United Kingdom VAT & Duties Tribunals (Excise) Decisions

McCullim & Ors v Customs and Excise [2005] UKVAT(Excise) E00845 (07 February 2005)

E00845

EXCISE DUTY – refusal to restore excise goods including 18 kilograms of hand rolling tobacco and 24,860 cigarettes imported by the three Appellants – the Appellants claimed that the goods were not liable to forfeiture and proceedings were commenced in the magistrates court – those proceedings had not been heard at the date of the hearing of these appeals - whether the tribunal had jurisdiction to decide whether the goods were held for the personal use of the Appellants – in these appeals no – whether if the tribunal had that jurisdiction the goods were held for the personal use of the Appellants – no – whether the disputed decision was a reasonable decision – yes - appeals dismissed – Council Directive (EEC) No 92/12 Arts 7 to 9; The Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 SI 2002 No. 2691; Customs and Excise Management Act 1979 S 152(b); Finance Act 1994 Ss 14 to 16

LONDON TRIBUNAL CENTRE

WENDY ANN MCCULLIM (1)

SYLVIA JOY BLAKE (2)

BARBARA EDITH SLADE (3)

Appellant

Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: DR A N BRICE (Chairman)

MRS C E FARQUHARSON

Sitting in public in London on 8 November 2004

Mr John Blake for the Appellants

Mr G F Facenna of Counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION

The appeals

1. Mrs Wendy Ann McCullim, Mrs Sylvia Joy Blake and Mrs Barbara Edith Slade (the Appellants) appeal against a review decision of Customs and Excise made on 4 December 2003. The decision was to refuse to restore to the Appellants excise goods seized by Customs and Excise on 20 August 2003 on the ground that the excise goods were not for the personal use of the Appellants but were held for commercial purposes.

The legislation

2. We attach as an Annex to this Decision a summary of the applicable legislation. Three sets of provisions are particularly relevant in these appeals.
3. The first are contained in the Customs and Excise Management Act 1979 (the 1979 Act) which provides that all matters concerned with forfeiture and seizure are matters for the magistrates court and not for the Tribunal although there is an appeal to the Tribunal against a refusal to restore excise goods.
4. The second set of relevant provisions is found in Articles 8 and 9 of Council Directive (EEC) No. 92/12 which provide that where excise products are acquired by private individuals and transported by them excise duty is charged in the member state in which the goods are acquired. However, if excise goods are held for commercial purposes in another member state then duty is due in that other member state. In order to establish whether goods transported by private individuals are intended for commercial purposes member states must take account of certain criteria which include the quantity of the excise goods. As far as quantity is concerned member states may lay down guide levels solely as a form of evidence. In the United Kingdom the guide levels are 3,200 for cigarettes and 3 kilograms for hand rolling tobacco.
5. The third set of relevant provisions is found in sections 14 to 16 of the Finance Act 1994. These sections contain the powers of the Tribunal and provide that, if the Tribunal is satisfied that the disputed decision is unreasonable, it may only do one of three things, namely either (1) direct that the disputed decision ceases to have effect; or (2) require Customs and Excise to conduct another review in accordance with the directions of the Tribunal; or (3) declare the disputed decision to have been unreasonable.

The issues

6. In these appeals the Appellants claimed that the seized goods were not liable to forfeiture and proceedings were commenced in the magistrates court. Those proceedings had not been heard on the date that these appeals were called on for hearing. The Appellants argued that the Tribunal had jurisdiction to find that the goods were held for personal use and not for commercial purposes; that in fact the goods were held for personal and private use and not for commercial purposes; and that the decision to refuse to restore them was unreasonable. Customs and Excise argued that, in the circumstances of these appeals, the Tribunal had no jurisdiction to decide whether the excise goods were held for personal use or for commercial purposes; that in any event the goods were held for commercial purposes; and that the decision to refuse to restore them was a reasonable decision.
7. Thus the issues for determination in these appeals were:

(1) whether the Tribunal had jurisdiction to decide whether the excise goods were held for personal use or for commercial purposes; if so

(2) whether the excise goods were held for personal use or commercial purposes; and

(3) whether the Tribunal was satisfied that the disputed decision was unreasonable and, if so, what action should be taken.

The evidence

8. A bundle of documents was produced on behalf of the Appellants and a larger bundle was produced on behalf of Customs and Excise. Witness statements containing evidence on behalf of Customs and Excise from Mr Bernard Martyn Wills, Mr Gary Neill Vowles, Mr David Ronald Pope, Ms Nicola Jane Eaton, Mr Andrew Joseph Redman, Ms Lynne Ashton, Leslie Smith, and Mr Brian John Rowland had not been objected to by the Appellant and so were admissible as evidence at the hearing.

