024-SLLR-SLLR-2010-V-2-WASANA-TRADING-LANLKA-PVT.-LTD-vs.-DIRECTOR-GENERAL-OF-CUSTOMS-AND-ANOTH.pdf
Wasana Trading Lanka (Pvt.) Ltd Vs. Director General of Customs and another
CA319
WASANA TRADING LANKA (PVT.) LTDVS. DIRECTOR GENERAL OF CUSTOMS AND ANOTHERCOURT OF APPEALSRISKANDARAJAH, J.C.A. 1081/2005JUNE 8, 22, 27, 2007JULY 10, 2007SEPTEMBER 20, 2007
Customs Ordinance – Section 10 – Section 47-Importation of freezervehicle – CUSDEC submitted • Refusal to accept – Requirement toclassify the HS Code and enter the HS Code No. in Cusdec – Legality -Should the importer be asked to pay the duty corresponding tothe HS Code determined by CustomsP Could the Customs refuse toaccept the CUSDEC?.
The petitioner who is engaged in the importation of all kinds of usedre-conditioned motor vehicles had submitted the CUSDEC to thecustoms for the payment of custom duty. The respondent refused toaccept same and requested the petitioner to classify the vehicle un-der HS Code 8703. The petitioner contends that the declaration in theCUSDEC is in order and the refusal to accept the CUSDEC and theother important documents for processing is arbitrary and unrea-sonable and sought a writ of mandamus to compel the respondent toaccept CUSDEC containing the classified HS Code 87.23 21.07.
Held
Under Section 47 a person entering any goods inwards whetherit is liable for duty or not has a statutory duty to deliver to theCustoms a bill of entry of such goods in the prescribed form(CUSDEC) with the necessary particulars required by theCustoms in the said form. The particulars furnished in the bill of entry(CUSDEC) should be supported by documents. The particularsrequired to be furnished in the CUSDEC is not confined to thedescription of goods and the particulars that are contemplated andrequired to be furnished under Section 47, but also includes manyother particulars some not directly related to their goods. TheDirector General is empowered to call for all additional particulars.
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The requirement of Harmonized Commodity Description andCoding System (HS Code) in the CUSDEC is to classify productsfor the purpose of determining duties under Section 10, but is notcontemplated in Section 47.
The goods that are declared and described as required underSection 47 could be classified under different commodity HS Code.The HS Code is a classification of commodities into a nomenclaturegiven under Sch. A of Section 10 for the purpose of determining theduty rate.
Per Sriskandarajah, J.
“entering a HS Code in the CUSDEC is not a simple expression ofan existing fact such as the physical description and characteris*tics of goods but it is an expression of opinion of the importer underwhich category his good could be classified based on the interpre-tative principles laid down in guide to the Harmonized System ofTariff Nomenclature, Tariff Guide and the explanatory Notes”.
It is mandatory that the declarant must have a firm believe thatwhat he has declared to the best of his knowledge is correct. Whena declarant classified his goods into one H. S. Code with the use ofthe interpretative principles, which he believes correct the DirectorGeneral or for that matter any other person cannot force thedeclarant to enter a different HS Code in the CUSDEC which theDirector General or any other person believes correct.
If the Director General disagrees with the HS Code and the dutycalculated and entered in the CUSDEC by the declarant he couldmake a determination giving the correct classification of the goodswith the reference of the HS Code and the duty payable by theimporter and could demand and levy such duty on the article atthe rate or rates so specified.
The Director General of Customs cannot direct the importer toaccept the classification what he consider is correct without givinga hearing and without considering the declarant documentsthat made the declarant to form an opinion that goods fall into aparticular HS Code, even if a determination is made after giving ahearing that the HS Code is different from the HS Code given in theCUSDEC the declarant cannot be asked to correct the CUSDECto include the HS Code as determined by the Director General of
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Customs, asked to pay the duty corresponding to the HS Codedetermined by the director General.
Where officials have a public duty to perform and have refusedto perform, mandamus will lie to secure the performance of thepublic duty in the performance of which the appellant hassufficient legal interest.
APPLICATION for a writ of mandamus.
