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[2017] ZAWCHC 110
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Pioneer Foods (Pty) Ltd v Minister of Finance and Others (15797/17) [2017] ZAWCHC 110; 2019 (1) SA 273 (WCC) (29 September 2017)
In
the High Court of South Africa
(Western
Cape Division, Cape Town)
[REPORTABLE]
Case no: 15797/17
In
the matter between:
PIONEER
FOODS (PTY
LTD
Applicant
and
MINISTER
OF
FINANCE
First
Respondent
NATIONAL
TREASURY
Second
Respondent
MINISTER
OF ECONOMIC
DEVELOPMENT
Third
Respondent
MINISTER
OF TRADE &
INDUSTRY
Fourth
Respondent
DEPARTMENT
OF TRADE &
INDUSTRY
Fifth
Respondent
INTERNATIONAL
TRADE ADMINISTRATION
COMMISSION
Sixth
Respondent
REASONS (DELIVERED ON 29 SEPTEMBER
2017)
SHER,
AJ:
1.
The applicant is one of the principal wheat millers and suppliers of
wheat-based products including flour, bread and pasta, in
the
country. On 31 August 2017 it launched an urgent application in Part
A of which it sought a
mandamus
compelling the Minister of Finance (first respondent) and the
National Treasury (second respondent) to cause updated custom tariff
duties on wheat imports to be published in the Government Gazette by
no later than 8 September, in terms of the Customs and Excise
Act
[1]
(the “CEA”).
2.
The application was heard late on the afternoon of Friday 1
September, in the urgent lane of the motion court roll. As there
were
a number of other matters which still needed attention, immediately
after argument had concluded I made an
ex tempore
Order in
which I dismissed Part A of the application, with costs to stand over
for determination together with Part B, and indicated
that reasons
would be provided later, in the event that these were sought. Such a
request having been made, my reasons follow below.
Historical
and legislative background
2.
Due largely to climactic conditions the
production of wheat in South Africa occurs at a higher cost than for
most wheat-producing
countries in the northern hemisphere. As a
result,
South Africa is a net importer of
wheat. Between 2005 and 2015 domestic production declined by 25%
while demand increased by 17%.
In 2015, whilst the country was
experiencing its worst drought since the early 1980’s there was
a shortage of 60% of what
was required for domestic consumption.
3.
In 1999 the Ministers of Trade and Industry and Finance decided to
adopt a tariff-based policy whereby customs duties would be
levied on
the importation of wheat, with the aim of encouraging and protecting
local farmers in such a way that they would be able
to compete
sustainably against low priced imports without unduly raising prices
‘downstream’. In order to achieve this
the then Board of
Tariffs and Trade proposed the use of a variable tariff formula,
which would be benchmarked on a dollar-based
so-called ‘floor’
or ‘reference’ price (DBRP), being the international
price of wheat. This price was based
on the 10year average trading
price at the time for the US no. 2 Hard Red Winter Gulf wheat strain.
When the DRBP was first set
in 1999, it was pegged at USD 157 per
ton.
4.
The idea behind the use of a variable tariff formula was to impose a
countercyclical system of tariffs. When the price of imported
wheat
over a set period of time fell below the DBRP due to lowered
international prices, then import duties would be raised based
on the
difference between the two, and when international prices rose above
the DBRP the duties would be reduced proportionately.
To this end the
formula envisaged that a rise or fall in the DBRP would be triggered
if the 3 week moving average international
price of wheat varied by
more than USD 10/ton for 3 consecutive weeks. However, as will be
apparent from the history which is set
out below, in practice the
promulgation of increased or reduced custom duties, as the case might
be, was effected a number of months
after the trigger event, and as a
result of this time lag would often be out of sync with what was
happening on international markets.
5.
With the advent of the International Trade and Administration Act
[2]
(“ITA”) in 2002 the Minister of Trade and Industry was
given certain powers
[3]
to regulate the import and export of certain goods into the Republic,
and matters pertaining to the investigation of possible amendments
to
customs duties on certain imports in terms of the variable tariff
formula were taken over by the International Trade Administration
Commission
[4]
(“ITAC”), which was to report to the Minister of Trade
and Industry with its recommendations. If the Minister approved
ITAC’s recommendations he in turn would forward them on to the
Minister of Finance with a request for their implementation
in terms
of the CEA.
6.
