United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2006] UKVAT(Excise) E00959, [2006] UKVAT(Excise) E959

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Alan Fagg v Revenue & Customs [2006] UKVAT(Excise) E00959 (01 June 2006)

EO00959

PROCEDURE – No appeal against seizure – Weller considered – Whether Appellant allowed to raise issue of own use before Tribunal

EXCISE DUTY – Appellant had tobacco products within guide-lines – very frequent trips made by Appellant without exceeding guide-lines – Review decision flawed – Held products not for own use – Whether case should be referred back to the Commissioners – Appeal dismissed

LONDON TRIBUNAL CENTRE

ALAN FAGG Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: MISS J C GORT (Chairman)

MISS A WEST FCA

Sitting in public in Plymouth on 7 April 2006

The Appellant appeared in person

Mr David Manknell of Counsel appeared on behalf of the Respondents

© CROWN COPYRIGHT 2006

DECISION

This is an appeal against a decision dated the 18 July 2005 by the Commissioners not to restore 3kg of hand-rolling tobacco and 3,200 cigarettes, seized from Mr Fagg on 13 May 2005.

The Background

On 13 May 2005 the Appellant was stopped by officers of Customs & Excise at the Plymouth Ferry Port in the inward foot passenger hall, having just arrived on the ferry from Santander in Spain.

The Appellant had been interviewed and subsequently had the goods seized. The circumstances of the interview are set out below. The Respondents challenged the Tribunal's jurisdiction to consider the issue of whether the goods were imported for the Appellant's own use in circumstances where the Appellant had elected not to pursue a claim against the legality of the seizure, and hence there had been no condemnation proceedings, and therefore it was decided to hear the issue of jurisdiction as a preliminary matter.

The circumstances of the Appellant's decision not to challenge the legality of the forfeiture in condemnation proceedings were as follows. He had been provided with notice 12A dated October 2004 after he had been stopped. From this he had understood that he could appeal against the seizure by either going to the Magistrates Court or coming to the Tribunal, or he could appeal by following both routes. Paragraph 1.2 of Notice 12A is as follows:

What can I do now?

When you have had something seized by Customs and you either do not accept that we were legally entitled to seize it or you want us to consider returning it.

A) You can appeal against the legality of the seizure by sending us a Notice of Claim, advising us that you do not agree with the seizure in which case we will institute a condemnation hearing in a Magistrates Court. You will then be able to put your case to a magistrate who will decide whether the seizure was legal.

B) You can ask us to consider returning the thing to you – even if you accept the seizure was legal. We only return smuggled excise goods in very exceptional circumstances, but depending on the individual merits of the case, we may be able to offer to return vehicles …

C) You can follow both appeal routes simultaneously i.e. contest the legality of the seizure and ask us to consider returning seized thing(s) in the meantime.

The Appellant decided to take option C and follow both appeal routes. There was considerable correspondence between the Appellant and the Commissioners. By letter dated 15 June 2005 the Commissioners set out a summary of the case as they saw it in relation to the Appellant's challenge to the legality of the seizure. In that letter the writer, Mr G A Wood, stated inter alia that the Commissioners would be contesting the claim that the seizure was unlawful. Towards the end of the letter they stated as follows: "I must inform you that should the court decide that the things should be condemned as liable to forfeiture, HM Revenue & Customs normally ask for a contribution towards costs to be awarded. These are likely to be not less than £1,500." Following receipt of that letter, the Appellant replied by a letter dated 19 June 2005 stating that he could not afford to take the case to court and risk loosing £1,500 in costs. He stated that he would still pursue this appeal to an independent Tribunal.

In the course of the correspondence the Appellant had referred to "my solicitor". When giving evidence before us as to the circumstances of his withdrawing his appeal from the Magistrates Court, and the nature of the advice he had received from his solicitor, we learned that he had at no point formally consulted a solicitor, but had merely discussed the matter of the seizure of the goods with a solicitor whom he met regularly in his local pub of a Friday evening. The only document the solicitor saw was the seizure notice, and he had told the Appellant that he had "never heard of anyone with cigarettes within the guidelines being taken off them." The Appellant told us that he had not asked the solicitor whether he should go to the Tribunal or to the Magistrates Court, and he had made the decision to come to the Tribunal purely on financial grounds. It was clear that he had no understanding of the difference between the two procedures.

