United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2006/E00955.html
Cite as: [2006] UKVAT(Excise) E955, [2006] UKVAT(Excise) E00955

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P Cullum and R Rudd v Revenue & Customs [2006] UKVAT(Excise) E00955 (16 May 2006)

EO00955

EXCISE DUTY – Tobacco products imported, seized by the Commissioners and deemed to have been duly condemned as forfeited under para. 5, Sch. 3, CEMA – Appellants wishing to argue on an appeal to the Tribunal against the Commissioners' refusal to restore the goods that they had been purchased and imported for their own use – Commissioners objecting to the Tribunal hearing argument on the "own use" issue on the basis of abuse of process in reliance on Gascoyne v Commissioners of Customs and Excise [2005] Ch 215 and Commissioners of Revenue and Customs v Albert Charles Smith (17 November 2005) – Guidance in CRC v Albert Charles Smith followed and no abuse found – argument on the "own use" issue accordingly entertained – found on the evidence that the excise goods had not been imported for the Appellant's own use – appeal dismissed

LONDON TRIBUNAL CENTRE

P CULLUM and R RUDD Appellants

- and -

THE COMMISSIONERS

FOR HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: JOHN WALTERS QC (Chairman)

KEITH DUGDALE FCA

MRS. CAROLINE DE ALBUQUERQUE

Sitting in public in Lowestoft on 31 January 2006

The Appellants appeared in person, Mrs. Cullum leading

Sarabjit Singh, Counsel, instructed by the Solicitor for HM Revenue & Customs, appeared on behalf of the Respondents

© CROWN COPYRIGHT 2006


 


DECISION

1. Mr. Rudd and Mrs. Cullum ("the Appellants") appeal against the decision of the Commissioners on a re-review, dated 24 January 2003, to refuse restoration of excise goods seized from the Appellant as liable to forfeiture under section 139 of the Customs and Excise Management Act 1979 ("CEMA").
2. The Appellants were stopped by Customs Officers at the United Kingdom Control Zone at Coquelles, France on 24 April 2002. They were travelling in a Rover motor car, registration number G967 HNG. They were the only passengers.
3. The excise goods seized from the Appellant were 22 kilograms of hand rolling tobacco, 26,000 cigarettes and 5.3 litres of spirits.
4. By a letter dated 27 April 2002, the Appellants wrote to the Commissioners, Mrs. Cullum apologising for lying to Customs Officers when they were stopped, and asking for the return of the seized excise goods on the basis that they had been bought for the Appellants' own use.
5. The Commissioners (the Post-Seizure Unit) replied to that letter by a letter dated 3 May 2002. The text of the letter was as follows:

"Dear Sir/Madam,

Thank you for your letter received at this office on 30^th April 2002, I take note of the contents.

It is not clear whether or not you wish to lodge a formal appeal against the legality of the seizure under Schedule 3 of the Customs and Excise Management Act 1979.

A claim against forfeiture must be received by us within 1 month of the date of the seizure. If a valid claim is received, the Commissioners are then obliged to institute proceedings for the condemnation of the seized goods. This will involve Court proceedings, normally at Dover Magistrates Court, for which you will receive a summons, this may take as long as six months before the matter is placed before the Courts. Magistrates will decide whether the goods were liable to be seized and also decide on the awarding of costs.

Alternatively, you have the option of requesting the restoration of the seized goods and/or vehicle, a decision in writing will be made whether or not to restore the goods and/or vehicle to you.

Although you may formally appeal against the seizure AND request restoration of the goods and/or vehicle, please be aware that the restoration request will not be considered by Customs and Excise until such time as the Court proceedings have concluded or been withdrawn.

Please could you clarify in writing within 14 days from the date of this letter if you wish to appeal or request restoration.

[There followed three paragraphs relating to vehicle restoration which are not relevant to the appeal. The letter continued:]

Please detach and return the slip below within 14 days in the pre-paid envelope enclosed.

Yours faithfully"

6. The slip invited the Appellants to indicate whether they wished to request restoration of their goods and/or appeal against the legality of the seizure. The format was as follows:

"OPTION 1: I, Penelope Cullum confirm that I would like to request the restoration of my goods and/or vehicle

[There followed a place for signature and date of signing]

OPTION 2: I, Penelope Cullum confirm that I would like to appeal against the legality of the seizure. I am aware that this will involve Court proceedings and may take as long as six months before I receive a Summons to attend Magistrates Court [sic]

[Again, there followed a place for signature and date of signing]

7. Option 1 and Option 2 were repeated in the same format with the name of the second Appellant, Richard Rudd, inserted.
8. The Appellants both deleted the reference to "and/or vehicle" in Option 1 and signed and dated that Option so amended, while crossing out the form of Option 2 and not signing or dating that Option.
9. The Post Seizure Unit (Officer S Bennett) replied in letters dated 20 May 2002 acknowledging the request for restoration of the excise goods, but declining to offer the goods for restoration. The Appellants requested that a review be conducted. Officer Penfold conducted a review and informed the Appellants by letter dated 25 July 2002 that Officer Bennett's decision to refuse restoration was confirmed. The Appellants appealed to this Tribunal against the review decision by a Notice of Appeal dated 5 August 2002.
10. On the application of the Commissioners, this Tribunal directed a re-review which, if adverse, would give rise to a right of appeal. The re-review was conducted by Officer Leavesley, who gave evidence at the hearing of the appeal. He confirmed the decision not to restore the excise goods. His decision letter to the Appellants, dated 24 January 2003, is (as stated above) the subject of the appeal.

