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	United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Prankl v Revenue & Customs [2008] UKVAT(Excise) E01113 (23 May 2008) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01113.html Cite as: [2008] UKVAT(Excise) E1113, [2008] UKVAT(Excise) E01113

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E01113

EXCISE DUTY – lorry stopped and found to contain 2.5m cigarettes – same driver doing the trip a week before in the same lorry for the same consignor and consignee – found to have carried cigarettes on the previous journey – no AAD – driver's story that he was instructed to return the lorry and load to Austria on the previous trip not accepted – whether the driver liable for the duty – yes

LONDON TRIBUNAL CENTRE

RALPH PRANKL Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

RAY BATTERSBY

Sitting in public in London on 12 May 2008

The Appellant did not appear and was not represented

Alan Payne, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION

1. Mr Ralph Prankl appeals against an assessment to excise duty of £389,847. The Apellant did not appear and was not represented; the Respondents ("Customs") were represented by Mr Alan Payne.
2. This appeal raises the issue of whether the driver of a vehicle illegally carrying excise goods into the United Kingdom is liable for the duty.
3. We heard evidence from the interviewing officer Mr Philip Chisholm and the reviewing officer Mr G A Wood and find the following facts:

(1) The Appellant was the Austrian driver of freight vehicle WB992BX with towing trailer PAC4965 which was stopped by Customs at Dover having arrived by ferry on 16 October 2005 and found to contain 2,530,000 cigarettes in plain brown boxes amongst a load of 10 pallets of honey biscuits and 20 pallets of laser copier paper. The consignor was stated to be FA Mondi, Fabrikstrasse 26, 4400 Linz, Austria (which is the address of an antiques auction house) and the consignee was stated to be "Business Birmingham, Birmingham, West Midlands, Abbass Grove, Yardley" (of which there is no known business, and the address, if it is Abbess Grove, is a residential address in a small cul de sac in Yardley). In the cab was a paper showing that the Appellant had worked for Eder Leopold Transport and Entsorgung since 14 October 2005. On 6 February 2006 the Appellant pleaded guilty of being knowingly concerned in the fraudulent evasion of duty and was sentenced to 18 months imprisonment. On 24 April 2006 a deportation order was made against him.

(2) During an interview (through an interpreter) with Customs on 17 October 2005, at which he was represented by a solicitor, the Appellant initially stated that he had last been in the UK three or four months previously, and then said that he began working for Mr Eder on 7 (and not on 14 as stated in the paper in he cab) October 2005, and had been in the UK on 9 and 10 October 2005. He had been engaged in response to a newspaper advertisement, that he had not agreed his remuneration but understood that he would receive the statutory amount for that work (7 euros per hour). He said that he had not met Mr Eder but only spoken to him on the telephone. He said that he was told on the telephone to pick up the same lorry as he was driving on 16 October 2005 on 9 October 2005 in Ansfelden, Austria. The keys were left on top of one of the wheels and inside the cab was 600 euros for the expenses of the trip. On that trip he was given a document stating that he had started work for Mr Eder on 7 October 2005, and a CMR showing the same consignor and consignee as on the 16 October 2005 trip and that the goods consisting of paper only. He said that when he was at the service station before Birmingham at which he was taking a rest he was telephoned by Mr Eder saying that the load was incorrect and that he was to return to Austria, which he says he did. He rewrote the CMR for the return journey. Mr Chisholm put it to the Appellant in the course of the interview that Leopold Eder was a livestock business primarily involving farm animals, which would not have been transporting either the stated goods of cigarettes. (We make further findings of fact below about whether we accept any of these statements by the Appellant.)

(3) Not having sufficient evidence to include the trip on 9 and 10 October 2005 in the prosecution, Customs assessed the Appellant on 10 February 2006 under s 12(1) and 12(2A) of the Finance Act 1994 to excise duty of £389,847.

(4) Some of the correspondence from the Appellant to Customs is in English but he may have been received help with this. More recent correspondence has been in German and Customs have replied in German.

4. The Appellant, as stated above, did not appear and was not represented. In view of the deportation order against him we understand that he would not have been permitted to enter the UK without making an application for it to be temporarily waived in order for him to take part in this appeal. Customs have written to him in German requesting confirmation that he intended to continue with the appeal on 13 September 2006, 30 November 2007, 21 February 2008 and 28 April 2008, without receiving any replies. Has he replied they would have arranged for the Appellant to give evidence by video conference. Although the notice of the hearing date was sent to the Appellant by the Tribunal in English the date is referred to in Customs' last two letters. We consider that he Appellant has been made aware of the proceedings. We agreed under rule 26(2) of the VAT Tribunals Rules 1986 to hear the appeal in his absence.
5. Section 12 of the Finance Act 1994 provides:

12 Assessments to excise duty

(1)     Subject to subsection (4) below, where it appears to the Commissioners—

(a)     that any person is a person from whom any amount has become due in respect of any duty of excise; and

(b)     that there has been a default falling within subsection (2) below,

the Commissioners may assess the amount of duty due from that person to the best of their judgement and notify that amount to that person or his representative.

