United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01144.html
Cite as: [2008] UKVAT(Excise) E1144, [2008] UKVAT(Excise) E01144

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Susana Maria Romao v Revenue & Customs [2008] UKVAT(Excise) E01144 (24 October 2008)

E01144

EXCISE – Cigarettes posted from Portugal without payment of duty – Excise Goods (holdings, movement, warehousing and REDS) Regulations 1992 Reg 16- Customs & Excise Management Act 1979 S.139 and S.152 – Finance Act 1994 S.14-16- Commissioners Restoration Policy considered – Whether restoration with imposition of a penalty reasonable – Whether policy properly applied.

LONDON TRIBUNAL CENTRE

SUSANA MARIA ROMAO Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: MISS J C GORT (Chairman)

MRS R S JOHNSON

Sitting in public in London on 22 September 2008

The Appellant in person

Mr Rupert Jones of counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

This is an appeal against a decision of Her Majesty's Revenue and Customs Commissioners ("the Commissioners") contained in a letter dated 11 February 2008 to restore to the Appellant ("Mrs Romao") for a fee the 1,400 cigarettes seized. This fee was comprised of £277.30 for duty and value added tax and a penalty of £41.61 which was 15% of the tax and duty..

The background

On 15 January 2008 at Mount Pleasant postal depot a parcel addressed to Ms Romao was intercepted. It contained 1,400 cigarettes. The package was seized and a notice of seizure and Customs notice 12A was issued to Ms Romao.

On 19 January 2008 Ms Romao challenged the legality of the seizure, on 27 January 2008 she withdrew that challenge and by a letter dated 4 February 2008 she asked for a reconsideration of the seizure and for restoration of the cigarettes.

By the letter of 11 February 2008 the Commissioners offered to restore the excise goods upon payment of a fee of £318.95, as above.

The legislation

All postal importations of excise goods are subject to the payment of UK duty, where applicable.

Where excise goods are imported for 'own use', the traveller must accompany the goods themselves.

The requirements for the movement of excise goods between Member States are to be found in the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992. Regulation 16 provides:

Forfeiture of excise goods upon which duty has not been paid

Excise goods, in respect of which duty has not been paid, shall be liable to forfeiture where a breach of regulation 6 above, or of any regulation contained in Part IV, V or VI of these Regulations, or of any condition or restriction imposed by or under such a regulation, relates to those excise goods.

Statutory provision for forfeiture of goods is to be found in the Customs and Excise Management Act 1979, which provides:

s.139 Provisions as to detention, seizure, and condemnation of goods, etc

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.

In respect of the Commissioners' powers thereafter it provides:

S.152(b) Powers of the Commissioner to mitigate penalties etc:

The Commissioners may as they see fit –

Stay, sist or compound any proceedings for an offence of for the condemnation of any thing as being forfeited under the Customs and Excise Acts; or restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under those Acts.

The Respondents' powers of review are derived from ss 14-15 of the Finance Act ("FA 1994") Section 14(1)(d) provides that any decision by the Commissioners of a description specified in Schedule 5 to that Act may be subject to the review and appeals provisions contained in sections 14 to 16 FA 1994. Paragraph 2(1)(r) of Schedule 5 specifies that one of the decisions subject to such a procedure is:

"Any decision under section 152(b) as to whether or not anything forfeited or seized under the Customs and Excise Acts is to be restored to any person or as to the conditions subject to which any such thing is so restored."

By section 14(2) FA 1994, a person affected by a decision of the Commissioners may require that it be reviewed in accordance with the rest of that section and with section 15. Upon a review taking place, the decision may be either confirmed, withdrawn or varied and appropriate consequential steps taken.

S.16(4) of the FA 1994 provides that the powers of the tribunal on an appeal under s.16 are confined to a power, where the tribunal are satisfied that the Commissioners could not reasonably have arrived at the decision:

"(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;

(b) to require the Commissioners to conduct in accordance with the directions of the tribunal, a further review of the original decision;

(c) …"

The facts

We heard evidence from Mr David Michael Harris, review officer of the Commissioners. Ms Romao did not formally give evidence, but it was her case that her mother had bought the cigarettes in Portugal for Ms Romao's own use and had declared them to be cigarettes at the Post Office. She had not been told that it was necessary for her to pay duty on them, or that the cigarettes would be liable to forfeiture in the United Kingdom.

In her letter of 4 February 2008 Ms Romao stated inter alia:

"These cigarettes were for my own use, I smoke almost one packet per day, and the 60 packs that you have seized would be cigarettes for myself for two months."

A letter, which it must be assumed was generated electronically, a notice to that effect being at the foot of the letter, and there being no signature on it was sent to Ms Romao from the Commissioners. That letter states:

"The Commissioners' general policy for postal importations is that in non-aggravated cases, seized tobacco goods fully complying with UK specifications as set out in the Tobacco Products (Manufacture, Presentation and Sale) (Safety) Regulations 2002 will normally be restored on payment of the Excise Duty due, plus VAT on the duty, plus 15%.

"I have concluded, in accordance with that policy, that in this case the goods should be offered for restoration for the sum of £318.95."

