036-SLLR-SLLR-2006-V-1-KALA-TRADERRS-PVT-LTD-AND-ANOTHER-vs.-DIRECTOR-GENERAL-OF-CUSTOMS-AND-OT.pdf
CA
Kala Traders (Pvt.) Ltd. and Another Vs.
Director General of Customs and Others
295
KALA TRADERS (PVT.) LTD. AND ANOTHERVSDIRECTOR GENERAL OF CUSTOMS AND OTHERSCOURT OF APPEALWIJEYARATNE, J ANDSRIPAVAN, J,
CA 2034/2004,
FEBRUARY 8, 9, 10, 2005,
APRIL 26, 27, 2005 ANDJUNE 15, 2005.
Customs Ordinance, sections 47 and 125- Sri Lanka Standards InstitutionAct, No. 6 of 1984-Importation of sugar- Classification of sugar into white andbrown-Void – Basis of levy of customs duties – Who determines ? -Are thecustoms bound by standards set by Sri Lanka Standards Institution (SLSi) ? -Misinterpretation and suppression of material facts.
2-CM 6650
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(2006) 1 Sri L R.
The petitioner is a sugar importer who imported a consignment of sugardescribed as plantation white sugar. The petitioner having made the customsdeclaration (cus-dec) for 4.000MT of sugar had discharged 324MT on thebasis of the cus-dec. The petitioner contends that when it has taken delivery of324MT, the 1 st respondent demanded the petitioner not to discharge the sugarcargo, as the cargo was not entitled to the duty free concessions as the 1strespondent has taken a decision to classify white sugar as being sugar thatcontains a maximum colour of 200 ICUMA units and any sugar above 200ICUMSA units would be classified as brown sugar. The petitioner contendedthat, the SLSI (4th respondent) had set a standard that plantation white sugarshould contain a minimum polarization value of 99.2 degrees and its colourshould be maximum of 500 ICUMA units and sugar less than 500 ICUMA unitsbe classified as white sugar. The petitioner contended that the sugar importedhad a colour of 400 ICUMSA units containing a minimum polarization value of99.4 degree. The petitioner also contended that the decision of the 1strespondent to classify white sugar as sugar containing colour of 200 ICUMAunits and sugar about the number of ICUMA units being described as brownsugar is totally arbitrary, illegal and ultra vires.
The respondent's contention was that, the basis of levy of customs duties isunder the Customs Ordinance and its determination according to tariff guideaccording to which sugar is not distinguished as brown sugar and white butevaluated on the basis of polarization value. The respondents also contendedthat there was suppression and misrepresentation of facts, and the basis ofcus-dec disclosed frauds.
HELD:
(1) The classification of goods so far as the customs declaration and orinquiry is concerned is not by the 4th respondent (SLSI) whoseclassification has no binding effect on the Sri Lanka Customs. TheSLSI Act has no provision directing the Customs to adopt its standardsfor such purpose.
Per Wijayaratne, J
“The petitioners voluntarily submitted samples to the GovernmentAnalyst with sugar containing the colour 654 ICUMSA units disprovingthe very argument of the petitioner relying on the SLSI standards waswell within the knowledge of the petitioner and the fact that theysuppressed the result of the analyst from court alone is sufficient todismiss the application.
CAKata Traders (Pvt) Ltd. and Another Vs.297
Director General of Customs and Others (P. Wijeyaratne, J.,)
Per Wijayaratne, J.
"The submission that no duty is leviable on any sugar whether white orbrown has no relevance to the matter in issue, at the inquiry before the customs,because the application of section 47 can be on goods that are free of duty andthe scope of the inquiry was to include goods that are free of any duty but stillfalling within the ambit of section 47".
(2) The consignment of goods that was imported'needs classification/categorization by the Customs Department and the determinationwhether any duty is leviable on the same. This has to be determinedby the Customs Department through the inquiry under sections 8and 47,
APPLICATION for a writ of certiorari / mandamus.
Cases referred to:
Kandy Omnibus Co. Ltd. Vs. Roberts (1954) 56 NLR 293
Alphonso Appuhamy Vs. Hettiarachchi (1973) 77 NLR 131
Moosajee Ltd. l/s. Eksath Engineers Saha Samanaya Kamkaru Samithiya- (1976-79) 1 Sri LR 285.
Hulangamuwa 17s. Siriwardene – (1986) 1 Sri LR 275
Faleel Vs. Moonesinghe – (1994) 2 Sri LR 501
Laub Vs. Attorney General – (1995) 2 Sri LR 88
Malaffur and another Vs. M. B. Deragoda -(1981) 2 Sri LR 483
Wijesekera & Co. Vs. Principal Collector of Customs – (1951) – 53NLR 329.
M. A. Sumanthiran with Ms. Arulananthan for Petitioner.
Farzana Jameel, Senior State Counsel, with Janak de Silva, State Counselfor respondent.
