United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01102.html
Cite as: [2008] UKVAT(Excise) E1102, [2008] UKVAT(Excise) E01102

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Peter Roebuck v Revenue & Customs [2008] UKVAT(Excise) E01102 (28 March 2008)

E01102

EXCISE DUTY – seizure – tribunal's jurisdiction – tribunal's fact finding powers – challenge to grounds for seizure – own use - abuse of process? – no – appeal allowed.

MANCHESTER TRIBUNAL CENTRE

PETER ROEBUCK

Appellant

and –

THE COMMISSIONERS OF

HER MAJESTY'S REVENUE AND CUSTOMS

Respondents

Tribunal: Richard Barlow (Chairman)

Susan Stott FCA CTA

Sitting in public in York on 10 January 2008.

The appellant in person.

Mr Nigel Clive of counsel instructed by the respondents' solicitor for the respondents.

© CROWN COPYRIGHT 2008


 


DECISION
1. This is an appeal against the respondents' refusal to restore to the appellant 13 kilograms of hand rolling tobacco seized from him at Coquelles on 20 January 2007. The decision to refuse restoration was given on 27 February 2007 and the appellant requested a review of that decision by a letter dated 28 February 2007. The review decision was notified by a letter dated 18 April 2007 and it was not conducted within the 45 days required by section 15(2) of the Finance Act 1994 and so the appeal is strictly against a deemed confirmation of the refusal to restore the goods though the letter of 18 April 2007 sets out the respondents' case so far as this appeal is concerned.
2. The goods in question were seized in the presence of the appellant so that a Notice of Seizure was not required under paragraph 1 of Schedule 3 to the Customs and Excise Management Act 1979.
3. The goods were seized on the grounds that they were held for a commercial purpose.
4. In principle, section 2(1) of the Tobacco Products Duty Act 1979 charges a duty on all tobacco products imported into the United Kingdom and by reason of regulation 12(1) of the Tobacco Products Regulations 2001 the excise duty point is when the goods are charged with duty, which is the time of importation in the case of imported goods. Regulation 13(1) requires the person holding the goods at the excise duty point to pay the duty.
5. However, where tobacco products are acquired for his own use in another European Union Member State by any person who transports them to the United Kingdom the excise duty point is delayed, by regulation 12(1A), until the goods are held for a commercial purpose. If no such holding for a commercial purpose ever occurs, though the goods are charged with the duty by reason of having been imported, it never becomes payable because the duty point is not reached.
6. By reason of regulation 12(1B)(b) own use includes use as a personal gift but paragraph (c) deems transfer to another person for money including reimbursement of expenses to be for a commercial purpose and if the goods were duty free in the other Member State that also deems them to be for a commercial purpose.
7. It is not in issue in this case that the goods were acquired duty paid in Belgium and, although Coquelles is in France, article 20(A) of the Channel Tunnel (Customs and Excise) Order 1990 extends, to goods brought into the Control Zone (usually referred to as Coquelles), the commissioners' power under section 139(1) of the Customs and Excise Management Act 1979 to seize goods as liable to forfeiture. Article 5(2) of the Order treats goods as being imported when they are brought into the Control Zone.
8. The appellant's case is very straightforward. He contends that the goods were for his own use in part literally and in part as gifts for which he would not be reimbursed. The commissioners' case is principally that the appellant cannot now raise the issue whether the goods were for his own use as that would be an abuse of process in light of the fact that that issue could have been litigated in the Magistrates Court (in fact the respondents have the option under Schedule 3 to the Customs and Excise Management Act 1979 of commencing condemnation proceedings in either the High Court or a Magistrates Court).
9. Mr Clive said in his closing address that a challenge to the commissioners' view that the goods were not for own use was not a permissible ground of appeal in a case like this, essentially because that is an issue that can only be decided in condemnation proceedings. In other words the respondents are prepared to succeed in this tribunal, indeed argue that they must succeed, even if that means that goods that should not have been seized are retained by them.
10. Mr Clive also contended that the tribunal has limited fact finding powers so that the tribunal should not even consider as a matter of fact whether the grounds for seizing the goods ever existed. He did not say so, but by taking that course, if a miscarriage of justice has occurred, the tribunal would save the commissioners the embarrassment of being shown to have perpetrated it.
11. Mr Clive cited the case of Gascoyne –v- Customs and Excise Commissioners [2005] Ch 215 as authority for the proposition that the tribunal has limited fact finding powers. We hold that submission to be wrong. In the case of Gora –v- Customs and Excise Commissioners [2004] QB 93 Mr Kenneth Parker QC, counsel for the commissioners, is recorded (at paragraph 38 of the judgement of Pill LJ) as having said:

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

Pill LJ endorsed that as correct in paragraph 39.

