United Kingdom VAT & Duties Tribunals (Excise) Decisions

Williams v Customs and Excise [2004] UKVAT(Excise) E00839 (30 December 2004)

E00839

EXCISE DUTRY – Restoration – Vehicle – Appellant and two friends imported 45 Kg of tobacco and other excise goods – Seizure on grounds of quantity and disbelief by Customs Officers of the travellers' "own use" explanations – Restoration of vehicle refused – Whether "own use" issue could be ventilated at the Tribunal at the appeal against the refusal to restore – Gascoyne v CCE [2004] EWCA Civ 1162 considered – held in the circumstances ventilation of the "own use" issue would not involve an abuse of process – "Own use" issue considered – found on the facts the importation of the 45 Kg of tobacco was not for "own use" – found refusal to restore proportionate – appeal dismissed

LONDON TRIBUNAL CENTRE

KYLE WILLIAMS Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: JOHN WALTERS, Q.C. (Chairman)

ANGELA WEST, F.C.A.

Sitting in public in Plymouth on 1st October 2004

N. Gibbon, of Nigel Gibbon &Co., for the Appellant

Sarabjit Singh, of Counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. Mr. Kyle Williams appeals against a decision of the Commissioners (through their Review Officer, Mr. R. Brenton) not to restore a motor car K99 YLE, a Mercedes C180 model, which was seized at Dover Eastern Docks on 20 June 2002. The Review Officer's decision is contained in a letter dated 11 October 2002, addressed to Nigel Gibbons & Co., Solicitors of Manchester, who represented Mr. Williams at the appeal hearing.

