E00607

RESTORATION OF VEHICLE — reasonableness of decision not to restore – Finance Act 1994 S16(4) – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

EDWARD KILBANE

GWENDOLINE KILBANEAppellants

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISERespondents

Tribunal:Miss J Warburton (Chairman)

Mrs M C Ainsworth

Sitting in public in Manchester on 13 November 2003

The Appellants appeared in person

Mr J Shields of counsel instructed by the Solicitor for the Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1. This is an appeal by Edward Kilbane and Gwendoline Kilbane against a decision to refuse to restore a vehicle, registration number L672 OEG, seized at Dover on 14 May 2001. The decision on review not to restore is contained in a letter dated 7 January 2002.

2.The Commissioners were represented by Mr J Shields of counsel instructed by the solicitor for the Customs and Excise. The Commissioners put in a bundle of copy documents. The Appellants appeared in person.

3.This appeal is only in relation to the vehicle and not the goods – 18 kilograms hand-rolling tobacco, 10,000 cigarettes and 19.92 litres of beer – which were seized on 14 May 2001. As the vehicle is registered in the name of Edward Kilbane, strictly speaking, he is the only Appellant.

4.We heard evidence on oath from both Appellants. There was also an agreed witness statement form Gerry Dolan, an officer of H.M. Customs and Excise. From the oral and written evidence, including the documents submitted, we find the main facts be as follows.

The Facts

5.The Appellants travelled on the 6:15 a.m. ferry to Calais on 14 May 2001 having got tickets with the assistance of tokens in a newspaper. The trip co-incided with Mr Kilbane’s birthday and Mrs Kilbane’s birthday was the following day. They drove through France to Belgium and bought tobacco at Adinkerke. On the return journey they were stopped by Customs officers at Dover and interviewed about 18 kilograms of hand-rolling tobacco, 10,000 cigarettes and 19.92 litres of beer in the car.

6.Mr Kilbane at interview told Customs officers that he had paid for the 3 boxes of Golden Virginia hand-rolling tobacco and 2 boxes of Lambert & Butler cigarettes purchased in Belgium by credit card. He did not know how much he had spent but thought it was about £1,800. He had decided to purchase the tobacco because it was much cheaper; £2.40 for a 50 gram pouch and £19.50 for 200 cigarettes. He intended to pay off the credit card bill from what was saved from not purchasing tobacco. He said that the tobacco was for himself although he might give a pouch or two to his son.

7.Mr Kilbane told the Customs officers that the number of roll-up cigarettes he smoked a day varied. He estimated he got between 30 and 40 roll-ups from a 50 gram pouch of tobacco and that a pouch lasted him between day and a half to two days. If he was not smoking roll-ups he smoked tailor-made cigarettes – about 40 a day. Mr Kilbane estimated that the tobacco he had bought would last a “good twelve months”. He normally paid £8.50 for a pouch of tobacco and £3.80 for a packet of Lambert & Butler cigarettes.

8.Mr Kilbane did not have cigarettes or a lighter or matches with him when he was stopped at Dover. He did roll and smoke a cigarette in the presence of Customs officers. He gave details of his income as a driver, outgoings and savings.

9.Mrs Kilbane, when interviewed, said that she was not sure how many pouches of tobacco were in a box. The tobacco purchases were mutual birthday presents between her and her husband. She had been provided with a map showing where to purchase tobacco. She said she smoked about 25 cigarettes a day. She also gave details of her income and outgoings to the officers. Mrs Kilbane did not have any cigarettes with her. Customs officers did not find a lighter or matches but did find in her handbag a Customs Duty Paid leaflet.

10.The officer was not satisfied that the tobacco goods were imported for a non-commercial use and the goods and vehicle were seized. A request for restoration was made but that was refused by a letter dated 8 June 2001. The Appellants’ solicitor wrote asking for a review on 13 July 2001 but that letter went astray and was never acted on as it was sent to the wrong address. In September 2001, Mrs Kilbane wrote to the Prime Minister and the Adjudicator. A letter of 23 November 2001 to Customs and Excise was treated as a request for a review.

11.The correspondence sets out that Mr Kilbane needed the vehicle to get to work as he worked unsocial hours. Mrs Kilbane needed the vehicle for hospital appointments for herself and her parents. Mrs Kilbane suffers from osteoarthritis of the spine and is now registered disabled. She pointed out in correspondence that the vehicle had heated seats which helped her pain and the vehicle also enabled her to shop as she cannot carry heavy weights.

12.A review was carried out by Kathryn Philpott on 7 January 2002. She reviewed all the papers including records of interview and later correspondence. Ms Philpott concluded that restoration of the vehicle should not be made. She concluded that the goods were correctly seized in view of the quantity involved, lack of knowledge of the details of purchase, absence of smoking paraphernalia, statements as to the number of cigarettes from a pouch of tobacco and discrepancies as to the stated use of tobacco and cigarettes. Mrs Philpott concluded that non-restoration of the vehicle was in line with the Commissioners’ policy and that there were no exceptional circumstances to warrant departing from that policy.

