Cool Petroleum says customs user fee unconstitutional
Published:Wednesday | January 26, 2011 | 12:00 AM
Barbara Gayle, Court Reporter
In a case which, if it loses, could mean the Jamaica government refunding billions of dollars to importers, Joey Issa's Cool Petroleum is claiming that a five per cent "customs user fee" charged at the island's ports to be unconstitutional, and a clawback of J$1.4 billion paid out since Cool's launch nearly five years ago.
The constitutional court is to hear Cool Petroleum's application on February 14, with its case to be marshalled by eminent Queen's Counsels, Richard Mahfood, and Dr Lloyd Barnett.
Dr Barnett is a noted constitutional expert.
Cool, if it wins, not only wants the refund, but at prevailing commercial interest rates from the dates of payments.
Cool was launched in 2005 when it acquired Shell's petroleum distribution and service station business in Jamaica.
Neither have publicly commented on the case, but at the root of their argument, legal sources say, is the power of the minister of finance to create law without the imprimatur of Parliament and the limits laid down in this regard by section 257 of the Constitution.
That section says: "The minister may make regulation for the better carrying out of the provisions of the customs laws and for the prevention of fraud on the revenue and may in such regulations prescribe fees, rents or charges to be paid in respect of any matter therein referred to; and such regulations shall be published in the Gazette."
The minister, "by order subject to affirmative resolution in the House of Representative" has the authority, under the Customs Act to "amend or vary any such penalty".
It is apparently under these provisions that the former finance minister, Dr Omar Davies, first introduced the customs user fee, at two per cent, in 2003. The current minister, Audley Shaw, hiked it to five per cent in 2009.
The fee is applied to the cost insurance freight or CIF value of all imports, except for material usedmanufacturing under section 807 of the US tax code.
Under section 807, material for garments are sourced and/or cut in the United States, or countries designated by the US, and completed in Jamaica for re-export to America.
The Americans then charge duty assessed only on the Jamaican value-added, mostly labour.
However, with regard to imports used in the domestic market, the user fee is tax deductible. Or, if the user fee is paid on capital goods, there is a capital allowance for tax purposes.
Cool is contending that Jamaica's constitutional scheme required all taxes and duties to be imposed by acts of Parliament, either directly or through clearly delegated statutory powers and the customs user fee followed none of these.
In that regard, it was not properly authorised and, therefore, unconstitutional, the company argues.
Moreover, the company said the charge was not a fee, rent or charge within the meaning of section 257 of the Customs Act.
On those two grounds, they argue that the fee breaches section 18 of the Constitution against the compulsory acquisition of a person's property without compensation.
But according to court docu-ments, the Government, through Solicitor General Douglas Leys, and government lawyer Lackston Robinson, will argue that the finance minister can lawfully impose the fee pursuant to section 257 of the Customs Act.
No constitutional issue, therefore, arises, they will claim.
Joey Issa's company seeks to recoup J$1.4b
Court hears case February 14