United Kingdom VAT & Duties Tribunals (Excise) Decisions

E01010


EXCISE DUTY – Non-restoration of cigarettes and hand-rolling tobacco – condemnation order made by magistrates in the absence of the Appellant – Appellant contended that he purchased the excise goods for personal use – condemnation order materially defective on the face of the order – legality of condemnation proceedings in doubt because the Appellant did not submit a notice of claim – Tribunal admitted evidence of personal use – no abuse of process – Review Officer's approach flawed – placed undue weight on an alleged inconsistency in the Appellant's interview and disregarded relevant facts – was the decision not to restore excise goods reasonable – no – appeal allowed and further review directed.

MANCHESTER TRIBUNAL CENTRE Reference No: MAN/06/8023

GERRY BACON Appellant

- and -

HER MAJESTY'S REVENUE and CUSTOMS Respondents

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

ELIZABETH POLLARD (Member)

Sitting in public in North Shields on 4 October 2006

The Appellant appeared in person

Elizabeth McClory, counsel instructed by the Acting Solicitor for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2006


 


DECISION

The Appeal

1. The Appellant was appealing against the Respondents' decision on review dated 29 March 2006 refusing restoration of excise goods comprising three kilograms of hand rolling tobacco and 3,200 cigarettes.
2. The grounds of Appeal as set out in the Notice dated 21 April 2006 were:

"I only had the legal limit, what the customs say. Yes I do give my mother some cigarettes but that is not breaking the law. It was 16 weeks since I had been. Only been three times in a year and only go when I need to. I am not breaking any laws. Just send me the court date".

Issues in Dispute

3. On 8 January 2006 a Customs Officer at Dover Eastern Docks stopped the Appellant who had travelled from Calais as a coach passenger where he had purchased 3,200 Lambert and Butler cigarettes and three kilograms of "Drum" hand rolling tobacco for £514. The Customs Officer seized the hand rolling tobacco and cigarettes because she was not satisfied that they were for personal use.
4. The Appellant sent an undated letter appealing against the seizure of the excise goods, which was accompanied by the Respondents' "Appeal Letter" which had been ticked in the "B" column: requesting return of things. The Respondents received the undated letter around 13 February 2006 when they refused restoration of the excise goods.
5. The Appellant sent another undated letter enclosing his pay slip, which was received by the Respondents on 15 February 2006. The Appellant stated that he did not agree with the decision and requested a date for the magistrates' court or departmental review. On 29 March 2006 the Respondents on review confirmed the non-restoration of excise goods.
6. On 1 September 2006 East Kent Magistrates ordered the excise goods to be condemned as forfeited. The condemnation order was made pursuant to paragraph 10(1) of schedule 3 of Customs and Management Excise Act 1979 because of the Appellant's failure to attend the hearing. The Magistrates also ordered the Appellant to pay the Respondents' costs of £1,300.
7. The Appellant contended that he had done nothing wrong. The goods were purchased for his personal use and their quantities did not exceed the legal limits. The Respondents submitted that the magistrates' condemnation order prevented the tribunal from taking account of the Appellant's evidence about personal use.
8. The two issues in this Appeal:

(1) Was the Tribunal entitled to take account of the Appellant's evidence about personal use?

(2) Whether Mrs Gillespie's refusal to restore the tobacco and cigarettes was a decision which no reasonable body of Commissioners could have arrived at. In order for the decision to have been reasonable Mrs Gillespie must have considered all relevant matters and must not have taken into consideration irrelevant matters.

The Evidence

9. We heard evidence from Mrs Gillespie who carried out the review decision on 29 March 2006, and the Appellant. The Respondents supplied a bundle of documents.

The Respondents' Review Decision of 29 March 2006

10. In reaching her decision refusing restoration, Mrs Gillespie examined all the circumstances surrounding the seizure of the excise goods except for the legality or correctness of the seizure. She formed the view that the Appellant had not provided her with details of exceptional circumstances that would justify restoration under the terms of the Respondents' restoration policy for excise goods. Further she found positive additional reasons for concluding that non-restoration of excise goods was appropriate.
11. The positive additional reasons were as follows:

(1) The Appellant told the Customs Officer that he last travelled four months ago. His last trip, however, was on 25 September 2005 which was closer to three months rather than four. On that trip the Appellant imported 3,200 cigarettes and three kilograms of hand rolling tobacco.

