E00847
EXCISE DUTY — Restoration of a motor vehicle and excise goods — father
importing cigarettes and beer — son importing tobacco and beer — father's
importation was for personal use — son's importation commercial use for profit
— material difference from the Review Officers' finding that both were
involved in commercial importation — whether this difference may have a
bearing upon the decision not to restore — yes — was the decision not to
restore the vehicle reasonable — no — Appeal allowed.
MANCHESTER TRIBUNAL CENTRE
ROBERT BROOKES Appellant
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: Michael Tildesley (Chairman)
J David Kippest
Sitting in public in Birmingham on 6 January 2005
The Appellant appeared in person
Zaheer Afzal, instructed by the Solicitor's office for HM Customs and
Excise, for the Respondents
© CROWN COPYRIGHT 2005
DECISION
The Appeal
- The Appellant was appealing against the decision of
the Respondents on review dated the 5 August 2004 to refuse restoration of
excise goods and a motor vehicle (Rover 420, registration V434 DJM). The
excise goods consisted of 12 kilograms of hand rolling tobacco, 800
cigarettes, 250 cigars and 234 litres of beer.
- The Appellant's grounds of appeal were:
"I was only verbally accused of evading tax. They could not
offer a review they had in no time disposed of my £12,000 car without my
knowledge. I am innocent until proved guilty. I can prove from credit card
statements my average spend per trip was £228 as agreed through my
solicitor. I am seeking £18,000 compensation. Customs work on assumptions
and probabilities".
- The Appellant disputed the Respondents' assertion
that he was selling the excise goods for profit. He challenged the inferences
drawn by the Respondents about the Appellant's trips to France and Belgium.
The Appellant also considered that the Respondents were not justified in their
refusal to restore his motor vehicle.
- The function of the Tribunal is to determine whether
the Respondents' decision not to restore the excise goods and the motor
vehicle was a decision which no reasonable body of Commissioners could have
arrived at. In order for the decision to have been reasonable the decision
maker must have considered all relevant matters and must not have taken into
consideration irrelevant matters.
- We received evidence from the following persons:
(1) Robert Brookes, the Appellant
(2) Richard Graham Brookes, the Appellant's
son
(3) Gareth Morgan, the Customs and Excise Officer who carried
out the Review.
An agreed bundle of documents was presented to the Tribunal.
The Evidence
Background
- The Appellant and his son, Richard Graham Brookes,
left Marston Green, West Midlands at 8am on 21 May 2001 in the Appellant's
motor vehicle and caught the 12 midday Channel Tunnel train to Calais where
they purchased the excise goods. On their return to the UK they were stopped
at 3.40pm by Customs Officers at the UK Control zone in Coquelles and
interviewed. The Officers were not satisfied that the excise goods had been
purchased by the Appellant and his son for personal use whereupon the Officers
seized the goods and the Appellant's motor vehicle. The Appellant and his son
made their own way back to Marston Green.
- On 22 May 2001 the Appellant wrote to the
Respondents requesting restoration of the motor vehicle, which was refused on
14 June 2001. On 11 July 2001, Allsop and Co, the Appellant's solicitors,
requested a review of the decision not to restore. The Respondents
acknowledged receipt of the solicitors' letter on 24 July 2001 in which they
stated that if the solicitors had not heard from the Review Team within 45
days of 12 July 2001, they should assume that the original decision not to
restore was upheld. In late October 2001 the Appellant contacted the
Respondents and was informed that his motor vehicle had been sold by auction
on 18 October 2001.
- The Appellant's Member of Parliament wrote on behalf
of the Appellant to Treasury Ministers and the Parliamentary Ombudsman to
challenge the Respondents' decision regarding seizure and sale of his motor
vehicle. Mr Boateng, Treasury Minister, and Ms Moffit, Senior Investigation
Officer of the Parliamentary Ombudsman both advised the Appellant to appeal to
the VAT and Duties Tribunal, which he did on 17 August 2003.
