E00846
EXCISE DUTY — seizure of load of beer – cloning suspected – discrepancies in documentation and vehicle movements – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	CARIKSTONE EXPORT 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Elsie Gilliland (Chairman)
                  					 Howard Middleton  

Sitting in public at Manchester on 8 December 2004

Mr  A  Young of counsel for the Appellant 
Mr J Gray of counsel instructed by the Solicitor of HM Customs and Excise for the Respondents.

	© CROWN COPYRIGHT 2005

DECISION
1. 	The appeal before the tribunal is that of Carikstone Export (“the Appellant”) challenging the decision of the Commissioners in a review letter dated 26 February 2004 not to restore to the Appellant excise goods (“the goods”) seized on 2 December 2003. The goods comprised 12 pallets of Carlsberg Black Label (12,960 litres) and 12 pallets of Fosters (11,520 litres) a total of 24480 litres of dutiable beer. The background of the matter was that the vehicle in which the goods were being carried (43AJW59) was stopped at the U.K. Control Zone at Coquelles at about 13.15 hours on 4 November 2003; the driver who was French answered some questions put to him. The unit, its trailer (70ACM59), and the load it was carrying were detained under s. 139 of the Customs and Excise Management Act 1979 (“CEMA”) on the advice of the National Discreditation Team of the Commissioners pending further checks and enquiries as to the movement of the goods. Subsequently all were seized. The goods were condemned by passage of time.                                                                               
2. 	John Dennis McCarrick the office manager of the Appellant gave evidence to the tribunal of the business procedures followed by the Appellant in respect of the order for beer. He told us that the Appellant was essentially a two-man business owned by Barry Kenneth Livingstone but with him (Mr McCarrick) with twenty to twenty five years of import-export experience dealing with buyers and sellers. Mrs Gillian Martha Hurrell the review officer was the witness called by the Commissioners. A number of witness statements from various officers of the Commissioners were available in the bundle of documents before us and accepted as background to the case by the Appellant’s counsel. The grounds of the appeal as set out in the Notice of Appeal dated 9 March 2004 were that the review decision was “unreasonable and/or not proportionate”.                     
3. 	The main reason for the seizure was that the Customs officers considered that the order for beer put in place by the Appellant for delivery had been “cloned” in that the paperwork had been used more than once, the (“AAD”) Administrative Accompanying Document had been used to duplicate at least one other load of beer (the goods specified on it having in the Commissioners’ view been imported on 3 November 2003), resulting in no duty being paid on the second movement of the specified items, that is the detained and seized load. The officers considered that the carrying trailer had been exchanged in France.              
4.	The information obtained by the Commissioners from the driver (Thierry Francois Montangon) was set out in the copy foreign driver questionnaire in the bundle of documents before us (pages 127-134 of the bundle). He said that he was employed by Alpe Transporters (“Alpe”) in Annecy the owners of the vehicle which he drove (43AJW59). He produced the CMR (p.135) but not the AAD which the Commissioners obtained later.  The procedure in these circumstances was that the AAD was carried by the transport company with the excise goods and thus went direct from the supplier to the customer. Computer records available to the Commissioners showed that the vehicle had travelled on that day (3 November 2003). The AAD showed a date of 3 November 2003 but specified the excise goods carried as 23120 litres of beer (not the quantity actually carried and seized of 24480 litres.) The load was in excess of the quantities covered by the CMR which showed 960 trays of Fosters and 990 trays of Carling. The driver said that he had checked the legitimacy of his load against the CMR and whether the load was expected at its destination.  He had collected the load in Germany at 22 hours at a pick-up he had been to before. He had gone straight to the port and would have continued directly to the delivery address (which he also knew having delivered there the previous week). He was due to deliver his load there at 15 hours. He said that he had not swapped trailers; he would have had his papers signed at the delivery point; and would have done his return journey without a load. An officer of the Commissioners also removed the tachograph from the vehicle (43AJW59) on 5 November 2003 at 12.32 hours. Evidence was given in a witness statement that the intercepted vehicle had made a short run in Calais only, whereas the tacho discs from another vehicle 1634WK80 showed a run of 380 kms. and back.                                                                                                               
