United Kingdom VAT & Duties Tribunals (Excise) Decisions

LONDON TRIBUNAL CENTRE

GUY DARE First Appellant

CLIVE RUST Second Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: MISS J C GORT (Chairman)

MRS C HOWELL

Sitting in public in Bristol on 15 March 2005

The Appellants in person

Mr B Lask of counsel, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1. Both appeals are against the Commissioners' decision not to offer for restoration excise goods seized from the Appellants on 11 March 2001. This decision is contained in a letter from the Commissioners dated 11 May 2004.
2. An initial decision not to restore the goods to Mr Rust was contained in a letter dated 1 May 2001, and that decision was confirmed in a letter dated 6 July 2001 by a reviewing officer. Refusal of restoration of the goods was notified to Mr Dare in a letter dated 22 October 2001 and that decision was confirmed in a review notified to him in a letter dated 15 November 2001. The same reviewing officer had acted in both cases. Both Appellants appealed, Mr Rust by a notice of appeal dated 12 September 2001 and Mr Dare by a notice of appeal served on 22 November 2001. The grounds of appeal in both cases were as follows:

"The tobacco and alcohol was being brought into the country for personal use only (for personal consumption by Clive Rust and Guy Dare and as gifts to friends of Clive Rust and Guy Dare …)."

3. The appeals were brought on for hearing together on 12 March 2004. On that date the Tribunal directed by consent that the appeals be allowed to the extent that the matter be remitted back for a further review by the Commissioners. The direction made by the Tribunal on that occasion was:

"… the Respondents carry out a further review of the decisions under appeal having regard to the changes in the law following the decision in Lindsay v Customs and Excise Commissioners and Customs and Excise Commissioners v The Queen (on the application of Hoverspeed Ltd & Others) and to the further evidence and submissions of the Appellant …"

4. Following this direction of the Tribunal a further review was carried out in respect of both Appellants by Mr David Harris, a reviewing officer of the Commissioners who had not previously been involved in the case. Mr Harris by a letter dated 11 May 2004 upheld the decision in the case of both Appellants. By separate notices of appeal, both dated 26 May 2004, both Appellants appealed, and in both cases the grounds of appeal were:

"Personal use and not for commercial use. I did not act in a dishonest manner and was not smuggling."

