Offences Under the Customs Ordinance – Part 1

OFFENCES UNDER THE CUSTOMS ORDINANCE – PART 1

The Customs Ordinance of Sri Lanka is the general law that regulates imports and exports to and out of the country. Dating back to 1869, to the British Colonial rule, this law was amended time to time. However, the law is still catering to the demands of globalised trade and finance and Sri Lanka Customs, which comes under the Ministry of Finance, also corporates with the World Customs Organization and follows its standards.

The Customs Law is a revenue law, while it also is a penal law. The Customs law in one hand facilitates global trade and on the other hand stands as the watch dog to prevent evasion of Customs duty, in order to ensure that State revenue is earned.

The goods which are the subject matter related to the Customs offences are provided to be forfeited under series of Sections of the Ordinance and the persons concerned are often subjected to pay heavy penalties. The penalty could reach upto three times of the “value” of the goods. The fines, penalties and/or forfeitures are imposed after a Customs Inquiry conducted in that regard, except when forfeiture is effected by operation of law, where importers or exporters or other suspects have to show cause as to why such fines, penalties and/or forfeiture should not be imposed.

The arrangement of Sections of the Customs Ordinance under their topics is as follows:

Part I -MANAGEMENT

Section 1 to Section 9C

Part II – LEVYING OF CUSTOMS DUTIES

Section 10 to Section 22A

Part III – PORT DUES

Section 23 to Section 26

Part IV – REGULATIONS INWARDS

Section 27 to Section 52A

Part V – ENTRY OF GOODS RE-IMPORTED 

Sections 53 and 54

Part VI – REMOVAL OF GOODS BY SEA OR INLAND CARRIAGE

Section 55

Part VII – REGULATIONS OUTWARDS

Sections 56 to Section 64

Part VIII – TRADE BY VESSELS OF LESS THAN 15 TONS BURTHEN

Section 65

PART IX – REGULATIONS COASTWISE

Sections 66 and 67

PART X – REGULATION OF MOVEMENTS, & C., OF SHIPS UNDER 250 TONS TONNAGE

Section 68

PART XI –  WAREHOUSING OF GOODS

Section 69 to Section 100A

PART XII – GENERAL REGULATIONS

Section 101 to Section 124

PART XIII –  SMUGGLING, SEIZURES, AND PROSECUTIONS GENERALLY

Section 125 to Section 166B

Part XIV – INTERPRETATION OF TERMS USED IN THIS ORDINANCE

Section 167

Accordingly, Part IV provides for regulating the import of goods and Part VII provides for regulation of export of goods. Most of the offences in respect of which investigations are conducted and considered in Customs Inquiries fall under the sections in these two parts. Several other offences coming under Part XII and XIII may also be in issue during such inquiries.

In a number of Sections that provide for the offences under the Customs Ordinance, the sanctions imposed could be forfeitures, penalties or fines.

Forfeitures are imposed under following Sections:

4 – Officer taking any fee or reward on account of anything done by him relating to his office shall be dismissed. Penalty for offering fee.

19(6) – goods sold or disposed of in contravention of the preceding provisions of this subsection shall be liable to be forfeited.

19A(3) – Where any goods specified in an Order made under subsection 19A(1) are subsequently sold or disposed of contrary to the conditions of such Order, such goods shall be liable to be forfeited.

21(1) – articles passed duty free for naval, military or airforce officers, if sold or disposed of without permission, the same is liable to be forfeited.

27 – all goods not duly reported, or which shall be unladen contrary hereto, shall be forfeited.

29 – in every such case such master shall be liable to forfeit a sum.

30 – goods concealed forfeited.

31 – Master shall provide every Customs officer with suitable shelter and accommodation while on board, and in case of neglect or refusal so too shall be liable to forfeit a sum not exceeding ten thousand rupees.

33 – Goods unshipped from the importing vessel, or landed contrary to the regulations of the Collector, forfeited.

34 – all goods unladen, landed, or removed without such sufferance, or contrary to the directions in such sufferance, shall be forfeited.

35 – No goods to be unladen except during the legal hours and days of business.

37(2) – If any goods are transhipped, or attempted to be removed from one vessel to another contrary to the provisions of this section, such goods, together with the boat and other means used for conveying the same, may be seized and shall be liable to forfeiture.

