United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2005] UKVAT(Excise) E00854, [2005] UKVAT(Excise) E854

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Emmerson & Anor v Customs and Excise [2005] UKVAT(Excise) E00854 (24 February 2005)

E00854

EXCISE DUTY RESTORATION OF GOODS — jurisdiction — condemnation proceedings before Magistrates Court instituted and abandoned in favour of request for restoration of excise goods — allegation before tribunal that the goods were for own use and that they should for that reason be restored — abandonment of condemnation proceedings indicative of acceptance that seizure lawful — improper for tribunal to assume jurisdiction of magistrates as to lawfulness of seizure —- result of review of decision not to restore goods which upheld original decision found to be not unreasonable — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

(1) NIGEL EMMERSON

(2) SUSAN EMMERSON Appellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Michael Johnson (Chairman)

Norman Phillips

Sitting in public in Birmingham on 14 January 2005

Mr D Hallett, friend of the Appellants, for the Appellants

Mr N Smith, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

DECISION

In this appeal the Appellants seek to overturn a review decision of the Commissioners of Customs and Excise ("Customs") dated 14 June 2004. That review, conducted by Mrs Hilda Marshall, a Senior Officer of Customs employed as a Review Officer, affirmed a previous decision of Customs not to restore to the Appellants certain excise goods ("the goods"), seized by Customs from the Appellants at East Midlands Airport on 3 May 2002, on the occasion of the Appellants' return to the UK from Spain.
The goods consisted of the following –

4,400 Embassy No 1 cigarettes;

3,200 Superkings Black cigarettes;

4,000 Lambert & Butler cigarettes;

400 Sovereign King Size cigarettes;

500 Fortuna Filter cigarettes;

200 Fortuna Full Flavour cigarettes;

6 Kg Drum hand-rolling tobacco;

4 Kg Golden Virginia hand-rolling tobacco.
This is not the first occasion on which the Appellants have been before this tribunal in respect of the non-restoration of the goods, although this is the first time that the Appellants' case has been considered in full. On 22 January 2003 a different reviewing officer of Customs, Mr Noel Allan, issued a review in which he upheld the original decision of Customs not to restore the goods to the Appellants. On 6 May 2004, in the context of a separate appeal in relation to that review, proceeding under reference MAN/2003/8054 and heard at the tribunal centre in Manchester, we directed by consent that a re-review of the Appellants' case should be conducted by another reviewing officer of Customs not hitherto involved in the Appellants' case, and we reserved the case to ourselves for further consideration if necessary, subject to the outcome of the re-review.
Mrs Marshall's review has resulted adversely to the Appellants, as did Mr Allan's previous review. We now need to consider Mrs Marshall's review in the light of the full circumstances of this case.
Mrs Marshall was not called to give evidence, but Mr Smith of counsel, who represented Customs, handed to the tribunal a folder of documents relevant to the appeal, which included a witness statement from her dated 4 October 2004. From that statement, and the exhibits to it, it is clear that Customs seized the goods for the following reasons, that is to say –
Customs assert that it was reasonable for Mrs Marshall to uphold the decision not to restore, as the evidence available to Customs demonstrated that the goods were probably held or used for commercial purposes. The Appellants, by contrast, say that all the goods were being brought into the UK either to be smoked by the Appellant Mr Emmerson, or by members or friends of the Appellants' family, who would pay nothing for them, and that Customs ought to have accepted that fact. If Customs are right, UK excise duty would be payable in respect of the goods, so that the goods should have been declared for that purpose – that did not happen, so that the goods were properly seized and forfeited and Customs say that it would be inappropriate to restore them. If the Appellants are right, then they say that Mrs Marshall could not in the circumstances reasonably have decided that it would be inappropriate not to restore the goods, as the goods were manifestly acquired and transported by the Appellants for their own use.
Such is the scope of the dispute in this appeal. However, before proceeding to decide the dispute, we think that it is necessary, in the light of the fairly recent decision of the Court of Appeal in Gascoyne v Customs and Excise Commissioners [2005] 2 WLR 222 (Judgment dated 28 July 2004), to state the position with regard to the Appellants' erstwhile wish that condemnation proceedings should take place in respect of the seizure of the goods.
The folder of documents handed in by Mr Smith shows that Customs treated the Appellants as having given notice that condemnation proceedings should be instituted by Customs. The Appellants so required in a letter to Customs dated 28 May 2002. On 23 July 2002, Customs confirmed to the Appellants that they were referring the seizure to the Magistrates Court. It then appears that a hearing date of 11 December 2002 was set, for the matter to be considered in the Loughborough Magistrates Court.
Mr Simon Barr, a law clerk with Creighton & Company, Solicitors of Belfast, received instructions from the Appellants to act for them, on a personal rather than a professional basis. On 15 November 2002, Mr Barr wrote to Customs on the Appellants' behalf, suggesting that the condemnation proceedings be stood over. He wrote again on 18 and 28 November 2002 respectively, stating on the latter occasion that the Appellants wished " … to have the condemnation proceedings stood over pending the decision of the duty tribunal as to as to whether they can have their case heard at the tribunal … ." Mr Barr asked for a review of the decision in which the goods were seized (sic) to be conducted by Customs.
Customs then wrote to the Appellants, by letter dated 3 December 2002, seeking clarification as to whether the Appellants wished to apply for restoration in lieu of the condemnation proceedings, and as to whether the condemnation proceedings were to be continued. The following day, 4 December 2002, Customs wrote to the Appellants to say that Mr Barr's letter dated 28 November 2002 was being treated as a request for restoration, and expressly stating that Customs refused that request. The letter of 4 December 2002 also stated that a request for a departmental review of that decision might be made, followed by an appeal to the tribunal, but that in order for such an appeal to proceed, the condemnation proceedings would need to be withdrawn.
Subsequently the Appellants sought a review of the decision refusing restoration, and they confirmed that, now that a review was being carried out under the Finance Act 1994, they no longer wished to continue with the condemnation proceedings. The review conducted by Mr Allan thereupon ensued.
It therefore appears that the Appellants were offered, but chose to decline, a hearing before the Magistrates in order that they might contest the seizure of the goods. When they were informed that the condemnation proceedings could not be stood over, but would need to be dealt with prior to the question of restoration, the Appellants in effect decided to abandon the condemnation hearing.
In that regard we note what Buxton LJ said in the Gascoyne case [2004] at [46], where he doubted that there should be what he termed "a second bite at the cherry of lawfulness", if condemnation proceedings have been allowed to "go by default". He then said this, at [47]:

