United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E785, [2004] UKVAT(Excise) E00785

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Beasley v Customs and Excise [2004] UKVAT(Excise) E00785 (17 August 2004)

E00785

EXCISE DUTY — Restoration of seized excise goods — facts found do not support the findings of the review — Respondents fail to have regard to the circumstances of the Appellant's importation — Respondents pay too much attention to the actions of the Appellant's co-travellers — was the decision not to restore the excise goods reasonable — no — appeal allowed and further review directed

MANCHESTER TRIBUNAL CENTRE

RAYMOND BEASLEY Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M Tildesley (Chairman)

Mrs MP Kostick BA FCA CTA (Member)

Sitting in public in Birmingham on 17 June 2004

The Appellant appeared in person

Mr James Puzey, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

DECISION

The Appeal

The Appellant is appealing against the decision on review of the Respondents dated 1 May 2003 not to restore excise goods (2,800 cigarettes, 4.5 litres of wine and 18.48 litres of beer) and the withdrawal of the decision refusing to restore a vehicle, Peugeot 309GL registration number F 752 SDU.

The History of the Proceedings

On the 7 June 2001 the Respondents seized excise goods and the Appellant's

motor vehicle, Peugeot 309 GL, registration number F752 SDU. On 10 June 2001 the Appellant requested restoration of the goods and motor vehicle. On the 4 July 2001 the Respondents refused restoration. The Appellant requested a review of the Respondents' refusal to offer restoration which was received by the Respondents on 10 July 2001. The Respondents failed to carry out the review in the required time of 45 days with the result the original decision to refuse restoration became the deemed decision on review.

The Appellant submitted a Notice of Appeal on 6 October 2001. The grounds for Appeal were as follows:

"The purchases by myself and to the very best of my knowledge both A McPartlin and M Hamilton was for personal use only and not excessive but if I am deemed guilty I wish to be proved so by Court and I am only too pleased to go to jail if found guilty".

On 31 March 2003 the Respondents applied for a direction of the Tribunal that the Appeal be allowed with a fresh review of the decision not to restore the excise goods and the vehicle. The reason for the Application was that the deemed decision not to restore should not be relied upon in the light of the Hoverspeed decision and that the issues raised by the request for restoration should be fully reviewed. The direction was granted and a further review by a different officer was ordered.

The review was completed and notified to the Appellant by letter dated 1 May 2003. The outcome of the further review confirmed the decision not to restore the excise goods, but the decision not to restore the vehicle was withdrawn. The Respondents, however, had already disposed of the vehicle, so they offered the Appellant a compensation payment based on the market value of the vehicle at the time of seizure.

On 6 August 2003 the Tribunal directed that the Appellant was "at liberty to carry on with the existing Appeal on the basis that it related to the forfeited goods as well as the vehicle which was the subject of the Review".

On 29 January 2004 the Appeal hearing was adjourned because the Review Officer was unable to attend. Further the Tribunal directed that the Appellant's appeal related to the Respondents' decision on review dated 1 May 2003.

On 17 June 2004 the Review Officer again was unable to attend, however, we decided to hear the Appeal to avoid further delay and because the Appellant stated he had no questions to ask of the Officer. The Respondents supported the decision to proceed with the Appeal.

The Issue

The function of the Tribunal is to determine whether the Respondents' decision not to restore the excise goods was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable the decision maker must have considered all relevant matters and must not have taken into consideration irrelevant matters.

The Evidence

The Tribunal heard evidence from the Appellant. A bundle of documents was provided to the Tribunal.

On the 7 June 2001 at Eastern Docks, Dover the Appellant was intercepted by the Respondents. At the time the Appellant was driving his motor vehicle, registered number F752 SDU. There were two passengers in his car Mark Hamilton and Anthony McPartlin. After interviewing the Appellant and his two passengers the Respondents seized 5,000 Benson and Hedges cigarettes belonging to Mr McPartlin, 10 kilograms of Golden Virginia hand rolling tobacco belonging to Mr Hamilton, and 2,800 Superkings cigarettes, 4.5 litres of wine, 18.48 litres of beer all belonging to the Appellant. The Respondents also seized the Appellant's motor vehicle.

