In the District Court of Nauru 
Criminal Jurisdiction

Criminal Case No. 44 of 2015

Republic

 V

Liu Fu Quang

Date of hearing: 21, 22, 23,24,30,31 and 1 April 2016 
Date of Ruling: 2nd April 2016 

Mr. Filimoni Lacanivalu for the Republic
Mr. Vinci Clodumar for the defendant

Judgment

INTRODUCTION

1.	The defendant is charged with 1 count of making a false declaration contrary to section 243(4) (a) and (5)(a) of the Customs Act 2014. Section 243(4)(a) of the Customs Act 2014 reads:

“A person commits an offence who:

(a)	makes a false declaration under the Act knowing it to be false”

Section 243 (5) (a) of the Customs Act 2014 read:

“A person convicted of an offence under subjection (4) is liable for an individual to a fine not exceeding $30,000.00 or to imprisonment for a term not exceeding 6 months; or both”

The particulars of the offence charged read:

“Liu Fu Quang trading a break of Dawn on the 16 December 2014 at Nauru made a false declaration under the Customs Act 2014 in declaring the description and statement of goods in the Customs Declaration of Imports (Dutiable) form containing only bicycle and other goods which he knew to be false as it also contained 203 sleeves of cigarettes”

2.	The defendant is also charged with 1 count of defrauding the revenue of customs contrary to section 252(1) (a) and (2)(a) of the Customs Act 2014. Section 252(1)(a) of the Customs Act 2014 reads:

“A person commits an offence who does any act or omits to do any act for the purpose of evading, or enabling any other persons to evade, payment of duty or full duty on goods”

Section 252(2)(a) of the Customs Act 2014 read:

“A person convicted of an offence under subsection (1) is liable; for an individual, to a fine not exceeding $30,000.00 or to imprisonment for a term not exceeding 5 years or both” 

The particulars of the offence read:

“Liu Fu Quang trading as Break of Dawn on the 16 of December 2014 at Nauru omitted to declare to the department of customs and revenue that he was importing 203 sleeves of Chinese cigarettes which were dutiable to evade payment of duty in the sum of $11,278.68 on the said cigarettes”

3.	The defendant pleaded not guilty and a trial was conducted.

VALIDITY OF THE PROCEEDINGS

4.	Mr. Clodumar for the defendant has raised a preliminary point in his submissions regarding the legality of the proceedings in this case. The thrust of the submission by Mr. Clodumar is that Mr. Brenan has failed to comply with the provisions of Section 206 (1) and (4) of the Customs Act 2014. Section 206 (1) relates to the powers conferred on custom officers to arrest a person without a warrant and the circumstances under which they may do so. Section 206(4) of the Customs Act 2014 imposes the duty on customs officers who have exercised their powers to arrest any one to take the person so arrested and deliver the person arrested to the custody of the police.

5.	Mr. Clodumar has submitted that Mr. Brenan’s failure to comply with sections 206(1) and (4) of the Customs Act 2014 and Mr. Richard Brenan’s act of directly referring the matter to the Director of Public Prosecutions without first referring the matter to the police is ultra-vires section 206(1) and (4) the Customs Act 2014 and therefore the complaint filed against the defendant by the Public officer working at the Director of Public Prosecutions Office is a nullity.

6.	The Director of Public Prosecution is appointed under section 45 of the Criminal Procedure Act 1972. Under section 47 of the Criminal Procedure Act 1972, the Director Public Prosecutions may delegate any of the powers, rights vested in him or duties imposed on him to be exercised on his behalf by a public officer of the Department Justice. Section 48 of the Criminal Procedure Act 1972. The Director of Public Prosecutions and his officers are public officers.

7.	Under section 51 of the Criminal Procedure Act 1972, a complaint or a charge may be instituted by a private person, a police officer or a public officer. Section 51(3) of the Criminal Procedure Act 1972 triggers the criminal process and a public officer may file a complaint and lodge a charge with the District Court. The submission by Clodumar that the charge is nullity because it is not signed by a police officer has no basis and is in direct conflict with the provision of section 51(3) of the Criminal Procedure Act 1972. I find that he charge preferred and filed against the defendant with the District Court on 11 December 2015 is compliant with the requirements of section 51(3) of the Criminal Procedure Act 1972.

