The definition of made-wine is in s 1 of the same Act and is “any liquor which is of a strength exceeding 1.2% and which is obtained from the alcoholic fermentation of any substance….but does not include wine, beer, black beer, spirits or cider.” It was not suggested that the confiscated bottles contained anything other than an alcoholic drink. So whether the imported home-made alcoholic drinks were actually wine or made-wine is immaterial. Both are subject to excise duty. So in other words, the home-made wine and spirits brought into the country on the Appellant’s trailer were subject to excise duty. That duty was not paid.

24. The time at which liability to the duty arises is determined under regulations. Article 13 of Excise Goods (Holding, movement and Duty Point) Regulations 2010 provided that where excise goods “are held for a commercial purpose” that excise duty point is that time when they are first so held in the United Kingdom. In other words, the duty point was when the goods first arrived in the UK if they were held for a commercial purpose.

25. Commercial purpose is defined in article 13(3):

(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.

(4) For the purposes of determining whether excise goods referred to in the exception in paragraph (3)(b) are for P’s own use regard must be taken of—

(a)P’s reasons for having possession or control of those goods;

(b)whether or not P is a revenue trader;

(c)P’s conduct, including P’s intended use of those goods or any refusal to disclose the intended use of those goods;

(d)the location of those goods;

(e)the mode of transport used to convey those goods;

(f)any document or other information relating to those goods;

(g)the nature of those goods including the nature or condition of any package or container;

(h)the quantity of those goods and, in particular, whether the quantity exceeds any of the following quantities—

10 litres of spirits,

20 litres of intermediate products (as defined in article 17(1) of Council Directive 92/83/EEC(1)),

90 litres of wine (including a maximum of 60 litres of sparkling wine)

110 litres of beer,

3200 cigarettes,

400 cigarillos (cigars weighing no more than 3 grammes each),

200 cigars,

3 kilogrammes of any other tobacco products;

(i)whether P personally financed the purchase of those goods;

(j)any other circumstance that appears to be relevant.

(5) For the purposes of the exception in paragraph (3)(b)—

(a)“excise goods” does not include any goods chargeable with excise duty by virtue of any provision of the Hydrocarbon Oil Duties Act 1979 or of any order made under section 10 of the Finance Act 1993(2);

(b)“own use” includes use as a personal gift but does not include the transfer of the goods to another person for money or money’s worth (including any reimbursement of expenses incurred in connection with obtaining them).

26. In other words, unless the alcoholic drinks were imported for personal use, as defined above, they were liable to excise duty at the point of importation. No duty was paid in this case.

27. Section 49(1) of the Customs and Excise Management Act 1979 (“CEMA”) provides that

“(1) Where—

(a) except as provided by or under the Customs and Excise Acts 1979, any imported goods, being goods chargeable on their importation with customs or excise duty, are, without payment of that duty-

(i) unshipped in any port,….

those goods shall…. be liable to forfeiture.”

In other words, if the home-made wine and spirits were liable to excise duty and were brought into the UK without payment of such duty, the wine and spirits were liable to forfeiture.

28. Section 139(1) of CEMA provides that

“Any thing liable to forfeiture under the customs and excise Acts may be seized or detained by any officer or constable or any member of Her Majesty's armed forces or coastguard”.

29. The effect of this provision is that where the home-made wine and spirits were liable to forfeiture, the UKBA officer had the right to seize them, as indeed he did.

5.Further, section 141(1) of CEMA provides that:

“(1) Without prejudice to any other provision of the Customs and Excise Acts 1979, where any thing has become liable to forfeiture under the customs and excise Acts—

(a) any ship, aircraft, vehicle, animal, container (including any article of passengers' baggage) or other thing whatsoever which has been used for the carriage, handling, deposit or concealment of the thing so liable to forfeiture, either at a time when it was so liable or for the purposes of the commission of the offence for which it later became so liable;

...

shall also be liable to forfeiture.”

