United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E815, [2004] UKVAT(Excise) E00815

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Brian John Osbourne v Customs and Excise [2004] UKVAT(Excise) E00815 (03 November 2004)

E00815

EXCISE DUTY — Seizure of Vehicle and Goods – Reasonableness of Commissioners' Decision to refuse restoration — was the importation commercial and for profit — yes in part — application of Commissioners' policy — Appeal allowed in respect of the vehicle.

MANCHESTER TRIBUNAL CENTRE

BRIAN JOHN OSBORNE

Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Lady J C Mitting (Chairman)

Mrs E MacLeod

Sitting in public in Birmingham on the 7th October 2004.

The Appellant appeared in person

Mr N Baker of Counsel instructed by the Solicitor's office of HM Customs and Excise for the Respondents

DECISION

The Appellant is appealing against the decision on review of the Respondents dated 10^th February 2003 to refuse restoration of Excise goods and a Mazda motorcar S887 DOJ.

The seizure took place on 23^rd April 2001. The Appellant requested restoration, which was refused by letter dated 12^th May 2001. The Appellant then requested a review of that decision which did not take place within the statutory time limit and the original decision was therefore deemed upheld. By direction of the Tribunal, released 1^st October 2002, a further review was ordered. This review was carried out by Mr D A Leavesley and was dated 10^th February 2003. The outcome of this further review confirmed the decision to refuse restoration of both goods and vehicle and it is this decision which is the subject of the appeal.

We heard oral evidence from the Appellant but no evidence was called on behalf of the Commissioners.

The Evidence

On 23^rd April 2001, at Dover, the Appellant was intercepted by Customs Officers. At the time, he was driving his Mazda motorcar and he was carrying two passengers, his partner of some 28 years, Miss Avril Heather Cooper, and a long term friend of the couple, Mrs Rosemary Roche. Initially, all three travellers were questioned together. They told the Officer that they had been to Belgium and Calais and when asked what goods they had bought, Mr Osborne replied that he had purchased six kilograms of tobacco, Miss Cooper, 5000 cigarettes and Mrs Roche, 5000 cigarettes. Mr Osborne said that the last time he had travelled had been two weeks previously and that he had been stopped by Customs a year ago but "nothing happened".

When Officers searched the vehicle, they found the following:- 5000 Benson & Hedges cigarettes, 5000 Silk Cut cigarettes, 1600 Super King cigarettes, 800 Embassy No. 1 cigarettes, 6 kilograms Hand rolling tobacco, 30 litres of beer, 158.25 litres of still table wine and 0.75 litres of sparkling wine. The Officers required the travellers to satisfy them that the goods had not been imported for commercial purposes and all three agreed to remain to be interviewed.

Mr Osborne, in interview, claimed ownership of the hand rolling tobacco, which he said had cost him £240 for which he had paid cash. He intended to give his son ten pouches but would not receive any payment in return and the remainder of the tobacco he would smoke himself. He said that he smoked a pouch a day, but when asked how many cigarettes he got from a pouch, he did not know. He was asked how many cigarettes he smoked in a day and again, he said he did not know. He then amended his reply to say that he might smoke half a pouch a day, he did not know, as he did not count. He was then asked when he had last travelled abroad, to which he replied last week to France, but that he had purchased no cigarettes or tobacco. He had travelled with Miss Cooper on that occasion but she had not bought any cigarettes either. He went on to tell the Officer that he had not purchased any cigarettes or tobacco since Christmastime when he had purchased five kilograms of tobacco and Miss Cooper had purchased 5000 cigarettes. He had 20 pouches left from his purchase. He told the Officer that he had been retired for some five years and that he received £560 a month from an investment, which he had made when he sold his public house. He also had some savings from which this purchase had been made. He was asked how many trips he had made in the last twelve months, to which the recorded reply was "round about thirty". It should be mentioned at this stage that Mr Osborne claimed that that figure was put to him by the Officer and not volunteered by Mr Osborne. He said the purpose of these trips was shopping because they had nothing else to do. He said that he had handed the cash over for all the purchases. His and Miss Cooper's goods had been paid for out of a joint fund and Mrs Roche had given him £475 for her cigarettes which he then handed over.

