United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E776, [2004] UKVAT(Excise) E00776

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Woodhouse v Customs and Excise [2004] UKVAT(Excise) E00776 (13 August 2004)

E 00776

EXCISE – non restoration of excise goods – vehicle restored on payment of sum equivalent to duty evaded – Customs' decision reasonable and proportionate – appeal dismissed

LONDON TRIBUNAL CENTRE

DAVID WOODHOUSE Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: MISS J C GORT (Chairman)

MR K MANTERFIELD

Sitting in public in London on 15 December 2003

Mr D Roberts appeared on behalf of the Appellant

Mr D Manknell of Counsel appeared on behalf of the Respondents

© CROWN COPYRIGHT 2004

DECISION

This is an appeal against a decision of the Respondents contained in a letter dated 31 January 2003, on review, to offer restoration of a BMW motorcycle on payment of a restoration fee of £522, and that excise goods seized from the Appellant would not be restored.

Background

The Appellant had initially appealed against seizure of the motorcycle and there was no indication that the Appellant had ever withdrawn the matter from the Magistrates Court. At the same time he had applied for restoration of the vehicle and excise goods and had lodged an appeal directly with the Tribunal against their non-restoration.

At a pre-hearing on 17 December 2002 the then chairman of the Tribunal directed that the Respondents should carry out a review of the case by 31 January 2003. At the time the review was carried out condemnation proceedings had not been heard, and no written decision had been made concerning any possible restoration, but Mr I F McEntee, the reviewing officer, treated the Tribunal's direction of 17 December 2002 as a valid requirement to conduct a statutory review of a decision as provided by the Finance Act 1994, Section 14 and Schedule 5.

The Facts

The Tribunal heard oral evidence from Mr R J Newell, an officer of Customs and Excise, from Paul Stewart Mirams, a Customs officer, from Mr McEntee and from the Appellant himself. Both parties provided bundles of documents.

The Appellant travels regularly to the continent for his work, and when he does so he usually goes in a company car and it is his policy not to bring back any excise goods when travelling in the company car. He also travels fairly frequently on his motorbike for pleasure, being a "biker".

The Appellant is a professional engineer who lives in part in Essex and in part in Cornwall. He earns some £47,000 per annum, and his partner of 7 years earns approximately £12,000 per annum. The Appellant is of a generous and hospitable nature and, particularly in Cornwall, is regarded as better off than most of his neighbours.

The Appellant was stopped around midday on the 10 March 2002 by Customs at the UK Control Zone in Coquelles when riding his motorbike. There was a preliminary interview and an examination of the storage compartments on the motorbike. In them were found 4.55 kilos of hand-rolling tobacco, 36 pouches of which were inside two taped up wine boxes, there were 400 cigarettes, 9 litres of wine and 12 litres of beer. The Appellant told the officer who stopped him that a friend had purchased the tobacco for him and placed it in the boxes. There was subsequently a full interview with the Appellant.

In the course of that interview the Appellant said inter alia that he had purchased 50 pouches of tobacco and 2 cartons of cigarettes, a friend of his had given him the loose Golden Virginia and the tobacco that was packed in the wine boxes. Whilst he had known there was tobacco in the wine boxes he had not known the quantity. His friends had frequently given him pouches of tobacco or other gifts in the past which he would take to Cornwall for his family. Prior to being given this tobacco he had himself purchased some tobacco, he had known that he would be in excess of the guide levels when he was given the further quantity but did not consider that he was importing a commercial volume. He had not paid his friends for the tobacco.

The Appellant said that he himself was a light smoker, that he was trying to give up and was using patches. The unopened tobacco which he had purchased was a gift for an odd job man in Cornwall called Charles Bettingson. The Appellant said: "Rather than pay him, I give him ten pouches, he does odd jobs." He also said that Mr Bettingson took him fishing for which he paid him cash. He was asked how many times he had purchased tobacco for Mr Bettingson for jobs he had done, giving it as a gift in lieu of payment; the Appellant replied that he done so twice, maybe three times, in the previous six months. The Appellant also said that he received the cost price for the tobacco from family members in Cornwall. The Appellant signed the officer's notebook, having made two corrections.

The seizing officer, Mr Newell, had taken various matters into account including the manner in which the items were packed which he considered was likely to deceive. He had also taken into account that the Appellant had not purchased the goods himself, and that he was to receive the cost price from his family members. The reviewing officer, Mr McEntee, was not convinced that the Appellant had actually tried to conceal the excise goods in the carrying compartments of the vehicle: he excepted that the Appellant would need to optimise the storage space available, especially as he was importing a case of beer and twelve bottles of wine. He also accepted that there was no evidence to suggest that the Appellant intended to sell the goods at a profit, and for this reason he decided to restore the motor bicycle to the Appellant on the payment of the sum of £522, which was approximately the value of the duty on the excise goods.

In the course of correspondence the Appellant had indicated that the motor bicycle had been damaged during the time that it was with the Respondents and that he would be seeking compensation for such damage. This was not an issue before the Tribunal, and is not a matter which could be decided by the Tribunal.

