Baravi Boatcruisers Ltd v Comptroller of Customs, Revenue & Customs Authority [2014] FJHC 165; Civil Action 112.2012 (18 March 2014)

In the High Court of Fiji at Suva
Civil Jurisdiction
Civil Action no. 112/2012

Between:

Baravi Boatcruisers Limited
1st Plaintiff

And:

Timothy Thrift Page
2nd Plaintiff

And:

The Comptroller of Customs, Revenue & Customs Authority
Defendant

Appearances: Mr Devanesh Sharma for the plaintiffs
Ms T. Rayawa for the defendant
Date of hearing: 25th March,2013

Judgment

1. By inter-partes notice of motion the plaintiffs move that the defendant:
   
   • (a) " immediately releases the vessel Sea Petal to the 1st Plaintiff.
   • (b) enlarge the time period allowed to pay the fiscal duty and VAT on the vessel..".
     
2. The defendant, FIRCA declines to restore the vessel(boat).It is alleged that the boat was detained, as the second plaintiff contravened the conditions under which it was cleared, free of duty. As to the second relief, the defendant states the Customs Tariff Act,1986, does not allow the enlargement of time to pay duty
   
3. Affidavit in support

3.1. In an affidavit in support of the motion, Andreas Supper, an officer of the first plaintiff states that the second plaintiff had imported a "Boston Whaler Conquest 295" vessel(given the epithet "Sea Petal"),to use as a pleasure craft. The second plaintiff cleared the boat.

3.2. Subsequently, when the boat was "sabotaged" in Maumi Bay, the second plaintiff decided to sell it to the first plaintiff, to undertake game fishing and island trips for tourists. The FTIB granted approval to the first plaintiff for the required use.

3.3. The affidavit proceeds to state that the defendant, by letter of 13th January, 2012, approved the boat being used by the first plaintiff for game fishing and island trips for tourists. On the evening of the same day, officers of the defendant conducted a raid on the property of the second plaintiff and seized the boat. It is alleged that the seizure is illegal and mala fide.

3.4. Finally, the deponent states that the plaintiffs are willing to pay the duty set out in the defendant's letter of 13th January, 2012.

4. Affidavit in reply

Senior Customs Officer, FIRCA Mr Winston Rounds, in his affidavit in reply states that:

1. The boat was cleared by the second plaintiff under concession code 228, without payment of fiscal duty or VAT, subject to the conditions contained in schedule 2 of the Customs Tariff Act. The conditions provided that the boat could only be used for pleasure cruising for a period of 18 months, and not for commercial purposes such as game fishing or island cruises for tourists. The first plaintiff was not involved in that process.
   
2. Investigations conducted by the defendant established that the second plaintiff had used the boat for commercial gain. It was utilised for game fishing and transporting tourists. Accordingly, it was liable for detention and forfeiture under section 129 of the Customs Act and section 17(2) of the Tariff Act. A search warrant was executed on the premises of the second plaintiff and a detention notice was issued on the boat.
   
3. The first plaintiff lodged an application for registration of the boat with FIMSA on 14th October, 2011, for game fishing and island trips, two months before the application for switch of code 228 to 115, although no duty was paid nor had FIRCA cleared the boat with FIMSA.
   
4. The defendant, by its letter of 13th January, 2012, indicated its approval for the switch of concession code 228 to 115 and provided general information on duty rates. The plaintiff's agent was required to lodge a customs entry seeking clearance under code 115 and the precise duty to be paid.
   

5. In his affidavit in reply, Andreas Supper states:
   
   1. The defendant should have dealt with the allegation before it granted its approval on 13th January, 2012, to the transfer of the boat from the second to the first plaintiff and for the change of use.
      
   2. The boat was borrowed by Maui Palms on a one off trip to assist tourists on Vatulele Island, who wanted to go on a pleasure cruise and do fishing. Maui Palms boat was broken down at that time.
      
   100. The plaintiffs intended to obtain approval from the defendant, pay the duty and then go back to FIMSA to get the boat surveyed and registered, but were prevented by the defendant's actions of 13th January, 2012.
        
6. The determination

6.1. The plaintiffs challenge the detention of the boat by the defendant. The facts, so far as it is necessary to state are as follows.

6.2. By letter dated 30th June, 2011,the second plaintiff's agent sought approval from the defendant to have the boat cleared under concession code 228. The letter reads:

Re: Approval for Duty Concession

We wish to apply for approval to have a vessel(Boston Whaler Conquest 295 Boat) cleared under concession Code 228.