In her interview, Miss Cooper said that normally they travelled to France on a regular basis but that she had been to Belgium before "ages ago". She claimed ownership of the carton of Benson & Hedges but when asked by the Officer how many cigarettes that was, she replied that she did not know. She agreed with the Officer that it would be 5000. She was asked how much she smoked, to which she replied "About 2000 a week". She then went on to say, however, that she smoked 25 to 30 a day. The Officer put it to her that that would be approximately 200 per week, to which Miss Cooper replied that it was more than that, maybe 1400 to 1600 a week. She went on to say that it would depend how many the children took, as she would give some away to them, but not for cash. Miss Cooper said that she was retired and had been so for nearly five years and that she lived off her bank balance. They had been stopped by Customs once before but she had not seen a Public Notice One before. She went on to say that she had last travelled to Belgium to purchase tobacco approximately six or seven months previously but had been to France in the intervening time, including last week.

Mrs Roche, in her interview, claimed ownership of the 5000 Silk Cut cigarettes, which she said had cost her £400 and the beer and the wine. All the goods were for her own use, although her daughter would have a packet of cigarettes if she wished but no more than two or three. She had paid cash for her goods, she did odd cleaning jobs and her husband and daughter were both employed. She had last travelled abroad just before Christmas when she had bought the same quantity of goods as on this trip. She had used her previous purchase of cigarettes up one month previously as she had been smoking heavily. She put her consumption rate at between 60 and 80 a day. She said that Mr Osborne had handed the cash over for the goods and she had given him £350 to make the purchase on her behalf. Mrs Roche estimated that her goods would have cost approximately £500. The Officer asked if she owed Mr Osborne £150, to which there is no recorded reply. He asked where the money had come from, to which Mrs Roche replied that she had saved it.

The Officers then seized the goods and the vehicle, the reasons for seizure being the goods carried were in excess of the minimum indicative levels; Mr Osborne had had previous contact with Customs when he had been issued with a Public Notice One; Mr Osborne and Miss Cooper had unreasonable consumption rates; Mr Osborne was a regular traveller; there were inconsistencies between what the three travellers had said during interview; Mrs Roche's income was incommensurate with the amount of money spent on her goods and 2,400 cigarettes had not been claimed by any of the travellers.

When Mr Leavesley came to carry out his review, he had the seizure file in front of him and correspondence from the three travellers. The gist of the correspondence was that the goods had all been purchased for their own personal consumption, that the guidelines were not law and that certainly as far as Mr Osborne and Miss Cooper were concerned, they could well afford the goods they had purchased.

Mr Leavesley set out in his letter the Departmental policy on restoration of goods and private vehicles. In respect of goods, he said that restoration would be exceptional. In respect of private vehicles, he summarised the changes, which had taken place in the light of recent case law, in particular Lindsey. He explained that following Lindsey, Customs had to differentiate between "commercial smugglers" who sold imported goods for profit and those who distributed their goods to family and friends but not for profit. He went on to say that where the case "involved no profit and a family and friends element", the vehicle would be restored on a first seizure on payment of a sum equal to the excise duty chargeable on the goods. He then went on to summarise a further change in the following terms.

"Further change was introduced at the end of October 2002. That change was as result of the findings of the Court in the case of Hoverspeed. Where a vehicle was seized due to the improper importation of excise goods, restoration would be allowed where this was a first instance and the volume of goods involved did not exceed a certain multiple of new guidance levels, which have now been introduced. Such restoration would be conditional upon payment of a sum equal to the excise duty on the goods that had been carried in the car."

Mr Leavesley stated that his task was to consider whether or not the refusal to restore the goods would still be proper in the light of the current law and the facts as currently known. He also noted the reversed burden of proof.

Mr Leavesley first considered whether or not this was a "Lindsey type case". He noted the frequency of travel, the quantity of goods purchased and that the goods were stated by all three travellers to be for their own personal consumption or to a very minor extent, gifts for their children. Mr Leavesley concluded that "the considerations for restoration under Lindsey" did not apply and that the correct policy to be applied was therefore that quoted above in relation to improper importations.

Mr Leavesley noted that the volume of goods carried by the travellers was twice the level for tobacco and less than twice the level for cigarettes and that this was the first occasion on which any of the travellers had had any goods seized.