5. We find the following facts. The Appellants are friends who both live in Somerset. In May 2001 Mr Dare suggested to Mr Rust that they take a trip over to Belgium to purchase hand-rolling tobacco and cigarettes. Mr Dare was working earning about £14,000 a year, but he had an expensive smoking habit of about 40 cigarettes a day, and in addition his mother, whom he supported, also smoked. Mr Dare had the use of his grandfather's car at that time and, without informing his grandfather, borrowed the car to make the trip.
6. Mr Rust at the time was doing some building work and also working as a market trader with an income of something over £10,000 per annum. He wished to get some hand-rolling tobacco for himself and for his girlfriend at the time. They both smoked hand-rolling tobacco at the same rate of about twenty each day. They would achieve about fifty roll-up cigarettes per pouch.
7. Mr Rust's parents owned a public house. At the relevant time Mr Rust was not living with his parents but was living in Chardstock with his girlfriend. He was captain of a local skittles team which played one day a week at his parents' pub. The rest of the week they played elsewhere. Mr Rust hoped to purchase an adequate supply of hand-rolling tobacco for himself and his girlfriend to last approximately a year, he also wished to give the tobacco to friends in the skittle team and to his family. He had the previous Christmas asked for money in lieu of presents as he was setting up house with his girlfriend, and he had not given any presents at that time himself. For the trip he took out approximately £1,000 from his savings. Mr Dare had taken out about £1,300 from his savings.
8. The Appellants travelled over to Belgium and obtained between them 19½ kilogrammes of hand-rolling tobacco, 1,800 Benson and Hedges cigarettes, 600 Super Kings cigarettes, 50 cigarillos, 1 litre of whisky and 6.34 litres of beer. Because of the lapse of time, neither Appellant remembered precisely who had purchased what. Unfortunately there was no clear evidence as to how the hand-rolling tobacco was made up. There was agreement that there were three boxes of hand-rolling tobacco, two of which belonged to Mr Rust and one to Mr Dare. Mr Dare accepted that he had purchased the 1,800 king-sized filter cigarettes, but believed he had bought Benson and Hedges cigarettes as well, of which there were none. Mr Rust accepted that he might have purchased the 600 Super Kings filter cigarettes. The 50 cigarillos were a gift to the Appellants at the supermarket where they had made their purchases, and the whisky was given to them on the boat.
9. On their return from the supermarket they were stopped by the Customs at Calais and the car was inspected. They were allowed to continue on their way. At 5.50am on 11 March 2001 they were stopped by an officer of HM Customs and Excise at the Docks in Dover Kent. They were initially asked questions by the officer who had pulled them over, but those questions and answers were not recorded. They then had to move the car into a lay-by where the questions and answers previously given were repeated to them and written down. These notes were signed by both Appellants with an addendum from Mr Rust.
10. The interview notes record that the officer first spoke to Mr Dare who told him that they had travelled to Lille to deliver a package for his boss. He believed the package contained a radio and they had met someone out there. At this point the officer asked him whether he knew it was illegal to import controlled drugs and other matters into the United Kingdom and Mr Dare replied that he did. Mr Rust then spoke for the first time saying: "Yes. We do have some tobacco." In response to further questioning Mr Dare said that the vehicle was his and he had owned it for about a year. When asked if they had gone anywhere else apart from Lille, Mr Rust said that they had gone to Belgium and in fact they had not gone to Lille. Mr Rust said that he had been stopped before and thought it was about a month ago. In fact he had been stopped on 27 January 2001 with a Mr Brian Salter. On that occasion Mr Rust had driven Mr Salter over to purchase tobacco. A note produced by the Commissioners states that on that occasion the occupants of the car had 18 kilogrammes of hand-rolling tobacco each. Somewhat surprisingly they were both allowed to continue without the tobacco being seized. It was disputed by Mr Rust that he had had 18 kilogrammes and it was his evidence that Mr Salter had had two-thirds of the importation and he himself had had one-third, i.e. about 6 kilogrammes. If the note provided by the Customs is correct, it is very surprising that the two men were allowed through with 36 kilogrammes of hand-rolling tobacco between them.
11. After the notes were completed Mr Rust added that they had left for France between 10.30pm and 11.00pm and that when he had been asked about the MILS he had replied: "I think we are allowed one box each but we had three boxes between us so I think we were pushing our luck that's why we lied to the Customs officer who stopped the car".
12. The officer's notes give no indication that the Appellants were invited to remain for interview. It was the evidence of both Appellants, which we accept, that they were advised by the officer that it would be in their best interest to go and see a solicitor and, that if they proceeded on that day, then they would lose the chance of getting their goods back. Mr Rust's evidence was that they were being hurried by the officers as there was another ferry due in. The Appellants were trying to get the goods and the car, which had also been seized, back on that day but were told they had only one chance to do so and they had better get legal advice. None of this was recorded by the officers in their notebooks.
13. The vehicle which had been seized along with the goods was subsequently returned to Mr Dare's grandfather, as he had been completely unaware of the purpose for which his car was being used.
14. The Tribunal heard evidence from Mr David Harris, the reviewing officer, on behalf of the Commissioners. Both Appellants gave evidence on their own behalf and in addition a Mr James Edmunds gave evidence on behalf of Mr Rust. A bundle of documents was produced and the report on the intercept of Mr Rust on 27 January 2001 was produced in the course of the hearing.
15. Broomhead & Saul, solicitors, had been acting on behalf of both Appellants throughout. Their name appears on all the notices of appeal, and throughout they were in correspondence with the Commissioners about the case. On the day of the hearing however, when contacted on behalf of the Tribunal, somebody from that firm denied ever having acted for the Appellants. Correspondence from the solicitors was taken into account by Mr Harris in his review decision, and Mr Harris had taken the further step of telephoning the solicitors and asking for further information from them.
16. The earlier letters from the solicitors on behalf of the Appellants state inter alia that Mr Rust had purchased two boxes of drum HRT and a quantity of cigarettes which he intended to give away as gifts to family members; Mr Dare had never been abroad before, he had purchased a box of Golden Virginia hand-rolling tobacco, three packs of Benson & Hedges cigarettes and three packs of Embassy cigarettes; all items were for Mr Rust's personal use and Mr Rust resented the statement that he was untruthful to the Customs officer as he was completely honest; Mr Rust had approximately 10-20 packs left from his previous trip, his girlfriend smoked cigarettes, the hand-rolling tobacco was to be given away to family and friends as he had not managed to buy them Christmas presents, tobacco was to be given away to members of his skittle team who paid approximately £5.00 per week to the pub to play skittles, he had six close members of his family to whom he gave 20x50 gram packs each and ten members of the skittle team to whom he gave 20x50 gram packs each. A final letter from the solicitors in respect of Mr Dare dated 10 May 2004 gave his wages as approximately £14,000 per year, it was also stated that he smoked approximately 20 cigarettes a day, the hand-rolling tobacco was to be given away to his mother, uncle and cousins as gifts, but most of the tobacco was for his own use. The last two letters from the solicitors on behalf of each Appellant, one dated 6 May 2004 on behalf of Mr Rust and the other dated 10 May 2004 on behalf of Mr Dare, were in response to a telephone call from Mr Harris who had asked five questions. Only four of those questions were answered, the fifth question being as to why they had not stayed for interview. The solicitor does not appear to have put his mind to that question. We note that in answer to question three (we do not have the wording of the questions themselves) it is stated on behalf of Mr Rust: "The hand-rolling tobacco was to be given away to family and friends …". The answer to question four is in the following words: "He also gave tobacco away to members …". It was Mr Rust's evidence that this is referring to his future intention, as was the previous answer. Mr Harris, in reviewing the case, concluded that, because Mr Rust had only 20 pouches remaining when he travelled in March, and because he consumed a 50 gram pouch every two days, between travelling in January and March he would have used 22 pouches for his own use, making 42 pouches in all. This left 318 pouches from the 18 kilogrammes which he believed had been purchased in January which would have been given away.
17. A major consideration for Mr Harris in upholding the decision not to restore the goods was that Mr Dare had been untruthful to the officer when stopped and coupled with Mr Rust's explanation for the attempted deception: "Because we have a bit too much tobacco than what we should have", he considered that they were not bona fide travellers who had been to the continent to purchase excise goods for their own use. He was further influenced by the fact that Mr Rust had previously travelled to the continent in January and had been stopped with 18 kilogrammes of hand-rolling tobacco. On that occasion Mr Rust had been handed a Customs Notice 1 which explained the guidelines concerning excise goods. Mr Harris then made the calculations above to the effect that, since Mr Rust had only 20 pouches left when he returned to the continent (I note the solicitors said he had 10-20 pouches left) he concluded he would have given away 318 pouches or 15.9 kilogrammes. Mr Harris had checked on the electoral roll and had found that Mr Rust was living at Ashill Inn, a public house owned and run by his parents. This public house had a skittle alley and the team members were to be given the hand-rolling tobacco. Mr Harris did not find it credible that a person on an income of £250 per week would give away the majority of his goods without expecting some form of recompense.
18. With regard to Mr Dare, Mr Harris took account of his attempted deception and he further stated: "However the officer gave Mr Dare the opportunity to stay and explain his actions and the intended purpose for the goods. After all no one is in a better position to know whether they are to be used for private or commercial purposes than someone in Mr Dare's position; Mr Dare chose not to avail himself of this opportunity."
19. Mr Edmunds' evidence was to the effect that he was a friend of Mr Rust and played in his skittles team. Mr Rust had handed out tobacco to members of the team in January, but he could not be sure whether he himself had been playing on that occasion.

