United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2005] UKVAT(Excise) E00937, [2005] UKVAT(Excise) E937

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John Cowie T/A Cowie Transport v Revenue and Customs [2005] UKVAT(Excise) E00937 (21 December 2005)

EO00937

EXCISE DUTY — restoration of four vehicles subject to payment of restoration fee — review officer restricted her review to validating the fee against the amounts detailed in the relevant policy — review officer did not address Appellant's blameworthiness and displayed a limited understanding of proportionality — review officer considered that the elements of the restoration fee were fixed and could not be altered by her — the proportionality of the Respondents' policy open to question — was the decision to restore the four vehicles subject to payment of fee reasonable — no — appeal allowed and further review directed

MANCHESTER TRIBUNAL CENTRE

JOHN COWIE trading as COWIE TRANSPORT Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Michael Tildesley OBE (Chairman)

JT Brian Strangward

Sitting in public in Manchester on 9 September 2005 and 11 November 2005

Scott Redpath, counsel, instructed by Backhouse Jones Solicitors for the Appellant

Josh Shields, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

DECISION

The Appeal

The Appellant was appealing against the Respondents' decision on review dated 27 February 2004 to restore four vehicles on condition of payment of £4,710 which was later reduced to £3910.

The four vehicles were:

(1) One Iveco Eurostar – R792 GTL

(2) One Iveco Eurostar – M553 VWT

(3) One Mercedes 240D – B205 RPY

(4) One Land Rover Discovery – V39 GRH

The Notice of Appeal dated 19 March 2004 set out detailed grounds of Appeal which are summarised below:

(1) The restoration fee was effectively a fixed penalty imposed under section 9 of the Finance Act 1994 and section 24A (5) of the Hydrocarbon Oils Duties Act 1979. The Respondents failed to apply these sections in line with the Human Rights Act 1998.

(2) The Respondents applied their powers disproportionately having no regard to the culpability and the degree of co-operation of the Appellant.

(3) The Respondents failed to consider whether the penalty imposed for the restoration of the vehicles was commensurate with the mischief which the Regulations were aimed at preventing.

(4) The Respondents' decision was one to which no reasonable Commissioner or Review Office could come.

(5) The Respondents erred in their quasi-judicial function in making findings of fact and applying the law correctly.

We have treated the Notice of Appeal as an Appeal against the conditional restoration of four vehicles not the three vehicles as mentioned in the Respondents' statement of case. The fourth vehicle, the Land Rover Discovery was offered for immediate restoration following its seizure. The Respondents' letter of 23 December 2003 offering restoration of the vehicles subject to payment included the Land Rover Discovery. The Review decision letter of 27 February 2004 which was the subject of the Appeal referred to four vehicles not three vehicles.

The Issue

On 13 November 2003 the Respondents carried out a fuel inspection of the vehicles in the Appellant's yard. The Respondents discovered that four vehicles contained marked fuel which could not be lawfully used as fuel for road vehicles or taken into such road vehicles as fuel. The Respondents seized the four vehicles. They offered the Land Rover Discovery for immediate restoration on payment of £500 which the Appellant paid because it was the family vehicle. The other three vehicles were offered for restoration of payment of a fee in the sum of £4,210 which comprised £1,500 for penalties and £2,710 removal and storage charges. The fee was reduced to £3,660 because of an overcharge of storage costs. The Review Officer further reduced the fee to £3,410 since she considered that there should be one penalty for the act of decanting not two.

The Appellant when interviewed on 13 November 2003 explained that his drivers last fuelled the two commercial vehicles (the Iveco Eurostars, registration numbers: R792 GTL and M553 VWT) at a garage in Belgium, known as Karpol. Further the Appellant decanted fuel from one of the Iveco Eurostars, R792 GTL, into the other two vehicles. The Appellant contended that he was an innocent victim of fraud. He had not knowingly used the marked fuel for road vehicles.

The issue for the Tribunal was whether the Respondents' decision dated 27 February 2004 to restore the four vehicles subject to a payment of a fee in the sum of £4,710 (later reduced) was a decision which no reasonable body of Commissioners could have arrived at. In order for the decisions to be reasonable the decision maker must have considered all relevant matters and must not have taken into consideration irrelevant matters.

The Evidence

We heard evidence on oath from

(1) John Vincent Cowie, the Appellant.

(2) Arpad Gyorgy Bizco, the driver of the Iveco Eurostar, R792 GTL

(3) Maureen Crook, the Officer who conducted the review dated 27 February 2004.

