EXCISE DUTY  — importation of 13,600 cigarettes — Commissioners’ refusal to offer restoration — whether the refusal was reasonable — yes — appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

 
 	
		Appellant
	MRS BRENDA SULLIVAN

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Lady Mitting (Chairman)
						Mrs M Crompton (Member)	

Sitting in public in Manchester on 25 November 2003

The Appellant appeared in person
 
Mr J Shields of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2003

DECISION

1.	 This is an appeal by Mrs Brenda Sullivan against the decision of the Commissioners, taken on review, dated 25 June 2002 not to restore to her 13,600 cigarettes seized on 11 March 2002.  We heard oral evidence from Mrs Sullivan and on behalf of the Commissioners from Miss J M Logan, the reviewing officer.

2.	On 11 March 2002 Mrs Sullivan and three friends with whom she was travelling were stopped at Manchester Airport on their return from a 4 day break in Majorca.  Mrs Sullivan was found to be carrying 13,600 cigarettes and her travelling companions were also found to be carrying similar quantities.  Mrs Sullivan agreed to be interviewed and in answer to questioning gave the following material answers:-
-	Mrs Sullivan had been stopped by Customs some 16 months previously when she had been carrying 8,000 cigarettes
-	She had been allowed to proceed with the goods but had been given a Notice 1
-	1,000 of the cigarettes were for her son, 1,000 for her mother and the rest were for herself
-	She smoked between 20 and 30 cigarettes a day and expected them to last her until November
-	She had been to Tenerife in January, bringing back 400 cigarettes and Benidorm in February, bringing back 1,000 cigarettes and was going away again in July to the Canaries and in November to Benidorm again
-	The goods had cost between £800 and £900 and she had paid for them out of her savings of £2,000
-	She was a nurse earning £10,000 per year gross out of which she contributed to the joint mortgage on her and her husband’s home
-	She had not been paid by anyone else for the goods and was not expecting to receive any financial assistance 

3.	The intercepting officer was not satisfied that the goods had been purchased for Mrs Sullivan’s own use and he therefore seized them, the reasons given for seizure being:
(1)	In excess of mils
(2)	Notice 1 previously seen
(3)	Income not consistent with expenditure
(4)	Regular previous trips
(5)	Consumption rate excessive

4.	Mrs Sullivan agreed in her oral evidence that the contents of the notebook were accurate.

5.	By letter received by the Commissioners on 14 March 2002, Mrs Sullivan requested the return of her cigarettes.  In the letter she explained that although she only earned £10,000 per annum, her husband, a prison officer, earned £16,000 a year and that was how she could afford the cigarettes.  She also explained that she took frequent short holidays because she and her husband, in their respective careers, did not get the holidays that ordinary members of the working public got as both the hospitals and the prisons had to be manned 365 days a year so they would take a break when they got the chance.  The cigarettes were solely for herself, her son and her mother.  The ones for her mother were because her mother looked after their 13 year old daughter as she and her husband worked long and different shifts.

6.	The Commissioners wrote to Mrs Sullivan on 20 March 2002 explaining the difference between an application for restoration and an appeal against seizure and requesting clarification.  Mrs Sullivan responded on the 2 April confirming that it was restoration which she sought.  With her letter of 2 April, Mrs Sullivan enclosed a copy of the travel documentation and a receipt from the Halifax Bank showing the transfer of £1,000 out of her savings.

7.	By letter dated 17 April 2002, the Commissioners refused restoration on the grounds that it was not departmental policy to restore seized goods unless there were exceptional circumstances.  Mrs Sullivan requested an independent review of the refusal by letter received by the Commissioners on 15 May 2002.

8.	It fell to Miss Logan to carry out the review.  Miss Logan had before her the seizure file and all the correspondence and copy documentation received from Mrs Sullivan.  Miss Logan summarised the law, the circumstances surrounding the seizure and the answers given to the seizing officer.  In her letter Miss Logan incorrectly stated that it was for her to determine whether the decision contested was one which a reasonable body of Commissioners could not have reached.  This of course is not the test which Miss Logan should have been applying but we believe this error is immaterial as it is in fact quite clear from Miss Logan’s letter that she did take all circumstances into account and in effect took a completely fresh look at the case.