- The Respondents were unaware of the Appeal until a
pre-hearing review was listed on 24 May 2004 when the Tribunal directed the
Respondents to carry out a review of their decision refusing restoration. Mr
Morgan carried out the review which was communicated by letter to the
Appellant on 5 August 2004.
The Review Decision
- Mr Morgan found no exceptional circumstances in
the Appellants' case to depart from the Respondents' policies that seized
excise goods and private vehicles used for the improper importation or
transportation of excise goods should not normally be restored. In reaching
his decision he relied upon the following findings:
(1) The quantity of excise goods imported by the Appellant exceeded the
guide levels specified in the Excise Goods, Beer and Tobacco Products
Amendment Regulations 2002 and the Channel Tunnel (Alcoholic Liquor and
Tobacco Products) (Amendment) Order 2002 (hereinafter referred to as "The
Regulations). The 12 kilograms of hand rolling tobacco imported by the
Appellant's son exceeded the guide level of one kilogram 12 times. The 234
litres of beer imported was more than twice the guideline of 110 litres.
(2) The Appellant and his son when first stopped did not
mention they had seen Customs Notice 1 and only said they travelled five
times in order to give the Customs Officer the impression that they
travelled far less than they actually did.
(3) The financial viability of making so many visits in a
short space of time to buy small quantities of excise goods, particularly
as it appeared that the Appellant was claiming Disability Living Allowance
from May 2000 to February 2001.
(4) The Appellant's son had not taken the opportunity to bring
hand rolling tobacco back for his partner on previous trips. He had only
just started to smoke tobacco himself and yet his consumption rate was
five pouches a week. Also the 12 kilograms of tobacco would have cost him
£488.80 (1.5 times his weekly income).
(5) Most of the excise goods brought back were to be sold for
a profit which took the case beyond the threshold where the value of the
motor vehicle was taken into account.
- Mr Morgan gave evidence that the value of the
motor vehicle as at June 2001 was £7,011 retail and £5,836 trading in value.
This information was obtained from "Glass's Motoring Guide for Used Car
Prices". He was not aware that the motor vehicle had been converted to run on
gas. Mr Morgan was unable to produce documentary evidence to support his
assertion that the Appellant was in receipt of Disability Living Allowance.
This information had been supplied to him during a telephone conversation with
an official from the Department of Work and Pensions.
The Appellant's Evidence
- On 21 May 2001 the Appellant purchased 800
cigarettes and cigars on his credit card. The cigarettes were for himself and
his wife, whilst the cigars were for his brother who would reimburse him at
cost. His son using his credit card bought the Golden Virginia hand rolling
tobacco and the beer which was to be split between him and his father.
- The Appellant accepted that he regularly travelled
to the Continent. Between 11 June 2000 to 20 May 2001 he made 18 trips, of
which 15 were day trips and three were holidays. The total amount of money
spent on alcohol and tobacco on these 18 visits was £4,286, an average of
£238.11 per trip. The Appellant extracted this information from his credit
card statements. His solicitor shared the information with the Respondents on
11 July 2001. The Appellant accepted that he bought beer on all the day trips
and usually one thousand cigarettes each visit. In October and December 2001,
he made three separate trips in each of those months mainly to buy beer.
- The Appellant denied that he lied to the Customs
Officer about the number of previous trips made. He believed that the Officer
was asking him about the number of previous trips he made in 2001, in which
case he gave an accurate response of five trips.
- The Appellant together with his two sons were
heavy beer drinkers averaging between them about ten pints a day. He also
entertained a lot, particularly at Christmas. The beer purchased on 21 May
2001 would last him between two and four weeks. The Appellant smoked between
15 and 25 cigarettes a day.
- The Appellant thought nothing of driving to Calais
and back to the West Midlands in one day. The Appellant was used to driving.