The facts

9. From the evidence before us we find the following facts.
10. Before the events the subject of this appeal the motor car in which the Appellants travelled had made journeys to France in August 2001, July, August, September, October, November, and December 2002, and January, March, April, May and 16 July 2003. The journeys were taken with either P&O, Sea France or Hoverspeed. On most of the journeys the three Appellants travelled together. Mrs Slade was Mrs McCullim's mother.
11. At approximately 8.15 pm on 20 August 2003 Mr Vowles of Customs and Excise stopped a Vauxhall Astra motor car registration number X823 SNO at the Hoverport terminal at Dover. The car was driven by Mrs McCullim. Mrs Blake and Mrs Slade were passengers and there were also two child passengers. The car was provided to Mrs McCullim by Motability, a charity which assists disabled persons. Mrs McCullim told Mr Vowles that the car had been to France and Belgium for shopping and food, wine and cigarettes had been purchased.
12. Mr Vowles asked the Appellants how much excise goods they had. Mrs McCullim said that she had about 4,200 cigarettes; Mrs Blake said that she had about the same amount; and Mrs Slade said that she had about 3,200 cigarettes. The Appellants were asked how much hand rolling tobacco they had. Mrs McCullim said that the three Appellants had 90 pouches between them. (Later she said that the 90 pouches were all hers.) 90 pouches weigh 4.5 kilograms. Some receipts were produced. When asked about their previous journey Mrs McCullim said that they usually travelled every month but that the previous journey was two months previously, that is in June 2003.
13. Mr Vowles then looked in the boot of the car and found large quantities of cigarettes and tobacco packed in Sainsbury's carrier bags. He unloaded the goods which amounted to:

18 kilograms of hand rolling tobacco

24,860 cigarettes

38 litres of beer

13.5 litres of wine

3.4 litres of spirits

0.5 kilograms of pipe tobacco

155 cigarillos

14. These quantities were greater than those stated in the receipts which had been produced. We were told that the value of these goods was between £4,000 and £5,000 and that the United Kingdom duty on them would be between £5,000 and £6,000.
15. The interior of the car was then examined and a number of empty black carrier bags were found under the seats. The Appellants said that they had re-packed the excise goods from the black carrier bags in which they came into the Sainsbury's bags as those bags were smaller and so more convenient and easy to pack into the car. More receipts were then produced. The three Appellants signed Mr Vowle's notebook as an indication that the answers to his questions were true.
16. The three Appellants were then interviewed separately. Mrs McCullim was interviewed by Ms Eaton who told Mrs McCullim that she was not under arrest and could leave at any time but that if she chose to do so she would fail to satisfy Ms Eaton that the goods were for personal consumption and the goods would be seized. Mrs McCullim said that she had been travelling regularly, every four to eight weeks, for two and a half years. She had four children and a husband. All contributed to the household budget and when tobacco or cigarettes were needed she had a day out and purchased them with the housekeeping money. She had 6,200 cigarettes some of which were for her son and some for her two daughters. She also had 120 pouches (six kilograms) of hand rolling tobacco which were for her husband and son. The goods were for personal and family use. The goods would last about ten weeks. She had been importing goods like this for three years. Her goods cost £1,600. She earned between £400 and £600 each month as a check out operator. Everyone else in her family worked and contributed. The goods came in a box and some black bags and had been re-packed into Sainsbury's bags because too much had been put in the black bags.
17. Mrs Blake was interviewed by Mr Pope. At first she said that between 3,200 and 3,400 cigarettes were hers and she did not know how much tobacco was hers. Later she said that all she had bought was on the receipts. Later still she estimated that she had about 42 to 45 sleeves of cigarettes (between 8,400 and 9,000 cigarettes) and between 1.5 to 2 kilograms of hand rolling tobacco. She did not know how much her goods had cost her. She had left the United Kingdom with about £500 and had come back with less than £100. She had bought about one month's supply for her family, being a disabled husband, two daughters, her daughter's fiance, and her mother-in-law and father-in-law. She expected the goods to last a month. She went abroad every five or six weeks and purchased similar quantities each time. She had not travelled the previous month as she was on holiday. She said that the excise goods she had bought that day were for presents but that normally the family paid for the goods when she got home. She brought back roughly the same amount of goods each time. She did not work but had a disability allowance and income support and her daughters gave money for housekeeping. She smoked 200 cigarettes each week (28 each day) and her husband smoked 400 each week (57 each day). The tobacco goods had been purchased in black bags and had been re-packed into Sainsbury's bags so that they could be loaded more easily into the car.
18. Mrs Slade was interviewed by Mr Redman and she told him that she suffered from temporal epilepsy and memory loss. She said that she had purchased cigarettes but she did not remember the quantities. The cigarettes were for herself, her son, her daughter and her husband and some were for a party. She did not know how many cigarettes were for the party. She did not know how much she had spent on the tobacco goods. She did not know how much she smoked. She was retired and lived on a pension and disability money. She also had the monthly house keeping money which she had used to buy the goods. She travelled almost every month and bought cigarettes and tobacco on each occasion. The cigarettes had been put in Sainsbury's bags because that made it easier to pack them in the car; the bags in which the goods came were thick and bulky.
19. After the interviews Mr Vowles was not satisfied that the excise goods were held for the personal use of the Appellants. The reasons for his dis-satisfaction were: that initially the quantities of the goods had been misdeclared by the Appellants; that the Appellants were unable to account for all the tobacco goods and the receipts which they produced did not tally with the amount of the goods; that some of the Appellants had said that they would receive money for the goods which meant that those goods were held for commercial purposes; that the Appellants had said that they travelled frequently but had failed to mention that they had travelled on 16 July 2003; and that Mrs Blake's consumption rate for herself and her husband was unreasonable.
20. Accordingly, Mr Vowles seized both the excise goods and the motor car. However, when informed that Mrs McCullim had walking difficulties the motor car was immediately restored to her without charge on humanitarian grounds.

