Commissioner of Customs v Delta Petroleum (Caribbean) Limited

Goods intended exclusively for a statutory duty-free beneficiary may be treated as imported by that beneficiary even where a commercial operator physically carries out the importation. The exemption must be interpreted in its statutory context and in light of its purpose. A breach of customs procedures does not, without more, make goods liable to forfeiture under provisions directed to goods subject to duty on importation. Forfeiture powers are strict, but every statutory condition must be clearly established. Procedural irregularities may instead be pursued through the applicable offence and penalty provisions.

Delta Petroleum imported fuel into the British Virgin Islands for supply to the British Virgin Islands Electricity Corporation, which was entitled under section 20 of the British Virgin Islands Electricity Corporation Ordinance of 1979 to import qualifying petroleum products free of duty. Customs seized Tank 7 and its contents under section 131 of the Customs Management and Duties Act No 6 of 2010, asserting liability to forfeiture under section 30(1)(a).

The High Court upheld the forfeiture. The Court of Appeal of the Eastern Caribbean Supreme Court allowed Delta’s appeal. The central issue before the Board was whether the fuel was subject to duty on importation for the purposes of section 30(1)(a).

1. Appeal dismissed; cross-appeal allowed. The Commissioner was not entitled to forfeit the tank and fuel under section 30(1)(a) of the Customs Management and Duties Act No 6 of 2010. The respondent was entitled to the costs of the appeal, subject to the opportunity for further submissions on costs.
2. Lord Carnwath, delivering the judgment of the Board, held that section 20 of the British Virgin Islands Electricity Corporation Ordinance of 1979 must be read in its statutory context and purpose. Although the entitlement is expressed in terms of BVIEC, it does not require BVIEC itself to undertake every physical stage of importation. Fuel arranged by BVIEC to meet its own requirements and used solely for that purpose may be regarded as imported by BVIEC.
3. On the evidence, the fuel discharged directly into Tank 7 was destined solely for BVIEC and was held under Customs’ control. The general payment-and-refund procedure did not establish that duty was payable on fuel specifically destined for Tank 7. Any breach of Customs’ conditions could support proceedings under section 29, but it did not itself engage section 30(1)(a).
4. Section 30(1)(a) requires proof that goods subject to duty on importation were unloaded or removed without payment of that duty. That condition was not established. The Board therefore did not need to determine the scope of section 69(1)(d), concerning goods imported by or on behalf of a person entitled to relief.
5. Forfeiture provisions are strict and potentially draconian, and the court has no general discretion to mitigate the statutory consequence once the conditions are met. However, the Commissioner had not shown reasonable grounds for choosing forfeiture where the lesser procedural powers were adequate and appropriate. The protection in section 134(2) was therefore unavailable.

• Privy Council: Commissioner of Customs v Delta Petroleum (Caribbean) Limited [2016] UKPC 27 dismissed Customs’ appeal and allowed Delta’s cross-appeal.
• Court of Appeal of the Eastern Caribbean Supreme Court (British Virgin Islands): allowed Delta’s appeal and set aside the High Court’s forfeiture order.
• High Court (British Virgin Islands): Ellis J upheld forfeiture of Tank 7 and its contents under section 30(1)(a), while rejecting reliance on section 30(1)(b).