30. The effect of this provision is that any vehicle which at the time of importation transported any goods liable to seizure is itself also liable to forfeiture and seizure.

31. HMRC have power under s 152 of CEMA to restore anything forfeited or seized subject to such conditions as they see fit:

“the Commissioners may, as they see fit –

….

(b) restore, subject to such conditions (if any) as they think proper, anything forfeited or seized under the Customs and Excise Acts.”

32. As mentioned earlier, HMRC refused to excise that power in favour of the Appellant in this case. The Appellant asked for that decision to be reviewed, which under s 16 Finance Act 1994 it must do in order to appeal it. Mr Sked, an officer of UKBA, carried out the review on behalf of UKBA and the Appellant has appealed that decision. We did not hear any evidence from Mr Sked because he is now on long-term sick leave and unavailable to give evidence.

33. Section 16 of the Finance Act 1994 also provides that:

“(4) In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say—

(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;

(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, [a review or further review as appropriate] of the original decision; and

(c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by [a review or further review as appropriate], to declare the decision to have been unreasonable and to 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.

….

(6) On an appeal under this section the burden of proof as to—

(a) the matters mentioned in subsection (1)(a) and (b) of section 8

above,

(b) the question whether any person has acted knowingly in using

any substance or liquor in contravention of section 114(2) of

the Management Act, and

reasonable cause for belief as is required for liability to a penalty to arise under section 22(1) or 23(1) of the Hydrocarbon Oil Duties Act 1979 (use of fuel substitute or road fuel gas on which duty not paid),

shall lie upon the Commissioners; but it shall otherwise be for the appellant to show that the grounds on which any such appeal is brought have been established.”

9. Section 16(8) Finance Act 1994 and Schedule 5 paragraph 2(1)(r) provides that an “ancillary matter” includes:

“any decision under section 152(b) as to whether or not anything forfeited or seized under the customs and excise Acts is to be restored to any person or as to the conditions subject to which any such thing is so restored”

34. The effect of this provision is that this Tribunal is limited to considering the reasonableness of HMRC’s decision on review to uphold the original officer’s decision not to restore the tractor unit to the Appellant.

35. UKBA publishes its policy on restoration. This provides (in so far as relevant) as follows:

(ii) the driver but not the haulier is responsible – If the haulier provides evidence satisfying the UKBA that the driver, but not the haulier, is responsible for, or complicit, in the smuggling attempt then:

(a) if the hauler also provides evidence satisfying UKBA that the haulier took reasonable steps to prevent drivers smuggling then the vehicle will normally be restored free of charge unless:

(i) the same driver is involved (working for the same haulier) on a second or subsequent occasion in which case the vehicle will normally be restored for 100% of the revenue involved in the smuggling attempt (or for the trade value of the vehicle if lower) except that:

(ii) if the second or subsequent occasion occurs within 6 months of the first, the vehicle will not normally be restored.

(b) Otherwise

(i) on the first occasion the vehicle will normally be restored for 100% of the revenue involved (or the trade value of the vehicle if lower).

(ii) on a second or subsequent occasion the vehicle will not normally be restored.

(iii) the haulier is responsible:

(a) If the revenue involved is less than £50,000 and it is the first occasion, the vehicle will normally be restored for 100% of the revenue involved (or the trade value of the vehicle if less).

(b) If the revenue involved is £50,000 or more or it is restored on a second or subsequent occasion within 6 months, the vehicle will not normally be restored.

Decision

36. It is for the Appellant to demonstrate that UKBA’s decision not to restore the vehicle was unreasonable. We deal with the Appellant’s grounds of appeal.

The goods were for personal use

37. This was not a ground of appeal in its Notice of Appeal nor even specifically advanced by the Appellant’s representative at the hearing. Nevertheless, mention was made of the fact that the total of the wine and spirits imported was less than what might be regarded as three persons’ ‘allowance’ under the regulations cited above which say regard should be had to whether the import was less than 10 litres of spirits and 90 litres of wine per person.

