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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 >> Bodegas Vallemayort SL v Customs and Excise [2004] UKVAT(Excise) E00828 (08 November 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00828.html
Cite as: [2004] UKVAT(Excise) E00828, [2004] UKVAT(Excise) E828
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- Where an irregularity or offence has been committed in the course of a movement involving the chargeability of excise duty, the excise duty shall be due in the Member State where the offence or irregularity was committed from the natural or legal person who guaranteed payment of the excise duties in accordance with Art 15(3), without prejudice to the bringing of criminal proceedings.
- When, in the course of movement, an irregularity or offence has been detected without it being possible to determine where it was committed, it shall be deemed to have been committed in the Member State where it was detected.
- Without prejudice to the provision of Art 6(2), when products subject to excise duty do not arrive at their destination and it is not possible to determine where the offence or irregularity was committed, that offence or irregularity shall be deemed to have been committed in the Member State of departure, which shall collect the excise duties at the rate in force on the date when the products were dispatched unless within a period of four months from the date of dispatch of the products evidence is produced to the satisfaction of the competent authorities of the correctness of the transaction or of the place where the offence or irregularity was actually committed.
E00828
Excise Duty – Duty Suspended Movement of Excise Goods – Goods not arriving at destination having been removed from their container as a result of interference in transit – whether Excise Duty payable in the UK – Article 20(2) and (3) of Council Directive 92/12/EEC – Excise Duty points (Duty Suspended Movement of Goods) Regulations 2001, 3, 4 and 7(1).
EDINBURGH TRIBUNAL CENTRE
BODEGAS VALLEMAYOR S.L Appellant
- and -
Tribunal: (Chairman): T Gordon Coutts, QC
(Member): Mr K Pritchard, OBE., BL., WS
for the Appellant HEARD ON PAPERS ONLY
for the Respondents Mr Julian Ghosh, Advocate
© CROWN COPYRIGHT 2004.
This appeal is against a decision dated 13 October 2003 upholding an assessment for Excise Duty of £3,341.33 arising as a result of the disappearance of 2,164.5 litres of Rioja wine being transported from Spain to a bonded warehouse in the UK.
The Tribunal had before it a bundle of correspondence and papers and written submissions by the Appellant. The Appellant sought that his appeal be heard on Papers Only and confirmed that attitude to the Tribunal by fax dated 2/11/04. The Tribunal were assisted by Mr Julian Ghosh, Advocate who appeared for the Respondents and provided a Skeleton Argument and Bundle of Documents together with helpful comments and submissions.
Findings in Fact
These facts are found from the papers and in particular in a letter from Morgenrot Chevaliers Plc of Bolton, England to the shipping agents dated 19/11/02. These were the consignors of a consignment of 12,433.5 litres of Rioja wine despatched by container lorry from Spain to a bonded warehouse in Greater Manchester. The Appellants were the guarantors for the Excise Duty exigible on that consignment.
The driver of the container lorry, having arrived on 15 November 2002 discovered that he could not effect delivery before the due date of 18 November 2002 then failed to arrange secure storage and left the vehicle over the weekend in an un-secured parking facility at Heywood near the destination bonded warehouse.
On arrival at the destination bonded warehouse on 18 November 2002 the driver cut the seal and it was then discovered that the container was not full but that 2,164.5 litres of wine was missing. The seal had been tampered with and reconstructed to appear intact.
In the result therefore the Excise Goods in question had been subject to an irregularity or offence. It was not possible to determine at what point the irregularity or offence had taken place.
The irregularity or offence was one which must have occurred prior to arrival at the bonded warehouse at Middleton, Greater Manchester where it was detected.
The UK Legislation
The relevant UK legislation is contained in Regulations 3, 4 and 7(1) of the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001, SI 2001/3022 ("the Regulations"). Regulations 3 and 4 are intended to reflect Articles 20(2) and (3) of the Council Directive (92/12/EEC) respectively (see Re The Arena Corporation Ltd [2004] EWCA Civ 371 at paragraph 47):
3. Irregularity occurring or detected in the United Kingdom
(1) This regulation applies where:
(a) excise goods are:
(i) subject to a duty suspended movement that started in the United Kingdom; or
(ii) imported into the United Kingdom during a duty suspended movement; and
(b) in relation to those goods and that movement, there is an irregularity which occurs or is detected in the United Kingdom.