The use of the variable tariff formula for setting customs duties on
wheat imports was maintained by ITAC until 2005 when it
recommended
that a switch be made to
ad valorem
tariffs. However, subsequent to representations made by the National
Chamber of Milling, Grain SA and the DTI in 2008, ITAC recommended
a
return to the variable tariff formula and the DBRP system.
7.
Following recommendations by ITAC in 2010 the DBRP was increased in
2011 to USD 215/ton and in 2013 following further recommendations
it
was increased to USD 294/ton. In December 2015 the Minister of Trade
and Industry recommended to the Minister of Finance that
the import
duty on wheat be raised again, as international prices had fallen,
and consultations were held by the National Treasury
with various
stakeholders with a view to assessing the impact of a raise in the
DBRP on food prices and on upstream and downstream
industries. At the
same time, the Minister of Trade and Industry directed ITAC
[5]
to conduct a full review of the variable tariff formula and the DBRP
which applied in respect of wheat, maize and sugar. In a media
release by National Treasury on 8 April 2016 it was announced that
the Minister of Finance had approved an amendment of the DBRP
for
wheat (in rand terms) to R 1224.31 per ton and this tariff would
continue to apply for the remainder of 2016, pending the outcome
of
the review.
8.
In December 2016
ITAC
published the report
[6]
of its review. It identified a number of issues as essential to the
outcome, including the effects of the severe and long-lasting
drought, food inflation (particularly in relation to bread prices),
exchange rate fluctuations and the relationship between the
cost of
production and the level of protection of the local industry.
9.
As far as the drought was concerned it noted that wheat production
was projected to recover significantly due to expected favourable
climactic conditions, which would result in a diminished dependence
on imports. In a detailed analysis of the impact of inflation
on
downstream wheat products such as bread and cereals it came to the
conclusion that there was no simple correlation between movements
in
the international price of wheat and the duties levied thereon, and
domestic prices.
10.
As far as exchange rate fluctuations were concerned it found that
substantial depreciation in the value of the rand as against
the
dollar over the preceding two years had a dramatic effect on the
value of import duties that were levied. It noted that there
were
complaints that, because of this, duties were too high and had
resulted in unnecessary protection in Rand terms, and as a
result a
number of role-players had advocated a possible switch to a
Rand-based reference price system. On examining the financial
implications of such a model it was of the view that due to the
trajectory of the local currency it either would not yield a
sufficient
duty, or would only trigger a duty at very low levels. In
addition, it was of the view that a Rand-based pricing system would
place
farmers at a commercial disadvantage given local inflationary
cost pressures and would be unworkable, as it would have to be
revised
constantly to take account of the most up to date industry
figures. However, in order to address issues of over-protection when
there was an extreme fall or appreciation in the value of the
currency it recommended that a new variable should be introduced
into
the formula viz the Real Effective Exchange Rate (REER) Index, which
is published monthly by the Reserve Bank. The Index accounts
for
currency differentials between SA and 20 of its most important
trading partners. Utilising the REER to adjust an increase or
decrease in duty that was triggered by a drop or a rise in the
international price would ensure that local producers were only
protected from cost pressures in real terms, and that they did not
benefit unduly from exchange rate movements. The Commission
was of
the view that this would bring stability to the DBRP system.
11.
In the result, the Commission was of the view that the variable
tariff formula based on the DBRP system (as adjusted by the
REER)
still was the appropriate vehicle to utilise in order to stimulate
local production and ensure stability in the trading environment
with
due regard for volatility in international markets. Having regard for
the average level of imports over the preceding 5 years,
and the
significant change in the world price over recent years, as well as
certain ‘distortion factors’ pertaining
to the shifts in
import sources and transportation costs the Commission recommended
that the DBRP be based on the 5 year average
international price and
that it be adjusted downward from the then current level of USD
294/ton, to USD 279/ton.
12.
The applicant avers that the adoption of ITAC’s review report
by the relevant authorities was delayed until the Minister
of Finance
formally implemented its recommendations on 23 June 2017 when he
published updated customs duty tariffs in the Gazette.
Effectively
therefore, a period of 6 months elapsed between the time when ITAC
recommended a reduction in the DBRP, and the promulgation
of reduced
tariffs. Applicant points out that by the time the amended tariffs
were introduced they were out of sync with the then
prevailing
international wheat price.
13.
Applicant avers that according to a schedule produced by the SA Grain
Information Service an adjustment of the DBRP was again
triggered on
11 July 2017, and in terms of the variable tariff formula the import
duty tariff on wheat was to have been revised
downward in rand value
from R 947.20 per ton to R 379.34 per ton.
