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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/E00766.html
Cite as: [2004] UKVAT(Excise) E00766, [2004] UKVAT(Excise) E766
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Long Big Trans KFT v Customs and Excise [2004] UKVAT(Excise) E00766 (16 July 2004)
    E00766
    EXCISE DUTIES – Restoration of commercial vehicle – Vehicle and trailer seized after search revealing nearly 1.2 million cigarettes – Restoration of vehicle and trailer offered on payment of £13,000 – Whether reasonable – Yes

    LONDON TRIBUNAL CENTRE

    LONG BIG TRANS KFT Appellant
    • and –

    THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

    Tribunal: STEPHEN OLIVER QC (Chairman)

    Sitting in public in London on 5 July 2004

    No appearance for the Appellant

    Sarabjit Singh, counsel, instructed by the Solicitors for the Customs and Excise, for the Respondents

    © CROWN COPYRIGHT 2004

     
    DECISION
  1. Long Big Trans KFT ("Long Big") appeals against a decision of the Customs dated 25 April 2003. The decision takes the form of a letter which notifies the Appellant that the Customs upheld, on review, the decision to offer restoration of a vehicle and a trailer upon the payment of a restoration fee of £13,075. There was no representative for Long Big. Long Big had been notified of the hearing. I decided to go ahead and hear the appeal in Long Big's absence. This means that Long Big has the opportunity to apply to the Tribunal, within 30 days of receiving this Decision, to have the matter reviewed and reinstated by the Tribunal on such terms as seem just to the Tribunal. This may mean that the Tribunal will decide to re-hear the appeal. Rule 26 of the Tribunal Rules enables the Tribunal to adopt this course where one of the parties has not attended the hearing. But it will only re-hear an appeal if the appellant (such as Long Big) or its representative attends the application and, if granted, the subsequent hearing.

    2. Background facts
  2. Long Big was the owner of an Iveco-Magirus heavy goods vehicle ("the vehicle") and trailer ("the trailer"). Long Big's business address is in Damjanich in Hungary. On 13 August 2002 the vehicle and the trailer were intercepted at Eastern Docks Dover. The driver of the vehicle was Zoltan Szigeti. Mr Szigeti responded to some initial questions. He told the officers that he had travelled from Hungary. He produced the "CMRs" for what was described as a "groupage" load which was being carried. He said that the cargo had been loaded in Hungary and was being delivered to Dartford. The seal, he said, had been put on in France. Mr Szigeti said that he had not been carrying any cigarettes or tobacco.

  3. The trailer was examined by Customs. 1,179,600 Superkings cigarettes were discovered, contained in five separate shrink-wrapped pallets. A photograph shows them placed on the top of the groupage load. The cigarettes were seized along with the vehicle and the trailer.

  4. On 30 August 2002 Long Big wrote to the Customs requesting restoration of the vehicle and the trailer. On 5 December 2002, the Customs informed Long Big's representative that the vehicle and trailer would be offered for restoration upon payment of a fee of £13,075, an amount equivalent to the "value" of the vehicle and the trailer. On 7 January 2003 Long Big's representatives wrote to the Customs requesting a review of this decision. The letter was received by Customs on 17 March 2003. On 7 April 2003 Customs wrote to Long Big's representative notifying them that a formal review of the decision had taken place. The review officer requested further information from Long Big before he made a final decision. As this further information was not forthcoming, the Customs wrote to Long Big's representatives (on 25 April) informing them that the original decision to offer restoration of the vehicle and trailer upon payment of the fee of £13,075 would be upheld.

  5. The Customs had written to Long Big back in October 2002 inviting a representative to attend an interview at Dover Eastern Docks. The person coming to the interview was asked to bring proof of identity and commercial documentation relating to the trip. They were asked to ensure that the person attending the interview had knowledge of the workings of Long Big and specific details relating to the trip and the consignment which had resulted in the seizure of the vehicle. On 5 November 2003 Long Big's representatives had written back to Customs saying that in view of language difficulties in connection with the owner, it would be helpful if Customs could explain why they wanted a representative to come to England for the purpose of having an interview. Customs had responded on 19 November stating that, in view of the nature of the seizure, it would be helpful for the deciding officer to be able to discuss matters relating to the transit of the goods and thus make an informed decision.

  6. On 7 January 2003, following receipt of the decision letter, the representatives for Long Big wrote to the Customs officer asking for a review explaining that the figure of £13,075 required as the fee for restoration was exceptionally high having regard to the fact that Long Big was a small firm who were, in the view of the representatives, not culpable in the secretion of contraband on their lorry.

