[2010] UKFTT 209 (TC)

TC00511

Appeal number TC/2009/134398

EXCISE DUTY- Goods deemed condemned - appellant withdrew from Magistrates’ hearing- goods condemned Tribunal no jurisdiction to hear argument as to own use – application on grounds of hardship for return ofvehicle - appellant able to obtain another vehicle - case dismissed

FIRST-TIER TRIBUNAL

TAX

ANDREW BRADY

BLACKWOOD QUARRY ENGINEERING LIMITEDAppellant

- and -

UK BORDER AGENCY

(FORMERLY THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS) (Customs Duty) Respondents

TRIBUNAL:David S Porter (Judge)

Stuart Martin (Member)

Sitting in public in Birminghamon 16 March 2010

The Appellant in person

Miss Alison Graham-Wells, instructed by the General Counsel and Solicitor to the Border Agency

© CROWN COPYRIGHT 2010

1

DECISION

  1. Mr Andrew Brady (Mr Brady) appeals against the review by Mr R Brenton, the reviewing officer, contained in a letter dated 4 August 2009 refusing to return the Appellant’s Misubishi L200 Trojan pick up truck, registration number FD55 DNN. The Appellant says that the goods,12 Kilos of hand-rolling tobacco (being half of the 24 Kilos of hand-rolling tobacco shared with Mr Gary Sanders, his friend and passenger), were purchased for his own use.He understood that he could bring in as much tobacco as he wished so long as it was for his own use. Customs should not have seized the tobacco and his goods and the vehicle should have been returned to him. The Respondents (Border Agency) say that, as the goods had been deemed forfeit under paragraph 5 of Schedule 3 of The Customs and Excise Management Act 1979 (“CEMA”),Mr Brady could not claim before the Tribunal that the goods were for his own use. As a result,neither the goods nor the vehicle should be returned. Further more there were no hardship grounds under which the vehicle could be returned.
  2. Miss Graham-Wells appeared for the Border Agency with Mr R Brenton, the reviewing officer in attendance as a witness. Copies of the Border Agency bundle were made available to the Tribunal. Mr Brady appeared in person with his wife. He also produced a note headed ‘Customs blunder farcical’.
  3. We were referred to the following cases:

Lindsay v Customs and Excise Commissioners [2002] 3 ALL ER 118

Gasgoyne v Customs and Excise Commissioners [2005 CH 215

Customs and Excise Commissioners v Albert Smith CH [2005] APP 0117

Revenue and Customs Commissioners v Dawkin [2008] ALL ER (D) 83 (Aug)

John Morgan TC/00102

The facts

  1. Mr Brady, who lives at Coalville in Leicestershire, was stopped by Customs and Excise on 29 May 2009 on his return to Coquelles France with his friend Gary Sanders, who was driving. They had been away since the previous day. They had travelled to Belgium for a night out and to buy some wine and tobacco. They had purchase 24 kg (480 pouches) of hand rolling tobaccoat a cost of £2418, the tobacco and costswere shared between them,. Mr Brady said that he had paid for the tobacco out of cash which he had had at his home. He thought the tobacco would last him for at least two years. His goods were seized and he was given notice C156, Customs Warning Letter, and Seizure of Vehicle Notice 12A. The notice explained that he could challenge the legality of the seizure in the Magistrates Court, which would have been in Dover. Mr Brady wrote a letter to HM Revenue and Customs, which they received on 4 June 2009, to say that the seizure was unlawful and that he required the vehicle for his business. Apparently, a substantial vehicle is required for access to the sites of the quarries and without it he was unable to estimate the price of his jobs. He also enclosed copy letter B (referred to below) from Notice 12A stating that he did not want to challenge the legality of the seizure with an appendix to the letter setting out why he believed the goods and vehicle should be returned to him. H M Revenue and Customs treated the letter as a request challenging the legality as Mr Brady had stated that the seizure was unlawful. They wrote to him on 12 June 2009 indicating that condemnation Proceedings would be instigated on his behalf. Mr Brady wrote back on the 19 June 2009 requesting the restoration of his vehicle and for the Condemnation Proceedings to be withdrawn. On 25 June 2009 an officer replied to his letter refusing to restore the excise goods or the vehicle. He also advised that on Mr Brady’s request the proceedings before the Magistrates’ court had been withdrawn. Mr Brady requested a review of the decision on 29 June 2009 and the review letter was sent by Mr Brenton on 4 August 2009’informing him that the restoration of the goods or the car had been refused.
  2. Miss Graham-Wells said that the Border Agency had taken over Customs responsibilities from H M Revenue and Customs and, both in this case, and in the future would be responsible for hearings before the Tribunals. Mr Brady’s Notice of Appeal to the Tribunal sought to challenge the legality of the seizure of the vehicle and the goods. As a result the Tribunal needed to decide, as a preliminary issue, whether it would be ‘an abuse of process’ for Mr Brady to raise the defence before this Tribunalthat the goods were purchased for his own use. She referred us to the four cases mentioned above and indicated thatRevenue and Customs Commissioners v Dawkin [2008] ALL ER (D) 83 (Aug) referred to the leading cases and was relied upon as the primary reference in this appeal. The earlier cases have expanded the proposition that because an appellant chooses not to apply to the Magistrates Court to contest the legality of the seizure under section schedule 3 of CEMA, it is not open to that appellant to argue that he purchased the goods for his own use in the Tribunal. This was particularly the case where the appellant failed to attend the hearing at the Magistrates Courtwithout a good reason for not doing so. An appellant had the opportunity to attend at the Magistrates Court to justify his purchase of the goods and, if he chose not to attend, he could not then raise the defence in the Tribunal that he had bought the goods for his own use. It would be an ‘abuse of process’ for the Tribunal to allow him to do so.Paragraph 5 of Schedule 3 of CEMA goes a step further however and provides that if there is no actual hearing before the Magistrates Court the goods are deemed to be forfeit. The cases referred to have decided that in those circumstancesan appellant cannot raise the argument that he purchased the goods for his own use in the Tribunal as that would be an abuse of process.There may not even have been a hearing,either because the one month period had passed for an application to be made, or because, as here, the appellant asked for those proceedings to be withdrawn before a date had been set for the hearing by the Magistrates Court. Buxton LJ inGasgoyne v Customs and Excise Commissioners [2005 CH 215 was concerned for the appellant’s convention rights and said:-

