[2010] UKFTT 164 (TC)

								
TC00469

Appeal number LON/2006/8010

EXCISE DUTIES – intra – community transport of excise goods in duty suspension – whether a consignment arrived at stated destination- whether a duty point within the UK was established

FIRST-TIER TRIBUNAL

TAX 

	JIGSAW WHOLESALE LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Excise Duty)	Respondents

				TRIBUNAL: JUDGE MRS.S.M.G.RADFORD 
						MS.S.O’NEILL (MEMBER)

Sitting in public in London on 19 February 2010

Rebecca Murray for the Appellant

Richard Smith instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2010

DECISION

The Appeal

1.	The Appellant appeals against a review decision dated 13 December 2005  (‘the Review Decision’) given under FA 1994 Section 15 upholding an assessment to excise duty dated 18 October 2005 in the amount of £26,106.00 (‘the Assessment’).  The Notice of Appeal against the Review Decision was filed on 11 January 2006.
2.	The Assessment relates to the movement of excise goods under duty suspension from an excise duty warehouse in the UK to a bonded warehouse in France. 
3.	HMRC contend that the goods failed to arrive at their destination so that an excise duty point arose under Regulation 4 of the Excise Duty Points (Duty Suspended Movements of Excise Goods) Regulations 2001 (“the DSMEG Regulations”). HMRC rely in this respect on information from the French Fiscal Authorities that the goods did not reach the destination warehouse.
The Law
4.	The rules concerning excise duty points were harmonised within member states of the EU at the material time by Directive 92/12/EEC (“the Directive”). Article 4(c) thereof gives the following definition:
suspension arrangement: a tax arrangement applied to the production, processing, holding and movement of products, excise duty being suspended
5.	Article 6 of the Directive provides:
1. Excise duty shall become chargeable at the time of release for consumption or when shortages are recorded which must be subject to excise duty in accordance with Article 14 (3).
Release for consumption of products subject to excise duty shall mean:
(a) any departure, including irregular departure, from a suspension arrangement;
2. The chargeability conditions and rate of excise duty to be adopted shall be those in force on the date on which duty becomes chargeable in the Member State where release for consumption takes place or shortages are recorded. Excise duty shall be levied and collected according to the procedure laid down by each Member State, it being understood that Member States shall apply the same procedures for levying and collection to national products and to those from other Member States.
6.	Article 15 of the Directive provides:
1. Without prejudice to the provisions of Articles 5 (2), 16 and 19 (4), the movement of products subject to excise duty under suspension arrangements must take place between tax warehouses.
2. Warehousekeepers authorized by the competent authorities of a Member State in accordance with Article 13 shall be deemed to be authorized for both national and intra-Community movement.
3. The risks inherent in intra-Community movement shall be covered by the guarantee provided by the authorized warehousekeeper of dispatch, as provided for in Article 13, or if need be, by a guarantee jointly and severally binding both the consignor and the transporter. If appropriate, Member States may require the consignee to provide a guarantee.
The detailed rules for the guarantee shall be laid down by the Member States. The guarantee must be valid throughout the Community.
4. Without prejudice to the provision of Article 20, the liability of the authorized warehousekeeper of dispatch and, if the case arises, that of the transporter may only be discharged by proof that the consignee has taken delivery of the products, in particular by the accompanying document referred to in Article 18 under the conditions laid down in Article 19.
7.	Article 18(1) of the Directive provides:
Notwithstanding the possible use of computerized procedures, all products subject to excise duty moving under duty-suspension arrangements between Member States shall be accompanied by a document drawn up by the consignor. This document may be either an administrative document or a commercial document. The form and content of this document shall be established in accordance with the procedure laid down in Article 24 of this Directive.
8.	Article 19(2) of the Directive provides:
When products subject to excise duty move under the duty-suspension arrangements to an authorized warehousekeeper or to a registered or non-registered trader, a copy of the accompanying administrative document or a copy of the commercial document, duly annotated, shall be returned by the consignee to the consignor for discharge, at the latest within 15 days following the month of receipt by the consignee.