The Respondents' case

20. In addition to the facts and matters relied on by Mr Harris in his review letter, Mr Lask referred to the amount of tobacco products being imported as being nearly ten times the indicative levels in force at the time, and even under the new guidance the Appellant had more than three times the indicative levels. The excise duty on the seized goods amounted to £2,238.15. Mr Lask submitted that the amount of tobacco being imported was a relevant factor that the Commissioners had properly taken into account in arriving at their decision.
21. Mr Lask also relied on what he deemed to be discrepancies, omissions and implausibilities in the information and explanations provided by or on behalf of the Appellants subsequent to the seizure, and in particular he pointed to the doubt as to which goods belonged to which of the Appellants. Mr Lask, unlike Mr Harris, submitted that it was not credible that Mr Rust would have been buying tobacco as Christmas presents for friends and family in March when no mention had been made of Christmas presents in any of the correspondence prior to the letter of 6 May 2004. Had there been a genuine intention to give away the tobacco to members of the skittle team, he submitted that Mr Rust would not have failed to mention this earlier, either at the time the goods were seized or in the initial correspondence. He submitted that the decision was reasonable and proportionate in all the circumstances.
22. We were referred to the cases of Anthony Johnstone, heard in the High Court on 31 January 2005, Gora and Others [2003] EWCA Civ 525 and Gascoyne [2004] EWCA Civ 1162.

