R on the application of (1) Hoverspeed Limited (2) Alan Charles Andrews (3) Pauline Andrews (4) Lynne Andrews (5) George Wilkinson v Commissioners of Customs and Excise
 EWHC 1630 (Admin)
The failure of Customs and Excise to provide reasons for stopping passengers suggested that they did not have reasonable grounds for doing so. In any event Customs’ refusal to return the car to the owner without even considering whether it might be restored to her on payment of an appropriately proportionate sum represented a disproportionate response
The four individual Claimants brought applications for judicial review challenging the lawfulness by which excise goods being carried by Mr and Mrs Andrews and Mr Wilkinson and the vehicle in which they were travelling were seized by Officers of Customs and Excise. Hoverspeed Ltd made a general challenge to different aspects of the policies followed by Customs in relation to passengers who landed at the Hoverport.
Mr and Mrs Andrews and Mr Wilkinson were stopped pursuant to sections 163 and 163A of the Customs and Excise Management Act 1979 (“CEMA”). They were found to be in possession of excise goods that exceeded the minimum indicative levels (“MILS”) set out in the Excise Duties (Personal Reliefs) Order 1992 (“the 1992 Order”). As a result they were asked to satisfy the Officers that the goods were not held for a commercial purpose. This they failed to do. Consequently the excise goods and vehicle were seized pursuant to sections 139 and 141 of CEMA.
In bringing their applications for judicial review the Claimants relied upon the terms of Council Directive 92/112/EEC (“the Excise Directive”) rather than the 1992 Order by which this country set out to implement the requirements of the EC law.
(i) That excise duty is only chargeable on alcohol, cigarettes and tobacco purchased by an individual in another member State of the European Union when they are held in this country for commercial purposes, as opposed to being held by the individual for his own use;
(ii) That the 1992 Order wrongly reverses the burden of proof by requiring the individual to prove that he is not holding excise goods over the MILS for a commercial purpose;
(iii) That if an individual holds goods in excess of the MILS, this fact must be used solely as a form of evidence and not as a persuasive presumption that he holds the goods for a commercial purpose, although except in a borderline case this may not make much difference in practice;
(iv) That there must be reasonable grounds for suspecting an individual of holding goods bought in another member State for a commercial purposes before he may lawfully be stopped and searched;
(v) That prima facie individuals and their excise goods must be free to travel across internal frontiers of the European Community without being impeded and delayed by checks for excise duty purposes, although such checks may be made where grounds of reasonable suspicion exist on an individualised basis;
(vi) That Customs Officers must follow principles of proportionality when determining whether or not to restore goods and vehicles they have seized to their owners;
(vii) That because Customs and Excise did not explain to the court the reasons why they stopped Mr and Mrs Andrews and Mr Wilkinson in their car, and because they suggested in their evidence that they might stop passengers for legally inadmissible reasons, they did not prove to the court that there were reasonable grounds for stopping the car and questioning the occupants. The goods in it should therefore not have been seized. Nor should the car. In any event Customs’ refusal to return the car to Miss Andrews without even considering whether it might be restored to her on payment of an appropriately proportionate sum represented a disproportionate response.
COMMENT (August 2002)
The Hoverspeed decision has been hailed in the national press as a “smugglers’ charter”. It is said it will allow dishonest individuals to travel abroad with the intention of purchasing excise goods for resale in the UK at profit with impunity. Much will be undone in the progress made by Customs to reduce the smuggling problem from one costing £3.5 billion in lost revenue as at March 2001, to one which cost £345 million as at November 2001.
Others have applauded the decision as the long awaited protection of the innocent individuals’ Community right to purchase excise goods for their own use from an over zealous policy by Customs to combat smuggling. Certainly the ramifications of the decision are wide reaching, perhaps wider than can be appreciated at first glance.
Mr and Mrs Andrews and Mr Wilkinson were stopped by Customs pursuant to sections 163 and 163A of CEMA. Following the judgment, travellers can only be stopped under these sections where Customs have reasonable grounds for suspecting they hold excise goods for a commercial purpose. The court made clear reasonable grounds would not exist where these are based on “generalities or trends”. It appears from the judgment by this is meant there must be intelligence or information to support personal factors. Customs cannot rely on travellers fitting into “risk profiles” or “trend intelligence”.
Despite this the court acknowledged evidence from Customs Officers that it is a relatively rare situation where they hold intelligence relating to a specific smuggling attempt. This is hardly surprising when one considers the resources required to obtain such intelligence. It is difficult therefore to see exactly what will be required to provide reasonable grounds. Still less to see how this can be achieved after the event in those cases now pending before the courts and tribunal.
There are other sections of CEMA which give to Customs the power to stop individuals at internal frontiers. Perhaps the most important of these is section 78(2) of CEMA which provides the power to Customs to require travellers to answer questions relating to his baggage and anything in his baggage or carried with him. The focus of this section is prohibited or restricted articles.
The court considered the availability of other powers to Customs. It concluded, however, the only relevant powers that can be utilised by Customs in relation to preventing the improper importation of excise goods are those in section 163 and 163A of CEMA. It seems questionable therefore whether Customs will be able to avoid the burdensome requirement of “reasonable grounds” by simply acting pursuant to another section of CEMA.
The court has made clear the finding the reversal of the burden of proof in the 1992 Order is incorrect is not likely to have great practical effect in the majority of cases. There is in real terms little difference between a traveller failing to satisfy Customs the goods are not held for own use and Customs being satisfied they are held for a commercial purpose.
The judgment does not expressly deal with what effect this finding is to have on appeals and condemnation cases pending before the tribunal and magistrates’ courts. Arguably, those travellers who have been required to discharge the burden of proof in the 1992 Order have had their Community rights infringed. It may well not be enough to show the reality of the situation was Customs treated the fact the traveller was in possession of excise goods in excess of the MILS as just one of a number of factors that pointed towards the goods being held for a commercial purpose.
The final point of significance in the judgment is the consideration given to Article 1 of Protocol 1 of the ECHR and the concept of proportionality. Whilst the distinction drawn in Lindsay v C & E Comrs  WLR 1766 between smuggling for profit and not-for-profit smuggling was expressly approved, the Commissioners’ policy on the restoration of vehicles was criticised for paying little more than “lip service” to the principle of proportionality.
The courts have made clear in future the tribunal must consider what a proportionate response would be, for example whether restoration should be offered on terms. This has two consequences. Firstly, the tribunal may consider a refusal to restore is disproportionate and allow an appeal by the traveller because the decision not to restore must therefore be Wednesbury unreasonable.
Secondly, given the limited powers of the tribunal where an appeal is allowed, such cases are likely to be remitted back to the Commissioners for re-review on the basis of a finding that, for example, a failure to consider restoration on terms rendered the decision disproportionate and unreasonable. The Commissioners would thereby be forced to consider restoration on terms as part of any re-review carried out.
Following Dannat v C & E Comrs (unreported) a broader view than that previously argued for by the Commissioners must be taken of the tribunal’s powers to render their jurisdiction compliant with article 6 of the ECHR. The tribunal held that findings of fact can be made on issues of underlying fact such as whether excise goods were held for a commercial purpose. Such findings bind any future Reviewing Officer.
These decisions, taken together, have considerably broadened the scope of the issues that can be raised in appeals against decisions not to restore vehicles used in the improper importation of excise goods. Inevitably, and perhaps uncomfortably for both the Commissioners and Community travellers alike, they will fall to be resolved by the tribunal on a case by case basis.
Zoë Taylor, 1 Crown Office Row