Ratnayake v Ekanayake Commissioner General of Excise
and others fSripavan, J.)
CAR PLAN LTD AND OTHERSv
K.L.G. PERERA, DEPUTY DIRECTOR OF CUSTOMS AND
COURT OF APPEALSRIPAVAN, J.
CA NO 1169/2001MARCH 14 AND 17 ANDMAY 2 AND 20, 2003
Customs Ordinance, sections 52, 165, 164 and 165- Exercise of power of mit-igation – Can it be exercised after the vehicles are seized as forfeit?
Once the vehicles are seized as forfeit in terms of section 52, the own-ership of such vehicles vest in the State.
It is the Minister who has the power to order the restoration of the vehi-cle under section 164.
The Minister is also empowered in terms of section 165 to direct theseized vehicles to be delivered to the proprietor subject to terms andconditions.
Director General of Customs (2nd respondent) has no power to releasethe vehicles in question acting in terms of section 163.
The only power the 2nd respondent has in terms of section 163 is tomitigate a forfeiture or penalty when such forfeiture or penalty isdeemed to be unduly severe.
The power of mitigation conferred upon the 2nd respondent by section163 cannot be exercised after the vehicles are seized or forfeit as thepower to restore or/deliver seized vehicles is vested in the Ministeralone.
Sri Lanka Law Reports
 2 Sri L.R
APPLICATION (or writ of certiorari.
Cases referred to:
Culasubadhra v University of Colombo and others (1985) 1 SRI LR 244at 257
Bangamuwa v S. M. J. Senaratne, Director General of Customs (2000)1 SRI LR 106
Shibly Aziz P.C. with Nigel Hatch for petitioner
Y.J.W. Wijayatilake Deputy Solicitor General for respondents
July 7, 2003SRIPAVAN, J.
The first petitioner is a duly incorporated company engaged in the 01business of, inter alia, the importation and sale of motor vehicles.
The second and third petitioners are the Managing Director and theDirector of the petitioner company respectively. The first petitionercompany was appointed as the sole distributor and/or agent of theKIA Motor Company of Korea in 1996. The following clients placedtheir orders with the first petitioner for the importation of right handdrive KIA Spoilage jeeps.
Janatha Estates Development Board-5vehicles
Sri Lanka State Plantations Corporation-4vehicles
McLarens International Limited-1vehicle
Mr. S. Ratnayake-1vehicle
Mr. B. Jayaratne-1vehicle .
Mr. A. Cramer-1vehicle
Udapussellawa Plantation Limited-1vehicle
Dr. M.M. Janapriya-1vehicle
It is common ground that the CIF price of a left hand drive KIASpoilage jeep is US$ 10,920. Separate payments of US$ 1,500 pervehicle to the Korean Company were made on behalf of the follow-ing clients through telegraphic transfer in order to convert eachvehicle from left hand drive to right hand drive.
i. Janatha Estates Development Board -5 vehicles
Car Plan Ltd and others v K.L.G. Perera Deputy Director of
Customs and others (Srioavan. J.)
Sri Lanka State Plantations Corporation-4vehicles
McLarens International Limited-1 vehicle
Dr. M.M. Janapriya-1 vehicle
The first petitioner remitted the conversion cost in respect ofone vehicle and gave instructions to the Union Bank to remit US$1,500 per vehicle by telegraphic transfer in respect of the otherthree vehicles to the credit of the Korean Company.
