Excise goods – Tobacco products – Whether for personal use – Appeal dismissed

LONDON TRIBUNAL CENTRE

	ADRIAN M POWDRILL	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	MISS J C GORT  (Chairman)
						MR G MILES

Sitting in public in Cardiff on 9 September 2003

The Appellant appeared in person

Miss K Sawyer of counsel, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	This is an appeal against a decision of the Respondents contained in a letter dated 6 October 2002 upholding upon review a decision not to restore excise goods which were seized from the Appellant on 27 May 2002. 

The legal framework

2.	Council Directive 92/12/EEC lays down the general arrangements for products in the European Union which are subject to excise duty and for the holding, movement and monitoring of such products. 

3.	Article 7 of the Directive provides that in the event of excise goods already released for consumption in one Member State being held for a commercial purpose in another Member State, the excise duty shall be levied in the Member State in which those products are held.

4.	There is an exception to that rule in the case of products acquired by private individuals for their own use and transported by them from one Member State to another.  Article 8 of  the Directive provides:

Article 8

As regards products acquired by private individual for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the Member State in which they were acquired.”

5.	Article 9 of the Directive provides:

“1.	Without prejudice to articles 6, 7 and 8, excise duty shall become chargeable where products for consumption in a Member State are held for a commercial purpose in another Member State.

In this case the duty shall be due in the Member State in whose territory the products are and shall become chargeable to the holder of the products.

2.	To establish that the products referred to in article 8 are intended for commercial  purposes, Member States must take account, inter alia, of the following –

-	the commercial status of the holder of the products and his reasons for holding them,
-	the place where the products are located or, if appropriate the mode of transport used,
-	any documents relating to the products,
-	the nature of the products,
-	the quantity of the products.

For the purpose of applying the fifth indent of the first subparagraph, Member States may lay down guide levels, solely as a form of evidence.  These guidelines may not be lower than –

(a)	Tobacco products

Cigarettes 800 items, cigarillos (cigars weighing not more than 3g each) 400 items, cigars 200 items
Smoking tobacco 1kg.”

6.	The Excise Duties (Personal Reliefs) Order 1992, S.I. 1992/3155 (as amended) provides:-

2.	Interpretation 

In this Order –

…

“Own use” includes use as a personal gift provided that if the person making the gift receives in consequence any money or moneys worth (including a reimbursement of expenses incurred in connection with obtaining the goods in question) this use shall not be regarded as own use for the purpose of this Order.

…

“Shuttle train goods” has the meaning given in article 2 of the Channel Tunnel (Alcohol, Liquor and Tobacco Products) Order 2000;

…

3.	Relief from duty of excise – cross-border shopping

Subject to the provisions of this Order a Community traveller entering a control zone or the United Kingdom shall be relieved from payment of any duty on excise goods which he has obtained for his own use in the course of cross-border shopping and which he has transported.

3A.	Relief from duty of excise – conditions – Shuttle train goods

(1)	In relation to shuttle train goods, this article shall have effect for the purpose of determining whether relief has been treated as having been afforded under article 3 above.

(2)	No relief shall be treated as having been afforded if the goods are held for a commercial purpose.

(3)	Where the Shuttle train goods exceed any of the quantities shown in the Schedule to this Order the Commissioners may require the person holding the goods to satisfy them that the goods are not held for a commercial purpose.

(4)	In determining whether or not any person holds Shuttle train goods for a commercial purpose regard shall be taken of the factors listed in subparagraph (a)-(j) 5(2).

(5)	If the person holding the goods is required so to do but fails to satisfy the Commissioners that he does not hold them for a commercial purpose, it shall be presumed that the goods are held for a commercial purpose.

(6)	Where the person holding the goods so fails to satisfy the Commissioners that he does not hold them for a commercial purpose, but the purpose of any proceedings instituted in accordance with paragraph 8 of Schedule 3 to the Customs and Excise Management Act 1979 or any appeal under section 16 of the Finance Act 1994, his failure shall cause goods to be treated as “goods held for a commercial purpose” and, accordingly, section 154(2) of the Customs and Excise Management Act 1979 shall apply.