The evidence

2. What follows of a factual nature (as opposed to recitations of statements made at interview or in evidence at the appeal hearing) may be taken as our findings.
3. Mr. Williams (who is 33 years of age), with two friends, Mr. Tucker (who is 40) and Mr. Mostyn (who is 44) left Devon about 3 a.m. on 20 June 2002 for a day trip to Calais and Belgium for the purpose of cross border shopping. They live at different addresses in the Exeter area. They caught a ferry from Dover at 8.15 a.m. and they were stopped when they returned to Dover at 8.50 p.m.
4. They travelled in Mr. Williams's car, a Mercedes C180 with a "personalised" number plate (K99 YLE), which was a distinctive vehicle, having a stereo system and alloy wheels fitted. It is clear that the vehicle was a prized possession of Mr. Williams his "pride and joy". He referred to it in evidence as a "£13,000 Mercedes", that being his estimate of its value.
5. When the car was stopped, Mr. Tucker was driving and Mr. Williams and Mr. Mostyn were passengers. The travellers stated that they were aware of the prohibitions and restrictions on importing certain goods into the UK, such as firearms and drugs, and that they had no such goods. Mr. Williams, Mr. Tucker and Mr. Mostyn had been colleagues at work, Mr. Williams being in charge of the other two.
6. The Customs officer examined the boot of the car and found there the following excise goods: 45 Kg. of hand rolling tobacco, 1,380 cigarettes, 100 cigars, 5 packets of Cigarillos and 75 cl. of wine. The travellers were told that they were not under arrest and the Officer read a formal statement requiring the travellers to satisfy her that the goods were not held for a commercial purpose. The travellers stated that they understood this and elected to stay to be interviewed.
7. They were each interviewed separately by different Customs officers, Mr. Williams by Andrew Vague, Mr. Mostyn by Joanne Woodland and Mr. Tucker by Johanna Walker. Statements by each of these three Officers were in evidence before the Tribunal. None gave oral evidence. Mr. Williams gave oral evidence, but Mr. Mostyn and Mr. Tucker did not. Neither do we have any statements from Mr. Mostyn or Mr. Tucker.
8. Mr. Williams, as he frankly agreed when he gave oral evidence, was drunk when he was interviewed. As a consequence, his interview was cut short. However in answer to the question "what goods are yours?", he said "£700 of tobacco, which would hopefully last me a year if that's OK" and he told the Officer that he had just been made redundant from work as a vacuum caster on aeroplane and land based gas turbine engines, and that he had received a redundancy payment of £75,000. In evidence he said that this was not the correct figure and that he had been "very drunk and was on a wind up"; he had in fact received £5,500.
9. Mr. Mostyn told Officer Woodland that his girlfriend had booked the travel ticket using Mr. Williams's card. When asked whose idea it was to do the trip, he said "it was just a conversation". When asked where he bought the tobacco, he said "I think the boxes came from Eastenders [a retail outlet in Adinkerke, Belgium] and the rest I bought adjacent to Eastenders because they are gifts". He said that they had all gone into the shop and Mr. Williams had bought "it on the credit card and then I went off and bought the gifts". He said he had given Mr. Williams £700 a couple of weeks previously. He said the tobacco was for personal use. He said he and his girlfriend smoke "one and a bit" pouches a week. When asked how long he expected the tobacco to last, he said "it's the first time we've done it, probably the more we've got the more we'll smoke, we'll just have to see". He had no smoking material on him, other than an opened packet of cigarettes. He said he was made redundant the previous month and that the money for the tobacco came from his redundancy payment (£3,938). He said he had uncertain disposable income, his girlfriend worked in a shop, he had two dependent children and £204 mortgage and normal bills as monthly outgoings. He had no savings.
10. Mr. Tucker, when asked by Officer Walker, how much tobacco each had purchased, said "I don't know, I spent about £700". He had no idea how much tobacco they had each purchased. He said he was a disc jockey and "some weeks I only earn £100, some weeks £300, I pay my mum £40 per week, I have to pay for food and my washing". When asked what goods belonged to him, he said "£700 each on tobacco. I think I've got a big box of 50 cigars and 2 boxes of 25 cigars". He said he had paid Mr. Williams £700 the previous night and that Mr. Williams had paid for the tobacco on his credit card. He said he got through a pouch and a half a week. He said that he had got £200 from his family to get tobacco for them – his parents, brother, two sisters and half brother all smoked. He said he usually paid about £9.15 for a 50-gram pouch of tobacco in the UK.