Cases referred to:-
Tokyo Cement Company (Lanka) Ltd. Vs. Director General ofCustoms and others – 2005 – (BLR) 24 at 26
Mulaffer and another vs. M. B. Dissanayake -1981 – 2 Sri LR 483
Wijeyesekera and Co. Ltd vs. The Principal Collector of Customs -(1951) 53 NLR 329 at 332
Ratnayake and others vs. C. D. Perera and others -1982 – 2 Sri LR451 at 456
K.Deekiriwewa with L.M. Deekiriwewa and M. K. Hearth for petitioner.
Farzana Jameel SSC for Respondent.
Cur.adv.vult
September 20th 2007SRISKANDARAJAH, J.
The Petitioner a limited liability company incorporatedunder the Companies Act No 17 of 1982 is engaged in theimportation of all kinds of used reconditioned motor vehiclesmainly from Japan and Singapore. The Petitioner in October2004 had imported one unit of used refrigerated van typevehicle (freezer vehicle) bearing chassis No. EE 102 0093270.The Petitioner submitted that when the import documentswith duly filed Sri Lanka Customs – Goods Declaration Form(CUSDEC) was submitted to the customs, the 3rd Respondenthas refused to accept the same for the payment of customsduty. The Petitioner contended that the CUSDEC was duly
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filed with the correct classification of H.S. Code 87.04.21.07for a Freezer Van type vehicle but the customs officersrefused to accept these documents unless the Petitionerenters the HS Code 8703 in the said CUSDEC. The Respondentsalso admitted this position and submitted that after raising aquery on the H.S. Code, the import documents and CUSDECwere given back to the Petitioner’s clearing agent to classifythe vehicle under HS code hearing 8703 or to obtain a rulingfrom the relevant authorities. The Petitioner contended thatthe declaration in the CUSDEC is in order and the refusalto accept the CUSDEC and the other import documents forprocessing is arbitrary and unreasonable and has soughta writ of Mandamus to compel the Respondents to acceptthe CUSDEC containing the classification of H.S. Code87.04.21.07.
Under Section 47 of the Customs Ordinance, a personentering any goods inwards, whether it is liable for duty ornot has a statuary duty to deliver to the Director General ofCustoms a bill of entry of such goods on the specified form(CUSDEC) with the necessary particulars required by theDirector General of Customs in the said form. The Particularsfurnished in the bill of entry (CUSDEC) shall be supportedby documents. This section imposes a fine for the failure todeliver such bill of entry and the supporting documents.
It is necessary at this stage to consider the particularsthat are required to be furnished in the CUSDEC in relationto the relevant provisions of the Customs Ordinance. Section47 of the Customs ordinance provides:
47. The person entering any goods inwards, whether forpayment of duty or to be warehoused, or for payment ofduty upon the taking out of the warehouse, or whether
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such goods be free of duty, shall deliver to the Collectora bill of entry of such goods, on a form of such sizeand colour as may be specified in that behalf by theCollector by Notification published in the Gazette, and befairly written in words at length, expressing the name ofthe ship, and of the master of the ship in which thegoods were imported, and of the place from whichthey were brought, and the description and situationof the warehouse, if they are to be warehoused, andthe name of the person in whose name the goods areto be entered, and the quantity, value and descriptionof the goods, and the number, dimensions, anddenominationordescriptionoftherespectivepackagescontaining the goods, and such other particularsas the Collector by that or a subsequent Notifica-tion may require him to furnish, and in the margin ofsuch bill shall delineate the respective marks and num-bers of such packages. The particulars furnished in the billof entry shall be supported by such documents contain-ing such particulars as the Collector may, by Notificationpublished in the Gazette, require if such person fails todeliver a bill of entry prepared, and supported bysuch documents, as aforesaid, he shall be liable toa penalty not exceeding one thousand rupees. Suchperson shall pay any duties and dues which may be pay-able upon the goods mentioned in such entry; and suchperson shall also deliver at the same time two or moreduplicates of such bill, in which bill all sums and num-bers shall be expressed in figures, and the particularsto be contained in such bill shall be legibly written andarranged in such form and manner, and the number of suchduplicates shall be such, as the collector shall require, andsuch bill of entry when signed by the Collector, or person