8.	There is no evidence to show that Mr. Brenan ever arrested the defendant. There is evidence to show that Mr. Brenan interviewed the defendant. Interviewing an individual and arresting an individual are totally two different things.

9.	Mr. Clodumar’s submission on the effect of sections 206(1) and (4) of the Customs Act 2014 are misconstrued, not supported by evidence and must accordingly be rejected.

BURDEN OF PROOF

10.	In discussing the burden of proof, Datuk Dr. Hj. Hamid Sultan Bin Abu Backer observed:

“As a general rule, ‘proof” must be adduced through oral or documentary evidence. It may also be established by conduct or statutory presumption or provisions such as judicial notice or admitted facts”

11.	The effect of the provision of section 286(1)(2)(3) of the Customs Act 2014 would be that issues in relation to the identity of nature of goods, the value of any goods for duty, the country or time of exportation of goods; the fact or time of exportation of goods; or the place or manufacture, or production of any goods, or the payment of any duty on goods the presumption by law is that as long as these allegations are made on behalf of the Republic the law presumes that these are true unless the contrary is proved.

12.	The evidential burden on the facts described in Section 286(1) (2) and (3) of the Customs Act 2014 shifts but the legal burden of proof beyond reasonable doubt remains that of the prosecution to prove and the standard if one of beyond reasonable doubt.

THE EVIDENCE

13.	The evidence presented by the prosecution comprised the following documents tendered by consent:

i)	Customs Declaration of Imports (Dutiable)
ii)	Bill of Lading No. CF4004641250
iii)	Packing List dated 28 August 2014 issued by Sanyu International Limited Room 301, No. 17 Siyouxin Malu, Yuexiu District, Guanzhou, China.

iv)	Commercial invoice no: 1408028 dated August 28 2014 issued by Sanyouxin Malu, Yuexiu District, GuanZhou, China

14.	The video recording taken by Kilo Giouba on the afternoon of 20 January 2015 was admitted into evidence by the court.

15.	The prosecution also called 7 witnesses to give evidence.

16.	The defendant made an unsworn statement from the dock.

FACTS NOT IN DISPUTE

17.	On the evidence the following facts are not in dispute:

i)	The defendant is the proprietor of Break of Dawn Store. The Break of dawn store is a retail shop that also sells cigarettes. Break of Dawn/defendant were the named recipients of the goods described in Commercial invoice No. 1408028 dated August 2014 and the Packing List dated August 28 2014. Break of Dawn/defendant were also the named consignee on the Bill of Lading no. CF$0046H1250.Break of Dawn is the named importer/consignee in the customs declaration of imports (dutiable) and that the defendant signed the said declaration before a customs officer on the 16 December 2014. No cigarettes were declared in the Declaration of Imports (dutiable). No cigarettes were listed in the Bill of lading. No cigarettes were listed in the commercial invoice. No cigarettes were listed in the packing list.

ii)	Container no. TRHU1524104 contains the goods imported by the defendant and the said container was inspected by Customs Officers on 20 January 2015 and 21st January 2015. 203 sleeves of cigarettes were found packed inside mini-fridges, folded beds and inside large buckets and amongst other places in the container.

iii)	The defendant has on prior occasions imported goods to Nauru. The defendant has been in Nauru for more than 20 years.

DEFENSE CASE

18.	The defendant made an unsworn statement from the dock. The defendant’s case is that his wife’s brother was responsible for ordering the goods the goods imported and the bulk of undeclared goods including the 203 sleeves of cigarettes. He and his wife did not know exactly what was in the container, they just rely on the documents they were sent and that this is how they normally do business. That he runs a daily shop and there are plenty of goods they have to order so he just simply trusts his wives brother. The defendant further said he was shocked to see such a big amount of undeclared goods.

COUNT 1: MAKING A FALSE DECLARATION

19.	In respect of this count Mr. Clodumar has submitted that there is no shred of evidence in the testimonies of the prosecution witnesses that point to the defendant having knowledge of what was inside the container at the time he made the declaration on 16 December 2016. In addition to this Mr. Clodumar submits that with Mr. Brenan agreeing that it was reasonable and that he was inclined to agree that the defendant would only know what was in the container based on the documents provided to him by the shipper. The defense case is that because the cigarettes were packed in China, not listed in the Bill of Lading, not listed in the commercial invoice and not listed in the packing list, he did not know at the time he signed the declaration that cigarettes were also included in the container and that there was a bulk of other undeclared goods. And because the defendant did not know about the cigarettes and other undeclared goods in the said container, he could not have made a false declaration, knowing the said declaration he made to be false when he signed the custom declaration of imports (dutiable) on the 16 December 2016.