(2) Where the Commissioners are satisfied that the irregularity occurred in the United Kingdom, the excise duty point shall be the time of the occurrence of the irregularity or, where it is not possible to establish when the irregularity occurred, the time when the irregularity first comes to the attention of the Commissioners.
(3) Where it is not possible to establish in which Member State the irregularity occurred, the excise duty point shall be the time of the detection of the irregularity or, where it is not possible to establish when the irregularity was detected, the time when the irregularity first comes to the attention of the Commissioners.
(4) For the purposes of this regulation, detection has the same meaning as in Art 20(2) of the Directive.
4. Failure of excise goods to arrive at their destination
(1) This regulation applies where:
(a) there is a duty suspended movement that started in the United Kingdom; and
(b) within four months of the date of removal, the duty suspended movement is not discharged by the arrival of the goods at their destination; and
(c) there is no excise duty point as prescribed by regulation 3 above; and
(d) there has been an irregularity.
(2) Where this regulation applies and subject to paragraph (3) below, the excise duty point shall be the time when the goods were removed from the tax warehouse in the United Kingdom.
(3) The excise duty point as prescribed by paragraph (2) above shall not apply where, within four months of the date of removal, the authorised warehousekeeper accounts for the excise goods to the satisfaction of the Commissioners.
Regulation 7(1) of the Regulations provides:
Subject to paragraph (2) below, where there is an excise duty point as prescribed by regulation 3 or 4 above, the person liable to pay the excise duty on the occurrence of that excise duty point shall be the person shown as the consignor on the accompanying administrative document or, if someone other than the consignor is shown in Box 10 of that document as having arranged for the guarantee, that other person.
That legislation as noted is intended to reflect the Articles 20(2) and (3) of Council Directive 92/12/EEC. That Directive provides by Article 20:
Where the excise duty is collected in a Member State other than that of departure, the Member State collecting the duty shall inform the competent authorities of the country of departure.
Contention for the Appellants
The Appellant's contention, so far as we could understand it was that since the goods might not have been stolen in the UK the Spanish Authorities had the same right to decide the matter as the UK Authorities, from which the Tribunal understood that an attempt was being made to invoke Article 20(3) of the Directive.
Submissions for the Respondent
The relevant irregularity was first detected at the premises of bonded warehouse in the UK on 18 November 2002. The person liable to pay Excise Duty on the occurrence of this Excise Duty Point was the consigner and guarantor, the Appellant, in terms of Regulation 7(1). On the basis of UK Legislation the Assessment was correctly made. Although no specific argument was indicated by the Appellant relating to the vires of the UK Legislation, consideration of the Directive reveals that the rules in Article 20 should be applied consecutively. The first consideration is the country in which the offence or irregularity was committed if this could be determined. If so Article 20(1) applies. If not Article 20(2) sets down rules whereby a deeming of the place of the offence will take place. Article 20(3) properly construed is a default provision although that is not made clear in terms. The Tribunal does not however require to consider 20(3) since the facts are clear and 20(2) plainly applies.
Decision
In the view of the Tribunal the Commissioners approach is the correct one. There can be no doubt on the facts that there was an offence or irregularity but that it has not been possible, as conceded by both parties, to determine where this took place. However what is relevant and important it was detected in the UK.
It was in the view of the Tribunal precisely in such circumstances that the Directive applies to regulate to whom the Excise Duty should be paid. It requires to be borne in mind that the tax which is being considered in this context is Excise Duty which only arises either within the country of production or on import. It would be strange if the country of origin could collect Excise Duty exigible at a point occurring out-with its territory.
Article 20(3) does not, strictly, require to be considered in a context of this appeal. However it appears to the Tribunal that, for example, total non-arrival of goods or arrival of something other than the goods ordered might give rise to a claim for duty by the originating state. In the context of the Directive, however, 20(3) can only arise in highly exceptional circumstances and is a "long stop" provision.
In the present case there can be no doubt that on detection of the irregularity and on failure to ascertain where the irregularity took place the member state in which it was discovered is entitled to the duty.
The appeal is accordingly dismissed.
EDN/03/8011