5.	Relief from duty of excise – conditions

(1)	The reliefs afforded under this Order are subject to the condition that the excise goods in question are not held or used for a commercial purpose whether by the Community traveller who imported them or by some other person who has possession or control of them; and if that condition is not complied with in relation to any excise goods, those goods shall, without prejudice to article 6 below, be liable to forfeiture.

(2)	In determining whether or not the condition imposed under paragraph (1) above has been complied with, regard shall be taken of –

(a)	his reasons for having possession  or control of those goods;
(b)	whether or not he is a revenue trader;
(c)	his conduct in relation to those goods and, for the purposes of this sub-paragraph, conduct includes his intentions at any time in relation to those goods;
(d)	the location of those goods;
(e)	the mode of transport used to convey those goods;
(f)	any document or other information whatsoever relating to those goods;
(g)	the quantity of those goods;
(h)	whether he has personally financed the purchase of those goods; and
(i)	any other circumstance that appears to be relevant .

(3)	Paragraphs (3A)-(3C) below apply to a person who has in his possession or control any excise goods afforded for relief under this Order in excess of any of the quantities shown in the Schedule to this Order.

(3A)	The Commissioners may require a person to whom this paragraph applies to satisfy them that the excise goods afforded for relief under this Order are not being held or used for a commercial purpose.

(3B)	Where a person fails to satisfy the Commissioners that the excise goods in question are not being held or used for a commercial purpose the condition imposed by paragraph (1) above shall, subject to paragraph 3C below, be treated as not being complied with.

(3C)	Paragraph 3B above shall not apply where a court or tribunal is satisfied that the condition imposed by paragraph (1) has been complied with.

7.	At the relevant time the Schedule to the Order specified quantities of goods for the purposes of paragraph (3) of article 5 of the Order in line with article 9 of the Directive cited above.  Subsequently, that Order was revoked with effect from 1 December 2002 and the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 (S.I. 2002/2692) came into effect and the quantity of tobacco in excess of which would give an indication that the goods were held for a commercial purpose by article 4 was raised to 3kg and the amount of cigarettes was raised to 2200.

8.	The Customs and Excise Management Act 1979 (“CEMA”), provides:

49.	Forfeiture of goods improperly imported 

(1)	Where –

( c)	Any goods, being goods chargeable with any duty … are found, whether before or after the  unloading thereof, to have been concealed in any manner on board any ship or aircraft … 

those goods shall, subject to subsection (2) below, be liable to forfeiture

139.	Provisions as to detention, seizure and condemnation of goods, etc 

(1)	Any thing liable to forfeiture under the Customs and Excise Acts may be seized or detained by any officer or constable or any member of her Majesty’s armed forces or coastguard.

141.	Forfeiture of ships, etc used in connection with goods liable to forfeiture

Without prejudice to any other provision of the Customs and Excise Acts 1979 where any thing has become liable to forfeiture under the Customs and Excise Acts -

(a)	…
(b)	any other thing mixed, packed or found 

shall also be liable to forfeiture.

152(b)	Power of Commissioners to mitigate penalties, etc

The Commissioners may as they see fit –

(a)	stay, sist or compound any proceedings for an offence or for the condemnation of any thing as being forfeited under the Customs and Excise Acts; or
(b)	restore, subject to such conditions (if any) as they think proper, any thing forfeited or seized under those Acts.

9.	Section 14 of the Finance Act 1994 requires the Commissioners to carry out a review, in accordance with the procedure set out in section 15 of that Act, of any decision requiring the forfeiture of goods under the Customs and Excise Acts.

10.	Section 16 of the Finance Act 1994 provides that an appeal lies to the VAT Tribunal with respect to any decision by the Commissioners on a review under section 15 of the Act and the appeal will only be entertained if the Appellant himself required a review in question.

