United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E792, [2004] UKVAT(Excise) E00792

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Dunbar v Customs and Excise [2004] UKVAT(Excise) E00792 (08 September 2004)

EXCISE DUTY — excise goods and car transporting goods seized at Dover Dover on return to UK and forfeited — review decision confirming decision not to restore goods or vehicle — held on facts to be reasonable for Customs to conclude against restoration as goods apparently being imported I the vehicle for a commercial purpose and not for own use — neither exceptional hardship nor other grounds for restoring vehicle present on the facts — appeal dismissed as to both goods and vehicle

MANCHESTER TRIBUNAL CENTRE

HARVEY DUNBAR Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr M S Johnson (Chairman)

Miss K Ramm FCA (Member)

Sitting in public in North Shields, Tyne and Wear on 11 August 2004

The Appellant did not appear and was not represented

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

DECISION

The appellant has not attended tribunal to present his appeal. The tribunal file shows that he was notified of the date, time and place of the hearing. The tribunal centre has not been informed of any reason why the appeal should not proceed at this time as arranged. Consequently we determined to proceed with the hearing pursuant to rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).

Mr Spragg, who was briefed to represent the Commissioners for Customs and Excise ("Customs"), has presented us with a bundle of documents relevant to the appeal. These documents show both the background to the appeal and the basis of it.

The background is that the appellant appealed to the tribunal, under reference MAN/2001/8034, against a review decision of Customs dated 23 January 2001. That review had been conducted by Mr P A Devlin, a reviewing officer of Customs. In his review, he upheld a previous decision of Customs not to restore to the appellant certain excise goods and the vehicle transporting them, which had been seized from the appellant in Dover on 2 November 2000 and forfeited.

The excise goods ("the goods") consisted of the following:

38 Kg of hand-rolling tobacco;

50 cigarillos;

180 litres of beer;

4.5 litres of wine;

4.7 litres of spirits.

The vehicle transporting the goods ("the vehicle") was a Peugeot 309, Registration No J659 MCN.

Subsequently Customs applied to the tribunal, in the appeal proceedings instituted by the appellant, for a direction that the decision not to restore the goods and vehicle should be further reviewed by Customs. The application, which was in January 2003, was allowed unopposed in February 2003. A further review accordingly took place, and the review decision, conducted by Mr Gordon A Murray, another reviewing officer of Customs, was dated 23 October 2003. It is against the outcome of that decision, which emerged as adverse to the appellant that he now appeals. He does so on the ground that the decision wrongly concludes that the goods were intended for a commercial purpose, rather than for the appellant's own use.

The evidence of Customs is contained in witness statements as follows:

The statement of Mr Murray, dated 2 March 2004, with 16 exhibits;

That of Ms Abigail Diane Amanda MacFarlane, dated 1 March 2003 – she was the officer of Customs who initially questioned the appellant at Dover Eastern Docks at 23.15 hours approximately on 2 November 2000;

The statements of Mr Alistair David Holden, dated 3 March 2003 and 11 March 2003 respectively – he was the officer of Customs who formally seized the goods and the vehicle following a fuller interview with the appellant, prior to which he was present for the tail-end of the time when Ms MacFarlane was questioning the appellant;

That of Mr Philip Thomas dated 21 January 2003 – as another officer of Customs, he was also present at Dover on 2 November 2000, and subsequently prepared a letter declining to restore the goods and vehicle to the appellant;

That of Mr Philip William White, dated 1 February 2003 – another officer of Customs, whose statement relates to an occasion when he was on duty at London Heathrow Airport on 16 October 2000, when he questioned the appellant on his return from Lithuania, seizing goods in excess of the appellant's duty free allowance from him; and

That of Mr Neil Hutchison, dated 3 February 2003 – he was the officer of Customs who, on 16 October 2000, presented the appellant with a seizure importation form and warning letter relating to his attempted importation of the goods seized on that occasion.

None of the witnesses gave oral evidence, but we have no reason to reject any of the contents of their statements.

The exhibits to Mr Murray's statement include copies of the entries that Ms MacFarlane made in her notebook of the conversations she and Mr Holden had with the appellant on the night of 2/3 November 2000. We find that, although the appellant made no bones about having been to France and Belgium to shop for beer and tobacco, he misinformed Ms MacFarlane as to how much tobacco he was transporting. He told her that he had 2 boxes of tobacco, which were visible on the back seat of the vehicle along with the beer. However, when she opened the boot of the vehicle, she found another 3 boxes of tobacco, which the appellant had not mentioned. When asked by Ms MacFarlane why he had not told the officer about those boxes, the appellant initially replied that he had been driving a long time and he was tired. Later he told Mr Holden that following a 500-mile drive he had felt seasick on the ferry, owing to the appalling weather conditions in the English Channel, and at the time had only thought of the tobacco that he (as distinct from his partner) preferred to smoke. These answers do not seem to us to amount to an adequate explanation for his having mentioned 2 boxes to Ms MacFarlane but having failed to mention the other 3. We find that the appellant was probably deliberately keeping quiet about the other 3 boxes and so misleading the officer.

