Carreras wins court battle for Customs refund

Lawyers for tobacco company Carreras Limited say they are awaiting word from Jamaica Custom Agency, JCA, after the Supreme Court this month ordered the commissioner of customs to repay the cigarette trader $58.38 million, or an amount that reflects the difference between the six-per cent duties owing for in-bond transactions and full duties applicable to goods sold domestically.

However, Commissioner of Customs Velma Ricketts Walker is not ready to fork over the funds, and is instead said to be consulting with the agency’s lawyers to decide her next move.

“The agency has received the judgment of the Supreme Court and is currently reviewing same with our legal advisers to determine our next steps,” Ricketts Walker told the Financial Gleaner this week via email.

The orders granted in the civil division of the Supreme Court quashed the JCA’s decision not to make the refund and compels the agency to turn over the money. The ruling was handed down on November 13 by Justice Audre Lindo in a case brought by the cigarette company against a 2015 customs duty levy it insists was inaccurately applied, but paid over to Customs, anyway.

The levy stemmed from a review conducted by the JCA, which the agency says revealed an absence of ex-warehouse entries on a prescribed ‘C33’ form for 374 cases of cigarettes removed from a bonded warehouse. Carreras contends that the cigarettes were sold to the duty-free trade and that although the specific required documentation was not submitted before the removal, sufficient documentation was provided to the JCA thereafter to prove that the items were sold duty-free to customers.

On the company’s appeal to the Ministry of Finance in April 2016 for a refund of the duty paid, the ministry ordered that the JCA conduct an audit to verify that the goods were in fact sold to the duty-free trade, in which event Carreras should be refunded the duty paid “or any other amount which appropriately represents the difference between the required 6% Additional Stamp Duty (ASD) payable for the goods sold to an in-bond shop and the full duties payable for the said goods if they were sold domestically,” according to documents filed in court.

The audit was done in 2017 and auditors supplied with documentation by Carreras. However, the company not having received a response, on March 13, 2018, wrote to the commissioner of customs asking about the outcome of the audit.

“The post-audit exercise was completed and based on the findings the Jamaica Customs Agency was unable to recommend a refund for the amount stated,” the JCA replied to the tobacco company by letter of May 8, 2018.

Receiving no response to a subsequent May 11, 2018 letter requesting reconsideration of the JCA’s position, Carreras’ initiated legal action seeking to quash the JCA’s decision not to provide the refund, to compel the agency to do so, that the legal costs be awarded against the JCA and that the court provide “further or other relief as the court deems just”.

In granting Carreras’ application, Justice Lindo found that the JCA: “Acted in breach of the principles of natural justice by its failure to provide Carreras with a copy of the audit report to inform them of the basis of the decision that the fact of the transfer could not be verified, and by failing to give Carreras an opportunity to make representations.”

The judge held, too, that the process by which the JCA arrived at the decision that it cannot verify the transfer of the cigarettes was “procedurally unfair, and in breach of natural justice and, in my estimation, would undoubtedly render the decision null and void”.

Justice Lindo concluded that the JCA acted unreasonably and unfairly in the process of carrying out the post-audit exercise. It was the view of the court that during the audit, the JCA took into consideration irrelevant matters, such as its preoccupation with a specific form not being submitted, and did not give Carreras an opportunity to be heard prior to coming to the decision that the transfer could not be verified and that there would be no refund of the duties paid. In addition, the JCA did not provide Carreras an opportunity to make any representations after it came to its decision, according to the judgment.

Lindo said that in granting the orders against the JCA, the court should not be deemed as condoning a contravention of the Customs Act and Regulations in the failure of Carreras to use the prescribed form. She held, however, that the minister in approving the audit and making allowance for the refunding of the sums paid, as prescribed by the Customs Act and Regulations, “has the authority to give approval for a post-audit exercise to be conducted and for sums paid to be refunded, whenever he shall deem it expedient”.

Carreras was represented in the case by attorneys Gavin Goff and Adrian Cotterell of Myers Fletcher & Gordon, while attorneys Christine McNeil and Hazel Edwards of the Attorney General’s chambers appeared for the JCA.

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