The Respondents' Decision on Review dated 1 May 2003

The Review Officer, H B Perkins, took a fresh look at the circumstances of the case. She noted that the quantity of excise goods imported by the Appellant and his two passengers exceeded the guide levels specified in the REDS (beer and tobacco products) Regulations. The Officer considered that Mr Hamilton's expenditure of £408 on tobacco was unrealistic when he had just returned to work after being unemployed for two years and because some of the tobacco was likely to go stale with its limited shelf life. She was of the view that Mr McPartlin's expenditure of £475 on 5,000 cigarettes was implausible. The Officer noted that Mr McPartlin claimed he used his redundancy money to fund the purchase but no documentary evidence had been provided to support his claim.

The Review Officer referred to the contradiction between the statements of Mr Hamilton and the Appellant regarding the length of time they knew each other. Mr Hamilton stating 20 years in contrast to the ten years mentioned by the Appellant. The Officer pointed out that the Appellant did not know the surnames of his passengers. Further he travelled with them abroad despite his assertion that their relationship was a casual one and that he would not drink with them. The Officer concluded that these factors suggested a business relationship with his passengers with the objective of purchasing excise goods for resale. The Review Officer also doubted the Appellant's statement that he had just bought beer, not cigarettes on his previous trip abroad. She did not believe his explanation that he had not seen cigarettes on sale at "Eastenders".

The Review Officer concluded that the excise goods imported were not for own use and that they were being held for commercial purposes. She recorded that as there had been no successful appeal to a magistrates' court about the seizure of the goods, they were condemned as forfeited to the Crown by the passage of time. The Review Officer decided that the goods would not be restored – the seizure remained unchanged. The Review Officer in her decision did not refer to the Respondents' policy on restoration of excise goods in her consideration, nor was it recited in her decision letter.

The Review Officer then examined whether the motor vehicle should be restored to the Appellant. She found that

"The Commissioners' new policy from 29 October 2002 provides that for first offences involving small quantities of excise goods vehicles will be considered for restoration. The quantity of tobacco and alcohol products concerned in your case amounts to a relatively small amount and I have therefore concluded that under the Commissioners' revised policy it would be appropriate on this occasion to exceptionally restore the vehicle. However, as the vehicle has been disposed of , Customs will make a compensation payment to you based on the market value of the vehicle at the time of seizure"

The Review Officer recited in her letter the Respondents' "Restoration Policy for Private Vehicles" as

"With effect from 14 July 2000 the Commissioners' normal policy regarding privately owned vehicles used for the improper importation of excise goods is that they will not be restored. However, as from the 18 April 2002, restoration of vehicles will be considered where the traveller can demonstrate that the goods were to be supplied at purchase price and not for profit and also, as from 29 October 2002 for first offences involving small quantities of excise goods. Every case is considered individually to determine whether the affected party has substantiated that restoration should exceptionally be allowed".

The Evidence of the Appellant

The Appellant told the Tribunal that he saw an offer of cheap ferry journeys to France in the local paper which coincided with his one week holiday from work. The Appellant told some of his acquaintances in the betting shop in a joking manner that he was going to France to get some booze. Mark Hamilton, asked to go along as he was doing nothing that week. Later on Mr Hamilton telephoned the Appellant to see if his friend, Tony McPartlin, could come along too. The Appellant had no problem with either Mr Hamilton or Mr McPartlin travelling with him.