12. In Commissioners of Customs and Excise –v- David Weller [2006] EWHC 237 (Ch) Evans-Lombe J was hearing an appeal by the commissioners against a tribunal's interlocutory order that an appeal to the tribunal could proceed where there had not been condemnation proceedings. During the course of the judgement he said (at paragraph 23) that at the full hearing the tribunal would have to consider the facts including those relating to abuse of process more fully than had been the case in the interlocutory hearing and added:

"That tribunal may conclude, as a step in arriving at its decision that in all the circumstances Mr Weller should not be allowed to challenge the validity of the forfeiture. Though it is unlikely to do so if it was going to allow Mr Weller's appeal".

That last remark makes it clear that the tribunal can find the full facts, including those relating to the substantive merits of the appeal, even at the stage in its reasoning where it is considering whether the appeal can be allowed to proceed.

13. We accept that the tribunal might decline to make findings of fact about matters that are irrelevant to its decision, as might any first instance court or tribunal, but to say that it has limited fact finding powers goes too far.
14. In the Gora case the court of Appeal had held that the only Court in which an importer could challenge a seizure of goods was a Court in which condemnation proceedings were instituted. It followed that the tribunal had no jurisdiction to consider a case where the Court had condemned the goods as forfeit and that a deemed condemnation, that is to say a case where the owner of the goods had not required the commissioners to begin condemnation proceedings within the permitted time, would be in the same position as one where there had been proceedings.
15. In Gascoyne the Court of Appeal pointed out that that Court need not have made that holding in Gora (in legal terms that it was obiter dicta) in order to reach its decision but more importantly that, although it was correct as a matter of UK law, it did not necessarily afford an importer all the rights available to him in light of the European Convention on Human Rights. We would add that those rights might also be available as a matter of European Union Law given the terms of Council Directive 92/12/EEC.
16. Accordingly the Court of Appeal held as follows in the Gascoyne case (see paragraphs 44 – 57 of the judgement of Buxton LJ):

The reason why UK law would not permit the issue of the correctness of the seizure to be considered by the tribunal when it should have been considered by the courts is not the literal interpretation of the legislation but the principles of procedural law known as res judicata and abuse of process.

The owner of the goods can, because of the rights conferred by the European Convention on Human Rights, re-open the question of the seizure in the VAT and Duties Tribunal where the goods have been condemned by the deeming provision in paragraph 5 of Schedule 3 to the Customs and Excise Management Act 1979 (i.e. where the owner has not required the commissioners to begin condemnation proceedings within the month allowed) but that right will not apply where a Court has actually condemned the goods following a finding that they were not for own use.

17. The situation where the owner of the goods has required the commissioners to commence condemnation proceedings by giving a notice of claim under paragraph 4 of Schedule 3 to the Customs and Excise Management Act 1979 but withdraws that request either before the commissioners commence the condemnation proceedings or withdraws from those proceedings after they have been commenced, but before the hearing, is not specifically referred to in the judgement of Buxton LJ.
18. Condemnation proceedings are in rem and once the owner of goods has served a notice of claim and thus required the commissioners to begin condemnation proceedings it is arguable that an order of the Court is necessary even if the owner purports to withdraw from the proceedings, though no doubt in such cases the Court would decide the matter summarily without hearing evidence. Where the owner withdraws or purports to withdraw the notice of claim before the commissioners have actually instituted those proceedings it is less clear whether an order of the Court would still be needed. Paragraph 6 of Schedule 3 to the Customs and Excise Management Act 1979, which says that the commissioners "shall take proceedings" once a notice of claim has been given, suggests that an order would be needed even where the owner withdraws the notice of claim.
19. Although Buxton LJ did not refer to those circumstances directly and did refer specifically only to the case where there has been a deemed condemnation by reason of a failure to serve a notice of claim, we hold that in principle at least, the tribunal can deal with cases where the notice is withdrawn and the condemnation proceedings, if any, then go by default.
20. Mr Gascoyne had argued that a letter he had written to the commissioners should have been taken to be a notice of claim but the Court held against him on that issue so that the goods in that case had been condemned as forfeit under the deeming provision only and it was not strictly necessary for the Court to consider what the position might have been if he had given a notice of claim and withdrawn it before the proceedings had been commenced or had withdrawn from the proceedings after they were commenced but before they were heard.
21. In paragraph 54 of the judgement Buxton LJ said:

"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". (Emphasis added).

The reference to the only tribunal before which he has appeared would encompass a case where there had been a notice of claim which has been abandoned.