20.	Section 64(1) (a) of the Customs Act 2014, imposes a duty on the importer in this case the defendant to present the invoice for goods to the chief collector of customs or other customs officers. Section 64(1) (b) of the Customs Act 2014 imposes a duty on the importer in this case the defendant to make and deliver to the chief collector or other customs officers, a declaration in the prescribed form verifying that invoice so produced, and setting out the true values for duty purposes of the goods and any other prescribed particulars.

21.	On the evidence the defendant complied with the mandatory obligation imposed on him by the provisions of section 64 of the Customs Act 2014, when he on the 16 December 2014 presented himself to the customs and presented to Customs Officer Mr. Saroa Palik the Commercial invoice, the packing list, and the bill of lading and then signed the declaration. The fact that the goods as listed in the commercial invoice have been verified in the goods declared in the declaration is that the total value of goods in the declaration amounting to $15,995.42 correspond the value of the goods as contained in the commercial invoice and the packing list.

22.	The declaration reads:

“I hereby declare that the description and particulars of the goods as stated in this declaration of the goods as stated in this declaration of imports are true and correct in every respect and in accordance with the Nauru Customs Ordinance and Regulations. I also declare that this is a complete statement of all goods subject to duties of customs consigned to and delivered to me ex above aircraft/ship”

The effect of this declaration is that only the goods as contained in the packing list and the commercial invoice, both documents issued by Sanyu International Limited has been declared.
 
23.	The description of goods listed in the commercial invoice in terms of description and quantity also correspond the goods listed in the packing list. From this it can be inferred on the evidence that Sanyu International Limited which is a corporate entity is responsible for packing the goods in container number TRHU1524104, the container containing the goods imported by the defendant in which 203 sleeves of cigarettes and other goods not declared by the defendant comprising almost one third of the container found. This aspect of the prosecution case is not disputed by the defense.  This is also admitted by the defendant when he said he himself was shocked by the large quantity of undeclared goods.

24.	In blaming his brother in law for sending the undeclared goods, the defendant did not identify his brother in law by name or explain how his brother in law is connected to Sanyu International Limited. 

25.	Sanyu International Limited under the principle of corporate legal entity is a separate entity from any individual and this must include the brother in law of the defendant. In the absence of any explanation regarding how his brother in law is or may have been connected to Sanyu International Limited, the assertion by the defendant that his brother in law was responsible for ordering and packing the goods on the evidence contradicts the documentary evidence (Bill of lading, the commercial invoice and the packing list) that the defendant presented to the customs department on the 16 December 2014 which he verified in the customs declaration of imports (dutiable) as: 

“true and correct in every respect and in accordance with the Nauru Customs Ordinance and Regulations and also further declaring that this is a complete statement of all goods subject to duties of customs consigned to and delivered to him ex above aircraft/ship” emphasis mine.

26.	Section 64(1)(a) of the Customs Act 2014 must be read together with section 64(1)(b) of the Customs Act 2014 because of the use of the word “and” between clauses (a) and (b) of subsection (1). This in turn means two separate things must be done by the importer. First he must present the invoice for the goods to the chief collector or a customs officer and secondly the importer must verify by way of a declaration in the prescribed form that invoice and setting out the true value for duty purposes. 

27.	The word “verify” amongst other things mean “to prove (something) to be true, as by evidence or testimony; to confirm or substantiate the truth or correctness of especially by examination or comparison.” An invoice is defined to mean “a written list of merchandise with prices delivered or sent to a buyer.” Viewed in this context the act of signing a declaration in the legal sense does not mean the act of merely signing a piece of paper before a customs officer to clear goods. What it really entails is that the importer in signing the declaration is in effect saying that he had taken all the necessary steps to know and find out what he is importing and that his declaration verifying the invoice and that the description of goods in the said invoice is a complete statement of all goods subject to duties of customs consigned to and to be delivered to him.

28.	As such it is not open to the defendant to say 203 sleeves of cigarettes and other bulk of undeclared goods were put into the container by his brother in law without his knowledge his brother in law informing him. It is also not open to an importer to say the goods were packed overseas and that he was not there and as such he is only relying on the documents sent to him or her make this declaration. 