The Appellant had known Mr Hamilton for a long time (ten to twenty years). He would see Mr Hamilton around Market Harborough. He might not see him for about six months and then see him every day. The Appellant had given Mr Hamilton his phone number in the betting shop because Mr Hamilton indicated that he wanted to travel to France with him. The Appellant was not aware until the phone call from Mr Hamilton that Mr McPartlin was a friend of his. The Appellant in interview described his relationship with Mr Hamilton and Mr McPartlin as a casual one. He would not go drinking with them and he knew them only from the betting shop. The Appellant did not know their surnames, only their first names. This was the first time that the Appellant have travelled with them abroad. Mr Hamilton in interview with Customs said that he had known the Appellant for about 20 years. They were not close friends, just associates. They knew each other because both liked to bet. Mr Hamilton and Mr McPartlin had been close friends for eight years.

They set off from Market Harborough at about 10am on 7 June 2001. They managed to catch a ferry straightaway after arriving in Dover. After disembarking at Calais they travelled for about 15/20 minutes on the freeway before turning off when the Appellant stopped at a garage for petrol. The Appellant bought initially 12 sleeves of cigarettes at the garage, when he realised how cheap they were he purchased another two sleeves of cigarettes. The Appellant could not recall now whether he paid for the cigarettes and petrol in cash and the price that he paid.

Whilst he was filling his motor vehicle with petrol Mr Hamilton and Mr McPartlin went to a nearby shop to purchase cigarettes and tobacco. The Appellant did not accompany them to the shop so he did not see what they purchased and how much they paid. They were away for several minutes when they returned the Appellant was still filling his motor vehicle with petrol. They put their cigarettes and tobacco on the back seat and in the car boot. The Appellant did not consider that Mr Hamilton and Mr McPartlin bought excessive quantities of cigarettes and tobacco. Further, he did not consider that the two boxes of hand rolling tobacco were particularly neither heavy nor large in size. The Appellant believed that the garage and the shop were in Adinkerke, Belgium. A British person advised the Appellant on the ferry to purchase the cigarettes there because they would be cheaper. The Appellant denied that Mr Hamilton or Mr McPartlin had given him that advice.

After purchasing the cigarettes the Appellant returned to Calais where he bought some wine and beer from Eastenders and a duvet before catching the ferry to Dover. The Appellant was adamant that there were no cigarettes on display for sale in Eastenders. The Appellant previously travelled to France in March or April 2001 where he purchased wine and beer from Eastenders for a party at home. He stated in interview with the Customs Officer at Dover that he did not get any cigarettes from Eastenders. However, when giving evidence before the Tribunal he accepted that he may have bought 200-800 cigarettes on the ferry home in March/April 2001. When challenged by Respondents' Counsel, the Appellant denied that he had lied to the Customs Officer. The only other time that the Appellant had travelled to France was some five or six years ago when his daughter accompanied him.

The Appellant had never been previously stopped by Customs. He was of the view that he could bring into the UK as much excise goods as he liked. He had seen the Customs Notice on the boat and was aware that it was an offence to sell excise goods. He also knew that there was a black market for excise goods.

The Appellant gave up smoking about 18 months before the hearing. When he was stopped in June 2001, he was in possession of cigarettes and lighter and smoked about 20 cigarettes a day. He estimated that the 2,800 cigarettes would last him about 14 weeks. In June 2001 the Appellant was employed as a farm manager earning about £960 a month. He lived in a caravan on the farm and had outgoings of £50 per week.

The Appellant was not aware that Mr Hamilton had been off work for two years. The Appellant knew that Mr Hamilton had meant to be on holiday that week. As far as the Appellant was concerned Mr Hamilton only smoked roll-ups, he was always rolling in the betting shop. The Appellant did not know that Mr McPartlin was on the dole and that he had been over to Europe. He did not realise that Mr McPartlin was a mate of Mr Hamilton's. The Appellant, however, was aware that this was the first time that Mr Hamilton and Mr McPartlin had travelled to France by means of the cross-Channel ferry.