9.	Article 20 of the Directive provides:
1. Where an irregularity or offence has been committed in the course of a movement involving the chargeability of excise duty, the excise duty shall be due in the Member State where the offence or irregularity was committed from the natural or legal person who guaranteed payment of the excise duties in accordance with Article 15 (3), without prejudice to the bringing of criminal proceedings.
Where the excise duty is collected in a Member State other than that of departure, the Member State collecting the duty shall inform the competent authorities of the country of departure.
2. When, in the course of movement, an offence or irregularity has been detected without it being possible to determine where it was committed, it shall be deemed to have been committed in the Member State where it was detected.
3. Without prejudice to the provision of Article 6 (2), when products subject to excise duty do not arrive at their destination and it is not possible to determine where the offence of irregularity was committed, that offence or irregularity shall be deemed to have been committed in the Member State of departure, which shall collect the excise duties at the rate in force on the date when the products were dispatched unless within a period of four months from the date of dispatch of the products evidence is produced to the satisfaction of the competent authorities of the correctness of the transaction or of the place where the offence or irregularity was actually committed.
10.	The general rules as to excise duty points have been transposed into domestic legislation under the Excise Goods (Holding, Movement, Warehousing and REDs) Regulations 1992 (“HWMR”), regulation 4. Regulation 4(2) is relevant for present purposes:
(2) If any duty suspension arrangements apply to any excise goods, the excise duty point shall be the earlier of–
(a) the time when the excise goods are delivered for home use from a tax warehouse or are otherwise made available for consumption, including consumption in a warehouse;
(b) the time when the excise goods are consumed;
(c) the time when the excise goods are received by a REDS or by an occasional importer or by an importer for whom the REDS is acting, or when the duty ceases to be suspended in accordance with those duty suspension arrangements;
11.	In this case the excise duty point under that provision (and under article 6(1) of the Directive) is when the goods were released for consumption. 
12.	 Article 20 of the Directive is enacted into domestic law under regulations 3 and 4 of DSMEG:
3. Irregularity occurring or detected in the United Kingdom
(1) This regulation applies where:
(a) excise goods are:
(i) subject to a duty suspended movement that started in the United Kingdom; or
(ii) imported into the United Kingdom during a duty suspended movement; and
(b) in relation to those goods and that movement, there is an irregularity which occurs or is detected in the United Kingdom. 
(2) Where the Commissioners are satisfied that the irregularity occurred in the United Kingdom, the excise duty point shall be the time of the occurrence of the irregularity or, where it is not possible to establish when the irregularity occurred, the time when the irregularity first comes to the attention of the Commissioners.
(3) Where it is not possible to establish in which Member State the irregularity occurred, the excise duty point shall be the time of the detection of the irregularity or, where it is not possible to establish when the irregularity was detected, the time when the irregularity first comes to the attention of the Commissioners.
(4) For the purposes of this regulation, detection has the same meaning as in Article 20(2) of the Directive.
4. Failure of excise goods to arrive at their destination
(1) This regulation applies where:
(a) there is a duty suspended movement that started in the United Kingdom; and
(b) within four months of the date of removal, the duty suspended movement is not discharged by the arrival of the excise goods at their destination; and
(c) there is no excise duty point as prescribed by regulation 3 above; and
(d) there has been an irregularity.
(2) Where this regulation applies and subject to paragraph (3) below, the excise duty point shall be the time when the goods were removed from the tax warehouse in the United Kingdom.
(3) The excise duty point as prescribed by paragraph (2) above shall not apply where, within four months of the date of removal, the authorized warehousekeeper accounts for the excise goods to the satisfaction of the Commissioners.
13.	Regulation 7 of DSMEG provides:
(1) Subject to paragraph (2) below, where there is an excise duty point as prescribed by regulation 3 or 4 above, the person liable to pay the excise duty on the occurrence of that excise duty point shall be the person shown as the consignor on the accompanying administrative document or, if someone other than the consignor is shown in Box 10 of that document as having arranged for the guarantee, that other person
(2) Any other person who causes or has caused the occurrence of an excise duty point as       prescribed by regulation 3 or 4 above, shall be jointly and severally liable to pay the duty with the  person specified in paragraph (1) above.
14.	Section 12(1A) FA 1994  provides:
Subject to subsection (4) below [time limit], where it appears to the Commissioners –
(a)	that any person is a person from whom any amount has become due in respect of any duty of excise; and
(b)	that the amount due can be ascertained by the Commissioners,

the Commissioners may assess the amount of duty due from that person and notify that amount to that person or his representative.

