030-SLLR-SLLR-2009-V-1-TOYOTA-LANKA-PVT-LTD.-AND-ANOTHER-v.-JAYATHILAKA-AND-OTHERS.pdf
276
Sri Lanka Law Reports
[2009J1 SR1L.R.
TOYOTA LANKA (PVT) LTD., AND ANOTHER V.JAYATHILAKA AND OTHERS
SUPREME COURTSARATH N. SILVA, C. J.,AMARATUNGA, J. ANDSRIPAVAN, J.
S.C. APPEAL NO. 49/2008C.A. NO. 2118/2005JUNE 30™, 2008
Certiorari – Discretionary remedy- Quash a decision which is ultravires – Customs Ordinance – Section 125 – Seizure of goods inrespect of which a Bill of Entry (CUSDEC) had been submitted – Sections.18 and 18A – Recovery of additional dues that maybe claimed insteadof seizure – Section 153 – Disbursement of forfeitures and penalties infavour of Customs Officers and informers – Section 47 – Applicabilityin a situation of a disputed classification of goods or underpayment or
short levy of duties or dues.
This is an appeal from the judgment of the Court of Appeal, refusinga writ of certiorari sought by the plaintiff-appellant to quash an ordermade by an officer of the customs seizing nine Toyota Land CruiserPrado motor vehicles imported by the 1“ appellant company. The Orderstates that it is made under Section 125 of the Customs Ordinance.One of the issues before the Supreme Court was whether it is compe-tent for an officer of the Customs to have recourse to Section 125 of theCustoms Ordinance and effect seizure of goods in respect of which aBill of Entry (CUSDEC) had been submitted, as provided by Section 47and goods released consequent to a physical examination and paymentof duties that were levied, or whether, in such a situation instead ofseizure the lawful course of action is for the Customs to seek recoveryof the additional dues that maybe claimed by recourse to provisions ofSections 18 or 18A of the Customs Ordinance.
Held:
The mandatory consequences of forfeiture that are penal in naturein Section 47 which states “but if such goods shall not agree with
sc
Toyota Lanka (Pvt) Ltd., And Another V. Jayathilaka And Others
(Sarath N. Silva, C. J.)
277
particulars in the bill of entry the same shaU be forfeited” apply to asituation of concealment and evasion to pay duties as distinct froma situation of misdescription and under payment of duties.
In a situation of wrongful entry and evasion, since the consequenceof forfeiture is by operation of law, even if the officer had deliveredthe goods upon the submission of Bill of Entry (CUSDEC), suchgoods maybe seized at any subsequent stage in terms of Section125.
In a situation of misdescription and underpayment of duties theproper course would be to require the person concerned to pay“the duties and dues which may be payable” being the statutoryobligation of the importer in terms of Section 47 or in the event ofa short levy to recover the amount due in terms of Section 18(2)and 18(3) or 18A of the Customs Ordinance. Where a person hasbeen charged in excess, he has a statutory right to seek a refund interms of Section 18(1) of the Ordinance.
The forfeiture provided for in Section 47 would not apply to a situ-ation of a disputed classification of goods or an underpayment orshort levy of duties or dues. In such an event the proper coursewould be a requirement for payment of the amount due prior todelivery of goods or the recovery of the amounts due in terms ofSection 18.
Per Sarath N. Silva, C. J.,
“It is preposterous that officers of Customs recovered as much as129.75% of the value as duties and thereafter seized the goods aswell. The preceding analysis establishes that such action does notcome within the scope of Sections 47 and 125 and is inconsistentwith the scheme and structure of the Ordinance.”
“Audit or examination” in terms of Sections 128A (1) relates to therecords an importer is required to maintain for a period of 3 yearsfrom the date of importation in terms of Section 5IB. There is noprovision for the examination of goods at the stage and any suchexamination is ispo facto ultra vires.
There is no provision for a forfeiture of goods by operation of lawin the event of an alleged undervaluation. Such a provision wouldrender importation of goods well nigh impossible except by thegrace of an officer of the Customs. Hence the purported seizure atthe ‘post audit stage’ is ultra vires and of no force or effect in law.
