F.B Clearing and Forwarding Company Ltd v Zambia Revenue Authority (SCZ Appeal 111 of 2001) [2002] ZMSC 130 (14 February 2002)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT NDOLA/ LUSAKA, (Civil Jurisdiction) SCZ APPEAL NO.l 11/2001 F. B. CLEARING AND FORWARDING COMPANY LTD APPELLANT AND ZAMBIA REVENUE AUTHORITY RESPONDENT Coram: Ngulube, C. J., Sakala, J. S., Mambilima, Ag. J. S., 4* December, 2001 and 14th February, 2002 For the Appellant: For the Respondent: Ms. C. Shapi - Mutambo, Legal Officer. Mr. N. Chanda of Okware and Associates. _____________________ JUDGMENT_____________________ Sakala, J. S., delivered the Judgment of the Court. This is an appeal against a Judgment of the High Court dismissing the Appellant’s application for Judicial Review seeking the restoration of the Appellant’s Clearing Agent’s Licence suspended by the Respondent. In the same Judgment, the Court ordered that the Licence remains suspended until the sums of money owed by the Appellant and demanded by the Respondent had been settled. :J2: The brief facts of the case are that the Appellant was a registered Clearing Agent under the provisions of the Customs and Excise Act, Cap 322, with offices at Chirundu. Between 26th January and 6th March, 2001, the Appellant cleared goods for one F. Bhudia, a Congolese National. These goods were cleared as Removals in Transit. They were to enter Congo. They did not. They were, instead, off loaded in Kanyama, Lusaka, Zambia. On 21st March, 2001, the Respondent suspended the Appellant’s Clearing Agent’s Licence pending investigations into alleged fraudulent acquittals of Removals in Transit. Upon the conclusion of the investigations, the Appellant was informed by a letter dated 23rd April, 2001. The letter stated as follows: “23rd April. 2001 The Managing Director F. B. Clearing and Forwarding Company Ltd P. O. Box 38150 LUSAKA Dear Sir SUSPENSION OF CLEARING A GENTS LICENCE. I refer to the above subject Investigations in regard to the above subject have been concluded and found that all exports by F. Budia purported to have been exported to Congo are false. It has therefore been resolved as follows: : J3 : /. You as the Agent who guaranteed the five transactions of those five fake exports on behalf of F. Bhudia to Congo should pay all the Taxes due on each consignment Le. Duty, VAT and Interest amounting to KI04, 289,189. This is in line with Section 183(1) of Customs & Excise Act Cap 322. 2. You should, in addition, pay 100% fine on each consignment This is broken down as follows: Total Taxes payable K103,030,738 Interest 100% Fine TOTAL K 7,786,359 K103,030,738 K213,847,835 The amount of K213,847,835 is payable as soon as possible. Your Licence will remain suspended till the above full amount is paid. A Worksheet indicating the BUI of Entries involved and amounts is attached. ” The Appellant applied for Judicial Review praying for the following reliefs: the Respondent re-consider its decision to suspend the An order that the court quashes the decision to suspend the Applicant’s Licence; An order that Licence; A declaration demanded was 2000; and That the decision to suspend the Appellant’s Licence had no legal effect. the Respondent’s decision on the sums of money harsh and ultra vires Statutory Instrument No. 54 of that too The learned trial Judge considered the oral and documentary evidence on record. The court noted that the Appellant’s application did not raise complex issues of law; that the Respondent had lost revenue; and that a criminal offence had been committed. The court also noted that the Respondent’s employee was a party to : J4: the offence and had been punished. The court further noted the Appellant’s argument that stressed that the Appellant was not privy to the offence which led to the loss of revenue to the Respondent. The court found that the Appellant’s Licence was neither cancelled nor suspended in perpetuity as the suspension was conditional and could come to an end upon payment of the sums of money due and demanded. The court considered Section 83 of the Customs and Excise Act and found that it imposed a duty on the Appellant to ensure that all the transactions to which the Appellant was a party in its operation as a Clearing Agent did not result in loss to the Respondent. The court rejected the Appellant’s argument that it had no capacity for ensuring that some of its clients did not contravene the law. It was the view of the court that the Appellant was involved in a foreseeable business risk. The Appellant’s claim was dismissed with costs. The Licence was ordered to remain suspended until the sums owed and demanded were settled. On behalf of the Appellant, Mr. Chanda filed written heads of argument based on two grounds of appeal namely that the learned trial Judge erred in law and fact in holding that the Appellant’s Licence must remain suspended until the monies owed and demanded are paid, which finding was against the weight of evidence : J5 : especially with regards to acceptance by the trial Judge that the fraud was perpetrated by the Respondent’s own employee; and that the learned trial Judge further erred in both law and fact in finding that the Appellant took a foreseeable business risk which finding was against the weight of evidence as evidenced by proof of acquittals. The gist of Mr. Chanda’s oral submissions and heads of argument on these grounds was more of a plea in mitigation of the fine. Thus, Mr. Chanda submitted that the court having found that the respondent’s employee was a party to the offence committed, the Appellant was not a beneficiaiy as the Respondent’s employee connived with the importer. Counsel contended that the Appellant had no role to play other than preparing the documents indicating that goods were in transit to Congo. According to counsel, the law does not impose duty on an Agent to monitor that goods have left the country. Counsel pleaded that the Appellant be given back the Licence contending that the fine was too harsh. : J6 : On behalf of the Respondent, Mrs. Mutambo pointed out that the Appellant’s plea in mitigation can be appropriately made to the Commissioner-General by way of an appeal. She pointed out, however, that the bond taken by an Agent is a guarantee that goods will leave the country. She further pointed out that the acquittals are prepared by the Agent, stamped by the Respondent’s employees at the point of exit but taken back to the entry point by the Agent after the Agent has confirmed the exit of the goods. We have considered the judgment of the learned trial judge, the evidence on record and the submissions by both learned counsel. We are satisfied that the gist of the submissions on behalf of the Appellant is more of a plea in mitigation than a challenge of the learned trial Judge’s findings. The facts not in dispute clearly established that the Appellant entered into a bond, guaranteeing that the goods will leave the country. It was common cause that the Appellant, as Agent, had guaranteed five fake exports on behalf of same importer, F. Budhia to Congo. On all the occasions the goods never went to Congo. The acquittals made were all fraudulent, admittedly with the connivance of the Respondent’s employee. This, in our view, is no justification although a valid plea in mitigation. The fact is that the Respondent lost revenue. There is presently an : J7 : outstanding liability of duties payable on the goods. Above all, the liability to pay duty due on the consignment does not fall on an employee of the Respondent. We have also considered Section 183 of the Act in relation to liabilities of an Agent. It imposes the burden on the Agent who has represented himself to an officer of the Respondent. In his own evidence, the Appellant stated “When the goods do not exit, we still remain Hable. We pay the money due on the goods.” We find no merit on ground one. On the second ground of appeal, we agree with the submissions on behalf of the respondent that the taking out of the bond and the undertaking that goods in transit will leave the country make the business a foreseeable risk. We therefore find no basis for criticising the court when it so held . We find no merit in the whole appeal. It is dismissed with costs to be taxed in default of agreement. M. M. S. W. NGULUBE CHIEF JUSTICE E. L. SAKAJLA SUPREME COURT JUDGE L C. MAMBILIMA SUPREME COURT JUDGE