Shaw v Customs & Excise [2003] UKVAT(Excise) E00508 (15 October 2003)

EXCISE DUTY – Restoration of goods – Small non-commercial consignments – Postal packet containing cigarettes seized on arrival in UK from Germany – Quantity in excess of restriction contained in regulations dealing with “small non-commercial consignments” – Whether decision not to restore unreasonable – Whether decision wrongly based on conclusion that goods were imported for commercial purposes – Yes – Appeal allowed – Excise Duties (Small Non-Commercial Consignment) Relief Regulations 1996

LONDON TRIBUNAL CENTRE

	DAVID SHAW	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	STEPHEN OLIVER QC   (Chairman)
						CAROLINE de ALBUQUERQUE

Sitting in public in London on 23 September 2003

No appearance by the Appellant

Christopher Mellor, counsel, instructed by the Solicitors for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	David Shaw appeals against the Commissioners’ decision on review dated 20 February 2003 to refuse to restore excise goods consisting of 950 cigarettes and 200 grams hand-rolling tobacco (“the goods”).  David Shaw did not attend the hearing.  He asked us by letter to proceed on the basis of his own written submissions.  We agreed to do so.  David Shaw is a private individual living in Germany.

2.	On 16 May 2002 a Customs officer in Dover postal depot examine a postal packet sent by David Shaw to his father-in-law in Liverpool.  The packet contained 380 John Player Special cigarettes, 570 Benson & Hedges cigarettes and 200 grams of Golden Virginia hand-rolling tobacco.  No other items or documents were found in the packet.

3.	The Commissioners considered that the goods were liable to forfeiture as they were chargeable with excise duty and did not qualify for relief from duty.  A notice of seizure was issued to David Shaw’s father-in-law.  It is not in issue in this appeal that no claim was made by either David Shaw or his father-in-law against the seizure of the goods by way of  condemnation proceedings.

4.	On 4 July 2002 the Commissioners decided not to restore the goods.  David Shaw asked for a review by letter of 9 January 2003 and on 20 February 2003 the decision was upheld.  The review officer, Mr Carl Penfold, gave evidence.  

5.	The UK Excise Duty law relating to postal packets is found, to start with, in  Postal Service Act 2000 section 105(1).  This applies customs and excise enactments to goods contained in postal packets.  Section 2(1) of the Tobacco Products Duties Act 1979 directs that excise duty is to be charged on tobacco products imported into or manufactured in the UK.  Regulation 12(1) of the Tobacco Products Regulations 2001 provides:

“Subject to the provisions of this regulation, the excise duty point for tobacco products is the time when the tobacco products are charged with duty”.

Regulations 4, 6 and 16 of the Excise Goods (Holdings, Movement, Warehousing and REDS) Regulations 1992  (“the 1992 REDS Regulations”), then provide:

“4  Excise duty point

(1)	Except in the cases specified in paragraphs (2) to (6) below, the excise duty point in relation to any Community excise goods shall be the time when the goods are charged with duty at importation.”

Regulation 6 of the 1992 REDS regulations provides that the time for payment of duty is “on or before an excise duty point”.  Regulation 16 provides for forfeiture of excise goods on which duty has not been paid.

6.	The Excise Duties (Small Non-Commercial Consignments) Relief Regulations 1986 (“the 1986 Regulations”) then state as follows:

“3.	Relief from excise duty

(1)	Subject to the provisions of these Regulations, no excise duty is payable on the importation of goods forming part of a small consignment of a non-commercial character.

(2)	In these Regulations “small consignment” means a consignment (not forming part of a larger consignment) containing goods with a value for customs purposes not exceeding –

(a)	£75 in the case of a consignment from a member State;
(b)	£32 in any other case.

(3)	For the purposes of these Regulations a consignment is of a non-commercial character only if the following requirements are met, namely –

(a)	it is consigned by one private individual to another;
(b)	it is not imported for any consideration in money or money’s worth;
( c)	it is intended solely for the personal use of the consignee or that of his family and not for any commercial purpose.

