Customs and Excise Highlights

This week’s selected highlights in the Customs and Excise environment since our last instalment.

22 Jun 2018 5 min read Tax & Exchange Control Alert Article
  1. Amendments to Schedules to the Customs & Excise Act, No 91 of 1964 (Act):

Schedule 1 Part 1:

The substitution of tariff subheadings 1701.12, 1701.13, 1701.14, 1701.91 and 1701.99 to increase the rate of customs duty on sugar from 213.1c/kg to 233.81c/kg; 

The insertion and substitution of various items under heading 73.12 in order to review the rates of customs duty on stranded wire, ropes and cables;

Schedule 2:

The deletion of item 206.04/3207.40/01.06 and substitution of item 206/04/3207.40/02.06 to give effect to the sunset review of the anti-dumping duties on glass frit originating in or imported from Brazil; and

Schedule 4:

The insertion of rebate items 460.15/7312.10/01.06 and 460.15/7312.90/01.06 in order to provide for a rebate facility on stranded wire, ropes and cables.

  1. New case law / authority:

The Commissioner for the South African Revenue Service v Encarnaçâo N.O. (431/2017) [2018] ZASCA 71 (29 May 2018):

This was an appeal to the Supreme Court of Appeal (SCA) by SARS against a judgment in favour of the taxpayer.

The initial question was whether rebate item 412.09 would be applicable in the case of imported cigarettes being stolen as a result of an armed robbery. 

The rebate item provides as follows:

Goods, excluding goods contemplated in rebate item 497.02, in respect of which the customs duty, together with the fuel levy (where applicable), amounts to not less than R2,500, proved to have been lost, destroyed or damaged on any single occasion in circumstances of VIS MAJOR or in such other circumstances as the Commissioner deems exceptional while such goods are:

(a)         in any customs and excise warehouse or in any appointed transit shed or under the control of the Commissioner;

(b)         being removed with deferment of payment of duty or under rebate of duty from a place in the Republic to any other place in terms of the provisions of this Act; or

(c)         being stored in any rebate storeroom, provided:

(i)     no compensation in respect of the customs duty or fuel levy on such goods has been paid or is due to the owner by any other person;

(ii)     such loss, destruction or damage was not due to any negligence or fraud on the part of the person liable for the duty; and

(iii)    such goods did not enter into consumption”. 

The SCA found that:

  • Armed robbery falls within the scope of vis major as provided for in rebate item 412.09; and
  • As there was a lack of evidence that the stolen products were ever found it was difficult to see what more was required of the taxpayer in order to claim the rebate. The manner in which the cigarettes were inserted into the market for consumption was irrelevant and the appeal was dismissed with costs.

The Commissioner for the South African Revenue Service v Daikin Air Conditioning (185/2017) [2018] ZASCA 66 (25 May 2018):

The case dealt with the tariff classification of air conditioning machines imported into South Africa. We quote the relevant sections from
the majority judgment handed down by Van der Merwe JA:

“[7]    The Commissioner contends that the products are indoor units for machines of subheading 8415.10.10 and that they should therefore be classified under subheading 8415.90.05. On the other hand, Daikin’s case is that the products are parts for ceiling type air conditioning machines that do not fall within the ambit of subheading 8415.10. Thus, it contends that the products are classifiable under subheading 8415.90.90 (‘Other’). Therefore, the question is whether the complete machines consisting of the products and the appropriate outdoor units fall under tariff subheading 8415.10 or not. The answer lies in the interpretation of the words ‘window or wall types, self-contained or “split-system”’.


[11]   The Brussels Notes favour the interpretation of the Commissioner. First, if the subheading was intended to refer only to window or wall type air conditioning machines and to no other, one would have expected these notes to contain some limitation to and/or description of window or wall types. Second, the added sentence appears to me to provide decisive guidance. It makes clear that the subheading includes ‘split-system’ air conditioning machines of which the indoor units are mounted on ceilings.


[14]   There is a further consideration. It is well established that a commercially sensible construction should be preferred. In this regard it appears from the evidence that the machines in respect of which the products constitute the indoor units, fall squarely within the meaning of subheading 8415.10.10. They are ‘Of a kind used for buildings, compressor operated, having a rated cooling capacity not exceeding 8,8 kW’. It also appears from the evidence that the same outdoor units may be used for these ‘split-system’ machines, irrespective of whether the indoor units are mounted on walls or ceilings. It appears quite unbusinesslike to differentiate for customs duty purposes, between ‘split-system’ air conditioning machines of which the indoor units do exactly the same work and the outdoor units are exactly the same, simply because the indoor units are placed on ceilings and not on walls. 


[15]   Although the matter is by no means free of difficulty, I have come to the conclusion that the interpretation advanced by the Commissioner is to be preferred.  I hold that the products are classifiable under tariff subheading 8415.90.05 of Part 1 of Schedule 1 to the Act and would uphold the appeal”.

  1. Per Notice 339 of 2018 (dated 15 June 2018) the Department of Agriculture, Forestry & Fisheries issued a communication wherein comments are invited with respect to proposed inspection fees relating to certain regulated:
  • Locally manufactured products;
  • Imported products; and
  • Laboratory tests.

Comments may be submitted in writing to: 

The CEO: Impumelelo Agribusiness Solutions, Dr. Mduduzi Ngcobo at e-mail: or posted (couriered) to Unit 5, 36 van Rensburg Street, Nelspruit, 1200, by no later than 30 days from the date of publication of the notice.

  1. Please advise if additional information is required.

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