United Kingdom VAT & Duties Tribunals (Excise) Decisions
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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2006/E00991.html
Cite as: [2006] UKVAT(Excise) E00991, [2006] UKVAT(Excise) E991
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- This is an appeal against a decision of the Respondents dated 2 December 2004 to uphold a decision not to restore 5,000 cigarettes to the Appellant.
- On 21 September 2004 the Appellant, who was then aged 16, disembarked from the Port Aven returning from Spain at Plymouth ferry port. She was stopped by the Commissioners' officers together with two of her travelling companions: Sandra Murray (her mother) and Pamela Richards. Following an interview with the Commissioners' officers, the 5,000 cigarettes she was carrying were seized.
- Following the seizure the appellant was given a copy of Public Notice 12A produced by the Respondents. This notice explained that two courses of action were open to the Appellant if she wished to recover her goods. The first was to require the Respondents to institute condemnation proceedings in the magistrates court in which the question of whether or not the cigarettes were liable to forfeiture could be determined. A central issue of such proceedings would be whether the cigarettes were for the Appellant's Own Use (we set out the particular meaning we accord to that term in paragraph 92 below). The second was to apply to the Commissioners for the restoration of the cigarettes subject to any conditions they might impose. Pro forma letters, respectively Letter A and Letter B, were included in Public Notice 12A to instigate each course of action.
- The Appellant submitted both Letter A and Letter B to the Respondents on 28 September 2004 (together with a covering letter repeating that the cigarettes were for her own use and for a gift to her grandmother). This appeal is a continuation of the process started as a result of the submission of Letter B: following the receipt of the Letter B the Commissioners indicated that they would not restore the cigarettes, the Appellant sought a review of that decision by the Respondents and on review the decision was confirmed. This appeal is against that decision on review.
- Following the receipt of Letters A and B the Respondents replied on 1 October. The letter contained the following paragraphs:
- The Appellant replied on 3 October 2004:
- Following receipt of this letter it appears that the Respondents did not start condemnation proceedings. But they considered restoration and made the decision, and later the review decision referred to above, not to restore the cigarettes.
- When the Appellant appealed against the review decision the Respondents applied to the tribunal that that appeal be dismissed as an abuse of process. The grounds for that application were that the substance of her appeal was the contention that the goods were for her own use, and that broadly that issue could not be re-opened and should be treated as determined against the Appellant as the result of her failure to seek condemnation proceedings in the magistrates court. We shall return to the detail of this argument later.
- That application was heard by the tribunal on 1 July 2005. The chairman was Theodore Wallace. He dismissed the application. He held that the tribunal did not have the power to grant the application (see paragraph 45 of his Decision). Having so held he went on to consider whether re-opening the issue would be an abuse of process so that the Appellant would be debarred from giving evidence on the issue. He found that the paragraphs quoted above from the Respondent's letter of 1 October 2004 mis-stated the law and that the Appellant withdrew her claim against forfeiture on the basis of that letter. He said, at paragraph 36:
- As a result of that decision the appeal came in due course before us. Before us the Respondents contended that the issue of the legality of the seizure or the question of Own Use should not be dealt with by this tribunal, and that Mr Wallace's decision should be treated as confined to the finding that the tribunal did not have power to dismiss the appeal as an abuse of process.
- Mr Barnes did not however contend that we should not hear any evidence that went to the question of legality of seizure and Own Use, but instead that we should exclude such matters from our consideration.
- We proceeded to hear oral evidence from the Appellant, from Malcolm Guy, who also represented her, and from Raymond Brenton, an officer of the Respondents. We made no attempt to prevent the witnesses from dealing with the questions of Own Use and the legality of the seizure. We also had before us copies of other documents including the notes of the interview with the Appellant made by the Respondent's officer who interviewed her on 21 September 2004.
- The structure of the remainder of this decision will be as follows: first we shall deal with the undisputed facts and the evidence before us, then we shall consider the relevant law. We shall then deal with the issue of Own Use before considering the nature of our jurisdiction in this appeal and setting out our conclusions.
- In addition to the factual matters set out above we find the following facts as to which there was no dispute:
- During 2004 and 2005 the Appellant was a frequent traveller to Europe, generally to Spain. Most of her trips were in the company of Malcolm Guy who organised the trips. On three occasions in 2004 she was stopped by officers of the Respondents when returning to this country. On two of those occasions she was carrying tobacco products. The following table sets out the detail of these trips abroad.
- On 18 June the Appellant had been booked to travel on the following trip, but told us that she did not travel on this date.
- Mr Guy also made visits abroad in March, May and August 2004 and in June 2005.
- The cigarettes and tobacco which were seized from the Appellant on 10 June 2004 were subsequently returned to her.
- On 21 September 2004 Mr Guy travelled with the Appellant and those with whom she was stopped. He, however, went through Customs at a different time from the Appellant and the others in the party. But Mr Guy was also stopped by officers of the Respondents who seized the 8,320 cigarettes and the [3] kg of hand rolling tobacco he was carrying. Mr Guy appealed against the seizure using letter A and the Respondents started condemnation proceedings in Plymouth Magistrates Court. On 5 May 2005 that court found that those goods were liable to forfeiture. Mr Guy appealed to the Crown Court against that finding but the appeal was dismissed.
- Mr Guy has advised and assisted the Appellant in relation to her appeals against the seizure on 21 September 2004. Her letters were written by him and signed by her.
- Mr Guy's purpose in relation to the trips from Stansted to Bilbao was to buy cigarettes. The party going took an early coach to Stansted, departed on the plane from Stansted early in the morning and returned later in the day. The flight operator was Easyjet; when Easyjet had operated such flights from Bristol, as it had in early 2004, Mr Guy and his friends had made the corresponding trip from Bristol to Bilbao and back.
- A number of issues arise from the Appellant's evidence and from the notes of her interview with the Respondent's officers. We deal below with those issues and set out our conclusions in relation to each of them.
- The interview notes record the Appellant her companions as being intercepted at 12.25 and the interview beginning at 12.55. The interview is recorded as suspended at 13.30 and recommencing briefly at what appears to be 15.00. Although the questioning appears to have taken half an hour the Appellant submitted to being detained for some 2 ½ hours. In her witness statement the Appellant says she was "interrogated on and off for three hours."
- The Appellant asked us to bear in mind "what sort of a mood [she] was in when [she] got stopped by Customs. [She] went to bed at about 3.30 am, after having a drink and enjoying the disco. [She] got up at about 8 o'clock expecting the ship to dock at 9 o'clock, but the ship was three hours late".
- The Appellant referred us to a report from one of her college lecturers which indicated that she experienced a range of difficulties which were of a dyslexic nature, including "remembering information and instructions and short-term memory", although it indicated that she had relative strengths in verbal and non-verbal reasoning. The report was dated 30 September 2004.
- The Appellant also said that the interviewing officer was confusing in her approach and tried to ridicule the Appellant with her questions.
- For these reasons the Appellant says she did not read the officer's notebook carefully or at all before she signed it, but just signed it so that she could get away.
- In deciding whether and to what extent the Appellant's signature of the officer's notebook indicated real acceptance that the account therein was clear and accurate it seems to us that the following factors are relevant: on the one hand the Appellant was aged 16 at the time of the interview and had agreed to remain for questioning for quite a considerable period and she was also probably tired and keen to get away; on the other hand she told us in her oral evidence that there had been occasions during the interview when she had seen what the officer was writing and had told the Officer to correct it when it was wrong: she had thus displayed an interest in the accuracy of the record, she had also been stopped previously and would not have been totally unfamiliar with being stopped by Customs Officers. It did not seem to us that the difficulties noted by her college lecturer should play any significant part in this issue: it was clear when she read her witness statement before us that she had no difficulty reading, and the issues identified in the report in relation to information and memory do not bear on the question of her ability to assess the accuracy or truth of the report in the notebook.
