E0074215/04/2004 02 8012 NICHOLAS DAVID LESLIE DOWNING Mr J D Demack      

	EXCISE DUTY — large non-standard fuel tank fitted to trailer to serve refrigeration unit — whether fuel in tank qualified for relief from UK duty under Travellers’ Reliefs (Fuel and Lubricants) Order 1995 — held fuel did not  so qualify the tank  being non-standard as defined in art 8a(2) of Council Directive 92/81/EEC  — appeal dismissed 

LONDON TRIBUNAL CENTRE

 
 	
	NICHOLAS DAVID LESLIE DOWNING	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Mr J D Demack (Chairman)
						Mr M Silbert FRICS

Sitting in public in  London on 8 December 2003 and 5 April 2004
Mr Downing appeared in person
Mr Christopher Mellor of counsel instructed by the solicitor for the Customs and Excise for the Respondents 

	© CROWN COPYRIGHT 2004

DECISION

1.	This is an appeal by Mr Nicholas David Leslie Downing against a decision of the Commissioners of Customs and Excise on review to uphold an assessment to excise duty of £5,394.87.  They made the assessment on the basis that Mr Downing imported fuel from within the European Union in circumstances which did not qualify for relief from UK duty under the Travellers’ Reliefs (Fuel and Lubricants) Order 1995 SI 1995/1777 (the 1995 Order).
2.	The facts are not in dispute and may be stated quite shortly.  On 1 September 2000, Mr Downing was stopped by Customs officers on entering the UK Control Zone at Coquelles, France, as he was returning to the UK.  He was driving an articulated tractor unit which was towing a refrigerated trailer, both of which vehicles he owned.  An officer asked him to open the offside pallet locker of the trailer for inspection.  He did so to reveal a fitted diesel tank measuring 2.4m x 0.45m x 1.1m.  It was attached to and fuelled the refrigeration system.  (It is common ground that the tank was not attached to the fuel tank of the tractor unit).  Mr Downing told the officer that the tank had a capacity of 950 litres (as compared with a standard tank for a trailer’s refrigeration system of 60 litres) and was two thirds full of diesel bought in Spain.  He added that it cost about £400 to fill the tank in Spain, compared with £620 in the UK.  He also said that there was no similar tank in the nearside locker as he could not afford to have one fitted.  (It is also common ground that there was no second tank).
3.	Mr Downing produced fuel receipts for inspection – 2 from the Eurotunnel terminal for 613 litres of diesel, and 1 from Spain for 647 litres.  He explained to the officer that he worked abroad only 50 per cent of the time; as he earned no more money for doing so than from domestic work, he only accepted continental work to enable him to buy fuel abroad.
4.	Mr Downing said that he had bought the trailer second-hand in June 1999, and had had the pallet tank fitted in or about March 2000.  (Before us Mr Downing added that the tank had been fitted to replace a similar-sized tank that was in need of replacement.  Whether it did so is not a matter with which we need deal).  He also admitted having used the fuel from the pallet tank to power the engine of the tractor unit.
5.	As the officer took the view that the pallet tank on the trailer was not a ‘standard tank’, he informed Mr Downing that in his opinion he, Mr Downing, was not entitled to the reliefs afforded by the 1995 Order, and that details of Customs findings would be passed to their ‘relevant office’.  Mr Downing was then allowed to proceed on his journey.
6.	Mr Downing was sent a letter by Customs advising him not to fill the pallet tank.  It also invited him to contact Customs to arrange an appointment to examine his records, particularly photographs, fuel receipts and details of the fitting of the tank.  An appointment was made for 6 November 2001, but Mr Downing cancelled it.  Customs attempted to arrange other appointments, with no success.  Consequently, on 12 January 2002 they wrote telling him that, unless he contacted them within a week, they would assume he was content for them to assess him to excise duty calculated on the basis of information they had.  As he did not contact them, they proceeded to assess him.
7.	The assessing officer, Mrs Watson calculated the duty assessed in this way.  Based on other users consumption rates, she allowed 60 litres of fuel per week for refrigeration purposes.  Taken over the 26 week period the tank had been fitted before Mr Downing was stopped that amounted to the consumption of 1560 litres of fuel.  The calculation continued:
“12 trips [based on Customs records] @ 1000 litres per trip = 12000 litres 
Deduct allowance for fridge unit 12000-1560 = 10440 litres
The full rate of UK duty for this period was £0.5182 pence per trip.  One trip done was under 1999/2000 rate of duty of £0.5021 pence per litre
This means
940 litres @ £0.5021 pence per litre = £471.97
9500 litres @ £0.5128 pence per litre = £4922.90
This gives a total amount of duty payable on £5394.87”.
8.	On 4 April 2001, Mr Downing was assessed to the duty of £5394.87, and was advised that he might require Customs to review their decision to assess him.  He did require a review, giving the following reasons for doing so:
1. there was no pipework in existence to connect the tank in the trailer locker to the engine of the articulated tractor;
2. there was a connection between the trailer tank and the refrigeration motor;
3. there was no breach of the 1995 Order in having European fuel in the trailer tank for use with the refrigeration unit;
4. there was no breach of the 1995 Order if the tank on the articulated tractor contained European fuel.
9.	The review officer, Mrs P Turner, opened her consideration of Customs decision to assess Mr Downing by saying that it was for her to determine whether the decision was one which a reasonable body of Commissioners would not have reached. That was not her function: she was required to confirm, vary or withdraw the duty assessment.
10.	Initially, Mrs Turner considered the way in which the assessing officer had gone about the process of calculating the duty assessed.  She concluded that the officer had been “exceptionally reasonable in her assessment” in deducting an amount of fuel which Mr Downing might have used to fuel the fridge unit during the six months it had been fitted.  She also noted Mr Downing’s statement that it was only the purchase of fuel abroad that made his European trips profitable.
11.	Of the four points made by Mr Downing in requiring Customs decision to be reviewed (see para 8 above), Mrs Turner observed that Customs did not dispute that the pallet tank was not connected to the tractor unit; that the existence of a connection between the tank and the fridge unit was irrelevant; and that “the European fuel contained in the articulated tractor is not in breach of the [1995] Order as it is a standard running tank and its contents have not been included in the assessment”.  Mrs Turner then continued the decision.  
12.	We then turn to the law in point in the appeal 
13.	European Community law provides for certain reliefs from excise duty.  Article 8a of Council Directive 92/81/EEC (the Directive) is in the following terms:
1. Mineral oils released for consumption in a Member State, contained in the standard tanks of commercial motor vehicles and intended to be used as fuel by those same vehicles as well as in special containers and intended to be used for the operation, during the course of transport, of the systems equipping those same containers shall not be subject to excise duty in any other Member State.
2. For the purposes of this Article—
“standard tanks” shall mean—
—	the tanks permanently fixed by the manufacturer to all motor vehicles of the same type as the vehicle in question and whose permanent fitting enables fuel to be used directly, both for the purpose of propulsion and, where appropriate, for the operation, during transport of refrigeration systems and other systems.
Gas tanks fitted to motor vehicles designed for the direct use of gas as a fuel and tanks fitted to other systems with which the vehicle may be equipped shall also be considered to be standard tanks.
—	tanks permanently fixed by the manufacturer to all containers of the same type as the container in question and whose permanent fitting enables fuel to be used directly for the operation, during transport, of the refrigeration systems and other systems with which special containers are equipped.
“Special container” shall mean any container fitted with specially  designed apparatus for refrigeration systems, oxygenation systems, thermal insulation systems or other systems.
14.	The Directive was implemented in UK domestic law by the 1995 Order.  It sets out the circumstances in which fuel can be imported into the UK without payment of UK excise duty.  The relevant parts of it provide as follows:
“2 Interpretation
In this Order – “commercial vehicle” means any road vehicle that –
(a)	by its type of construction and equipment, is designed for and capable of transporting goods or more than 9 persons, including the driver; or
