“4. We must explain at the outset that the role of this tribunal in an appeal of this nature is unusual and is limited. There are two aspects to this. 5. First, in relation to the question of whether or not a car should be returned, we are not given authority by Parliament to make a decision that it should or should not be restored. The decision as to whether or not to restore the car is left in the hands of the UKBA: only they have the power or duty to restore it. Instead we are required to consider whether any decision they have made is reasonable. If it is not reasonable we can set the decision aside and require them to remake it; we can give some instructions in relation to the remaking of the decision, but we cannot take the decision ourselves. If we set aside a decision and UKBA make a new decision, then the taxpayer may appeal against that decision and the same process follows. 6. It is important to remember that a conclusion that a decision is not unreasonable is not the same as a conclusion that it is correct. There can be circumstances where different people could reasonably reach different conclusions. The mere fact that we might have reached a different conclusion is not enough for us to declare that a conclusion reached by UKBA should be set aside. 7. The second limitation in our role follows from the fact that Parliament has decreed that it is for the magistrate’s court or the High Court to decide upon whether or not goods are legally forfeit.The Customs and Excise Management Act 1979 (“CEMA”) sets out the required procedure: if the subject disputes the legality of the seizure he can require UKBA to bring proceedings (unhappily they are called condemnation proceedings) in the magistrate’s court to determine the legality of the seizure. If the magistrate’s court decides that the goods are properly forfeit then the tribunal cannot overturn that decision or take a different view. Further we must proceed on the basis that any finding of fact which was necessary for the magistrate’s court to have come to this decision is to be taken as having been determined by the magistrates and, before us, is therefore to be treated as proved. 8. If the subject does not require condemnation proceedings to be taken in the magistrate’s court, he can effectively concede the legality of the seizure. That is because Schedule 3 CEMA provides: “5. If on the expiration of the [one month period for giving notice that something is asserted not to be liable to forfeiture] no such notice has been given to the commissioners, or if, in the case of any such notice given, any requirement of paragraph 4 above is not complied with, the thing in question shall be deemed to have been duly condemned as forfeit." 9. The effect of this deeming is that any facts which would have been necessary to the conclusion that the goods are forfeit must also be assumed to have been proved. It would be an abuse of process to permit such conclusions to be reopened in this (see para [71(7)] HMRC v Jones[2011] EWCA Civ 824 : “Deeming something to be the case carries with it any fact that forms part of that conclusion”). 10. … 11. There is one other oddity about this procedure. We are required to determine whether or not the UKBA’s decision was “unreasonable”; normally such an exercise is performed by looking at the evidence before the decision maker and considering whether he took into account all relevant matters, included none that were irrelevant, made no mistake of law, and came to a decision to which a reasonable tribunal could have come. But we are a fact finding tribunal, and in Gora and Others v Customs and Excise Commissioners[2003] EWCA Civ 525 Pill LJ approved an approach under which the tribunal should decide the primary facts and then decide whether, in the light of the tribunal’s findings, the decision on restoration was in that sense reasonable. Thus we may find that a decision is “unreasonable” even if the officer had been, by reference to what was before him, perfectly reasonable in all senses.”
“Following our enquiries, and subsequent results from testing at our laboratory, we are satisfied that this oil was intended for illegal use as a road fuel. It is the policy of HMRC not to offer terms for the return of duty free or rebated oil intended for misuse as road fuel, or any vehicles or equipment used to handle it.” 32. The subsequent tests referred to in the letter were undertaken by Mr Rafferty of LGC whose conclusions are set out in the letter HMRC’s letter of15 July 2013 (see below). He found (and Dr Stinton the expert instructed of behalf of Behzad agrees) that pots 1, 2 and 3 of vehicle MX54 EEU were contaminated. It is also agreed that pots 1, 2, 4 and 5 of tanker PK51 DNO contained red diesel and were not contaminated by kerosene. No tests were undertaken on any of the pots of the fuel tanker V407 ECY. 33. A review of the decision not to restore the fuel and vehicles was requested by Hafiz & Haque in a letter to HMRC dated24 April 2013 , again referring to the SGS Report and raising questions in relation to the items seized. Following further correspondence between the parties a review was undertaken by HMRC Higher Officer Louise Bines who, in a letter dated15 July 2013 to Hafiz & Haque, upheld the decision not to restore the fuel and vehicles. 34. After setting out the background to the seizure and explanations given on behalf of Behzad at the interview and subsequently (which we consider below) and stating that she was guided by HMRC’s policy (which she did not quote in the letter) but not fettered by it, Ms Bines concluded (and we set out her conclusions in full): In your letter dated24 April 2013 , you and your client have raised a number of questions concerning each of the items seized, that I shall endeavour to answer in turn. I have attached at Appendix 1, the test results from the Laboratory of the Government Chemist, to which I shall refer. 