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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 >> Thomson v Revenue & Customs [2008] UKVAT(Excise) E01142 (20 October 2008) URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2008/E01142.html Cite as: [2008] UKVAT(Excise) E1142, [2008] UKVAT(Excise) E01142

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E01142

Hydrocarbon Oil Duties – nature of fuel in Appellant's vehicle – seizure of the vehicle – whether terms of restoration reasonable – FA 1994, Sections 14 and 16 – Appeal Refused.

EDINBURGH TRIBUNAL CENTRE

ARTHUR THOMSON Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: (Chairman): Mr Kenneth Mure, QC

(Member): James D Crerar, WS., NP

Sitting in Edinburgh on Wednesday 10 September 2008

for the Appellant Mr Arthur Thomson

for the Respondents Mr Andrew Scott, Solicitor Shepherd+Wedderburn

© CROWN COPYRIGHT 2008.
 


DECISION

Introduction

The issue for the Tribunal is whether the Respondents acted reasonably in offering to restore a Cherokee Jeep vehicle reg no R951 GHS for a fee of £480. The vehicle had been seized by the Respondents as its tank contained fuel which did not satisfy the criteria for bio-diesel as its total ester content was below 96.5% by weight, and so had not borne the correct fuel duty. The Respondents obtained decree in condemnation proceedings in Ayr Sheriff Court on 5 June 2008. Ultimately the Appellant withdrew his defence to these proceedings.

The Law

In terms of Section 152 Customs and Excise Management Act 1979 the Commissioners may restore any items forfeited or seized for breach of excise duties. However, such a decision is subject to review by this Tribunal in terms of Sections 14-16 FA 1994.

Bio-diesel is defined in Section 2AA of the Hydrocarbon Oil Duties Act 1979 as having inter alia an ester content of not less than 96.5% by weight. Provision is made in Sections 6AA and 6A for excise duties chargeable on such fuel.

The Facts

We heard evidence firstly from the Appellant. He is a Marine Engineer and is technically knowledgeable on engine fuels. He had no inclination to avoid tax, he claimed, and considered that his use of the particular fuel was not illegal. He had withdrawn from the action at Ayr Sheriff Court because of concerns as to costs. Any differences found in the analysis of the fuel from statutory requirements were marginal and negligible. The conditions of testing, particularly temperature, could easily distort the results. He had sought to register an interest as a producer of bio-diesel but complained of the delays in processing his application until after the date on which the vehicle was detained.

In cross-examination he explained that the vehicle belonged to a friend of his, Mrs Loughlin, and he had purchased it from her subsequent to this incident. He asserted that the fuel used was Rix bio-diesel, a mixture of vegetable oil and normal derv.

The Respondents led the evidence of one of their fuel testing officers, Wesley John Cartlidge, who spoke to testing the fuel in the vehicle and the decision and terms to restore the vehicle. Mr Cartlidge explained that the fuel seemed very thick with an unusual consistency and gravity. A sample was submitted to the Local Government Chemist who found that it was a mixture of diesel and vegetable oil, not qualifying as bio-fuel. He explained that there had been difficulties contacting Mr Thomson to discuss terms in which the vehicle might be restored. Ultimately a fee of £480 was calculated as representing a revenue penalty of £250 for not declaring duty on the fuel, removal costs of £160 and storage costs of £70. (Storage costs were "capped" at one week although the vehicle was stored for a longer period).

On the basis of that evidence we make the following:

Findings-in-Fact

1. On 28 April 2006 the Appellant was observed filling the fuel tank of the Cherokee Jeep reg no R951 GHS with what appeared to be vegetable oil.
2. The vehicle was then owned by Mrs Elizabeth Loughlin, a friend of the Appellant. Subsequently he purchased the vehicle from her and thus acquired such rights as she may have had in relation to the Respondents' procedures in respect of the vehicle. (Reference is made to the Tribunal's earlier decision dated 28 February 2007 (see page 2 thereof)).
3. The vehicle was detained by the police and in the circumstances hereinafter narrated, on 30 April 2006 the Respondents seized the vehicle.
4. A sample of fuel was taken from the vehicle's tank. Part of the sample was sent to the Local Government Chemist's Laboratory. On analysis the fuel was found to be a combination of vegetable oil and diesel fuel. It did not meet the criteria for bio-diesel as the total ester content was below 96.5% by weight (see Doc 62 and 65).
5. On 17 May 2006 the Appellant was registered as a bio-diesel producer. He was not previously registered.
6. By Appeal Letter dated 11 May 2006 Mrs Loughlin indicated that she was both appealing against the seizure of the vehicle and seeking its restoration.
7. The Respondents raised proceedings in Ayr Sheriff Court to condemn the vehicle as forfeit. The action was raised against the Appellant as defender as having by then acquired from Mrs Loughlin all rights relative to the vehicle. Having initially entered appearance to defend the action the Appellant subsequently withdrew and decree of condemnation was pronounced in favour of the Respondents on 5 June 2008.
8. The vehicle was restored to the Appellant on payment of £480. The Respondents calculated this as being the total of the statutory penalty under HODA of £250, removal costs of £160 and storage costs of £70.
9. The terms of the offer of restoration for £480 were confirmed in the Respondents' letter to the Appellant dated 30 June 2006. The terms of this offer are the subject of the present Appeal.

Parties' Submissions

On behalf of the Respondents Mr Scott invited us to dismiss the Appeal.

Having referred us to the relevant statutory provisions noted supra he argued that we could not re-consider the legality of the seizure of the vehicle. The forum for challenging that had been in the Sheriff Court action at Ayr. Although the defence had ultimately been withdrawn, the legality of the seizure had been determined. As a result matters of registration with MORC as a producer of bio-fuels and the purchase of the particular fuel had become irrelevant as relating to the legality of the seizure.

Duty had not been paid on the fuel and the decision to restore on payment of £480 was based on the penalty due in terms of HODA, Section 22, together with removal costs of £160 and storage costs for 7 days of £70. Mr Scott noted that the Respondents could have sought storage costs for 28 days but were prepared to mitigate this. The decision was clearly a very reasonable one, he argued.

So far as the Appellants registration as bio-fuels producer was concerned, this post-dated the relevant date.

The burden of proof was on the Appellant to show that the offer was not reasonable. No evidence had been produced to show a failure to consider relevant factors or of an error in considering irrelevant factors in Mr Scott's view.

In reply the Appellant submitted that the vehicle's tank contained fuel on which duty had been paid at the correct rate. There was no rebated fuel in it and accordingly no offence had been committed.

The Appellant complained about the unsatisfactory treatment which he had received from the Respondents' officials and this, of course, is echoed in the productions (see Doc 25, 44 and 52). He noted also that there had been a delay in the return of the vehicle during which its condition had deteriorated.

Decision

We consider the Respondents' stance well-founded.

Firstly, given that the Appellant had initially defended the condemnation proceedings at Ayr Sheriff Court, the decree obtained must represent res judicata. This Tribunal cannot review the legality of the seizure in such circumstances. We have to accept that the basis for seizure of the vehicle was sound i.e. the fuel did not meet the prescribed criteria for bio-diesel. In any event we note the results of the scientific analysis (Doc 62-65) which sets out the LGC's findings.

In terms of Section 16(4) FA 1994 the Tribunal can consider whether the decision to restore the vehicle on payment of £480 was reasonable. We were satisfied with the explanation given by the Respondents' officer, Mr Cartlidge. It represents no more than the total of the fiscal penalty and modest uplift and storage charges. Indeed, had they so wished, the Respondents might readily have justified significantly greater storage charges.

We acknowledge that the fuel as analysed fell only somewhat short of the prescribed standard for bio-fuel. Also, we note that there were difficulties and delays in contacting the Appellant about the vehicle, and as a result its restoration was delayed, during which period it may have deteriorated. While we are sympathetic with all of that, it does not cause us to modify our assessment of the terms of restoration.

Accordingly we refuse this Appeal.

Costs

Mr Scott indicated that in the event of success he did not seek an award of costs. Therefore, we make no award.

Finally, we thank both Mr Thomson and Mr Scott for the manner of presentation of their arguments.

MR KENNETH MURE, QC CHAIRMAN
RELEASE: 20 OCTOBER 2008

EDN/06/8018