- Overall, we conclude that her signature on the notebook under the legend "can you read my notebook and if it is a true account of the interview sign my notebook" is evidence that the Appellant accepted that the account therein was substantially correct and free of obvious error; but not that it was complete or a verbatim account or free from any ambiguity. Indeed it seems to us to be unlikely that the notes are a verbatim account of 30 minutes' interview: they take less than five minutes to read aloud.
- The Appellant told us that prior to the September 2004 trip she had been working at a convenience store. She told us that she had worked 4 shifts of 8 hours each week, and had been paid £5 per hour (after deductions). That meant a weekly net wage of £160 per week.
- The interview notes record the Appellant as saying that "I work in [a shop] night and day 2 days part time", and that she received wages of £160.00 per week for "the two shifts I do". It is noted that she told the interviewing Officer that she asked her "boss" to hold back £50 - £60 a week so that she didn't spend it, and that by the time of her trip she therefore had about £600 saved of which she took £400 on this trip.
- The Appellant told us that she told the officer that she worked two day shifts and two night (late) shifts a week. She said she told the officer this twice.
- The Respondents say that if the Appellant worked only two 8 hour shifts per week (as they say the notebook indicates) that meant she was being paid at the rate of £10 per hour net, and that such a rate was incredible for someone of her age and experience doing that job. They say that in her evidence before us she changed her story to make it more credible. They say that we should not therefore find that the Appellant earned and had at her disposal £160.00 per week.
- We are not sure the interview note unambiguously records only two shifts. The phrase "night and day 2 days part-time" might have represented the four shifts the Appellant told us she worked; although the record later on that she was paid £160"for the two shifts I do" is possibly a clearer indication of only two shifts. This, taken in the light of our conclusion about the Appellant's probable approach to the attestation of the notebook suggests to us that it is plausible that the Appellant's story has not changed. On that basis we do not find that the notebook entries provides a reason to doubt the Appellant's veracity.
- We believe it possible that a 16 year old would work four shifts for £5 per hour net. On the other hand, the only evidence before us of the Appellant's financial resources was that she gave to us orally. We were not provided with pay slips, tax records or any other form of corroboration even though the absence of such corroboration had been flagged in the Respondents' review letter).
- In summary, the evidence did not enable us to conclude that it was more likely than not that the Appellant did earn at this level, but the evidence did not support the contention that in giving her earnings as £150 per week, the Appellant was attempting to deceive the interviewing Officer.
- The interview notes record the Appellant as saying "Mum has a shop. I work there night and day 2 days part-time". A few lines after this she says "I ask my boss to keep back £50 - £60 a week from my wages so I don't spend it." (We note she says "boss" not "mum") At the end of the notes there is recorded a later a question from the officer: "Just clarifying a point is it your mum's shop" to which the Appellant answers "No" and explains that it is the shop of John Bennett, a family friend.
- In the review letter of 2 December 2004 the review Officer says:
- Mr Barnes submitted that the account in the Officer's notebook was evidence that the Appellant was reluctant to give details of the shop in a question, stating first that it was her mother's shop and later that it was owned by a family friend called John Bennett. He says that to mistake her mother's shop for John Bennett's shop is incredible, and by implication casts doubt on her truthfulness before us and with the interviewing Officer.
- We find no substance in this point. Just as the child of a solicitor might refer to "my mother's firm", or of a schoolmaster to "my father's school" where neither parent owned the firm or the school, so too could a child of a shop worker refer to "my mum's shop".
- It seems to us that it is quite wrong to regard this description of the shop as evidence that the Appellant was attempting to deceive the Officer, or as casting any doubt on her veracity before us or with the interviewing Officer. Indeed it seems to us that such a conclusion is not one which could reasonably be drawn from the account in the Officer's notebook.
- The Appellant was asked about the trips she made in 2005. She had made three trips between January and May that year. She told us that she might have brought back 6 sleeves or 1200 cigarettes on each occasion. She said she brought back fewer cigarettes than she had on previous trips because she was worried about Customs and Excise stopping her. These were all trips to Bilbao via Stansted which permitted only a few hours to be spent in Bilbao. They were all trips where Mr Guy's evidence was that his purpose was to buy cigarettes. We conclude that it was the Appellant's purpose in going on these trips to buy cigarettes.
- We asked the Appellant about her sources of income in 2005. She told us that she worked at the Galleries in Broadmead, Bristol clearing tables and doing dishes. She was paid £5 per hour and initially worked full time but then became part time. But her answers on this topic become confused. She said she had been caring for her grandmother during part of this period, and from August or September onwards had been full time at college. We felt that this confusion contrasted oddly with her clear evidence of the previous year when she had been working at her "Mum's shop", and gave us some concern therefore as to whether her evidence as to 2004 was as reliable as it could be. We bore this in mind in our overall consideration of the evidence and our conclusion.
- There was some dispute as to the record of Miss Smith's account of the cost of the cigarettes seized. In summary, the Appellant maintained that the review officer had mistaken the interviewing officer's notebook entry of a Euro amount for a sterling amount, and, as a result the review officer had based her decision on an inflated cost for the cigarettes.
- The table below sets out the difference:
- The Appellant said she took £400 with her and returned with about £5. The review Officer's letter uses the prices of £20 for the Gold Coast and £26 for the Lambert & Butler to conclude that, if these had been a present for Miss Smith's grandmother, they would have cost "over £230". The letter continues "I do not accept that you were intending to give them away as a present without receiving any reimbursement". The letter does not record a specific price for the Royals, but proceeds basis of the Appellant's recorded statement that the total cost of the cigarettes was £370. If that was right then the Royals would have cost £140 or approximately £9.50 for 200 rather than the £13.50 stated by the Appellant.
- Mr Brenton was asked whether in his view the notes indicated that the Gold Coast and the Lambert & Butler had cost €20 and €26 or £20 and £26. He replied that he would say the latter, thus supporting the figure used in the review letter.
- It seems to us that the entries on page 34 of the interviewing Officer's notebook fairly clearly read €20 and €26. On page 32 there are amounts of sterling recorded, and in each case the manuscript "£" is quite different from the "€" used on page 34.
- It also seems to us more likely that Miss Smith's account to the Officer was accurate and consistent on this matter than that either the Royals cost £9.50 for 200 or that the Appellant's overall figure for the cost was understated. As a result we believe that the review Officer was wrong to take £230 as the cost of the present for the Appellant's grandmother. Instead the figure shall have been about £160. That of course still leaves the question of whether it is believable that the Appellant would have made a gift of this value without receiving any reimbursement.
- The Appellant was carrying 3,000 Royals, 800 Gold Coast and 1200 Lambert & Butler Menthols when she was stopped. She told the interviewing Officer and us that she smoked the Royals, but that the Gold Coast and the L&B Menthols were a birthday present for her grandmother.
- On the basis of the Appellant's statement that the Gold Coast cost €80 or about £54, and the L&B Methols €236 or about £108, the gift to her grandmother would have cost her about £160.
- She told us that when she had brought cigarettes back in June 2004 she had then brought back 2000 Superkings as a present for her mother. She told us that those cigarettes cost an amount comparable to the cost of the Gold Coast and Lambert & Butler Menthols.
- She told us that she brought cigarettes as presents for her mother and grandmother because they helped her out when she was short of money.
- The Appellant told us of another instance of her generosity. She had won £500 on bingo just before Mothers' day in 2006 and had given £150 to her mother. Mr Guy asked us to conclude that the gifts of cigarettes were consistent with Miss Smith's generous approach to her relatives.
- Mr Barnes asked us to find the Appellants' declared intention to give the cigarettes to her grandmother unbelievable because, he said, it was so unlikely that the Appellant could have afforded to make such a generous present. The reviewing Officer, in her letter of 2 December 2004, says:
- We think it would be unusual for a 16 year old who had only recently started working to make such comparatively lavish gifts as the Appellant avers, but we do not think that it is unbelievable: the making of such gifts can be just as much as a sign of independence as going out drinking all night. Whilst we would be inclined, in the absence of any other facts to believe the Appellant, it does not seem unreasonable to disbelieve her in the absence of any other facts. We say "in the absence of any other facts" for other evidence could compel a conclusion that it was more likely that the Appellant did not, or did not intend to, pursue this course of action.
