United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00756.html
Cite as: [2004] UKVAT(Excise) E00756, [2004] UKVAT(Excise) E756

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Summerhose Ltd (t/a Ward Bros) v Customs and Excise [2004] UKVAT(Excise) E00756 (06 July 2004)

E00756

Rebated fuel — two vehicles seized from Company's haulage premises — restoration on terms offered — calculation disputed — best judgement on information available — decision reasonably arrived at — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

SUMMERHOSE LTD Appellant

(trading as WARD BROS.)

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mrs E Gilliland (Chairman)

Mrs R Dean (Member)

Sitting in public in Manchester on 26 April 2004

Mr R Ward, Managing Director of the Appellant for the Appellant

Miss M Mayoh, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. The appeal before the tribunal is that of Summerhose Ltd. trading as Ward Brothers (the Appellant) against the decision of the Commissioners to impose terms on the restoration of two vehicles seized on 11 May 2002.The Appellant's business is in bulk haulage. Mr. G. Ward Managing Director of the Appellant and in charge of the day to day running of it has presented its case. He has put to us his recollection of the events on the day of the seizure. He has told us that officers of the Commissioners arrived at the Appellant's depot (the Red Lion Garage site at Lepton near Huddersfield) at about 10.a.m. They dipped the fuel tanks in 7 vehicles and found 2 with split fuel tanks. Both of those vehicles tested positive for red diesel (rebated fuel) and were immediately seized. Mr Ward was at the premises as they were working on one of the seized vehicles on that Saturday morning. He was interviewed he says for some hours and states that arrangements were made for 2 drivers to remove the seized vehicles; and the Appellant's books and the tachograph charts were also taken by the officers. He has said that some 8 weeks later the Commissioners came up with some figures being the terms on which the Appellant could get its vehicles back. He disagreed with these figures and paid a small portion of them to have the vehicles restored. We have in the bundle of copy correspondence and documents before us a letter dated 2 July 2002 from Mr. Ward to Mr. H.V.Worrell Senior Officer at the Road Fuel Testing Unit at Hull and in it Mr. Ward sets out what he states is "the agreed figure of £12850 which is full and final payment for the release of the 2 vehicles minus their fuel tanks"; he then makes his proposal for an immediate payment of £6850 followed by monthly instalments of £1000 on the 1^st of each month commencing 1 August 2002. The vehicles were accordingly released to the Appellant. Mr. Ward sought a review of Mr. Worrell's decision on 17 July 2002. This review was conducted by Mr. J.R.Rushforth (who has given evidence to the tribunal today) on 30 August 2002 and he upheld the restoration terms as fair and reasonable. The Appellant then appealed to the tribunal. The grounds of appeal set out in the Notice of Appeal dated 25 September 2002 were "There has been no proof that the vehicles in question were using rebated fuel on the public road".
2. It is not in dispute that the 2 vehicles referred to are a Volvo tractor unit registration L556 TTL (the Volvo) and a Scania tractor unit registration R227 JNL (the Scania). Mr Ward has acknowledged that both vehicles were taxed for public road use. The Volvo he has told us was purchased as a spare from a haulage company that went out of business; the Scania had been bought only a few months prior to the visit by the officers. That was the vehicle being worked on that day as it had some fuel problem on its fuel system and would not run. The Scania needed hydraulic equipment for the discharging of loads and because of difficulties in getting the hydraulic tank high enough, the previous weekend Mr. Ward had taken the fuel tank off, cut it in two and put a false dividing plate inside creating two parts, one for hydraulic fuel and one for diesel. The drum of diesel they were using on 11 May 2002 was unfortunately contaminated with red diesel and it was fed round the system though Mr. Ward says only a small amount went to the diesel tank. When interviewed Mr Ward had said that the red diesel was in the Volvo as they had done internal site work.
3. There are with the papers before us copies of the manuscript records of the interviews of 11 May 2002 and 25 June 2002.In addition we have copies of the seizure documents the analysis of tachograph charts and diesel requirements (the officer's calculations) and the sample test notes. Mr.Ward's case is that the vehicles should not have been seized; up to the day before the visit the Scania had only been on the road with white diesel and as for the Volvo apart from the M.O.T. test and tachograph calibration it had never been on a public road and then it had been on a lowloader. He had no explanation at the second interview when asked about a sighting on a public road in March 2002. Further he did not accept the officer's figures and considered the calculations of the shortfall and duty "plucked from the sky". The Commissioners response has been that it is an absolute offence to run vehicles taxed for public road use on rebated fuel; that the restoration terms were properly within the declared policy of the Commissioners; and that they were calculated on figures available to the Commissioners, were made to best judgement and constituted fair and reasonable settlement terms.
