EXCISE DUTY — Travel to France Spain and Belgium with companion each in a separate vehicle — import of substantial quantities of cigarettes and tobacco — finances and arrangements for trip considered — finance company owner of vehicle under hire purchase agreement — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	 ANDREW SMITH 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	Mrs E Gilliland (Chairman)
						Miss C A Roberts	

Sitting in public Manchester on 6 September 2002 

The Appellant in person

Mr J Puzey of Counsel instructed by the Solicitors office of HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2003

DECISION
1.	This is an appeal by Andrew Smith (the Appellant) against a decision of Commissioners on review not to restore to the Appellant the excise goods (the goods) comprising 7.5 kilograms of hand rolling tobacco 20,000 cigarettes 150 cigarillos 12 litres of beer 1 litre of brandy and 4.5 litres of still wine and a vehicle a Vauxhall Vectra registration number R598 CTX (the vehicle) seized from him on 11th January 2001.  
 2.	Since the hearing both parties to the appeal have been afforded the opportunity to put to the tribunal any further submissions which they might wish to make subsequent to the judgment of the Court of Appeal in Commissioners of Customs and Excise and the Queen on the Application of Hoverspeed Limited [2002] EWCA Civ 1804 (the Hoverspeed case).  Neither party has done so. 
3.	It is accepted that the Appellant and Mr Terence Howard Matthews (Mr Matthews) although each alone in separate vehicles were travelling together to the continent. This trip has been contended by the Commissioners to be a joint venture for a commercial purpose.   Both the Appellant and Mr Matthews strenuously deny this.  Mr Matthews has also given notice of appeal to the tribunal in his own case though this has not yet been heard nor has it been listed for today.  The Commissioners have requested that these two appeals be heard together.  The tribunal has decided to proceed at today's hearing with the appeal of the Appellant and has determined that the same tribunal shall sit in the appeal of Mr Matthews when heard.  Further whilst we do not consider bound to hold back the decision of the tribunal in this appeal pending the hearing of the appeal of Mr Matthews nevertheless it is a point to which we will give consideration in due course. 
 4.	During the hearing Counsel for the Commissioners has called for Rule 27(g) of the Tribunals Rules 1986 No. 590 to be put into operation with regard to Mr Matthews who has been attending the hearing.  In the event Mr Matthews has been agreeable to being called as a witness by the Commissioners and to give evidence on oath.  
 5.	The circumstances of this case are that the Appellant and Mr Matthews both private hire drivers were stopped at the UK Customs Control Zone at Coquelles France in the early hours of 11th January 2001.  They had been to Spain and Belgium as well as France.  The Appellant has said that the Customs Officers were checking on drug smuggling and then moved on to checking out what the Appellant and also Mr Matthews were carrying in their vehicles.  Both were asked if they wished to stay and answer questions and both at first refused though subsequently agreed.  The Appellant has suggested that what changed his mind was his understanding that it was part of an appeal process.  He has expressed dissatisfaction with the circumstances of his interview but this is not a matter for the tribunal and we understand that any complaint is being dealt with elsewhere.  
 6.	In the bundle of papers before the tribunal in addition to a copy of the interview record signed by the Appellant we have a copy of the signed notes of the interview by a different officer at the same time of Mr Matthews. 
 7.	The Appellant told the interviewing Officer that the goods in the vehicle belonged to him and he had spent £2,116.00 on his credit card for them.  He had bought the beer at Eastenders in Calais and the cigarettes in Belgium.  Two boxes of the cigarettes were for his wife the wine was for his mother-in-law and the tobacco for his brother.  No one else had contributed to the cost of the goods.  When asked about the gift to his brother he said he had not wanted to get tobacco but it was cheap and he knew that his brother smoked.  He himself smoked 200 cigarettes a week and he thought he would get a years supply ; he and his wife spent £8.00 per day on cigarettes.  His disposable income was about £130.00 per week.  He had not made any checks about what he could bring back merely read a sign on the train and he had not seen Customs notice 1 before.  The last time he had travelled abroad he said had been in November to Benidorm but when asked if he had travelled to Calais or Belgium recently he acknowledged that he had been to Calais the previous month for some beer for Christmas.  He had forgotten because he was just thinking of holidays.  He had then bought some crates of Stella and 800 cigarettes.  He had not bought more then as he did not have a lot of money.  The limit on his new card now used for the first time abroad  was £3,200.  He confirmed that the vehicle was not his and that he had had the use of it since the previous  August.  He said he had not been aware that there were guidelines for the amount of excise goods which could be brought into the United Kingdom and he said that he had not wanted to come to Calais in any event ; he had wanted to take the ferry to Bilbao but it was not operating.  When he travelled out he was not intending to purchase excise goods just some cans but when he got the beer he wanted some cigarettes and as he could not get them at Eastenders he and Mr Matthews decided to travel to Belgium.  He had not bought cigarettes in Spain as they only had Spanish ones.  The Appellant confirmed that he was aware that it was an offence to sell excise goods imported for personal use as he had seen posters on bus stops and knew what people said.  
