United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2007] UKVAT(Excise) E1035, [2007] UKVAT(Excise) E01035

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Ireneusz Paluch (t/a P & Z Trans SC v Revenue & Customs [2007] UKVAT(Excise) E01035 (27 March 2007)

E01035

Excise Duty – Tractor unit and trailer seized under s.88 CEMA 1979 (adaptation for smuggling) – whether decision of the Commissioners not to offer tractor unit and trailer for restoration unreasonable – held it was not – appeal dismissed

LONDON TRIBUNAL CENTRE

IRENEUSZ PALUCH

trading as P & Z TRANS SC Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: JOHN WALTERS QC (Chairman)

ALEX MCLOUGHLIN

Sitting in public in London on 25 January 2007

The Appellant did not appear and was not represented

Sarabjit Singh, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

When this appeal was called on for hearing in the absence of the Appellant in person or by any representative, Mr. Singh, for the Commissioners, submitted that the Tribunal should proceed to consider the appeal in the exercise of its powers under rule 26(2) of the Value Added Tax Tribunals Rules 1986. The Tribunal accepted this submission and proceeded accordingly.

The Appellant appeals against the decision of a reviewing officer (Officer R. Brenton) communicated in his letter dated 14 February 2006, confirming the decision of Officer S. Millard of the Commissioners' Post Seizure Unit, not to restore a vehicle (a DAF tractor unit) and trailer (a Tuat trailer) seized at Eastern Docks, Dover, on 20 October 2005.

The Tribunal heard no oral evidence, but a bundle of documents including copy notebook records of officers who questioned and interviewed the Appellant on 20 October 2005, a witness statement made by Officer Brenton, and correspondence between the Appellant and the Commissioners was before the Tribunal. From the evidence, the Tribunal finds the following facts.

The Appellant was stopped on 20 October 2005 at Dover Eastern Docks. He was driving a tractor unit, registration LU 62233 together with a trailer, numbered LBIS 070. Mr. Tomasz Daman Panasiuk was a passenger. On initial questioning by Officer A. Macfarlane, the Appellant was asked if he spoke English, to which he responded "a little". When asked whether he had any cigarettes, the Appellant said "No". When asked whether Mr. Panasiuk had any cigarettes, he answered "No, no smoke". Officer Macfarlane then carried out a search of the underside of the vehicle, where he noticed signs of disturbance in the air tanks. He tapped the side of the air tank with his panel popper and it made a dense sound instead of the usual ringing sound. This indicated to Officer Macfarlane that something was concealed within the air tank. He then inspected the two hoses attached to the air tank and found that they were not attached to anything at the other end. He removed the two straps that support the air tank, enabling him to rotate the tank. A cut at the top of the tank, which had a single bolt holding it on, was revealed. Officer Macfarlane then removed the bolt and the metal cut out plate. This revealed 9,000 Benson and Hedges cigarettes packed inside the air tank. He removed these cigarettes.

After a further examination, Officer Macfarlane saw that a box section had been built on to the end of the chain locker. The box section was not sealed and was an open space. Inside the space Officer Macfarlane found a cardboard box wrapped in a plastic bag. The box contained a further 2,000 Benson and Hedges cigarettes. During a further search of the vehicle a further 5,000 cigarettes were found behind the bulkhead. The total quantity found was thus 16,000 cigarettes.

Both the Appellant and Mr. Panasuik signed the officer's notebook to confirm that the above was true account of events and that they had understood what had happened. The goods, and the vehicle and trailer, were seized and the Appellant was given documents showing that the reasons for the seizure were: (1) the vehicle had been adapted to conceal smuggled goods; (2) the goods were concealed in 3 separate concealments; and (3) a large quantity of goods had been imported.

The first letter from the Appellant on the Tribunal's file is a letter, apparently dated 3 November 2005, in which the Appellant wrote requesting the return of the vehicle and trailer. He stated in that letter that the vehicle belonged to a leasing company and the trailer to the firm (P & Z Trans SC) of which he was co-owner. He went on: "Difficult economic situation of my country [Poland] reflects our small company which had been the reason for the legal offence I committed to enlarge the company's income and for which I have been justly punished". He stated: "The seizure of the car has dramatically lowered the company's income and makes it unable to run the company. To sum up, I am now strongly convinced that one may lose everything in order to their illegal activity [sic]".

The Commissioners replied on 8 November 2005, informing the Appellant that they were considering his request for restoration of the tractor unit and trailer, and asking for further information.

The Appellant wrote again, a letter dated 17 November 2005, enclosing documents. His letter stated: "I would also like to clarify some of my previous statements. First of all, I would like to inform you that I fired my employee who committed the offence to make some extra money. … I want to state that I knew nothing of the illegal cargo hidden in the car by my ex-employee [Mr. Panasiuk]". It appears from an official translation of one of the enclosed documents that the DAF tractor was leased by the Appellant's firm from a Polish entity called Bank Lease Fund Joint Stock Company (Bankowy Fundusz Leasingowy S.A.).

On 6 December 2005, Officer S. Millard wrote to the Appellant, informing him that the vehicle and trailer would not be restored.