We found the Appellant to be a reliable witness and accept his evidence,

He told us that he had a joint bank account with his partner and that it would be she who would give her money from her own account for the relevant purchases. He also said that when he had told the officer he smoked some three to five cigarettes per day, this related only to when he was at work. He would smoke between six or seven in a course of an evening and might get through between 15 and 20 cigarettes a day. He had smoked ever since he left school and he had been trying to give it up since 1973.

The hand-rolling tobacco which he had been given by his friends was more probably a gift for his partner than for the Appellant. On a previous occasion they had given wine to the Appellant.

It was only from his partner that the Appellant took money, the rest of the tobacco that he distributed was done purely as gifts. His partner's relatives in Cornwall were farming people on a low wage, whereas he was in a position to make gifts of this nature from time to time, although not on a regular basis. Similarly he liked to give tobacco as a gift to Charles Bettingson who owned a chainsaw which he would allow the Appellant to use to cut up logs. He would go fishing with Mr Bettingson and would pay him the proper rate for this. The Tribunal was shown a copy of a brochure which inter alia set out Mr Bettingson's rates for fishing, which, for salmon were £120 a day, and for sea trout £75 per day. We were also shown various photographs of Mr Bettingson, one of which was him with the Appellant and a large Cornish salmon. It was suggested by the Appellant that it would take a lot of tobacco or cigarettes to pay Mr Bettingson's professional rates.

It was normal in the part of Cornwall where the Appellant lived for small gifts such as pheasants or fish to be left at his door and he would reciprocate. Any gifts he himself gave were in addition to payment at the proper rate for any jobs which were done. However he did not pay Mr Bettingson an hourly rate for any log cutting which Mr Bettingson himself did for the Appellant. At no time did he ever consider the gifts he gave as payment for services rendered. The Appellant likened the gifts he gave to Mr Bettingson to gifts which would be given in Scotland to a ghillie after a day's shooting. It was in addition to payment.

Legislative Provisions

The relevant provision of the Excise Duties (Personal Reliefs) Order 1992 as amended are:

Article 3: "Subject to the provisions of this order a Community traveller entering a control zone or the United Kingdom shall be relieved from payment of any duty of excise on excise goods which he has obtained for his own use in the course of cross-border shopping and which he has transported."

Article 2(1): " 'Own use' includes use as a personal gift provided that if a person making the gift receives in consequence any money or monies worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use should not be regarded as own use for the purposes of this order."

Article 3A(2): "No relief shall be treated as having been afforded if the goods are held for a commercial purpose.

Article 5(1): "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."

Section 49(1) of the Customs and Excise Management Act 1979 ("CEMA") provides:

"Where –

(f) Any imported goods are concealed or packed in any manner appearing to be intending to deceive an officer,

… those goods shall … be liable to forfeiture.

Section 141(1) of CEMA provides that:

Where anything has been liable to forfeiture under the Customs and Excise Acts –

(a) Any ship, aircraft, vehicle … or anything whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture, either at a time when it was so liable or for the purposes of the commission of the offence for which it later became so liable; and

(b) Any other thing mixed, packed or found with the thing so liable, should also be liable to forfeitures."

Section 152 of CEMA provides that:

"The Commissioners may, as they see fit –

…

(b) Restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under the Customs and Excise Acts."

Article 5(3A) provides: "The Commissioners may require a person to whom this paragraph applies to satisfy them that the excise goods afforded relief under this Order are not being held or used for a commercial purpose.

(3B) Where a person fails to satisfy the Commissioners that the excise goods in question are not being held or used for a commercial purpose the condition imposed by paragraph (1) above shall, subject to paragraph (3C) below, be treated as not being complied with.

(3C) Paragraph (3B) above shall not apply where a Court or Tribunal is satisfied that the condition imposed by paragraph (1) above has been complied with."

The Respondents accepted that whereas the 1992 Order sought to implement the 1992 Excise Directive it failed so to implement the Directive, which has direct effect to the extent that:

(i) It made excise goods imported from another Member State chargeable to UK excise duty without it being established that the goods were imported into the UK for a commercial purpose; and

(ii) It placed a persuasive burden of proof on the individual to prove that the goods were not held for a commercial purpose where the goods were in excess of the minimum indicative levels.

The Respondents' case

The Respondents accepted that the standard statement read out by the officers to the Appellant at the time reflected in its terms the misapprehension of the legal position and the burden of proof. It was submitted that the question was what attitude the Respondents had actually adopted in coming to their conclusion that the goods were liable to forfeiture. The Tribunal was referred to the case of R (Hoverspeed) v Customs and Excise [2003] QB 1041 and Gascoyne v Customs & Excise [2003] EWHC 257.) In Hoverspeed it was said:

"[A] s Lord Woolf CJ pointed out …, no one is in a better position to know whether the goods are to be used for private or commercial purposes than the person in possession of them and, if Customs officers do not believe him, there is in practical terms not much difference between his failing to satisfy them that they are not being held for his own use (the PRO test) and them being satisfied that they are being held for 'commercial end' (the test under the Directive). In a border line case, however, the location of the burden of proof may well make a difference."