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authorized by him, and transmitted to the proper officer,shall be the warrant to him for the examination anddelivery of such goods; but if such goods shall not agreewith the particulars in the bill of entry the same shall beforfeited, and such forfeiture shall include all other goodswhich shall be entered or packed with them as well as thepackages in which they are contained (emphasis added)
Section 10(1) of the Custom Ordinance provides:
10(1) The several duties of customs, as the same arerespectively inserted, described, and set forth in figures inthe table of duties (Schedule A)* shall be levied and paidupon all goods, wares, and merchandise imported into orexported from Sri Lanka : Provided that –
Sarath N. Silva CJ observed in Tokyo Cement Company(Lanka) Ltd v. Director General of Customs and four othersat 26:
“In November 1993 the Department of Customscomputerized the cargo entry system. The notificationreferred to earlier was made for the purpose of the AutomatedCustoms Cargo Entry System of Sri Lanka, referred to asACCESS. In this process the CUSDEC form was introducedto serve the purpose of a bill entry, in terms of Section 47of the Customs Ordinance. ACCESS Guide was intended tofacilitate this process”, and held “that provisions of a guidecannot supersede the provisions of law.”
It is important to note that the particulars required tobe furnished in the CUSDEC which is introduced to servethe purpose of a bill entry and to facilitate AutomatedCustoms Cargo Entry System of Sri Lanka (ACCESS), is notconfined to the description of goods and the particulars that are
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contemplated and required to be furnished under Section47 but also includes many other particulars some are notdirectly related to the goods. But the Director General underthe said section is empowered to call for these additionalparticulars.
When one examines the CUSDEC; CUSDEC I contains54 cages and DUSDEC II contains 53 cages. These cages arearranged under five main heads horizontally divided. Namely:(1) Header Information, (2) Packages and description of goods,
Additional information/Documents, (4) Calculation ofTaxes and (5) Office use
under Header Information the following information isrequested; the name of the ship, and of the flag of ship inwhich the goods were imported, voyage number and thename of the person in whose name the goods are to beentered, exporter, consignee, declarant/representative,person responsible for financial settlement, under thishead there are 28 cages that has to be filed. Some of thecages requires code number of different categories andone cage for exchange rates etc.
under Packages and description of goods there are 13cages: quantity, value and description of the goods, andthe number, dimensions, and denomination or descriptionof the respective packages containing the goods,net mass, gross mass, H.S. Code, city of origin code,procedure code, previous documents, unit of measurementand quantity, item price etc.
The requirement of Harmonized Commodity Descriptionand Coding System (H.S. Code) in the CUSDEC is to classifyproducts for the purpose of determining duties under section10 but it is not contemplated in Section 47. The Revenue
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Protection Order which is published time to time in theGovernment Gazette contains the “Table of Duties" (ScheduleA) to Section 10 of the Customs Ordinance, it provides asfollows:
Schedule A being the “Table of Duties” is comprisedof a nomenclature of commodities, or groups ofcommodities, and rates of duties prescribed for eachcommodity or group of commodities classified therein.
(i) The said nomenclature is in accordance with the“Harmonized Commodity Description and CodingSystem” (hereinafter referred to as the HarmonizedSystem or H.S), comprising the heading andsubheadings and their related numerical codes, theSection, Chapter and Subheading Notes and theGeneral Rules for the interpretation of the Harmo-nized System, set out in the Annex to the Interna-tional Convention on the Harmonized CommodityDescription and Coding System.
For the determination of the duty rate or ratesapplicable for any goods, wares or merchandise, hereinafter referred to as commodities, the same shall beclassified in the said nomenclature.
The goods that are declared and described as requiredunder Section 47 could be classified under differentcommodity H. S. Code. The H. S. Code is a classification of
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commodities into a nomenclature given under Schedule Aof Section 10 of the Customs Ordinance for the purpose ofdetermining the duty rate. The fact that the CUSDEC hasa column to enter the H. S. code does not mean that the H.
S.Code is designated for the declaration of goods requiredunder Section 47.
