EXCISE DUTY – restoration fee for commercial vehicle – customs policy unreasonable – policy incorrectly applied – decision not to repay fee unreasonable – appeal allowed.

LONDON TRIBUNAL CENTRE

	D&SMB UK LIMITED	Appellant

-	and –

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	MR RICHARD L BARLOW   (Chairman)
						MR R BATTERSBY

Sitting in public in London on 28 November and 5 December 2003

Ms M Lonsdale of counsel, instructed by Birkett Long & Co, for the Appellant 

Mr J O’Flaherty of counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004

DECISION

The appeal

1.	This appeal concerns the Commissioners’ review decision, communicated to the appellant in a letter dated 13 January 2003, by which the Commissioners refused to restore to the appellant the sum of £23,765.40 which the appellant had been required to pay for the restoration to the appellant of a tractor and trailer unit (the vehicle) seized by the Commissioners.  The vehicle had been seized because it was used to carry vodka (the goods) that was itself liable to seizure and which was being imported at Dover on 20 September 2002.    

2.	Paragraph 2(1)(r) of Schedule 5 to the Finance Act 1994, which lists the decisions subject to review and appeal, refers to a decision of the Commissioners with regard to whether ‘anything’ forfeited or seized under the customs and excise Acts is to be restored under section 152(b) of the Customs and Excise Management Act 1979 or with regard to the conditions under which it is to be restored.  Although paragraph 2(1)(r) does not expressly refer to the sum of money paid for the restoration of goods it seems clear that the reference to the conditions on which a thing is to be restored is apt to include the imposition of a restoration fee.  Neither party took any point on this and we hold that we do have jurisdiction

3.	In fact the appellant was unable to pay the fee until some considerable time after the review so that at the time the review was conducted the Commissioners were still in possession of the vehicle.  By the time the appeal was heard the vehicle had been returned on payment of the fee.

4.	Whether or not the review should, strictly speaking, have concerned the vehicle rather than the fee it was in fact conducted on the basis of considering the fee and as neither party took any point on this we will proceed on that basis.

The grounds for seizure and forfeiture

5.	The vehicle was, according to a form dated 25 September 2002 served on the appellant, seized under section 139 of the Management Act.  That section does empower an officer to seize any thing that is liable to forfeiture under the customs and excise Acts but to state that something has been seized under that provision gives no information as to the grounds on which it was seized.  It appears from the wording of that document that the Commissioners thought the vehicle had been seized in the presence of its driver, Mr Kevin Inkersole, on 25 September 2002 but that was not the case.  According to the review, the vehicle had been detained in his presence on 20 September 2002 but it had not been seized on that date.  Customs and Excise had stated in another document, also dated 25 September, that the vehicle had been seized on the grounds that it was liable to forfeiture under section 141 of the Management Act, again stating in error that it had been seized from Mr Inkersole at Dover on 25 September.  This was slightly more informative in that section 141 was indeed a ground upon which Customs and Excise later relied to justify the seizure but, as the Management Act was referred to as ‘CEMA’ in that document, only someone already familiar with customs’ internal  usage would have been any better informed by it.  That document also stated that the vodka had been seized under section 170B of CEMA.

6.	The vehicle was not seized in the presence of any of the categories of persons referred to in paragraph 1(2) of Schedule 3 to the Management Act, as is clear from the fact that no such person was present on 25 September when it was seized.  It was only detained on 20 September when Mr Inkersole, who might have fallen within those categories, was present.  A notice of seizure stating the grounds for the seizure should therefore have been served in accordance with paragraphs 1 and 2 of that Schedule.  If any such notice was given, it was in a letter dated 14 November 2002 in which only section 141 of the Management Act was relied upon.  No point was taken that the vehicle had not been seized so we will proceed on the basis that that letter was an adequate seizure notice.  

7.	Subsequently, in their Statement of Case, Customs and Excise relied or purported to rely, additionally, on sections 163 and 139 of the Management Act and regulations 6 and 24 of the Excise Goods (Accompanying Documents) Regulations 2002 (the regulations) for the seizure.  The Statement of Case did not refer to section 170B of the Management Act.

