Need of the hour: Change in 150-year-old Customs Law!

Wednesday, 27 July 2016 00:02 -     - {{hitsCtrl.values.hits}}

Custom-Officers'-Association-meets-PresidentPresident Maithripala Sirisena meeting Customs officials

 

By An Outsider

Here’s why: For far too long bona-fide business people and even innocent members of the public have been at the receiving end of merciless and callous dictates of heartless Customs ‘officials’ who appear to be a law unto themselves, thanks to the 70:30 ratio they enjoy! Yes, it almost amounts to State-sponsored bribery when Customs officials are ‘permitted’ to rake in a cool 70% of fines they impose on hapless individuals whilst only the balance lop-sided 30% is the meager ‘takings’ of the State!

Many are the verifiable true stories of some of these now filthy rich customs officials who first came to the Customs Department from their humble rented abodes and by public transport, trudging much of the way! Today many of these once dirt-poor Customs officials are as wealthy as top tycoons possessing valuable real estate, swanky apartments and of course status symbols such as the latest Prados and BMWs.

No wonder they are moving heaven and earth to maintain their status quo, based on sheer greed for filthy lucre and what money buys – position and power in society! Enough is enough! Things got to change, pronto! Justice and fair-play has to be restored and more importantly those hard working business people in the export/import trade must be allowed to make their businesses flourish sans ‘official harassment’ to such degrees that numerous businesses have crashed never to recover – thanks to these absolutely corrupt customs officials who are always on the look out to fleece their next victim at their unjust gain!

It all begins with a seemingly innocuous ‘Inquiry’ courtesy Customs Officials. Read the following Q&A:

Q: How does a customs inquiry begin?

A:
With enormous powers Customs officers possess, they could willy-nilly seize the goods or documents from any company on the basis of ‘suspecting of a Customs offence’. Together with this seizure there is threat posed by the Customs Ordinance which says irrespective of anything in the Customs Ordinance or in any other written law if the value of the goods is over Rs. 500,000, that it is a non-bailable offence! 

Q: What follows from such a seizure?

A:
Any goods, for example in any mobile phone shop, saree shop or any ‘shop’ in Pettah will easily be over Rs. 500,000. Therefore any seized goods of any company or any document seized with computers will be in custody of Customs without a time restriction which will destroy anybody’s business. 

For example, recently, several highly-valuable motor cars [no, not the super-cars such as the Lamborghinis which were surreptitiously slipped into SL duty-free!] in spite of paying due duty after the Customs examination and clearing of the cars, had been arbitrarily seized and detained in their warehouse in two instances for over eight months! Just imagine what damage is done to unattended cars during eight months – value depreciates by at least 50% doesn’t it? Then a top international clearing entity from whom a computer with their entire data base was seized, lost all the data: and the ‘remedy’ that the ‘smart’ Customs proposed was to give them a computer with all the data lost! 

Q: After the seizure what happens next?

A:
These ‘seizures’ are effected by several departments of Customs: it can be the Revenue Task Force, Preventive Division of Customs, Post-Audit Division, Central Intelligence Bureau, etc. Within the same department they investigate and a ‘friendly’ officer partial to them is made to sit as an inquiring officer exercising quasi-judicial functions. This officer can impose triple the value of the goods which can be Rs. 100 million, Rs. 500 million, or even Rs. 1 billion or more, whilst this inquiring officer has the authority to mitigate it to Rs. 50 or zero! The worst aspect of the ‘inquiry’ is that it is held by a person/s with no legal background; the prosecution too is conducted by people with no legal background!

Resultant sorry position is that the importer and/or exporter will be compelled to give in to whatever demands made on him/her by the prosecution as the inquiring officer appointed is one amongst them to uphold the position of the prosecution, heavily slanted towards the mostly corrupt Customs cliques!

Q: Is there a Right of Appeal from the imposition of such a penalty?

A:
In 2013 the Right of Appeal to the Director General [DG] was introduced; however none wanted to exercise this as the DG never inquired into any appeal that was forwarded to him. Then if the Director General of Customs didn’t take a decision on the matter within 90 days, the Right of Appeal has to go before the Tax Commission; yet up to now the Tax Department is defunct as the regulations has not been framed! So it’s a catch 22 Situation and therefore the existing Ordinance of the powers vested in the customs officers are abused no end due to the uncertainty of the law.

Q: What repercussions does SL face in view of these excessive powers of the Customs officers?

