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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Williams & Anor v Customs & Excise [2003] UKVAT(Excise) E00509 (20 October 2003) URL: https://www.bailii.org/uk/cases/UKVAT/Excise/2003/E00509.html Cite as: [2003] UKVAT(Excise) E00509, [2003] UKVAT(Excise) E509 |
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Williams & Anor v Customs & Excise [2003] UKVAT(Excise) E00509 (20 October 2003)
EXCISE DUTY Import of tobacco Seizure of goods and vehicle Reasonableness of Commissioners deemed decision to refuse to restore vehicle Review out of time Proportionality Lindsay & Hoverspeed considered Appeal allowed
LONDON TRIBUNAL CENTRE
MS S E WILLIAMS & MR J R WHITTAL Appellants
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: PAUL HEIM CMG (Chairman)
MR D CORKE FCA
MRS A WEST FCA
Sitting in public in Cardiff on 6 March 2003
Miss Sandercock, counsel, for the Appellants
Mr Mitrophanous, counsel, for the Respondents
© CROWN COPYRIGHT 2003
DECISION
"No, I am not going to jeopardise my business by selling HRT, but I thought you could bring in as much as you wanted".
She also said that they came over once a year just to get Christmas things.
"I seized the goods due to factors indicating the probability of goods held for a commercial purpose due to the following reasons.
1. Excessive amount of excise goods held in Mr Whittal and Ms Williams' possession.
2. Income and expenditure.
3. Inconsistent stories.
4. Mr Whittal is not aware of how long goods will last.
5. Consumption rate taken into account for both, the goods will last approximately three years.
6. It is unreasonable to give away 2-3 boxes of tobacco as gifts".
"The Excise Duties (Personal Reliefs) Order 1992 sets out the circumstances and conditions under which a traveller may be afforded relief from payment of UK excise duty when transporting excise goods.
The Schedule to the above-mentioned Order lays down the guidance levels for these goods. Goods in excess of the guide levels are deemed to be for commercial purpose unless, if required to do so, the traveller satisfies Customs and Excise to the contrary. This means that if you fail to satisfy Customs and Excise that the goods in your possession are not solely for your own use, then there is a legal presumption that the goods are intended for a commercial purpose, and the goods become liable to forfeiture and can be seized.
In your case you were intercepted at Dover Eastern Docks on 20 November 2001, where 22 kg of hand rolling tobacco, 1,360 cigarettes, 25 cigars, 4.5 ltrs of wine and 13.92 ltrs of beer were seized.
You were then interviewed regarding your intentions for the goods transported. The goods and vehicle were seized for the following reasons:
1. The vehicle was used for the transportation of excise goods that were in excess of the guidelines as per article 5 of the Excise Duties (Personal Reliefs) Order 1992.
2. Inconsistencies within your story over who the goods were intended for failed to satisfy the officer that the goods were for personal use.
3. The officer was not satisfied that your income supported the quantity of purchases made or that it was reasonable to give away such quantities as gifts.
The Customs and Excise Management Act 1979 section 141(1) follows that if a vehicle has been used for the carriage of goods liable to forfeiture then that vehicle becomes liable to forfeiture.
Therefore in your case both the goods and the vehicle were seized.
I have considered the facts in this case and in conclusion I am unable to offer the goods and vehicle for restoration as the seizure was made in accordance with Departmental policy as stated above. There are no exceptional circumstances in this case, which would justify a departure from this policy.
If you wish to have the decision not to restore the goods and vehicle reviewed, then please write to the following address:
The Review Officer
HM Customs & Excise
Crownhill Court
Plymouth
Devon PL6 5BZ
A Departmental Review Officer impartially carries out all reviews.
You have 45 days from the date of this letter to ask for a Review to be conducted."
Although this letter refers to "Departmental policy stated above", it does not in fact set out the policy.
"Subsequent to the events of 20 November 2001 Ms Williams wrote a three page letter to our Post Seizure Unit requesting restoration of the excise goods and vehicle, in considering matters as described below I have taken into account the contents of this letter."
"Restoration policies
Vehicles
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. However, each case is considered to determine whether the affected party has substantiated that restoration should exceptionally be allowed.
