011-SLLR-SLLR-2000-V-1-BANGAMUWA-v.-S.-M.-J.-SENARATNE-DIRECTOR-GENERAL-OF-CUSTOMS-AND-ANOTHER.pdf
BANGAMUWA
V
S.M. J. SENARATNE. DIRECTOR GENERAL OFCUSTOMS AND ANOTHER
COURT OF APPEALJ. A. N. DE SILVA. J.
CA APPLICATION NO. 259/9926th JANUARY. 2000
Writ of certiorari – Order under section 163 of the Customs Ordinance -Whether the Director-General may release goods seized as forfeit -Minister’s powers under sections 164 and 165 of the Ordinance.
Haskell Lanka (Pvt) Ltd. (“Haskell") had entered into an agreement withthe Board of Investment of Sri Lanka (“the BOI"). The said enterpriseobtained a permit dated 5.4.1994 from the BOI to import a MilusubishiPajero on a duty free basis, as was permitted by its agreement with theBOI, to be used by the enterprise. Haskell opened a letter of credit on 'nilmargin’ on guarantee given by one Ismail Osman, who appeard to be adealer in vehicles. The motor vehicle was imported on a duty free basison the said permit. It was cleared from the customs and registered on17.9.1994. But the vehicle was not used at all by Haskell. It was foundto be in the possession of Osman. Thereafter it was in the possession ofone Wijesuriya who was a vehicle dealer himself and sold to RohanRodrigo and Company Ltd. for a sum of Rs. 4.5 million. After inquiry,the 2nd respondent (an Assistant Director of Customs) ordered theforfeiture of the vehicle and imposed penalties on the Managing Directorof Hasekell, Osman and Wijesuriya, in terms of section 129 of theCustoms Ordinance.
The said vehicle was thus seized as forfeit. But the 1st respondent(Director-General of Customs) by the order dated 22.2.1999 ordered therelease of the vehicle to Haskell on total fiscal levies leviable undernormal law.
Held :
The Director-General had no power to release the vehicle under section163 of the Customs Ordinance which only permits mitigration of aforfeiture. The power to order the restoration of seized goods has beengiven to the Minister to be exercised in terms of section 164 and 165 ofthe Customs Ordinance.
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Bangamuwa v. S. M. J. Senaratne, Director General of
Customs and Another (J. A. N. De Silva, J.)
107
Application for a writ of certiorari in respect of an order made by theDirector-General of Customs.
A.S.M. Perera, PC with Nevil Ananda for the petitioner.
Y. Wijayatilake, D.S.G. for the respondent
Cur. adv. vult.
January 26. 2000J. A. N. DE SILVA. J.
By this application the petitioner prays for a writ ofcertiorari to quash the order dated 22.02.1999 given by thefirst Respondent the Director General of Customs to releasethe vehicle bearing No. 64-7666, Pajero to Haskell Lanka (PVT)Ltd.
According to the facts set out in the petition Haskell Lanka(Pvt) Ltd. entered into an agreement with the Board of Invest-ments of Sri Lanka under which the said enterprise wasentitled to numerous concessions including the importation ofa vehicle without the payment of duty.
The said enterprise obtained a permit dated 05.04.94.from the Board of Investments to import a Mitsubishi Pajero ona duty free basis and free of import licence control to be usedby the enterprise. The following conditions were laid down inthe said permit.
The vehicle imported should not be sold for a periodof three years: and after three years the vehicle couldbe re-exported, sold to the Procurement and AdvisoryUnit of the Ministry of Finance or in the local marketon a payment of customs duty and other duties asmaybe determined by the customs.
The enterprise was expected to obtain an endorse-ment from the Registrar of Motor Vehicles to includethe clause referred to above in the registration book
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relating to the said vehicle and the said registrationbook had to be forwarded to the Investor ServicesDepartment of the Board of Investments for scrutinyand return soon after the registration.
Haskell Lanka (Pvt) Ltd. opened a letter if credit on nilmargin on guarantee given by one Ismail Osman who appearsto be a dealer in vehicles and a director of an organisationcalled Asian Motor (Pvt) Ltd.
The said motor vehicle was imported to Sri Lanka on aduty free basis on the said permit and was cleared from thecustoms without payment of duty and was registered on17.09.94. On the material that was available it became clearthat the said vehicle had not been used at all by Haskell Lanka(Pvt) Ltd. Investigations have further revealed that IsmailOsman referred to earlier, who was the Guarantor of the letterof credit (opened for this vehicle) was in possession of the saidvehicle after it’s importation.