8.	As already explained, section 139 deals with the power to seize goods but not the grounds for doing so.  Section 163 deals with the power to search vehicles and makes it a criminal offence to refuse to permit a search but provides no grounds for seizure.  No suggestion has ever been made that any such offence was committed by the appellant.  Regulation 6 of the regulations deals with exports and although regulation 24 does provide for forfeiture it does so only where there has been a contravention of the regulations.  The additional grounds referred to in the Statement of Case are therefore not possible grounds for seizure.

9.	It is clear from the above recitation of the history of the technical aspects of the seizure that Customs and Excise have failed to understand or to communicate accurately the basic provisions applicable to this case.  Fortunately the appellant was represented by Ms Marion Lonsdale of counsel who is a specialist in customs and excise related matters so that ultimately the appellant was not at a disadvantage but we deprecate the fact that Customs and Excise had misrepresented the position to the appellant in a way that could have been to its detriment if it had not been adequately represented.  

10.	In a helpful skeleton argument presented by Mr O’Flaherty of counsel, Customs and Excise added yet another ground, said to justify the seizure.  They contended that regulation 12 of the regulations had been contravened.   

11.	The possible grounds for seizure of the vehicle (excluding those which Customs had sought to rely upon but which have no application or which were entirely in error as simply not being grounds for seizure at all) are section 141 of the Management Act and regulation 12.

12.	Section 141 makes a vehicle liable to forfeiture if it “has been used for the carriage … of [a] thing … liable to forfeiture”.

13.	The things alleged to be liable to forfeiture were 16,200 litres of vodka which were owned by a third party.

14.	Regulation 12 of the regulations reads:

“Imported excise goods must be consigned to –
(a) an authorised warehouse keeper, or
(b) a REDS, or
(c) an occasional importer, or
(d) an ultimate destination outside the United Kingdom

and must at all times be accompanied by an accompanying administrative document that complies with the Community provisions”.

15.	Customs and Excise relied upon the concluding words rather than any suggestion that the goods had not been consigned to a relevant person.  Under regulation 24 a contravention of regulation 12 would give rise to a ground for forfeiture of any goods in relation to which that contravention occurred, if those goods are excise goods which are liable to duty.  It would therefore provide an additional ground for forfeiture of the goods being carried on the vehicle but would only provide a basis for the forfeiture of the vehicle which would be under section 141.

16.	The respect in which it was alleged that the goods were not accompanied by an accompanying administrative document (AAD) which complied with the Community provisions was that, although the goods were accompanied by an AAD, it did not comply with the requirements because the brand of vodka was stated to be ‘Kimoff’ whereas it was in fact ‘Sirius’ and because the destination was stated to be London City Bond whereas Customs and Excise contended that was not the intended destination.

17.	Our attention was not drawn to any particular Community provision though Council Directive EEC 92/12 may be in point.  

18.	Customs and Excise relied upon the fact that the goods had been seized on the grounds that the third party owner had been in breach of section 170B of the Management Act, which makes it an offence to be knowingly concerned in taking steps with a view to the fraudulent evasion of duty and that that gives rise to a liability of forfeiture of goods in respect of which the offence is committed.  They argued that, as the goods were liable to forfeiture, section 141 made the vehicle liable.  

19.	They also relied upon the fact that, as the owner of the goods has not contested their seizure, the tribunal must proceed on the basis that the goods were therefore liable to forfeiture and that, at least under section 141 of the Management Act, the vehicle therefore became liable to forfeiture.  

20.	Where goods are seized and no notice of claim is served within a month contesting the seizure under paragraph 3 of Schedule 3 of the Management Act, paragraph 4 deems the goods to be duly condemned as forfeited.  Such deemed condemnation depends upon the seizure having been made or notified in accordance with the applicable provisions.  In view of the fact that neither the vehicle nor the goods were seized on 20 September in the presence of the only person present having any connection with the goods on that date, the seizure of the goods would have required a written notice to the owner or other person referred to in paragraph 3 but we were not told that any such action had been taken and it seems at least doubtful that the necessary steps have been taken to have ensured that the goods are deemed to be forfeited.

21.	However, section 141 of the Management Act makes a vehicle liable to forfeiture if goods carried in it “have become liable” to forfeiture so that it is not a necessary condition for that section to apply to a vehicle for the goods actually to have been condemned as long as they are liable to forfeiture.