5. 	There were a number of parties involved in the supply and delivery arrangements. The evidence of Mr McCarrick was that a telephone order was received on 31 October 2003 from Cube Cash & Carry Ltd. of Barking Essex (Cube). He amended the original purchase order (p.98 of the bundle) from 12 pallets of Carling to 11 pallets as he knew that otherwise the load would have excess weight. The order for 12 pallets of Fosters was unchanged. He confirmed this by a faxed purchase order and on 31 October 2003 sourced a bonded supplier General Trade Import Export KG (GTI) of Kevelaer in Germany a regular supplier with whom the Appellant had a credit payment arrangement. They in turn sourced the beer from elsewhere. In a fax to GTI (p.18) Mr McCarrick had referred also to the “usual transport company” being used, namely Sarl ASF Logistics of Largile France (ASF). (In the event when the goods were detained there had been a sub-contract and the goods were in the hands of a driver from Alpe). On 1 November 2003 an invoice was sent by GTI for £11,113.00 (p.143); on 3 November 2003 Cube were invoiced and charged with the delivered price of the beer £23670 plus Vat (p.153); and also on 3 November 2003 ASF faxed the Appellant as to collection and delivery. It was Mr McCarrick who dealt with the import duty. He calculated it at £11633.10 and paid the amount (less a credit to which the Appellant was entitled) to the Reds agent they used namely Denholm-Bahr Forwarding Ltd. of Liverpool (Semstar). Semstar faxed GTI with their Reds details to enable GTI to complete the paperwork with the unique reference number CAR1042 shown. Semstar invoiced the Appellant for the administration fee (p.147).                    
6. 	Mr McCarrick told the tribunal that he was informed of the detention on 4 November 2003 by his contact at ASF. He took the matter up with the Commissioners, supplying information. An officer of the Commissioners informed him on 18 November 2003 that the load did not comply with the CMR. He pursued the matter with GTI who confirmed an error on their part by putting in the load 12 pallets of Carling. For this extra pallet they then invoiced the Appellant for £526 (p.167). The beer (including the extra pallet) was paid for by the Appellant on 15 January 2004.  Mr McCarrick sought to pay the extra duty, but the goods were then seized. He put the allegations of the Commissioners that this had been a cloning fraud to GTI and ASF. The Commissioners had also been in touch with the various companies in their trail and their checks included the port records of ferry companies and the records of entries and departures at the Channel Tunnel. They also looked for information about delivery of a consignment of water that a company at Neasden (Tibbett & Britten Group plc) confirmed they had accepted on 3 November 2003. Mr McCarrick had become aware through ASF of enquiries directed as to a delivery by ASF of water. From this the Commissioners built up a narrative of a sequence of events which to their minds established that the duty on the (intercepted) goods had been evaded and that they should accordingly be seized and not restored. The conclusions of the Commissioners have been explained by the review officer in her letter and in the evidence she has given to the tribunal.                                                  
7. 	The Appellant  brought the appeal we are told because it suffered financial loss as it had not been paid. The Revenue were secure as the Reds agent had been paid, but Cube cancelled the order and not having been required to pay in advance had made no payment. 
8. 	The role of the tribunal within s.16 of the Finance Act 1994 is to consider the reasonableness of the decision the review officer made on behalf of the Commissioners. In making her decision the review officer is required to look at the matter afresh and to follow Wednesbury principles in taking into account all matters to which she ought to give weight and excluding all irrelevant material. (Associated Provincial Picture Houses v Wednesbury Corp. [1948] 1KB 223.) The officer does have power under s.15 of the Finance Act 1994 to uphold vary or withdraw the contested decision before her for review. She said in her review letter and in her evidence to the tribunal that in reaching her decision she looked at the Commissioners’ policy and looked also to see if there were any exceptional circumstances which should influence her decision and further that she considered the issues of proportionality and hardship. She had calculated the revenue lost in the matter at a total of £17,673 made up of  £12,124.20 duty and £5,548.93 Vat. The price paid for the goods she stated would have been substantially less.
