United Kingdom VAT & Duties Tribunals (Excise) Decisions

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Cite as: [2008] UKVAT(Excise) E01146, [2008] UKVAT(Excise) E1146

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Mrs Doris Ezemu v Revenue & Customs [2008] UKVAT(Excise) E01146 (07 November 2008)

E01146

Excise goods – Restoration – Whether own use – Whether decision reasonable – Finance Act ss.14-16 – New Review – Appellant to make written representations outlining all relevant facts – Matter sent back for review

LONDON TRIBUNAL CENTRE

MRS DORIS EZEMU Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: DR K KHAN (Chairman)

MR A McLOUGHLIN

Sitting in public in London on 26 September, 2008

Mr Osiberu, accountant, for the Appellant

Mr R Jones, Counsel, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

The disputed decision of the Respondents is contained in a letter, dated 25 October 2007, notifying the Appellant that they would uphold the decision not to restore 1157.3 litres of alcohol (500 litres of beer, 422 litres of wine and 229.8 litres of spirits) seized from a freight lorry on 26 August, 2007. The excise duty is £2,509.86.

On 26 August, 2007 at Dover Eastern Docks, the Appellant's goods were found in a freight liner travelling from Germany, by Customs. No customs documents were produced and the Appellant was not travelling with the goods.

The driver was interviewed and at the conclusion of the interview on 26 August 2007, the goods were seized on the basis that the officer of the Respondents was satisfied that the Appellant's goods were held (i) for a commercial purpose and (ii) there was no accompanying documentation with the said goods. They were liable to forfeiture under Section 49 (i) (a) (i) of the Customs and Excise Management Act 1979 ("CEMA") and under Regulation 16 of the Excise Goods (Holdings Movement, Warehousing and REDS), Regulations 1992, ("THE REDS Regulations")

The driver was issued with a "Seizure Information Notice" (form C156), Form 162 ("warning") and Customs Notice 12A (goods and/or vehicles seized by customs). They explained that there could be a challenge of the seizure in Magistrate's Court by sending a Customs Notice of Claim within one month from the date of seizure. Where there was no challenge to the legality of the seizure then the goods are confirmed as for a commercial purpose and condemned as forfeit to the Crown by the passage of time under paragraph 5 of Schedule 3 CEMA.

On 20 August 2007, the Respondents received a letter from the Appellant which included copies of German invoices for the goods and requesting restoration of the seized goods.

By letter dated 6 September 2007, the Respondents refused to offer restoration of the goods and on 12 September 2007 the Appellant wrote a letter requesting a review of that decision stating that the goods were intransit. The Appellant provided invoices showing furniture purchased in the UK, which would be consolidated with the spirits in a container shipment to Nigeria. On 27 September 2007 the Respondents wrote a letter to the Appellant explaining the review and procedure and inviting her to provide any further evidence or information in support of the request. On 25 October 2007, the Respondents confirmed by letter that after completing a review they would not restore the goods to the Appellant.

The Law

The relevant legal provisions are as follows:

(a) Regulation 4 of The Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 ("the REDS Regulations"), Regulation 15 of The Beer Regulations 1993 and Regulation 12 of The Tobacco Products Regulations 2001, each as amended by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 provide that:

"(1A) In the case of excise goods ...beer, tobacco products) acquired by a person in another member state for his own use and transported by him to the United Kingdom, the excise duty point is the time when those goods are held or used for a commercial purpose by any person.

(1B) For the purposes of paragraph (1A) above –

(b) "own use" includes use as a personal gift,

(c) if the goods ...beer, tobacco products) in question are (is)-

(i) transferred to another person for money or money's worth (including any reimbursement of expenses incurred in connection with obtaining them), or

(ii) the person holding them intends to make such a transfer,

those goods ...that beer, those tobacco products) are (is) to be regarded as being held for a commercial purpose.

(d) if the goods (beer, tobacco products) are (is) not duty and tax paid in the member State at the time of acquisition, or the duty and tax that was paid will be or has been reimbursed, refunded or otherwise dispensed with, those goods (that beer, those products) are (is) to be regarded as being held for la commercial purpose.