The vessel will be used by our client, Mr Timothy Page, for his pleasure in cruising the waters of the Fiji Islands during his stay in Fiji. He intends to use the boat in Fiji for a period of about eighteen (18) months before shipping it to either Europe or to New Zealand...(underlining mine)

6.3. The stated use fell within the "Conditions of temporary entry" envisaged in code 228 of the Customs Tariff Act,1986,where goods may be imported into Fiji, without payment of fiscal duty. This, as so far as relevant, reads:

Visiting yachts enter and are kept temporarily in Fiji without payment of customs dues provided:

1. The yacht is on bona fide cruise or participating in a yacht race.
   
2. The yacht is solely for personal use of the owner or master.
   

100. The yacht shall remain in Fiji for a period not exceeding 18 months from its arrival provided the owner or master is still cruising.
     

The boat was accordingly, given relief from duty.

6.4. On the evening of 13th January, 2012, it was detained by the defendant on the ground that it was used by the second plaintiff for commercial gain, flouting the conditions under which duty concession was granted. The investigations established that the boat was hired for game fishing at Vatulele, as evidenced in the invoice of 22 December,2011, issued by Maui Palms and the cheque drawn in favour of the second plaintiff for $2100.

6.5. In my judgment, the hire of the boat is the precise antithesis of a cruise by the owner, as contemplated by concession code 228.

6.6. I now turn to the provisions which lays down the consequences of breach of code 228.

6.6.1. Section 17(1)(b) of the Customs Tariff Act provides that if imported goods cleared under a concession, "are disposed of or used for any purpose other than that for which such freedom from duty..was granted (within five years from the date of importation, then such goods will be)liable to duty at the rate and upon the value subsisting at the date of such disposal or of the goods being put to such other use, as determined by the Comptroller".(emphasis added)

6.6.2. Section 17(4) declares the breach to be an offence, liable to a fine and forfeiture.

6.6.3. Section 129 of the Customs Act provides that such goods may be seized or detained.

6.7. The plaintiffs contended that there was no commercial element. The incident was an "one off trip to assist tourists..who would(otherwise)have had a bad impression of Fiji by (a) last minute cancellation". That is not an acceptable defence.

6.8. In my judgment, the detention of the boat is justifiable. The facts,as admitted, support a detention. It follows that it cannot be released, until the second plaintiff pays the full duty and the penalty.

6.9. The solicitors for the plaintiffs have issued a notice dated 10 February, 2012, under section 157 of the Customs Act, 1986, claiming the boat. I find that the defendant had issued a detention notice under section 129(2)(b) and (d) of the Act.

6.10. Mr Sharma, counsel for the plaintiffs strenuously argued that although the Act under review does not specifically lay down as to how goods held under detention may be recovered, the word "detain" in section 129 cannot be read in isolation. He submitted that section 157 is applicable to goods that are "seize(d) or detain(ed)", in terms of section 129. I do not accede to this contention. The Act draws a distinction between the two concepts of seizure and detention. When goods are detained, the legal title remains with the owner. The necessity to make a claim does not arise. The Comptroller of Customs has custody of the goods pending the finalization of any matter, in the present case, the duty payable.

6.11. Before I conclude my judgment, I think it necessary to dispel the argument that lies at the forefront of the case for the plaintiffs.

6.12. The case for the plaintiffs was fought on the enticing happenstance that officers of the defendant seized the boat on the evening of the same day the defendant had approved the transfer of the boat from the second to the first plaintiff, for game fishing and island trips for tourists and set out the duty payable thereto.

6.13. The prospective approval granted to the first plaintiff on 13th January, 2012, does not touch the critical issue that led to the detention of the boat, namely, the act of the second plaintiff in hiring the boat on 22 December,2011, for game fishing and island trips for tourists, in contravention of the conditions laid down in code 228 .

6.14. I would reproduce the defendant's letter of 13th January, 2012. This reads:

Reference is made to your letter dated 5th January 2012 regarding the above subject matter.

We have considered your request and note that Baravi Boat Cruises Limited undertake game fishing and island trips for tourist only. In addition, we note that local boat manufactures cannot manufacture similar type of boat.

After considering your request, we wish to advise you that this boat will qualify for duty concession under Concession Code 115 to Part 2 to Schedule 2 of the

Customs Tariff Act a concessionary duty rate of 5% Fiscal, Free Import Excise and 15% VAT payable...(emphasis added)

6.15. Finally, on the second relief sought by the plaintiffs, in my view, the relevant statute does not contemplate the enlargement of time to pay duty.

7. Orders
   
   • (a) The inter partes summons is dismissed.
     
   • (b) The plaintiffs shall pay the defendant costs summarily assessed in a sum of $ 2500 within 21 days of this judgment.
     

18th March, 2014

A.L.B.Brito-Mutunayagam
Judge