13.In evidence to the Tribunal, Mrs Kilbane stated that they had only decided to buy tobacco when then were on the ferry, in particular, when she overheard a conversation about how cheap tobacco was in Belgium. She smoked between 20 and 30 cigarettes a day. Her husband smoked her cigarettes if they went out on an evening. When they purchased the tobacco they had no idea how much there was in each box. They bought for themselves and would give some to their son. She did not know there was a Customs Paid Notice in her handbag – it was probably with the ticket wallet. She had smoked on 14 May 2001 but had finished her cigarettes and box of matches and left the empty packet on the ferry. There was a lighter tucked in the bottom of her bag which she had forgotten about.

14.Mr Kilbane gave evidence that he smoked more roll-ups than tailor made cigarettes. It varied between 30 to 40 to 40 to 50 a day depending on whether he went out in the evening. If he was out with friends he would smoke tailor made. When asked how many roll-ups he got from a pouch of tobacco he replied that he could not remember how many he had said at interview but the actual figure was about 30 to 35. He said that a pouch of tobacco would last about 2 days. When it was suggested that a pouch would last only a day if he smoked 30 to 40 or more a day he stated that that figure included tailor made as well as roll-up cigarettes.

15.Mr Kilbane stated that they did not go deliberately to buy tobacco. He did not know how much their purchase would cost. He just asked for 2 boxes of cigarettes and 3 of hand-rolling tobacco. He was under the impression he could buy as much as he wanted. Money was then no object and what they had spent on tobacco in Belgium meant they were to save daily expenditure on tobacco.

16.The witness statement of Gerry Dolan, an officer of H M Customs and Excise, sets out the policy of H M Customs and Excise in relation to the restoration of vehicles. It is a policy not to restore even for a first occasion of commercial importation unless there are exceptional circumstances.

The Law

17.The law as it applied in this case was the subject of review in 2002 by the Divisional Court in Regina (Hoverspeed Limited) v Customs and Excise Commissioners [2002] 3WLR 1219 (the “Hoverspeed case”) and to a more limited extent in relation to seizure by the Court of Appeal in Commissioners of Customs and Excise v The Queen on the application of Hoverspeed Limited [2002] EWCA Civ 1804. These cases make it clear that under the Excise Directive 92/12 EEC goods are either held for personal use and subject to excise duty in the member state of acquisition, Article 8, or held for a commercial purpose and subject to excise duty in the member state in which they are held, Article 9 (see the Hoverspeed case para 105 and the Court of Appeal at para 65). The Divisional Court in Commissioners of Customs and Excise v Ian Newbury [2003] EWHC 702 (Admin) has confirmed that duty is only payable in the country of origin under Article 8 if goods are acquired by a private individual for their own use which does not include purchase as an agent (see para 32). The Hoverspeed case also held that the Excise Duties (Personal Reliefs) Order 1992, article 5, was incompatible with EC law and that the burden of proof as to commerciality is on Customs.

18.The Tobacco Products Regulations 2001 as amended by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations 2002 set out a number of factors to be considered when determining whether a person is holding excise goods for a commercial purpose. These included reference to the quality of goods and the indicative level for tobacco is 3kgs. In May 2001 the level was 1kg.

19.The Commissioners are empowered by the Customs and Excise Management Act 1979 (CEMA) section 49 to forfeit dutiable goods which have been imported or held without payment to duty. A vehicle used to carry goods liable to forfeiture is itself liable to forfeiture by section 141(1) of CEMA. All such goods are liable to seizure pursuant to section 139 of CEMA. Such powers, must however, be exercised with due regard to proportionality as they involve the deprivation of a person’s property. In the case of goods imported for a non-profit-basis for friends or neighbours regard should be had to scale of importations, whether it is a ‘first offence’, and attempts at concealment and hardship in determining whether to forfeit goods – see Lindsay v Customs and Excise Commissioners [2002] STC 588 para 52 and 64.

20.Section 152(b) of the 1979 Act allows the Commissioners as they think fit to restore any goods which have been seized. A review and appeal procedure from decisions of the Commissioners is set out in sections 15 and 16 of the Finance Act 1994. A holder of goods may appeal against a review decision of the Commissioners taken under section 15 to the Tribunal. The Tribunal’s powers on appeal are, however, limited by Section 16(4) to directing that the Commissioners’ decision shall cease to have effect, to directing that a further review be carried out or, if the latter is no longer possible, declaring the decision to have been unreasonable. It is for the Tribunal to consider that the response is proportionate in any case (see the Hoverspeed case para 196).

