White & Ors v The Crown

The four appellants, Ian Leslie White (“White”), James Dennard (“Dennard”), Craig Russell Perry (“Perry”) and John Thomas Rowbotham (“Rowbotham”) appeal confiscation orders made against them. The four cases, not otherwise linked, involve the smuggling of tobacco into this country for resale and have been listed together because they raise similar issues. The resolution of these issues will determine these cases and hopefully will assist in the disposal of a number of other cases.

Before looking at the individual cases it will be helpful, we believe, to summarise a few of the general principles which apply in confiscation proceedings of the kind with which these appeals are concerned.

Under both the Criminal Justice Act 1988 and its successor the Proceeds of Crime Act 2002 if a person obtains a pecuniary advantage as a result of or in connection with an offence (the 1988 Act) or with conduct (the 2002 Act), he is treated, for confiscation purposes, as having received a sum of money equal to the pecuniary advantage (see section 71(5) of the 1988 Act and section 76 (5) of the 2002 Act). Thus his benefit will be deemed to include a sum of money equal to the pecuniary advantage.

However, the evasion by a smuggler of duty or VAT constitutes, for the purposes of confiscation proceedings, the obtaining of a pecuniary advantage only if he personally owes that duty or VAT. This was established by the House of Lords in May [2008] UKHL 28; [2008] 1 AC 1028; [2009] 1 Cr App R (S) 31 and Jennings [2008] UKHL 29; [2008] 1 AC 1046; [2008] 2 Cr App R 29 and applied in Chambers [2008] EWCA 2467 and Mitchell [2009] EWCA Crim 214.

In May the House of Lords said in paragraph 48 that a defendant “ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject” (underlining added). The House pointed out that more than one person could be personally liable.

In Jennings the House of Lords overruled the Court of Appeal (Laws, Longmore and Lloyd LJJ) [2005] EWCA Civ 746, [2006] 1 WLR 182, [2005] 4 All ER 391which had held, in an advance fee fraud case, that all that is required is that the defendant's acts should have contributed, to a non-trivial extent, to the getting of the property. Laws LJ had said:

38.

What remains to be said about the meaning of the word "obtain" in s.71(4) [of the Criminal Justice Act 1988]? Clearly it does not mean "retain" or "keep". But no less clearly, in my judgment, it contemplates that the defendant in question should have been instrumental in getting the property out of the crime. His acts must have been a cause of that being done. Not necessarily the only cause: there may, plainly, be other actors playing their parts. All that is required is that the defendant's acts should have contributed, to a non-trivial (that is, not de minimis) extent, to the getting of the property. This is no more than an instance of the common law's conventional approach to questions of causation.

The House disapproved of this approach, saying:

14.

... a person benefits from an offence if he obtains property as a result of or in connection with its commission, and his benefit is the value of the property so obtained, which must be read as meaning "obtained by him".

The relevant Regulations will determine whether a defendant personally owes duty or VAT, subject to the compatibility of those Regulations with the primary domestic legislation and the relevant EC Directive. However before the law was clarified by the House of Lords in May and Jennings, the Regulations were generally unimportant in confiscation hearings since whether the defendant personally owed the duty or VAT did not matter because he would normally have contributed to the evasion of the duty or VAT by another.

In May the House of Lords also said in paragraph 48:

D ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else. ... Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property. It may be otherwise with money launderers.

A person obtains a pecuniary advantage by evading duty or VAT even though the smuggled goods were seized before they could be sold on: see Smith [2001] UKHL 68; [2002] 1 WLR 54; [2002] 1 Cr App R 35. In that case the House of Lords answered the following certified question in the affirmative:

Whether an importer of uncustomed goods, who intends not to enter them for customs purposes and not pay any duty on them, derives a benefit under section 74 of the Criminal Justice Act 1988 through not paying the required duty at the point of importation, where the goods are forfeited by HM Customs following importation, before their value can be realised by the importer?

Smith remains good law (see CPS v N; CPS v P and R v. Paulet [2009] EWCA Crim 1573, paras 46-47) notwithstanding a passage in Jennings in which the House of Lords said:

13.

... It is, however, relevant to remember that the object of the legislation is to deprive the defendant of the product of his crime or its equivalent, not to operate by way of fine. The rationale of the confiscation regime is that the defendant is deprived of what he has gained or its equivalent. He cannot, and should not, be deprived of what he has never obtained or its equivalent, because that is a fine. This must ordinarily mean that he has obtained property so as to own it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else.

It was confirmed by the House of Lords in May that, if several defendants were jointly responsible for a fraud, and the property thus obtained was jointly held by them, each benefited in the amount jointly held and there was no requirement to apportion that amount between them. Thus if two or more defendants have evaded the liability to pay £x in duty, the sum of money which each defendant is treated as having received as benefit is £x. This is subject to a possible exception described in this way by the House of Lords in May:

45.

... There might be circumstances in which orders for the full amount against several defendants might be disproportionate and contrary to article 1 of the First Protocol, and in such cases an apportionment approach might be adopted, but that was not the situation here and the total of the confiscation orders made by the judge fell well below the sum of which the Revenue had been cheated.

It may be that only if the Revenue was in a position where they would actually recover more than the sum of which they had been cheated would the issue of possible disproportionality arise. In these appeals there appears to be no realistic prospect of that occurring.

We turn to Chambers. The appellant had pleaded guilty to an offence under section 170(1)(b) of the Customs and Excise Management Act 1979 of being on September 13 2006 knowingly concerned in carrying, harbouring, depositing, keeping, concealing, removing or in any manner dealing with goods, which were chargeable with a duty which had not been paid, with intent to defraud the Crown of the duty chargeable on the goods. He was made the subject of a confiscation order in the sum of £66,120 under the Proceeds of Crime Act 2002, that sum being the value of the duty evaded.

At the confiscation hearing the prosecution relied on the decision in the Court of Appeal in Jennings. By the time the appeal came to be heard the House of Lords had allowed the appeal (see para. 6 above) and the respondent accepted that it was necessary to show that Chambers was personally liable to pay the duty. Thus the Regulations became relevant. To show that he was so liable, the respondent relied on the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992, 1992/3135 (“the 1992 Regulations”) not knowing that they had been superseded (so far as tobacco products were concerned) on 1 June 2001 by the Tobacco Products Regulations 2001, 2001/1712 (“the 2001 Regulations”). See Regulation 28 of the 2001 Regulations the effect of which is to amend the 1992 Regulations so as to provide that, with exceptions, Part II and Part III of the 1992 Regulations do not apply to tobacco products from 1 June 2001.

The Court of Appeal prepared a draft judgment dismissing the appeal applying the 1992 Regulations. Toulson LJ giving the judgment of the Court described what happened thereafter:

54.

Fortunately, as matters have turned out, we reserved our judgment. Two days ago we released to the parties our draft judgment, in which we were going to conclude that on the proper construction of those Regulations [the 1992 Regulations] there was a liability to duty on the part of the appellant and that the appeal should therefore be dismissed.

55.

Yesterday, by a fortunate accident, our draft judgment came across the desk of a lawyer in the Asset Forfeiture Division of the Revenue and Customs Prosecutions Office, who was aware that the 1992 Regulations no longer applied to tobacco products. She immediately took proper steps to ensure that this court was alerted.

56.

It transpires that the Excise Goods Regulations 1992 were superseded in relation to tobacco products by the Tobacco Product Regulations 2001, which came into force on 1st June 2001, i.e. over 5 years before the events giving rise to the present prosecution.

Toulson LJ continued:

57.

The provisions of the Tobacco Product Regulations 2001 are materially different from the Excise Goods Regulations 1992. In written submissions prepared for today, Mr Cammerman submitted that although the circumstances under which liability to duty may arise under the Tobacco Product Regulations 2001 are narrower than under the preceding relevant Regulations, they still cover the position of the appellant. This would depend on whether liability arose under paragraph 13(3)(e) of the Regulations, which would impose liability on him if he was a person who "caused the tobacco products to reach an excise duty point." In his oral submissions Mr Cammerman invited the court to adjourn the hearing of the appeal in order that fuller submissions could be made by both parties on that issue.

58.

In our judgment, it would be wrong to do so. The issue now sought to be raised involves a question of fact upon which the judge made no finding because he was not asked to address it. We have no idea, and it would be wrong to speculate, whether if the case below had been presented on the basis that the prosecution asserted that this appellant had caused the tobacco to reach an excise duty point, the appellant would have chosen to give evidence. It would be wrong for this court, which is primarily a court of review, to make a finding of fact of that kind in these circumstances. It is for the prosecution in a case of this kind to place before the court at first instance the relevant statutory provisions and to invite the court to make such findings of fact as it seeks.

59.

Accordingly, this appeal must be allowed and the confiscation order quashed.

Subsequently three appellants had their confiscation orders quashed following concessions by the respondent: Khan and others [2009] EWCA Crim 588.

The Revenue and Customs Prosecutions Office (“RCPO”) has carried out a Review to identify cases in which the wrong Regulations had been raised by the prosecution or relied upon by the judge or cases in which the decision of the Court of Appeal in Rowbotham (John) [2006] EWCA Crim 747 had been raised by the prosecution or relied upon by the judge. In Rowbotham the Court of Appeal, presided over by Rose LJ, Vice-President, had dismissed an appeal relying in part on the 1992 Regulations which, unknown to all concerned, did not apply having been superseded by the 2001 Regulations. That Review has led to a number of applications for leave to appeal which are pending.

Dennard, one of the appellants in this appeal, and Chambers were co-defendants and Dennard, like Chambers, was also made the subject of a confiscation order under the Proceeds of Crime Act 2002 in the same amount. Unfortunately for Dennard, he had abandoned his application for leave to appeal the confiscation order shortly before the hearing.

His subsequent application to treat the abandonment as a nullity was granted. His appeal was joined to that of White, Perry and later Rowbotham, the appellant in the 2006 unsuccessful appeal whose case has been referred to this Court by the Criminal Cases Review Commission (the “CCRC”).

We shall return in more detail to the appeals of Perry and Rowbotham. It is sufficient to say at this stage that the respondent did not oppose the appeals. We allowed the appeals and quashed the confiscation orders.

It follows that the substantive hearing which lasted two days was concerned only with the cases of White and Dennard.

At a directions hearing on 7 July 2009 we made orders the effect of which were to invite submissions as to the personal liability of Dennard under the 2001 Regulations to pay the evaded excise duty and the compatibility of the Regulations with the relevant EC Directive and with section 1(4) of the Finance Act 1992.

In the case of White the conspiracy of which he was convicted spanned the period 1 January 2001 to 19 March 2002. During that time numerous consignments of hand rolling tobacco (“HRT”) were smuggled into this country from Luxembourg. For convenience the smuggling operations were divided into three phases, to the first two of which the 1992 Regulations applied and to the third of which the 2001 Regulations applied. At the directions hearing we therefore invited submissions as to the liability of White under the 1992 and 2001 Regulations to pay the evaded excise duty and the compatibility of the two sets of Regulations with the relevant EC Directive and with section 1(4) of the Finance Act 1992.