On the 20 May 2005 Mr Fagg had written a letter to the Commissioners stating inter alia: "Although I do not look forward to a hearing in a Magistrates Court, if this is the only way that I will get my goods returned to me, then so be it." Mr Fagg has maintained throughout his correspondence and the hearing before us that his reason for contesting both the seizure and the non-restoration was that the goods were for his own use. He said of himself that he was not a clever man but he had read the booklet 12A and believed that he could take either route to achieve the return of his goods. We accepted his evidence that the only reason he dropped the condemnation proceedings in the Magistrates Court was because of the letter of 19 June from the Commissioners stating that they would seek costs which could amount to £1,500. We took account of the fact that his letter dropping the Magistrates Court proceedings followed immediately upon receipt of this letter. By that time he had received documentation from the Tribunal about the appeal procedure in the Tribunal, and in that documentation there was no mention of costs.

We were addressed at length by Mr Manknell, and in particular he submitted that to come to the Tribunal was an abuse of process when there was a procedure available in the Magistrates Court. He submitted that there was no reasonable basis for the Appellant's belief that he could equally challenge the seizure on the grounds that the cigarettes were for his own use in the Tribunal as in the Magistrates Court. He further submitted that the mere fact that the Appellant had been threatened with costs could not by itself be a reason for the Tribunal to allow him to call evidence as to own use, it being an almost universal practice that if you lose a case you pay the costs.

We were referred to the case of Gascoigne v Customs & Excise Commissioners (2005) CH 215 and to the case of The Commissioners of Customs & Excise v David Weller [2006] EWHC 237 (CH). It was submitted that since the case of Gascoigne the procedure had changed and, in default of an Appellant making a decision about which appeal route to take, the matter was to be heard in the Magistrates Court, but in the present case the Appellant had made a conscious decision not to pursue the Magistrates Court route, and therefore he was, barred from raising the issue of the seizure before the Tribunal.

In Weller Mr Justice Evans-Lombe stated at paragraph 16, after having referred to the approach of Mr Justice Lewison in Gascoigne, "… whether or not an importer, having suffered a deemed forfeiture under paragraph 5 of Schedule 3, is able to raise the validity of the forfeiture on a review by the Commissioners and on appeal from them to the Tribunal, depends on two questions, first, did the importer have a realistic opportunity to invoke the condemnation procedure and, secondly, if he did, are these nonetheless reasons, disclosed by the facts of the case, which should persuade the Commissioners or the Tribunal to permit him to reopen the question of the validity of the original seizure on an application for the return of the goods."

In the present case Mr Fagg undoubtedly had an opportunity to invoke the condemnation procedure. We accept that the notice 12A makes quite clear to any lawyer what the difference is between the two procedures available. However, Mr Fagg is not a lawyer, he did not take his documents to a lawyer, and his intention had been to pursue both the condemnation route as well as the Tribunal route. It was only when he received what he regarded as a bullying attempt by the Commissioners to deter him from going to the Magistrates Court, namely the letter referring to the possibility of their seeking £1500 in costs, that he, quite understandably, decided to pursue only the Tribunal route. The goods which had been seized from Mr Fagg had cost him approximately £330. We do not consider that he could reasonably be expected to risk losing £1500 in pursuit of goods which had cost him £330, particularly where he believed that there was an alternative procedure available to him where he would not be expecting to pay any costs. In this regard we note that once he had rejected the Magistrates Court route, on two occasions the Commissioners wrote to him stating that the Commissioners reserved the right to recover their costs if they were successful before the Tribunal. These letters are dated 17 August 2005 and the 25 August 2005. In my experience of these cases in the Tribunal it is absolutely exceptional for the Commissioners to seek to recover their costs, and any such costs where they have been sought have never been remotely of the order of £1500. I also note that in the letter of 17 August 2005, for the first time, the Appellant is advised to seek legal advice.

