The Taxpayer’s appeal before the Customs Appeal Tribunal (“Tribunal”) was dismissed. The Tribunal ruled that the 2016 letter to FMM constituted a legal condition imposed by Customs on LMWs pursuant to Sections 65(2) and 65A(2) of the Customs Act. However, the High Court[2] later overturned the Tribunal’s decision, holding that:

a) Section 34(1) of the Anti-Dumping Duties Act requires the Act to be construed in conjunction with the Customs Act. Customs, in demanding payment of anti-dumping duties, had also relied on Section 17(1) of the Customs Act to issue the BOD[3].

b) Section 2(1) of the Customs Act defines “customs duty” to include any import duty, export duty, surtax, surcharge, cess, countervailing duty, or anti-dumping duty imposed under the Anti-Dumping Duties Act[4].

c) The Exemption Order was gazetted by the Minister of Finance under Section 14(1) of the Customs Act, granting exemption from the payment of “the whole or any part of any customs duty,” including anti-dumping duties[5].

d) Paragraph 2(1) of the Exemption Order unambiguously exempts “customs duty” without qualification, not just import and export duties, as contended by Customs[6].

e) Customs’ letter to FMM merely reflected its own interpretation and did not impose a binding legal condition on all LMWs. Such a document does not carry the force of law[7].

f) Relying on the COA’s decision in Seruntun Maju[8], Sections 65(2) and 65A(2) of the Customs Act require legal conditions to be clearly stated in the license itself. A separate letter to a trade federation does not satisfy this requirement[9].

g) Further, the letter to FMM was not directly communicated to the taxpayer. Therefore, the taxpayer could not be bound by a legal condition not explicitly conveyed, especially when such a breach could result in penalties under Section 133(1)(a) of the Customs Act for incorrect declaration[10].

Dissatisfied with the High Court’s ruling, Customs appealed to the Court of Appeal (“COA”).

On 9 December 2024, the COA unanimously dismissed Customs’ appeal, upholding the High Court’s decision that LMWs enjoy exemption/suspension from the payment of all customs duties for the imported steels, including anti-dumping duties. In reaching this decision, the COA accepted the Taxpayer’s arguments that:

• The special treatment of LMWs was explained during the 1972 Parliamentary debate on the introduction of Section 65A of the Customs Act, which allowed manufacturing activities in licensed warehouses. Parliament expressly stated that these warehouses are not subject to customs duties, which would include anti-dumping duties.
• This special treatment was designed to incentivise exporters and ensure that Malaysian exporters can compete internationally. Imposing anti-dumping duties on LMWs for imported raw materials would undermine the purpose of the legislation by increasing production costs and putting Malaysian exporters at a disadvantage in global markets.
• The purpose of anti-dumping duty is to protect domestic industry from unfair competition caused by foreign companies selling their products below normal value. LMW licensees are generally required to export at least 80% of their products. In this case, the taxpayer exports 100% of its finished products, causing no harm to domestic manufacturers.
• The Anti-Dumping Duties Act was enacted to protect domestic manufacturers from unfair foreign practices, not to place Malaysian exporters at a competitive disadvantage in international markets.

Conclusion

This case highlights how Malaysia can uphold robust trade defence mechanisms without compromising its export ambitions. In an era of rising trade barriers and global uncertainty, the High Court’s decision (as affirmed by the COA) sends an important message:

1. LMW and LW licensees are statutorily exempt/ enjoy suspension from the payment of anti-dumping duties for imported raw materials

• The Anti-Dumping Duties Act must be read in conjunction with the Customs Act. When construed harmoniously, both statutes confirm that LMW and LW holders are exempt/ suspend from the payment of all customs duties, including anti-dumping duties.

2. Parliamentary intent overrides administrative interpretation

• The Court underscored that laws granting exemptions to LMW and LW holders must be interpreted in line with Parliament’s clear intent to promote export-led growth. Administrative and quasi-judicial bodies are bound to give effect to this objective and cannot dilute or override it through narrow or conflicting interpretations.

3. Customs’ letter to FMM is merely a guideline and do not carry any force of law

• Internal documents, such as Customs’ circulars or the letter to FMM, cannot override statutory exemptions or impose new legal obligations, as they do not have the force of law. This is particularly significant, as it highlights that Customs has no authority to unilaterally create legal obligations or limit statutory exemptions through administrative instruments. Such actions amount to an unlawful attempt to circumvent Parliament’s intent and exceed the legal powers conferred upon Customs under the law.

The COA’s decision serves as a beacon for legal clarity and economic pragmatism—key qualities as Malaysia navigates the complexities of a multipolar trade world. The Taxpayer was successfully represented by Dato’ Nitin Nadkarni, Ivy Ling Yieng Ping, and Jay Fong Jia Sheng from Lee Hishammuddin Allen & Gledhill’s Tax, Customs & Trade Practice.

The High Court’s grounds of judgment can be accessed here.

This alert is written by Ivy Ling Yieng Ping, Partner and Charlene Woon Zi Xuan, Pupil of LHAG’s Tax, Customs and Trade. For any inquiries, please contact Partner Ivy Ling Yieng Ping (il@lh-ag.com).

REFERENCES

[1] Civil Appeal No.: W-01(A)-567-10/2023

[2] [2024] 9 MLJ 249

[3] See para. 8 of GOJ

[4] See para. 18 of GOJ

[5] See paras. 33 – 36 of GOJ

[6] See paras. 22 – 23 of GOJ

[7] See paras. 40 – 44 of GOJ

[8] Seruntun Maju Sdn Bhd v Pengarah Kastam Negeri Perak Jabatan Kastam Diraja Malaysia & Anor [2020] 6 MLJ 401

[9] See paras. 52 – 61 of GOJ

[10] See paras. 48 – 51 of GOJ