(e) without prejudice to sub-paragraphs (c) and (d) above, in determining whether excise goods ...beer, tobacco products) are (is) held or used for a commercial purpose by any person regard shall be taken of –

(i) that person's reasons for having possession or control of those goods (that beer, those products),

(ii) whether or not that person is a revenue trader (as defined in section 1(1) of the Customs and Excise Management Act 1979),

(iii) that person's conduct, including his intended use of those goods (that beer, those products) or any refusal to disclose his intended use of those goods (that beer, those products),

(iv) the location of those goods (that beer, those products),

(v) the mode of transport used to convey those goods (that beer, those products),

(vi) any document or other information whatsoever relating to those goods (that beer, those products),

(vii) the nature of those goods (that beer, those products) including the nature and condition of any package or container,

(viii) the quantity of those goods (that beer, those products), and in particular, whether the quantity exceeds any of the following quantities –

10 litres of spirits

20 litres of intermediate products (as defined in Article 17(1) of Council Directive 92/83/EEC[4]),

90 litres of wine,

110 litres of beer,

3,200 cigarettes,

400 cigarillos ...cigar weighing no more than 3 grammes each),

200 cigars,

3 kilogrammes of any other tobacco products,

(ix) whether that person personally financed the purchase of those goods (that beer, those products),

(x) any other circumstance that appears to be relevant."

(b) Regulation 16 of the REDS Regulations provides that:

"Excise goods, in respect of which duty has not been paid, shall be liable to forfeiture where a breach of regulation 6 above ...which states that "excise duty shall be paid before the excise duty point") or any other 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."

(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, anything forfeited or seized under the Customs and Excise Acts."

(d) Finally, Sections 14 to 16 of the Finance Act 1994 provide that:

Section 14(2):

(2) Any person who is –

(a) a person whose liability to pay any relevant duty or penalty is determined by, results from or is or will be affected by any decision to which this section applies,

(b) a person in relation to whom, or on whose application, such a decision has been made, or

(c) a person on or to whom the conditions, limitations, restrictions, prohibitions or other requirements to which such a decision relates are or are to be imposed or applied,

may by notice in writing to the Commissioners require them to review that decision.

Section 15(1):

"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."

Section 16(4) to (6):

(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say –

(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; and

(c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a further review, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.

(5) In relation to other decisions, the powers of an appeal tribunal on an appeal under this sections hall also include power to quash or vary any decision and power to substitute their own decision for any decision quashed on appeal.

(6) On an appeal under this section the burden of proof as to –

(a) the matters mentioned in subsection (1)(a) and (b) of section 8 above,

(b) the question whether any person has acted knowingly in using any substance or liquor in contravention of section 114(2) of the Management Act, and

(c) the question whether any person had such knowledge or reasonable cause for belief as is required for liability to a penalty to arise under section 22(1) or 23(1) of the Hydrocarbon Oil Duties Act 1979 (use of fuel substitute or road fuel gas on which duty not paid);

shall lie upon the Commissioners; but it shall otherwise be for the appellant to show that the grounds on which any such appeal is brought have been established.

The Appellant's Case

In her letter dated 28 August 2007, the Appellant stated that the goods were in transit to Nigeria and not for sale in the UK.

The Respondent's Case

The Respondents identified imported goods as unaccompanied excise goods into the UK. As such, since the goods did not follow any of the three procedures for unaccompanied excise goods, which are, the REDS procedure, the Occasional Importers Licence (OIL) procedure or duty suspension or accounting for duty procedure, the goods were liable for forfeiture under Section 49 of CEMA 1979.

Unaccompanied EU goods in transit to the UK to a non EU country must comply with the procedures under the REDS, duty suspension or OIL and as none of these were followed, the goods were forfeited. The goods were of a commercial quantity and therefore the presumption is that they were for commercial use. In the case of JOUSTRA (2006) ALL.E.R. 311, the Court ruled that even unaccompanied non-commercial goods (for own use) must comply with the procedures as unaccompanied goods do not qualify for relief.

The Respondents say that the non restoration decision was reasonable in the circumstances.

Let us look at the facts and HMRC's decision.

There were two witnesses. Doris Ezemu, Appellant and Brian Rayden, Higher Review Officer, HMRC, based in Plymouth.

The Appellant gave evidence that the drinks were purchased in Germany from a cash and carry wholesaler using a membership card, which allowed her to obtain a discount. The drinks were for a friend's wedding in Nigeria and for her wedding. It was her understanding that the drinks would be sent from Germany, where she lived, to Nigeria. The Nigerian friend (Mr Ezeh) provided her with £4,000 to purchase the spirits with the balance of the payment on receipt of the goods.

