United Kingdom VAT & Duties Tribunals (Excise) Decisions

---

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Weller v Revenue & Customs [2008] UKVAT(Excise) E01110 (30 April 2008)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01110.html
Cite as: [2008] UKVAT(Excise) E01110, [2008] V & DR 221, [2008] UKVAT(Excise) E1110

---

[New search] [Printable RTF version] [Help]

---

David Weller v Revenue & Customs [2008] UKVAT(Excise) E01110 (30 April 2008)

E01110

EXCISE – RESTORATION – payment when restoration not possible – amount of payment - goods purchased on cross-channel ferry - ferry operator used simplified scheme under Article 7(9), EU Council Directive 92/12 - goods subject to French excise duty - goods forfeit by Customs on return to UK - decision on review to restore goods - restoration not possible as goods had been destroyed - payment in lieu of restoration offered - was it reasonable to offer French retail value of goods forfeited in lieu of restoration - yes - decision reasonable - appeal dismissed

LONDON TRIBUNAL CENTRE

DAVID WELLER Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: Nicholas Aleksander (Chairman)

Praful Davda

Sitting in public in London on 28 March 2008

Dougle Robinson, friend, for the Appellant

James Puzey of counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION

1. Mr David Weller was stopped at Dover on 1 July 2004. He had been a foot passenger and was carrying 1400 cigarettes, 1.5kg of hand rolling tobacco and 3 litres of spirits. After interview, the Commissioners concluded that the goods were held for commercial purposes and so they were seized. Eventually, following various reviews and appeals to this Tribunal and to the High Court, Customs wrote to Mr Weller stating that the goods should be restored to him free of charge. However Customs no longer had the goods and offered to make an ex gratia payment as a means of settling the matter. It is the amount of the payment that is the subject of this appeal.

Jurisdiction

2. This appeal relates to a decision on a review required by a direction by the Tribunal under section 16(4)(b) Finance Act 1994 ("FA 1994") released on 12 September 2006 on an appeal against an earlier review in respect of the same goods. The review concluded that the goods should be restored to Mr Weller free of charge, but that since restoration was not possible, an ex gratia payment would be offered. The question of the Tribunal's jurisdiction in these circumstances was addressed in Powell v HMRC [2005] 1 V&DR 1 (a decision not cited in argument before us), in which the Tribunal held that "restore" in section 152(b), Customs & Excise Management Act 1979 ("CEMA") includes a payment in lieu when restoration is no longer possible.
3. As this appeal is from a review decision, what we have to decide is whether we are satisfied that Customs could not reasonably have arrived at their decision to offer £390.97 in lieu of restoration of the actual goods that had been forfeited. If they could not, then we have to go on to decide what action we should take under section 16(4) FA 1994. Section 16(4) restricts the power of the Tribunal on an appeal. The Tribunal, of course, may dismiss an appeal but cannot simply allow it. The Tribunal may only do one or more of the three things mentioned in section 16(4) and then only if they are satisfied that Customs could not reasonably have arrived at the review decision. The three things are: (a) to direct that the disputed decision ceases to have effect; (b) to require Customs to conduct another review in accordance with the directions of the Tribunal; and (c) to declare the decision to have been unreasonable.

The Evidence

4. No witnesses appeared on behalf of the Appellant. Mr Neill Brettell, Higher Officer, HM Revenue & Customs gave evidence on behalf of Customs. Bundles of documents were produced by both the Appellant and by Customs.