In the case of White only, his confiscation order included an amount to reflect the VAT avoided. Thus we invited submissions as to his liability in domestic and EC law to pay VAT.

The Court made these orders so as to be in a better position than the Court was in Chambers to resolve the complex questions raised in confiscation hearings where the benefit is said to be the duty or VAT evaded on smuggled tobacco products.

At the conclusion of the hearing we asked for written submissions about a driver’s liability for excise duty, where a driver is no more than a courier paid to transport the load. We subsequently received the last of those submissions in January. We made that request because if drivers in this category are personally liable under the Regulations to pay duty and thus would obtain a pecuniary advantage, there is an apparent conflict between the two passages in paragraph 48 of May:

[a defendant] ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject.

Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property.

At the conclusion of this judgment we return to this issue but only briefly and without reaching any concluded opinion.

The appellant pleaded guilty to a single count under s.170(1)(b) of the Customs and Excise Management Act 1979 charging him with being knowingly concerned in carrying, harbouring, depositing, concealing, removing or in any manner dealing with 600kg of tobacco, chargeable with a duty which had not been paid, with intent to defraud Her Majesty of the duty chargeable.

He had originally been charged with an offence under section 170(2) of being knowingly concerned in the fraudulent evasion of duty. The indictment was amended at the request of the prosecution to allege the offence under section 170(1)(b). Dennard, like Chambers, was ordered to pay a confiscation order in the sum of £66,120 under the Proceeds of Crime Act 2002 with the sum to be paid in six months and in default 1 year and 8 months’ imprisonment. That sum represented the value of the duty evaded. He appeals against that order. The original ground of appeal related only to the issue of apportionment, a ground which could not survive the decision of the House of Lords in May.

In discussing the Chambers case above, we have pointed out that the Regulations only became relevant after the House of Lords had overruled the Court of Appeal in Jennings (see para. 6 above).

In the words of the summary of facts prepared by the respondent:

To this summary Mr Corrigan, counsel for Dennard, responded in writing:

The appellant absconded before trial and was convicted and sentenced in his absence.

On 19 September 2003 he was convicted of a conspiracy to cheat the Revenue contrary to section 1 of the Criminal Law Act 1977, by fraudulently evading the payment of excise duty and value added tax on smuggled hand rolling tobacco. Two other defendants were convicted, Robin Marshall and Tony Weston. Confiscation orders were made against them respectively in the sums of £30,000 and £43,000.

On 12 December it was decided that the amount of White’s benefit was, as recorded in the court order, £6,151,841. That figure was made up in accordance with the Prosecutor’s statement as follows: £4,927,025.70 of duty evaded and £1,224,815.40 of VAT evaded. The benefit figure did not include an amount representing any sums received on the sale of the tobacco on the domestic market. No reference was made to the Regulations. There appears to have been no dispute about the amount of the benefit – nor could there have been as the law stood at the time. HHJ Neligan QC made no factual findings in assessing benefit in the case of the appellant.

On 11 March 2004 White was sentenced to six years’ imprisonment and a confiscation order was made against him in the sum of £6,151,841. He was ordered to pay that sum within three months, with 10 years’ imprisonment in default. The judge was not satisfied that the appellant’s realisable assets were less than that amount, an unsurprising conclusion given that the appellant had absented himself from the proceedings. The appellant was subsequently extradited back to this country on 20 September 2007 and is now serving his sentence. He appeals the confiscation order.

The parties provided the court with an agreed summary of the facts in White’s case which we set out as Annex A.

The Tobacco Products Duty Act 1979 provides in section 2(1) for the charging of “a duty of excise” on tobacco products imported into this country. Section 2(1) states that there “shall be charged on tobacco products imported into ... the United Kingdom a duty of excise ...”.

Section 1(1) of the Finance (No 2) Act 1992 provides:

Subject to the following provisions of this section, the Commissioners may by Regulations make provision, in relation to any duties of excise on goods, for fixing the time when the requirement to pay any duty with which goods become chargeable is to take effect (“the excise duty point”).

Section 1(3) provides:

Regulations under this section may provide for the excise duty point for any goods to be such of the following times as may be prescribed in relation to the circumstances of the case, that is to say—

(a)

the time when the goods become chargeable with the duty in question; ...

Section 1(4) provides that

Where regulations under this section prescribe an excise duty point for any goods, such regulations may also make provision—

(a)

specifying the person or persons on whom the liability to pay duty on the goods is to fall at the excise duty point (being the person or persons having the prescribed connection with the goods at that point or at such other time, falling no earlier than when the goods become chargeable with the duty, as may be prescribed); and

(b)

where more than one person is to be liable to pay the duty, specifying whether the liability is to be both joint and several. (Underlining added)

The 1992 Regulations were made on 10^th December 1992, shortly after the Finance (No 2) Act received Royal Assent on 16^th July 1992. The two pieces of legislation were planned and carried through together, with a view to the commencement of the Single Market on 1^st January 1993.

The Regulations have been the subject of a number of amendments, which, we were told, are not relevant in these cases or the pending cases.

Regulation 4(1) provided, in so far as relevant to tobacco smuggling cases:

... the excise duty point in relation to any Community excise goods shall be the time when the goods are charged with duty at importation.

The goods are charged with duty at importation by virtue of section 2(1) of the Tobacco Products Act 1979 (see para. 37 above).

By virtue of section 5(2)(a) of the Customs and Excise Management Act 1979, the time of importation shall be deemed to be:

where the goods are brought by sea, the time when the ship carrying them comes within the limits of a port.

In Mitchell [2009] EWCA Crim 214 the Court said:

26.

... Importation occurs when dutiable goods enter the UK territorial waters, although the point at which an evasion occurs will not be until the importer ought to declare.

We do not believe that that is right. The evasion takes place when the ship carrying the tobacco enters the limits of the port.

It should be noted, lest it be relevant in other cases, that there are special provisions relating to goods coming through the Channel Tunnel and special provisions for those who import tobacco for their own use and then sell or decide to sell the tobacco on the domestic market.

Section 1(1) of the same Act provides that “importer” “includes any owner or other person for the time being possessed of or beneficially interested in the goods”.

Regulation 5 of the 1992 Regulations provides in so far as relevant to tobacco smuggling cases:

(1)

The person liable to pay the duty in the case of an importation of excise goods from another member State shall be the importer of the excise goods.

(2)

Each of the persons specified in paragraph (3) below having the specified connection with the excise goods at the excise duty point, shall be jointly and severally liable to pay the duty with the person specified in paragraph (1) above of this Regulation.

(3)

The persons specified in this paragraph are–

(a)

any authorised warehousekeeper or REDS acting on behalf of the importer of the excise goods in respect of the importation of those goods;

(b)

any other person acting on behalf of the importer of the excise goods in respect of the importation of those goods;

(c)

...;

(d)

... ;

(e)

any consignee of the excise goods which have been imported into the United Kingdom; and

(f)

any other person who causes or has caused the imported goods to reach an excise duty point.

Sub-paragraph 3(a) which refers to authorised warehousekeepers etc is only relevant to the extent to which it may help in the interpretation of the word “other” in sub-paragraph (b).

Regulation 5(9) defines the word “importer”:

In this regulation “importer of the excise goods” includes any owner of those excise goods or any person beneficially interested in those excise goods.

By virtue of Regulation 6(1) in tobacco smuggling cases duty was to be paid on or before an excise duty point. Thus, in tobacco smuggling cases like the present ones, the duty became payable as the ship came within the limits of the port and those personally liable to pay the duty at that time were obtaining a pecuniary advantage by evading the payment and were deemed, for the purposes of ascertaining benefit, to have received a sum of money equal to the pecuniary advantage.

It is submitted on behalf of the appellants that sub-paragraph (3)(f) is ultra vires section 1(4) of the Finance (No 2) Act 1992. It is submitted that, by virtue of paragraph (3)(f) “any other person who causes or has caused the imported goods to reach an excise duty point” is made liable for the duty, whereas by virtue of section 1(4) of the Act such a person is not liable unless at the time the goods become chargeable with the duty, he has the necessary connection with the goods. In the words of the appellants:

By definition, the causing of goods to reach a point takes place prior to the excise duty point. To fall within the scope of s.1(4) of the Act, the person must have some connection with the goods at that point. The notion of having a connection at that point is quite separate from whether there was any previous connection and cannot be founded on such a prior connection.

The respondent does not accept the submission, arguing that, by virtue of Regulation 5(2) any person who causes or has caused the imported goods to reach an excise duty point is only liable if he retains a connection with the excise goods at the excise duty point. In the words of the respondent:

Regulation 5(3)(f) on its proper construction is perfectly consistent with s 1(4). It is not to be construed as catching all those who assist with the dispatch or transport of the excise goods, but only as catching those who – in the words of the regulation – cause or have caused the goods to reach an excise duty point. To be liable they must, in other words (and as indicated also by s 1(4) and the opening words of Regulation 5(2)) retain a connection with the goods at the excise duty point.

We accept the respondent’s argument that the regulation is to be interpreted in a manner which is consistent with the primary legislation and the argument that, interpreted in this way, the Regulation is not ultra vires. What is important to remember, when construing the 1992 Regulations, is that a person who causes or has caused the goods to reach the excise duty point is not liable to pay the duty unless he retains a connection with the goods at the excise duty point, which in tobacco smuggling cases involving sea ferries, is at the time the ship enters the limits of the port.

By virtue of Regulation 12(1) of the 2001 Regulations and in so far as relevant to tobacco smuggling cases “the excise duty point for tobacco products is the time when the tobacco products are charged with duty”. By virtue of Regulation 3 “duty” means (subject to an exception) “the duty of excise charged on tobacco products by section 2(1) of the Tobacco Products Act 1979”, set out in para. 37 above.

It follows that the excise duty point on imported tobacco products is the time of importation which, as we have already seen, will be at the point when the ship carrying the smuggled tobacco enters the limits of the port.

Regulation 13 determines who is liable to pay for the duty. Regulation 13(1) provides:

(1)

The person liable to pay the duty is the person holding the tobacco products at the excise duty point. (Underlining added)

Mr Anderson QC, for the respondent, submits that “holding” means possession or control. Support for that interpretation can be found from the part of Regulation 12 dealing with tobacco products acquired by a person in another Member State for his own use and transported by him to the United Kingdom, albeit that this part of Regulation 12 was added by the Excise Goods, Beer and Tobacco Products (Amendment) Regulations, 2002/2692, Regulation 4(3) (December 1, 2002). In such a case the excise duty point is the time when those products are held or used for a commercial purpose by any person. Regulation 12 (1B) (e) provides that:

in determining whether tobacco products are held or used for a commercial purpose by any person regard shall be taken of—

(i)

that person's reasons for having possession or control of those products.

...

Regulation 13 continues:

(2)

Any person (not being the person specified in paragraph (1) above) who is described in paragraph (3) below is jointly and severally liable to pay the duty with the person specified in paragraph (1) above.

