United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2006] UKVAT(Excise) E971, [2006] UKVAT(Excise) E00971

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Gollogly Transport v Revenue & Customs [2006] UKVAT(Excise) E00971 (04 July 2006)

E 00971

Excise – Detention and seizure of hydrocarbon fuel oils- Notice served under paragraph 1 of Schedule 3 of the Customs and Excise Management Act 1979- absence of appeal notice within one month- solicitors involved- request for restoration of fuel – refusal of restoration – appeal- operation of deeming provision in paragraph 5 of 1979 Act – whether appellant able on appeal to seek determination on issue of lawfulness of detention and seizure- absence of good reasons for non service of notice of appeal

BELFAST TRIBUNAL CENTRE

GOLLOGLY TRANSPORT Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: ALISTAIR F W DEVLIN (Chairman)

JOHN ADRAIN FCA

Sitting in public in Belfast on 14 November 2005 and on 2 and 3 March 2006

Justin Byrne of counsel, instructed by John P Hagan, solicitors, for the Appellant

James Puzey of counsel, instructed by the solicitor for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

The appeal

This is an appeal by the Appellant Gollogly Transport of Kinelowen Street, Keady, County Armagh against a decision on the part of the Respondent not to restore to the Appellant 75,000 litres of hydrocarbon fuels detained and subsequently seized by the Respondent on 14 September 2000. The appeal is brought pursuant to section 16[1][a] of the Finance Act 1994

The facts

Insofar as they were not in issue between the parties, the undisputed facts of this matter were as follows. The Appellant is a general haulage and transport company owned by four members of the Gollogly family, and operating out of premises at Keady, County Armagh. The events leading up to the detention and seizure of the fuel in question occurred in September 2000, at the time of a fuel crisis in mainland Great Britain. Fuel could be difficult to source, and in some areas there were shortages. In September 2000 the Appellant firm was operating a fleet of approximately 15 vehicles. On 14 September 2000 officers of the Respondent stopped and questioned the drivers of three articulated tanker vehicles at Belfast docks. The driver of the first vehicle told the officers that his vehicle and the two others were carrying diesel fuel, 'derv', which had been loaded in Keady. This driver, a Mr Monaghan produced a dangerous goods note which showed the exporter of the fuel oil to be McGleenan Fuels, and the consignee to be Carlton Fuels Limited by whom Mr Monaghan said he was employed. The note had attached to it an envelope which contained an invoice. The invoice was numbered 12071, but was undated. It had been made out by the Appellant in favour of Carlton Fuels Limited ["Carlton"] of Gores Road, Knowsley Industrial Estate, Liverpool, and contained details of a quantity of 15,000 litres of fuel priced at £0.69 [69 pence] per litre. Mr Monaghan went on to explain to the Respondent's officers that the fuel had been loaded at the Respondent's premises and in his presence. The officers then spoke with the driver of the second vehicle, a Mr Goodwin. This driver explained that the three tankers had arrived in Belfast earlier that day at approximately 0800 hours on the early ferry from Stranraer, that they had been driven to Keady, where two of the vehicles had each been loaded with 30,000 litres of fuel, and the third vehicle with 15,000 litres. Mr Goodwin then produced a dangerous goods note for the 30,000 litres which he said his vehicle was carrying. Once again, on the face of the dangerous goods note the firm of McGleenan Fuels were described as being the fuel exporters. Once again, the note had attached to it an envelope which contained an invoice. This invoice, again undated was numbered 12069, and had been made out by the Appellant in favour of Carlton. In this second invoice the goods passing were described as being 30,000 litres of fuel at a price of 70 pence per litre.

The Respondent's officers issued the three drivers with notices under section 51 of the Customs and Excise Management Act 1979 ['CEMA'], and with notices confirming that the vehicles driven by them were being detained. The vehicles and their loads were detained at approximately 2100 hours on the evening of 14 September 2000.

On the same evening, one of the Respondent's officers received a telephone call from an employee of Carlton, a Mr Paul Williams, the firm's Operations Director. He told the officer that his firm had agreed to purchase 3 lots of 30,000 litres of fuel at a price of 70 pence per litre. He claimed to have dealt with someone called John or Barry. He explained that 70 pence per litre was a good price for this fuel at the time in question, and that the same fuel if sourced in Liverpool would have costs in or about 71 pence or 72 pence per litre. Mr Williams went on to inform the officer that during the course of the day his firm had been told that the delivery would be short, in that the total amount of 90,000 litres previously agreed upon could not be sourced, and that as a result he had asked for a further discount of 1 penny per litre upon the 15,000 litres being supplied short.

Later that same evening one of the Respondent's officers received a telephone call from Mary Gollogly, one of the four partners in the Appellant firm. Mrs Gollogly told the officer that the price at which she had agreed to sell the fuel to Carlton in England was not 70 pence per litre, but was instead 73 pence per litre. She told the officer that she in turn had been purchasing the fuel from McGleenan Fuels ['McGleenans'] at a price of 72 pence per litre. Mary Gollogly went on during the course of that telephone conversation to claim that someone whom she described as the office junior had made a mistake in the preparation of the invoices, and that it was only as a result of this mistake that the invoices had incorrectly specified the sale price of the fuel to be 70 pence per litre.