He had been previously employed as an HGV driver. In any event he usually
shared the driving with his passenger. His car was converted to run on gas
which considerably reduced the fuel costs. The Appellant estimated that a
return journey to Calais would cost him about £35 - £40 for the fuel and the
Channel Tunnel ticket. In the Appellant's view this cost was insignificant
when compared with the £250 on average he saved by purchasing the beer and
cigarettes in France and Belgium.
- The Appellant strongly denied that he had been in
receipt of disability benefits. He had always been in employment. His earnings
as at 21 May 2001 were in the region of £15,000 to £16,000 per annum. His wife
earned about £26,000 per annum.
- The Appellant estimated the value of his motor
vehicle when seized to be in the region of £12,000. He, however, was prepared
to accept the valuation provided by Mr Morgan subject to the added value
provided by the gas conversion. The Appellant required a loan of £8,760 to
purchase a replacement vehicle.
- Mr Richard Brookes, the Appellant's son explained
that the 12 kilograms of hand rolling tobacco was for himself and his partner.
He told the Officer, however, that he might give away some of the tobacco
pouches as presents. He knew that the 12 kilograms was well above the
guidelines in the Regulations. Mr Richard Brookes bought the large quantity of
tobacco because it was on offer with a third off the normal price. He accepted
that he only started smoking roll-ups from March 2001in contrast to his
partner who had started much earlier. Mr Richard Brookes and his partner
smoked daily each about 30 roll-ups. He confirmed that he was a heavy drinker
and over the Christmas period would drink 17 pints of beer a day.
- Mr Richard Brookes made about 5 or 6 trips in his
car to France and Belgium in the previous year. On 18 March 2001 he
accompanied a friend to Calais. They purchased 5,000 cigarettes and one half
of kilogram of hand rolling tobacco between them. On that day Customs Notice 1
had been given to his friend. In interview with the Customs Officer he
referred to another journey with a friend where they each brought back six
cartons of 200 cigarettes.
- Mr Richard Brookes was employed as a postman
earning about £300 to £350 per week with monthly outgoings of £559. His
partner was employed as a Prisoner Escort Officer at the local magistrates'
court earning a reasonable wage, which was not mentioned by Richard Brookes in
interview with the Customs Officer. She also had an interest in a shop in
Chelmsley Wood, Birmingham.
Jurisdiction of the Tribunal
- The Respondents' power regarding restoration of
goods which have been forfeited or seized is set out under section 152(b) of
the Customs and Excise Management Act 1979. Once the power is exercised
whether in the form of a positive decision to restore on terms or a refusal to
restore, the person affected has a right of appeal to the Tribunal. The powers
of the Tribunal are limited in the terms set out in section 16(4) of Finance
Act 1994 which provides that:
"confined to a power, where the Tribunal are satisfied that
the Commissioners or other person making the 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 directions of the Tribunal, a further review of the original
decision;
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
that decision to have been unreasonable and to give directions to the
Commissioners as to the steps to be taken for securing that repetitions of
unreasonableness do not occur when comparable circumstances arise in
future.
- The precondition to the Tribunal's exercise of one
or more of its three powers, namely, that the person making a decision could
not reasonably have arrived at it falls within the guidance given by Lord Lane
in the decision in Customs and Excise v JH Corbitt (Numismatists) Ltd
[1980] STC 231 at page 239:
"…..if it were shown the Commissioners had acted in a way in
which no reasonable panel of commissioners could have acted; if they had
taken into account some irrelevant matter or had disregarded something to
which they should have given weight".
- The Tribunal is entitled to make its own findings
on the primary facts which are to be taken into account by the Commissioners
when exercising their powers regarding restoration of goods. The finding of
facts includes blameworthiness, the intended use for the excise goods:
private, not for profit or commercial, the proportionality of the penalty
imposed to the policy aims pursued having full regard to the individual
circumstances of the case and exceptional hardship. The Tribunal, however, has
no fact finding jurisdiction for the purpose of challenging the legality of
the seizure and forfeiture of the goods. The Tribunal will then apply its
findings of fact to determine whether the Commissioners acted reasonably in
refusing restoration.