278
Sri Lanka Law Reports
[2009] 1 SRIL.R.
Case referred to :
1. Palasamy Nadar v. Lanktree – 52 NLR 520APPEAL from judgment of the Court of Appeal.
Faiz Musthapha P. C., with Riyad Ameen, Mrs. Faizer Marker andMs. T. Machado for the Appellants.
Ms. F. JameeZ,D.S.G., with A/7imaO&eysefcera,S.S.C.,fortheRespondnets.
Cur.adv.vult.
March 20, 2009SARATH N. SILVA, C. J.
This is an appeal from the judgment of the Court ofAppeal dated 01.10.2007 refusing a writ of certiorari sought bythe Petitioner Appellant to quash the order dated 08.12.2005made by an officer of the Customs, seizing nine Toyota LandCruiser Prado motor vehicles imported by the Is* AppellantCompany. The Order states that it is made under Section 125of the Customs Ordinance read with the Exchange ControlAct.
After hearing submissions of counsel on certain dates towhich the matter was adjourned, it was agreed by counselthat the issue to be decided could be narrowed down to thequestion, whether it is competent for an officer of customsto have recourse to Section 125 of the Customs Ordinanceand effect seizure of goods in respect of which a Bill ofEntry (CUSDEC) had been submitted, as provided in Section 47and the goods released consequent to a physical examinationand payment of duties that were levied. Whether, in sucha situation instead of seizure the lawful course of action isfor the Customs to seek a recovery of the additional duesthat may be claimed, by recourse to provisions of Sections 18
sc
Toyota Lanka (Pvt) Ltd., And Another V. Jayathilaka And Others
(Sarath N. Silva, C.J.)
279
or 18A of the Customs Ordinance. Counsel agreed to tenderwritten submissions on this question. The question was thusnarrowed since there are other matters pending in Courtinvolving the identical issue of seizure of goods under Section125 of the Customs Ordinance after goods have been deliveredupon payment of duties.
The submission of the Petitioner Appellants in this caseand in other similar cases is that the officers of customsresort to the procedure of seizure, after delivery of goods upontender of a CUSDEC and examination of goods in view of thestatutory scheme for the disbursement of amounts recoveredas forfeitures and penalties upon such seizure. In terms ofSection 153 one half of the amount recovered as forfeituresand penalties is paid into a “Fund” under the control of theDirector General of Customs for distribution in accordancewith the scheme approved by the Minister, “amongst customsofficers concerned and the “informers”. From the other halfalso 40% is credited to the Customs Officers Managementand Compensation Fund and only the balance is credited tothe Consolidated Fund of the State. Thus out of the amountsrecovered as forfeitures and penalties under the CustomsOrdinance or any other provision of written law read withthe Ordinance as much as 70% go to customs officers andinformers through one means or another and only 30% getcredited to revenue.
The submission of the Appellants is that this statutoiyprovision in Section 153, as amended by Act No. 83 of 1988,for disbursement of forfeitures and penalties heavily weighedin favour of officers of customs, induce these officers to harassimporters by effecting seizures in terms of Section 125 ofthe goods in respect of which CUSDEC forms have beensubmitted and duties paid. The submission is that in such asituation the proper recourse should be not to effect a seizureof goods and impose penalties but to recover in terms of
280
Sri Lanka Law Reports
[2009] 1 SRIL.R.
Section 18 any additional amounts that may be claimed asduties. In terms of Section 18(3) if the amount so demandedis not paid, it is lawful for an officer of the customs to refuseto pass any goods which that person imports or exportsuntil such amount is paid. Section 18A in addition providesfor the recovery of any duties omitted to be levied or shortlevied by recourse to the Magistrate’s Court where the sumdue is deemed to be a fine which carries a term of imprison-ment in the event of non payment. However, the amountsso recovered in terms of Sections 18(3) or 18A would not beforfeitures or penalties and as such the provisions of Section153 referred to above which provides for as much as 70% ofthe amounts recovered to be distributed to customs officersand informers would not be attracted.