April 2002 update vehicle restoration policy
With effect from 18 April 2002 the Commissioners' policy in respect of restoration of seized vehicles has been amended as follows:-
(a) Private vehicles seized where alcohol or tobacco goods are detected and Customs are satisfied that the excise goods are intended for a commercial use, i.e. for profit:-
in such cases Customs policy is that both the goods and vehicle seized will not be restored unless there are exceptional and/or humanitarian circumstances.
(b) Private vehicles seized where alcohol or tobacco goods are detected and Customs are satisfied that the excise goods are intended not for own use but for sale at cost, i.e. not for profit:-
in such cases where it is a first detection the vehicle seized may be restored upon payment of 100% of the revenue due on the value of the excise goods or the value of the vehicle whichever is the lower."
• Any evidence of previous smuggling or failure to comply with legal requirements;
• Any evidence that the person involved knew what they were doing was wrong;
• Any evidence that the person was paid to make the journey;
• Large quantities of goods which might damage legitimate trade;
• Any evidence that the goods were for a commercial purpose."
"The guide level for tobacco is 1 kilo per person, jointly your clients had in their possession 22 kilos which is 11 times the guide level. This is a substantial quantity of tobacco and they were required under the legislation, when asked to do so, to satisfy Customs that the tobacco was for own use and rebut the statutory presumption of commerciality.
The two travellers had 22 kilos of tobacco and the excise goods in total cost approximately £800, much of this would have been for the tobacco. This is a substantial sum of money, with regard to Mr Whittal it is evident that he was generally vague as to how much tobacco they would give away and how long his tobacco would last. Considering the sum spent I would have thought that if the tobacco was for use as described he would have calculated and planned the amounts to be purchased and would have a much more precise idea of the associated quantities.
Secondly, reading the interview with Mr Whittal I am left with the impression that Ms Williams mainly smokes cigarettes, only sometimes did she smoke roll up cigarettes, the tobacco was essentially for Mr Whittal with some to be given away as presents. In contrast to this Ms Williams said that she did smoke roll ups, she consumed 1½ pouches per week. On another point, I find it somewhat implausible that if Ms Williams smoked as she said, she would not also have the means to make roll up cigarettes, namely roll up papers. I am of the view that there are clear inconsistencies in the two accounts.
Thirdly, a pouch of tobacco equates to 50 grams, 20 pouches per kilo, 22 kilos of tobacco is equivalent to 440 pouches. Mr Whittal said he consumed 1 pouch every 2-3 days, say 2½ pouches per week, Ms Williams consumed 1½ pouches per week, total 4 pouches per week. In her interview Ms Williams effectively said that 12 pouches (2 pouches each for 6 people) would be given away as presents. Hence, 440 less 12 equals 428 pouches, divide by 4 equals 107, that is, at a consumption rate of 4 pouches per week the tobacco would last 107 weeks or just over 2 years. Information from tobacco manufacturers advises that in ideal storage conditions tobacco has a shelf-life of 14-18 months. I consider it highly implausible that your clients would wish to buy such a quantity of tobacco for consumption so far ahead, even more so when one considers that tobacco is a perishable commodity.
Fourthly, I am also guided by decisions of the VAT and Duties Tribunals, in this context I refer to the case of the Commissioners versus Mr Gordon Boyd (case EDN/96/8006). The Appellant had 9.6 kilos of hand rolling tobacco, in relation to this quantity, the Chairman, Mr T Gordon Coutts, QC, in his decision of 7 April 1997 commented as follows:-
"The Tribunal came to the view that even half the quantities involved would have raised a justifiable suspicion but where 9.6 kilos of hand rolling tobacco are imported it strains credulity beyond acceptable levels that this could be for one man's own use. The importation of twenty odd pounds of tobacco of the hand rolling variety is sufficient justification in itself for the Respondents not being satisfied that this was for personal use."
Your clients effectively had 11 kilos each, I consider that the above decision has relevance, I concur with the thoughts of Mr T Gordon Coutts, QC, that it strains credulity beyond acceptable levels that the tobacco was for the personal use of Mr Whittal and Ms Williams.
Fifthly, it is evident that Ms Williams sells cigarettes/tobacco in her petrol station, clearly there exists the opportunity to sell the tobacco through this outlet and I submit that it would not be unreasonable to suggest that this was the intention of Ms Williams. On a minor point I note from the Officers notebook that the list of other items in the vehicle included one bag containing 2 boxes of lighters. It appears to me not unreasonable to surmise that the lighters may well have been purchased for sale in the petrol station, if this was the case then why not also the tobacco?