The Appellant did not consider that Mr Hamilton and Mr McPartlin had imported excessive excise goods. He did not give it a thought to warn them about bringing in excessive goods or advise them about the offences of selling. The Appellant had brought back what he wanted, he assumed that they had brought back what they wanted. Both Mr Hamilton and Mr McPartlin in interview stated that they purchased the cigarettes and tobacco for their own use. They had used either their savings or redundancy money to finance the transaction.

The excise goods were not concealed in the Appellant's car when he was stopped. He had to get a taxi home. His passport and driving records were left in his seized motor vehicle which required the Appellant to return to Dover to collect the documents. The Appellant felt that it was all wrong. The goods belonged to him. He had paid for them. The quantity purchased was not excessive. He did not realize how much Mr Hamilton and Mr McPartlin had at the time but in any event did not regard the amounts as excessive. He felt that he was being punished for the actions of others. He could not understand why the Respondents had disposed of his motor vehicle, particularly when they knew he was appealing against the decision.

Jurisdiction of the Tribunal

The Respondents' powers regarding restoration of goods which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the Tribunal may direct;

b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a further review of the original decision;

c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future.

The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown the Commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight".

The Tribunal is entitled to make its own findings on the primary facts which are to be taken into account by the Commissioners when exercising their powers regarding restoration of goods. The finding of facts includes blameworthiness, the intended use for the excise goods: private or commercial, the proportionality of the penalty imposed to the policy aims pursued having full regard to the individual circumstances of the case and exceptional hardship. The Tribunal, however, has no fact finding jurisdiction for the purpose of challenging the legality of the seizure and forfeiture of the goods. The Tribunal will then apply its findings of fact to determine whether the Commissioners acted reasonably in refusing restoration.

Respondents' Policy for Restoration of Excise Goods

The Review Officer did not recite the Respondents' policy on restoration of excise goods. Their Counsel accepted that the Tribunal could have regard to that policy as it was within the public domain. For completeness the policy is set out below:

"It is this Department's general policy that seized excise goods are not restored. However, each case is examined on its merits to determine whether or not restoration may be exceptionally offered. In conducting this examination the presence of any one of the following factors will militate against restoration:

• any evidence of previous smuggling or failure to comply with legal requirements;

• any evidence that the person involved knew what they were doing was wrong;

• any evidence that the person was paid to make the journey;

• large quantities of goods which might damage legitimate trade;

• any evidence that the goods were for a commercial purpose".

The Tribunal's Findings of Fact

We are dealing with the Appellant's appeal for restoration of his excise goods, not the excise goods brought in by Mr Hamilton and Mr McPartlin. We are not concerned with restoration of his motor vehicle because the Respondents have decided to restore the vehicle. We have decided to make our findings of fact in two stages. First we shall determine the facts in relation to the Appellant's importation of excise goods without reference to Mr Hamilton and McPartlin. Second we shall make findings on the nature of the relationship between the Appellant and his co-travellers and decide how those findings impact upon our conclusions from stage one.

We note the wording of section 141(1)(b) of the Customs and Excise Management Act 1979 which allows Customs to seize "any other thing mixed, packed or found with the thing so liable, shall also be liable to forfeiture". However, section 141(1)(b) is directed at the Respondents' powers of forfeiture not restoration. The conditions leading to forfeiture do not necessarily reflect the criteria for considering restoration. We accept, however, that we should not look at the Appellant's action in isolation. His relationship with Mr Hamilton and Mr McPartlin is a relevant factor for the fact finding exercise, hence the two stage approach.

The Respondents' policy for restoration of excise goods identified five factors, the presence of any one of which will militate against restoration. We make the following findings of fact in relation to Mr Hamilton's importation against each of those factors.