- The recent Court of Appeal decision in Gascoyne
v Customs and Excise Commissioners [2005] 2 WLR 222 has ruled that the Tribunal in restoration proceedings should not
revisit the facts necessary to establish the legality of the seizure or
forfeiture, such as, whether the excise goods were acquired for personal use.
The effect of this ruling is relaxed when there has been no condemnation
proceedings before the magistrates' court, in which case it may be open to the
Tribunal to revisit the facts pertinent to the legality of the forfeiture and
seizure provided the Tribunal is satisfied that it will not be an abuse of
process. The Respondents did not raise "the abuse of process argument" at the
hearing. The Appellant did not pursue the route of condemnation proceedings
before the magistrates. Thus there had been no previous finding about whether
the excise goods had been bought for private or commercial use. Also the
Appellant was advised by the Treasury Ministers and the Parliamentary
Ombudsman to pursue an Appeal before the VAT and Duties Tribunal.
The Facts found by the Tribunal
- The Respondents accepted that the Appellant
purchased the cigarettes and the cigars, whilst his son bought the hand
rolling tobacco. The beer was shared between them. The quantity of cigarettes
and cigars imported were within the guidelines indicative of own use. The
amount of beer imported at 234 litres was slightly over the 110 litres
multiplied by two for the Appellant and his son, not as Mr Morgan suggested
exceeding the guideline by two times. The quantity of hand rolling tobacco was
twelve times the guideline as at 21 May 2001 but four times the amended
guideline of three kilograms introduced from 1 December 2002.
- We were satisfied on the evidence that the
Appellant had not sought to deceive the Customs Officer about the frequency of
his previous trips to the Continent. We accepted his explanation that he
interpreted the Officer's question as asking about the number of previous
trips in 2001, in which case he gave a truthful answer. We placed no weight on
his initial denial about seeing Notice 1 before. He readily accepted that he
had seen the Notice when interviewed. We considered that the overall tenor of
his interview with the Customs Officer was cooperative and open with his
responses. The Appellant took the trouble through his solicitor to provide the
Respondents with a detailed breakdown of his journeys abroad in the previous
12 months and the amounts spent on excise goods. This information was
supported by documentary evidence in the form of credit card statements, which
was made available to the Respondents on request.
- We were satisfied from the Appellant's evidence,
in particular the amount spent on each trip, that he travelled about every
four weeks to France and Belgium for the principal purpose of buying beer for
consumption by himself and his immediate family. In addition he would buy
about one thousand cigarettes for himself, his wife and his brother who would
reimburse him at cost. These purchases were within the indicative guidelines
set out in "the Regulations" for determining own use. We considered that the
Appellant had the means to afford the expenditure and that he secured
significant savings from his purchases abroad. We disregarded Mr Morgan's
assertion that the Appellant had applied for Disability Living Allowance
because it was strongly disputed by the Appellant and not supported by
documentary evidence. The amounts purchased were consistent with the
Appellant's stated rates of consumption.
- We, therefore, concluded that the Appellant's
purchases on 21 May 2001 followed his existing pattern of purchasing beer and
cigarettes for use by himself and his family with his brother recompensing the
Appellant at cost.
- We found the evidence of the Appellant's son, Mr
Richard Brookes unconvincing. He was unclear about the details of recent
purchases of excise goods. During the interview with the Customs Officer he
stated that his last purchase abroad was six packets of 200 cigarettes each.
Mr Morgan believed that this purchase took place at the beginning of March
2001 and preceded a more significant purchase with a friend on 18 March 2001
of 5,000 cigarettes and a half kilogram of hand rolling tobacco. Mr Richard
Brookes did not challenge Mr Morgan's statement; instead he suggested that he
had simply gone along with his friend to increase the amount of excise goods
that his friend could import within the guidelines. We did not accept his
explanation particularly as Mr Richard Brookes was the driver on the 18 March.
