United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2008] UKVAT(Excise) E1115, [2008] UKVAT(Excise) E01115

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Express Trans Ltd v Revenue & Customs [2008] UKVAT(Excise) E01115 (29 May 2008)

E01115

EXCISE DUTY – Seizure of lorry – Refusal to restore – Lorry adapted for concealment of goods – Cigarettes concealed – Whether decision not to restore reasonable – Yes – Appeal dismissed

LONDON TRIBUNAL CENTRE

EXPRESS TRANS LIMITED Appellants

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: SIR STEPHEN OLIVER QC (Chairman)

JO NEILL ACA

Sitting in public in London on 6 May 2008

D John, counsel, instructed by Henrys, solicitors, for the Appellants

Sarabjit Singh, counsel, instructed by the general counsel and solicitors, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

Express Trans Ltd ("ETL") appeal against a review decision of Customs in a letter of 16 March 2007 upholding a decision not to offer restoration of an Iveco Fridge Lorry ("the vehicle") which had been seized on 9 December 2006.

ETL is a Polish transport services company owned by two individuals, a Mr Janus and a Mr D Musik. One of ETL's vehicles (the vehicle) was stopped in Coquelles. The Customs officers understand that the vehicle had been loaded in Poland with Polish food. The driver, Mr Krzysztof Musik, appeared to speak little or no English. When examined, the vehicle was found to have a concealment space under the fridge floor; the fridge floor (covering the entire space at the back of the vehicle) was covered with aluminium checker platting supported by wooden boards. The fridge floor was lifted up and below it were found 60,800 cigarettes.

The vehicle was seized on the grounds that it had been adapted for the purpose of concealing goods. No appeal was made against the legality of the seizure.

The adjournment application

The appeal was called on for hearing on 6 May 2008. The two proprietors of ETL and their counsel, Mr John, were present. Mr John asked for an adjournment because there was no interpreter.

We noted from the file that in September 2007 the Tribunal had been notified by ETL's then solicitors that they were no longer instructed. The hearing notice was sent on 5 February 2008 direct to ETL's address in Poland. ETL responded by letter of 6 March 2008 from Mr Janus stating that the hearing would take one hour and that he would be the representative. He said that Mr Dominik Musik would be giving evidence. He asked to be supplied with an interpreter. The Tribunal wrote back on 19 March, explaining that it does not provide interpretation services and that it was for the parties to organise and pay for such services.

Bearing in mind that ETL had had plenty of time to find an interpreter and that they were represented by counsel instructed by Henrys, solicitors, of Stockport, the Tribunal adjourned the case until 1.00pm to enable them to find someone who would interpret if either Mr Janus or Mr Dominik Musik chose to give evidence. The Tribunal emphasised that an official interpreter was not required.

At 1.00pm the Tribunal reconvened. There was no interpreter. We decided to go ahead and Mr John opened the case for ETL.

The adaptation of the vehicle

It was not in dispute that the vehicle had been adapted. The evidence of Mr C R Kidd, a Technical Equipment Manager employed by Customs, is now summarised.

The vehicle was a refrigerated box vehicle with no separate trailer. The adaptation had involved the aluminium plated floor being raised from the base of the refrigerated box and supported on wooden members. The aluminium plates had eyebolts specially drilled into the plates. A pulley mechanism attached to the roof enabled the floor plates to be lifted. Moveable angled strips were placed around the base of the box.

The whole of the floor had to be raised to give access to any goods placed beneath it.

Normally, explained Mr Kidd, a sealant would fill any gaps between the base and the sides. There was no such sealant here. Consequently the vehicle was not suitable for carrying frozen meats which might cause leakages through the unsealed base. The vehicle as adapted was suitable for transporting cling-wrapped chilled goods on pallets.

The pulleys and ropes found in the vehicles were not, explained Mr Kidd, normal for a chiller van.

Mr Kidd estimated that it would have taken two men four to five days to make the adaptation. He described the adaptation as sophisticated. In its adapted state the vehicle was, he suggested, more suitable for carrying concealed goods under the raised floor than for carrying refrigerated goods.

A very rough diagram (which included the pulley system), evidently of the adaptation, was found in the vehicle when it had been seized and searched.

The case for ETL

Neither Mr Janus nor Mr D Musik gave evidence. Mr John told us that Mr Krzysztof Musik, the driver, was a cousin of one of the proprietors of the ETL business. He had been taken on on trust. Mr John asked us to accept that both Mr Janus and Mr D Musk denied any knowledge of adaptation to the vehicle.

ETL's grounds of appeal contain the following contentions:

"Express Trans are the owners of the tractor and trailer unit. Any modification to the trailer unit was conducted without their permission or knowledge."