Any evidence of previous smuggling or failure to comply with legal requirements

There was no evidence to support a finding of previous smuggling or failure to comply with legal requirements. The Appellant had travelled once before to France to purchase beer for his personal use. He had not been stopped previously by Customs. The Review Officer doubted the Appellant's word that he did not purchase cigarettes from Eastenders on his previous trip. Respondents' counsel accused the Appellant of lying when he said in his evidence that he may have bought 200-800 cigarettes on the ferry home. We did not consider this apparent contradiction between his testimony before the Tribunal and his interview as significant. The Appellant was consistent throughout that he had not purchased cigarettes from Eastenders. Even if he had bought 200 – 800 cigarettes on the ferry home it would not amount to evidence of previous smuggling or failure to comply with legal requirements.

Any evidence that the person involved knew what they were doing was wrong

The Appellant has asserted throughout that the cigarettes were purchased for his own use and has been adamant about his innocence. The Review Officer has not suggested that the Appellant knew what he was doing was wrong.

Any evidence that the person was paid to make the journey

The Appellant purchased the cigarettes and alcohol from his own money. He had the resources to fund the purchase. There was no evidence that the Appellant had been paid to make the journey.

Large quantities of goods which might damage legitimate trade

The Appellant brought into the UK 2,800 Superkings cigarettes, 4.5 litres of wine, 18.48 litres of beer which was within the guide levels as set out in the Regulations. The Review Officer accepted in her consideration for restoring the motor vehicle that the quantity of tobacco and alcohol in the Appellant's case amounted to a relatively small amount.

Any evidence that the goods were for a commercial purpose

This question needs to be considered in the context of the legislative framework. Council Directive (EEC) No. 92/12 lays down a number of rules on the holding, movement and monitoring of products subject to excise duty, in particular so as to ensure that chargeability of excise duties is identical in all the Member States. The Directive draws a distinction between, on the one hand, goods held for commercial purposes, in respect of which accompanying documents are required for transportation purposes, and, on the other hand, goods held for personal use. Under Article 8 excise duty for goods held for private use is payable in the Member State in which they are purchased. No document is required when they are transported to another Member State. For Article 8 to apply, however, a number of conditions must be satisfied. The goods on which excise duty is chargeable must have been acquired by private individuals for their own use and transported by them. Article 9.2 sets out criteria for establishing whether goods transported by private individuals are intended for commercial purposes.

The provisions of the Directive were originally implemented in the United Kingdom by The Excise Duties (Personal Reliefs) Order 1992 SI 1992 No.3155. The 1992 Order was replaced by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 SI 2002 No. 2692. Regulation 12 gives guidance on whether the goods are held for own use or commercial purposes.

The relevant provisions of Regulation 12 are as follows (note they just relate to tobacco but the same wording is incorporated in the Regulations dealing with wine and beer):

1B(b) "own use" includes use as a personal gift,

(c) if the tobacco products in question are -

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to make such a transfer,

those products are to be regarded as being held for a commercial purpose,

(d) if the products are not duty and tax paid in the member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those products are to be regarded as being held for a commercial purpose,

(e) without prejudice to sub-paragraphs (c) and (d) above, in determining whether tobacco products are held or used for a commercial purpose by any person regard shall be taken of -

(i) that person's reasons for having possession or control of those products,

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(iii) that person's conduct, including his intended use of those products or any refusal to disclose his intended use of those products,

(iv) the location of those products,

(v) the mode of transport used to convey those products,

(vi) any document or other information whatsoever relating to those products,

(vii) the nature of those products including the nature and condition of any package or container,

(viii) the quantity of those products, and in particular, whether the quantity exceeds any of the following quantities -

3,200 cigarettes,

400 cigarillos (cigars weighing no more than 3 grammes each),

200 cigars,

3 kilogrammes of any other tobacco products,

110 litres of beer

90 litres of wine.

(ix) whether that person personally financed the purchase of those products,

(x) any other circumstance that appears to be relevant."