Mr Manknell referred us to a letter dated the 1 June 2005 from the officer who originally considered the request for restoration of the goods. He said inter alia:

"In considering restoration I have looked at all of the circumstances surrounding the seizure but I do not consider the legality or the correctness of the seizure itself. If you have contested the legality or correctness of the seizure – and that includes any claim that intra–EU purchases of excise goods are for own use – your appeal will be heard in a Magistrates Court in due course as explained in Customs notice 12A given to you at the time of the seizure."

Whilst we accept that this passage makes the position clear to a lawyer, what the letter does not do is make clear that a claim for own use may not be made in the Tribunal. There is a passage headed "Customs policy for restoration of excise goods," which states that the general policy ".. is that excise goods seized because of an attempt to evade payment of duty should not normally be restored but each case is examined on its merits to determine whether or not restoration may be offered exceptionally." Nowhere does the letter set out what might be considered exceptional circumstances, and there is simply a bald statement from the officer that he concludes that in the present case there are no exceptional circumstances justifying a departure from the Commissioners' policy. He has not set out any of the circumstances, and makes no reference to the fact that the goods which Mr Fagg had on him were within the Commissioners guidelines, and therefore there were no self evident attempt to evade duty. In such circumstances we consider it reasonable for Mr Fagg to have opted to pursue the Tribunal route, and to have failed properly to understand that he would no longer be able to challenge the issue of own use before the Tribunal. In all the circumstances therefore we allowed Mr Fagg to raise before us the issue of whether or not the cigarettes had been purchased for a commercial purpose which, in effect, amounted to a challenge to the validity of the forfeiture.

The Legislation

Article 8 of Council Directive 92/12/EEC states:

"As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the Member State in which they are acquired."

Article 9(1) of Council Directive 92/12/EEC provides that:

"Without prejudice to Articles 6, 7 and 8, excise duty shall become chargeable where products for consumption in a Member State are held for commercial purpose in another Member State. In this case, the duty shall be due in the Member State in whose territory the products are and shall become chargeable to the holder of the products."

Article 92(2) of Council Directive 92/12/EEC states that:

"To establish that the products referred to in Article 8 are intended for commercial purposes, Member States must take account, inter alia, of the following:

- the commercial status of the holder of the products and his reasons for holding them,

- the place where the products are located or, if appropriate, the mode of transport used,

- any document relating to the products,

- the nature of the products,

- the quantity of the products.

For the purposes of applying the content of the fifth indent of the first subparagraph, Member States may lay down guide levels, solely as a form of evidence. These guide levels may not be lower than:

(a) Tobacco products

cigarettes 800 items

cigarillos (cigars weighing not more than 3 g each) 400 items

cigars 200 items

smoking tobacco 1,0 kg"

Regulation 12 of the Tobacco Products Regulations 2002 provide that:

"(1A) In the case of excise goods acquired by a person in another member state for his own use and transported by him to the United Kingdom, the excise duty point is the time when those goods are held or used for a commercial purpose by any person.

(1B) For the purposes of paragraph (1A) above-

(b) "own use" includes use as a personal gift,

(c) if the goods in question are –(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or (ii) the person holding them intends to make such a transfer, those goods are to be regarded as being held for a commercial purpose.

(d) if the goods are not duty and tax paid in the member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those goods are to be regarded as being held for a commercial purpose.

(e) without prejudice to sub-paragraphs (c) and (d) above, in determining whether excise goods are held or used for a commercial purpose by any person regard shall be taken of-

(i) that person's reasons for having possession or control of those goods,

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(iii) that person's conduct, including his intended use of those goods or any refusal to disclose his intended use of those goods,

(iv) the location of those goods,

(v) the mode of transport used to convey those goods,

(vi) any document or other information whatsoever relating to those goods,

(vii) the nature of those goods including the nature and condition of any package or container,

(viii) the quantity of those goods, and in particular, whether the quantity exceeds any of the following quantities-

3,200 cigarettes,

400 cigarillos (cigars weighing no more than 3 grammes each),

200 cigars,

3 kilogrammes of any other tobacco products,

(ix) whether that person personally financed the purchase of those goods,

(x) any other circumstance that appears to relevant."

Regulation 16 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 provides that:

" Excise goods, in respect of which duty has not been paid, shall be liable to forfeiture where a breach of regulation 6 above or any other regulation contained in part IV, V, or VI of these Regulations, or of any condition or restriction imposed by or under such a regulation, relates to those excise goods."