(2) The Appellant's disposable income was £43 per week, as he had been on incapacity benefit for the four months prior to being stopped by Customs on 8 January 2006. Mrs Gillespie found it hard to accept in view of his financial circumstances that he would give to his mother cigarettes to the value of £180. Although the Appellant later claimed that the money to purchase the cigarettes and hand rolling tobacco had come from holiday pay from his work, Mrs Gillespie considered it implausible that the Appellant would spend the last of his pay on excise goods unless he intended to sell them commercially.

(3) The Appellant told the Customs Officer that he obtained 80 roll-ups from a pouch of tobacco, smoking 30 to 40 roll-ups a day with one half pouch of tobacco lasting two weeks. Mrs Gillespie considered that the Appellant's statement about tobacco consumption was inconsistent, in particular his daily consumption as against his fortnightly consumption of one half pouch. Mrs Gillespie concluded that the Appellant did not smoke tobacco at all.

(4) Mrs Gillespie doubted the Appellant's assertion that the 1600 cigarettes and the three kilograms would last him about four months. She was of the opinion that each pouch of tobacco yielded about 100 roll ups. Mrs Gillespie considered that the tobacco and cigarettes should last about eight months which brought into question the excise goods purchased by the Appellant on his previous trip in September 2005.

12. Mrs Gillespie placed no weight on the fact that the Appellant's tobacco and cigarette importation did not exceed the guideline quantities as set out in the Regulations. In her view the Appellant's compliance with the guidelines did not preclude the Appellant's importation from being commercial.
13. At the time the Appellant was stopped, the Respondents' policy for seized excise goods was that they should not normally be restored. However, each case would be examined on its merits to determine whether restoration could be offered exceptionally. Mrs Gillespie indicated that the policy changed in March 2006. Instead of the excise goods being seized, the traveller had the option to pay the duty evaded when the goods had been purchased for non-profit making purposes.

The Appellant's Evidence

14. The Appellant contended that he purchased the tobacco and cigarettes for his own use. He gave 800 cigarettes to his mother because she looked after him. The Appellant suffered from mild epilepsy and did not give money to his mother for her care of him.
15. The Appellant did not understand Mrs Gillespie's finding that he did not smoke tobacco at all. The Appellant rolled two cigarettes, a thin and thick one, in the presence of the Customs Officer to demonstrate that the number of roll ups from a tobacco pouch depended upon its thickness. He had smoked since he was 11 years old.
16. The Appellant saw no contradiction in his statement to the Officer about the length of time a pouch of tobacco would last him. He told the Customs Officer that a pouch would last him two to three days and that he smoked about 30 to 40 cigarettes each day. The duration of the tobacco pouch, however, would depend upon whether he rolled thick or thin cigarettes.
17. The Appellant stated that he had done nothing wrong. He declared the amount of excise goods straightaway to the Customs Officer. The Appellant had nothing to hide. He purchased the legal amount of cigarettes and tobacco that he was entitled to bring into the United Kingdom.
18. The Appellant sent a bank statement to the Respondents around July 2006 which showed that he had the funds to purchase the tobacco and cigarettes. He worked on the production line for Appleyards Plastics in Middlesborough for three years and received Christmas pay in the sum of £808.
19. The Appellant suffered an industrial injury which completely crushed the calf muscle in one of his legs. His doctor told him that he could no longer stand on a production line, which forced the Appellant to give up work and rely on incapacity benefits. The Appellant believed that he was being victimised by the Respondents for being on sickness pay.
20. The Appellant did not attend the condemnation proceedings before the East Kent magistrates because he could not afford the journey to Dover which was a long way from his home. He also thought that he did not have to attend. The court notice advising him of the hearing on 1 September 2006, however, told him that he must attend as he was opposing the proceedings.
21. The Appellant was adamant that he broke no laws. He had imported the legal quantities for tobacco and cigarettes. He considered that he suffered hardship from the forfeiture of his goods. The Appellant lost both his money and the excise goods forfeited. He was also worried and stressed out by the delay in resolving his Appeal.