22. In addition, in paragraph 46 of the judgement, Buxton LJ refers to cases where the owner has failed in condemnation proceedings or let them go by default as cases where UK domestic law would not allow a "second bite at the cherry" and then he goes on to consider the Convention rights before contrasting in paragraph 51 a case where the Court has made an actual finding in condemnation proceedings with a case where they have gone by default. It is unclear whether the reference to "by default" was intended to apply only to the case where there has been a deemed condemnation because no notice of claim was given but that phrase seems apt to include a case where the owner did not contest those proceedings, at least if that led to them being withdrawn or decided summarily without consideration of the evidence.
23. The reference in paragraph 47 of the judgement to "normal English law rules of res judicata or abuse of process" as the basis for the conclusion that in UK domestic law the owner cannot challenge the seizure in the tribunal must encompass at least some cases where Court proceedings have been commenced because the statutory deeming provision is not an example of res judicata. The implication from that is that in Convention Law the situation may be different in cases where res judicata might apply in UK domestic law.
24. Clearly an appellant cannot challenge or contradict, in the tribunal, an actual finding of the Magistrates Court or the High Court but we conclude that, subject to any question of abuse of process or similar considerations, the appellants can raise the issue of own use in this case which has certainly not been the subject of substantive consideration by the Courts.
25. The appellant wrote to the respondents on 27 January 2007 and that letter was treated as a request for restoration of his goods. He said: "I would like to appeal against the goods been taken from me …". He went on to explain that the goods were for his own use. Clearly that letter could have been taken as a Notice of Claim leading to the institution of condemnation proceedings, though it appears that no such proceedings were commenced. The initial letter refusing restoration, dated 27 February 2007, stated that Mr Roebuck had withdrawn his appeal to the Magistrates Court which is apparently an error. The respondents had received two partly completed forms from Mr Roebuck with the letter of 27 January 2007. The first form stated that if he wished to ask Customs and Excise to "consider returning the [goods] you must make it clear (by ticking the box below) that you do not also wish to contest the legality of the seizure". Mr Roebuck did not tick the box which is next to the words "I/we do not wish to contest the legality of the seizure" but he had signed and printed his name in spaces provided for those purposes below the box. The second form accompanying the letter was for use by a person requesting restoration of the goods and it was filled in by Mr Roebuck who stated his reason for requesting restoration was that the goods were for his own use and as gifts for his family. At the foot of that form there is a Note stating that if the only reason why a person is requesting restoration is that Customs had no right to seize them, giving as an example own use, then he cannot rely upon that reason when requesting restoration.
26. The letter and the two forms could and perhaps should have been treated as a Notice of Claim but as no condemnation proceedings were commenced no question or res judicata can arise in this case, though the question of abuse of process does arise because the case is one where the deeming provision in paragraph 5 of Schedule 3 of the Customs and Excise Management Act applies so far as seizure is concerned.
27. The relevant facts so far as abuse of process is concerned appear to us to be as follows. Although the forms completed by Mr Roebuck attempt to explain the distinction between condemnation proceedings and the tribunal's role in cases of refusal to restore, we find that the appellant had not understood the distinction, although he did know in general terms that the Magistrates Court had potentially some role to play. He was aware that the relevant Magistrates Court would be in Dover and said to us in evidence "How would I get there?". He believed that the tribunal had jurisdiction as he had previously been successful in a broadly similar appeal to the tribunal. The distinction is not an easy one for a lay person to understand and indeed it is clear that Customs and Excise were unable to apply the law correctly in this case because they neither instituted condemnation proceedings nor clarified with the appellant what he wanted to do after receipt of the forms that were clearly ambiguous in the way that he had filled them in. Mr Roebuck is clearly not a person used to making the subtle distinctions of the sort needed to understand the complicated system the law has devised for resolving issues in this area.
28. We therefore hold that an abuse of process or similar concept does not arise and the appellant is not precluded from raising the question of own use in this tribunal on that ground.
29. We turn therefore to the evidence.
30. No witnesses were called by the respondents but a witness statement was read from Helen Perkins, the reviewing officer, and she produced the correspondence and the notebooks of the officer who had principally dealt with the appellant at Coquelles. Mr Roebuck gave evidence that was tested by cross examination.
31. He had travelled to Dover from Leeds on a bus which set off at 5am. The bus was to take about 40 passengers to Adinkerke in Belgium. The sole purpose of that part of the journey was to buy duty paid tobacco at the favourable Belgian price. The bus also stopped at a supermarket in France.
32. On arrival at Dover the passengers were interviewed in groups of ten or so by what Mr Roebuck took (correctly no doubt) to be Customs officers who asked how much money the passengers had and what they intended to buy in Belgium. Mr Roebuck answered their questions saying he intended to buy 260 kilograms of hand rolling tobacco and, when asked, he showed the money he had with him which he said was £1200. That part of his evidence was not challenged.