11. In evidence, Mr. Williams said that he smoked 30 to 50 cigarettes a day in 2002, using 2 or 3 pouches of hand rolling tobacco a week. His partner at the time smoked heavily, as did his father, who has since given up. He said the three of them planned to spend around £700 each on tobacco, that they agreed that it would go on his credit card and that if the purchases went over £700 each "it would be of no great consequence". £700 was a figure they came to – "it was no big deal". He could afford his share out of his redundancy money – and he had money in the bank. Before they left he, Mr. Williams, had received £700 from each of the others.
12. As to the tobacco purchased for himself, Mr. Williams said he planned to smoke it himself, and store it in his wardrobe in the meantime. He denied the suggestion that it would dry out after 12 months; asserting that the tobacco was vacuum sealed, so no air could get out or in, and that would keep it moist. He would let his partner at the time use some, "and no doubt my father also". He did not know what quantity of tobacco £700 would buy. He selected the tobacco at Eastenders in Adenkirke. It was Golden Virginia, the brand they smoked. He said "We asked for 15 Kg. each". He calculated the quantity from the displayed prices – although he could not, when giving evidence, remember how the prices were displayed or whether the prices were in £ sterling or euros. He was not going to sell the tobacco, and neither of his friends had said anything to indicate that they were going to sell their shares of the tobacco. The tobacco was not concealed in the car. It was simply placed in the boot. He had smoking paraphernalia with him when the car was stopped.
13. The Review Officer, Mr. Brenton, gave evidence. He supported the reasonableness of the decision not to offer restoration of the car, contained in the review letter dated 11 October 2002. The car had been seized because the Officer concerned had concluded as a result of the interviews of the three travellers that the excise goods (chiefly the hand rolling tobacco) had been imported in an attempt at commercial smuggling. They were, in quantity, very greatly in excess of the guidelines in article 5 of the Excise Duties (Personal Reliefs) Order 1992; the stated consumption rates were not commensurate with the quantity of goods imported; their reported incomes and financial resources were not commensurate with the expenditure on the tobacco.
14. The guidelines at the time were 1 Kg. of smoking tobacco – 45 Kgs. had been imported.
15. The Commissioners' policy with effect from 14 July 2000 had been not normally to restore privately owned vehicles used for commercial smuggling. From 18 April 2002, the policy had been modified to consider restoration of a vehicle where the traveller can demonstrate that the goods were to be supplied at purchase price and not for profit. He stressed that each case is considered to determine whether exceptional circumstances would make restoration appropriate.
16. In the review letter, Mr. Brenton took account of the decision in R (on the application of Hoverspeed Ltd) v Customs and Excise Commissioners [2002] All ER 498 to the effect that the burden of proof was not on the traveller to show "own use", but was on the Commissioners to show that an importation was for commercial purposes.
17. Nevertheless, Mr. Brenton took account of the quantity imported – 45 Kg. – and the comparison with the applicable guide lines as an indication of whether the importation was in reality for "own use" rather than for commercial purposes.
18. Mr. Brenton considered that the evidence that each of the travellers had spent £700 on tobacco but yet were unaware of the quantity bought was an indication "that this was an attempt to disguise the large quantity being imported".
19. Mr. Brenton also pointed to Mr. Tucker's admission that his family had given him £200 so that he could buy tobacco on their behalf. This meant, he said, that Mr. Tucker's importation was not all for "own use".
20. At Mr. Tucker's declared level of consumption (1½ pouches per week), Mr. Brenton calculated that it would have taken him over 3 years to consume say 12½ Kg. of tobacco. Mr. Brenton considered that Mr. Tucker's statement that he had spent £500 of his own money purchasing this tobacco for his own use was implausible, given his general financial circumstances.
21. Mr. Brenton regarded Mr. Mostyn's statement that he had spent £700 on tobacco for his own use as also being implausible, given his financial circumstances and domestic commitments. On his declared rate of consumption, Mr. Brenton calculated that the tobacco would have lasted him almost 4½ years. He considered that Mr. Mostyn's statement that he had spent £700 on tobacco for his own use (given Mr. Mostyn's declared financial circumstances) to be implausible.
22. Mr. Brenton's conclusion was that Mr. Williams, who had purchased the 45 Kg of tobacco on his credit card at a cost of £2,100, had attempted to import the tobacco for a commercial purpose, i.e. to sell it at a profit.
23. He considered that three bona fide "own use" shoppers would not have spent exactly £700 each and bought exactly the same product. Shoppers have different consumption rates (as in this case) and he would expect this to be reflected in different amounts purchased.
24. He cited the observation of the Chairman of the VAT and Duties Tribunal (T. Gordon Coutts, QC) in the appeal of Boyd (EDN/96/8006) :