The Facts

5. The background facts are not in dispute. On Sunday 11 July 2004, Mr Weller drove to Dover and left his car in a car park. He boarded the P&O ferry "Pride of Aquitaine" at Dover sailing for Calais. He had a non-landing ticket which he had purchased for £1 from an advertisement in a newspaper. The ferry set sail from Dover at 7:00am. The on-board shop opened at 7:20am. Mr Weller purchased cartons of cigarettes - 800 Benson and Hedges, 200 Berkley lites, 200 Berkley menthol, and 200 Special Kings. He also purchased 1.5kg of Golden Lee Virginia hand-rolling tobacco, 3 bottles of spirits and a carton of Café Creme small cigars. The time stamp on his till receipt showed that these purchases were made at 7:27am. The price paid by Mr Weller for the goods was £390.97. The goods were purchased with French excise duties paid, and bore French fiscal stamps.
6. Mr Weller returned on the ferry to Dover. When the ferry got back to Dover shortly after 11:00am, Mr Weller took the passenger bus back to "the controls" where he was stopped and questioned. The cigarettes, hand-rolling tobacco and the spirits (but not the cigars) were seized on the basis that they had been acquired for a commercial purpose. Mr Weller did not apply for condemnation proceedings, and therefore pursuant to paragraph 5, schedule 3, CEMA, these goods were deemed to have been duly condemned as forfeited on 11 August 2004. In accordance with Customs policy, as the goods were perishable, they were destroyed.
7. Mr Weller wrote to Customs requesting for his goods to be restored on the grounds that they were not acquired for commercial purposes. Mr Weller did not ask for condemnation proceedings, and condemnation was deemed to have taken place on 11 August 2004. Customs responded to Mr Weller's letter denying restoration. Mr Weller wrote and asked for a review, which was then appealed to this tribunal and to the High Court. Following a further review, Customs wrote to Mr Weller on 17 October 2006 stating that the goods should be restored to him free of charge. However Customs no longer had the goods and offered to make an ex gratia payment as a means of settling the matter. The review decision did not specify the amount of the payment, but an offer of £388.67described as ex gratia was subsequently made by Mr KT Phillips of the Post Seizure Unit. The amount was subsequently increased in correspondence with the Respondent's Solicitor's Office to £390.97, being the amount that Mr Weller had paid on the ferry for the goods.

The Issues in Dispute

8. The issue before the Tribunal is whether Customs offer of £390.97 as payment in lieu of restoring the goods is unreasonable.
9. Mr Weller argues that he is entitled a payment on one or other of the following bases:

(1) The amount that would be required to enable Mr Weller to purchase equivalent goods in the UK (UK duties paid). This is approximately £890; or

(2) Reimbursement of Mr Weller's original outlay (£390.97), plus (a) compound interest at 5.5%, (b) cost of return travel from Mr Weller's home to Dover (say 180 miles at 40p/mile - £72.00), (c) non-landing passenger fare for P&O Dover-Calais return (currently £20) and (d) lost wages for one day off work (say £120). As at October 2006 this amounted to £657.07 in total.

The Law

10. Mr Brettell, a Higher Officer of HM Revenue & Customs, gave evidence. Mr Brettell is a policy advisor within the Respondents responsible, amongst other things, for policy matters concerning the sale of tobacco and alcohol products on board ships and aircraft. He explained to us the law relating to the sale of excise goods on the cross-channel ferries and the manner in which it is administered in practice by Customs.
11. The sale of excise goods on journeys between member states of the European Union is governed by Council Directive 92/12. Articles 7 and 8 of the Directive are set out below:

Article 7

In the event of products subject to excise duty and already released for consumption in one Member State being held for commercial purposes in another Member State, the excise duty shall be levied in the Member State in which those products are held.

To that end, without prejudice to Article 6, where products already released for consumption as defined in Article 6 in one Member State are delivered, intended for delivery or used in another Member State for the purposes of a trader carrying out an economic activity independently or for the purposes of a body governed by public law, excise duty shall become chargeable in that other Member State.

Depending on all the circumstances, the duty shall be due from the person making the delivery or holding the products intended for delivery or from the person receiving the products for use in a Member State other than the one where the products have already been released for consumption, or from the relevant trader or body governed by public law.

The products referred to in paragraph 1 shall move between the territories of the various Member States under cover of an accompanying document listing the main data from the document referred to in Article 18(1). The form and content of this document shall be established in accordance with the procedure laid down in Article 24 of this Directive.

The person, trader or body referred to in paragraph 3 must comply with the following requirements:

(a) before the goods are dispatched, make a declaration to the tax authorities of the Member State of destination and guarantee the payment of the excise duty;

(b) pay the excise duty of the Member State of destination in accordance with the procedure laid down by that Member State;

(c) consent to any check enabling the administration of the Member State of destination to satisfy itself that the goods have actually been received and that the excise duty to which they are liable has been paid.

The excise duty paid in the first Member State referred to in paragraph 1 shall be reimbursed in accordance with Article 22 (3).

