Judgment summary
This is an appeal against an assessment of excise duty in the sum of £279,728.00 arising from the seizure of 1,333.5 kg of hand rolling tobacco from the Appellant's vehicle at Dover Docks on 3 April 2017 (paras 1, 4).
An excise penalty of £153,850.00 had been withdrawn, so the appeal concerned only liability to excise duty (para 2).
The Tribunal held that the Appellant, although not in physical possession of the goods, had de facto and/or legal control of the goods through his employees, and that this control outweighed the driver's physical possession. The Tribunal found the Appellant was liable as the person 'holding' and, alternatively, 'making the delivery of' the goods under regulation 13 of the Excise Goods (Holding Movement and Duty Point) Regulations 2010. The appeal was dismissed (paras 103, 112, 119).
Background
On 3 April 2017 Border Force Officers stopped a 7.5 tonne lorry driven by Mr Dariusz Kostka at Dover Eastern Docks. The load was manifested as car parts but was found to contain 64 boxes of hand rolling tobacco weighing 1,333.5 kg, which were seized along with the vehicle (para 4).
Mr Kostka was employed by the Appellant, trading as 'Uslugi Transportowe'. He stated he was approached at a service station in Luxembourg by a man called 'Peter' who asked him to take a load of car parts to the UK. Mr Kostka referred Peter to the Appellant's freight agent, Mr Przemyslaw Milasz, also known as 'Shermak', who was also employed by the Appellant (para 5).
Mr Milasz instructed Mr Kostka to make the delivery to Dover for €500 cash. The load was collected from a warehouse near Luxembourg and Mr Kostka completed and stamped a CMR identifying the carrier as 'Uslugi Transportowe Jerzy Wesolowski' (paras 6-9).
The vehicle was owned, taxed and insured by the Appellant, and the ferry crossing was arranged and paid for by the Appellant (paras 12, 15).
The assessment was made under regulation 13 of the Excise Goods Holding Movement and Duty Point Regulations 2010 on 6 November 2018 and upheld on review on 25 January 2019 (para 17).
The appeal was stayed pending the CJEU decision in The Commissioners for Her Majesty's Revenue and Customs v WR Case C-279/19 (para 22).
Core dispute
The issue was whether the Appellant was liable to pay excise duty on the basis that he was 'holding' or 'making the delivery of' the goods at the excise duty point, notwithstanding that he was not in physical possession of the goods, which were in the physical possession of his employee driver, Mr Kostka (para 23).
HMRC submitted that the Appellant's employees, Mr Kostka and Mr Milasz, were acting in the course of their employment and with authority, such that the Appellant had de facto and/or legal control of the goods, and was also arguably in physical possession as owner and bailee of the vehicle (paras 43-64).
The Appellant submitted that HMRC had failed to prove that he accepted, authorised or exercised control over the transportation contract, and that Mr Milasz and Mr Kostka had acted outside the ordinary course of business and contrary to company procedures (paras 66-84).
Court findings
The Tribunal attached no weight to the Appellant's witness statements because none of the witnesses attended the hearing for cross-examination and no cogent reason was given for their absence, and because none had direct involvement in the seizure (para 86).
Applying the CJEU decision in WR and the Upper Tribunal decisions in Dawson's (Wales) Limited v HMRC and Agniezska Hartleb t/a Hartleb Transport v HMRC, the Tribunal found that Mr Kostka had physical possession of the goods as driver, but that Mr Kostka and Mr Milasz were acting in the course of their employment when the load was accepted and transported (paras 87-91, 101).
The Tribunal found that Mr Milasz had authority, ostensible or otherwise, to accept loads on behalf of the Appellant, that the Appellant's own evidence acknowledged difficulty in supervising home-based freight forwarders, and that there was no evidence of a rigorously enforced company policy requiring prior authorisation for unusual loads (paras 92-97).
The Tribunal rejected the Appellant's argument that knowledge or express authorisation was required, noting that WR confirmed knowledge is not a relevant factor, and found implicit authorisation from the course of employment (paras 98-99).
Applying the four questions from Dawson's UT, the Tribunal concluded that the Appellant's de facto and/or legal control, through ownership and operation of the vehicle, payment for the ferry, and identification as carrier on the CMR, outweighed the driver's physical possession (paras 100-107).
The Tribunal also found, for completeness, that the same facts supported a conclusion that the Appellant was 'making the delivery' of the goods (paras 108-113).
Outcome
The appeal was dismissed. The Tribunal found the Appellant liable for the excise duty assessed, on the basis that his de facto and/or legal control of the goods outweighed the driver's physical possession (paras 114, 119).
Major issues / areas of contention
- Whether the Appellant, not in physical possession of the goods, was nonetheless 'holding' the excise goods at the excise duty point under regulation 13 of the Excise Goods (Holding Movement and Duty Point) Regulations 2010.
- Whether, alternatively, the Appellant was 'making the delivery of' the goods.
- Whether de facto or de jure control of the goods, exercised through employees, could outweigh a lack of physical possession.
- Whether the Appellant's employees, Mr Kostka and Mr Milasz, were acting in the course of their employment and with authority when the load was accepted and transported.
- Whether weight should be attached to witness statements adduced by the Appellant where the witnesses did not attend the hearing to be cross-examined.