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United Kingdom VAT & Duties Tribunals (Excise) Decisions
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Cite as:  UKVAT(Excise) E00374
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EXCISE DUTY - Restoration of vehicle - Tobacco - Partner of Appellant imported tobacco concealed in cases of beer - Importer alleged that he had stolen the beer and did not know tobacco was there - Review officer ignored importer’s account - Review officer failed to review facts - Whether decision reasonable - FA 1994 ss 15(1), 16(4) - Appeal allowed
LONDON TRIBUNAL CENTRE
DESPENA HACON - Appellant
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE - Respondents
Tribunal: ANGUS NICOL (Chairman)
JOHN E BENTLEY
MRS J M SMITH
Sitting in public in London on 10 July 2002
The Appellant appeared in person
Mr C Mellor, instructed by the Solicitor for the Customs and Excise, for the Respondents
© CROWN COPYRIGHT 2002
1. The Appellant, Miss Despena Hacon, appeals against a decision of the Commissioners notified to her in a letter dated 24 January 2001, to refuse to restore to her a Vauxhall motor car, which had been seized by Customs officers at Dover on 12 November 2000. The car was being driven at that time by a Mr Hayden Brown, the Appellant's partner, and the Appellant herself was not present.
2. The facts as summarised in the statement of case were as follows. Mr Brown was stopped at 7.15 p.m. on 12 November 2000, driving the Appellant’s car, and was questioned by Mr Michael Johnson, a Customs officer. In answer to the questions Mr Brown said that he had been away for the day in order to buy beer, for which he had paid £190 at Eastenders, though he had no receipt. He produced identification. The car, he said, belonged to his wife. He said that he had made one trip at Christmas the previous year, and one in June 2000. He said that he had one box of tobacco behind the driver’s seat, which he had not mentioned before because he was being asked about beer. He had a receipt for the tobacco, which he had also bought at Eastenders. At that stage of the questioning, he had signed the officer's notebook.
3. A quantity of tobacco was also found packed in beer boxes. Mr Brown said that he had stolen the boxes of beer from another vehicle at Eastenders, and was unaware that there was any tobacco concealed in them. He also said that the amount of tobacco that he had bought was to distribute amongst his five work mates, instead of a Christmas bonus. He wished to take the beer with him.
4. At 8.10 p.m. the goods and vehicle were seized. The reasons given for the seizure were: excess MILs, underdeclared goods, Luxembourg tobacco purchased in Calais, an unrealistic story, the allegedly stolen tobacco having the same serial number as that purchased, and that he was receiving favours for goods. It is to be noticed that it was not given as a reason for seizure that there was tobacco concealed in boxes of beer.
5. Correspondence ensued between the Appellant and the Commissioners. The first letter was dated 14 November 2000. This referred briefly to the seizure, and informed the Commissioners that the car belonged to her, that she was not travelling with Mr Brown, and that she relied upon her car for travelling daily to her work with a NHS trust. She requested the release of the car. Mr Brown wrote to the Commissioners on 15 November. He related that he had been stopped and the contents of his car taken out. That consisted of tobacco and beer "which was for myself to party at Xmas time." He went on to say that he had been stopped almost every time he had returned from France, where he went quite often to visit friends who lived near Calais, and that on most of those occasions he had had nothing in the car, but when he had said that he had some shopping in the car it had been inspected and replaced and he had been allowed to go on his way. He said that he thought that you could bring in as much as you liked, and that that was what was said everywhere in Calais. He, too, asked for the car to be restored.
6. The Appellant’s letter was answered on 23 November 2000. This was clearly a letter which was simply copied out of the writer’s computer without bothering to correct it, as it referred in two places to "your client" although addressed to an individual. Having said that the car would not be offered for restoration, and stating that the department’s efforts were directed to deterring and detecting fraud and failure to pay excise duty due, and setting out part of section 141 of the Customs and Excise Management Act 1979, the letter said that there were no exceptional circumstances "which would justify a departure from this policy": no policy was actually set out in the letter. That letter was answered on 12 December 2000, asking the Commissioners to reconsider that decision, or to let her know where the car would be auctioned so that she could bid for it.
7. Mr Brown gave evidence. He said that on the day in question he had gone to Calais, and went to Eastenders, where they sell tobacco from the back door. He bought one 6 Kg box, which he collected from a van in the car park and put in the Appellant's car. He then went into the warehouse to buy beer, and bought about 20 cases each of 24 bottles. This he also put in the car. The van was still in the car park, with boxes of beer inside, and he stole ten of them. When he was stopped he said that he had some beer. He did not mention the tobacco at that stage because they were asking him about the beer. When asked if he had any tobacco, he said that he had one box. Asked if he had any more tobacco than the one box, he said that he had not. He said that one of the officers took a knife and cut open one of the cases of beer, and revealed that there was beer at each end and tobacco concealed in the middle. Mr Brown said that he explained to the officers that he had stolen those boxes of beer. He agreed that he had said that he had only made two previous trips, which was untrue as he used to travel to Calais about once a week, but had never had any goods seized before. He said that if he had said that he had travelled only five days earlier the goods would have been seized anyway. He told the officer that he was a shed builder and had five employees, and was intending to give the tobacco to them as a Christmas bonus instead of money.
8. The notes made by the officer who spoke to Mr Brown were produced. They record that the officer first asked Mr Brown what the reason had been for the trip, and Mr Brown answered, "To buy beer." He was then asked about the car and the number of trips he had made, a total of five questions. Then the officer asked "What do you have behind your seat?", and Mr Brown replied "A box of tobacco." The conversation continued: "You didn’t say that you purchased tobacco." "No, you only asked about the beer." "No, you said you only went to buy the beer. How much tobacco do you have?" "One box." Mr Brown produced a receipt on request. The notes contained no record of the officer having required Mr Brown to satisfy him that the goods were not being held or used for a commercial purpose.
9. The Appellant’s letter of 12 December was treated as a request for a review, and the review letter was dated 24 January 2001. The letter set out the facts summarised above. It also stated that the amount of beer found in the car was 172.68 litres, and that there were 34.65 kilos of tobacco. The relevant parts of the Excise Duties (Personal Reliefs) Order 1992 ("the 1992 Order") were set out, and parts of sections 141 and 152 of the Customs and Excise Management Act 1979 ("CEMA"). The letter then continued:
"I am empowered by section 15 of the 1994 Act to confirm, vary or withdraw a reviewable decision on behalf of the Commissioners.
With effect from 14 July 2000 the Commissioners’ policy regarding privately owned vehicles used for the improper importation of excise goods is that they will not be restored, even on the first occasion they are so used. That policy applied at the time of the seizure of the vehicle. A car may, however, be restored to a third party where it has been stolen and the matter was reported at the time.
It is for me to determine whether the decision you are now contesting is one which a reasonable body of Commissioners could not have reached. Before considering that matter I have firstly examined whether or not the goods and vehicle were appropriately seized in the first instance."
10. The review officer, Mrs Diane Florence, then set out certain factual matters. These were, first, that Mr Brown tried to mislead the officer about the goods that he was importing by not declaring the tobacco at first, and when challenged admitting to one box only. Secondly, that further tobacco was found concealed amongst the beer. Thirdly, Mr Brown intended to give the tobacco to work mates instead of a bonus, which placed the goods outside the scope for relief from payment of excise duty. Fourthly, Mr Brown said that he had last travelled abroad in June 2000, while commercial information shewed that the vehicle had crossed to France only five days earlier. Fifthly, the answers to questions led the officer to infer that the goods were not for Mr Brown’s own use. No mention was made at all of Mr Brown’s statement that the beer which contained the concealed tobacco had been stolen by him. Mrs Florence concluded that the goods and vehicle had been properly seized.
11. Mrs Florence’s consideration of whether to restore or not consisted of setting out briefly the Commissioners’ policy and asking herself the question whether the Appellant had made out a case for disapplying that policy. She stated that the Appellant had taken a calculated risk in lending the car to Mr Brown, and it was not the Commissioners’ policy to restore in such circumstances. She concluded by saying that she considered "the refusal to have been reasonable and equitable in that it treats you no more leniently or harshly than anyone else in your position".
12. Relief from excise duty is afforded to a Community traveller by the Excise Duties (Personal Reliefs) Order 1993 as amended. Article 3(1) provides:
"Subject to the provisions of this Order a Community traveller entering the United Kingdom shall be relieved from payment of any duty of excise on excise goods which he has obtained for his own use in the course of cross-border shopping and which he has transported."
The expression "own use" is defined in article 2(1) in the following terms:
"own use" includes use as a personal gift provided that if the person making the gift receives in consequence any money or money’s worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this Order."
Article 5 of the Order provides, so far as is relevant to this appeal:
"(1) The reliefs afforded under this Order are subject to the condition that the excise goods in question are not held or used for a commercial purpose ... and if that condition is not complied with in relation to any excise goods, those goods shall ... be liable to forfeiture.
(2) . . .
(3) Paragraphs (3A) to (3C) below apply to a person who has in his possession or control any excise goods afforded relief under this Order in excess of the quantities shown in the Schedule to this Order.
(3A) The Commissioners may require a person to whom this paragraph applies to satisfy them that the excise goods afforded relief under this Order are not being held or used for a commercial purpose.
(3B) Where a person fails to satisfy the Commissioners that the excise goods in question are not being held or used for a commercial purpose the condition imposed by paragraph (1) above shall, subject to paragraph (3C) below, be treated as not having been complied with.
(3C) Paragraph (3B) above shall not apply where a court or tribunal is satisfied that the condition imposed by paragraph (1) above has been complied with."
The Schedule to the Order specifies the amounts of excise goods above which the traveller may be required to satisfy the Commissioners that they are not held or used for a commercial purpose. It includes 1 Kg of tobacco and 110 litres of beer. Article 5(1) of the Order provides that if the traveller fails so to satisfy the Commissioners, the goods shall be liable to forfeiture.
13. Any vehicle or container or other thing which has been used for the carriage, handling or concealment of the goods, and also anything mixes, packed or found with the goods, may be forfeited under the provisions of section 141 of CEMA. Section 151 of CEMA gives the Commissioners a discretionary power to restore the goods or vehicle unconditionally or under such conditions as they may think fit.
14. The Finance Act 1994 provides for review of the Commissioners’ decision whether to restore or not, and for appeals to the Tribunal, and also sets out the Tribunal’s jurisdiction. Section 14(2) allows a person affected by a decision to which section 14(1)(d) applies (as in the present case) to require the Commissioners to review that decision. Section 15(1) provides:
"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) sets out the jurisdiction of the Tribunal on an appeal to it:
"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 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 upon 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."
15. The Appellant relied upon the fact that she was not present as passenger or driver in the car, which was her own property, on the trip in question, and that it was harsh and unfair that her car should be forfeit when she herself was blameless. She needed the car to travel to work, where she had free parking. Travelling by bus was more expensive and took longer.
16. Mr Mellor, for the Commissioners, began by contending that if the goods were correctly seized, then so was the vehicle, and seizure had never been challenged. The Commissioners’ policy of non-restoration still applied when a car used for importing goods belonged to an absent third party. He referred as examples to a number of decisions: Dannat v Customs and Excise Commissioners (2002) (Decision No E243), Masood Mustafa v Customs and Excise Commissioners (2002) (Decision No E261), Customs and Excise Commissioners v Lindsay  V&DR 220;  EWCA Civ 267, Dulas v Customs and Excise Commissioners (2002). He distinguished Granger v Customs and Excise Commissioners (2002) (Decision No E204), on the ground, unlike the present case, that the vehicle had been lent by the appellant to his brother for specific purpose. He referred also to Hopping v Customs and Excise Commissioners (2001) (Decision No E170). On the issue of proportionality Mr Mellor referred to Sporrong and Lonroth v Sweden (1982) 5 EHRR 35, Derecznik v Customs and Excise Commissioners (2001) (Decision No C138) and Lindsay ( supra), but added that the review officer had concluded that this was a case of commercial smuggling. Mr Brown had not initially declared the tobacco, and it was not believable that he should have stolen cases of beer with tobacco concealed inside. He had also been untruthful about his previous trips to France. Referring to Houlton Meats Ltd v Customs and Excise Commissioners (2002) (Decision No E233), Mr Mellor contended that the Commissioners were not obliged to consider the value of the vehicle. There was no exceptional hardship in the present case, and the Commissioners’ policy left their discretion unfettered.
17. This appeal is against the decision of the review officer. Section 16(4) of the Finance Act 1994 provides that the jurisdiction of this Tribunal is limited to considering whether the review decision was reasonable, that is, whether or not it was a decision which no reasonable body of Commissioners could have reached. In this context, reasonable is to be given the wide meaning used in Associated Provincial Picture Houses Ltd v Wednesbury Corporation  1 KB 223, in which Lord Greene MR said, at page 229,
"A person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matter which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting ‘unreasonably’."
