E00818

EXCISE DUTY — Importation of tobacco goods to give to workmen in return for services rendered — whether commercial and for profit — yes — reasonableness of Commissioners’ refusal to allow restoration of vehicle and goods — hardship — proportionality — appeal allowed in respect of the vehicle — re review on specified matters only 

MANCHESTER TRIBUNAL CENTRE

 	TAJ SINGH
		Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Lady Mitting (Chairman)
						Mrs M P Kostick BA FCA CTA	

Sitting in public in Birmingham on the 9 June 2004 and 11 October 2004.

Mrs B Johal for the Appellant 

Mr W Baker of Counsel instructed by the Solicitor for the Customs and Excise for the Respondents 

	© CROWN COPYRIGHT 2004

DECISION

1.	 The Appellant is appealing against the Decision of the Respondents, taken on review, dated 16 January 2004 to refuse restoration of Excise goods and a motor vehicle registered number W248 AJW seized on 23 October 2003. 
2.	We heard oral evidence from the Appellant himself and on his behalf from his brothers, Messrs. Rajpal Singh and Pardep Singh and from Mr Sean Green.  On behalf of the Commissioners, we heard oral evidence from the Review Officer, Mr David Harris.
The Evidence
3.	On the 23 October 2003, the Appellant was intercepted at the UK Customs Control at Coquelles.  At the time of the interception, the Appellant was driving his Peugot 406 motor car registration W248 AJW and travelling with him was his brother Mr Pardep Singh.  Initially, both men were interviewed together and they told the Officers that they had left home at approximately 2.00 am and had been to France and Belgium for the purpose of pleasure.  They were asked what they had bought that day and the Appellant answered 50 cases of beer and a box of tobacco.  They were asked for receipts and the Appellant handed over a receipt for 30 cases of Budweiser beer.  Mr Pardep Singh handed over a receipt for some beer, spirits, 150 pouches of Samson tobacco and four cartons of Silk Cut.  The Officer obtained confirmation from Mr Pardep Singh that the Samson tobacco and the Silk Cut cigarettes were his.  The Officer then asked the Appellant whether he had any tobacco, to which the Appellant replied “No, but I have 800 Benson and Hedges”.  He said he did not have a receipt for these goods and when asked whether that was all he had bought, he replied “Yes”.  The Appellant went on to tell the Officer that he had last travelled some two months previously and six months previously and that he did three or four trips a year.  On each occasion he travelled with his brother.  The Officer looked in the boot of the car and saw a 6 kilogram box of Golden Virginia tobacco lying on top of a box of beer.  He asked whether the travellers had a receipt for it, to which they said they did not.
4.	A search of the vehicle then revealed 7.5 kilograms of Samson hand rolling tobacco and 1.5 kilograms of Drum hand rolling tobacco, both found in the wheel well; 0.5 kilograms of Old Holborn found in the offside rear panel; 0.5 kilograms of Old Holborn and half a kilogram of Amber Leaf, both found in the nearside rear panel.  In the load, the Officers found 6 kilograms of Golden Virginia hand rolling tobacco, 2 kilograms of Amber Leaf hand rolling tobacco, 800 Silk Cut and 800 Benson and Hedges cigarettes; 360 litres of Budweiser; 24 litres of  Tenants beer and 240 litres of Stella.
5.	The Officer asked both men to sign his notebook, which they refused to do although they did tell him that they did not disagree with what he had written.  They were then both asked why they had only declared the Samson tobacco when other brands had been found hidden in the vehicle.  The Appellant replied that the goods were not hidden but he just did not want them on top of the beer.  Mr Pardep Singh replied that only the Samson was his and the remainder was not his to declare. 
6.	Both men agreed to stay for interview.  Mr Pardep Singh, in his interview, stated that his goods were the 7.5 kilograms of Samson, 800 Silk Cut, the Stella and the Tenants beer, the Tia Maria and the Vodka.  He had paid cash for them, he thought in the region of £200.  The cigarettes were for him and the tobacco for his wife.  He had placed his Samson tobacco in the wheel well but did not know who had placed the Drum there.  He himself smoked about 20 cigarettes a day but he did not know how much his wife smoked but thought that the tobacco would last her about a year.  He had not loaded any of the remaining brands of tobacco into the vehicle.  The Officer had found various receipts in the vehicle dated 2 April 2003, 18 and 19 June 2003 and 28 August 2003.  Mr Singh was asked a number of questions about these trips and the receipts, in response to all of which, he replied that he did not know.  Mr Singh said that he worked as a taxi driver but he was not able to say how much he earned as it varied but he listed his outgoings at just over £1000 per month.  He was asked when he had last purchased a pack of cigarettes in the United Kingdom, to which he replied “Never” and when asked if he had bought a pouch of tobacco in the UK before, he answered “No”.  The interview concluded with him stating that he did not know about the tobacco purchased by his brother, he did not know there was any Golden Virginia tobacco on top of the beer and he had put his own tobacco in the wheel well to prevent it being squashed.