Where products subject to excise duty and already released for consumption in a Member State are to be moved to a place of destination in that Member State via the territory of another Member State, such movements shall take place under cover of the accompanying document referred to in paragraph 4 and shall use an appropriate itinerary.

In the cases referred to in paragraph 7:

(a) the consignor shall, before the goods are dispatched, make a declaration to the tax authorities of the place of departure responsible for carrying out excise-duty checks;

(b) the consignee shall attest to having received the goods in accordance with the rules laid down by the tax authorities of the place of destination responsible for carrying out excise-duty checks;

(c) the consignor and the consignee shall consent to any check enabling their respective tax authorities to satisfy themselves that the goods have actually been received.

Where products subject to excise duty are moved frequently and regularly under the conditions specified in paragraph 7, Member States may agree bilaterally to authorize a simplified procedure in derogation from paragraphs 7 and 8.

Article 8

As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the Member State in which they are acquired.

12. Mr Brettell told us that there were two ways in which shops could be operated on a cross-Channel ferry under the terms of Article 7 of the Directive. Under the first method, the shop would be open for the entire duration of the crossing. While the ferry was within UK territorial waters, the stock on the ferry be UK duty paid and bear UK fiscal stamps. However as soon as the ferry crossed into French territorial waters, the stock would fall within Article 7(1), as it would have been originally released for consumption in the UK, but was now held for commercial purposes in France - and accordingly French excise duties would be due. In addition any UK fiscal stamps would need to be removed and replaced by French fiscal stamps. To operate a shop on a ferry on this basis - with the requirement for the payment of French duties (and refund of UK duties) and the replacement of fiscal stamps when crossing from UK to French territorial waters (and the reverse procedure operating when crossing the other way) - was wholly impractical, and to Mr Brettell's knowledge no one operated any shop on a cross-Channel ferry on this basis.
13. Instead, ferry operators use a simplified procedure authorised under a derogation under the provisions of Article 7(9). The simplified procedure is based upon the ferry starting on its journey in France, and ultimately ending its journey back in France - only transiting through the UK. The shop is closed for the sale of excise goods whilst the ferry is in UK territorial waters. Any such stock is therefore not held for commercial purposes in the UK during that time, as it is not available for sale. Under the simplified procedure all the stock on the ferry is released for consumption in France, and is only held for commercial purposes by the ferry operator whilst the ferry is in French territorial waters.
14. In addition, because of the difficulties in determining when the ferry crosses from UK to French territorial waters, the derogation allows Customs to agree with ferry operators a time-based system to determine when ferries enter and leave UK territorial waters. This is based upon the vessel and the route taken to and from each port. In the case of the Pride of Aquitaine, Customs consider that it enters into or exits from the UK territory 20 minutes after leaving or arriving at the Dover dockside.
15. The facts in this case are entirely consistent with the simplified procedure. The on-board shop opened at 7:20am - 20 minutes after the ferry departed the Dover dockside. Mr Weller completed his purchases at 7:27am. The goods would have been released for consumption in France, and would have been subject to French excise duties and French fiscal stamps. On his return to the UK, Mr Weller sought to import these goods into the UK without having to pay UK excise duties under the provisions of Article 8 of the Directive, on the basis that the goods had been subject to French excise duties (France being the Member State in which they had been acquired) and were being imported into the UK for personal use.

Contentions of the parties

16. We had the benefit of an extensive skeleton argument from the Appellant. The Appellant's contentions fall under two grounds.
17. The first ground is that Custom's offer of compensation is inadequate and unjust as it fails to satisfy the Appellant's human rights. The Appellant submits that he is entitled to adequate financial recompense for the full economic loss suffered by him in replacing the goods which had been forfeited. The Appellant referred to Article 1 of the First Protocol of the European Convention (which is brought into force in the UK under clause 1(1)(b) and schedule 1, part II, Human Rights Act 1988). This provides:

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law …"