Section 49(1) of the Customs and Excise Management Act 1979 ("CEMA") states:

"Where-

a) except as provided by or under the Customs and Excise Acts 1979, any imported goods, being chargeable on their importation with customs or excise duty, are, without payment of that duty-

(i) unshipped in any port,

those goods shall … be liable to forfeiture.

Section 139(1) of CEMA provides that:

"Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard."

Section 152 of CEMA establishes that:

"The Commissioners may, as they see fit-

… (b) restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under the Customs and Excise Acts."

Finally, section 15(1) of the Finance Act 1994 provides that:

"Where the Commissioners are required in accordance with this Chapter to review any decision, it shall be their duty to do so and they may, on that review, either-

(a) confirm the decision; or

(b) withdraw or vary the decision and take such further steps (if any) in consequence of the withdrawal or variation as they may consider appropriate."

The Evidence

A trial bundle was produced and we heard oral evidence from Mr Fagg and from Mr Raymond Brenton, the Reviewing Officer.

The Facts

Mr Fagg lived in Plymouth and at some point in early 2005 he saw an offer in his local newspaper for daytrips from Plymouth to Santander in Spain at a cost of £53. He decided to take advantage of this offer and made some five trips in all. It was on the fifth occasion that he was stopped by Customs & Excise and found to be in possession of the 3kg of hand-rolling tobacco and 3,200 cigarettes which were seized from him on the 13 May.

Mr Fagg has worked for most of his life, but latterly has been unable to work and receives disability allowance. Part of the effect of his disability is that he has problems with his hands and has some difficulty in hand-rolling cigarettes. He therefore smokes cigarettes when he is out, but uses hand-rolling tobacco when he is at home. At the time of the hearing he had a 40 a day smoking habit, but this was reduced from an earlier habit of some 60 to 80 cigarettes a day which he was smoking at the time of the seizure.

The living allowance which Mr Fagg gets is £100 a week, his rent is paid and also his council tax. He has a credit card which allows him to draw up to £12,000. He lives with his ex-wife who looks after him in the same house. They share the cost of the rent and the food and alcohol. She herself does not smoke. At the time of the seizure Mr Fagg had savings amounting to about £2,000, which has subsequently been spent, mainly on tobacco, since he no longer takes trips specifically to purchase tobacco as he used to. His daughter would occasionally help him out financially.

In the course of his evidence Mr Fagg was very uncertain as to the amount of purchases he had made on his various trips. From Customs' records it appeared that he made the following journeys between 2002 and 2003:

i 29 March 2002 Spanish trip, stopped with 1.8kg of tobacco and 1,000 cigarettes. (At this time Customs guidelines were that if a passenger had over 1kg of hand-rolling tobacco and 800 cigarettes, it should be investigated whether or not they were for personal use only.) Allowed to proceed.

ii On the 28 March 2003 again on a trip to Spain he was stopped with 2½kg of tobacco and 1600 cigarettes and allowed to proceed. By this time the guidelines had been increased to 3kg of hand-rolling tobacco and 3,200 cigarettes.

iii On 11 April 2003 again after a ferry trip to Spain he was stopped with 3,200 cigarettes and on that occasion informed the officer that he was travelling to Minorca in May. Allowed to proceed.

iv On 24 October 2003 returning on the ferry from Spain he was stopped with 3kg of tobacco and 2,800 cigarettes and allowed to proceed.

In 2005 Mr Fagg went to Malta for a five week holiday in January which was paid for by his daughter and he claims to have returned with 10 cartons of cigarettes at a cost of £28 per carton, making some 2,000 cigarettes. He made the first of his 'special offer' ferry trips to Santander at the beginning of March, and although his evidence was very unclear, it appeared that on that occasion, which he described as a "fact-finding" trip, he was unable to buy hand-rolling tobacco on the ferry because they would not take his credit card. He had therefore only bought cigarettes on the Spanish mainland, but we were not told how many. He made a second journey to Santander a couple of weeks later, and believed that he returned with 10 cartons of cigarettes and 2kg of hand-rolling tobacco. However, when pressed about the quantities he had purchased, the only thing he could be certain of was that he had not exceeded the guidelines on any one trip. He had subsequently made a third and fourth journey to Santander.