7.	The Appellant in his interview claimed ownership of the Budweiser, the Golden Virginia, the Amber Leaf, the Drum and the Old Holborn and 800 Benson and Hedges cigarettes.  He had spent approximately £900.  He was asked what he was going to do with the goods, to which his recorded reply was “Tobacco is not for personal smoking, its for paying people who’ve done work.  I’ve had a new roof and patio.  People who do it smoke, that’s why I have different brands”.  He confirmed that he himself did not smoke.  The beer was all for personal use.  When asked about the tobacco in the wheel well, he said that when he had purchased the car in February or March, the spare wheel had been punctured and removed and he had never replaced it.  He said that he and Mr Pardep Singh had both purchased their tobacco together and they had both placed it in the car.  The tobacco in the wheel well was to prevent it from being crushed and in the side panels because it was “some where to put it”.  He was anxious that the tobacco should not be on view to prevent people breaking in and stealing it.  When it was pointed out that there was in fact a box of tobacco on view, the Appellant replied that he had been intending to put a coat over it.  He was asked in rather more detail about the destination of the goods, to which he replied that the Golden Virginia was to be given to someone the following February who would be plastering his hall, landing and ceiling.  He did not know at this stage how much the job would cost but if it was anymore than that he would balance it out with cash.  800 cigarettes were for his older brother who would repay him at cost.  The Old Holborn and Drum were for a roofer and tiler and the Amber was for a mechanic.  The tobacco would be full payment for the roofer.  The Appellant said that he worked as an HGV driver for Tibbett & Britten and had done for the last 20 years.  The combined income of himself and his wife was £40,000.  He was asked if he had just one vehicle at home, to which he replied “I do”.  Asked about previous trips, mostly he purchased alcohol but he had bought some Amber Leaf for his mechanic and some Old Holborn for a man who mended his computer. 
8.	The goods and the vehicle were then seized.  The reasons for seizure were stated to be use of the goods as payment in kind; selling goods; goods for non travellers; unreasonable explanation as to lack of spare wheel; unreasonable explanation as to why tobacco packed in wheel well; inconsistencies re packing of the tobacco; under declaration of the quantity of tobacco and previous contact.
9.	On 31 October 2003, the Appellant wrote requesting restoration of his goods and vehicle.  Restoration was refused and on the 3 December 2003 a review was requested.  Mr Pardep Singh also requested restoration of his goods but on refusal did not pursue an Appeal. 
10.	The review of the refusal to restore was carried out by Mr David Harris.
11.	Mr Harris, in his review letter, summarised the interviews and the legislation.  He went on to state the Commissioners’ Restoration Policy.  In respect of goods, it was departmental policy that they would not normally be restored.  In cases of “improper importation or transportation of excise goods” vehicles would not normally be offered for restoration.  However, at the discretion of the Commissioners, they could be offered for restoration or restoration on terms where the excise goods were destined for supply on a “not for profit basis or where they were destined for supply for profit, providing the quantity of goods was small and it was a first occurrence.  
12.	Mr Harris concluded that restoration should not be offered.  The reasons he gave were the initial false declaration as to quantity; that the cigarettes were for his brother who would pay cost for them and the tobacco was to be used for payment for work done, neither of these uses being within the definition of “own use” and finally the implausibility of the reason given for placing the tobacco in the wheel well. 
13.	Mr Harris went on to consider the Appellant’s claim that non-restoration of his vehicle had caused hardship.  This claim had been made in a letter from the Appellant dated 31 October.  The Appellant had stated that the loss of his car might have meant the loss of his job as he started work at 3.00 am each day and he had to pay £20 per day in taxi fares to get to and from work.  He also needed the vehicle to take his housebound father to hospital appointments and only he could accompany his father because of language difficulties.  Mr Harris carried out a vehicle search and records revealed that in addition to the seized vehicle, there were three other vehicles registered to the Appellant at his home address, namely a Volkswagen TAJ 547R, a Citroen Zantia T24 MSC and a Peugeot V884 KBA.  Mr Harris commented that the reply which the Appellant had given in interview to the effect that he had only one vehicle had therefore been incorrect.  
14.	For all these reasons, Mr Harris then concluded that the goods and vehicle would not be offered for restoration.