"To the extent that it was argued that the literal provisions of section 152(b) ^[1] are wide enough to allow such a second bite, I would agree that that is so, but the reason why the importer cannot have that liberty is not because of the terms of the statute, but because of the normal English law rules of res judicata or abuse of process".
Buxton LJ then went on to say, in [54] and [55], that he did not consider that an importer should 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" by reason of condemnation proceedings not having been pursued. He said that, in his view, in a case where excise goods are deemed to be condemned, "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".
In so saying, Buxton LJ was following the decision of the Court of Appeal in Gora v Customs and Excise Commissioners [2004] QB 93. In the Gascoyne case, both Carnwath LJ and Brooke LJ agreed with him and thought that he was correct to do this.
As we interpret the Gascoyne and Gora cases, therefore, we conclude that it would not be correct for this tribunal to allow the Appellants to ventilate before it matters that would have been relevant to the abortive condemnation proceedings, if we find that the Appellants had their opportunity to raise those matters before the magistrates, and deliberately chose not to do so.
In that regard, we note firstly that the Appellants had required the institution of condemnation proceedings. Secondly, those proceedings had been carried forward to the point where a hearing date had been set, before Loughborough Magistrates. Thirdly, Mr Barr corresponded with Customs on the Appellants' behalf, seeking a standover of the condemnation proceedings – which, had this been achieved, would have preserved the right of the Appellants to argue that the seizure was unlawful. Fourthly, the Appellants were told by Customs that the matter of the seizure would have to be resolved before restoration was considered. Finally, the Appellants elected to go down the "restoration route" and to abandon the condemnation proceedings, and with it their opportunity to contend that the seizure was unlawful.
We think that it is one case where excise goods are automatically deemed to be condemned, under Schedule 3, paragraph 5 of the Customs and Excise Management Act 1979, and another case entirely where an importer, on the evidence, wishes condemnation proceedings to go ahead, and then deliberately suffers them to go by default. It is hard to see why, when a hearing date had been set before the Magistrates, the hearing having been required by the Appellants, they did not take advantage of it. In this case we find that the Appellants made a conscious, informed choice not to contest the lawfulness of the seizure, and that is not a matter that they can, directly or indirectly, reopen before this tribunal.
It is against the above background, therefore, that we proceed to consider the merits of this appeal. The only live witness from whom we heard was the Appellant Mrs Emmerson. She gave evidence that all the goods were bought in Spain and brought to England for smoking either by her husband, that is the Appellant Mr Emmerson, or by their family, or by best friends of members of the family. Mrs Emmerson's position was that, using the surplus money received by herself and her husband from the State by way of social security benefits (she explained the kinds and amounts of benefits received by them), she and her husband wished to be generous towards their family and give them cigarettes and tobacco free and without thought of any return. They had spent the equivalent in Euros of between £900 and £1,000 on the goods. Mrs Emmerson's evidential position was: "If I choose to be generous with my money, who is to say that I shouldn't be? I have nothing else to spend it on. My needs are already met".
Mrs Emmerson was cross-examined by Mr Smith for Customs. It would be fair to say that she was not seriously shaken in cross-examination, and that what she told the tribunal broadly corresponded with what she is recorded as having told Customs at the time of the Appellants' interview and the seizure of the goods in May 2002 ^[2] ; by the same token, we found her story to be so unlikely that we feel that it would need to be looked upon by a reasonable Customs officer with a degree of scepticism, then as much as now.
The Appellants' case, as explained to the tribunal by their advocacy friend, Mr Hallett, can be summarized as follows –
We have to observe that the case as presented by Mr Hallett is really the case that might have been presented before the magistrates. It is directed not so much at whether restoration should have been made as at whether the goods were correctly seized in the first place. Our role is not that of the magistrates, and we should not purport to accept the jurisdiction that they were called upon to exercise in this case. That, as we see it, would be improper.