On 1 May 2005 Mr Fagg and his wife had flown to Cyprus for a week's holiday. At some point his wife had developed an ear infection and was unable to fly back on the appointed date of 9 May. Mr Fagg had flown back by himself as not only had he been unable to obtain warfarin out there which he needed to take daily, but also he could not afford to rearrange his flight. He had had to leave behind all the money that he had taken with him for his ex-wife, and therefore on that occasion was unable to buy any cigarettes or tobacco to bring back with him, although he had, when out there, purchased 200 cigarettes which he left behind with his ex-wife. Mr Fagg was uninsured and this was the reason why he had returned, rather than remaining with his ex-wife.

With regard to the trip to Malta, not only had Mr Fagg's daughter paid for the 5 week holiday, but his other daughter had given him some £300 to £400 spending money. His ex-wife had paid for the trip to Cyprus, and Mr Fagg had made a contribution. The money for purchasing the cigarettes and tobacco, apart from the first occasion, came from an unusual method of saving Mr Fagg had adopted. His practice was that on each occasion that he took a packet of cigarettes from the stock that he had purchased abroad, he would put £3 into a tin. This was to represent the difference between the UK price and the Spanish price. Before he went abroad he would take this money down to the pub and change it into notes. He would draw any further money that he needed using his credit card. He would purchase hand-rolling tobacco on the boat with his UK currency, and in Spain he would purchase euros using his credit card with which he would purchase the cigarettes. He would also on occasion, use English notes to buy in Spain, but he felt the exchange rate was not very favourable doing it that way. He was able to purchase five packets of cigarettes in Spain for the price of one packet in the United Kingdom.

The trip on the 13 May had been a last-minute decision and was undertaken at the instigation of a friend whom he had encountered in the pub the night before. Because Mr Fagg had not pre-booked the ferry, on that occasion it cost him £99 rather than the £53 under the special offer. It was his evidence that because of the extra cost of the ferry, he had thought it sensible to purchase the maximum allowance of cigarettes and hand-rolling tobacco in order that his saving might be the greater.

We find Mr Fagg's evidence as to the cost of his trips somewhat confusing. In a letter dated 20 May 2005 he wrote to Customs & Excise stating that he had obtained six vouchers for the ferry, and that, prior to travelling on the 11 May he had travelled to Spain on four previous occasions, once with his ex-wife, once with a friend and on two occasions by himself. On the occasions when he had travelled with his ex-wife and his friend the trips had cost £53 each, it therefore appears that Mr Fagg had used up all his vouchers before the 11 May. Indeed in that same letter he states that on two other occasions he had travelled alone and those trips had cost him £73 on each occasion. In the bundle there is a letter dated 13 May 2005 from Brittany Ferries stating that they regretted the problems that Mr Fagg had had when attempting to make a reservation with his credit card, and that, in appreciation of his frequent use of their service, they were enclosing a voucher of £26 which represented the difference between the offer price and that which he had paid. It therefore appears that the offer price was in fact £73, because if you add £26 to £73 you then arrive at the £99 which Mr Fagg had apparently paid on the last occasion.

In Mr Fagg's letter of 20 May 2005 he stated that it was not true that on each of his visits he had brought back goods to the same amount as the guidelines. In his evidence to us, he was quite unable to say how much he had brought back on each occasion, which is perhaps understandable, but was adamant that he had no occasion exceeded the guidelines. In a letter dated 27 June 2005 Mr Fagg set out that to purchase two packs of cigarettes every day in the United Kingdom at £4.10 per pack would cost him £229.60 for a 28 day supply. He compared this to the £53 for the ferry trip and 56 packs of cigarettes at £1.10 each, which was the cost in Spain, made a saving of £115.

Mr Fagg's calculations are therefore based on his smoking 40 cigarettes a day, which in his evidence to the Tribunal is the amount he said he now smoked having reduced his consumption since the seizure. At no stage does he make any comparable calculations with regard to the hand-rolling tobacco. He claimed to obtain some 80 cigarettes from a packet of hand-rolling tobacco, but also said that he had difficulty in rolling cigarettes, but nonetheless did not have a machine for doing so.