“ 54. As it seems to me, for an importer to be completely shut out in the only Tribunal before which he has in fact appeared from ventilating the matters that are deemed to have been decided against him because of paragraph 5 of schedule 3 does not adequately enable him to assert his convention rights.

55. In my view,therefore, in a case where the deeming provisions under paragraph 5 are applied, the Tribunal can reopen those issues; though the Tribunal will always have very well in mind considerations of, or similar to, abuse of process in considering whether such issues should in fact be ventilated before it.

56. The mere fact that the applicant has not applied to the commissioners, and therefore there have been no condemnation proceedings, would not in my view, be enough (emphasis added). But, in my judgment, it goes too far to saythat the deeming provisions have always, in every case, got to be paramount.”

InCustoms and Excise Commissioners v Albert Smith CH [2005] APP 0117

Lewison J considered and applied the observations of Buxton J and stated:

“ 20……………………. There must, therefore, be something more than a failure on the part of the applicant to invoke condemnation proceedings before the Tribunal is empowered to question the legality of the forfeiture.

  1. It is, in my judgment, clear from that passage that in the run of the mill cases where there has been a failure to give a paragraph 3 notice invoking the condemnation proceedings the deeming provisions will operate against the applicant in any subsequent appeal to the Tribunal . The Tribunal’s function, therefore, is analogous to a sentencing court once a defendant has been convicted. No matter that the defendant still protests his innocence of the charge against him, the functioning of the sentencing court is to accept mitigation but not to question the original conviction.
  2. …. So the relevant questions will always be, first, could the applicant have raised the question of lawfulness of forfeiture in other proceedings and, if the answer to that question is yes, why did he not do so. In light of his reasons for not raising the matter of condemnation proceedings the Tribunal can thenanswer the question should he have done so and if they answer that question ‘yes’ then it will be, in most cases, an abuse of process for him to raise the question before the Tribunal.”
  1. Miss Graham-Wells identified the law. Duty is payable on tobacco products imported into the United Kingdom by operation of section 2 (1) of the Tobacco Products Duty Act 1979[8] and regulation 4 (1) of the Excise Goods (Holding, Movement, Warehousing and REDs) Regulations 1992 [8-9]. By virtue of Council Directive 92/12/EC products acquired by private individuals for their own use and transported by them may be exempt from payment of excise on importation into the United Kingdom when the duty has been paid in the MemberState in which they were acquired. Articles 8 and 9 refer [9-10]. The Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002[10-12] brings the Council Directive into effect in domestic legislation and set out matters to which reference may be had when determining whether excise goods are held for a commercial purpose.[11]

Section 49 CEMA provides that goods imported without payment of duty are liable to forfeiture

Section 141 CEMAprovides as follows-

(1)…where anything has become liable to forfeiture under the Customs and Excise Acts –

(a) any ship, aircraft, vehicle…which has been used for the carriage handling deposit….of the thing so liable for forfeiture…and

(b) any other thing mixed, packed or found with the thing so liable shall also be liable to forfeiture.

Section 152(b) CEMA provides that the Commissioners may as they see fit , restore, subject to such conditions (if any)as they think proper, any thing forfeited or seized.

Schedule 3 to CEMA lays down the procedure relating to forfeiture:

3. Any person claiming that any thing seized as liable to forfeiture is not so liable shall, within one month of the date of the notice of seizure or, where no such notice has been served on him, within one month of the date of the seizure, give notice of his claim in writing to the Commissioners at any office of customs and excise.