38 – the boat containing such goods may be detained by any officer of the customs, and unless the cause of deviation or excess be explained to the satisfaction of the Collector, such boat and such goods shall be liable to forfeiture.

43 –Goods imported contrary to the prohibitions and restrictions contained in  table B  such goods shall be forfeited.

44 – Goods exported contrary to the prohibitions and restrictions in Schedule B to be forfeited.

47 –but if such goods shall not agree with the particulars in the bill of entry the same shall be forfeited, and such forfeiture shall include all other goods which shall be entered or packed with them as well as the packages in which they are contained.

50 –Entry to agree with manifest & c. Goods not duly entered forfeited.

50A(1) –where such conditions are not complied with, then such goods shall be forfeited.

52 – where the value declared in respect of any goods according to section 51 is a false declaration, the goods in respect of which such declaration has been made shall be forfeited together with the package in which they are contained.

55 –if the seals of office attached to such packages be broken, or if the contents shall not be found to agree with the particulars of entry and advice from the port of removal, such packages, with their contents, shall be forfeited.

56 –If any goods be laden on board any ship before such entry be made, the master of such ship shall forfeit a sum not exceeding ten thousand rupees.

57 –and if such goods shall not agree with the particulars in the bill of entry, or if such goods are removed from the warehouse or other place appointed for shipment before such entry is passed and all duties and dues paid, and in the absence of any explanation to the satisfaction of the Collector the same shall be forfeited. Such forfeiture shall include all other goods which shall be entered or packed with them as well as the packages in which they are contained.

58(b) – such permission to export shall not in any way be construed as a waiver of the Collector’s right to order forfeiture of the goods, if the goods have not already been shipped out of Sri Lanka,.

59 –and all goods which are laden, put off, water­borne, or shipped contrary to the provisions of this section or of any regulations made hereunder, or which are found in a boat without a boatnote, or in excess of the quantity specified in the boatnote, or in excess of the quantity shut out, or which are shipped on board any vessel not duly entered outwards may be re­landed by the proper officer of customs, and, in the absence of any explanation to the satisfaction of the Collector, shall be forfeited together with the means of conveyance.

62 –and if such declaration be false, or if he fails to make such entry before the content of the ship is delivered in by the master, he shall forfeit a sum not exceeding five thousand rupees.

63 –or if the master shall deliver a false content, he shall forfeit a sum not exceeding one hundred thousand rupees.

64 –if any goods contained in such clearance or victualling bill be not on board, the master shall forfeit a sum not exceeding five thousand rupees for every package.

65 –No goods shall be imported into  or exported from Sri Lanka from or to parts beyond the seas in any ship of less burthen than fifteen tons, and any goods SO imported or exported shall be forfeited.

67 –the master of such ship shall be liable to forfeit a sum not exceeding one hundred thousand rupees.

68(5) –Every ship which is used or employed or makes voyage in any manner contrary to any regulation made under the preceding provisions of this section which may be applicable to such ship, and any goods which are unlawfully carried therein or any goods which having been unlawfully carried therein are jettisoned therefrom, shall be liable to forfeiture.

72 – Entry for the warehouse. Particulars. Warrant for warehousing. Bond upon entry of goods for the warehouse. All goods not duly entered shall be liable to forfeiture.

75 –Goods not duly warehoused or fraudulently concealed or removed, forfeited.

76 –Warehouse keeper neglecting to produce goods deposited, when required, to forfeit one hundred rupees.

77 –Importer or proprietor clandestinely gaining access to warehoused goods to forfeit one hundred thousand rupees.

80 –Landing account to be taken of goods for the warehouse. Contents to be marked on packages and in landing book. And if any such goods shall be delivered, withheld, or removed from the proper place of examination before the same shall have been duly examined and certified by such officer, such goods shall be deemed to be goods not duly entered or warehoused, and shall be liable to be forfeited.

100A(2) –Any goods found in any such ware house which are not duly accounted for by the owner of such goods to the satisfaction of the Collector shall be forfeited.

107 – Goods being moved out of any ship or to any ship or out of any warehouse if not duly entered to be forfeited.