The tribunal’s powers

22.	The Court of Appeal held in paragraph 57 of its judgment in Babir Singh Gora –v- Commissioners of Customs and Excise [2003] EWCA Civ 525 (Gora) that where a thing is deemed to have been condemned as forfeit the tribunal does not have jurisdiction to decide that it was not liable to forfeiture, though the second sentence of that paragraph makes it clear that the tribunal’s jurisdiction over restoration of a thing that has been forfeited is a different matter.  That case was further explained by Mr Justice Peter Smith in Commissioners of Customs and Excise –v- Darren Dickinson [2003] EWHC 2358 (Ch).  He held that although the tribunal has no jurisdiction to decide on the legality of a deemed forfeiture for the purpose of ruling that the seizure was invalid it is open to it to consider that point where the validity of the original seizure is relevant to a question of restoration falling within the tribunal’s jurisdiction.  For example, if the goods were not liable to forfeiture a decision to refuse to restore them would be likely to be unreasonable.  

23.	Mr O’Flaherty pointed out that the owners of the vodka had not even come forward to request its restoration to them or to explain what its destination was.  Certainly that is a strong pointer to the fact that the goods were liable to forfeiture, whatever the correct position may be as to whether they have in fact been deemed to be forfeited.  Ms Lonsdale, rightly in our opinion, refused to concede that the goods were liable to forfeiture.  Her clients were not in a position to know the true facts about the vodka and so she was not in a position to concede that point, unless Customs and Excise produced evidence about it that convinced her clients that the goods were liable to forfeiture.

Conclusions about forfeiture

24.	We are however persuaded that the goods were liable to be forfeited and, if no proper notice of seizure has been given, that the goods remain liable to forfeiture.  Our conclusion to that effect is based firstly on the fact that the owners have not come forward, which gives rise to only one reasonable inference.  Secondly, the evidence, somewhat inconclusive though it appears to be, that the goods were not in fact expected at London City Bond, reinforces the conclusion that the owners intended to divert them from the duty free regime. 

25.	It then follows that the vehicle was also liable to forfeiture under section 141 of the Management Act because, as we have already said, that is the case as long as the goods are liable to forfeiture even if they have not been forfeited.  It is also the case that the vehicle was deemed to be condemned because notice of the seizure was not challenged.  

26.	We are not persuaded that the vehicle was liable to forfeiture because of any breach of regulation 12.  It may be that the Community provisions require the AAD to state the brand name of the goods but we were not shown any such provision.  Although the Community provisions do no doubt require the destination of the goods, i.e. the consignee to which the goods were consigned, to be stated, we are not persuaded that London City Bond was not the destination to which the goods were consigned, when they left Spain, whatever may have been the owner’s intention about diverting them after arrival in the UK.

27.	It follows that we must proceed on the basis that the vehicle was liable to forfeiture for the reason that it was carrying goods that were liable to forfeiture under section 170B, i.e. it was so liable under section 141 only.

Reasonableness of the Commissioners’ policy

28.	It by no means follows that the decision not to restore the fee was reasonable and that is the point we have to decide.

29.	Customs and Excise made no allegation of deliberate fault against the appellant and have relied in support of their decision not to restore the fee on an allegation of negligence or carelessness.

30.	It is necessary to refer to the Commissioners’ policy in cases of this sort because that is the basis on which the decision not to restore the fee was taken.  We also have to bear in mind that in the Gora case the Court of Appeal was told that the Commissioners accepted that the tribunal’s jurisdiction includes a power to hold that a policy of the Commissioners is unreasonable as well as to consider the application of the policy in a particular case but that consideration of the reasonableness of the policy is to be conducted on judicial review principles.  The Court agreed with that point. 