It was submitted in the present case that the decision was not reached on the basis of any legal misapprehension nor by reference to any burden of proof: the officers had reached a clear conclusion that they believed that the goods were not for the Appellant's own use. The Respondents relied on the Appellant's frank admission to the effect that some of the goods were for his family who had reimbursed him the cost price of the goods.

The Appellant had also admitted that some of the goods were to be given as payment in kind for odd jobs, and this did not satisfy the criteria of being "for own use". The Tribunal was directed to the Tribunal decision in the case of William St George v Customs and Excise heard on 18 September 2003.

On the above basis all of the goods were therefore liable to forfeiture, the remaining goods being liable on the basis that they were "mixed, packed or found with" the Appellant's other goods, pursuant to Section 141(1) of CEMA.

Insofar as it was an issue, it was submitted that the Tribunal had no jurisdiction to award compensation in those circumstances and the Tribunal was referred to the case of HMCE v Alzitrans S L [2003] EWHC 75.

Finally it was submitted that the review officer's decision was reasonable in that he had taken into account the Respondents' policy in relation to the restoration of privately owned vehicles. The application of the policy in the present case had achieved a fair balance between the deterrence of smuggling and the protection of the revenue on the one hand and the right to enjoyment of property under Article 1 of the First Protocol to the ECHR on the other.

The Appellant's case

It was submitted that at no time during the interception or during the subsequent interview did the officer give any reasons for stopping the Appellant, nor was it explained to the Appellant the implication of his answers to the officer's questions. The commerciality statement read to the Appellant wrongly implied that the burden of proof was on the Appellant.

It was contended that following the search of the Appellant's vehicle the Customs officer had already decided on seizure. It was considered that there was nothing the Appellant could have said or produced in evidence that would have prevented the seizure. The seizure was both disproportionate and unreasonable in relation to the small value of the excise goods against the high value of the vehicle.

Furthermore it was submitted that the seizure of the vehicle and excise goods was in breach of Article 1, Protocol 1 of the ECHR. The Respondents' blanket policy of non-restoration of the excise goods fettered their exercise of their discretion under CEMA.

It was submitted that the Respondents' review decision was flawed since it was conducted without giving the Appellant the opportunity to make oral representations as the Appellant had requested by his letter dated 23 April 2002. Nor was there any reference to arguments which had been advanced by the Appellant in his letter of the 19 November 2002. In this letter the Appellant had stated that the goods were partly for his own consumption and partly as gifts as kind. Nor had the officer considered that the Appellant had no financial difficulties.

It was submitted that the restoration of the motor bicycle upon the payment of the sum equivalent to the excise duty was a severe and harsh penalty since none of the excise goods were being restored, even though some of those goods were for the Appellant's own personal use. The officer failed to take into account that the Appellant had already suffered the loss of the use of his vehicle for nearly 12 months, together with stress, shame and financial loss.

Reasons for Decision

We entirely accept the Appellant's evidence to us about the circumstances of his life in Cornwall and his generous habit of giving presents to people who do him favours. Unfortunately for the Appellant that is not sufficient for him to succeed in this appeal.

The jurisdiction of the Tribunal is limited to considering whether or not the decision made by the review officer was such that no reasonable officer could have reached in that he had either taken into consideration matters which he ought not, or had failed to consider matters which he ought have done. In the present case we find that Mr McEntee carried out an exemplary review. He did not rely on all the reasons for seizure given by the seizing officer, but looked at the evidence in front of him. Unlike the seizing officer he considered that the way the items were packed was on account of the difficulty of transporting them on a motorbike, and therefore was not a reason for considering the importation to be a commercial one. He also gave the benefit of the doubt to the Appellant with regard to whether or not the Appellant had any intention to make a profit.

Whilst it is true that Mr McEntee did not follow up the Appellant's request for an interview, we do not consider this to be unreasonable. Mr McEntee was of the view that the Appellant would have been invited to submit any matters which he wished to be considered to him, and we conclude that he was entitled to take this into account.

In the Appellant's oral evidence to the Tribunal he in effect repeated what he had said to the seizing officer, namely that he would be receiving payment for part of the consignment from his partner. This money would be paid not from their joint account but from her own separate account. We do not consider that even if Mr McEntee had considered the Appellant's economic situation that his decision would have been any different.

With regards to the Appellant's submission that only part of the consignment should have been seized or not restored, because the rest was for own use, Section 141(1) of the CEMA provides that where goods which are liable for forfeiture are mixed, packed or found with other goods, those other goods are also liable to forfeiture.

We find the Respondents' decision to be reasonable and proportionate and this appeal is dismissed.

No order for costs.

J C GORT

CHAIRMAN

RELEASED: 13 August 2004

LON/02/8310