Judgement no.35/2006/KDTMPT dated may 04, 2006 on request for compensation for damage from business operation

HO CHI MINH SUPERIOR’S PEOPLE COURT

JUDGEMENT NO.35/2006/KDTMPT DATED MAY 04, 2006 ON REQUEST FOR COMPENSATION FOR DAMAGE FROM BUSINESS OPERATION

The appellate trial court was conducted at the office of Ho Chi Minh Superior’s People Court on May 04, 2006 to hear the case No.98/2005/KDTMPT dated December 27, 2005. Parties concerned:

Petitioner:  Vina World Service Production Limited Company

Head office:  Street No.6, National Highway 22, Trang Bang industrial park, Tay Ninh province.

Legal representative of the petitioner:  Mr. Nguyen Van Nho born in 1949.

Residing at: Neighborhood 4/24, Go Dau town, Tay Ninh province.

Defendant:  Beautec Vina Company

Head office: Number 7 Thong Nhat, Song Than 2 industrial park, Di An district, Binh Duong province.

Legal representative of the defendant:  Mr. Tran Thanh Quang born in 1974.

Residing at: 1/15 B9 -304 housing estate, ward 25, Binh Thanh district.

FINDING THAT

Statements of the petitioner's representative:  Vina World Service Production Limited Company (hereinafter referred to as “Vina World Co.) and Cavina Inc Company entered into contract No.02/VNW-CVN/04 on March 19, 2004 and continued to sign Contract Appendix No.01 which specified that Vina Word Co. would process 6 types of clothing for Cavina Inc Co., one of which is "Reversible Jacket” coded  4685 processed by using fur which were then delivered to the customer – Awha Trading Company (hereinafter referred to as "Awha Co.).

However Vina World Co. failed to duly process these products since Awha Co. asked for such products urgently. As for that reason, Vina World Co. and Cavina Inc Co. entered into an agreement with Awha Co. which stated that the clothing article coded 4685 would be transferred to Beautec Vina Company (Beautec Co.) for processing purpose.

According to the aforesaid request, Beautec Co. and Awha Co. signed Contract Appendix No.03 (included in Contract No.01/04/BVAW dated September 16, 2004 between Beautec Co. and Awha Co.) on September 16, 2004, in which Beautec Co. was designated to receive the processing accessories which are 6,250 fur pieces from Vina World Co. according to processing contract No.02/CVN-VNW/04 by Awha Co.  And these fur pieces were received by Vina World Co. from Cavina Inc Co. as specified in Customs Declaration No.1243/NK dated August 18, 2004.

Vina World Co. delivered 6,249 fur pieces to Beautec Co. on August 30, 2004. Mr. Pham Huy Hien is the recipient.  Vina World Co. made the delivery note of intermediary processing accessories and supplies for Beautec Co. as regulated by the customs law.  Since the form is changed as specified in Decision No.69/2004/QD-BTC dated August 24, 2004 of the Ministry of Finance on customs declaration of intermediary processed products, Beautec Co. failed to make the declaration on schedule then refused to carry out the customs procedure as regulated.

Due to Beautec Co.’s failure to make customs declaration of intermediary processed products, Vina World Co. could not liquidate processing contract No.02/CVN-VNW dated March 19, 2004 signed with Cavina Inc Co.  And since Beautec Co. had delivered the clothing products to Awha Co. without notification, Vina World Co. had to carry a fine of VND 6,000,000 and make customs declaration of non-merchant article on April 18, 2005, and pay a tax of VND 42,656,250 in order to liquidate contract No.02/CVN-VNW/04 dated March 19, 2004 as specified in Decision No.08/QD-XPHC9 dated March 16, 2005 issued by Customs Sub-department of Trang Bang industrial park. 

Due to the taxes and fine resulted from irresponsible acts of Beautec Co., Vina World filed a lawsuit to ask for payment of an amount of VND 48,656,250 which is paid for administrative fine and import-export duty from Beautec Co.