- The interviewing Officer's note indicates that the Appellant said she smoked 35 - 40 cigarettes a day. She told us she smoked about 35 a day.
- In June 2004 she imported 3200 Lambert & Butler, 2,000 Superkings and 3 kilos of hand rolling tobacco. She said that the Lambert & Butler and the tobacco were for herself and the Superkings for her mother. The evidence of Mr Brenton was that the hand rolling tobacco would have yielded 4,800 to 6,000 cigarettes. The Appellant, when asked how many cigarettes she could obtain from a pouch of tobacco, seemed a little unsure, and said she did not count.
- The cigarettes and tobacco imported by the Appellant on 10 June 2004 were restored to her on or about 28 June 2004. Between 28 June 2004 and 26 September 2004 there are 86 days. At a consumption rate of 35 cigarettes a day she would have smoked 3,010 cigarettes in that period. If she gave away the Superkings and did not smoke the hand rolling tobacco, then by 21 September she would have had 190 Lambert & Butler and 3 kilos of hand rolling tobacco left. She told us that she had about 400 cigarettes left and that "I didn't buy any tobacco in September, because I still had the tobacco from June except for a few packets my sisters have helped themselves to." In cross-examination by Mr Barnes she said that she "occasionally" smoked hand rolling tobacco.
- She told us that she brought a further quantity of cigarettes back in September for her own consumption because she didn't think she would be able to get away again until December and did not want to "smoke just tobacco for months".
- On 21 September the Appellant says she imported 3,000 Royals for herself. At 35 per day, these would have lasted 85 days - or for the period to 15 December 2004. If she expected to travel again in December there is implicit in this either an expectation that she would smoke none of the hand rolling tobacco in this period, or that she was guarding against not making a further trip in December.
- The Appellant's account is internally consistent, but accepting it as true requires acceptance that the gifts of 2,000 cigarettes to her mother and 2,000 to her grandmother were made, and that, although she had imported tobacco for between 4,800 and 6,000 cigarettes, she smoked it only occasionally, had smoked little or none of it before September, and intended to smoke little or none of it in the period up to December.
- The Appellant's account in relation to the hand rolling tobacco gave us cause to doubt her evidence. It is possible that a 16 year old would import 3 kilos of tobacco thinking that she would use it slowly, but it seems at best ill thought out and on balance unlikely that she would have bought so much tobacco when she smoked it only occasionally and could have used her money on cigarettes instead. This cast some doubt in our minds as to the veracity of her evidence of her own consumption.
- On two occasions on her return to this country one of the party with which the Appellant travelled came through Customs separately from the others.
- The first occasion was on 10 June 2004 at Bristol airport when Terrance Guy, who was travelling with her, went through Customs ahead of her. The Appellant told us that this was because his bags came out first and he went outside to have a cigarette as he had not been able to have one for over two hours. She told us that Terrance Guy, when questioned by Customs, had initially denied that he was travelling with her, and that "the reason he gave for that was that he wanted to get home for his daughter".
- The second occasion was on 21 September, being the occasion of the seizure which is the subject of this appeal. Malcolm Guy, the Appellant told us, became separated from the rest of the party because "he had started to talk to some people he met on the ship." She said that when 1,500 people get off a ship it is easy to get separated.
- Mr Barnes suggested that not coming through Customs together was behaviour which was typical of smugglers. Mr Brenton gave evidence endorsing the review decision and witness statement of Helen Perkins and thereby gave evidence that the practice of coming through Customs separately "is one often adopted by regular travellers who wish to avoid interception and are importing goods for commercial purposes".
- Mr Barnes asked us to conclude that Terrance Guy's initial denial on 10 June 2004 that he was travelling with the Appellant was evidence that he was up to no good and that the Appellant was on that occasion also part of an operation to import goods for commercial use without payment of duty.
- We accept that it is possible for members of a party to separate for legitimate reasons when they collect their baggage and pass through Customs on their return to this country. But it is unusual: in our experience most people who have been travelling together keep together and try to keep together at this time. In the Appellant's case the separation occurred on two occasions. That makes it more unusual. Because it is unusual compelling evidence of the innocent reasons for it is required. We did not find the evidence given to us on this issue particularly compelling. We are disposed to doubt the explanations and conclude that the separation may have been a deliberate ploy to avoid interception.
- Mr Guy had organised the trips abroad described in paragraph 15 above. The trip to Santando was a mini-cruise: 2 days were spent on board the ship and only a few hours in Spain. The trips to Bilbao were day trips (with the exception of that on 10 June 2004, when a day had been spent in Spain): the party went to the airport (initially Bristol airport but after Easyjet changed the schedules, Stansted) in the morning, flew to Bilbao, spent a few hours in Bilbao and then flew back and returned to Bristol. When Mr Guy flew he bought and brought back cigarettes.
- Mr Guy said he had a Visa credit card. He had used this to book the party's tickets for the flights on-line. He said that he booked the flights because most of the other people who would be in the party had Visa Electron cards which were rarely accepted (in 2004 and 2005) for booking flights. His Visa card was acceptable. He told us that the members of the party would give him the money for the flights before he booked the trips.
- Miss Smith told us that she had paid for the trips she had been on. The cost had been she said £32 - 34 return, and a contribution had been made to the petrol costs.
- The members of the parties were members of Mr Guy's family or his friends. Those who on some occasion were members of a party organised by Mr Guy, and their ages (where evidence of their ages was given by Mr Guy) were:
- Mr Guy is 47. The Appellant, who was 16, was the youngest member of any party.
- Mr Guy had organised a trip on 18 June 2005. The Appellant had been booked to travel on that trip but told us that she did not in fact travel at that time.
- Mr Barnes suggested that Mr Guy was running a small scale smuggling operation, regularly organising parties of people to travel to buy cigarettes and to import them for commercial use. The co-travellers were people like the Appellant who were asked to bring back a variety of brands and schooled in what to say if they were stopped. Mr Guy denied this allegation.
- As we have noted, Mr Guy said that his purpose for the trips to Bilbao was to buy cigarettes. We find that must have been the purpose of all those in the party. It is in our view very unlikely that anyone would undertake these journeys for pleasure or relaxation. We therefore find that Mr Guy organised, and the participants went on, those trips in order to import cigarettes. Mr Guy went on at least seven trips (albeit not all to Bilbao) in 2004. On one of those trips Mr Guy was found to have imported cigarettes for a commercial purpose without paying duty. The persons in each party varied and we cannot conclude that each member of each party was importing goods otherwise than for his or her Own Use, but the Appellant travelled on four occasions with Mr Guy in 2004 and on three further occasions in the first five months of 2005. We find that this frequent travel with Mr Guy could indicate that on some occasions the Appellant may have imported cigarettes otherwise than for her Own Use, and at the very least does not indicate that she imported cigarettes for her Own Use.
- We have recorded above the letter from the Respondents of 1 October 2004 and the Appellant's reply of 3 October which included the words "I am writing to let you know that I wish to withdraw my appeal, so that you can consider restoring my goods."
- The letters from the Appellant to the Respondent were drafted by Mr Guy. They were also in his handwriting. They were signed by the Appellant.
- Mr Guy referred us to the last sentence of the second paragraph of the letter of 3 October 2004. This paragraph is not set out above. It reads so far as presently relevant:
- Mr Guy says that the gist of this letter was a request, not completely to cancel the notice which would give rise to the condemnation proceedings, but to postpone those proceeding. He says that this is clear from the indication that "I will put in an appeal" if the restoration request failed, and from the use of the word "Court" in the paragraph above rather than "tribunal". He says he was well aware of the difference between a tribunal and a Court. The use of the word "Court" was an indication that a magistrates Court condemnation hearing was within his contemplation and all that was being sought was a postponement of such a hearing until the restoration route had been completed. He says he used the word "withdraw" rather than "postpone" because that was how the letter from the Respondents of 1 October 2004 was phrased.