In a further telephone call to the officer still later that same evening Mr Vian, the Sales Director of Carlton stated that the price which he had agreed with the Appellant firm had been 73 pence per litre.

On the following day, 15 September 2000 an officer of the Respondent made telephone contact with Mr Williams of Carlton who enquired how he could recover the vehicles. Mr Williams explained that the telegraphic transfer of funds for £49,850 as previously issued on behalf of Carlton and in favour of the Appellant, calculated on the basis of 60,000 litres being acquired at 70 pence per litre had now been successfully cancelled by Carlton, and that in the circumstances Carlton were regarding the fuel as belonging to the Appellant. Later on 15 September the Respondent's officer was again contacted by Mrs Gollogly who enquired as to the current situation. The officer informed her that he was still waiting for evidence to be produced to show that duty and VAT had been paid on the fuel. In reply, Mrs Gollogly stated that she could send a fax to that effect immediately. The officer upon asking for original documents was told that there would be no problem in supplying them. Mrs Gollogly replied by telling the officer that the fuel had come from McGleenans, that at that time she had neither a loading nor a delivery docket, but that she could and would obtain them and deliver them in person to the Respondent's local office.

Three days later, on 18 September 2000 Mrs Gollogly duly produced to the officer two invoices from McGleenans, and one from S.A.F.E. Fuels ['Safe']. The details of the two McGleenans invoices were as follows, one was dated 8 September 2000 and specified 30,000 of diesel at 72 pence per litre; the other was dated 12 September 2000 and was also for 30,000 litres at the same price of 72 pence. The officer detained the fuel under section 51 of CEMA and issued Mrs Gollogly with a notice to that effect.

Correspondence then followed in December 2000 between the Respondent and the Appellant's solicitors. Release of the detained was fuel was sought by the Appellant's solicitors, but declined by the Respondent. The Respondent stated that its enquiries were continuing. The Respondent expressed concerns to the effect that on the face of the documentation provided to it, some of the fuel appeared to be being sold on to Carlton at a price which was less than the Appellant had paid for it. The Appellant through its solicitors complained of prevarication, delay and unfair treatment on the part of the Respondent. Ultimately on 4 January 2001 the Respondent issued a notice of seizure in respect of the detained fuel under Schedule 3 of CEMA. No notice of appeal against such seizure was served by the Appellant or its solicitors within the period of one month thereafter. Subsequently, on 20 March 2001 a notice of appeal against seizure of the fuel was finally served by the Appellant's solicitors, and the Appellant's solicitors sought thereafter to have the notice accepted by the Respondent as being valid in spite of the fact that it had been served out of time. No such agreement was forthcoming. The Tribunal was told that the only reason for delay in the serving of a notice of appeal against the seizure of the fuel was as a result of counsel having been briefed on behalf of the Appellant and by reason of the fact that his advices and directions were being awaited.

In late July 2002, after further correspondence, Mr Spence, an officer of the Respondent employed as an anti-smuggling manager, by letter dated 31 July 2002 informed the Appellant that the Respondent had decided not to restore the seized fuel. It was stated that the reason for this decision was by reason of the fact a large commercial quantity of smuggled fuel had been involved, and the fact that the policy of the Respondent was not to offer restoration in these circumstances.

By letter dated 23 August 2002 the Appellant by its solicitors sought review of that decision. In that letter, the grounds for the review were stated as follows:

'1. Despite continuously explaining the reasons for the delay in issuing the Appeal Notice on numerous occasions by correspondence to your office and to the Manager for International Trade, your Department continuously refused to allow my clients to lodge a Notice of Appeal in regard to the forfeiture of the fuel. They have also denied our formal request to restore the goods and our request for an Independent Review to be carried out in this matter. It is our respective [sic] view that Customs and Excise have adopted a highly technical and unfair stance in regard to our clients in this matter.

2. Your officers have a very wide discretion in the care and management of these types of case. I feel that Customs and excise [sic] are seeking to deny my clients a hearing in a Tribunal which is specifically set up to resolve such disputes.

3. I feel that such a denial could be seen as breach of human rights under both Domestic and Community Law and European Convention [sic]. There is no apparent prejudice to HM Customs and Excise in regard to the delay issue.

4. My client was not the only guilty party in the delay of dealing with this matter. Your officers took a period of almost 4 months from which the goods were detained until a Notice of Seizure was issued. During this period, despite several requests and reminders from this office, Customs and Excise never explained the reasons for delay or gave any indication of when they would reach a decision of when my clients would be notified of this decision.'