Background and Facts
15.	 Mr. Munawar Khan director of the Appellant; Mr McWilliam an HMRC Officer from the Excise Holding & Movement Unit in Leicester; and Ms. Cook an HMRC Review Officer gave evidence to the Tribunal.
16.	The Appellant was the registered owner of 960 cases of Kestrel Super and 960 cases of Skol Super (‘the Consignment’), which Thames Beer offered to purchase on 15 April 2004. Thames Beer is registered for VAT in France.
17.	The Consignment was to be delivered to a bonded warehouse, Entrepot De Wimille (“EDW”), 2 Route de la Tresorerie, 62126, Wimille, France.
18.	On 6 May 2004 the Appellant executed the order by instructing Edwards Beers & Minerals Limited (‘Edwards ’) to send the Consignment to EDW.  Edwards has a bonded warehouse in Leighton Buzzard with which the Appellant has an account.
19.	All products moving under duty-suspension arrangements must be accompanied by an Accompanying Administrative Document (“AAD”) drawn up by the consignor (i.e. the warehousekeeper of dispatch): Article 18(1) of the Directive. The onus of controlling the legitimate movement of duty-suspended goods is placed on the warehousekeeper. 
20.	An AAD was created by Edwards to reflect the Appellant’s instructions. In addition to the details referred to above, the Appellant was named as the provider of the guarantee in box 10 and Capital Carriers Limited (“Capital Carriers”) was named as transporter. The AAD was given number 456.
21.	An AAD is a document in quadruplicate. It is completed by the consignor, or warehousekeeper of despatch, prior to the excise goods being transported. If the goods are to be delivered to another bonded warehouse, the warehousekeeper of which will be the consignee, then that bonded warehouse must return one copy of the AAD to the consignor as a receipt for the delivery of the goods.
22.	Regulations governing the AAD are contained in regulation 2719/92/EEC. 
•	One copy to be retained by the consignor (no.1)
•	One for the consignee (no.2)
•	One to be returned to the consignor on receipt of the goods (no.3)
•	One for the tax authorities in the destination state (no.4)
23. Each copy of the AAD is marked with a number to identify it. This number may be in the left hand corner as part of the document as was the case with AAD 456. 
24. Mr. McWilliam of HMRC sent a fax to Mr Khan of the Appellant which stated “Fax confirmation of instructions for removal of mixed load of Kestrel (960 cases) and Skol Super (960 cases) from Edwards on 6th May 2004. Please ensure that the driver contacts Customs at Dover (01 304 664689) prior to arrival at Folkestone”.
25. The Appellant produced a copy of this fax on which had been written:
“CHECKED AT EUROTUNNEL BY U.K. CUSTUMS (sic) & EXISE (sic)”
and claimed that this showed that the driver had checked in with the Consignment with HMRC at Folkestone on the way to France.  
26. The Appellant claimed that Edwards had received back the relevant copy no. 3 of AAD 456 from EDW, the consignee, and that Thames Beer had sent the Appellant a receipt for the goods. 
27. On 23 September 2004 an officer of HMRC (or HM Customs and Excise as it then was) visited Edwards and found evidence of a number of AADs for which the copy no. 3s, showing that the goods had been received,  had not been returned by the consignee and in each case this was EDW.
28. Requests were therefore made for information (known as mutual assistance verification) from the French Fiscal authorities in relation to each of the unreceipted AADs including AAD 456.
29. The substance of the response from the French Fiscal authorities in relation to AAD 456 was that this AAD, and by inference the goods travelling under it, never arrived at EDW. A departure from the excise suspended movement therefore occurred in that the consignment of beer did not end at EDW.
30. As a result of this finding the Respondents issued assessment BM239/05 on 29 June 2005. 
31. Initially this assessment was made against HSM Technologies Ltd (a company of which Mr Munawar Khan, a director of the Appellant, is also director). This was because the guarantee used by the Appellant is one to which HSM Technologies is principal. 
32. However, on further consideration, given the fact that the Appellant was named as the provider of the guarantee on the AAD and is named in Schedule 2 to the guarantee as a company with the same rights under it as the principal, HMRC withdrew the original assessment and a substituted assessment was issued to the Appellant in the same amount and on the same basis. 
33. This was notified to the Appellant on 18 October 2005.
34. The Appellant requested a review of the Assessment under Section 14(2) FA 1994.
35. The Review Officer, Ms. A. Cook, confirmed the Assessment under Section 15 FA 1994. 
36. In his witness statement Mr Khan, director of the Appellant, gave evidence that the Appellant was to supply a quantity of beer to Thames Beer by delivery to EDW.
37. Accordingly he arranged for Capital Carriers to transport the goods to France. He stated that the goods were loaded onto the ferry and dispatched to France.