11.	Section 16(4) of the Finance Act 1994 provides:

“For powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the commissioners or other person making that 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; and
(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 the decision to have been unreasonable and to give directions to the commissioners as to the steps to be taken for securing that repetitions of the unreasonableness do not occur when comparable circumstances arise in future.”

12.	The jurisdiction of the Tribunal, being supervisory, is limited to an assessment of whether the Commissioners had acted reasonably.  The test of reasonableness is that of  “Wednesbury reasonableness”; to succeed the Appellant must show that the Respondents have acted in a way in which no reasonable body of Commissioners could have acted, that they have taken into account some irrelevant matter, or that they have disregarded something to which they should have given weight, or made some other error of law.

The facts

13.	Both parties provided bundles of evidence.  The Tribunal heard oral evidence from the Appellant himself, we did not hear from either the seizing officer, nor the reviewing officer.  Both these officers were present at the Tribunal but the Appellant did not dispute their evidence as contained in their witness statements, nor the factual matters contained in the review decision and did not wish to cross-examine them.  He contested the conclusions which were to be drawn from those facts.  

14.	On 11 May 2002 the Appellant was a passenger on a coach returning from Belgium when it was stopped by Customs.  He was found to be carrying the following excise goods:

4.5 kilogrammes Golden Virginia hand-rolling tobacco; 
2.5 kilogrammes Drum hand-rolling tobacco;
520 Gauloise cigarettes;
400 Superkings Lights cigarettes.

15.	On 27 May 2002 the Appellant was interviewed by Ms A J De Klerk, an officer of Customs and Excise, having attended voluntarily at Avonmouth Custom House. 

16.	The Appellant told the officer that he had purchased the goods in Belgium having travelled there on his own.  He had been abroad eight to ten times in the past year, sometimes on his own and sometimes with friends or with his girlfriend.  

17.	The Appellant also told the officer that he himself smoked, mostly Drum and Gauloise.  His girlfriend smoked Golden Virginia and Superkings.  He had spent about £350 on the tobacco which he had purchased, he did not normally spend that much but he was stocking up.  He had previously been abroad in March.  

18.	The Appellant’s income was given as being roughly £20,000 after tax, and his girlfriend was said to earn about £38,000.  (At the hearing the Appellant produced various documents which confirmed these levels of income, although he had failed to provide them to the Customs and Excise when asked to do so by the reviewing officer, Mr B M Wills.)  

19.	It was said by the Appellant to the officer that he usually brought back a third of what he had brought on this occasion because he was stocking up as he did not intend to go abroad again for a while.  In addition he said that the Superkings were a wedding present for someone called “Nikki”.  He also said that 1kg of tobacco was for a Christening present.  

20.	The Appellant knew that it was an offence to sell imported goods and he knew that excise goods were liable to duty.  He told the officer that he understood that the products had not got UK tax paid on them, but that they had been taxed in the country of origin.  He was also aware of the guidelines, and that, provided it was for your own personal use, you could bring back what you liked.  His girlfriend was not going to pay for any of the tobacco.  

21.	The Appellant said that he himself smoked the best part of a 50gram packet of hand-rolling tobacco per day, and smoked cigarettes only when he was driving.  His girlfriend smoked less than he did, smoking about three 50gram pouches of tobacco per week and 4-5 packets of cigarettes a week.  

22.	The Appellant had paid with a mixture of a credit card and cash, saying that there was a limit on how much would be accepted on the credit card.  He had previously travelled to Belgium in March and he had about 8 or 9 packs left from that trip.  On that occasion he had purchased round about 40-50 pouches.  

23.	Following the interview the Appellant was issued with a seizure notice and by a letter dated 25 June 2002 he wrote to the Commissioners stating inter alia as follows:

He was the retired General Sales Manager of a multi-million pound multi-national company, his partner was a senior technician in the NHS, and they had a joint income in the region of £60,000 per annum.  Both he and his partner were graduates and he spoke three languages fluently.  He doubted that this would be considered the typical profile of a tobacco smuggler.  