Jurisdiction of the Tribunal

22. The Respondents' power regarding restoration of goods and vehicles which have been forfeited or seized is set out under section 152(b) of the Customs and Excise Management Act 1979. Once the power is exercised whether in the form of a positive decision to restore on terms or a refusal to restore, the person affected has a right of appeal to the Tribunal. The powers of the Tribunal are limited in the terms set out in section 16(4) of Finance Act 1994 which provides that:

"confined to a power, where the Tribunal are satisfied that the Commissioners or other person making the 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;

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 that decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of unreasonableness do not occur when comparable circumstances arise in future".

23. The precondition to the Tribunal's exercise of one or more of its three powers is that the person making a decision could not reasonably have arrived at it. The test for reasonableness is set out by Lord Lane in Customs and Excise v JH Corbitt (Numismatists) Ltd [1980] STC 231 at page 239:

"…..if it were shown 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".

24. In Gora and others v Customs and Excise Commissioners [2003] EWCA Civ 525, the Court of Appeal decided that the Tribunal had a comprehensive fact finding jurisdiction in restoration Appeals:

"[The Tribunal] satisfies itself that the primary facts upon which the Commissioners have based their decision are correct. The rules of the tribunal and procedures are designed to enable it to make a comprehensive fact-finding exercise in all appeals.'

Strictly speaking, it appears that under s 16(4) of the 1994 Act, the Tribunal would be limited to considering whether there was sufficient evidence to support the Commissioners' finding of blameworthiness. However, in practice, given the power of the Tribunal to carry out a fact-finding exercise, the Tribunal could decide for itself this primary fact. The Tribunal should then go on to decide whether, in the light of its findings of fact, the decision on restoration was reasonable. The Commissioners would not challenge such an approach and would conduct a further review in accordance with the findings of the Tribunal" (paragraph 39).

25. The Court of Appeal, however, considered that the Tribunal's comprehensive fact finding jurisdiction did not extend to finding of facts about the legality of the seizure of the goods, which was a matter for the magistrates in condemnation proceedings. Thus Lord Justice Pill in Gora at paragraphs 56 – 58stated that

"56. The Tribunal accepted that where liability to forfeiture has been determined by a court in condemnation proceedings, there is no further room for fact finding by the Tribunal and it has no jurisdiction. However, the Tribunal went on to hold that Mr Gora did not give a notice under paragraph 3 and as a result the law took its course and the goods were treated as property seized and so liable to forfeiture. No finding of fact resulted. A deemed fact is not a real fact. It cannot consequently rank as a consideration relevant to the subsequent decision on restoration until determined by the Tribunal or conceded to exist. It was held to be open to the Tribunal to determine the question of fact whether the goods were seized.

57. I do not agree with that conclusion. Jurisdiction to decide whether any thing forfeited is to be restored under section 152(b) is with the Tribunal. The jurisdiction in condemnation proceedings is, by virtue of Schedule 3, with the courts. If the deeming provision in paragraph 5 of the Schedule operates, the thing in question shall be deemed to have been duly condemned as forfeited. The effect of this deeming provision is to provide that the thing is to be treated as forfeited. The purpose of the provision is to treat the deemed fact as a fact and I cannot accept that it can be treated as "not a real fact".

58. While the division of jurisdiction between the courts and the Tribunal may arguably be curious, and is probably retained because of the long standing jurisdiction of the courts in proceedings for condemnation, the division is clear and it is not intended that the Tribunal should have jurisdiction to reconsider the condemnation of goods as forfeited. Mr Cordara's submission that the Tribunal should have jurisdiction to consider whether duty has been paid is no more than another way of claiming that the court's findings should be re-opened. The Tribunal's view would produce the surprising result that the person whose goods had been seized could make a choice of fact-finding tribunal. If he wanted the court to determine the issue he would serve a notice under paragraphs 3 and 4; if he wanted the Tribunal he would do nothing. In my judgment, the statutory scheme does not produce that result. The application to the Tribunal is for restoration under section 152. There is no breach of Article 6 because the owner has recourse to the courts in the condemnation proceedings".