33. Mr Roebuck said that on returning to the bus the driver told the passengers that they would be questioned by Customs on the return journey. Again, that evidence was not challenged.
34. When the bus arrived at Coquelles on the return journey Mr Roebuck was interviewed and he told us that he did say that his income was £560 a week as recorded by the officer who interviewed him. In fact his income was slightly more than that and he had received a rebate of tax shortly before the trip (he produced pay slips proving these facts).
35. The reasons given for the seizure of the tobacco are set out in the officer's notebook. The first was that the officer claimed that Mr Roebuck had to look in his bag when he was asked what brand of tobacco he was carrying. He denied that in evidence and it seems clear that anyone asked to say what he had bought might well open the bag to show it even though he might know very well what it was. It seems the officer may be alleging that Mr Roebuck was carrying the tobacco for someone else. If that were so it would be the main ground for refusing restoration and as it is not relied upon we conclude that that is no longer in issue.
36. The officer notes the second reason as being that it would be unreasonable to give a majority of the tobacco away when he smokes a large amount himself. Mr Roebuck had said that the tobacco was for his own use and as gifts to family members. He told us the gifts had been intended to be made at Christmas but an earlier trip he had taken to buy the tobacco for that purpose was unsuccessful because of a problem about paying with a credit card. We accept that evidence is the truth.
37. Mr Roebuck is said to have given inconsistent replies about how long the tobacco would last compared with his rate of consumption as described to the officer and about how long the tobacco he had bought on a previous trip in June 2006 had lasted. We note that the officer also believed the rate of consumption to be excessive. Mr Roebuck told us that he only stated a rate of consumption because he was repeatedly asked and that he did not and could not give an accurate figure and we accept that.
38. The officer said that Mr Roebuck had no smoking materials on him and presumably again that was intended to imply that he was carrying the tobacco for someone else. He said that he had smoking materials in his jacket which was on the bus. We find that to be truthful evidence.
39. Our overall impression of Mr Roebuck's evidence is that he told the truth and that is based on his manner and the fact that he was not shaken by cross examination. He did not contradict himself or exaggerate his evidence and gave it is a sensible and restrained manner.
40. The fact that he knew he was likely to be interviewed on his return is of course relevant. Mr Roebuck struck us as being a sensible man of normal intelligence and it seems barely credible that he would bring tobacco back with him other than legitimately in the circumstances. Indeed presumably the whole purpose of the interviews of passengers before they leave Dover is to deter them from bringing in tobacco for illegitimate purposes and it seems unlikely that those who had any illegal motives would bring back amounts exceeding the guidelines after such a warning.
41. The review officer also relied upon some apparent inconsistencies in the consumption rates stated by Mr Roebuck when he was questioned in June 2006 and indeed at the tribunal hearing when he had previously successfully challenged a non-restoration but those inconsistencies arise from the difficulty we have mentioned already, Mr Roebuck was pressed for an answer and gave one that he was not really able to give accurately. The review officer also questioned whether it was worth Mr Roebuck's while to travel when he was going to give away a good proportion of the tobacco but he told us the cost of the trip was negligible (£29).
42. We find Mr Roebuck to be a truthful witness and that the tobacco was not for commercial purposes, as defined, i.e. it was for his own use and partly at least as gifts for family members.
43. In overall summary of the case we therefore hold that we are entitled to make full findings of fact, we hold that the appellant's Convention rights entitle him to challenge the correctness of the seizure and that he is not precluded by procedural issues such as abuse of process and the like from doing so in the circumstances of this case. We find that the goods were for his own use and that accordingly they were not liable to seizure or forfeiture.
44. Section 16(4) of the Finance Act 1994 provides that before an appeal can be allowed the tribunal must be satisfied that the commissioners' decision was unreasonable. Mr Clive urged us to conclude that that means that, unless the commissioners' decisions about the facts were ones that they could not have reasonably reached, we must take the facts as the commissioners found them to be and judge the reasonableness of their decision in light of those facts without substituting our own. We hold that given the fact finding powers of the tribunal and the terms of section 16(4)(b) of that Act, which appears to contemplate that the tribunal will direct a further review in the light of its findings, we do not agree that the question should be judged on the commissioners' view of the facts even if that view was one they could reasonably have reached. It is also relevant that the tribunal, having heard evidence on oath or affirmation which has been tested by cross examination, will be in a better position to make a finding of fact than a review officer who simply sees notebooks and reports from the relevant officers.
45. Accordingly we allow the appeal.
46. Our powers are limited by section 16(4) of the Finance Act 1994 but in accordance with those powers we direct that the review decision under appeal shall cease to have effect and we direct that a further review is to be conducted by an officer not previously involved in the case. We direct that that review is to be conducted in light of our findings of fact in this Decision and in particular in light of the fact that we have found that the goods were for the appellant's own use.
47. Such costs as the appellant has reasonably incurred in and arising from this appeal shall be paid by the respondents, such costs to be determined by a chairman sitting alone if not agreed.
CHAIRMAN RELEASED: 28 March 2008

MAN/07/8032