A:
Very serious and damaging repercussions: for instance several BOI companies including the largest currency printing company of this region closed down all operations in SL in view of the harassments they faced from the customs. In short these crooked customs officials ‘successfully’ turn-off would be investors and even established businesses by their unsavory and damaging antics inimical to the credibility and good name of our paradise island. Should we, the public ignore these corrupt so called state officials and permit them to carry on such vile campaigns that flout norms of justice and fair-play?

In summary: 

Today’s Customs can arbitrarily seize goods and even [God forbid!] remand people for undue lengths of time, hold on to bank guarantees and other securities given for release of goods for indefinite periods: refuse to answer any letters or queries by lawyers or importers on any questions including the violation of laws which makes it absolutely impossible to conduct one’s business with certainty.

At this critical juncture when the present Government is making all attempts to woo wealthy and successful global investors to set up shop in Sri Lanka, paving the way towards enhanced FDIs and creation of sustainable employment opportunities, there should be zero-tolerance for the current ‘customs mafia’ and their criminal activities to flourish a moment longer!

We yearn for completely new transparent Customs Regulations in line with such Laws prevalent in Singapore, UK, Australia, NZ, Japan, etc., where any would be investor could log into the Internet and check up on all customs procedures relevant and make informed business propositions towards win-win business scenarios as he/she would be certain there would be no bogey man such as present day crooked customs officials would be around to spoil the business-friendly environment – never again!

Read below the important judicial pronouncement under the existing law by Justice Sarath N. Silva:

Toyoto Lanka Ltd. vs DGC others

The submission of the Petitioner Appellants in this case and in other similar cases is that the officers of customs resort to the procedure of seizure, after delivery of goods upon tender of a CUSDEC and examination of goods in view of the statutory scheme for the disbursement of amounts recovered as forfeitures and penalties upon such seizure. In terms of Section 153 one half of the amount recovered as forfeitures and penalties is paid into a “Fund” under the control of the Director General of Customs for distribution in accordance with the scheme approved by the Minister, “amongst Customs officers, concerned and the “informers”. From the other half also 40% is credited to the Customs Officers Management and Compensation Fund and only the balance is credited to the Consolidated Fund of the State. Thus out of the amounts recovered as forfeitures and penalties under the Customs Ordinance or any other provision of written law read with the Ordinance as much as 70% go to customs officers and informers through one means or another and only 30% get credited to revenue.

The submission of the Appellants is that this statutory provision in Section 153, as amended by Act No.83 of 1988, for disbursement of forfeitures and penalties heavily weighed in favour of officers of customs, induce these officers to harass importers by effecting seizure in terms of Section 125 of the goods in respect of which CUSDEC forms have been submitted and duties paid. The submission that in such a situation the proper recourse should not to effect a seizure of goods and impose penalties but to recover in terms of Section 18 any additional amounts that may be claimed as duties. In terms of Section 18 (3) if the amount so demanded is not paid, it is lawful for an officer of the customs to refuse to pass any goods which that person imports or exports until such amount is paid. Section 18Ain Magistrate’s Court where the sum due is deemed to be a fine which carries a term of imprisonment in the event of non-payment. However, the amounts so recovered in terms of sections 18 (3) or 18A would not be forfeitures or penalties and as such the provisions of Section 153 referred to above which provides for as much as 70% of the amounts recovered to be distributed to customs officers and informers would not be attracted.

Ordinarily, marginal notes and the title would not be taken into account in interpreting the provisions of a Section since they are, considered to be editorial inclusions. However, as observed by Gratiaen J., we are dealing with a law that is antiquated and amended several times over a period of nearly 150 years. In this background it would be reasonable to ascertain the legislative intent by looking at not only the words of section but also by taking into account the context both within (the entirety of the provisions in a section and inter se (the relation of one provision to another), the titles and marginal notes. All of which, in my view constitute the moorings of wide and ambiguous words of a section that should not be read in isolation.

It is preposterous that officers of customs recovered as much as 125.75% of the value as duties and thereafter seized the goods as well. The preceding analysis establishes that such action does not come within the scope of Sections 47 and 125 and is inconsistent with the scheme and structure of the Ordinance. The manifestly illegal action lends credence to the submissions of the Appellants as to the reward oriented motivation which includes over-zealous action in effecting seizures and imposing penalties where the proper cause would be to recover any additional amounts that may be due according to the due process of law.

Indeed such a provision would render importation of goods well nigh impossible except by the grace of an officer of the customs. Hence the purported seizure effected by document P10 at the `post audit stage’ is in any event ultra-vires and of no force or effect in law. 

This system of seizure procedure by a misinterpretation of law, until the judgment of Justice Sarath Silva on 20 March 2009; even now such seizures are effected by passing this law.

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