In a letter dated the 5 July 2005 Mr Fagg stated that he had never been told that by travelling frequently he could jeopardise his supply of tobacco. He believed he could travel and purchase goods in EU countries as often as he wished. In the same letter he said that he had only been stopped once, and on that occasion with goods that were within Customs' guidelines. He considered a warning would have been appropriate. However, as set out above, it is clear that Mr Fagg has been stopped on several occasions, and he did not on each occasion have goods within the guideline limit: on the occasion when he was stopped in 2002 he had 1.8kg of hand-rolling tobacco at a time when 1kg was the guideline amount.

On the 13 May Mr Fagg told the interviewing officer that the purpose of his trip was to see friends and to buy some cigarettes. He said that in addition to some 50 cigarettes a day that he smoked when he was out, he also consumed about 1½ pouches of tobacco each week. He expected the goods he had with him on that occasion to last a couple of months at least. He also stated that he had "a little bit" of sickness benefit, but not a lot as his wife worked. He obtained some £62 to £70 per week. His wife received about £900 a month after tax. His half of the rent was paid directly, and he did not pay council tax. His wife worked at Sainsburys and obtained groceries cheaply, he therefore spent only about £10 a week on groceries.

He told the officer that his last visit to Santander had been about four weeks previously, when he did not buy any tobacco but had brought five cartons of cigarettes. Prior to that he had travelled a couple of weeks earlier and he did not bring anything back with him as his credit card would not be taken. He had managed to buy 200 Mayfair cigarettes on the boat, but only had 60 left when he came back. He initially claimed to have travelled to Santander four times since the beginning of March, including the present occasion. It was subsequently put to him that Customs' records showed that he had made five trips since the end of March, and Mr Fagg accepted that that could be right. He also told the officer that on previous occasions he had brought back far less than his "allowance", and on one occasion he had not brought back anything.

On the 18 May Mr Fagg wrote a letter to Customs complaining about the conduct of the officers. This letter was passed to Customs' complaints team. The complaint chiefly concerned the fact that Mr Fagg had slipped whilst leaving the terminal in full view of at least two Customs officers, who had not made any attempt to help him but had laughed and walked away. By a letter dated 20 June 2005 Customs responded to the letter of complaint, rejecting the allegation and stating that there were port security staff present at the exit of the arrival hall, and the officers on duty had confirmed that they did not witness him falling over. Mr Fagg responded to this letter stating that he had received the letter and he accepted the results of the investigation into the allegations he had made. He continued: "I am not a lover of HM Customs & Excise but they do have a hard job and I might have overacted to what I believed at the time was harassment."

In conducting his review Mr Brenton had looked at all the lengthy correspondence in this case and all the relevant documents. It was his opinion that there were no exceptional circumstances in the case which would result in his deciding to restore the goods to Mr Fagg under the Commissioners' policy. Apart from the absence of exceptional circumstances, which was clearly the main basis for Mr Brenton's decision, he also took account of a complaint which Mr Fagg had made with regard to the interviewing officer laughing and saying it was Friday the 13^th, and he was seizing Mr Fagg's goods, as well as the incident when Mr Fagg slipped and cracked four ribs. Mr Brenton described these matters as "very serious allegations". He continued in his review letter: "After lengthy and time-consuming investigations by Customs you eventually admitted to fabricating deliberate, wilful and facetious allegations against Customs officers carrying out their duties." Mr Brenton then referred to a Tribunal case in which the chairman said: "The Appellant, having been caught out on this easily-verifiable point, the Commissioners understandably did not believe the rest of the answers." Mr Brenton then stated that he regarded that statement as being "wholly applicable" in Mr Fagg's case "in that you made serious allegations about your treatment and the behaviour of the Officers, which were established and eventually admitted by you to be totally untrue". We find it astonishing that Mr Brenton should regard the allegations as very serious, and more particularly that he should consider Mr Fagg's withdrawal of his complaint in the way he did as being an admission that he had fabricated "deliberate, wilful and facetious" allegations. We do not consider that Mr Fagg's complaint against Customs should have been a matter taken into account by Mr Brenton when considering whether or not to restore the goods.