(3)

Paragraph (2) above applies to—

(a)-(d) ...

(e)

any person who caused the tobacco products to reach an excise duty point.

Although Regulation 13 does not refer to persons “having the specified connection with the excise goods at the excise duty point” as Regulation 5 of the 1992 Regulations did, the respondent accepts that it must be interpreted in conformity with section 1(4) of the Finance (No 2) Act 1992 so that a person who has caused the tobacco products to reach an excise duty point is not liable for the duty unless he retained a connection with the goods at the excise duty point. Interpreted in this way, Regulation 13(e) is not ultra vires.

Regulation 14 provides, in so far as relevant to tobacco smuggling that the duty must be paid at or before the excise duty point.

The relevant Directive is Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products (“the 1992 Directive”). It is a complex Directive dealing with many matters which are of no concern in this case, such as importation for personal use into a Member State of goods subject to excise duty on which the excise duty has been paid in another Member State and such as direct selling.

The 1992 Directive is repealed with effect from 1 April 2010 by Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty (“the 2008 Directive”) and repealing the 1992 Directive. Member States are required to adopt by 1 January 2010 the necessary provisions to comply from 1 April 2010 with the 2008 Directive. We were taken in some detail to the 2008 Directive as an aid to an understanding of the 1992 Directive but we have not found it necessary to refer to the 2008 Directive. There is also new domestic legislation intended to implement it, namely the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (SI 2010/593) which came into force on 1^st April 2010.

We were referred to a number of the matters in the Preamble of the 1992 Directive:

Whereas the establishment and functioning of the internal market require the free movement of goods, including those subject to excise duties;

...

Whereas, in order to ensure the establishment and functioning of the internal market, chargeability of excise duties should be identical in all the Member States;

Whereas any delivery, holding with a view to delivery or supply for the purposes of a trader carrying out an economic activity independently ... , taking place in a Member State other than that in which the product is released for consumption gives rise to chargeability of the excise duty in that other Member State;

...

Whereas products subject to excise duty purchased by persons who are not approved warehousekeepers or registered or non-registered traders and dispatched or transported directly or indirectly by the vendor or on his behalf must be subject to excise duty in the Member State of destination;

Whereas in order to ensure that the tax debt is eventually collected it should be possible for checks to be carried out in production and storage facilities; whereas a system of warehouses, subject to authorization by the competent authorities, should make it possible to carry out such checks;

....

Whereas in the context of national provisions, excise duty should, in the event of an offence or irregularity, be collected in principle by the Member State on whose territory the offence or irregularity has been committed, or by the Member State where the offence or irregularity was ascertained, or, in the event of non-presentation in the Member State of destination, by the Member State of departure;

...

Whereas payment of the excise duties in the Member State where the products were released for consumption must give rise to the reimbursement of those duties when the products are not intended for consumption in that Member State;

Whereas, as a result of the abolition of the principle of taxes on imports in relations between Member States, the provisions on exemptions and allowances on imports cease to apply in respect of relations between Member States; whereas these provisions should therefore be abolished and the directives concerned adapted accordingly;

...

Article 1(1) provides

This Directive lays down the arrangements for products subject to excise duties and other indirect taxes which are levied directly or indirectly on the consumption of such products, except for value added tax and taxes established by the Community.

Article 6 (1) provides:

Excise duty shall become chargeable at the time of release for consumption. ...

Release for consumption of products subject to excise duty shall mean:

(a)

- (b) ...

(c)

any importation of those products, including irregular importation, where those products have not been placed under a suspension arrangement.

Article 6(2) provides:

The chargeability conditions and rate of excise duty to be adopted shall be those in force on the date on which duty becomes chargeable in the Member State where release for consumption takes place or shortages are recorded. Excise duty shall be levied and collected according to the procedure laid down by each Member State, it being understood that Member States shall apply the same procedures for levying and collection to national products and to those from other Member States.

The respondent puts particular stress on Article 6(2), submitting that the Directive does not harmonise fully the regime for the levying and collection of excise duties but leaves it to Member States. Therefore, so it is submitted, the relevant provisions of the 1992 Regulations and the 2001 Regulations in issue in this case do not have, by Community law, to be compatible with the Directive in so far as the Regulations provide who is liable to pay the duty. This submission is not accepted by the appellants.

We turn to the important Article 7, bearing in mind that the Article is not exclusively concerned with smuggling operations.

Article 7 provides:

1.

In the event of products subject to excise duty and already released for consumption in one Member State being held for commercial purposes in another Member State, the excise duty shall be levied in the Member State in which those products are held.

2.

To that end, without prejudice to Article 6, where products already released for consumption as defined in Article 6 in one Member State are delivered, intended for delivery or used in another Member State for the purposes of a trader carrying out an economic activity independently or for the purposes of a body governed by public law, excise duty shall become chargeable in that other Member State.

3.

Depending on all the circumstances, the duty shall be due from the person making the delivery or holding the products intended for delivery or from the person receiving the products for use in a Member State other than the one where the products have already been released for consumption, or from the relevant trader or ...

...

6.

The excise duty paid in the first Member State referred to in paragraph 1 shall be reimbursed in accordance with Article 22 (3).

There is no dispute that Article 7 does not, on the face of it, envisage joint and several liability or double recovery.

An understanding of Article 7(3), which sets out who is liable to pay excise duty, requires it to be read in conjunction with Article 7(1) and (2).

The effect of Article 7(1) is to provide that in the event of products subject to excise duty and already released for consumption in one Member State, A, being held for commercial purposes in another Member State, B, the excise duty shall be levied in the Member State in which those products are held (B). Article 7 therefore comes into play when excise goods are being held for commercial purposes in that second Member State, in this case, the United Kingdom. In a tobacco smuggling case, the excise goods are held for commercial purposes in the UK at the point of “importation” into the UK.

The effect of Article 7(2) is that where products already released for consumption in one Member State, A, are delivered, intended for delivery or used in another Member State, B, for the purposes of a trader carrying out an economic activity independently, excise duty shall become chargeable in that other Member State, B. It is not clear whether the words “for the purposes of a trader” attach to the words “delivered” and “intended for delivery”, but, we doubt that it matters and, in any event, in the light of Article 7(1) the products must physically be in the second Member State, B, for the duty to become chargeable.

Article 7(2) thus envisages excise duty becoming chargeable when the goods are delivered in B for commercial purposes, when they are being held in B with the intention of delivering them in B for commercial purposes in B and when they are used in B for commercial purposes in B by a trader. They would be used for commercial purposes in B by a trader if, for example, he sold the goods to someone in B intending to use them for his own consumption.

It may be that Article 7 would also come into play when a third Member State is involved, but we do not need to consider that.

Article 7(2) having prescribed when the duty is payable, Article 7(3) tells us who is liable for the duty.

On our reading of Article 7(3) in the light of Article 7(2), we believe that the duty is due from:

The appellants submit that the words “depending on all the circumstances” in Article 7(3) are important. In the words of the skeleton argument:

30.

The ... categories are all listed in the alternative. Article 7(3) does not provide for joint and several liability, but requires an individual person to be identified in the particular case.

31.

Thus liability is imposed “depending on all the circumstances”. It follows that the appropriate authority must examine the circumstances of the case in order to determine not only whether a given person falls within the scope of the listed categories, but also whether that person should be liable depending on all the circumstances.

32.

Where the person making the delivery or holding the products intended for delivery retains control over the goods when they are in the Member States where the goods are held for commercial purpose, it will be that person who is liable to pay the duty. Thus, “delivery” includes delivery to a place, as well as to a person.

33.

Where the goods have been consigned to another person who is identified in advance of the delivery, that person will be liable to the duty.

34.

Where the goods have been transferred to a trader, it is the trader who is liable.

35.

It is clear that the dividing line between these events may on occasion be blurred or unclear. However, in that event, the authorities must still make a determination that a particular person is liable in the circumstances of the case.

36.

The Directive does not provide that it is open to the authorities to decide that they will either impose joint and several liability or to identify one person as liable when the liability properly falls, depending on the circumstances, on another person. Nor is this permitted just because it would be easier to collect duty from one person rather than another.

37.

For example, if, in the circumstances, one person was deemed to have 90% control over the goods whereas another person had 10% control, it would not be permissible for the latter to be deemed liable to the duty.

During the course of oral argument it was submitted on behalf of the appellants that only an owner was liable for the duty.

In our view and notwithstanding the reference to “depending on all the circumstances” and the absence of any reference to joint and several liability, the 1992 Directive clearly envisages that any person who fits within the listed categories is liable to pay the excise duty. Given that one of the aims of the Directive is the collection of excise duty, it is unlikely that it was envisaged that a Member State, in the words of the appellant, “must ... make a determination that a particular person is liable in the circumstances of the case”, even though, for example, the excise duty could not in fact be collected from him and even though another person or other persons would be liable. That is not to say that the Directive would permit recovery of more than the excise duty due – but we do not need to decide that issue in these appeals.

Nor do we accept the argument that, under the 1992 Directive, only owners of the goods are liable for the duty. Nothing in the language of the Directive suggests that only owners are liable. The respondent referred us to the judgment of the First Chamber in United Antwerp Maritime Agencies NV and another Belgium Case C-140/04, judgment given on 15 September 2005. That case concerned the collection of customs duties from a freight forwarding company from whose premises goods, upon which customs duties had not been paid, were stolen. The Court held that, under the relevant Community legislation, a person “who holds the goods after they have been unloaded in order to move or store them” is liable for the customs debt, that person being the person who has custody or possession of the goods.

Article 8 of the 1992 Directive provides:

As regards products acquired by private individuals for their own use and transported by them, the principle governing the internal market lays down that excise duty shall be charged in the Member State where they are acquired.

Article 9(1) provides:

Without prejudice to Articles 6, 7 and 8, excise duty shall become chargeable where products for consumption in a Member State are held for commercial purpose in another Member State.

In this case, the duty shall be due in the Member State in whose territory the products are and shall become chargeable to the holder of the products.

The balance of Article 9 deals with the criteria which Member States must apply when deciding whether excise goods are being held for commercial purposes.

It seems clear that Article 9 is dealing with cases in which a person has acquired or purported to acquire excise goods in one Member State for personal consumption and is now holding them for commercial purposes in another Member State. It does not help to resolve the issues in this case.

As we have seen (paras. 43, 56-57 above) the effect of both the 1992 and 2001 Regulations and the primary legislation is that the excise duty becomes chargeable at importation, namely, when the goods are brought by sea, the time when the ship carrying them comes within the limits of a port.

Article 6(1) of the Directive provides that excise duty shall become chargeable at the time of release for consumption, which, in the case of an irregular importation, is the time of importation (see Article 6(1)(c), para. 67 above).

It follows that domestic law and EU law are consistent in this respect.

Regulation 5(1) of the 1992 Regulations provides, as we have seen, that the person liable to pay the duty shall be the importer of the excise goods. The equivalent provision in the 2001 Regulations is Regulation 13(1) which provides that the person liable to pay the duty is the person holding the tobacco products at the excise duty point, which, in the case of smuggled tobacco, is the time of importation.