31.	The policy applicable to heavy goods vehicles used to carry goods liable to seizure was set out in full in Mr O’Flaherty’s skeleton argument and Mr Matthews, who carried out the review and gave evidence, confirmed that it was the full policy.  It reads:

“1. Where the Commissioners are not satisfied that the driver or the haulier is not involved in smuggling excise goods and the revenue is significant, on first detection their vehicles may be seized and not restored.
2. In other case where the Commissioners are not satisfied that the driver or haulier is not involved in smuggling excise goods, on first detection the vehicles may be seized and restoration offered for a fee equal to 100% of the revenue involved or the trade value of the vehicle, whichever is the lower.  On the second occasion, the vehicles may be seized and not restored.
3. Where the Commissioners are not satisfied that the driver or haulier has carried out what Customs consider to be basic reasonable checks, which would have identified the illicit load, on the first occasion the vehicle may be seized and restoration offered for a fee equal to 20% of the revenue involved or the trade value of the vehicle, whichever is the lower.  On the second detection the vehicle and trailer may be seized and not restored.
4. Where the Commissioners are satisfied that the driver and haulier have taken all reasonable steps to ensure the legitimacy of the load, the vehicle and the trailer may be seized and restored free of charge.
5. Any vehicle or trailer adapted for the purpose of smuggling may not be restored”.

32.	The policy stated in that way leaves a great deal to be implied and we have noted that in explaining the policy to the appellant in the review decision letter Mr Matthews has paraphrased it inaccurately.  He paraphrases paragraph 3 of the policy in this way: “Cases where a driver or haulier has not undertaken reasonable checks which would have made clear the illicit nature of their load”.  The policy refers to basic reasonable checks and so it appears Mr Matthews applied a higher standard than that required by the policy.  The policy states that the basic checks must have been such that the illicit load would have been identified whereas Mr Matthews paraphrases that as meaning that the checks should have been such as would have identified the illicit nature of the load which again appears to apply a higher standard than the policy.

33.	Unless we were of the opinion that the correct application of the policy would inevitably have led to the same conclusion we would have allowed the appeal on that ground alone and directed a further review.  We do allow it on that ground as well as on the others referred to below.

34.	The policy draws a distinction in paragraphs 3 and 4 between cases where the driver and the haulier have failed to carry out basic reasonable checks on the one hand (paragraph 3) and where the driver and haulier have “taken all reasonable steps to ensure the legitimacy of the load” on the other (paragraph 4).  Many circumstances would fall between those two extremes.  For example, where the driver has carried out all the basic reasonable checks but those checks have not identified the illicit load he may well not have taken all reasonable steps to ensure the legitimacy of the load, that could depend on whether there was anything, unrelated to a physical examination of the load, that should have alerted him to a cause for suspicion.  The policy then leaves unclear how a driver who has carried out the basic reasonable checks but not all reasonable steps should be dealt with.  The absence of any guidance from Customs and Excise as to what they consider the basic reasonable checks are makes the policy liable to variable interpretation by different officers.

35.	The policy applies the 20% fee without regard to any differences in degree of blame or without catering for the fact that the relationship between 20% of the value of the vehicle and 20% of the revenue involved will not necessarily bear any relationship to the degree of blame in different cases, even where the blameworthiness is similar.  The policy may well penalise an owner for the fault of his driver even where the owner has been extremely conscientious.  We therefore find in favour of the appellant on the basis referred to in item 3(c) of the concessions made by the Commissioners, recorded in paragraph 38 of the judgment of the Court of Appeal in Gora, i.e. that the policy is unreasonable as it takes no, or no sufficient, account of ‘blameworthiness’.

36.	It is true that the policy as a whole distinguishes between being “involved in smuggling” in paragraphs 1 and 2 and other cases in paragraphs 2, 3 and 4 but within paragraphs 2 and 3 it makes no further distinction.  We read paragraph 3(c) in paragraph 38 of Gora as saying that the degree of blameworthiness is relevant and that a defensible policy would have to take account of that.  This policy does not do that and so it is unreasonable, in the sense that it is one that no reasonable body of Commissioners could have adopted, and the appeal will be allowed for that reason and we will give directions for a further review in light of that.

37.	In paragraphs 3(d) and (e) of the concessions in paragraph 38 in Gora Customs and Excise conceded, with the Court’s approval, that the tribunal is obliged to make findings of fact and to decide on the reasonableness of the decision on restoration in light of those findings.  We also regard the same principle as having been established in other cases on appeal from the tribunal such as Dickinson and Lindsay –v- Customs and Excise Commissioners [2002] STC 588 which we mention because Customs and Excise have, in some cases, continued to argue that the tribunal can only decide on the reasonableness of their findings of fact and cannot make findings of its own (though Mr O’Flaherty did not make that suggestion in this case).