- Mr Guy said that he was not aware that the time limit for giving a notice to institute condemnation proceedings could not be extended.
- In our view a reasonable person receiving that letter, and having before him the Respondent's letter of 1 October would not regard the Appellant's letter as an unqualified instruction to revoke the notice already given. The letter is equivocal or ambiguous. Those defects could have been cured by making the Respondent's position clear and asking whether the Appellant wished to withdraw the notice irrevocably. That such a question could reasonably and sensibly have been asked makes it clear to us that the letter cannot reasonably be taken as a withdrawal of the notice.
- Mr Barnes took us to a record of Mr Guy's criminal convictions. Between 1972 and 1981, Mr Guy was convicted for offences on 13 occasions. These were offences in the nature of theft.
- In 1999 he was convicted of the offence of persistently using the public telephone system to cause annoyance, and was fined. In 2000 he was convicted of five criminal damage offences and a hospital order was made under the Mental Health Act. A further criminal damage offence was committed in 2002 for which he was fined.
- Mr Guy told us that the 1999 offence arose from telephone calls he made to attempt to get Bristol City Councillors to take action in relation to a particular matter, and that between 1999 and 2002 he had suffered from depression: that was why hospital order had been made.
- Mr Barnes said that this string of convictions suggested that Mr Guy did not have a high regard for the law and that accordingly we should incline to distrust his evidence.
- We note that the last offence for which Mr Guy was convicted which involved dishonesty was in 1981, over 25 years ago, and that his subsequent offences were connected with his mental illness. We do not regard the conviction for the persistent telephone calls as indicating a low regard for the law.
- We also noted the honesty of Mr Guy's reply to a question from Mr Barnes about the condemnation proceedings relating to Mr Guy's importation of cigarettes and tobacco on 21 September 2004 referred to in paragraph 19 above. Mr Barnes asked whether his import of "5,000 cigarettes and 8 kilos of tobacco" on that date was normal. Mr Guy replied "Sorry it was a lot more than that: 8,000 or so".
- Taking all this together we did not conclude that we should be especially doubtful of Mr Guy's evidence for reasons associated with his previous criminal convictions.
- Section 2 of the Tobacco Products Duty Act 1972 provides that excise duty is payable on the importation of cigarettes and hand rolling tobacco into the UK. The Tobacco Products Regulations 2001 are made in part under the provisions of that Act: Regulation 13 provides that the person liable to pay the duty is the person holding the goods at the excise point, and Regulation 14 that the duty is to be paid at the excise point. Regulation 12(1) provides that the excise point is the time when the goods are charged with duty. But this is subject to Regulation 12(1A) which provides that where tobacco products are acquired in a member state for a person's "own use… the excise duty point is the time where those products are held or used for a commercial purpose."
- Thus if goods are acquired in Spain for a persons "own use" and are never held for a commercial purpose, there is never an excise duty point, and duty does not become payable. But if they are not acquired for a persons own use, or later become held for a commercial purpose duty will become payable. We use the capitalised "Own Use" elsewhere in this decision, to mean goods acquired for own use and not held for a commercial purpose.
- The Regulations provide some further provisions on the question of "Own Use" and "commercial purpose". By Regulation 12(1B)(b) own use includes use as a personal gift. Thus if the Appellant acquired the goods to give to her grandmother or mother, that would be for her "Own Use" for these purposes, and provided that the goods did not then become held for a commercial purpose no duty would be exigible. On the other hand, sub-paragraph (c) provides that if the goods are, or are intended to be, transferred to another person for money or money's worth (including for the reimbursement of their cost) then they are to be regarded as held for a commercial purpose. Thus if Miss Smith, having acquired cigarettes with the intention of giving them to her grandmother later changed her mind and asked for, or accepted something in return, or intended to do so, then when she changed her mind the cigarettes would become held for a commercial purpose and duty would become chargeable.
- There is a further point to make however. For sub-paragraph (c) to have effect the transfer or proposed transfer must be "for" money or money's worth. This to our mind indicates a requirement for new consideration directly linked to the transfer. That consideration can be provided before the transfer as well as after but it must be "for" the transfer. Thus the transfer of the goods because the recipient has in the past provided or is expected in the future to provide gifts, cash or assets, or support to the holder is not enough: there has to be a giving of money or money's worth for the transfer.
- Thus if the Appellant intended to transfer the cigarettes to her grandmother because her grandmother had helped her financially in the past, or in the hope that she might continue to do so in the future, that would not be enough to cause the cigarettes to be regarded as held for a commercial purpose.
- Sub-paragraph (e) sets out factors to which regard must be had in determining whether goods are held for a commercial purpose. Those factors are:
- We note that those factors need to be taken into account both when they suggest that the goods are held for a commercial purpose and when they suggest the contrary. Thus, for example, the unconcealed carriage of the products through Customs may suggest that the goods were not being held for a commercial purpose.
- Because the requirement to consider these factors is mandatory, no decision as to whether the goods were held for a commercial purpose could be properly made unless any and all evidence relating to each heading is considered.
- The power to forfeit goods imported without payment of the proper duty is provided by section 49 of the Customs & Excise Management Act 1979 (CEMA):
- Section 139 CEMA gives an officer the power to seize anything liable to forfeiture:
- And section 141 CEMA makes other items liable to forfeiture:
- Thus if some of Miss Smith's cigarettes were held for a commercial purpose but others were held for her Own Use, then those held for her Own Use would be liable for forfeiture if they were mixed or packed or found with the other cigarettes.
- There was no evidence before us as to how the different cigarettes which Miss Smith imported were packed. If they were packed in separate bags carried separately through Customs they would neither have been "mixed" nor "packed" together, and merely finding that they were carried by the same person may not be enough to conclude that they were "found with" the other goods. Miss Smith's reply a question from Mr Corke's question about the size and shape of the bag which would contain the cigarettes however indicated that it was more likely than not that the cigarettes were packed or found together.
- Schedule 3 of CEMA provides a mechanism for an appeal against Customs' seizure of goods considered liable to forfeiture. The relevant provisions are these:
- Thus the taxpayer is given one month from the seizure to give notice of a claim. If he gives the notice, the Respondents are required to commence condemnation proceedings to test the liability of the goods to forfeiture. But if no notice is given the goods are deemed to have been liable to forfeiture.
- The Appellant gave such a notice by submitting Letter A on 28 September 2004 but then wrote on 3 October to say she wished to "withdraw" her appeal. We note that there is no provision in Schedule 3 for the withdrawal of a notice. The Act simply provides that if a notice is served then the Respondents are required to take condemnation proceedings.
- The suggestion that the withdrawal of a notice is contemplated by the Act gives rise to a number of questions unanswered by the words of the Act: in what period would the withdrawal have to be made? What if the notice is given within the one month period and withdrawn after the expiration of that period? If a notice is withdrawn within the period, can it be given again within the month? The fact that such questions are not addressed suggests that the withdrawal of a notice was not contemplated by the Act.
- The Appellant in condemnation proceedings may always indicate that he or she does not wish to contest them. In such circumstances judgment will generally be given for HMRC.
- Does fairness or administrative convenience or consideration relating to the waste of public authorities time compel a different conclusion? We understand that when condemnation proceedings are brought there is a stage when the importer is asked if he still wishes to contest the case. If he does not, he is asked to agree "to Customs asking the court to give them an order enabling them to keep the goods sected" and to do so by ticking a box and signing a form. Further the hearings tend to be in two stages - an initial hearing to see if the Appellant really wishes to contest the condemnation and a substantive hearing. The actual procedure adopted does not therefore call for the ability to "undo" a notice and release the Commissioners from their obligation under Schedule 3. The provisions of paragraph 10 of Schedule 3 reinforce this view: if the Appellant does not turn up to make oath as required judgment is to be given for the Commissioners. We therefore see no reason either in the language of Schedule 3 or in the practice of the Courts to write into Schedule 3 provision permitting the "ungiving" of a notice.
