PNG Nambawan Trophy Ltd v Sode [2004] PGLawRp 21; [2004] PNGLR 191 (7 October 2004)

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DAVID SODE – COMMISSIONER GENERAL OF INTERNAL REVENUE COMMISSION; AND THE STATE

STATUTES – Interpretation – Customs (Prohibited Imports Regulations Ch. No. 101) Schedule 2, Item 187 (as amended by Act No. 3 of 2003) – Gaming Machines – "Poker Machines" include parts of poker machines for which permission of Gaming Board required – No permission sought and obtained – Parts declared prohibited import and ordered to be destroyed.

The defendents, using its powers under the Customs Act, Ch. 101, seized certain poker machine parts from the plaintiff, on the ground that these parts were prohibited under the said Act.

The plaintiff sought declaratory orders inter alia, that the poker machine parts seized by the defendents were not prohibited parts under the said Act.

The poker machine parts seized and confiscated by the defendents are prohibited parts under the said the Customs Act, ch 101, as no prior permit or licence was obtained for their importation.

Injia dcj. The plaintiff seeks various declaratory orders that certain "gaming machine" parts seized by the defendants on 8 October 2002 were wrongfully seized and that the said parts be returned. The plaintiff also claims damages. The defendants deny the claim and say the goods were lawfully seized because they were prohibited imports.

The plaintiff's evidence consists of the affidavit of Mr Leong Yan Cheng on which he was cross-examined by the defendants (Ex. "A"), the oral evidence of Mrs Rachel Rosario, and two (2) sample boxes of twenty-three (23) boxes containing "gaming machine" parts – Box – Ex "B", Box 2 – Ex "C.1"– "C.4", Invoice No. 1093 (Ex "D") and Customs Clearance Document – Ex"E". Mr Cheng is the Maintenance Manager with the plaintiff and Mrs Rosario is the Plaintiff's manager.

The evidence for the defendant consists of the oral evidence of of Mr Eddie Simoi. Mr Simoi is the Chief Gaming Inspector with the National Gaming Board, upon whose instructions or information the goods were seized by the defendants.

There is no dispute that the twenty-three (23) boxes of spare parts for some form of entertainment machines were imported by the plaintiff from Malaysia. The boxes were assembled and packaged in Malaysia by the plaintiff's parent company by the name of Gui Family Company and shipped to PNG, upon the plaintiff's request. They were paid for in advance by the plaintiff. When the goods arrived at the wharf in Port Moresby, the first defendant's officers seized the goods, as prohibited goods under s.146(1)(a) of the Customs Act (Ch. No. 101). This section says "all prohibited imports" shall be forfeited to the State.

The term "prohibited import" is defined in Customs (Prohibited Imports) Regulation (Ch. No. 101). Item 187A of Schedule 2 of this Regulation, as amended by Amendment No. 2 of 2003" states:

"Item No.	Description of goods	Nature of prohibition, or conditions, etc, or name of person to give permission.
187	Poker Machines	Permission of the National Gaming Control Board
187A	All gaming machines parts and accessories thereof other than poker machines, such as horse race machines, roulette, tables and wheel sets or other similar games of chance or their parts or accessories."	Prohibited absolutely."

The amendments came into force on 1 January 2003. The imports in this case were seized in October 2002. Schedule 2, item No. 187 as it stood at the time of seizure stated:

"Item No.	Description of goods	Nature of prohibition, or conditions, etc, or name of person to give permission.
187	Poker machines, punch boards and all similar instrument of gaming.	Permission of the National Gaming Board."

I accept submissions by both parties that for purposes of determining the legality of the seizure in this case, the law as it stood prior to the 2003 amendment is applicable.

It is not disputed that in 2002, no permission was obtained from the Gaming Board for the importation of these parts. The reason, Mr Steven submits, is because these parts, as the evidence shows, were not covered under Item 187, therefore it did not require permission from the National Gaming board. Item 187 covered poker machines, punch boards or all other similar instruments of gaming but not their parts or accessories.

