552 Keng Soon Finance Berhad v.

Pegawai Kanan Kastam, Johore Bahru [1981] 1 MLRA

KENG SOON FINANCE BERHAD

v.
PEGAWAI KANAN KASTAM, JOHORE BAHRU

Federal Court, Johor Bahru

Wan Suleiman J, Salleh Abas J, & Abdul Hamid Fjj
[Federal Court Criminal Reference No I Of 1981]
20 May 1981

Abdul Hamid FJ
(delivering the JUDGMENT of the Court): This reference to the Federal Court
under section 66(1) of the Courts of Judicature Act, 1964 is for the determination
of the following questions of law:——
(1) whether the court, when hearing a summons issued pursuant to section
128(4) of the Customs Act, 1967 can rely on the presumption under section
135(2) of the same Act to determine whether an offence in relation to the
conveyance is committed when no prosecution was preferred against any
person for any offence under the same Act and when the conveyance could
not have been the subject matter of the said summons.
(2) whether the court could, pursuant to section 128(5) of the Customs Act,
1967, invoke the provisions of section 119 of the same Act and shift the
burden of proof on to the defendants as owners of the conveyance to show
that customs duties on the goods found in the conveyance but belonging to
unknown persons had been paid when the subject matter for inquiry under the
said summons should only have been goods found in the conveyance.

The facts in so far as they are relevant for the determination of these questions are
that on April 11, 1973 three customs officers, acting on information, laid an
ambush for motor car No. BAE 1024 at 12th mile Jalan Masai, Johore. On seeing
the motor car approaching the road was blocked by placing a landrover across the
road, however the motor car drove past, lost control, landed in a ditch and was
abandoned. It was found loaded with the following goods (hereafter called 'the
goods')——
(1) 7 cartons x 80 packets 'Pak Cheong Tong Hou' Chinese Patent Medicine.
(2) 8 boxes x 1 kati Korean Ginseng.
(3) 8 packages x 5 katies Ginseng.
(4) 41 packages x 1 kati Ginseng.
(5) 16 bolts of textiles measuring 1,002 yards.
[1981] 1 MLRA Keng Soon Finance Berhad v. Pegawai Kanan Kastam, Johore Bahru 553

No one came forward to claim the goods. Ownership to the motor car was claimed
by Messrs. Keng Soon Finance Bhd. Kuala Lumpur.
Pursuant to section 128(4) of the Customs Act, 1967 (Act 235) (hereafter called 'the
Act'), summons was issued by the Sessions Court Johore Bahru requiring Messrs.
Keng Soon Finance Bhd. to appear before an enquiry to determine the claim.
Either inadvertently or acting upon a supposition that it was necessary to state in
the summons all the goods seized, the claimant was also notified of the goods
found in the motor car where no claim was made within one calendar month from
the date of the seizure and were therefore deemed to be forfeited under section
128(1) of the Act.
At the inquiry the President of the Sessions Court found that the goods were
dutiable goods and an offence of being concerned in conveying dutiable goods
under section 135(1)(e) was committed. As the motor car was evidently used in the
commission of the offence it was therefore ordered to be forfeited. Keng Soon
Finance Bhd. appealed to the High Court against the order. It was dismissed.
Two grounds were raised on appeal before Syed Othman J. (as he then was) as
follows:——
(1) The learned President erred in law when he found that an offence under
section 135(1)(e) of the Customs Act, 1967 had been committed when in fact
the summons alleged that an offence under section 135(1)(g) of the Customs
Act, 1967 was committed.
(2) In any event the learned President erred in finding that an offence under
section 135(1)(e) of the Customs Act, 1967 had been proved when in fact there
was no evidence on record of "knowledge" and "intention to defraud the
Government".

On the first ground the learned judge had this to say——

"From the provision the presiding officer need only concern himself whether
an offence under the Act has been committed and not any particular offence."