Submissions

21.The Appellants’ submissions are taken from their statements to the Tribunal and from earlier correspondence. All the goods were for their own use. They had not seen anything which indicated that there might be a limit on purchases or that they could possibly lose the vehicle. The loss of the vehicle had caused considerable problems and, in particular, caused Mrs Kilbane’s back problem to deteriorate badly to the extent that she is now registered disabled. They had had to take out a loan to purchase a replacement vehicle as well as paying off the credit card debt incurred for the purchase of the tobacco.

22.Mr Shields for the Commissioners submitted that the Tribunal could only consider the decision on review and that they had no jurisdiction to consider the correctness or otherwise of the seizure – see Gora v Commissioners of Customs and Excise [2002] EWCA Civ 525 para 56-58. The goods were deemed to be held for a commercial purpose as there had been no successful challenge in condemnation proceedings. At most the Tribunal could consider if the goods were imported for profit or not for the purpose of considering the application of the policy of restoration as set out in Lindsay - see Commissioners of Customs and Excise v Dickinson [2003] EWCA 2358.

23.Alternatively, Mr Shields submitted that the goods were held for a commercial purpose. The quantity imported raised an evidential presumption that the goods were for a commercial purpose and that presumption had not been rebutted by the Appellants. The evidence as to cigarettes consumption and rolling by Mr Kilbane was contradictory, the lack of thought as to cost at the time of purchase of the tobacco was not credible, the length of time the tobacco would last on stated rate of consumption and the lack of evidence of smoking paraphernalia at the time the Appellants were stopped all led to the conclusion that the goods were imported for a commercial purpose.

24.Mr Shields further submitted that consideration of proportionality in relation to restoration was only relevant if the goods were imported for a non-profit purpose. There was evidence that a small amount of the goods may be given to the Appellants’ son but it was a reasonable assumption that the goods were imported for a profit. Mr Shields finally submitted that even if the reviewing officer had made such an error that would warrant the ordering of a further review, such an order should not be made as the outcome – that the goods were imported for a commercial purpose for profit – would inevitably be the same – see John Dee Limited v Commissioners of Customs and Excise [1995] STC 941

Reasons for Decision

25.The Tribunal’s jurisdiction under section 16(4) of the Finance Act 1994 is not one to try again the original decision to forfeit but to consider whether the decision on review not to restore goods is one that the Commissioners could not reasonably have come to.

26.It is generally accepted that the test of reasonableness requires the Tribunal to ask:

-Is this a decision which no reasonable panel of Commissioners could not reasonably have come to?

-Have some irrelevant matters been taken into account?

-Has some matter which should have been taken into account been ignored?

-Has there been some error of law?

(see Customs and Excise Commissioners v J H Corbitt (Numismatists) Limited [1980] STC 231: Associated Provincial Houses Limited v Wednesbury Corporation [1948] 1KB 223).

27.When Ms Philpott reviewed the decision on 7 January 2002 she clearly reviewed all the evidence then available to her and gave due weight to all the documents. It is also clear that she did not consider any irrelevant matters. She considered whether the goods were correctly seized and concluded that the goods were imported for a commercial purpose. On the evidence available to her, we consider that that was a reasonable conclusion. In the light of the Commissioners’ policy in relation to restoration, which has been accepted by the courts, it was reasonable for her to follow that policy and to refuse to order restoration. Whilst we obviously have sympathy for the problems and difficulties caused, particularly to Mrs Kilbane, from non-restoration of the vehicle, they are not so exceptional as to make the decision not to restore the vehicle so unreasonable that the Tribunal should interfere.

  1. It can be argued that Ms Philpott’s decision is wrong in law because she applied the, then correct, statutory presumption of commerciality, raised by the quantity of goods imported. Regardless of legal arguments based on the decision in Gora, that the Tribunal cannot question the correctness of the seizure, the quantity of goods seized, 18kgs of hand-rolling tobacco and 10,000 cigarettes, raises an evidential presumption that the importation was commercial – see the Hoverspeed case para 130. In our view, the Appellants have not rebutted that presumption by the evidence that they have given in relation to both the circumstnaces of the purchases and their smoking habits. We were confirmed in the view that the evidential presumption as to commercial use had not been rebutted when we considered the inconsistencies in Mr Kilbane’s evidence both to the officers at Dover and in the Tribunal as to how much he smoked, the division between roll-ups and tailor made cigarettes and the economics of taking only 30 roll-ups from a 50 gram pouch of tobacco. It follows that we consider that a further review would inevitably come to the same conclusion and, on the basis of the John Dee case, make no order.
  1. In view of the commercial nature of the importation we also find that it was reasonable and proportionate not to restore the vehicle.
  1. Accordingly, the appeal is dismissed but we make no direction as to costs.

MISS J WARBURTON

CHAIRMAN

Release Date: 21 January 2004

MAN/02/8228