On or about 19th September 2000 the said fifteen vehiclesarrived in the Port of Colombo. It was found that fourteen of the saidvehicles had been consigned to Dr. M. M. Janapriya and one vehi-cle to Mrs. W. A. Ariyawathie, both of whom obtained one conces-isionary duty permit each from the Treasury. McLarens InternationalLimited established a letter of credit for US$ 10,990 and remittedUS$1,500 by telegraphic transfer in the name of Mrs. W.A.Ariyawathie for the importation of one KIA Spoilage jeep. The firstrespondent commenced an inquiry around 25th January 2001since there were reasonable grounds to suspect that the declara-tions made to Customs by the first petitioner in respect of the afore-said vehicles were false. At the inquiry, the second petitioner stat-ed that US$12,420 remitted in favour of the Korean Companyincluded the conversion cost of US$1,500. (Vide page 10 of theinquiry proceedings resumed at 12.55 pm on 16.02.2001). The sec-ond petitioner also admitted that the first petitioner confirmed to theDirector General of Customs that the total CIF price including theconversion cost for a KIA Spoilage diesel jeep is US$12,420 (Videpage 13 of the inquiry proceedings resumed at 2.55 pm on16.02.2001). As stated in paragraph 10 0) of the second petitioner’saffidavit dated 30th July 2001, the only explanation given was thatthe conversion cost of US$1,500 was not declared to the Customsbecause the Korean Company was to return the said amountcharged from the importers due to an undue delay in delivering thesaid vehicles. However, the first petitioner failed to produce any evi-dence or correspondence at the inquiry regarding the waiver of theconversion cost of US$ 1,500 b^the Korean Company. On the con-trary Dr. M.M. Janapriya at the inquiry (page 10 of the inquiry pro-ceedings of 08.03.2001) stated that Mr. Senanayake, SalesManager of the first petitioner informed him that US$ 1,500 had tobe remitted through a Bank of Sri Lanka and that it should be
Sri Lanka Law Reports
[2003) 2 Sri L.R
declared to the Customs and if not, the vehicle would be seizedafter importation. Dr. M.M.Janapriya further stated that he has notgot any refund of the said US$ 1,500 todate. The letter dated 3rdOctober 2000 sent by Dr. M.M.Janapriya to the second petitionermarked X2 shows that even though he paid the full CIF price of thevehicle, namely, US$ 12,420, the first petitioner failed to declare thetotal price to the Customs. This is further confirmed by the facsim-ile message sent by the second petitioner to the Korean Companyon 19th May 2000 marked X3. This document X3 gives the totalCIF price of a right hand drive KIA jeep as US$ 12,420 which 70includes a conversion cost of US$ 1,500. The second petitioner bythis letter X3 further informed the Korean Company that whennegotiating final documents the price must be quoted as US$10,920 and if not, the petitioner would have problems with theCustoms. This clearly demonstrates the intention of the petitionersto defraud the revenue. It appears that the first petitioner companyobtained concessionary car permits from various permit holders inorder to import vehicles for its clients. The permit holders who tes-tified at the inquiry stated that they gave their permits through athird person to the first petitioner company and received cash pay- 80ments. None of the permit holders other than Dr. M.M.Janapriyaopened the letters of credit or remitted the money through tele-graphic transfer. It was the first petitioner company, the CentralFinance Company Limited and McLarens International Limited whoestablished the letters of credit and took steps to remit the moneythrough telegraphic transfers in the names of the permit holders.
In the case of Culasubadhra v University of Colombo and oth-ers 0) Seneviratne, J. stated that “it is not the function of this Courtto determine whether the finding is justified or not. A finding of factby a Tribunal such as this can be set aside by way of a writ only if 90it is found that there was no evidence at all to base such a findingor if the Tribunal has not properly directed itself in evaluating theevidence and drawing necessary inferences and could not havecome to that conclusion if it properly directed itself.”
I am satisfied that based on the evidence led at the inquiry, thefirst respondent came to a correct finding. In the circumstance, Isee no reason to interfere with the order dated 28th June 2001made by the first respondent, namely, that the first petitioner com-
Car Plan Ltd and others v'K.L.G. Perera Deputy Director of
Customs and others (Sripavan. J.)
pany has failed to declare the conversion cost of US$ 1,500 onevery imported vehicle and thereby made false declarations to 100Customs in order to evade the payment of correct duty and otherlevies. The order forfeiting the said vehicles in terms of. sections 52and 119 of the Customs Ordinance therefore stands.
Once the vehicles are seized as forfeit in terms of section 52of the Customs Ordinance, the ownership of such vehicles vest inthe State. Thereafter, it is the Minister who has the power to orderthe restoration of the vehicles under section 164 of the saidOrdinance. The Minister is also empowered in terms of section 165to direct the seized vehicles to be delivered to the proprietor in cer-tain cases subject to certain terms and conditions. Therefore, the 110order of the first respondent does not preclude the Minister fromconsidering an application made by the petitioners in that behalf.
The second respondent has no power to release the vehicles inquestion acting in terms of section 163 of the said Ordinance. [VideBangamuwa v S.M.J. Senaratne, Director General of Customs andanother (2)]. The only power the second respondent has in terms ofsection 163 is to mitigate a forfeiture or penalty where such forfei-ture or penalty is deemed to be unduly severe. The power of miti-gation conferred upon the second respondent by section.163 of thesaid Ordinance cannot be exercised after the vehicles are seized 120as forfeit, as the power to restore or deliver seized vehicles is vest-ed in the Minister alone. In the circumstances, a writ of mandamusdirecting the second and/or the third, respondents to mitigate theorder of forfeiture and release the vehicles to the petitioner, isrefused.
For the reasons stated, the petitioners application is dis-missed, however in all the circumstances without costs.
CAR PLAN LTD OTHERS v. K. L. G. PERERA, DEPUTY DIRECTOR OF CUSTOMS AND OTH