RESTORATION OF GOODS — condemnation proceedings — reasonableness of decision not to restore — Finance Act 1994 S16(4) — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	HAROLD DAVID JOHNSTONE AND ANTHONY JOHNSTONE	Appellants

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Miss J Warburton (Chairman)
						Mrs R Dean

Sitting in public in Manchester on 12 February 2004

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

	© CROWN COPYRIGHT 2004

DECISION

1.	This is an appeal by Harold David Johnstone (known as David) and Anthony Johnstone against decisions to refuse to restore cigarettes seized at Liverpool Airport on 28 February 2003.  The decisions on review not to restore are contained in letters dated 15 August 2003.
2.	The Commissioners were represented by Mr J Shields of counsel instructed by the solicitor for the Customs and Excise.  The Commissioners put in a bundle of copy documents.  The Appellants appeared in person.  David Johnstone produced to the tribunal a letter setting out his entitlement to Incapacity Benefit and Disability Living Allowance.
3.	The issue in this case is the reasonableness of the decisions of the Commissioners to refuse to restore 16,031 cigarettes to David Johnstone and 12,600 cigarettes to Anthony Johnstone.
4.	We heard evidence on oath from both Appellants.  There were also two agreed witness statements from Julie Marie Logan, a senior officer of HM Customs and Excise who carried out the reviews, witness statements from Harpreet Kaur Athwal and Richard Carl Dangerfield, both officers of HM Customs and Excise, and witness statements from Howard Baker and Jason Lee James, both officers of the Inland Revenue. From the oral and written evidence, including the documents submitted, we find the main facts to be as follow.
The Facts
5.	On the 26 February 2003 David and Anthony Johnstone travelled to Palma on a short break to buy cigarettes.  On their return on 28 February 2003 they were stopped by officers of HM Customs at Liverpool Airport.  Mr Anthony Johnstone was interviewed by Richard Carl Dangerfield, an officer of HM Customs and Excise.  Mr Dangerfield, when the interview was terminated, read his notes to Mr Johnstone who then signed his notebook.  Mr David Johnstone was interviewed by Harpreet Kaur Athwal, an officer of HM Customs and Excise.  Mr Johnstone was not prepared to answer some of Ms Athwal’s questions and refused to sign her notebook.
6.	Cigarettes were found in the luggage of both Appellants.  There was some confusion as to which cigarettes belonged to which brother.  Ultimately, 16,031 cigarettes were seized from Mr David Johnstone and 12,600 cigarettes from Mr Anthony Johnstone.
7.	In the course of interviews both Appellants maintained that the cigarettes were for personal use save 3 cartons which were for family and a friend.  Mr Anthony Johnstone purchased his cigarettes with cash he took with him.  The cigarettes purchased by Mr David Johstone cost about £1,400 and he used his credit card in Palma to withdraw cash to purchase the cigarettes.  Mr Anthony Johnstone had travelled abroad three times in 2002 and purchased 25 cartons of cigarettes on each occasion.
8.	In the case of both Appellants, following a request, restoration of goods was refused by letter dated 19 May 2003.  A review of that decision was sought by the Appellants’ solicitor by letter of 2 July 2003.  The Appellants’ solicitors subsequently provided further information in the form of receipts and some details of employment.  A review was carried out in both cases by Ms Logan on 15 August 2003.  She reviewed all the papers including the records of interview and later correspondence.  Ms Logan concluded that in neither case should goods be restored.
9.	The Appellants took condemnation proceedings in relation to the cigarettes.  Those proceedings were heard in Liverpool Magistrates court on 4 February 2004.  The magistrates condemned the cigarettes as forfeited.
Evidence
10.	We considered evidence on a number of issues.  The statement of Mr Dangerfield states that Mr Anthony Johnstone originally stated that he was travelling alone but that he later indicated he was travelling with his brother.  In oral evidence both Appellants maintained that Mr David Johstone had gone ahead to collect his car as it was raining and he already had his bag. At the time Mr Anthony Johnstone was stopped he was actually alone.
11.	The record of interview of Mr Anthony Johnstone by Mr Dangerfield originally refers to Mr Johnstone stating that he smoked 40 a day but when asked how long the cigarettes would last Mr Johnstone referred to “60 a day minimum”.  In oral evidence Mr Johnstone stated that the 60 a day included his wife’s consumption as well and that Mr Dangerfield had omitted reference to his wife in the notes.  In oral evidence Mr David Johstone, when asked about his rate of smoking, replied by asking what was the relevance of how many he smoked before saying 50 to 60 a day.
12.	According to Mr Dangerfield’s notes, Mr Anthony Johnstone originally stated that he had not previously been stopped by Customs and Excise but when informed he had been stopped at Coquelles in 2000 he stated that it was only a spot check and it had skipped his memory.  In oral evidence Mr Johnstone maintained that there was a training exercise that day and everyone had been pulled over.  He did not regard it as a stopping.  Ms Logan’s letter of 15 August 2003 refers to 14,000 cigarettes being seized from Mr Johnstone when he was stopped in 2000.