Findings of fact

38.	Mr Paul Winestein, the appellant’s transport manager, gave evidence by a written statement which stood as his evidence in chief.  He was cross examined only briefly on points of detail and none of his evidence was challenged as being untruthful.  We find his evidence to be truthful.  Mr Inkersole has left the employment of the appellant, indeed he was made redundant because the seizure of the vehicle meant that one less driver was needed.  Some of Mr Winestein’s evidence was therefore hearsay but as the main issue relating to Mr Inkersole’s role relates to how far he could have seen what the load consisted of and as Customs and Excise could have called evidence about that, but chose not to do so, we have no hesitation in accepting Mr Winestein’s unchallenged evidence, including the hearsay evidence, as an accurate account of the true facts. 

39.	In summary the appellant’s evidence was that a company called Eurolink UK Ltd contacted Mr Winestein by telephone and, apparently acting as agents, asked if the appellant could bring a load of vodka from Spain.  Mr Winestein managed to find a customer wanting a load to be taken from France to Spain on the outward journey, though a problem with the vehicle actually prevented this happening.  He quoted a price to Eurolink which was accepted and Mr Inkersole was despatched to Madrid on the understanding that the paperwork would be available when he picked up the load, which is what happened.  The paperwork appeared to be in order and it consisted of an invoice, AAD and CMR documents.  

40.	The AAD and CMR documents show London City Bond as the destination, Anrosia SL as the sender and El Arriba Indicado of Barking Essex apparently as the owner (though no-one was able to tell us what box 7a of the AAD, which referred to that organisation, meant).  Mr Inkersole was instructed to telephone Anrosia when he arrived in Madrid and they escorted him to their warehouse.  This is a normal courtesy and convenience and Mr Winestein said it was common practice, which we find to be the case.  Mr Inkersole went to a legitimate warehouse and although he was present when the goods were loaded he did not pay much attention.  In any event the goods were shrink wrapped and it would not have been possible to make out with any great clarity what they were.  Customs and Excise did not dispute that the warehouse in Spain was a registered excise warehouse and called no evidence to refute the suggestion that the goods were shrink wrapped.

41.	Mr Winestein said it was quite normal to deal with customers on the basis of telephone orders and for the driver to pay little attention to the loading particularly at an excise warehouse where the practice is to back the lorry up to the loading bay and load it with the driver still in the cab and in any event the driver could not reasonably ask the warehouse to open up the packages.  On the return journey P&O required the trailer to be opened up which required the seals to be broken but they were carrying out a security check, almost certainly for illegal immigrants, and the driver would not have looked into the load at that point.

42.	We find as facts the statements summarised in paragraphs 38 to 40.

43.	When he was interviewed, briefly, by Customs and Excise at Dover Mr Inkersole confirmed that the place where he had collected the goods was Anrosia’s premises and that he had been met after making a phone call.  At that stage the discrepancy between the brands of vodka in the lorry and on the papers was not put to Mr Inkersole.

44.	Mr Tahir Khan, officer, was the only witness of fact called by Customs and Excise and he produced a document setting out copies of several e-mail messages between customs officers including a request to him to visit or contact London City Bond ‘to confirm they are expecting the goods’.  He contacted that organisation and by way of an e-mail to a colleague he stated that London City Bond had said ‘ELL Arabia indicado’ (sic) were not customers and no load of spirits for that customer was expected on that day (apparently Friday 20 September) or the following Monday or Tuesday.  We entertain some doubt as to whether that evidence really confirms that the load was not expected because, if the records are computerised and the wrong name is keyed-in a nil response will be given, but Mr Khan said the Bond would receive about 10 consignments a day and would have a schedule of what was expected so that it seems likely that a name only similar to one that was expected would elicit a reply.  Occasionally a consignment arrives without having been booked in but, although that is rare, the official procedures do allow such goods to be stored.