Entering a H. S. Code in the CUSDEC is not a simpleexpression of an existing fact such as the physical descrip-tion and characteristics of goods but it is an expression ofopinion of the importer, under which category his goods couldbe classified based on the interpretative principles whichwere laid down in ‘Guide to the Harmonized System of TariffNomenclature, the Tariff Guide and the explanatory notes.This is buttressed by the submissions of the learned SeniorState Counsel that the Customs Department itself has a unitin which the importer or any public could get a H.S. Coderuling for the purpose of entering the same in the CUSDEC.In cases where the customs officers are in doubt the rulingwas obtained from a Nomenclature Committee.
In the case of Mulaffer and Another v. M. B. DissanayakeP1The Bills of Entry were framed by the petitioners on the ba-sis that the goods imported by them came under HeadingNo. 64.05 and the duty payable was set out as Rs. 34,057/59.The Customs authorities however took a different view. Aletter dated 13th June, 1979 (annexure MX2”) signed on behalfof the respondent was sent to the petitioner informing himthat these goods are correctly classifiable under B.T.N. No.64.01 dutiable at Rs. 50/- per pair. The total duty payable onthis consignment is Rs. 240,000/-. According to the two billsof entry only a sum of Rs. 34,057/59 has been entered by youin column 10 of the said entries.
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You are hereby requested to take necessary action to paythe correct duty of Rs. 240,000/-, in respect of this consign-ment.
The 1st petitioner thereupon interviewed the respondentwith his Counsel and thereafter wrote the letter “X3” of28.6.79 requesting the respondent to refer the matter to theAttorney-General for his opinion, since a similar matter waspending before him, for his decision.
As no reply was received the Petitioner sought a writof mandamus and the court considered the relevant clas-sifications and held that the Petitioners (importers) hadcorrectly categorised the imported consignment under theheading dealing with parts of footwear and given the correctparticulars in the bill of entry.
The above facts and the decision reveal that theclassification of goods under H. S. Code is not an expressionof existing fact but an expression of opinion. It is importantto note that the declarant of the CUSDEC signs the CUSDECdeclaring that “I do hereby affirm that the particulars andthe values entered by me true and correct.” In view of thisdeclaration that the particulars given in the CUSDEC whetherit relates to the particulars of the goods or otherwise, it ismandatory that the declarant must have a firm believe thatwhat he has declared to the best of his knowledge is correct.When a declarant classified his goods (which goods werealready physically described in a different Column 2, Cage31) into one H. S. Code with the use of the interpretativeprinciples which were laid down in ‘Guide to the Harmo-nized System of Tariff Nomenclature, the tariff Guide and theexplanatory notes’ which he believes correct, the DirectorGeneral or for that matter any other person cannot force
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the declarant to enter a different H. S. Code in the CUSDECwhich the Director General or any other person believescorrect. Merely because the Director General of Customsdoes not agree with the classification of goods and the dutycalculation of the person submitting the CUSDEC he can-not refuse to accept the bill of entry or for that matter hecannot compel the person submitting the CUSDEC to cor-rect the CUSDEC to fall in line with the classification of theDirector General of Customs as condition precedent to acceptthe CUSDEC (bill of entry).
In Wijeyesekera and Co. Ltd. v. The Principal Collector ofCustomsf3) at 332 Gratiaen J. observed:
“Admittedly, the respondent is charged with a public dutyunder section 59 of the Customs Ordinance to accept inproper form a bill of entry tendered by an exporter andcontaining true particulars as to the quantity, value, etc.,of the intended consignment. It necessarily follows that toinsist upon the bill of entry being incorrectly filled up insuch a manner that, upon the face of the document, theexporter would be liable to pay a heavier export duty thanwas justly due, would amount to a refusal to perform apublic duty. In that event, a mandamus would clearlylie.”