Statements of the defendant’s representative:

Beautec Co. entered into a discussion with Vina World Co. on transfer of accessories used for processing exported clothing as follows:

Name of products: fur, quantity: 6,250 pieces, value: USD 5,000.

According to regulations on transfer of processing accessories and supplies, the transferor shall prepare completed documents for the transferee according to the forms regulated by Customs Department and the transferee shall carry out customs procedures.  If the completed documents are made in compliance with specified requirements, the customs authority would grant permission for transfer of accessories.

Vina World Co. made documents according to processing contract No.01/04/BV-AW dated September 16, 2004 and sent them to Beautec Co. for carrying out customs procedure.  However, all of these documents were made inconsistent with the forms regulated by the Customs Department in Decision No.69/2004/QD-BTC dated August 24, 2004 which took effect on September 15, 2004. 

As for that reason, Beautec Co. requested Mr. Hung – the representative of Vina World Co. to re-make all documents according to the new forms as for Beautec Co. to complete the customs procedure for transferring the processing accessories but Vina World Co. failed to do so. Therefore, Song Than customs authority did not grant permission for accessory transfer which resulted in Beautec Co.’s failure to receive 6,250 fur pieces from Vina World Co. For the purpose of executing the contract signed with Awha Co., Beautec Co. entered in to contract No.01LT-BT on August 30, 2004 in order to purchase 6,249 faux fur pieces from Long Thao facility for processing 2 clothing articles coded 4680 and 4687 then delivered the processed clothing products to Awha Co. on September 25, 2004.

Vina World Co. had to pay a number of taxes and fine since it failed to get hold of customs regulations. Hence, Beautec Co. rejected the request of Vina World Co.

According to first-instance judgment No.10/2005/KDTMST dated October 14, 2005 of Binh Duong province People’s Court:

Pursuant to Articles 29, 34, 131, 210 and 238 of the Code of Civil Procedure.

Pursuant to Decree No.57/1998/ND-CP dated July 31, 1998 and Decree No.44/ND-CP dated August 02, 2001 of the Government on guidelines for enforcement of the Commercial Law; Decree No.70/CP dated June 12, 2004 of the Government on Court costs and court fees; Decision No.69/2004/QD-BTC dated August 24, 2004 of the Minister of Finance, hereby judges: 

1. Accept the petition of Vina World Co.

2. Compel Beautec Co. to pay an amount of VND 48,656,250 which had been paid for administrative fine and import-export duty to Vina World Co.

3. In terms of first instance court fees: Beautec Co. and Vina World Co. have to pay an amount of VND 2,432,812.

Return an amount of VND 1,216,421 to Vina World Co. according to payment receipt No.008439 dated August 02, 2005 of Binh Duong province Office for judgment enforcement.

Moreover, the first-instance judgment specified the amount of overdue interest due to late enforcement of the Court’s judgment and rights to appeal as per law provisions.

Beautec Co. filed an appeal for a retrial on October 21, 2005.

At the appellate court hearing, Mr. Tran Thanh Quang- representative of the defendant (Beautec Co.) still did not change its appeal and dissented from the first-instance judgment, and rejected the request of the petitioner (Vina World Co.) as Beautec Co. had not received the accessories from Vina World Co. Beautec Co. only received 6,249 faux fur pieces from Long Thao facility and processed two clothing articles coded 4680 and 4687 and delivered them to Awha Co. on September 25, 2004. In addition, the defendant did not change the request which is voluntarily giving an amount of VND 1,000 to the petitioner so that the case would be quickly solved.

However, Mr. Nguyen Van Nho – representative of the petitioner (Vina World Co.) dissented from the aforesaid appeal of the defendant and asked for rejection of such appeal and suggested that the first-instance judgment shall be upheld. 

According to the evidence and documents provided in the case record which are verified in the court hearing and results of discussion at the court hearing; upon full and comprehensive consideration of evidence and opinions provided from the petitioner and defendant.