107A(1) –and if any prohibited, restricted or uncustomed goods are found concealed in the baggage of any passenger arriving in Sri Lanka or upon his person or in any place in which they have been put by his direction or with his connivance either before or after landing, the same shall be forfeited, together with the contents of the packages and the packages containing the same.

107A(2) –and if any prohibited, restricted or uncustomed goods are found concealed in the baggage of any passenger leaving Sri Lanka or upon his person or in any place in which they have been put by his direction or with his connivance either before or after embarkation, the same shall be forfeited, together with the contents of the packages and the packages containing the same.

118 –and if there are any goods on board prohibited to be imported into Sri Lanka, and if the master does not truly answer the questions which are demanded of him on such examination, he shall forfeit a sum not exceeding one hundred thousand rupees.

119 –Making false declaration. Signing false documents and untruly answering questions. Counterfeiting and using false documents. Every person so contravening shall be liable to forfeit a sum not exceeding one hundred thousand rupees, and any goods; including currency in any form, in relation to which the document or statement was made shall be liable to forfeiture.

121 –Export, &c, of naval, military, and air stores maybe prohibited. And if such goods shall be exported from Sri Lanka or carried coastwise in contravention of such prohibition or otherwise than in accordance with such restrictions and conditions, or be water­borne to be so exported or carried, such goods may be seized and shall be forfeited.

122 –Every person who shall make or cause to be made an entry inwards or entry outwards of any goods, not being duly authorized thereto by the proprietor or consignee or exporter of such goods, shall for every such offence forfeit a sum not exceeding one hundred thousand rupees.

125 –Smuggling, seizures, and prosecutions generally. Forfeiture of ship to include tackle. And all other things made use of in any way in the concealment or removal of any goods liable to forfeiture under this Ordinance, shall be forfeited.

129 –Persons concerned in importing prohibited or restricted goods, whether unshipped or not, and persons unshipping, harbouring or having custody of such goods, to forfeit treble the value, or one hundred thousand rupees.

130 –Persons concerned in exporting prohibited or restricted goods. Every person shall in each and every of the foregoing cases forfeit either treble the value of the goods, or be liable to a penalty of one hundred thousand rupees at the election of the Collector of Customs

131 –Any ship not exceeding 250 tons tonnage, knowingly used in the importation or exportation of any goods prohibited of import or export, or in the importation, exportation or conveyance, or in the attempted importation, exportation or conveyance, of any goods with intent to defraud the revenue, shall be forfeited.

132 –If goods removed prior to examination, penalty upon parties concerned in the removal. Every such person shall forfeit either treble the value thereof, or be liable to a penalty of one hundred thousand rupees,

133 –Persons assisting in unshipping or harbouring such goods liable to treble the value or one hundred thousand rupees.

135 –Goods, vessels, &c, liable to forfeiture may be seized by officers, & c. Persons resisting officers or rescuing or destroying goods to prevent seizure, to forfeit one hundred thousand rupees.

136 –If any goods liable to forfeiture under this Ordinance shall be stopped taken by any police officer or grama seva niladhari, such goods shall be conveyed to the custom­house. If neglected, police officer or grama seva niladhari shall forfeit a sum not exceeding two hundred thousand rupees.

137 –Officers making collusive seizures, or taking bribes, and persons giving bribes, subjected to penalties.

141 –Penalty on officers for misconduct with respect to search; such officer shall forfeit and pay a sum not exceeding two hundred rupees

142 –Penalty on persons on board falsely denying having foreign goods about them. 

Penalties are imposed under following Sections:

4 – officers taking fee or reward;

22A(6) – falsely claiming rebate;

27 – master of ship shall forfeit;

29 – master to deliver manifest, failure offence;

32 – penalty on master not having delivered goods, or cargo doesn’t correspond with papers;

33 – goods unshipped contrary to regulations. Penalty on Persons concerned;

38 – Owners of boat to provide statement of quantities (manifest?). Failure incurs penalt;

42 – Penalty for neglect to handle with care or refusal;

47- importer to deliver bill of entry together with other documents;

48- misdescription or undervaluation in the Cusdec;

52 – forfeiture and penalty on the  person on false declaration of value;

52A – penalty for failing to keep, destroying or altering records;

57 – Exporter to enter bill of entry;

58(b) – exporting prior to the presentation of Cusdec;

68(6) – regulation of movements of ships below 250 tons;

74 – Goods warehoused to be marked and numbered;

95,96- warehoused good not to be delivered without Warrant;

103B(2)- regulation of the movement of containers;

110(2) –Collector to order removal of goods from one warehouse or customs premises to another warehouse or place. Any person who, without reasonable cause, fails to comply with an order issued to him under subsection (1) shall be liable to a penalty not exceeding ten thousand rupees.