It seemed that Mr Ezeh, very late in the day, requested that the goods be sent from Germany to the UK to be put in a container with other goods he was importing from the UK. The goods were addressed on the Customs paperwork to the London address of Mr Ezeh. The late instructions meant that the proper Customs paperwork did not accompany the goods. The drinks were supposed to be delivered to the home of the Appellant and stored in a parking area outside her home (she now lives in London) where they would be collected and put in Mr Ezeh's container to Nigeria.

The purchase of the goods was arranged in Germany since the Appellant had a special discount card, which gave preferential treatment to her as part of a membership club offering discounted drinks. It seems that Mr Ezeh thought that since she and her husband ran a business in Germany selling among other things, spirits, they would be well placed to get the best prices and arrange shipment to Nigeria. The original plan to ship directly to Germany were altered and the goods were sent to the UK for shipment to Nigeria.

The Tribunal asked the Review Officer, Mr Rayden, whilst given his evidence and after the Appellant had given her evidence, whether there was anything he heard which may have caused him to alter his decision. He said No. The Tribunal pointed out that the drinks were in transit to Nigeria and that the goods could have been purchased at roughly comparable prices in the UK. Therefore, there was no profit to be gained in purchasing the goods in Germany. Further, the change of plan in sending the goods via the UK seemed to have been a last minute decision on instructions from Mr Ezeh rather than a decision taken by the Appellant. The freight forwarders in Germany were not very competent in arranging proper paperwork for the goods to be sent to the UK which resulted in the goods not being treated as being in transit and were therefore seized. These plans did not suggest that thee was a smuggling operation in progress. Rather it appeared that the plans were not very well thought out or implemented.

The Review Officer said that the Appellant had several opportunities to make representation to raise points which the review officer should have considered. However, no representations were made.

The Officer said that the goods which were intransit required certain documentation (SAD papers) which were not presented when the goods arrived in the UK. They were therefore not treated as in transit goods The goods were therefore seized. He also understood that there would be no duty on goods shipped directly from Germany to Nigeria but if shipped via the UK would be liable to additional charges. HMRC had indicated (letter of 12 September) to the Appellant that they could provide further information which would help with the review. However, since none was received there was nothing further for HMRC to consider.

It became apparent to the Tribunal that some information raised in evidence was not properly presented by the Appellant to the Review Officer and the Appellant should be given another opportunity to present such information in a full and complete manner. Whilst the Appellant had received letters requesting additional information, these offers were not taken up or understood. It may be due to the fact that the Appellant's first language is not English.

The Tribunal would like to send this matter back for a further review of the original decision. This is to be done pursuant to the Finance Act 1994, Section 14-16 In order for this review to take place Officer Rayden should make available all relevant notes and information to another review officer. The Appellant should be asked to make available to the new review officer any documentation relating to the purchase, export and financing of the seized excise goods together with an explanation of their relationship with the Nigerian buyer, the instructions received from the buyer and how the plans to ship the good were made and implemented. All of this information should be made available to the new review officer in a timely manner. The Tribunal accepts that the Review Officer did request information from the Appellant in his review letter of 25 October 2007. He is not at fault in that he did properly executed his duty in making that request. However, it is apparent from the evidence presented at the Tribunal that there is further evidence which should have been considered which was not presented. This is an opportunity for the Appellant to present that information.

The Appellant should be written to separately and asked to make written representations on the following:-

(i) A clear time line of the transaction, purchase, shipping and identify all parties involved and explain their involvement in the transaction.

(ii) The arrangements with Mr Ezeh to purchase and ship the goods (including any changes in the agreed arrangements).

(iii) The arrangements with the freight forwarders, relevant documents and instructions on shipping to the UK and Nigeria (including any arrangements for delivery and collection of the goods in the UK).

The Appellant should be given 21 days from writing to her to provide all information to the Review Officer, who would then be in a position to undertake the new review within a reasonable period. A copy of this decision and the address of the Review Officer should be given in the letter.

The Tribunal believes that it is reasonable and fair to have a new review with all the facts properly presented.

DR K KHAN

CHAIRMAN

RELEASED: 7 November 2008

LON/2007/8127