15.	Mr Harris does not make clear in his letter how he categorised the importation.  In his oral evidence, he did however say that it was his view that this was a commercial movement of goods for profit.  There had been a false declaration of goods which had, in his view, been deliberately concealed, those goods being destined to be passed on at a profit by the Appellant.
16.	As far as hardship was concerned, although in the letter Mr Harris gives only the one reason for rejecting the plea, namely the number of vehicles registered to the Appellant, in evidence, he said that he also took into account the combined income of the Appellant and his wife as he believed that that did not point to exceptional hardship.
17.	The value of the vehicle had been £5,800 and the total revenue evaded on all goods £2,539 of which £1,621 related to the Appellant’s goods.
18.	The Appellant’s three witnesses all came to the Tribunal to claim ownership of the three vehicles, which Mr Harris had ascertained had been registered in the Appellant’s name.  Mr Green told us that he had purchased  the Citroen from the Appellant in June 2003 but as he had been intending to sell it on and not wishing to increase the number of registered owners, he did not register it in his own name until December 2003 when, not having been able to sell it, he had to tax it.  Mr Harris made a check with the Licensing authorities, having heard this evidence and in the light of what he was told by them, he accepted, as do we, that this vehicle was at all times Mr Green’s.  
19.	Mr Pardep Singh claimed ownership of the Volkswagen, which he had purchased in December 2000 with the benefit of a loan from the Appellant.  It was agreed that until the loan had been repaid, which it had not yet been, the vehicle would remain registered in the Appellant’s name.
20.	Mr Rajpal Singh claimed ownership of the Peugeot, which had been purchased at an auction, the bidding being carried out by the Appellant who was rather more experienced at such things than he himself was.  As bidder all the registration details, which had been taken by the auction company, were the Appellant’s.  Mr Rajpal Singh had paid for the car with the aid of a Mastercard loan which he was still repaying.  
21.	Additionally, Mr Pardep Singh and Mr Rajpal Singh both ran their vehicles as plated taxis.  Documentary evidence was produced from the Licensing Department of Nottingham City Council to the effect that both vehicles were plated as at 23 October 2003; the licence for each was in the name of Mr Pardep and Mr Rajpal Singh; once plated, a vehicle cannot be driven by anyone other than a licensed driver and finally, that the Appellant had never held any such licence.  It was therefore contended by the Appellant that he would have had no legal right to use either of these vehicles even had he felt they belonged to him.  He had no right to either vehicle.
22.	In his oral evidence, the Appellant maintained that he had not been aware that he could not give goods to family and friends as payment for work undertaken in his house.  He denied profiting from the exchange.  He repeated his explanation given in interview to the effect that his spare wheel was punctured and he had therefore driven without a spare wheel since the purchase of the vehicle some eight months previously.  The tobacco was placed in the wheel well to prevent it from getting squashed and to prevent it from being seen by thieves and that he had not under declared goods because during the course of his interview, he had in fact made a full declaration.  
23.	In cross examination, he explained his initial under declaration and the obviously incorrect answers given to the first officer by saying that he was confused with the rapid fire questions.  He denied any deliberate concealment.  He was questioned at length by Mr Baker about the work for which the tobacco was to be exchanged.  The new patio and roof were being laid by a friend who himself suggested that he should be paid in tobacco.  When Mr Baker asked how much the work was costing, the Appellant answered to the effect that he did not really know but that he would be saving some money.  The Drum and the Old Holborn had been bought for a friend who was laying some bitumen and the tiler.  The bitumen layer had not yet charged but the tiler’s fee was £200.  The Appellant’s receipt, which was in fact eventually produced during interview, revealed that the Drum and Old Holborn had cost £69 and £51 respectively.  The Amber Leaf, which had cost the Appellant £114, was for the mechanic who repaired his car and whose bill was £150.  The Golden Virginia was for the plasterer who was going to be working for him in February whilst the Appellant was in America.  The Appellant maintained that all the friends had themselves suggested this method of payment and that he purchased the different varieties because he knew that was what they liked.
24.	He reiterated his plea of hardship adding that he was only able to buy a replacement vehicle some four weeks after the seizure by cashing in early a save as you earn bond which had itself caused him financial loss.
Submissions 
