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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Stern v Director of Border Revenue [2013] EWHC 553 (Admin) (23 January 2013) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2013/553.html Cite as: [2013] EWHC 553 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand London WC2A 2LL
		23 January 2013

1. LORD JUSTICE LAWS: This is an appeal by way of case stated against the decision of the Dover Magistrates on 9 February 2012 to the effect that 540 litres of wine imported from France through Dover were liable to forfeiture pursuant to section 49(1)(a) of the Customs and Excise Management Act 1979 and Regulation 88 of the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 on the ground that the goods had been released for consumption in another Member State of the European Union and at importation into the United Kingdom were not being transported by a private individual for his own use.
2. The appellant, Mr Stern, has addressed us in person this morning, not only with great restraint and courtesy but also with a skill and pertinence from which many professional advocates might learn much.
3. Wine imported into the United Kingdom is subject to excise duty under section 54 of the Alcoholic Liquor Duties Act 1979. The Excise Goods (Holding, Movement and Duty Point) Regulations 2010 ("the 2010 Regulations") implement provisions contained in Directive 2008/118/EC ("the 2008 Directive"). Article 32(1) of the 2008 Directive provides:

"Excise duty on excise goods acquired by a private individual for his own use, and transported from one Member State to another by him, shall be charged only in the Member State in which the excise goods are acquired."

Article 33 provides:

"1. Without prejudice to Article 36(1), where excise goods which have already been released for consumption in one Member State are held for commercial purposes in another Member State in order to be delivered or used there, they shall be subject to excise duty and excise duty shall become chargeable in that other Member State."

Regulations 13(1) to (3) of the 2010 Regulations provide as follows:

"(1) Where excise goods already released for consumption in another Member State are held for a commercial purpose in the United Kingdom in order to be delivered or used in the United Kingdom, the excise duty point is the time when those goods are first so held.

(2) Depending on the cases referred to in paragraph (1) the person liable to pay the duty is the person-

(a) making the delivery of the goods;

(b) holding the goods intended for delivery; or

(c) to whom the goods are delivered.

(3) For the purposes of paragraph (1) excise goods are held for a commercial purpose if they are held-

(a) by a person other than a private individual; or

(b) by a private individual ("P"), except in a case where the excise goods are for P's own use and were acquired in, and transported to the United Kingdom from, another Member State by P."

Regulation 13(4) contains a list of considerations to which regard must be had in deciding whether the goods are for the importer's own use but the list does not bear on the meaning of "transported by P" in 13(3)(b).

4. The magistrates found that the wine in this case was held for a commercial purpose and therefore dutiable on importation to the United Kingdom because the importer, the appellant Mr Stern, was not physically present at the moment of importation. No duty was paid or offered at the time, so the court ordered the goods to be condemned as forfeit, pursuant to Regulation 88 of the 2010 Regulations.
5. The question posed in the stated case for the opinion of this course is: "Did we correctly interpret Regulation 13(3)(B) by finding that importation for personal use requires the physical presence of the importer at the moment of importation?". It is necessary to set out in full the facts found by the magistrates, as described at paragraph 2 of the case, as follows:

"(a) The Appellant is an Orthodox Jew who observes the rituals and celebrations of the Orthodox Jewish faith. He is aged seventy six years of age and is registered at an 'invalid' for the purposes of qualifying for a blue badge for special parking for invalid persons.

(b) The Appellant has a wife and six children each of whom is married and each of whom has between 5 and 9 children.

(c) The Appellant's custom over the last six years is to supply wine and alcoholic drinks for family occasions arranged in accordance with Jewish tradition.

(d) There is a Jewish festival of Purim which occurs once a year usually in March when it was customary in the Orthodox Jewish community to exchange with friends and relatives gifts of food and drink to celebrate the festival at which customarily large amounts of wine were consumed it being customary on this one occasion in the Jewish calendar for adult male guests to become slightly inebriated.