Regulation 5(3) also provides that the person liable to pay the duty shall also be any (other) person acting on behalf of the importer of the excise goods in respect of the importation of those goods and any consignee of the excise goods which have been imported into the United Kingdom. The effect of Regulation 5(3)(f) of the 1992 Regulations and Regulation 13(3)(e) of the 2001 Regulations is also to catch any other person who causes or has caused (1992 Regulations) or who caused (2001 Regulations) the imported goods to reach the point of importation (provided that he retains a connection with the goods at that time).

In so far as relevant to tobacco smuggling cases of the kind with which we are concerned, Article 7(3) of the 1992 Directive provides, as we have already seen, that, depending on all the circumstances, the duty shall be due from any of the following:

For the purposes of tobacco smuggling cases, the person who is referred to in Regulation 5(1) of the 1992 Regulations as the “importer” must come within category (b) above. There is therefore no incompatibility between Regulation 5(1) and the Directive.

In so far as Regulation 13(1) of the 2001 Regulations is concerned, the person holding the tobacco products at the excise duty point (i.e. the point of importation) must also come within (b) provided that the concept of “holding” in the Regulations is interpreted in the same way as it is to be interpreted in the Directive (about which there is no guidance in the Directive).

In so far as Regulation 5(3)(f) of the 1992 Regulations and Regulation 13(3)(e) of the 2001 Regulations make a person who causes/caused the goods to reach the point of importation liable for the duty (provided that he retained a connection with the goods at that point), there will be no incompatibility with Article 7(3) if he fits into any of the categories (a) to (d) at para. 93 above.

Regulation 5(3) of the 1992 Regulations, as we have seen, also made “(b) any other person acting on behalf of the importer of the excise goods in respect of the importation of those goods” liable to pay the duty. This would seem to catch someone acting as an agent of the importer. As an agent he may well also fall within (b) and he is likely to fit into one of the other categories listed in Article 7.

In so far as the 1992 Regulations make “(e) any consignee of the excise goods which have been imported into the United Kingdom” liable to pay the duty, there is unlikely to be any incompatibility with the Directive because such a person will fall within category (c) above.

It follows that there is unlikely to be any incompatibility between those made liable by the Regulations to pay the duty and those made liable by the Directive.

It is the submission of the respondent that

12.

Directive 92/12 is a classic example of partial harmonisation: the chief mechanism by which the internal market was created. Member States were directed to harmonise their laws and practices to the extent that was necessary for the internal market to function, and left to make their own provisions in other respects. In particular, “ .. the collection of excise duty is in principle a matter for the member state where the goods are consumed”: Emu Tabac & others [1998] QB 791, per Colomer AG at para 12.

13.

Article 7 concerns the excise treatment of duty-paid products from one Member State which are taken to another Member State and held there for commercial purposes. It therefore governs the factual situation in both these appeals, even though Article 7 is not tailored specifically to the issue of smuggling.

14.

It follows directly after Article 6(2), which provides:

“… Excise duty shall be levied and collected according to the procedure laid down by each Member State, it being understood that Member States shall apply the same procedures for levying and collection to national products and to those from other Member States.”

That illustrates the partial nature of the harmonisation effected by the Directive, Member States being left to lay down their own procedures, subject only to the requirement that those procedures should not discriminate in favour of domestic goods.

Thus the respondent submits that the 1992 Regulations and the 2001 Regulations can make a person liable for the excise duty albeit that he is not liable under the Directive.

This submission is disputed by the appellants.

Given our conclusion that there is unlikely to be any incompatibility between those made liable by the Regulations to pay the duty and those made liable by the Directive, it is not necessary for us to resolve the issue. It is sufficient to say that we see some force in the appellants’ submissions which are to the following effect:

22.

..., unlike Article 6(2), Article 7(3) does not leave it for national provisions to stipulate the persons liable to pay the duty but instead goes on establish the categories of such persons as a matter of EC law. ...

23.

These are closed categories, and there is no provision in the Directive for Member States to add other categories of persons liable to pay. The Crown is mistaken in saying that there is no basis for the view that Article 7(3) is an exhaustive list. Moreover, the fact that Directive 2008/118/EC, which repeals and replaces Directive 92/12/EC with effect from 15 January 2009, adopts additional rules as regards the persons liable for duty does not detract from this proposition of earlier harmonisation, but rather reinforces it.

24.

The reason why this is a closed category of liable persons is that, unlike the initial release of the excise goods for consumption in a Member State, there is now a cross-border or internal market consideration to be taken into account. If Member States could impose a duty on any person as they saw fit in respect of goods on which duty had already been paid in another Member State, there would be a grave danger of double taxation, which would be contrary to the principle of the internal market.

25.

Accordingly, Article 7(3) limits the categories of persons who may be liable to specific identifiable persons and provides a clear duty on the Member State where the goods were released for consumption to repay the duty initially imposed. That combination can only work effectively where there are harmonised rules as to the persons who may be subject to duty in the Member State where the goods are subsequently held for commercial purpose.

26.

It follows that it is not possible for the UK to add additional categories of persons liable to duty in addition to those identified under Article 7(3) of the Directive.

If it is not possible for a Member State to add additional categories of persons liable to duty in addition to those identified under Article 7(3) of the Directive, then the respondent accepts the Regulations must be interpreted in accordance with Article 7(3) and if they cannot be so interpreted they fall to be disapplied by the national court.

In Mitchell, a post-Chambers decision, the prosecution appealed a refusal by a Recorder to make a confiscation order against the respondent, Mitchell. Mitchell pleaded guilty to being knowingly concerned in the fraudulent evasion of duty payable on the importation of tobacco contrary to section 170(2) of the Customs and Excise Management Act 1979. The offence came to light when a lorry was stopped by customs officers at Dover on 17th September 2004. The lorry had come from Belgium and was pulling a refrigerated trailer, containing what were supposed to be frozen chips but in fact consisted mainly of Golden Virginia Tobacco. There were a large number of boxes weighing a total of over 2,000 kilograms. The driver was arrested.

At the confiscation proceedings it was the prosecution’s case that Mitchell was an importer. The Recorder refused to accept that case, deciding that Mitchell’s role in the importation was no more than that of a person who helped to load the tobacco and then returned to the UK before the importation (although he also made a swift visit to Calais the day after the importation). The Recorder was not referred to the Regulations.

The Court of Appeal rejected the appellant prosecutor’s challenge to the findings of fact. However it was submitted on behalf of the prosecution for the first time during the appeal that Regulation 13(3)(e) of the 2001 Regulations applied and the respondent was a person who had caused the tobacco products to reach an excise duty point. Toulson LJ, giving the judgment of the court, pointed out:

24.

It is important to keep separate in one's mind the distinction between civil liability under the regulations and criminal liability under section 170 of the 1979 Act, which may trigger confiscation proceedings under POCA. A person who dishonestly evades the civil liability will commit an offence and be liable to a confiscation order but it is wrong to approach the construction of the civil liability imposed by Regulation 13 on the footing that this regulation is aimed at crooks; it is aimed at importations in general, which will include some dishonest importations but of which the vast majority will be lawful.

Toulson LJ then, in the same paragraph, summarised the submissions of Mr Mitchell QC, counsel for the respondent:

Mr Mitchell submitted that Regulation 13(3)(e) should be given a very wide reach and the Secretary of State, pursuant to statutory powers, had deliberately chosen broad words in order that rogues should not escape. Accordingly, anybody, he submitted, whose role contributed to the importation would fall within Regulation 13(3)(e). This would include any driver on any leg of the journey which brought the goods to the point of importation, with knowledge that they were to be imported, and anybody who had loaded the goods.

Toulson LJ continued:

25.

The Court put various examples to him in the course of argument, such as the innocent student abroad who, for a small reward, helped to load cigarettes into the boot of a person's car with knowledge that he was returning to the United Kingdom but no knowledge that the goods were intended to be smuggled. Mr Mitchell, consistently with his broad approach to the wording of the regulation submitted that, yes, he would be someone who had caused the tobacco products to reach an excise duty point. So, if we understood him correctly, would the railway porter at a French station who loaded goods into a car or onto a lorry, knowing that the driver was on his way to the United Kingdom. So too would be the individual driver on any leg of the journey and not merely the company which employed him.

26.

These submissions seemed to us to cast the net of civil liability extraordinarily wide. ... [i]t would seem to us to follow as a matter of logic that the innocent driver of products which he had no idea were intended to be smuggled, or which are not intended to be smuggled, would incur a civil liability which could be of significance if, for example, at a time of economic downturn, credit arrangements made by his employer failed and the excise duty was not paid. Mr Mitchell submitted that this was not so but we do not see as a matter of construction why it would not be so. We readily accept that it would be unlikely that the Revenue and Customs would in fact seek to enforce a liability in such circumstances, but nevertheless we are concerned with the proper construction of the regulation.

During the course of the hearing of the appeal the Court pointed out that the regulations were made in order to implement the 1992 Directive. In the words of the court:

We raised this with counsel, because it is trite law that when regulations are made in order to implement a Council Directive it is proper to have regard to the Council Directive in the construction of the regulations. We are aware that this enquiry took the parties by surprise. Over the short adjournment they studied the Council Directive. It follows that the arguments provided to the court on those regulations may have been less full than if the parties had foreseen the point.

In the present appeals, following what we said in the directions hearing, we have had the benefit of argument from counsel who specialise in European Community law.

It was submitted by the appellant prosecutor in Mitchell that, in the light of Article 7(1) of the Directive, the duty became payable at the point of entry into the United Kingdom. Toulson LJ summarised the arguments of counsel for the appellant in this way:

30.

... Article 7(3) provided that the duty should be due either from the person making the delivery or holding the products intended for delivery or from the person receiving the products, and he submitted that the person making the delivery should be construed broadly as including anybody who had made a material contribution to the delivery. Mr Mitchell accepted that, although there is no similar indication in Article 6 about the persons from whom the duty may be due, Article 7 is a valuable pointer and it would be unlikely that Article 6 was intended to create a wider range of people liable than those who would be liable under Article 7.

Toulson LJ continued:

31.

It seems to us clear that Regulation 13 must have been intended to give effect to those provisions of the Council Directive. One can see a broad comparison between those identified in Article 7(3) and those identified in Regulation 13. As we see it, Article 7(3) is directed in effect at the consignor or consignee or, where one and the same person is the holder of the goods both before and after importation, at that person. That is also a rational way to interpret Regulation 13. Regulation 13(1) would cover a recipient who holds the goods from the moment of the importation and also a person who is carrying through the goods which are that person's before and after the importation. Paragraph 13(3)(e) would cover a consignor. Now, there is a difference in language between Article 7(3) of the Directive, "the person making the delivery" and Regulation 13(3)(e), "any person who caused the tobacco products to reach an excise duty point". It may be that the reason for the choice of language in 13(3) is to make clear that attention is being directed to the person who may not be physically making the delivery but is the person who is truly responsible for it being made. In the case of a company, to take an example considered in argument, J Snoops might be the driver and could be said to be the person physically making the delivery, but it would be his employer who, in reality, caused the products to reach the excise duty point.