He suffered from spondulitis and was not able to drive long distances.  Accordingly he travelled to Europe to shop on coach trips but even on painkillers it was becoming too much to do this on a regular basis.  Before his last trip he decided he would not travel again for three months or so and accordingly purchased sufficient duty paid hand-rolling tobacco in Belgium to last until his next trip.  In addition he purchased some cigarettes as a practical and welcome wedding present for some friends who had been together for many years and already had a house and children.  Some of the hand-rolling tobacco was intended as a practical present for other friends who had just had a baby and consequently were reduced from two incomes to one with a concomitant cost of a new child to clothe and feed.  His partner was originally to have accompanied him but was called into work on an emergency.

He requested the return of his goods.

24.	By a letter dated 12 July 2002 the Appellant was informed that the goods were not being offered for restoration.  The Appellant wrote a letter dated 22 August 2002 requesting a review of the seizure.  In that letter he stated inter alia the following:

“(1)	The EEC Directive 92/12/EEC interpreted by Customs and Excise as maximum personal amounts are in fact the minimum amounts to be accepted for legitimate commercial activity.  There is in fact no upper limit for personal use.  As you should be aware this principle has been upheld in the recent Hoverspeed judgment.

(2)	There are many people of my age who smoke 45-50 cigarettes per day (i.e. one pouch hand-rolling tobacco) and I dispute how ADK can possibly assess my consumption contrary to my statement during a short interview in non-smoking building.

(3)	As you state I am aware of EEC, and now UK law and have not contravened it.  (Again Hoverspeed judgment refers).

(4)	To give credence to the subjective opinion of an unmarried, presumably childless and non-smoking young girl, about a situation she has never experienced is both not only prejudiced and ludicrous; it reflects very poorly upon the attitude of a public service towards those it is intended to protect and who pay for it.  It undermines the integrity of Customs and Excise that this opinion was not only accepted but upheld as a reason to deprive me of my goods.

(5)	As a retired person I have been a frequent traveller but not always to France or Belgium.  During the last twelve months I have spent time in Germany, Channel Islands and Ireland – hardly venues for cheap tobacco and wine.  My health is deteriorating to the extent I am unable to travel long distances and so purchased sufficient tobacco goods on this trip enable me to lengthen the time between holidays.  Are you really arguing that active retirees who have the time and inclination to take advantage of cheap holiday offers are all big time smugglers?  SAGA will be impressed!

In short I purchased tax paid goods for my personal use – you have no evidence otherwise.  In seizing my goods you acted illegally.  I demand them back together with a written apology from all concerned and compensation for the stress and expense this has caused me.”

25.	Mr B M Wills was appointed to review the seizure.  On 1 October 2002 Mr Wills wrote to the Appellant a letter in which he stated:

“In order to assist me to come to a fairer decision I am now writing to request documentary evidence of the joint income that you have quoted.  May I suggest the last twelve months’ pay slips, or your P60 forms to April 2002 and the monthly slips to date.”

26.	On 4 October the Appellant made two telephone calls to Mr Wills in which he, according to the Appellant’s own evidence to the Tribunal, told him where to go and “told him to get stuffed”.  He also told Mr Wills that the issue was not the £350 worth of tobacco, but his rights as a British citizen.  

27.	In his review letter Mr Wills took account of all the matters raised in the interview and in subsequent correspondence, as well as the contents of that telephone call.  Various factors had been taken account of by the officer who seized the goods as follows:

Large quantity of tobacco;

the quantity of tobacco purchased, which translated into over one pouch a day, the department recognised a rate of between 80 and 100 roll-ups cigarettes per pouch, and this would represent smoking “at an implausible rate each day”;

the Appellant had said he paid by cash and credit card because £350 cost exceeded the retailers credit card limit, this was considered to be an improbably low figure to exceed a credit card limit, as most credit card accounts permitted very much higher figure; cash was a feature of purchases made for commercial intention in spite of the inconvenience and risk of carrying the cash;

the tobacco was said to be for a christening present, christening presents were traditionally given to the infant, so tobacco appeared to be notably unsuitable (it was Mr Wills’ view that this statement was made to mislead the officer about his intentions and to disguise the intended commercial sale);

it was considered impossible that cheap, duty-free, imported tobacco goods would be given to a friend for such a significant event as their wedding and more probably this was a further means to justify the large amount of tobacco goods that the Appellant had, and to disguise the intended commercial disposal;

the Appellant had a multiplicity of brands of goods and a wide variety of brands was a feature of commercial importations, where appeal to a number of potential purchasers is important.