We received an agreed bundle of documents.

The Respondents' Letter dated 23 December 2003

This letter addressed to the Appellant stated that:

"The above vehicles ( two Iveco Eurostars and Mercedes Benz) were seized from John Cowie under section 141(1)(a) of the Customs and Excise Management Act 1979 as a result of rebated fuel being found in the running tanks contrary to section 12 of the Hydrocarbon Oils Duty Act 1979. On this occasion the vehicles have been restored on payment of £4,210 calculated as per attached schedule. This is without prejudice to any further action that the Commissioners of Customs and Excise may take against you in connection with this seizure".

The schedule attached to the letter of 23 December 2003 was headed "ROAD FUEL OFFENCES – SCHEDULE OF RESTORATION TERMS. The schedule was then broken down into three parts which were as follows:

PART A: PENALTIES	Two penalties of £250 each under sections 24A (HODA) and 170A (CEMA) were imposed against the four vehicles.	The sub-total of the eight offences = £2,000
PART B: COSTS	This comprised removal and storage costs for the three vehicles which were seized and taken away by the Respondents.	The sub-total of costs = £2,710
PART C: MONEY ON DEPOSIT (DELIVERY UP)	This related to the Land Rover Discovery	The sub-total = £500 which was deducted from the above two sub-totals.
TOTAL		£4,210

The Review Decision dated 27 February 2004

Mrs Crook identified in her letter that she was conducting a statutory review of the decision under section 14 and schedule 5 of the Finance Act 1994 which required her to consider afresh the decision to restore on terms by taking account of the material before the Commissioners at the time the decision was made and the Appellant's representations.

Mrs Crook set out the background of the Appeal and the applicable legislation. Her consideration, however, contained no detailed analysis of the facts upon which she placed weight. In the second paragraph of her consideration Mrs Crook concluded that

"The penalties that have been levied on Mr Cowie are due to be paid by him as the owner of the vehicles and the Director of the business. The penalties are fixed penalties and the amounts are not discretionary. All of the four vehicles contravene section 24A of the Hydrocarbon Oils Duties Act 1979 as they were all found to contain marked fuel this then attracts a penalty of £250 for each vehicle under section 9 of the Finance Act 1994".

Mrs Crook in her consideration then went onto consider the penalties imposed under section 170A of the Customs and Excise Management Act 1979 which related to the actions of the Appellant decanting marked fuel into his other two vehicles. Mrs Crook concluded that the four penalties levied under this Act should be reduced to three because the Appellant only decanted the marked fuel from one of his commercial vehicles.

Mrs Crook stated in her consideration that she considered the various components of the restoration fee against the stated Respondents' policy dealing with marked fuel and road vehicles which resulted in her reducing the fee for the "decanting offences". She did not consider the fact that the Appellant may have been an innocent victim of a fraud as a relevant factor because he was the owner of the vehicles and was ultimately responsible for having marked fuel in his vehicles. Mrs Crook was aware of the "Lindsay case" and the issue of proportionality but not that familiar with the Human Rights Act 1998. Mrs Crook could not contemplate circumstances under the policy where a lesser penalty than the fixed restoration charges might be applicable. She considered that the value of the restoration terms was far less than the value of the two commercial vehicles seized.

Mrs Crook was of the view that the restoration terms could not be altered. They were set amounts. Mrs Crook confirmed that she did not consider whether the removal and storage fees were excessive. Further, she did not examine the effects of the seizure on the Appellant's business.

Mrs Crook agreed that the Respondents' policy played a major part in her decision. She compared the restoration terms imposed upon the Appellant against the charges referred to in the policy. Mrs Crook considered that the terms corresponded with the charges except the number of penalties for the decanting offence. Mrs Crook conferred with the Respondents' policy section before reducing the number of penalties from four to three.

Appellant's Counsel cross-examined Mrs Crook on the various references in the Respondents' documentation to sections 12 and 24A of the Hydrocarbon Oils Duty Act 1979. The Review letter and the schedule to the letter dated 23 December 2003 referred to section 24A, whereas the covering letter dated 23 December 2003 referred to section 12. Mrs Crook was not fully aware of the differences between the two sections but her decision was based on section 24A of the Hydrocarbon Oils Duty Act 1979.

Additional Evidence Requested by the Tribunal

When the hearing was adjourned part heard on 9 September we directed that the Respondents provide:

(1) A witness statement setting out the Respondents' policy for dealing with seizure and restoration of vehicles found to have marked fuel in their fuel tank or a copy of the policy itself.

