Judgment summary
The Plaintiff, an importer and sole distributor of Royal De Lite Tomato Paste, imported 15 containers between 2nd March and 11th May 2018. On arrival it obtained a Customs Classification and Valuation Report (CCVR) and, considering the FOB values too high, petitioned the Commissioner General on 20th March 2018 for a downward review.
While the petition was pending, some containers were allocated and auctioned to third parties in August and November 2018, before the Commissioner General responded to the petition on 12th November 2018 accepting the Plaintiff's proposed FOB values. The Plaintiff claimed it lost four containers, plus associated handling and sea freight charges, valued at $57,883.4.
The Defendant denied liability, contending that the Plaintiff was obliged to pay all duties and taxes while its petition was under consideration, that the goods were not cleared within the statutory period, and that they were therefore lawfully seized, detained and auctioned.
The Court, applying the preponderance of probabilities standard under sections 10, 11 and 12 of the Evidence Act 1975 (NRCD 323), found in favour of the Plaintiff and awarded the sums claimed together with interest, damages and costs.
Background
The Plaintiff, Kenashmi Ghana Limited, is a limited liability company registered in Ghana, operating from Tema, engaged in the import and export of general goods and the sole distributor of Royal De Lite Tomato Paste in Ghana.
Between 2nd March and 11th May 2018, the Plaintiff imported 15 containers of the tomato paste on three Bills of Lading (GOSUXNG1231023, GOSUXNG1231222 and GOSUXNG1231013), with 5 containers on each. On arrival at Tema Harbour, the Plaintiff applied for a CCVR and found the FOB values on the CCVR higher than the FOB values declared on its Sale Contract and Sales Invoice.
On 20th March 2018, Andrew B. Okutu, General Manager of Santa Shipping, petitioned the Commissioner General on the Plaintiff's behalf for a downward review of the FOB values, attaching the Sale Contract, Swift and Customs Export Declaration.
While awaiting a response, the Plaintiff discovered that some of its tomato paste had reached the Ghanaian market without having been cleared, and that containers with tag numbers ZIMU1143664 and TRHU3374087 had been taken from the port. Santa Shipping wrote again on 14th August 2018 alerting the Commissioner General to this, copying the Sector Commander at Tema Port.
On 12th November 2018, Deputy Commissioner (Operations) Seth Dwira wrote to Santa Shipping confirming that the Commissioner General had accepted the FOB values proposed in the March 2018 petition and asked that duties and taxes be paid to clear the goods, which had by then been earmarked for auction.
By the time this letter was received, some containers, including TRHU-3374087, ZIMU-1143664, TRHU-1362678 and ZIMU-2887450, had already been allocated by auction slip and released to third parties (Atta Poku, Nana Agyeman, Issah Alhassan and Felix Dzikunu respectively) between August and December 2018. The Plaintiff also produced a Commercial and Industrial Bulletin of 5th October 2018 which listed seven containers, including two of those later auctioned, as advertised for auction on 3rd February 2018, before the goods had even arrived in Ghana.
In October 2019 the Plaintiff's lawyers wrote to the Ghana Revenue Authority demanding an enquiry and refund, but received no reply. The Plaintiff issued its Writ of Summons on 11th February 2020.
Core dispute
The dispute concerned whether the Plaintiff was entitled to a fair hearing within a reasonable time after petitioning the Defendant over the FOB values, and whether the delay in clearing the goods was occasioned by the Defendant or by the Plaintiff's own failure to pay duties pending the petition.
It also concerned whether the Defendant was justified in seizing, allocating and auctioning the Plaintiff's containers before informing the Plaintiff that its proposed FOB values had been accepted, and whether the Defendant complied with the laid-down procedure, including advertisement and gazetting, for confiscating and auctioning goods under the Customs Act, 2015 (Act 891).
The Defendant argued that a petition against a tax decision did not suspend the obligation to pay duties or the statutory clearance period under section 42(5) of the Revenue Administration Act, 2016 (Act 915), and that the Plaintiff should have used the ICUMS electronic objection system, which automatically halts the clearance process, rather than a manual petition. The Plaintiff argued that it was denied natural justice by the Defendant's seven-to-eight month delay in responding, and that the auctioning breached the procedural requirements of the Customs Act, 2015.
Court findings
The Court found that the Plaintiff's petition to the Commissioner General for review of the FOB values was lawful and supported by section 13(1)(a) of the Customs Act, 2015 (Act 891), section 37(3) of the Revenue Administration Act, 2016 (Act 915), and section 39(1) and (2) of Act 915.
The Court noted that the Commissioner General entertained and responded to the objection in November 2018, which it held implied that the requirement to pay tax pending objection had effectively been waived or suspended. It queried why, if payment was suspended, the Defendant had continued to calculate the clearance period against the Plaintiff and treat the goods as uncleared.
The Court held that the choice between manual petition and the electronic system was a matter for the individual or institution and should not be held against the user, since the user could not have known in advance which method would be to its advantage.
The Court found, based on the exhibits, that allocation slips/auction allocations to Nana Agyeman and Atta Poku were issued in August 2018, while the petition was still pending, and that any advertisement in the Commercial and Industrial Bulletin only appeared in October 2018. It concluded that the allocation and auctioning were done before any advertisement was made, contrary to the rules, regulations and the law, including section 124(2) of the Customs Act, which requires written notice of seizure to the owner of goods liable to forfeiture.
The Court found no evidence on record that the four containers had been returned to the Plaintiff, and resolved this benefit of the doubt in the Plaintiff's favour. It concluded that the Defendant did not comply with the laws, rules and regulations in handling the Plaintiff's products.
Outcome
The Court held that the Plaintiff had proved its case on the preponderance of probabilities and was entitled to its claims.
The Court ordered recovery of the sum of Fifty-Seven Thousand Eight Hundred and Eighty-Three Dollars, Four Cent ($57,883.4), being the total value of the royal de lite tomato paste in the four containers auctioned, handling and freight charges.
The Court also awarded interest at the prevailing bank rate on that amount from the date of default to the date of final judgment, damages of GH¢5,000.00, and costs of GH¢5,000.00.
Major issues / areas of contention
- Whether the Plaintiff was entitled to a fair hearing within reasonable time after petitioning the Defendant over the FOB values
- Whether the delay of the goods at the port was occasioned by the Defendant
- Whether the response from the Deputy Commissioner, Operations, showed the Plaintiff had a genuine case for its petition
- Whether the Defendant was justified in seizing, transferring and auctioning the Plaintiff's products before informing it that the proposed FOB values had been accepted
- Whether the loss incurred by the Plaintiff was reasonably incidental to, or occasioned by, the Defendant's conduct and late response
- Whether it was standard practice for goods to be put up for auction before they arrived in the country
- Whether the Defendant complied with the laid-down procedure for confiscating and auctioning the Plaintiff's goods
- Whether the Plaintiff complied with the laid-down procedure and timelines for clearing imported goods
- Whether the Plaintiff was entitled to the reliefs endorsed on the writ of summons