28.	Mr Wills took account of the emphasis laid by the Appellant on his high level of income and that of his partner, and was surprised that the Appellant had refused to give him evidence of that income.  He stated:

“In the light of your unwillingness or inability to do so I have had no alternative but to draw such inference as your foul language and refusal invites.  

Accordingly I have been unable to find any exceptional circumstances that warrant any change of policy.  I am satisfied that the decision not to restore your goods was reasonable and equitable in view of the volume of the tobacco, and that you were treated no more harshly nor leniently than anyone else in your position.”

The Appellant’s case

29.	The Appellant relied particularly on the contents of the two letters he had written to the Commissioners cited above.  He stated that he was not a liar and that he was being called a liar by the officer of Customs and Excise.  

30.	He insisted that he did not deal in tobacco and that he had not imported the products for a commercial purpose.  As previously stated, at the hearing he provided evidence of his and his partner’s incomes.  He submitted that this showed that he did not need to put his liberty on the line for a few kilogrammes of tobacco.

31.	It was his evidence that he obtained about 50 cigarettes out of a pouch of tobacco, not the 80-100 cigarettes which the Customs officer considered the appropriate amount.  He accepted that his partner smoked only half of what he did, and that he had bought more tobacco for her than for himself.  

32.	He told the Tribunal that his partner was a consultant haematologist.  She worked six days a week.  He accepted that she could not smoke on duty but claimed that she smoked a lot when she was off duty and that in the evening when they were out they would get through six packets of cigarettes and three bottles of wine in a couple of hours.

33.	The Appellant produced two letters, one from his partner and one from a Michael Hayman.  Neither of these people was available to give evidence to the Tribunal, nor had the letters been shown to the Respondents prior to the hearing.

34.	It is clear from the letter from the Appellant’s partner, Miss Sue Read, that the christening present was in respect of a christening of a friend of hers, and it was to be a present from her, rather than from the Appellant.  She says nothing in the letter about whether or not she was to pay the Appellant for this tobacco.  

35.	Mr Hayman wrote that he had been asked by the Appellant what he should give as a present to the “couple with everything”.  He had asked for some beer and some cigarettes `for Nicky’.

36.	The Appellant considered that there was no relevant British law, and that he had not transgressed any European law.  He relied on a news item in the Daily Telegraph about three heavy-smoking women who had had £2,300 worth of cigarettes and wine seized at Calais, which had been restored to them and who had received a total of £14,000 in compensation and costs for the wrongful seizure of their duty-free goods and their car.  He accepted that he had perhaps been over to buy tobacco three or four times in the year preceding the date on which he was stopped.   He informed the Tribunal that from Wales if he took his car it was a six-hour drive, and it was eight hours in the coach and he said: “This is not something you do for pleasure.”  However, he also said that on occasion he and his girlfriend stayed overnight.   He did not say how he had travelled on those occasions.

37.	The Appellant relied on the fact that his Passport was headed both “European Community” and “United Kingdom of Great Britain and Northern Ireland”.  He submitted that British law had been superseded by European law which entitled him to take goods freely between EC countries and that Community law was supposed to apply equally.  It was his opinion that the guidelines were not law.

38.	The Appellant also relied on the fact that the limits had in the interim been raised.  

The Respondents’ case

39.	Miss Sawyer accepted that following the Hoverspeed case the burden of proof was on the Respondents to show that the Appellant was bringing in the goods for a commercial purpose.  