(2) In writing their knowledge of the reasons for the closure of the Karpol garage as described in paragraph 54 of the Appellant's witness statement.

The Respondents supplied their policy in relation to the misuse of rebated fuel which we assumed applied equally to the misuse of marked fuel. Under the policy the Respondents adopted a "three strikes and out approach" which meant that the Respondents would restore the seized vehicles on the first and second occasion on payment of a fee which consisted of the value of the civil penalties, 100% of the revenue evaded and any storage costs with non restoration on the third occasion. In the case of private vehicles the restoration on the first and second occasion could take place immediately after seizure provided the required fee was paid. The restoration of commercial vehicles would depend upon establishing a number of facts, such as identifying the owner through HPI checks and the previous history of the offender. Thus the policy required the removal of all commercial vehicles until those facts could be established.

The policy required the Officers to consider issues of proportionality and human rights on all occasions where detection was made and where non-restoration would normally be the case. There was no specific mention of requiring the Officer to examine the culpability of the owner or user of the vehicle in the policy provided.

The aims of the policy were to cause significant disruption to fraudsters who engaged in oil frauds and making such frauds unattractive so as to deter others who may become involved in the frauds.

The Respondents had no knowledge as to the reasons for the closure of the Karpol garage. The Appellant's solicitors in a letter dated 19 October 2005 enquired of the Respondents the extent of their investigation into the reasons for the closure. The Respondents did not reply to that letter by the date of the resumed hearing on 11 November 2005.

The Appellant's Evidence

The Appellant was a sole trader and owner of Cowie Transport which he set up in 1982 as a general international haulage firm operating out of his home address. In November 2003 he employed six drivers on a lucrative contract with R J International Haulage who was then the sole customer of Cowie Transport.

Vehicle M553 VWT was allocated to carry a consignment of whiskey from the United Kingdom to Sofia in Bulgaria. Mr Nethercott was the driver of the vehicle which left the United Kingdom on 19 October 2003 and returned to the operating base on 9 November 2003. Mr Nethercott refuelled the vehicle at the Trans International Lorry Park ("TIR") Karpol in Belgium on 22 October 2003 on his outward journey and again on the return journey on 5 November 2003. Mr Nethercott paid 434 euros for 700 litres of diesel fuel at "TIR" Karpol which worked out at 0.62 euros per litre, the market price for diesel at the time.

Vehicle R792 GTL was allocated to deliver a consignment of televisions and other electrical equipment to Italy. Mr Bizco was the driver who departed from Birmingham on 30 October 2003 returning to Cowie Transport on 12 November 2003. On 2 November 2003 Mr Bizco refuelled at "TIR" in Luxembourg where he purchased 1,026 litres of diesel for 657 euros which worked out at 0.60 euro per litre. On the 8 November 2003 on his return journey he refuelled at "TIR" at Karpol in Belgium where he bought 960 litres of diesel for 556 euros, 0.58 euro per litre. Mr Bizco also confirmed the purchase details of the diesel.

The Appellant's drivers preferred to fuel at "TIR" lorry parks because they provided a safe area for them to park their vehicles and to rest and refresh themselves.

The Appellant provided his drivers with a "running sheets document" upon which the drivers recorded the costs incurred on each journey, such as toll charges, taxes and fuel. The driver was required to submit to the Appellant the completed "running sheets" together with signed proof of the delivery document at the end of each journey. The Appellant would then invoice RJ International for the delivery. Mr Nethercott and Mr Bizco completed "running sheets" for the journeys in question. The sheets contained details of the fuel purchases. The Respondents seized the "running sheets" at the same time as the forfeiture of the vehicles.

The drivers were either provided with cash by the Appellant or a cheque from RJ International to pay for the costs incurred on the journeys. The drivers would then cash the cheque.

On 13 November 2003 at 7.30am Customs Officers arrived at the Appellant's premises to test the fuel of the commercial vehicles parked there. The Officers previously that day inspected another of the Appellant's vehicles at the Truck Yard in Padiham. The Officers found nothing untoward in respect of that vehicle. The Officers, however, found traces of "Euromarker" (commonly known as "yellow diesel") in the two commercial vehicles, R792 GTL and M553 VWT which had just returned from the continent. On being informed of the inspection outcome, the Appellant told the Officers that he had taken some fuel from vehicle R792 GTL to refuel his two domestic vehicles V39 GRH (Land Rover Discovery) and B205 RPY (Mercedes 240d). The subsequent test carried out by the Officers confirmed that the fuel in these vehicles contained traces of "Euromarker".