1 – the white stock tank containing 18,000ltr of white diesel You have said that the independent results you received from SGS Oil Gas & Chemicals shows that there is no contamination, and that this should be grounds for restoration. The report shows the Coumarin content of the fuel as <0.2mg/l You also say that if some contamination is found in the HMRC results, the traces of contamination might be due to slight errors by the operators in following the Wetline procedure in full. The results for the fuel tank sample from LGC (sample #187225) show that the sample is consistent with containing UK Rebated Gas Oil [red diesel]; the percentage of red diesel based on the Quinizarin value was 4%. This is higher than would normally be expected for an accidental wetline contamination, and could indicate that, if caused by wetline, the procedures may not have been followed for some time, allowing the contamination to build up. 2 – the red stock tank containing 6,000 litres of red diesel You have said that the 6,000 litres of red diesel was not contaminated and that HMRC has not confirmed any such contamination. No laundering and/or mixing and/or misuse and/or smuggling of fuel of any kind has taken place. Your client mainly deals in Gas Oil [red diesel] which is evident from documentation checked by HMRC. However, there is sufficient evidence, from the intensity of the contaminations of pot 3 of vehicle PK51 DNO, the white stock tank, in the running tanks of the four seized vehicles and in other equipment found on the site, eg the bags of bleaching earth, soil samples etc, that red diesel was being used or had been misused in the contaminated fuel. Therefore, the red diesel from the stock tank was seized. 3 – the running tanks of vehicles BX05 RYT, V407 ECY, MX54 EEU and PK51 DNO. You have said that independent results you received from SGS Oil Gas & Chemicals shows both the Coumarin and Quinizarin content of the fuel as negative; and that <0.2mg/l is equivalent to nil or negative. The Euromarker test returned positive. You state that the absence of Coumarin and Quinizarin from the sample shows that your client was not misusing rebated fuel for its own purposes, and that as there was no Quinizarin, this was not laundered red diesel. As an explanation for this result, you say that occasionally the drivers sometimes empty leftover diesel into the running tanks using the hose reel, rather than return it to the yard. When doing so there is the possibility that there may be a slight contamination it the driver hasn’t followed the wetline procedures. The LGC results in all 4 cases indicated that the fuel is consistent with containing Laundered UK Rebated Gas Oil at a level between 4% and 8% red diesel based on the Quinizarin value. This is higher than would normally be expected for an accidental wetline contamination, and could indicate that, if caused by wetline, the procedures may not have been followed for some time, allowing the contamination to build up, or that the fuel was taken directly from the contaminated white stock tank. 4 – pot 1-5 of vehicle PK51 DNO and the 18,900ltr of fuel therein. You state that your client maintains that the fuel in pots 1, 2, 4 and 5 was not contaminated. Pot 3 had not been working since January 2013, but there may have been 200-300 litres of red diesel in that pot. Your client keeps pot 3 marked as empty as it doesn’t work. Your client’s test from SGS Oil Gas & Chemicals for the fuel found in pot 3 shows the Coumarin content as 0.52mg/l, but they had no intention of selling this minimal amount of fuel as red diesel. The LGC results for Pot 3 show the sample contained a mixture of UK Rebated Gas Oil and UK Rebated Kerosene, with a Kerosene level of 31% based on the Coumarin value and Red Diesel level of 81% based on the Quinizarin value. The Sulphur content of this fuel was 45.00 parts per million; which is higher than the BSEN 590 limit for that allowed in road fuels. With regard to the red diesel contained in pots 1, 2, 4 and 5 of this vehicle, I cannot comment on this fuel as part of the review, as no decision on the matter of restoration has been made by the seizing team. I can only review the restoration decision of3 April 2013 , which did not mention the fuel within these pots. The Department takes a zero-tolerance attitude to the presence of the statutory markers in road fuels. We will not allow fuel that has the presence of markers, which can be identified by the chemical field tests used by the RFTU, to be used or supplies as road fuel. The zero tolerance is in connection with removal of that contaminated fuel from the road fuel market, it must not be available for supply or use as a road fuel. It is the policy of HM Revenue & Customs not to offer terms for the return of rebated oil intended for misuse as a road fuel, or any vehicles and equipment used to handle it. 5 – pots 1-4 of vehicle MX54 EEU Your client has said due to a mistake in a delivery to a customer, a tanker had been dispatched to retrieve the fuel from the customer’s premises. This fuel was then transferred into pots 2 and 3 of vehicle MX54 EEU by an employee who was unaware of the contaminated nature of the fuel. But, the rest of the pots, to your client’s knowledge, should not be contaminated. The results from the LGC testing show that there is a substantial contamination of fuel in all 4 pots of this tanker, and that the fuel contained UK Rebated Gas Oil and UK Rebated Kerosene. This is not consistent with your client’s explanation about how a contamination may have occurred to the fuel in this vehicle. 