Concrete products manufacturer KSM investments Incorporated has moved to the High Court to fight what it says is a decision by the Guyana Revenue Authority (GRA) to overestimate the value of its cement imports without any explanation and demand higher duties and taxes as a result.
KSM is seeking from the courts, among other things, an order or writ of certiorari quashing the decision of GRA’s Deputy Commissioner, Customs Excise and Trade Administration, Patrick Hyman, demanding payment of short levied customs duty and taxes from it in the sum of $16,626,814 in respect of five shipments of cement imported during the period January to March of this year.
KSM is calling the demand by the GRA “unlawful, unconstitutional, in breach of and contrary to the Customs Act and other relevant laws, in breach of and contrary to the legitimate expectation of the applicant, unreasonable, arbitrary, capricious, made in bad faith and based upon irrelevant and improper considerations.”
Sole importer and distributor in Guyana of Portland grey cement from the Dominican Republic for the past four years, KSM says in its application that when it first began importing the cement in 2015, the declared value, exclusive of freight, was US$72 per metric tonne and, inclusive of freight, US$89 per metric tonne.
The company says a total of 2,175 metric tonnes of cement was imported for the year 2015. It added that from 2016 to 2018, both its manufacturing business and resale of cement expanded and grew and resultantly, its importation of cement also increased significantly.
During the year 2018, KSM said it imported a total of 24,480 metric tonnes of cement and the declared value in respect thereof was US$68.50 per metric tonne, exclusive of freight charges, and US$83.50 per metric tonne, inclusive of freight charges.
According to KSM, as a result of the increase in the quantity of cement purchased and imported, it benefitted from a reduction of the price from the manufacturer, Domicem S.A., of Santo Domingo, Dominican Republic.
It says in court documents seen by this newspaper that all payments in respect of the cement imported are made to Sonex International Limited of One Welches, St. Thomas, Barbados, which is the company that handles all financial transactions in respect of orders, sale, shipping and payments for Domicem cement.
KSM complains that sometime in May of 2018, GRA “unilaterally and without any reasonable or justifiable grounds” increased the declared value, exclusive of freight charges, from US$68.50 to US$96.92 and thereafter, between the periods from May, 2018, to December, 2018, without offering it any reasonable or justifiable grounds for so doing.
The applicant said it disputed and challenged the increase in the declared value and a letter, dated 8th May, 2018, confirming the price was sent by Sonex International to Lancelot Wills, Chairman of the Technical Committee on Customs Valuation at the GRA.
Despite the letter, KSM says the GRA proceeded to assess duties and taxes on the unilaterally increased value for all shipments of cement imported by it for the period May, to December, 2018.
As a result of the unilateral increase in the declared value, KSM said it was forced to lodge, deposit and pay additional taxes in the sum of $44,048,902 to GRA for cement imported during the period May to December, last year.
Payment of the additional duties and taxes, it says, has resulted in the depletion of its working capital and has caused and continues to cause tremendous financial hardship on its business.
Meanwhile, for 2019, KSM said it imported five shipments of cement, totalling 9,023 metric tonnes, at the same declared value of US$68.50, exclusive of freight charges and which were cleared by customs.
The applicants said that the GRA accepted the declared value of each of those shipments and duly assessed duties and taxes payable in respect thereof without revising and/or increasing the said declared value.
Thereafter, KSM said that it paid the duties and taxes assessed, and cleared and obtained the shipments of cement which it has already either used or resold.
The applicants argue that by its conduct, the GRA, in accepting the declared value and assessing duties and taxes thereon, the applicant was reasonably led to believe that a decision was made by the respondent to accept the declared value provided by the applicant and confirmed by Sonex International.
However, KSM said that it subsequently received two letters from GRA, dated May 8th and 10th, 2019, signed by Hyman, informing that the Revenue Authority had imposed a customs revised value of US$111.92, inclusive of freight charges, per metric tonne of cement in respect of the five shipments.
KSM said that in those letters, GRA also demanded that it pay within seven days, additional duties and taxes referred to as short levied customs duty and taxes in the sum of $16,626,814.
Despite its numerous requests for reasons behind the increases, KSM said that none have been forthcoming from the Revenue Authority and as far as it is aware, GRA has conducted no proper investigation to base its decision.
If there has been an investigation, KSM says it is unaware of it, nor was it ever given an opportunity to be adequately heard before the decision to unilaterally increase the declared value and impose a revised customs value.
As far as the applicant is concerned, the increase is not based upon any empirical information or data such as differences in price of Portland grey cement, or declared value of cement imported by other companies into Guyana, or prevailing world market prices for the said brand of cement.
Instead, it says that the unilateral increase in the value of the cement “seems to be based upon opinions, conjecture, whims and fancies” of the Revenue Authority.
In the circumstances, KSM is contending that both the unilateral imposition of the customs revised value and the demand for payment of short levied customs duty and taxes are unlawful.
Against this background, KSM Investments wants the court to nullify GRA’s decision making the increase. The applicant is also seeking court costs and any other relief which the court may deem just and reasonable to grant.
KSM operates a fully automated factory that manufactures various concrete products, including hollow and vent concrete blocks, concrete pavers, concrete spindles, concrete tiles, and numerous other concrete products at Lot 8 Good Hope Public Road, East Coast Demerara.
The company is being represented by attorney Anil Nandlall.