26. In Gascoyne v Customs and Excise Commissioners [2004] EWCA Civ 1162 the Court of Appeal elaborated upon Lord Justice Pill's observations regarding the Tribunal's jurisdiction to reconsider the condemnation of goods as forfeited. Lord Justice Buxton stated at paragraphs 46 – 56:

"46 All that said, I shall now turn to express my view on what was said by Pill LJ. So far as domestic law is concerned I would respectfully say that the observations were clearly correct. I do not think it can have been intended that the importer before the tribunal would have a second bite at the cherry of lawfulness, having failed in the condemnation proceedings, or let them go by default.

47 To the extent that it was argued that the literal provisions of section 152(b) are wide enough to allow such a second bite, I would agree that that is so, but the reason why the importer cannot have that liberty is not because of the terms of the statute, but because of the normal English law rules of res judicata or abuse of process.

48 As I have already said, that conclusion does not lead to the more severe conclusion, tentatively drawn by Lord Phillips MR in para 10 of the original judgment in this case, in that it does not cause the tribunal to be effectively functus even on issues of discretion.

49 I turn to the Convention. The forfeiture process interferes with Mr Gascoyne's rights to his property that are potentially protected by article 1 of the First Protocol to the Convention.

50 That is made clear in the judgment of this court in Lindsay v Customs and Excise Comrs [2002] 1 WLR 1766, 1784, para 52, to which I have already referred, in the leading judgment of Lord Phillips MR in that case. That being so, issues of proportionality, and indeed of due process in the arrangements made by this jurisdiction for dealing with issues of forfeiture, potentially arise.

51 As to those, in my view there is no Convention objection to holding that an actual finding in condemnation proceedings binds in a tribunal application, be it binding as to the decision as to lawfulness of seizure, or binding as to the underlying facts. In that respect, one can draw assistance, and the European Court of Human Rights has drawn assistance, from the parallel jurisprudence of article 6. If the importer has actually been in court, first of all he has had his day in court in front of a judicial body, and, secondly, as is well known, Convention jurisprudence permits a proportionate restriction on access to a court, provided the essential rights that are in contest from a Convention point of view are not thereby rendered nugatory. That was decided in Lithgow v United Kingdom (1986) 8 EHRR 329, incidentally a First Protocol case, at pp 393-394, para 194.

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

53 Miss Simler drew our attention in that connection to what was said by Lord Phillips MR in Lindsay's case, at p 1786, para 64, that the principle of proportionality requires that each case should be considered on its particular facts. Lord Phillips MR then went on to indicate the sort of facts that might be relevant.

54 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.

55 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.

56 The mere fact that the applicant has not applied to the commissioners, and therefore there have been no condemnation proceedings, would not, in my view, be enough. But, in my judgment, it goes too far to say that the deeming provisions have always, in every case, got to be paramount".

57 I do not think that that issue was ever brought to the attention of this court in Gora's case. If it had been, I doubt whether the court would have expressed itself in quite the unqualified terms that it adopted".

27. Against the background of those decisions of the Court of Appeal, Lewison J in the Commissioners of Customs and Excise v Albert Charles Smith ChD (2005) unreported, described the tribunal's function as analogous to a sentencing court in the case of an Appellant who challenges the legality of the forfeiture without invoking condemnation proceedings. Thus:

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

28. In the same decision Lewison J identified the approach that should be adopted by the Tribunal when dealing with the issue of whether the Appellant's challenge on seizure in restoration proceedings amounts to an abuse of process:

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

29. Evans-Lombe J in Commissioners of Customs and Excise v Weller [2006] EWHC 237 (Ch) concluded that whether a Tribunal should permit an Appellant to mount a challenge to the legality of the seizure in restoration proceedings would depend on the application of the principle of proportionality to the particular facts of the case in question.