The Appellant knew that it was illegal to use "yellow diesel" in road vehicles. However, he denied knowledge of the existence of the "yellow diesel" in the vehicles in question. As far as the Appellant was concerned his drivers purchased their fuel from recognised garages and there was no reason to suspect that such fuel would contain traces of "yellow diesel". The Appellant subsequently learnt that the petrol station at "TIR" Karpol had been closed down within six months from 13 November 2003 which in his view might provide an explanation for the discovery of "yellow diesel" in his vehicles' fuel tanks.

The Appellant did not consider that he committed an offence by decanting the fuel from his lorry to his two domestic vehicles. He considered that he was simply using diesel that he had already bought. In his opinion his actions were indicative that he knew nothing about the traces of "yellow diesel" in the fuel of his lorries.

The Respondents inspected the Appellant's vehicles on many occasions since 1982 and found nothing wrong. The Appellant was expecting that the outcome of the 13 November 2003 inspection to be no different from the previous inspections. The Appellant had not been in trouble before with HM Revenue and Customs except for an incident involving a new driver who was caught importing cannabis to the value of £4.2 million, whilst driving one of the Appellant's vehicles. The Appellant had been charged and bailed in relation to this matter and the criminal proceedings were still ongoing.

The Appellant owned vehicle M553 VWT for three years and vehicle R792 GTL for less than one year. The Appellant valued them at £8,000 and £9,000 respectively. The Appellant estimated that he lost about £4,000 per commercial vehicle whilst they were in the Respondents' custody which was in addition to the storage charges.

The Jurisdiction of the Tribunal

The Respondents' power regarding restoration of goods which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the Tribunal may direct;

b) to require the Commissioners to conduct, in accordance with the directions of the Tribunal, a further review of the original decision;

c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future".

The precondition to the Tribunal's exercise of one or more of its three powers, namely, that the person making a decision could not reasonably have arrived at it, falls within the guidance given by Lord Lane in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown the Commissioners had acted in a way in which no reasonable panel of commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight". The tribunal might also have to consider whether the commissioners had erred on a point of law".

The leading case on the jurisdiction of the Tribunal in relation to its powers under section 16 of the Finance Act 1994 is the Court of Appeal decision of Balbir Singh Gora and others v The Customs and Excise Commissioners [2003] 3 WLR 160. Lord Justice Pill at paragraphs 55-58 stated that the Tribunal had no jurisdiction to reconsider the condemnation of goods as forfeited. That was a matter for the Magistrates. Thus it was not open to the Tribunal to determine as a question of fact whether the goods were lawfully seized or whether duty has been paid on the goods. However, in paragraphs 37 –39 Lord Justice Pill considered in detail the jurisdiction of the Tribunal. The Commissioners for Customs and Excise conceded that it was proper for the Tribunal to examine the policy adopted by the Commissioners in restoration cases against the principles of proportionality. Further the Commissioners accepted that Appellants in restoration proceedings were entitled to raise the issue of blameworthiness. Counsel for the Commissioners then submitted that

"Strictly speaking it appears that under section 16(4) of the 1994 Act the Tribunal would be limited to considering whether there was sufficient evidence to support the Commissioners' finding of blameworthiness. However, 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".

Lord Justice Pill accepted the Commissioners' view of the jurisdiction of the Tribunal:

"subject to doubting whether, its fact-finding jurisdiction having been accepted, it should be limited even on the "strictly speaking" basis mentioned at the beginning. That difference is not, however, of practical importance because of the concession and statement of practice made by the Commissioners later in the sub paragraph".

Was the Review Decision dated 27 January 2004 Reasonable?

Appellant's Counsel queried the lawfulness of the original seizure of the vehicles because of the contradictory references in the Respondents' documentation to sections 12 and 24A of the Hydrocarbon Oils Duty Act 1979. As the Gora case demonstrated the Tribunal has no jurisdiction to deal with the legality of the seizure, that was a matter for the magistrates' courts in condemnation proceedings. We also noted that the Appellant's previous solicitors, Steele and Son, notified the Respondents on 17 December 2003 that the Appellant was requesting restoration only. The Appellant was not appealing against the seizure.