104 – transport of goods overland under band;

116 – when boat to be removed;

117-No timber, &c, to be left on wharf for more than one day. and such owner shall be liable to a penalty not exceeding one hundred rupees.

128A(6) – Power to enter for the purpose of audit or examination or records. A person who is guilty of an offence under subsection (4) or (5) shall be liable to a penally not exceeding one hundred thousand rupees. 

129 –Persons concerned in importing prohibited or restricted goods, whether unshipped or not, and persons unshipping, harbouring or having custody of such goods, to forfeit treble the value, or liable to a penalty of one hundred thousand rupees.

130 –Persons concerned in exporting prohibited or restricted goods, forfeit either treble the value of the goods, or be liable to a penalty of one hundred thousand rupees

132 – Goods if removed prior to examination;

133 –Persons assisting in unshipping or harbouring such goods liable to treble the value or one hundred thousand rupees.

134 – how value calculated in case of penalty;

141 – penalty on officers for misconduct with respect of search;

142 – penalty on persons on board who falsely deny having foreign goods about them;

145-Recovery of penalties and forfeitures by Attorney General by action in district court.

146 –Persons liable to forfeiture or penalty under any section of the Ordinance to be guilty of an offence.

149 – jointly and severely liable.

Fines are imposed under following Sections:

4 –Officer taking any fee or reward on account of anything done by him relating to his office shall be dismissed. Penalty for offering fee

8(2) –if he does not comply with the summons or refuses to be sworn or affirmed or to give evidence, be guilty of an offence of and liable to a fine not exceeding twenty five thousand rupees

9(2) – giving false evidence, a person shall be liable on conviction to a fine not exceeding twenty five thousand rupees or to imprisonment for a term not exceeding six months or to both such fine and imprisonment.

43-persons importing dangerous substance, guilty of an offence and be liable to a fine not exceeding two thousand rupees.

100 –Penalties against a keeper of a bonded warehouse

126(4) –any driver or other person who fails or refuses to comply with an order to stop shall be guilty of an offence and liable on conviction thereof to a fine not exceeding one hundred thousand rupees.

128(4) –Arrest of persons reasonably suspected of an offence under the Ordinance. A person who is guilty of an offence by failing to assist or by obstructing a customs officer,  shall be liable on conviction to a fine not exceeding one hundred thousand rupees.

Persons could be Guilty of an offence under following Sections:

43-persons importing dangerous substance, guilty of an offence and be liable to a fine not exceeding two thousand rupees.

78 –Duty on goods taken out of warehouse without entry to be paid by warehouse keeper. Persons taking out of or destroying goods in warehouse to be deemed guilty of an offence. Importer or consignee defrauded by officers to be indemnified.

101 –Any person who shall disobey the regulations of the Minister shall be guilty of an offence and shall on conviction after summary trial by a Magistrate be liable to a fine, not exceeding twenty five thousand rupees or to imprisonment

104(2) –Transport of goods overland under band. Any person who transports goods in contravention of the provisions of this section shall be guilty of an offence and be liable to a penalty not exceeding one hundred thousand rupees.

126(4) –and any driver or other person who fails or refuses to comply with such order, direction or signal shall be guilty of an offence

128(2) –if such person when so requested fails to assist the Collector or such officer, he shall be guilty of an offence

128(3) –obstructing a customs officer an offence

128A(4), (5) – a person failing to assist customs officer to enter and search  a building and obstructing shall be guilty of an offence.

143(2) –the master or person in charge of the vessel who flies Sri Lanka Customs flag without authority shall be guilty of an offence

146 –Persons liable to forfeiture or penalty under any section of the Ordinance to be guilty of an offence.