Further to Ms Romao's application for a review of the decision, by a letter dated 8 February 2008 another letter was sent from the Commissioners to Ms Romao, (again there is no name attached to this letter), stating that, following receipt of Ms Romao's letter on 23 January 2008, (which was the date the Commissioners had stamped her formal notice appealing against the legality of the seizure) there would be a statutory review of the seizure

Mr Harris' review of the decision to restore the goods for a fee was contained in a letter dated 11 February 2008. In that letter he sets out the background to the case, and refers to the withdrawal of the gift concession which had previously obtained allowing the importation of certain gifts free of UK Customs charge as from 19 July 2007. However, that concession was never relevant in this particular case, applying only to goods worth £75 or less, and to the importation of 50 cigarettes or fewer. Mr Harris sets out under the heading "Summary of HM Revenue and Customs Restoration Policy for Excise Goods" the following:

"The Commissioners' general policy is that seized excise goods should not normally be restored. However, each case is examined on its merit to determine whether or not restoration may be offered exceptionally.

"Postal

The general policy for excise goods is modified in respect of first time offences where there are no aggravating circumstances, provided that, where necessary, the goods meet UK health marking requirements. In such cases, restoration may be offered on payment of the excise duty and VAT due, together with a penalty of 15% of the charges payable."

Under the heading 'consideration' Mr Harris states that he is guided by the Commissioners' policy but not fettered by it, in that he considered every case on its individual merit. He claims to have considered the decision afresh, including the circumstances of the seizure and the related evidence, so as to decide if any mitigating or exceptional circumstances may exist that should be taken into account. In deciding whether the excise goods should be restored, and if so what fee should be charged, he examined whether the excise goods were imported improperly and whether there were aggravating circumstances, and, if there were aggravating circumstances, then whether the degree of that aggravation should result in the refusal to restore the goods. He then claimed that he considered whether the result was fair, reasonable and proportionate in all of the circumstances. He concluded that there were no aggravating circumstances and that the goods should be restored for a fee as originally offered. He therefore confirmed the original decision.

In his evidence to us Mr Harris stated that if there were a small amount of goods, and if it were a first offence then the goods would be restored on payment of the duty only. He accepted that there were no aggravated circumstances in the present case, and he described 'aggravating circumstances' as where somebody had on more than one occasion attempted to bring in cigarettes without payment of duty. He made no comment on whether he considered 1400 cigarettes to be a small amount.

Mr Harris also said that the penalty was discretionary, and it was necessary to look at the individual facts of the case. He had not taken specific account of the fact that the cigarettes were for Ms Romao's own use because it was his understanding that restoration was only offered where goods were for own use.

In this case the power of the Tribunal is limited to considering whether the decision was one which the Commissioners could reasonably have arrived at, and in the circumstance that we do so find, to require them to conduct a further review of the original decision.

Whilst in this case we have no difficulty in deciding that the decision of the Commissioners only to restore the goods on payment of the duty and the value added tax was a reasonable one, we do not so find with regard to the imposition of the penalty of 15% of that tax and duty. We were not provided with a copy of the Commissioners' policy, and we have only the two slightly different paraphrases of it contained in the letter from the Commissioners of 15 January 2008 and the decision letter of 11 February 2008 which are set out above. The anonymous officer who took the original decision simply decided to apply the policy of restoring goods on payment of the excise duty due, plus VAT on the duty, plus 15% without any thought. When Mr Harris reviewed that decision, he stated that the policy was to be applied "in respect of first time offences", not a matter referred to by the original officer. Mr Harris accepted that the application of the penalty was a discretionary matter. Nonetheless he does not seem to have considered in what circumstances that penalty might either be mitigated or increased. It was his stated view that the general policy of non-restoration was only modified in respect of first time offences, and yet he gave an example of a person committing a first offence being only required to pay the duty and not a penalty, and the penalty coming in on the second occasion. In our judgment Mr Harris was paying no more than lip service to the notion that the penalty was discretionary. There is nothing in his decision letter to evidence his claim that he did not consider himself to be fettered by the Commissioners' policy, despite his statement to the effect that he was not fettered by it. A matter which he might have been expected to take into account was the fact that Ms Romao had not, in our view, caused to be imported a particularly large quantity of cigarettes. She told us that she smoked one pack of cigarettes a day, and therefore the packs would have lasted her for some seven weeks. Whilst the quantity that she smoked was not known to Mr Harris, the amount of the importation was.

We accept the account told to us by Ms Romao, namely that her mother declared at the Post Office from which she sent cigarettes what the contents of the parcel were, there was therefore no attempt to conceal what the package contained. There was no question of Ms Romao using the cigarettes other than for her own purposes, and her claim that there was no means of finding out at the Post Office in Portugal that payment of the duty was a prerequisite of the ability to send the goods was not disputed. Whilst we accept that ignorance of the law is no excuse, and that it would have been possible for Ms Romao to find out from the Commissioners' website what the correct procedure was, nonetheless we consider that it was no unreasonable to expect the Post Office official in Portugal, a member of the European Union, to know the United Kingdom's requirements in this regard.

Whilst section 152(b) of the Customs and Excise Management Act 1979 gives the Commissioners the power to restore things forfeited under the Act "subject to such conditions (if any) as they think proper" there is an implied term that such conditions must be reasonable. Whilst we do not consider it unreasonable for Commissioners to operate a policy which imposes a 15% penalty on those who have had things properly seized under the Act, it is not reasonable in our judgment for the policy to be applied as a blanket policy and officers not to consider whether a penalty is appropriate in the particular case they are considering. In this case neither officer gave thought to whether the imposition of a penalty of 15% was appropriate.

For the above reasons therefore we remit this matter back to the Commissioners to consider whether the imposition of a penalty of £41.61 is appropriate in the circumstances of this case as we have found them to be. Our view is that it is not.

This appeal is allowed to the extent that it is referred back to the Commissioners. No order for costs.

MISS J C GORT

CHAIRMAN

RELEASED: 24 October 2008

LON 2007/8011