A food distribution company has won its lawsuit against the Comptroller of the Customs and Excise Division over a move to seek to back duties on shipments of frozen potato wedges imported by it over the past decade.
Delivering judgment on Monday, High Court Judge Carol Gobin upheld Westco Foods Unlimited’s judicial review lawsuit over the decision.
The lawsuit before Gobin related to shipments imported by the company between 2011 and 2017.
In 2018, the division’s comptroller wrote to the company claiming that a post-clearance audit had revealed that it was incorrectly allowed to pay the five per cent duty reserved for frozen French fries for its frozen potato wedges shipments when it should have paid 20 per cent.
The company was asked to pay the difference in taxes retroactively.
In deciding the case, Gobin ruled that there was no legal justification for the audit.
“The actions of the defendant in conducting a post-clearance audit in the manner it did and years after goods were cleared, verified, and delivered, only served to defeat the salutary objective above of facilitating trade, reducing time and its claim to be entitled to do this at all injects a level of uncertainty for importers which is highly prejudicial, unfair, and which offends against commercial sense,” Gobin said.
Gobin also ruled that the division only had the authority to claim the back duty in limited circumstances including where importers are alleged to have committed criminal offences under the Customs Act.
“The defendant has no roving jurisdiction to simply embark on a reclassification exercise, and to demand further duty where an importer has complied with all the guidelines and duty has been assessed and paid and delivery of goods has been allowed,” Gobin said.
“The Act makes sensible exceptions for the discovery of criminal activity, but otherwise, in circumstances where it is reasonable to allow post clearance audits for example in circumstances of human or technological errors, given the clearly stated policies of the Division and the need for certainty, a period of six months from date of delivery and no more should be allowed,” she added.
Gobin ruled that the company had a right to be heard before the decision was taken, which was breached by the division by only allowing it to provide literature to support its contention that “wedges” were “fries” after the decision was communicated.
“In the circumstances, I have concluded that not only was there a denial of the right to be heard but there was a predetermination of the issue in any case which rendered even the invitation to submit literature a sham,” Gobin said, as she described the decision as procedurally unfair.
In her ruling, Gobin noted that there were inconsistencies in the import duty policy for frozen French fries, which was based on the manufacturer describing wedges as a “speciality product”.
“So important a decision on classification for exemption should not rely on the manufacturer’s marketing choices. If anything I should have thought that more weight would be attached to the certification from health officials from the port of export as to how the product would be classified,” she said.
In the judgment, Gobin quashed the decision and ordered the comptroller and the Division’s Tariff Classification Committee to reconsider the frozen French fries duty policy.
The division was ordered to pay the company’s legal costs for the lawsuit.
The company was represented by Jagdeo Singh, Leon Kalicharan, Savitri Samaroo and Karina Singh.
Karlene Seenath, Maria Belmar, Nicol Yee Fung, Amrita Ramsook and Kezia Redhead represented the Customs Comptroller.