Mr Brenton concluded that Mr Fagg's initial answer to the officer that on two previous trips to Santander he had brought back "about the same as this time. I never brought back more than I'm allowed" as being evidence that on each of his trips he had brought back 3kg of tobacco and 3,200 cigarettes. He also considered that his subsequent statements in the interview that on one occasion he had brought back "not a lot, no tobacco and I think 5 cartons of cigarettes", and on another trip he had made a couple of weeks earlier he had not brought back anything as they would not take his card, were untrue. Mr Brenton believed that Mr Fagg had changed his story in realisation that he had initially declared an importation of approximately 9kg of tobacco and 9,600 cigarettes in six weeks, which would far exceed his declared consumption rate, and would confirm that the goods were being imported for a commercial purpose.

Mr Brenton did not believe Mr Fagg's account of leaving his wife in Cyprus in hospital, and of having no insurance to cover the resulting medical bill. Mr Fagg had not said he had no insurance to cover the resulting bill, he said he had no insurance, which is perfectly compatible with his wife having insurance to cover the medical bill, but he himself having no insurance to fund a longer stay and return journey at a later date. Mr Brenton doubted the fact that Mr Fagg had been unable to obtain warfarin in Cyprus, and emphasised the fact that Mr Fagg had travelled the day after his return to Spain on a "mini cruise" spending over £300 on tobacco goods and £99 on the ticket.

The Appellant's case

Mr Fagg's case was that he had on each and every occasion when he had travelled abroad he had only come back with tobacco products which were within the guidelines, and which were intended exclusively for his own use.

The Respondents' case

The Respondents' case was that Mr Fagg had been less than forthcoming during his interview, in particular with regard to the number of trips he had made, the purpose of his trip had been to "see friends" and Mr Fagg had not given any indication of the number of times that he had travelled abroad before and purchased cigarettes. Mr Macknell also pointed to the inconsistencies in his evidence as to when he had travelled, what he had brought and how he had paid for it.

In addition it was submitted that Mr Fagg had brought far in excess of his stated consumption rate of some 60 cigarettes per day. It was pointed out that he was obtaining 80 cigarettes from a pouch of tobacco and therefore there would be 4,800 cigarettes in 3kg of hand-rolling tobacco, combined with the 3,200 cigarettes he had purchased that made a total of 8,000 cigarettes. Mr Manknell calculated that Mr Fagg would have available 265 cigarettes each day.

It was suggested on behalf of the Respondents that it was a coincidence that Mr Fagg had on him the absolute maximum amount within the guidelines on the one occasion when he was stopped, whereas previously he claimed to have had less than that amount.

It was accepted that Mr Fagg had given a more understandable account to the Tribunal than he had at the time of his interview, however it was submitted that Mr Brenton was entitled to be sceptical about Mr Fagg's truthfulness. It was the Respondents' principal submission that the Tribunal could not consider the issue of whether the goods were imported for the Appellant's own use, and must accept that the goods were imported for a commercial purpose and, in light of this deemed fact, turn its attention to the proportionality of the decision not to restore the goods. The only issue for the Tribunal to determine was reasonableness of the Respondents decision to refuse to offer the goods for restoration.

It was further submitted that the decision to refuse to offer the goods for restoration was proportionate, and the Respondent relied on the following:

a The goods were dutiable and the Appellant had failed to pay duty or guarantee payment of duty on the goods in advance, as commercial importers of goods are required to do.

b The supply of such goods on the UK market would damage legitimate trade and the revenue.

c Once it was established that the Appellant was in breach of the statutory requirements, there had to be some penalty for this breach, as otherwise the statutory requirements would be rendered meaningless and inoperable.

d If the Respondents' policy were to offer seized excise goods for restoration upon payment of the outstanding duty, the deterrent to prevent breaches of the statutory requirement would be weak, and the penalty for breaches would be minimal and non-effective. Travellers would be encouraged to purchase goods to be sold at cost or for profit and, if caught, would only have to pay the duty they should have paid in any event. This would inevitably increase the likelihood that the interests of legitimate trade and the protection of revenue would be damaged.

e There were no exceptional circumstances in the Appellant's case which justified restoration of their goods.

f The decision struck a fair balance between ensuring compliance with UK Revenue law and protecting revenue on the one hand, and the right to enjoyment of property under Article 1 of Protocol 1 of the European Convention on Human Rights on the other.