The request for restoration

21. On 28 August 2003 the Appellants asked Customs and Excise to restore their goods on the grounds that they were solely for their own use including their own consumption and family gifts. The letter asked that, if any further information was required to enable a satisfactory and favourable decision, the Appellants should be contacted before the decision was made. The letter of each Appellant attached a schedule of the goods claimed by that Appellant and also some more receipts. Mrs McCullim claimed that she had imported 8,660 cigarettes and 12 kilograms of tobacco; Mrs Blake claimed that she had imported 13,200 cigarettes; and Mrs Slade claimed that she had imported 3,000 cigarettes and 1.5 kilograms of tobacco. Thus collectively the three Appellants claimed 24,860 cigarettes but only 13.5 kilograms of tobacco. None of the quantities claimed corresponded to the quantities mentioned at the interviews. On 22 September Customs and Excise wrote to the Appellants to say that the goods would not be restored. Each of the Appellants requested that that decision be reviewed. It was reviewed by Mr Wills of Customs and Excise who wrote at length (eleven pages) on 4 December 2003 to the Appellants to say that the goods would not be restored
22. The review decision relied on the facts that collectively the Appellants had transported 24,860 cigarettes of which initially 13,260 had not been declared; that collectively the Appellants had transported 18 kilograms of hand rolling tobacco of which initially 13.5 kilograms had not been declared; that the quantity of cigarettes was two and a half times the guide level and the quantity of hand rolling tobacco was six times the guide level; that the Appellants had travelled regularly at intervals of about a month for three years; that some of the Appellants did not remember how much they had purchased or how much they had spent; that the Appellants had made purchases for their families for which money would be received; and that the re-packing of the goods in to the Sainsbury's bags was an attempt to disguise and conceal them.
23. It is against that review decision of 4 December 2003 that the Appellants appeal to the Tribunal. The appeals were lodged on 29 December 2003.

The condemnation proceedings

24. Meanwhile, on 15 September 2003 the Appellants notified Customs and Excise that they wished to appeal against the seizure of the excise goods and asked Customs and Excise to commence condemnation proceedings on their behalf. On 20 October 2003 Customs and Excise replied to say that they accepted the letter as notice of a claim against forfeiture of the goods and proceedings would be instituted in the magistrates court. However, the review officer, Mr Wills, was not informed.
25. There was an initial hearing at the East Kent Magistrates Court on 16 February 2004 which the Appellants did not attend. On 20 February 2004 the Appellants were notified that there would be a full hearing on 7 October 2004.
26. On 26 February 2004 Customs and Excise applied to the Tribunal for the present appeals to be stood over until 12 November 2004 to allow the condemnation proceedings to be completed first. That application was heard in public on 7 April 2004 By that time the hearing in the East Kent Magistrates Court had been brought forward to 6 May 2004. The Tribunal directed that these appeals be heard together and stood over until 7 May 2006 and gave other directions for the progress of these appeals.
27. The hearing of the condemnation proceedings on 6 May 2004 was postponed because of the illness of at least one of the Appellants. The proceedings were re-listed in August 2004 but again postponed because the court had a full list. They have now been listed to be heard on 3 February 2005.

Reasons for decision

28. We consider separately each of the issues for determination in the appeal

(1) Can the Tribunal decide now that the goods were for personal use?