For Customs, Mr Smith correctly drew our attention to the jurisdiction and powers of the tribunal in this kind of appeal, which are confined to circumstances in which we conclude that the reviewing officer could not reasonably have arrived at the conclusion reached in the review, and to the limited remedies specified in section 16(4) of the Finance Act 1994. Mr Smith then submitted that the discrepancies between what the Appellants had stated in correspondence, what they had told Customs in interview and what they were now saying cast real doubt upon their credibility. We agree that there are such discrepancies, but on the whole, these are not in our view significant, and we discount them. Finally, Mr Smith submitted that the tribunal should be slow to accept the Appellants' case about spending their social security savings on gifts for their family and friends in the absence of evidence apart from that put forward. We take his point.
For the Appellants, Mr Hallett firstly submitted that it was inevitable that the goods should have been seized. At face value, we found this to be a very frank admission, unless Mr Hallett meant (we are not sure that he did) that Customs are inevitably prejudiced against travellers when the facts are equivalent to those in this case. If that is what Mr Hallett meant, we unhesitatingly reject that suggestion, which is tantamount to an allegation of bad faith for which there is not a shred of justification. Secondly, Mr Hallett submitted that the Appellants were honest travellers, and that there were no grounds for thinking otherwise. We deal with this submission in the next paragraph of this Decision. Finally, Mr Hallett drew our attention to Lindsay v Customs and Excise Commissioners [2002] STC 588, and submitted that the approach of Lord Phillips MR at [64] in relation to non-profit making importations should be applied by us in this case. We deal with this submission in paragraphs 26 and 27 of this Decision.
If, as Mr Hallett submits, the Appellants were honest travellers, and this tribunal is to accept Mrs Emmerson's evidence, it follows that the non-declaration of the goods for duty purposes was justifiable because the goods were lawfully imported without requirement to pay UK excise duty. That has always been the Appellants' case, and it was for that reason that, as we understand it, the Appellants required condemnation proceedings to be instituted. That was their way of taking the point that the seizure was unjustifiable. This tribunal must take account of the fact that the Appellants chose to abandon those proceedings. In so abandoning the proceedings they accepted, as indeed Mr Hallett firstly submitted, that seizure was inevitable. In choosing not to contest the case before the magistrates, the Appellants in our view accepted that the importation was indeed a commercial one. No matter that they continue to say that it was not such an importation – they have accepted that it was.
In the Lindsay case, at [64], the court was dealing with the situation in which the importation was not for own use, yet there was no intention to profit from the disposal of the excise goods to others. The court considered whether that factor should be a consideration, in the context of whether it would or would not be proportionate to restore a car used to transport the goods in question. The court held in the affirmative. As in the Lindsay case, the Appellants in this case are compelled to accept the unlawfulness of the importation. But, in contrast to that case, and if we accept Mr Hallett's final submission as to the analogy with the Lindsay case, the Appellants have dissimulated throughout. If it is right that the goods were in large part brought in for family and friends on terms of payment, on a par with the Lindsay case, then the Appellants have not told the truth at any stage.
It would have been open to the Appellants to make a clean breast of matters before Mrs Marshall conducted her review. If the Appellants had then sought to rely upon the analogy of the Lindsay case, that might have been a wise course, given that the Appellants had decided to abandon the condemnation proceedings. However Mrs Marshall was called upon to conduct her review against the same background as before. She was sceptical, as her brother officers had been before her. We too are sceptical, and we decide that, having regard to the unlikelihood of the Appellants' story, considered in relation to what Mrs Marshall had learned about the Appellants, it was not unreasonable for her to have decided to uphold the previous decision of Customs not to restore the goods.
For the above reasons this appeal is dismissed.

MICHAEL JOHNSON

CHAIRMAM

RELEASE DATE: 24 February 2005

MAN/2004/8087

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