18. The Appellant submits that in restricting their offer of compensation to the price paid on board the ferry, Customs are interfering with this right, as the Appellant is, as a matter of fact, unable to restore his possessions on an equivalent basis for the amount offered - as he must either pay the current UK high street price or travel to Dover to undertake a return trip to France at his own expense and inconvenience in order to purchase like-for-like goods. The Appellant also notes that the hand rolling tobacco is not available on the high street in the large sized pouches that are sold on ferries, and buying 1.5kg of hand rolling tobacco in smaller pouches will carry an additional cost.
19. We do not consider that the rights of the Appellant under the European Convention are of much assistance in this case. The Appellant's rights under Article 1 of the First Protocol are subject to the important qualification that the right to peaceful enjoyment of possessions does not in any way impair the right of the State to enforce such laws as it deems necessary to secure the payment of taxes or other contributions. The forfeiture of the Appellant's goods was undertaken in accordance with the laws of the United Kingdom, and the laws give the Appellant the right of appeal to this Tribunal and to the higher courts - which the Appellant has exercised. Customs do not dispute that the Appellant is entitled to compensation for the destruction of his goods - the question is the amount - and Customs agree that in determining the amount of the compensation, they are subject to the oversight of this Tribunal and the higher courts in making that determination. We do not consider that any of the Appellant's convention rights have been infringed by this process, and we do not consider that the European Convention is of much assistance in determining the amount of compensation that is due to the Appellant.
20. The second ground is that the ferry was in UK territorial waters at the time the purchases were made, and therefore, following the decision of the High Court in R (on the application of the Commissioners for HM Revenue and Customs) v Machell [2005] EWHC 2593 (Admin), the measure of compensation should be the UK duty paid price.
21. The Appellant referred us to the Territorial Sea Act 1987. Section 1(1) of that Act provides that the breadth of the territorial seal adjacent to the United Kingdom shall be 12 nautical miles. We note that the Straits of Dover are approximately 33km (17.8 nautical miles) wide at their narrowest point. The Appellant submitted to us that as the UK's territorial sea extended 12 nautical miles from the coastline, the territorial boundary between the United Kingdom and France was therefore beyond the mid-point of the English Channel. Although we had no detailed submissions or evidence on the point, we take the view that given the principles of international law, the boundary between the UK and France is unlikely to be nearer to France than to the UK, and that section 1(2) of the Act is likely to be in point (section 1(2) provides that by Order in Council the territorial sea may extend to some other line than that provided in section 1(1) for the purposes of implementing any international agreement or otherwise).
22. The Appellant submitted that the technical specification for Pride of Aquitaine shows a maximum speed of 21 knots (say 38.9 km/hr). Accordingly the maximum distance that could be travelled in the 27 minutes (between the ferry leaving Dover and the time of the sale) would be 9.45 nautical miles (say 17.5km.). In practice, submits the Appellant, the ferry would be unlikely to reach as far out to sea as this - it would take some time before it reached its maximum speed (if indeed it travelled at its maximum speed), and it would probably not be travelling in a straight line from Dover to Calais. The Appellant therefore submitted that at 7:27am (when the goods were sold) the ferry was within UK territorial waters. Because the goods were sold in the UK, the Appellant submits that in determining the amount of compensation due, the goods should be valued on the basis of their UK duty-paid price (relying upon the decision in the Machell case). Customs rely upon Machell to arrive at exactly the opposite conclusion, for reasons which will become apparent.
23. The Machell case is a decision of the High Court on a judicial review relating to two instances where tobacco products had been purchased in Belgium in quantities in excess of the Customs guideline quantities. Belgian duty had been paid on the goods. The goods were seized by Customs on their importation into the UK on the basis that they were intended for commercial use. Notice was given in both instances by the importers under paragraph 3, schedule 3 CEMA claiming that the goods were not liable to forfeiture. Customs took proceedings for the condemnation of the goods as required by CEMA, and the Dover Magistrates' Court condemned the goods as forfeit. In both instances the importers appealed to the Crown Court, and their appeals were successful. However, between the condemnation of the goods by the Magistrates' Court and the successful appeal before the Crown Court, Customs had destroyed the goods. As a result, the importers were entitled to compensation in accordance with paragraph 17, schedule 3, CEMA. This relevant provisions of paragraph 17 were as follows:

17 (1) If, where any thing is delivered up, sold or destroyed under paragraph 16 above, it is held in proceedings taken under this Schedule that the thing was not liable to forfeiture at the time of its seizure, the Commissioners shall, subject to any deduction allowed under sub-paragraph (2) below, on demand by the claimant tender to him—

(a) an amount equal to any sum paid by him under sub-paragraph (a) of that paragraph; or

(b) where they have sold the thing, an amount equal to the proceeds of sale; or

(c) where they have destroyed the thing, an amount equal to the market value of the thing at the time of its seizure.