"It will be seen, therefore, that Buxton LJ accepted what Pill LJ had said in the Gora case in the passage I have quoted above as a correct description of the effect of the various provisions dealing with forfeiture so far as domestic law was concerned. However he took the view that where there had been a deemed forfeiture under para 5 of Sch 3 (as has happened in the present case) it was a potential breach of the importer's rights under art 6 and art 1 of the first protocol of the Human Rights Convention to prevent him, in all circumstances, from seeking to reopen the issue of whether the original forfeiture was lawful as a reason, or one of the reasons, why his forfeited goods should be returned to him. Whether the Commissioners, and on appeal from them, the VAT and Duties Tribunal, should permit him to do so would depend on the application of the principle of proportionality to the particular facts of the case in question. Buxton LJ did not seek to limit what sort of facts would be relevant to the decision beyond a recommendation that the tribunal "will always have very well in mind considerations of, or similar to abuse of process. . .". It would not be enough "that the Applicant has not applied to the commissioners" under para 3 of Sch 3. Later in his judgment, commenting on a statement in the judgment being appealed that the importer "was still able to maintain a right to argue against the validity of the seizure" on the review under ss 14 and 15 to the commissioners and on appeal to the tribunal under s 16, he says, at para 76, "in the light of Gora's case . . . what the judge says there is not correct, or at least not unequivocally correct. That is because failure to give a para 3 notice will, in most cases, preclude subsequent challenge to the lawfulness of the seizure." He does not say in all cases".

Summary of Tribunal Jurisdiction

30. The review of the authorities on the Tribunal's jurisdiction in restoration proceedings establishes the following principles:

(1) The Tribunal's jurisdiction is limited to determining whether the Commissioners' decision to refuse restoration or to offer restoration on terms was reasonable.

(2) The Tribunal is not entitled to substitute its own view about whether the goods should be restored.

(3) The test for reasonableness is whether 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.

(4) In deciding the reasonableness of the Commissioners' decision the Tribunal has a comprehensive fact finding jurisdiction to establish whether the primary facts upon which the Commissioners have based their decision were correct.

(5) The Tribunal is not entitled to consider the lawfulness of the seizure, or determine the underlying facts relating to seizure when deciding the reasonableness of the Commissioners' decision to refuse restoration except when the Tribunal is satisfied that it would not be an abuse of process to take into account the facts surrounding the seizure of the goods.

(6) Where the goods have been condemned as forfeited by the magistrates, there is no further room for fact finding by the Tribunal on the circumstances surrounding the seizure.

(7) Where there has been a deemed forfeiture of the goods, the Tribunal should apply the principle of proportionality to the particular facts of the case having in mind considerations of abuse of process when deciding whether to reopen the issue about the lawfulness of the original seizure.

(8) The Appellant's failure to institute condemnation proceedings will, in most cases, preclude subsequent challenge to the lawfulness of the seizure in restoration proceedings. In such circumstances the Tribunal should consider the Appellant's response to two questions when deciding whether to re-open the facts of the original seizure. The first question is: why did the Appellant not institute condemnation proceedings. The second question is: should he have done so.

Is the Appellant entitled to rely on the underlying facts relating to the seizure?

31. The Appellant's principal ground for requesting restoration of the goods was that he had done nothing wrong because the cigarettes and tobacco purchased were for personal use. Respondents' counsel pointed out that the goods had been condemned as forfeited by East Kent Magistrates on 1 September 2006. Thus the Appellant's appeal was misconceived in that he was precluded from advancing his case on the basis of own use by the magistrates' order. Counsel applied for the Appeal to be struck out.
32. The Appellant did not attend the magistrates' hearing on 1 September 2006 because he could not afford to travel to Dover. The Appellant had been properly notified of the hearing. The notice advised him to attend as he was contesting the application. The magistrates also ordered him to pay the costs of the hearing in the sum of £1,300.
33. The condemnation order issued by the magistrates on 1 September 2006 contained on the face of it a material irregularity. Paragraph 5 of the order stated that

"Furthermore the quantities imported exceeded the guidelines quantities set out in Regulation 12 (1B)(e)(viii) of the Tobacco Products Regulations 2001 (SI 2001/1712) as amended by SI 2002/2692".

