Company: Customs’ 600 charges on Perak duty-free store’s operator despite failed appeal bid at Federal Court suggests prosecutorial misconduct, malicious prosecution

Ida Lim
·4-min read
On January 11, 2021, the Federal Court rejected the Customs Department’s leave to appeal the Court of Appeal’s decision. — Reuters pic
On January 11, 2021, the Federal Court rejected the Customs Department’s leave to appeal the Court of Appeal’s decision. — Reuters pic

KUALA LUMPUR, Feb 27 ― The Customs Department’s move to proceed with prosecuting the operator of a duty-free store in Perak by slapping 600 charges on Thursday on the company and its directors could amount to malicious prosecution and prosecutorial misconduct, lawyers for the company have suggested.

This was because the Customs Department’s duty-free licence condition ― which the company was accused of breaching under the 600 charges ― had been quashed by the Court of Appeal, while the Customs Department had previously failed in its bid to appeal to the Federal Court.

The company in this case is Seruntun Maju Sdn Bhd, which has been operating since 1991 and with its main business being a duty-free shop in the border town of Pengkalan Hulu, Perak, which is located as what is known as the “buffer zone” or between Malaysia and Thailand’s immigration checkpoints.

The Customs Department had granted renewable two-year duty-free licences to Seruntun Maju since 1993, but added new conditions to the licence via an Appendix D issued on November 5, 2014 and again issued on September 14, 2016.

In both situations, the Appendix D or additional set of conditions were only issued months after the two-year duty-free licences for 2014 and 2016 were issued to the company, respectively on June 2, 2014 and June 1, 2016.

Under Appendix D’s paragraph 19, Seruntun Maju was required to prepare records of sales receipts with the full name, travel document number and vehicle number of the duty-free store’s customers.

Seruntun Maju had later told the Customs Department that it could not possibly state the customers’ names and passport numbers in the cash sale receipts, as most of its customers are from Thailand and are allowed to make purchases at the duty-free store without entering Malaysia as it is located at the buffer zone between Malaysia and Thai borders, with such procedure in place since the 1990s.

On November 23, 2017, Seruntun Maju challenged the legality of the additional conditions in Appendix D which the Customs Department said it had breached, with the company’s court challenge being through a judicial review at the High Court against the Perak Customs director-general and the Customs director-general.

The High Court on June 29, 2018 dismissed Seruntun Maju’s challenge by ruling among other things that the Customs Department is allowed to issue any conditions for duty-free shop licences and at any time even after the licence is issued.

Seruntun Maju then appealed to the Court of Appeal, which ruled in the company’s favour on June 18, 2020.

In the judgment written by Court of Appeal judge Datuk Hanipah Farikullah, she said Section 65D(2) of the Customs Act 1967 clearly states that licences for duty-free shop operations are subject to conditions that may be specified in the licence.

The Court of Appeal also found that there were no provisions under Section 65D that allows the Customs Department to modify and vary the licence or add new and further conditions after the duty-free licence had been issued to Seruntun Maju, before proceeding to quash the additional conditions in Appendix D.

On January 11, 2021, the Federal Court rejected the Customs Department’s leave to appeal the Court of Appeal’s decision.

Singapore-incorporated firm Duty Free International Limited (DFIL) had in a February 25, 2021 company announcement to the Singapore stock exchange noted that Malaysia’s Customs Department had on February 25 brought criminal charges against its subsidiary Seruntun Maju and officers for breaching duty-free licence conditions, but pointed out that the very same conditions had been quashed after a court process.

National news agency Bernama reported that 600 charges were read out on February 25 in the Magistrates Court in Pengkalan Hulu for about eight hours from noon until 8pm to three Seruntun Maju directors Ahmad Zubir Khalid, Ong Bok Siong, Mohd Radzuan Abdullah and the company Seruntun Maju as represented by its manager Chin Chin Jun.

With 150 chargers each read out separately to the three directors and the company as represented by its manager, all of them pleaded not guilty and claimed trial, with the four allowed bail at RM10,000 each with one surety.

The charges were based on the company’s alleged failure to comply with the licence conditions in Item 19 requiring sales receipts to contain the duty-free store’s customers’ full name, travel document number and vehicle number and were allegedly committed at the duty-free shopping complex in Pengkalan Hulu on September 9, 2015, with the charges under Section 65D which is punishable by a fine of up to RM20,000 or fine of up to five years or both upon conviction.

Seruntun Maju and the three directors were represented by Rosli Dahlan Saravana Partnership’s lawyer Louis Liaw Vern Xien, while the prosecution was led by Perak Customs director-general Mohamad Saprin.

The criminal case is set to come up for mention on April 8.

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