(e) There is the Jewish holiday of Passover which takes place over eight days every year in April and that on the first two nights of that holiday - known as Sedar nights - it was a religious obligation for each male and female adult to consume four cups of wine. As many persons were not keen to consume four cups of full strength wine it was customary to use on that occasion special low alcoholic content wine with an alcoholic content of 5% to 7% (instead of the usual 12% to 14%).

(f) The Appellant never asked for or received any payment in money or money's worth when he supplied wine and alcoholic drinks at such events.

(g) The Appellant's practice was to buy the wine from another European country and arrange for his full time employee driver to transport the pre-paid wine back to the United Kingdom to the Appellant's address and that he had done this on a number of occasions prior to the seizure of the wine on this occasion.

(h) In relation to the goods in question the Appellant bought these goods, namely 540 bottles of wine, by auction in Saint Omer, France, on 13 December, 2010 with the intention to supply them to his family as part of the observance of the Jewish festival of Purim and the Jewish holiday of Passover.

(i) A large percentage of the wine purchased was half-strength wine specifically purchased for the Passover Holiday.

(j) The Appellant arranged for an employee of his, Mr Bradley Wilson, described as a full time driver for the Appellant, to transport the goods in question to the Appellant's address for this purpose.

(k) The car in which the goods were transported was registered in the Appellant's name and the insurance was in the Appellant's name as the main driver and in Mr Wilson's name as a second driver.

(m) When Mr Wilson brought the wine from France into the United Kingdom the wine was seized by officers acting for the Respondent.

(n) On the next occasion after the seizure of the wine, the Appellant accompanied Mr Wilson when wine was brought into the United Kingdom."

6. The magistrates held that the words in Regulation 13(3)(b), "transported to the United Kingdom from another Member State by P", required the importer to be physically present at the importation. Since the appellant was not so present but had caused the goods to be brought in by his employee Bradley Wilson the wine was "held for a commercial purpose" and therefore dutiable and liable to forfeiture. On the particular facts this result is to say the least surprising; but the respondent submits, and submitted below, that the Court of Justice of the European Union has decided that the requirement that the importer transport the goods from one Member State to the other means that he must accompany the goods in person at the importation. Two decisions in Luxembourg are relied on and also a decision of this court. It is, of course, elementary that implementing municipal legislation such as the 2010 Regulations must be read conformably with the Directive which it implements.
7. The first case is R v Customs and Excise Commissioner, ex parte EMU Tabac SARL [1998] ECR1-11605. There the court was concerned with Council Directive 92/12/EEC, the predecessor of the 2008 Directive, and in particular Article 8, which provided:

"As regards products acquired by private individuals 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 are acquired."

It is said that this is materially the same as Article 32 of the 2008 Directive which I have read and which is, as I have indicated, implemented by the 2010 Regulations. The facts of EMU Tabac were, in essence, as follows. Private individuals in this country purchased, or caused the purchase of, cigarettes in Luxembourg. They were for the individuals' private use but the consumers did not go to Luxembourg, buy the goods and bring them back themselves; they placed orders through a company, MBL, which then bought the products from an associated company in Luxembourg and arranged their importation into the United Kingdom by private carrier on behalf of the individuals in return for payment of a fee.

The Customs and Excise Commissioners detained the goods imported under this scheme and litgation followed. The Court of Appeal referred two questions to the Court of Justice. The first question was this, at paragraph 20:

"Does Directive 92/12/EEC and in particular Article 8 have the effect of precluding the charging of excise duty on goods in Member State A in circumstances where-

(i) the goods were acquired for the use of a private individual in Member State A;

(ii) they were acquired in Member State B by an agent acting on behalf of that private individual;

(iii) transportation of the goods from Member State B to Member State A was arranged by the agent; and

(iv) the individual did not himself travel with the goods from Member State B to Member State A?"