45.	Assuming, as we have done, that the silence from any owner of the goods after their seizure suggests that they were taking steps to avoid duty it must have been the case that the goods were not destined for London City Bond.  Customs and Excise have specifically accepted that the appellant was not party to that.  Our finding of fact is that the goods were not in fact destined for London City Bond.  It follows that at some point, if the goods had not been impounded, the true owners would have had to divert them but we cannot speculate as to how they might have achieved that or whether official intervention subsequently would have identified who had evaded the duty.  It is an important fact that the appellant was not a party to any scheme by which the goods were to be diverted.  Had the appellant been a party to that our decision would have been different. 

The decision to refuse restoration

46.	Next we have to consider Mr Matthews’ reasons for refusing restoration.  

47.	Mr Matthews’ review proceeds on the basis that the following are legitimate criticisms of the appellant’s conduct:

a.	Mr Inkersole had ‘not really seen [the vehicle] loaded’, which was at least careless.
b.	His carelessness was compounded by the fact that he had not previously visited the exporter’s premises where he was required to telephone and be escorted to the loading site.
c.	He only looked at the load in Calais when P&O carried out the security check.
d.	Even when prompted by the security check he did not notice the discrepancy between the brands.
e.	The CMR Convention stipulates that there is a requirement by the carrier to check and note the CMR with any discrepancies between the load and the CMR details.
f.	London City Bond were not expecting the goods but the appellant has produced no evidence of any checks it undertook to demonstrate that it had taken any steps to establish the credibility of the load, the owner of the goods or the credibility of the destination of the load.
g.	There were infringements of the Excise Goods (Accompanying Documents) Regulations. 

48.	We have found as facts that where a driver collects goods from an excise warehouse it is neither common practice, nor is it really practicable, for the driver to inspect the load as it is being loaded and that in this particular case the shrink wrapping certainly made that impossible.  This deals with points (a), (c), (d) and (e) and in effect makes them irrelevant and unjustified as criticisms of the appellant.

49.	Point (b) would be valid if the driver had been escorted to somewhere that was clearly not a legitimate collecting site but as he was taken to a legitimate warehouse the point becomes irrelevant.

50.	Point (f) would be a valid criticism if Customs and Excise had been able to show that the appellant could have been expected to make these enquiries.  These points were covered in cross examination of Mr Winestein and we have found that it was normal practice to trade in this way.  Of course, had the sender and the consignee not been registered warehouses the situation might have been quite different but as the goods were moving in an apparently legitimate bonded transaction no reason for suspicion on the part of the appellant has been demonstrated.  As to checking the owner, the appellant had the owner’s goods entrusted to it (giving rise to a reasonable assumption that the owner existed) and it was not unreasonable to assume that, as they were going to a registered warehouse, there was nothing untoward about the load.

51.	It has not been demonstrated in what respect the regulations were not complied with.

52.	We add that when the CMR Convention was produced it was far from clear which provision Mr Matthews was referring to.  His source of information was internal Customs guidance to their staff rather than the Convention itself but we were referred to articles 6 and 8 of the Convention.  Article 6 sets out what the consignment note should contain and the relevant document in this case certainly appeared to comply with the requirements.  Article 8 only requires the carrier to check the accuracy of the statements in the consignment note so far as the number of packages, their marks and numbering is concerned and the apparent condition of the goods.  We do not know if Mr Inkersole checked the number of packages, although it seems likely he did not, but there is no reason to think that the wrong number were loaded.  There is no reason to think that the packages were marked or numbered in any way that would be relevant to this case.  We are not prepared to assume that the brand-name inconsistency would have been apparent.  Customs and Excise have not called any evidence to suggest it was.  Article 11(2) of the Convention specifically says that the carrier is not responsible (i.e. as between him and his customer) for the accuracy of documents necessary for customs formalities.  The CMR requirements, which regulate relations between carriers and their customers, have little if any relevance to what Customs and Excise can expect of carriers.  Certainly breaches of the CMR requirements might afford evidence of negligence, relevant to Customs’ policy about restoration, or even evidence of involvement in smuggling, but no such evidence has emerged in this case.