The submission of the Appellants is that a seizure iseffected in a situation where a recovery process is the propercourse solely for the benefit of officers of customs and notfor the benefit of the State and public revenue. It was furtherargued that in view of the statutory scheme stated aboveofficers of customs effect purported seizures on tenuousgrounds causing harassment to importers and traders, forthe purpose of enhancing their rewards and other gains.
On the other hand Deputy Solicitor General submittedthat a misdescription of goods would be a fraudulent acton the part of the importer and the mere recovery of theadditional duties that may be due is not an “adequatedeterrent.” As regards the initial inspection of goods upona CUSDEC at the time of delivery to the importer, it iscontended that if goods are mis described inspite of deliveryof such goods on a short levy of duties, the goods are forfeitedby operation of law and may be seized at any subsequentpoint by an officer of customs in terms of Section 125 of theOrdinance.
The reply of the Petitioners is that the submission of theState is inconsistent with Section 47 of the Ordinance being
sc
Toyota Lanka (Pvt) Ltd., And Another V. JayathUaka And Others
(Sarath N. Silva, C, J.)
281
the applicable provision. That, upon the submission of aCUSDEC signed by the authorized officer and transmittedto the officer charged with clearance in terms of Section 47the goods are either inspected and delivered or forfeited onthe basis that the goods do not agree with the particulars inthe CUSDEC by a lawful and proper exercise of such powerand that the section does not envisage an examination anddelivery and also a forfeiture by operation of law of the samegoods.
I would now examine the submissions referred to abovein the light of the relevant facts and the applicable provisionsof the Customs Ordinance.
The 1st petitioner Appellant is a fully owned subsidiary ofToyota Tsusho Corporation of Japan. The Toyota Land CruiserPrado being the vehicle in question is a product of the ToyotaMotor Corporation. At the time of importation a Bill ofEntry (CUSDEC) was submitted by the 1st Petitioner Appel-lant describing the vehicles under HS Code 8702.10.01. TheHS Code that is adopted for revenue purposes in Sri Lanka isbased on a Harmonized System being an internationally rec-ognized classification. The first six digits is the local variant.The applicable gazette notification of 12.02.2004 states thetitle of Code 87.02 as:
“Motor vehicles for the transport of 10 or more persons,including the driver. ”
The description of the item in HS Code 87.02.10.01 statesas follows:
“Ten seater passenger van of the Nissan Petrol, Mitsubishipajero, Toyota Land Cruiser, Range Rover and similar typeof not more than three years old. ”
282
Sri Lanka Law Reports
(2009] 1 SRILR.
The petitioner Appellant submitted a CUSDEC on thesaid HS Code 8702.10.01 and paid the following duties:
The submission of the CUSDEC and the payment ofduties and levies amounting to 129.75% of the value of avehicle by the Appellants is not disputed. The goods werereleased to the Appellants by the 2nd Respondent whoprocessed the CUSDEC that was submitted.
The Appellants claim that the vehicles were examinedby the 2nd Respondent prior to its release. The 2nd respondenthas not filed an affidavit in the Court of Appeal denying thisspecific contention of the Appellants. The impugned seizureunder Section 125 of the Customs Ordinance was effectedsubsequently by the 3rd Respondent who played no role inthe clearance of the CUSDEC and the delivery of the vehicles.The contention of the state is that the vehicles shouldbe properly classified under HS Code 8703.32.07. Thedescription of this HS Code in the gazette notification is asfollows:
“Motor cars including Station Wagons and racing cars ofa cylinder capacity not exceeding 2000 cc. And not morethan 3Vs years old. ”
Customs DutySurcharge on Customs DutyPort & Aviation LevyVAT
Excise Duty
Social Responsibility LevyTotal
25%
10%
1.5%
18%
72%
0.25%
129.75%
This classification is relied on by the State on thebasis that the particular motor vehicle although a Toyota
sc
Toyota Lanka (Pvt) Ltd., And Another V. Jayathilaka And Others
(Sarath N. Silva, C. J.)