32.

It is not necessary for us to reach a formal decision on this point. We are conscious, as already indicated, that we have not heard as full argument on this subject as we might, but we are satisfied that the civil liability created by the Regulations is not intended to have the wide sweep contended for by the prosecution. It would be undesirable for us to seek to put a precise definition on the phrase "any person who caused the tobacco products to reach an excise duty point", least of all without fuller argument than we have heard in this case, but it appears to us that it is directed at that person or body who had real and immediate responsibility for causing the product to reach that point, which will typically and ordinarily be the consignor. (Underlining added)

The Court concluded that the respondent, Mitchell, did not have a personal liability to pay the duty and dismissed the appeal.

In the light of the acceptance in these appeals that a person who caused the tobacco products to reach the excise duty point (i.e. at the point of importation) is only liable if he retained a connection with the goods at the point of importation, it is likely, in many cases, that such a person would also have real and immediate responsibility for causing the product to reach that point. If a case arises where such a person did not have real and immediate responsibility for causing the product to reach the excise duty point, then the correctness or otherwise of the underlined obiter passage will have to be considered.

We start with the careful and detailed ruling on confiscation made by the Recorder. This (as the Recorder found) not being a criminal lifestyle case, he had to decide whether the defendants had benefited from the particular criminal conduct to which they had pleaded guilty.

Neither Chambers nor Dennard gave evidence at the confiscation hearing. The Recorder said in para. 6:

To the extent that it is necessary for me to make findings of fact in relation to the offence to which these defendants pleaded guilty or to draw inferences from those facts relevant to the issue of benefit and apportionment, I may only do so in respect of such matters as appear not to be in dispute or as may be taken to arise from the defendants’ guilty pleas.

The Recorder examined a number of cases including Rowbotham. He pointed out that although the Crown had cited the 1992 Regulations, the Court had not based its decision on the Regulations but rather on the fact that the appellant had accepted in his basis of plea that he had been playing a part in the continuous process of keeping the cigarettes away from discovery and that this process involved the evasion of duty.

The Recorder concluded:

33.

On the material which appears to me to be not in dispute, and on Mr Chambers’ written basis of plea, I think that the only proper view of the defendants’ pleas is that they were present in the yard for the purpose of removing such tobacco as might be present, or at least assisting in that removal, and consequently in its continued concealment from HM Customs & Revenue. I have no doubt that they ‘obtained’ the tobacco itself (in the sense that the keys found in the car gave them access to it and sufficient control over it) but that is not the point. That they had not yet touched the tobacco is also not in point: the offence which they admitted was becoming concerned in dealing with the goods in one or more of the ways prohibited by s.170(1)(b) with the necessary intent. The question is: what (if any) benefit did they obtain as a result?

The Recorder answered the question posed in the last sentence in paragraph 35:

In so far as it is necessary, I find on the basis of the defendants’ pleas, and on what I regard as the proper view of those pleas, that both of them played a significant (and, necessarily, more than a de minimis) part in the ‘getting of the property out of the crime’. In becoming concerned in the removal and continuing concealment of the goods they provided an important link in the chain between the importation and ultimate sale, up to which point no profit could actually be realised. It seems to me that their participation in the offence (and consequent benefit from it) must, in the absence of evidence from them about it, be regarded as equal. I do not think that Mr Chambers’ basis of plea serves to lessen the pecuniary advantage that he obtained. It may have gone to reduce his culpability for the offence but that is not a matter with which I am concerned under the 2002 Act. (Underlining added)

The underlined words were taken by the Recorder from paragraph 38 of the decision of the Court of Appeal in Jennings (see para. 6 above) which was not an excise duty case but an advance fee fraud case.

Unsurprisingly given the authorities as they stood when the Recorder gave his ruling, he did not ask the question that should have been asked: Did the defendants have a personal liability to pay the excise duty? Indeed no-one asked who was liable to pay the duty. Instead a passage from Jennings in the Court of Appeal concerning obtaining money in an advance fee fraud case was used to make a confiscation order in a case where the pecuniary advantage was obtained at importation. We make it clear that we imply no criticism at all of the Recorder or indeed of others.

The respondent invites us to apply the Regulations to the facts and conclude that the Recorder would have inevitably found that, on the balance of probabilities, Dennard was liable to pay the duty if he had been asked to resolve the correct question. Mr Bird in his skeleton argument submits:

“18.

...the Appellant was a person who had obtained a pecuniary advantage, because he was either “the person holding the tobacco products at the excise duty point” or “any person who caused the tobacco products to reach an excise duty point” (or both) and so would be within the category of persons liable to pay the duty, under Regulation 13(1) and/or Regulation 13(3)(e) of the Tobacco Products Regulations 2001 SI 1712.

Mr Bird relies on the fact that Dennard appears because of evidence of use of his mobile phone to have been in Belgium at the time of the purchase of the tobacco seized the next day from Parsons at Nickoll’s Yard. He also relies on the submission made by Dennard’s counsel as recorded in the ruling:

21.

... Second, he argued that the [£9000] found in the car must be considered to be part of the benefit obtained by the defendants in connection with this tobacco and taken into account in quantifying the benefit arising from their conduct. Since it had been forfeited, it must be deducted from the benefit figure.

Mr Bird ingeniously submits that this argument necessarily involved a concession of fact which demonstrated Dennard’s relationship to the tobacco, namely that he had the power to sell it and receive the proceeds. We do not accept that such a concession was necessarily being made. If Dennard was liable merely because he was helping to get “the property out of the crime”, then it does not follow that this concession was being made.

One problem faced by Mr Bird is that we do not know what evidence may have been given or led by Dennard had it been known that the prosecution had to show that Dennard was personally liable for the excise duty under the 2001 Regulations. A second problem is what the Recorder said in paragraph 6 (see above para. 117). A third problem is that the Recorder ascribed only a limited role to Chambers and Dennard:

In becoming concerned in the removal and continuing concealment of the goods [the defendants] provided an important link in the chain between the importation and ultimate sale.

Taking this into account and also Mr Corrigan’s submissions set out at paragraph 31 above about the Toyota, and the involvement of others we conclude that it cannot be said that the Recorder would have inevitably found that Dennard was holding the tobacco products at the point at which they were imported. Nor can it be said that he would have inevitably found that Dennard retained a connection with the goods at the excise duty point, which he would have had to even if he were to have found that Dennard caused the tobacco products to reach the point at which they were imported.

It is not necessary therefore for us to decide whether the prosecution had to show, in accordance with Mitchell, that Dennard had real and immediate responsibility for causing the product to reach that point.

For these reasons we set aside the confiscation order made against Dennard.

Mr Bird submits that the Court should substitute a lesser confiscation order using the discretion afforded to it under section 11(3) of the Criminal Appeal Act 1968 which provides:

On an appeal against sentence the Court of Appeal, if they consider that the appellant should be sentenced differently for an offence for which he was dealt with by the court below may—

(a)

quash any sentence or order which is the subject of the appeal; and

(b)

in place of it pass such sentence or make such order as they think appropriate for the case and as the court below had power to pass or make when dealing with him for the offence;

but the Court shall so exercise their powers under this subsection that, taking the case as a whole, the appellant is not more severely dealt with on appeal than he was dealt with by the court below.

Mr Bird submits:

29.

The Crown Court held that Dennard had “obtained” the tobacco itself (para [33]) and there was evidence (see para [22]) that the purchase price of it was £24,000. The evidence of Dennard’s travel to Belgium the previous day and his possession of the £9,000 onwards sale proceeds of part would support the proposition that he had “obtained” the tobacco for himself (with or without others) and had the power to dispose of it. Thus the tobacco could properly be considered to be his “benefit” as “property obtained” by him in connection with his offence.

30.

Even if ... the Court determines that Mr Dennard obtained no pecuniary advantage from the evasion of duty in this case, it is clear that he obtained the tobacco. The crucial concession of his having the proceeds in his car means that he had the power to dispose of it.

31.

By s.76(4) of the Proceeds of Crime Act 2002:

“A person benefits from conduct if he obtains property as a result of or in connection with the conduct.”

And by s.76(7):

“If a person benefits from conduct his benefit is the value of the property obtained.”

32.

In Waller [2008] EWCA Crim 2037 it was held, applying the principles set out by the House of Lords in May, that a tobacco smuggler benefited both from the duty that he evaded and by way of the property (the tobacco) that he obtained. His benefit figure was the aggregate of these values.

33.

In these circumstances there is sufficient basis for the Court to determine that, as an alternative to the way in which the case was dealt with in the Court below, this Appellant had benefited by obtaining tobacco valued at £24,000, and so that a confiscation order should be substituted in that sum.

Whilst the Recorder did find that Chambers and Dennard had “obtained” the tobacco, the effect of his ruling is that they may have done no more than “assisting in [the] removal” of such tobacco as might be present. If that was their role (and he treated them as having the same role), then the issue arises whether they were only “custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale”. If so, by virtue of May (para. 9 above), they would not obtain the property for the purposes of confiscation proceedings. In the light of the Recorder’s findings we do not substitute another order for the order made.

For the reasons which we have given we quash the confiscation order in the case of Dennard.

The respondent invites us to apply the Regulations to the facts and conclude that the judge, if he had been asked to resolve the correct question, would have inevitably found that, on the balance of probabilities, White was liable to pay the excise duty on all the consignments in the sum of £4,927,025.70.

The respondent submits that White comes within all the 1992 Regulations categories: as the importer of the goods, as the consignee and as a person who caused the goods to reach the excise duty point, namely the point of importation, and having the necessary connection with the goods at that time. In so far as the 2001 Regulations the respondent submits that the appellant was the person holding the tobacco products at the excise duty point, namely at the time of importation, and also a person who caused the tobacco products to reach that point.

In the words of Mr Evans for the respondent:

Approximately 52 tonnes of HRT was smuggled in these different ways. A co-conspirator called Howard Tilyard was responsible for the purchase, packing and dispatch of the HRT in Luxembourg. White and others were responsible for the collection, distribution and sale of the smuggled goods in England. The Crown placed White at the top of the hierarchy in England. It is clear from the sentences he passed that this was accepted by the judge

White was sentenced to 6 years’ imprisonment, Anthony Weston to 5 years’ and Robin Marshall (who had pleaded guilty on re-arraignment) to 4½ years’ (reduced on appeal to 3½ years’). Two others alleged to have been involved, Stephen Dinnen and Nigel Marshall were acquitted.

Mr Kovalevsky QC for White submits that Tilyard, who never stood trial, was the principal and that on the evidence it cannot be said that the judge would have inevitably found that White was a joint principal with Tilyard in the smuggling operation, jointly owning with Tilyard all the tobacco that was to be smuggled.

We agree with that submission. The judge would not have inevitably found that White was, with Tilyard, an importer.