38. The Appellant does not challenge the legality of the seizure and indeed it cannot do so: that has already been determined by default by its failure to challenge the seizure in the magistrates’ court. We are bound by the Court of Appeal authority in HMRC v Jones & Jones [2011] EWCA Civ 824 which is that the effect of Schedule 3 paragraph 5 to the Customs and Excise Management Act 1979 is that where the owner has not challenged the legality of the seizure within one month of the seizure then the thing seized is “deemed to have been duly condemned as forfeited.” The conclusions of the Court of Appeal were:

“the stipulated effect of the respondents’ withdrawal of their notice of claim under paragraph 3 of Schedule 3 was tht the goods were deemed by the express language of paragraph 5 to have been condemned and to have been “duly” condemned as forfeited as illegally imported goods…..

…In brief, the deemed effect of the respondents’ failure to contest condemnation of the goods by the court was that the goods were being illegally imported by the respondents for commercial use.”

39. We consider that this means that in this case the appellant’s failure to challenge the legality of the seizure in the Magistrates’ court means we are bound to find that the goods were imported illegally by the appellant for commercial use. UKBA’s decision not to consider that the goods were for personal use was therefore in compliance with the law and cannot be faulted.

40. We note that in any event, even were we able to consider personal use, we would not have been persuaded that the goods were for personal use. UKBA and the Tribunal have been given at least 3 different stories about the intended use of the goods. At Dover, the UKBA officer was told the goods belonged to the 3 men in the cab. As mentioned, in a letter written by Mrs Vrabie, the UKBA review officer was told that the wine belonged to a Mr and Mrs Ursu and was intended for a family wedding. Yet at the hearing Mr Vrabie and Mr Bucur’s story was that it belonged to between 10-15 friends and acquaintances (unnamed) who were sending supplies over to relatives in the UK and Mr Vrabie and Mr Bucur would deliver them in return for favours such as a meal or shower.

41. We do not consider that any of these explanations are correct: they are inconsistent and none of them have been reliably verified. In any event only the original claim (that the goods belonged to all three of the men in the cab) was consistent with personal use. They not only now deny that they owned the spirits and wine but in any event regulation 13(4)(h) only requires regards to be had to the quantity imported when considering personal use: it does not create an irrebutable presumption that importing a lesser quantity must be for personal use. And in this case, even if they were the owners, where the three persons travelling in the cab were on their evidence only to be in the UK a very short time it is most unlikely that they would be bringing in around 90 litres of wine each for their own personal use.

42. So (were it relevant, which it is not) for all these reasons we are satisfied that the spirits and wine were not for personal use.

The appellant did not know of the previous seizure of the vehicle

43. We consider it would be relevant whether the appellant knew of the previous seizure as it would affect how HMRC applied its policy with regards the question of whether it was a second or subsequent smuggling attempt. However, as a matter of law, we consider that the appellant company must be taken to know whatever an individual director knows with respect to the business of the company.

44. We accept Mrs Vrabie’s evidence that Mr Vrabie and Mr Bucur had not told her about the earlier seizure in September 2010 until after the second seizure in February 2011. The evidence of all three witnesses for the appellant was consistent on this but as explained above we would treat the evidence particularly of Mr Vrabie and Mr Bucur with caution. Nevertheless, we note that Mr Vrabie dealt with the fine on the spot in September 2010 and we accept their evidence the letters from UKBA were handed to Mr Vrabie rather than posted to the company in Romania. We also note that the evidence (that Mr Vrabie and Mr Bucur agreed to keep it a secret from Mrs Vrabie) was credible on the basis neither of these witnesses were entirely straightforward with the Tribunal either.

