8 July 2016 by Tax and Exchange Control Alert

Customs and excise highlights

We will be providing a brief overview of the Customs and Excise environment in our weekly Tax Alert. This is the fourth instalment of the series.

Below are this week’s selected highlights:

  1.     Amendment of heading 08.11 relating to “Fruit and nuts, uncooked or cooked by steaming or   boiling in water, frozen, whether or not containing added sugar or other sweetening matter”.
  2.     New Zimbabwean law (Statutory Instrument 64) has placed restrictions on the importation of  certain goods, including potato chips, bottled water, baked beans and yogurt. This, amongst other reasons, has caused protests at the Beitbridge border.

In an interesting judgment of the Commissioner for the South African Revenue Service v Prudence Forwarding (Pty) Ltd and another [2016] JOL 35747 (GJ), the Full bench of the North Gauteng High Court, Pretoria held as follows:

“The most compelling and essentially dispositive ground of appeal is that the respondents failed to comply with the peremptory provisions of ss89(2) and 96(1) of the Act and hence the court lacked jurisdiction to set aside the seizure of the goods. Section 89(2), it will be recalled, requires any litigant to give notice to the Commissioner before serving any process for instituting any proceedings as contemplated in s96(1)(a) within 90 days after the date of the seizure or the conclusion of an internal administrative appeal.

The respondents gave written notice of their intention to seek interim relief in the form of an order to release the container against payment of a provisional payment. They gave no similar notice in respect of the new cause of action introduced by the amendment in which they sought to review and set aside the seizure of the goods.

It was therefore incumbent upon them to serve the relevant notice and to obtain the agreement of the Commissioner or the sanction of the court to reduce the one month period in respect of the new cause of action involving a review of the seizure decision. This was not done. The respondents could not rely on the notice they served to obtain the release of the goods from detention. Section 96(1)(a)(i) of the Act makes it plain that the notice must relate to a specific cause of action, which is required to be set forth “clearly and explicitly” in the written notice. And s96(1)(a)(iii) provides that no notice shall be valid unless it complies with the requirements prescribed in the section. Thus, since no notice was delivered in respect of the review, and neither the Commissioner or the court agreed to a reduced period, the jurisdictional conditions precedent was not fulfilled, and the court accordingly lacked jurisdiction to grant the final relief it granted, in the form of an order setting aside the seizure of the goods. For that reason alone, the appeal must succeed”.

The above demonstrates the importance (or rather necessity) of delivering a notice in terms of s96 of the Customs and Excise Act, No 91 of 1964 (Act) prior to instituting litigation (note that notice periods may differ depending on the cause of action). Further, that such notice must relate to a specific cause of action.

The Court continued as follows:

“…the value of each blanket would have been US$34,78 and thus there was still a significant underdeclaration. Moreover, the respondents did not furnish adequate proof in rebuttal of the Bank of Taiwan documentation and the invoice sent by the supplier to the bank. The invoice is compelling prima facie proof that the value of the goods had been underdeclared. The respondents have not adequately answered why the bank was in possession of documentation indicating a purchase in the amount of US$119 630, as opposed to the declared value of US$9 460. They have produced other documentation setting out imports in an aggregate amount of US$847 446,85; but have singularly neglected to explain how the consignments were made up or which entries related to the container in question. Section 102(4) and (5) of the Act places an onus upon the respondents to prove compliance with the Act. They failed to discharge that onus by furnishing credible evidence of payment that controverted the supplier’s invoice. That obliged the court a quo to regard the prima facie proof as conclusive. As a result there was no basis to set aside the seizure or to order the Commissioner to release the goods”.

This demonstrates that in general, the onus to prove compliance with the Act is not on SARS, but on the person/entity alleging compliance.

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