8.	The record shows that Mr Matthews when interviewed confirmed that the goods in his vehicle belonged to him.  These comprised 14600 cigarettes 5.95 kilograms of hand rolling tobacco 50 cigarillos and 1 litre of brandy.   He had told the Officer that when he and the Appellant had gone to Eastenders they had been told that they could not buy them there and so they had gone to Belgium.  The goods had cost him £1,600 and he had bought just that amounts worth and did not know actually what  he had purchased.  He had brought holdalls as he did not know how the cigarettes and tobacco were packaged.  He and the Appellant had already planned to go to Spain for a couple of days and to buy some cigarettes in France; this was because they thought it was legal to buy them in France but not in Spain as duty had not been paid on the Spanish ones.  He and his wife would have smoked the cigarettes and the tobacco he was to give to his father-in-law as a gift.  He himself smoked 200 cigarettes a week and his wife about 20 a day.  Mr Matthews said that at the end of each month he had nothing left to spend and that he had no savings ; he could afford to spend £1600 on cigarettes because of his earnings over the Christmas period.   He did not have a receipt for the tobacco ; he had paid in cash and it worked out at about £90.00.  He did not know how much he had just that he had asked for £100 worth.  Similarly with his purchase of the cigarettes £1,500 worth.    His bank account was overdrawn.  He had not left the cigarettes and tobacco in the boxes that they came in because it was easier for him.  He understood that there is duty and tax on cigarettes and tobacco in the UK.  When asked why the Appellant and he had not travelled together  to Spain he said it was because they could not find parking in Calais and the reason why they did not travel from Leeds to Spain in one car was because they were not sure whether either car could have made the journey to Spain and back.  He was not aware of the guidelines on excise goods.  He did not have a joint account with his wife but he bought her cigarettes in the UK and she  would not contribute to the cost of the ones he had purchased on the continent. 
9.	The reasons the officer gave for seizure of the goods were "(1) in excess of Mils; (2) expenditure incommensurate with income; (3)  details of journey.  Suggest reason for trip - to buy excise goods in Spain; (4) some goods for 3rd party - not satisfied that payment has not been received either in cash or kind; (5) excise goods in holdalls - not commercial packaging - attempt at concealment.  In the case of (5) there is no evidence that the Appellant used holdalls.
10.	The Appellant by two letters dated 11 January 2001 requested restoration in one of the goods and in the other of the vehicle.  With regard to the goods the Appellant said he had not been allowed representation; he had done nothing wrong and that posters he had seen stated that any amount of excise goods could be imported; his human rights had been infringed.  Similarly he requested the return of the vehicle which was on finance was used for his business and he had lost his only source of income.  
11.	The Commissioners received a request from Hartwell Finance Ltd dated 12th January 2001 for the restoration of the vehicle to them as owners under a regulated hire purchase agreement and innocent of any offence.
 12.	Solicitors acting for both the Appellant and Mr Matthews wrote to the Commissioners on 23 January 2003 emphasising the financial burden placed on both by the loss of their vehicles.  
 13.	On 29 January 2001 Mr D.S. Marwood a Senior Officer of the Commissioners reviewed the request of the Appellant for restoration of the goods and the vehicle. He recommended that they should not be offered for restoration  as the quantities were in excess of the guidelines ; the cigarettes on a consumption rate of 200 per week would last almost 2 years and the Appellant had said that he had purchased a years supply ; it was implausible that someone would purchase 150 pouches of tobacco to give away as a present: one month after his previous visit to France when he said he did not purchase much because he did not have much money the Appellant had spent over £2,000 on a recently issued credit card and this, the Officer considered implausible ;  because of the possible commercial side to the importation there was a strong risk of damage to legitimate trade ; the vehicle was used to carry a large quantity of excise goods and operating the Departments policy as it was used to transport these the vehicle should not be restored.  
 14.	The Appellant wrote once more on 17 February 2001.  Again he referred to the misleading nature of the posters and a Notice which was only brought to the attention of Mr Matthews and him after their goods had been taken.  He also said that at the interview he had said that his wife and he both smoked 200 cigarettes which would amount to a one year supply as he had stated.  He could not see that it was any concern of the Commissioners that he made a present to his brother.  As to his previous trip to France a friend who could not drive had paid him.  He pointed out that if his intention had been profit he could have bought the cigarettes in Spain at half the cost and he would not have offered to open every pack.  The vehicle had been used to make his living and now he had lost everything.  