The Respondent acknowledged the request for a review, and informed the Appellant that it should expect to hear of its outcome by 18 August 2002. By letter dated 30 August 2002 the Respondent asked the Appellant's solicitors to state why specifically they of the Appellant disagreed with the decision not to restore the goods. In reply, by letter dated 16 October 2002 the Appellant's solicitors responded as follows:

'I confirm that my clients require an independent review to be carried out in respect of Mr Spence's decision not to offer restoration of the seized fuel, on the following grounds:-

1. Gollogly Transport sourced the fuel from two separate independent suppliers, McGleenan Fuels and SAFE Fuels, who are both legitimate companies and registered for VAT.

2. My client has furnished invoices to HM Customs to support the source of supply.

3. The seized fuel was purchased legitimately in order to supply a contract in England, Carlton Transport.

4. HM Customs have wrongly penalised and singled out Gollogly Transport who has produced evidence to support supply.

5. Road tests were carried out by HM Customs, which resulted in the seized fuel being declared 'clean' and unlaundered.

6. HM Customs carried out further tests and analysis on the seized fuel, the results of which have been withheld from my client. Please forward results of same to this office forthwith.

7. HM Customs have never requested any further documentation from my client or any further explanation or clarification of the documents already furnished. It must be assumed that all such papers are in order.

8. The vehicles, which carried the seized fuel were not detained by HM Customs and were allowed to proceed to their final destination. This appears to be at variance with normal HM Customs practice.

9. HM Customs have not enforced a penalty on the vehicles carrying the fuel. From experience it is HM Customs practice to seize vehicles and then insist on a penalty being paid in order to have the vehicle released.

10. My clients have never been informed how the fuel has been disposed of. Did HM Customs dispose of the fuel and if so how much did they receive for it.

11. The Notice of seizure does not specify any particular ground for seizure of the fuel.

12. There is no prejudice to HM Customs in accepting the late Notice of Appeal against seizure.

13. HM Customs failure to handle this matter in a proper fashion, to include their lack of co-operation with my client and delay in informing my clients of their proposed course of action'.

By letter dated 31 October 2002 Geraldine Stokes a reviewing officer of the Respondent confirmed that a review of the decision not to restore the goods under section 152[b] of CEMA had been carried out, and that the decision on review was to uphold the original decision not to restore.

On the face of it at least, it is against that decision that the Appellant now appeals to this Tribunal. In the Notice of Appeal to the Tribunal dated 28 November 2002 the Appellant broadly relied upon as grounds of appeal each of the thirteen grounds already set out in the letter dated 16 October 2002 as set out above, with some minor amendments. As an additional ground of appeal the Appellant stated that it firmly believed that all duty had been paid on the fuel

Evidence

On behalf of the Appellant the Tribunal heard evidence from Mrs Mary Gollogly, and also from Mr John Magennis of Safe. The Tribunal also heard evidence from Mr Barry Gollogly, and from Mr Paul Gollogly sons of Mrs Gollogly, and from Mr Frank Gollogly her husband. On behalf of the Respondent, the Tribunal heard evidence from Mr Williams of Carlton, from a Mr Huston a former distribution manager of Maxol Oil Limited, from a Mr Kevin Murray, a senior officer of the Respondent, from Mr David McGarel, a higher officer with the Respondent, and from Mr Terence Spratt and Mr John Spence, also officers of the Respondent.

In his evidence Barry Gollogly explained that up until September 2000 the firm had previously had no involvement in the sale or transportation of fuel. He told the Tribunal that in the midst of a fuel crisis in Great Britain a suggestion had been made to him by a Gollogly Transport driver named Fowler, who had a relative employed in England by Carlton, that due to the shortage of readily obtainable fuel on the mainland there might be a possibility of the Appellant making some money in selling and supplying fuel out of Northern Ireland to Carlton in England. Barry Gollogly said he told Fowler to get someone from Carlton to call them to see if a deal could be arranged.

Mrs Gollogly in turn told the Tribunal that she received a telephone call, from a Mr Paul Vian of Carlton, and that after discussions she had agreed to sell and supply to Carlton a total of 90,000 litres of DERV at a price of 73 pence per litre. She claimed to have been in contact with McGleenans, who had told her that they could supply her with the fuel at 72 pence per litre. The figures would have produced a profit for the Appellant on the sale of £1,057.50. Carlton were to make the necessary arrangements for the fuel to be collected in Northern Ireland by means of three Carlton tankers which would come over on the ferry. The Tribunal was told that Paul Gollogly made the necessary travel arrangements for the vehicles. After the tankers had arrived in Northern Ireland, the Tribunal was told that on the morning of 14 September 2000 Mrs Gollogly was contacted by McGleenans who told her, it was claimed, that they were not going to be in a position to supply more than 60,000 litres that day. Mrs Gollogly phoned Mr Vian and told him of the position; he was unhappy and asked for a discount on the fuel actually being supplied. In an effort to redress the situation, Mrs Gollogly told the Tribunal that she managed to source a further 15,000 litres of fuel from Safe, but only at a price of 74.2 pence per litre. Mr Vian, the Tribunal was told, continued to press for a discount by reason of the continuing shortfall as between what had been agreed to be supplied and what was actually being supplied, whereupon Mrs Gollogly told the Tribunal that she finally agreed to allow Carlton a reduction of one pence per litre in respect of the 15,000 litres being obtained from Safe, making the price of that consignment 72 pence per litre. Mrs Gollogly told the Tribunal that she then instructed her son Barry to draw up the necessary invoices on the basis of 60,000 litres being bought in at 72 pence per litre from McGleenans and sold at 73 pence per litre, and a further 15,000 litres being bought in at 74.2 pence per litre from Safe and sold at 72 pence per litre. Her evidence was that she told her son Barry that the prices were 73 pence per litre and a penny less on the 15,000.