283
Land Cruiser as described in the HS Code 8702.10.01has only 9 seats and not 10 seats. In the circumstancesthe higher duty rate under the latter classification wouldapply to the vehicle. On that basis it was contended that theExcise Duty that should be paid is not 72% but 115%.It wassubmitted by the Deputy Solicitor General that the misdescription was to secure a lesser Excise Duty of 72% andbeing a fraudulent act which resulted in the vehicles beingforfeited by operation of Section 47 and as such liable forseizure in terms of Section 125 of the Ordinance.
Since the issue is whether the vehicle has 10 seats or 9seats, the Appellants contend that the physical examinationof the vehicle done by the 2nd Respondent at the time ofdelivery should be the determinant factor. It was contendedthat since the 2nd Respondent, being the officer of customsto whom the Bill of Entry (CUSDEC) was “transmitted” interms of Section 47, duly examined the vehicles and releasedthem upon payment of duties and levies, the vehicles cannotbe considered as being forfeited in terms of the alternativelimb of Section 47. As noted above the 2nd Respondent hadnot filed an affidavit but in paragraph 100 of the writtensubmissions of the State it is stated that; “Assuming thevehicles had been examined and the officer had mistakenlycounted the number of seats as 10, and at Post audit stageafter a physical examination, it was revealed that the vehicledid not have 10 seats, then, the Petitioner would not be ableto claim a benefit out of the mistake of the officer”. The legalimplications of this submission would be considered hereafterbut it suffices to observe for the present that the 2ndRespondent has not stated anywhere that he made a mistakein counting upto 10.
The submissions of the Appellants and of the State relateprimarily to the interpretation of the provisions of Section47 of the Customs Ordinance and in particular to the last
284
Sri Lanka Law Reports
[2009] 1 SRI LR.
limb thereof. Section 47 requires an importer to deliver to theDirector General of Customs a Bill of Entry of goods on a formas may be specified by the Director General. It is commonground that in usage the Bill of Entry to be submitted is nowdescribed as the CUSDEC, the contents of which have beenspecified by notification. The CUSDEC has been introducedfor use in a computerized system and to be in accord with thepractice operative internationally. Section 47 is a long provi-sion coming well within the description stated by Gratiaen
J., in the case of Palasamy Nader vs Lanktree01, where heobserved as follows”
“Customs Ordinance is an antiquated enactment which
first found its way into the Statute Book in 1869, and
has been subject to various amendments from time to time
thereafter. ”
The situation described by Gratiaen J., in 1949 has beencompounded further by many amendments that have beenlater introduced to the antiquated language of Section 47.For purposes of interpretation the provision could be suitablyparaphrased to encompass the different stages of clear-ance of goods by Customs at the time of importation. The Is'step, as noted above is the submissions of CUSDEC with theparticulars that have been specified by the Director General.The next sentence requires that the importer “Shall pay anyduties which may be payable upon the goods mentioned insuch entry. ” The next portion of Section provides that theCUSDEC when signed by the Director General of Customs ora person authorized by him and “transmitted” to the properofficer “shall be the warrant to him for the examination anddelivery of such goods”. Thus it is clear that the importeris required to present the CUSDEC with all the relevantinformation, as specified, pay the duties and dues and awaitaction on the part of the officer to whom the CUSDEC istransmitted by the Director General or a person authorized
sc
Toyota Lanka (Pvt) Ltd., And Another V. JayathHaka And Others
(Sarath N. Silva, C. J.)
