United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2005] UKVAT(Excise) E876, [2005] UKVAT(Excise) E00876

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Wellings v Customs and Excise [2005] UKVAT(Excise) E00876 (13 April 2005)

E00876

EXCISE DUTIES — Seizure of car and goods at Coquelles — no condemnation proceedings and goods and car deemed to be forfeit — whether issue of importation of goods for own use can be raised by Appellant before tribunal — yes — whether decision on review to refuse restoration reasonable — no — case remitted by tribunal for further review — appeal allowed

MANCHESTER TRIBUNAL CENTRE

GEOFFREY WELLINGS Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Michael Johnson (Chairman)

Gilian Pratt

Sitting in public in York on 31 March 2005

The Appellant appeared in person

Xanthë Craddock, counsel, instructed by the Solicitor's office of HM Customs and Excise for the Respondents

DECISION

This is yet another in the stream of appeals to these tribunals in which cross-border shoppers, returning to the UK from the continent, seek the restoration of excise goods which have been seized by HM Customs and Excise and condemned as forfeited pursuant to paragraph 5 of Schedule 3 of the Customs and Excise Management Act 1979 ("CEMA").

Typically, as in the present appeal, owners of the forfeited goods maintain before us that they were importing the goods for their own use rather than for commercial purposes. They seek to rely upon that fundamental point before the tribunal. It has commonly not impressed itself upon these appellants that these tribunals might be precluded from deciding such issue because proceedings were never instituted before the court to determine the matter of condemnation in accordance with paragraph 6 of Schedule 3 of CEMA. Appellants come to these tribunals asking us to decide this central issue which might have been determined had they pursued the "court route" rather than the "tribunal route".

Such appellants ask the tribunal to order restoration of the condemned goods because they should not properly have been condemned. That is often the only issue that appellants ask us to decide.

The jurisdiction of these tribunals is circumscribed in these cases by section 16(4) of the Finance Act 1994. Our jurisdiction comes into play where a decision not to offer restoration has been made by the Commissioners of Customs and Excise ("Customs") which has then been confirmed by a separate decision of a reviewing officer of Customs. We are empowered, where we are satisfied that Customs or other person making the decision, ie the decision made on review, not to restore the items in dispute – usually tobacco and/or alcohol products, but sometimes, as in this case, also the vehicle in which the goods were being transported – could not reasonably have arrived at the decision, to exercise certain powers, of which the most useful in this context is to direct Customs to conduct, in accordance with our directions, a further review of the original decision. That is as far as our jurisdiction goes. Our jurisdiction does not extend to reopening the matter of the legality of the forfeiture, conclusively determined by CEMA.

The Appellant, Mr Geoffrey Wellings, here invites the tribunal to consider and rule upon the issue whether 6,400 cigarettes and 6 Kg of hand-rolling tobacco ("the excise goods"), which he and his son Mr Daniel Wellings were seeking to bring into the UK through the Channel Tunnel on 6 July 2004 in the Appellant's Rover 825 saloon Registration No L884 FJA ("the Rover"), should not have been restored to him by the decision of the reviewing officer, seeing that the excise goods were being imported to the UK for their own use. The Appellant is also concerned to get his car back. Both the excise goods and the Rover were seized by Customs at the UK Customs Control Zone in Coquelles, France, as the Appellant and his son were preparing to return to the UK. Customs did not seize a quantity of alcoholic drinks that the travellers were also importing in the Rover, accepting without demur that these were to be consumed at a party.

The Appellant asks the tribunal to make findings of fact, and to decide that there should be a further review of his case by Customs because the decision under appeal was unreasonable.

It is common ground in this appeal that condemnation proceedings were never issued because the Appellant never gave notice of claim to Customs under paragraph 3 of Schedule 3 of CEMA requiring Customs to do so. Consequently the excise goods and the Rover stand condemned as forfeited in law.

Miss Craddock, appearing in this appeal for Customs, submitted that we are precluded from entertaining the appeal on the basis sought by the Appellant. She cited a number of recent authorities in support. These were: Gora v Commissioners of Customs and Excise [2004] QB 93; Gascoyne v Commissioners of Customs and Excise [2004] EWCA Civ 1162; Johnstone v Commissioners of Customs and Excise [2005] EWHC 115 (Admin); and J & P M Dockeray v Secretary of State for the Environment [2002] EWHC 420 (Admin).

We were able to draw to Miss Craddock's attention certain other very recent authorities also of relevance and to provide her with copies of them to consider in the context of her submissions to us, namely Commissioners of Customs and Excise v Eatock & Speakman [2005] EWCA 330 (Ch) (judgment handed down on 7 March 2005); and Crozier v Commissioners of Customs and Excise (heard on 17 March 2005 by a VAT & Duties Tribunal in North Shields, Tyne and Wear chaired by Mr Colin Bishopp - release of decision imminent).

