Arrest of Chinese national and forfeiture of his gems worth Rs. 21 m by Customs are unlawful

By M.M. Zuhair, PC

The Daily Mirror of 27 March 2018 reported the case of a Chinese national coming into Sri Lanka, under the following heading, ‘Chinese nabbed with Rs. 21 million worth gems’. The report said that a “39 year old Chinese national was arrested with gems over Rs. 21 million while he was trying to smuggle them into the country…”

The customs ‘detection’ took me by surprise for the reasons that the alleged arrest and deprivation of the property of the Chinese, as reported in the media are in my view unlawful under the Customs Ordinance and its regulations and the National Gem and Jewellery Authority Act. This discussion is based on the facts as reported in the media. I also believe that it is good to encourage a public discussion particularly if the Customs Department or anyone else has a different point of view.

Under our laws there is no prohibition or restriction for anyone bringing into Sri Lanka gems or any category of gem stones. What is legally permitted cannot be described as ‘smuggling’.  There is of course restriction but not prohibition when exporting or taking out gems from Sri Lanka. The law has been so framed for obvious reasons of restricting uncontrolled outflow but advisedly not the inflow. Furthermore under the Customs regulations made on 10 November 1993, there is no obligation on the part of any passenger to voluntarily declare to the Customs any item which is neither prohibited nor restricted. Any item which is not prohibited or restricted cannot be seized or forfeited even on an allegation of concealment or non-declaration. The use of the green channel by a passenger with gem stones securely protected is perfectly lawful as it amounts to a clear declaration that he has nothing to declare to Customs. The 1993 rules were brought in to facilitate tourism and to prevent harassment of genuine persons and citizens using the airports.

It appears that some Customs officers are following past practices in breach of the law. It is the responsibility of the higher officers to give, accurate circular instructions upholding the law, to the officers at the periphery, who may not be fully conversant with the law. It may also be that detecting officers are being motivated to seize and forfeit goods which are neither prohibited nor restricted but encouraged by the high percentage of the value (up to 40% of the recovered value) of the forfeited goods which the detecting customs officers become entitled to as their ‘reward share’ following the forfeiture. In other words the officers have a personal and beneficial interest in the forfeiture, which may be prompting some of them to overlook the law.

The question arises as to why there is no inexpensive revision mechanism within the department to redress grievances in cases in which customs officers act in violations of the law? Why are the appeals procedure laid out in the Ordinance not being acted upon? Why are the higher officers of the department not acting according to the judgment in Navaratne vs Director General Customs reported in (2003) 3 SLR 310 which recognises the power, authority and duty of the higher officers to revise invalid decisions made by junior officers? Why are persons whose properties had been wrongfully seized being compelled to go through the long drawn out and expensive process of civil litigation in District Courts and then Appeal Courts which take a minimum of two to ten years? Where is good governance? I raise these issues because this is not the first time this has happened. There is obviously something terribly wrong in the department which needs to be corrected.

I should not be misjudged in this case as holding a brief for anyone. My view is that the rule of law must prevail. It is possible that the Chinese passenger might lose his job for an act which is not an offence or a violation of the Customs enactments or rules. He might feel shamed amongst his peers and kith and kin if the Chinese media were to carry the news. I am told by members in the legal fraternity that the wrongful forfeiture and the publicity given in similar cases had led to innocent mostly middle-class citizens here ending up as destitutes. 

The National Gem and Jewellery Authority Act No 50 of 1993 restricts but does not prohibit the export of gems from Sri Lanka. Gems can be exported or taken out of the country in compliance with the legally valid procedure. But there is no prohibition or restriction to import or bring into the country gems or gem stones, under Act No 50 of 1993 or the Customs Ordinance or regulations made thereunder. 

Under section 6A of the Customs Ordinance a customs notification dated 5 July 2012 has been issued which offers a voluntary “special service” facility. This facility can be made use of by and at the discretion of those exporting or bringing in gems to the country on payment of $ 200 to the Customs. This is a facility that a person bringing gems into the country can, at his discretion, if he so requires, make use of at a cost of $ 200. The customs notification of 5 July 2012 is not a restrictive regulation but a notification or announcement of a special service available to dealers in gems but at a cost.

Even in cases of the duty free allowances then granted under the Passengers’ Baggage (Ordinarily Resident in Sri Lanka) regulations, paragraph E (iv) specifies that where a passenger to whom the regulation applies , brings in excess of the value of his quota entitlement, the excess must be allowed at “Normal Tariff Rate”. Because there is no duty on gems any longer, the above duty free rules are no longer applicable. The point here is that even under those circumstances the excess cannot be forfeited!

Under the “Passengers’ Baggage (Exemption Inward) Regulations dated 10 November 1993 issued by the Minister, there is no legal obligation on any passenger to subject himself or his baggage for Customs examination or to make a declaration of his own, unless required to do so by a customs officer. Since gems are not prohibited, not restricted and not dutiable, passengers can proceed through Customs both normal and green channels on the basis that there is nothing to declare to Customs. But if he has any restricted goods such as for example an item which is subject to payment of duty, he must declare and pay the duty.

Under section 138 of the Customs Ordinance the power to search any passenger cannot be exercised arbitrarily. The Customs officer must have good reason to suppose that the passenger has any prohibited or restricted goods prior to search. It is a laudable provision to prevent innocent passengers, particularly tourists, being harassed or embarrassed at the hands of over enthusiastic officers.

The Customs Ordinance is a penal enactment which imposes severe penalties on those who violate its provisions. The State must prove violation of its provisions beyond reasonable doubt as was held in Govindasamy vs Attorney-General (1980) 2 SLR 278. 

What is important is that the higher echelons of this important revenue earning department exercise their power of ‘superintendence’, as provided for in section 2 of the Customs Ordinance upon the subordinates. I hope the Customs Department will issue a clarification for the benefit of the public, the Tourist Board, our overseas missions and the over a million passengers who use our main airports. 

(The writer is a former Member of Parliament. Contrary views if any are most welcome direct to the media or to the writer on [email protected])