4. The supervisory jurisdiction of the tribunal in matters of this nature is to determine whether the decision of the Commissioners is one that could not reasonably have been arrived at. We look to see that the officer making the decision in this case under s. 152 of the Customs and Excise Management Act 1979 (CEMA) has taken into account all relevant considerations, has disregarded all irrelevant factors and has acted on a correct understanding of the applicable law. Under the provisions of s.12 of the Hydrocarbon Oil Duties Act 1979 (the Fuel Act) no rebated fuel shall…"(a) be used as fuel for a road vehicle; or (b) be taken into a road vehicle as fuel, unless an amount equal to the amount…allowable in respect of rebate on like oil has been paid to the Commissioners"…; s.13 sets out penalties for misuse of rebated heavy oil and renders rebated fuel taken into a road vehicle as liable to forfeiture; s.24 (A) deals with penalties for the misuse of marked oil (hydrocarbon oil identified as not to be used as fuel for road vehicles, or for road vehicles of a particular description) which also becomes forfeitable. The vehicle carrying the fuel is forfeitable under s.141 of CEMA. For the purposes of the Fuel Act a road vehicle is defined as " a vehicle constructed or adapted for use on roads" but this does not include an "excepted vehicle "ie. an unlicensed vehicle not used on public roads but that is only when (a) it is not used on a public road, and (b) no licence under the Vehicle Excise and Registration Act 1994 is in force in respect of it (Schedule 1, s. 27).
5. We accept the Commissioners' submissions on the law. This is a case where strict liability applies and the reasons for the taxation of the vehicles or the taking in or use of the inappropriate fuel is not relevant. The Scania was a vehicle used on the road. Mr. Ward has said that it was fuelled only with white diesel and it was through a combination of circumstances when it was in the yard under repair that led to red diesel being in it when dipped. Whether this arose through inadvertence or intention the fuel and the vehicle are properly forfeitable. With regard to the Volvo it also was taxed as a road vehicle and found with rebated fuel in its system and again both fuel and vehicle were forfeitable. Mr Ward has called for evidence that the vehicles were using rebated fuel on the public road; the evidence required is however that the vehicles were duly taxed for road use and had rebated fuel in them and on this we are satisfied and so find. The Commissioners did however offer to the Appellant restoration on terms. Mr Rushforth has given evidence as to the Commissioners' policy in that for a subsequent offence as distinct from a first offence (and we accept that this was not a first offence) officers would be less willing to be lenient and restoration would not normally be given. We do not know why the policy was varied in this matter but it was and that was clearly to the Appellant's advantage. The reasonableness of those terms has today been put in issue by Mr. Ward and accordingly we are looking at how the review officer reached his decision.
6. The actual breakdown of the calculation of the restoration figure is in the papers before us. The amount of duty evaded was calculated at £9519.44; the civil penalties were put at £250 for taking in rebated fuel and for usage of the same for each vehicle multiplied by the number of times taken from the interview record they were evidenced as used on the roads. There were added storage costs of £1212.60 and £117 .50 the cost of removal of the tanks. The Commissioners have not disputed that there has had to be a measure of estimation in the figures produced where there was no other information available. We are satisfied with the methodology of the calculation. We accept it as legitimate for the Commissioners to seek to calculate by other means than actual figures when these are not produced or provided the duty evaded and the shortfall. The mileage was an estimate based on the information available but not a spurious estimate as Mr. Ward would suggest. The average mileage of vehicles of that type was taken since satisfactory documentation with actual figures was not made available. There have been no admissions as to usage but Mr Ward has not sought to produce from the Appellant's records details of mileages of other vehicles to dispute the assumptions of the officers in making the calculations and reviewing them. No tachographs were produced for the Volvo even within a 12 month period though Mr. Ward said that the tachographs were calibrated for this vehicle. Reference was made at the second interview to another vehicle (registration number F77JTY) not the subject of forfeiture but Mr. Ward has not presented any comparative figures on that or any other vehicles owned and used by the Appellant. As to evidence of use on the public road we have been referred also to the second interview when a series of invoices were put to Mr. Ward. Some did not relate to the seized vehicles but an invoice from Keighley Tyre Sales on 18 January was for a call out to the Volvo and later an invoice from Crossroads Truck and Bus dated 4/2/2 re a tachograph check on the face of the record did. The evidence drawn from these was that there had been roadside repairs and fuelling. No credible explanation has been given by Mr. Ward other than to deny their existence. We are satisfied that Mr. Ward could have disputed these conclusions before signing the interview record as accurate. Equally in taxing a vehicle for road use even as a spare the logic is that it is available for road use and Mr. Ward himself said that the cost of doing so was acceptable. Mr. Rushforth was not able to explain to us in detail today the manuscript calculations in the papers of the Senior Officer who was the road fuel testing officer but he had discussed the figures with him and saw it as a reasonable interpretation of the shortfall and duty and in fact he drew to our attention that on the figures shown only 2/3rds of the calculation produced had been used. Mr.Ward had been given the opportunity to produce responses but had not done so. In the absence of other information it was appropriate for the officer to assume that the vehicles were used in an average manner in the business. We are satisfied that the interviewing and the road testing officers were experienced and had used that experience and the business profile for the calculations. Nothing that Mr. Ward has submitted has led us to consider the decision of the Commissioners one which could not reasonably be arrived at.
7. Accordingly we dismiss the appeal.
8. The Commissioners have not sought costs and we make no direction as to costs.

MRS E GILLILAND

CHAIRMAN

Release date:06/07/2004

MAN/02/8227