Court directs Customs to release areca nuts imported under TIEP

 By S.S. Selvanayagam

The Supreme Court affirmed the direction of the Court of Appeal to release a cargo of areca nuts imported by 4S International Ltd. under the scheme of temporary importation for export processing.

 The bench, comprising Chief Justice K. Sripavan and Justices Eva Wanasundera and Priyantha Jayawardena, made the order to release the said cargo with the verification of the authenticity and validity of the permit from the Director General of Agriculture subject to all other levies and taxes imposed by Customs.

The petitioner company filed the writ application seeking the Court of Appeal to quash the decisions of the Customs relating to an inquiry and the demand of a payment of $ 5,000 per container as well as the decision to prevent the release of certain consignments of areca nuts. It cited the Director General of Customs and five others as respondents.

 The company entered into an agreement with the Customs for the importation and exportation of areca nuts under a TIEP (Temporary Importation for Export Processing) scheme which was intended to be re-exported without the payment of import duty, and where import duty has been paid or secured in respect of such goods permitting the refund or rebate of the import duty paid or secured.

 The petitioner company furnished a bond of Rs. 10 million valid with regard to VAT that is not paid at the time of import since the imported goods were to be exported without being sold locally.

 The petitioner imported 48 containers of areca nuts under the said scheme. Thereafter it was informed that the clearance of consignments would be permitted upon the payment of US $ 5,000 per container.

 The petitioner filed the writ application before the Court of Appeal alleging that it was arbitrary, illegal and ultra vires.

The company argued that due to circumstances beyond its control, the vessel’s arrival was delayed and in such a situation what was important to consider was whether the importer had placed the order and the goods were placed on board when the permit was valid.

The Court of Appeal held that it could not agree with the argument of the Customs that when a permit lapses, it ceases to have any legal effect and force.  The Court of Appeal granted interim relief to the petitioner restraining the Customs from detaining the said 23 consignments of areca nuts imported by the petitioner. The Customs filed special leave to appeal against the decision of the Court of Appeal.

 Additional Solicitor General Ranjay Rajaratnam appeared for the Customs. Manohara de Silva PC instructed by Gowry Shangary Thavarasha appeared for the company.