United Kingdom VAT & Duties Tribunals (Excise) Decisions

E00997

EXCISE DUTY – Restoration – Importation of dutiable goods – Forfeiture of goods – Forfeiture of vehicle used to carry goods – Commissioners' policy not to restore vehicle save in exceptional circumstances – Whether discretion exercised properly – Yes – Appeal dismissed

LONDON TRIBUNAL CENTRE

LAHOUCINE BAZGAOU Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: STEPHEN OLIVER QC (Chairman)

ROY JENNINGS FCA FTII

Sitting in public in London on 24 October 2006

No appearance for the Appellant

Matthew Barnes, counsel, instructed by the acting general counsel and solicitor for HMRC, for the Respondents

© CROWN COPYRIGHT 2006


 


DECISION

1. Mr Lahoucine Bazgaou appeals against the decision of the Customs dated 24 August 2005. The effect of that decision was to uphold a decision to refuse to restore a Mercedes Elegance motor vehicle ("the vehicle") and 150 kilogrammes of chewing tobacco ("the goods") to Mr Bazgaou.
2. When the case was called on for hearing there was no one present to represent Mr Bazgaou. Every telephone number that had anything to do with Mr Bazgaou found on letters contained in the file was called. There was no success in tracing either Mr Bazgaou or his representative. We decided to go ahead and hear the appeal in Mr Bazgaou's absence. We are entitled to do this by rule 26 of the Tribunals Rules. The effect of deciding an appeal in the absence of one of the parties is that that party has the opportunity to make an application, within 14 days of the release of the decision, to have it set aside on terms that appear just to the Tribunal. An application can only be entertained by the Tribunal if someone is present to represent the Appellant at the hearing of the application.

The background facts

3. Mr Bazgaou was importing the excise goods into the United Kingdom in a vehicle on 17 May 2004. He was stopped by an officer at the UK Control Zone at Coquelles, France.
4. On being stopped, Mr Bazgaou confirmed, among other things, that the vehicle was his. He confirmed that he had 30 boxes of chewing tobacco with him and that he sold them in his shop. He confirmed that he had not paid any duty on them. This information is taken from the officer's notebooks which were exhibited as part of the Customs' evidence at this hearing.
5. In the circumstances, the goods and the vehicle were seized on the basis that the goods were held for a commercial purpose. This is confirmed in the officer's notebook and recited in the relevant seizure documents.
6. On 16 February 2006, the East Kent Magistrates sitting at Dover ruled that the goods had indeed been held for a commercial purpose on importation into the United Kingdom and that they were chargeable with excise duty by virtue of section 2(1) of the Tobacco Products Duty Act 1979 and that no excise duty had been paid on the goods. The Magistrates condemned the goods and the vehicle as forfeit.

Mr Bazgaou's case

7. Mr Bazgaou's case is contained in letters that he or his representative wrote asking for restoration (dated 31 May and 11 July 2005). His case is summarized in two Notice of Appeal. In essence he states that he had not been given an option to pay duty on the goods and that there had been no attempt on his part to smuggle. In this respect he points out that the goods were not concealed. In his letter of 11 July 2005 Mr Bazgaou asserted that he did not know at the time that he was bringing in tobacco. He stressed that this had been his first offence.
8. At no point in Mr Bazgaou's communications with the Customs has he claimed that the goods were for his own use; but, in response to questions by the Customs officer, he indicated they were for sale in his shop.

The case for the Customs

9. In essence the Customs' case is that Mr Bazgaou was importing the goods into the UK for the purpose of selling them on for a profit. Their policy in relation to the goods which have been seized are not offered for restoration is, they say, reasonable and proportionate. That policy has been appropriately applied in the present case. The same applies to the decision not to restore the vehicle.
10. So far as the goods are concerned, the Customs rely on the affirmation given by Mr Bazgaou in the course of the interview on 17 may 2004 that he intended to sell the goods from his shop. They rely on the quantity of the goods (i.e. 150 kilogrammes of chewing tobacco) to demonstrate that the goods must have been held for a commercial purpose with a view to being sold at a profit. In any event, they mention, Mr Bazgaou has never suggested that the goods were held for any other purpose than for sale at a profit.

The Customs' policy

11. Under section 152(b) of Customs and Excise Management Act, the Customs may, if they see fit, "restore subject to such conditions (if any) as they think proper, any thing forfeited or seized" under the relevant Act.
12. The Customs have a policy in relation to excise goods and vehicles seized and forfeited in cases where the excise goods were imported to be sold for a profit, but the excise duty has not been accounted for. That policy was summarized by the review officer in his decision letter of 24 August 2005 as follows:

"Summary of Customs' Restoration Policy of Excise Goods

The Commissioners' general policy is that seized excise goods should not normally be restored. However, each case is examined on its merits to determine whether or not restoration may be offered exceptionally

Summary of Customs' Policy for the Restoration of Private Vehicles

The Commissioners' general policy is that private vehicles used for the improper importation or transportation of excise goods should not normally be restored. The policy is intended to be robust so as to protect legitimate UK trade and revenue and prevent illicit trade in excise goods. However vehicles may be restored at the discretion of the Commissioners subject to such conditions (if any) as they think proper (e.g. for a fee) in the following circumstances:

…

if the excise goods were destined for supply of a profit, the quantity of the excise goods is small, and it is a first occurrence …

…

In all cases any other relevant circumstances will be taken into account in deciding whether restoration is appropriate."

That policy was endorsed by the Court of Appeal in Lindsay v Customs and Excise Commissioners [2002] EWCA Civ 267. We refer in particular to paragraphs 63 and 72.

The Tribunal's conclusion on the Customs' decision

13. We are satisfied that the Customs applied their policy as set out above. We are further satisfied that they decided not to restore the vehicle and the goods on the basis of the guidelines set out in the policy and in doing so they took into account such, if any, factors as appeared to be exceptional in the circumstances.
14. The Customs took into account the substantial quantity of chewing tobacco being imported by Mr Bazgaou. This is fifty times the guidance level of 3 kilogrammes. The entire consignment was being imported for the purpose of onward sale at a profit.
15. The Customs have taken into account the fact that Mr Bazgaou had been in breach of the statutory requirements; consequently there had to be some penalty for the breach, as otherwise the statutory requirements would have been rendered meaningless and inoperable. Thus, for Customs to have simply permitted Mr Bazgaou to have imported the large quantity of chewing tobacco into the United Kingdom without duty having been paid would have rendered the statutory scheme for importing such goods meaningless.
16. The Customs also took into account Mr Bazgaou's assertion that he did not know that the goods contained tobacco. They did not regard this as credible given his confirmation in interview that the goods were chewing tobacco and that they had been described in that manner on the outside of the boxes.
17. The Customs have also taken into account the fact that not to restore a motor vehicle and excise goods is likely to cause hardship. The decision of the Customs took into account the fact that Mr Bazgaou is the owner of another motor vehicle, a transit van; consequently he had not made out his case that the refusal to restore the seized vehicle would have caused him exceptional hardship.
18. Our function is to decide whether the Customs could not reasonably have arrived at the decision that they did. We refer to section 16(4) of Finance Act 1994. We have examined the points taken into account by the Customs and as set out in the reviewing officer's letter. We are satisfied generally that the decision could reasonably have been taken by any body of Commissioners. It does not take into account irrelevant circumstances and does not leave out of account matters that we would regard as relevant. In the light of all the circumstances and in particular those summarized above, we think that the decision in relation to Mr Bazgaou was reasonably arrived at. The appeal should therefore be dismissed.

STEPHEN OLIVER QC

CHAIRMAN

RELEASED: 26 October 2006

LON/05/8106