- In this case the Respondents treated the letter of 3 October as cancelling the notice of claim and treating it as never having been made. They therefore argue that no notice was given for the purposes of paragraph 5 and accordingly that the goods are deemed by that paragraph to be liable to forfeiture. This is the foundation of their argument that the question of Own Use is not open to this tribunal: because the cigarettes are deemed to have been liable to forfeiture, that must necessarily mean that they could not have been for the Appellant's Own Use and accordingly (subject to the discussion of Gascoyne below) that question is decided by Statute and not open to us.
- We are less sure. The notice was given. There is no provision for it to be revoked. Paragraph 5 does not apply.
- Section 152(b) CEMA confers a discretion on the Respondents to restore seized goods (whether or not liable to forfeiture) . It provides:
- By submitting Letter B the Appellant sought restoration of her cigarettes under this provision. The Respondents in their letter of 22 October 2004 decided not to restore the cigarettes. There is no provision for an appeal against that decision, but section 14 Finance Act 1994 permits a person by written notice to require the Commissioners to review a decision, and section 15 Finance Act 1994 provides that:
- Section 16 provides for an appeal to this tribunal in relation to that review. The Appellant applied for a review and the review letter of 2 December 2004 represented the result of that review. This is an appeal against that letter.
- In relation to such an appeal the tribunal's powers are circumscribed by section 16(4) which provides:
- Thus the tribunal is not empowered to substitute its own decision for that of the Respondents. Instead it has to consider whether the Respondent's decision could reasonably have been arrived at, and if it decides it could not have been it may make one of the orders set out above. The sub-section does not expressly confer a discretion on the tribunal to make none of the listed orders - instead "confining" its power to making one or more of the orders. But it seems to us that the exercise of a power is necessarily something within the discretion of the tribunal, and accordingly that the tribunal may make none of the specified orders even when the unreasonableness condition is satisfied. We return to this question at the end of this decision.
- In Gascoyne v Customs & Excise Commissioners (2005) Ch 215, the Court of Appeal considered (for the third time in 18 months) the question of whether, where either condemnation proceedings had taken place and the Commissioners succeeded, or where they had been deemed to have been concluded pursuant to paragraph 5 Schedule 3 CEMA, it was open to the tribunal to consider the question of Own Use as part of its consideration of the issues under section 16.
- After considering the issues first purely as a matter of domestic law unaffected by the provisions of the Human Rights Act, the Court turned to the affect of that Act and the Conventions on the interaction of paragraph 15 Schedule 3 and section 16. Buxton LJ said:
- … Lord Phillips in Lindsay at paragraph 64 of his judgment: [states] that the principle of proportionality requires that each case should be considered on its particular facts. …
- 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 may 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"
- In Commissioners of Revenue and Customs v Albert Charles Smith (17th November 2005 unreported) Lewison J commented on this test thus:
- Mr Barnes referred us in particular to Lewison J's later statement that:
- That, said Mr Barnes, should be our role. We should not consider the issue of whether the goods were for Own Use, instead we should confine ourselves to issues relating solely to the reasonableness of a decision not to restore on the basis that the goods were not for the Appellant's Own Use. He took us also to the judgement of Moses J in Johnstone v Chairman of the VAT and Duties Tribunal 2005 EWHC 115 (Admin) where the magistrates court had found goods were liable to forfeiture, Moses J said:
- Mr Barnes brought to our attention to the decision of the High Court in Commissioner of Customs and Excise v David Weller [2006] EWHC 237 (Ch) where the High Court refused to interfere with the Tribunal's decision to permit the validity of forfeiture to be contested. Evans-Lombe J said that the question of whether an Appellant could raise the validity of forfeiture on review and on appeal under section 16 depended upon two questions:
- Mr Barnes submitted that the answer to these questions compelled the answer that the validity of the original forfeiture could not be re-opened by Miss Smith. He said it was clear that the Appellant had had a realistic opportunity to invoke condemnation proceedings - indeed she had sent in Letter A for that very purpose. As to the existence of reasons which should persuade us to permit her to re-open the question, he says there are none. He said that whereas the Respondents' letter of 1 October 2004 might have been better expressed: "restoration will not [rather than "cannot" as it actually said] be considered until the condemnation proceedings have been heard or withdrawn", this did not affect the Appellant's decision which was in reality not to invoke condemnation proceedings.
- Whatever had been said in the letter of 1 October 2004, Notice 12A was, Mr Barnes said, clear. It had been seen by Mr Guy who wrote the letters. The Appellant's letter did not say "Can I put this on hold", but "I want to withdraw". The Appellant, through Mr Guy, knew about the 30 - day deadline. The Appellant, though Mr Guy chose not to invoke the condemnation proceedings.
- Mr Guy says that he (and via him the Appellant) were misled by the letter of 1 October 2004, and in any event, for the reasons in paragraph 81 above, the letter "withdrawing" the appeal when properly read was an application to postpone.
- We take the view that it would not be an abuse of process for us to consider the legality of forfeiture. That is for the following reasons:
- So far as the question of Own Use is relevant to our decision, the Respondents relied upon the following as indicating that the cigarettes were not for the Appellant's Own Use:
- Having regard to all the evidence we heard, it seems to us that it would not be unreasonable to conclude that the cigarettes imported by Miss Smith on 21 September 2004 were not wholly for her Own Use. Further we conclude that it is more likely than not that the cigarettes were not wholly for her Own Use. We reach these conclusions having regard to evidence of her travels after that date as well as before it and bearing in mind each of the criteria listed in paragraph 96 above.
- There were no aspects of the evidence before us which lead inescapably to this conclusion; rather it was a number of factors, some where the facts were clear and bore with them likely and possible implications which were more adverse to the Appellant's case than in her favour, some where the absence of evidence, or doubts as to the veracity of the evidence made it impossible to make clear findings of fact in the Appellant's favour, and some which were in the Appellant's favour such as the evidence that the appellant did indeed smoke and the apparent lack of concealment of her imports. It is therefore not possible to list all the considerations which took us to this conclusion; but, whilst we thought that her reply in relation to her mum's shop was an irrelevant consideration, that it was possible but somewhat unlikely that she would make lavish gifts to her mother and grandmother, and that her evidence as to her earnings in 2004 was not unbelievable, the following factors in particular suggested that the cigarettes were not for her Own Use:
- Having thus concluded that the Appellant intended some commercial use for some of the cigarettes she imported, the forfeiture of any other cigarettes which were in fact for her own consumption would be permissible as a result of section 141 CEMA.
- We have deliberately differentiated between the concept of goods being for a person's Own Use or not, and that of the legality of the forfeiture. That is because even if a forfeiture was legal or is to be deemed to have been legal, it is not a necessary consequence that all the goods which are forfeit were not for Own Use. This is a result of section 141 CEMA: that section makes forfeit, goods which are mixed, packed or found with goods liable to forfeiture. Such "mixed, packed or found" goods may well have been for Own Use even though they are legally forfeit. Only where it is clear that the actual decision of a court is that all the goods were not for Own Use does the question of Own Use merge with that of the legality of forfeiture: where the forfeiture is deemed to have been legal it cannot be assumed that all of the goods were not for Own Use.
- Section 16(4) permits us to make one of the specified orders only if we are satisfied that the person making the decision could not reasonably have arrived at it.
- The nature of this jurisdiction was considered by the Tribunal in Jason Thomas Bowd (1995 [Ref]). The Tribunal said this:
- On this basis we ask ourselves the following questions:
- In Golobiewska v Commissioners of Customs & Excise (2005) VAT DT 267 the Court of Appeal considered the nature of the jurisdiction of the tribunal under section 16(4). Lloyd LJ cited paragraphs 57 to 59 of the tribunal's decision in Gora and Others v Customs & Excise Commissioners and its approval by Pill LJ in the Court of Appeal. Pill LJ had agreed that the tribunal cannot decide whether a decision qualified as reasonable in the relevant sense unless it examines the facts asserted by the parties and substantiates whether those facts exist. Although it appears that under section 16(4) the Tribunal would be limited to considering whether there was sufficient evidence to support an officer's finding, in practice, given the powers of the Tribunal to carry out a fact-finding exercise, the Tribunal should decide the primary facts and in the light of its findings then go on to consider whether the decision on restoration is reasonable. We thus are required to determine whether a decision made by the officer on the basis of evidence available to her is reasonable by reference to facts found by us.
