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United Kingdom VAT & Duties Tribunals (Excise) Decisions

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Gray & Anor v Customs and Excise [2004] UKVAT(Excise) E00786 (17 August 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00786.html
Cite as: [2004] UKVAT(Excise) E786, [2004] UKVAT(Excise) E00786
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Gray & Anor v Customs and Excise [2004] UKVAT(Excise) E00786 (17 August 2004)

    E00786

    Excise duty — cigarettes (8000) and hand rolling tobacco (2.84 kilograms) seized at Manchester Airport — from husband and wife who had travelled from Malaga with daughter and son-in-law — resale denied — Officer who seized the goods made the decision not to restore — decision not reasonably arrived at — appeal allowed

    MANCHESTER TRIBUNAL CENTRE

    JOHN MALCOLM GRAY Appellant

    SUSAN MARY GRAY

    - and -

    THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

    Tribunal: Mrs E Gilliland (Chairman)

    Mrs E M Macleod (Member)

    Sitting in public in Birmingham on 18 June 2004

    Mr J M Gray for himself and co-Appellant

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

    © CROWN COPYRIGHT 2004


     

    DECISION

  1. This is an appeal by John Malcolm Gray and his wife Susan Mary Gray (the Appellants) against a decision of the Commissioners not to restore to them excise goods (the goods) seized from them at Manchester Airport on 16 February 2002. The goods as shown on the seizure information form comprised 8000 cigarettes and 2.84 kilos of hand rolling tobacco. The Appellants have been cross-examined on oath by Mr. James Puzey Counsel for the Commissioners and two Customs officers have also given evidence to the Tribunal namely Simon Anthony Byron and Adrian Anthony Ford. Julie Marie Logan another officer was to have attended but has been prevented from doing so through illness.

  2. The background of the case as put to us by Mr. Gray in his presentation was that he and his wife were returning from Malaga with their daughter and son-in-law. All four were stopped and questioned. The couples were separated at the Customs Desk. The appeal of his daughter and son-in-law had already been brought before a Tribunal and their appeal was allowed. Mr Gray insisted that he and his wife were bringing back cigarettes and tobacco for personal use only though Officer Byron thought that they were smuggling and would sell on the goods and indeed the officer did not seem to think that the Appellants smoked. Mr. Gray agreed that they did not have lighters with them as that was not permitted on an aeroplane and smoking was prohibited. Both he and Mrs. Gray in cross-examination drew attention to an incident subsequent to their being stopped when Mrs. Gray sought permission to go to her son-in-law to tell him that they were still being held. It is said that Mrs. Gray came back to the Customs Hall smoking a cigarette. She subsequently said that she brought back three one of which she smoked at the desk and the other two later. Mr. Gray's evidence seems to suggest that she had one cigarette and he had expressed sarcastic annoyance that she had not brought back one for him. This the Appellants said established that they were smokers. There is no record nor confirmation from Mr. Byron that he recollected this event. The fact that Mrs. Gray smoked however does not establish that Mr. Gray was a smoker also as was pointed out by Counsel for the Commissioners. Further evidence was produced by Mr. Gray by way of some holiday photographs which showed him smoking. It was only after cross-examination that Mr. Gray did in fact acknowledge that these photographs did not relate to the holiday in Malaga the subject of the appeal but to a trip in 1995. It was accepted by Mr. and Mrs. Gray that the cigarettes on show in the photos were the Regal brand and not Lambert & Butler as they had imported from Malaga. Mrs. Gray's evidence was that they had ceased to smoke Regals as they were too expensive.

  3. Mrs. Gray made an issue of the fact that she was "humiliated" by having to be escorted by an officer through the Customs Hall to the waiting area to allow her to speak to her son-in-law she said "as if she were a criminal". This was an unjustified complaint as the officer was merely complying with the strict Airport security procedure in operation.