13.	When he was interviewed Mr Anthony Johnstone stated that he was a lorry driver and gave a figure for weekly income.  The statement of Mr James refers to there being no trace of Mr Johstone in the records of the Inland Revenue.  In correspondence Mr Anthony Johnstone’s solicitor stated that Mr Johnstone  was not prepared to produce evidence of his earnings but did give the name of his employer.  Mr David Johnstone produced to the tribunal a letter showing his entitlement to Incapacity Benefit of £75.75 a week and Disability Living Allowance of £166 a month.  In oral evidence Mr David Johnstone stated that he had two credit cards and asked if he was being discriminated against because he was unemployed and had a credit card.
The law
14.	It is clear following R (Hoverspeed Ltd and others) v Customs and Excise Commissioners [2002] 3 WLR 1219 that under the Excise Directive 92/12EEC goods are either held for personal use and subject to excise duty in the member state in which they are acquired, Article 8, or held for a commercial purpose; and subject to excise duty in the member state in which they are held, Article 9.  It is for the Commissioners to show that goods are held for a commercial purpose.  However, where a person possesses goods above the guide levels, in the case of cigarettes, 3,200, there is an evidential presumption that the goods are held for a commercial purpose which calls for a response from the person holding those goods – see the Hoverspeed case para 130.
15.	In Gora v Commissioners of Customs and Excise [2003] 3 WLR 160 the Court of Appeal stressed that the question as to whether goods are forfeit as being for commercial use is a matter for the magistrates court and not the tribunal.  Commissioners of Customs and Excise v Dickinson [2003] EWHC 2358 (Ch) decided that the issue of private use could be raised in relation to the discretionary procedure of restoration on the issue of proportionality – see para 49.
Submissions
16.	The  Appellants submitted that the cigarettes were for personal use.  They acted within their rights and should be able to pass between member states without being harassed.  Mr Anthony Johnstone submitted that he did not have to give reasons for personal use.  Mr David Johstone submitted that he had not heard of any justification to stop him and the seizure was unlawful.  He did not have to divulge how he ran his life.
17.	Mr Shields for the Commissioners submitted that as the goods had been condemned as forfeit in the magistrates court it was no longer open to the Appellants to argue that the goods were imported for a non-commercial use.  The question of the lawfulness of the seizure was not one for the tribunal.  The only question was whether there were any circumstances of extreme hardship to mitigate in favour of restoration but none had been put forward.  In any event, in the case of both Appellants there were more than sufficient contradictions in evidence to lead to the conclusion that the goods were not for personal use.
18.	Mr Shields further submitted that the review decisions of 15 August 2003 were reasonable.  In the case of Mr Anthony Johnstone even if the officer had made an error by ignoring the bank statement that should not warrant the ordering of a further review as the outcome – that the goods were imported for a commercial profit – would inevitably be the same – see John Dee Limited v Commissioners of Customs and Excise [1995] STC 941.
Reasons for decision
19.	The tribunal’s jurisdiction under section 16(4) of the Finance Act 1994 is not to try again the original decision to forfeit but to consider whether the decision on review not to restore goods is one that the Commissioners could not reasonably have come to.
20.	It is generally accepted that the test of reasonableness requires the tribunal to ask:
•	is this a decision which no reasonable panel of Commissioners could have come to?
•	has some irrelevant matter been taken into account?
•	has some matter which should have been taken into account been ignored?
•	has there been some error of law?
(see Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1980] STC 231; Associated Provincial Houses Ltd v Wednesbury Corporation [1948] 1KB 223)
21.	When Ms Logan reviewed the decisions on 15 August 2003 she clearly reviewed all the evidence then available to her, including documents submitted by the Appellants’ solicitors.  It is also clear that she did not consider any irrelevant matters. On the evidence available to her we consider that her conclusion that the goods were not for own use was a reasonable one.  In the light of the Commissioners’ policy in relation to restoration, which has been accepted by the courts, it was reasonable for her to follow that policy and to refuse to order restoration.
22.	Subsequent to Ms Logan carrying out her review, the cigarettes were condemned as forfeit in the magistrates court.  The quantity of cigarettes seized raised an evidential presumption that the importation was commercial – see para 14 above.  In our view the Appellants have not rebutted that presumption by the evidence that they have given.  We were confirmed in our view that the evidential presumption as to commercial use had not been rebutted when we considered the contradictions and inconsistencies in their evidence, for example, as to consumption rates and previous stoppings and, it has to be said, the unhelpful manner in which the Appellants, from time to time, gave their evidence.  There are thus no grounds on which to hold that the decisions not to restore are not proportionate.
23.	Accordingly the appeal is dismissed but we make no direction as to costs.

MISS J WARBURTON
CHAIRMAN
MAN/03/8145