Foresythe v Revenue & Customs [2006] UKVAT(Customs) C00216 (05 May 2006)

                                                                                                CO0216

CUSTOMS DUTY – restoration of counterfeit goods refused – whether unreasonable – no – appeal dismissed

LONDON TRIBUNAL CENTRE

	FUNMI  FORESYTHE	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

			Tribunal:	DR JOHN F AVERY JONES CBE (Chairman)
					ALEX MCLOUGHLIN

Sitting in public in London on 28 April 2006

The Appellant in person

Matthew Barnes, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1.	Mrs Funmi Foresythe appeals against a decision on review dated 18 July (which should be August) 2005 refusing to restore two cartons of goods.  The Appellant appeared in person; Customs were represented by Mr Matthew Barnes.
2.	The Appellant and the reviewing officer Mr Roger Duckworth gave evidence.  We also had witness statements from the seizing officers Mr Kevin Penhale and Mr Michael Burt.  We find the following facts:
(1)	While on a visit to China the Appellant bought goods which were too heavy and bulky to take back in her luggage.  She arranged for a friend with whom had travelled with her and who knew the nature of the goods to arrange for them to be shipped from Hong Kong in two cartons weighing 58 and 57 kilos.  The goods consisted of clothes with branded names such as Gucci and Christian Dior.  The value of the goods was about £1,300.  She did not complete the forms C3 which were completed by the agent in her and her husband’s name.  The forms did not declare the goods as new goods.  The Appellant says (but we make no finding on this) that the goods were for her family and friends.
(2)	Customs seized the goods as not having been properly declared.  The legality of the seizure has not been disputed.  
(3)	Customs refused to restore the goods on the ground that they were counterfeit and the decision was upheld on review.  
(4)	Following the appeal, on 15 September 2005 Customs sent a Christian Dior belt, a Gucci watch and two pairs of Gucci sandals from one carton and a Gucci handbag, a pair of Gucci sandals, a Gucci belt, a pair of Gucci sunglasses, a pair of Dior sunglasses and a paid of Channel sunglasses to the rights-holders who confirmed that they were counterfeit.  We find on the balance of probabilities that all the goods were counterfeit.  This was not known to the Appellant who says (and we accept) that she had bought them in respectable shopping malls in Guangzhou and she considered that they were damaged or second quality genuine goods.
(5)	If the goods had not been counterfeit Mr Duckworth would have considered restoring the goods on payment of the duty.  The review letter states that Customs’ policy is not to restore goods that infringe intellectual property rights but each case is examined on its merits to determine whether or not restoration should be offered exceptionally.  He instanced the case of goods of a value slightly over the duty-free allowance, perhaps up to £165 or £170 that might be considered for exceptional restoration.
3.	Council Regulation No.1383/2003 provides in article 16 that goods found to infringe an intellectual property right at the end of the procedure provided for in article 9 shall not be allowed to enter into the Community Customs territory.  Article 9 permits Customs to ask the right-holder of the intellectual property to analyse the goods.  Article 3 provides that Member States may consider that goods of a non-commercial nature within the limits of the duty-free allowance (£145: the Travellers’ Allowances Order 1994) to be outside the scope of the Regulation.
4.	Section 152 of the Customs and Excise Management Act 1979 provides that: “The Commissioners may, as they see fit…(b) restore, subject to such conditions (if any) as they think proper, anything forfeited or seized….”  By section 14(2) of the Finance Act 1994 a person affected by a decision of the Commissioners, which includes a decision under section 152(b), may require it to be reviewed.  
5.	We accept that the Appellant did not herself make the false declaration and that it must have been done by her forwarding agent.  However, the legality of the seizure is not in issue.  We are concerned with restoration.  Mr Barnes, for Customs, contended that the policy not to restore counterfeit goods was necessary, proportionate and appropriate to protect bona fide traders and the revenue.  In particular he instanced: the massive adverse effect on legitimate trade and the protection of the revenue; the illegality of importation of counterfeit goods under Regulation No.1383/2003; if Customs restored counterfeit goods there would be no incentive for travellers to adhere to the rules and the amount of illegitimate trade would be greater; bearing in mind the £145 duty-free limit, the policy strikes a fair balance between the deterrence of counterfeiting and the protection of the revenue on the one hand and the individual’s right to enjoyment of property within article 1 of Protocol 1 to the Human Rights Convention; the policy is flexible and the review officer had a discretion to adjust the policy, as in the case of goods slightly over the duty-free limit.
6.	The Tribunal’s jurisdiction is contained in section 16 of the Finance Act 1994 which applies to matters contained in Schedule 5 including decisions on restoration.  Section 16(4) provides that 
“In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making the decision could not reasonably have arrived at it, to do one or more of the following, that is to say—
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct;
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a further review of the original decision;….”

7.	We find that the review decision was both reasonable and proportionate for the reasons put forward by Mr Barnes.  We consider that non-restoration of counterfeit goods in circumstances in which it is illegal to import counterfeit goods carries greater weight than the Appellant’s right to her property before it was forfeit.  Indeed we go further and say that if Customs had considered restoration they would have been acting illegally in breach of Regulation No.1383/2003.  Accordingly we dismiss the appeal.  Mr Barnes did not ask for costs.

JOHN F AVERY JONES

CHAIRMAN
RELEASE DATE: 5 May 2006

LON/05/7067