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KURUWITA MANCHESTER TEXTILE MILLS LTDAND ANOTHERv
DIRECTOR- GENERAL OF CUSTOMSCOURT OF APPEALTILAKAWARDENA, J. (P/CA)WIJEYARATNE, J.
CA 1386/2000FEBRUARY 21,2003MAY 30, 2003
Writ of Certiorari – Quash charges – Customs Ordinance -S. 8 (1), S. 51, S.52- Sale of unexportable fabric-Dispute pertaining to the value? – Show causewhy forfeiture should not be imposed – Charges framed against individual andnot against the Company – validity – Statements recorded during investiga-tion – are the Petitioners entitled to same?
The petitioner company was permitted to sell unexportable fabric in the localmarket subject to conditions stipulated. As there was a dispute pertaining tothe value which had been set out in the custom declaration form, the petition-er was requested to show cause as to why a forfeiture of Rs. 68,828/- shouldnot be imposed on them. The petitioners sought to quash the charges framedagainst the 2nd Petitioner (The General Manager).
Held:
In terms of S. 51 and S. 52 the value that had been placed on the unex-portable goods which were sought to be sold in the local market couldnot be valued merely on the market value of those goods but had toconsider the^ input of the imported value that had been placed upon.
It is clear that the respondents are empowered to determine the valueof all items with reference to Schedule E, and they had the power tomake a decision regarding the value of the goods, that were under theirpurview. The petitioners cannot invoke the writ jurisdiction upongrounds that the respondents were precluded from determining thevalue.
The Inquiry is held under the provisions of Section 8 (1). There is nostatutory provision which mandated the issue of the Statements to thepetitioners. This is not a judicial inquiry.
Kuruwita Manchester Textile Mills Ltd. and another v
CA Director-General of Customs (Shiranee Titakawarderia. J. (P/CA)
Though the 1st petitioner company has a separate legal entity, the 2ndpetitioner has been employed as the Representative of the company,The company has no physical existence in its affairs, it is managedthrough its agents, the charges framed against the 2nd petitionerGeneral Manager on behalf of the company were valid, and could bemaintained.
APPLICATION for a writ of certiorari.
Manohara de Silva for petitionerFarzana Jameel, SSC for respondents
SHIRANEE TILAKAWARDENA, J. (P/CA)The petitioners have preferred this application seeking a writ 01of certiorari against the respondents to quash the charges framedagainst the 2nd petitioner. The customs inquiry bearing referenceNo. PCAB/2000/63 on 01.11.2000, whereby the 2nd petitioner wascalled upon to show cause in respect of goods sold by the 1st peti-tioner Company and also to quash the proceedings made thereun-der. The petitioners have also sought a writ of prohibition againstthe respondents from holding this inquiry or any such inquiry inrespect of the goods that had been declared in document “P3A1 ’ to‘P3K2’ and also have sought a writ of mandamus to direct the 1st 10to 3rd respondents to issue statements of the prosecution witness-es to the petitioner.lt is not in dispute that the 1st petitionerCompany had entered into an agreement dated 27/03/1992 withthe Board of Investments to carry on a business of “manufacturinghigh quality textile fabrics.” Consequent to an amendment to theterms of the agreement on 1st of December 1999 the Companywas permitted to sell 50% of its production in the local market, sub-ject to the payment of corporate tax, turnover tax and defence levy(P2). It is conceded between parties that prior to the sale of theunexportable fabrics certain conditions that were stipulated by the 20Board of Investments of Sri Lanka (B.O.I) had to be complied with.
One of such conditions was that there would be the payment of rel-evant customs duty, defence levy and other levies to the Sri LankaCustoms as determined by them and the documentary proof ofsuch payments to the department. These were some of the contin-
160Sri Lanka Law Reports[2003] 3 Sri LR
gencies for the sale of the un-exportable qualities as seen in docu-ment P3A2 and the other connected documents wherein approvalis sought. It was also conceded between parties that permission forthe sale of such goods was granted and accordingly the petitionerswere permitted to sell un-exportable fabric in the local market sub- 30ject to the conditions stipulated. It is not in dispute that the customduties that had been levied was in accordance with the value thathad been disclosed in the Cusdec forms relating to such itemswhich have been tendered in the pleadings of the petitioner. Thedocuments that had been annexed to the petition marked ‘P3A2’ to‘P3K2’ set out details of the goods which have been declared by thepetitioner Company was unusable and for which they have soughtpermission of the Board of Investments for sale in the local market.
On 29.09.2000 the Post Clearance Audit Branch of the SriLanka Customs required the petitioners to present themselves for 40an inquiry on 01.11.2000 as there was a dispute pertaining to thevalue which had been set out in the relevant Cusdec forms onthese goods. The petitioner was required to show cause as to whya forfeiture of Rs. 68,628/- should not be imposed upon them.
The only matter that is in issue in this case is whether theDirector-General of Customs had correctly assessed the value ofthese goods and whether the value placed by the petitioners wasan under valuation of the goods. In terms of the CustomsOrdinance the price of goods could only be ascertained in terms ofSection 51 and 52 read with Schedule E of the Customs Ordinance. 50These Sections read as follows.
Section 51:“In all cases when the duties imposed upon the importation ofarticles are charged according to the value thereof, therespective value of each such article shall be stated in theentry together with the description and quantity of the same,and duly affirmed by declaration by the importer or his agent,and such value shall be determined in accordance with theprovisions of Schedule E, and duties shall be paid on a valueshall be determined in accordance with the provisions of 60Schedule E, and duties shall be paid on a value so deter-mined.”