285
by him and who is “warranted” (empowered) to examine anddeliver the goods. The next set of words read as follows:
“but if such goods shall not agree with the particulars inthe bill of entry the same shall be forfeited, and such for-feiture shall include all other goods which shall be enteredor packed with them as well as the packages in which theyare contained. ”
Counsel for the Appellants contended that these wordscommencing with the word “but” is an alternative to thedelivery of the goods provided for in the preceding words thatwhen the officer empowered to carry out the examination,delivers the goods pursuant to such examination, thequestion of forfeiture on the basis that the goods do not agreewith the particulars in the “bill” CUSDEC would not arise.It is submitted that these are alternative provisions, theaction of the officer of customs would be one of delivery afterexamination or one of declaring a forfeiture and seizing thegoods. On that basis Counsel submitted that since the goodshave been delivered upon examination (which is not disputedby the State) there is no question of a forfeiture and seizureof such goods.
The submission of the Deputy Solicitor General is thatthe words “shall be forfeited” is by operation of law and anecessary consequence of goods not being in agreementwith the particulars in the bill. In support of this propositionDeputy Solicitor General relied on the judgment of Gratiaen J.,in Palasamy Nadar us Lanktree,(supra) where a distinction isnoted by in the use of the words “shall be forfeited” and“liable to forfeiture". It was observed in that judgment thatthe former is forfeiture of goods by operation of law, I
I have to note that in Palasamy Nadar’s case (supra)Gratiean J., sitting alone did not consider the provisions of
286
Sri Lanka Law Reports
[2009] 1 SRIL.R.
Section 47 or of the corresponding provisions with regard toimportation. The question considered related to an instanceof exportation and more specifically related to the issuewhether a notice of claim for goods that have been seized asforfeited has been given within time, as provided in Section147 (the present section 154). Significantly, Gratiaen J., wasnot called upon in the case to consider the specific content ofSection 47 dealt with above.
The content and sequence of Section 47 analyzed abovetends to support the submission of the Appellants that actionon the part of the officer to whom the CUSDEC is transmittedfor clearance, should be one of the two courses, the firstbeing the examination and delivery of goods and the secondbeing a refusal to do so on the basis that the goods do not agreewith particulars in the entry which will be followed by thedeclaration that the goods are forfeited and a seizure thereof.
However, since the State seeks to support the forfeitureon the basis that the last limb of Section 47 is a consequenceof law which would not be precluded by the delivery of thegoods by the officer to whom the CUSDEC is transmitted, itis necessary to consider this aspect as well.
The submission of the Deputy Solicitor General is thatthe words.
“but if such goods shall not agree with the particulars in
the bill of entry the same shall be forfeited.”
apply by operation of law to a situation in which the HSCode is incorrectly stated in the CUSDEC to attract a lowerrate of duty;
The HS Code is replete with manifold distinctions includingfine variants such as between vehicles having 10 seats andmore and 9 seats and less, being the particular issue in thiscase. In my opinion the words “but if such goods shall not
sc
Toyota Lanka (Pvt) Ltd., And Another V. Jayathilaka And Others
(Sarath N. Silva, C. J.)
287
agree with the particulars in the bill of entry…. "which taken inisolation have a seemingly wide ambit should be interpretedin the context in which these words appear which state theconsequences that follow. The mandatory consequencesare not restricted to a forfeiture of the goods in question asrevealed by the words that follow:
*and such forfeiture shall include all other goods whichshall be entered or packed with them as well as thepackages in which they are contained. ”
These mandatory consequences of forfeiture that arepenal in nature demonstrate that the words “but if suchgoods shall not agree with the particulars in the bill of entry”apply to a situation of concealment and evasion to pay dutiesas distinct from a situation of misdescription and under pay-ment of duties. In the latter situation the proper course would
t
be to require the person to pay the “duties and dues whichmay be payable” being the statutory obligation of the import-er in terms of Section 47 or in the event of a short levy torecover the amount due in terms of Sections 18 (2) and (3) or18A referred to above. Where the person has been charged inexcess, he has a statutory right to seek a refund in terms ofSection 18(1).