29. The first issue is whether the Tribunal has jurisdiction to decide, in this appeal, whether the excise goods were held for personal use or commercial purposes.
30. At the commencement of the hearing before us Mr Blake, who acted for the Appellants, asked us to give an immediate decision on this issue so that the rest of the hearing could take place in the light of that decision.
31. Mr Blake argued that the decision of the Tribunal which followed the hearing on 7 April 2004, at paragraphs 12, 13 and 14, had stated that it was not necessary for the condemnation proceedings to be concluded before the substantive hearing before the Tribunal took place. He also referred to the decision of the Tribunal in Philip Neil Riley v The Commissioners of Customs and Excise (2003) Tribunal Decision No. E00560 for the principle that, even though a magistrates court had decided that excise goods were held for commercial purposes within the context of the forfeiture and seizure of goods, the Tribunal had jurisdiction to decide whether the excise goods were held for personal use or commercial not-for-profit use within the context of an appeal against a refusal to restore. He argued that the Appellants had not yet had any day in court.
32. For Customs and Excise Mr Facenna cited Gora v Commissioners of Customs and Excise [2003] EWCA Civ 525 at [58] and Gascoyne v HM Customs and Excise [2004] EWCA Civ 1162 at [46], [47] and [51]. He accepted that the comments of the Court of Appeal in these authorities were directed at situations where condemnation proceedings had been concluded or had never been instigated but argued that the same principles should apply where condemnation proceedings were pending but had not been heard. The issues before the magistrates court and the Tribunal were the same, namely whether the goods were held for personal use or for commercial purposes. The Appellants would have their day in court in the magistrates court. The Tribunal should avoid reaching a decision on the issue whether the goods were held for personal use or for commercial purposes but could decide whether the disputed decision was unreasonable.
33. After hearing these arguments we adjourned for a short time to consider them. We returned to announce that we did not wish to give an immediate decision on this issue as we wished to consider and reflect on the authorities cited to us. However, as all the parties were represented before us that day, and as the three Appellants were also present, we said that we would hear such evidence and arguments as the parties wished to put to us on the other issues in the appeal and give our decision on all the issues at the same time.
34. We have now had an opportunity of considering the arguments put to us on the first issue. The question whether the Tribunal can make a finding of fact that goods were imported for the personal use of the importer was considered in Gascoyne by Lord Justice Buxton. At paragraph 49 of his judgment he referred to the Convention in Schedule 1 of the Human Rights Act 1998 and remarked that the forfeiture process interfered with rights to property potentially protected by Article 1 of the First Protocol of the Convention. In paragraph 50 he said that issues of due process potentially arose. He then said that an actual finding in condemnation proceedings is binding on a tribunal both as to the decision as to the lawfulness of seizure and as to the underlying facts; if there were condemnation proceedings the importer would have had his day in court in front of a judicial body. However, if the importer had given no notice that the thing seized was not liable to forfeiture, with the result that it was deemed to be condemned as forfeit, then in certain circumstances the Tribunal could reopen those issues. We have derived two principles from Gascoyne. First, that in no case should both the magistrates court and the Tribunal decide the same issue as that would be an abuse of process; and, secondly, that if proceedings are lodged with both the magistrates court and the Tribunal concerning the same issue then the matter is primarily for decision by the magistrates court.
35. Applying those principles to the facts of the present appeal we recall that there are in this appeal condemnation proceedings. They will provide the Appellants with their day in court in front of a judicial body as required by Article 6 of the Convention. We accept that those proceedings will not be heard until 3 February 2005 but in our view it is for the magistrates court in those proceedings, and not for us, to decide whether the goods were held for personal use or for commercial purposes as that is the issue underlying the condemnation proceedings. Also, the issue whether goods were liable to forfeiture and so properly seized is a prior issue to that of whether they should be restored. This conclusion also accords most closely with the views of the Court of Appeal in Gora and Gascoyne.
36. We have carefully considered the arguments of the Appellants. However, the decision of the Tribunal in these appeals which followed the hearing on 7 April 2004 and the decision of the Tribunal in Philip Neil Riley both pre-dated the judgment of the Court of Appeal in Gascoyne which was given on 28 July 2004. The decisions in Gora and Gascoyne are binding on us but previous decisions of the Tribunal are not.
37. We therefore conclude that in these appeals the Tribunal does not have jurisdiction to decide whether the excise goods were held for personal use or commercial purposes because there are already condemnation proceedings before the magistrates court in which the same issue will be decided.
38. However, in case we are wrong about that conclusion we have gone on to consider the other issues in the appeal.

(2) Were the goods held for personal use or for commercial purposes?