29.	In the normal conduct of business and trade an invoice is “a written list of merchandise with prices delivered or sent to a buyer or an itemized bill containing the prices which comprise the total charge for the goods” Therefore it is the importer’s responsibility to take all reasonable steps to know what he is importing and to remind his service provider to invoice him for all the goods and services provided to him. Section 64 of the Customs Act 2014 only speaks in terms of the importer or his agent. Not the supplier. Therefore an importer ought to take all reasonable steps to know what he is importing, ought to know what he is importing and should know what he is importing. 

30.	Section 64(1) (b) clearly imputes the responsibility to know and this knowledge to the importer by virtue of requiring the importer to verify the invoice as a complete statement of all dutiable goods. Otherwise it would make the legal requirement for making a declaration redundant. This said the prosecution still has the duty to prove beyond reasonable doubt that the defendant knowingly made a false declaration on the 16 December 2016 when he signed the declaration and failed to declare the 203 cigarettes. This on the evidence is the only issue that needs to be determined by the court.

31.	Turning now to the evidence, the evidence of Customs Officer Mr. Dillion Harris is the he was the one who broke the customs seal. The first goods they saw were two microwaves which were not declared. When they asked the wife of the defendant where on the invoice is the microwave listed she pointed to the item in the invoice listed as the toaster. Present at the time the container was opened was the defendant, his wife and other Chinese persons. After it was discovered that the microwaves were not declared, the owner of the container asked Mr. Harris to close the container and to allow them to go and make another declaration. Mr. Harris refused because the customs seal was already opened. Later because the Chinese persons who were there started arguing amongst themselves he decided to close the container. Mr. Harris further gave evidence that when they went back later in the afternoon to open the container again, that was when they found the cigarettes and because there was a large quantity of cigarettes they had to close the container to be further inspected the next day.

32.	Mr. Richard Brenan the Deputy Secretary for customs gave evidence and the relevant aspect of his evidence is that on the 20 January 2015 he was informed by custom officers that they were having problems with the container in terms of undeclared goods with cigarettes. He then made his way to location and he spoke to Mr. Kilo. He then satisfied himself that the cigarettes did not appear in the paper work required. Mr. Brenan further gave evidence that cigarettes have a different duty and there is a need to place it separately on the paper work so that the revenue office can code it correctly. The defendant and his wife were identified to him as the owner of the goods and so he went to them and asked why no cigarettes in the paper and the defendant’s wife answered him sorry.
 
33.	Mr. Brenan’s evidence is that when they realized that there was a significant amount of undeclared goods and it was apparent that they could not control the situation so they closed the container and went back to the office. Mr. Brenan gave evidence that there was an animated discussion between the defendant and his wife. During cross-examination Mr. Brenan further explained that there were raised voices, gesticulation and that he saw finger pointing between the husband and wife. Mr. Brenan further gave evidence that he saw the defendant walked in one direction and saw him sit down with his head in his hands. And that it became difficult for them to control the situation because of there was something going on between the defendant and his wife and that there were other Chinese workers there as well. Mr. Brenan further agreed during cross-examination that he formed the opinion that the defendant was cross with his wife but pointed out that he does not speak Chinese but that he could only figure out that something was wrong.

34.	From this aspect of Mr. Brenan’s evidence Mr. clodumar submits that this court should take this to conclude that this is the picture of a dejected person and that his actions are consistent with a person who just realized the predicament he is in, pressing the issue of lack of knowledge of the cigarettes and the other undeclared goods by the defendant comprising one third of the goods imported by the defendant. This court cannot just pick one aspect of the evidence and draw an inference. It must look at the whole of the evidence and then draw the only reasonable inference available to it on the whole of the evidence.