40.	She submitted that, whilst it might be reasonable for the Appellant to bring in 2.5 kilos of Drum for his own use and also the Gauloises, representing three months supply, his explanations regarding the remaining 4½ kilogrammes of tobacco and the 400 Superkings Lights cigarettes were unconvincing.  He had considerably more than the accepted levels at the time and was still well in excess of the new guidelines.  

41.	The Appellant’s explanation that the tobacco was for a christening present was improbable.  It was also improbable that he would bring in a whole kilogramme more for his partner than for himself, when she only smoked half as much as he did.  Furthermore it was not credible that she smoked as much as he claimed, given that she works six days a week in an environment where she would not be able to smoke.  

42.	Because 4.5 kilogrammes were not for the Appellant’s own use, section 141 of CEMA provided a lawful basis for the seizure of the rest of the products.  It was then a matter whether or not the Commissioners should have exercised their discretion to remit the seizure.  

43.	Whilst the burden of proof was on the Respondents to show that the tobacco was being brought in for a commercial purpose, it was for the Appellant to show that the decision not to restore the goods was one which no reasonable body of commissioners could have arrived at.  The only power in the Tribunal was to make findings of facts, and in the light of them to judge the reasonableness of the decision of the Commissioners.  If the Tribunal were to find that the decision was unreasonable, they were limited to referring the matter back to the Commissioners for a further review.  It was accepted that if it were found that the products were for the Appellant’s own use, the Commissioners would have to take that into account on any further review.

Reasons for decision

44.	We accept the Appellant’s evidence that he obtains about 50 cigarettes from a pouch of tobacco, and that he smokes approximately one pouch of tobacco per day.  He is retired, and we do not consider this to be an unreasonably large amount.  

45.	We do not accept that the tobacco was purchased for a christening present, as he claimed to the officer.  Whilst the tobacco may have been purchased for his partner’s friend who had recently had a baby, as he later said, that is not the same thing as tobacco being purchased for a christening present.  We consider that the reviewing officer was perfectly entitled to take the Appellant’s first explanation, that it was a christening present, rather than his later explanation in his letter of 25 June 2002 that it was “intended as a practical present for other friends who had just had a baby and consequently were reduced from two incomes to one with a concomitant cost of a new child to clothe and feed.”  With regard to the reviewing officer finding it implausible that tobacco goods will be given to a friend for such a significant event as a wedding, we cannot say that it was unreasonable for him to take this view, even though the Appellant had subsequently explained that the people had been together for many years and already had a house and children.  

46.	We do not find that any of the matters which the reviewing officer took into account were matters which he should not have taken into account, nor do we find that he took account of any matters which he ought not to have taken account.

47.	We did not find the Appellant to be a witness of truth. He referred to his partner as a “consultant haematologist” in his evidence, whereas it is clear from the pay document which the Appellant produced that she is no such thing.  Her post is described as “medical laboratory scientific”, and her gross pay is £38,997.32.  If she were a consultant haematologist she would earn considerably more than that. Nor do we accept that he and his partner between them would smoke six packets of cigarettes in a couple of hours as he claimed.  We do not accept that he would have purchased more hand-rolling tobacco for his partner than he would for himself, given both the relative amount that each is said to smoke, and the amount of time available to his partner to smoke, given that she is said to work six days a week.

48.	We accept Miss Sawyer’s submissions and in all the circumstances we find that the Appellant was bringing in at least some of the tobacco products for commercial purposes and not for his own use and the Commissioners were therefore entitled to seize those goods and also the other tobacco goods which were for the Appellant’s own use which were found with them.

49.	Article 9 of Council Directive 92/12/EEC is clear authority for the Respondents’ right to charge duty on commercially imported products.  The UK legislation is made in accordance with that Directive.

50.	We accept the Respondents’ arguments that the decision not to restore the goods was reasonable and was properly made, and that they have discharged the burden of proof upon them to show that the importation was in part for a commercial purpose.

51.	This appeal is dismissed.

52.	No order for costs.

MISS J C GORT
CHAIRMAN

RELEASED:

LON/03/8069