39. The second issue is whether the excise goods were held for personal use or commercial purposes.
40. For the Appellants Mr Blake argued that the burden of proof was not on the Appellants to prove that the goods were for personal use but on Customs and Excise to prove that the goods were held for commercial purposes and he cited The Queen on the application of Hoverspeed and others v Commissioners of Customs and Excise [2002] EWHC 1630 (Admin) at paragraph 170. He argued that Customs and Excise had no evidence to substantiate their case. The Appellants had not mis-declared the goods as they had shown them all to Mr Vowles and had produced receipts. In any event there was no requirement to declare excise goods when travelling within the European Union. Customs and Excise had no evidence on which they could conclude that the Appellants had received money for the excise goods. He further argued that all three Appellants were disabled and the statements they made when stopped at Dover had to be considered in that light. He produced documents which indicated that all three Appellants had medical conditions which, he argued, could affect hearing, cognition, attention span and memory.
41. For Customs and Excise Mr Facenna argued that the burden of proof in this appeal was on the Appellants to prove the grounds upon which the appeals had been brought and he referred to section 154(2) of the Customs and Excise Management Act 1979 and to section 16(6) of the Finance Act 1994.
42. In considering the arguments of the parties we begin with the burden of proof. In Hoverspeed the legislation under consideration was The Excise Duties (Personal Reliefs) Order 1992 SI 1992 No. 3155 (which has since been repealed). Brooke LJ described the applicable principles at paragraphs 169 to 173. Relying upon the principles of the Directive he said that excise goods are only not to be treated as being imported for the traveller's own use if the state can show that they are in fact being held for a commercial purpose (paragraph 169); and that if an individual holds goods in excess of the guide levels this fact must be used solely as a form of evidence and not as a persuasive presumption that he holds the goods for commercial purposes (paragraph 173).
43. Section 154(2) of the 1979 Act provides that where, in any proceedings against Customs and Excise relating to excise, questions arise as to certain stated matters, the burden of proof is on the appellant. The question as to whether imported goods are for the personal use of the traveller or held for commercial purposes is not one of the stated matters. Section 16(6) of the Finance Act 1994 provides that on an appeal under that section the burden of proof (apart from some named matters which are not relevant in this appeal) is for the appellant to show that the grounds on which any such appeal is brought have been established. These appeals are brought under section 16 of the Finance Act 1994. However, the primary legislation dealing with excise duty is the Directive which was interpreted in Hoverspeed and, as far as the burden of proof is concerned, we will apply the principles in Hoverspeed. The standard of proof is the balance of probabilities.
44. The evidence before us leads us to conclude that Customs and Excise have shown that the Appellants were most probably holding the excise goods for commercial purposes. Not only were large amounts of excise goods imported but there were also serious discrepancies in the information given to the interviewing officers and different quantities were stated on different occasions. When individuals spend large amounts of money on any goods they are usually fully aware not only of what they have spent but also of what they have acquired. There was also misleading information given about the previous journey as the journey on 16 July 2003 was not mentioned. Another relevant factor is the frequency of travel particularly in the light of the level of expenditure. £4,500 was a large amount to spend especially as there had been a previous journey one month earlier. The frequency of travel and the level of the expenditure leads to the question as to why the goods were being imported. We do not think that it was possible that they were all for personal use and so the conclusion is that they were most probably held for commercial purposes.
45. We have carefully considered the arguments for the Appellants. We think that the Appellants did mis-declare the goods when they were interviewed when the quantities of cigarettes and tobacco were under-stated. We accept that receipts were produced both at the interviews and later but the existence of the receipts does not establish either that the goods were held for personal use or that they were held for commercial purposes. We agree that there is no requirement to declare excise goods when travelling within the European Union but the Directive gives member states power to establish whether goods transported by private individuals are held for commercial purposes and so there is a requirement to provide accurate information to Customs and Excise if asked. We do not agree that Customs and Excise had no evidence on which they could conclude that the Appellants would receive money for the excise goods. When interviewed Mrs McCullim said that her family would contribute to the cost. Mrs Blake said that the goods she had bought (later claimed as 13,200 cigarettes) were for presents but she also said that she purchased similar quantities each time she went abroad and the family normally paid her. In any event we find it hard to believe that a person on disability allowance and income support would find it easy to pay for 13,200 cigarettes for presents. Mrs Slade said that she had used the monthly house keeping money to pay for her goods. In all these case we are of the view that the tobacco products were transferred by the Appellants to other persons (including members of their families) for money or money's worth and so are to be regarded as being held for a commercial purpose. Mr Blake's final argument was that all three Appellants were disabled and the statements they made when stopped at Dover had to be considered in that light. However, the documents produced by Mr Blake which related to the medical conditions of the Appellants related mainly to appointments for hospital visits and lists of medication but did not include any doctors' certificates. From the documents which were produced we were unable to conclude that the statements made by the Appellants when they were stopped at Dover should not be evidence of what the Appellants said.
46. If we had jurisdiction to consider this issue we would conclude that the evidence before us shows that the excise goods were most probably held for commercial purposes.

(3) Was the disputed decision reasonable?

