A court has rejected a request by a company importing yoghurt which argued it should not have paid about €322,000 in levies, over four years, because the product was suitable for diabetics and, therefore, exempt from tax.
Lawrence Quintano and Co. Ltd had filed an application before the First Hall of the Civil Court claiming that Danone Vitasnella should have been exempt from the levy.
The company asked the court to hold the Public Health Director and the Customs’ Controller responsible for damages it incurred when it paid levy unduly and for loss of profits between 2000 and 2004.
Madame Justice Abigail Lofaro heard how, in 1998, the company started importing the yoghurt as a product suitable for diabetics even through the manufacturer did not label it as such. At the time, foodstuffs for diabetics were exempt from paying a levy. This tax was removed in May 2004 when Malta joined the EU.
In 1998, the Port Health Office (PHO) carried out tests on the yoghurt and found it conformed to regulations governing products suitable for diabetics. The PHO, however, pointed out that the product contained aspartame, an artificial sweetener. After these tests were carried out, the Public Health Department instructed the company to affix a label on the yoghurt after importation. The label read that the product was: “Suitable for diabetics. May not be used by overweight diabetics, others are advised to consult their doctor/dietician.”
Once the product was imported, the label was fixed to the container under the supervision of Customs officers. The system allowed the company to benefit from the levy exemption.
However, in January 2000, the company was informed there had been a policy change and the system used since 1998 would no longer be allowed. The PHO informed the company that “these products do not fall under any of the classifications listed in our legislation. Thus, any claims that products in question are dietetic should be disregarded. Previous correspondence by this department regarding the same products should be discarded.”
The company claimed the authorities did not have the right to change the agreement and held them liable for damages suffered through the levy paid and profits lost between 2000 and May 2004.
The court heard John Attard Kingswell, a manager at the Health Inspectorate, explain that the policy had changed after the inspectorate sought legal advice. It was decided that labelling had to be carried out by the manufacturer and not the importer because it was the manufacturer that knew exactly what the product contained.
The court noted that the health authorities had changed the policy in the interest of consumers and was, therefore, justified in doing so.