14.
On 27 July 2017 the applicant addressed letters to the Chief
Commissioner of ITAC, and the Ministers of Trade and Industry and
Finance in which it expressed the hope that every possible effort
would be employed to ensure that the amended wheat import duty
tariff
would be published ‘within the shortest possible time period’.
In the absence of any response the applicant
arranged a meeting
between certain of its executives and the Chief Commissioner on 22
August. Applicant avers that at that meeting
it was informed that
updated tariffs had been forwarded to the Minister of Finance for
publication.
15.
Immediately after the meeting the applicant’s Group Executive:
Sustainability and Stakeholders approached National Treasury
with a
request for a meeting to be held in order to discuss the ‘mechanism
for the new tariff’. On 30 August the applicant’s
Managing Executive duly met with the Treasury’s Head of
Economic Policy and its Chief Director: Microeconomic Policy, and
a
Commissioner from ITAC. At this meeting the applicant’s
representatives urged National Treasury to cause publication of
the
amended import duty tariff to be effected as a matter of urgency, and
pointed out that the applicant was expecting a large
shipment of
wheat on 8 September. Applicant avers that the representatives from
National Treasury did not dispute that an adjustment
to the DBRP had
been triggered and indicated that import duty tariffs were to be
amended accordingly in due course, but were not
prepared to provide
any commitment as to when this would occur.
16.
It is apparent from the papers that immediately after the meeting on
30 August the applicant took a decision to proceed with
the instant
application and the founding affidavit was deposed to on the same
day, and the application was launched a day later
and set down for
hearing on 1 September ie on one day’s notice.
17.
The basis for the urgent part of the relief sought was that the
shipment of 50 000 tons of wheat which was expected to arrive
on 8
September would, in the absence of an adjustment to the import duty
tariff, be liable for import duty of R 47 360 000, based
on the
existing tariff of R 947.20 per ton, as opposed to import duty in the
amount of R 18 967 000, were the import to be processed
on a reduced
tariff of R 379.34 per ton. Applicant pointed out
that it could not delay offloading and processing
the shipment for
any length of time pending the decision of the Minister of Finance as
it would incur demurrage charges of approximately
USD 14 000 per day,
and the ship would lose its docking slot.
The
parties’ contentions: a summary
18.
The applicant contended in its founding affidavit that as updated
duties had already been determined by ITAC in accordance with
the
variable tariff formula, which duties had been endorsed by the
Minister of Trade and Industry, the Minister of Finance was
simply
required to Gazette them in order to bring them into operation. The
applicant described the Minister of Finance’s
function in this
regard as simply being an administrative one, which did not require
him to do anything other than to rubberstamp
and give effect to the
tariffs previously determined by ITAC. In their view the only power
which the Minister of Finance had over
the tariffs was to scrutinize
them for the purposes of ensuring that they had been correctly
calculated by ITAC.
19.
However, in its supplementary founding affidavit the applicant
indicated that it had wrongly conflated the role and duties of
ITAC
and the DTI with that of the Minister of Finance. On reconsideration
it was of the view that ITAC’s role was limited
to making
recommendations in respect of updated tariffs to the Minister of
Trade and Industry who, if he approved such recommendations
would in
turn forward them on to the Minister of Finance with a request that
such tariffs be implemented by publication in the
Gazette.
20.
The respondents in turn contended that the powers of the Minister of
Finance were wide and discretionary executive powers which
could not
be compelled and when exercised were, in effect, legislative in
nature.
The
legislative provisions
21.
According to its preamble the purpose of the CEA is to provide for
the levying of customs and excise duties and certain other
levies,
[7]
and to regulate the importation, export, manufacture and use of
certain goods. As such, the CEA has been described as a so-called
tax
or ‘money bill’ in terms of the Constitution.
[8]
The main function of such a piece of fiscal legislation is to impose
taxes on the public, which are paid into a general revenue
fund.
[9]
22.
In
Gaertner
[10]
the Constitutional Court described the primary function and purpose
of custom and excise duties
[11]
as being to ensure a constant stream of revenue for the state and to
discourage consumption of certain products.
[12]
22.
In terms of the CEA, a customs duty is defined as any duty leviable
under Part 1 of Schedule no. 1 or Schedule no. 2 of the
Act, on goods
imported into the Republic. It is common cause that the import duties
which are in issue in this matter constitute
customs duties levied in
terms of Part 1 of Schedule 1, and the Minister of Finance’s
powers to levy such duties are derived
from s 48(1)(b) of the CEA.