"The Tribunal came to the view that even half the quantities involved would have raised a justifiable suspicion, but where 9.6 Kilos of hand rolling tobacco are imported, it strains the credulity beyond acceptable levels that this could be for one man's own use. The importation of twenty odd pounds of tobacco of the hand rolling variety is sufficient justification in itself for [Customs] not being satisfied that this was for personal use."

25. He cited the well known judgment of Lord Phillips, MR in Lindsay v Commissioners of Customs and Excise [2002] EWCA Civ 267 at [63] to the effect that:

"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 their vehicles. Nor does it seem to me that, in such circumstances, the value of the car 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."

26. Mr. Brenton considered whether there were any exceptional circumstances, in particular the degree of hardship caused to Mr. Williams by the loss of his car, and concluded that this had not been shown. Accordingly he confirmed the decision not to offer restoration of the vehicle.
27. In oral evidence he said that the Commissioners had received information from the Imperial Tobacco Company to the effect that hand-rolling tobacco kept at ambient conditions should normally last 12 months. In other words after that period the tobacco starts to dry out and is not so pleasant to smoke. He said that the tobacco in the pouches is not vacuum packed and it will decay even when the pack is left unopened.
28. In answer to a question put to Mr. Brenton in cross-examination to the effect that, if the party had been smugglers, would he not have expected them "to prepare the ground more professionally", he answered that in his experience the majority of cross border smugglers work on the premise that they are not going to be stopped.

Submissions

29. On behalf of Mr. Williams, Mr. Gibbon submitted as follows:
30. First, with respect to the absence of evidence from Mr. Tucker and Mr. Mostyn, he emphasised that Mr. Williams is entitled to have the Tribunal assess whether he was part of a joint enterprise, regardless of whether the Tribunal considers that Mr. Tucker or Mr. Mostyn may have been part of a joint enterprise.
31. We understood this to be a submission that we should consider Mr. Williams's appeal on the ground that the importation by him was for his own use, independently of any conclusion we might reach that Mr. Tucker or Mr. Mostyn had been jointly involved in an enterprise to smuggle tobacco goods into the UK.
32. Mr. Gibbon submitted that in any event there was no evidence of a joint enterprise between any of the three individuals. If Mr. Tucker or Mr. Mostyn did have an intention to sell the imported tobacco in the UK, this was irrelevant to the case against Mr. Williams, unless the Tribunal concluded that in some way Mr. Williams was acting in concert with Mr. Tucker and Mr. Mostyn in a smuggling enterprise.
33. Relying on the Hoverspeed decision, he reminded the Tribunal that the burden of proof was on the Commissioners to show that importations were not for the own use of the persons importing tobacco.
34. He reminded the Tribunal that it had never been suggested to Mr. Mostyn and Mr. Tucker in their respective interviews that they had not put up the £700 contributions they claimed to have made to the total cost of the tobacco.
35. As to the quantity of tobacco imported, Mr. Gibbon submitted (again relying on Hoverspeed) that by itself, quantity was irrelevant. It only became relevant when it was so large that there could be no reasonable explanation for the importation other than that it was for resale.
36. As to the relevance of the question of how long tobacco lasts before it deteriorates, Mr. Gibbon submitted that Mr. Williams's evidence was that he thought it was vacuum packed (whether or not it was in fact) and that he would be able to keep the tobacco at home for an extended period. What was important was his state of mind, rather than the objective fact as to the durability of the product.
37. He submitted that the redundancy payments provided the source for financing the tobacco purchases, and that it was credible that the three travellers, who all smoked Golden Virginia should have paid £700 each for this purpose.
38. Mr. Gibbon submitted that Mr. Williams came over as a witness of honesty and integrity. He said that his use of a car "which sticks out like a sore thumb" was an indication that he was not engaged in smuggling. He said that people who engaged in joint ventures would be more careful. A mastermind of a criminal enterprise would not have been drunk – that would have given rise to additional risks of calling attention to oneself. These factors should persuade the Tribunal to accept his evidence that he did not intend to sell the tobacco, and that his importation was intended by him for his own use.
39. Mr. Singh for the Commissioners submitted, first of all, that following the decision of the Court of Appeal in Barry Gascoyne v Commissioners of Customs and Excise [2004] EWCA Civ 1162, the Tribunal had no jurisdiction to consider the "own use" issue, but must regard that question of fact as decided in a sense adverse to Mr. Williams. He relies on paragraphs 44 to 56 (per Buxton LJ) and paragraphs 89 and 91 containing the agreements of respectively Carnwath LJ and Brooke LJ with what Buxton LJ said.
40. In the passage cited, Buxton LJ surveys the jurisdiction of this Tribunal where the vehicle concerned has been legally seized: this involving a finding in fact or a deeming that the vehicle had been used for an attempted illegal importation.
41. Speaking of the "own use" factual issue, Buxton LJ said:

"54. As it seems to me, for an importer to be completely shut out in the only tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of Schedule 3 [to CEMA] does not adequately enable him to assert his Convention rights.

