The Commissioners for HMRC v Répertorie Culinaire Limited

Excise-duty exemptions tied to end use require the qualifying use to have occurred, not merely be intended or probable. Where cooking liquors have not yet been used when duty becomes payable, duty is due; the exemption may be implemented through a refund after proof of actual qualifying use.

A refund scheme under the Finance Act 1995 was lawful in principle. Its restrictions to manufacturers, the short claim period and minimum claim amount were incompatible with Council Directive 92/83/EEC and had to be disapplied. The directly effective right did not allow the importer to resist an assessment where duty had never been paid.

The respondent imported salted and peppered cooking wine, port and cognac from France. HMRC raised separate excise-duty assessments on imported goods, while another consignment was seized.

Following a preliminary ruling by the CJEU, the First-tier Tribunal dismissed the new appeal against the assessments but allowed the original appeal concerning restoration of the seized goods. The Upper Tribunal allowed the appeal concerning goods already sold, but dismissed it concerning goods retained in the warehouse: [2016] UKUT 0104 (TCC).

HMRC appealed. RCL cross-appealed in relation to the warehouse goods. The central issues were whether Article 27 required actual qualifying use, whether the domestic refund scheme lawfully implemented the exemption, and what directly effective EU rights were available.

1. HMRC’s appeal was allowed. The Upper Tribunal’s decision was set aside and the First-tier Tribunal’s decision reinstated. RCL’s cross-appeal concerning the warehouse goods was dismissed.

2. Article 27 of Council Directive 92/83/EEC ties the mandatory exemptions to the end use of the alcoholic product. Article 27(6) permits Member States to implement those exemptions by refunding excise duty paid. The words when used require actual qualifying use. A likely or intended future use is insufficient.

3. Accordingly, cooking liquors unused at the excise-duty point are ordinarily dutiable. The exemption can arise later when qualifying use has occurred and is proved. A refund system is therefore a lawful and practical means of implementing the exemption.

4. Section 4 of the Finance Act 1995 was valid in principle as a refund scheme. However, its restriction to manufacturers, its time limit and its minimum repayment amount were conditions that could not be justified by concrete, objective and verifiable evidence of a serious risk of evasion, avoidance or abuse. HMRC could not rely on those conditions against wholesale importers.

5. RCL’s directly effective right was limited to obtaining the benefit of the exemption once the statutory requirements were met. Because the goods had not been used for a qualifying purpose when imported, and the duty had not been paid, RCL had no accrued exemption and no defence to the assessments. The appropriate response to the defective conditions was to disapply them while retaining the refund framework. The reasoning in Autologic supported suitable adaptation of the claim machinery; Metallgesellschaft was distinguishable.

6. The warehouse goods had never been used in a finished food product. Article 27 did not extend to hypothetical use or use prevented by different circumstances. No further CJEU reference was required because the applicable principles were established.

1. Court of Appeal (Civil Division) — HMRC’s appeal allowed and RCL’s cross-appeal dismissed. The Upper Tribunal decision was set aside and the First-tier Tribunal decision reinstated: [2017] EWCA Civ 1845 .
2. Upper Tribunal (Tax and Chancery Chamber) — RCL’s appeal was allowed concerning the larger assessment for goods already sold, but dismissed concerning the smaller assessment for warehouse goods: [2016] UKUT 0104 (TCC).
3. First-tier Tribunal — The new appeal against the assessments was dismissed. The original appeal concerning restoration of seized goods was allowed and remitted for a further departmental review.