23.
S 48 provides that the Minister may ‘from time to time’
by notice in the Gazette, amend the General Notes to Schedule
1 and
Part 1 of the Schedule, or substitute the said Part 1 and amend Part
2 of the Schedule in so far as it relates to imported
goods, in
certain instances.
[13]
These include instances such as in this matter where the Minister of
Finance seeks to give effect to a request by the Minister
of Trade
and Industry in regard to the amendment of import duties listed in
Schedule 1
[14]
as well as instances where he seeks to give effect to an
international agreement amending the so-called GATT tariffs
[15]
or an amendment to the international Convention on Nomenclature for
the Classification of Goods in Customs Tariffs,
[16]
or in order to remove reference in the Schedule to a country which
has cancelled a preferential customs tariff it afforded SA on
any
goods produced by it.
[17]
An
evaluation
24.
The applicant submitted that if one had regard for the circumstances
under which the Minister of Finance may exercise his powers
to amend
Schedule 1 customs duties in terms of the principal empowering
provision, these largely pertain to situations where he
is simply
required, mechanistically, and as a formality, to give effect to
decisions (such as the conclusion of agreements) taken
by other state
actors. In effect therefore, his role was little more than to
rubberstamp decisions taken elsewhere. In support
of its argument in
this regard the applicant sought to contrast the exercise of
ministerial powers in terms of s 58 of the CEA,
which provides that
the Minister may at any time table a taxation proposal in the
National Assembly imposing a new duty (or increasing
the rate of duty
already payable) upon specified goods, whereupon such duty
immediately becomes payable without the need for the
proposal to be
deliberated upon and accepted in the Assembly by majority vote. The
applicant averred that it was thus apparent
that when the Minister
exercised his powers under s 58 he was performing a legislative
function, whereas when acting in terms of
s 48 he was simply
performing an administrative one.
25.
I do not agree with the applicant’s contentions in this regard.
In the first place, whereas it does indeed appear (I make
no finding
in this regard) that when exercising his powers in terms of the
former provision, the Minister exercises a legislative
power, this
does not necessarily mean that he does not exercise a similar power
when amending custom duties listed in Schedule
1, in terms of the
latter provision, simply because he exercises it in a different way
ie by promulgation.
26.
It is trite that when considering whether or not the exercise of a
power by a functionary constitutes administrative action
the focus of
the enquiry is directed at the nature of the power and its source,
and not the functionary.
[18]
The court must consider whether the exercise of the power involves
the exercise of a public duty and how closely it is related
to policy
matters.
[19]
When the action in question constitutes the enactment of legislation
or the formulation of policy it will generally constitute
either a
legislative or executive act and not an administrative one.
[20]
As was pointed out in
Greys
Marine
[21]
administrative
action
“
is
rather, in general terms, the conduct of the bureaucracy (whoever the
bureaucratic functionary might be) in carrying out the
daily
functions of the state, which necessarily involves the application of
policy, usually after its translation into law
”.
27.
In my view, when seeking to interpret the provisions of s 48(1)(b) I
am required to adopt a contextual, and purposive approach.
In
Endumeni
[22]
the Supreme Court of Appeal explained
[23]
that:
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed …. Where more than one meaning
is possible each possibility must be weighed
in the light of all
these factors
.
The
process is objective, not subjective.
A
sensible meaning is to be preferred to one that leads to insensible
or unbusiness-like results or undermines the apparent purpose
of the
document.
”
28.
Therefore, when interpreting the provisions of subsection (1)(b) or
any of the other subsections of s 48(1), these must be read
in the
context of the section as a whole, and not as isolated provisions,
standing on their own. In this regard it is important
to note that
subsection 48(1)(e) affords a residual power to the Minister to amend
Schedule 1 “
whenever
he deems it expedient in the public interest otherwise to do so
”.
Save for the word “
otherwise
”
this self-same phrase appears at numerous other places in s 48. So,
for example s 48(2) provides that the Minister may similarly
from
time to time and by like notice amend or withdraw or insert Parts
2-5
[24]
of Schedule 1 or may reduce any duty specified therein with
retrospective effect on such terms as he deems fit “
whenever
he deems it expedient in the public interest to do so
”.
29.