The Jurisdiction of this Tribunal

11. Mr. Singh, for the Commissioners, takes the preliminary point that this Tribunal has no jurisdiction to make a finding of fact that the goods were imported for the Appellants' own use, following the decision of the Court of Appeal in Gascoyne v Commissioners of Customs and Excise (2005) Ch 215.
12. He cites in particular the following passage from that Buxton LJ's judgment in that case:

"55. In my view … in a case where the deeming provisions under paragraph 5 [of Schedule 3 to CEMA] are applied, the tribunal can reopen those issues [i.e. the matters that are deemed to have been decided against him because of paragraph 5, viz: the "own use" issue]: 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.

56. 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."

13. Mr. Singh drew our attention to the later case of Commissioners of Revenue and Customs v Albert Charles Smith (17 November 2005, unreported) in which Lewison J commented on the Gascoyne decision as follows:

"20. Just pausing there, what Lord Justice Buxton is saying is not enough is the mere fact that the applicant has not applied to the Commissioners, requiring them to invoke condemnation proceedings. Not enough for what? Well, clearly, in my view, not enough to enable the Tribunal to reopen the question or, indeed, open the question for the first time. There must, therefore, be something more than a failure on the part of the applicant to invoke condemnation proceedings before the Tribunal is empowered to question the legality of the forfeiture.

21.This is borne out by a subsequent passage in Lord Justice Buxton's judgment. He refers to paragraph 66 of the first instance Judge's decision, in which that Judge said that the applicant was able to argue against the validity of a seizure on review under Sections 14 and 15 of the 1994 Act and on an appeal to the tribunal under Section 16. Commenting on that, in paragraph 76 of his judgment, Lord Justice Buxton says this, "What, however, about paragraph 66? In the light of Gora's case, what the Judge says there is not correct, or at least not unequivocally correct. That is because failure to give a paragraph 3 notice will, in most cases, preclude subsequent challenge to the lawfulness of the procedure.

22. It is, in my judgment, clear from that passage that in the run of the mill case where there has been a failure to give a paragraph 3 notice invoking the condemnation proceedings the deeming provision will operate against the applicant in any subsequent appeal to the Tribunal. The Tribunal's function, therefore, is analogous to a sentencing court once a defendant has been convicted. No matter that the defendant still protests his innocence of the charge against him, the function of a sentencing court is to accept mitigation but not to question the original conviction.

23. Lord Justice Buxton's reference to abuse of process or to considerations analogous to abuse of process are, in my view, references to the well-known principle that it may be an abuse of process to raise in one tribunal matters that could and should have been raised in another. So the relevant questions will always be, first, could the applicant have raised the question of lawfulness of forfeiture in other proceedings and, if the answer to that question is yes, why did he not do so? In the light of his reasons for not raising the matter in condemnation proceedings the Tribunal can then answer the question should he have done so and if they answer that question 'yes', then it will be, in most cases, an abuse of process for him to raise the question before the Tribunal."

14. Mr. Singh submits that the Tribunal in this case must accept that the goods were imported for a commercial purpose (that being the basis of the deemed forfeiture) and, in the light of this "deemed fact" (words quoted from paragraph 7 of Mr. Singh's Skeleton Argument) must turn its attention to the proportionality of the decision not to restore the goods. He adds that if the Tribunal decides that it has jurisdiction to consider the "own use" issue, then we should make a formal record that we have considered the question of abuse of process in accordance with paragraph 55 of the decision in Gascoyne and state why we believe there are exceptional circumstances in this case which permit us to consider the issue of "own use".
15. We apply Lewison J's guidance as it appears at paragraph [23] of his judgment in Albert Charles Smith. It appears that the Appellants could indeed have raised the question of lawfulness of forfeiture in other proceedings, viz: condemnation proceedings, and so we consider why they did not do so.
16. The answer to this question is, we think, to be found in the terms in which the choice between condemnation proceedings and a request for restoration of the goods was put to the Appellants in the letters dated 3 May 2002 from the Post Seizure Unit which we have set out above.
17. It is a fair inference from the terms of those letters that the Appellants were being warned that the option ("Option 2") of appealing against the legality of the seizure was discouraged because it was a lengthy and possibly costly procedure involving travel to the Dover Magistrates Court, whereas the option ("Option 1") of requesting restoration of the goods suffered from none of these disadvantages. The Appellants were not told before they made the choice, which the letter dated 3 May 2002 invited them to make within 14 days of the date of the letter, that the "own use" issue – which the earlier correspondence had made clear was the basis of the Appellants' dissatisfaction with the seizure – could only be aired in condemnation proceedings.
18. If they had been made aware of this serious disadvantage in appealing to this Tribunal, there is every reason to expect that they would have elected to appeal against the legality of the seizure.
19. In these circumstances we refer again to Lewison J's guidance and consider whether the Appellants should have raised the matter in condemnation proceedings. We consider they were led by the letter dated 3 May 2002 to elect not to contest the seizure and instead (ultimately) to bring an appeal to this Tribunal. We therefore hold that it would not be an abuse of our process, or any analogous abuse, for them to argue the "own use" issue in this appeal. We therefore reject the Commissioners' preliminary jurisdictional argument.