The court summarised the applicant's argument as follows, at paragraph 28:

"... the applicants in the main proceedings argue that the maxim of Roman law qui facit per alium facit per se, meaning that a person acting through an agent must be treated as if he himself were so acting, constitutes a general principle in a number of legal systems, in particular in English law, and must be applied in this case, a fortiori since neither the English version of the Directive nor the French, Italian, Spanish, German, Dutch or Portuguese versions exclude the possibility of using an agent."

8. The court rejected this argument. Its reasoning is to be found at paragraphs 29 to 37. Critically, this is said at paragraph 33:

"As far as Article 8 is concerned, it is evident that none of the language versions expressly provides for such involvement [that is the involvement of a third party] and that, on the contrary, the Danish and Greek versions indicate particularly clearly that, for excise duty to be payable in the country of purchase, transportation must be effected personally by the purchaser of the products subject to duty.

I should read also paragraph 36:

"Furthermore, to discount two language versions, as the applicants in the main proceedings suggest [that is to say the Danish and Greek versions], would run counter to the Court's settled case-law to the effect that the need for a uniform interpretation of Community regulations makes it impossible for the text of a provision to be considered in isolation but requires, on the contrary, that it should be interpreted and applied in the light of the versions existing in the other official languages... Lastly, all the language versions must, in principle, be recognised as having the same weight and this cannot vary according to the size of the population of the Member State using the language in question."

Lastly, paragraph 37:

"It follows from the foregoing that Article 8 of the Directive is not applicable where the purchase and/or transportation of goods subject to duty is effected through an agent. The conditions governing the application of Article 8 are not, therefore, satisfied in the situation described by the national court."

9. The next case is Staatssecretaris van Financien v Joustra [2007] 1 CMLR 831, also concerned with Article 8 of the 92 Directive. The facts were somewhat closer to those of the present case, though the appellant says they are no less readily distinguishable. Mr Joustra, along with some 70 other private individuals, belonged to a group called the "Cercle des Amis du Vin" in the Netherlands. The court described what happened at paragraph 17 of the judgment:

"Each year, on behalf of the circle, Mr Joustra orders wine in France for his own use and that of the other members of the group. On his instructions, that wine is then collected by a Netherlands transport company which transports it to the Netherlands and delivers it to Mr Joustra's home. The wine is stored there for a few days before being delivered to the other members of the circle on the basis of their respective shares of the quantity purchased. Mr Joustra pays for the wine and the transport and each member of the group then reimburses him for the cost of the quantity of wine delivered to that member and a share of the transport costs calculated in proportion to that quantity. It is common ground that Mr Joustra does not engage in that activity on a commercial basis or with a view to making a profit."

Excise duty was paid on the wine in France. The Netherlands tax authority sought to levy duty in the Netherlands. The Court of Justice referred to EMU Tabac. They went on to state at paragraph 41:

"Consequently, and having regard to the wording of Article 8 of the Directive, which does not exhibit any ambiguity, the Court has already held, in paragraphs 37 and 40 of EMU Tabac and Others, that that provision is not applicable where the purchase and/or transportation of products subject to excise duty is effected through an agent, as the Community legislature did not at any point intend that provision to apply in the event of such involvement."

That, as it seems to me, is the critical passage. There is further reasoning at paragraphs 43 to 47, to which, of course, I have had regard, but with respect need not set out.

10. The last case, though the second one in time, is the decision of this court in Customs and Excise Commissioners v Newbury [2003] 1 WLR 2131. This case also concerned Article 8 of the 92 Directive. A principal issue was as to the proportionality of a forfeiture on the particular facts. However, Hale LJ (as she then was) giving the judgment of the court recalled the decision in EMU Tabac, and in particular the Advocate General's opinion, and said this at paragraph 32:

"However, it was part of the Court's reasoning [I interpolate, in EMU Tabac] that article 8 is not applicable where the purchase and/or transportation of goods subject to duty is effected through an agent. The Advocate General had answered the first question in the negative and then answered the second a fortiori from the first. The object of the rules is to determine whether duty is payable in the country of origin or the country of destination. The general principle is the latter and article 8 is an exception in which three conditions must be fulfilled: the products must be acquired by private individuals; the products must be acquired by private individuals for their own use; and the products must be transported by private individuals.