Miss Craddock's submissions in relation to jurisdiction were as follows:

That the Appellant had had his chance to require proceedings to be instituted in the Magistrates Court under Schedule 3 of CEMA which he had chosen to forego;

That he had done this "with open eyes" and with full appreciation that that was the correct process for challenging the seizure of the excise goods and the Rover, because Customs had drawn this to his attention;

That the Appellant was only now for the first time contending that he was ignorant of the correct process, which was not the case;

That the Appellant's human rights were not infringed, because he knew exactly what he had to do, and when, in order to assert the "own use" contention; and

That the effect of the authorities was that in consequence the tribunal should regard the assertion of the "own use" contention as improper and decline to entertain the appeal on that basis.

Miss Craddock drew our attention in particular to what she submitted was the leading authority in this area, namely the case of Gascoyne v Customs and Excise Commissioners in the Court of Appeal. Part of the judgment of Buxton LJ (with whom the other members of the court, Carnwath and Brooke LJJ, agreed) at [2004] EWCA Civ 1162 [54]–[56], reads as follows:

"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 [of CEMA] does not adequately enable him to assert his [Human Rights] Convention rights.

"In my view, therefore, in a case where the deeming provisions of 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 [Customs], 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."

Miss Craddock laid particular emphasis on the sentence in the preceding paragraph which we have, for convenience, italicised. She asked us to find that there was nothing in the context of the present appeal to displace what amounted to the presumption that, having been told about his rights, the Appellant should not seek to exercise them, by a back door route, as it were, before the tribunal rather than the Magistrates Court, which was the proper forum. She pointed out that the Gascoyne case deals with the typical situation where Customs have presented the traveller with a notice setting out, in non-technical language, what his rights of appeal are. She referred us to Buxton LJ's judgment in that case at [71]-[72], where he said that, for his part, he saw no reason why Customs, having given a notification in those terms, should not reasonably assume that the importer will have read and understood the notice.

These are powerful submissions, and it is right that we should weigh them against the sequence of events that we find in this appeal. Given that this is a case where the deeming provisions of paragraph 5 of Schedule 3 of CEMA are applied, should we allow the reopening of the "own use" issue as the Appellant seeks?

As to this, we find that the Appellant was indeed told, on more than one occasion, that his right of appeal in order to challenge the seizure was to the Magistrates Court. Customs Notice 12A deals with that. We find that the Appellant was given at Coquelles on 6 July 2004 a Seizure Information Notice, Form C156, and was at the same time issued with a copy of Notice 12A. On 8 July 2004, the Appellant wrote a letter to Customs in which he made the allegation that the seizure of the goods and the Rover was unlawful – a matter, therefore, for the court to determine. In their letter in reply, dated 19 July 2004, Customs asked the Appellant to clarify whether he wished to contest the matter before the Magistrates Court, seek restoration before the VAT & Duties Tribunal, or both. That letter contained the following sentences:

"If you believe that your items should not have been seized (eg you assert that excise goods you were importing were for your own use and not for a commercial purpose) [our italicisation for emphasis] you can challenge the seizure. This process takes place in the Magistrates Court, and Customs will initiate proceedings on your behalf.

…

"If you accept that Customs were legally entitled to seize the items, but still want them returned to you, you can write to the Post Seizure Unit and ask for the items to be restored. … If you do not agree with the decision given by the Post Seizure Unit you may ask for that decision to be reviewed. If you do not agree with the review decision you may take the matter to the VAT & Duties Tribunal who are (sic) wholly independent from Customs and Excise."

The Appellant gave oral evidence before us and was cross-examined by Miss Craddock. He came across as sincere and genuine. We accept his evidence. We are satisfied that he was confused after receiving Customs' letter dated 19 July 2004. He did not understand the difference between the "court route" and the "tribunal route". He could see that the "own use" point, on which he relied, could be taken before the Magistrates Court, yet he nevertheless believed (wrongly, if the "own use" point is accepted) that Customs were legally entitled to seize the items. He did not know which court or tribunal he should be applying to; but he did know that he had to act swiftly, if he wanted to get his car back.

We find that the Appellant decided to ask Customs for further information as to what he should do. He did not take legal advice; rather he telephoned Customs on the same day that he received their letter dated 19 July 2004. He spoke to a lady whose name he could not recall. She told him that the "court route", before the Magistrates, could take 12 months. He formed the clear view that she was suggesting the "tribunal route" to get back the Rover and the excise goods. He showed us the letter, at the top of which he wrote "Restoration", meaning that the upshot of the conversation was that that was the route which she felt that he should pursue.