- We start therefore by considering which issues were taken into consideration by the officer who wrote the review letter.
- The writer sets out the Commissioners general policy that "seized excise goods should not normally be restored. However each case is examined on its merits to determine whether or not restoration should be offered exceptionally."
- The Appellant made no attack on this policy but in passing we note that as expressed by the Officer it fails to distinguish between goods which are forfeited, and goods which are seized. Goods may be seized because it is thought or expected that they may be forfeited (see section 139(1)) but if goods which are, or are later found to be, not liable to be forfeited are seized, a policy that they should not normally be restored merely because they have been seized appears unreasonable. We suspect however that the writer intends to say that forfeited exercise goods which have been seized should not normally be restored.
- The writer then sets out under the heading "Consideration" the matters she has taken into account in taking her decision not to restore the goods. After considering these matters she says "For the reasons set out above I conclude the… goods should not be restored." It is clear that the issues she sets out are those which lead her to that conclusion.
- First she says that she does not consider the correctness of the seizure (forfeit) itself. If it were the case that the goods had been condemned, or by operation of paragraph 5 Schedule 3 CEMA were deemed to have been properly condemned, then this would be the proper approach. However, in circumstances where that question is at large, it seems to us that considerations as to the legality of the forfeiture are relevant and should be taken into consideration.
- The officer says in the same paragraph that if the Appellant was making any claim that the goods are for "Own Use then she should have appealed to a Magistrates' Court. It is not clear whether the officer is saying that she will give any consideration to Own Use or whether she regards that issue as closed too. If she is saying that it is closed then she is wrong, because as noted at paragraph 131 above, a deemed condemnation does not carry the necessary implication that all the goods were not for Own Use, (although it must carry the implication that some were not for Own Use): and the extent to which some of the goods were for Own Use appears to us to be a relevant consideration in relation to the question of whether all or some of them should be restored. At first sight it appears that the officer is regarding this issue as closed, although as will become apparent her later considerations appear to muddy the water.
- Then she considers a number of other issues:
- The officer notes the facts that we have record elsewhere and notes the practice of separation as often adopted by travellers who wish to avoid interception.
- Again this issue seems to us to be relevant to the legality of forfeiture only. If that question is closed we cannot see how it is relevant to restoration.
- It seems to us that whether or not the forfeiture was legal there were issues relevant to the question whether or not to restore which were not considered by the officer. Those include separate consideration as to whether, if simple restoration was denied, restoration should be offered subject to conditions, and the issues of proportionality and the harshness of the forfeiture having regard to the Appellant's means and whether some of the cigarettes were for her own use.
- Putting this together and whether or not the question of legality of forfeiture was open, and whether or not the forfeiture was legal, the reviewer has in our view failed to take into account relevant matters, and considered irrelevant matters. Accordingly, her decision must be unreasonable in the sense of the review jurisdiction in section 16(4). That is not to say we have no sympathy with the writer. The only issues put to her related to Own Use and generally the addressing of such issues might be considered helpful to the recipient of the review.
- This means that we must consider whether to make any of the orders permitted by section 16(4). As noted at paragraph 116 above we have a discretion whether or not to make any such order. In exercising this discretion there are three issues which may be relevant: our views on the reasonableness of any conclusion on Own Use or the legality of forfeiture, our view on the question of whether or not on the facts as we have found them it would be reasonable to restore, and the evidence of Mr Brenton, that having heard the evidence we heard he would have made a decision not to restore.
- It is not our job to substitute our decision for that of the Commissioners. However, it seems to us that a decision of the Commissioners not to restore the Appellant's cigarettes would not be unreasonable if made on the basis of the following:
- If the decision were ours, therefore, we would decide not to restore.
- Mr Brenton said in evidence before us that he would have decided not to restore on the basis of the evidence before us.
- We considered therefore whether it would be appropriate not to make a direction for a further review. In the judicial review context the court, once apprised of a procedural impropriety, will be slow to say "no harm has been done", and to make a declaration effectively substituting its decision for that of the body entrusted by statute with the decision. It seems to us that similar principles must apply to section 16: unless it is inevitable that a further review would lead to a decision not to restore the goods, then to make that course of action would be to substitute our decision (and our view of a proper policy) for that of the Respondents. If there is a possibility that the Respondents would decide to restore, then, even if that outcome is unlikely, and even where we would view, as we would, a second decision not to restore as not being unreasonable if properly taken, we must not usurp the Respondent's statutory function.
- Neither is it possible to treat Mr Brenton's evidence as constituting a second decision which this decision can relate. That is because the Appellant's appeal was not against that decision and so we have no jurisdiction in relation to it. Neither would it have been clear that Mr Brenton would have been making that decision on the basis of the facts as we found them so as to permit us to conclude in this decision whether or not his decision was unreasonable in the relevant sense.
- Therefore, and with reluctance, we direct that the review decision shall cease to have effect from the date of release of this decision, and that Respondents shall conduct a further review of the original decision on the basis of the evaluation of the evidence set out in this decision considering firstly whether seizure was legal, secondly whether all or any of the goods were for Own Use, and thirdly, in the light of the Commissioners' policy whether restoration, or restoration subject to condition, is appropriate in the light of the proportion of the goods for Own Use, the Appellant's circumstances, and the circumstances of seizure.
E0091
Excise Duties - Non-restoration of seized goods - cigarettes imported by regular traveller - Appellant "withdrawing" notice to commence condemnation proceedings: whether possible - Appellant misled by Customs' letter: whether legality of forfeiture and own use open for consideration by tribunal - reasonableness of decision on review - powers of tribunal under Section 16(4) FA 94
LONDON TRIBUNAL CENTRE
DEBORAH SMITH Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY'S
REVENUE AND CUSTOMS Respondents
Tribunal: Charles Hellier (Chairman)
Richard Corke
Sitting in public in Bristol on 20 June 2006
Malcolm Guy on behalf of the Appellant
Matthew Barnes of Counsel instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2006
DECISION
A. Introduction
"Thank you for your recent letter, which the Commissioners of Customs and Excise accept as notice of claim against forfeiture of the items specified in your letter.
"Under Schedule 3 to the Customs and Excise Management Act 1979, the Commissioners are required to institute proceedings for the condemnation of the seized goods. These proceedings will be instituted in the Magistrates' Court having jurisdiction for the area in which the seizure took place, who will decide whether the goods were liable to be seized and also decide on the awarding of costs.
"If you wish to contest the seizure as being unlawful, then you need take no further action. We will institute condemnation proceedings in the appropriate Court, and you will be sent a summons telling you where and when the first hearing will take place in due course.
"If you do not wish to contest the seizure of the goods, then you must notify us in writing immediately, so that proceedings are not started unnecessarily.
"Please note that restoration cannot be considered until the condemnation proceedings have been heard in Court or withdrawn."
"I am writing to let you know that I wish to withdraw my appeal, so that you can consider restoring my goods. If my request for the goods to be returned fails, I will then put in an appeal. I don't think your leaflet Notice 12A is clear, if you look at page 4 it tells you to send letters A and B if you wish to appeal and ask for your goods back, it doesn't say you can do one or the other."
"In my judgement when she withdrew her claim against forfeiture the Appellant was misled by Customs on a matter which is confusing at the best of times. On the facts of this case I conclude that it is not an abuse of process for the Appellant to re-open the issue of legality [of seizure]."
B. Findings of Fact
.pNg)
| 18 June 2005 | Stansted | Bilbao | Malcom Guy Alistair Diamond Bridget Flynn Stephen Alford Sharon Diamond Robin Guy |
C. The Evidence
(1) The interview and the interview notes.