4.	Conditions of relief

(1)	In the case of goods consigned from another member State, no relief shall be given under these Regulations unless the goods were acquired in the Economic Community subject to the taxation normally imposed in the domestic market of a member State and without relief from excise duty or turnover tax chargeable there.

(2)	…

5.	Quantitative restriction on relief for certain goods

Where a small consignment of a non-commercial character contains goods of any of the following descriptions, namely –

(a)	tobacco products (being cigarettes, cigars or smoking tobacco);
(b)	…

in excess of the quantity shown in relation to goods of that description in the Schedule to these Regulations, no relief under these Regulations shall be given in respect of any goods of that description in that consignment.
…

Schedule

(1)	Tobacco products

	cigarettes ………………………………………….50
	or
	…
	smoking tobacco …………………………………..50 grammes”.

7.	The Court of Appeal has recently ruled that this Tribunal does not have jurisdiction to reconsider the seizure and condemnation of goods: see Gora v Customs and Excise Commissioners [2003] 3 WLR 160 at 180B-D.  For the record the basis for the seizure was founded on these provisions.  The tobacco products that Mr Shaw sent by postal packet were liable to excise duty on arrival in the UK pursuant to section 2(1) of the Tobacco Products Duties Act 1979, Regulation 12(1) of the Tobacco Products Regulations 2001 and Regulations 4 and 6 of the 1992 REDS Regulations.  Those are all set out above.  Furthermore, as the quantities were greater than those specified in the 1986 Regulations, no relief from payment of UK excise duty could be afforded to those goods.  Given that the UK excise duty had not been paid, the goods became liable to forfeiture under regulation 16 of the 1992 REDS Regulations and were properly seized under section 139 of the Customs and Excise Management Act 1979.

8.	The Tribunal’s jurisdiction in this matter is therefore confined to a consideration of the reasonableness of the review officer’s decision.  We refer to Finance Act 1994 section 16(4).  In making this determination it has been confirmed by the Court of Appeal (in the context of cross-border travellers importing goods) that this Tribunal has the power to make findings of primary fact, although as stated above it does not have the jurisdiction to reconsider the condemnation of goods as forfeited (see the Gora decision referred to above).

9.	It was accepted for the Commissioners that any question of whether goods were intended for a “commercial purpose” (see regulation 3(3)(c) of the 1986 Regulations) as distinct from “for the personal use of the consignee or that of his family” was to be determined on the basis that the onus of proof lies with the Commissioners.  See R (Hoverspeed Ltd) v Customs and Excise Commissioners [2003] 2 WLR 950.  

10.	The explanation given by Mr Shaw in correspondence is that he had bought the goods as a surprise present for members of his family.  While his 75 years old father-in-law did not smoke David Shaw had sent them to him in a single package for his father-in-law to distribute.  570 cigarettes were for his aunt, the 200 grammes of hand-rolling tobacco were for his cousin and 380 of the cigarettes were for his cousin’s partner.  All three of those individuals had helped his father-in-law out in a recent serious illness and had kept David Shaw and his wife informed over the telephone of progress.  David Shaw had chosen English named cigarettes.  He would have bought cigarettes all of the same brand, but the shop that he went to at his home town in Bavaria had not stocked enough.  As a result he had bought two separate brands of cigarettes.

11.	David Shaw explained in correspondence that he had sent all the goods in a single parcel for convenience and because this was cheaper to post.  A schedule of postal charges in Germany confirmed this.  We are satisfied on this score.  He had expected his father-in-law to telephone him on receipt of the parcel.  David Shaw would then have given him instructions as to how the contents were to be distributed.  David Shaw started (again in correspondence referred to us) that he had not made a habit of making gifts of this sort; he expected to receive no payment and the amounts were not in his view excessive.  