We find that the appellant was invited to sign Ms MacFarlane's notebook to indicate the correctness of its contents, but he declined to do so. However, he orally indicated that its contents were accurate.

Consequently, at just after midnight on 2/3 November 2003, the appellant was accompanied to a room where he was questioned further. He told how he had come to the southeast of England from his home in County Durham in order "to go to the Home Office." He said that he had taken the opportunity to travel to the continent to shop for the goods. He intended to smoke the tobacco with his partner and drink the beer. There were 2 boxes of Drum tobacco, which he would smoke, and 3 boxes of Golden Virginia, which she preferred, in total 30 Kg. The money for the goods was, he said, found from his wages, which were between £20,000 and £80,000 per year. He had only smoked hand-rolling tobacco for a matter of weeks, because of the expense of cigarettes. He had no idea how long the tobacco would last, but when the supply had diminished, then it would be time for a further visit to the continent. He could not account for having in his possession an additional 8 Kg of tobacco acquired as well as the 5 boxes purchased, maintaining that he only intended to buy the 5 boxes.

At the conclusion of the interview, the appellant stated, "My mind is in such a state of tiredness that it's time for me to sleep." He declined the opportunity to read the notebook entries, stating that he had a headache, and again declined to sign the notebook.

The goods were seized by Customs on the basis that they exceeded the quantities specified in the Schedule to the Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155 ("the PRO") and that the appellant had lied as to the amounts he was transporting. The vehicle was seized because it was being used to transport the goods.

There appears to be doubt in this case as to whether the appellant was required to satisfy Customs that the goods were not being held or used for a commercial purpose (in other words, whether a so-called "commerciality statement" was uttered), as article 5(3A) of the PRO used to provide. The circumstances of this case pre-date the decision of the Divisional Court of the Queen's Bench Division in R (on the application of Hoverspeed Ltd and Ors) v C & E Comrs [2002] 4 All E R 912 ^[1] ("the Hoverspeed case"), in which the court held that the PRO wrongly placed the burden of proof on travellers to satisfy Customs that they were not holding or using excise goods for a commercial purpose, instead of on Customs. Account was not taken of the burden of proof in this case until Mr Murray's second review decision came to be written.

Mr Holden states in his second witness statement that he would have uttered a commerciality statement in this case, but the notebook entries themselves do not confirm this. The letter to the appellant declining restoration of the goods and vehicle was, as mentioned above, written by Mr Thomas. It was dated 22 November 2000. That letter appears to assume that a commerciality statement was uttered. The first review, conducted by Mr Devlin, proceeded on the basis that the appellant was " … properly required to satisfy Customs that your excise goods qualified for relief from UK excise duty by being for own use." In our view, there must be a question whether, on the facts, the appellant was expressly so required, whatever might be implied from the circumstances. That would have been a matter that he might have relied upon in his appeal commenced under reference MAN/2001/8034.

Be this as it may, we are not considering the first review. The review that we are considering is that dated 23 October 2003, conducted by Mr Murray. We therefore turn to the contents of that review. We note immediately that account is there taken of the Hoverspeed case and the incorrect burden of proof specified by the PRO. Whether or not a commerciality statement was uttered in this case, we think that Mr Murray is quite right that the evidence must be considered in the round to see whether it adds up to proof that, on a balance of probabilities, the importation in this case was for a commercial purpose. That is consonant with the result of the Hoverspeed case, as Mr Murray states.

After rehearsing the background, the circumstances of the attempted importation, the amount of UK excise duty in issue (stated to be £3,765.01), the applicable legislation and the policies of Customs, Mr Murray turned in his review letter to consider the case for restoration. He made the following points:

Even applying the new "guideline" levels for quantities of excise goods brought into the UK by EU cross-border shoppers, instituted following the revocation of the PRO, the tobacco brought back by the appellant was over 12 times the recommended level;

The appellant had absolutely no reason not to declare the boxes of tobacco in the boot of the vehicle, if, as he contends, all the tobacco was for his own use, yet he misled the questioning officer;

In the event, he had more hand-rolling tobacco than even the 5 boxes for which he accounted in interview – an extra 8 Kg worth;

The appellant had provided no information as to the time it would take to smoke the tobacco, which was surprising, having regard to the cost of the tobacco;

At average rates of consumption, the tobacco would take about 4 years to smoke;

Tobacco kept for that length of time perishes and becomes unpalatable.

Mr Murray considered that, all in all, it was demonstrated that the goods were not being imported for the appellant's own use. There must, Mr Murray thought, have been a motive to exploit the goods commercially, and that was what he concluded.

