At centre stands the tank containing the 240,000 gallons of fuel the Customs Department seized from Delta Petroleum in 2013, an action that was deemed unlawful on Monday by the London-based Judicial Committee of the Privy Council. File photo: Eric Voorhis

The four-year-long dispute between Her Majesty’s Customs Department and Delta Petroleum came to a close on Monday, when the London-based Judicial Committee of the Privy Council ruled that Customs was wrong in seizing some 240,000 gallons of Delta fuel at Pockwood Pond in Sept. 2012.

As the case made its way through the High Court and the Eastern Caribbean Supreme Court of Appeal, customs officials argued that the fuel was subject to seizure because Delta imported it unlawfully without the presence of customs officers and without paying duty.

At centre stands the tank containing the 240,000 gallons of fuel the Customs Department seized from Delta Petroleum in 2013, an action that was deemed unlawful on Monday by the London-based Judicial Committee of the Privy Council. File photo: Eric Voorhis
But Delta argued that because the fuel was earmarked for use by the BVI Electricity Corporation, it wasn’t subject to duty or liable for forfeiture.

The fuel company also contended that it tried to contact two customs officers before the fuel was discharged, but those attempts were unsuccessful.

Case history

In February 2013, High Court Justice Vicki Ann Ellis ruled in favour of Customs, stating that Delta imported the fuel illegally.

“There are obvious reasons why both the legislature and the commissioner of customs have mandated that importers secure the imprimatur of customs officials before removing goods from the place of importation,” Ms. Ellis wrote in her decision. “Given the commissioner’s duties under the Customs Act, how else can he track and verify the imported goods, and how can he assure the efficient and effective collection of customs duty?”

However, the ECSCA overturned that decision in January 2014, ruling that Ms. Ellis didn’t take into account the fact that the fuel was for the BVIEC, which is entitled to a duty-free concession.

“The fuel imported on behalf of the BVIEC is not liable for forfeiture,” wrote Justice of Appeal Mario Michel. “The fuel imported on behalf of the BVIEC is exempt from the payment of duty. The appeal is allowed.”

Later that year, in September 2014, the ECSCA gave leave for Customs to appeal its decision to the Privy Council. Delta was also granted leave to file a cross-appeal that the ECSCA should have ordered damages for the alleged wrongful seizure.

Privy decision

The Privy Council sided with Delta on both appeals.

In striking down Customs’ appeal, the panel of justices agreed with the ECSCA that Delta’s fuel was not subject to duty.

And while the agreement between Customs and Delta called for the fuel company to unload the fuel in front of Customs officials – something Delta did not do – that procedural infraction was not grounds for the fuel to be seized, the Privy Council ruled.

“This was not on any view a case of deliberate evasion of customs duties,” the Privy Council stated in its judgment. “If the commissioner [of Customs] was concerned by Delta’s failure to comply with the proper procedures, the natural course would have been to proceed against them for an offence under section 29 of the Customs Act, under which the penalty would have been a matter for the court.”

Because Customs failed in its appeal, the Privy Council ruled that Delta’s appeal was successful by extension.

“[Customs’ failed appeal] leaves no defense to Delta’s cross-appeal, unless the court could be satisfied that there were ‘reasonable grounds’ for the seizure,” the panel stated. “[Customs] has not sought to advance any independent reason to justify its use of forfeiture rather than the less draconian powers otherwise available… The board is not satisfied that there were reasonable grounds for the use of forfeiture powers.”

The costs and damages to be awarded to Customs have not yet been assessed.

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