Ketua Pengarah Jabatan Kastam Diraja Malaysia v Howe Keat Sdn Bhd (P-01(A)-362-05/2024)

This is an appeal against the decision of the High Court dated 24th April 2024 allowing the Respondent’s application for, inter alia, an order of certiorari to quash the decision of the Royal Malaysian Customs Department (Customs Department) dated 18th August 2023, which rejected the Respondent’s appeal against the imposition of sales tax amounting to RM201,636.33.

The appeal herein is relating to sales tax imposed on the importation of a chemical product known as WEX-SL from Thailand.

The Respondent has been importing the product since 2020 and claimed that the product is exempted from sales tax as it is tax exempt pursuant to Section2 and schedule A of the Sales Tax (Goods Exempted from Tax) Order 2018. This is because the product has been claimed by the Respondent under the classification tariff code:

2909.30.00.00. [4] On 23rd February 2022, the Customs Department issued a letter to the Respondent and required the Respondent to provide a sample of the goods for evaluation. The Respondent gave a sample as requested by the Appellant. [5] After an audit carried out by the Appellant on the product in February 2022, the suitable tariff code suggested by the Customs Department’s branch of Cawangan Import, Export & Zon Bebas, Pelabuhan Selatan, Butterworth, Penang was 3402 20 1400 meant for other anionic surface-active preparations. [6] Since there was a dispute as to the exact tariff code applicable, the Appellant’s auditor wrote to the Appellant’s Bahagian Perkhidmatan Teknik for a ruling on the classification of the goods where a sample was asked from and provided by the Respondent for evaluation. Upon evaluation by the Chemistry Department, the Appellant found and ruled on 9th January 2023 that the product fell under classification tariff code: 3402.90.1400 which specify the goods as “other anionic surface-active preparations” and thus subject to 10% sales tax. [7] A certificate under Section 22A of the Customs Act 1967 was issued by the Appellant on 9th January 2023 which specify the goods as “other anionic surface-active preparations” with tariff code 3402 90 1400 attracting 10% sales tax. [8] The Appellant accordingly issued a bill of demand dated 20th March 2023 to the Respondent to claim for 10% outstanding sales tax amounting to RM201,636.33. [9] Dissatisfied with the decision, a revision was applied on 6th April 2023 but was rejected by the Appellant via a letter dated 18th August 2023. [10] As a result, the Respondent applied to the High Court for a judicial review to quash the decision communicated via the letter dated 18th August 2023. The Respondent also prayed for a declaration that the Bill of Demand made by the Appellant is invalid. Declarations were also sought to the effect to render the goods known as “WEX-SL” are classified under tariff code 2909 30 0000 and exempted from payment of sales tax and that the Certification Result Classification of Goods dated 9th January 2023 is void. [11] At the same time, the Respondent procured an expert opinion by one, Dr. Woo Choon Kong, a registered chemist under the Chemists Act 1975. Dr. Woo opined that the goods ought to be classified under the tariff code: 2909.30.0000. DECISION OF THE HIGH COURT [12] The learned High Court judge found in favour of the Respondent primarily by reason that the Appellant failed to exhibit in court the chemist report that analyses the product ought to be classified under tariff code: 3402.90.14.00 particularly when the Respondent has tendered a contrary chemist report by Dr. Woo. The learned High Court Judge held as follows: “(a) The ruling, which was made by the Respondent without an analysis by a chemist, is a conclusion which is not supported by evidence. It is therefore irrational and the Respondent has committed an error in law; and

The Respondent has failed to rebut the Applicant’s chemist report, which therefore stands unrebutted.” [13] The learned High Court Judge further held that: “38. Clearly, the Customs Act 1967 and the Sales Tax Act 1967 never intended for the customs ruling to apply retrospectively. In fact, there is no express provision in the said statutory provisions providing such effect. Hence the Respondent had acted irrationally and committed an error of law by imposing the sales tax retrospectively.

I agree with the Applicant that the goods which were declared by Thailand under the Tariff Code: 2909.30.00 and imported from Thailand to Malaysia, ought to be the same to maintain consistency and uniformity under the Harmonised System pursuant to the Convention. Unless it has been proven by the Respondent vide a qualified chemist that the goods shall be classified otherwise. This is especially so where the Respondent’s classification vides the ruling was done without any scientific basis by a qualified chemist.” APPELLANT’S SUBMISSION [14] In this appeal, the Appellant’s main contention is that the learned High Court Judge has erred in deciding that the Appellant has no basis to form his decision wherein a Chemist Report has been reported and referred to by the Appellant. [15] The Appellant submitted that Section 22A of the Customs Act 1967 does not give the Court the space and opportunity to provide a different interpretation regarding the admissibility of the certificate by the Appellant and it shall be accepted as sufficient evidence of the facts stated therein and the Appellant shall not be required to give evidence in respect of such decision. [16] On the issue of retrospective imposition of sales tax, the Appellant submitted that in the present case, a ruling was made only after the importation and upon request from the Appellant’s audit team to verify the conflicting position taken by the Applicant’s audit team and the Respondent, which in any event will not come under the ‘ruling’ within the definition of section 10A Customs Act 1967. The Appellant further submitted that retrospective collection of sales tax is permissible under Section 17 of the Customs Act 1967. [17] Regarding the point that the tariff code by the Appellant went against the International Convention on the Harmonized Commodity Description and Coding System and Technical Data Sheet issued by the exporter in Thailand, the Appellant submitted that there was enough evidence relied on by the Appellant before issuance of the certificate under Section 22A of the Customs Act 1967. The issuance of the certificate itself renders the decision to be a valid one without any proof of further evidence. [18] The Appellant further contends that the international documents are not binding on the Appellant when they are not an authority in Malaysia to decide on the tariff code for tax purpose. These international instruments are merely a guidance to importers. The Appellant referred to the Customs (Anti-Dumping Duties) (No 2) Order 2019 [P.U.(A) 362/2019 where it is clearly stated that the International Convention on the Harmonized Commodity Description and Coding System is merely for guidance and have no binding effect on the classification of goods. RESPONDENT’S SUBMISSION [19] The Respondent contends that the issuance of the Certificate under Section 22A of the Customs Act 1967 is merely about admissibility of the certificate but not final and conclusive and may be subject to scrutiny when it was issued without a chemist report. [20] The Respondent contends that the goods which were declared by Thailand under the Tariff Code: 2909.30.00 and imported from Thailand to Malaysia ought to be the same to maintain uniformity and consistency under the Harmonized System pursuant to the Convention, until and unless it has been proven by the Appellant via a qualified chemist that the said goods shall be classified otherwise. This is especially where the Appellant’s classification via the Ruling was done without any scientific basis by a qualified chemist. [21] The Respondent further submits that there is an ambiguity in the Customs Act 1967 as to whether the public ruling can apply retrospectively and there is nothing in the statute which provides that the public ruling can apply retrospectively. In support of their contention, the Respondent cited several authorities viz (1) Everise Sprint (M) Sdn Bhd v The Minister of Finance, Malaysia & Anor [2015] 7 CLJ 309 CA (2) Jakinta Trading Sdn Bhd v Director General of Customs & Anor (2021) LNS 678 HC (3) Kerajaan Malaysia v Wong Pot Heng & Anor (1997) 2 CLJ 188 FC and (4) Syed Ibrahim Syed & Ors v Esso Production Malaysia Incorporated (2004) 1 CLJ 889 CA. EVALUATION AND FINDINGS OF THIS COURT [22] The main issue for determination in this appeal is whether the Appellant’s tariff code classification via the ruling was done without any scientific basis by a qualified chemist and whether a chemist report must be produced in evidence by the Appellant to justify his ruling notwithstanding the issuance of the Section 22A certificate by the Director General. [23] The salient principles on judicial review are clear. The function of the Court in a judicial review application is supervisory, not appellate and the Court is generally not so much concerned with the decision but the decision making process. See. Harpers Trading (M) Sdn Bhd v National Union of Commercial Workers (1991) 1 CLJ (Rep) 159 SC. The decision of an inferior tribunal may be reviewed on the grounds of illegality, irrationality, procedural impropriety and possibly proportionality which allow the courts to review the decision not only for process but also for substance. See. R Rama Chandran v The Industrial Court of Malaysia & Anor

1 MLJ 145 FC. [24] In this appeal, the Appellant is required to show that the learned High Court Judge is plainly wrong in allowing the application for judicial review. See. Ng Hoo Kui & Anor v Wendy Tan Lee Peng, Administrator of the Estate of Tan Ewe Kwang, Deceased & Ors

10 CLJ 1 FC and Fermpro Sdn Bhd v Ketua Pengarah Jabatan Kastam Dan Eksais Diraja Malaysia (2025) 4 CLJ 685 CA. [25] Sections 22 and 22A of the Customs Act 1967 provides as follows: Questions in respect of goods deemed to be dutiable: “22. If any question arises as to whether any particular goods are or are not included in a class of goods appearing in an order made under subsection 11(1), such question shall be decided by the Director General. Certificate of Director General admissible in evidence 22A. Notwithstanding anything contained in any other written law or rule of evidence to the contrary , where in any proceedings a document purporting to be a certificate under the hand of the Director General in respect of a decision made by him under section 10B,13B or 22 is produced, such document is admissible in evidence and shall be accepted as sufficient evidence of the facts therein stated and the Director General shall not be required to give evidence in respect of such decision unless the court otherwise orders.” [26] In the present appeal, the sample provided by the Respondent was referred by the Appellant to Jabatan Kimia Malaysia for analysis by experts. See. Paragraph 10 of the Appellant’s Affidavit at pages 29 -30 of Encl 4. Further, the Goods Classification Statement also referred to an expert report on the analysis of the sample of the goods and the result of the analysis. See. Goods Classification Statement at Page 80 of Encl 4. [27] There is no dispute that a certificate under Section 22A of the Customs Act 1967 has been issued in respect of the goods (WEX-SL) and the Director General has classified the goods under Tariff Code 3402.90.1400. See. Sijil Keputusan Klassifikasi Barangan at Page 77 of Encl 4. The Affidavit evidence shows that the Section 22A certificate was issued based on the expert report by Jabatan Kimia Malaysia Makmal No. B(IK)00133/33 dated 6th June 2022. [28] As the meaning of the words in Section 22A are plain and unambiguous, it the duty of the Court to give full effect to a clear provision of the law.See.Calamas Sdn Bhd v Pentadbir Tanah Batang Padang (2011) MLJU 1528. [29] In Malaysian Bar v Dato’ Kanagalingam A/L Velupillai (2004) 4 MLJ 153, the Federal Court agreed with the sentiments expressed in the case of Duport Steels Ltd & Ors v Sirs & Ors (1980) 1 WLR 142 wherein Lord Diplock at p 157 held: “Where the meaning of the statutory words is plain and unambiguous it is not for the judges to invent fancied ambiguities as an excuse for failing to give effect to the plain meaning because they themselves consider that the consequences of doing so would be inexpedient, or even unjust or immoral.” [30] Section 22A clearly and expressly states that such certificate shall be admissible and accepted as sufficient evidence of the facts stated therein and the Director General shall not be required to give evidence in respect of such decision unless the Court otherwise orders. [31] Pursuant to Section 22A, the Director General is not required to give further evidence or tender a chemist report in Court to substantiate the facts stated in the certificate. Further, an expert report by Jabatan Kimia Malaysia on the analysis of the sample of the goods provided by the Applicant was referred to in the certificate and the goods classification statement. If the Applicant wishes to challenge or rebut the facts contained in the certificate, the Applicant could apply to the Court to order the Director General or its chemist to testify or for the said chemist report by Jabatan Kimia Malaysia to be produced in evidence failing which the Applicant could not complain that no chemist report was prepared or exhibited in evidence by the Appellant. [32] Section 22A provides that “…where in any proceedings a document purporting to be a certificate made under the hand of the Director General in respect of a decision made by him…. is produced, such document shall be admissible in evidence and shall be accepted as sufficient evidence of the facts therein stated and the Director General shall not be required to give evidence in respect of such decision….”. Similar words or language is also expressed in Section 25A(6) of the Adoption Act 1952 and Section 33(1) of the Births Deaths Registration Act 1957. [33] In Samuel Duraisingh & Anor v Pendafter Besar Kelahiran dan Kematian, Malaysia and another appeal (2019) MLJU 1688, the High Court held that the certificate issued under the said Section 25A(6) and Section 33(1) does not amount to conclusive proof of the entry or facts therein. [34] From a legal context, the words “sufficient evidence of the facts…” appearing in Section 22A is synonymous with prima facie evidence or case. In Ng Pik Lian v Tai May Chean & Anor and other appeals (2022)CA 2 MLJ 950 CA and Balachandran v PP

2 MLRA 547 FC, the appellate Courts applied the definition of a prima facie case in Mozley and Whiteley’s Law Dictionary, 11th edn as follows: “….A litigating party is said to have a prima facie case when the evidence in his favour is sufficiently strong for his opponent to be called on to answer it. A prima facie case, then, is one which is established by sufficient evidence and can be overthrown only by rebutting evidence adduced by the other side…” [35] In our considered view, the Section 22A certificate is not conclusive and can be disproved by rebuttal evidence adduced by the Respondent. [36] Upon our review, we find that the learned High Court judge has been plainly wrong by not having given effect to Section 22A of the Customs Act 1967. We however find that based on the special wordings of Section 22A “Notwithstanding anything contained in any other written law or rule of evidence to the contrary” as well as “the Director General shall not be required to give evidence in respect of such decision unless the court otherwise orders”, the certificate of the Appellant is sufficient evidence to conclude that the sales tax is due as demanded unless rebutted by the Respondent. We are mindful that the Respondent tendered its chemist report describing the product but the Appellant merely tendered particulars of the product in its Keterangan Klassifikasi Barangan dated 9th January 2023 analysed by a chemist but without an accompanying affidavit of the chemist. [37] In the circumstances, we hold that pursuant to Section 22A Customs Act 1967, the certificate is not conclusive and is rebuttable. The burden of proof to rebut is however upon the Respondent. Albeit, the Respondent has tendered its chemist report, we are of the view that, in discharge of the burden, the Respondent has the duty to invite the Court to order that the Appellant and/or its chemist be present in court to testify. The Respondent has however not done so at its peril. This is principally because we find that the description of the product in the Appellant’s particulars and the Respondent’s chemist report are significantly different akin to comparing an apple and an orange. [38] In the premises, we find that appellate intervention is thus warranted. Nonetheless, we are aware that the Respondent has also raised the point that the product has been classified under tariff code:

2909.30.00.00 in Thailand but we find that this is claimed by the exporter but not that pronounced by the Custom Authority of Thailand; thus, it is not cogent. [39] Moreover, the Respondent contended that the Appellant is unlawfully collecting sales tax retrospectively, but we find that this is plainly permissible pursuant to Section 17 of the Customs Act 1967 which provides as follows: “17(1) Whenever-

Through inadvertence, error, or for any other reason, misconstruction on the part of any officer of customs, or through unintentional misstatement as to value, quantity or description by any other person, or for any other reason, the whole or any part of any custom duty, surcharge, penalty, fee or other money payable under this Act have not been paid; or

The whole or any part of customs duty, surcharge, penalty, fee or other money after having been paid, have been, owing to any cause, erroneously refunded, the person liable to pay such customs duty, surcharge, penalty, fee or other money or the person to whom such refund has erroneously been made, as the case may be, shall pay the deficiency or repay the amount paid to him in excess, on demand being made within 6 years from the date on which customs duty, surcharge, penalty, fee or other money was payable or deficient customs duty, surcharge, penalty, fee or other money was paid or the refund was made , as the case may be, and without prejudice to any other remedy for the recovery of the amount due, any goods belonging to such person which may be in customs control may be detained until such customs duty, surcharge, penalty, fee or other money or deficiency be paid or the refund be repaid, as the case may be. …..

Nothing in subsection (1) shall prevent the Director General from making a demand at any time after six years whenever any payment of customs duty, surcharge, penalty, fee or other money is not paid or short paid due to any form of fraud or default committed by or on behalf of any person.” [40] In the present appeal, there is no dispute that the six years time frame for the Director General to make a demand for payment of sales tax has not lapsed. [41] The appeal is therefore allowed and the decision of the High Court is set aside. Costs of RM18,000 here and below to the Appellant without allocatur. Dated this 13th August 2025 -sgd-LEONARD DAVID SHIM COURT OF APPEAL JUDGE LIST OF COUNSELS:

Counsels for the Appellants

Aliza Jamaluddin Aqilah binti Md Desa Pejabat Penasihat Undang-Undang Negeri Pulau Pinang Counsel for the Respondent Cheong Yew Sheng