Reasons for decision

23. To allow this appeal we would have to be satisfied that the reviewing officer in conducting his review had either taken account of matters which no reasonable reviewing officer would have taken into account, or had failed to take account of matters which he ought to have taken into account. The burden of proof is upon each Appellant to satisfy us on the balance of probabilities as to this.
24. We accept both Appellants' evidence that they did not decline to stay for interview in the way Mr Harris had concluded. We accept that they were positively advised by the officers at the time to continue on their way without waiting to be interviewed. We find that Mr Harris gave the Appellants every opportunity through their solicitor to state their case. He took the step of asking the solicitor specific questions which troubled him, which is not the step often taken by reviewing officers. It is unfortunate for the Appellants that the solicitor appears to have misunderstood the answers given to him by the Appellants.
25. In this case it is incumbent on us to consider the case of each Appellant separately, as had Mr Harris. Whilst Mr Rust does not accept that he had 18 kilogrammes of tobacco with him on the occasion when he returned in January, the intercept produced by the Commissioners states unambiguously that Mr Rust and Mr Salter had 18 kilogrammes each. Mr Harris did his calculations on the basis that Mr Rust had 20 pouches remaining from his January trip when he travelled in March. Given that Mr Edmunds confirmed that some tobacco had been given away to the skittles team in January, and given the wording of the intercept, we are unable to find that Mr Harris was acting unreasonably in arriving at the conclusions which he did.
26. Mr Harris had wrongly concluded that at the time Mr Rust was living at his parents' public house, although the evidence of Mr Rust's correct address was available to Mr Harris at this time. Given, however, that Mr Rust's parents own a public house, and that his skittles team plays there, we do not find that this is an error sufficient to warrant referring the matter back to the Commissioners.
27. Insofar as Mr Dare is concerned, whilst we accept his evidence that he was purchasing tobacco for his own and his mother's use, it cannot be said that, given the clear lies he told to the officers at the outset, Mr Harris was acting unreasonably in concluding that the lies were told to mislead the officers as to the real reasons for the purchase of the hand-rolling tobacco and cigarettes. We accept that Mr Dare was frightened in the circumstances and that it was his first trip abroad.
28. In the case of Mr Rust we find it improbable that he would have been giving away such large quantities of tobacco, even if he had only come through with six kilogrammes on the previous journey. We find it much more likely that he was receiving moneys worth for the hand-rolling tobacco, even if he did not intend to receive any direct payment.
29. We do not accept that doubt as to which goods belong to which Appellant can affect the commerciality or otherwise of the intended importation.
30. The case of Anthony Johnstone, which we were referred to, is a decision of Mr Justice Moses in the High Court and in that case he states that the jurisdiction of the tribunal on such an appeal was limited to the question of whether the reviewing officers' decision was outwith the range of reasonable decisions on the issue whether the goods should be restored. He held that it was not a matter for the tribunal whether or not the goods were for a commercial purpose or for personal use. This decision is at odds with the approach taken by the Commissioners to the jurisdiction of the tribunal in the case of Gora. At paragraph 38 of that decision is set out the Commissioners' view which at sub-paragraph (e) is as follows:

"… In practice, given the power of the tribunal to carry out a fact-finding exercise, the tribunal could decide for itself this primary fact. The tribunal should then go on to decide whether, in the light of its findings of fact, the decision on restoration was reasonable. The Commissioners would not challenge such approach and would conduct a further review in accordance with the findings of the tribunal."

Given that the appellant appeared in person in the case of Johnstone, and there was no legal argument on the point, and therefore cannot be conclusive of the issue.

31. In this case the Appellants did not appeal against the condemnation proceedings of the Magistrates Court. The remarks in Gora on the jurisdiction of the tribunal were obiter. In the case of Gascoyne, Baxter LJ at paragraph 54 and 55 said 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 does not adequately enabled 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 re-open those issues: though the tribunal will always have very well in mind considerations of, or similar, 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."

32. We take the view that it would be open to us to make findings of fact as to whether or not each Appellant was importing the goods for a commercial purpose. As stated above, we accept that Mr Dare was importing the hand-rolling tobacco for personal use. However, whilst we accept that Mr Rust was not going to receive any direct payment for the hand-rolling tobacco, nonetheless we do not accept that he did not receive moneys worth. He had asked for money only in December previously because he was setting up house with his new partner, we do not find it credible that he was able to go over both in January and then again in March and buy such large quantities. Unfortunately for Mr Dare, his goods were together with those of Mr Rust, and it is not possible at this stage to decide with any certainty which of the various goods belong to whom.
33. In all the circumstances this appeal is dismissed.

MISS J C GORT

CHAIRMAN

RELEASED: 29 April 2005

LON/04/8043

LON/04/8044