47. The third issue in the appeal is whether we are satisfied that the disputed decision was a reasonable decision and, if not, what action we should take.
48. For the Appellants Mr Blake raised a number of matters about the review decision of which we mention the most significant. First, he argued that the review had been incorrectly carried out as it did not mention the Hoverspeed judgment. We agree that it did not. However, it did refer to the current legislation and did not argue that the burden of proof was on the Appellants. It just did not mention the burden of proof. We do not regard this as rendering the review decision unreasonable.
49. Next, Mr Blake argued that the review officer was not impartial as his evidence was that his duties included undertaking reviews of decisions regarding restoration of goods seized as a result of improper importations which showed that he had made up his mind before he began his review. The review officer also relied upon the policy of Customs and Excise. He was employed by Customs and Excise and his job was to uphold their decisions. We agree that Mr Wills, the review officer, was employed by Customs and Excise and to that extent no review officer can be wholly independent. However, there was no evidence before us that would lead us to conclude that Mr Wills was not as impartial as he could be when carrying out his review.
50. Mr Blake went on to argue that one of the grounds for the review decision was that the re-packing of the goods in the Sainsbury's bags was an attempt to disguise and conceal the goods. That had not been given as a reason for the seizure and had not been given in the original decision as a reason to refuse to restore. He argued that there had been no attempt to disguise or conceal. All the excise goods had been unloaded from the car and the Sainsbury's bags were more transparent than the original bags. Although Mr Facenna, for Customs and Excise, did not withdraw the point about concealment, he argued that it was not a major part of the case for Customs and Excise. On the evidence before us we are unable to find that the re-packing of the goods into the Sainsbury's bags was an attempt to conceal. The matter of the re-packing was put to the Appellants during the interviews but it was not then suggested that it was done for concealment. It is, therefore, merely an opinion formed by Mr Wills during his review. However, even if Mr Wills were wrong in his opinion, it was not a crucial part of his decision and we would not regard it as rendering the whole review decision unreasonable.
51. Mr Blake's next argument was that the review decision said that a deliberate attempt to deceive was itself a breach of section 49 of the 1979 Act but that was not what section 49 said. The paragraph from the review decision referred to stated:

"You all said that you had assisted in the re-packaging of the goods, so you were all fully aware of the amount of goods involved, which, of course, you had presumably not long before bought and paid for. The joint misdeclaration of this prodigious amount of tobacco goods can therefore only be seen as a deliberate attempt to deceive the Officer which, by itself, constituted a breach of section 49 of CEMA, which rendered the goods liable to forfeiture".

52. Section 49 of the 1979 Act provides that certain excise goods improperly imported are liable to forfeiture. These include any imported goods, being goods chargeable on their importation with excise duty if they are, without payment of the duty, unshipped in any port. Section 49(1)(f) refers to imported goods which "are concealed or packed in any manner appearing to be intended to deceive an officer". We accept that section 49 does not in terms state that a mis-declaration of the amount of excise goods amounting to an intention to deceive an officer makes the goods liable to forfeiture but the opening provision of section 49 (that excise goods improperly imported are liable to forfeiture) still applies. We do not regard this point as rendering the whole review decision unreasonable.
53. Mr Blake went on to argue that the review letter did not comment on all the items seized and it also stated that the schedules produced by Appellants with their letters of 28 August 2003 had been compiled with the benefit of hindsight and did not explain the ignorance of the Appellants about the quantities of goods so shortly after they had been ordered, paid for and packed into the car. Mr Blake argued that this statement ignored the fact that the times of the purchase of the goods were noted on the receipts. We do not regard that omission as significant. Mr Wills was making a valid point when he said that it was surprising that the Appellants could not remember the quantities of the goods each had purchased on the very day of purchase. We find that surprising too especially in view of the amount of money involved. We also record that there appeared to be some inconsistencies in the documents about the items seized but these were of a minor nature. For example, on the Revenue Goods Tally Sheet Form C&E 76 a bottle of "Highfields" was recorded once as being of 0.70 litres and once as being 1 litre. One pack of cigarettes was recorded as containing 4,000 cigarettes and this was later amended to 4,260. However, in our view these small inconsistencies do not render the whole review decision unreasonable.
54. Mr Blake also made the point that in their letter of 28 August 2003 the Appellants had asked to be contacted before an adverse decision was made but this had not been done before the review decision was given. We do not regard this as unreasonable as if the Appellants had wished to put forward evidence or argument to be taken into account during the review they were not prevented from doing so.
55. Mr Blake also argued that the review had not attempted to decide whether one or more of the Appellants had imported identifiable goods for their own use which should not have been seized. One reason for the refusal to restore was that some of the Appellants could not remember which goods were theirs but the Appellants had been given no opportunity to identify their goods and/or receipts. He also argued that the customs officers had removed and destroyed the Sainsbury's carrier bags which had the Appellant's identifying initials on. For Customs and Excise Mr Facenna argued that, as the three Appellants always travelled together, and as they had been unable to tell which goods belonged to whom, they had been treated as being in a joint enterprise. We do not agree that the Appellants were given no opportunity to identify their goods and/or receipts. Mr Vowles asked specifically how much excise goods each Appellant had and asked for receipts and the three officers who interviewed the Appellants separately also asked what quantities each Appellant had. In their schedules of 28 August 2003 the Appellants had identified which goods they claimed were theirs. We neither saw nor heard any evidence about whether the carrier bags had identifying initials on and so we make no finding on that matter.
56. Mr Blake also argued that the fact that the Appellants travelled frequently was not evidence that they imported similar quantities of goods each time. However, at their interviews each of the Appellants said that they brought back similar amounts each time.
57. Finally, Mr Blake argued that the review had not considered how the Appellants had funded the expenditure. However, the review did consider the interview with Mr Vowles and the three separate interviews when the Appellants had stated their incomes and two (Mrs McCullim and Mrs Slade) had said that the purchases were funded from house keeping moneys. If the Appellants had wished to give further evidence of how they had funded the expenditure they could have done so.
58. None of the matters raised by Mr Blake has persuaded us that the review decision was unreasonable.