5. If on the expiration of the relevant period under paragraph 3 above for the giving of notice of claim in respect of any thing no such notice has been given to the Commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeited.(Our emphasis)

If an appellant claims in the Notice of Claim that the thing seized is not liable to forfeiture condemnation proceedings must be commenced in the Magistrates Court or High Court. If the deciding Court is satisfied that the thing was not liable to forfeiture and therefore the seizure was unlawful it will decline to condemn it as forfeit. If no Notice of Claim is given within the period of one month then the thing shall be deemed to be forfeit. HMRC and the Border Agency may consider restoring any thing liable to forfeiture. Any refusal will be reviewed upon a proper request being made and if the refusal to restore is confirmed then an appeal may be lodged for a decision by the Tribunal. Under section 16 of the Finance Act 1994 the Tribunal is constrained to consider the reasonableness of HMRC/ the Border Agency’s decision to refuse restoration. For the Tribunal to allow Mr Brady to raise the issue that he purchased the goods for his own use, when he should have raised the issue in the Magistrates Court, would be an abuse of process. Further, the vehicle has been condemned by passage of time and it is deemed forfeit and the seizure was lawful.

  1. Mr Brady told the Tribunal that he was handed Customs Notices 1 and 12A. In the letter received by HMRC on 4 June 2009, Mr Brady asked for the tobacco and vehicle to be returned. The letter enclosed ‘Letter B’ requesting a return of the seized things. He asserted the seizure was unlawful and as a consequence condemnation proceedings were commenced. The note to Letter B states:

“Note: if your only reason for requesting the return of the seized things is that you think that Customs have no legal right to seize them (e.g. that the excise goods were entirely for your ‘own use’ or they were to be given to others as gifts ‘free of charge’), you cannot rely on that as a reason for it to be returned to you. In those circumstances you must also challenge the legality of the seizure as set out in Section 2 of this notice.

If you wish us only to consider returning the seized thing you must make it clear (by ticking the box below) that you do not also wish to contest the legality of the seizure.

It was therefore made quite plan to Mr Brady that the correct place to challenge the legality of the seizure was the Magistrates Court. In his letter Mr Brady unequivocally states that he does not wish to “legally challenge the seizure and requests that any condemnation proceedings are halted forthwith.” Mr Brady has not been misled and the Tribunal cannot therefore allow him to bring evidence to the effect that he purchased the tobacco for his own use and his appeal must fail.

  1. Mr Brady submitted that he did not understand the implications of not pursuing the case in the Magistrates Court. Notice 12A indicated that if he was unsuccessful in the Magistrates Court he might have to pay costs of a minimum of £1500. Miss Graham–Wells indicated to the Tribunal that Mr Brady would not have known that he might be subject to costs until he received details of the hearing from the Magistrates Court. Unfortunately that information is incorrect because the reference appears at paragraph 2.16 of the Notice. His wife confirmed, however, that she had understood that if they did not go to the Magistrates Court they would not be able to allege that the tobacco had been purchased for their own use.

We have decided that it would be an abuse of process for us to allow Mr Brady to claim that the tobacco had been purchased for his own use.InRevenue and Customs Commissioners v Dawkin [2008] ALL ER (D) 83 (Aug) Richards J stated the position with regard to ‘abuse of process’ at paragraph 40:

“40……………….. The prima facie position of HMRC is the same as that of the Tribunal. They are bound by the deeming effect of paragraph 5 of the 3 schedule to CEMA. However, where it would not be an abuse of process for the importer to raise the issue as to whether he imported the goods for his own use, HMRC like the Tribunal are bound to consider it. Unless it would not be an abuse of process, it cannot be a criticism of HMRC or a factor in favour of permitting the importer to raise the issue before the Tribunal that HMRC did not consider it on review. There may be other exceptional cases. such as the existence of incontrovertible evidence that the goods were for the importer’s own use, which would require the reviewing officer to consider the issue, but this is not the present case. It is hard to see how a reviewing officer, who is to conduct a review of an administration decision not to restore goods and is not conducting a hearing at which the parties can appear and witnesses can give evidence, could give an importer an opportunity to test the evidence of seizure.

In the light of that decision, and on the basis that this is not an exceptional case, we cannot allow Mr Brady to give evidence to the effect that he purchased the tobacco for his own use. Mr Brady had the opportunity to attend at the Magistrates Court and he chose not to do so. Whether that was because he thought the costs of £1500, including his cost in attending, were too great or that he believed he could recover his vehicle by applying directly to HMRC we do not know. It cannot have been too much of a difficulty to go to the Magistrates Court even if the Court was on the south coast. He had been quite prepared to travel to Belgium for two days in order to buy wine and tobacco. We therefore uphold Mrs Graham-Wells’ objection.