(We observe that the vehicle was a single lorry and was not divided into tractor and trailer units.)

"The company have assisted Customs and Excise in every way possible in the investigation in relation to the offence of evasion of duty.

The company respectfully suggest that the seizure of the tractor unit itself is disproportionate to the total value of duty evaded in relation to the quantity of cigarettes found.

The company further states that they took all necessary steps in relation to the integrity and honesty of the driver, including taking up character references and ensuring that the driver was fully aware of all security procedures adopted by the company".

(We note from the contract of employment of Mr Krzysztof Musik, supplied by ETL, that he was engaged by ETL on 1 June 2006.)

The law

The relevant legal provisions are as follows:

(a) Section 88 of the Customs and Excise Management Act 1979 ("CEMA") states that where –

(c) 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 ship, aircraft or vehicle shall be liable to forfeiture."

(b) Section 139(1) of CEMA provides that:

"any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard".

(c) Section 152 of CEMA establishes that:

"the Commissioners may, as they see fit –

…(b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under the customs and excise Acts."

(d) Section 15(1) of Finance Act 1994 provides that:

"where the Commissioners are required in accordance with this Chapter to review any decision, it shall be their duty to do so and they may, on that review, either –

(a) confirm the decision; or

(b) withdraw or vary the decision and take such further steps (if any) in consequence of the withdrawal or variation as they may consider appropriate."

(e) Section 16(4) of Finance Act 1994 confirms that ETL's appeal can succeeds only if the Tribunal is satisfied that the Customs "could not reasonably have arrived at" the disputed decision.

Conclusions

We note that at no stage has any explanation been provided as to how the vehicle came to have the false floor. No explanation has been put forward (and here we rely on the Grounds of Appeal) as to what use the false floor could have been put, save to conceal goods. We accept Mr Kidd's evidence that the adaptation, which is quite substantial, must have taken several days to carry out.

To the extent that ETL imply in their Grounds of Appeal that they knew nothing about the conversion or adaptation, we cannot accept this; and we think that Customs reasonably proceeded on the basis that the proprietors of ETL did know about the conversion adaptation. We acknowledge that neither Mr Janus nor Mr Dominik Musik gave evidence. We draw no adverse inferences against them on that account. Nonetheless, certain facts make it more probable than not that they were aware of the adaptation. First, the adaptation was done properly and without any "bodging" (to use Mr John's expression in cross-examination of Mr Kidd). Second, the cost of adaptation was not cheap. Third, Mr K Musik, the driver, had been working for ETL only since June 2006. Fourth, the lack of any sealant to prevent leaked fluids from entering the area under the floor so limits the use to which the vehicle may be put (i.e. by making it unsuitable for carrying frozen meats) as to suggest that carrying concealed goods was a function, if not one of the main functions, of the vehicle. Fifth, Mr K Musik was said by Mr John to be a cousin of one of the proprietors of ETL. Sixth, the extent and sophistication of the adaptation (which included the false floor, the pulley mechanism and the fixing points on the roof) all render it more than likely that no persons genuinely involved in the haulage business would not have known about the adaptation. Lastly, the diagram referred to in paragraph 14 above, showed how the concealed space was created and the pulley mechanism that was introduced to access it.

For those reasons we are satisfied that the decision of the Customs to refuse to offer ETL restoration of the vehicle was reasonably arrived at. In essence, the vehicle had been adapted in a sophisticated way for concealment for goods. We accept that it was not a casual concealment or one that could easily have been made without the knowledge of the proprietors of ETL. Thus, bearing in mind that the proprietors of ETL, as owners of the vehicle, should be taken to have known about the adaptation for concealment, and bearing in mind that the adaptation had taken time to effect and that Mr K Musik had been with ETL for a relatively short time, we think it unlikely that the vehicle had been extensively adapted behind the backs of the two proprietors. For that reason we think that the Customs reasonably concluded that the proprietors were complicit in the attempt to smuggle excise goods into the UK using the vehicle.

We mention that Customs considered whether the vehicle could be offered for restoration under the terms of their restoration policy for freight vehicles; but we observe that restoration was deemed inappropriate, as the policy provided that vehicles seized under section 88 of CEMA would not normally be restored, unless Customs were satisfied that the owner of the vehicle had no knowledge of the adaptation.

Taking everything into account, we are satisfied that there were no exceptional circumstances justifying restoration of the vehicle. We mention in this connection that the Review Officer had concluded that any hardship suffered by the proprietors of ETL as the result of the non-restoration was not over and above the normal hardship that would normally be expected.

Our conclusion is that the decision of Customs was reasonably arrived at. Accordingly the appeal should be dismissed.

SIR STEPHEN OLIVER QC

CHAIRMAN

RELEASED: 29 May 2008

LON 2007/8045