Applying the criteria set out in Regulation 12(1B)(viii) the Tribunal finds that

i. The Appellant's reason for travelling to France and Belgium was to do some shopping which included the purchase of cigarettes and alcohol for personal use.

ii. The Appellant was not a revenue trader.

iii. The Appellant has maintained throughout that the goods were purchased for his own use. He did not refuse to disclose his intentions with respect to the goods. The quantity purchased was consistent with his stated level of consumption of 20 cigarettes a day. He was able to produce when asked a packet of cigarettes and a lighter. He purchased one brand of cigarettes.

iv. The Appellant made no attempt to conceal the excise goods. They were readily visible in the back seat and the boot of the car.

v. The Appellant conveyed the goods in his motor vehicle.

vi. The receipts for the excise goods were provided to the Customs Officer when stopped.

vii. The Appellant purchased one brand of cigarettes, a mixture of Guinness and Bud beer and 4.5 litres of Hardy still wine.

viii. The quantity of cigarettes (2,800), beer (18.48 litres) and wine (4.5 litres) purchased did not exceed the quantities specified in the Regulations of 3,200 cigarettes, 90 litres of beer and 110 litres of wine.

ix. The Appellant purchased the goods himself. He had the means to pay for the goods. His income was £950 per month with outgoings of £50 per week.

x. The Appellant was not a regular traveller to France. He had only been twice before in his lifetime.

We find as fact that none of the militating factors specified in the Respondents' policy applied to the circumstances surrounding the Appellant's actions when viewed in isolation from those of Mr Hamilton and Mr McPartlin.

The Review Officer placed considerable weight on her finding that there was a business relationship between the Appellant and his co-travellers in refusing restoration of the excise goods. The factual basis for her conclusion was that the Appellant travelled abroad with two men about whom he only knew their first names and that he would not drink with them. These facts do not in our view fit the characteristics of a business relationship which we would describe as requiring significant elements of planning, organisation, structure and joint activity. Rather the evidence shows that this was a spontaneous act on the part of the Appellant. After seeing an advert in the local paper for cheap ferry crossings, he decided to take a day trip to France in his holiday to buy some booze. He jokingly mentioned the trip in the betting shop which prompted Mr Hamilton to ask if he could travel with him. Later on Mr Hamilton rang the Appellant to enquire whether his friend Mr McPartlin could also come. They went in the direction of Adinkirke because somebody on the ferry recommended it as a place to buy cheap cigarettes. There they bought their goods from separate stores. The Appellant did not accompany Mr Hamilton and Mr McPartlin when they purchased their cigarettes and tobacco. The evidence supports the view that this was a casual arrangement between the parties. Further, the Appellant operated independently from Mr Hamilton and Mr McPartlin.

Respondents' Counsel challenged the Appellant for not warning his travellers about the need to observe Customs requirements with the implication that he was reckless about whether they broke the law. Strictly speaking Counsel was raising a new ground for refusing restoration which was not identified by the Review Officer. However, we did not share Counsel's reservations about the Appellant's conduct. We accept that the Appellant did not ask questions of his travellers or give them advice but in our view the circumstances did not put him on notice. The Appellant believed that he was entitled to buy as much as he liked provided it was for himself, which applied equally to his travellers. In his view Mr Hamilton and Mr McPartlin did not buy excessive amounts of tobacco and cigarettes. He did not consider that the two boxes of hand rolling tobacco were particularly heavy or large. The items bought fitted in with his perceptions of their smoking habits, Mr Hamilton was always rolling his own. The Appellant did not know enough of their personal circumstances to challenge whether they had the means to pay for the goods.

The Review Officer pointed to the contradiction between the accounts of Mr Hamilton and the Appellant about the length of the time they knew each other. Mr Hamilton saying 20 years whereas it was about ten years for the Appellant. There was a slight inaccuracy in the Review Officer's consideration because the Appellant in interview said "about ten years, possibly more". In any event we do not consider that this contradiction is significant because of the nature of the relationship between the Appellant and Mr Hamilton.

Summary of our Findings of Fact

We find that

• The Appellant had no previous history of smuggling or failure to comply with legal requirements.