  4. Mr. Puzey referred to confusion and inaccuracies as to the cost of the purchases. He pointed out to Mr. Gray that he had put the Appellants share at £700.00 whereas in the record of his interview with Mr. Byron (which he had signed as accurate) he had put the total for all four travellers at £1,000.00. This could not be reconciled with the Appellants' daughter and her husband having the same quantity of goods. Mr. Gray thought that he was then making a guess rather than anything else. Both Mr. and Mrs. Gray were agreed that he had paid in cash for their share and both made much of the fact that £1,000.00 had been won by Mrs. Gray at bingo on 16 December 2001. From cross-examination of both Mr. and Mrs. Gray it appeared that the money had not been banked but had been left in the house. This money however some two months later gave them the opportunity to buy the amount of the goods which they had. Mr. Gray had told the officer that they had taken with them £1,500.00 in cash the rest having been savings for the trip although the holiday travel had been pre-booked. He could not say when as his daughter would have made the booking.

  5. There was also some confusion in the Appellants' evidence as to the number of trips abroad which they had made in recent months. Mr. Gray confirmed that he and his wife had last been abroad in October 2001 to Tenerife when he had misunderstood the situation about the European Union and had brought back more goods than the permitted amounts. He explained that his daughter had a timeshare in Portugal but did swaps for different areas and this was how they had come to be in Tenerife and subsequently in Malaga. Although as Counsel pointed out the Appellants had had three holidays namely May 2001 October 2001 and then February 2002 Mr. Gray said that they usually had only two trips in February and September-October. Mr. Gray said that he had not referred to his wife's work at the interview as he did not class it as work i.e. she did shopping for people for which she was paid £40.00 per week. When reference was made to the May 2001 trip being to Tenerife Mr. Gray could not recall having been there in May. On checking through the information from the interview given by the Appellants we have found that Mr. Gray had said that they had been to Tenerife in September and Mrs. Gray said that they had been in October. Although on benefits with no savings Mr. Gray has insisted that he is still not a "pauper". As to why the Appellants' daughter and son-in-law brought in the same amounts of goods as they had Mr. Gray said that he did not know nor did he know their financial circumstances nor their rate of smoking. The quantity they (the Appellants) had of hand rolling tobacco was purchased by them because it was cheaper than cigarettes and it was easy to get in the suitcase. Mr. Gray also told the Tribunal that he and his wife had no future holiday plans after the Malaga trip since they had expected to be moving house though that had in fact fallen through.

  6. We have noted that Mr. Gray has handed to the Tribunal a bundle of some 23 copy letters dating from 16 August 2002 to 19 January 2004. The matter of the Appellants' appeal has clearly been to the forefront of his mind notwithstanding that in his evidence before us he was confused and unable to answer certain specific questions put to him as to trips he and his wife had made abroad and the cost of smoking habits. He has attributed these lapses of memory to the passage of time some two and a half years from the incident.

  7. In her oral evidence Mrs. Gray could not recall the locations of previous holidays in May 2001 and October 2001. She confirmed that she smoked hand rolling tobacco but only when her husband rolled the cigarettes for her as she was no good at it. As to the number of roll ups which could be produced it was pointed out to Mrs. Gray that she had said at interview 30 to 40 which her husband has sought to clarify by saying that his wife was referring to the 12½ gram packs only that is the smaller size packs.

  8. The first witness called by Mr. Puzey for the Commissioners was Adrian Anthony Ford. This was not the officer who interviewed the Appellants but the one who interviewed their daughter and son-in-law. We have before us the manuscript record of that interview with the comments of Mr. J Murray Senior Officer added and also the typed record of the interview questions and answers as set out in a witness statement of Mr. Ford dated 3 February 2003. The officer indicated that this had not been an interview as such merely initial questions written up by him after the couple had left and not signed. He could not recall whether it had been suggested to him that instead of a sister to pay for goods (as in the record) there was to be a gift to a brother-in-law for decorating. In response to questioning however the officer confirmed that he wrote out the record without having made rough notes and the interview had not proceeded further because he had been told by his senior officer to seize their goods once the interviewees had said that financial recompense would be received for them. The procedure is that when that arises the seizure is effective there and then. We have looked at this evidence but it is more relevant to the appeal of the daughter and son-in-law heard elsewhere and which the officer had not attended as a witness.