The evidence of Barry Gollogly was that he must have misheard these instructions, because he proceeded to draw up the invoices on the basis of sales of 60,000 litres at 70 pence per litre, and a sale of 15,000 litres at 69 pence per litre. This was described as an administrative error.

The evidence of Mrs Gollogly to the Tribunal was also to the effect that whereas the Safe invoice as signed by Mr Magennis, and as issued in the sum of £13,077.00 had been paid by the Appellant in early December 2000, the two McGleenans invoices as issued by that firm each in the sum of £25,380.00 remained unpaid and outstanding, save for the amount of £3,000 which the Tribunal was told had been paid by the Appellant to McGleenans on 16 August 2002.

Mr Williams of Carlton told the Tribunal that the original negotiations as between Carlton and the Appellant had taken place between Mr Paul Vian of Carlton and Mrs Gollogly. This he claimed had resulted in agreement upon a sale of 90,000 litres at 73 pence per litre. Mr Williams told the Tribunal that having learned of the terms of the deal he then became personally involved, being concerned at the fact that in addition to the price of 73 pence per litre Carlton was going to have to discharge transport costs. His evidence was that he then spoke to Mrs Gollogly personally, and was able to re-negotiate a revised price of 70 pence per litre. That he said was on 13 September, and the lorries were sent over the following day, with their contact to be Barry Gollogly and/or Mary Gollogly. His evidence was that after the vehicles had been stopped and detained, he spoke both with the Respondent's officers and with Mrs Gollogly. His evidence was that Mrs Gollogly had telephoned Mr Vian, that he was present when the conversation took place, that it was irate and concerned the contents of the invoices. Mr Williams told the Tribunal that he took the call over, asked Mary Gollogly what was going on, and asked her to explain what was her problem with the pricing. He denied that Mary Gollogly had told him that she had been working on the basis of an agreed price of 73 pence per litre.

The thrust of the evidence from Mr Huston, and also from Mr Murray and Mr McGarel was directed towards establishing that, as the Respondent contended on the facts as alleged by it, that all of the fuel which the McGleenan had been sourcing and supplying during the relevant period had been secured by McGleenans from an outlet based in Newtownhamilton, County Armagh named NV Oils, and that supplies of fuel had in turn been supplied to NV Oils on foot of bogus and counterfeited Maxol invoices. None of this evidence was accepted by the Appellant. No such evidence or imputation was adduced in respect of the 15,000 litres obtained by the Appellant from Safe. The evidence of Mr Spratt concerned the events of the original interception and detention of the fuel at Belfast on 14 September 2000.

Further evidence was given to the Tribunal by Mr Spence on behalf of the Respondent. His evidence was to the effect that after notice had been served upon the Appellant under paragraph 1 of Schedule 3 of CEMA, and after one month had passed as and from the date of service of such notice without notification to the Respondent of any appeal against seizure, the goods were then regarded by the Respondent as having been illegally imported. He referred to what he described as the deeming provision contained within paragraph 5 of Schedule 3 of CEMA, and told the Tribunal that in such circumstances the Respondent regarded the detained fuel as having been deemed to be smuggled fuel. He told the Tribunal that since it was and always had been the policy of the Respondent never to restore smuggled fuel, there could be no question of any decision being arrived at thereafter by the Respondent to restore the fuel to the Appellant.

The legislative framework

Section 49 of CEMA provides as follows:

'[1] Where-

[a] except as provided by or under the Customs and Excise Acts 1989 any imported goods, being goods chargeable on their importation with customs or excise duty, are, without payment of that duty-

[i] unshipped in any port,

[ii] unloaded from any aircraft in the United Kingdom,

[iii] unloaded from any vehicle in, or otherwise brought across the boundary into, Northern Ireland, or

[iv]…………………

………………..

those goods shall……be liable to forfeiture'

Section 51 of CEMA goes on to provide:

'[1] If goods of any class or description chargeable with duty on their importation from the Republic of Ireland are found in the possession or control of any person ………..in Northern Ireland any officer or any person having by law in Northern Ireland the powers of an officer may require that person to furnish proof that the goods have not been imported from the Republic of Ireland or that the duty chargeable on their importation has been paid.

