Customs & Excise v Smith

Where goods are deemed condemned under paragraph 5 of Schedule 3 to the Customs and Excise Management Act 1979, a tribunal hearing an appeal against refusal to restore them cannot ordinarily reopen the legality of the seizure. Mere failure to commence condemnation proceedings is insufficient only where the applicant shows good reasons for that failure. The tribunal must consider whether the issue could and should have been raised in condemnation proceedings, applying principles analogous to abuse of process. Under section 16(4) of the Finance Act 1994, the tribunal’s task is to decide whether the Commissioners could reasonably have reached the challenged decision. It must not substitute its own view on the merits, as it may under section 16(5).

Customs officers seized Mr Smith’s vehicle and excise goods after finding substantial quantities of beer, wine and spirits imported from France. Mr Smith did not give notice of claim under paragraph 3 of Schedule 3 to the Customs and Excise Management Act 1979, so the goods and vehicle were deemed condemned under paragraph 5.

The Commissioners refused restoration. On review and appeal, the VAT and Duties Tribunal considered whether the goods were liable to seizure and concluded that there was no abuse of process in allowing Mr Smith to challenge the seizure. The Commissioners appealed to the High Court. The central issues were when a tribunal may reopen the legality of a deemed forfeiture and the proper scope of its jurisdiction under section 16(4) of the Finance Act 1994.

1. The appeal was allowed and the tribunal’s decision was set aside.

2. Paragraph 5 of Schedule 3 operates in the ordinary case where an owner fails to give the required notice of claim. The tribunal must generally treat the forfeiture as established and cannot determine afresh whether the seizure was lawful. The position is analogous to a sentencing court accepting mitigation but not reopening the conviction.

3. The exceptional qualification identified in Gascoyne v Customs and Excise Commissioners [2005] 2 WLR 222 requires more than mere failure to invoke condemnation proceedings. The applicant bears the burden of showing good reasons for not challenging the forfeiture in that procedure. The tribunal should ask whether the issue could have been raised there and, if so, why it was not; it should then decide whether the issue ought to have been raised. In most cases, allowing it to be raised later will constitute an abuse of process.

4. The tribunal misdirected itself by treating the validity of the seizure as relevant merely because it bore on restoration. The evidence that Mr Smith had been told the reason for seizure, together with the warnings in Form 12A, did not establish a good reason for failing to give notice. The absence of any finding that he or his legal advisers had been misled was material.

5. The tribunal also failed to apply section 16(4) of the Finance Act 1994. Its statutory question was whether the Commissioners could reasonably have arrived at their decision. It was not entitled to substitute its own view on whether the goods were for personal or commercial use. That broader power belongs to an appeal within section 16(5), not to a review of an ancillary matter under section 16(4).

• High Court (Chancery Division): allowed the Commissioners’ appeal and set aside the VAT and Duties Tribunal’s decision.
• VAT and Duties Tribunal: considered the refusal to restore the seized vehicle and goods and permitted the legality of the seizure to be examined.