Principle Offences explained:

Primarily, the Offences under aforesaid parts of the Ordinance may be categorized into following types of offences relating to

1. Declaration of goods
2. Valuation of goods
3. Classification of goods
4. Conditional import or export of goods
5. Prohibited or restricted goods

Offences regarding valuation and classification of goods fall under the broader category of offences relating to declaration of goods.

The importation of goods under duty concessions granted by way of an Agreement with the Board of Investment (BOI), under concessions provided in terms of ISAFTA, TIEP I, TIEP IV schemes  etc. are conditional imports.

Several sections often cited during Customs Inquiries are considered in detail hereinafter:

Offences relating to prohibited or restricted goods:

Not all goods are permitted to be imported and there are some goods that could be imported only after fulfilling certain license requirement. This is laid down in Section 43, which provides as follows:

“If any goods enumerated in the table of prohibitions and restrictions in Schedule B shall be imported or brought into Sri Lanka contrary to the prohibitions and restrictions contained in such table in respect thereof, such goods shall be forfeited, and shall be destroyed or disposed of as the Principal Collector of Customs may direct:

Provided that if any dangerous substance be imported or brought into Sri Lanka without the licence of the Minister, or contrary to any of the regulations which may be made from time to time by the Minister, for the safe landing and deposit of such substance, the person importing or bringing the same to Sri Lanka, and any person concerned in such importation or bringing of the same, shall, in addition to the forfeiture above provided, be guilty of an offence and be liable to a fine not exceeding two thousand rupees.”

In the case of Adamjee Lukmanjee & Sons Lid. v. The Controller of Imports [71NLR153],  T.S.Fernando J decided that ” A contravention of section 43 of the Customs Ordinance carries with it penalties of great severity, and before those penalties can be exacted, the importer is right in his contention that the licence shall speak without equivocation on the issue.”

In the same manner, in respect of exports, it is provided in Section 44, which states:

“If any person exports or attempts to export or take out of Sri Lanka any goods enumerated in the table of prohibitions and restrictions in Schedule B, in contravention of the prohibitions and restrictions contained in such table in respect thereof, such goods shall be forfeited, and shall be destroyed or disposed of as the Principal Collector of Customs may direct.”

Another provision is applicable here, which is Section 12(1) and provides that the goods enumerated in the  Schedule B shall not be imported or brought into or exported or taken out of Sri Lanka save in accordance with the conditions expressed in the said Schedule.

These provisions enclose a type of strict liability and, compared to some other significant sections, the mental element (mense rea) of the persons concerened in such importation of restricted or prohibited goods seems to be hardly material. According to the proviso to Section 43, the any person concerned in such importation or bringing of the same, shall, in addition to the forfeiture above provided, be guilty of an offence and be liable to a fine not exceeding two thousand rupees.

There is no penalty specified upon a person in respect of exportation of goods, under Section 44.

The forfeiture effected upon these goods, the importation or exportation of which is prohibited or restricted, is automatic, by operation of law. Both Sections 43 and 44 provide that “such goods shall be forfeited”, and the phrase “liable to be forfeited” has not been used, as is the case with in many other Sections. Thus, there is no order for forfeiture to be made by an inquiring officer and once the goods are seized the same shall stand forfeited.

This legal position is affirmed in the case of Ishak v. Laxman Perera, Director General of Customs and others [(2003)3 SLR18 CA].

Section 12 only provides for the restrictions on importation or exportation of certain goods and does not provide for any penalty or consequences in contravention of such restrictions. It is Sections 43 and 44 that provide for the consequences of violation of Section 12(1),  which is forfeiture of the goods necessarily followed by destruction or disposal of the goods forfeited. The words used are “shall be forfeited, and shall be destroyed…” It is clear therefore that for these actions to be taken upon the forfeiture being effected upon the goods by operation of law, the goods should have been imported or exported and also the goods should have been available in the custody of the Customs. In the the event the subject goods are not available in the custody of the Customs upon seizure of the same, there are no goods to be forfeited by operation of law and there are no goods to be destroyed or desposed of.  In addition, since these Sections do not provide for forfeiture of either “treble the value of the goods” or “hundred thousand rupees” as provided in many other Sections, where the discretion of the inquiring officer is involved, here, under Sections 43 and 44, the value of the goods cannot be considered for any forfeiture by operation of law.

SWJ