Mr Leavesley had, by the time of his review obtained Mr Osborne's travelling records. He had ascertained that he had travelled some five days before the seizure and also some seventeen days before. The records also showed him that he had travelled on the 10^th December 2000 and in the nineteen weeks between then and this trip, he had been on a further ten occasions, spending each time only some two and a half to three and a half hours. Also from March 2000 to November 2000, there had been at least seventeen trips. In addition, there were some half a dozen holiday trips to Portugal when Mr Osborne had said that he stopped off in France. Given such regular travel, Mr Leavesley could see no reason why this quantity of goods should have been purchased.

Mr Leavesley also analysed in some detail the inconsistency in the replies which the travellers had given about the number of cigarettes they smoked and the sheer implausibility of the reply given by Miss Cooper that she smoked 2000 cigarettes. He pointed out the inconsistency in Mrs Roche's statement that she said she had given £350 towards the payment of her goods, whereas Mr Osborne had said it was £475. He commented on the fact that 2,400 cigarettes had gone unclaimed by any of the travellers and he concluded in the following terms that neither goods nor vehicle should be restored.

"Given the frequency of travel, the numerous inconsistencies in the various accounts, the opportunity to obtain the goods, the fact that you misled the Officer concerning the frequency of trips and that nobody would admit to ownership of over 2,000 cigarettes, I am of the opinion that there is a commercial element to this import and that the vehicle should not be restored."

In his oral evidence, Mr Osborne relied on the fact that the levels were not mandatory but guidance levels only; the travellers had not been in excess of the guidance levels in respect of their alcohol; the Public Notice One "is not law" and that the goods were for the personal consumption of the three of them. In cross examination, he said that he travelled abroad frequently because it was something that he and Miss Cooper very much enjoyed doing. He would take Miss Cooper on most occasions but he also took a number of other people on other occasions and indeed had a number of trips planned in the future, taking various friends. Although it was a long day from Halesowen to France or Belgium and back, it was enjoyable and they would stop for a meal on the way there and again on the way back. However, he rarely went into Belgium because that would put an extra couple of hours on the journey and on the vast majority of occasions, they went only to France. They bought cigarettes in France but he only bought tobacco in Belgium. The shuttle ticket cost him £9 and petrol £45. He always paid for the ticket and the petrol and never expected repayment from any of his passengers. Mr Osborne also said that the additional 2,400 cigarettes had been purchased at the terminus and not in Belgium (this is supported by the receipt). The cigarettes had been bought at the instigation of Miss Cooper, although Mr Osborne had paid for them on his card. He did not know what they were to be used for, except that 200 of them were to be given to the lady who looked after their house whilst they were away. He explained the inconsistencies in their evidence as being due to their being intimidated by the quick fire questions and becoming flustered.

Conclusions

The role of the Tribunal is to determine whether the Respondents' decision to refuse restoration was a decision, which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable, Mr Leavesley must have considered all relevant matters and not taken into consideration any that where irrelevant. He must also have given due weight to the factors which he took into account. We are entitled to make our own findings of fact and it is against these facts that we then judge the reasonableness of the Commissioners' exercise of their powers.

Findings of Fact

The Appellant has maintained throughout that all the goods were purchased for the personal use of himself and his passengers. Odd very minor quantities were to be given away but never for any financial return. We do not accept this contention. Given the frequency of travel and the ability to buy excise goods on each and every occasion, we can see no reason why such large amounts should be bought on this occasion for personal consumption. This is especially so in relation to the cigarettes which are clearly not only purchased only in Belgium but also in France and can therefore quite easily be purchased on each and every trip. We also take into account the inconsistencies in interview over the number of cigarettes and the sheer implausibility of some of the answers but the factor influencing us most in this conclusion is the unclaimed 2,400 cigarettes. They are of two different varieties. None of the travellers owned up to having purchased them and no-one seemed to know what they were destined for (other than 200 to be given to the lady looking after Mr Osborne's house).