9. 	Two specific discrepancies identified by the officer were addressed by the Appellant. Mr McCarricks’s evidence as outlined above was that GTI had admitted loading an additional pallet of Carling (p.166). The Appellant, he said , had no control over the paperwork or the loading. Neither GTI nor the transport company appear to have been aware as Mr McCarrick had been of the weight implications of the full load. Secondly, Mrs Hurrell could not see the transaction as one making any economic sense to the Appellant. On the figures confirmed to us by Mr McCarrick the actual profit on the deal would have been £79.94 (p.37). The benefit he submitted was in using the sums collected on Vat invoices to supply substantial amounts of cash flow pending the date on which the Appellant would have to make the Vat payment. We cannot accept that trading on minimal margins and using collected Vat as day-to-day cashflow makes any financial sense in the running of a trading company particularly if as in the case of the Cube order buyers did not have to make a payment in advance or even pay a deposit
10. 	The third discrepancy and the one on which the Commissioners substantially based their view that the documentation had been used twice related to various vehicle movements. The driver (Thierry Montangon) had completed the questionnaire (p.127-134) already mentioned. Also in the bundle is a response to questions from the NDT supplied by Dominic Anscutte, Mr McCarrick’s contact at ASF (p.66 and 70). He stated that it was vehicle 1634WK80 which was picked up in Germany by his brother Vincent Anscutte and that the trailer number was 70ACM59. Loading was in the afternoon of 3 November 2003; the driver thought that 23 boxes of beer were loaded (11 pallets of Carling and 12 of Fosters); the loaded trailer was deposited at the Ibis at Calais at about 23 hours on 3 November 2003; and the documentation (AAD and CMR) was handed to Alpe on 4 November 2003 when Vincent Anscutte detached the trailer 70ACM59 and Thierry Montangon re-attached it to vehicle 43AJW59. Mr McCarrick in his evidence said that swopping of trailers was not unusual. He himself was not concerned with the load of water. Information was also given by Dominic Anscutte to an officer of the Commissioners by telephone that the tractor unit 43AJW59 had imported water to Tibbett & Britten at Neasden on 3 November 2003 in trailer 2452WR84, returned to France and collected trailer 70ACM59 loaded with the beer. Tibbett & Britten confirmed to the Commissioners delivery of Evian water on a vehicle on 3 November 2003 between 17.30 and 19.30 hours. There were thus clear contradictions between these two versions. The records available to the Commissioners confirmed that the driver Montangon was still in the shuttle at 22 hours on 3 November 2003 and the tacho disc of his vehicle  43AJW59 was consistent with a short journey only from the shuttle to Calais. So far as the water was concerned there was a discrepancy re the trailer. The supplier of the water confirmed the truck number per the CMR. The delivery note showed a different number. The time of departure on the delivery note was 31 October 2003 with an expected delivery date of 4 November 2003. Records again established that an Evian trailer was used as was customary and not trailer 2452WR84. All these points are covered evidentially in the witness statements in the bundle and their accompanying exhibits. The Commissioners were satisfied therefore that the vehicle 43AJW59 had travelled to England on 3 November 2003 and on the balance of probabilities it was carrying the load of beer in the Cube order. A separate load was going through on 4 November 2003 using the earlier documents, but this was not the corrected Cube load to which Mr McCarrick had referred in his evidence and in respect of which the Reds agent had received and made payment. We find on this basis that no duty had been paid on the seized goods by the Appellant and equally they are not the Appellant’s goods which it can claim to have restored. Whatever may be the Appellant’s rights we are satisfied that it does not have a right on any reading of the relevant regulations to require a substitution of the seized goods for those comprised within the order for Cube processed by it
12. 	Counsel for the Appellant has submitted that the review officer was not sufficiently rigorous in her re-consideration of the evidence and too readily accepted the conclusions of the investigating officers particularly those of the NDT.  He considered that she had the power which she did not satisfactorily exercise of finding facts on her own account. Mrs Hurrell said in evidence that she did not look behind the reasons for seizure but observed how that decision had been reached and in particular she found the checks and enquiries put in hand reasonable and normal. The tribunal also may look at the surrounding facts but not in such a way as to treat the matter as an appeal against seizure. 