Decision

59. Our decisions on the issues for determination in the appeal are:

(1) that in this appeal the Tribunal does not have jurisdiction to decide whether the excise goods were held for personal use or for commercial purposes because proceedings are pending in the magistrates court where this issue will be decided; that means that we do not need to consider the other issues in the appeal but as argument was put to us we express our views which are:

(2) that, on the evidence before us, Customs and Excise have shown that the excise goods were most probably held for commercial purposes; and

(3) that we are satisfied that the disputed decision was reasonable and so no further action is required.

60. The appeal is, therefore, dismissed.

DR A N BRICE

CHAIRMAN

RELEASE DATE: 7 January 2005

LON/2004/8000

LON/2004/8004

LON/2004/8005

04.01.05

Annex – A summary of the legislation about excise duty on tobacco products

The Directive

61. Article 99 of the Treaty of Rome (now Article 93 EC) provides that the Council of Ministers of the European Community should adopt provisions for the harmonisation of legislation concerning excise duties. The main excise duty directive was adopted on 25 February 1992 and is Council Directive (EEC) No. 92/12 on "the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products". The directive applies to mineral oils, alcohol and tobacco. The principles are set out in the recitals to the Directive and the sixth and seventh recitals provide:

"Whereas in the case of products subject to excise duty acquired by private individuals for their own use and transported by them, the duty must be charged in the country where they were acquired;

Whereas to establish that products subject to excise duty are not held for private but for commercial purposes, Member States must take account of a number of criteria."

62. Article 7 of the directive provides that, where excise goods are released for consumption in one member state but held for commercial purposes in another, then excise duty is chargeable in the member state in which the goods are held. Article 8 provides that, as regards products acquired by private individuals for their own use and transported by them, excise duty is charged in the member state in which they are acquired. Article 9 provides that, without prejudice to Articles 6, 7 and 8, excise duty is chargeable where products for consumption in one member state are held for commercial purposes in another member state; duty is due in the member state in which the products are held and the holder of the products is chargeable with the duty.
63. Thus the scheme of the directive is that where excise goods are acquired by private individuals for their own use and transported by them excise duty is charged in the member state in which they are acquired. If any excise goods are held for commercial purposes in another member state then duty is due in that state from the holder of the goods.
64. Article 9.2 of the directive provides that, in order to establish whether goods transported by private individuals are intended for commercial purposes, member states must take account of certain criteria including: the commercial status of the holder of the products; his reasons for holding them; the place where the products are located; the mode of transport used; any documents relating to the products; the nature of the products; and the quantity of the products. As far as quantity is concerned, member states may lay down guide levels solely as a form of evidence. The guide levels may not be lower than 800 cigarettes, 400 cigarillos, 200 cigars and 1 kilogram of smoking tobacco.

The Directive as implemented in the United Kingdom

65. The provisions of the Directive have been implemented in the United Kingdom by:

(1) The Finance (No 2) Act 1992 section 1;

(2) Regulation 4 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 SI 1992 3135;

(3) Regulation 12 of the Tobacco Products Regulations 2001 SI 2001 No. 1712 as amended by

(4) The Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 SI 2002 No. 2692 (the Amendment Regulations).

