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2024 MarsdenLR 2428
HIGH COURT MALAYA PENANG
PAN INTERNATIONAL ELECTRONICS (M) SDN BHD – Appellant
Versus
MENTERI KEWANGAN MALAYSIA & ANOR – Respondent
[Application For Judificial Review No: PA-25-65-08-2023]
The Customs Department cannot impose import duties contrary to the ASEAN Trade in Goods Agreement, and the Minister's decision to uphold such duties was irrational and illegal.
Headnote:(A) Customs Act 1967 – Sections 11(1), 14A, 65, and 65A – ASEAN Trade in Goods Agreement – Import duty and sales tax – Judicial review application allowed against the Minister's decision rejecting remission of import duty and sales tax for exceeding local sales quota – Customs Department acted ultra vires by imposing duty contrary to ATIGA provisions. (Paras 14, 30, 36, 49)
(B) Judicial Review – Grounds for intervention include illegality, irrationality, and procedural impropriety – The court may scrutinize both the process and substance of the decision. (Paras 10, 12)
Facts of the case: The Applicant, a Licensed Manufacturing Warehouse, contested the imposition of import duty and sales tax by the Customs Department due to exceeding local sales quota, claiming entitlement to a 0% duty under the ATIGA Order. (Paras 3-5)
Findings of Court: The Minister's decision was found to be irrational and illegal, as it improperly linked LMW conditions to ATIGA exemptions. (Paras 14, 49)
Issues: Whether exceeding the local sales quota disqualified the Applicant from the ATIGA rate of 0% for import duty. (Paras 28-29)
Ratio Decidendi: The court held that the Customs Department lacked authority to impose duties contrary to the ATIGA Order, and the Minister's decision was similarly flawed. (Paras 36, 49)
Result: Application for judicial review allowed; costs awarded to the Applicant. (Paras 52)
JUDGMENT
Introduction
[1] This is an application for judicial review dated 21 August 2023 by the Applicant for an order of certiorari to quash the decision of the 1st Respondent ("Minister") dated 22 May 2023. By way of the said decision, the Minister had rejected the Applicant's appeal for remission of import duty and sales tax.
[2] On 19 February 2024, I allowed the application for judicial review. Here are the grounds of my decision.
Background Facts
[3] The Applicant is a local company which has the status of a Licensed Manufacturing Warehouse ("LMW") under ss 65 and 65A of the Customs Act 1967 . The dispute herein concerns import duty and sales tax levied by the 2nd Respondent ("Customs Department") in relation to the sale of goods known as "Decoder Assembly (ASTRO)" ("decoders") by the Applicant.
[4] According to the Applicant, the decoders are entitled to import duty at the rate of 0% based on the ASEAN Trade in Goods Agreement ("ATIGA"). This is pursuant to para 3(1) and the Second Schedule of the Customs Duties (Goods of ASEAN Countries Origin) (ASEAN Harmonised Tariff Nomenclature and ASEAN Trade in Goods Agreement) Order 2012 ("ATIGA Order"). This had also been approved by the Customs Department.
[5] However, the Customs Department issued a Bill of Demand against the Applicant for import duty of RM8,432,282.51 and sales tax of RM841,342.00. The reason is because the Applicant had exceeded the local sales quota by 7.21%. According to the Respondents, this disqualified the decoders from the ATIGA rate of 0%.
[6] The relevant extract of the Bill of Demand dated 22 June 2015 states:
"Mengikut Seksyen 17 Akta Kastam 1967 dan s 30 Akta Cukai Jualan 1972, tuan ada lah dituntut untuk membayar kurang pungut Duti Kastam sebanyak RM8,432,282.51 dan Cukai Jualan sebanyak RM841,342.00 untuk tempoh pertama lesen Gudang Pengilangan Berlesen (P78G6200700000049). Jumlah duti/cukai kurang pungut keseluruhan adalah RM9,273,624.51. (Rujuk Lampiran A (III)).
2. Tuntutan ini dikeluarkan atas sebab-sebab berikut:
2.1 Penjualan tempatan melebihi kuota sebanyak 7.21% menyebabkan syarikat tidak layak menuntut pengecualian Duti Import dengan menggunakan kadar duti di bawah Perintah Duti Kastam (Barang - Barang Berasal dari Negeri - Negeri ASEAN) (Tatanama Tarif Berharmonis ASEAN dan Perjanjian Perdagangan Barangan ASEAN 2012 (ATIGA)."
[7] The Applicant appealed to the Minister by way of a letter dated 27 February 2023. The appeal was rejected by the Minister on 22 May 2023.
Judicial Review Application
[8] In the application for judicial review, the Applicant sought for the following reliefs:
(a) an order of certiorari to quash the Minister's decision in the letter dated 22 May 2023 from the Ministry of Finance of Malaysia, which dismissed the Applicant's appeal for remission of import duty and sales tax amounting to RM9,273,624.51;
(b) a declaration that the Bill of Demand dated 22 June 2015 from the Customs Department is invalid;
(c) a declaration that all goods sold by the Applicant in the local market with the description "Decoder Assembly (ASTRO)" are entitled to enjoy import duty at the ATIGA rate of 0% at all times; and
(d) an order that the matter of import duty and sales tax remission be referred back to the Respondents for reconsideration in consonance with the spirit and intent of this order, and for all appropriate steps to be taken in giving full effect to this order.
[9] The grounds canvassed by the Applicant may be summarised as follows:
(a) The Respondents failed to justify the grounds for imposing import duty of 30% on the decoders, merely because of a breach of the LMW condition. This is despite the decoders being declared to be zero - rated under the ATIGA Order. The exemption of import duty under the ATIGA Order has nothing to do with the LMW status;
(b) The Respondents failed to show any statutory provision under the Customs Act 1967 or the ATIGA Order, which confers the Respondents with power to impose import duty of 30% o