(2) The Appellant's earnings and cash resources.
(3) "Her Mum's shop"
"When you were first stopped you informed the Officer that you were employed part-time in your Mum's shop, a convenience store. Subsequently you admitted to the Officer that the shop was actually owned by "John Bennett" who is a friend of the family. I fail to understand why you would initially attempt to deceive the Officer as to who owned the convenience store unless you were deliberately trying to mislead the Officer".
(4) Events in 2005
(5) The cost of the cigarettes
.png)
(6) Gifts of cigarettes
"Given that the purchase of those goods together would have cost you over £230. I do not accept that you were intending to give them away as a present without receiving any reimbursement."
(7) The Appellant's consumption of cigarettes
(8) Becoming separated
(9) The organisation of the trips
| Terrance Guy | |
| Robin Guy (Mr Guy's brother) | 43 |
| Pamela Richards | |
| Sandra Murray (the Appellant's mother) | |
| Nigel Hartley | 43 |
| Alistair Diamond | 43 |
| Bridget Flynn | 43 |
| Stephen Alford | 47 |
| Sharon Diamond (Mr Guy's ex-wife) | 35+ |
(10) The circumstances of the Withdrawal of the appeal
"Find enclosed a copy of a report from my college lecturer… Due to my difficulties I may have given some wrong answers. I hope you understand that. If my request for the goods to be returned fails please return the report to me so that I can use it in Court."
(11) Mr Guy's character
D. The Law and
(1) The imposition of duty
"(i) that person's reasons for having possession or control of those products,
(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 products or any refusal to disclose his intended use of those products,
(iv) the location of those products,
(v) the mode of transport used to convey those products,
(vi) any document or other information whatsoever relating to those products,
(vii) the nature of those products including the nature and condition of any package or container,
(viii) the quantity of those products, 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 products,
(x) any other circumstance that appears to be relevant."
(2) Seizure and Forfeiture
"Where -
(a) except as provided by or under the Customs and Excise Acts 1979, 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,
…or
(b) any imported goods are concealed or packed in any manner appearing to be intended to deceive an officer,
those goods shall, subject to subsection (2) below, be liable to forfeiture."
There was no suggestion that paragraph (b) was relevant in this case.
"Any thing liable for 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."
(1) "Without prejudice to any other provision of the Customs and Excise Acts 1979, where any thing has become liable to forfeiture under the customs and excise Acts -
(a) any ship, aircraft, vehicle animal, container (including any article of passengers' baggage) or other thing whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture, either at a time when it was so liable or for the purposes of the commission of the offence for which it later became so liable; and
(b) any other thing mixed, packed or found with the thing so liable,
shall also be liable to forfeiture."
(3) Appeal against forfeiture
"3 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…
"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, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, 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 paragraphs 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….
"10(1) In any proceedings for condemnation instigated in England, Wales or Northern Ireland, the claimant or his solicitor shall make oath that the thing seized was, or was to the best of his knowledge and belief, the property of the claimant at the time of the seizure.
"(2) In any such proceedings instituted in the High Court, the claimant shall give such security for the costs of the proceedings as may be determined by the Court.
"(3) If any requirement of this paragraph is not complied with, the court shall give judgment for the Commissioners."
(4) Restoration
"the Commissioners may, as they see fit - …(b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those Acts;"
"(1) 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…"
"(4) In relation to any decision, as to an ancillary matter [which includes a decision not to restore], or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say -
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision; and
(c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future."
(5) The reopening of the legality of forfeiture
"52. …[the Convention] 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 that those provisions necessarily prevent any further consideration of the legality of the seizure was an excessive limitation.
"There must therefore, be something more than a failure on the part of the applicant to involve condemnation proceedings before the Tribunal is empowered to question the legality of the forfeiture."
"The Tribunal's function, therefore, is analogous to a sentencing court once a defendant has been convicted… the function of the sentencing court is to accept mitigation but not to question the original conviction."
"If all someone importing cigarettes such as this does is to persist in saying they are for personal use, the correct response is to say: "You have advanced no ground whatever for restoration in exercise of the powers under Section 152(b)"".
"first did the importer have a realistic opportunity to invoke the condemnation procedure and, secondly, if he did, are there nonetheless reasons disclosed by the facts of the case which should persuade the Commissioners or the Tribunal to permit him to re-open the question of the validity of the original [forfeiture]…."
(6) Our decision on the re-opening issue
(1) first, as noted at above, paragraph 107 - 111 we see nothing in Schedule 3 which permits a notice once given to be ungiven. If that is right then the Respondents remain under a duty to take condemnation proceedings and paragraph 5 does not apply. There is therefore no presumption that the goods are legally forfeited which binds us;
(2) second, even if our first reason is wrong, we do not read the appellants' letter of 3 October 2004 as the cancellation of the original notice. This letter was clearly not the letter of someone wishing irrevocably to withdraw his notice under paragraph 3 of Schedule 3 CEMA. In Gascoyne itself the Court considered the meaning of a letter from the Appellant. The Court applied the test of asking what was the understanding of the letter which would have been held by a reasonable person in the position of the Commissioners taking into account the "relevant objective contextual scene" (see paragraph 63). To that we would add: and the law properly understood. In our view a reasonable person knowing that the Respondent's letter of 1 October 2004 misstated the law would not have taken the Appellant's letter of 3 October as a letter intended irrevocably to undo the giving of the notice under paragraph 3 - even if that undoing were possible. The notice was not therefore withdrawn and the Respondents remain under an unfulfilled duty to take condemnation proceedings, and paragraph 5 Schedule 3 does not apply.
(3) third, even if undoing a notice were possible, and even if the Appellant's letter of 3 October 2004 could properly be construed as a letter which had that effect, we find that there are "nonetheless reasons disclosed by the facts which should persuade the tribunal to re-open the question of the validity of [forfeiture]", and that the Appellant has discharged the "burden on the Applicant to satisfy the Tribunal that there was good reason why he did not challenge the forfeiture" (Albert Charles Smith para 25).
Those reasons are substantially those given by Mr Wallace at the hearing of the preliminary application, and we gratefully adopt what he says at paragraphs 50 to 56 of his decision: the letter of 1 October was wrong in law and misled the Appellant. All we heard from Mr Guy or Miss Smith, went to support that conclusion. We conclude that it would not be an abuse of process for the Appellant to re-open the issue of legality of forfeiture or for us to consider it.
E. The Question of Legality of Forfeiture
The Respondent's submissions on the evidence on Own Use
(1) that the Appellant was a regular traveller with a group who were also regular travellers, or at least with Mr Guy who was a regular traveller;
(2) that the separation of members of the party as they come through Customs on two occasions (including that on 21 September) was indicative of smuggling;
(3) that the mixture of 6 brands imported: Lambert & Butler, Superkings, Royals, Lambert & Butler Menthols, Gold Coast and Golden Virginia hand rolling tobacco was indicative of the goods not being for the Appellant's own use;
(4) that it was not believable that the Appellant intended to make such lavish gifts to her mother and grandmother;
(5) that, at a consumption rate of 35 - 40 cigarettes per day, the Appellant's imports were in excess of her consumption;
(6) that the Appellant's evidence as to her income was unbelievable and accordingly that she could not have afforded goods into the country. In this regard the Respondents regard Miss Smith's answers to the interviewing Officer about the ownership of the shop in which she worked as evasive.
2. Our conclusion on the issue of Own Use
(1) the Appellant's account of her consumption left some doubt in respect of the hand rolling tobacco which cast doubt over the accuracy of her testimony as to her own consumption;
(2) her cigarette purchases represented a very high proportion of her stated earnings: in June and September her purchases must have cost some £700. Her earnings in that period would, on her own evidence, have been £1970 (although we recognise that if she did smoke the number of cigarettes she said she did her imports achieved considerable savings and reduced what she would otherwise have had to spend);
(3) the quantity of cigarettes she was importing and its excess over 3,200;
(4) her travel with Malcolm Guy and his pattern of travel and history;
(5) the separation of the party members on two occasions seemed odd and tended to suggest that at least some of the party were concerned in evasion of duty;
(6) it seems odd that a 16 year old girl should become involved in such frequent cross border shopping trips in the company of older people; and
(7) the mix of cigarettes given our doubts about her intention to make the stated gift to her grandmother.