In the former situation where the goods sought to becleared do not agree with the Bill manifesting a concealmentand an evasion of duties and dues, the penal consequences offorfeiture stated above follow by operation of law. The officialintervention which gives effect to the forfeiture by operationof law is seizure of such goods by any officer of the customsas provided in Section 125. The seizure impugned in thiscase was purportedly made in terms of this section and itis necessary now to consider its provision which reads asfollows:
288
Sri Lanka Law Reports
12009]! SRIL.R.
“All goods and all ships and boats which by thisOrdinance are declared to be forfeited shall and may beseized by any officer of the customs; and such forfeitureof any ship or boat shall include the guns, tackle, apparel,and furniture of the same, and such forfeiture of any goodsshall include all other goods which shall be packed withthem, as well as the packages in which they are contained;and all carriages or other means of conveyance, togetherwith all horses and all other animals and all other thingsmade use of in any way in the concealment or removal ofany goods liable to forfeiture under this Ordinance, shallbe forfeited
It is significant that this is the first section in Part XIII ofthe Ordinance which bears the following title:
‘SMUGGLING, SEIZURES AND PROSECUTONSGENERALLY
The marginal note to Section 125 also contains the samewords:
“Smuggling, Seizure and Prosecutions generally”
Ordinarily, marginal notes and the title would not betaken into account in interpreting the provisions of a Sectionsince they are considered to be editorial inclusions. However,as observed by Gratiaen J., we are dealing with a law that isantiquated and amended several times over a period of nearly150 years. In this background it would be reasonable toascertain the legislative intent by looking at not only the wordsof a section but also by taking into account the context bothwithin (the entirety of the provisions in a section and inter se(the relation of one provision to another), the titles and mar-ginal notes. All of which, in my view constitute the mooringsof wide and ambiguous words of a section that should not beread in isolation. “Smuggling” stated in the title and marginalnote is a word of ordinary usage which means, to take send
sc
Toyota Lanka (Pvt) Ltd., And Another V. Jayathilaka And Others
(Sarath N. Silva, C. J.)
289
or bring goods or people secretly and illegally into or out of acountry. In the context of customs it would mean the move-ment of goods by stealth and in concealment to evade pay-ment of customs duties. Customs duties, prohibitions andrestrictions attach to the goods. Hence, when the goods areconveyed by stealth and in concealment to evade payment ofcustoms duties, or the applicable prohibitions and restric-tions, by operation of law such goods and other goods packedtogether and packages are forfeited. Since they are forfeitedby law as being smuggled goods they may be seized by an offi-cer of the customs at any stage in terms of Section 125. Thusa harmonious interpretation could be made of the two relatedSections 47 and 125 that arise for consideration in this case.
The view stated above that the words in the last limbof Section 47 "but if such goods shall not agree with theparticulars in the bill of entry the same shall be forfeited….”apply to a situation in which by means of a wrongful entrygoods are conveyed by stealth to evade payment of customsduties and dues or contrary to prohibitions, restrictions andthat such goods and other goods and packages as providedare forfeited by operation of law is supported by a briefsurvey of the other sections in which the same phrase “shallbe forfeited” is used:
They are:
Section 30 provides that “any goods found to be con-cealed on board any ship (that has arrived at the Port)shall be forfeited. This would relate to a non disclosure inthe manifest;
Section 33 provides that goods unshipped or carried con-trary to rules and regulations “shall be forfeited”;
Section 34 provides that goods “unladen from any shipor removal from a warehouse contrary to the provisions“shall be forfeited”;
290
Sri Lanka Law Reports
[2009] 1 SRIL.R.
Section 43 provides that goods imported contrary to theprohibitions and restrictions in schedule B “shall be for-feited”;
Section 50A provides that goods exempted from customsduty are subject to conditions and when the conditions
. are not complied with the “goods shall be forfeited.”