'The private individual must carry out sequentially a number of personal operations in order to benefit from the tax provisions in the Member State of purchase: ... he must travel to that Member State and from there he, personally, must transport the goods acquired. It seems to me to follow logically from those requirements that the purchase, as such, should also be deemed to be limited to a purchase made by the buyer himself, not through an agent or middleman.' [para 27 of the Advocate General's opinion].

The involvement of people other than the purchaser in the intra-Community movement of goods is carefully regulated by other provisions in the Directive, including the provision for distance selling in article 10. If it had been intended that the purchaser could have been reflected by any natural or legal person to whom he had given a power of attorney in order to benefit from article 8 of the Directive, it would have said so. The person doing the transporting must also be the private individual purchaser."

11. The appellant seeks, as he sought before the Magistrates' Court, to distinguish these three cases on their facts. EMU Tabac involved a plainly commercial operation invloving importation by a carrier who was associated with the seller of the goods for a fee. Joustra involved importation by a commercial transport company which charged for doing so. Newbury involved the importation of goods for relatives of the importer who had given her the money required to do so.
12. In this case the Magistrates' Court found in effect that the goods were not in substance or in fact being imported for a commercial purpose. They were brought in by the appellant's private full-time employee in the ordinary course of his employment. Many would find it surprising, to say the least, that the law of the European Union requires that on these facts the goods be treated as dutiable for all the world as if they had been a commercial import. Mr Stern is plainly and wholly without any culpability of any kind.
13. I accept the points of factual distinction which the appellant has put forward between this case and the three I have cited but I am driven to conclude that the Court of Justice of the European Union has plainly decided that the language of Article 8 of the 92 Directive unambiguously requires that the importer must personally accompany the goods if they are not to be treated as held for commercial use. That being so, the same reasoning must apply to Article 32 of the 2008 Directive and in turn to Regulation 13(3)(b) of the 2010 Regulations. The distinctions raised by the appellant cannot avoid this conclusion.
14. I regard this as a wholly astonishing result. I think there is a real question whether the impact of the legislation, specifically in a case such as this, is not disproportionate. And in a case where the importer is disabled, I wonder whether the present arrangements raise issues under the disability legislation. Moreover Newbury, it would appear, decides that condemnation is a discretionary remedy. I see no reason why consideration should not be given in proceedings of this kind, where the court accepts an importer's account that in substance and in fact the goods he brought in were for private use, whether an order of condemnation would not itself be disproportionate in the circumstances; if at any rate the importer undertakes to pay the duty. In fact, Mr Stern has told us this morning that the goods have been restored to him upon his payment of the duty that was due.
15. In all the circumstances, for the reasons I have given, I would answer the question posed by the Magistrates' Court in the affirmative and dismiss the appeal.
16. MRS JUSTICE SWIFT: I agree for the reasons expressed by my Lord.
17. LORD JUSTICE LAWS: Are there any consequential orders sought?
18. MR JONES: My Lord, there is an existing costs order from the Magistrates' Court but we do not seek the costs in relation to today.
19. LORD JUSTICE LAWS: There is no application in this court?
20. MR JONES: No.
21. LORD JUSTICE LAWS: Thank you. That is very helpful.
22. THE APPELLANT: Will your Lordship's judgment be published?
23. LORD JUSTICE LAWS: I do not know, it is not necessarily up to me, Mr Stern. You can bespeak a copy of it.
24. THE APPELLANT: Can a litigant obtain a copy?
25. LORD JUSTICE LAWS: Yes, most certainly. It is the shorthand writers you need to get a copy from.
26. Can you see that Mr Stern knows who to apply to.
27. THE APPELLANT: But your Lordship has had it recorded?
28. LORD JUSTICE LAWS: It has been recorded and a full text will be available. Not for a little while because I have to correct it first. That is not to say alter it but just to correct the grammatical infelicities. Thank you very much indeed.