[2] If proof of any matter is required to be furnished in relation to any goods under subsection [1] above but is not furnished to the satisfaction of the Commissioners, the goods shall, for the purposes of proceedings under the customs and excise Acts, be deemed to have been unlawfully imported from the Republic of Ireland without payment of duty, unless the contrary is proved.'

Section 139[1] of CEMA further provides:

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

Paragraph 1 of Schedule 3 of CEMA provides:

'[1] The Commissioners shall, ………..give notice of the seizure of any thing as liable to forfeiture and of the grounds therefore to any person who to their knowledge was at the time of the seizure the owner or one of the owners thereof.'

Paragraph 3 of Schedule 3 of CEMA further provides:

'Any person claiming that any thing seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise'.

Paragraphs 5 and 6 of Schedule 3 of CEMA go on to provide:

'5. If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, ……….., the thing in question shall be deemed to have been duly condemned as forfeited.

6. Where notice of claim in respect of any thing is duly given in accordance with paragraph 3 and 4 above, the Commissioners shall take proceedings for the condemnation of that thing by the court, and if the court finds that the thing was at the time of seizure liable to forfeiture the court shall condemn it as forfeited.'

Submissions of the parties

Counsel for the Respondent relied strongly upon the fact that there had not been on the part of the Appellant any appeal against seizure within the one month period referred to in paragraph 3 of Schedule 3 as specified above. Mr Puzey argued that there was no power for the Tribunal whether under statute or otherwise for the one month period permitted for the initiation of an appeal against seizure to be extended. He argued that the decision under appeal was correctly to be analysed as being that of Mr Spence, as opposed to that of Ms Stokes, the reviewing officer. In the absence of an appeal against seizure, it was submitted, Mr Spence was correct not to consider the merits or otherwise of the seizure itself.

Mr Puzey for the Respondent further argued that any assertion made by the Appellant in the proceedings to the effect that the detained fuel or any part of it was in reality excise duty paid fuel inevitably amounted to an assertion by the Appellant that the goods had never been properly liable to forfeiture in the first place. Any such assertion it was submitted ought properly to have been dealt with by means of an appeal against seizure. Relying upon Gora –v- Commissioners of Customs and Excise [2003] 3 WLR 160 he submitted that it was not now appropriate in the circumstances for such an issue to be dealt with in the context of the current appeal against the review of a decision on non restoration.

Counsel for the Respondent also relied upon Gascoyne –v- Commissioners of Customs and Excise [2005] 2 WLR 222 as authority for the proposition that whilst the Tribunal could certainly in some circumstances consider an implicit challenge to forfeiture in limited circumstances so as to give effect to Convention rights, but that the Tribunal should only exercise its discretion so to do where the Appellant was in a position to offer to the Tribunal a cogent reason or reasons for the previous failure to appeal against seizure in accordance with the statutory code. Counsel for the Respondent also referred the Tribunal to the decision in Commissioners of Revenue and Customs –v- Smith Case No. CH/2005/APP/017 a case in which Mr Justice Lewison had delivered judgment on 17 November 2005. In that case, it was submitted the Court had held that in a case governed by the deeming provision as contained within paragraph 5 of Schedule 3 of CEMA, the validity of the seizure did not become an issue before the Tribunal on an appeal against a decision not to restore merely because it was relevant to the question as to whether the goods should be restored. What was necessary, it was submitted, was for the Appellant to be able to satisfy the Tribunal that the Appellant had good reasons for not previously having raised the validity of the seizure by way of condemnation proceedings. It was suggested that in the present case, no such good reasons existed. Counsel for the Respondent further submitted that if the Tribunal was minded in these current proceedings to exercise its discretion in favour of the Appellant, and as a result to permit the issue as to the validity or otherwise of the seizure to be considered.

Counsel for the Appellant. Mr Byrne argued that in spite of the late service of the Notice of Appeal against the seizure of the detained fuel outside of the 30 day period provided for in the statutory code, and in spite of the operation of the deeming provision contained within paragraph 5 of Schedule 3 of CEMA, the Appellant was nevertheless entitled to adduce evidence before the Tribunal to the effect that the fuel had duty and VAT paid upon it at the time of its detention, and that, contrary to the assertions of the Respondent, the fuel was not in reality being sold for a price less than the Appellant had paid for it.

Mr Byrne argued that before the Tribunal could arrive at a decision as to whether the decision on the part of the Respondents not to restore the fuel was reasonable or otherwise, the Tribunal had to consider all of the available evidence before it, and that such an exercise would necessarily involve on the part of the Tribunal an examination of such evidence as was relied upon by the Respondents at the time of their original seizure of the fuel, together with such evidence as they subsequently relied upon in refusing to restore it.