Similarly the Minister may from time to time and by like notice,
whenever he deems it expedient in the public interest to do
so,
authorize ITAC to withdraw
[25]
any duty specified in Part 2 or Part 4 of Schedule 1
[26]
or he may impose an export duty on certain goods intended for
export
[27]
or he may insert, withdraw or amend Part 8 of Schedule 1.
[28]
30.
In my view it is thus apparent that when the Minister exercises his
powers to amend Schedule 1 customs duties under s 48, including
import duties of the kind that feature in this matter he is enjoined
to have regard for what will be in the public interest, and
the
qualifying word “
otherwise
”
which appears in the relevant phrase in s 48(1)(e) read
contextually, does not detract from such an interpretation.
[29]
But, it must be pointed out, in addition, that his powers are framed
in wide, discretionary and permissive (he ‘’
may
”),
and not obligatory terms. Read contextually with reference to this
matter, he may, but is not obliged to, amend customs
duties on wheat
imports as listed in Part 1 of Schedule 1 when and if he deems it
“
expedient
”
in the public interest i.e. when and if he considers it necessary in
the public interest, to do so.
[30]
In my view, in exercising his powers the Minister thus is of
necessity engaged in a policy exercise, in which he will have to have
regard for a number of issues, including fiscal and economic matters.
This much is further apparent if one has regard for the nature
of the
enquiries and inputs which are currently made by various policy,
legal and research units of National Treasury and the SARS
and
related departments, as is detailed hereunder, before the Minister
ultimately decides whether or not to promulgate the amended
duties.
As such, he is not merely a rubberstamp functionary.
31.
This has two further consequences. Firstly, it means that when
exercising powers under s 48(1)(b), the Minister is not engaged
in
administrative action. In the first place, when considering whether
or not to accept a recommendation in this regard from ITAC
and the
Minister of Trade and Industry the Minister appears to be carrying
out an executive function
[31]
and once the Minister has considered that amended import duties are
necessary in the public interest and causes them to be promulgated
in
the Gazette, in my view he carries out a legislative function.
[32]
In this regard I am fortified by the provisions of s 48(6) which
provide that any amendment, withdrawal or insertion made under
s 48,
shall unless Parliament otherwise provides, lapse on the last day of
the next calendar year following such action.
32.
Secondly, given that the Minister exercises a policy choice which
lies within his terrain it is not up to the court to second-guess
him, nor should the court interfere with the process, save in the
clearest of cases when irreparable harm would otherwise ensue
and it
is constitutionally appropriate to grant the order concerned.
33.
In
ITAC v SCAW
[33]
the International Trade Administration Commission had recommended to
the Minister of Trade and Industry that an anti-dumping duty
[34]
which was in force should be terminated. The Constitutional Court set
aside an interdict whereby ITAC and the Minister of Trade
and
Industry had been restrained from recommending the termination of
such duty to the Minister of Finance and the latter had been
interdicted from implementing the termination, pending the outcome of
a review of ITAC’s recommendation.
34.
The court expressed the view that the setting, amending or removal of
anti-dumping duties in order to regulate exports and imports
was a
patently executive function that flowed from the power to formulate
and give effect to international trade policy, which
was a power
which resided “
in the
kraal
” of the
national executive authority.
[35]
It held that where the Constitution or legislation had entrusted
specific powers and functions to a particular branch of government,
courts should not usurp that power or function by making a decision
of their preference as this would frustrate the balance of
power
implied in the doctrine of separation of powers, especially where the
decision at issue was “
policy-laden
or polycentric
”.
[36]
35.
In addition, it held that where the decision-making process was still
incomplete and entailed considerations of national policy
choices and
specialist knowledge in regard to which a court was ill-suited, it
should only intrude into the terrain of the executive
in the clearest
of cases and when irreparable harm was likely to ensue if
interdictory relief was not granted.
[37]
36.
In like vein, in
National
Treasury and Ors v OUTA
[38]
the Constitutional Court warned that when a court was invited to
restrain the exercise of a statutory power which fell within the
exclusive terrain of the executive or legislative branches of
government, by way of an interdict, it should carefully assess how
and to what extent the relief sought would disrupt the executive or
legislative functions by ‘cutting’ across or preventing
the proper exercise of a power or duty, and it should only grant such
an order when a “
proper
and strong case
” had
been made out for the relief and only in the clearest of cases, where
it was constitutionally appropriate.
[39]
37.
