McColl v Customs & Excise [2003] UKVAT(Excise) E00457 (30 July 2003)

	EXCISE DUTY — importation of cigarettes in excess of Mils — whether for Appellant’s own use or commercial — reasonableness of the Commissioners’ decision not to restore — appeal allowed

MANCHESTER TRIBUNAL CENTRE

 
 	
	LYNDA McCOLL	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Lady Mitting (Chairman)
						Mrs M Crompton	

Sitting in public in Manchester on 13 May 2003

The Appellant appeared in person
Miss L Clarke of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2003

DECISION

1.	This is an appeal by Mrs Lynda McColl against the decision of the Commissioners, taken on review, dated 25 June 2002 not to restore to her tobacco products seized from her on 11 March 2002.

2.	The Commissioners had carried out a further review voluntarily and not at the behest of Mrs McColl, the result of which was notified to Mrs McColl by letter dated 27 February 2003.  Miss Clarke contended that this decision was the one under appeal as it had had the effect of quashing the earlier review.  We did not accept this contention as the second review was carried out outside the statutory framework for reviews and appeals against review decisions as set out in Sections 14 to 16 Finance Act 1994.  Miss Clarke accepted our view and the case proceeded as an appeal against the original decision of 25 June 2002.

3.	We heard oral evidence from Mrs McColl and from Miss J M Logan, senior officer of HM Customs and Excise.  The Facts are as follows:

4.	On 11 March 2002, Mrs McColl and three friends with whom she was travelling were stopped at Manchester Airport.  They were returning from Spain.  Mrs McColl was found to be carrying 13,980 cigarettes and 50 cigars.  Mrs McColl agreed to be interviewed and in answer to questioning gave the following material answers:
-    The cigarettes were for Mrs McColl, her husband and her son who still lived        at home
-	They had cost approximately £13 per carton of 200 and she had spent some 1,470 euros on them
-	She had been on sick leave until the previous Tuesday and was due to go back to work after completing her holiday leave
-	She smoked 25 to 30 cigarettes per day, her husband smoked 20 per day and the cigarettes were expected to last up to 12 months
-	Mrs McColl took home approximately £300 every fortnight and her husband £400 to £450 per week.  She had £4000 in savings and used her savings for her trip which cost £239 half board
-	She had travelled abroad the previous month, February to Benidorm, bringing back 400 cigarettes and in January to Tenerife bringing back 200 cigarettes which had lasted some 3 weeks.
-	She had been unaware when she visited Benidorm that she could bring back more then 400 cigarettes.

5.	Certain answers which were given assumed a rather greater significance and we therefore quote those verbatim 

Q.	Did they give you the money for them?
A.	Yes, well – it’s our money
…

Q.	Who do the cigarettes belong to?
A.	Myself, my husband and my son
…

Q.	How much did your son give you towards the cigarettes?
A.	He gives me £30 per week.  I have been saving £10 per week of that for him

Q.	How much have you saved for him in total
A.	£100 approximately
…

Q.	How many cigarettes will you give to your son
A.	I will just give them to him when he needs them.  If I give them to him at once he would just smoke them.  By rights I should really give him 10 boxes.

6.	 Mrs McColl signed the officer’s notebook.  The officer then seized the cigarettes giving as his reasons for so doing:
1.	Excess Mils
2.	Previous regular trips
3.	Unreasonable to suggest large amounts of cigs not brought back on previous trips
4.	Money received towards purchase price
5.	Goods for non-entitled persons non travellers

7.	By letter dated 13 March 2002 Mrs McColl applied to the Commissioners for the return of the seized goods.  In her letter she said that “No monies have, or will, change hands for these goods”.  She went on to say that there was no intention to make any profit from the goods and that she and her husband had “paid for this break and the goods personally”.  She explained she had been on paid sick leave for the previous eight or nine months but had just been signed off as fit to return to work although she had to use her outstanding holiday entitlement by the end of April.  Her husband had earned £22,000 during the year and she had been able to save.  She would give some cigarettes to her son and her husband’s son and daughter both of whom “get treated”.  She closed by stating that the cigarettes were for her own use and they were not “profit making goods”

8.	By letter dated 18 April the Commissioners refused restoration and by letter dated 11 May Mrs McColl requested an independent review reiterating that no money had changed hands before or after the trip.

9.	This review was carried out by Miss Logan who had before her the notes of interview and Mrs McColl’s correspondence.  In her letter of review Miss Logan summarised the answers given to the seizing officer, explained that although each case was examined on its merits to determine whether or not restoration may be exceptionally offered, it was general policy that seized goods would not be restored.  She took the view that restoration was not appropriate giving as her reasons that first, one of her co-travellers, her cousin, Mrs Sullivan, had had a similar quantity of cigarettes seized from her and that she likewise had  been to Tenerife in January and Benidorm in February and on each occasion stated that she had brought back similar quantities.  Secondly, Mrs McColl had not submitted any evidence in support of her earnings and savings.  Thirdly, she was a regular smoker and traveller having travelled abroad 3 times in 3 months.  It was therefore difficult to believe that she was unaware of the quantity of excise goods which could be imported for own use, especially as Mrs Sullivan had been aware of this when she went to Benidorm.  Fourthly, although she now denied having received any payment for the cigarettes she did in fact tell the officer on two occasions that she had received payment.

10.	In her evidence to us Mrs Logan confirmed that she still held to the view that she had expressed in her letter and she had learned nothing to change her mind.

