United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01091.html
Cite as: [2008] UKVAT(Excise) E01091, [2008] UKVAT(Excise) E1091

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Mr Paul & Mrs Susan Steadman v Revenue & Customs [2008] UKVAT(Excise) E01091 (04 March 2008)

E01091

EXCISE DUTY – Seizure of cigarettes and tobacco – did tribunal have jurisdiction to consider legality of the seizure – on the facts no – deemed refusal of restoration – was the refusal reasonable – no – further review directed – appeal allowed

MANCHESTER TRIBUNAL CENTRE

MR PAUL & MRS SUSAN STEADMAN Appellants

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: LADY MITTING (Chairman)

JON DENNY

Sitting in public in Manchester on 29 January 2008

Paul Steadman for the Appellants

Josh Shields, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2006


 


DECISION
1. The decision under appeal is that of the Commissioners to refuse restoration of tobacco goods seized from the Appellants on 14 July 2006.
2. Mr And Mrs Steadman were intercepted on 14 July 2006 at Manchester Airport, having flown in from Spain. They were found to be carrying:

1. 6kgs Golden Virginia hand rolling tobacco

2. 4,400 Embassy Number One cigarettes

3. 4,080 Royals cigarettes

3. The Steadmans answered preliminary questions and then both agreed to stay for further interview. In answer to questions, it emerged that Mr and Mrs Steadman were returning from a package holiday. They had last travelled the previous year and would next travel the following year. They were both on disability benefit, receiving in the region of £1,200 per month. They were both heavy smokers. Mr. Steadman stated he smoked approximately eighty cigarettes per day, a combination of roll-ups and Embassies. Mrs. Steadman smoked between forty and sixty per day, Royals. The holiday had been funded from monies saved from their benefits, and they had also saved up enough to take approximately £2,000 with them for gifts, cigarettes and tobacco. They would both give some cigarettes and tobacco to their son and daughter as gifts, neither of them having given their parents any money for the purchase.
4. Customs Officers were not satisfied that the goods were not held for a commercial purpose and seized them. The following reasons were given for the seizure:

1. Income of £1,200 per month was not consistent with spending £1,500 on tobacco goods

2. The amounts they claimed to smoke were excessive and neither had smoked for a number of hours' interception

3. There were inconsistencies in the answers they gave to Officers about the amounts and which products were to be given to their children

4. The amounts being carried were in excess of Customs guidelines

5. Mr. Steadman carried 6kgs of tobacco plus 4,000 cigarettes and yet claimed to smoke only 25% more than Mrs. Steadman who had a similar quantity of cigarettes

5. On seizure, Mr and Mrs Steadman were given a copy of Notice 12A and they returned Letter B to the effect that they did not wish to contest the legality of the seizure, but did wish to apply for restoration. They also wrote in to Customs by letter dated 22 July 2006, also asking for the return of the goods. The letter in effect amounted to a detailed criticism of the way they had been dealt with by Officers, and explaining why they smoked so much. The letter concluded by saying they would have liked to go to court were it not for the legal costs and Mrs. Steadman's medical condition.
6. The request for restoration was put before Miss L Crowney. Miss Crowney replied on 13 October 2006 refusing restoration. In her letter she set out the Customs policy for the restoration of excise goods. The general policy was that excise goods seized would not normally be restored but where it could be shown that the goods were not for own use but were to be passed on to others on a not-for-profit reimbursement basis, those goods, would be offered for restoration on payment of the duty plus a penalty. Miss Crowney went on to say that because condemnation proceedings had not been sought, the goods were deemed to have been imported for a commercial purpose and she was not therefore considering the legality of the seizure. She went on to say:-

"I conclude that your case does not meet the criteria under which restoration may be offered. There are no exceptional circumstances that would warrant restoration. On this occasion the goods will not be restored."