  7. The review decision is contained in two letters. The first is dated 7 April 2003. In this letter the review officer recites the facts set out above. He goes on to observe that Customs had invited a representative of Long Big to come to an interview and that no further communication had been received by Customs in relation to this request. The letter concluded with a request for information. The terms and conditions of Long Big's driver's contract of employment were sought. Long Big was asked to inform Customs whether smuggling would be treated by it as a serious disciplinary offence which would lead automatically to dismissal or other strong sanctions. Long Big was asked whether it had sought and obtained a copy of employment references from the driver's previous employers or made enquiries of the previous employers to establish whether the driver had had no previous dealings with Customs. There was no response. The second letter embodying the review officer's decision was dated 25 April 2003. In that letter the review officer noted that, had the cigarettes been loaded into the vehicle at the same time as the groupage load, the driver had failed to comply with article 8(2) of the Convention on the Contract for the International Carriage of Goods by Road in that he had failed to state that he had been unable to check the load. The review officer went on to observe that by that omission, under article 9(2) of the Convention, the driver had accepted the CMR as it stood in the sense that it agreed with the load, which in fact it did not as there had been no mention in the CMR of the cigarettes concealed within the load.

    8. Long Big's case
  8. Long Big, it will be noted, provided no information in support of its claim for the return of the vehicle and the trailer other than that referred to above. It simply relied on the fact that the figure of £13,075 was unjustified in view of the fact that there had been no opportunity of inspecting the load and that the principal of Long Big had had no knowledge of any items secreted within the load and had had no opportunity of checking it. It is also relevant to mention that Long Big stated that the seizure of the vehicle and the trailer would deprive the company of a substantial part of its operations and earning ability.

    9. The legal background
  9. The seizure of the vehicle and the trailer has not been challenged. The only question for us is whether the decision of the Customs to offer restoration of the vehicle and the trailer on payment of a fee of £13,075 is reasonable in all the circumstances. This follows from Customs and Excise Management Act 1979 section 152(b) which provides that the Customs may, if they see fit, "restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under the customs and excise Acts".

  10. The Customs have a policy. The policy is that on first detection restoration will be offered for 100% of the revenue value of the goods or the value of the vehicle, whichever is the lower. (In the present case the duty value of the goods was £162,462, whereas the value of the vehicle and the trailer was £13,075.) Restoration was offered for the latter amount. The "value" I understand, is the "trade value" and this is usually determined from a trade publication such as Glass's Guide.

  11. We have to look at the decision reached by the Customs and determine whether they have acted in a way in which no reasonable body of "Commissioners of Customs and Excise" could have acted; this means asking whether they have taken into account some irrelevant matter or of disregarded something to which they should have given weight – or whether the decision is disproportionately harsh in all the circumstances.

  12. Another point relevant to the exercise by the Customs of their discretion arises from the circumstance that they are operating within a policy. In an earlier decision of this tribunal (Handel v Customs and Excise Commissioners (2002) Ex Dec 695) the tribunal observed that a policy might be flawed where it made no allowance for the efforts of the trader to comply with the excise regime. In Handel, the evidence of the review officer was that the terms of the policy were strictly adhered to and the efforts or otherwise of the trader to comply were not regarded as relevant exceptional circumstances. Mr Sarabjit Singh representing the Commissioners assured me that this was not the case, at least as regards the limb of Customs' policy followed in the present case: (namely that on first detection restoration will be offered for 100% of the revenue value of the goods or the value of the vehicle, whichever is lower). I proceed therefore on the basis that the particular circumstances under which Long Big carry on their business are considerations relevant to the decision.

    13. Missing information
  13. Long Big has failed to give any useful information. We know that it is a small company and, according to their letter to the Customs, the loss of a vehicle for nearly two years and the restoration fee have seriously damaged its capacity to carry on trade. We have also been told that the management of Long Big did not know that cigarettes were being transported in the trailer.

  14. At the same time, Long Big have failed to provide information which, in my view, is relevant to the question of whether the vehicle and the trailer should be restored. What, for example, is the status of Zoltan Szigeti? Is he a manager or one of the rank and file drivers employed by the company? If he is a manager, his bootlegging activities may be treated as Long Big's. We know nothing of the circumstances in which the cigarettes were loaded onto the trailer, assuming the CMR to be correct. We know nothing of Long Big's internal rules and disciplinary regime. They were asked by the Customs to provide details of these and have not. We have no knowledge of the record of Mr Szigeti. Nor do we know whether any checks were made on his honesty and reliability at the time when he was engaged by Long Big. Nor do we have any first hand knowledge of Long Big's business. Does it, for example, make regular trips to the UK? If it does it cannot fail to have noticed the precautions that the UK takes to protect its excise revenue. There may well be other features that are relevant to the decision; but these are within the knowledge of Long Big and have not been disclosed to the Customs.

  15. Also relevant to the decision is the value of the vehicle and the trailer. This is the starting point in determining the restoration fee for the purposes of the policy referred to above. The Glass's Guide value in England may bear no relation to the trade value of such a vehicle in other parts of Europe.

  16. I have mentioned the above items of missing information because, if Long Big exercises its right to ask for this case to be re-heard, it would do well to come along, through one of its management, who could give a full explanation and cover the missing information. As things are I cannot give Long Big the benefit of the doubt. In the absence of any more detailed explanation I cannot determine whether the Customs have taken into account some irrelevant matter or have disregarded something that they ought to have given weight to.