(b)	is being used or is intended for use to carry passengers for reward; or
(c)	is being used or is intended for use for a purpose other than transport; “standard tanks” has the meaning given in Article 8a of Council Directive 92/81/EEC.
3 Relief for fuel and lubricants contained in a commercial vehicle
(1)	Subject to the provisions of this Order, a person who has travelled from another member State shall on entering the United Kingdom be relieved from payment of excise duty on the fuel and lubricants contained in a commercial vehicle that he has with him.
(2)	The reliefs afforded by this Order apply only to fuel that – 
(a)	is contained in the vehicle’s standard tanks; and
(b)	is being used or is intended for use by that vehicle.
(3)	The reliefs afforded by this Order apply only to fuel on which –
(a)	excise duty has been paid in the member State in which the fuel was acquired at a rate that is appropriate to the use to which that fuel is being or is intended to be put; and
(b)	the excise duty paid on that fuel has not be remitted, repaid or drawn back.
(4)	The reliefs afforded by this Order apply only to fuel and lubricants that were taken into the vehicle within the European Union and are of a type and quantity necessary for the normal operation of the vehicle during its journey.
4 Conditions
(1)	The reliefs afforded by this Order are subject to the following conditions; and if any condition is not complied with the fuel and lubricants shall, unless that non-compliance was sanctioned by the Commissioners, be liable to forfeiture.
(2)	The fuel and lubricants are used only in the vehicle and are not removed from the vehicle except –
(a)	temporarily, to facilitate repair; or
(b)	permanently, to be destroyed.
(3)	The fuel and lubricants are used only for purposes appropriate to the rate of excise duty paid in the member State in which the fuel was acquired.
(4)	The excise duty paid on the fuel and lubricants is not remitted, repaid or drawn back.”
15.	To deal with certain questions which we raised on the first day of the hearing, Mr Christopher Mellor, counsel for the Commissioners, initially addressed us on the “special container” provisions in the Directive.  He submitted that it was clear that a fuel tank was not a “special container”: rather a special container was a refrigeration unit itself, i.e. the entire refrigerated trailer.  He contended that such a conclusion was evident, first, from the definition of “special container” in art. 8a(2) of the Directive – “any container fitted with specially designed apparatus for refrigeration systems, oxygenation systems, thermal insulation systems or other systems”; and, secondly, because the definition of “standard tanks” made it apparent that special containers and tanks were distinct, given that art. 8a(2) detailed “tanks permanently fixed by the manufacturer to all containers….”
16.	And, for the avoidance of doubt, Mr Mellor further submitted that for fuel used in special containers (for the operation during the course of transport of the systems equipping them) to qualify for relief from UK duty, that fuel had to be contained in “standard tanks”.  For that further submission Mr Mellor relied on the definition of “standard tanks” in art. 8a(2).  He accepted that, whilst that definition was “perhaps unfortunately set out (with the provision dealing with gas tanks in the middle)” it was evident that there were two relevant definitions: one relating to tanks fitted to “motor vehicles”, and the other to tanks fitted to “containers”, namely “tanks permanently fixed by the manufacturer to all containers of the same type as the container in question….”  Consequently, he contended, despite the perhaps somewhat unclear wording of art. 8a(1) of the Directive, it was evident from the provisions of art. 8a as a whole, and particularly art. 8a(2), the “special container” in the instant case consisted of the refrigeration unit itself, the trailer, and that the fuel had to be contained in a standard tank fixed to the trailer to qualify for relief.
17.	Mr Mellor next submitted that the 1995 Order had correctly implemented the Directive, and that the definition of “commercial vehicle” in art. 2 of the 1995 Order included the refrigeration trailer, i.e. the special container, as well as the tractor unit in cases such as the instant one.  He advanced three reasons for that submission:
1) that the definition of “commercial vehicle” included any vehicle that, “by its type of construction and equipment, is designed for and capable of transporting goods….” (art. 2 (a) of the 1995 Order): in cases such as the instant one the “vehicle” only became capable of transporting goods when the trailer/container was attached and, consequently, it was evident that the container fell within the ambit of the definition;
2) art. 2 of the 1995 Order stated that “standard tanks” had the meaning given in art. 8a of the Directive and, as mentioned above, that included definitions relevant to both tractor unit and trailer;
3) it was clearly intended that the 1995 Order included relief for fuel contained in a container’s standard tanks for the 1995 Order was specifically enacted to implement art. 8a of the Directive.
18.	In any event, continued Mr Mellor, given that the 1995 Order could be construed in accordance with the Directive without distorting its meaning, it should be so construed.  Furthermore, the conclusion that the 1995 Order allowed for relief of fuel contained in such a container’s standard tanks was also supported by the fact that the assessing officer gave an allowance in her calculation for fuel said to have been used in running the fridge motor.
19.	Mr Mellor further submitted that Mr Downing was not entitled to relief from duty on the fuel in the pallet tank.  He maintained that that tank did not constitute a “special container”, rather the refrigeration trailer in its entirety was a special container.  For the fuel used in the special container to operate the trailer’s refrigeration system to qualify for relief from duty, it had to be contained in a standard tank as defined in art. 8a(2) of the Directive.  The tank on Mr Downing’s trailer was not a standard tank, it was not “permanently fixed by the manufacturer to all containers of the same type as the container in question…..”  Therefore, Mr Mellor contended, on any basis, and even if the tribunal were to conclude that the 1995 Order had not been correctly implemented, which the Commissioners disputed, Mr Downing would still not be entitled to relief from excise duty under the Directive or otherwise.
20.	Mr Downing submitted that he had done nothing wrong: the pallet tank was the only tank serving the refrigeration system on the trailer, and there was nothing in the legislation to prevent anyone from fitting a larger than average tank.  As we mentioned earlier, he instructed solicitors to deal with matters on his behalf and claimed that they had failed him.  Consequently, he invited us not to visit their sins upon him.
21.	(At the hearing Mr Downing explained to us that immediately after the events of 1 September 2000 he consulted solicitors and throughout acted on their advice: it was not his fault that the matter had not been dealt with as it ought to have been.  He apologised to Customs for what he accepted was discourtesy, but maintained that he had expected the Solicitors to deal with his affairs professionally and expeditiously).
22.	The problem we have with Mr Downing’s case is that the European Legislation (upon which he may directly rely in the event of the domestic legislation failing correctly to implement it, see BeckerFinanzamt Münster-Innenstadt (case 8/81 [1882] ECR 53requires that any tanks fitted to “containers” – an expression we initially found confusing in the context of art. 8a of the Directive but later, by a process of elimination, were unable to construe other than as relating to trailers – must be “permanently fixed by the manufacturer”.  That condition permits of no exclusion for tanks fixed later by persons other than the manufacturer; and since Mr Downing accepted that he himself had fixed the tank, or caused it  to be fixed, it follows that the pallet tank could not have been a standard tank for the purposes of art. 8a.  (The fact that Mr Downing claimed to have fixed the tank to replace a similarly – sized tank avails him nothing).
23.	We have most carefully considered all the evidence before us, and conclude that the Commissioners’ case, as most carefully and fairly advanced by Mr Mellor, is correct in every particular.  In those circumstances, we have no alternative but to dismiss Mr Downing’s appeal.  The flaw in procedure we identified at para 9 above avails Mr Downing nothing, since we are quite satisfied that had Mrs Turner applied the correct criteria, the end result of her review would inevitably have been the same (see John Dee Ltd v CEC [1995] STC 949).
24.	We make no direction as costs.

DAVID DEMACK 
CHAIRMAN
Release Date: 08/06/2004
LON/02/8012