11.	Mrs McColl, in her evidence, clarified certain of the answers she had given to the seizing officer.  She explained that her son, Lee, was 20 years old and lived at home, paying his mother £30 per week for his board.  Unknown to Lee, Mrs McColl had, since the New Year, been putting to one side out of this payment £10 per week, her intention being to save it and apply it at some stage in the future for Lee’s benefit.  On this trip she decided to use the accumulated fund of £100 for cigarettes for Lee, although he did not know this.  When she said that she should give Lee “by rights 10 boxes”, she was meaning that this was approximately what the fund would buy.  She confirmed that she had been abroad several times over the past few months, something she could afford because she was being paid whilst off sick.  She was however returning to work and also due to go into hospital again.  It would therefore be a long time before she would be travelling again – hence her wish to stock up with cigarettes to last herself and her husband for a number of months.

12.	Miss Clarke submitted that Mrs McColl’s cigarettes were not solely for her own use but also for her husband and her son who had not travelled with her and in the case of her son, money had changed hands, thus making the importation commercial in nature.  She highlighted inconsistencies in Mrs McColl’s answers to the seizing officer, saying that she smoked 25 to 30 cigarettes per day where as the 200 cigarettes brought back from Tenerife lasted 3 weeks which would only be 10 per day.  She was a frequent traveller and it was not therefore credible that she would bring back such small quantities on her two previous trips and such a large quantity now.

13.	At the time of the seizure and the review decision, the Excise Duties (Personal Reliefs) Order 1992 provided that a traveller bringing excise goods into the UK in quantities in excess of a minimum indicative level had to satisfy the Commissioners that the goods were for own use, “own use” being defined as
“own use includes use as a personal gift provided that if the person making the gift receives in consequence any money or money’s worth (including any reimbursement of expenses incurred in connection with obtaining the goods in question) his use shall not be regarded as own use for the purpose of this Order.”

14.	If the traveller failed to so satisfy the Commissioners the goods were treated as being held for a commercial purpose and UK duty became payable on them.  At the time the limit for cigarettes was 800 and for cigars 200.  Following the decision in Regina (Hoverspeed Limited) v Customs and Excise Commissioners [2002] 3WLR 1219, the Commissioners have accepted that in fact the burden should be upon them to satisfy themselves that goods are held for a commercial purpose.

15.	Miss Logan, in her review letter, stated:
“It is for me to determine whether the decision you are contesting is one that a reasonable body of Commissioners could not have reached … because of the volume of excise goods you were importing you were required, under the Excise Duties (Personal Reliefs) Order 1992, when asked to do so, to satisfy the officer that the goods were for own use and rebut the statutory presumption of commerciality”

16.	It is clear from this that Miss Logan’s approach on her review was flawed in that she applied what is now accepted to have been the wrong burden of proof.  This cannot be taken as a criticism of Miss Logan as she followed the accepted law at the time.  Miss Logan also incorrectly stated in her review letter that it was for her to determine whether the decision was one that a reasonable body of Commissioners could not have reached.  This is of course not the test for the reviewing officer but it does not in fact appear to us that it was in any event the test applied by Miss Logan.  In our view she reviewed the case with some care and brought a fresh mind to it.  She set out at length the factors she was taking into account, her reasoning and her conclusions.

17.	We have to say that we share her reservations about Mrs McColl’s assertion that she had previously been unaware of the rules of importation.  However, in all other respects we accept the evidence given to us on oath by Mrs McColl.  First, as Mrs McColl told the interviewing officer she had been on sick leave but was due to go back to work.  She expanded on this in her letter of 3 March to the effect that her sick leave had been long term and had been paid.  Both of these factors had enabled her to travel frequently, bringing back smallish quantities on each occasion.  This trip would be her last for some time and in fact had been planned before the previous one.  It was not therefore difficult to understand the vast difference in amount imported.

18.	Secondly and most importantly however, we believe that Miss Logan misunderstood the position with regards to Mrs McColl’s son, Lee.  Miss Logan said in her letter “the officer asked you twice about  money being received for the goods and on both occasions you confirmed that money was received”.  It will be seen from our earlier
verbatim description of the questions and answers that this was not quite accurate.  Mrs McColl said that the money was “our money”.  The second answer which Mrs McColl gave to the officer, also referred to above, was summarised by Miss Logan in her review letter as “you confirmed that they gave you money for the cigarettes and explained that your son gives you £30 per week out of which you save £10 per week for him for cigarettes.  You took approximately £100 of his money with you for cigarettes.”  This is a somewhat distorted summary of what was said and meant.  Mrs McColl did not say she was saving £10 a week for him for cigarettes or that she took £100 of his money.  To Mrs McColl, the money she spent on the cigarettes was “ours” because it came from the joint account held by herself and her husband.  The £10 per week saved from Lee’s board was not Lee’s money, it was in every respect Mrs McColl’s money.  She had mentally earmarked £10 per week of it to be saved and held towards buying Lee something special.  This does not make the money Lee’s.  It does not mean he paid her for the cigarettes.  The cigarettes were, in our view, a gift from Mrs McColl to her son, bought out of money that was clearly Mrs McColl’s by right.  We find that no element of this purchase was commercial.

19.	The test which we the tribunal have to apply is whether the decision not to restore was one which no reasonable body of Commissioners could have reached.  We find that in reaching her decision, Miss Logan made errors which rendered the decision fatally flawed and thus unreasonable.  The incorrect burden of proof was applied; insufficient regard was had to Mrs McColl’s explanation in her letter of how the purchase was afforded and thirdly Miss Logan incorrectly took the purchase for Lee as being paid for by him out of money provided for the purpose by him.

20.	For these reasons we allow the appeal and in accordance with our powers under Section 16(4) Finance Act 1994, we direct the Commissioners to carry out a further review which shall take account of our findings and our conclusion that the cigarettes were not held for a commercial purpose.  The review shall be carried out within 6 weeks of the release of this decision by an officer who has had no previous involvement with the case.

LADY MITTING
CHAIRMAN
RELEASE DATE:

MAN/02/8160