Section 75 provides that goods carried from one portto another in Sri Lanka contrary to regulations andrestrictions “shall be forfeited”
Hence I am fortified in the view and hold that the provi-sion in Section 47 “but if such goods shall not agree withparticulars in the bill of entry the same shall be forfeited. . .”apply to a situation in which by means of a wrongful entrygoods are conveyed by stealth, to evade payment of customsduties or dues or contrary to prohibitions or restrictions. Insuch a situation of a wrongful entry and evasion, since theconsequence of forfeiture is by operation of law, even if theofficer had delivered the goods upon the submission ofa CUSDEC, such goods may be seized at any subsequentstage in terms of Section 125. I am further of the view andhold that the forfeiture provided for in Section 47 would notapply to a situation of a disputed classification of goods or anunderpayment or short levy of duties or dues. In such eventthe proper course would be a requirement for payment of theamount due prior to delivery of goods or the recovery of theamounts due in terms of Section 18.
In this case the officer who was charged with the functionof examining and delivering the goods in fact agreed withthe classification of the importer and delivered the goods asprovided in Section 47 cited above.
The item is a motor vehicle and the issue is the numberof seats being a fact which could be easily perceived by the
sc
Toyota Lanka (Pvt) Ltd., And Another V. Jayathilaka And Others
(Sarath N. Silva, C. J.)
291
senses at a physical examination. The excuse of a mistakein counting the seats is unacceptable and cannot be availedof to ascribe a conveyance by stealth and a concealment toevade payment of dues by the importer. Infact there hadbeen no evasion and as much as 129.75% of the value hasbeen paid as duties. The only issue, if any, would be one ofrecovery of any additional amounts that may be due.
It is preposterous that officers of customs recovered asmuch as 129.75% of the value as duties and thereafter seizedthe goods as well. The preceding analysis establishes thatsuch action does not come within the scope of Section 47 and125 and is inconsistent with the scheme and structure ofthe Ordinance. The manifestly illegal action lends credence tothe submissions of the Appellants as to the reward orientedmotivation which induces overzealous action in effectingseizures and imposing penalties where the proper causewould be to recover any additional amounts that may be dueaccording to the due process of law.
The Deputy Solicitor General submitted that the act ofthe 3rd Respondent and another Customs Officer in effect-ing the seizure under Section 125 is valid since “this fraudwas discovered by the Post Audit Branch of the Customs”. Itwas submitted that the 3rd Respondent (Post Audit Branch)visited the premises of the 1st Petitioner for the purpose ofconducting further inquiries and examined the vehicles. Theimplication of their submission is that an examination of thegoods is not restricted to the stage prior to delivery as statedin Section 47 but that such examination could be done at asubsequent stage described as the “Post Audit Stage”.
It appears that the stage contemplated in the submissionis that referred to in Section 128A of the Customs Ordinanceintroduced by the Amending Act No. 2 of 2003. In this regardI have to note initially that the “audit or examination”. . .
292
Sri Lanka Law Reports
[2009] 1 SR1L.R.
terms of Section 128A(1) relates to the records an importeris required to maintain for a period of 3 years from the dateof importation in terms of Section 5IB. There is no provi-sion for the examination of goods at that stage and any suchexamination is ipso facto ultra vires. Further, provisions ofSection 128A read with Section 51A (2) show that the auditis carried out to determine the value of the goods. This couldlead to an amendment of the value and an importer who isdissatisfied with any decision to amend the value has a rightof appeal to the Director General in terms of Section 51A(6).There is no provision for a forfeiture of goods by operation oflaw in the event of an alleged undervaluation. Indeed such aprovision would render importation of goods well nigh impos-sible except by the grace of an officer of the customs. Hencethe purported seizure effected by document P10 at the “postaudit stage’ is in any event ultra mres and of no force or effectin law.
For the reasons stated above 1 allow this appeal and setaside the judgment of the Court of Appeal dated 1.10.2007.I direct that a writ of certiorari issue quashing the seizurenotified by document marked P10 in the Court of Appeal andthereby grant to the Appellants the relief prayed for in prayer(a) of the petition filed in the Court of Appeal. This order willnot prejudice the authority of an officer of customs ro recoverany sums that are due according to law. No costs.
AMARATUNGA J – I agree
SRIPAVAN J – I agree
Appeal Allowed.