• There was no evidence that the Appellant knew he was doing anything wrong.

• The Appellant paid for the excise goods from his own resources. He did not receive payments from anybody else to buy excise goods.

• The quantities of excise goods purchased by the Appellant would not damage legitimate trade.

• The Appellant bought the cigarettes, beer and alcohol for his personal use

• There was no business relationship between the Appellant and his travellers. They acted independently of each other.

• The Appellant did not act in a reckless manner in his dealings with Mr Hamilton and Mr McPartlin.

Was the Respondents' Review decision Reasonable?

We consider that the Review Officer paid insufficient attention to the circumstances surrounding the Appellant's importation of excise goods. She did not assess the facts of the Appellant's importation against the Respondents' policy for restoration of excise goods, which was not cited in her review decision. Further, the Review Officer did not apply the REDS Regulations against the facts to determine whether the excise goods purchased by the Appellant were for own use.

The Review Officers' consideration begins with the importation of the Appellant and his travellers as a whole followed by a detailed examination of the actions of Mr Hamilton and Mr McPartlin and the relationship between them and the Appellant. Her approach lead her to the erroneous conclusion that restoration of the Appellant's excise goods should be refused effectively because of the association with the goods of Mr Hamilton and Mr McPartlin. In our view she was wrongly using the power to forfeit goods mixed or packed under section 141(1)(b) of the 1979 Act to justify the non-restoration of the Appellant's excise goods. The Review Officer's reasoning for restoring the motor vehicle to the Appellant exposed the flaws in her approach to the restoration of the excise goods. She tackled the question of restoration of the motor vehicle by looking at the Appellant's importation in isolation, which resulted in the motor vehicle being restored because of the relatively small quantity of excise goods. We consider that this outcome was at odds with her finding in respect of the excise goods. If the Review Officer believed that the Appellant was engaged in commercial activity we would have expected restoration of the motor vehicle on condition of payment of the duty on the excise goods. An unconditional restoration suggests to us that the Review Officer was not convinced of the culpability of the Appellant. The Review Officer could have avoided these difficulties if she had started with the circumstances of the Appellant's importation and then considered those circumstances in the context of Mr Hamilton's and Mr McPartlin's importation and their relationship with the Appellant.

We are therefore satisfied that the Review Officer's decision of 1 May 2003 was unreasonably arrived at within the meaning of section 16(4) of the Finance Act 1994.

Our Decision

In view of our finding that the Respondents' decision of 1 May 2003 was unreasonably arrived at, we allow the Appeal. No order for cost is made because the Appellant submitted no application despite being invited to do so. We note that our decision does not affect the Respondents' decision to restore the motor vehicle which still stands because the right of appeal does not extend to a decision to restore unconditionally.

Orders

We make the following orders pursuant to our decision to allow the Appeal and in accordance with section 16(4) of the Finance Act 1994:

a. The decision not to restore the Appellant's excise goods shall cease to have effect from the date of release of this decision.

b. The Commissioners shall conduct a further review of the decision not to restore the excise goods and serve the same on both the Appellant and the Tribunal within 30 days of release of this Decision.

c. An Officer not previously involved with the case shall conduct the further review.

d. The further review shall be on the basis of the Tribunal's findings of fact as set out in paragraphs 31 to 46 of this decision and shall consider whether restoration should be made in the form of compensation and if so shall specify the amount of compensation and the basis of the calculation.

e. The Review Officer shall take account of any further material or representations made by the Appellant within 14 days from release of this decision. The representations shall be made to HM Customs and Excise, Review Team, Detection South Region, Crownhill Court, Tailyour road, Crownhill, Plymouth, PL6 5 BZ.

f. The Appellant will have a further right of appeal to the Tribunal if dissatisfied with the outcome of the further review.

MR M TILDESLEY

CHAIRMAN

Release Date: 17 August 2004

MAN/01/8222