7. On receipt of this letter, Mr. And Mrs. Steadman replied by letter dated 18 October 2006 asking for a review. The letter added little that was new but again criticised the intercepting Officers.
8. The requested review should have been carried out within 45 days but it was not until 26 February 2007 that the Commissioners responded. This letter was written by Mrs. Julie Wiggs who set out that, because of the failure to carry out the review within 45 days, the original decision was deemed upheld. She did however go on to carry out what she referred to as a "late review" and she also concluded that the excise goods should not be offered for restoration.
9. Mr and Mrs Steadman then appealed to the Tribunal. Three issues arose before us. First, Mr. Steadman asked that the tribunal should consider the legality of the seizure and whether or not the goods were purchased for his and his wife's private use. Secondly, we were asked by Mr. Shields to determine which of the Commissioners' decisions constituted the review decision and consequently the decision under appeal. Thirdly, having established which decision was under appeal, did the Commissioners act reasonably?

THE JURISDICTION OF THE TRIBUNAL

10. Mr. Steadman accepted that he and his wife had been given a copy of Notice 12A and that they had read it and understood it. He told us in his oral evidence that he and his wife would have wanted to seek condemnation proceedings but were deterred by two factors. First the Officer who had been interviewing Mrs. Steadman told her, it would appear in a rather threatening manner, that if they applied for condemnation proceedings it would cost them £1,500 each and they would be "facing me". Allied to this, and secondly, Mrs. Steadman is not a fit lady. She suffers from nerves and would be quite incapable of appearing before a Magistrates Court.
11. We referred ourselves to the cases of Gascoigne v Commissioners of Customs and Excise (2005) CH215 and to the case of Commissioners of Customs and Excise v David Weller (2006) EWHC 237 (CH). In Weller at paragraph 15, Evans-Lombe J referred to the approach of Lewinson J in Gascoigne and then went on to say in paragraph 16:

"I respectfully agree with Mr Justice Lewison's approach in this case, namely, that, whether or not an importer, having suffered a deemed forfeiture under paragraph 5 of schedule 3, is able to raise the validity of the forfeiture on a review by the Commissioners and on appeal from them to the Tribunal, depends on two questions, first, did the importer have a realistic opportunity to invoke the condemnation procedures 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 reopen the question of the validity of the original seizure on an application for return of the goods."

12. We considered with some care the wording of Notice 12A. Paragraph 2.14 makes it clear that if the applicant is successful before the Magistrates Court, not only will they not pay any costs but will in fact be entitled to payment of their own legal fees. Paragraph 2.16 makes it clear that the £1,500 is only payable if the court finds in favour of Customs. We saw no medical evidence of Mrs. Steadman's condition although we have no reason to doubt her illness. However, it would always have been possible for Mr. Steadman to have applied for condemnation proceedings and to have represented them both and, indeed, Mrs. Steadman did come to the Tribunal although she did not come into the courtroom. We are satisfied that Mr. And Mrs. Steadman fully understood the options open to them and made a reasoned decision to apply only for restoration. We do not consider the fact that costs might have been awarded against them had they lost to be sufficient cause to allow the legality of the seizure to be opened before us and neither do we consider Mrs. Steadman's medical condition to be sufficient grounds.
13. We therefore decided, and explained fully to Mr. Steadman, that we were not able or willing to consider own use and that the goods were, by the time the appeal came before us, deemed to have been imported for a commercial purpose.

WHICH DECISION IS UNDER APPEAL?