25.	Mr Baker submitted that this was a commercial for profit importation for which non restoration was a reasonable response.  He maintained that all the evidence pointed to a deliberate concealment and a deliberate under declaration and that the use to which the tobacco was put was clearly commercial.
26.	He stressed that hardship had to be exceptional before it could possibly justify a restoration.  It was always inconvenient to lose one’s vehicle and something considerably greater than inconvenience had to be shown.  
27.	Mrs Johal contended that the tobacco was purchased for friends.  It was, in each case, the friends who had suggested they should take tobacco in lieu of cash.  She contended that the Appellant had never agreed a price with his friends for the work done so it could in fact be argued that the tobacco was gifted to them.  She viewed the transaction as social distribution to family and friends from which the Appellant was making no profit.
28.	She accepted the reasonableness of the policy but contended that it had been incorrectly applied.  She maintained that the Appellant had suffered undue hardship in his need to purchase the replacement vehicle.  Finally, citing Lindsay v Customs and Excise Commissioners 2002 EWCA Civ 267, the refusal to restore was a disproportionate response.
The Jurisdiction of the Tribunal
29.	Our function is to determine whether the Commissioners’ decision not to restore the goods and vehicle was a decision which no reasonable body of Commissioners could have arrived at.  In order for the decision to have been reasonable, Mr Harris should have taken into account all relevant matters and none which were irrelevant.
Conclusions
Mr Harris was of the view that the Appellant had made a deliberate under declaration on interception and had attempted to conceal the volume of goods being carried.  The Appellant denied both.  There was an obvious under declaration and to our mind it could not have been accidental.  Neither do we believe that the Appellant was confused by “rapid questioning”.  The questions he was asked were perfectly clear and unequivocal and he gave clear and unequivocal and incorrect answers in reply.  Having failed to volunteer to the Officer, when asked, the precise goods which he had purchased, thus concealing the tobacco purchase, he was later asked whether he had purchased any tobacco and he quite clearly replied that he had not, only some cigarettes.  We find this to be a wilful and deliberate under declaration.  Our view is enforced by the fact that when asked for a receipt for his goods, the Appellant did not produce it but was able to produce it once the goods had been discovered.  We believe that the concealment of the goods goes hand in hand with the under declaration.  The intention of both was that the Officers would not be alerted to the volume of goods carried.
30.	Mr Harris, from the evidence in front of him, took the view that the importation was commercial and for profit.  It was Mrs Johal’s contention that there was no profit element to the Appellant and that what he had done amounted to little more, if at all, than social distribution to family and friends.  Mrs Johal maintained that the Appellant never agreed a price with his friends.  However, the Appellant told us in his oral evidence that he did and indeed he was able to tell us in several cases what that price was.  It was contended that he made no profit out of the transactions but again, if one cross refers the receipts to the amount charged by the respective labourers, it is clear that, to a greater or lesser extent, the Appellant paid less for the tobacco than the labourer was charging.  Indeed, in his evidence, the Appellant stated that he saved money.  It is clear to us that the tobacco was purchased with specific labourers in mind, in that different brands were purchased for each according to their choice.  We find, in accordance with the Appellant’s evidence, that in most, if not all cases, the labourer stated his price and tobacco of his choice was purchased for him at a lesser cost to the Appellant.  This can only be viewed as a commercial purchase and importation and for profit.
31.	In for profit importations, the Commissioners do have a discretion to restore the vehicle on terms in cases which meet certain criteria, namely that it is a first interception and that the amount carried is “small” which within the policy is less than three times the indicative level.  This was a first interception, although there was clear evidence from the Appellant that he had travelled previously and bought goods back to pay friends for work done.  However, the amount involved (eleven kilograms) was in excess of the nine kilograms, which would constitute a “small” amount.  It would therefore appear that this importation fell outside the Commissioners’ discretionary power to restore and within their policy of non restoration.
Hardship
32.	In his plea of hardship, the Appellant had relied on three factors.  First, his very unsocial hours of work, necessitating the use of taxis; secondly, his need to take his father to and from hospital appointments and thirdly, the financial loss to himself when he cashed in part of his pension scheme to pay for a new vehicle.  