Decision

Mr Fagg was clearly under the misapprehension that, whist he was entitled to travel as often as he liked, he was entitled without question, to bring back on each and every occasion cigarettes and hand-rolling tobacco up to the amounts stipulated in the guidelines of 3,200 cigarettes and 3kg of hand-rolling tobacco. Although he was aware that any tobacco purchases had to be for his own use, he seemed to be of the opinion that any amount under the guidelines would automatically be deemed to be for his own use. This is not, in fact, the case. If, for example, a non-smoker were to bring back only 200 cigarettes with the intention of selling them, then Customs would be entitled to seize them, although they might have difficulty in proving that such a small quantity was not for the purchaser's own use.

This case has presented the Tribunal with a difficulty: whilst we find that Mr Brenton took into account matters which he should not have done (see above), we do not accept that the hand rolling tobacco brought back by Mr Fagg was for his own use. This raised the interesting question that, if we had not accepted jurisdiction of the issue of whether or not the tobacco products were for Mr Fagg's own use, would we have been bound to refer the case back to the Commissioners? If one looks at the very great frequency of his journeys to Santander, and takes account of all the tobacco purchases he had made over the previous months, it is not credible that the supplies he brought in on the 13 May would have lasted him only for a matter of two months. Even ignoring his previous purchases, for the supply to have lasted only two months he would have been smoking at the rate of 133 cigarettes per day. Whilst there was no direct evidence that Mr Fagg was selling on tobacco or cigarettes, it was a reasonable inference, given the amount of his stated consumption and the amount of his purchases. There was no evidence before us that any part of Mr Fagg's purchases were for gifts to others.

Mr Fagg, whilst clearly an angry and aggrieved man, who believed he had done nothing wrong, was a very unreliable witness. Whilst it is not always possible to remember exactly what one has purchased on which occasion, particularly if one travels as frequently as Mr Fagg did at the time, it would nonetheless have been possible for him to have obtained his credit card statements which, presumably, would have shown his expenditure on hand-rolling tobacco abroad for the relevant period. We find it quite extraordinary that he told the interviewing officer that he only got £62 to £70 a week in sickness benefit, whereas before us he said it was in fact £100. Also, we accept Mr Brenton's conclusion that there was some deliberate prevarication to the officer about the number of trips he had made previously.

We are not convinced that Mr Fagg smokes the hand-rolling tobacco, as he claimed. His evidence to the Tribunal was that, at the time he smoked 50-60 cigarettes per day, and in correspondence, that he smoked 40 cigarettes a day. He told us that he had difficulty with his hands and therefore could not make roll up cigarettes. When asked if he used a machine easily, he told us that he was not able to use a machine, and this was why he only smoked roll ups at home, and smoked cigarettes when he was out. He told us that he obtained some 80 roll-ups from one pouch of hand-rolling tobacco: this seems to us to be a very large number when he has admitted to being clumsy and incompetent at rolling cigarettes himself.

We do not consider that it was appropriate for Mr Brenton to place such an enormous emphasis on the complaint made by Mr Fagg about being mocked by the Customs officers. The alleged event occurred after the interview, and after the tobacco and cigarettes had been seized, and the fact of the complaint seems to us to be entirely irrelevant. Similarly we do not accept Mr Brenton's conclusion that Mr Fagg had brought back 3kg of tobacco and 3,200 cigarettes on each of his previous trips simply from his statement that he never brought back more than he was allowed. It is, of course, a fact that Mr Fagg would be entitled to bring in as much tobacco as he liked, provided that it was all for own use. The extent of our jurisdiction is limited to referring the matter back to the Commissioners for reconsideration by a different reviewing officer. Whilst we find that Mr Brenton's review is flawed, we do not consider that it would be appropriate to refer the matter back in the light of our finding that the tobacco purchases were not for the Appellant's own use. In the circumstances the appeal is dismissed.

No order for costs.

J C GORT

CHAIRMAN

RELEASED: 1 June 2006

LON/05/8086