34. The quantities seized by the Respondents from the Appellant on the 8 January 2006 were 3,200 cigarettes and three kilograms of hand-rolling tobacco which corresponded exactly with the guidelines quantities set out in the Regulations.
35. The condemnation order stated that the Appellant by letter dated 9 January 2006 gave notice in writing of a claim that the goods were not liable for forfeiture. The letter referred to in the order was the pro-forma Appeal letter drawn up by the Respondents. That letter offered the Appellant the opportunity to appeal against the seizure and or to request return of seized things by ticking box A and completing part A if appealing against seizure, and or ticking box B and completing part B , if requesting restoration. The Appellant ticked box B and completed B. The Appellant, therefore, did not give a written notice dated 9 January 2006 claiming that the goods were not liable for forfeiture.
36. On 30 November 2006 the Respondents responded to the Tribunal's request for clarification about the Appellant's notice of claim. The Respondents believed that the Appellant had requested condemnation proceedings. For their belief, the Respondents relied on the Appeal letter referred to in paragraph 35 above, two undated letters from the Appellant and a tick box reply dated 26 May 2006 from the Appellant in response to the Respondents' standard letter for condemnation proceedings.
37. In his first undated letter the Appellant explained his belief that he had been victimised. He visited Citizens' Advice which told him to appeal. The Appellant did not state in his letter that he was appealing to the magistrates' court.
38. In his second undated letter received by the Respondents on 15 February 2006 the Appellant stated he would like a date for the magistrates' court or departmental review. This letter would appear to be in response to the Respondents' refusal to restore the goods on 13 February 2006 because they offered a departmental review in their reply of 22 February 2006 to the second undated later.
39. The Respondents' standard condemnation letter is sent after an Appellant has submitted a written notice claiming that the goods were not liable for forfeiture, and a hearing date has been fixed at the magistrates' court. The purpose of this letter is to discover whether an appellant wishes to continue with his appeal. In his reply dated 26 May 2006 to the standard condemnation letter, the Appellant ticked the box which stated that "I wish to contest this case. Please fix a date for a contested hearing at the first hearing". The Appellant's reply, however, was made subsequent to his Notice of Appeal to the Tribunal against the non-restoration which was dated 21 April 2006.
40. We make the following findings of fact in relation to the Appellant's correspondence with the Respondents dealing with his appeal:

(1) The Appellant was aggrieved by the Respondents' seizure of his tobacco and cigarettes. He sought advice from his local Citizens' Advice Bureau which told him to appeal. The Bureau assisted him with the completion of the relevant appeal documentation. We consider that the Appellant did not appreciate that the Respondents had embarked simultaneously on two different appeal processes for the return of his goods. As far as the Appellant was concerned he simply wanted his goods back with the result that he drew no distinction between the Respondents' separate correspondence on condemnation and restoration. He perceived the two sets of correspondence as dealing with the same issue of getting his goods back under the single umbrella of his appeal.

(2) The Appellant's appeal letter dated 9 January 2006 confined his appeal to the restoration route. The letter did not amount to a written notice appealing to the magistrates' court against the seizure of the goods.

(3) The two undated letters did not constitute a notice of appeal to the magistrates' courts. The undated letters formed parts of the chain of correspondence between the Appellant and the Respondents about the Appellant's request for restoration of the seized goods.

(4) The Appellant's reply to the Respondents' standard condemnation letter was not conclusive that the Appellant had requested condemnation proceedings before the magistrates' court. His reply was simply a restatement of his intention to pursue his Appeal.

(5) The Appellant did not submit a notice of claim to the Respondents that the seized goods were not liable for forfeiture.

41. Schedule 3 of the Customs and Excise Management Act 1979 sets out the procedure for bringing condemnation proceedings before the magistrates' court. Paragraph 6 of schedule 3 states that

"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".

42. Paragraphs 3 and 4 of schedule 3 deals with the notice of claim referred to in paragraph 6:

"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" (paragraph 3).

"(1) Any notice under paragraph 3 above shall specify the name and address of the claimant and, in the case of a claimant who is outside the United Kingdom [and the Isle of Man], shall specify the name and address of a solicitor in the United Kingdom who is authorised to accept service of process and to act on behalf of the claimant.

(2) Service of process upon a solicitor so specified shall be deemed to be proper service upon the claimant" (paragraph 4).