On 24 January 2006, the Appellant, care of a friend's address in Birmingham, wrote to the Commissioners objecting to the decision not to restore the vehicle and trailer, "as the contraband found on the vehicle was there without my knowledge or consent. It was the second driver who brought the contraband onto the vehicle and it was for personal use and for family members in the U.K. it was not intended for any financial gain as he was not making any profit from the sale of the cigarettes."

The Commissioners received a letter dated 24 January 2006 from Bankowy Fundusz Leasingowy SA, explaining that they had learned on 23 January 2006 that their DAF tractor vehicle, on lease to the Appellant's firm, had been seized, and asking to receive information as to what legal action they should take to recover their property.

Officer Brenton carried out a review of the decision not to offer restoration, in accordance with sections 14 and 15, Finance Act 1994. He confirmed the decision not to restore. He cited section 88 Customs and Excise Management Act 1979, which provides that:

"Where a vehicle is or has been within the limits of any port … while constructed, adapted, altered or fitted in any manner for the purpose of concealing goods, that vehicle shall be liable to forfeiture".

He explained that the Commissioners' policy is normally to refuse to restore vehicles that have been seized under section 88, unless they are satisfied that the owner had no knowledge of the adaptation, in which case the vehicle may be restored on conditions, one of which would be the removal of the adaptation. He added that in the policy "vehicle" should be read to include any trailer. Officer Brenton recounted the facts of the seizure and recited the correspondence received from the Appellant. He stated that he was convinced that as the owner and driver of the vehicle, the Appellant had knowledge of the adaptation, and was aware that the air tank had not been connected, and the reasons for this. He was "further convinced" of the Appellant's involvement by his initial acceptance in correspondence that he had committed a legal offence, notwithstanding the Appellant's attempt (as Officer Brenton saw it) in later correspondence to retract this admission and to lay the blame on his co-traveller and employee, Mr. Panasiuk. He stated that he could not accept the truth of the statements in the Appellant's later letters (recited above).

After stating his satisfaction that the decision not to restore the vehicle was both reasonable and equitable, Officer Brenton went on to deal with the question of hardship. He wrote: "I have also paid particular attention to the degree of hardship caused by the loss of the vehicle. I sympathise with your difficulties in carrying on your business. One must expect considerable inconvenience as a result of having a vehicle seized by Customs, and perhaps a large expense in making other transport arrangements or even in replacing the vehicle. Hardship is a natural consequence of having a vehicle seized and it would have to be exceptional hardship for me to restore the vehicle under this part of the policy. I do not regard either the inconvenience or the expense caused by the loss of the vehicle in this case as exceptional hardships over and above what one should expect. In the circumstances I do not consider that you have suffered exceptional hardship. I conclude that there is no reason to disapply the Commissioners' policy of not restoring the vehicle in all the circumstances."

Mr. Singh in his submissions emphasised that the legality of the seizure was not challenged and that the matter before the Tribunal was the reasonableness and proportionality of the decision not to restore the vehicle, including the trailer, to the Appellant.

He submitted that in the light of the letter from Bankowy Fundusz Leasingowy SA, while there was some doubt as to whether the Appellant owned the tractor unit, it seems to have been accepted by him that he owned the trailer. The crucial point, he contended, was the question of the Appellant's knowledge of the adaptation to the tractor unit. If the Tribunal endorsed Officer Brenton's conclusion that the Appellant had knowledge of the adaptation, and was aware that the air tank had not been connected, and the reasons for this, Mr. Singh's submission was that the Commissioners' decision not to offer restoration of the tractor unit and trailer to the Appellant should be upheld on the following grounds.

First, it was reasonable and proportionate not to restore the trailer, apparently admitted to be the Appellant's property, because of the Appellant's knowledge of the adaptation to the tractor unit.

Secondly, it was reasonable and proportionate not to restore the tractor unit to the Appellant, either, on the basis that it was the Appellant's property (because he knew of the adaptation to the tractor unit) or on the basis that it was the property of Bankowy Fundusz Leasingowy SA, because in that case a decision not to restore it to the Appellant was obviously reasonable.

He reminded the Tribunal that we were not dealing with an appeal by Bankowy Fundusz Leasingowy SA against a refusal to restore the tractor unit to it.

He cited John Dee Ltd. v Customs and Excise Commissioners [1995] STC 941, a decision of the Court of Appeal, as authority for the proposition that if a tribunal finds that the Commissioners ought to have taken into account additional material in reaching a decision, but that nevertheless it finds that had such additional material been taken into account, the decision would inevitably have been the same, then the tribunal can safely dismiss an appeal. This was relevant, he submitted, if the Tribunal found that Officer Brenton should have, but did not, take into account the fact the tractor unit was leased by the Appellant's firm from Bankowy Fundusz Leasingowy SA.

The Tribunal accepts Mr. Singh's submissions that the decision not to offer restoration of the tractor unit and trailer to the Appellant was reasonable and proportionate for the reasons given by Officer Brenton. We find on the balance of probabilities that the tractor unit was the property of Bankowy Fundusz Leasingowy SA, but we also find, in terms of John Dee Ltd., that although Officer Brenton should have, but apparently did not, take that fact into account, his decision would inevitably have been the same if he had done so.

We therefore dismiss the appeal.

JOHN WALTERS QC

CHAIRMAN

RELEASE DATE: 27 March 2007

LON/2006/8034