Cur. adv. vult.
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(2006) 1 Sri L R.
June 29, 2005,
W1JEYARATNE, J.,
The 1 st Petitioner is the sugar importer who imported a consignment of10,000 metric tons described as Plantation white sugar from Papua NewGuinea on board the vessel "Ever Bright" which berthed in Colombo Harbouron 04.10.2004. The Petitioners having made custom's declaration (CUS-DEC) for 4,000 metric tons of sugar had discharged 324 metric tons onthe basis of such CUS-DEC.
The Petitioners take up the position that on 05.10.2004 when it hastaken delivery of said 324 metric tons, the Sri Lanka Customs under the1st Respondent directed the Officer of the 1st Petitioner to cease todischarge the sugar cargo. The Petitioner was informed the cargo was notentitled to the duty free concession as the 1 st Respondent has taken adecision to classify white sugar as being sugar that contains a maximumcolour of 200 ICUMSA units and any sugar above 200 ICUMSA unitswould be classified as Brown Sugar. These Petitioner's contention thatthe Sri Lanka Standards Institution the 4th respondent has set standardfor said plantation white sugar be contained a minimum polarization valueof 99.2 degrees and its colour should be a maximum of 500 ICUMSAunits, and sugar containing less than 500 ICUMSA units be classified aswhite sugar.
The Petitioners also alleged that a policy decision was taken by theGovernment of Sri Lanka to discontinue or cease an imposition VAT andimport duty on white sugar as well as brown sugar.
However, a duty of Rs. 4.50 per kilogram was imposed upon imports ofbrown sugar and this decision was announced to the sugar importersincluding the 1 st Petitioner at a meeting held at the Treasury on or about
The Petitioners contend that the sugar imported had a colourof 400 ICUMSA units containing a minimum polarization value of 99.4degrees which brings consignments within the classifications of plantationwhite sugar in terms of the standards set by the 4th Respondent.
The Petitioners alleged that the decision of the 1 st Respondent to classifywhite sugar as sugar containing the maximum colour of 200 ICUMSAunits and sugar above the said number of ICUMSA units being describedas Brown sugar is totally arbitrary, illegal and ultra vires.
CA
Kala Traders (Pvt) Ltd. and Another Vs.
Director GeneraI of Customs and Others (Wijeyaratne, J.,)
299
The Petitioners also alleged that an alteration of the SLSI (4thRespondent's) the classification of white sugar by the 1st Respondentand refusal to release the balance consignment 9676 metric tons of whitesugar, the Petitioner described as plantation of white sugar, on suchpurported basis of dutiability on the part of the 1 st and 2nd Respondentsare arbitrary, unreasonable, illegal, null and void and of no force or avail inlaw. On such basis the Petitioners sought the grant of several mandatesof writs of certiorari, mandamus and interim relief as contained in prayers'a' to 'q' of the Petition.
Given notice the 1st to 3rd Respondents filed their objections to theapplication and the Respondents urged that the basis of levy of customsduties is under the provisions of Customs Ordinance and its determinationaccording to Tariff Guide marked 2R15. According to which sugar is notdistinguished as brown sugar and white but evaluated on the basis ofpolarization value. They also urged that the customs did not go by thestandards set by the 4th Respondent to determine the classification of thegoods and the levy of duty according to the standards set by the 4thRespondent.
It was their contention that even if it is to be accepted for the purpose ofargument that any sugar beyond the unit value of 500 ICUMSA is to beconsidered brown sugar they further took up the position that the purportedcertificate issued by the 4th Respondent's employee is disclaimed by the4th Respondent institution and the report of the Government Analyst onsamples submitted by very Petitioners indicates that it has a colour of 654ICUMSA units which fact the Petitioners did not disclose. The Respondentsalso urged that the 1st and 2nd Respondents are entitled to investigateand inquire into the matter of classification of consignment of goods vis-a-vis CUS-DEC submitted by the Petitioner. They sought a dismissal of thePetition on the basis of suppression of material facts and misrepresentationof facts and further on the basis of CUS-DEC which, they submitted,disclosed frauds.
When the matter was taken up for argument learned counsel for thePetitioners took pains to describe the process of classification and theuse of Sri Lanka Standards Institution standards for the identification ofgoods. His argument was that the Customs Department is bound to followthe standards set by the SLSI, the 4th Respondent. He even referred tothe objects and scope of the 4th Respondent.
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However, what the learned counsel failed to establish is that the CustomsDepartment is obliged to follow the standards set by the 4th Respondentin the categorization of goods by the Customs Department and the 1 stand 2nd Respondents in the imposition of import or export duties or torelate the duty free structure to such goods. The SLSI Act, No. 6 of 1984certainly has no provision directing the Customs to adopt its standards forsuch purpose.