So he did. Customs rejected his request for restoration, on policy grounds, in a decision letter dated 13 August 2004. He requested a review of that decision, writing that the decision was unjust, as no commercial gain was made or proved. The review was conducted by a reviewing officer of Customs, Mr David Cawthraw, who was the other witness who gave evidence before us. His decision letter was dated 4 October 2004. It is against that decision that the Appellant now appeals.

Mr Cawthraw upheld the original decision, again on policy grounds. However Mr Cawthraw duly examined the facts of the Appellant's case and descended to consider the "own use" point. The decision letter is long and was conscientiously prepared. The nub of Mr Cawthraw's findings on the "own use" point appears from the final sentence of the second complete paragraph on page 7 of the letter, which reads as follows:

"Whilst I accept that you may have given small quantities [of the excise goods] away to family and friends, taking all of the above arguments on cost, receipts, consumption, the amount of tobacco claimed to be given away and conflicting information from the interviews, I am persuaded that the most likely purpose of your trip of 6 July 2004 was to purchase tobacco and cigarettes for commercial purposes".

It can thus be seen that Mr Cawthraw did reach his own independent view on what is being urged before this tribunal by the Appellant as the key issue in the appeal.

Notwithstanding the submissions of counsel for Customs as to our jurisdiction, we have decided to consider the contents of the review letter, and the conclusion reached in it, in the light of the "own use" point, what we have heard from the witnesses, and our impression of the weight and validity that it is appropriate to give to the various factors that we consider to be relevant to the decision arrived at in the review letter. We have done this for the following reasons:

1) As we interpret the judgment of Buxton LJ in the Gascoyne case, at [54]-[56], he is setting out his view of the circumstances in which the tribunal can reopen the "own use" point after a deemed condemnation under paragraph 5. Within the parameters that he mentions, the decision as to whether to reopen belongs to us – the tribunal.

2) It is for us, the tribunal, to have in mind considerations of, or similar to, abuse of process in so deciding.

3) Buxton LJ's view, at [56], of the weight to be given to the fact that an importer has not applied to Customs to challenge the legality of the seizure is, of course, worthy of the utmost respect, but it is clear to us that it is for the tribunal to form its own view of the matter in a given case.

4) We agree entirely with Buxton LJ, at [72], that Customs are reasonably entitled to expect that a well-drawn notice in non-technical language would normally be well understood by the importer. However if it is found as a fact that there was no such reasonable expectation, the matter is otherwise.

5) In this case, Customs were telephoned by the Appellant on receipt of the letter dated 19 July 2004 because he was confused. The confusion was allayed in such a way that the Appellant had recourse to the "tribunal route" and ignored the "court route".

6) In so doing, it appears to us that the Appellant must have had a genuine belief that the "tribunal route" would entitle him to raise all matters relevant to his case. As Buxton LJ said in the Gascoyne case at [54], he must be enabled adequately to assert his human rights. That would not be the case if he ignored the "court route", even deliberately, whilst at the same time reasonably believing that the "tribunal route" would enable him to do that.

7) There was no abuse of process in this case, or anything akin to it. This kind of case is entirely different from the case where court proceedings have deliberately been embarked upon and have been abandoned by the importer without obtaining a ruling from the court, or a ruling has been obtained as to "own use" from the court and the importer, in effect, seeks a rehearing of that issue from the tribunal.

We moreover think that, wherever the reviewing officer of Customs has felt it to be appropriate to take into account the factual matrix of the circumstances of the importation, including the allegation of "own use", as in the present case, it will normally be right for the tribunal to have regard to criticisms on the part of the Appellant as to how the reviewing officer has done that. We therefore proceed to consider the "own use" point in this case, having decided the preliminary point of jurisdiction against Customs.

When he gave oral evidence before the tribunal, Mr Cawthraw was cross-examined by the Appellant. The cross-examination met with some success. Mr Cawthraw admitted that he might have missed a point over which of the travellers had produced receipts for which goods to the interviewing officers of Customs.

Customs took the view that all the excise goods were being imported by the Appellant. The receipts and the record of interview of Mr Daniel Wellings, who did not give evidence and did not attend the hearing, suggest that each traveller was seeking to import 3,200 cigarettes and 3 Kg of hand-rolling tobacco. Those are the quantities per person specified in regulation 12(1B)(e)(viii) of the Tobacco Products Regulations 2001 SI 2001/1712 (as amended) to which one is to have regard for the purposes of determining whether tobacco products are held or used for a commercial purpose by any person.

The stories given by each of the travellers, when separately interviewed, do appear to have contained contradictions, not least with regard to the payment for and ownership of the excise goods. We find that the Appellant paid for all the excise goods at the point of purchase. However we do not find that this meant that all the goods were necessarily the property of the Appellant. Rather we find that it is just as probable as not that the father had provided the son with the money to buy his share of the excise goods, as to which the father might or might not have demanded repayment when back in the UK.

