United Kingdom VAT & Duties Tribunals (Excise) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2009/E01171.html
Cite as: [2009] UKVAT(Excise) E1171, [2009] UKVAT(Excise) E01171

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S Darwesh v Revenue & Customs [2009] UKVAT(Excise) E01171 (11 March 2009)

E01171

Excise – seizure of tobacco and alcohol – goods packed in luggage without taxpayer's knowledge – condemnation proceedings determined in taxpayer's absence – whether decision not to restore the goods reasonable – yes – appeal dismissed

LONDON TRIBUNAL CENTRE

S DARWESH Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: Malcolm Gammie CBE QC (Chairman)
S K Das

Sitting in public in London on 24th September 2008

The Appellant appeared in person

Robert Jones (Counsel) instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2009

DECISION

This is an appeal by Mr S Darwesh against the seizure of 3,800 cigarettes and 9 litres of spirits on 8 August 2007 at Heathrow Airport. The total duty payable in respect of the seized goods was £644.91. Mr Darwesh conducted his own appeal and gave evidence of the relevant events. We also heard the evidence of Helen Perkins, a Higher Officer of the Respondents who had conducted the review of Mr Darwesh's case. The Respondents produced a bundle of documents including a copy of the notebooks of the Officers who had made the seizure and the correspondence between the parties.

The Facts

Mr Darwesh returned to London from Cairo on 8^th August 2007 and entered the Customs Red Channel ("Goods to Declare" for persons arriving from "Third Countries") at Heathrow Airport in order to declare goods that he was carrying. He had to wait for one of the Respondents' Officers of the Respondents but was eventually approached and asked what goods he had to declare. The Officer's notebook records the following exchanges:

Officer: "What do you have to declare?"

Darwesh: "I have some alcohol."

Mr Darwesh showed the Officer two bags containing 5 litre bottles of spirits.

Officer: "Anything else?"

Darwesh: "No."

Officer: "Is this all your luggage?"

Darwesh: "Yes."

Officer: "Did you pack the bags yourself?"

Darwesh: "Yes."

Officer: "Has anybody given you anything to carry?"

Darwesh: "No."

The Officer then informed Mr Darwesh that he wished to search his luggage. Before doing so, the Officer noticed that Mr Darwesh had a carton of 200 cigarettes on his trolley in a see-through bag. The Officer's note book records the following exchanges:

Officer: "Do you have any more cigarettes"

Darwesh: "Yes, I have six cartons."

Officer: "Why did you not declare them to me?"

Darwesh: "I am declaring them to you."

Mr Darwesh's luggage was searched and this revealed 3,800 cigarettes of various brands and a further 4 litres of spirits. The Officer asked Mr Darwesh why he had not declared the goods at which point Mr Darwesh became agitated and loud, saying that he was unwell. The Officer's notebook records that Mr Darwesh told him his sister had packed his bag. Mr Darwesh insisted that he had been honest and that was why he had entered the red channel. Mr Darwesh demanded to speak to the Officer's manager and this was arranged once he had calmed down. The manager's notebook records that he listened to Mr Darwesh's complaint about the seizure of the goods, given that he had declared them. The manager's notebook records that Mr Darwesh conceded that he had not declared all the goods.

The manager explained to Mr Darwesh that the Officer had sought his advice as to whether he had any option but to seize the goods and the manager had instructed him that he had no option. The Officer issued Mr Darwesh with Customs Notice number 1, Notice of Seizure (C156), Notice 12A and all the goods were seized. The Officer told Mr Darwesh that he would be writing an account of the incident, including the fact that Mr Darwesh had originally declared 5 litres of sprits and, on further questioning, six cartons of cigarettes. The Officer's notebook records that Mr Darwesh was offered but declined the opportunity of waiting and reading the Officer's notes. The notes record that Mr Darwesh agreed with the Officer's oral summary of what had occurred.

In evidence Mr Darwesh explained that he (or members of his family) had homes in the UK, Egypt and Sweden. He was a regular traveller to Cairo, going there about four times a year. He said that he would buy duty free goods at Heathrow on the outward journey on the basis that he could buy as much as he wanted and the goods were cheaper and of better quality. In Cairo there was always a risk that goods would be counterfeit. On this occasion he had travelled to Cairo in early June expecting to stay two or three weeks but he had been taken ill and hospitalised, so that he was only well enough to return in August. He had bought 13 cartons of cigarettes intending to give 3 to his mother-in-law in Sweden and 1 carton to a friend. The remaining 9 cartons were for his use. Because of his illness he had only smoked about a carton and a half, leaving about 1500 cigarettes for himself. He had bought another 2 cartons on the return flight.

Mr Darwesh said that he was familiar with the procedure in the red channel as he had on previous occasions declared goods on returning to the UK. He produced receipts to support this statement. On this occasion he said that he had declared the cigarettes and he was upset at the suggestion that he was dishonest. He accepted that the Officer's notebook recorded clear questions and answers. He insisted, however, that, with the exception of six cartons of Kent cigarettes packed in his luggage by his daughter-in-law (about which he knew nothing), he had declared the cigarettes he had bought. His explanation of his reply to the Officer's question that he had packed his bags was that they had been packed in part by his daughter-in-law and that he did not distinguish between the packing that he did and packing by a member of his family. He said that he had not been in the same room when his daughter-in-law had packed the Kent cigarettes and that he had not checked his bags after she had packed them.

Mr Darwesh's explanation of why he had not given this explanation of the Kent cigarettes at the time of the seizure and only in a later appeal letter was that he had only subsequently spoken to his daughter-in-law. She had intended the cigarettes for his son who was in the UK receiving treatment for cancer. He had had a conversation with his daughter-in-law about bringing back cigarettes for his son but he had said he would not. As regards the remaining cigarettes he had not been clear how much was left of the 13 cartons he had bought. He thought he had about six cartons left. He insisted that the six cartons of Kent cigarettes were the only issue because he had declared the rest of the goods.

The Appeals and the Review

Mr Darwesh agreed that he had been issued with Notice C156 (Seizure Information Notice) and Notice 12A (What you can do if things are seized by Customs). Notice 12A explains the two courses of action open to someone whose goods have been seized: (a) to appeal against the legality of the seizure and (b) to seek restoration of the goods whether or not the legality of the seizure is challenged. Mr Darwesh duly appealed on 5^th September 2007 against the legality of the seizure and sought restoration of the goods. His appeal letter stated that he had declared the alcohol and tobacco but that because he was unwell his daughter in law had helped him pack his luggage and had packed Kent cigarettes, purchased in Cairo, in one suitcase without his knowledge.

The issue of the legality of the seizure was dealt with by the Uxbridge Magistrates who condemned the goods on 26^th February 2008 in Mr Darwesh's absence. In evidence Mr Darwesh denied that he had received any summons regarding the condemnation proceedings. He had received a letter about the Magistrates Court procedure and he had telephoned the Magistrates Court regarding dates for the hearing. He was told he would be sent papers but subsequently when he had telephoned Customs while he was abroad in Sweden, he was told that the hearing had been held some four weeks previously. He later telephoned the Magistrates Court to be told that he was out of time to appeal. He denied that he had ever received a copy of any Order from the Magistrates Court. He said that if he had known about the hearing he would have attended to contest the matter. He said that he did not really understand the difference between the proceedings before the Magistrates and in this Tribunal and that he had left his wife to fill in the appeal forms which he had then signed.

On 18^th September 2007 Mr Darwesh's application for restoration was refused. In a letter of 27^th October 2007 he sought a review of the decision. In that letter he set out his explanation of the six cartons of Kent cigarettes and stated that the rest of the goods had been declared. He enclosed details of the duty he had paid on previous trips. On 7^th November 2007, an Officer of the Respondents sent an e-mail to the Mr Darwesh explaining the review process and inviting him to provide further information in support of his request for a review. No further information was provided.

The review was conducted by Helen Perkins, who gave evidence. In her letter of 5^th December 2007 Ms Perkins concluded that the goods should not be restored. Her letter recites the facts as she understood them. In reaching her conclusion Ms Perkins took account of the fact that Mr Darwesh was carrying 19 times his allowance of cigarettes and 9 times his allowance of spirits and yet in his initial response to the Officer he had only referred to "some alcohol" and had not mentioned cigarettes. The subsequent exchanges had not resulted in a full declaration of the goods that were revealed by the search. Ms Perkins also drew attention to the fact that Mr Darwesh had initially stated that he had packed the bags himself, that the Officer's record indicated that the bag had been packed by Mr Darwesh's sister and that Mr Darwesh had subsequently said that it was his daughter-in-law. Ms Perkins concluded that she could see no exceptional reasons in Mr Darwesh's case to vary the Respondents' ordinary policy not to restore goods.

In evidence Ms Perkins went through her review letter and confirmed her conclusion. She said that nothing that she had heard of Mr Darwesh' case would lead her to reach a different conclusion. In cross-examination by Mr Darwesh she said that it was not unusual for someone to go through the red channel but only declare some of the dutiable goods. She said that she had read and taken into account the notes made by the two Officers on the day of the seizure and had no reason to believe that they were incorrect.

The Law

Section 78(1) of Customs and Excise Management Act 1979 ("CEMA") provides that—

"Any person entering the United Kingdom shall, at such place and in such manner as the Commissioners may direct, declare any thing contained in his baggage or carried with him which-

(a) he has obtained outside the United Kingdom; or

(b) being dutiable goods (, he has obtained in the United Kingdom without payment of duty or tax,

And in respect of which he is not entitled to exemption from duty and tax by virtue of any order under section 13 of the Customs and Excise Duties (General Reliefs) Act 1979 (personal reliefs)."

Under section 78(4) of CEMA—

"Anything chargeable with any duty or tax which is found concealed, or is not declared, and anything which is being taken into or out of the United Kingdom contrary to any prohibition or restriction for the time being in force with respect thereto under or by virtue of any enactment, shall be liable to forfeiture."

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."

Section 141(1) of CEMA states that—

"... where any thing has become liable to forfeiture under the customs and excise Acts-

(a) any ship, aircraft, vehicle, animal, container (including any article of passengers' baggage) or other thing whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture, either at a time when it was liable or for the purposes of the commission of the offence for which it later became so liable; and

(b) any other thing mixed, packed or found with the things so liable,

shall also be liable to forfeiture."

Under section 152 of CEMA—

"The Commissioners may, as they see fit—

(a) ...

(b) restore, subject to such conditions (if any) as they think fit proper, any thing forfeited or seized under [the Customs and Excise] Acts."

Section 14 of the Finance Act 1994 allows for the review of certain the Commissioners' decisions (as in this case) and section 15 of that Act allows them to confirm, withdraw or vary the decision and take such further steps as they consider appropriate to give effect to any withdrawal or variation. Under section 16 a person may appeal to this Tribunal in respect of any decision on review but under section 16(4)—

" ... 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 the 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."

The Respondents' Case

Mr Jones made two points for the Respondents:

(1) First, he said that the Appellant's case, to the extent that it sought to challenge the legality of the seizure, was an abuse of process on the basis that the goods were condemned by the Uxbridge Magistrates on 26^th February 2008.

(2) Second, to the extent that the Appellant was arguing that the decision not to restore the goods was unreasonable, the review decision was one of a range that could reasonably have been arrived at.

On the first point Mr Jones referred us to Gora and Others v Customs and Excise Commissioners [2004] QB 93 and Gascoyne v Customs and Excise Commissioners [2005] Ch 215. The Respondents' Case also referred to Lewison J's decision in Customs and Excise Commissioners v Smith (17^th November 2005, unreported) and Evans-Lombe J's decision in Customs and Excise Commissioners v Weller [2006] EWHC 227 (Ch).

He noted that this was not a case in which Mr Darwesh had failed to exercise his right to appeal the legality of the seizure so that the goods were deemed to be condemned. Mr Darwesh had appealed but the condemnation order had been signed without further hearing given Mr Darwesh's non-attendance. Having decided to appeal against forfeiture Mr Jones said that the responsibility lay with Mr Darwesh to carry through his appeal. Whether or not we accepted that he had never received proper notification from the Uxbridge Magistrates Court of the date of the hearing, Mr Darwesh had failed to act reasonably in the conduct of his proceedings. Even when he became aware that the appeal had been dealt with in his absence he had taken no steps to appeal the matter to the Crown Court where it would have been heard de novo.

On the second point Mr Jones said that the goods were lawfully seized and liable to forfeiture. Mr Darwesh had not suggested that he had suffered any hardship. In applying the Respondents' policy to the facts of this case it was reasonable for Ms Benson to conclude that there were no exceptional circumstances allowing restoration. Mr Jones also drew attention to the aspects of the case which suggested that this was more than an innocent mistake but was a case of deliberate misstatement.

Our decision

It seems to us that Mr Darwesh's case rests on three main propositions—

(1) He entered the red channel honestly intending to declare and pay duty on the goods he was importing;

(2) He had declared all the alcohol and cigarettes of which he was aware, but

(3) He was unaware that his daughter-in-law had packed an additional six cartons of Kent cigarettes in his luggage for his son.

As regards Mr Jones' first point for the Commissioners, Evans-Lombe J in Weller summarised the position on the legality of the seizure in these terms—

"(whether or not an importer, having suffered a deemed forfeiture under paragraph 5 of Schedule 3, is able to raise the validity of the forfeiture on a review by the Commissioners and on appeal from them to the Tribunal, depends on two questions, first, did the importer have a realistic opportunity to invoke the condemnation procedure and, secondly, if he did are there nonetheless reasons, disclosed by the facts of the case which should persuade the Commissioners or the tribunal to permit him to reopen the question of the validity of the original seizure on an application for return of the goods. The first question will almost always be answered in the affirmative, since facts would have to be very unusual to base a conclusion that an importer was prevented, in the 30 days succeeding forfeiture, from giving notice to the Customs to initiate condemnation procedure in the Magistrates court.

In Mr Darwesh's case the answer to the first question – did he have a realistic opportunity to invoke the condemnation procedure – is clearly "yes" because Mr Darwesh did in fact start proceedings. The fact that he may not have fully appreciated the distinction between the proceedings in the Magistrates Court and the proceedings before this Tribunal seems immaterial. On his own evidence he knew that the condemnation proceedings were being dealt with by Uxbridge Magistrates and he communicated with Uxbridge Magistrates Court. The most that it seems to us he can say is that the Uxbridge Magistrates did not actually determine the facts because the matter was dealt with in his absence. However, those facts show (by his own admission) that he was importing goods that he did not declare so that the Officer was acting within his powers in seizing the goods.

As regards the reasonableness of the review decision, we can find no fault with it. There are no matters that Ms Perkins ought to have taken into account which she failed to do so, and she did not take account of matters which she ought not to have done.

Mr Darwesh was a regular traveller and should therefore be familiar with the limitations on importation and what is required to be declared on entering the UK. The fact that he entered the red channel indicates an intention to make a declaration of some sort but that in itself, however, is not enough. The question whether "some alcohol" covered all 9 litre bottles of spirits when only 5 could be seen to the inspecting Officer was not much debated before us. Even allowing Mr Darwesh the benefit of the doubt on that issue, however, his declaration did not cover all the cigarettes that he was carrying.

Mr Darwesh's evidence as to how the six cartons of Kent cigarettes came to be packed in his luggage does not explain how his daughter-in-law thought those cigarettes would reach her husband without telling Mr Darwesh about them and obtaining his agreement to pass them on to his son. In evidence Mr Darwesh said that he had had a conversation with his daughter-in-law about bringing cigarettes back for his son and he had said that he would not do so. Whatever the truth of the matter we assume that Mr Darwesh will take more care in future to check what has been packed in his luggage. Leaving that aside, however, his declaration of six cartons of cigarettes did not cover all the cigarettes in his possession and his explanation of how many cigarettes he had bought at Heathrow on his way out to Cairo and how many he was bringing back was unclear.

It may be that Mr Darwesh's plans were disrupted by his illness in Cairo and that he had not fully recovered at the time of his return to the UK. Whatever the position, however, there is nothing in the evidence that we heard that would allow us to conclude that Ms Perkins' decision to refuse restoration was one that could not reasonably have been arrived at. Accordingly, we must dismiss this appeal.

MALCOLM GAMMIE CBE, QC

CHAIRMAN

RELEASE DATE: 11 March 2009

LON/2008/8019