Khan & Ors, R. v

In a tobacco-smuggling confiscation case, a pecuniary advantage based on unpaid excise duty depends on the defendant’s personal liability for that duty. From 1 June 2001, Tobacco Products Regulations 2001 restricted liability to specified persons, including a person holding tobacco at the excise duty point or causing it to reach that point. A confiscation order founded solely on the wider, superseded regulations must be quashed where the findings of fact establish no alternative benefit. The offence charged does not by itself determine either personal duty liability or benefit for confiscation purposes.

The three appellants had been convicted of offences concerning smuggled cigarettes found in their possession in Essex. They had a limited organisational role in collection and distribution, rather than responsibility for importation.

Following conviction, the Recorder made confiscation orders after accepting the prosecution’s reliance on pre-2001 regulations that imposed wider personal liability for excise duty. The Crown accepted on appeal that the applicable regime was regulation 13 of the Tobacco Products Regulations 2001, and that the findings did not support confiscation on another basis.

The Court of Appeal considered whether the confiscation orders should stand and gave guidance on similar cases affected by reliance on the superseded regulations.

1. The applications were allowed. Time to appeal was extended, leave was granted, and each confiscation order was quashed.
2. For confiscation under sections 76(4) and 76(5) of the Proceeds of Crime Act 2002, a defendant may obtain a benefit through a pecuniary advantage where he is personally liable for excise duty that has been evaded. The former regime in regulation 5 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 imposed wide liability, including on importers and consignees.
3. That regime ceased to govern liability for tobacco on 1 June 2001. Regulation 13 of the Tobacco Products Regulations 2001 confined the relevant liability, apart from registered persons, to a person holding the tobacco at the excise duty point or causing it to reach that point. The Recorder had been led to apply the obsolete wider categories. On the findings made, the appellants were neither shown to be personally liable under the current regulations nor shown to have obtained another benefit. The orders therefore had no lawful basis.
4. The court stressed that citation of the wrong regulations would not invariably invalidate a confiscation order. A defendant might still be personally liable under the current regime, or might have benefited by obtaining the goods. Nor does the form of the indictment conclusively establish personal duty liability or confiscation benefit.
5. The court gave case-management guidance for affected defendants. A challenge would ordinarily proceed by an application for leave to appeal against sentence, with an extension of time where required. A concluded or abandoned prior appeal could not be reopened by the court; the available route was an application to the Criminal Cases Review Commission. The court also directed that citation of R v Rowbotham [2006] EWCA Crim. 747 should be avoided because it risked repeating the regulatory error, while expressing no view on whether its ultimate order was justified.

• Court of Appeal (Criminal Division): extended time, granted leave to appeal against sentence, and quashed the three confiscation orders.
• Crown Court: the Recorder made confiscation orders after relying on superseded excise-duty regulations.