- His purchase of 12 kilograms of hand rolling
tobacco did not fit in with his previous purchasing pattern. Previously he had
not imported significant quantities of hand rolling tobacco even though his
partner apparently smoked tobacco. Mr Richard Brooke's justification for
bringing in such a large quantity was that he recently started to smoke hand
rolling tobacco and that the said quantity had been significantly discounted.
Mr Richard Brookes, however, knew that the quantity of 12 kilograms was
obviously too much and that he and his partner would not smoke that quantity.
The price paid for the tobacco of £488 was a substantial outlay against his
weekly wage. He told the Tribunal that it was affordable because his partner
was working as a Prison Escort Officer at the local Magistrates' Court,
however, he failed to mention this fact to the Customs Officer and when
pressed in cross examination he stated that she only started work there in
April or May 2001. We are satisfied from the evidence that Mr Richard Brookes
imported the hand rolling tobacco for the purpose of selling on at a profit.
Was the Non Restoration Proportionate?
- Mr Morgan concluded that the Appellant and his son
were both involved with the importation of excise goods for the purposes of
selling them at a profit, in which case it was unnecessary for Mr Morgan to
carry out a detailed analysis of whether the non-restoration of the motor
vehicle was a proportionate response. We have a reached a different conclusion
from Mr Morgan in that the Appellant was importing excise goods for his own
use or to be given to his brother at cost, whilst his son was importing the
tobacco to make a profit. In those circumstances we consider that it is
necessary to re-examine the proportionality of the non restoration of the
motor vehicle against the facts found by the Tribunal. We accept that this
analysis is not required for the forfeiture and the seizure of a motor vehicle
because of the wording of section 141 Customs and Excise Management Act 1979.
This Tribunal, however, is not concerned with forfeiture but with the
Respondents' discretionary powers of restoration under section 152(b) of the
1979 Act. The exercise of those powers demands a deeper analysis of the
precise extent of the Appellant's culpability, if indeed he is culpable from
our findings, and the relationship of that analysis to the full range of the
Respondents' powers under section 152 of the Customs and Excise Management Act
1979.
Was the Respondents' Review decision
Reasonable?
- We have found that the Appellant was importing
excise goods for his own use; however, his son who was travelling with him was
importing tobacco for a commercial purpose. This finding is materially
different from Mr Morgan's findings which may have an impact on the
Respondents' decision not to offer restoration of goods and in particular the
motor vehicle. We, therefore, conclude that the Review Officer's decision of 5
August 2004 was unreasonably arrived at within the meaning of section 16(4) of
the Finance Act 1994.
Our Decision
- In view of our finding that the Respondents'
decision of 5 August 2004 was unreasonably arrived at, we allow the Appeal. No
order for costs is made because the Appellant submitted no application despite
being invited to do so.
Orders
- We make the following orders pursuant to our
decision to allow the Appeal and in accordance with section 16(4) of the
Finance Act 1994:
a. The decision not to restore the Appellant's excise goods
and motor vehicle shall cease to have effect from the date of release of
this decision.
b. The Commissioners shall conduct a further review of the
decision not to restore the excise goods and motor vehicle and serve the
same on both the Appellant and the Tribunal within 30 days of release of
this Decision.
c. An Officer not previously involved with the case shall
conduct the further review.
d. The further review shall be on the basis of the Tribunal's
findings of fact as set out in paragraphs 26 to 32 of this decision and
shall consider whether restoration should be made in the form of
compensation and if so shall specify the amount of compensation and the
basis of the calculation.
e. The Review Officer shall take account of any further
material or representations made by the Appellant within 14 days from
release of this decision. The representations shall be made to HM Customs
and Excise, Review Team, Detection South Region, Crownhill Court, Tailyour
Road, Crownhill, Plymouth, PL6 5 BZ.
The Appellant will have a further right of appeal to the Tribunal if
dissatisfied with the outcome of the further review.
MICHAEL TILDESLEY
CHAIRMAN
Release Date: 22 February
2005
MAN/04/8098