It is my view that this position was very clear in the minds of thePetitioners who themselves have submitted samples drawn from theconsignment of sugar to the Government Analyst for classification andidentification of colour in terms of ICUMSA units. The Petitioners concedehaving submitted samples for analyst and it is for no other purpose than toclassify the goods as they described the consignments as plantation whitesugar. This is a clear admission, the proper authority is the GovernmentAnalysts and the classification of goods so far as the Customs declarationand or inquiry is concerned is not by the 4th Respondent SLSI whoseclassification has no binding effect on the Sri Lanka Customs, under the1 st Respondent.
In my view it is because the Petitioner so mere convention report by theGovernment Analyst to bring it within their classification of plantation ofwhite sugar and not fall within the categorization of goods by the 1stRespondent. It is significant to note that upon voluntary submission by thePetitioner the samples of the consignments of sugar imported, theGovernment Analyst has reported it to contain 654 ICUMSA units bringingthe same within the classification or category of brown sugar.
Even according to the standards set by the 4th Respondent, therespondents have submitted, that the report of the Government Analyst2R3, certified that the sugar imported fell within the description of Brownsugar. It is to be noted that the Petitioner having the benefit of the reportsof the analysis done by the Government Analyst neither submitted it tothe 1st and 2nd Respondents nor to this Court, in support of their claimthat the consignment of sugar imported is white sugar and not brownsugar, knowing very well that the result of the analysis did not supporttheir contention. It is this position that the Respondents referred to assuppression of material facts. Learned counsel for the Petitioner in the
CAKala Traders (Pvt.) Ltd. and Another Vs.301
■ Director General of Customs and Others ( Wijeyaratne, J.,)
course of his arugument proposed to submitted that though the Petitionersconcede that fact of having submitted samples for analysis by theGovernment Analyst, they did not receive the report from the GovernmentAnalyst and that is why the same is not referred to in their application tothis Court.
However in the course of the argument learned counsel for theRespondent through the production and submission of relevant registersmaintained by the Department of the Government-Analyst establishedthat very employee who had subsequently made statement to the customshas collected the report. In the course of their investigation it was furtherdisclosed that it was this very employee of the 1 st respondent who madefraudulent attempt to defraud the revenue by importing the consignmentsof sugar as plantation white sugar has collected this report. Accordingly itis made quite clear that as at the time of presenting this application to thisCourt seeking several mandates of writs as sought therein the Petitionerswere fully aware or at least ought to have been aware that the report of theGovernment Analyst made on the voluntarily submissions of samples bythe Petitioner did not support their contention that the consignments ofsugar being the plantation white sugar and not brown sugar, as thePetitioners are now trying to make out. It was also established by the verystatement on behalf of the Petitioner that they did not receive the reportwhen in fact their employees have collected the report, an attempt on thepart of the Petitioner to suppress this material facts is willful and withulterior motive of not disclosing the true postition to this Court.
In the course of the argument the Respondent's counsel referred toresult of on going investigation which reveals that the Petitioners had adesign to avail the benefit of duty free imports by describing the articlesdifferently from its true positions, when compared with the documentsdeclarations and connected documents submitted to the bank for thepurpose of obtaining letters of credit facilities. All these descriptions giventhere vary from the true categorization of the consignments and these arerelevant to the determination as to whether any duties are payable, arematters for the Customs' Department.
It is not for this Court to determine any of such material facts. ThePetitioners concede their having submitted the Customs declaration andinquiry being commenced by the 1 st and 2nd Respondents under section8 of the Customs Ordinance.
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In the event of the Customs Department under the 1 st Respondent andinvestigation carried out by the 2nd Respondent revealing that theconsignment of goods described therein did not answer the descriptiongiven there, then the matter falls within the ambit of section 47 of theCustoms Ordinance.
The argument of the counsel that there is no duty payable on sugaraccording to the Revenue Protection Orders or the Customs Ordinancepublished in the Gazette is not a relevant fact for the reason that theapplication of the provision of section 47 of the Customs Ordinance did notdepend on the liability of goods for the levy of customs duty or otherwise.
Section 47 reads: "The person entering any goods inwards, whetherfor payment of duty or to be warehoused, or for payment of duty upon thetaking out of the warehouse, or whether such goods be free of dutyshall deliver to the Director General a bill of entry of such goods“
Accordingly the submissions made by the learned counsel for thePetitioner that no duty is leviable on any sugar whether white or brown hasno relevance to the matter in issue, at the inquiry before the Customs,because the application of section 47 can be on goods that are free ofduty and the scope of the inquiry may include the goods that are free ofany duty but still falling within the ambit of section 47.