CONSIDERING THAT

The defendant’s appeal mentioned above could not be accepted as there is no legal base provided according to the followings reasons:

According to the delivery note of processing accessories and supplies dated September 16, 2004 signed and sealed by Mr. Choe Bee Ho – Deputy Director General of Beautec Co.:  Beautec Co. sufficiently received 6,249 fur pieces from Vina World Co. (case file p. 23); according to the delivery note dated August 30, 2004, Beautec Co. actually received 6,249 fur pieces from Vina World Co. (case file p. 24); according to the export declaration dated September 25, 2004 signed and sealed by Mr. Cho Bee Ho – Deputy Director General of Beautec Co, and the customs procedure carried out by Mr. Pham Huy Hien (a staff- representative of Beautec Co.) with a report on processing accessory and supply consumption dated September 16,2004, (case file p. 65) which confirmed different types of furs were purchased in Vietnam; according to processing contract No.01/04BV-ANV dated September 16, 2004 between Beautec Co. and Awha Co., party B (Awha Co.) shall provide all accessories with correct quantity and quality to party A (Beautec Co.), which were imported (case file p.56). Additionally, the defendant failed to provide any evidence for its appeal other than the copy of contract signed with Long Thao facility (case file p. 66).

The aforementioned evidence pointed out that Beautec Co. had received 6,249 fur pieces from Vina World Co. and had made a customs declaration with a report on consumption of processing accessories and supplies and appended its signature to the delivery note of processing accessories and supplies for confirming that all the goods required has been received following the customs procedure specified by the Ministry of Finance.

Considering that Beautec Co. had received the goods from Vina World Co. but failed to duly provide documents and complete the customs procedure as per customs law provisions, which resulted in Vina World Co.’s failure to liquidate contract No.02/VNW-CVN/04 dated March 19, 2004 between Vina World Co. and Cavina Co. and imposition of administrative fine and import duty (VND 46,686,250,00 in total, of which VND 6 million is the amount of fine and VND 42,656,250 is import duty) on Vina World Co. decided by Customs Sub-department of Trang Bang industrial park were due to Beautec Co.’s fault. Considering that the first-instance judgment which accepted the petition of Vina Word Co. which requested Beautec Co. to pay a compensation to Vina World Co. by giving an amount of VND 48,686,250,00 which were paid by Vina World Co. for administrative fine and import duty imposed due to fault of the defendant was based on legal documents and lawfully accepted.  Hence, there is no legal base for approving the appeal of the defendant and the first-instance judgment shall be upheld.

- The appellate economic court fees shall be paid by Beautec Co.

- Other decisions specified in the first-instance judgment without any appeal shall take effect from the date of the expiry of time limit for appeal.

Pursuant to documents and evidence mentioned above

- and Clause 1 Article 275 of the Code of Civil Procedure,

HEREBY DECIDES

1/- The defendant’s appeal is not accepted and the first-instance judgment regarding the liability and amount of money paid to the petitioner is upheld.

2/- Pursuant to Articles 29, 34, 131, 210 and 238 of the Civil Code; Decree No.57/1998/ND-CP dated July 31, 1998 and Decree No.44/ND-CP dated August 02, 2001 of the Government on guidelines for enforcement of the Commercial Law and Decision No.69/2004/QD-BTC dated August 24, 2004 of the Ministry of Finance and Decree No.70/CP dated June 12, 1997 of the Government on court fees and charges. 

Hereby judges:

- Accept the petition of Vina World Co.

- Compel Beautec Co. to pay an amount of VND 48,656,250 which has been paid for administrative fine and import-export duty to Vina World Co. - Beautec Co. shall pay an amount of VND 200,000 for appellate economic court fees.

3/- Other decisions specified in the first-instance judgment without any protest shall take effect from the expiry of time limit for appeal. 

The appellate judgment comes into force from the day on which it is passed./.