In my view, the power to amend import duties listed in Schedule 1 of
the CEA, in terms of s 48(1)(b) thereof, similarly constitutes
a
power which lies in the domain of the executive authority of the
Minister of Finance, and especially where the exercise of such
power
is in process it should not be interfered with by way of a mandatory
order, save in the clearest of cases, and only where
irreparable harm
might eventuate should such an order not be granted. In my view
neither of these considerations were shown to
be present in this
matter, and to have granted an order in the terms sought by the
applicant would therefore have impermissibly
breached the principle
of the separation of powers.
38.
In an attempt to bolster its argument that a mandatory order was
permissible and would not offend against the separation of
powers the
applicant referred me to the order granted in a similar matter
between
Grain SA
and the self-same respondents in the North Gauteng High Court on 18
August 2016 (under case number 62058/2016) in terms of which
National
Treasury was ordered to cause an adjustment of the wheat import duty
tariff which was submitted to it by ITAC a few months
earlier, to be
published in the Gazette by no later than 24 August 2016. It is not
apparent from a copy of the record of that matter
whether the
order
[40]
was made in terms of a written judgment and the applicant’s
legal representatives were unable to ascertain whether one had
in
fact been handed down.
39.
However, from a consideration of the affidavits which were filed in
that matter it seemed to me as if the order was in fact
one made by
agreement between the parties. I say this because in the answering
affidavit which was filed on behalf of the respondents
by the then
Director-General of National Treasury, it was pointed out that
National Treasury and the Minister of Finance had carefully
considered the recommendations made by ITAC for a raise in the import
duty tariff, and after having regard for a range of fiscal
and
macroeconomic policy issues had accepted them, and had already taken
a decision to give effect to them by publishing adjusted
import duty
tariffs in the Gazette. As such, there was no
lis
between the
parties, and the only practical and logistical difficulty lay in
having the adjusted tariffs published in the Gazette
by 19 August
2016, being the date referred to in paragraph 2 of the notice of
motion. In paragraphs 40-41 of his affidavit the
Director-General
indicated that all the necessary documentation for publication to
occur would however be processed by the middle
of the following week.
In the circumstances the order granted in that matter was
understandable, and given that the ITAC recommendations
had already
been accepted and a decision to promulgate the amended tariffs had
been taken by the Minister of Finance, the matter
is clearly
distinguishable from this one.
39.
What is of importance is that the Director-General pointed out that
the delay in finalising the decision arose in an environment
in which
there were competing concerns and interests which National Treasury
had to give consideration to, in the public interest,
and that it
sought to strike a balance between policy certainty on the one hand,
with respect to the variable tariff formula, and
the fiscal and
macro-economic objectives of government as required in terms of the
Public Finance Management Act,
[41]
on the other. Of particular concern to National Treasury and the
Minister of Finance was the impact the imposition of amended import
duties would have on local economic and trading conditions, and to
this end the respondents had relied on a comprehensive economic
analysis which had been done. The respondents warned that ultimately
it would not be appropriate for a court to make an order which
would
‘fetter’ the ability of any of the various organs of
state (which participated in the decision in relation to
the
amendment of import duties) to “
interrogate
or raise matters
”
which were pertinent to the decision which they needed to arrive at,
and that were the court to make an order compelling
these organs of
state to arrive at a decision within a set period of time, it would
not accord with the principle of separation
of powers.
40.
In the circumstances, the decision in
Grain SA
in fact was not
contrary to the principles laid down in the Constitutional Court
matters referred to above and did not provide
any support for an
order interfering in the process in which the first and second
respondents were engaged, and the position adopted
by the respondents
in that matter was consistent with that adopted by them in this
matter.
41.
In this matter the current Acting Director-General in the National
Treasury has outlined a complex regulatory and consultative
process
which is followed by SARS and the National Treasury, before the
Minister of Finance is in a position to consider whether
or not to
approve recommended adjustments to import duties.
42.
In this regard, on receipt of a request from the Minister of Trade
and Industry, the Commissioner of SARS forwards it to the
Strategy,
Legal and Policy unit of SARS which considers the recommendations by
ITAC and the proposed amendments and obtains the
necessary
statistical information in order to ascertain the impact the
amendments will have on the fiscus. A draft submission and
draft
legislative amendment is then produced and reviewed by specialists in
a number of departments
[42]
before it is submitted to the Chief Officer: Legal Counsel for
consideration and approval, whereupon the draft final SARS submission
is forwarded to the Commissioner for sign-off.