Section 47 provides that such person (the importer) shallpay any duties and dues which may be payable upon thegoods mentioned in such entry. This provision clearlyshows that the self declaration of the classification of goods(H. S. Code) and the corresponding duty calculated andentered in the CUSDEC by the importer has no significanceas he has to pay duties and dues which may be payableupon the goods mentioned in such entry. The duties and
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dues that are payable on the goods mentioned in thatentry has to be determined by the Director General ofCustoms according to the Schedule published under Section10. If the Director General of Customs disagrees with the HSCode and the duty calculated and entered in the CUSDEC by thedeclarant he could make a determination (on the descriptionof the goods and/or by examining the goods) giving thecorrect classification of the goods with the reference of HSCode and the duty payable by the importer (declarant) andcould demand and levy such duty on the article at the rate orrates so specified.
The Director General of Customs cannot direct theimporter to accept the classification what he consider iscorrect without giving a hearing and without considering thedocuments of the declarant that made the declarant to forman opinion that the goods fall into a particular classification(HS Code). Even if a determination is made by the DirectorGeneral of Customs after giving a hearing that the HSCode is different from the HS Code given in the CUSDE thedeclarant cannot be asked to correct the CUSDEC to includethe HS Code as determined by the Director General of Customs(for the reasons stated above) but declarant/importer mayby an order of the Director General of Customs asked to paythe duty corresponding to the HS Code determined by theDirector General of Customs.
This Court presided by (Sripavan J) made the followinginterim order on 28.10.2005;
“Court issued an interim relief directing the 1st to 7lhRespondent to accept the duty difference between thecategorizations claimed by the Petitioner and the catego-
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rizations claimed by the customs authorities by way of an
irrevocable bank guarantee acceptable to the customs.
Upon furnishing the required bank guarantee on thedifference in the duty, the 1st to 7th Respondents are directedto release the vehicle.”
The customs authorities acted in total disregard ofthis order, submitted in their objection at paragraph 17 asfollows;
“That. your lordships court has made an order on28.10.2005, ordering the release of the vehicle and directingthe Petitioner to pay the difference between the amountclaimed by the Petitioner as correct, and that claimed by theCustoms Department. However, the Petitioner did not makethe relevant declaration in order to clear the said vehicle.Without a CUSDEC being completed imported goods cannotbe cleared.”
The position of the Respondents is that the Petitionershould correct the H. S. Code in the CUSDEC to make theCUSDEC complete for the Respondent to accept the same. Asdiscussed above the Petitioner cannot be asked to sign andsubmit a CUSDEC declaring that “I do hereby affirm that theparticulars and the values entered by me true and correct”which in his opinion contains a wrong H. S. Code.
In this instant case the Director General of Customs hasrefused to accept the bill of entry (CUSDEC) for the reasonthat he is not agreeing with the classification of goods madeby the declarant. It is a right and a legal requirement for theimporter to submit a bill of entry (CUSDEC) as provided bySection 47 and it is a legal duty on the part of the DirectorGeneral of Customs to accept a bill of entry (CUSDEC) that
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is in conformity with section 47. The classification of goodsunder Schedule A of Section 10 of the Customs Ordinanceand the corresponding duty chargeable to the said goods arematters for the Director General of Customs as discussedabove.
In Ratnayake and others v. C. D. Perera and othersat 456 Sharvananda, J. with Victor Perera, J. and Colin -Thome, J. agreeing held;
“The general rule of Mandaus is that its function is tocompel a public authority to do its duty. The essence ofMandamus is that it is a command issued by the superiorCourt for the performance of public legal duty. Whereofficials have a public duty to perform and have refusedto perform, Mandamus will lie to secure the performanceof the public duty, in the performance of which theapplicant has sufficient legal interest.”
For the aforesaid reasons this Court issues a mandamusdirecting the 1st Respondent to accept the CUSDEC submittedby the Petitioner, copies of which are marked and filed in thisapplication as X3(ii) and X3(iii) and if the 1st Respondent isnot agreeable to the classification of the goods (H.S. Code)and the corresponding duty declared by the Petitioners the 1stRespondent after giving a hearing to the Petitioner determinethe correct classification of the goods and the correspond-ing duty payable by the Petitioner and could make an orderto that effect. The application for the writ of mandamus isallowed with cost of Rs. 30,000/-payable by the 1st Respondentto the Petitioner.
application allowed.