Counsel for the Appellant further submitted that the Respondents in their dealings with the Appellant had to adopt a procedure which was capable of ensuring that the Appellant's Convention rights were adequately protected. It was claimed that the procedure adopted in the circumstances of this case had prevented the Appellant from having an opportunity to ventilate its case in open court. Any denial to the Appellant of its rights to challenge the Respondent's assertion that on duty had been paid on the fuel was a denial of the Appellant's Convention rights, and in particular those arising under Article 1 of the First Protocol.

Counsel for the Appellant further submitted that in its decisions the Respondent had failed to consider or properly consider the evidence now relied upon by the Appellant, and that in that regard, the Respondent's decisions had properly to be regarded as being unreasonable and unsustainable.

In addition, both counsel made submissions on the detailed factual evidence placed before the Tribunal in relation to the issue as to whether on the facts and on the basis of the information known now and known to the Respondent's officers at the time of the original detention and seizure, the fuel was ever properly liable to seizure and forfeiture at all, and also in relation to the issue of the lawfulness in the circumstances of the original seizure itself. For the reasons set out below, the Tribunal does not consider it necessary to arrive at finding of facts in relation to these issues.

Issues for the Tribunal

It seems to us that a central issue in this case is going to be the extent to which, if at all, the Tribunal is going to be prepared in these proceedings to open up the issue of the lawfulness or otherwise of the original seizure of the goods, in light of the fact that the Appellant by its own admission, in spite of having had served upon it a notice in accordance with the requirements of Paragraph 1 of Schedule 3 of CEMA thereafter failed to serve notice of any appeal against seizure within the period of one month specified in the notice.

It seems to us that if we decide not to permit the Appellant to open that issue in these proceedings, we must then take the lawfulness of the original seizure to be effectively established and proceed on that basis. If on the other hand, we decide to permit the issue of the lawfulness of the original seizure to be considered in these proceedings, in spite of the fact that the Appellant failed to serve notice of appeal against seizure within the one month period permitted to it to so do, we must then go on to determine additional findings of fact in the matter, above and beyond the undisputed facts already outlined above, so as to enable us to consider, in light of those findings of fact, both the lawfulness of the original seizure, and the reasonableness or otherwise of the decision on the part of the Respondent not to effect restoration of the seized goods.

The Tribunal reminds itself of the approach taken in relation to this issue in Gora –v-Customs and Excise Commissioners [2003] 3 WLR 160. In that case, there had been no notice of appeal against seizure served by or on behalf of the appellant. At first instance, the tribunal accepted that where liability to forfeiture had been determined by a court in condemnation proceedings there was no further room for fact finding by the tribunal, and the tribunal had effectively no jurisdiction. However, the tribunal at first instance also sought to draw a distinction as between those cases in which liability to forfeiture had actually been determined by a court in condemnation proceedings and those cases in which instead no notice of appeal against seizure had ever been served by the appellant, and the goods had simply as a result been deemed to be liable to forfeiture. The tribunal in Gora had observed;

'No finding of fact resulted. A deemed fact is not a real fact. It cannot consequently rank as a consideration relevant to the subsequent decision on restoration until determined by the tribunal or conceded to exist.'

On that basis, in the Gora case, the tribunal went on to determine the question of fact as to whether or not the goods had been properly seized. However, it is to be noted that the Court of Appeal found itself unable to agree with this approach. In particular Pill LJ stated at [57]:

'I do not agree with that conclusion. Jurisdiction to decide whether anything forfeited is to be restored under section 152[b] is with the tribunal. The jurisdiction in condemnation proceedings is, by virtue of Schedule 3, with the courts. If the deeming provision in paragraph 5 of the Schedule operates, the thing in question shall be deemed to have been duly condemned as forfeited.

The effect of the deeming provision is to provide that the thing is to be treated as forfeited. The purpose of the provision is to treat the deemed fact as a fact, and I cannot accept that it can be treated as 'not a real fact'.

While the division of jurisdiction between the courts and the tribunal may arguably be curious, and is probably retained because of the long standing jurisdiction of the courts in proceedings for condemnation, the division is clear and it is not intended that the tribunal should have jurisdiction to reconsider the condemnation of the goods as forfeited.'

This issue was revisited in Gascoyne –v- Customs and Excise Commissioners in which the Court of Appeal had an opportunity to consider the appropriateness of the method of approach adopted by Pill LJ in Gora. The Court of Appeal in Gascoyne did not doubt that certainly so far as domestic law was concerned, the general approach to the interaction as between the jurisdiction of the court in condemnation proceedings and that of the tribunal in a restoration appeal was as described and adopted by Pill LJ in Gora. As Buxton LJ observed at [46] of the judgment:

'So far as domestic law is concerned I would respectfully say that the observations were clearly correct. I do not think it can have been intended that the importer before the tribunal would have a second bite at the cherry of lawfulness, having failed in the condemnation proceedings, or let them go by default'.