The arguments on the part of the Petitioner specially the submissionsmade by the counsel for the Petitioner on the effect of Revenue ProtectionOrdinance, the application of the legal provisions and effect of the sameon the Gazette notification XI to X4 therefore has no relevance for thematter in issue here because even if no duty was leviable in view of any ofthis notification, or any such notification not having the effect of law stillthe 1st and 2nd Respondents are empowered under the CustomsOrdinance to proceed with their investigation to examine the classificationof goods and determine whether they agree with the description given inthe declaration admittedly made by the Petitioner. I am not in a position todisagree with the learned counsel for the Respondent that this argumentwas an attempt to vary the basis of the application made to the Court.However the undisputed position is that the consignments of goods thatwas imported by the Petitioner needs classification/categorization by theCustoms Department through the 1st and 2nd Respondents and
CAKala Traders (Pvt.) Ltd. and Another Vs.303
Director General of Customs and Others ( Wijeyaratne, J.,)
determination whether any duty is leviable on the same. This has to bedetermined by the 1 st and 2nd Respondents through the inquiry under theprovisions of the Customs Ordinance more particular sections 8 and 47thereof. Pending such inquiry provision of section 125 authorizes andempowers the 1st and 2nd Respondents to seize such goods. ThePetitioner has sought the Customs inquiry to proceed and through theargument of this case with the consent of the Petitioner, the custom inquiryhas commenced and is proceeding. In such situation, there is no reasonfor this Court to interfere with such inquiry merely on the basis ofcategorization/classifications of goods according to'the Petitioner whichthrough the acts of the Petitioner itself proved to be different from theclassifications they sought to give the goods.
Besides there is a presence of misrepresentation and suppression offacts. In the case of Kandy Omnibus Co. Ltd l/s Roberts it wasobserved that the Petitioner "must be frank with the Court and must notsuppress material facts or practice anything like deception."
Again in the case of Alphonso Appuhamy Vs Hettiarachchi{2) Pathirana,J observed that "there is always the need for a full and fair disclosure of allmaterial facts to be placed before the Court when an application for a writor injunction is made of other words, so rigorous is the necessity fora fulland fair disclosure of all material facts that the Court will not go into themerits of the application, but will dismiss it without examination."
In the case of Moosajees Ltd Vs Eksath Engineru Saha SamanyaKamakru Samithiya(3) Hulamgamuwa Vs Siriwardenaf41 and Faleel VsMoonesinghe (5K Following the decisions referred to above, refused theapplication for writs on the failure of the Petitioner to disclose the materialfacts in his pleadings.
In the case of Laub Vs Attorney-General<6).Court even found that theapplication could be dismissed in limine as the Petitioner had suppressedmaterial facts and had not acted with uberrimei tides.
In the instant case the Petitioners voluntarily submitted samples to theGovernment Analyst with sugar containing the colour of 654ICUMSA unitsdisproving the very argument of the Petitioner relying on the SLSI standardswas well within the knowledge of the Petitioners and the fact that theysuppressed the result of the analysts from this Court alone is sufficient todismiss this application. Beside such position of suppression of material
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facts, the legal position is also clear that the 1 st and 2nd Respondentsare entitled to investigate and inquire into the matter of identification/categorization/classification of the consignments of goods imported, inrelation to the description given in the CUS-DEC and consider whether thegoods agreed to description given in the CUS-DEC. To interfere with thisduty by way of a mandate issued in this Court would not be a review of anadministrative decision but would amount to preventing the CustomsOrdinance being given effect to, by the intervention of this Court.
Learned counsel for the Petitioner submitted that in the case of MulafferandanotherVs M. B. Dissanayake(7), this Court having held that "whengoods are correctly categorized and correct particulars are given in the billof entry, insistence that goods are correctly classifiable under a differentheading which attracts heavier duty is a refusal to perform a public dutyand mandamus will lie.”
The said judgment followed the decision in Wijesekera & Co. Vs ThePrincipal Collector of Customs(7), where it was held that 'to insist uponthe bill of entry being incorrectly filled up in such a manner that, upon theface of the document, the exporter would be liable to pay a heavier exportduty than was justly due, would amount to a refusal to perform a publicduty. In that event mandamus would clearly lie.”
In both these cases, the most material fact was that goods were correctlycategorized and correct particulars were given in the bill of entry, in otherwords true particulars as to the quantity, value, etc has been given in thedeclaration.
In the instant case, it is not the position that the Petitioners havinggiven the true particulars or correct categorization of the goods but a caseof Petitioners attempting to describe the goods under the category whichattracted no duty and as a result of their own act and deed in obtainingGovernment Analyst Report, established that their description of goods inthe Bill of entry did not agree with the consignments of goods. Thereforethe above decisions have no application to the facts and material in thiscase.
Accordingly the application of the Petitioners is dismissed with costsfixed at Rs. 10,000/-.
SRIPAVAN,J.- (agree.
Application dismissed.