United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2004] UKVAT(Excise) E824, [2004] UKVAT(Excise) E00824

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Wilkes v Customs and Excise [2004] UKVAT(Excise) E00824 (11 November 2004)

E00824

EXCISE DUTY RESTORATION OF GOODS — cigarettes alleged to be for own use — goods seized following implausible explanation as to large quantities imported — review decision confirming decision not to offer restoration held to be not unreasonable — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

GARY WILKES Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Michael S Johnson (Chairman)

Warren Snowdon (Member)

Sitting in public in North Shields, Tyne and Wear on 27 October 2004

The Appellant did not attend and was not represented

Miss E Piasecki, counsel, instructed by the Solicitor's office for HM Customs and Excise, for the Respondents

DECISION

The appellant has appealed against a decision of the Commissioners of Customs and Excise ("Customs") contained in a review letter dated 3 January 2003 ("the review") sent to him by Customs. By the decision the reviewing officer of Customs, Mrs Maureen Crook, upheld a previous decision of Customs ("the original decision") contained in an earlier letter to the appellant dated 10 November 2002, written by Mr Nicholas Stott of Customs.

The original decision and the review were both decisions declining to restore to the appellant certain excise goods, namely 20,000 cigarettes and 400g of hand-rolling tobacco ("the excise goods"). The excise goods were seized by Customs from the appellant on his return to the UK from Spain on 17 October 2002. It appears from the documents presented to the tribunal by Miss Piasecki, who represented Customs at the hearing, that the seizure, which took place at Manchester Airport, was for the following reasons:

1) The excise goods were in excess of the guidelines published by Customs;

2) The appellant's stated consumption rate of cigarettes/ tobacco was such that the excise goods would last far longer than represented by him;

3) When questioned, the appellant had specified an unrealistic figure for the cost of his smoking habit;

4) The appellant showed no signs of being a smoker during interview, having no smoking equipment with him and not asking to smoke during that time; and

5) The appellant had imported small quantities of cigarettes on his previous trips abroad, but by way of contrast had brought back a large quantity on 17 October 2002.

In consequence of the interview, the officer of Customs who interviewed the appellant, Mr Stott, formed the view that the excise goods were held for a commercial purpose and not for the appellant's own use, so he seized the excise goods.

When the appeal was called on for hearing, it was apparent that the appellant had not attended tribunal, nor had he sent a representative to speak for him. Seeing that there was no explanation for his absence, and that the Notice of Appeal shows that he lives at no great distance from the tribunal centre (his stated address is in West Moor, Newcastle upon Tyne), it seemed to us that we should nevertheless proceed with the hearing. We therefore did so, pursuant to rule 26(2) of the Value Added Tax Tribunals Rules 1986 (as amended).

The Notice of Appeal specifies the following grounds of appeal:

"My goods were confiscated on the assumption that they were for commercial use. EU ruling says that the burden of proof is with H M Customs and Excise, so therefore they were taken from me illegally".

The appellant is correct to say that the burden of proof as to commerciality rests with Customs - that was established by the decision of the Divisional Court of the Queen's Bench Division in the case of 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 former Excise Duties (Personal Reliefs) Order 1992 SI 1992/3155^[2] wrongly placed the burden of proof on travellers to satisfy Customs that they were not holding or using excise goods for a commercial purpose. In the Hoverspeed case, the court held that, according to article 9(2) of Council Directive (EEC) 92/12, there existed at most an evidential burden upon a traveller to provide an explanation of the importation.

However if the burden of proof is discharged in a given case, Customs may come to the conclusion that the importation is for a commercial purpose, rather than for the traveller's own use. The question for the tribunal is whether the conclusion reached in the review that the excise goods should not be restored was such that it could not reasonably have been arrived at by Customs - see section 16(4) of the Finance Act 1994. Only if the tribunal so concludes is it in a position to allow the appeal.

The tribunal has been referred to letters written to Customs by the appellant contesting the seizure of the excise goods. In the first letter, dated 18 October 2002, the appellant stated that the seizure was unlawful and that he wished to challenge its validity. Thereafter he returned a form indicating that he was requesting restoration of the excise goods as well as appealing the seizure ^[3]. Customs then proceeded to arrive at the original decision, dated 10 November 2002, which was adverse to restoration. Then by another letter, dated 20 November 2002, the appellant disagreed with the original decision and requested the review. In that letter, he stated that he believed that Customs' "agency" had acted unlawfully by proceeding to obtain evidence "under intimidating conditions".

The appellant has not provided the tribunal with any information as to why the conditions under which evidence was obtained by Customs might be regarded as intimidating in this instance, nor does the letter in which he makes that allegation explain this.

It does not appear that the appellant is disputing that he was questioned by Customs and that he gave a set of answers to the officer's questions on which Customs have relied. The appellant has not alleged that those answers might be inaccurate in any respect. The appellant was not under arrest when questioned, and he might have declined to provide the answers he gave. It appears from the record before the tribunal, incorporated in Mr Stott's signed Witness Statement, that the appellant gave the answers freely, in the knowledge that the issue between him and the officer was whether or not the excise goods were for the appellant's own use.

We find that the appellant stated that he had travelled abroad 2 to 3 times in the previous couple of months, looking for work (he had been working as a taxi driver, but also did joinery work). He said that over the previous 12 months he had been abroad 6 or 7 times, working. On the last occasion, he said that he had brought back 15 cartons of cigarettes, and between 10 and 15 cartons on each of his previous trips. He said that he had smoked these cigarettes. It was not suggested that anyone other than the appellant smoked any of them.

