Lindsay v Customs and Excise Comrs

A policy of refusing to restore vehicles used for excise smuggling must distinguish commercial smuggling for profit from non-profit importation for family or friends. Subject to exceptional hardship, automatic forfeiture may be proportionate where a vehicle knowingly furthers a commercial smuggling venture.

For non-profit importation, proportionality requires an individual assessment. Relevant matters include the scale of importation, any previous offence, concealment or dissimulation, the vehicle's value, resulting hardship and available lesser sanctions. Importing goods for another person against reimbursement is outside “own use”, but is not necessarily holding them for a commercial purpose.

On an ancillary-matter appeal under section 16(4) of the Finance Act 1994, a tribunal may set aside an unreasonable decision and require a further review. It may not reverse the decision or substitute its own.

Customs officers seized excise goods and a recently purchased car after the respondent brought substantial quantities of tobacco and cigarettes through the Channel Tunnel control zone. Some goods had been bought for family members who had supplied purchase money. A review officer applied the Commissioners' policy that a privately owned vehicle used for improper importation would ordinarily not be restored.

The VAT and Duties Tribunal held that the refusal to restore the car was disproportionate, caused undue hardship and resulted from a policy which prevented proper consideration of relevant circumstances. It directed restoration or compensation.

The Commissioners appealed directly to the Court of Appeal. The principal questions were whether the policy unlawfully fettered the restoration discretion by preventing an individual proportionality assessment, and whether section 16(4) of the Finance Act 1994 empowered the Tribunal to order restoration or compensation.

1. Appeal allowed in part. Lord Phillips MR delivered the leading judgment. Judge LJ and Carnwath J agreed. The refusal to restore the vehicle could not stand, but the Tribunal lacked jurisdiction to substitute an order for restoration or compensation. The matter was remitted to the Commissioners for a further review.

2. Importing goods for family or friends against reimbursement takes the goods outside “own use” under the Excise Duties (Personal Reliefs) Order 1992. It does not, without more, mean that the goods are held for a commercial purpose. Commercial smuggling naturally connotes importing goods for sale at a profit. Confusing these concepts had caused Customs officers to treat materially different conduct alike.

3. Article 1 of the First Protocol requires a fair balance between the public interest and the individual's right to peaceful enjoyment of possessions. There must be a reasonable relationship of proportionality between the means used and the legitimate objective. The individual must not be subjected to an unconscionable interference. European Community proportionality likewise requires administrative penalties to go no further than strictly necessary or become disproportionate to the infringement.

4. A stringent forfeiture policy may proportionately be applied to deliberate smuggling for profit. Ordinarily, the vehicle's value need not be considered once that threshold is crossed, although exceptional hardship must always receive proper consideration. Judge LJ emphasised that this approach could extend even to smuggling for a small profit.

5. The same virtually automatic policy cannot lawfully be applied to non-profit importation. Each such case requires a realistic assessment of all its circumstances, including the quantity imported, whether it is a first offence, concealment or dissimulation, the vehicle's value, hardship and available lesser sanctions. The review officer had treated several of those matters as irrelevant. Her decision therefore failed to consider material considerations and was one which she could not reasonably have reached.

6. Section 16(4) of the Finance Act 1994 permits the Tribunal to direct that an unreasonable ancillary decision cease to have effect and to require a further review. Unlike section 16(5), it gives no power to quash or vary such a decision and substitute another. The Tribunal therefore exceeded its jurisdiction by ordering restoration or compensation.

• Court of Appeal: The Commissioners' appeal was allowed only on the Tribunal's jurisdiction. The Court upheld the conclusion that the review decision could not stand and remitted the matter for a further review in accordance with the Tribunal's decision and this judgment. Leave to appeal to the House of Lords was refused.
• VAT and Duties Tribunal: The Tribunal allowed the vehicle owner's appeal. It held that the refusal to restore the car was disproportionate and caused undue hardship, and directed restoration or compensation.
• Customs review: A review officer confirmed the decision not to restore the seized vehicle.