Mr Kovalevsky submits that the judge would not have inevitably found that White was the consignee and/or “caused” the tobacco to reach a duty point, having the necessary connection with the goods at the time of importation. He was no more than “a rung higher in the conspiracy” (to use the judge’s words) than the co-defendants.

Mr Evans relies upon the following matters to show that White was liable for the excise duty (we have made a few minor changes to what Mr Evans wrote):

Danzas and the ‘Jungling episode’

51.

The evidence established that HRT was being sent by Tilyard in Luxembourg concealed in boxes of carpet tiles. Once in England it was collected from the transit depot by Robin Marshall. Marshall would take the empty ‘carpet tile’ boxes to Tilyard for re-use. He would also take cash for more HRT.

52.

The first of the concealments to be detected was carpet tiles [see Summary of Facts; §§3 to 16]. The Continental haulier was a firm called Danzas. After the stop by German customs, a Danzas employee called Heiko Jungling was phoned by Tilyard who candidly admitted to being a smuggler and tried to persuade him to continue to carry loads for him regardless. To this end he set up a meeting with Jungling to be attended by an Englishman who would arrive by plane and who wanted to take part in the discussion [see Summary of Facts; §§7 to 9]. The ‘Englishman’ Tilyard was referring to was White.

53.

White went to Luxembourg to attend the meeting in his ‘red Mercedes’ (as described by Tilyard to Jungling; he paid for the tickets [see Summary of Facts; Interview: §40].

54.

During an interview with a German Customs officer, Karl Backhaus, on 25^th April 2001, Tilyard described the purchase, concealment and dispatch of HRT to England with disarming candour. However he refused to name “the consignees in England” [see Summary of Facts; §§12 to 14].

55.

The fact that the meeting with Jungling was arranged so White could attend demonstrates that he was of central importance to the conspiracy. The judge was entitled to conclude that Tilyard and White were joint principals of the smuggling operation; Tilyard was responsible for the Luxembourg end, White for the UK end. The inference is overwhelming that IW had a beneficial interest in the HRT.

‘Computer’ Loads (Luxor/Lynx)

56. HRT was sent to England by Tilyard from May to October 2001 [see Summary of Facts; §§17 to 32]. Once the boxes were delivered to the Lynx depot, they were collected by Robin Marshall in a van, R926 YPV, frequently used for cross channel trips by Robin Marshall and Nigel Marshall (2 or 3 times per week).

57.

According to evidence given by Nigel Marshall in the trial, that van - R926 YPV belonged to and was provided by Ian White [see Summary of Facts; §42].

The ‘Dinnen cash’

58.

On 24^th July 2001, co-accused Dinnen was stopped outbound at Harwich by UK Customs driving a green LDV hire van (R633 BWY) that was found to contain empty computer towers/cases. Under his seat was a carrier bag with £31,000 in cash inside. Dinnen said the computers and the money had been given him by Nigel Marshall [see Summary of Facts; §§25 to 29].

59.

Nigel Marshall went to Dover Customs and asked for the return of the £31,000 claiming that it was his. In evidence at trial he said he was asked by White to go to Dover and reclaim the £31,000. White offered him £100 if he would allow his account to be used to pay the money into. After that happened, Marshall withdrew the equivalent sum in cash and paid it over to White [see Summary of Facts; §§42].

60.

Dinnen’s booking was made using a debit card belonging to Rosemary White (White’s wife). On the night of the stop, White was in phone contact with Dinnen and Tilyard [see Summary of Facts; §32].

61.

The inescapable inference from the above is that money being sent by White to Tilyard in Luxembourg to pay for HRT. When £31,000 was seized, White gave instructions to one of his lieutenants to get it back for him.

Telephone evidence

62.

White’s billing from 15^th May to August 2001 was obtained and a schedule prepared for the number: 727791. This demonstrated very frequent and lengthy contact between White, Tilyard and the co-defendants. Between 15^th May and 31^st July 2001 (the period for which billing was available) White contacted Tilyard 165 times and spent a total of 13 hours 47 minutes on the phone with him (in Luxembourg). There was no credible explanation from White as to why these phone calls were made. The merged schedule of calls, trips and deliveries shows that White was in contact with Tilyard, Weston, the Marshalls and Dinnen.

Evidence given by co-defendants

63.

Nigel Marshall, in particular, gave evidence in the trial that incriminated White.

i.

He said that he became involved in trips to Luxembourg through his brother, Robin. To begin with, he would just ‘go along for the ride’ but then he got a job from IW, starting immediately. The vans they used: R926 YPV and R648 TET, belonged to White. All instructions came from White, he also paid for all the trips. Nigel Marshall would go to White’s house and collect cash for the trips (tickets, diesel, his wages).

ii.

After the arrests, White phoned Nigel Marshall and told him that he wasn’t to say he knew him. In interview, Nigel Marshall answered “no comment”; asked by the judge whether this was because he had a headache or because White told him not to, Nigel Marshall said it was White’s phone call.

iii.

His evidence in relation to the £31,000 seized by Customs from Dinnen on 24^th July 2001 is set out above (at §§58 to 61).

64.

Weston said in evidence that White arranged the ‘Jungling meeting’ and made the arrangements regarding ferry crossings. He (Weston) stayed in the car when they got to the restaurant [see Summary of Facts; §42].

65.

White did not contradict any of the evidence in the witness statements; his case was lack of ‘knowledge’ [see Statement of Facts; §2].

Mr Kovalevsky relies heavily on the statement of Emma Turner, employed as Customer Services co-ordinator at Lynx. The effect of her statement is that she had a number of phone calls with a man who must have been Tilyard. She wrote:

In the spring of 2001 I took a phone call from someone who introduced themselves as Howard. He was enquiring as to whether a delivery he was expecting had arrived at the Dartford depot. He stated that the company under which he traded was Luxor Computer Logistics based in Luxembourg and that the goods being transported were computer bases, which were made up in Luxembourg before shipping. All consignments were sent through the Belgian company ASAP. The goods were consigned to addresses in the Essex area and at first Howard would call me to tell me whether they were to be delivered by LYNX to the addresses or whether they would be collected from the LYNX depot in Dartford by a colleague, the majority of the consignments were collected. Normal LYNX procedure is for goods to be delivered by LYNX themselves to the addresses on the consignment. All consignments for delivery by LYNX are sorted at a central sorting point and then distributed to local delivery branches for onward delivery to the consignment addresses. The local delivery branch for the Essex area is at Chelmsford. The majority of occasions Howard would contact me with the details of delivery, but sometimes I called Howard to let him know that the consignments had arrived, on these occasions I called him on the mobile telephone number he gave me.

...

Howard was always a friendly person on the phone and on one occasion sent me a large bunch of flowers, as a thank you for being so helpful in administering the deliveries for Luxor Computer Logistics.

The witness also gave a description of the only person to pick up goods. Her description fits Robin Marshall.

It is submitted on behalf of the appellant that Tilyard was both the consignor and consignee. But there is nothing to suggest that Tilyard controlled the UK sales network. He needed a person or persons in England to buy the tobacco from him and sell it on. He needed to know the identity of that person before the goods arrived in England so that they could safely be dispatched to him. We have no doubt about that.

Having regard to all the matters set out by Mr Evans in his paragraphs 51 to 65, we have no doubt that the judge would have inevitably found that White was at the least a consignee at the time of importation of at least some of the tobacco. As such he would, in relation to that tobacco, come within at least one of the categories in the 1992 Regulations. In the case of the 2001 Regulations the judge would have inevitably found White to have been, at the least, a person who, as consignee, caused some of the tobacco to reach the excise duty point and as having a connection with the goods at that point sufficient for the purposes of satisfying the test in Mitchell.

Would the judge have inevitably found that White was the consignee of all the tobacco? He would be if the judge would have inevitably found that White was in charge of the UK operations.

The principal evidence that White was in charge of the UK operations is as follows:

(1)

In relation to the Jungling episode the fact that the meeting was set up so that White could attend. This suggests that he was the principal in charge of the UK end of the operation.

(2)

In relation to the Dinnen cash the fact that the outbound £31,000 cash was claimed by White to belong to him. The obvious inference is that this was money which was to be used to pay for the HRT.

(3)

In giving evidence Nigel Marshall said that it was White who gave all instructions for the Luxembourg trips, who paid for them and whose vans were used.

It was White who was directing matters from the UK and issuing instructions and paying for the transport (Marshall); it was White who needed to be and was involved in any major decisions relating to the smuggling arrangements (Jungling); and most importantly it was White whose cash was being used to buy the tobacco (Dinnen).

Furthermore and importantly the heavier sentence passed on White makes it clear that the judge was accepting that White was in charge of the UK operations.

For these reasons we conclude that the judge would have inevitably found White to be the consignee of all the tobacco.

On the assumption that the respondent must be able to show in any particular case that the defendant is liable to pay excise duty only if the Directive, in addition to the Regulations, also makes him liable, we ask whether on the facts sets out by Mr Evans, White was liable under the Directive. We have no doubt that he was. He comes within at least one, and probably more, of the categories set out in paragraphs 79 and 92 above.

We have no doubt that the judge would have found White had obtained a pecuniary advantage in so far as the full amount of the excise duty is concerned and we uphold the challenged finding of benefit in so far as it relates to excise duty.

This aspect of the case concerns White only. The VAT component of the benefit figure was calculated by reference to the value of the acquisitions rather than by reference to the lost VAT on the supply into the domestic market. The VAT component was £1,224,815.40.

Section 10(1)(c) of the Value Added Tax 1994 provides for VAT (“acquisition VAT”) to be charged on any acquisition from another Member State of any goods where either “the person who makes the acquisition is a taxable person” or “the goods are subject to a duty of excise …”.

As to the second of these two categories, it is pointed out on behalf of the appellant that:

There is no provision in the Sixth Directive [OJ L 145, 13.06.1977] providing for VAT to be imposed on goods by virtue of the fact that they are excise goods other than where the acquisition is by a taxable person or a non-taxable legal person.

To this the respondent replies that White was, in any event, a “taxable person” under both domestic law and the Sixth Directive and that he made the acquisition. The Court, so the respondent submits, need not therefore concern itself with the second category.

In the words of the respondent:

53.

Under domestic law a person is a “taxable person” if he is, or is required to be, registered for VAT (see s.3(1) of the VAT Act 1994). Under Article 4(1) of the Sixth Directive a “taxable person” means any person who independently carries out any economic activity specified in Article 4(2), which includes traders.

54.

White was required to be registered because he was engaged in the business of selling HRT (‘chargeable supplies’), smuggled or otherwise, and his turnover easily exceeded the applicable threshold then in force. White was clearly a “taxable person” within Article 4 of the Sixth Directive – he was independently carrying on economic activity. He was also a “taxable person” within the different meaning of s.3(1) of the VAT Act 1994: He was required to be registered since the level of his business supplies exceeded the then threshold.

The appellant accepts that:

If White were a principal in the smuggling operation then clearly he would incur such liability.

The appellant submits that the judge would not have inevitably found White to be a principal and repeats the submissions made in relation to liability for excise duty.