45. However, this finding of fact is irrelevant. The company is deemed as a matter of law to know what either of its directors knows. Mr Vrabie was one of the appellant’s directors. He was well aware of the earlier seizure, even if Mrs Vrabie was not. The company must therefore be taken to have known of the seizure of the vehicle in September 2010. There is therefore nothing in this ground of appeal.

The two directors were married

46. It was Mr Adeniyi’s case that the UKBA’s officers decision ignored the fact that the vehicle was owned by a company and not Mr Vrabie personally or alternatively was influenced by the fact that the two directors of the company were married. We agree with Mr Adeniyi that the two directors’ personal relationship is irrelevant: we disagree with him that it influenced UKBA’s decision. It is not mentioned as a reason for the decision and we do not find any reason to suppose that it did influence the decision. In particular, as we have explained above, Mr Vrabie’s knowledge is imputed to the company, not because he was married to a director but because he was himself a director. This is not lifting the veil of incorporation but merely recognising that the company as an incorporeal entity must act by its directors.

The Appellant did not know it risked seizure of its vehicle

47. The appellant accepted that Mr Vrabie was well aware of the first seizure and that this had led to Mr Vrabie paying a penalty of £1,520. We therefore find that the appellant company (through its director Mr Vrabie) knew that it was against the law of this country to bring into this country home-made wine and spirits without paying excise duty.

48. It was the appellant’s case that it did not understand from the previous seizure that a second seizure would lead to confiscation of their trailer, and that the UKBA was wrong not to take this into account in its decision.

49. We had little evidence about this as UKBA had not produced the officers’ notebooks from the earlier seizure. The appellant produced a letter written to them in English and an attached document written in Romanian. Although the English version warned that a second smuggling attempt would lead to non-restoration of the vehicle, we were not satisfied that the Romanian version did as it was clearly not a translation of the English document.

50. We take into account that on Mr Vrabie’s own evidence the penalty imposed on him back in September 2010 was part paid by a Romanian friend living in England with good English and that Mrs Vrabie’s evidence that this was Mr Ionuţ. Mr Vrabie’s evidence was that Mr Ionuţ’s English was good enough for him to act as translator when he was speaking to the solicitor who represented the appellant at this hearing, and he was the person Mr Vrabie had asked the officer to speak to on the phone at the second smuggling attempt to explain what was happening with regards the confiscation of the vehicle.

51. We therefore find that at the time of the first incident Mr Vrabie had a document in English which explained the point and an English-speaking friend who helped at the time with paying the fine. We take into account that Mr Vrabie’s evidence on other matters was not reliable. We are therefore not satisfied that he did not know that he risked forfeiture of the vehicle if he attempted to smuggle again.

52. In any event, as a matter of law we do not think it matters whether or not Mr Vrabie (and therefore the appellant company) understood that they risked forfeiture of the vehicle. We think it is relevant to the application of HMRC’s policy that the appellant understood that what it was doing was against the law of this country and it is clear that Mr Vrabie was well aware that smuggling home-made wine and spirits was unlawful as he had had to pay a penalty for doing just this five months before. In conclusion, there is nothing in this ground of appeal.

No interpreter

53. Mr Vrabie says he asked for an interpreter at Dover and one was not provided. Even if true, we do not consider as a matter of law that this by itself is a ground for restoration. It would be potentially relevant if Mr Vrabie was disadvantaged by the lack of the interpreter. The only reason it was suggested that Mr Vrabie was disadvantaged by the lack of an interpreter was because, it was said, he misunderstood the questions and gave answers which UKBA considered to be misleading the officers which was taken into account in the restoration decision.

54. We have already found as a fact that he did not misunderstand the questions and in particular in telling the UKBA officer that there was no wine on board he was misleading the officer as evidence he gave at the hearing was that he knew that there was some alcohol in the bags.