14. Mr. Shields put it to us that there were two review decisions and he asked us to determine which one should be considered the appeal decision. The two competing decisions were that of Miss Crowney dated 13 October 2006, which said decision was later deemed to be confirmed and secondly the "late review" carried out by Mrs. Wiggs of 26 February 2007. Mr. Shields suggested that the Tribunal might have retrospective power to extend the statutory time limit for the carrying out of a review and, if we did, then we should treat Mrs. Wiggs' decision as the appealed decision. If we did not then under section 15(2) Finance Act 1994, it would appear that the October decision should be treated as the decision under appeal. Mr. Shields knew of no authority giving us any power to extend the time limit. We do not believe any such power exists and it is quite clear to us that the decision under appeal is that of Miss Crowney, later deemed upheld, and we are therefore judging the reasonableness of that decision.
15. One further matter arose out of this decision by us. There had been no witness statement from Miss Crowney and she was not present in court. There had been a witness statement from Mrs. Wiggs which had been challenged and she was present. When we pointed this out to Mr. Shields he requested an adjournment to allow Miss Crowney to attend to give evidence. We do not for one moment blame Mr. Shields for the position in which he found himself. We allowed him to take instructions and he told us that Customs had picked the wrong officer. They had assumed that Mrs. Wiggs' review was carried out in time and that she was therefore the correct officer. It would in our judgement have been quite inappropriate to allow an adjournment and utterly unfair to Mr. And Mrs. Steadman. The position was quite clear throughout to the Commissioners. Nothing had occurred at the Tribunal for which they should not have been prepared and we directed that the case should proceed.

THE REASONABLENESS OF MISS CROWNEY'S DECISION

16. It remained Mr. Steadman's view throughout that the goods were for his and his wife's own use, both personally and as gifts to their children. As he maintained in answer to questions from the intercepting officers, he had received no money for the goods.
17. Mr. Shields invited the Tribunal to look only at Mr. Steadman's letter of 22 July as it was in response to that letter that Miss Crowney made her decision and the contents of that letter were the circumstances which she would have taken into account. Mr. Shields went on to argue that as the only argument ever pursued by the Steadmans was that the goods were for own use and this was not an argument which they were permitted to raise, Miss Crowney in effect had no other information on which she could base a decision. There was no evidence before her that this case fell into the second limb of the Commissioners' policy (passing on but not for profit) and in default it had to be assumed that it was a for-profit transaction. There was nothing, he argued, to displace the general policy that the goods should not be restored.

CONCLUSIONS

18. The limit of our jurisdiction is to consider the reasonableness of Miss Crowney's decision. In so doing, we consider whether there were any facts which she omitted to take into account or anything which she considered which she should not have done; whether she gave excessive weight or insufficient weight to any particular matter, or made an error in law. If we find her decision to have been unreasonable, we are then limited to directing that a further review should be carried out. It is not open to the Tribunal to substitute their own decision for that of the Commissioners.
19. The problem we as a Tribunal have in this case is that we have no idea what matters Miss Crowney took account of and what weight she attached to them. Clearly she took account of the contents of the letter of 22 July. She would not have been able to take account of the content of the Steadmans' letter of 18 October but this probably is of little consequence as it does not take the matter much further. If Mr. Shields is correct and Miss Crowney's thought process was merely that the Steadmans have only argued own use; they have never expressly said the goods were purchased to pass onto others but not for profit; the goods must therefore have been imported for sale for profit – then we consider this not to be sustainable or reasonable.
20. In reality, without hearing Miss Crowney and understanding why she took the view she did we are unable to find that her decision, deemed to be upheld, was reasonable and we have to allow the appeal. In line with our jurisdiction we direct that a further review should be carried out by an officer with no previous knowledge of the case. This matter has been going on for far too long already and we direct that the review should be carried out within six weeks of the date of this decision. If Mr or Mrs Steadman wish to make any further representations to the Commissioners then they should do so within 14 days of the release of this decision and the reviewing officer should take account of these representations.
21. One point occurs to us that was not argued by Mr. Shields but for the sake of completeness we should mention. It is of course open to the Tribunal, even if they consider the decision to have been unreasonable, to reject the appeal if the Tribunal considers that even had all the correct factors been taken into account and properly reasoned then the decision would inevitably have been the same. We need merely say that this is not a case where we are able to make that assertion with anything like the degree of certainty required. It is quite impossible to say that a correctly made decision would inevitably have been the same as Miss Crowney's.
22. In summary the appeal is allowed on the terms set out above. There was no application for costs and we make no order.

Lady Mitting

CHAIRMAN
Release Date: 4 March 2008