Varsani, R. v

For tobacco-duty purposes, the expression “cigarettes of that description” includes counterfeit cigarettes made to resemble genuine cigarettes of substantially the same type. The statutory description is sufficiently generic to cover both genuine and counterfeit products; counterfeiting does not create a lower-rate category.

Accordingly, where counterfeit cigarettes imitate a branded product, duty may be calculated by reference to the recommended retail price of the genuine product under section 5(1)(a) of the Tobacco Products Duty Act 1979. Fiscal neutrality was not needed to resolve that question. Duty evaded is a pecuniary advantage for confiscation purposes even where the goods were seized before sale.

The appellant pleaded guilty at Ipswich Crown Court to three offences of being knowingly concerned in the fraudulent evasion of duty contrary to section 170(2)(a) of the Customs and Excise Management Act 1979. He received concurrent sentences of five years’ imprisonment.

In subsequent confiscation proceedings under the Proceeds of Crime Act 2002, the Crown Court found that he had benefited by £2,241,761.29 and made an order based on realisable assets of £516,278.50. The appellant appealed against sentence and the confiscation order.

The imported cigarettes were counterfeit products made to resemble Sovereign King Size cigarettes. The central issue was whether the retail-price wording in section 5 of the Tobacco Products Duty Act 1979 required duty to be calculated by reference to the price of counterfeit cigarettes, rather than the recommended retail price of the genuine branded product.

1. The appeals were dismissed. The court upheld both the confiscation order and the sentence.
2. The issue was one of statutory construction. Fiscal neutrality did not need to be invoked. Section 5 of the Tobacco Products Duty Act 1979 establishes duty rates for descriptions of tobacco products. Parliament could not be taken to have intended that counterfeit goods should attract a lower rate of tax than the genuine goods they imitate.
3. The phrase “cigarettes of that description” includes genuine goods and counterfeit goods of substantially the same type made up to resemble them. On the facts, the counterfeit cigarettes fell within the description of Sovereign cigarettes offered for retail sale in the United Kingdom. Their counterfeit character did not require a separate retail-price inquiry. The duty was therefore correctly calculated by reference to the recommended retail price of genuine Sovereign King Size cigarettes under section 5(1)(a).
4. For confiscation, sections 76(4) and 76(5) of the Proceeds of Crime Act 2002 required the court to identify property or pecuniary advantage obtained through the conduct. A defendant obtains a pecuniary advantage by evading duty even if the goods are seized before sale, provided that he caused the tobacco products to reach an excise duty point. The appellant accepted that he met that condition.
5. There was no supported alternative basis on which to reduce the benefit figure. Since the confiscation appeal failed, the appellant’s concession meant that his sentence appeal had no merit.

• Court of Appeal (Criminal Division): Dismissed the appellant’s appeals against sentence and the confiscation order.
• Ipswich Crown Court: The appellant pleaded guilty on 27 April 2009, was sentenced on 26 June 2009, and was made subject to a confiscation order on 2 October 2009.