In my view however, Item No. 187 in 2002, must be read broadly. Although no mention is made of parts of gaming machines or instruments such as poker machines, they would be implied as of necessity, because no gaming machine would become serviceable without parts. It would not make sense that whilst Gaming Machines were allowed to be imported with permission from the National Gaming Board, their parts or accessories would not also be expressly permitted to be imported by the National Gaming Board.

It would also not make sense that once a licensed gaming machine broke down, it would be sent abroad to be fixed by the overseas supplier or manufacturers, because spare parts are not available in this country. The licensing of import of spare parts for Gaming Machines would have been conferred on the Gaming Control Board, by necessary implication.

In 2003, Parliament thought there was a gap or loophole in Item 187 which had to be filled by amendment, to address the import of gaming machines parts. Item 187A, as it reads, says all gaming machines parts and accessories thereof, "other than poker machines", are absolutely prohibited. Under the amendment, all poker machine parts are not prohibited absolutely, because poker machines are importable items, and they will still require the National Gaming Board's permission or license to import them, even though Item No. 187 and 187A do not expressly say so. This interpretation is consistent with the interpretation I have given to the unamended Item No. 187, insofar as "Poker Machines" are concerned.

The uncontested evidence in this case is that no permission was sought by the plaintiff from the National Gaming Board to import these machine parts.

In the present case, the question is whether the parts imported by the plaintiff and seized by the defendant were "gaming machine" parts.

There is no issue taken on the interpretation of "gaming machines." The definition of "gaming machines" in s.2 of the Gaming Machines Act 1993 states:

(i) for the playing of a game of chance or a game that is partly a game of chance and partly a game requiring skills; and

(ii) for paying out money or tokens or for registering a right to an amount of money or monies worth to be paid; or

A part or accessories of a gaming machine relates to gaming machine as defined above.

The question is whether the parts imported by the plaintiff in this case, were in 2002, "gaming machine parts" for Poker machines, punch boards and all other similar instruments of gaming. This is a question of fact. On the evidence before me, I am presented with two different versions, but I must find the evidence for the defendants has lot more weight than the plaintiff's evidence. Further, the plaintiff's evidence in some material respects supports the defendant's evidence. First Invoice No. 1093 (Ex. "D") and the Consignment note (Ex. "E") both say the 23 boxes contain "gaming machines". The boxes must contain "gaming machines" or parts and accessories thereof. This is conclusive evidence. No amount of explanation from the plaintiff can change the label "Game Machine" to something else.

Secondly, as to whether the contents are gaming machines parts, an independent expert opinion is required. I would prefer the evidence of Mr. Simoi, to Mr Cheng's. Mr Simoi's evidence is that all these parts can be used in poke machines as well as other amusement machines. One of this parts, Fan Motor (Ex. C.4) is a mechanical hoper which stores, counts and pays out coins and it is mainly found in poker or gaming machines. This is confirmed by Mr Cheng as well. Mr Cheng also confirmed that all these parts can be used to assemble a gaming machine. I do not accept Mr Cheng's evidence and also that of Mrs Rosanio that these parts were imported for use in entertainment or amusement machines and TV machines for their staff to use in the living quarters.

I accept Mrs Korus' submissions that these parts or accessories were gaming machines parts which would be used in a poker machine, which is a prohibited import. As no permission was sought from the National Gaming Board, they remained prohibited items under Item No. 187.

There is also then no question of these gaming machine parts being prohibited imports under the 2003 amended Item No. 187.

I reject Mr Steven's submissions that I should order some parts to be returned to the plaintiff in the exercise of my discretion under s.155(4) of the Constitution. All the parts stand seized and forfeited to the State.

Having reached this conclusion, it is not necessary to deal with Mrs Korus' submissions on seizure bond or fake/untrue/misleading information in Invoice No. 1093 in terms of the amount stated in the invoice, etc.

For these reasons, I find that the defendants lawfully seized the gaming machine parts. I order that they be destroyed by the defendants. I dismiss the plaintiff's action with costs to the defendant.

Lawyer for the plaintiff: Stevens Lawyers.
Lawyer for the first defendant: Policy & Legal Affairs Division, IRC.

Papua New Guinea Law Reports

PNG Nambawan Trophy Ltd v Sode [2004] PGLawRp 21; [2004] PNGLR 191 (7 October 2004)