  9. Mr. Byron who interviewed both Mr. and Mrs. Gray also gave evidence to the Tribunal. He has confirmed that he put questions to each of them and they had each endorsed the record that they had read the relevant part of it and agreed it to be accurate. Mr. Bryon sought to clarify the position as to the numbers seized and said that the seizure notice (8000 cigarettes) would be correct and that he had initialled and altered to 8000 his note on the interview record. Equally we note that Mr. Byron would appear to have changed and initialled the manuscript record on tobacco but it is 2.84 kilograms which has been shown on the seizure notice. Mr. Byron had set out the reasons for seizure of the goods. The reasons were given as excess mils; those travelling with the Appellants had cigarettes seized as they appeared not to smoke and were carrying cigarettes to dilute the number carried per person for the Appellants; the financial situation was not commensurate with the purchase; there had been a previous seizure and Notice 1 issued and the Appellants were aware of the guidelines; no smoking materials were carried; Mr. Gray did not know the quantity of roll ups per pouch; their travelling companions had admitted getting payment for some of the product and carried the same quantities of the same goods.

  10. The first letter received from the Appellants subsequent to the seizure was dated 21 February 2002 when they said that they had not exceeded limits as they were importing entirely for their own consumption; that Mr. Gray smoked approximately 20 to 30 cigarettes a day and his wife approximately 20 and that they were hoping that the purchase would last for a reasonable time as they were not planning any further holidays abroad for a considerable time. The letter then went on to refer to Malaga being within the EU and that the Customs Officers had referred to guidelines which the Appellants said were not advertised at the Airport; that it was their understanding that tax was paid in the originating country. The Appellants then received a letter dated 13 March 2002 from the North West Review and Appeals Team sending a form with options for completion and from the papers in front of us we have seen that the Appellants requested restoration only. The Appellants wrote again on 19 March 2002 insisting that the goods were for personal use; that the officer had seen Mrs. Gray smoking while being questioned; and forwarding the three photographs referred to above one showing Mr. Gray lighting a cigarette and the other two him holding a cigarette. He also considered the amounts brought back not excessive for the time scale that they were going to last.

  11. Officer Byron has told the Tribunal that following the Commissioners procedure it was he who made the original decision not to restore the goods in a letter dated 31 March 2002. He confirmed in response to examination-in-chief that at that time he did not have before him the letter dated 19 March 2002 with which were enclosed the photographs which were the same as those handed to the Tribunal at the hearing. Although the letter of 31 March 2002 had not been signed by him as he was away at the time he was in fact the officer who had taken the decision not to restore. He stated in the letter that it was the Departments policy not to restore seized goods unless there were exceptional circumstances and that having given due consideration to the Appellants' case and the details in their letter he was not prepared to consider restoration of the goods. No further reasons were set out in the letter but a more detailed explanation has been given by the officer at the hearing. He has said that the quantity was five times the then guidelines; he believed the daughter and son-in-law were non-smokers would receive money and were carrying goods for the Appellants – this he thought the logical conclusion with cigarettes split four ways; he had considered it unreasonable to spend £1,000.00 of bingo money almost all on cigarettes; on the previous seizure in October at Tenerife they would have received Notice number 1 and been aware of what could be brought in from the EU though these were only guidelines; as to their smoking habits there were no open packets and there were full cartons in the cases; so far as the hand rolling tobacco was concerned although Mr. Gray had said it was for him there were no rolling papers and it would have been expected that he would know how many cigarettes would have been obtained from each pouch; so far as their daughter and son-in-law (the Bradburys) were concerned they had admitted that they would receive payment and they had the same brand as the Appellants and accordingly if the Bradburys and Grays had the same quantities and brands it would be expected that the Grays would be receiving payment also; so far as the photographs were concerned simply because these were in 1995 did not mean that Mr. Gray was still smoking. He confirmed in examination-in-chief that he was satisfied that his original decision was correct. He saw no exceptional circumstances in March 2002 and there was no subsequent material which would have caused him to reconsider his decision.