12.	The Customs officer whose decision it had been not to restore the goods expressed his decision as follows:

“The law Customs and Excise work to when dealing with travellers is the Customs and Excise Management Act 1979.  

It does not matter that the goods are tax paid in the country of despatch; they remain liable to excise duty and VAT on importation into the UK.

My colleague explained to you in her letter dated 10 June 2002 the gift criteria for a package.

You have stated that although you addressed the package to your father-in-law the tobacco products were for various members of your family.  For this package to be considered a gift we would need to know all the names of the recipients and proof of their dates of birth or anniversaries and the quantity of tobacco products intended for each person as, the total quantity of this one package addressed to one person is excessive.

It is Customs and Excise policy not to export seized tobacco products this is to protect the revenues of both the UK Government and the UK legitimate wholesale and retails trade.”

13.	Mr Penfold the review officer expressed his reasons for upholding that decision with particular emphasis to the following points.  It was not, he said, credible that the goods were intended for gifts (as Mr Shaw contended) for the following three reasons.  First, there were no cards, letters or messages or labels inside the package with the goods.  Second, there were three different brands of tobacco products of different quantities.  This supported the contention that the goods were the result of a “shopping list”.  Third, had the goods been intended as gifts, not for the addressee, but for the three other members of Mr Shaw’s family, the review officer would have expected that Mr Shaw would have sent individual packages to those three relatives.  Moreover the review officer observed, Mr Shaw had not made any enquiries about sending tobacco goods by post to the UK before he posted the goods and it was reasonable to expect that such enquiries would have been made.  

14.	We think that Mr Shaw has established a prima facie case that the goods were bought for his own use to enable him to make gifts of them.  There was a good reason for this.  The amounts were relevantly modest and Mr Shaw’s aunt, cousin and his cousin’s partner were people to whom Mr Shaw was evidently grateful for their help with his father-in-law during his illness.  The Commissioners do not deny this.  The actual consignee, Mr Shaw’s father-in-law, was an old man and an invalid and not someone whom we would expect to use the goods for a commercial purpose.  That there was no message in the package is, to us, quite natural.  Neither member of this Tribunal puts letters or messages in parcels.  Moreover, the absence of any message tends, as we have already indicated, to negate the inference that Mr Shaw had been shopping for his aunt, his cousin and his cousin’s partner.  Had he been shopping for them we would have expected a written acknowledgment that he had spent money on behalf of each of them.  Finally in this connection, the reason for sending the cigarettes and the hand-rolling tobacco in a single package is entirely believable; it was certainly cheaper and more convenient from Mr Shaw’s point of view.

15.	Nothing said or asserted on behalf of the Commissioners persuades us that the goods were being imported for a commercial purpose.  Indeed we think that the explanation given by Mr Shaw is the more credible. 

16.	For those reasons we think that the decision appealed against was taken on a wrong consideration, namely that it was not credible to the deciding officer that the goods were intended for gifts.  The decision was not therefore “reasonable” in the sense that that word is used in section 16(4) of Finance Act 1994.  The matter should go back for a further review decision in the light of our findings that the goods were bought and consigned as gifts.  

17.	In the course of the hearing we expressed some misgivings as to whether the 1986 Regulations (dealing with small non-commercial consignments) are compliant with the 1992 Excise Directive (Council Directive (EEC) No.92/12). Should this matter come back to the Tribunal for a further hearing, we will need to hear full argument to satisfy us that the Community law rights of Mr Shaw and of his father-in-law have not been violated by the Commissioners’ use of the 1996 Regulations.

18.	Appeal allowed.  For Mr Shaw’s information we mention that the law of the UK providing for appeals in these circumstances does not enable us to direct restoration of the seized goods.  We can only direct that the matter goes back for a further review at which our findings shall be taken into account.

STEPHEN OLIVER QC
CHAIRMAN

RELEASED:

LON/03/8073