43.
Once the Commissioner for SARS has signed off on the submission it is
delivered to the National Treasury where it is again subjected
to an
extensive internal review process. In this regard it proceeds through
the office of the Deputy Director-General of Economic
Policy for
assessment, where after it is forwarded to the Microeconomic Policy
section, where an economic analysis is conducted
which involves an
assessment of the principal economic issues which may arise from the
proposals, should they be put into effect.
Key considerations in this
regard include the financial impact of the proposed amendment on
trade and industry (including the competitiveness
of the industry),
as well as the effect on upstream and downstream value-added
industries, and the consumer.
44.
The proposal is also reviewed by the Tax and Financial Sector Policy
division which considers issues relating to tax policy
and the fiscal
impact of the proposed amendment of the tariff as well as legal and
administrative issues. Once this unit has provided
input, and the
proposal has been formally approved by the Deputy Director-General:
Tax and Financial Sector Policy the complete
and comprehensive final
submission by National Treasury as to whether or not the amendment
should be affected, and the terms thereof,
is finally forwarded to
the Minister of Finance.
45.
After considering all the various inputs and the financial
implications, including presumably the effect on the country’s
trade account and balance of payments the Minister makes a decision
whether or not to amend the customs duties accordingly. Only
when the
Minister is satisfied that the competing interests of various
stakeholders including farmers, millers, consumers, taxpayers
and the
fiscus have been taken into account and that the proposed amendment
is accordingly in the financial and fiscal interests
of the country
will he proceed to approve it, whereupon the necessary documentation
is forwarded to the office of the Commissioner
of SARS in order that
publication in the Gazette can be arranged.
46.
In the result, it is evident that a request by the Minister of Trade
and Industry for an amendment to the import duties on wheat
does not
result in an automatic acceptance and amendment by the Minister of
Finance and it does not necessarily follow that a request
by the
Minister of Trade and Industry will necessarily be approved by the
Minister of Finance. In the circumstances the applicant
is not
entitled as of right to a legislative amendment of the import duty as
proposed by ITAC and recommended by the Minister of
Trade and
Industry, nor is the Minister of Finance obliged to promulgate the
recommended amendments to the tariffs unless and until
he deems it to
be expedient to do so, in the public interest.
47.
It is also evident from the aforegoing not only that an amendment to
import duty tariffs for wheat is a complex process involving
multiple
issues of policy and specialist knowledge, to which a court must
defer, but also that it cannot be effected in a hurry,
and will of
necessity take a matter of months. This has been the case in regard
to previous amendments to import duties which have
been effected at
least since 2013, from what I was able to see from the papers. That
this may be frustrating and may cause financial
harm or loss to
certain role-players in the industry as well as to consumers, is an
unfortunate consequence of the nature of the
process that must be
followed if a proper decision is to be made by the Minister of
Finance, in the public’s best interests,
in terms of the
statutory provision in question. Unlike other provisions in the CEA
whereby the Minister may impose anti-dumping,
[43]
countervailing,
[44]
or safeguard duties,
[45]
or amendments to other Parts of Schedule 1 with retrospective or
prospective effect, it appears no such powers exist in regard
to the
imposition of customs duties listed in Part 1 of Schedule 1, in terms
of s 48(1)(b).
[46]
This may be a matter which needs to be addressed by way of a
legislative amendment, but the long and the short of it is that the
delays in this matter were occasioned by the nature of the
decision-making process, and not because of any constitutional breach
on the part of National Treasury or the Minister of Finance.
[47]
Conclusion
48.
Consequently, and for the reasons set out above, I was of the view
that the applicant had failed to make out a case for an order
compelling the Minister of Finance to cause a notice to be published
in the Gazette by no later than 8 September 2017, adjusting
the
import duty tariff on wheat to R 379.34 per ton, and I accordingly
dismissed the application for urgent relief in terms of
Part A of the
notice of motion, with costs to stand over for determination when
Part B is heard.
__________
SHER
AJ
Appearances
:
For
applicant: Adv JG Dickerson (with him Adv L Kelly)
Instructed
by: Edward Nathan Sonnenbergs (A Hoeben)
For
respondent: Adv D Jacobs (with him Adv A Coetzee)
Instructed
by: State Attorney
[1]
A
ct
91 of 1964.
[2]
A
ct
71 of 2002.
[3]
In terms of s 6 of the Act.
[4]
In terms of s 26.