38. He produced a fax from Thames Beer acknowledging receipt of the beer and stated in examination that he had been paid in cash sterling by Mr Khalid, Thames Beer’s agent. Mr Khan had been advised by Mr Ahmed of Thames Beer on 5 May 2004 that payments for the Consignment would be made by Mr Khalid.
39. When asked in cross examination why he had been paid such a large amount in cash sterling from a European customer Mr. Khan said that he had wanted to be paid straight away.
40. AAD 456 shows vehicle number VIW 4831 with trailer number TL04 as transporting the goods from Edwards to EDW on 6 May 2004. The transporter is shown as Capital Carriers.
41. However a GMB Transport job card dated 6 May 2004 exhibited with Mr. Khan’s witness statement shows vehicle number VIW 4831 with trailer number TL04 transporting the consignment from Edwards to EDW on 6 May 2004. It also appeared to show that GMB Transport had subcontracted the Consignment to KML of Bromwich with vehicle number R398 JUB. It shows a trailer swap at the Eurotunnel apparently as a result of a compressor break. It shows a different vehicle number Y347 RTD at the Eurotunnel and dated 7 May 2004 and that the driver of VIW 4837 had flown back to Ireland.
42. HMRC alleged that the documents showed at least one vehicle swop but the CMR for AAD 456 which was also exhibited with Mr. Khan’s witness statement showed Capital Carriers as the transporter with vehicle number VIW 4831 and trailer number TL04. The CMR was stamped and signed by EDW.
43. In cross examination Mr. Khan was asked why he had claimed that the goods travelled by ferry when Eurotunnel was written on the fax described at paragraph 25 above. Mr. Khan was unable to assist with any further evidence concerning the transport and specifically could not say any more about the Eurotunnel and ferry inconsistency.
44. He produced a copy of an AAD which he claimed was returned to Edwards, the dispatching bonded warehouse from EDW, the receiving bonded warehouse but it appeared to be a copy of the copy no.1 which is the copy kept by Edwards as the dispatching warehousekeeper or consignor and not a copy of the copy no. 3 which was the copy to be sent back to Edwards by the consignee EDW once the goods had reached their destination (see paragraph 22 above).
45. Mr. McWilliam in evidence confirmed that he had sent the fax described in paragraph 24 above.  HMRC at Dover has a team who do checks on consignments of bonded goods going to Europe.
46. The procedure should have been that when the driver of the vehicle called them they would have sent an officer to Folkestone who would have checked the Consignment and stamped the documents. They have a fixed routine to minimise the risk of errors.
47. The officer would have put his name and stamp on the documents and sent a copy to Mr. McWilliam.
48. Mr. McWilliam considered it was most unlikely that an HMRC officer would just have written on his fax in the manner shown at paragraph 25 above and even more unlikely that he would have spelled Customs and Excise wrongly.
49. Mr. McWilliam gave evidence in respect of the request he raised with the French Fiscal authorities. He said that the French generally responded in French and it would be translated into English before being passed on to him.
50. In this case requests were sent in respect of 21 consignments of which the consignment covered by AAD 456 was one.
51. The response from the French Fiscal authorities was that none of the 21 consignments had been received and, in particular, the consignment on AAD 456 had not been received at the destination warehouse in France. HMRC produced a document signed and stamped by the French Fiscal authorities confirming that in respect of AAD 456 the goods had not arrived at EDW.
 52. The translation provided of the information accompanying this document stated that in respect of the 21 intra-community movement verification requests which all related to the same consignor, Edwards, and the same consignee, EDW, none of the AADs in question had arrived at EDW.
53. Additionally the French Fiscal authorities advised that EDW had not been authorised for beer since 15 November 2004.
54. Edwards keep a spread sheet of which copy no. 3s of the AAD’s they have received back from the consignee. They had definitely not received a copy no. 3 of AAD 456 from the consignee EDW. Mr. McWilliam checked twice.
55. On cross examination Mr. McWilliam stated that he had been in regular contact with Edwards for 7 years and that their routine was to file the copy no. 3s as soon as they were received.
56. Ms. Cook of HMRC gave evidence in respect of her formal review of the Assessment.
57. She stated that an irregularity in the movement of goods covered by AAD 456 was found when no properly receipted copy no. 3 of the AAD was returned to Edwards within the four months allowed as laid down in Regulation 4(1) of DSMEG. 
58. Having made several requests of the Appellant’s solicitors requesting a copy of copy no. 3 of AAD 456 and any other relevant information they might have, and having been provided with nothing showing the goods had arrived in France, Ms Cook wrote to the solicitors with her decision that the Assessment would be upheld in full.

