Excise duty - duty chargeable - excise duty point - warehouse keeper liable to pay excise duty on goods

Greenalls Management Ltd v Customs and Excise Commissioners: CA (Lords Justice Schiemann and Carnwath and Sir Christopher Staughton): 26 June 2003

The company operated a bonded warehouse.

It released 250,000 bottles of vodka from its warehouse under excise duty suspension arrangements on the understanding that they were to be exported to bonded warehouses in Spain and Belgium.

However, in spite of Greenalls having taken all reasonable precautions, the vodka was fraudulently diverted after leaving the warehouse and sold for consumption in the UK.

The company was assessed to nearly 2 million of duty.

On a preliminary issue, the Manchester Value Added Tax and Duties Tribunal upheld the assessment.

On appeal by the company, Mr Justice Jacob ([2002] 1 WLR 3333) held that, under the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 (SI 1992/3135), the excise duty point, when the duty became payable, was reached when the goods were fraudulently diverted.

If the irregularity had occurred as the goods left the warehouse, that would be when the excise duty point was reached, but if they left suspension thereafter, then the irregularity occurred later.

The judge considered that he did not have enough information to enable him to decide whether there was an irregularity when the goods left the warehouse and remitted the matter to the tribunal to make appropriate findings.

Both the company and the commissioners appealed.

Robert Venables QC and Rory Mullan (instructed by Ernst & Young) for the company; Rupert Baldry (instructed by the Solicitor for Customs and Excise) for the Commissioners.

Held, remitting the case to the tribunal, that the regulations were made under section 5(4) of the Finance (No 2) Act 1992, which envisaged that the person liable to pay duty must have a connection with the goods at the excise duty point; that the phrase 'were made available for consumption' in regulation 4(2)(a) of the Excise Goods (Holding, Movement , Warehousing and REDS) Regulations 1992 (SI 1992/3135) was designed for circumstances in which the warehouse keeper was responsible for the making available of the goods for consumption rather than merely responsible for the making of a further transfer under continuing duty suspension arrangements; that even if regulation 5(4) might be read as imposing a liability on a warehouse keeper in such circumstances, it should not be so read because of the principle that a tax should be imposed by clear language.