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2024 MarsdenLR 2508
HIGH COURT MALAYA KUALA LUMPUR
AHMAD KAMAL MD SHAHID, J
SUNRISE HOME GOODS (M) SDN BHD – Appellant
Versus
KETUA PENGARAH KASTAM & ANOR – Respondent
[Originating Summon No: WA-24-73-12/2022]
A licensed manufacturing warehouse is entitled to suspension from anti-dumping duties under the Customs Act, and any contrary internal circular by Customs is not legally binding.
Headnote:(A) Customs Act 1967 - Sections 2(1), 65, 65A - Anti-Dumping Duties Act 1993 - The Appellant, a licensed warehouse operator, sought to challenge the Tribunal's decision that it was liable for anti-dumping duties, arguing that it was entitled to an exemption under the Customs Act - The Tribunal erred in interpreting the law and failing to recognize the Appellant's entitlement to suspension/exemption for anti-dumping duties as a licensed manufacturing warehouse - The court found that the Customs Circular imposing a restriction was not legally binding and that the Appellant's licenses did not contain any such conditions. (Paras 7-66)
(B) The court emphasized that the legislative intent was to encourage export-oriented industries and that the Customs could not impose conditions that contradict the statutory framework. (Paras 26-36)
Facts of the case:
The Appellant manufactured kitchen sinks for export and imported raw materials under a licensed warehouse, arguing it was exempt from anti-dumping duties. The Customs issued a bill of demand for underpaid duties based on an internal circular.
Findings of Court:
The court ruled that the Appellant was exempt from anti-dumping duties, as the Customs had no authority to impose such conditions outside of the statutory framework.
Issues: The main issues were whether the Appellant was liable for anti-dumping duties and the validity of the Customs Circular.
Ratio Decidendi: The court held that the Customs Circular could not impose legal conditions on the Appellant, and the statutory provisions must be interpreted to reflect Parliament's intent to incentivize export activities.
Result: The appeal was allowed, and the Tribunal's decision was set aside.
Introduction
[1] The Appellant is appealing against the decision of the 2nd Respondent (the Customs Appeal Tribunal) (Tribunal) in respect of Appeal No: MOF.TRK 700-6/1/8 (2021) dated 7 November 2022 which dismissed the Appellant's appeal against the decision of the 1st Respondent (Customs) in the form of a bill of demand dated 4 May 2021 in relation to the anti-dumping duties allegedly underpaid by the Appellant.
[2] The Appellant filed an Originating Summons (OS) dated 2 December 2022 (encl 1) primarily seeking the following reliefs:
2.1 That this appeal be allowed, whereas the Decision of the 2nd Respondent (Tribunal) regarding Appeal No MOF.TRK 700- 6/1/8 (2021) dated 7 November 2022 (Tribunal Decision) be set aside;
2.2 That the decision of the 1st Respondent (Customs) in the form of a bill of demand dated 4 May 2021 in relation to the anti-dumping duties allegedly underpaid by the Appellant be set aside;
2.3 That all payments made by the Appellant for the said bill of demand dated 4 May 2021 be fully refunded by the Customs to the Appellant;
2.4 Costs; and
2.5 Any other and further relief that this Honourable Court deems fit and proper.
[3] After the hearing, I allowed the Appellant's OS (Enclosure 1). Here are the grounds for my decision.
Background Facts
[4] The background facts gathered from the cause papers, Affidavit in Support and submissions of the parties are largely undisputed and can be summarized as follows:
4.1 The Appellant's principal business is to manufacture kitchen sinks (Products) solely for export mainly in the United States. To manufacture the Products, the Appellant uses, amongst others, imported stainless-steel plates from Jiangmen XHHL Stainless Steel Manufacturing Co Ltd (Jiangmen XHHL), a company located in Guangdong, China. These stainless- steels plates were imported under the tariff code or harmonised system (HS) code of 7219.33.0000;
4.2 The Appellant has a licensed (ie bonded) warehouse (LW) under s 65 of the Customs Act and a licensed (ie bonded) manufacturing warehouse (LMW) under s 65A of the Customs Act;
4.3 As an LMW Licensee, the Appellant is automatically also a licensed warehouse (LW) under s 65(1) Customs Act (LW Licensee). The Appellant is entitled to suspension / exemption on customs duties for the imported raw materials upon depositing the materials into its licensed (ie bonded) warehouse;
4.4 Under the definition of the words "licensed warehouse', "dutiable goods" and "customs duty" under s 2(1) of the Customs Act, this suspension / exemption from Customs duties enjoyed by the Appellant expressly includes suspension / exemption from anti-dumping duties. Accordingly, the Appellant did not pay any anti-dumping duties on the imported stainless-steel plates;
4.5 Under an internal circular / letter dated 3 November 2016 (Customs Circular), the Customs imposed a legal condition on all LMW Licensees (including the Appellant) that an LMW Licensee does not enjoy suspension / exemption for anti-dumping duties;
4.6 The purported condition had been communicated to the Appellant through the Customs' letter to the Federation of Malaysian Manufacturers (FMM) dated 9 January 2016 (Letter to FMM);
4.7 It is a fact not disputed that:
(a) The Customs Circular does not purport to impose any conditions on LMW Licensees, but rather sets out Customs' interpretation of the law;
(b) The Customs Circular was not written to the Appellant, but to other Customs Departments, and forwarded to the President of FMM by the Letter to FMM issued some two years before the issuance of the LMW license to the Appellant; and
(c) The LMW licence issued to the Appellant neither contains this nor any similar condition, nor does it refer to the Customs Circular / Letter to FMM.
4.8 On 2 December 2020 and 6 January 2021, the State Customs of Perlis conducted an audit on the Appellant and found out that the Appellant has underpaid anti-dumping duties at the rate of 23.95% for the importation of the stainless-st