 15.	The Appellant's letter was taken as a request for a further review.  This was conducted by Mr P A Devlin Review Officer Detection South and his decision is set out in his letter of 6 April 2001.  He considered the background including  the interview notes and correspondence the legislation and the Commissioners restoration policy and  reconsidered the points made by the Appellant but nevertheless confirmed the refusals to restore.  The Commissioners had written to Hartwell Finance Ltd on 7 March 2001 requesting them to contact the Commissioners  after  6 April 2001 so that they could let them know if the vehicle would be returned to the Appellant after review or could be restored to the Company .  If the latter they would require an undertaking from the Company that the vehicle would not be restored to the Appellant.  Since then we understand that there have been proceedings by Hartwell Finance Ltd against the Appellant but again whilst noting the hardship experienced by the Appellant these are not part of the matter before us.  We would observe however that since the hearing date it is our understanding that the Commissioners policy has been changed and that a condition of the nature put to Hartwell Finance Ltd cannot be justified in law ; further in his Notice of Appeal to the tribunal dated 10 June 2001 the Appellant in setting out his grounds said that the goods were taken without proper reason and that the vehicle had been released without his appeal having been properly heard with a cost of £7,750.00.  He required the goods to be returned and the cost of the vehicle as the Commissioners no longer had it.
 16.	The powers of the tribunal in an ancillary matter of this nature are supervisory only.  Under Section 16 (4) of the Finance Act 1994 if we are satisfied that the Commissioners or any other person making a decision could not reasonably have arrived at it we are to direct either that the decision, so far it remains in force, is to cease to have effect from such time as we direct; or, require the Commissioners to conduct, in accordance with our directions, a further review of the original decision; or where a decision has already been acted on or taken effect and cannot be remedied by a further review we are to declare the decision to have been unreasonable and 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.  In a number of cases guidance has been given on the interpretation of "reasonably".  Lord Greene M.R in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1KB 223 said at page 229 ;
"... A person entrusted with a discretion must, so to speak, direct himself properly in law.  He must call his own attention to the matters which he is bound to consider.  He must exclude from his consideration matters which are irrelevant to what he has to consider.  If he does not obey those rules, he may truly be said, and often is said, to be acting "unreasonably". 
 Lord Lane in CCE v J.H. Corbitt (Numismatists) Ltd [1980] 2WLR 653 at 663, stated that the approach to be adopted by a tribunal in reviewing the exercise of a discretion was that the tribunal could only properly review the same "if it were shown that 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."
 17.	In his review decision of 6 April 2001 Mr P A Devlin was incorrect when he said that his role was to "determine whether or not the contested decision is one which a reasonable body of Commissioners could not have reached".   The role of the review officer is to look at the matter afresh.  It is for the tribunal to determine whether or not a decision appealed against is one that the Commissioners could not reasonably have arrived at.  The review Officer did however consider all available background material including correspondence   as well the applicable legislation and we are satisfied that he sought to act independently.  Since his decision however there have been changes in the law.  His review looked at the responses of the Appellant on the intended use of the goods on the basis that it was for the Appellant to re-but the statutory presumption of commerciality.  The Divisional Court in the Hoverspeed case held that Article 5(3) Excise Duty (Personal Reliefs) Order 1992 was incompatible with community law and therefore the burden of proof of commerciality was on the Commissioners.  Further by The Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 which came into force on 1st December 2002 the guidelines were increased to 3,200 cigarettes, 400 cigarillos, 200 cigars 3 kilograms of any other tobacco products, 10 litres of spirits, 20 litres of intermediate products, 90 litres of wine and 110 litres of beer.   The tribunal has considered these changes in the law.  It has been noted however that the import of 20000 cigarettes is considerably more than the guideline  level of 3,200 and the tobacco brought in of 7.5  kilograms is still substantially more than the guideline of 3 kilograms.  The Channel Tunnel (Alcoholic Liquor and Tobacco Products) (Amendment) Order 2002  amended the Channel Tunnel (Alcoholic Liquor and Tobacco Products Order) 2000 to enable these new arrangements to apply (as did those they replaced) to relevant alcohol and tobacco taken into a shuttle train control zone in France.  Under these 2002 Statutory Instruments in determining whether tobacco products are held or used for a commercial purpose regard is to be taken of a number of factors including the travellers reasons for having possession of them, his conduct including his intended use or any refusal to disclose his intended use, the nature of the products including the nature and condition of any package or container and the quantity brought in particularly whether the quantity exceeds the revised quantities set out above.  The Commissioners are accordingly to satisfy themselves as to commerciality but still take into account the background and circumstances of the matter.  