13.	The relevant Act in this appeal is CEMA and the regulations are the Excise Duties (Holding, Movement, Warehousing and REDS) Regulations 1993 (“the REDS Regulations”) and the Excise Goods (Accompanying Documents) Regulations 2002 (“EGAD”). Part 1V of EGAD is headed: Imports under Community Duty Suspension Arrangements. Part V1 requires those who are not registered dealers and shippers to account for duty before moving goods and to obtain a customs certificate which must accompany the goods when they arrive. REDS Regulation 16 provides that where there has been a breach of the proper procedures goods become forfeitable and the Customs may seize them; s.49 of CEMA provides that dutiable excise goods on which duty has not been paid are liable to be forfeited.
14. 	Mrs Hurrell outlined the policy of the Commissioners to be not to restore seized goods but that each review did take account of the merits of the case. Counsel for the Appellant however specifically drew the attention of the tribunal to the Commissioners’ guidelines on restoration (p.32) and in particular as an example of a good reason to restore: “where we know the person from whom the goods were seized is innocent of the offence for which they were seized i.e. an innocent dupe”. Despite pressure in cross-examination the review officer said that she could not accept the Appellant’s innocence as the goods had been improperly imported but she had not made a judgement as to whether the Appellant was involved. It was her view that in any event she had a discretion in applying the policy otherwise nothing would be restored. She put it that had there been evidence before her that the goods were those belonging to the Appellant and that duty had been paid, restoration would have been favourably considered but that when she did the review such evidence was not before her.
15. 	Another issue raised by the Appellant’s counsel related to documentation. He claimed that the Commissioners had shortly prior to the review decision i.e. on 16 February 2004 uplifted documents   relating to the Appellant and that the review officer ought properly to have been advised by the Commissioners or known for herself that papers relevant  to her decision had been removed prior to her decision. She has told the tribunal that she did not then know about them what they were or whether they were relevant to her non-restoration decision or indeed the seizure and did not know the purpose of the uplift. She would not have made a decision on whether there had been cloning of goods. We do not consider that there were any further steps that the review officer could have taken. It would be not be possible for her to refer to documents of which she had no knowledge. We do not accept that she was put on enquiry to ask if there were any further documents. We understand from comments made at the hearing that a complaints process was put in hand in connection with documentation.
16. 	The review officer also considered the issues of proportionality and hardship. The revenue lost she placed as higher than the value of the goods if purchased from the same supplier. As to hardship she had not then evidence that duty had been paid though she accepted that payment had been made to the Reds agent. Equally she had no information as to payment for the beer. Given that there had been a suspected improper (and she used this term rather than illegal) importation she did not see it as for her to go behind that decision. We find that the approach of the review officer was reasonable. The conclusion which had been  reached by the officers was that there had been a substitution of trailers and that no duty had been paid on the seized goods and this was  justified on the evidence before her. 
17. We are satisfied that the review officer put herself in a position to look at the facts associated with the seizure including the Commissioners’ enquiries which were detailed and set out in a clear documentary trail. It was not her role in conducting the review to search for further documents or to seek to pursue matters outside the scope of her review including parallel investigations which might have been pursued by the Commissioners within a wider operation than the importation of the goods the subject of the appeal.                                                   
18. 	We dismiss the appeal.
19.	At the conclusion of the hearing we heard representations from the parties’ counsel on the question of costs. We then indicated that the matter of costs would be treated as a separate matter on which the parties could at a later date address the tribunal at a hearing. Accordingly we direct that if the parties cannot agree on costs either shall be at liberty to apply to the tribunal to determine the issue of costs both as to entitlement and amount.

ELSIE GILLILAND
                                                            CHAIRMAN
Release Date: 10 February 2005

MAN/04/8035