In our view White was certainly a taxable person, albeit not registered.

The respondent submits that:

66.

... on the evidence (particularly in relation to the 24^th July cash seizure) he was the ‘acquirer’ of the goods within the meaning of the VAT Act and so was liable for the ‘acquisition VAT’.

To succeed in the submission that the value of White’s benefit was £1,224,815.40, the respondent has to show that the judge would have inevitably found on the balance of probabilities that White was the acquirer of all the tobacco sent to this country by Tilyard and thus liable to pay all the acquisition VAT.

In the light of our conclusions in paragraph 148, we have no doubt that the judge would have so found. It follows that we have no doubt that the judge would have found White had obtained a pecuniary advantage in so far as the full amount of the VAT is concerned and we uphold the challenged finding of benefit in so far as it relates to the VAT.

For these reasons we dismiss White’s appeal.

On the hearing of the appeal we announced that the respondent did not oppose the appeal of Rowbotham against the confiscation order, that we would allow the appeal and that we would give our reasons later. We are grateful to Mr Bird and Mr Jackson for preparing an agreed note about the appeal much of which we have incorporated into this judgment.

On 9^th May 2005 at the Wolverhampton Crown Court (HHJ Onions) a confiscation order was made against the appellant in the sum of £249,252.

Rowbotham appealed against the order, but this was dismissed by the Court of Appeal, presided over by Rose LJ on 13^th March 2006, [2006] EWCA Crim 747.

In the course of his argument opposing the appeal, prosecuting counsel referred the Court to the 1992 Regulations rather than the 2001 Regulations and submitted that Rowbotham was a person included within the range of those liable to pay excise duty by reason of being a “person acting on behalf of an importer …in respect of the importation”.

The Court of Appeal did not in fact determine the appeal on the basis of whether or not Rowbotham was personally liable to pay the duty.

Having identified that the wrong Regulations had been cited, RCPO wrote to the appellant alerting him to the fact and advising that he could consider an application to the CCRC. The appellant made such an application and the CCRC referred the case to this Court on 3 June 2009.

In the light of the extensive review of the facts in the CCRC Statement of Reasons, the following summary will be brief.

Rowbotham was arrested on 15^th September 2003. At his premises (in two transit vans and a conservatory) were over two million cigarettes upon which excise duty had not been paid. The duty evaded was £305,171. He was interviewed and said that he had agreed to look after the cigarettes and expected to be paid £200 for doing so. He was charged and released on bail.

On 1^st October 2004, whilst on bail, he was arrested on the M6 motorway. He was driving a van which contained 420,000 cigarettes upon which duty of £63,000 had been evaded. He was also in possession of a large sum of cash. He was interviewed and said that he had been paid £80 to drive the van to Liverpool, but was unaware of its contents.

Both the 2003 and the 2004 offences were charged as offences of carrying or keeping goods upon which excise duty had not been paid, with intent to defraud Her Majesty of the duty payable, contrary to s.170(1)(b) of the Customs and Excise Management Act 1979. On 14^th October 2004 Rowbotham pleaded guilty in the Cannock Magistrates’ Court to the 2004 offence and was committed for sentence to the Crown Court. On 27^th October 2004 he entered a guilty plea on indictment to the 2003 offence.

He submitted a written basis of plea to the 2003 matter, the effect of which was that his role was solely to store the goods for another in expectation of a reward of £200, which was not paid. This was accepted by the Crown. On 17^th November 2004 he was sentenced to a total of 24 months’ imprisonment.

The confiscation order was made in the sum of £249,252. The benefit finding had been made at a hearing on 17^th January 2005 in the sum of £368,393.01. This was the sum of the duty evaded on the two consignments of cigarettes that had been found in his possession on 15^th September 2003 and 1^st October 2004.

No Regulations were cited to the Crown Court by either party. As the law then stood, the issue of who was liable as a matter of law to pay the duty was not determinative of any issue in confiscation proceedings.

The grounds of appeal dated 17^th July 2009 adopt the CCRC’s Statement of Reasons and submit (in summary) as follows:

The appellant did not obtain a pecuniary advantage as he was not a person who was liable to pay the duty under Regulation 13 of the 2001 Regulations;

The appellant did not obtain a benefit by any other means; and

Therefore the confiscation order should be quashed.

In the words of the respondent:

Notwithstanding that the citation of the incorrect Regulations did not appear to infect the judgment, the Crown accepts that the decision of the Court of Appeal in 2006 was tainted by error and should not now stand. This is (a) because of the danger that the citation of the Regulations may have provided additional support (for different reasons) for the Court’s stated conclusions, (b) because the failure to cite the 2001 Regulations deprived the Court from having a contrary argument to consider, and (c) because upon analysis of the law as it now stands the judgment cannot now be supported on the facts.

Firstly Mr Rowbotham had not pleaded guilty to the evasion of duty. He had pleaded guilty to one count and one charge, each of which alleged that he had been respectively keeping and carrying goods with intent to defraud Her Majesty of the duty. Secondly, in civil law terms, the duty on the cigarettes had already been evaded (by others), prior to Mr Rowbotham receiving them. He was not the importer, manufacturer, or diverter from bond. While his acts and his guilty pleas could correctly be said to have involved an intention to defraud the Crown from that continuing liability to pay, the liability itself was the liability of others (as determined by the 2001 Regulations) and not of Mr Rowbotham, and had been evaded by others.

The respondent accepts that the appellant derived no benefit by way of pecuniary advantage. Someone else (who was not apprehended) evaded the duty, probably when the goods were smuggled in. The respondent does not seek any substituted order.

On the hearing of the appeal we announced that the respondent did not oppose the appeal of Perry against the confiscation order, that we would allow the appeal and that we would give our reasons later. We are grateful to Mr Puzey for preparing a note about the appeal much of which we have incorporated into this judgment. We understand that the note was approved by Mr John Evans for the appellant.

The appellant appeals the confiscation order made under the provisions of the Proceeds of Crime Act 2002 by HHJ Onions sitting at Shrewsbury on 2^nd May 2008.

At 15.16 on Friday, 1st June 2007, Customs Officers entered an outbuilding in the courtyard of Vale View Farm, Green Lane, Ashley, near Market Drayton. Inside the outbuilding were a number of motor vehicles including a red Ford Escort van. The rear doors of the van were open, Perry was standing directly to the rear of the van and there were large boxes of cigarettes on the floor near where he was standing. Inside the van were further large boxes of cigarettes of the same type as those outside. After caution Perry said he was not prepared to answer any questions.

The red van contained 30,000 cigarettes of two brands and pouches of smoking tobacco. The other vehicles contained 72,200 cigarettes of the same two brands plus one other and there were 95,200 cigarettes of the same two brands on the floor at the rear of the red van. A further 60,060 cigarettes were found in a storage box inside the unit.

Perry was arrested and taken to Shrewsbury Police Station. In interview he answered no comment to all questions asked about the farm and the cigarettes. He conceded he lived at Beech House, Doctors Bank, Ashley.

Perry was charged with being knowingly concerned in dealing with tobacco products which were chargeable to duty where duty was not paid and with intent to defraud Her Majesty of the duty thereon under Section 170 of the Customs and Excise Management Act 1979. The duty said to be avoided was put at £46,388.95 in the prosecution papers.

Perry pleaded guilty at the first hearing in the Crown Court on 21st April 2008. He did so with a written basis of plea. This set out his role as the provider of storage for another for about 2 weeks and the transporter of 8 boxes of cigarettes to the unit. The judge sentenced Perry on this basis:

A so-called friend, who I doubt has been in much in contact with you recently, wants to use this barn that you had access to and it seems to me that you probably closed your mind to what was going on. I have not been told that you were going to get any benefit from letting your barn be used for the storage of these tobacco goods, but by your plea of guilty, you accept that at some stage, Mr Perry, you knew that there were tobacco goods in your barn and you knew that they were being smuggled into this country for sale on the black market and, to that extent, you closed your mind to the obvious and, unfortunately for you, you were caught by officers from the Customs & Revenue department and you now find yourself standing in the dock, losing your good name and having to pay a financial penalty that in some senses, whilst it is set out in the legislation, is entirely disproportionate to the harm that you have done.

The confiscation order was made in the agreed sum of £47,465.17, which represented the duty evaded with an allowance for the effects of inflation. 18 months’ imprisonment was imposed in default of payment within 6 months.

In the words of the respondent:

The Crown have now reconsidered their opposition to this Appeal in the light of the Judgment in R v Mitchell and also upon further consideration of the Endnote in R v May. It has been decided that on the facts of this case the appeal should no longer be resisted. The Basis of Plea and the Learned Judge’s Sentencing Remarks make it untenable to argue here that the Appellant caused the goods to reach the excise duty point in any real sense and that being so he could not be said to have obtained a pecuniary advantage by evading a liability to which he was personally subject.

As we said in paragraph 26, at the conclusion of the hearing we asked for written submissions about a driver’s liability for excise duty, where a driver is no more than a courier paid to transport the load into this country. We have received those submissions.

We have decided that we shall not resolve the issue given that it is both complex and does not arise in this case. We say only this. It tentatively seems to us that a lorry driver who knowingly transports smuggled tobacco will, for the purposes of the Regulations, have caused the tobacco to reach an excise duty point and will have the necessary connection with the goods at the excise duty point. We are concerned as to whether the driver falls within Article 7(3), assuming that is it is necessary for him to do so.

If he does so, it would remain a matter of domestic law whether he has obtained a benefit for the purposes of confiscation proceedings. We note, in this respect, that in paragraph 48 of May it was said that a defendant “ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject” (underlining added) and that: “Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property.”

The appeals of Dennard, Rowbotham and Perry succeed. The appeal of White fails.

The span of the conspiracy was 1^st January 2001 to 19^th March 2002. During this period numerous consignments of hand rolling tobacco (“HRT”) were sent to England from Luxembourg concealed in:

By his DCS (dated 31.12.02), IW accepted that he did not take issue with the contents of any witness statements provided by the Crown.

On 28^th February 2001, German Customs officers [Thiel sp190b] stopped a vehicle driven by a man called Uwe Schtschepik. Concealed in boxes of carpet tiles loaded in his vehicle was a total of 485kg of HRT. The driver had collected the load that morning from:

According to the documents that accompanied the load, the carpet tiles were to be delivered to a German haulage company called Danzas. Documentary records obtained from Danzas show that the goods were to be carried to the UK. The consignee was shown as either Premier Upholstery or Securicor Omega International. A total of 6 loads were despatched by Danzas for RNI. The last of the consignments was also intercepted by German Customs officers on 1^st March; it too contained tobacco hidden in boxes ostensibly containing carpet tiles. On this occasion, the Danzas driver was Dimitri Spielmann [sp 181b]; he had collected 3 earlier loads from RNI in Foetz.

The UK leg of the journey was sub-contracted to Securicor Omega in Rainham. Documents were provided to the Customs by Securicor [Reeves, sp13; xp106-120]. One such load was collected on 27.2.01 by a person giving the name John Jones from Premier Upholstery, Unit 1, Crown Farm Crescent, Nr Epping. No company by the name of Premier Upholstery has any connection with that address.