In my view, therefore, in a case where the deeming provisions under paragraph 5 are applied, the tribunal can reopen those issues: though the tribunal will always have very well in mind, considerations of, or similar to, abuse of process in considering whether such issues should in fact be ventilated before it.

The mere fact that the applicant has not applied to the Commissioners, and therefore there have been no condemnation proceedings, would not, in my view, be enough. But, in my judgment, it goes too far to say that the deeming provisions have always, in every case, got to be paramount."

42. Paragraph 5 of Schedule 3 of CEMA is in the following terms:

"If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeited."

43. In this case there have been no condemnation proceedings and so paragraph 5 above applies to deem the car to have duly condemned as forfeited. Mr. Singh, for the Commissioners, submits that the only reason why there have been no condemnation proceedings is because Mr. Williams has elected not to appeal against the legality of the seizure, which is not enough to enable the issue of "own use" to be ventilated before the Tribunal.
44. He submits that the only issue before the Tribunal is the reasonableness of the Commissioners' decision to refuse to offer the vehicle for restoration. Specifically, in relation to proportionality, he submits that the decision was proportionate in view of the Commissioners' view that this was a case of commercial smuggling, relying on the passage from the judgment of Lord Phillips MR in Lindsay v Commissioners of Customs and Excise [2002] EWCA Civ 267 at [63] referred to above.
45. In case we do not accept that this Tribunal cannot determine the factual issue of whether the goods were imported for "own use", Mr. Singh submits that the goods were imported for a commercial purpose, and that the decision not to offer the vehicle for restoration was proportionate, for the reasons given by Mr. Brenton.
46. In the course of argument Mr. Singh eventually agreed with Mr. Gibbon that the relevance of the evidence concerning Mr. Tucker and Mr. Mostyn in this appeal was limited to the issue of whether Mr. Williams knew of or participated in any smuggling enterprise in which they were engaged.