 18.	It is of course the case that a cross-border traveller may import excise goods in the quantity he chooses so long as they are for his personal use; gifts fall within the definition of personal use so long as there is no reimbursement and any payment even if it is on a not-for-profit-basis is commercial.  The review Officer was satisfied that the posters to which the Appellant has referred include at their base the advice, that there are guidelines.  They could  have enquired.
 19.	The Appellant has contended before the tribunal that the record taken at his interview was incorrect and that certain of his responses taken out of context are misleading.  He says that he had been given to understand that there would be rectification later.   For instance when asked if he had thought of buying cigarettes in Spain his reply had been ; "We asked for cigarettes, but  they only had Spanish ones.  I wasn't thinking of buying this amount until I saw that guy at Eastenders".  He has put it to the tribunal that he cannot smoke Spanish cigarettes and that out of context his reply to the question makes it look as if he went to Spain initially to buy cigarettes.  Similarly he had said that both he and his wife smoked 200 cigarettes per week and this was not actually recorded.  This meant that he had  imported as he in fact  had said a one year's supply. He had read the sign on the train but this was out of context also as they had never seen the guidelines before.  He would have liked to have added to the record what he had said at the time but which was not included there. 
 20.	We do not accept that the interview record was inaccurate.  Had it been so we are satisfied that the Appellant would not have signed it.  There are also discrepancies between the evidence given by the Appellant and Mr Matthews with regard to the same trip, for instance,  contradictory versions of why they had driven that whole trip in two cars and why they had not bought cigarettes in Spain.
 
21.	We are satisfied and find that the Appellant planned the trip to the continent with Mr Matthews and that both were aware of what they wanted to purchase namely to purchase cigarettes and tobacco and this was not a last minute decision.  On his last trip to France the Appellant had purchased only 800 cigarettes but on the present trip he had bought 20000 cigarettes, clearly a substantial financial outlay unless there was an expectation of recompense.  The Appellant may have had a new credit card but payment still would have to be made even if only by instalments out of the limited disposable income he has said is available to him.  The appeal of Mr Matthews will be heard later but nothing in his evidence to the tribunal has led us to believe that this was the case of two friends merely off to relax abroad for a few days.  We find the narrative of the various journeys within the journey not plausible nor the suggestion that the 9 month old vehicles which they used daily in their business were so unreliable that they could not risk taking them on a long trip.  We do not accept that the substantial amount of hand rolling tobacco brought back by the Appellant would merely have been given to his brother particularly as he has said that he had not even thought of buying tobacco originally.  As to the Spanish cigarettes the truth most likely is that the Appellant does not smoke them and others do not either; simply there is no market for them. 
 22.	The Appellant has argued that his human rights have been infringed.  This is a civil matter, not a criminal one and we are satisfied that this was  made clear at the time of the interview.  We have considered the non-restoration in the light of Article 1, Protocol 1 of the European Convention on Human Rights and judgments in Lindsay v Customs and Excise Commissioners [2002] 1WLR 1766 and the Hoverspeed case and we are satisfied that there is a legal basis for the goods having been taken from the Appellant under legislation which complies with European Law. 
 23.	So far as the goods are concerned we are satisfied that the decision on review against which the appeal has been made was one which an Officer of the Commissioners could reasonably have reached.  Non restoration is proportionate in view of the high level of UK duty on tobacco and cigarettes as compared with its cost abroad.  The Commissioners have indicated the duty on all the seized goods was in excess of £3,400.  Even though at all stages prior to the hearing the Commissioners had proceeded on the basis that the Appellant was to satisfy them on the issue of commerciality, in our view this did not play a part in the determination by the Officers that the goods would be seized or on review that the goods should not be restored.  The Officers were not satisfied that the goods were for personal use on the weight of the evidence before them.  We dismiss the appeal with regard to the goods.
24.	So far as the vehicle is concerned it was a third party vehicle, that is, owned by someone uninvolved in the offence.  The tribunal has no authority either to restore the vehicle nor award compensation.  Our powers are limited to those in Section 16(4) of the Act.  However whatever the actual feasibility of the return of the vehicle or whatever the current policy of the Commissioners as to the restoration of the vehicles, we are satisfied that the decision not to restore the vehicle to the Appellant was reasonable.  We dismiss the appeal against the non-restoration of the vehicle.
25.	The Commissioners have not sought to costs and we make no direction as to costs.	

Mrs E Gilliland
Chairman
Release Date:
MAN/01/8098