9.	Miss Logan concluded that there were no exceptional circumstances justifying the return of the goods, noting in particular that one of her co-travellers had purchased a similar quantity of cigarettes and like Mrs Sullivan she also had travelled to Tenerife in January and Benidorm in February.  Secondly, in her interview Mrs Sullivan had said that she had only purchased a small quantity of cigarettes on her previous trip as she had not had sufficient funds and Miss Logan could not see how her finances could have changed so substantially in the time span of four weeks.  Thirdly, on an estimate of smoking 30 cigarettes a day, Mrs Sullivan’s share of the purchase would have lasted her until April 2003, considerably longer than her November estimate.  Further, being such a frequent traveller there was no reason to purchase such a large quantity in one trip.  Fourthly,  the fact that the cigarettes to be given to her mother were in return for her mother looking after Mrs Sullivan’s daughter indicated that the gift was “a thank you for the favour” which breached the conditions of the Personal Reliefs Order.  Finally, construing the travel documentation supplied by Mrs Sullivan, Miss Logan assumed that this trip had cost £500 and if all Mrs Sullivan’s trips had cost a similar amount, her holidays could not be supported out of her stated income and savings.

10.	In her oral evidence, Miss Logan added little to what had been stated in her decision letter.  She did however readily accept that, in the light of an explanation from Mrs Sullivan, she had misinterpreted the travel documentation and the holiday had not cost nearly as much as £500 as indeed Mrs Sullivan’s earlier holidays had not either.  Miss Logan stated however that even taking this factor out of her deliberations, she would still have reached the same decision to refuse restoration.

11.	In her own oral evidence, Mrs Sullivan added little to what she had already stated in interview and in her correspondence.  She told us that her and her husband’s income went into a joint account out of which all outgoings were paid but that although her husband did occasionally pay for a trip for her, this particular trip and her purchases had been paid for by herself alone.  Although this was never mentioned during her evidence in chief or during cross examination, in her closing submission, Mrs Sullivan stated that she had just been prompted by her husband and had remembered that in fact this trip and her purchase had been funded out of a windfall which she and her husband had received in February 2002 of £1,800 on a sale of shares.  There had been no previous mention of this and there was no documentation in support.

Submissions
12.	Mrs Sullivan’s submission was that the cigarettes were for her own use in that the entire purchase had been funded by herself.  The majority she would smoke herself but those for her mother and son were gifts.

13.	Mr Shields submitted that the fact that the cigarettes for Mrs Sullivan’s mother were in return for her looking after Mrs Sullivan’s daughter meant that the gift to her mother was not a bone fide gift and therefore fell outside the definition of own use and rendered the goods liable to seizure.  Further, he addressed us on the cases of Gora v Commissioners of Customs and Excise [2003] EWCA 525 and the Commissioners of Customs and Excise v Dickinson [2003] EWHC 2358.  We refer to these submissions in the body of our conclusions.

Legislation
14.	At the time of seizure and the review decision, the Excise Duty (Personal Reliefs) Order 1992 provided that a traveller bringing excise goods into the UK in quantities in excess of a minimum indicative level had to satisfy the Commissioners that the goods were for own use, “own use” being defined as:
	“own use includes use as a personal gift provided that if the person making the gift receives in consequence any money or monies worth (including any reimbursement of expenses in incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this order”
15.	If the traveller failed to so satisfy the Commissioners, the goods were treated as being held for a commercial purpose and UK duty became payable on them.  At the time of the seizure the level for cigarettes was 800 and for hand rolling tobacco, 1 kilogram.

16.	This definition of “own use” has been upheld.  It has also been held that if family and friends are reimbursing on a not for profit basis then this is nevertheless commercial and duty is payable (Lindsay v Customs and Excise Commissioners 2002 1WLR 1766).  Following the decision in Hoverspeed, the Commissioners have accepted that the burden of proof should not be upon the traveller to satisfy the Commissioners that the goods were not for commercial purpose but rather upon themselves to show that the goods were held for such purpose.

17.	The Commissioners are empowered by the Customs and Excise Management Act 1979 (“CEMA”) section 49 to forfeit dutiable goods which have been imported or held without payment of duty.  Section 141(1) empowers the Commissioners to seize any goods, mixed, packed or found with the dutiable goods.  Section 152(b) CEMA allows the Commissioners as they think fit to restore any goods which have been seized.  A review and appeal procedure from decisions of the Commissioners is set out in sections 15 and 16 of the Finance Act 1994.  A holder of goods may appeal against a review decision of the Commissioners taken under section 15 to the tribunal.  The tribunal’s jurisdiction is set out in section 16(4) in the following terms:
	“In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say –
(a)	to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b)	to require the Commissioners to conduct, in accordance with the direction 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.

18.	In exercising its jurisdiction, the test of reasonableness requires the tribunal to ask whether the decision was one which no reasonable panel of Commissioners could have come to; whether some irrelevant matter had been taken into account; whether some matter which should have been taken into account had been ignored or there had been some error of law.