35.	Mr. Clodumar has further submitted that Mr. Brenan has given evidence that he is inclined to agree that the defendant would only know what was in the container based on the documents provided to him by the shipper in China. The evidence of Mr. Brenan in this regard during cross-examination is that he was shown exhibit PE 3 the packing list and asked if he agree that Sanyu International Limited is the name on the packing list and Mr. Brenan agreed further saying that he is familiar with this heading because he sees it on a lot of imports that are presented to customs. Mr. Brenan further agreed that the address for Sanyu International as it appears on the packing list is in Guangzhou China. Mr. Brenan further agreed that it would be reasonable to say that they packed the goods and prepared the packing list. And it was at this point in time that Mr. Brenan was asked the question if it was reasonable to say that Sanyu International Limited also prepared the commercial invoice and this is where Mr. Brenan answered saying “I am inclined to agree with that statement because of the format of both the packing list and the commercial invoice.” Mr. Brenan further agreed that the commercial invoice and the packing list would form the basis for preparing the Bill of Lading and further agreed during cross-examination that the three documents, the Bill of lading, the Commercial invoice and the packing list are required to be presented to the customs by the defendant for his declaration. This was when it was put to Mr. Brenan whether it would be fair that a consignee can only declare what is in the three documents and Mr. Brenan answered “The consignee has to declare what is in the container. It is there responsibility to know by doing all they can to find out what is in the container is reflected in the documentation” And when it was further put to Mr. Brenan that these three documents tells what is in the container Mr. Brenan answered “I agree it tells it to a point if there is more in that container that information has to be presented to customs”.

36.	So Mr. Clodumar’s submission that Mr. Brenan has stated that it was reasonable and he was inclined to agree that the defendant would only know what is in the container based on the documents provided to him by the shipper in China is not supported by the evidence and is not even an inference that could be drawn on the evidence.

37.	It is not disputed by the defense that when the container was first opened the two undeclared microwaves were the first items to be taken out. When it was discovered by customs that these two microwaves were not declared, the defendant’s wife asked if they could close the container and allow them to make another declaration. This was refused. The defendant has been in the country for more than 20 years conducting a retail business that involves ordering a lot of goods. This is clear from his unsworn statement. There is clear evidence that the defendant has on prior occasions imported goods. Taking into account the fact that one third of the goods contained in the container were not declared, the manner in which the cigarettes were packed on the evidence reasonably implies an attempt to avoid detection and not to fill as much space in the container. I am supported by the fact that the weight and space taken up in the container would still be paid for and the evidence is clear that the freight for the goods were prepaid. 

38.	The alternative view that the manner in which the cigarettes were packed were to make use of all available space is only open to being accepted as reasonable if the said goods were declared. That is not the situation in this case. The defendant said that he has been relying on his brother in law for the past 20 years and that this is how he conducts his business is rejected on the basis that he has not given any explanation to the court regarding the connection his unnamed brother in law has with Sanyu International Limited. In rejecting that aspect of the defendant’s statement the whole of the evidence presented by the prosecution in this case points to the only reasonable conclusion that he knowingly made a false declaration without any belief in its truth and was careless about whether or not what he was declaring was true when he verified the commercial invoice by way of the declaration he made on 16 December 2015.

39.	I therefore find that the prosecution has proved its case beyond reasonable doubt that the defendant had made a false declaration under the Customs Act 2014.

COUNT TWO: DEFRAUDING THE REVENUE OF CUSTOMS

40.	In respect of the charge of the defrauding the revenue of customs the evidence as already discussed supports a finding that the defendant had made a false declaration, by failing to declare the 203 sleeves of cigarettes and other goods comprising one third of the goods imported by him.
 
41.	The defendant is charged with failing to declare the said 203 cigarettes to avoid paying tax on the said cigarettes. The fact that he did not declare the said cigarettes is not disputed. The manner in which the cigarettes were packed in the container as already discussed in the preceding paragraphs is not disputed. In assessing the whole of the evidence the court has come to the conclusion that the manner in which the cigarettes were packed points a reasonable conclusion the cigarettes were packed in such a way to avoid detection or being discovered during inspection rather than to filling up and taking up all the spaces possible in the container as the defense suggest. The fact that the defendant offered to declare and pay for the goods after the customs seal on the container has been broken and the container opened is an offer after the omission to declare the goods. His responsibility to declare for all custom purposes is prior to the opening of the container. Not after. His responsibility to declare the said cigarettes before the customs seal on the container was broken and the container opened must be distinguished from his offer to pay tax after failing to declare the cigarettes in the first instance.

42.	I find on the evidence that the failure or omission by the defendant to declare the 203 cigarettes on the evidence presented and in the whole circumstances of this case is a failure to or omission to declare for purposes of evading the payment of full duty on the said 203 cigarettes. I find that the prosecution has proved the case against the defendant for defrauding the revenue of customs beyond reasonable doubt.

Dated this 2nd day of April 2016

Emma Garo
Resident Magistrate