43. Under the statutory framework provided by schedule 3 of the Customs and Excise Management Act 1979 the Commissioners can only institute condemnation proceedings on notice from the claimant. In this Appeal we found that the Appellant did not submit a notice of claim, in which case the legality of the condemnation proceedings brought by the Respondents and the condemnation order issued by East Kent magistrates on 1 September 2006 must be problematical.
44. The issue that we have to decide is whether the Appellant is entitled to put forward his case for restoration on the facts underlying the seizure. The Court of Appeal in Gascoyne and Gora decided that where the magistrates had ordered condemnation there was no room for the Tribunal to find facts on the original seizure. Gascoyne permitted the Tribunal to admit facts relating to the original forfeiture in cases of deemed condemnation under paragraph 5 of schedule 3 of Customs and Excise Management Act 1979, provided that the admission did not amount to an abuse of process.
45. The circumstances of this Appeal, however, posed a new situation of whether the facts relating to the original seizure can be admitted when the condemnation proceedings and order were defective. In this instance there was no deemed forfeiture because of the condemnation proceedings. Whether the Appellant is entitled to rely on the facts relating to the original forfeiture would depend, in our view, on the application of the principle of proportionality to the particular facts of this case.
46. The facts of this case were:

(1) The condemnation order issued on the 1 September 2006 was materially defective on the face of the document. The order stated that the magistrates were satisfied that the quantities of excise goods seized from the Appellant were in excess of the guidelines quantities, when in fact the quantities seized corresponded exactly with the guidelines. Further the order referred to the Appellant's notice of claim dated 9 January 2006. The Appellant's notice of that date related solely to the restoration Appeal route.

(2) The defect on the face of the order about exceeding the guidelines cast doubt upon whether the magistrates made the order on the correct facts pertaining to the seizure of the Appellant's goods.

(3) The Respondents had no lawful authority to institute condemnation proceedings because the Appellant did not submit a notice of claim in accordance with schedule 3 of the Customs and Excise Management Act 1979. In those circumstances the lawfulness of the condemnation order of 1 September 2006 must be problematical.

(4) The Appellant did not appreciate that the Respondents had instituted simultaneously two separate appeal processes. The Appellant drew no distinction between the Respondents' separate correspondence on condemnation and restoration. He perceived the two sets of correspondence as dealing with same issue of getting his goods back under the single umbrella of his appeal.

(5) The Appellant did not have his "day in court".

47. We consider that the above findings outweigh potential criticisms of the Appellant, in that he should have realised that the Respondents had instituted condemnation proceedings, and he should have attended the hearing on 1 September 2006. We are satisfied that it would be disproportionate to disallow the Appellant's evidence on the original seizure, particularly as it would appear that the magistrates based their order on incorrect facts.

Our Findings of Fact on the Substantive Appeal

48. We make the following findings of fact relating to the substantive Appeal:

(1) The quantities of cigarettes and hand rolling tobacco brought in by the Appellant on 8 January 2006 corresponded exactly with the guidelines quantities in Regulation 12 (1B)(e)(viii) of the Tobacco Products Regulations 2001 (SI 2001/1712) as amended by SI 2002/2692.

(2) The Appellant declared the tobacco and cigarettes when requested by the Customs Officer and volunteered the receipt for the goods.

(3) The Appellant did not conceal the excise goods from the Customs Officer.

(4) The cost of the excise goods to the Appellant was £514.

(5) The Appellant had the means to pay for the excise goods, having received £808 in Christmas pay just before his trip to the continent.

(6) The Appellant's outgoings were low, £25 per week, as he lived with his mother.

(7) The Appellant smoked roll-ups and cigarettes, averaging about 30 to 40 each day.

(8) The Appellant gave away half the quantity of cigarettes to his mother as she looked after him.

(9) The hand rolling tobacco and the remaining cigarettes were for the Appellant's personal use.

Was the Decision of Mrs Gillespie Reasonable?