Mr Leavesley makes much of the fact that Mr Osborne, in initial interview, told the Officer that he had previously travelled two weeks before, whereas in fact it was only five days before. We do not attach such importance to this as did Mr Leavesley as in individual interview, Mr Osborne readily answered that he had travelled last week and a fortnight before. However, this is not a major factor and does not alter our view. It may well be that some of the goods were to be used by the travellers themselves. Some of the tobacco and cigarettes may well have been smoked by the travellers and we accept that some were also to be given as gifts to their children. However, we find that this does not apply to all the goods and that a major part of them were not for the personal consumption of the travellers or to be given as gifts. It follows that they must have had a commercial purpose.

We next have to consider the nature of that purpose. It has never been the contention of any of the travellers that the goods were to be passed on at cost to family or friends. Indeed, the question was put on several occasions to the travellers in interview and to Mr Osborne in cross examination and any such purpose has always been denied. We therefore have to rule out that the goods were to be passed on at cost and we can only conclude that they were to be passed on for profit. We believe that this accords with the view which Mr Leavesley formed.

It is against this finding that we now consider whether Mr Leavesley's decision to refuse restoration of the goods and the vehicle was reasonable. In relation to the goods, we find it to be completely reasonable and see no reason why the goods should be restored.

The position of the vehicle has to be looked at against the background of the Commissioners' policy. Mr Leavesley states the Commissioners' policy somewhat obliquely in his letter. Mr Baker had been briefed by the Respondents to the effect that the current policy on the restoration of vehicles in a "for profit" case is that they would never under any circumstances be restored. This did not accord with our understanding of the policy or with how we understood Mr Leavesley to be stating the policy. For the avoidance of doubt, we set out here what we believe the policy to be and upon which we base our decision. We understand that the current policy of the Commissioners in respect of the restoration of vehicles is that, at the discretion of the Commissioners, vehicles may be offered for restoration or restoration on terms where the excise goods were destined for supply for profit but where the quantity is small and it is a first time seizure. By "small" we believe the Commissioners to apply a level of three times the current guidance levels.

In this case, as indeed is pointed out by Mr Leavesley in his letter, the amount of tobacco and cigarettes imported was well within the Commissioners' definition of "small". Although Mr Osborne had been stopped by Customs on previous occasions, he had never had goods seized from him and this was therefore a first time seizure. This, therefore, is the policy which Mr Leavesley should have applied. It is a discretionary policy and there is no automatic right to restoration. It is not, however, clear to us from Mr Leavesley's letter whether he has in fact applied the policy and if so, in refusing restoration, for what reason. Having accepted that this was a first time seizure of small quantities, thus implying that he was applying the policy, he went on "However, I also note the following … ". From this, we would have understood he was then going to set out reasons why he was using his discretion to refuse restoration. However, he went on to point to the frequency of travel and the inconsistencies in consumption rates and contradictions in the evidence and concluded "I am of the opinion that there is a commercial element to this import and that the vehicle should not be restored". In fact, that there was a commercial element was his starting point and he does not expressly give any reason why he did not exercise the policy in favour of the Appellant.

We have to say that we cannot see why this case does not fall within the ambit of the policy and we can see no reason why the Commissioners should not have exercised their discretion and allowed restoration on terms. As we say, from a reading of Mr Leavesley's letter, we are uncertain whether he did not in fact apply the policy or whether he did apply it but considered that restoration was inappropriate. Merely to conclude that he was not allowing restoration because there was a "commercial element" does not, in our view, demonstrate any true consideration of the policy and certainly does not give sufficient reason why the policy was disapplied. In fact, the reasons given by Mr Leavesley are the very reasons for which he and we believed the importation not to be for own use and leading us both to conclude that it was a commercial venture for profit. The reasons give no true indication of an application of the policy.

In summary, therefore, we find that this importation was, at least in part, a commercial importation for profit. As such and as it was a first time seizure of a "small" quantity, the Commissioners should have considered their discretionary policy of restoration on terms. We can see no reason why restoration should not have been offered on terms and we can not see any reasoning in Mr Leavesley's letter which would justify any other conclusion.

We therefore allow the Appeal in respect of the vehicle and in line with our jurisdiction, we direct there should be a further review, such review to be carried out within six weeks of the release of this decision by an Officer who has had no previous involvement in the case.

There will be no Order for Costs.

LADY MITTING
CHAIRMAN

Release Date: 3 November 2004

MAN/01/8132