66. Regulation 4 of the Amendment Regulations applies to tobacco products and provides that, in the case of tobacco products acquired by a person in another member state for his own use and transported by him to the United Kingdom, the excise duty point is the time when those products are held or used for a commercial purpose by any person. "Own use" is defined as including a personal gift. However, Regulation 4 goes on to provide that, if the tobacco products in question are transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them) or the person holding them intends to make such a transfer, the products are to be regarded as being held for a commercial purpose.
67. Finally, Regulation 4 provides that, in determining whether tobacco products are held or used for a commercial purpose, regard shall be taken of: the person's reasons for having possession or control of those products; whether or not that person is a revenue trader; the person's conduct, including his intended use of the products or any refusal to disclose his intended use of the products; the location of the products; the mode of transport used to convey the products; any document or other information relating to the products; the nature of the products including the nature and condition of any package or container; whether the person personally financed the purchase of the products; any other relevant circumstances; and the quantity of the products and, in particular, whether the quantity exceeds 3,200 cigarettes; 400 cigarillos; 200 cigars; and three kilograms of any other tobacco products.
68. Thus both the Directive and the Amendment Regulations provide that, where excise goods are held for commercial purposes, then excise duty is due in the member state in which the goods are held. At first sight, therefore, it would appear that a conclusion that goods are held for commercial purposes would result in a demand for the tax due. However, the provisions relating to administration, collection and enforcement of excise duty are left to member states and in the United Kingdom they are contained in the Customs and Excise Management Act 1979 (the 1979 Act). There are also many regulations made under the provisions of that Act.

The provisions about forfeiture

69. Section 49 of the 1979 Act provides that goods which are imported without payment of duty are liable to forfeiture. Section 124 provides that, where imported goods have been relieved from duty on importation and any condition connected with the relief has not been complied with, the goods shall become liable to forfeiture. Section 141(1)(a) provides that, where a thing has become liable to forfeiture, then any vehicle used for the carriage of that thing is also liable to forfeiture. Section 139(1) provides that anything liable to forfeiture may be seized by a Customs Officer.
70. Paragraph 1 of Schedule 3 of the 1979 Act provides that Customs and Excise shall give notice of seizure to any person who, to their knowledge, was at the time of the seizure the owner or one of the owners. Paragraph 3 provides that, if a person claims that anything seized as liable to forfeiture is not so liable, he must give notice of his claim in writing to Customs and Excise within one month of the date of the notice of seizure or of the seizure. Paragraph 5 provides that, if a notice has not been given after that month, then the thing is deemed to be condemned as forfeit. Paragraph 6 provides that, if a notice has been given within that month, then Customs and Excise must take proceedings for the condemnation of the thing by the magistrates court. If the court finds that the thing was liable to forfeiture then the court shall condemn it as forfeit. Paragraph 11 provides that either party may appeal against the decision of the magistrates' court to the Crown Court.
71. Thus all matters concerned with forfeiture and seizure are not matters for the Tribunal but for the magistrates court or the Crown Court.

The provisions about restoration

72. Section 152(b) of the 1979 Act provides that Customs and Excise may, as they see fit, restore, subject to such conditions (if any) as they think proper, anything forfeited or seized. Sections 14 to 16 of the Finance Act 1994 provide for appeals to the Tribunal with respect to certain decisions of Customs and Excise. Section 14 provides that Customs and Excise may be required to review certain decisions and section 14(1)(d) provides that such decisions include those specified in Schedule 5. (If Customs and Excise are asked to review a decision and fail to do so within forty-five days then the original decision is deemed to be the review decision.) Paragraph 2(1)(r) of Schedule 5 specifies any decision under section 152(b) as to whether or not anything forfeited or seized is to be restored to any person or as to the conditions subject to which any such thing is so restored. Section 15 describes the review procedure and section 16 provides that an appeal lies to the Tribunal with respect to a decision on review.
73. Thus, although there is no appeal to the Tribunal against either forfeiture or seizure, there is an appeal to the Tribunal against a refusal to restore a vehicle or excise goods.

The powers of the Tribunal

74. Before appealing to the Tribunal, the person wishing to appeal must first ask Customs and Excise to review the disputed decision and then the appeal is against the review decision (and not against the original decision). Further, if the appealed decision concerns what is called an ancillary matter, then the powers of the tribunal are limited. Section 16(4) provides that, in relation to any decision on an ancillary matter, the powers of the Tribunal are restricted and section 16(8) provides that ancillary matters are those specified in Schedule 5. As schedule 5 includes decisions not to restore things forfeited or seized the powers of the Tribunal in appeals against refusals to restore excise goods or vehicles are limited.
75. In restoration appeals, therefore, the Tribunal may not just allow the appeal but may only do one or more of the three things mentioned in section 16(4) and then only if the tribunal are satisfied that the disputed decision is unreasonable. The three things are: (a) to direct that the disputed decision ceases to have effect; (b) to require Customs and Excise to conduct another review in accordance with the directions of the tribunal; and (c) to declare the decision to have been unreasonable