[5]
I
n
terms of S 16 (1)(d)(i) of the ITA.
[6]
No. 538.
[7]
Such as the fuel levy (imposed in terms of s 52 rtw Part 5A of
Schedule 1), the environmental levy (imposed in terms of
s 54A and
54B rtw Part 3 of Schedule 1) and an air passenger tax.
[8]
Which is
subject to certain special requirements in the case of any
legislative amendment thereto, a
as
opposed to legislation which simply imposes regulatory changes-
vide
s 77(1)(b) of the Constitution.
[9]
See
SA Reserve Bank v
Shuttleworth
2015 (5) SA
146
(CC) at paras [48]-[52].
[10]
Gaertner
& Ors v Minister of Finance & Ors
2014
(1) SA 442 (CC).
[11]
An excise duty is defined as any duty leviable under Part 2 of
Schedule 1, on the sale of certain goods imported into or
manufactured
in SA. It is commonly imposed on so-called luxury goods
(including high-end motor vehicles), and on tobacco and alcohol
products.
[12]
Id
para [54].
[13]
S
et
out in sub-paragraphs (a) to (e) of s 48(1).
[14]
S 48(1)(b).
[15]
Imposed in
terms of t
he Geneva
General Agreement on Tariffs Act 29 of 1948 (s 48(1)(a)).
[16]
S 48(1)(c).
[17]
S 48(1)(d).
[18]
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others
2000
(1) SA 1
(CC) at para [141];
Greys
Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
[2005] ZASCA 43
;
2005
(6) SA 313
(SCA) at para
[24]
.
[19]
Id
SARFU
para [143].
[20]
Id
SARFU
para [141],
Greys
Marine
paras [24]-[25].
[21]
Note 18 at
para [24].
[22]
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012
(4) SA 593 (SCA).
[23]
At para [18].
[24]
I
ncluding
Part 5A and 5B.
[25]
W
ith
or without retrospective effect and on such conditions as the
Commissioner may determine.
[26]
In terms of
s
48(2A)(a)(i).
[27]
S 48(4).
[28]
S 48(4A)(a).
[29]
A similar view was expressed by Tuchten J in the matter of
SA
Sugar Association v Minister of Trade and Industry & Ors
(Case no. 5494847) [2017] ZAGPPHC, which was decided on 30 August
2017, at para [35].
[30]
“
Expedient
”
is defined in the Pocket Oxford Dictionary (3
rd
ed) as “
necessary to
achieve something, though not always right or fair
”.
[31]
In terms of
ss 85(2)(b)-(e) of the Constitution.
[32]
A similar view was expressed by Tuchten J in
SA
Sugar Association
n 29 at
para [33].
[33]
International Trade
Administration Commission v SCAW SA (Pty) Ltd
2012 (4) SA 618 (CC).
[34]
S 56 of the CEA provides that the Minister of Finance may from time
to time and by notice in the Gazette amend Schedule no. 2
of the Act
to provide for anti-dumping duties to be imposed on goods imported
into the country for ‘home consumption’.
In terms of
international trade, dumping refers to the introduction of goods
into a country or its common customs area at an
export price less
than the normal value of such goods. Anti-dumping duties are
commonly imposed to counteract or reduce harmful
dumping practices.
[35]
ITAC
n
33, para [102].
[36]
Id
para [95].
[37]
Id
para [101].
[38]
National
Treasury & Ors v Opposition to Urban Tolling Alliance
2012 (6) SA 223 (CC).
[39]
Id
at paras [65]-[66].
[40]
Per
Van Der Westhuizen AJ.
[41]
Act 1 of 1999.
[42]
Including the Functional Specialist, Manager: Tariff Amendment, the
Senior Specialist: Customs Policy, the Specialist: Customs
Legislative Policy, the Executive: Customs Legal Policy and the
Group Executive: Legislative Research and Development.
[43]
S 56(2)(a) and (b).
[44]
S
56A(2)(a)
and (b).
[45]
S 57(2)
(a)
and (b).
[46]
The power
to effect retrospective amendments in terms of s 48 lies in s 48(2)
which allows the Minister to amend or withdraw Parts
2-5B of
Schedule 1 and s
48(2A)(a)(i) which allows the Minister to authorize ITAC or the
Commissioner of SARS to withdraw a duty specified in Part 2 or
Part
4 of Schedule 1.
[47]
See
SA Sugar Assoc
n
29, at para [40].