United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E755, [2004] UKVAT(Excise) E00755

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Steele v Customs and Excise [2004] UKVAT(Excise) E00755 (06 July 2004)

E00755

EXCISE DUTIES — cigarettes purchased in USA — goods in excess of duty free allowances — appellant intercepted whilst passing through UK Customs "green" channel — undeclared goods seized — appellant and his wife mistaken as to their duty free allowances — restoration of goods sought — appellant and his wife failed to seek authoritative information as to duty free allowances — reasonable for Customs to decide that restoration should not be offered — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

GEORGE STEELE Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Mr N H Phillips (Member)

Sitting in public in Manchester on 6 May 2004

The Appellant appeared in person and was unrepresented

Mr J Gray, counsel instructed by the Solicitor for the Customs and Excise, for the Respondents

DECISION

This is an appeal against a review decision of the Commissioners of Customs and Excise ("Customs") dated 4 November 2003. That decision upheld an earlier decision of Customs dated 29 August 2003 not to restore to the appellant certain excise goods ("the goods") seized from the appellant and his wife by Customs on 2 August 2003. The goods consisted of 1,200 cigarettes.

The grounds of appeal, as taken from the notice of appeal dated 16 November 2003, are as follows:

"The appeal is based on two points. Firstly that the Statement of Facts surrounding the seizure of the goods is incorrect and that because of this all subsequent reviews based on those incorrect facts have been fundamentally flawed. That is to say that had the reviews been based on the correct facts a more favourable decision might have been achieved. Secondly, that although Customs have a review process in place, Customs state that it is their policy not to restore goods seized [which] totally and utterly negates what purports to be a fair independent review process".

The only oral evidence received by the tribunal has consisted of that from the appellant, who represented himself. However the tribunal has also had the benefit of a folder of documents relevant to the appeal, helpfully provided by counsel appearing for Customs, Mr Gray.

We find the facts of this matter to be as follows.

The appellant lives in Failsworth, Manchester. On 2 August 2003, he and his wife landed at Manchester Airport on a flight from the USA. They had with them six "sleeves" of cigarettes, a total of 1,200. The duty free allowance is 200 cigarettes each. The couple were thus 800 cigarettes above their allowances.

The officer of Customs who dealt with the appellant and his wife at the airport was a Mr Palmer. Unfortunately we have not heard from him. So far as we can see from Mr Palmer's notebook record of his dealings with the appellant and his wife, Mr Palmer simply seized the goods on the basis that they were liable to forfeiture as undeclared. In so doing, presumably Mr Palmer relied upon section 78 of the Customs and Excise Management Act 1979 ("CEMA").

Both Mr Steele and his wife are fairly frequent travellers to the USA. Neither of them smokes. They had not previously brought back cigarettes. The cigarettes brought back on this occasion were for a friend. They had seen the cigarettes on "special offer" and thought that they would make a nice present for the friend. They carried the cigarettes off the aircraft in two transparent "duty free" bags.

Because of the "special offer", the appellant and his wife had bought rather more cigarettes than at first intended. Nevertheless they presumed that they were within their duty free allowances. Consequently they made to pass through the "green" Channel on arrival at Manchester Airport, on the basis that they had nothing to declare. At that point they were stopped by Mr Palmer.

The appellant has made the point in tribunal that Mr Palmer's notebook record of the incident states that a "search of baggage revealed excess allowance". The goods were not in his baggage, the appellant told us, but were being carried in transparent "duty free" bags which were obvious. However we note that section 78(1) of CEMA expressly contains the requirement to declare anything contained in a traveller's baggage or carried with him. Consequently, we do not think that this feature of the case makes any difference. Whilst Mr Palmer did not mention the carrier bags, we find that the goods were just as liable to seizure as they would have been if concealed in the travellers' suitcases – which we accept they were not.

The appellant has also made the point that he and his wife did not intend to "abuse the system". By this we understand him to mean that they did not deliberately set out to bring an excessive quantity of cigarettes back with them. However we find that the appellant was aware that there was a duty free allowance, and had not taken the trouble to verify what that was.

The appellant firstly told the tribunal that he presumed that the duty free allowance was 3,000 cigarettes. Later, he told us that he thought that it might be 3,500 cigarettes – he was not sure. Then he told us that he had seen a sign specifying an allowance of 3,200 cigarettes. In his letter dated 4 August 2003, referred to in the next paragraph, the appellant stated that he and his wife genuinely believed that the allowance was 3,200. That is, of course, the "guideline" figure for cigarettes brought back by a traveller from the EU for his own use ^[1]. We find that the sign seen by the appellant probably related to that.

In his letter dated 4 August 2003 seeking restoration, the appellant accepted that Mr Palmer was correct to seize the goods. He wrote that "this unfortunate incident was a genuine mistake". He asked Customs to exercise their discretion to allow the goods to be returned.

By letter to the appellant dated 29 August 2003 Customs declined to restore the goods on policy grounds. That letter was from a Mr Lindsay, an appeals officer of Customs. There were, the letter said, no exceptional circumstances to warrant a deviation from the current policy in the appellant's case. The letter stated that a lack of knowledge of allowances was not a reasonable excuse.

By a letter to the appellant dated 9 September 2003, a different officer of Customs looked further at the appellant's case. He was a Mr Devine, who was Mr Palmer's manager. That letter treated the seizure as having been pursuant to sections 49(1)(a) and 139 of CEMA ^[2] . Again, restoration was declined, on the basis that it had been the travellers' responsibility to be aware of the need to go through the "red" channel on arrival.