49. Mrs Gillespie based her decision to refuse restoration on two principal grounds. The first was that she could find no exceptional reasons to depart from the Respondents' policy to refuse restoration of seized goods. The Appellant considered that he had done nothing wrong and from his perspective there was no need for him to advance exceptional reasons for the restoration of the excise goods.
50. Mrs Gillespie in fairness then went on to consider in her second ground the Appellant's submission that he was blameless. Mrs Gillespie concluded from her analysis of the facts that the Appellant intended to dispose of the goods commercially. However, we consider that her analysis was flawed. Mrs Gillespie placed too much weight on an apparent contradiction in the Appellant's interview with the Customs Officer and the Appellant's current finances, and she disregarded facts in the Appellant's favour.
51. The apparent contradiction concerned the Appellant's consumption of one half pouch of tobacco every two weeks which was inconsistent with his assertion that he smoked 30 to 40 roll-ups each day. She concluded from that contradiction that the Appellant did not smoke tobacco at all. We consider that had Mrs Gillespie examined the interview as a whole, she would have realised that the Appellant misunderstood what was meant by a half pouch. Throughout the interview the Appellant consistently asserted that he smoked 30 to 40 cigarettes each day, and that he expected the tobacco and cigarettes to last him four to five months.
52. Mrs Gillespie acknowledged that the Appellant explained that he funded the tobacco purchase with holiday pay from his previous employment. However, she challenged the veracity of the Appellant's explanation by pointing out that he told the Customs Officer that he was in receipt of incapacity benefit. In those circumstances she doubted whether the Appellant would spend the last of his holiday pay on tobacco goods, unless he intended to dispose of them commercially. The Customs Officer, however, did not ask the Appellant about how he funded the cigarettes and tobacco transaction. The Officer restricted her question about the benefits he received. The Appellant supplied a truthful answer to the question. Mrs Gillespie's misinterpretation of the Appellant's interview with the Customs Officer influenced adversely the weight she placed on the Appellant's explanation about his ability to pay for the excise goods.
53. Mrs Gillespie in her consideration did not examine the relevance of the quantities of excise goods brought in by the Appellant and whether he concealed the goods from the Customs Officer or misled her about what he had purchased. These facts were pertinent to the issue of whether the Appellant intended to dispose of the goods commercially.
54. We had the advantage over Mrs Gillespie of hearing the Appellant on oath. Our findings of fact confirmed that the Appellant smoked tobacco and that he purchased the excise goods for his personal use.
55. We find that Mrs Gillespie's analysis was flawed in that she placed undue weight on questionable facts and disregarded relevant facts. We, therefore, conclude that Mrs Gillespie's decision of 29 March 2006 was unreasonably arrived at within the meaning of section 16(4) of the Finance Act 1994.

Our Decision

56. In view of our finding that the Respondents' decision of 29 March 2006 was unreasonably arrived at, we allow the Appeal.

Orders

57. We make the following orders pursuant to our decision to allow the Appeal and in accordance with section 16(4) of the Finance Act 1994:

a. The decision to refuse restoration of the excise goods shall cease to have effect from the date of release of this decision.

b. The Commissioners shall conduct a further review of the decision not to restore the excise goods and serve the same on both the Appellant and the Tribunal within 30 days of release of this Decision.

c. An Officer not previously involved with the case shall conduct the further review.

d. The further review shall be on the basis of the Tribunal's findings of fact set out in paragraph 48 of this decision.

e. The Review Officer shall take account of any further material or representations made by the Appellant within 14 days from release of this decision. The representations shall be made to HM Revenue and Customs Review Team, Detection South Region, Crownhill Court, Tailyour Road, Crownhill, Plymouth, PL6 5 BZ.

f. The Appellant will have a further right of appeal to the Tribunal if dissatisfied with the outcome of the further review.

58. The Appellant applied for costs in the sum of £50. We order the Respondents to pay costs of £50 to the Appellant.
59. We request the Respondents to examine whether they intend to enforce the costs order of £1,300 imposed by the magistrates on 1 September 2006 in view of our concerns about the lawfulness of the condemnation proceedings. Likewise the Appellant may wish to seek legal advice on this issue.

MICHAEL TILDESLEY OBE

CHAIRMAN

RELEASE DATE: 2 January 2007

MAN/06/8023