The Appellant told the tribunal, and we accept, that Mr Daniel Wellings is handicapped in his literacy and conversational skills due to having contracted meningitis as a child. That was indicated to Customs in the Appellant's letter dated 8 July 2004. We find that in deciding what impression to form of the son's answers to questions from Customs when interviewed, account needed to be taken of that fact. Indeed, the precise manner in which account should be so taken would depend upon expert assessment of the extent to which the son's answers given in interview might have been affected by his condition. This tribunal is not equipped to make such an assessment, nor was Customs.

Although the Appellant had travelled to the continent several times in the previous year – he genuinely believed most recently three months previously, but Customs were able to demonstrate that it was just one month previously – evidence is lacking as to the quantities of excise goods obtained on such occasions, or as to any commercial purpose behind the trips, apart from the fact, as the Appellant told us, and as we accept, that he would travel to France on occasions because he had a business arrangement with a supplier there who would provide him with catalytic converters (the Appellant is proprietor of his own metals recycling business).

The Appellant maintained, both in interview and before the tribunal, that of the excise goods imported by himself and his son, such of the excise goods as remained unsmoked by the two of them were for gifts to various members and close friends of their family. There is no evidence that money was intended to change hands for any of the excise goods.

There is however one qualification to this. The Appellant disingenuously indicated that he might slip to business contacts a pouch of imported tobacco, instead of a pound or two in money, to uncover a part for him in scrapyards for the purposes of his business. It had not occurred to the Appellant that this might be properly interpreted as importing the tobacco in part for commercial purposes. This strikes us as such a trivial matter that consideration should be given to ignoring it as de minimis.

None of the grounds for seizure specified at the time by the officer seizing the excise goods from the Appellant of Customs impresses us as a particularly cogent indicator of commercial importation. (Separate grounds were given for seizure following the interview of Mr Daniel Wellings, but, as appears, we have reservations about the reliance placed upon his answers.) The grounds given in the case of the Appellant were: discrepancies between the stories of father and son; that some of the excise goods were to be used as payment for services rendered; that it was unreasonable to keep giving goods away; and that the travellers were vague as to their own consumption rates of cigarettes/ tobacco. What does, on the contrary, impress us is that these two travellers, the Appellant and his son, suffered the forfeiture of excise goods which in total do not exceed in quantity the amounts that without question are properly brought into the UK by a pair of cross-border shoppers from other member states of the EU.

Mr Cawthraw in his review decision upheld the decision to decline to offer restoration of the Rover as well as the excise goods. He so decided on the basis that the importation of the excise goods was commercial and had not been shown to be not for profit; he moreover declined to offer restoration on payment of a sum of money, because the amount of excise duty that, as he saw it, had been evaded – £1,600 – was so much greater than the value of the Rover, (which was, according to the Appellant, approximately £750, and according to Customs, approximately £500). This decision, of course, was predicated upon the conclusion that the importation was not for own use.

Having regard to our findings of fact, we think that Mr Cawthraw's review decision is unsatisfactory and requires to be revisited. We are satisfied that it was not reasonable for him or any other reviewing officer of Customs to have upheld the original decision on the footing that, as the decision is phrased, " … the most likely purpose of your trip of 6 July 2004 was to purchase tobacco and cigarettes for commercial purposes." We have therefore decided to allow this appeal, which we do. In Mr Cawthraw's position, we would have authorized unconditional restoration, both of the excise goods and of the Rover.

Accordingly we remit this case to Customs for the carrying out of a further review of the decision not to restore. We direct that the further review is to be conducted by a different review officer, and we direct that in so doing, he or she is to take account of the following matters found by us:

Reliance cannot safely be placed upon the discrepancies between the accounts given in interview by the Appellant and his son respectively, nor upon any apparent shortcomings in the answers given by the son in interview;

Such evidence as exists of commercial importation is limited to the matter mentioned in paragraph 28 above, which is so trivial as to appear to us to be de minimis;

It was just as likely as not that the excise goods were being imported in equal quantities by the Appellant and his son, neither of whom therefore exceeded the guideline amounts specified in the Tobacco Products Regulations;

This tribunal, having heard the evidence of the Appellant, has accepted the truthfulness of the Appellant's story; and

This tribunal, having heard the evidence of the reviewing officer, has found that, on the officer's own admission, he approached the matter on the basis that the importation of the excise goods was entirely that of the Appellant.

We further direct that the fresh review is to be conducted within six weeks of the release of this decision, and that when it is issued, a copy of it is to be sent to the Manchester Tribunal Centre for filing under reference MAN/2004/8118. Finally, if the fresh review results adversely to the Appellant, and he remains dissatisfied, we direct that he may make further application to the tribunal about the matter within these proceedings, without needing to issue a further appeal.

MICHAEL JOHNSON

CHAIRMAN
Release Date: 13 April 2005

MAN/04/8118