Buxton LJ then went on to consider the Convention compatibility of the relevant provisions and procedures. At [49] et sequitur of the judgment he stated:

' I turn to the Convention. The forfeiture process interferes with Mr Gascoyne's rights to his property that are potentially protected by Article 1 of the First Protocol to the Convention. That is made clear in the judgment of this court in Lindsay v Customs and Excise Commissioners [2002] 1 WLR 1766, 1784, para 52, to which I have already referred, in the leading judgment of Lord Phillips MR in that case. That being so, issues of proportionality, and indeed of due process in the arrangements made by this jurisdiction for dealing with issues of forfeiture potentially arise.

As to those, in my view there is no Convention objection to holding that an actual finding in condemnation proceedings binds in a tribunal application, be it binding as to the lawfulness of seizure, or binding as to the underlying facts…………………If the importer has actually been in court, first of all he has had his day in court in front of a judicial body, and secondly, as is well known, Convention jurisprudence permits a proportionate restriction on access to a court, provided the essential rights that are in contest from a Convention point of view are not thereby rendered nugatory……………….'

The Court of Appeal accordingly found no potential infringement of Convention rights to arise in the situation where the importer had previously had an opportunity, as a result no doubt of the timeous lodging of a notice of appeal against seizure and the subsequent initiation of condemnation proceedings, to have his day in court in connection with the condemnation proceedings and to argue unsuccessfully against the lawfulness of the original seizure. However, it then turned its attention in the direction of the deeming provision in the following terms:

'Secondly, however that jurisprudence itself creates a great deal more difficulty in relation to the deeming provisions under paragraph 5 of Schedule 3. One's instincts, if no more, suggest that the extent to which it was held in Gora's case that those provisions necessarily prevent any further consideration of the legality of the seizure was an excessive limitation……………………….

As it seems to me, for an importer to be completely shut out in the only Tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of Schedule 3 does not adequately enable him to assert his Convention rights.

In my view, therefore, in a case where the deeming provisions under paragraph 5 are applied, the tribunal can reopen those issues: though the tribunal will always have very well in mind considerations of, or similar to abuse of process in considering whether such issues should in fact be ventilated before it.

The mere fact that the applicant has not applied to 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'.

These concerns as voiced in the Court of Appeal by Buxton LJ about the Convention compatibility of a mechanistic application of the deeming provision to be found at paragraph 5 of Schedule 3 of CEMA, and its use in all circumstances to prevent an importer from raising before the tribunal on a restoration appeal issues related to the lawfulness or otherwise of the original seizure in circumstances where he could have done but failed so to do in condemnation proceedings were, it seems to us obiter. However, the concerns which Buxton LJ expressed in the passages outlined above were certainly shared by the other two members of the Court, and perhaps all the more so by Carnwath LJ who expressed his concerns in the following terms at [89] of the judgment:

'On the wider issues I have, with respect, rather greater doubts than Buxton LJ about the correctness of some of the observations of this court in Gora's case [2004] QB 93, but I agree that it would be inappropriate for us to go behind those observations. That is not only because it was a recent considered judgment given for guidance but also because I am not convinced that any alternative solution is without its problems. The difficulties arise from the very unsatisfactory mismatch of the two statutory procedures derived from different historical sources. That is something which only the legislature can correct.'

The issue as to in what broad circumstances it might be appropriate for the tribunal in a case where the deeming provision to be found at paragraph 5 of Schedule 3 of CEMA applied, to be prepared in a subsequent appeal by the importer against a decision not to restore seized goods to open up and examine the issue of the lawfulness of the seizure was further revisited in Commissioners of Revenue and Customs –v- Smith, Case No. CH/2005/APP/017. In that case, in seeking to identify those cases in which a tribunal, if faced on a restoration appeal with an importer who was seeking against the background of the deeming provision to nevertheless raise in the restoration appeal the issue of the lawfulness or otherwise of the seizure, Lewison J at paragraph 23 of his judgment referred back to the reference concerning abuse of process which Buxton LJ had raised in the Gascoyne decision:

'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 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'.

Later in his decision, and in particular at paragraph 25 of it, Mr Justice Lewison gave further indicators as to what ought to be the cases in which against the background of a deeming provision, the Tribunal should nevertheless be prepared to permit the issue of the lawfulness of the seizure to be ventilated before it. He suggested that such leave should only be granted where the appellant to the tribunal was able to present a good reason or good reasons for the issue not previously having been raised in condemnation proceedings. At paragraph 25 of his judgment, Mr Justice Lewison stated:

'The validity of the seizure does not become an issue merely because it is relevant to the question whether the goods should be restored. The validity of a seizure will only become an issue if, and only if, the Tribunal is satisfied that the applicant had good reasons for not having raised the matter by way of condemnation proceedings. There must, in my judgment, be a burden on the applicant to satisfy the tribunal that there was a good reason why he did not challenge the forfeiture'.

Decision

Applying the above to the facts and circumstances of the present matter, the Tribunal concludes as follows. In the present case, there was on 4^th January 2001 served upon the Appellant a Notice of Seizure. In that Notice it was specified as follows:

'If you claim that the goods are not liable you must within one month from the date of this notice of seizure give notice of your claim in writing in accordance with paragraphs 3 and 4 of Schedule 3 to the Customs and Excise Management Act 1979.