The appellant sought a review by a letter to Customs dated 30 September 2003. In his letter, he repeated that a mistake had been made; he wrote that he was not abusing the system; he and his wife had not been in trouble before; the mistake would never be repeated.

The review was carried out by Mr McNeight, a reviewing officer of Customs. The tribunal has not heard from Mr McNeight, but we have the benefit of a witness statement from him, a copy of which is contained in the bundle of documents submitted by Mr Gray. In that statement, Mr McNeight explains that the two letters sent to the appellant dated 29 August 2003 and 9 September 2003 constituted an error of duplication. In his review decision, contained in a letter written to the appellant and dated 9 November 2003, Mr McNeight treats the original decision of Customs refusing restoration as being that contained in the letter dated 29 August 2003.

In his review decision, Mr McNeight stated that he was satisfied that the appellant was stopped in accordance with section 78 of CEMA. He stated that the appellant had with him 1,200 cigarettes, whereas the duty free allowance under the Travellers' Allowances Order 1994 SI 1994/955 is 200 cigarettes per person. He made reference to other relevant provisions of CEMA as well as section 78. Under the heading "Consideration", Mr McNeight wrote inter alia:

"In your previous correspondence you wrote that you were unaware of the allowances when importing cigarettes from the USA, believing that you could bring back 3,200. I must point out that all travellers must ensure that they are fully aware of what they can and cannot import into any country. This, of course, includes cigarettes.

"There are many notices at Manchester Airport at outbound and, particularly, at inbound controls. Those notices explain what the Customs' allowances are for people who are travelling from outside the EU".

Mr McNeight added that the fact that the appellant had bought the goods as a gift or that he was unaware of the allowances afforded no reason for restoration. Mr McNeight decided to uphold the decision not to offer restoration of the goods.

Appearing for Customs, Mr Gray submitted that Mr Palmer was justified in the seizure, seeing that section 78 of CEMA gave rise to an absolute liability offence ^[3]. There were no extenuating circumstances of the case which justified restoration. The case arose from the mistake made by the travellers as to their duty free allowances. The appellant had put forward no good reason why these cigarettes, whether or not bought as a gift, should be restored. Customs' policy was not to offer restoration in such a case save in exceptional circumstances, and none were apparent. Mr Gray invited us to dismiss the appeal.

The appellant submitted that it was relevant that the goods were not concealed in his baggage but were being carried openly in carrier bags. He submitted that neither Mr McNeight nor those officers of Customs previously concerned with his case had in their decisions made proper allowance for the fact that his wife was travelling with him and that she was entitled to her own separate allowance of 200 cigarettes. He submitted that in a case like theirs, where a mistake had been made, and where there was no attempt or intention to abuse the system, Customs' decision not to restore the goods was unreasonable. The only reason that they had so many cigarettes was because of the "special offer". He invited us to allow the appeal and to remit the case for further review.

In our view this is not one of those cases where the appellant has made a justifiable mistake as to his duty free allowances. Cases can be imagined where a traveller has become confused, for some understandable reason, as to the allowance applicable to the particular country from which he has travelled. He might, for example, be travelling from Switzerland, under the impression that that is an EU member state, and have brought back with him the EU "guideline" quantity of 3,200 cigarettes. If he had been given that "guideline" as the result of an enquiry made of Customs, being at cross-purposes with Customs as to the country from which he was travelling, that might afford a ground for restoration of the goods.

However, in the present case, the appellant and his wife made, so far as we can see, no proper attempt to discover what the duty free allowance was. They knew that there was an allowance – they just did not know what it was. Having heard the appellant in evidence, we reject what he wrote in his letter dated 4 August 2003 about their having genuinely believed that the allowance was 3,200. Rather, we hold that they had an unsubstantiated notion that the allowance was 3,000 to 3,500 – somewhere in that bracket. It is not clear to us where they got that idea from. It is so wide of the true mark that we have to conclude that the appellant and his wife did not make reasonable enquiries or investigations directed to ascertaining what the real figure was.

The mistake they made is thus, in our view, not an excusable one. We accept what the appellant says about their lacking any intention to abuse the system. Indeed the fact that the goods were being openly carried in carrier bags appears to demonstrate the innocence of the appellant and his wife. Nevertheless, their failure to ascertain the true allowance means that they ran a risk that the goods were in excess of the duty free figure. The consequences of that risk must lie at their door if, as we have found, they made no proper attempt to ascertain and abide by their true allowances.

We are satisfied that Mr McNeight and his colleagues did not improperly ignore Mrs Steele's right to separate consideration and treatment with regard to her allowance. We reject the suggestion that the review process, culminating in the right of appeal to these tribunals, is unfair, because the nature of the hearings conducted by us is such that we revisit the full circumstances, ascertain the facts for ourselves, and reach our decision on that basis. That allows us to cater for differences of evidence between Customs on the one hand and travellers on the other. That is the process that has been gone through in this case.

For the above reasons, we have decided to dismiss this appeal. At the conclusion of the hearing we indicated that we were minded so to do. No application for costs was made, and none are awarded.

M S JOHNSON

CHAIRMAN

Release date: 06/07/2004

MAN/03/8186

Note 1    Under regulation 12(1B)(e)(viii) of the Tobacco Products Regulations 2001 SI 2001/1712 (as amended).     [Back]

Note 2    These provisions are in point, although not so much so as section 78 of CEMA.    [Back]

Note 3    Any person failing to declare anything as required by the section is liable to a penalty on summary conviction – see section 78(3).     [Back]