASED:

    LON/03/8121

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