Appellant’s submissions
59. Counsel for the Appellant stated that the Appellant contended in the first instance that the goods did arrive at their destination. The Appellant relied on the following evidence in support of this:-
A receipted copy of AAD 456 prepared by the bonded warehouse of dispatch as required by law. 
A receipt from Thames Beer for the Consignment dated 10 May 2004.
A fax from HMRC confirming that the lorry driver checked in with the goods at Folkestone, their furthest UK destination, before leaving the UK on the way to France.
60. The Appellant had no other way of confirming that the goods did in fact reach their destination and on the face of the evidence obtained it is clear that they did reach their destination.
61. Counsel for the Appellant cited the case of Teleos Plc v C & E Commissioners (C-409/04) (“Teleos”) in which it was held that:
“The first subparagraph of Article 28(c)(A)(a) of Sixth Directive 77/388, as amended by Directive 2000/65, is to be interpreted as precluding the competent authorities of the Member State of supply from requiring a supplier, who acted in good faith and submitted evidence establishing, at first sight, his right to the exemption of an intra–Community supply of goods, subsequently to account for value added tax on those goods where the evidence is found to be false, without, however, the supplier’s involvement in the tax evasion being established, provided that the supplier took every reasonable measure in his power to ensure that the intra-Community supply he was effecting did not lead to his participation in such evasion”
62.  Counsel for the Appellant compared the Appellant to the supplier in Telios. The Appellant had acted in good faith. Even if evidence was produced by HMRC which proved that notwithstanding the documentary evidence of delivery to the warehouse in France, the goods did not in fact reach the warehouse and the evidence was false, the Appellant relied on Telios and the above decision in this case to preclude HMRC the “competent authorities of the Member State of supply” from requiring “a supplier” the  Appellant, “who acted in good faith and submitted evidence establishing, at first sight, his right to the exemption of an intra-Community supply of goods,” subsequently to account for the excise duty on those goods “where the evidence is found to be false, without, however the supplier’s involvement in the tax evasion being established”.
63. Counsel for the Appellant submitted that even if the Tribunal finds, contrary to the Appellant’s primary submissions, that the goods did not arrive at the destination stated on the AAD, then, as an alternative argument, the irregularity occurred outside the UK with the result that excise duty is payable in France and not in the UK, in accordance with Article 20(1) and 20(2) of Council Directive 92/12/EEC. 
64. She submitted however that there is no evidence of an irregularity at all.  Although HMRC had stated that the French Fiscal authorities informed them that the goods did not arrive at their destination in France those checks were not made by the French until January 2005 which was some eight months after the goods arrived in France in May 2004. By that time it seemed unlikely that the necessary evidence would still be available.
65. If nonetheless, HMRC’s evidence is preferred, it should be accepted that any irregularity which occurred was outside the UK.
66. Article 5 of the Directive states that products become subject to duty on their manufacture or their importation into the Community. Article 6 states that duty becomes chargeable on their release for consumption.  
67. Under DSMEG Regulations 3 and 4 a charge to duty arises in the UK in relation to a duty suspended movement that started in the UK, if an ‘irregularity’ (as defined in Regulation 2) occurs.
68. For the purposes of Article 20 of the Directive there is no further explanation of the word “irregularity”.  Counsel for the Appellant submitted that if an irregularity occured then by virtue of Article 20(2) the excise duty is due in the Member State where the irregularity was committed, and if this cannot be established, then by virtue of Article 20(3) the irregularity is deemed to take place in the Member State of detection.