Our Decision

47. We start off by saying that we reject Mr. Singh's submission that we should draw an inference from the absence of Mr. Mostyn and Mr. Tucker from the appeal hearing that "they were guilty", presumably of illegal importation of part of the tobacco. We regard their absence as being of no evidential value in itself, but, of course, Mr. Williams's case is not as strong as it would have been if they had supplied weighty corroborative evidence.
48. We also regard the fact that the car was relatively expensive and distinctive as being neutral in the consideration of the matters we have to decide. It is true that it might be said that Mr. Williams would have been unlikely to travel in such a car if he were engaged in smuggling, but equally it can be said that he might have decided to travel in such a car because it reduced the chances of being stopped by Customs (on the basis that old and less valuable cars might be more likely to catch their attention).
49. In the same way, we treat the fact that Mr. Williams was drunk on arrival at Dover as being neutral to our consideration. It might show that he had nothing to hide and so could afford to be less capable than if he had been sober; it could equally be said that he was drunk because of nervousness that he might be discovered.
50. As to our jurisdiction, we have carefully considered the observations of Buxton LJ in Gascoyne, which were cited to us (see: paragraph 41 above). Officer Walker formally seized the goods and the car at 9:40 p.m. on 20 June 2002. From her witness statement it appears that she issued to Mr. Tucker (not Mr. Williams, presumably because he was judged to be incapable through drink) form C156, explanatory notes to seizure, a seizure vehicle form and restoration form. At the hearing, we were told that the back of the seizure vehicle form provides information of the alternatives of contesting the legality of the seizure at the magistrates' court, or applying for restoration of the vehicle, with an eventual appeal to this Tribunal. The front side of the seizure of vehicle form was in our bundle, and it contains the words "Further information regarding restoration is detailed overleaf". The back side of the form was not in our bundle, nor was a copy available for our inspection in court. The Commissioners' representative volunteered to forward to the Chairman after the hearing a copy of the "further information regarding restoration" on the reverse of the seizure of vehicle form, but the document which was received by the Chairman was not this, but the reverse of the form C156, which set out the provisions of s.139 CEMA. This did not advance matters.
51. We are not satisfied that Mr. Williams was at any stage made aware, or put into a position where he ought to have been aware, that he had the choice of contesting the legality of the seizure, where "own use" would have been in issue, and consenting to forfeiture and applying for restoration, on the basis that at an eventual appeal to this Tribunal "own use" could not be in issue. In those circumstances, taking the possibility of abuse of process into consideration as per [55] of Gascoyne, we are satisfied that we should reopen the issue of "own use" and make our own factual determinations.
52. We proceed therefore to the crucial issue of the credibility of Mr. Williams's evidence that the tobacco was bought by him on behalf of the three travellers (including himself) in equal shares, each of them having contributed £700 to the total purchase price, for their respective "own use".
53. We consider that Mr. Williams's blasé attitude in the witness box as regards the financial basis for the purchase of the tobacco – particularly when he said that if the purchases went over £700 each "it would be of no great consequence" and that the £700 figure they came to was "no big deal" – was contrived. Instead, we think that the financial basis for the purchase of the tobacco was of great importance to Mr. Williams.
54. We are sceptical about the claims that Mr. Mostyn and Mr. Tucker each contributed £700 in light of their declared financial circumstances. It seems to us highly unlikely that they in reality intended to invest a very substantial proportion of their available resources in a very large quantity of tobacco (15 Kg. each) which, however much they might reasonably give away or, in Mr. Tucker's case, supply at cost, to friends and family.
55. This scepticism is reinforced by a consideration of the answers they gave at interview to questions about their rate of consumption of hand rolled cigarettes. If those answers are taken at face value, the tobacco which they allegedly bought allegedly for their respective "own use" would have lasted them, in each case, several years.
56. We accept Mr. Brenton's evidence that hand-rolling tobacco deteriorates after 12 months kept in normal domestic conditions and we consider that any regular smoker of the product would have known this.
57. We conclude (endorsing Mr. Brenton's reasoning) that Mr. Mostyn and Mr. Tucker did not in fact commission Mr. Williams to acquire two thirds of the gross consignment. We find, instead, that Mr. Williams bought all 45 Kgs. for himself on his own account. We find that Mr. Mostyn and Mr. Tucker were induced by Mr. Williams (in the event of questioning by Customs) to claim that each of them had a one-third share in the consignment in order to make more plausible the claim that the consignment was for "own use".
58. We find that Mr. Williams attempted to import 45 Kgs. of hand rolling tobacco and that this importation was not for "own use" but was a commercial importation. The factors which weigh with us in reaching this conclusion are our impression of the importance of the financial basis of the purchase of the tobacco to Mr. Williams, the quantity of tobacco and, in particular, the length of time it would take Mr. Williams to smoke it at his declared consumption rate (one year for 15 Kg.). We also bear in mind, of course, our finding that the tobacco deteriorates after 12 months when kept in normal domestic conditions and that Mr. Williams probably was aware of this, at least in general terms. We consider that Mr. Williams intended to sell the smuggled tobacco in the UK for profit.
59. Having concluded that the importation was commercial, we further find (applying the guidance of Lord Phillips MR in Lindsay at [63]) that the decision not to restore the car to Mr. Williams was proportionate. There were no special circumstances in this case which would oblige the Commissioners to depart from their policy of non-restoration in normal cases. We find that Mr. Brenton's decision was reasonable and so (notwithstanding the attractive presentation of Mr. Williams's case by Mr. Gibbon) we dismiss the appeal.
JOHN WALTERS, Q.C. CHAIRMAN RELEASED: 30 December 2004

LON/02/8328