53.	When he gave evidence, Mr Matthews accepted that he could not go so far as to say that the appellant should have telephoned London City Bond to confirm it expected the load and, whilst being unable to suggest any specific checks that the appellant should have made, he asserted that some should have been made.  Moreover Mr Tahir Khan, the Commissioners’ witness, under questioning by the tribunal member, agreed that it would be difficult for a haulier to establish the identity of the owner by contacting the London City Bond even if the latter was in a position to know who was the owner.  The Bond might not be willing to disclose the information.  As Ms Lonsdale pointed out, it is by no means clear that the appellant could realistically have made any checks and that Customs and Excise, with all their resources and contacts, had some difficulty in establishing that London City Bond were not expecting the consignment.

54.	Our conclusion is that the Commissioners’ decision in the individual case was unreasonable because no fault attaches to the appellant.  This is our conclusion independently of our decision that the policy itself is unreasonable.  Our conclusion is that the decision was unreasonable because the Commissioners could not reasonably have concluded that a wholly innocent and non-negligent haulier who has not been shown to have been at fault, should suffer the penalty of a restoration fee.  To impose a fee in such a case is purely arbitrary and irrational because to punish hauliers who have not been at fault acts as no deterrent or incentive to others to be more careful.  A sensible policy aimed at the careless could of course be quite another matter. 

Conclusions

55.	We allow the appeal for three reasons.  Firstly as stated in paragraph 32 Mr Matthews did not carry out the review in accordance with the policy.  That in itself justifies our directing a further review.  Secondly however, as we have held in paragraph 34, the policy is itself unreasonable and so we allow the appeal for that reason and it will be insufficient for the further review to be carried out in accordance with the policy.  Thirdly as stated in paragraph 53 the decision not to restore the fee, viewed independently of the policy, was unreasonable.  

Directions

56.	As this is an appeal in relation to an ‘ancillary matter’ as defined by section 16(8) of the Finance Act 1994 our powers are limited to those contained in section 16(4).  Ms Lonsdale submitted that the decision in this case was one that had already taken effect and cannot be remedied by further review so that we should declare the decision to be unreasonable under section 16(4)(c).  

57.	The decision under appeal is ‘as to the conditions subject to which [anything forfeited under the customs and excise Acts] is [to be] restored’ (paragraph 2(1)(r) of Schedule 5 to the Finance Act 1994).  That condition is still in force in the sense that the Commissioners are holding the appellant’s fee and so we do not regard this as a case of a decision which cannot be remedied by a further review.

58.	We direct under section 16(4)(a) that the Commissioners’ decision is to cease to have effect from the release date of this decision. 

59.	We direct under section 16(4)(b) that the Commissioners carry out a further review in light of our findings and holdings.  Without prejudice to the generality of that direction we direct that the further review should be conducted within 42 days of the release date of this decision in the light, in particular, of the following holdings and findings:

Holdings:

(i)	That paragraphs 3 and 4 of the Commissioners’ policy are unreasonable.
(ii)	That any reasonable policy dealing with hauliers who are not involved in smuggling would have to take account of the degree of their blameworthiness.
(iii)	That some degree of blameworthiness would have to have occurred before a refusal to restore could be a reasonable decision.
(iv)	That the restoration conditions imposed should take account of the degree of blameworthiness.
(v)	That the restoration conditions should not include an arbitrary amount which fails to take account of the circumstances of the individual case.
Findings:

(vi)	That the appellants in this case were not in breach of any specific requirements of the legislation.
(vii)	That the conduct of the appellants in this case was that of a normally careful haulier.
(viii)	That it is normal practice for a haulier to accept instructions to deliver goods to an excise warehouse without checking with the warehouse that the goods are expected.
(ix)	That it is normal practice for a haulier to be assisted to find the consignor’s premises and that, as those premises were a registered excise warehouse, there was no reason why the appellant should have been suspicious when so assisted.
(x)	That the appellant’s driver was not at fault in failing to notice the discrepancy between the brands on the lorry and in the paperwork.
(xi)	That the driver could not have seen the precise nature of the shrink wrapped load even if he had attempted to examine it.
  
60.	The respondents are to pay the appellant’s reasonable costs of and occasioned by the appeal to be assessed by a chairman sitting alone if not agreed between the parties.   

RICHARD L BARLOW
CHAIRMAN

RELEASED:

LON/03/8056