(1A)     …

(2)     The defaults falling within this subsection are—

(a)     any failure by any person to make, keep, preserve or produce as required or directed by or under any enactment any returns, accounts, books, records or other documents;

(b)     any omission from or inaccuracy in any returns, accounts, books, records or other documents which any person is required or directed by or under any enactment to make, keep, preserve or produce;

(c)    …

(2A)     In subsection (2)(a) and (b) above "enactment" includes directly applicable Community provision.

Regulations made under s 1 of the Finance (No.2) Act 1992 may make provision specifying the person on whom the liability to pay the duty is to fall at the excise duty point.

6. The Excise Goods (Accompanying Documents) Regulations 2002, which are made under s 1 of the Finance (No.2) Act 1992, provide:

1(1)     In these Regulations—

"excise goods" means goods (other than chewing tobacco) of a class or description subject to any duty of excise;

"Community provisions" means, subject to paragraph (2) below—

(a)     in the case of accompanying administrative documents the provisions set out in Articles 1, 2 and 2a of Commission Regulation (EEC) No 2719/92 including the instructions concerning completion and the procedures for use mentioned in Article 1,

(b)     in the case of simplified accompanying documents the provisions set out in Articles 1, 2, 3, 4 and 5 of Commission Regulation (EEC) No 3649/92 and the explanatory notes set out on the reverse of copy 1 in the Annex;

16 Simplified accompanying documents for imports

Imported excise goods must be consigned—

(a)     to the person shown on the simplified accompanying document as the recipient, or

(b)…,

and must at all times be accompanied by a simplified accompanying document that complies with the Community provisions.

Regulation 16 (which is contained in Part V of the Regulations) applies to goods on which excise duty has been paid in a member state:

20 Obligations of owners and transporters

(1)     Every owner and every transporter of excise goods to which these Regulations apply must ensure, so far as it is in his power to do so, that the Community provisions are complied with at all times.

(2)     Every transporter of excise goods to which these Regulations apply must, whilst the goods remain in his custody or under his control, produce or cause to be produced to an officer any accompanying administrative document or simplified accompanying document and any certificate of payment that is required to accompany the goods when required to do so.

(3)     This regulation also applies to—

(a)     any person who undertakes the carriage of excise goods who is not shown as the transporter in the accompanying administrative document or simplified accompanying document, and

(b)     the driver of any vehicle in which the goods are being carried,

as it applies to the transporter.

21 Excise duty point

(1)     The excise duty point for excise goods to which these Regulations apply and in respect of which there has been a contravention described in paragraph (2), (3), or (4) below is the time specified in paragraph (5) below.

…

(4)     For the excise goods to which Part V above applies (imports not under Community duty suspension arrangements) the contraventions are—

(a)     contravention of or failure to comply with regulation 16 above (simplified accompanying documents for imports);

(b)     contravention of or failure to comply with regulation 17(1) above (simplified accompanying documents for imports—supplementary provisions);

(c)     contravention of or failure to comply with the Community provisions;

(d)     delivery of the goods to a place other than the place for delivery specified in the simplified accompanying document; and

(e)     failure by the recipient to comply with regulation 18 above (receipt of excise goods).

(5)     The excise duty point is—

(a)     [relates to goods removed from a excise warehouse]

(b)     in any other case, the time the excise goods were imported.

Part V is applicable here.

22 Payment

(1)     Subject to paragraphs (2) to (4) below, the person liable to pay the excise duty at the excise duty point is—

(a)     …

(c)     for excise goods to which Part V above applies (imports not under Community duty suspension arrangements), the person shown as the recipient in the simplified accompanying document.

…

(4)     Any person whose conduct caused a contravention described in regulation 21 above so that there was an excise duty point is jointly and severally liable to pay the excise duty at that excise duty point with the person specified in paragraph (1) or (3) above.

7. In summary, if the goods on the vehicle included cigarettes (which would have required the importer to be a registered excise dealer and shipper, which was not the case here) there was an obligation to carry a simplified accompanying document ("AAD") which declared the quantity of cigarettes and stated the true consignee; the driver is responsible for compliance with these Community provisions so far as it is in his power to do so; and the contravention caused an excise duty point. We believe that this makes the driver liable to a civil penalty under regulation 25 of the Excise Goods (Accompanying Documents) Regulations 2002, but so far as we are aware none has been imposed. Section 12(2A) of the Finance Act 1994 includes directly applicable Community provisions in the requirements for making documents, and accordingly this failure to comply with the Community provisions is a default within s 12(1)(b). For the Appellant to be assessed Customs also need to show that the Appellant "is a person from whom any amount has become due in respect of any duty of excise" within s 12(1)(a). Although this was not dealt with in Customs' Statement of Case, reg 22 makes the recipient shown in the AAD (which did not exist because the goods were declared as paper), and also makes jointly and severally liable "any person whose conduct caused a contravention described in regulation 21 above so that there was an excise duty point."
8. The Appellant contended in correspondence:

(1) He returned with the load on the trip of 9 and 10 October 2005 and did not deliver any cigarettes in the UK. It was not his business whether it was commercially viable to have done so.