At the hearing before us, Mr. P. Cumaraswamy counsel for the applicants
submitted that as there was no prosecution under section 135(1)(g) of the Act the
presumption under section 135(2) cannot therefore be invoked and as such there is
absence of proof of that essential element of knowledge to warrant a finding that
there was a commission of an offence and that is so even in respect of the goods.
He pointed out that the claim was in respect of the motor car which was not
uncustomed property and accordingly that knowledge cannot be imputed to the
claimant. The applicants also submitted that section 119 of the Act has no
application to the present case.
Before we determine the questions posed before us we must make it clear that these
554 Keng Soon Finance Berhad v. Pegawai Kanan Kastam, Johore Bahru [1981] 1 MLRA

questions are so framed that they are far from being explicit. The points of law
referred for our determination do not quite reflect the issues raised in the courts
below. There emerged from question (1) a combination of questions ——
(a)whether the court when hearing a summons issued pursuant to section 128(4) of
the Customs Act, 1967 can rely on the presumption under section 135(2) of the Act
to determine whether an offence under section 135(1)(e) of the Act is committed
where no prosecution was preferred against any person for any offence under the
Act; (b) whether the determination, as envisaged by section 128(4) , of the
commission of an offence relates to the conveyance; and (c) whether the
Conveyance was the subject matter of the summons.
The answer to question (1)(a) is plainly in the negative. Section 135(2) of the Act
enables the presumption to be invoked strictly in cases where there is prosecution
under section 135 or 139 of the Act. It has no application to the instant case.
As for question (1)(b), the answer is in the affirmative in so far as it affects the use
of the conveyance in the commission of an offence. A proceeding under section
128(4) is to determine whether an offence against the Act has been committed,
and, if it has, whether the conveyance, a subject matter of the claim, is used in the
commission of such offence. In the light of the foregoing, the answer to question
(1)(c) must also be in the affirmative.
It must be noted that in proceedings pursuant to section 128(4) of the Act, the
function of the President or the Magistrate, as the case may be, is to examine the
matter pertaining to the claim by the owner of the goods seized. In doing so he has
to satisfy himself that firstly, an offence against the Act has been committed and
secondly, either (a) the goods were the subject matter of the offence, or (b) where
the claim relates to the conveyance, such conveyance was used in the commission
of the offence. As regards proof it is for the court to consider the whole of the
matter including, inter alia , the goods found in the conveyance, the nature of such
goods, whether dutiable or otherwise, and all the circumstances surrounding the
particular case. The court may for purposes of such consideration invoke any
presumption of law provided under the Act as and when it is applicable. As for
example, by reason of section 128(5) of the Act, section 119 of the Act shall apply
in the determination of a matter pursuant to section 128(4) . For this reason the
answer to the first limb of question (2) on the facts of the particular case is in the
affirmative. Section 128(5)provides that——
"(5) In any proceedings under subsection (4), section 119 shall apply to the
person asserting that he is the owner of the goods and to the person from
whom they were seized as if such owner or person had been the defendant in a
prosecution under this Act."

Section 119 reads as follows:

"119. If in any prosecution in respect of any goods seized for non-payment of
[1981] 1 MLRA Keng Soon Finance Berhad v. Pegawai Kanan Kastam, Johore Bahru 555

duties or for any other cause of forfeiture or for the recovery of any penalty or
penalties under this Act, any dispute arises whether the customs duties have been
paid in respect of such goods, or whether the same have been lawfully imported or
exported or lawfully landed or loaded, or concerning the place whence such goods
were brought or where such goods were loaded, or whether anything is exempt
from duty under section 14 then and in every such case the burden of proof thereof
shall lie on the defendant in such prosecution."