Turning to the question whether the vehicle should be restored, Mr Murray referred to the decision of the Court of Appeal in Lindsay v C & E Comrs [2002] 3 All E R 118 ("the Lindsay case"), in which the court held that a decision by Customs not to restore a seized vehicle, even where excise goods were seized as not being for the traveller's own use, could be disproportionate. However in the Lindsay case, Lord Phillips of Worth Matravers MR stated, at [2002] 3 All E R page 137, letter g as follows, viz:

"Those who deliberately use their cars to further fraudulent commercial ventures in the knowledge that if they are caught their cars will be rendered liable to forfeiture cannot reasonably be heard to complain if they lose those vehicles. Nor does it seem to me that, in such circumstances, the value of the car used need be taken into consideration. Those circumstances will normally take the case beyond the threshold where that factor can carry significant weight in the balance. Cases of exceptional hardship must always, of course, be given due consideration".

Mr Murray concluded that the present case equated to the situation described by Lord Phillips. He said that non-restoration accorded with Customs' policy, even as amended in October 2002. He drew attention to the previous occasion on which the appellant had had goods seized from him at Heathrow Airport. As to proportionality, Mr Murray decided that if this factor entered into consideration at all, it was not disproportionate that the vehicle should not be restored. Nor were exceptional circumstances for restoration present. Mr Murray therefore decided that neither the goods nor the vehicle should be offered for restoration.

The bundle of documents before the tribunal contains two letters from the appellant to Customs.

In his first letter, dated 10 November 2000, the appellant complained about his treatment by Customs. He said inter alia that he had been questioned under duress, refused permission to contact his partner, assumed to be guilty when he was innocent, and kept prisoner without being allowed a single phone call. These are undoubtedly serious allegations, meriting investigation. However, the appellant has not come to tribunal to tell us about them, nor are we informed how these complaints may have been pursued and hopefully resolved. For present purposes, it seems to us to be proper to lay them to one side, without attempting to resolve them in the context of the matters that we have to decide, namely the correctness of the decision not to restore the goods and the car respectively.

The appellant's second letter is dated 11 December 2000. In that letter he reiterated his serious complaint about the treatment he received on the night of 13 November 2000 (we think that he means 2/3 November 2000), asking for a proper investigation of his complaint, which we agree that he was entitled to, as a matter apart from the consideration by this tribunal. He then made the points that he could not be expected to know about the "guidelines" for excise goods; that he never made a false declaration; that he was sick and exhausted after 14 hours of travelling, including a rough ferry crossing; and that he had no commercial intention, as the goods " … were for my own use including relatives and parties".

On behalf of Customs, Mr Spragg invited the tribunal to disregard the allegation that the goods were for relatives and parties. It had never previously been suggested, he said, that the goods were for anyone other than the appellant and his partner. Relatives and parties were not mentioned by the appellant in interview. The appellant may have been tired when he was interviewed, Mr Spragg said, but he had nevertheless lied about the quantities of tobacco he had in his possession. The sheer size of the importation meant that there must have been a commercial purpose behind it, irrespective of the appellant's knowledge of the "guidelines."

In our view, the review decision of Mr Murray cannot be faulted. The points on which he relied in concluding that restoration of the goods should not be offered, being the ones that we have "bulleted" in paragraph 17 above, we find to be cogent and eminently reasonable. On the facts that we have found, we think it highly improbable that all the tobacco brought back by the appellant would have been smoked by himself and his partner. There was just too much of it, and it would take too long to smoke.

In that regard, we agree with Mr Spragg that, according to the appellant at the time he was interviewed, only the appellant and his partner were allegedly to smoke the tobacco, contrary to the allegation contained in the letter dated 11 December 2000. We reject the allegation that any of the goods were to be smoked by relatives or at parties.

Moreover, we have found that the appellant probably did intentionally set out to mislead Ms MacFarlane in pretending that the two boxes on the back seat of the vehicle were all the tobacco he had. Why mislead Customs, if one has nothing to hide? We think that Mr Murray is right that the circumstances of this importation point to a commercial purpose, and that he correctly concluded that, on the balance of probabilities, this was an importation not for own use but for commercial purposes.

As for the vehicle, it is therefore doubtful that one should have regard to proportionality, taking full account of the Lindsay case. We do not think that the amount of duty evaded, when compared with the value of the J-registered Peugeot 309 in this case, cries out for restoration on that ground. Mr Murray is right, we think, that there is no evidence of exceptional hardship or any other special circumstances that should be taken into account in this case in favour of allowing restoration of the vehicle. We find his decision not to offer restoration of the vehicle to have been an entirely reasonable one.

At the conclusion of the hearing, we accordingly announced that we accepted Mr Spragg's submission that the appeal should be dismissed, and we duly dismissed it. This written decision records our findings and reasons for so dismissing the appeal.

Mr Spragg applied for costs of £350 plus VAT. That is a reasonable application, so we order that the appellant is to pay Customs their costs of the appeal, summarily assessed at £350 plus VAT, a total of £411.25.

MR M S JOHNSON

CHAIRMAN

Release Date

MAN/04/8022

Note 1 (which went on appeal, see [2003] 2 All E R 553, but not in respect of this point) [Back]