F. The nature of our jurisdiction
"On a literal application of those words it might be argued that they are only directed at the result of the review and that the Tribunal could only intervene if the decision were unsustainable in the light of the facts and the law. The Tribunal would only be concerned with the actual decision and section 16(4) would only apply if the only possible decision was contrary to that of the Commissioners on the review.
"On this view the Tribunal would not be concerned by a failure to consider all relevant material. It must be remembered that section 16(4) also applies to Customs appeals and such a restrictive interpretation might well be incompatible with the obligations of Member States under Article 243 of the Community Customs Code. Furthermore it is difficult to see what purpose would be served by the provision in section 16(4)(b) for a further review if there was only one possible conclusion.
"As noted above Mr Bartlett did not contend for a narrow construction of Section 16(4).
"In our opinion the word "reasonably" is to be construed in the wider sense used by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KG 223, …
"The approach to be adopted by a Tribunal in reviewing the exercise of a discretion conferred on the Commissioners (albeit a different discretion) was put in this way by Lord Jane in Customs and Excise Commissioners v JH Corbitt (Numismatists) Ltd [1980] 2 WLR 653 at 663,
"It could only, properly [review the discretion] if it were shown that the Commissioners had acted in a way in which no reasonable panel of Commissioners could have acted: if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight".
"That approach was adopted by the Court of Appeal in John Dee Ltd v Customs and Excise Commissioners.
(1) Did the officers reach a decision which no reasonable officers could have reached?
(2) Did she take into account all relevant considerations?
(3) Did she leave out of account all irrelevant considerations?
G. The reasonableness of the review decision
(1) the quantity of cigarettes imported (5,000) as compared to that set out in Regulation 12(1B)(e)(vii) above (3,200).
This is something required to be considered in relation to the question of Own Use, and the review officer makes it clear that she is not considering it in that context but in the context of restoration.
On the basis that the goods were not for the Appellant's Own Use, the extent of the contravention of the rules could be relevant to the question of restoration: a smaller number of cigarettes might be grounds for a more lenient approach whereas a vast quantity might be grounds for non-restoration. The use of the Regulation 12(1B)(e)(vii) quantities could be a starting point for this consideration, and does not appear to us to be an irrelevant consideration.
However, the mode of the Officer's consideration leaves something to be desired: she says "I do not view it as unreasonable for Customs Officers to take account of the criteria… including the quantities specified in those regulations." This appears to confuse the activity of making a fresh decision on review, with reviewing the reasonableness of the decision of the Officer who made the original seizure (a task she was not meant to be conducting). However, her statement could be read as directing herself what was reasonable for her to take into account in her own review (the task she was required to conduct by section 15). Taken in that light we cannot say that this was a consideration which was irrelevant.
(2) the issue of "Mum's shop" - see paragraph 37ff above. As we have indicated there, we consider that the conclusion that the appellant attempted to deceive the Officer in this respect was wrong and was one which no reasonable person could have reached on the facts.
This was, therefore, in our view an irrelevant consideration.
(3) the issue of the Appellant's income. The letter indicates that the writer is not persuaded that a person of the Appellant's age working two (rather than four) shifts a week would earn £160 net per week. The writer then points out that the Appellant had failed to provide any supporting evidence of her income.
The issue of the Appellant's income relates principally to the question of Own Use, but it seems to us that the writer is treating what she apparently considers is an attempt at deception by the Appellant (giving unbelievable information to the interviewing Officer) as relevant to the question of whether the discretion to restore should be exercised. Seen in this way the question of whether or not such deception was practiced does not appear to be irrelevant to the issue of the exercise of the power to restore. However, as we indicate at paragraph 36 above we were not persuaded that there was evidence that the Appellant attempted to mislead the interviewing Officer although we were also not able to conclude that it was more likely than not that the Appellant was telling the truth.
As a result it seems to us that this was an irrelevant consideration: if in truth the review officer was considering the issue of deception there was not in our view evidence of deception; if the review officer was considering the Appellant's resources in relation to the question of the legality of the seizure, then to the extent these issues were relevant only to that issue and that was an issue she had indicated that she was regarding as closed.
The extent of the Appellant's resources can be relevant to whether hardship would be caused by the failure to restore: the smaller those resources the greater the hardship. But the review officer appears to take the Appellant's limited resources as a reason not to restore. If that was her approach, it is in our view unreasonable.
The Appellant's reasons could also be relevant to the question as to whether some of the cigarettes were for the Appellant's Own Use - a question which on any view was open to the officer and was relevant to the issue of restoration. But there is nothing to indicate that the officer addressed that issue in relation to the extent of the Appellant's income. That was a failure to address a relevant consideration.
(4) cigarette consumption/gifts
The review officer says that she does not regard the account of the Appellant's consumption as plausible. In reaching this conclusion she tacitly assumes that the cigarettes the Appellant said she was going to give away were available to be smoked by the Appellant; but if account is taken of the gifts the Appellant's account is consistent. Later the writer says that she does not accept that the cigarettes were to be given away without reimbursement (a conclusion based in part and to some extent on a wrong appreciation of the recorded price of the cigarettes - see paragraph 49 above). It is difficult to reconcile these paragraphs: if the "gift" cigarettes were to be transferred for reimbursement they would not have been available to the Appellant to smoke.
Further this issue seems relevant only to the question of Own Use. As we note above, if the question of the legality of forfeiture is closed, then Own Use can be relevant only to whether some of the seized goods were for Own Use and others merely mixed packed or found with them. That issue could, as we have indicated above, be relevant to restoration. But the officer's approach is not to differentiate on this basis but merely to address the issue of whether forfeiture was appropriate.
Likewise, when later on the writer says that "the importation of mixed brands strongly suggests that the goods are not for own use", the writer is addressing the very question (of legality of seizure or Own Use) which she says she is not addressing. And we cannot see how the issue of Own Use can, assuming forfeiture is legal, be relevant to the exercise of the discretion to restore unless it is aimed at the question of whether some only of the forfeit goods were for Own Use and the proportionality of the consequences thereof: but that was not the thrust of the review letter.
Thus if the question of legality of forfeiture was closed, then the officer, by considering it, was acting illogically; but if it was open this was a relevant consideration. In either case however there is a failure to consider whether some only of the cigarettes were for Own Use, and the relevance of that to restoration.
(6) Travel with Malcolm Guy and Separation
(7) Learning difficulties
The review officer considers the college lecturer's report and the Appellant's statement that she may have given the wrong answers as a result of her difficulties. It seems to us that this may be an issue relevant to the question of the exercise of the discretion to restore, which the review officer properly and reasonably considered.
The reasonableness of the decision not to restore
(1) if the question of the legality of forfeiture is open, the factors which inclined us to the view that it would not be unreasonable to find that at least some of the goods were not for the Appellant's Own Use and accordingly all the goods were properly forfeit; and if that question is not open the deemed legality of the forfeiture. In either case in the light of the Commissioner's policy not to restore forfeit goods save in exceptional circumstances and the reasons for that policy,
(2) that the Appellant had not suffered disproportionate hardship by reason of the seizure (on the basis that the forfeiture was or could reasonably be assumed to be legal);
(3) that, although some of the cigarettes may have been for the Appellant's own consumption, and thus to that extent would not themselves have been forfeit if not packed mixed or found with cigarettes which were or might reasonably be regarded as not being for the Appellant's Own Use, the forfeiture of those cigarettes would not be a disproportionate penalty;
CHARLES HELLIER
CHAIRMAN
RELEASE DATE: 20 September 2006
LON/04/8102