We further find that the appellant told Mr Stott that the 20,000 cigarettes brought back on the occasion with which we are concerned, that is on 17 October 2002, would last him 3 months, although he later said that he would "need to work it out". He said that he spent "£12 per day" on cigarettes - "£80 to £100 per week". Earlier he had stated that he would himself be smoking the cigarettes brought back on this occasion. They had cost him 2,200 Euros, paid from his savings from his job. He stated his consumption rate to be 20 to 30 per day. Mr Stott queried this towards the end of the conversation, and the appellant again stated that this was his rate of consumption, and that 20 Lambert and Butler cigarettes purchased in Newcastle would cost him £3.59.

Mr Stott is then recorded as having suggested that 20,000 cigarettes would last the appellant over 2 years. The appellant replied, "A bit more eh". Mr Stott then told the appellant that the excise goods were being seized, and the reasons for this, which we set out above. The officer's notebook was offered for signature to the appellant, but the appellant declined to sign it as a correct record.

Although the contents of the notebook were not accepted as correct by the appellant at the time, we see no reason to question the record, and for the purposes of this hearing we accept it as accurate.

The original decision not to restore the excise goods, prepared and written by Mr Stott, simply stated that he had considered all the factors in the case, and had found that there were no exceptional circumstances justifying a departure from Customs' current policy, which was directed towards deterring and detecting fraud. Mr Stott declined to restore the excise goods, giving as his reasons the matters which are numbered (1) to (4) in paragraph 2 above.

The review is a more substantial document. In it, Mrs Crook reviewed the contents of the conversation between the appellant and Mr Stott, noting that the officer had clearly spelt out, at the start of the conversation, that his questions were directed to deciding whether the excise goods were for the appellant's own use or imported for a commercial purpose. Mrs Crook then highlighted a number of the answers given by the appellant, including those we mention above. She set out Mr Stott's stated reasons for seizure, observing that the appellant had declined to sign his notebook. She then drew attention to the applicable legislation, and to Customs' policy that seized goods should not be restored, and she proceeded to consider the position.

We quote 2 paragraphs from her consideration, in which she is addressing the appellant:

"Your estimate of your daily cigarette expenditure in the UK is £12.00, which does not tally with your stated consumption. You would use on average 8.75 packets of cigarettes in the UK to smoke 25 per day, spending £31.41 per week. This is calculated at the unusually low price quoted by you of £3.59 per packet of 20.

"You have admitted to travelling abroad 6 or 7 times in the last 12 months and you have bought between 10 and 15 cartons on each trip. Firstly, this is inconsistent with the quantity of goods purchased on this current trip. Secondly, if you had travelled 6 times in the last 12 months each time purchasing, on average, 12 cartons of cigarettes you would have purchased a total of 14,400 cigarettes. Those cigarettes would have lasted you 19 months. An excessive amount, which means before making this current trip you would have already had 7 months' supply, which makes your statement that these current goods are for own use incredible".

All things considered, Mrs Crook felt unable to accept the appellant's case that the cigarettes were for his own use, so she upheld the original decision.

With regard to the burden of proof, relied upon by the appellant, we note that the Hoverspeed case says that, if the individual in possession of the goods in question fails to provide a satisfactory explanation of his contention that the goods are for own use, a particular Customs officer may well properly conclude that the goods are indeed held for commercial purposes ^[4]. It seems to us that this is precisely in point in the present case. Mr Stott concluded that the appellant's case that he imported so many cigarettes to smoke himself did not hang together. Mrs Crook, having performed and set out the relevant calculations in the review, was sceptical in the same way.

We agree with Mrs Crook and Mr Stott. The appellant had evidently purchased far more cigarettes than he could possibly need for his own use. Having regard to the implausible nature of his case, we think that each of the officers was justified in considering that the appellant's case was without merit. It is clear to us that the appellant's explanation was a highly dubious one, and we can understand entirely why both officers - Mrs Crook in particular, whose decision is under appeal before us - came to the conclusion that the excise goods were being imported for a commercial purpose, and that there was no case for restoring them on the basis that they were for the appellant's own use.

We find that it has not therefore been shown that the decision in the review to uphold the original decision not to offer restoration of the excise goods could not reasonably have been arrived at.

The conclusion that we should reach was so clear by the end of the hearing that we felt that we could announce there and then that the appeal was dismissed, which we did without having called upon Miss Piasecki to make submissions. In these circumstances Miss Piasecki applied for costs in the sum of £300, an application which we felt to be justified.

We therefore record that this appeal is dismissed, and the appellant is ordered to pay Customs' costs of the appeal, summarily assessed in the amount of £300.

MICHAEL JOHNSON

CHAIRMAN
Release Date: 11 November 2004

MAN/2003/8031

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

Note 2    (since repealed, with effect from 1 December 2002)    [Back]

Note 3    Customs therefore took out a Summons on 17 April 2003 in the Manchester Magistrates’ Court for the condemnation of the excise goods. Miss Piasecki has provided us with a copy of this, and of the resultant Condemnation Order dated 28 May 2003, which adjudged that the excise goods should be condemned as forfeit.     [Back]

Note 4   per Brooke LJ in the Hoverspeed case at paragraphs [115], [173] ([2002] 4 All E R at 943c & 959j – 960b).    [Back]