33.	In his review, Mr Harris addressed none of these matters, instead he gave only one reason for deciding that hardship had not been caused, namely the availability to the Appellant of three other vehicles and the consequent conclusion that he had lied in interview about the number of vehicles to which he had access.  We totally accept the evidence which we have heard from Messrs Pardep and Rajpal Singh as far as the vehicles are concerned and from Mr Green.  We find that none of these three vehicles were available to the Appellant and thus, through no fault of his own, the information upon which Mr Harris based his decision was misunderstood.  
34.	We also believe that Mr Harris should have specifically addressed the points raised by the Appellant.  Further, in his oral evidence, he told us he took into account the combined income of the Appellant and his wife, but this is not apparent from his letter and at no time did he make any enquiry of their dependents or outgoings or make any attempt to put the income into context as to how much of it was in fact freely available to the Appellant.  
35.	For all these reasons, we believe the decision in so far as Mr Harris rejected the plea of hardship was unreasonable and should be the subject of reconsideration.  We also believe that before reconsideration, the Appellant should be given the opportunity to put in further evidence.  It was not until the day of the hearing that he knew Mr Harris considered his income.  Equally, his father’s medical condition has never been challenged but that is not to say that the new reviewing Officer will accept it.  We therefore wish to give the Appellant the opportunity to provide evidence of his father’s hospital appointments for a three month period beginning with the date of seizure.  We also will allow the Appellant to put in detailed and substantiated evidence of his and his wife’s joint income and their expenditure.
Proportionality
36.	Mrs Johal contended that proportionality should have been taken into account and that the non restoration was disproportionate.  Mr Harris’ view was not entirely clear.  In his letter, he makes no reference whatsoever to proportionality despite it having been raised by the Appellant in correspondence.  In his oral evidence, in answer to Mr Baker’s question whether he had to “balance the amount of goods against the value of the vehicle”, Mr Harris replied “not if it is for profit smuggling”.  This would appear to give the view that proportionality is not relevant in for profit importation.  However, we do not believe that this really represented Mr Harris’ view because at other stages in his evidence, he referred to the value of the vehicle “not necessarily” being taken into account.  We feel that Mr Harris should have given proportionality some consideration and afforded it a mention in his review letter.  In paragraph 63 of Lindsay, the paragraph relied upon  by Mr Harris, Lord Phillips refers specifically to those who use their cars for “commercial smuggling”.  He goes on to define that phrase as having “the meaning that it naturally bears of smuggling goods in order to sell them at a profit”.  It may be that the Commissioners should consider that although importing for a profit, what the Appellant was doing would not fall within Lord Phillips’ definition.  The Appellant was not importing large quantities in order to offer them for sale.  We feel this is a distinction which is worth making.  We do not accept Mrs Johal’s contention that the figure to be used in the balancing act is the excise duty evaded on the Appellant’s goods only.  Mr Pardep Singh’s goods were seized and he has pursued no appeal against their non-restoration.  They must therefore be taken as having been rightfully seized.  It is our view that in any balancing exercise in this case, the entire contents of the vehicle have to be taken into account.
Summary
37.	In summary, therefore, we believe Mr Harris was perfectly reasonable in viewing the importation as being commercial in nature and for profit.  As such, the refusal of restoration of the goods was perfectly reasonable and is one which we uphold.  
38.	In relation to the vehicle, however, we find that the manner in which Mr Harris considered hardship was not reasonable and we also find that he should have given some consideration to proportionality.  
39.	In respect of the vehicle, therefore, the appeal is allowed and in accordance with our jurisdiction, we make the following direction:-
(i)	within 14 days of the release of this decision, the Appellant shall forward to the Commissioners such further information as he wishes them to consider in relation to his finances and his father’s medical appointments as outlined in paragraph (35) of this decision
(ii)	the Commissioners shall carry out a further review of the decision to refuse restoration, such a review being limited to the questions of hardship and proportionality
(iii)	the review shall be carried out within 10 weeks of the release of this decision by an Officer who has had no previous involvement in the case and shall take into account both the findings in this decision and any further representations made by the Appellant pursuant to paragraph (i) of these directions.
(iv)	there shall be no order for costs.

LADY MITTING
CHAIRMAN
Release Date: 3 November 2004

MAN/01/8019