The name “Paul” and a mobile phone number 07960 535388 were given [7a] as contact details for the load. The load was collected in a van, registration number L497 MVW [7b]; this was a vehicle regularly used by Robin Marshall on cross-Channel trips (see schedule). It was Robin Marshall who collected this load.

Shortly after the second German seizure, a Danzas employee called Heiko Jungling [wsp177B xp322] was contacted on the phone by a man to whom he had previously spoken about the transport arrangements for the Danzas loads; this man only ever spoke to Jungling in English. The caller said he could be reached on telephone no. 00352 91469402. Jungling told the caller that goods had been seized by German Customs and gave him the telephone number of the relevant Customs Office.

The caller rang again on 6^th March and suggested they go for a meal together; he was adamant that they meet on 8^th March (two days later) because he said that on that day an Englishman would arrive by plane who wanted to take part in this discussion. The caller gave Jungling to understand that he would have cash with him in order to compensate him for the expense caused by “the trouble” with Customs. The caller offered Jungling £33,000 per month if he would continue to transport loads for him. He said he would be travelling to the meeting in a red Mercedes.

It was arranged that they would meet on 8^th March at the “Leinenhof” restaurant next to the Schweich exit from the motorway, between Trier and Wittlich. Jungling gave this location on the directions of German Customs who kept it under surveillance. It was the prosecution case that the caller was Tilyard.

At the appointed time, a red Mercedes Benz with British registration no. L824 RJN containing three men was seen in the car park of the Leinenhof restaurant [Feltz, sp187b]. According to P&O records, that vehicle travelled from Dover to Calais overnight on 7^th March and returned on 9^th March. The manifest recorded the names of the occupants as Robin Marshall, Ian White and Anthony Weston.

When interviewed, White admitted he was one of the three men in the red Benz (which he admitted was his car – see §44 below).

On 4^th April 2001, a man giving the name Paul Burnett telephoned German Customs claiming to have an interest in the seized loads and seeking the return of the tobacco. He was invited by the Officer, Karl Backhaus, for an interview. By prior arrangement, Mr Backhaus collected the caller from the railway station at Trier on 25^th April. He admitted to the officer that his name was not Paul Burnett, but Howard Tilyard; his passport confirmed that [jbp 17].

During the subsequent interview, Tilyard admitted that the seized loads were his. He said he concealed the tobacco under the carpet “to make it easier to import it into the UK illegally”. He said he deliberately misdescribed the goods because had he said it was tobacco:

“I would probably not have found a transport company to carry the goods to England”. [exp125]

He explained that he bought the tobacco from a wholesaler in Luxembourg called Mapine, a company occupying premises at 4 Rue de l’Avenir, next to the address purportedly used by RNI (see §5, above), and then re-packed it in boxes sent for that purpose from England by people whose names he would not reveal [exp126]:

On 27^th February 2001, the day before the first seizure by German officers, Robin Marshall (“RM”) was stopped at Dover Eastern Docks as he was leaving the country in a Volvo (F314 RAR) [exp40]. In his possession was £10,000 in cash, which he claimed was to buy a car (Footnote: ²) [Nowill sp192]. Robin Marshall was also stopped on his return to England; he said he had not had enough money to buy the car he wanted, so he had left the cash with his girlfriend in Belgium.

There were no further “carpet” loads after the stop on 1^st March 2001.

On 23^rd August 2001, Belgian Customs Officers [Michaux; sp33, Fontaine; sp38] stopped and searched a VW van that had travelled from Luxembourg. It contained three pallets loaded with boxes of what appeared to be computer parts. The officers thought the boxes looked rather old and the tape sealing them had not been properly applied. The load was examined; each box contained an empty computer tower which had been packed full with packets of tobacco; the total weight of the tobacco thus concealed was 810kg.

The van was driven by Karel Sollie, a manager of ASAP Express Courier. Sollie explained [wsp 46-9, 57-50] that the consignor was a Luxembourg based company called Luxor. This load was one of many, the first of which was sent in May 2001 [wsp46]. The pattern was always the same. On each occasion the pallets were collected by Sollie (or one of his drivers) from outside the premises of Ziegler at 166 Rue de Dippach, Bertrange, Luxembourg. (Footnote: ³) The pallets were unloaded from a Europcar van and handed over by a man who gave the name “Howard”, who said he represented Luxor Computer Logistics. “Howard” gave his address as Hotel Villa Romana, Foetz the same as Tilyard’s address. The first of the loads was collected by ASAP from that address.

ASAP were instructed to deliver the pallets to England. This was the return of the CPU for re-use in the smuggling enterprise. The English leg of the journey was subcontracted to a haulage firm called Lynx Express Ltd. Lynx vehicles were collecting pallets from the ASAP warehouse every day. Paperwork from ASAP and Lynx [Kennard; sp78] revealed a total of 88 previous transactions beginning on 1^st May 2001 [see schedule 9 - 17].

It transpired that another, apparently identical, load from Luxor was in transit at the time of the interception. Accordingly, on 24^th August, the day after the stop in Belgium, UK Customs Officers [Hamill, sp62, Thomas; sp 65] visited the Lynx warehouse at Dartford. On examination of the load that had just arrived, it was found to contain CPU cases stuffed with pouches of tobacco [see photos], a total of 675kg. The paperwork for the load identified the consignor as Luxor, at the same address as before.

A contact number had been provided to Lynx: 0035 221 384155. The area code is for Luxembourg. On the instructions of a Customs officer, Mr Morris of Lynx [wsp67] rang the number saying there was a problem with the load. The male voice at the other end said he was “Howard” [wsp69]. Mr Morris recognised the man’s voice; he had previously spoken to him on the telephone in connection with Luxor loads. Mr Morris told him that HMC&E had seized the load.

On 29^th August, the man called “Howard” telephoned Mr Morris to enquire whether there was any news on the seized goods. During the ensuing conversation, he admitted to Mr Morris that he knew the CPU cases contained tobacco - that, he said, was the business he was in. “Howard” then asked Mr Morris whether he was willing to “turn a blind eye” in respect of future loads - if so there would be “a drink” in it for him [wsp74].

The Luxor loads were collected from the depot at Dartford. It was always the same man who turned up; he was white, 5’9”-5’10”, slim build, hoop earrings, shaved head and covered in tattoos. The first time he said he had come to collect the goods for “Howard” [Turner; wsp82]. Another Lynx employee, Donald Williamson, also met this man. Mr Williamson [wsp83] wrote down the registration number of his vehicle - R926 YPV, (Footnote: ⁴) and the name he gave - Paul Jones [jbp 26]. That index number and van details match those of a van frequently used for cross channel trips by Robin Marshall and Nigel Marshall travelling 2 or 3 times per week (see schedule). The jury was invited to infer that the man who turned up at Lynx was Robin Marshall. Fingerprints matching his were discovered on wrapping from one of the seized CPU cases [Dawson; sp88 at 91].

Lynx received deliveries of what purported to be computer parts consigned to the following companies:

At about 7 o’clock on the evening of 24^th July 2001, Steven Dinnen was stopped outbound at Harwich by UK Customs [Farrow; sp17, Taylor; sp23] driving a green LDV hire van (R633 BWY) that was found to contain empty computer towers/cases. Under his seat was a carrier bag with £31,000 in cash inside.

At the time, Dinnen said he was taking computers to Brussels to be filled. When interviewed (between 20.06 and 20.35) that night [Mills; sp27], Dinnen said the computers and the money had been given him by Nigel Marshall; he was to take them to Luxembourg to an address he would be given (by phone) once he was there.

When Dinnen was arrested on 19^th March 2002, his home address was searched and a car hire agreement (dated 9^th August 2001) was found [85b] which indicated that he was employed by Universal Connections as a sales assistant. This was a business that had been sold by White to Weston.

The booking for Dinnen had been made using a debit card belonging to Rosemary White (White’s wife) at a cost of £231 [Sturgess sp 324; Newbiggin sp 321]. The address given when the ticket was booked was White’s previous address - 103 Lymington Road, Dagenham. In interview, White admitted he “probably did” pay for the ticket, suggesting that Dinnen told him “there was some kind of problem” because he, like the Marshals, had no debit card and had also got bad credit [IW ivp77].

On 30^th July, Robin Marshall attended the Customs office in Harwich seeking the return of the £31,000 that had been seized from Dinnen; it was eventually returned by Customs. On the instructions of the Marshalls [Coward; sp30], the money was paid into a Woolwich current account, no. 42555953 in the name of Nigel Marshall. Once the funds were cleared, they were promptly removed. (Footnote: ⁵)

On 12^th October 2001, Robin Marshall was again stopped by UK Customs at Outward Control. He had approximately £25,000 cash concealed under a spare tyre behind the passenger seat and £5,000 on his person [Pearcy; sp99]. He was arrested.

The van Dinnen was driving [R926 YPV] was seen outside the business premises shared by White and Weston (761 Becontree Avenue, Dagenham) on 3 occasions: 29^th August, 14^th September and 2^nd October (all 2001). A photograph taken inside the premises on 19^th March 2002 shows a cardboard box apparently identical to the Luxor boxes.

White’s billing records showed that after Dinnen’s interview with Customs on 27^th July 2001 (Footnote: ⁶) he was on the phone to him [22.25, 22.55 and 23.10]; after speaking to Dinnen, he called Tilyard [22.28] and co-defendants [Weston - 22.38; Robin Marshall– 22.47] – see White phone schedule.

On 20^th February 2002, a consignment of plastic 10 litre Crown paint tubs was intercepted by UK Customs at the Thames Europort, Dartford; on examination the tubs were found to be stuffed with tobacco [McLoughlin; sp108].

The load had been sent from Luxembourg by a transport company called Gefco UK Ltd, Dartford, Kent. The consignor was given as:

On arrival in England the loads were stored awaiting collection in the Gefco depot rather than being delivered; the pallets were marked “For Collection”. The Gefco warehouse in the Netherlands which sent the loads over was contacted by UK Customs. It was discovered that another consignment was ready to go; it was examined and it too contained tobacco, not paint.

The goods were in fact consigned by Tilyard. He attempted to recover his goods that were still in the Gefco depot in Holland. He said he needed the load back because the paint was sub-standard [J in ‘t Veld sp261].

In all, Gefco sent 39 identical consignments [Savory; sp106, xp274 to 285]. The first of these was despatched on 21^st November 2001. Starting with 2 pallets, the consignments increased to 6 per load.

The defendants were arrested on different dates in March 2002.

At Ian White’s home address, amongst papers found in his briefcase was one which had the address shown for CPP Refinery – Rue de Randlingen 18, 8366 Hagen [jbp 81] linked to Tilyard.

White was interviewed on 19^th March 2002.

IW was asked about various items seized from his briefcase:

Nigel Marshall, (Footnote: ⁷) in particular, gave evidence in the trial that incriminated White.

The duty and VAT evaded during each phase of the fraud was as follows: