Date: 20000619
Docket: T-194-95
BETWEEN:
SAFI SYED and FAZAL SYED, carrying on business as
AMIR ENTERPRISES INTERNATIONAL
Plaintiffs
- and -
THE MINISTER OF NATIONAL REVENUE OF CANADA
Defendant
REASONS FOR JUDGMENT
LAFRENIÈRE P.:
[1] This is an appeal by the Plaintiffs pursuant to section 135 of the Customs Act1 ("the Act") of a decision of the Minister dated December 30, 1994, made pursuant to section 131 of the Act, upholding the seizure and forfeiture of certain jewellery imported by the Plaintiffs to Canada on November 1, 1993. The terms of release of the jewellery, as assessed by the Defendant, is payment of $13, 493.60, which includes a penalty of three times the revenue allegedly evaded.
[2] The Plaintiffs seek a declaration that the goods seized were properly reported and that they were not subject to seizure and forfeiture. They also request the return of the seized goods upon payment of the exigible duty. The Defendant contends that the seizure and forfeiture were justified because the Plaintiffs did not report the jewellery upon their arrival at the Vancouver airport in accordance with section 12 of the Act. Subsection 12(1) reads as follows:
| 12. (1) Subject to this section, all goods that are imported shall, except in such circumstances and subject to such conditions as may be prescribed, be reported at the nearest customs office designated for that purpose that is open for business.
|
12. (1) Sous réserve des autres dispositions du présent article, ainsi que des circonstances et des conditions prévues par règlement, toutes les marchandises importées doivent être déclarées au bureau de douane le plus proche, doté des
attributions prévues à cet effet, qui soit ouvert.
|
| [3] Five witnesses were heard during the course of the three day trial - the two Plaintiffs, Safi Syed and his wife Fazal Syed, and three customs officers, Richard Backs, John Ashikian and Margaret Heather Smith. |
| [4] Since credibility of the witnesses was said to be at issue, an order excluding witnesses was granted at the commencement of the hearing. The events prior to the arrival of the Plaintiffs at the Vancouver airport from India on November 1, 1993 proved not to be contentious. However, the Plaintiffs" version of what transpired at the Vancouver airport on November 1, 1993 was contradicted by the Defendant"s witnesses in many respects. |
| [5] Mr. Syed is a businessman residing in the City of Richmond, British Columbia. He was born in Bangalore, India and immigrated to Canada in 1972. He married Fazal Syed in 1973 and has three children, all born in Canada. Having acquired a mechanical engineering degree in India, Mr. Syed was gainfully employed in that field with various employers in Toronto and Montreal until 1984, when he accepted a management consultant position on a term basis with Customs Canada. As a result, he relocated to Vancouver. |
| [6] Mr. Syed was one of four consultants hired to observe the performance of clerical duties by customs officers and to propose time standards to improve the efficiency of the department. His term employment came to an abrupt end after nine months when the department went through downsizing. Mr. Syed launched a human rights complaint against his former employer as a result of his lay-off, alleging that the termination of his employment was racially motivated. His complaint was ultimately dismissed by a Canadian Human Rights Tribunal. |
| [7] Within a couple of months of his termination of employment, Mr. Syed was hired as an industrial engineer with an aircraft company in Richmond. He worked for the company for three and a half years, at which point he was once again laid-off. Mr. Syed decided at that point to use his severance pay of approximately $30,000 to return to India with his family and set up a business importing jewellery and clothing. |
| [8] The relocation proved to be difficult. Mr. Syed"s children had problems adjusting to their new school and the climate, and they were constantly getting sick. Within nine months, the family decided to move back to British Columbia. |
| [9] In late 1988 or early 1989, the Plaintiffs started carrying on business under the name of Amir Enterprises International, a proprietorship in Fazal Syed"s name, which was engaged in importing jewellery and clothing for ultimate sale to East Indian businesses in the city of Surrey and surrounding area. |
| [10] In the beginning, the Plaintiffs imported goods into Canada two to three times a year. This entailed short trips by the Plaintiffs to do business with suppliers primarily in Singapore, Thailand and India. As the business expanded, the amount of travel more than doubled. |
| [11] When Mr. Syed returned from his trips abroad, he was routinely referred from the primary customs inspection line to secondary inspection where a more extensive examination would be conducted. It was Mr. Syed"s belief that his automatic referrals to secondary inspection constituted harassment and were directly related to his human rights complaint against the department back in 1985. |
| Events leading to the seizure and forfeiture |
| [12] On August 10, 1993 the Plaintiffs imported certain jewellery from India to Canada and paid duty thereon. Some of this jewellery turned out to be of the wrong design or size. As a result, the Plaintiffs decided to re-export the unmarketable product back to India. |
| [13] Immediately prior to their departure for India on October 11, 1993, the Plaintiffs attended at the Customs counter at the Vancouver airport to complete a form entitled Identification of Goods Exported or Destroyed ("E-15 form"). This form, in which the Plaintiffs listed the jewellery being exported back to India, was reviewed and endorsed by a customs inspector, who was later identified as Richard Backs. |
| [14] Mr. Syed testified that he sought advice from Mr. Backs while completing the E-15 form. This was corroborated by his wife. He asked Mr. Backs what would be required if the Plaintiffs exchanged the jewellery being returned to India for some other jewellery and they wanted to bring the exchanged items to Canada. According to Mr. Syed, Mr. Backs responded that if the jewellery was returned to the original supplier, the Plaintiffs would be required to obtain a letter from that supplier acknowledging receipt of the returned goods and they could then apply for a refund upon their return to Canada. If, on the other hand, they intended to return with jewellery obtained in exchange, the Plaintiffs would be required to report the goods to Customs and an adjustment and "remission" would be carried out at the airport. |
| [15] During his testimony, Mr. Backs did not deny providing advice to the Plaintiffs, although he had no independent recollection. He expressed doubt however that he would have used the word "remission" since he wasn"t familiar with the procedure - such transactions being routinely handled by other employees at the downtown Customs office. |
| [16] On October 20, 1993, Mr. Syed returned the jewellery listed in form E-15 to the Ellore Jewellery Mart in Bangalore, India. In exchange for the returned jewellery (valued at $11,273.60 U.S.), he purchased other jewellery for $6,122.85 U.S. ("Bangalore jewellery") and accepted a credit from the supplier for the balance. The credit was reflected in a letter from the supplier ("Ellore letter"). |
| [17] On their return flight to Canada, the Plaintiffs stopped in Singapore and purchased some additional jewellery from Little India Jewellery for approximately $13,000 Can. ("Singapore jewellery"). |
| Events of November 1, 1993 |
| [18] On arrival at the Vancouver airport on November 1, 1993, the Plaintiffs separated when lining up for primary inspection at the Customs counters and were processed by different customs officers. |
| [19] Mr. Syed testified that he presented an E-311 declaration card (which must be completed in advance by all travellers) to the customs officer at primary inspection, John Ashikian. Mr. Syed had written on the form that he was arriving from India, Singapore and Korea and had commercial goods to declare (clothing $401 and jewellery $13,363). He also wrote that the total value of all goods being brought into Canada "which were purchased, received or acquired in any manner while outside the country" was $13, 674. |
| [20] Mr. Syed asserted that both the Bangalore jewellery and the Singapore jewellery were in his handbag when he attended at primary inspection. He maintained that all the documents related to the jewellery were in his hand ready for production upon request. When asked by Mr. Ashikian to identify the goods declared on the card, Mr. Syed replied that they were the jewellery purchased in Singapore and some ladies clothing. According to Mr. Syed, he then handed over to Mr. Ashikian the E-15 form (completed on October 11, 1993), the Ellore letter and the B-3 form evidencing payment of duty on the jewellery imported in August 1993. |
| [21] Mr. Syed explained that he believed he would be entitled to a credit by way of remission since the duty already paid on the jewellery which had been re-exported was higher than duty payable on the jewellery obtained in exchange. However, he never got the opportunity to claim the remission. Mr. Ashikian simply corrected the E-311 to reflect $100 for personal exemption and then referred Mr. Syed to secondary inspection. |
| [22] Mrs. Syed confirmed that all the jewellery was in her husband"s handbag prior to their arrival at the Vancouver airport. Since Mr. Syed had walked faster, he got to the primary inspection line ahead of her. She recalled seeing Mr. Syed pull out some papers at both primary and secondary inspection from a distance. In cross-examination, she acknowledged that she couldn"t identify the documents except for form E-15 because of its green colour. |
| [23] Mr. Ashikian testified that he did not recall being shown any documents by Mr. Syed other than the E-311 form and his passport. It was his practise to write "inv." on the declaration card if a document identified as an invoice was produced by a traveller. In this case, there is no such notation on the declaration card. He remembered having dealt with Mr. Syed from previous enforcement action and therefore knew that he would be red-flagged if a computer check was conducted. Based on standard procedure, a referral to secondary inspection was therefore automatic. In addition, referrals were mandatory in all cases where commercial goods were declared. He coded the E-311 form with numbers reflecting the reasons for the mandatory referral and directed Mr. Syed to secondary inspection. |
| [24] Mr. Syed testified that at secondary inspection, he produced his E-311 form and his passport to customs officer Heather Smith. He also pulled out the same documents he had in his hand at primary from his green bag and was holding them in his hand. Ms. Smith proceeded to process the ladies clothing declared on the form. A Casual Goods Accounting Document (B-15 form) was completed and he was asked to pay duty and taxes at a separate counter. |
| [25] Mr. Syed then tendered an invoice for the Singapore jewellery and produced the jewellery to Ms. Smith. Another form was completed and the jewellery was retained in a safe, as is normal practise, pending clearance at the Customs Air Cargo office. |
| [26] According to Mr. Syed, he subsequently produced an invoice for blue sapphire samples valued at $75.00 purchased in Singapore. Ms. Smith inquired as to where the stones were. At that point, Mr. Syed took the stones out and handed them to her. Ms. Smith then asked him why the stones hadn"t been declared. Mr. Syed answered that he had declared them to Mr. Ashikian. He was surprised that there was no notation on the E-311 form. He became confused and told Ms. Smith that they were included in his personal exemption of $100. |
| [27] Mr. Syed maintained that he produced forms E-15 and B-3 and the Ellore letter to Ms. Smith and asked for a remission. It was his perception that Ms. Smith was being confrontational. She asked him to produce the jewellery, which he did, and she then accused him of smuggling. After been cautioned, Mr.Syed was subsequently detained on suspicion of failing to properly declare goods as required by the Customs Act. The Bangalore jewellery and the sapphires was seized. |
| [28] On cross-examination, Mr. Syed acknowledged that as an importer he was aware of the requirement to report all goods being imported into Canada. He further acknowledged that he was aware that referrals to secondary inspection were routine when commercial goods were being imported. When questioned with respect to his discussion with Mr. Backs, Mr. Syed conceded that he had not been advised not to declare goods when seeking a refund. He reiterated that he presented the relevant documents to the primary inspector and expected a remission to be processed. When confronted with Ms. Smith"s allegation that the Bangalore jewellery was found in one of his large bags, he insisted that he was carrying it in his handbag throughout. |
| [29] At the time of the seizure, Ms. Smith was a senior customs inspector with twenty years experience with the department She explained that the role of a secondary inspector is to expand on the sometimes perfunctory examination of passengers by primary inspectors. She stated that her practise was to first greet the passenger and then ask to see their goods or documents. She would then question the passenger to ascertain exactly what was being declared to reach a point of finality. Once that point has been reached, the passenger would be held to their declaration. Ms. Smith clarified that the point of finality occurs at the primary examination. |
| [30] She testified that Mr. Syed arrived at secondary and that the only documents produced were his E- 311 declaration card and passport. The card indicated that Mr. Syed was declaring $100 worth of personal goods (a correction made by Mr. Ashikian), $401 of commercial clothing, and $13,363 of commercial jewellery. Accodring to Ms. Smith, Mr. Syed claimed that he was travelling alone and his personal purchases consisted of three pairs of eyeglasses and some clothing for his wife. It was at this point that he produced invoices for the Singapore jewellery and commercial clothing. |
| [31] After processing the commercial clothing and jewellery, Ms. Smith conducted a computer check on both Mr. Syed and his company. This revealed that two enforcement actions had been taken against Mr. Syed and his company Amir Enterprises International in recent years. |
| [32] An examination was then conducted of Mr. Syed"s baggage, beginning with his hand-carry bag. Ms. Smith discovered a receipt from a vendor in Singapore for 225 grams of cut stones valued at $78.75 Singapore dollars. She asked Mr. Syed where the stones were. After some hesitation, he pointed to another suitcase from which he produced a bag of dark blue stones. When asked why he did not include these stones on his declaration, he stated that they were samples and that he did not think he had to declare samples. |
| [33] Ms. Smith then asked Mr. Syed if he had any more jewellery or stones in his bags. He responded that he did not. Ms. Smith continued to search the hand-carry bag and found a photocopy of the B-3 form, the E-15 form and the Ellore letter. |
| [34] Mr. Syed was questioned as to the significance of the Ellore letter. Ignoring the question, he pushed the letter aside, picked up the B-3 and E-15 forms and demanded that Ms. Smith immediately process a remission on the duty and taxes already paid. Ms. Smith explained that a refund was not available at the passenger terminal of the airport, however Mr. Syed persisted that the remission should be processed. |
| [35] Upon further questioning by Ms. Smith, Mr. Syed acknowledged that he had more jewellery in his luggage. The Bangalore jewellery was located in one of his suitcases and examined. It had been packed in three paper envelopes within a plastic bag and wrapped in cotton batting. |
| [36] Ms. Smith was of the view that Mr. Syed intended to claim a refund on the exported jewellery listed in form E-15 and not declare the Bangalore jewellery unless specifically questioned. Mr. Ashikian confirmed to her that this jewellery had not been declared. She concluded that there was evidence of intent to evade the payment of duties and taxes. Due to Mr. Syed"s previous customs history, a penalty equal to three times the amount evaded was imposed. |
| [37] In cross-examination, Ms. Smith acknowledged that Mr. Syed"s ability to speak English was limited, however she felt that there was no need for an interpreter as his English was acceptable. She admitted that she did not make any notes regarding the size and colour of Mr. Syed"s luggage. She did recall however that the jewellery was found in a checked bag and not the hand carried bag. She maintained that the sequence of events reflected in her notes prepared shortly after the seizure was accurate. |
| [38] The Plaintiffs appealed the seizure of the jewellery on November 9, 1993. Following an lengthy review, by letter dated December 30, 1994, the Minister concluded that there had been a contravention of the Customs Act and the seizure was upheld. |
| [39] The standard of proof in an appeal under section 135 of the Customs Act was set out by MacKay, J. in Mattu v. Canada: 2 |
| Section 135 of the Customs Act does not set out in any detail the requirements or the nature of the appeal that is provided from the decision of the Minister, and those matters were not argued in this appeal. My interpretation of the section is that it provides for a trial de novo in the sense that the court is not limited to consideration of evidence that was before the Minister. At the same time, as in the case of appeals from other administrative decisions or decisions of quasi judicial bodies established by statute this court will not readily vary the decision appealed from unless it is persuaded that the Minister or his agents failed to observe a principle of natural justice or failed to act within his or her statutory discretion, or that the decision is based on an error in law, or is based on a finding of fact that is perverse or capricious or without regard to the evidence before the Minister. |
| [40] The Plaintiffs deny having smuggled or attempted to smuggle the Bangalore jewellery into Canada. They submit that Mr. Syed made a proper declaration by presenting the E-15 form and supporting documents to the primary and secondary inspectors on arrival at the Vancouver airport. Alternatively, they contend that the representations of Mr. Backs gave rise to an estoppel as they believed that they were complying with the requirements to declare and pay any duty on the exchanged jewellery. |
| [41] The only issue is whether Mr. Syed declared the Bangalore jewellery and cut stones as required under the Act or, at the very least, intended to declare the jewellery but was denied an opportunity to do so. |
| [42] Conflicting evidence was adduced by the parties regarding what transpired on November 1, 1993 between Mr. Syed and the two customs officers. This matter clearly comes down to a question of credibility. Based on my review of the evidence, I have decided to prefer the testimony of Mr. Ashikian and Ms. Smith over that of the Plaintiffs. |
| [43] As an experienced importer, Mr. Syed was aware of the statutory requirement to declare goods being imported into the country. His first opportunity to declare the Bangalore jewellery was on the E-311 form. No satisfactory explanation was given for his failure to record the exchanged jewellery on the written form even though there was a positive obligation on his part. I do not accept that Mr. Backs" advice could be interpreted so as to relieve the Plaintiffs from their obligation to promptly declare all goods being imported into Canada. |
| [44] Mr. Syed"s second opportunity to declare the Bangalore jewellery and cut stones was during his oral declaration to Mr. Ashikian. Mr. Syed himself recognized that he didn"t even mention the Bangalore jewellery or stones at that point. He chose instead to retain documents in his hands, presumably to claim a remission. I do not accept this assertion as I believe Mr. Ashikian would have made a notation of the invoices on the E-311 form had such documents been produced. |
| [45] Further, even if I were to accept that the documents had been produced, there is no indication that Mr. Syed pursued the matter of remission with Mr. Ashikian. He appeared content to remain passive. Mr. Syed"s lack of initiative leaves me perplexed, particularly in light of his previous dealings with the department. |
| [46] Mr. Syed insisted that he produced the same documents when he was questioned by Ms. Smith and that the Bangalore jewellery was in his handbag. This was squarely contradicted by Ms. Smith who testified that she found the documents and the jewellery secreted in his luggage. Ms. Smith impressed me with her recollection of the events. I have no reason to believe that she fabricated her evidence. To the contrary, I found her to be honest and forthright. The same cannot be said about Mr. Syed. |
| [47] I note that Ms. Smith testified that Mr. Syed declared that he was travelling alone. It seems odd that a husband and wife, having travelled together for an extended period, would not accompany each other to make a joint declaration. The Plaintiffs" explanation for their separation at the primary inspection was tenuous. I conclude that Mr. Syed had the intention of misleading Ms. Smith on this point. |
| [48] I am further of the view that Ms. Smith properly recorded the correct time in her notes despite a computer generated form suggesting otherwise. |
| [49] As for Fazal Syed, she appeared reluctant and uncomfortable on the witness stand. Her recollection of the events was imprecise and vague except when corroborating her husband"s version. As such, I have given her testimony little weight. |
| [50] The Plaintiffs have failed to establish, on a balance of probabilities, that they declared, or intended to declare, the Bangalore jewellery to either the primary or secondary inspectors. As such, the argument of estoppel must also fail. Having had the benefit of hearing and observing the witnesses, I conclude that there is no basis for my intervention in this case. Consequently, I concur with the decision of the Minister and uphold the seizure and forfeiture. |
| [51] The appeal shall be dismissed. Costs shall be to the Defendant. If the parties are unable to agree as to the quantum of costs, counsel shall, within 10 days of the date of these reasons, submit written representations, not to exceed five pages in length, and attach any written offer to settle. |
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
| STYLE OF CAUSE: SAFI SYED and FAZAL SYED, carrying on business as AMIR ENTERPRISES INTERNATIONAL |
| THE MINISTER OF NATIONAL REVENUE OF CANADA |
HEARD AT VANCOUVER, BRITISH COLUMBIA
| REASONS FOR JUDGMENT BY: LAFRENIÈRE P. |
DATED: MONDAY, JUNE 19, 2000
SOLICITORS OF RECORD: Jack D. Buchan
Cohen Buchan Edwards
Barristers & Solicitors
208-4940 No. 3 Road
Richmond, British Columbia
V6X 3A5
Deborah L. Carlson
Swinton & Company
| Vancouver, British Columbia |
For the Defendant
FEDERAL COURT OF CANADA
Date: 20000619
Docket: T-194-95
Between:
| SAFI SYED and FAZAL SYED carrying on business as AMIR ENTERPRISES INTERNATIONAL |
Plaintiffs
- and -
| THE MINISTER OF NATIONAL REVENUE OF CANADA |
Defendant
__________________
1 R.S.C. 1985 (2nd Supp.), c.1
2 (1991) 45 F.T.R. 190 (T.D.)
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