Introduction

The case of SDM European Transport Ltd v. Revenue & Customs ([2011] UKFTT 211 (TC)) centers on an appeal against an assessment of excise duty imposed on SDM European Transport Ltd (hereafter referred to as SDM), a haulier company. The crux of the dispute lies in whether the consignments of spirits, which were transported under duty suspension from England to various destinations in Europe, were duly delivered to their intended consignees or were diverted, thereby causing SDM to be liable for additional excise duties.

The key issues in this case include the validity of the movement guarantees provided by SDM, the authenticity of delivery documents, the role of subcontracted drivers, and the interpretation of relevant excise duty regulations under the DSMEG (Excise Duty Points) Regulations 2001, implementing the Excise Directive 92/12/EEC.

Summary of the Judgment

Analysis

Precedents Cited

The judgment extensively references the Excise Directive 92/12/EEC, particularly Article 20, which delineates the liability for excise duties based on where an irregularity or offense occurred during the movement of goods. Additionally, the Tribunal considered prior cases such as Fen v D Cruz [2007] EWCA Civ 319, Anglo Overseas Ltd v Revenue and Customs Commissioners [2007] V&DR 71, and Re Anglo German Breweries Ltd [2002] EWHC 2458 (Ch), which informed the interpretation of duty liability and the burden of proof in excise duty disputes.

Legal Reasoning

The Tribunal's legal reasoning centered on interpreting Article 20 of the Excise Directive, which outlines the scenarios under which excise duty should be levied. The Directive stipulates:

• Where an irregularity occurs, duty is payable in the Member State where the offence took place.
• If an irregularity is detected but its location is indeterminate, duty is deemed payable in the Member State where it was detected.
• If goods do not arrive at their destination, and the irregularity's location remains undetermined, duty is deemed payable in the Member State of departure unless evidence proves otherwise within four months.

Applying these stipulations, the Tribunal assessed whether Customs had proven that the irregularities occurred within the UK or elsewhere. It scrutinized the authenticity of the AADs, the credibility of witness testimonies, and the procedural aspects of Goods Movement as regulated under the DSMEG Regulations.

A pivotal aspect of the reasoning was the weight given to the drivers' testimonies, which largely supported SDM's assertion of legitimate deliveries. The Tribunal also considered the lack of concrete evidence from Customs to definitively place the irregularities within the UK, thereby upholding SDM’s position for most movements.

Impact

Complex Concepts Simplified

Excise Duty Points (DSMEG Regulations 2001)

The DSMEG Regulations establish the framework for applying excise duties on goods that move within or leave the UK under duty suspension. Key aspects include:

• Regulation 3: Imposes duty if an irregularity is detected within the UK.
• Regulation 4: Imposes duty if goods fail to arrive at their destination and the location of the irregularity cannot be determined, deeming responsibility to the UK as the departure point.

Administrative Accompanying Documents (AADs)

AADs are essential documents that accompany goods under duty suspension during transit. They include details such as the origin, destination, and nature of the goods, and are used by authorities to verify the legitimacy of the movement.

Movement Guarantees

A Movement Guarantee is a financial assurance provided by transporters to ensure that excise duties are paid if goods under duty suspension are diverted or found to be illicitly handled.

Early Warning System (EWS)

The EWS is an EU-wide system designed to flag and verify high-risk movements of excise goods in real-time, facilitating prompt detection and response to irregularities.

Conclusion