Conclusions
19.	We have to express reservation about Mrs Sullivan’s evidence.  She brought in a very large number of cigarettes of which, on her evidence, 11,600 were for her own personal consumption – enough to last her over a year.  If she had been an infrequent traveller, this would not have been so surprising but she travels several times a year – in 2002 at least 5 trips.  Further, on each of these trips she appears to bring back a not insubstantial number of cigarettes – on her January and February trips, a total of 1,400 cigarettes.  She was due to travel again in July and again in November, making it even less likely that she would need to purchase such a large stock.  Her evidence as to how the purchases were funded was confused.  Until her closing submission, she had maintained the purchase was funded out of her savings of £2,000.  She then told us of the £1,800 windfall but when she was recalled to the witness box, she implied that in fact this £1,800 was included within her £2,000 savings.  On this basis, this one single purchase would have used up almost one half of her savings, unnecessarily given her frequency of travel.  We think it unlikely that these cigarettes were for Mrs Sullivan’s own personal consumption and can only conclude that rather more then 2,000 were for other people – on what basis we know not although we do not for one moment believe they were for resale at a profit.  At the very most she may have passed some on at cost which would itself have amounted to a commercial transaction (Lindsay).

20.	Even on Mrs Sullivan’s evidence, we find there was a commercial element to the purchase in the gift for her mother.  We accept that her mother did not pay for or contribute financially towards her share of the cigarettes but the cigarettes were in effect given to her in recognition of and in recompense for services which she had carried out for her daughter.  This is not an unfettered straight forward gift in the normal accepted use of the word and does not, in our view, fall within the narrow definition of a personal gift in the Personal Reliefs Order.  Mrs Sullivan had in effect received monies worth for the gift.  As such, the cigarettes purchased for Mrs Sullivan’s mother were not purchased for Mrs Sullivan’s own use.  They were therefore liable to UK duty and were rightly seized and rightly forfeit as indeed was the remainder of the consignment under section 141(1) CEMA.

21.	The policy of the Commissioners is not to restore goods unless there are exceptional circumstances.  We believe  Miss Logan considered all the relevant factors and did not take account of any matters which were not material.  Certainly she misinterpreted the cost of the holiday but this was not, in her view, nor in ours, critical and it did not go to the core of her decision which concerned the nature of the gift to her mother.  Her decision was not one which no reasonable panel of Commissioners could have reached.

22.	In case our view of the nature of the gift to Mrs Sullivan’s mother is wrong in law, we also address Mr Shields’ further submission on Gora.  A traveller is entitled to bring into the UK, without payment of duty, goods for his own use (as defined).  Such goods are not liable to forfeiture and therefore not liable to seizure either and if nonetheless such goods are seized, then the seizure is wrongful.  In this event the correct course of action for the traveller is to challenge the seizure by inviting condemnation proceedings which he does by serving the requisite Notice under Schedule 3 paragraphs 3 and 4 CEMA.  If such notice is not given or if condemnation proceedings take place but go against the traveller, the goods in question shall be deemed to have been duly condemned as forfeited (Schedule 3 paragraph 5).  It follows from this that the purchase must, at least in part, be deemed to have been of a commercial nature and not for the traveller’s own use.

23.	In the light of Gora, this issue is not one which the Tribunal is entitled to reopen.  The traveller’s appeal to the Tribunal is not against the original seizure as that issue is now closed and is deemed to have been resolved against the traveller.  The issue before the Tribunal concerns solely the Commissioners’ decision not to restore the goods and the Tribunal deals with the appeal within its powers set out in section 16(4) Finance Act.

24.	In Dickinson, Mr Justice Peter Smith accepted Gora as authority that there cannot be a challenge to the forfeiture save in condemnation proceedings but held that it was open to an appellant in the restoration proceedings to raise the issue of private use for the purposes of seeking to invoke the discretionary procedure of restoration, thus enabling the Tribunal, if appropriate, to make a finding that the purchase was not for profit.  This is highly relevant when it is a motor vehicle which the Commissioners are refusing to restore but is not of such assistance or relevance in a case concerning goods only.  Mrs Sullivan did not seek to argue that the refusal to restore was disproportionate , which, in any event, we find it not to have been or that she was suffering excessive hardship.  We therefore come back to our conclusion that the goods were properly forfeit and that the decision by the Commissioners to refuse restoration was not unreasonable.

25.	The appeal is therefore dismissed.  No application for costs was made and we make no order.

LADY MITTING
CHAIRMAN
Release Date:

MAN/02/8181