    17. Conclusions
  17. Central to the decision of the Customs has been their conclusion that Long Big had failed to take reasonable steps to prevent Mr Szigeti from importing illicit goods. The Customs have placed considerable reliance on the fact that the driver had failed to comply with his obligations under the Convention on the Contract for the International Carriage of Goods by Road. They say that if the cigarettes have been loaded into the vehicle at the same time as the "groupage" load, the driver had failed to comply with Article 8(2) in that he had failed to state that he had been unable to check the load. The effect of Article 9(2) of the Convention, say the Customs, is that the driver must be taken to have accepted the CMR as it stood and accepted that it agreed with the load, which it did not as there had been no mention in the CMR of the cigarettes concealed within the load. Alternatively, say the Customs, if the cigarettes have been loaded when the driver left the premises in Hungary and the CMR was in agreement with the load, the cigarettes must have been loaded and concealed some time before a seal was applied to the trailer after a security check in France. As the driver was in control of the vehicle, either he allowed the cigarettes to be loaded and concealed before the seal was applied to the trailer, or he failed to prevent the cigarettes from being so loaded and concealed. As such, say the Customs, it was clear that the driver had not fulfilled his obligations under the Convention; in the alternative he had failed to take due care to prevent cigarettes from being loaded and concealed in the trailer.

  18. The effect of the Convention is, according to section 1 of the Carriage of Goods by Road Act 1965 section 1, that it has the force of law in the United Kingdom so far as it relates to the rights and liabilities of persons concerned in the carriage of goods by road under a contract to which the Convention applies. It in no way imposes an obligation on the haulier or the driver, being an obligation that affects their rights and liabilities vis-à-vis the Customs. Nonetheless, where international transportation by road is involved, consignment notes (such as CMRs) will be filled in and carried. The contents of the consignment notes will inevitably contain information that can be used as primary evidence in determining whether or not a haulier has been involved in a bootlegging operation. For the reasons given above, I think that the conclusions to be drawn from the entries in the CMR (and the absence of any reference to cigarettes) can fairly be taken to indicate that either the cigarettes were loaded into the vehicle at the same time as the original loading or that they were loaded and concealed sometime before a seal was applied to the trailer after a security check in France.

  19. I have already noted that Long Big have not responded to the Customs' request for information about the terms and conditions of Mr Szigeti's contract of employment nor have they answered the question whether his contract treated smuggling as a serious disciplinary offence. The Customs ask Long Big whether they had sought references from previous employers or established whether Mr Szigeti had had any previous dealings with Customs. They did not answer; indeed in their letter of 7 October 2002 they decline the offer of an interview.

  20. In the circumstances it seems to me that the Customs reasonably assumed that Long Big did not have sufficient safeguards in place to prevent bootlegging. They have given no indication that smuggling is treated as a serious disciplinary offence by Long Big, nor have they told us whether Mr Szigeti was properly vetted to ensure that he could be trusted. Nor is there any indication that Long Big has a training policy designed to prevent illegal smuggling. In the absence of information on those features, the decision of the Customs was not, I think, unreasonable.

  21. I turn now to the question of whether the decision by the Customs to ask for a fee of £13,075 in return for the restoration of the vehicle and trailer was reasonable and proportionate. In this connection it is well established that the Customs are entitled to operate a policy to contain the serious impact on the revenue at the UK as a result of bootlegging. It will be noted that the duty value of the illicit goods seized from Long Big amounted to £162,462. Restoration has been offered for a relatively small fraction of the total duty involved. It is also relevant that under the Customs' policy the amount of revenue potentially evaded is one of the factors that can determine the amount of the fee. Moreover, bearing in mind the fact that the policy is (as Mr Singh explained) now accepted as merely a flexible guideline for review officers who have a wide discretion when applying it and are free to adjust the fee to ensure that a proportionate decision is reached in each case, the decision cannot now be faulted on Handel grounds. Recognizing that the information available to the deciding officer has been very slight, I nonetheless think that the decision is proportionate in all the circumstances. There was a relatively large cargo of contraband cigarettes. Long Big had taken no steps to displace the strong suspicion that they had been careless in their supervision of their drivers. Overall, therefore, I can see nothing to displace the decision on proportionality grounds. All I can do is to repeat that Long Big has the right to apply to this Tribunal to have the decision set aside. I have extended the time from 14 days, as specified in our rules, to 30 days to enable Long Big to get this decision translated. Rule 26(4) provides that if Long Big were to make an application "and does not attend the hearing of that application, (Long Big) shall not be entitled to have (this) decision … set aside."

  22. For the reasons given above I dismiss the appeal.

    23. STEPHEN OLIVER QC
    CHAIRMAN
    RELEASED:16/07/2004

    LON/03/8151

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