Taking all of the above analysis collectively I consider that your clients had a significant quantity of tobacco and they did not satisfy Customs that the excise goods were held for other than a commercial purpose. Therefore, the goods were liable to forfeiture pursuant to Article 5(1) of the Excise Duties (Personal Reliefs) Order 1992. the other excise goods were liable to forfeiture pursuant to Section 141(1)(b) of the Customs and Excise Management Act 1979.
In respect of the Volvo vehicle used to transport the excise goods, I am satisfied that this was also liable to forfeiture in accordance with Section 141(1)(a) of the Customs and Excise Management Act 1979. I consider that both the excise goods and vehicle were properly seized as liable to forfeiture under Section 139 of the same Act."
"I understand the vehicle belongs to Ms Williams and I have reviewed her case in the context of this amended policy. The policy is designed to prevent illicit trade in excise goods as well as protect legitimate UK trade and revenue.
Overall, on the balance of probability, I consider that the tobacco was intended not for own use but for a commercial purpose, that is, for profit. Following on from this in accordance with policy I consider that the vehicle should not be restored to Ms Williams. I consider that there are no exceptional circumstances in her case which would warrant a departure from this general policy. I consider the refusal to offer the vehicle for restoration is a reasonable and proportionate exercise of discretion bearing in mind the general public interest in protecting the revenue generated by excise duty."
"The Appellants were not frequent travellers abroad and had only gone over to France in this manner once before. This was a first offence. They were not aware of the precise amounts of tobacco they were allowed to bring into the country. The offence was committed in the run up to Christmas. The Appellants maintained that they went to buy presents for family and friends and also for themselves. They had done exactly the same last year for the same purpose. The inconsistencies in their stories were mainly down to the fact that they were not expecting to be stopped and questioned about each individual item. They submit that if they were taking risks they would have had a cast iron story. They did not perceive the amounts they brought back to be disproportionate. It was only the tobacco quantities that seemed excessive and even then it was justified for a once a year purchase. They have great hardship without the vehicle."
"Subject to the provisions of this Order a Community traveller entering a control zone or 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 term `own use' is defined in Article 2 of the Order as follows:
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 sets out the conditions for relief from duty of excise stating that if the condition that the goods be held other than for a commercial purpose is not complied with, then the excise goods are liable to forfeiture:
(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 whether by the Community traveller who imported them or by some other person who has possession or control of them; and if that condition is not complied with in relation to any excise goods, those goods shall, without prejudice to article 6 below, be liable to forfeiture.
(2) In determining whether or not the condition imposed under paragraph (1) above has been complied with, regard shall be taken of-
(a) his reasons for having possession or control of those goods;
(b) whether or not he is a revenue trader;
(c) his conduct in relation to those goods and, for the purposes of this sub-paragraph, conduct includes his intentions at any time in relation to those goods;
(d) the location of those goods;
(e) the mode of transport used to convey those goods;
(f) any document or other information whatsoever relating to those goods;
(g) the nature of those goods including the nature and condition of any package or container;
(h) the quantity of those goods;
(i) whether he has personally financed the purchase of those goods; and
(j) any other circumstance which appears to be relevant.
(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 any 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 being complied with.
(3C) Paragraph (3B) above shall not apply where a court or tribunal is satisfied that the condition imposed by paragraph (1) has been complied with.
The Schedule to the Order referred to in Article 5(3) above specifies the following quantities of excise goods:
Tobacco products
(a) 800 cigarettes;
(b) 400 cigarillos (that is to say cigars weighing not more than 3 grammes each);
(c) 200 cigars;
(d) 1 kilogramme of tobacco products other than in a form mentioned in paragraphs (a), (b) or (c) above.
Alcoholic beverages
(e) 10 litres of spirits;
(f) 20 litres of intermediate products (that is to say products defined as intermediate products in Article 17(1) of the Council Directive 92/83/EEC);
(g) 90 litres of wines (but only 60 litres may be sparkling wines)
(h) 110 litres of beer.
Section 78(4) of that Act provides that:
any thing chargeable with any duty which is found concealed or is not declared, and any thing 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.
Under section 139 of the same Act, any thing liable to forfeiture under the Customs and Excise Acts could be seized by the Commissioners.
Section 141(1) of that Act provides as follows:
Without prejudice to any other provision of the Customs and Excise Acts 1979, 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 so 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 thing so liable, shall also be liable to forfeiture.