(2) He never visited the address of the consignee and did not know whether it was false.

(3) The report showing that Leopold Eder was a livestock business was incorrect, and he produced an official paper showing that Eder-Leopold was an authorised haulier.

9. Mr Payne contends:

(1) Imported excise gods must be accompanied by an AAD. The driver is responsible for complying with this regulation.

(2) The Appellant failed to produce the AAD to Customs.

(3) None of the Appellant's statements that he had never met anyone from his employing company, had not agreed the rate of remuneration, he had returned to Austria with the goods, were credible. He initially lied about the date of the his previous trip to the UK, and the paper that he started work on 14 October 2005 was false and designed to cover up the existence of the trip and his involvement with it.

(4) The haulier shown on the CMR is Eder Leopold, which is not a transport business but a livestock business. The consignor's address was false. The consignee, Business Birmingham, did not exist and the address was not that of a business.

(5) The Appellant should not have written a new CMR for the return journey.

10. The question for us is whether the Appellant is liable to be assessed under the above provisions. We make the following inferences of fact:

(1) The Appellant travelled on 9 and 10 October 2005 with goods stated to be paper for the same consignor and consignee as on 16 October 2005, but he had a document saying that he had been working for Mr Eder only since 14 October 2005 (when he had in fact been working for him since 7 October 2005), and he said that he had not been in the UK for three months, he (and whoever he was working for) was trying to cover up the trip on 9 and 10 October 2005. His explanation that he did not want to make it worse, but he was unable to explain how, if the trip was an innocent one, lying about these made anything worse.

(2) That the load on 9 and 10 October 2005 included the same quantity of cigarettes as on 16 October 2005, and that those cigarettes had paid excise duty in Austria. Since the Appellant pleased guilty to being knowingly concerned in the fraudulent evasion of duty on 16 October 2005, he also knew that the goods he was carrying on 9 and 10 October 2005 were cigarettes. He was not carrying an AAD.

(3) We do not believe the Appellant's explanation of how he took charge of the lorry. The owner of the cigarettes would not, in our view, have left the keys on the wheel or money for the expenses insider the cab without meeting the Appellant. Nor do we believe how the Appellant came to be employed or the terms of his employment. Since he knew he was involved in smuggling we doubt if he would have agreed to work for the minimum wage.

(4) We are unclear who owned the lorry, which has since been seized and forfeited. If Customs are right that Eder Leopold was a livestock business primarily involving farm animals, the owner, and consequently the person actually employing the Appellant, may have been someone else.

(5) On the Appellant's explanation that he was told to return with the goods without delivering them on 10 October 2005, we are unable to accept the truth of this statement in the light of the Appellant's covering up the existence of the trip on 9 and 10 October 2005 and his having the paper showing that he started work for Mr Eder on 14 October 2005 which must have been created to help cover up his involvement with the trip. We are unhappy that Customs did not produce the ferry details for both journeys which we understand would have included the weight of the lorry on each journey, which might have provided evidence of whether the Appellant's explanation could be true. No documents from the Appellant regarding the 9 and 10 October 2005 consignment was available to the Tribunal. But on the balance of probabilities we infer that the Appellant drove the lorry to an unknown place in the UK where the cigarettes were unloaded.

(6) Although Customs contended that the Appellant should not have written a new CMR for the return journey we are not sure that this is correct and when put to Mr Chisholm he was not sure about it, although had in other cases seen a CMR endorsed to say that the goods had been refused. Accordingly we leave this point out of account.

11. We conclude, therefore, that the cigarettes entered the UK domestic market on 9 and 10 October, illegally, without payment of duty and would not have complied with the required procedures and documentation for such excise goods. We also conclude that the Appellant is liable to pay the assessment issued to recover the unpaid duty.  Equally, the calculations for the assessment based on the amount of cigarettes recovered from the 16 October 2005 consignment were soundly based.
12. Accordingly we dismiss the appeal.
13. Customs have offered to translate this decision into German and to send the translation to the Appellant. Since this is a decision made in the Appellant's absence that under regulation 26(3) of the VAT Tribunal Regulations 1986 he has 14 days from the date of release of this Decision to apply to set it aside, we direct that 28 days be substituted for 14 days and that the time shall not start to run until Customs send a translation of this decision in German to the Appellant. We request that Customs also send a copy of the translation to the Tribunal so that the date from which time runs is known.

JOHN F AVERY JONES

CHAIRMAN

RELEASE DATE: 23 May 2008

LON/06/8040