69. Counsel for the Appellant concluded therefore that unless an irregularity was detected in the UK, there were no provisions which would deem an irregularity to have occurred in the UK; and if an irregularity was detected in France, it was deemed to have occurred in France.

70.  HMRC relied on information purportedly obtained from the French Fiscal authorities that the goods did not arrive at EDW.

71. The irregularity in these circumstances would have been discovered by the French Fiscal authorities; the fact that this information was passed on to HMRC does not mean that the irregularity was detected in the UK.  The clearly stated purpose of Article 20 is to allocate taxing rights to one Member State and to decide in which Member State the irregularity occurs.  The only way in which the stated purposes of Article 20 can be achieved is if the Member State which detects the irregularity is the one which first uncovers it.  Otherwise information being passed on to any other Member State would result in duty being payable in more than one Member State.

72. Since Regulation 2 of  DSMEG  specifically states that an irregularity is one within Article 20, it must be the case that Article 20 determines firstly the Member State in which it occurs and secondly the Member State in which excise duty is payable, for the purposes of the DSMEG Regulations.

73. Regulation 3(4) provides “For the purposes of this Regulation, detection has the same meaning as in Article 20(2) of the Directive.”  Article 20(2) for the reasons given above, has the effect of deeming the irregularity to have occurred in France.

74. Regulation 3 of DSMEG only applies where the irregularity “occurs or is detected in the United Kingdom” (Regulation 3(1) (b)).

75. If it had been the case that the irregularity occurred in the UK then Regulation 3(2) or (3) would determine the excise duty point by reference to the time of detection.

76. Regulation 3 is simply a timing provision.  It does not have the effect of overriding Article 20 of the Directive, which determines where the irregularity took place and in which Member State excise duty is payable.

The Respondents’ submissions
77. Mr Khan, director of the Appellant, did not know who had moved the Consignment.
78. He claimed that it was Capital Carriers but the job card produced in the evidence showed that it was in fact GMB Transport.
79. Mr Khan seemed to think that the Consignment was transported by ferry but the same job card showed that the Consignment was transported by Eurotunnel.
80. The burden of proof was on the Appellant to prove that the Consignment arrived in France.
81. The evidence from the French Fiscal authorities established that the Consignment did not arrive at its destination, as defined on the AAD 456 as EDW. This was corroborated by the fact that the consignor, Edwards, had never received a receipted AAD 456 from EDW. 
82. The fact that the Appellant received a goods received advice notice and payment from Thames Beer did not prove where the goods were received.
83. The Appellant has produced what appears to be a receipted AAD 456 but the veracity of this document is extremely doubtful given that the other evidence suggests that it was neither sent by EDW nor received by Edwards. It appears to be a copy of the copy no. 1 of the AAD which would have been retained by Edwards the consignor. 
84. The document produced with this copy was not the reverse of the copy no.1 as according to Ms. Cook’s evidence this would have been retained by Edwards. Ms. Cook also explained that explanatory notes are printed on the reverse of each copy no.1 AAD sheet. Although the document produced had the stamp of EDW on it, clearly it had come from another document.
85. It was unclear how the Appellant would have come into possession of such a document in the normal course of events as there is no requirement to provide it to the guarantor as opposed to the consignor (as the Appellant’s solicitors themselves noted in a letter dated 31 August 2005). There is no confirmation from EDW that they provided it to the Appellant or any other party. 
86. The fact that Thames Beer appeared to have sent the Appellant a receipt for the consignment was neither here nor there when the bonded warehouse, EDW, said that the goods were not received. Diversion of the consignment is a fraud on the Revenue and the role of Thames Beer, as customer, must be highly suspect. However, no such finding was relevant to the issues before the Tribunal in this appeal.
87. HMRC at Dover have an established practice and if the transporter had checked in with them as directed they would have checked the documents, stamped them and sent Mr McWilliam  a report.
88. The goods must travel with the copy nos. 2, 3 and 4 of the AAD at all times. If these AAD’s did not arrive at the destination, then the goods did not arrive. 
89. The best evidence would suggest that the goods did not arrive at EDW. This is an irregular departure from the suspension arrangement under which the goods were travelling from Edwards to EDW as contemplated by Articles 6(1) and 20 of the Directive. The suspension arrangement required that the goods travel from one bonded warehouse to the other and the fact that they did not arrive at the latter is an irregular departure. 
90. As such an excise duty point arises either under Regulation 4 or Regulation 3(3) of DSMEG. In either event, the Appellant is liable to pay the excise duty pursuant to Regulation 7. 
91. In Anglo Overseas Limited v The Commissioners for Her Majesty’s Revenue and Customs (E01090) Colin Bishopp stated at paragraph 68 in response to the question of whether duty points arose in the United Kingdom
“However an additional argument raised by Mr Chaisty was that as the detection of the irregularities occurred not in the UK, but in Portugal, Spain and Italy or Belgium, regulation 3 could not apply so as to create a duty point in the UK: any assessment on Anglo Overseas Limited would have to be made by the country of detection, as article 20 of the Directive required……..”
and at paragraph 69 
“The Italian authorities knew nothing of these consignments (and the Portuguese, Spanish and Belgian authorities nothing of the consignments purportedly sent to their countries) until HMRC made enquiries about them. On any reasonable view, it was HMRC which detected the irregularities; the overseas authorities did no more than provide evidence. I am not persuaded that there is any basis on which it might be concluded that article 20.2 places the duty point in a country other than the UK.”
92. In deciding whether Regulation 3 or 4 of DSMEG applied, then Regulation 4 was the default provision and as there was ample evidence of an irregularity which occurred and which was detected in the UK Regulation 3 also applied.
93. The Assessment was properly raised and the Appellant had not made its case and shown that there was no irregularity.
94. One of the Appellant’s grounds of appeal was that there were objective grounds for concluding that the goods reached the warehouse, the Appellant acted in good faith and therefore, pursuant to Teleos (C-409/04), liability should not be imposed on the Appellant after the event.