Kuruwita Manchester Textile Mills Ltd. and another v
CA Director-General of Customs (Shiranee Tilakawardena. J. (P/CA) 1^1
Section 52:“Where it shall appear to the officers of the Customs that thevalue declared in respect of any goods is not in accordancewith the provisions of Schedule E,. the goods in respect ofwhich such declaration has been made shall be forfeitedtogether with the package in which they are contained. Wheresuch goods are not recoverable, the person making such falsedeclaration shall forfeit either treble the value of such goods or 70be liable to a penalty of two thousand rupees, at the electionof the Director-General.”
In terms of these provisions of the Customs Ordinance the valuethat had been placed on these un-exportable goods which weresought to be sold in the local market could not be valued merely onthe market value of these goods but had to consider the input of theimported value that had been placed upon this. This position wasbased on section 51 where it categorically and specifically stipulatedthat “such value shall be determined in accordance with the pro-
visions of schedule E and duties shall be paid on a value so deter- somined". So the position of the respondents was that value could notbe determined except with reference to Schedule E mere non com-pliance with such provisions of section 51 would attract the provisionsof section 52 of the Customs Ordinance and date of the forfeiture ofsuch goods which had not been valued in accordance with the provi-sions of Schedule E and the law referred to above. For a considera-tion of Schedule E, Clause 1 and Clause 2.7 are relevant.
Clause 1 states as follows.
“The value of any imported goods shall be the normal price,that is to say, the price which they would fetch at the time of 90importation on a sale in the open market between a buyer anda seller independent of each other as indicated in paragraphs2.7”.
Clause 2.7 states as follows:
“That a sale in the open market between a buyer and a sellerindependent of each other presupposes”
In interpreting these provisions it is important to observe thatthe Customs duty is paid on value and not on costs although itcould be observed that cost is one of the elements of value.
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Therefore in terms of the aforesaid Customs Law whereas it is clear 100that the respondents are empowered by the aforesaid CustomsOrdinance to determine the value of all items with reference toSchedule E, clearly had the'powers, vested in under the CustomsOrdinance to make a decision regarding the value of the goods thatwere under their purview.
In these circumstances such powers to determine the value,the petitioner could not invoke the writ jurisdiction of this Court upongrounds that the respondents were precluded from determining thevalue as it was ultra vires their powers.
One of the grounds that has been urged by the petitioner was nowhether the proceedings that had been conducted on 01/11/2000are not in accord with the rules of natural justice. So much as theyhad failed to issue statements that had been recorded during theinvestigations.
It is important to note that the inquiry in this matter had beenhad by virtue of the powers vested in the respondents under sec-tion 8 (1)of the Customs Ordinance. Section 8 (1) reads as follows.
“Upon examinations and inquiries made by the DirectorGeneral, or other principal officer of the customs or other per-sons appointed to make such examinations and inquiries, for 120ascertaining the truth of statements made relative to the cus-toms, or the conduct of officers or persons employed therein,any person examined before him or them as a witness shalldeliver his testimony on oath, to be administered by suchDirector-General or other principal officer, or such other per-sons as shall examine any such witness, who are herebyauthorized to administer such oath; and if such person shall beconvicted of giving false evidence on his examination on oathbefore such Director-General or other principal officer of cus-toms, or such other person in conformity to the directions of 130this Ordinance, every such person so convicted as aforesaidshall be deemed guilty of the offence of giving false evidencein judicial proceedings, and shall be liable to the pains andpenalties to which persons are liable for intentionally givingfalse evidence in a judicial proceeding.”
Kuruwita Manchester Textile Mills Ltd. and another v
CADirector-General of Customs (Shiranee Tilakawardena. J. IP/CA)163
It was incumbent upon the respondents and its officers toexamine these statements and to ascertain the veracity or truth ofthese statements and there appears to be no statutory provisionswhich mandated the issue of the statements to the petitioners. It isto be remembered that this inquiry is not a judicial inquiry. But is an 140administrative inquiry that is being conducted for the mere purposeof ascertaining the veracity and or credibility of the statements thathad been recorded in terms of the Customs Ordinance. Indeed thedocument P6 informs the petitioners that they could obtain theinquiry proceedings on payments from the relevant branch, so thatwhereas the inquiring officer was not statutorily bound to issuestatements had nevertheless given the opportunity to the petitionerto have the materials that had been used at the inquiry and accord-ingly we find that there is no breach of natural justice.
The petitioner has also taken up the position that the charges 150were framed against the 2nd petitioner, the General Manager(Finance) of the 1st petitioner Company and that such chargescould not be maintained merely on behalf of the Company.However it is clear that the Company was all times representedthrough the 2nd petitioner at the inquiry and he had accepted toshow cause on behalf of the Company during the inquiry. Thereforethough the Company has a separate legal entity distinct from itsmembers and share holders the 2nd petitioner has been employedas the representative of the Company in this case. In any event, asthe Company has no physical existence in its affairs it is clearly 160managed by its agents, in this case the 2nd petitioner and thereforeit can be concluded that the charges framed against the 2ndPetitioner on behalf of the Company were valid charges.Accordingly on a perusal of all the relevant matters, examination ofdocuments, pleadings in this case this Court finds that this is not afit and proper case to invoke the writ jurisdiction of this Court andaccordingly the application is dismissed with costs in a sum of Rs.5000/-
WIJEYARATNE, J.Application dismissed.
I agree.