Sections 119 and 128 of the Act appear in Part XIII of the Act entitled "Provisions
as to Trials and Proceedings." Proceedings under section 128(4) are clearly
proceedings under that Chapter.
On the question of forfeiture, it seems appropriate to refer to R v Ng Hee Weng & Ors
, ; [1956] MLJ 85, where Good J., in delivering the judgment of the court,
examined section 123 of the Customs Ordinance, 1952 to determine whether it
gives discretion to the court to order forfeiture or the release of the vehicle used in
the commission of the offence against the Ordinance which has been seized by an
Officer of Customs under section 110 of the Ordinance or whether forfeiture is
mandatory if it is proved to the satisfaction of the court that the vehicle was so
used.
Sections 123(1), 110(1) and 124(4) of the Ordinance have been replaced by sections
127(1) , 114(1) and 128(4) of the Act respectively.
In that case it was held that
"where a vehicle used in the commission of an offence had been seized by a
Customs Officer under section 110 of the Customs Ordinance 1952 and if it is
proved to the satisfaction of the court that the vehicle had been so used,
section 123 of the said Ordinance gave no discretion to the court, but render
an order for forfeiture mandatory."

In the course of the judgment, Good J. also considered the question whether
"goods" includes a vehicle used for the carriage of goods in the commission of the
offence against the Ordinance. He referred to section 2(1) of the Ordinance which
defines "goods" (similarly defined under section 2(1) of the Act) to include
"animals, birds, fish, plants and all kinds of movable property;" and went on to say
that "goods" in the context of section 123 clearly does not exclude receptacles,
packages, conveyances, vessels and aircraft. In the determination of the questions
before us we have to consider whether "goods" in the context of section 128(4)
excludes receptacles, packages, conveyances, etc. We think not. The law is clear in
that "goods" referred to in that section refers to goods seized pursuant to section
114 of the Act and which evidently includes receptacles, packages, conveyances,
etc.
It is true that in Ng Hee Weng's case the question of forfeiture arose consequent
 556 Keng Soon Finance Berhad v. Pegawai Kanan Kastam, Johore Bahru [1981] 1 MLRA

upon a conviction. Nonetheless there was clear provisions under section 123 of the
Ordinance (section 127 of the Act) to the effect that an order shall be made
notwithstanding that no person may have been convicted of an offence, i.e. an
offence against the Ordinance or any regulations made thereunder. The
fundamental question that calls for determination is whether there is proof to the
satisfaction of the court that an offence against the Ordinance (similarly the Act)
has been committed and whether the goods are the subject matter of the offence or,
if it is a vehicle, whether it is used in the commission of such offence. In our view
the distinction that emerges, upon construction of the effects of sections 127(1) and
128(4) of the Act, is essentially in regard to procedure. If there be no prosecution
with regard to goods seized under the Act and there is a claim made to any such
goods before the expiration of one calendar month from the date of seizure, the
court shall, consequent upon the issue of summons requiring the appearance of the
person asserting that he is the owner of the goods and the person from whom they
were seized, examine the matter and on proof that an offence against the Act has
been committed and that either (a) such goods were the subject matter, or, (b) if it
was a vehicle, it was used in the commission of such offence before it, make an
order for forfeiture.
On an enquiry pursuant to section 128(4) of the Act, the court shall examine all the
evidence produced before it including that which may be tendered by the claimant
in order to satisfy itself there is such proof. The court is competent in determining
the matter before it to draw inferences from the facts proved. Proof on any other
elements required to constitute an offence against the Act, such as knowledge or
intent, is strictly a matter of inference to be deduced from the facts and
circumstances surrounding each particular case where no presumption can
properly be invoked.
If the court is satisfied after considering the whole of the materials before it that an
offence against the Act has been committed and that the goods were the subject
matter or the vehicle was used in the commission of such an offence, then, in that
event, and not otherwise, it is mandatory for the court to make an order for
forfeiture. It is our considered view that that is indeed the intention of the
legislature underlying section 128(4) of the Act. In an appropriate case the court
must give effect to the manifest intention of the legislature.
The question of the shifting of the onus of proof does not in the light of what we
have stated earlier arise.

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