We are concerned solely with the reasonableness of Mrs Crook's review decision of 27 February 2004. There are two dimensions to the issue of reasonableness as set out in the guidance issued by Lord Lane in the case of JH Corbitt. The first dimension relates to the nature of the decision making, that is giving weight to relevant matters and disregarding irrelevant matters. The second dimension is whether Mrs Crook has applied the law correctly.

We are satisfied on the evidence that Mrs Crook has erred on a point of law, in that she has failed to understand her role as review officer. Her duty was to consider afresh the contested decision to offer restoration of the vehicles on payment of a sum of money. In other words Mrs Crook was required to apply her judgement and discretion to the facts of the conditional restoration and take account of the Appellant's representations. We found that Mrs Crook interpreted her duty as simply validating the quantum of the restoration fee against the sums set out in the Respondents' policy for road vehicles with rebated or marked fuel. Her approach led to the identification of the discrepancy in relation to the "decanting offences" for which she conferred with the Respondents' policy section. The limitations of her approach resulted in Mrs Crook failing to consider relevant factors and questioning aspects of the contested decision.

Thus Mrs Crook did not address the issue of the Appellant's culpability which was critical for deciding the proportionality of the conditional restoration in the context of the aims of the Respondents' policy. Mrs Crook formed the view that the Appellants' culpability was not relevant because he was the owner of the vehicles and, therefore, merited the appropriate fixed penalty for using his vehicles with "marked fuel". Mrs Crook's view was flawed because the issue at stake was the restoration fee which was not a fixed penalty but part of the Respondents' discretionary powers under section 152 of the Customs and Excise Management Act 1979. The fact that the Appellant may not have known about the existence of the marked fuel in his commercial vehicles was a factor that Mrs Crook should have addressed in her consideration. It was also relevant to the Appellant's explanation for decanting fuel from the commercial vehicles into his two domestic vehicles, namely, that he was simply recycling diesel fuel which he owned and paid duty upon. Mrs Crook did not apply her mind to the possibility that the "marked fuel" may have been purchased unknowingly from a legitimate garage. The "running sheets" for each of the seized commercial vehicles indicated that the drivers last bought their fuel in Belgium, which was at a garage called Karpol as elaborated upon by the Appellant in interview.

Respondents' Counsel submitted that the reasonableness of Mrs Crook's decision could not be challenged on the basis that she failed to take account of facts which were unknown to her at the time she made the decision. We do not see the relevance of this submission because the Appellant has consistently pleaded that he was an innocent victim of a fraud, a fact that Mrs Crook was aware of from the Appellant's correspondence received prior to the date of her review.

We are entitled under the Gora decision to make our own findings of fact on the Appellant's blameworthiness. We are reluctant make such findings at this stage because of Mrs Crook's omission to address this issue in her consideration. In our view it is a matter best left to the fresh review conducted by a different Officer which we will be ordering. We also take the view that the new Officer should consider the information regarding the closure of the Karpol garage. When the Appeal was adjourned part heard we directed the Respondents provide in writing their knowledge of the reasons for the closure of Karpol garage. The Respondents responded that they had no knowledge of the reasons, however, they did not reply to the Appellant's solicitors' letter about the extent of their enquiries into this matter. We suggest that the Respondents contact their counterparts in Belgium about the reasons for closure, if this has not already been done. It may be this point which was the subject matter of Respondents' Counsel's submission about unknown facts (see paragraph 43 above). However, we are satisfied on the evidence that the bona fides of the Karpol garage were in question at the time of Mrs Crook's review. We also consider that Mrs Crook was entitled to make further enquiries about this matter as part of her duties as Review Officer.

Our concerns about Mrs Crook's review were not restricted to the Appellant's blameworthiness. We also touched upon Mrs Crook's wrong assumption that she was dealing with civil penalties rather than restoration fees. She stated in her consideration that "the penalties are fixed penalties and the amounts are not discretionary". Respondents' Counsel described Mrs Crook's phrasing as "unfortunate". We consider that this phrasing was not only unfortunate but also exhibited a misunderstanding of the law regarding the discretionary nature of restoration fees. This misunderstanding extended to the storage and removal fees which Mrs Crook considered to be set amounts that could not be altered by her on review.

Mrs Crook's approach of validating the quantum against the set sums in the Respondents' policy meant that she overlooked other aspects of the policy. The policy indicated that seized private vehicles should be offered for immediate restoration subject to payment of the appropriate fee (more commonly known as deliver up). The Respondents limited their offer of immediate conditional restoration to one of the Appellant's private vehicles. Mrs Crook did not explore in her review why deliver up was not offered in respect of the second private vehicle.

