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2024 MarsdenLR 2754

COURT OF APPEAL PUTRAJAYA
FERMPRO SDN BHD – Appellant
Versus
KETUA PENGARAH JABATAN KASTAM DAN EKSAIS DIRAJA MALAYSIA – Respondent
[Civil Appeal No: W-01(A)-464-09/2023]

Petitioner Advocates:Dr Subbramaniam Arjunan ,Respondent Advocate: Mohd Faisal Md Noor,FC Liyana Muhammad Fuad

The court ruled that errors in customs declarations do not automatically lead to the imposition of taxes, reaffirming the provisions for free tax status for goods moved between free zones and licensed warehouses.

Headnote:(A) Customs Act 1967 - Section 17(1) - Excise Act 1976 - Section 15 - Goods and Services Tax Act 2014 - Section 43 - Sales Tax Act 2018 - Section 28 - Judicial review application dismissed by High Court against four Bills of Demand for customs duties raised against Fermpro due to erroneous declaration in Form K1. (Paras 19, 20, 21, 86, 88)

(B) Appellate Intervention - A court should not intervene unless the trial judge was plainly wrong. (Paras 36)

Facts of the case:
Fermpro Sdn Bhd appealed against the High Court's decision to dismiss its application for judicial review concerning four Bills of Demand issued by the customs authority for unpaid duties on ethanol sold to a customer. (Paras 1, 2, 5)

Findings of Court:
The appellate court found the High Court judge was plainly wrong in ruling that Fermpro should be named as an importer in Form K1, and that the duties raised were lawful. (Paras 86, 87)

Issues: The main issues were whether Fermpro was correctly named as an importer in Form K1 and if the duties were legally imposed despite the alleged error. (Paras 35)

Ratio Decidendi: The court held that the learned High Court Judge erred in interpreting the customs declarations, and that the provisions for free tax status apply despite the alleged errors in Form K1. (Paras 86, 84)

Result: Appeal allowed; High Court's order set aside. (Paras 87, 88)

JUDGMENT

Faizah Jamaludin JCA:

Introduction

[1] This an appeal by the Appellant, Fermpro Sdn Bhd ("Fermpro") against the decision of the High Court dismissing its application by way of a judicial review for an order of certiorari to quash the decision of the Ketua Pengarah Jabatan Kastam dan Eksais DiRaja Malaysia ("Respondent") affirming four Bills of Demand ("BODs") raised by the Respondent against Fermpro.

[2] The four BODs, all dated 15 June 2021, were raised by the Respondent through the Pengarah Kastam Negeri, Perlis against Fermpro, under s 17(1) of the Customs Act 1967 (Act 235) (" CA 1967"), s 15 of the Excise Act 1976 (Act 176) (" EA 1976"), s 43 of the Goods and Services Tax Act 2014 (Act 762) ("GST Act 2014") and s 28 of the Sales Tax Act 2018 (Act 806) (" STA 2018"), in respect of the sale of ethanol by Fermpro to Molnlycke Health Care Sdn Bhd ("Molnlycke"). The four BODs read:

1. Bil Tuntutan dibawah Akta Kastam 1967
Dimaklumkan bahawa tuan kurang membayar duti import bagi tempoh bercukai dari Januari 2017 hingga Ogos 2019.Hasil semakan dan auditan yang dilakukan ke atas rekod dan dokumen syarikat tuan mendapati terdapat kesalahan mengikrar Borang Kastam No 1 (K1). Dengan ini, mengikut s 17(1) Akta Kastam 1967, tuan adalah dituntut untuk membuat bayaran duti import seperti di Lampiran 1-1, Lampiran 1-2, Lampiran 1-2 & Lampiran 1-4 yang secara keseluruhan berjumlah RM2,333,770.00.
2. Bil Tuntutan dibawah Akta Eksais 1976
Dimaklumkan bahawa tuan kurang membayar duti eksais bagi tempoh bercukai dari Januari 2017 hingga Ogos 2019. Hasil semakan dan auditan yang dilakukan ke atas rekod dan dokumen syarikat tuan mendapati terdapat kesalahan mengikrar Borang Kastam No 1 (K1). Dengan ini, mengikut s 15 Akta Eksais 1976, tuan adalah dituntut untuk membuat bayaran duti import seperti di Lampiran 1-1, Lampiran 1-2, Lampiran 1-2 & Lampiran 1-4 yang secara keseluruhan berjumlah RM4,460,377.67.
3. Bil Tuntutan dibawah Akta Cukai Barang dan Perkhidmatan 2014
Dimaklumkan bahawa tuan kurang membayar cukai barang dan perkhidmatan bagi tempoh bercukai dari Januari 2017 hingga Ogos 2019. Hasil semakan dan auditan yang dilakukan ke atas rekod dan dokumen syarikat tuan mendapati terdapat kesalahan mengikrar Borang Kastam No 1 (K1). Dengan ini, mengikut s 43 Akta Cukai Barang dan Perkhidmatan 2014, tuan adalah dituntut untuk membuat bayaran duti import seperti di Lampiran 1-1, Lampiran 1-2, Lampiran 1-2 & Lampiran 1-4 yang secara keseluruhan berjumlah RM167,417.63.
4. Bil Tuntutan dibawah Akta Cukai Jualan 2018
Dimaklumkan bahawa tuan kurang membayar cukai jualan bagi tempoh bercukai dari Januari 2017 hingga Ogos 2019. Hasil semakan dan auditan yang dilakukan ke atas rekod dan dokumen syarikat tuan mendapati terdapat kesalahan mengikrar Borang Kastam No 1 (K1). Dengan ini, mengikut s 28 Akta Cukai Jualan 2018, tuan adalah dituntut untuk membuat bayaran duti import seperti di Lampiran 1-1, Lampiran 1-2, Lampiran 1-2 & Lampiran 1-4 yang secara keseluruhan berjumlah RM822,684.42.
[Emphasis Added]

[3] Fermpro made an application to the Respondent on 8 September 2020, under s 143(1) of the CA 1967, to review all four BODs.

[4] The Respondent on 3 August 2021 issued a letter dated 29 July 2021, notifying Fermpro of its decision to maintain all four BODs against Fermpro.

[5] Dissatisfied with the Respondent's decision of the review, Fermpro filed the application for judicial review at the High Court on 14 October 2021.

Salient Facts And The Applicable Laws

[6] Fermpro carries on the business of manufacturing ethanol (a.k.a. Denatured Ethyl Alcohol ("DEA")). It also engages in importing ethanol from overseas and selling the same to customers in Malaysia. Molnlycke is one of its customers.

[7] The subject-matter of the impugned BODs, issued by the Respondent against Fermpro, relates to the Fermpro's sale of ethanol to Molnlycke.

[8] Fermpro had entered into a sale and purchase agreement dated 14 November 2014 with Molnlycke for the sale and purchase of et

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2024 MarsdenLR 2754

COURT OF APPEAL PUTRAJAYAFERMPRO SDN BHD – AppellantVersusKETUA PENGARAH JABATAN KASTAM DAN EKSAIS DIRAJA MALAYSIA – Respondent[Civil Appeal No: W-01(A)-464-09/2023]

The court ruled that errors in customs declarations do not automatically lead to the imposition of taxes, reaffirming the provisions for free tax status for goods moved between free zones and licensed warehouses.

COURT OF APPEAL PUTRAJAYA
FERMPRO SDN BHD – Appellant
Versus
KETUA PENGARAH JABATAN KASTAM DAN EKSAIS DIRAJA MALAYSIA – Respondent
[Civil Appeal No: W-01(A)-464-09/2023]