95. The authority on which the Appellant sought to rely in this regard, Teleos, a decision of the ECJ, was made in relation to VAT and not excise duty. In the course of the judgment the Court stated that the application of customs duties and the imposition of VAT are not comparable. Therefore the reasoning within that decision is not apt to assist the Tribunal in this case. 
96. In any event, the basis for the decision in Teleos was that taxing authorities should not impose requirements on traders to produce evidence that an intra-Community supply has been made and then, even though those requirements have been met, assess the trader as liable to output tax where subsequent evidence has proved that the goods did not leave the country. 
97. The situation here was completely different. The requirements of the European and domestic law in relation to establishing that the goods moved from the UK to France in duty suspension have not been met in that a receipted AAD was not returned by EDW to Edwards. That was because the goods never arrived at EDW. 
98. The AAD that the Appellant had produced, in the light of the evidence from the French Fiscal authorities and Edwards was likely to be a forgery. It was irrelevant whether the Appellant has acted in good faith or not, or whether that AAD appeared objectively to evidence the arrival of the goods, because the Appellant had the responsibility to guarantee that the goods would reach their destination, in default of which it is liable to pay the excise duty.
99.  This was not a liability being imposed ‘after the event’, but an identification by HMRC that the requirements for a regular movement of goods in duty suspension had not been met. 
Findings
100. The Tribunal found that the front page of the receipted copy of AAD 456 on which the Appellant relied was in fact more likely than not to be a copy of the copy no.1 which would have been retained by Edwards.
101. The Tribunal found that Ms. Cook’s evidence was direct and straightforward. She stated that the document produced by the Appellant with this copy no. 1 was not the reverse side of the AAD as this would have been retained by Edwards and would have had a different content.
102. Although the document had EDW’s stamp on it we accept Ms. Cook’s view that it clearly belonged to a different document.
103. The goods received advice note from Thames Beer did not prove where the goods were received or that the Consignment had reached EDW.
104. The French Fiscal authorities had confirmed that no trace of the AAD 456 had been found at EDW.
105. Article 18(1) of the Directive states that all products moving under the duty suspension arrangements must be accompanied by the AAD.
106. It was most unlikely that Dover HMRC had marked Mr. McWilliam’s fax as produced.  Mr. McWilliam’s evidence was clear and unequivocal on this point. Had the lorry driver called Dover as requested Dover HMRC would have checked the Consignment and the documents, signed and stamped the documents and sent a copy to Mr. McWilliam.
107. The burden of proof was on the Appellant to prove that the goods had arrived at EDW in France and it had not done so.
108. The Consignment failed to arrive at its destination so that an excise duty point arose under Regulation 4 of the DSMEG Regulations. Where this regulation applies the excise duty point shall be the time when the goods are removed from the tax warehouse in the UK.
109. The irregularity was detected in the UK following the failure of the driver of the vehicle to check in at Folkestone with the Dover HMRC team and so Regulation 3 also applied.
110. The non receipt of copy no. 3 of the AAD by Edwards was a further irregularity detected in the UK which resulted in contact being made with the French Fiscal authorities.
111. The French Fiscal authorities did not detect the irregularity, they confirmed it.
Decision
112. The Appeal was dismissed.
The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

TRIBUNAL JUDGE MRS S M G RADFORD

RELEASE DATE: 13 April 2010