55. Nor do we accept that Mr Vrabie asked for an interpreter: there is no record of this in the officer’s notebook which instead records at the end of the conversation that Mr Vrabie asked the officer to speak to his friend on the phone (identified at the haring as Mr Ionuţ) to explain the position and that Mr Vrabie then signed the report to say he understood the reasons for the seizure. Mr Vrabie did not suggest this was not accurate and we bear in mind that we have not found his evidence reliable.

56. So in conclusion we do not think that Mr Sked should have considered the absence of an interpreter at Dover or that if he had he might have reached a different conclusion to the one that he did.

Value of the wine

57. Although this point was not specifically raised at the hearing we have considered whether UKBA should have taken the value of the wine into account in reaching their decision. We accept the evidence of Mr Bucur as it is consistent with common-sense that the value of the homemade wine in Romania was virtually nothing. Although we think the wine would have had some value in the UK, as a matter of common-sense its value would have been low. However, excise duty is charged on the quantity and not quality or value of spirits and wine. The value of the spirits and wine might have been relevant to a decision on restoration following a first offence in that it might not be obvious to someone that importing home-made wine is as much subject to excise duty as commercially produced wine (if not for personal use). However, the appellant (via Mr Vrabie) was well aware home-made wine was subject to excise duty as he had had to pay a fine for importing it five months before. Therefore, Mr Sked’s failure to consider the value of the goods in this case is right.

Forfeiture of the tractor is disproportionate to the offence

58. Very little documentary evidence of hardship was produced to UKBA or the Tribunal. Nevertheless, we accept Mrs Vrabie’s evidence at the hearing and in her letters that the loss of the tractor unit has caused her family financial hardship. In particular we find that this was the only tractor unit which the company owned and the appellant had to pay finance on it yet was earning no income from it since it had been seized. Nevertheless, in the absence of more evidence we are unable to be certain of the degree of hardship.

59. We find that Mr Sked took hardship into account in reaching his decision as his letter says so. He considered that it was not exceptional hardship over and above what could be expected from having a vehicle seized. We agree that the appellant has not demonstrated exceptional hardship over what could be expected from losing a vehicle.

60. Mr Adeniyi’s point is that he considers that the hardship is out of proportion to the offence which he saw as Mr Vrabie merely failing to check that the bags did not contain alcohol. However, we are unable to agree. As we have already stated, we do not accept Mr Vrabie’s evidence on this. We consider that Mr Sked was right to treat this as a case of the haulier (by the agency of its director Mr Vrabie) being complicit in the smuggling attempt.

61. We find (as the parties agreed) that the tractor unit was worth £7,875, which is about 10 times the value of the duty evaded. Mr Sked did not consider the value of the vehicle to be relevant. It was clear that he thought it irrelevant because he considered that the goods were being imported for a commercial purpose. When considering proportionality, we agree with and are bound by Phillips in Lindsey who said that the value of the vehicle would be relevant if the importation was not for profit. However, as is clear from above, like Mr Sked, this tribunal is not satisfied with the explanations provided by the appellant as to why the goods were brought into the country. We are not satisfied that Mr Vrabie’s motive was not profit. Indeed, based on the evidence we heard, we consider that there would have been a profit motive even though we were not told what it was. Therefore, we think Mr Sked was right to exclude the relative value of the vehicle from his consideration of whether the seizure was proportional.

Conclusion

62. We consider that Mr Sked considered all the factors which he should have considered and none that he should not have considered. He concluded that the haulier was responsible for the smuggling attempt because he considered Mr Vrabie was well aware of the presence of the alcohol. We agree with Mr Sked. His conclusions, based on our findings of fact, are in line with UKBA’s published policy.

63. We agree that he was right to conclude that the seizure of the vehicle was not out of proportion to the offence because it was the second offence within six months by the same persons with the same vehicle and the same type of goods smuggled and it was not without a profit motive.

64. We dismiss the appeal.

65. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

First-tier Tribunal (Tax)

Facts

Previous incident

Incident leading to refusal to restore

Reliability of the witnesses

Events after the seizure

Law