6 – other equipment In your letter, you mentioned that there was no equipment or apparatus which might tend to suggest that an involvement in misusing, mixing, laundering or smuggling of fuels. In your client’s interview with HMRC officers on7 March 2013 , the matter of the bleaching earth found in the yard was raised. Mr Livesey referred to the bleaching earth in the container in the yard, that Mr john advised hadn’t been used since 2010; by a Mr Jacobs [ie Jacob Mukkatu] who carried out experiments with bio-diesel. HMRC officers on4 March 2013 found a bag of bleaching earth in a washing machine in the yard before the container was opened, and LGC testing of this substance found that it was consistent with used Laundering Agent – a “bleached earth/fullers earth” material that has been used to remover or “launder” the markers from UK rebated Gas Oil. HMRC officers also found a liquid on the ground outside the container, which was also tested and found to contain Solvent Red 24. LGC have confirmed that Solvent Red 24 is a prescribed marker for rebated fuels, and experimenting with bio-diesel, as the company officers said the container was used for, should not lead to a rebated gas oil contamination of the soil next to the container. I am of the opinion that the application of the Commissioners Policy in this case treats you no more harshly or leniently than anyone else in similar circumstances, and I can find no reason to vary the Commissioners policy in this case. For the reasons set out above I have decided to uphold the original decision whereby your client’s vehicles and the fuel will not be restored. 35. Ms Bines now acknowledges that there are two errors in her letter. The first in relation to vehicle MX54 EEU; although the letter states that “all 4 pots of this tanker” were contaminated this was not the case. The LGC results indicated that while pots 1, 2 and 3 were contaminated pot 4 was not. Secondly Ms Bines referred to LGC tests on a “bag of bleaching earth” found in “a washing machine”, this was a reference to analysis of sludge like substance extracted from pot 1 of vehicle BX05 RYT not the “bleaching earth” found in the disused shell of a washing machine. The error appears to have arisen as the result of the LGC test which concluded that the “sludge”: … is consistent in appearance to what is commonly termed “Bleaching Earth” the statutory makers found in UK Rebated Gasoil were detected in the sample … [which] is consistent with being a used laundering agent. 36. However, despite these errors Ms Bines stands by her decision not to restore the items to Behzad on the basis that the evidence suggested that laundering was taking place and that she had made an assumption that a bag labelled “bleaching earth” was likely to contain bleaching earth despite accepting, in the absence of a test, that she could be sure that this was the case. During cross-examination Ms Bines confirmed that she had not consider the incident in 2009 that had been reported by Behzad nor had she considered the 2011 visit by HMRC but when re-examined said that these would have had a neutral effect on her decision. 37. Ms Bines accepted that the explanations given by Behzad for the presence of contaminated fuel had remained consistent with what was said at interview on7 March 2013 and agreed, when put to her in cross-examination that she should have possibly given more consideration to the return of the vehicles in return for a fee and that this “may have appeared more proportionate” than outright non-restoration. 38. On13 August 2013 Behzad submitted a Notice of Appeal to the Tribunal against this decision. 39. Although in their request for a review Hafiz & Haque had requested copies of all test reports only a narrative of the results obtained by LGC was appended to the review letter. Therefore, on27 August 2013 a written request was made for the provision of the “test reports and enquiry reports, with explanations (if any) provided by LGC and/or any experts with which HMRC has taken a decision.”
“… the Commissioners will not arrive reasonably at a decision if they take into account irrelevant matters, or fail to take into account all relevant matters.” 45. In considering whether HMRC reasonably arrived at the decision not to restore the seized items we have looked at the fuel and vehicles separately. Fuel 46. It is not disputed that the white diesel in the storage tank and in the running vehicles was contaminated. It is also accepted that the red diesel stored at the premises was not. 47. For HMRC, Mr Hays submits that the zero-tolerance policy it adopts is reasonable as any contamination would undermine the ability of HMRC to detect fraud of laundered fuels and create difficulties in determining which part of the supply chain could legitimately claim to rely on any allowed tolerance. In the circumstances he contends that it was reasonable and proportionate for Ms Bines to apply the policy in this case. 48. Mr Powell, for Behzad, contends that the level of contamination in the storage tank (4%) is not consistent with a determined effort to launder red diesel but as Dr Stinton concluded, more likely to have been caused by errors or poor practice especially given Behzad’s lack of technical knowledge or organisation and skill. 49. However, given that Dr Stinton accepted that laundering was a possibility for the contamination of the white diesel, we consider that there was evidence on which Ms Bines could reach such a conclusion. Not only was the fuel contaminated but there were present, on the site, bags labelled “bleaching earth”