In Customs and Excise Commissioners v J H Corbett (Numismatists) Ltd  2 WLR 653 at 663, Lord Lane said,
"It could only properly [review the discretion] if it were shown that the Commissioners had acted in a way in which no reasonable panel of Commissioners could have acted; if they had taken into account some irrelevant matter or had disregarded something to which they should have given weight."
18. We therefore look at the decision of the review officer, Mrs Florence, to see if it was reasonable according to those criteria. The first thing that leaps to the eye is the first sentence of that part of her review letter headed "Consideration" (see paragraph 9 above). Determination of whether the decision not to restore is one which no reasonable body of Commissioners could have reached is not the function of the review officer. It was Mrs Florence’s function to consider all the circumstances and to come to her own decision on the facts which were in the possession of the Commissioners. The review letter shews that she did not do that. What she did was to consider whether the seizure was appropriate, and then, having decided that it was, to apply the Commissioners’ policy not to restore. Consideration of whether the seizure was proper is not the same thing as consideration of whether the goods or vehicle should be restored. The decision whether to restore or not can only be made after seizure, and other factors fall then to be considered. If it were not so, the mere fact of lawful seizure would, under the Commissioners’ policy, rule out any possibility of restoration of goods or vehicle without the need for any further consideration.
19. But in considering whether the seizure was lawful, the review officer has ignored one prominent matter. That is, Mr Brown’s admission, or allegation, that he had stolen the cases of beer in which the tobacco was concealed. There is no mention of that at all in the review letter. It is true that it is a most extraordinary story, one might almost call it far-fetched. But that is no reason for omitting all mention of it. If it is untrue, that might be a further reason for considering that Mr Brown was trying to hide an intention to import the tobacco for a commercial purpose. But it is so strange a story that it just might be true. If so, that would lend a lot of weight to Mr Brown’s statement that he did not know that the tobacco was there, and that he had imported it unknowingly. One could hardly have an intention to use excise goods for a commercial purpose if one was unaware that they were in one’s possession. There is one small factor which suggests the possibility that Mr Brown might in truth have stolen the cases of beer. Mr Mellor contended that there was no evidence as to how they were opened. Mr Brown, in evidence, said that the officer who discovered the tobacco, had used a knife to open the cases. That may be true or it may not, but it is capable of belief. If true, it would suggest that the cases of beer had had the tobacco concealed within and had then been sealed up again. That in turn suggests that, if Mr Brown knew about the tobacco, he must have arranged with someone, perhaps in Eastenders, for the cases to be made ready in advance for his collection. As to that, or whether he had any opportunity to make such arrangements, there was no evidence at all, and neither the Commissioners nor this Tribunal is entitled to make any assumption on the subject. However, the review officer did not consider Mr Brown’s account of how the tobacco got into the Appellant’s car, either to accept or reject it. In our view, the review officer failed to take into consideration a highly relevant matter.
20. A factor which was taken into consideration in determining whether the seizure had been lawful was, as the review officer said, that Mr Brown’s intention to give the tobacco to his work mates instead of a bonus placed the goods outside the scope of the relief afforded by the 1992 Order. The definition of "own use" in article 2(1) says that "if the person making the gift receives in consequence any money or money’s worth" that is not regarded as own use (emphasis added). Without making a specific finding on the subject, we express doubt whether the making of such a gift to employees, which is a voluntary act and, presumably, after the employees have done their work and not in consideration of it, would take the import of the goods outside the meaning of "own use".
21. For the reasons set out in paragraphs 18 and 19 above, the decision of the review officer was not a reasonable decision within the definitions of reasonableness given in Wednesbury and J H Corbett.
21. Having so concluded, we allow this appeal. Our powers are limited to those set out in section 16(4) of the Finance Act 1994. Accordingly, we direct that if it remains possible the decision not to restore shall cease to have effect immediately; that a further review should be carried out, bearing in mind all the matters set out in this decision; and that the matters set out in this decision should in the future be acted upon, in particular that review officers should carry out their proper function as set out in paragraph 18 above.
22. No application was made at the hearing for costs. In the usual way, we would direct that the Commissioners should pay the Appellant’s costs of and incidental to and consequent upon the appeal. However, in case either party should wish to be heard as to costs, or in default of agreement as to costs, we give liberty to both parties to apply to the Tribunal on the matter of costs. Any such application should be made not later than 30 days after the date of release of this decision.