The "own use" issue

20. Mrs. Cullum and Mr. Rudd both gave oral evidence to the Tribunal, though Mrs. Cullum was the leading witness and spoke for both Appellants. Mr. Rudd confirmed what Mrs. Cullum had said.
21. She said that they were both heavy smokers. They had been to France to buy cigarettes and tobacco in bulk because they were so much cheaper than in England. They intended to get a large amount which would last them some time, as they intended to start a fence-spraying business together, which was likely to leave them little time for trips to France.
22. They had made a journey in January 2002, some three months before the journey which gave rise to the appeal, and had on that occasion been told by Customs Officers that they were allowed to bring in only certain quantities of excise goods. However they had seen notices in France and Belgium to the effect that they could bring in as much as they liked so long as it was for their own use.
23. On 24 April 2002, they had had a terrible argument, but they nonetheless decided to make the bulk purchase of tobacco goods. They had £3000 to spend and after the argument they had decided to separate (which the Tribunal understood as a decision to end their relationship) but they would together get the goods and split them between them on their return home.
24. Mrs. Cullum said she was panic-stricken when they were stopped by Customs officers and she lied in answering questions put by the Officer as to how much in tobacco goods they had brought with them. When the Officer asked her: "What have you bought on this trip?", she answered: "2 boxes of [200] cigarettes and some drink, no tobacco". Also, when asked by the Officer: "Have you been outside of France at all?", she replied "No", when in fact the Appellants had been to Belgium and made the purchases there.
25. The Officer asked to look in the boot of the car and discovered a large quantity of excise goods. Mrs. Cullum admitted to having lied when she said that they had bought 2 boxes of cigarettes.
26. Mr. Rudd had not corrected Mrs. Cullum when she gave false answers to the Officer.
27. Mrs. Cullum, when she admitted lying to the Officer, explained that this was induced by panic, not by the fact that the goods were not being imported for the Appellants' own use. She maintained that they were being imported for the Appellants' own use and that neither she nor Mr. Rudd intended to sell any of the excise goods.
28. She accepted that at their respective declared rates of consumption 26,000 cigarettes would last 76 weeks – quite apart from the hand rolling tobacco – but she explained that when there was a large stock of smoking materials to hand her experience was that she smoked more – and so did Mr. Rudd.
29. Mrs. Cullum acknowledged that she had spent £1800 on the tobacco goods, and Mr. Rudd had spent £1500.
30. Mrs. Cullum's income was £300 a month from the rent of a cottage and a further £100 approximately per week, given to her by Mr. Rudd. Mr. Rudd said his earnings were about £200 a week after he had given £100 to Mrs. Cullum. He had no savings.
31. Mrs. Cullum explained that she expected the fence spraying business to produce funds that would enable her to discharge the £1800 which she had charged to her credit card.
32. When Officer Leavesley gave evidence – he was, as we have said, the Reviewing Officer who was the writer of the decision letter appealed against – he said his decision to refuse restoration was based on four factors. These were (1) that the Officer had been misled at the time of the initial questioning and this undermined the Appellants' credibility generally, (2) that the Appellants had previously (in January 2002) been given a notice explaining to them the minimum indicative levels operated by Customs, (3) that there was such an imbalance between the declared income and savings of the Appellants and the expenditure on tobacco goods that their evidence that they did not intend to sell the goods was not credible; and (4) that the Appellants' declared consumption rates were such that the excise goods would last for so long a period, that their stated intention to smoke them all was not credible.

The Tribunal's conclusion

33. The Tribunal bears in mind that the burden of proof is on the Appellants to show that the tobacco goods were imported for their own use (see: section 16(6) Finance Act 1994.
34. We find that the Appellants have failed to discharge that burden. We are not satisfied that they imported the excise goods for their own use and hold that Officer Leavesley's decision to refuse restoration was reasonable for the reasons he gave. Further, the decision was not disproportionate having regard to the Respondent Commissioners' duty to protect the revenue and avoid damage to legitimate trade in the United Kingdom. There were no exceptional circumstances demonstrated which might have justified the restoration of the goods.
35. The appeal is dismissed.

JOHN WALTERS QC

CHAIRMAN

RELEASED:16 May 2006

LON/2003/8046