About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2013
>>
[2013] ZASCA 145
|
|
Smith Mining Equipment (Pty) Ltd v The Commissioner South African Revenue Service (728/2012) [2013] ZASCA 145; 76 SATC 49 (1 October 2013)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 728/2012
Not Reportable
In the matter between
SMITH MINING EQUIPMENT (PTY) LTD
........................................
APPELLANT
and
THE COMMISSIONER: SOUTH AFRICAN
REVENUE SERVICE
...........................................................................
RESPONDENT
Neutral citation:
Smith
Mining Equipment (Pty) Ltd v The Commissioner: South African Revenue
Service
(728/12)
[2013] ZASCA 145
(01 October
2013)
Coram:
Nugent, Lewis, Bosielo
and Wallis JJA and Swain AJA
Heard: 17 September 2013
Delivered:
01 October 2013
Summary: Customs and Excise Act 91 of 1964 –
tariff determination – section 47(9)(
a
)(i)(
aa
) of
the Act – Kubota RTV 900 Utility Vehicles – imported –
whether tariff heading 8904.21.80 or tariff heading
8709.19 is the
most appropriate classification for customs duty.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from:
North Gauteng High Court,
Pretoria (Prinsloo, Tolmay JJ and Van der Byl AJ sitting as a court
of appeal):
The appeal is dismissed with costs including the costs
of two counsel.
___________________________________________________________
JUDGMENT
___________________________________________________________
BOSIELO JA
(
NUGENT,
LEWIS and WALLIS JJA and SWAIN AJA CONCURRING):
[1] This appeal concerns the correct classification for
customs duty purposes of a vehicle known as a Kubota RTV Utility
Vehicle.
The Commissioner for the South African Revenue Service –
the respondent in this appeal – classified the vehicles under
TH 8704.21.80. The appellant – Smith Mining Equipment (Pty) Ltd
–
appealed against the determination to the North
Gauteng High Court under s 47(9)(e) of the Customs and Excise
Act 91 of 1964,
seeking a declaration that it falls to be classified
under TH 8709.19. That court (Bertelsmann J) upheld the appeal and
granted
the order. On appeal to the full court by the Commissioner
those orders were set aside (Prinsloo and Tolmay JJ and Van der Byl
AJ). This further appeal by Smith Mining is before us with the
special leave of this court.
[2] The competing tariff headings in section XVII of
Part 1 of Schedule 1 to the Act are headings 87.04 (subheading
8704.21.80)
and 87.09 (subheading 8709.19), which read as follows:
‘
87.04: MOTOR VEHICLES FOR THE TRANSPORT OF
GOODS
8704.21.80: Other, of a vehicle mass not exceeding 2 000 kg or a
G.V.M. not exceeding 3 000 kg, or of a mass not exceeding
1 600
kg or a G.V.M. not exceeding 3 500 kg per chassis fitted with a
cab.’
87.09: WORKS TRUCKS, SELF-PROPELLED, NOT FITTED WITH LIFTING OR
HANDLING EQUIPMENT, OF THE TYPE USED IN FACTORIES, WAREHOUSES,
DOCK
AREAS OR AIRPORTS FOR SHORT DISTANCE TRANSPORT OF GOODS; TRACTORS OF
THE TYPE USED ON RAILWAY STATION PLATFORMS; PARTS OF
THE FOREGOING
VEHICLES.
8709.19: Other’
Our task in choosing between these headings is
simplified by the fact that, unless we are persuaded that heading
87.09 is the applicable
heading, the classification by the
Commissioner must stand.
[3] The proper approach to customs classification was
set out in
International Business Machines SA
(Pty) Ltd v Commissioner for Customs and Excise,
1
in which Nicholas AJA stated:
‘
Classification as between headings is a
three-stage process: first, interpretation – the ascertainment
of the meaning of the
words used in the headings (and relative
section and chapter notes) which may be relevant to the
classification of the goods concerned;
second, consideration of the
nature and characteristics of those goods; and third, the selection
of the heading which is most appropriate
to such goods.’
[4] In
Secretary for Customs &
Excise v Thomas Barlow and Sons
Ltd,
2
Trollip JA described the structure of Schedule 1 as
follows:
‘
[All] goods generally handled in
international trade are systematically grouped in sections, chapters,
and sub-chapters, which are
given titles indicating as concisely as
possible the broad class of goods each covers. Within each chapter
and sub-chapter the
specific type of goods within the particular
class is itemised by a description of the goods printed in bold type.
That description
is defined in the Schedule as a “heading”.
Under the heading appear sub-headings of the species of the goods in
respect
of which the duty payable is expressed. The Schedule itself
and each section and chapter are headed by “notes”, that
is, rules for interpreting their provisions.
