By S.S. Selvanayagam
The Court of Appeal held that the re-opening of an inquiry without new or relevant material would lead to a practice where there will not be an end to any customs inquiry and ruled that to hold a fresh inquiry is ultra vires the powers of the Director General of Customs.
Justice S. Sriskandarajah (President of CA) delivered his judgment on the Writ application filed by Rican Lanka (Pvt.) Ltd against the Director General of Customs, Customs Director (Preventive Unit) and Assistant Director of Customs K.A. Dharmasena.
President’s Counsel S.A. Parathalingam with M.U.M. Ali Sabry appeared for the Petitioner. State Counsel Viveka de Silva appeared for the Respondents.
Petitioner Company Rican Lanka commenced it business in 1996 to manufacture material component related to manufacture of garments. Its sister company is Ceylon Textiles Industries (Pvt.) Ltd, registered under the BOI and took over the Wellawatte Weaving Mill from the Government.
The BOI subsequently terminated the agreement with the Ceylon Textiles Industries and requested to quit and vacate the premises.
In terms of the agreement entered into between Ceylon Textiles Industries and the BOK, the said company was entitled to export the articles, equipment and the iron and copper structural items to export through its sister company the Petitioner.
Petitioner purchased copper tubes, sheets, pipes wire barbs and conductors running into several thousand kilograms lying at the said premises under a sales contract entered into between the Petitioner and the Ceylon Textiles Industries.
The petitioner, having secured a buyer of these articles, sought approval from the BOI to export 20,000 kg of metal pieces and 7,000 kg of copper alloy bars. These items were sacked into a container and after following all the formalities and proceedings by the relevant authorities, including Sri Lanka Ports Authorities of the Customs, loaded into a vessel.
When the vessel was about to sail from Colombo Port, the Petitioner was informed that the Bill of Lading cannot be issued as the customs had put on hold the said container. It is the position of the Customs that upon a physical verification of the goods, it was found to be copper waste and scrap, contrary to the description and classification stated in the CUSDEC (Customs Declaration).
The customs’ contention is that the petitioner, by said misperception in the CUSDEC, has attempted to avoid the payment of cess and by this act, the petitioner had evaded a sum of Rs. 394,998 being cess payment on goods in question.
An investigation was conducted. After the conclusion of the said investigation, an inquiring officer made an order to release the goods in question and exonerated the Petitioner from all the charges.
But the Director General of Customs insisted there was a necessity to review the proceedings of the inquiry to ascertain whether there had been any lapse or error on the part of the prosecution or the inquiring officer.
The Court of Appeal observed there is no allegation against the Inquiring Officer or the Prosecuting officer that they have acted in a manner that is prejudicial to the Customs or that they have acted in favour of the Petitioner.
Court also noted that if the Director General of Customs or any other officer is dissatisfied with the decision of the Inquirer, could have sought a judicial review of the proceedings to review the decision of the Inquiring Officer; but without doing so, the Director General of Customs cannot revive or sit in appeal against the order of the Inquiring Officer.
The Court set aside the decision of the Director General of Customs to hold a fresh inquiry and directed the Respondents to release the Bank Guarantee and the Corporate Guarantee submitted by the Petitioner.