  12. Counsel has put to us that there were discrepancies in the evidence given by the Appellants; the consumption rate of both Mr. and Mrs. Gray was almost modest and did not establish a need for frequent trips abroad. The interview record showed that Mr. Gray had confirmed he and his wife had been abroad to Tenerife in September and had been stopped the previous May when 35 cartons and 35 to 50 pouches had been taken from them. They had been on their own in September but in May had been with their son and his girlfriend and as we know in February 2002 had been with their daughter and son-in-law. It is difficult to reconcile these clear responses given by Mr. Gray when stopped with the uncertainty at the hearing. We have noted also that Mr. Puzey has drawn attention to the quantity of tobacco purchased even though Mr. Gray said that they only bought it when their finances dictated as normally they liked cigarettes. With the bingo win it would appear that their circumstances were on this occasion satisfactory. We have noted also in connection with their travelling companions that we are told that all were carrying the same quantities and brands but with no clarification as to how if the total cost were £1,000.00 the Appellants share would be £700.00. Mr. Gray could not understand how it could be said that he and his wife were not smokers. As smokers there would be no purpose in their going abroad to buy cigarettes to sell at home and then have to purchase their own at home. They had bought a satisfactory amount and he said had done nothing wrong.

  13. The appeal before the Tribunal is that against the original decision of Officer Byron on 31 March 2002 the reason for this being that the decision of the Review Officer Julie Marie Logan was out of date and although the Appellants consented to an extension of time this is not provided for in the legislation or regulations and accordingly under Section 15(2) of the Finance Act 1994 the Commissioners are deemed to have confirmed the original decision not to restore made by Officer Byron.

  14. The power of the Tribunal is confined to a consideration as to whether the Commissioners or the person making the decision "could not reasonably have arrived at it" under Section 16 (4) of the Finance Act 1994 in which case a direction under one or more of sub-clauses (a) (b) and (c) may be made. In the appeal before us the decision not to restore has been made by the officer who stopped the Appellants conducted the interview and seized the goods. We are told that this is the procedure set up by the Appeals Section of the Commissioners but it is clear that it is not a policy authorised by legislation or regulations. Mr. Byron seized the goods and endorsed his reasons for seizure on the interview record. He relied on these reasons both then and later when undertaking his re-consideration and determining there were no exceptional circumstances arising in the matter. It is of course accepted law now that the burden of proof as to commerciality is on the Commissioners (Hoverspeed Limited –v- Commissioners of Customs and Excise [2002] 3 WLR 1219) and the guideline amounts of which regard is to be taken in determining whether excise goods are held for a commercial purpose have been increased by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002. The Appellants did not contest the seizure of the goods which are accordingly condemned as forfeit by passage of time. We are however as a Tribunal entitled to look at the circumstances and to consider whether all relevant matters have been taken into account irrelevant matters disregarded and whether correct legal principles have been applied. We do not consider that it can be seen as legally correct that an officer who has made a decision based on facts which he has determined and on the credibility of travellers he has interviewed and from whom he has seized goods should be the officer of the Commissioners authorised to look at the issue of restoration of the goods and determination of policy as part of an appeal process. Mr. Byron had also based his decision to seize the goods on "logical" conclusions he had come to in the circumstances associated with the Appellants' travelling companions. He had not himself interviewed those persons and he relied on an unsigned notebook entry and discussion with a colleague who had interviewed them. We do not consider that a decision of the Commissioners is properly arrived at when as in the instant case the decision as to the restoration of the goods is made by the officer who seized them in the first place. We are not satisfied that he could properly make an independent decision on restoration.

  15. Accordingly the appeal is allowed. We require the Commissioners to conduct a further review of the original decision. This is to be undertaken by an officer who has had no previous operational involvement and is to be concluded within 30 days of the release of this decision.

  16. We have afforded to the parties an opportunity to address the Tribunal on costs. Mr. Gray submitted a list of expenses a copy of which we released to Counsel for the Commissioners. We direct that if the expenses listed are not agreed and met either party is to be at liberty to apply to the Tribunal on the matter of costs to a Chairman sitting alone.

    17. MRS E GILLILAND
    CHAIRMAN
    Release Date: 17 August 2004
    MAN/02/8167

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