Subsequently one Upul Wijesuriya, who is a vehicle dealerhimself, was in possession of this vehicle, sold the said vehicleto Rohan Rodrigo and Company (Ltd) for a sum of 4.5 million.There had been no entries in the books of Haskell Lanka (Pvt)Ltd. in relation to the inclusion of this vehicle in the inventoryof Haskell Lanka (Pvt) Ltd.
However after the inquiry commenced an entry had beeninterpolated in the ledger relating to the cost of the Pajero. Theaccounts assistant at Haskell Lanka (Pvt) Ltd. had admittedthat he made this interpolation on 09.10.1997 by which timethe Customs Department had already started investigations.It was further revealed that the money to meet the cost ofimportation had been made available by Ismail Osman and afew others known to him.
Assistant Director of Customs Mr. P. Yoganathan, thesecond respondent was appointed to inquire into this matter.
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Bangamuwa v. & M. J. Senaratne. Director General of
Customs and Another (J. A. N. De Silva, J.)
109
The evidence of a large number of individuals was recorded,and the parties who were involved were represented by seniorlawyers at the inquiry.
After the conclusion of the inquiry the second respondentordered the forfeiture of vehicle no. 64-7666 valued at Rs.5,951,077/- in tenns of section 50 (A) (b) of the CustomsOrdinances read with section 27 (2)(b) of the Greater ColomboEconomic Commission Act. No. 4 of 1978. He also imposed apenalty of Rs.100 000/- each on Mr. Thejawani, ManagingDirector Haskell Lanka (Pvt) Ltd, Mr. Ismail Osman and Mr. U.Wijesuriya in terms of section 129 of the Customs Ordinances.The inquiiy officer severely warned Mr.. Rohan Rodrigo anddischarged him.
Subsequently Haskell Lanka (Pvt) Ltd. wrote to the Direc-tor General of Customs seeking the release of the said vehicle,and the Director General by the order dated 22.02.1999ordered the release of the said vehicle to the said company ontotal fiscal levies leviable as if the vehicle has been clearedunder the normal law.
At the hearing of this application, counsel for the peti-tioner contended that once an item is forfeited in terms of theprovisions of the Customs Ordinance, the Director Generalhas no power to release the same acting in terms of section 163of the Customs Ordinance. The only power the DirectorGeneral has in terms of section 163 is to mitigate a forfeitureor penalty should he deem such forfeiture or penalty is undulysevere. Section 163 of the Customs Ordinance reads thus:
"In all cases in which under this Ordinance any ships,boats, conveyances, goods or other things have become liableto forfeiture, or have been forfeited, and in all cases in whichany person shall have incurred or become liable to any penalty,it shall be lawful for the collector, should he deem suchforfeiture or penalty unduly severe, to mitigate the same; butall cases so determined by the collector shall nevertheless beliable to revision by the minister."
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120001 1 Sri LR.
The power of the restoration of seized goods is given to theMinister under the Customs Ordinance who may do so on suchterms and conditions as he thinks fit under section 164 andsection 165 of the Customs Ordinance. Section 164 readsthus:
“In case any goods, ships or boats shall be seized asforfeited, or detained as undervalued, by virtue of this Ordi-nance, it shall be lawful for the Minister to order the same tobe restored again in such manner and on such terms andconditions as he shall think fit to direct; and if the proprietorof the same shall accept the terms and conditions prescribedby the Minister he shall not have or maintain any action forrecompense or damage on account on such seizure or deten-tion and the person making such shall not proceed in anymanner for the purpose of obtaining the condemnation thereof."
Section 165 of the Customs Ordinance reads thus :
’The Minister may, by any order made for that purpose,direct any ship, boat, goods or other commodities whatever,seized under this Ordinance, to be delivered to the proprietorthereof, whether condemnation shall have taken place or not,and may also mitigate or remit any penalty or fine or any pailof any penalty or fine incurred under this Ordinance, or mayrelease from confinement any person committed under thisOrdinance, on such terms and conditions as to him shallalways appear to be proper:
Provided always that no person shall be entitled to thebenefit of any order for such delivery, mitigation, remission orrelease, unless such terms and conditions are fully andeffectually complied with.”
I am in total agreement with the submission of thepetitioner’s counsel. Deputy Solicitor General Mr. Wijayatilakewho appeared for the respondents who stated that after acareful examination of the law relating to the above matter theAttorney General has advised the Customs Department that
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Bangamuwa v. S. M. J. Senaratnc, Director General of
Customs and Another (J. A. N. De Silva, J.)
Ill
the Director General has no power to release goods which havebeen forfeited.
In the circumstances I hold that the order of the DirectorGeneral to release the vehicle to Haskell Lanka (Pvt) Ltd. isultra vires the power vested in him.
I direct to issue a writ of certiorari to quash the order dated
Application is allowed. I make no order withregard to costs.
Certiorari issued to quash the order dated 22.02.1999