(2) Where the amount to be tendered under sub-paragraph (1)(a), (b) or (c) above includes any sum on account of any duty or tax chargeable on the thing which had not been paid before its seizure the Commissioners may deduct so much of that amount as represents that duty or tax.

(3) If the claimant accepts any amount tendered to him under sub-paragraph (1) above, he shall not be entitled to maintain any action on account of the seizure, detention, sale or destruction of the thing.

(4) For the purposes of sub-paragraph (1)(c) above, the market value of any thing at the time of its seizure shall be taken to be such amount as the Commissioners and the claimant may agree or, in default of agreement, as may be determined by a referee appointed by the Lord Chancellor (not being an official of any government department), whose decision shall be final and conclusive; and the procedure on any reference to a referee shall be such as may be determined by the referee.

24. It must be noted that the provisions relating to compensation in paragraph 17 only apply in cases where the goods in question had been the subject of condemnation proceedings, and the court determines that the goods were not liable to forfeiture. In this case, Mr Weller did not apply for condemnation proceedings, and therefore the goods were deemed to have been duly condemned as forfeited. Customs submit that it would be perverse if someone whose goods were duly forfeited (as in this case) was entitled to a greater amount in compensation than someone whose goods were determined not to be liable to forfeiture. Accordingly Customs submitted that the principles applying to the determination of compensation under paragraph 17 were equally applicable to this case. We agree with this submission.
25. The issue before the High Court in Machell was the basis upon which compensation should be determined. Under paragraph 17(1)(c), as the goods had been destroyed, the importers were entitled to the market value of the goods at the time of seizure. The relevant portions of Stanley Burton J's decision are as follows:

[30] The next question is: what are the goods the purchase and sale of which is envisaged in determining market value? If one answers simply, for example, cigarettes of a certain brand, one can take the price at which such cigarettes are sold in the UK as their market value. But in my judgment that would be to refer to goods that are materially different from those imported by the Interested Parties. The retail price in the UK is of cigarettes on which UK duty has been paid. That is demonstrated by the fact that they bear the requisite fiscal mark. The Interested Parties' cigarettes were not cigarettes on which UK duty had been paid and they therefore did not bear the fiscal mark. It was for that reason that they could not be lawfully bought or sold in the UK. It follows that the duty paid price of similar cigarettes or tobacco in the UK was not their market value for the purposes of para 17 of the Third Schedule.

[31] This does not however mean that the goods had no market value. In the ordinary way, unless there is something to indicate a different conclusion, one would assume that the market value of goods for the purposes of para 17 is the value both at the date and the place of seizure. But para 17 specifies only the relevant date at which the market value is to be determined; it does not specify the location of the market, and it would be wrong to imply a restriction that Parliament has not included. If there is no lawful market at the place of seizure, and therefore no market value there, one is driven to a market value at a place where similar goods may be lawfully bought and sold. I say this because, like the Court of Appeal in the Building and Civil Engineering Holidays Scheme case, I consider it necessary to strive against concluding that the market value of goods lawfully purchased is nil. That would be a conclusion that Parliament, which clearly intended to confer a measure of compensation on persons whose imported goods are seized and destroyed, could not have intended. There was a place where the goods in question could be lawfully bought and sold, namely the country of purchase. In my judgment, the market value of cigarettes bought in retail quantities in Belgium is their retail price in Belgium.

[32] It may be that some support for this conclusion may be derived from a consideration of the provisions of para 17(1)(b) and (2). Suppose Customs had sold the tobacco goods they had seized instead of destroying them. (For the purpose of this comparison, I make the assumption that the packaging complied with English Law.) I do not see why Customs could not deduct from the amount to be tendered to the importer the amount of the duty on those goods. It has to be borne in mind that the deduction permitted by para 17(2) applies only where the goods were not in fact liable to forfeiture for (in this example) non-payment of duty. It is difficult to see why the amount payable under para 17(1)(b) should differ drastically from that payable under sub-paragraph (c).

[33] I turn to consider the question whether travel costs are recoverable under para 17 of Sch 3. Customs have presumably conceded their recoverability on the basis that without them the amount payable under para 17 would not fully compensate a personal importer. Consideration of this issue involves consideration of the nature of the right conferred by para 17(4) of Sch 3.

[34] It is implicit in s 144 that if Customs seize goods without reasonable grounds for doing so, they are liable in damages at common law. It is reasonable to infer that in the circumstances specified in s 144(2) in which Parliament has excluded that liability, the liability of Customs provided under subsection (3) is for something other, and presumably less, than common law damages. Leaving aside the question whether the compensation referred to in that subsection is identical to that provided for in Sch 3, on which I express no view, in these circumstances there is no presumption that Sch 3 confers a right to an amount equal to common law damages, and if anything a presumption the other way. Authorities on damages at common law may be a guide to what is fair and just, and may therefore influence the interpretation of the statute, but they must give way to the express provisions of the statute. In other words, the issue before the Court is one of statutory interpretation rather than the application of common law principles applicable to the measure of damages for torts or breaches of contract causing the loss of goods.

[35] When I turn to para 17 of Sch 3, I find provisions that do not confer a right to damages. Paragraph 17 confers a right to an amount equal to market value. Like Mr Machell and Mr Edis, I cannot see how it can be construed as conferring a right to travel costs in addition to the value of the goods in question on the relevant market. Mr de la Mare referred me to the well-known decision of the House of Lords in The Liesbosch [1933] AC 449, in which the costs of the transport of a comparable dredger from the place of her acquisition to the place where she was to be used were included in the damages recoverable by the appellants, the owners of the dredger that had been sunk as a result of the negligence of the respondents. However, those costs were not recoverable as a component of the market value of the sunk dredger, but as a component of the appellants' loss in addition to her market value. Lord Wright, all the other members of the House agreed, summarised at 468 the measure of damages recoverable as follows:

. . . it follows that the value of the Liesbosch to the appellants, capitalized as at the date of the loss, must be assessed by taking into account: (1.) the market price of a comparable dredger in substitution; (2.) costs of adaptation, transport, insurance, etc., to Patras; (3.) compensation for disturbance and loss in carrying out their contract over the period of delay between the loss of the Liesbosch and the time at which the substituted dredger could reasonably have been available for use in Patras, including in that loss such items as overhead charges, expenses of staff and equipment, and so forth thrown away, but neglecting any special loss due to the appellants' financial position.

[36] In my judgment, therefore, travel costs are not recoverable under para 17.

[37] I reach these conclusions without regret. To include travel costs would involve difficulties of assessment that in my judgment para 17 is designed to avoid. What if the goods were purchased in Poland, by someone who travelled business class? Would he be entitled to the cost of a business class return ticket? Would the market value of his cigarettes differ from that of the same cigarettes purchased by someone who travelled by coach? Would the entitlement to travel costs depend on whether the travel had a purpose other than the purchase of the goods in question? Would someone who purchased the goods after a long holiday in Europe recover something other than someone who had crossed the Channel for the sole purpose of buying alcohol and tobacco? Mr de la Mare's response to such questions that the travel costs would be restricted to those that would be reasonably incurred for the purpose of buying replacement goods raises questions as to what is reasonable, and in any event by introducing principles applicable to the assessment of damages and mitigation of loss confirms that travel costs are a component of damages rather than of market value.

[38] It is true that payment of the market value of goods may not in many cases amount to adequate compensation. Given the wide application of Sch 3, which is not limited to personal imports, I cannot consider every possible case that may arise under para 17. But in the case of personal imports, para 17 will generally ensure that the importer's expenditure on his goods is reimbursed. If he purchases and imports quantities in excess of the guide quantities, he should be aware that he faces the risk of Customs' suspicions being aroused and his goods seized and only his expenditure on the goods reimbursed. If he bought the goods while on holiday, he will have lost only one of the benefits of his travel. If he travelled to Europe for the sole purpose of purchasing alcohol and tobacco, he is able to return and with the payment made by Customs replace the lost goods. To pay him the UK retail price would enable him to return to Europe, replace the goods seized and pocket the substantial difference between the UK price and the Continental price, less only his travel costs, which given the level of imports in the cases I have seen may be relatively insignificant. Reimbursement at UK price levels may operate unfairly to the public purse, just as reimbursement at Continental price levels may be argued to be unfair to at least some personal importers. No formula, short of full compensation, can be fair as between the personal importer and the public purse in all cases.

26. The Appellant relies upon Stanley Burton J's decision - particularly the concluding sentences of paragraph [31] - in support of his argument that he is entitled to the UK duty paid value of the goods. As, according to the Appellant, the goods had been purchased in retail quantities whilst the ship was in UK territorial waters, their market value is their retail price in the UK.
27. Customs rely upon the decision to reach the opposite conclusion. Namely that as the goods had been purchased under the simplified procedure, they had been acquired with French duty paid. Accordingly the market value is their retail price in France.
28. We agree with Customs' submission that the relevant market value is the retail price of the goods in France (or in the shop on the ferry). This is because under the simplified procedure, the goods were purchased with French duty paid, and with French fiscal stamps. The goods could not be lawfully made available for sale in the UK without the payment of UK excise duties and the application of UK fiscal stamps. The only reason the Appellant could bring the goods into the UK without having to pay UK excise duties was because they had been acquired for private use, and could therefore be imported into the UK free of UK excise duties under Article 8 of Council Directive 92/12.
29. We have no evidence before us as to the exact boundary between the UK and French territorial waters, and whether at 7:27am the ferry was on the UK or French side of the boundary, nor do we consider this relevant to our decision. Under the simplified procedure, the goods were acquired by the Appellant on the basis that they were released for consumption in France, and accordingly were subject to French excise duties and fiscal stamps. The Appellant contends that if the ferry was in UK territorial waters at the time the sale was made, the ferry operator would have been in breach of UK law by selling goods without having accounted for UK excise duties or having applied UK fiscal stamps. In the event that the ferry was within UK territorial waters, the sale of the goods subject to French excise duties would be lawful under the simplified procedure under the terms of a derogation under Article 7(9) of Council Directive 92/12.
30. The Appellant also sought compensation for travel costs, interest and lost wages for time that he would need to take off work to travel to buy equivalent goods.
31. As regards travel costs, we note that Stanley Burton J at paragraphs [33] to [38] of his decision determined that travel costs were not recoverable as they were not a component of the market value of the goods in question, and paragraph 17 restricts compensation to the market value of the goods. Stanley Burton J also notes the practical difficulties in assessing the amount of compensation that would otherwise be due in respect of travel costs. These difficulties are illustrated in this case by the fact that Mr Weller only paid £1 for his ferry ticket, and yet his claim includes £20 for a non-landing Dover-Calais passenger fare. We agree with the conclusions of Stanley Burton J that compensation is not payable in respect of travel costs.
32. For similar reasons we consider that the Appellant is not entitled to compensation for any time he takes off work in order to travel to France to buy equivalent goods. This cannot be a component of the market value of the goods. We also note that Mr Weller made his original journey on a Sunday, and did not take any time off work when he bought the goods in question.
33. The Appellant also sought payment in respect of the goods at their current retail price, and not the original purchase price. He also seeks payment on the basis of the cost of the 50g pouches of hand rolling tobacco that he now purchases, rather than the larger sized pouches originally purchased on the ferry (this is because the larger pouches are only available in shops on ferries, and are not available on the High Street in the UK). We note that paragraph 17(1)(c) provides for compensation to be paid on the basis of the market value of the goods seized at the time of seizure. The market value must therefore be assessed on the basis of the relevant retail prices of the goods actually seized (French duty paid) at the date of seizure. For this reason no allowance can be made for inflation nor for the fact that exactly equivalent goods are not available on the UK High Street.
34. Finally, the Appellant seeks compound interest at 5.5% per annum. We note that there is no provision in paragraph 17 for the payment of interest. Interest is compensation for the loss of the use of money. There was no evidence before us that either the Appellant had borrowed funds to purchase the goods (or any replacements) or that the amounts involved would otherwise have been invested and earned interest. For these reasons we do not consider that it is appropriate for interest to be paid by Customs.

Decision

35. What we have to decide is whether we are satisfied that Customs could not reasonably have arrived at their decision to offer £390.97 in lieu of restoration of the actual goods that had been forfeited. We are satisfied that Customs could reasonably have arrived at their decision, and the appeal is, therefore, dismissed.

Nicholas Aleksander

CHAIRMAN

RELEASE DATE: 30 April 2008

LON/2004/8093