………………..

If you do not give notice of claim within the said period of one month, or If any requirement of the above mentioned paragraph 4 is not complied with, the goods will be deemed to have been duly condemned as forfeit.

If you given notice of claim in the proper form, the Commissioners will take legal proceedings for the condemnation of the said goods'.

This Notice was sent both to the Appellant and to its solicitors who were already acting for it and in correspondence with the Respondent at that time. The only explanation which the Tribunal has ever received, upon request by it, as to why no notice of appeal against seizure had been served or received until well outside of the one month period expressly specified in the notice was that counsel had been briefed, and that his advices and directions were being awaited. This the Tribunal was told was counsel other than that now instructed in the appeal on behalf of the Appellant. To say the least, the Tribunal finds this purported explanation less than satisfactory. The Tribunal notes from the correspondence placed before it that the Appellant's solicitors have previously stated that counsel was briefed on 12^th January 2001, but the Tribunal has heard nothing as to what instructions or documentation counsel received, nor anything as to the reasons for counsel's alleged delay if indeed delay on counsel's part there actually was. The Tribunal notes that in a letter sent by the Appellant's solicitors to the Respondent on 20^th August 2001, it was claimed that even after counsel's opinion had been received, the solicitors '…had to obtain a copy of the relevant Act in order to draft the Appeal Notice'. We find this also difficult to comprehend or accept. We are not told when counsel's opinion was actually received. Nor do we understand why counsel could not have been instructed in early to mid January 2001 to draft any notice of appeal which might have been considered necessary or appropriate.

In any event, leaving aside the question of the involvement of counsel on behalf of the Appellant, the terms of the notice were in our view perfectly clear, and upon careful reading could easily have been understood not only by the Appellant itself but also by the Appellant's solicitors upon whom the notice had been served, and who were fully engaged in the case on behalf of the Appellant at that time. We also consider the contents of the notice to have sufficiently explained the consequences of default in serving notice of claim against the seizure. Recourse to the provisions of CEMA itself, as expressly referred to in the notice, would we believe have swiftly and relatively easily dispelled any such doubts or uncertainties as may have remained within the mind of the Appellant's solicitors. We can accordingly think of no good reason as to why the Appellant's solicitors could not themselves have given notice of a claim against the seizure within the period of one month as specified in the notice, had it been considered by them or their clients appropriate so to do. In addition, whenever notice of appeal against the seizure was finally served, it was not only served late but substantially late being served as it was on 20^th March 2001 more than six weeks outside of the one month period permitted and specified in the notice itself.

We do not therefore consider that the Appellant has shown any good reason as to why the issue of the lawfulness or otherwise of the original seizure could not have been and indeed was not raised by the Appellant in condemnation proceedings which the Respondent would have issued before a magistrates' court upon receipt of a timeous notice of appeal against seizure.

We therefore do not propose in these proceedings to consider the issue as to the lawfulness of the original detention and seizure of fuel, since we are satisfied that this is an issue which the Appellant not only could have raised but should properly have raised by means of a notice of appeal to be served under paragraph 3 of Schedule 3 of CEMA. This would have led in turn to in condemnation proceedings having been issued, in which this issue could have been raised had the Appellant chosen so to do. To permit the Appellant now to so do would in our view in the circumstances amount to an abuse of process.

On that basis, we consider the deeming provision as contained within paragraph 5 of Schedule 3 of CEMA to operate in such a way as to have deemed the detained fuel automatically and by operation of law to have been duly condemned as forfeit. There is accordingly no need or requirement for the Tribunal to arrive at findings of facts relevant to the issue as to whether the fuel was indeed originally liable at all to seizure and forfeiture, nor to the issue of the lawfulness in the circumstances of the original seizure itself. In light of this, we make no further findings of fact in the matter above and beyond what we have already recorded above as having been the undisputed facts and circumstances of the interception, detention and seizure of the fuel in question. We accept that on the basis of the undisputed facts and circumstances of this case, the effect of the operation of the deeming provision as contained within paragraph 5 of Schedule 3 of CEMA, once the period of one month had passed from the date of service of the paragraph 3 notice upon the Appellant, with no notice of appeal against seizure having been served in response, was to deem the detained fuel to have been duly condemned as forfeit. In light of that, and in light of the Tribunal's decision not to permit the Appellant to reopen this issue as part of these current proceedings, as set out and explained above, we do not consider the Respondent's decision not to restore to the Appellant any of that detained fuel which had been deemed to have been duly condemned as forfeit, as having been anything other than entirely reasonable in all the circumstances.

For the reasons set out above, the appeal will therefore be dismissed. There will be no order as to costs.

ALISTAIR DEVLIN

CHAIRMAN

RELEASED:4 July 2006

LON/02/8349