Schedule 3 of the Act makes certain provisions relation to forfeiture:
Notice of seizure
1. (1) The Commissioners shall, except as provided in sub-paragraph (2) below, give notice of the seizure of any thing as liable to forfeiture and of the grounds therefore to any person who to their knowledge was at the time of the seizure the owner or one of the owners thereof.
(2) Notice need not be given under this paragraph if the seizure was made in the presence of
(a) the person whose offence or suspected offence occasioned the seizure; or
(b) the owner or any of the owners of the thing seized or any servant or agent of his; or
( c) in the case of anything seized in any ship or aircraft, the master or commander
Notice of claim
3. Any person claiming that any thing seized as liable to forfeiture is not so liable shall within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise.
4. (1) Any notice under paragraph 3 above shall specify the name and address of the claimant and, in the case of a claimant who is outside the United Kingdom [and the Isle of Man], shall specify the name and address of a solicitor in the United Kingdom who is authorised to accept service of process and to act on behalf of the claimant.
(2) Service of process upon a solicitor so specified shall be deemed to be proper service upon the claimant.
Condemnation
5. If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, or if, in the case of any notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeited.
Pursuant to section 152 of the Act, the Commissioner may, as they see fit
(a) Stay, sist or compound any proceedings for an offence or for the condemnation of any thing as being forfeited under the customs and excise Acts; or
(b) restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those Acts; or
Section 14(1)(d) of the Finance Act 1994 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. 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) of the Customs and Management Act 1976 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.
Under section 15 of the Finance Act 1994, following review of any decision, the Commissioners may confirm, withdraw or vary the decision. Where the Commissioners do not give notice of their determination of a review within 45 days, they shall be assumed to have confirmed the decision (section 15(2)FA).
Under section 16(1)(a) of that Act, an appeal lies to an appeal tribunal with respect to any decision on a review under section 15 FA including a deemed confirmation under section 15(2).
"Having considered the scope of the directive with the benefit of the full submissions that we have had on this topic, we can summarise the position as follows:
(i) The concepts of "products acquired by private individuals for their own use" in article 8 and "products held for commercial purposes" in article 9 of the directive are antithetical, in the sense that, if an individual acquires (or, having acquired for his own use subsequently decides to hold) products for a purpose other than his own use such products are to be regarded as held for commercial purposes (paragraph 64).
(ii) The divisional court's reasoning and conclusions regarding the scope of articles 8 and 9 were therefore correct; there is no room for a conclusion that United Kingdom excise duty was not chargeable in respect of goods, because, although the individual(s) importing them was or were not doing so "for their own use", they still were, or may have been, holding the goods for supply to others on a non-commercial basis (paragraph 60).
(iii) We record that we are not concerned with the precise scope of the concept "for his own use". The commissioners accept that it must receive a sensible interpretation. They accept, in particular, that it is not confined to situations where the private individual himself intends to consume the goods. So, for example, they accept that a private individual who travels abroad in order to stock up for his or her dinner table or a party which he or she is giving is acquiring for his own use. Likewise, we would suppose, in the case of an acquisition destined as a present for a relative or friend".
"16 (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."
"(6) On an appeal under this section the burden of proof 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 had been established."
The Tribunal next considers the reasons given by the Commissioners in their out-of-time review.
"The Commissioners' policy involves the deprivation of people's possessions. Under article 1 of the 1st Protocol to the Convention such deprivation will only be justified if it is in the public interest. More specifically, the deprivation can be justified if it is "to secure the payment of taxes or other contributions or penalties". The action being taken must, however, strike a fair balance between the rights of the individual and the public interest. There must be a reasonable relationship of proportionality between the means employed and the aim pursued (Sporrong and Lonroth v Sweden (1882)5 EHRR 35, paragraph 61; Air Canada v United Kingdom (1995) 20 EHRR 150, paragraph 30) I would accept Mr Baker's submission that one must consider the individual case to ensure that the penalty imposed is fair. However strong the public interest, it cannot justify subjecting an individual to an interference with his fundamental rights that is unconscionable".
Such considerations seem to have played no part in the Commissioners reasoning.
"Where vehicles are seized and not restored, individual applications for restoration are considered on their merits and officers bear in mind the need for proportionality".
PAUL HEIM CMG
CHAIRMAN
RELEASED:
LON/02/8141