It is clear that the above grouping and even the wording of the notes
and the headings in Schedule 1 are very largely taken from
the
Nomenclature compiled and issued by the Customs Co-operation Council
of Brussels. That is why the Legislature in sec. 47(8)(
a
)
has given statutory recognition to the Council’s Explanatory
Notes to that Nomenclature. These notes are issued from time
to time
by the Council obviously, as their name indicates, to explain the
meaning and effect of the wording of the Nomenclature.
By virtue of
sec 47 (8)(
a
) they can be used for the same purpose in respect
of the wording in Schedule 1’.
[5]
The approach to be adopted, generally, when applying
the explanations in the Brussels notes, was explained by the learned
judge
as follows:
3
‘
It can be gathered from all the aforegoing
that the primary task in classifying particular goods is to ascertain
the meaning of
the relevant headings and section and chapter notes,
but, in performing that task, one should also use the Brussels Notes
for guidance
especially in difficult and doubtful cases. But in using
them one must bear in mind that they are merely intended to explain
or
perhaps supplement those headings and notes and not to override or
contradict them. They are manifestly not designed for the latter
purpose, for they are not worded with the linguistic precision
usually characteristic of statutory precepts; on the contrary they
consist mainly of discursive comment and illustrations. And, in any
event, it is hardly likely that the Brussels Council intended
that
its explanatory notes should override or contradict its own
Nomenclature. Consequently, I think that in using the Brussels
Notes
one must construe them so as to conform with and not to override or
contradict the plain meaning of the headings and notes.’
[6] I do not think it is necessary to set out in full
the explanatory notes that accompany the two tariff headings. It is
sufficient
to say that the explanatory notes to tariff heading 87.04
record, amongst other things, that ‘the following features are
indicative of the design characteristics generally applicable to the
vehicles that fall under this heading’, and then list
various
such characteristics. Similarly, the explanatory notes to tariff
heading 87.09 'summarise the main features common to the
vehicles of
this heading which generally distinguish them from the vehicles of
heading … 87.04’.
[7] In argument before us counsel for Smith Mining
submitted that because the vehicle in question had the main
distinguishing features
summarised to in the explanatory notes to
heading 87.09 – and I accept for present purposes that it did –
that was
indicative of the proper classification of the vehicle under
that heading. As appears from the extract from
Thomas Barlow and
Sons
above, that is not the correct approach. The primary
question – in answer to which the explanatory notes might play
a secondary
role – is whether the vehicle falls under tariff
heading 87.09.
[8] The central characteristic of vehicles falling under
tariff heading 87.09 is not merely that they are used for the short
transport
of goods, but that they are ‘of the type used in
factories, warehouses, dock areas or airports’ for that
purpose. The
starting point for the enquiry must then be to establish
what vehicles are of that type, which is a factual question, to be
established
by evidence. No doubt there is a range of vehicles used
for that purpose in those locations, and it might be a matter of some
difficulty
determining what makes them ‘typical’, in
which case the explanatory notes might be helpful, but a court is not
in
a position even to commence the enquiry without evidence of what
those vehicles are.
[9] In this case there is no evidence at all of the type
of vehicles used in those locations for the short transport of goods.
Indeed,
the only evidence advanced, which illustrated
photographically vehicles used at airports, was struck out at the
instance of Smith
Mining. All that we know from the factual
description of the vehicle is that it is capable of operating as a
four-wheel drive vehicle,
and all those imported are fitted with
‘knobby’ tyres suitable for hard-packed surfaces, wet
turf and general usage,
rather than heavy duty tyres suitable for
asphalt, concrete and hard-packed surfaces. Whilst those features
would not foreclose
the use of the vehicles in factories, warehouses,
dock areas and airports, they are unlikely to serve any purpose there
and they
also indicate that the vehicles are capable of being used in
a wide range of other environments, such as on farms, golf courses
or
landscaping. That may well have the effect of removing them from
being ‘of the type used in factories, warehouses, dock
areas or
airports’, but without evidence that question cannot be
resolved.
[10] In the absence of such evidence it is not possible
to find that the vehicle in issue is typical of such vehicles. In
those
circumstances the court below was correct to uphold the appeal
and set aside the orders of Bertelsmann J.
[11] The appeal is dismissed with
costs that include the costs of two counsel.
_________________
L O BOSIELO
JUDGE OF APPEAL
Appearances:
For Appellant : AP Joubert SC (with him CJ McAsslin)
Instructed by:
Ramsay Webber Inc., Johannesburg
Lovius Block Attorneys, Bloemfontein
For Respondent : CE Puckrin SC (with him LG Kilmartin)
Instructed by:
State Attorney; Pretoria
State Attorney, Bloemfontein
1
International
Business Machines SA (Pty) Ltd v Commissioner for Customs and Excise
1985 (4) SA 852
(A) at 863F-G.
2
Secretary
for Customs & Excise v Thomas Barlow and Sons
Ltd
1970 (2) SA 660
(A) at 675D-675H.
3
At
676B-E.