The question of proportionality was not addressed in Mrs Crook's review. She was aware of the "Lindsay case" but not that familiar with the Human Rights Act 1998. Mrs Crook expressed her opinion that proportionality was not an issue in this Appeal because the quantum of the restoration fee was significantly less than the value of the vehicles restored. Respondents' Counsel sought to argue that the requirements of proportionality had been satisfied and was in line with the "Lindsay" decision by her statement about the level of fees compared with the vehicles' values. We disagree with Counsel's contention. The striking of a fair balance between the interests of the State and those of the individual (proportionality) depends upon many factors and the behaviour of the owner of the vehicle, not just the value of the forfeited vehicles (see Lindsay v Commissioners of Customs and Excise [2002] EWCA Civ 267 at paragraph 58).

Under Gora we are entitled to examine the proportionality of the Respondents' policy. We hold reservations about the blanket directive in the policy that commercial vehicles with rebated fuel should be removed for storage until certain facts are established, such as the details of the owner and the previous history of the offender. We note that private vehicles should normally be restored on the spot subject to the payment of the appropriate restoration fee. Although the policy stated that proportionality and human rights should always be considered on all occasions, it failed in our view to address the issue of the impact of the removal of the commercial vehicles on the owner's business. In the Appellant's case we heard evidence that he suffered a loss of £4,000 per commercial vehicle, whilst HM Revenue and Customs stored them. It would also appear that at the time the vehicles were removed for storage that the Officers knew that the Appellant was the owner of the vehicles and that he had no previous history of similar "offences". In that case we question why Mrs Crook did not examine the decision to remove the commercial vehicles for storage and the option of offering immediate restoration subject to the payment of the appropriate restoration fee which would have been considerably less than the eventual fee.

We, therefore, find the following facts:

(1) Mrs Crook erred in law about her duties as Review Officer.

(2) Her approach was limited to validating the quantum of the restoration fee against the sums set out in the Respondents' policy for road vehicles with rebated or marked fuel.

(3) Mrs Crook did not consider the issue of the Appellant's blameworthiness.

(4) Mrs Crook wrongly assumed that the restoration fee comprised set amounts which she could not alter, unless the set amount itself was not justified by the policy.

(5) Mrs Crook failed to examine the reasons for not offering conditional restoration on the spot for the second private vehicle.

(6) Mrs Crook displayed limited understanding of proportionality with the consequence that she did not analyse the relevant factors in deciding whether a fair balance was struck between the interests of the state and the interests of the individual.

(7) The proportionality of the Respondents' policy was itself questionable in that all commercial vehicles were to be removed for storage. The policy failed to address the issue of the impact of the removal on the Appellant's business.

(8) No consideration was given to the question of offering immediate conditional restoration of the commercial vehicles which may have been appropriate because it would appear that the ownership of the vehicles and the previous offence history of the Appellant were not disputed.

We are, therefore, satisfied that the Review Officer's decision of 27 February 2004 was unreasonably arrived at within the meaning of section 16(4) of the Finance Act 1994.

Our Decision

In view of our finding that the Respondents' decision of 27 February 2004 was unreasonably arrived at, we allow the Appeal.

Orders

We make the following orders pursuant to our decision to allow the Appeal and in accordance with section 16(4) of the Finance Act 1994:

a. The decision to restore the Appellant's vehicles on payment of a restoration fee shall cease to have effect from the date of release of this decision.

b. The Commissioners shall conduct a further review of the decision to restore the vehicles on payment of the restoration fee and serve the same on both the Appellant and the Tribunal within 30 days of release of this Decision.

c. An Officer not previously involved with the case shall conduct the further review.

d. The further review shall be on the basis of the Tribunal's findings of fact summarised in paragraph 49 of this decision.

e. The Review Officer shall take account of any further material or representations made by the Appellant within 14 days from release of this decision. The representations shall be made to HM Customs and Excise, Review Team, Detection South Region, Crownhill Court, Tailyour road, Crownhill, Plymouth, PL6 5 BZ.

f. The Appellant will have a further right of appeal to the Tribunal if dissatisfied with the outcome of the further review.

We further order that the Respondents pay the costs of the Appellant in connection with the Appeal hearing. The parties are at liberty to apply to the Tribunal to determine the quantum of costs, if no agreement can be reached between them.

MICHAEL TILDESLEY

CHAIRMAN
Release Date: 22 December 2005

MAN/04/8042