Bosch Home Appliances (Pty) Ltd t/a Bosch v International Trade and Administration Commission of South Africa and Others (12160/18; 67553/18) [2021] ZAGPPHC 8 (5 January 2021)

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[2021] ZAGPPHC 8
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Bosch Home Appliances (Pty) Ltd t/a Bosch v International Trade and Administration Commission of South Africa and Others (12160/18; 67553/18) [2021] ZAGPPHC 8 (5 January 2021)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE:
5 January 2021
12160/18
(1)
REPORTABLE:  YES / NO
(2)
OF INTEREST TO OTHER JUDGES:  YES / NO
(3)
REVISED
DATE
SIGNATURE
In
the matter between
BOSCH
HOME APPLIANCES (PTY) LTD t/a
BOSCH
Applicant
and
INTERNATIONAL TRADE AND
ADMINISTRATION COMMISSION
OF SOUTH AFRICA
First Respondent
MINISTER OF FINANCE
Second Respondent
DEFY APPLIANCES (PTY)
LTD
Third Respondent
And
67553/18
In the matter between
BOSCH HOME APPLIANCES (PTY) LTD t/a
BOSCH
Applicant
And
MINISTER OF TRADE AND
INDUSTRY
First Respondent
INTERNATIONAL TRADE AND
ADMINISTRATION COMMISSION
OF SOUTH
AFRICA
Second Respondent
MINISTER OF
FINANCE
Third Respondent
DEFY APPLIANCES (PTY)
LTD
Fourth Respondent
JUDGMENT
MABUSE
J
[1]
In this matter two applications, case
numbers 12160/2018 and 67553/2018 were fused together and heard as
one application. Because
these two applications are predicated
precisely on the same allegations, there is inextricably a great deal
of overlap in the allegations
made in the Applicant’s
affidavits in the respective applications. In fact, most of the
allegations in the founding and supplementary
founding affidavits are
simply repetitions of the founding and supplementary founding
affidavits in each application. Accordingly,
it was only proper, in
the circumstances, to avoid protracted proceedings and to save time
and costs, that the two applications
be consolidated into one and be
heard simultaneously.
[2]
The Applicant, Bosch Home Appliances (Pty)
Ltd t/a Bosch (“Bosch”), is a company duly incorporated
in terms of the company
statutes of this country, with its principal
place of business at 15
th
Road, Rantjiespark, Midrand.  Bosch is a non-appliances
manufacturer which imports most of its products from Turkey and
distributes
them within South Africa.
[3]    In the
above-mentioned matters Bosch seeks the following relief that:
[3.1] the recommendation of the
International Trade and Administration Commission of South Africa
(the Commission) that the Minister
of Trade and Industry and Defy
Appliances (Pty) Ltd.’s (“Defy”) application to
increase the general rate of customs
duties on gas stoves classified
under tariff heading 7321.11 (application for Increase) for a 15%
increase be approved by the Minister
of Finance as set out in Report
534 dated 23 February 2017;
[3.2] the Minister of Finance’s
approval of the Commission’s recommendation for the approval of
the application for
an increase in the tariff and the publication
thereof, as set out in the Government Gazette Nr. 41065, Regulation
dated 25 August
2017;
[3.3] the decision and action of the
Minister of Trade and Industry, to approve, recommend and request
that the Minister of Finance
approve the recommendation of the
Commission as per its Report 534 dated 23 February 2017, that a 15%
increase in the general rate
of customs duties be imposed for gas
stoves classifiable under tariff heading 732.11, be reviewed and set
aside;
[3.4]
Defy’s application for an increase in the general rate be
dismissed;
[3.5] alternatively, that the Defy’s
application for an increase in customs duties be referred to the
Commission for reconsideration.
[4]    For purposes of
convenience in this judgment Bosch Home Appliance (Pty) Ltd t/a Bosch
shall be referred to
as “Bosch”; the International Trade
and Administration Commission of South Africa shall be referred to as
“the
Commission”; Defy Appliances (Pty) Ltd shall be
referred to as “Defy”; the Minister of Finance and the
Minister
of Trade and Industry shall be referred to by their
respective titles.
[5]    Bosch launched
these review proceedings against the Commission in terms of the
Promotion of Administrative
Justice Act 3 of 2002 (PAJA).  The
Commission’s decision or recommendation is reviewable under s
46 of the ITA Act.
Bosch seeks the review and setting aside of the
decision of the Commission to recommend to the Minister of Trade and
Industry that
an application brought by Defy for an increase in the
general rate of customs duties on gas stoves for gas fuel
classifiable under
tariff heading 7321.11 and gas oven classified
under tariff heading 732.11 be recommended for approval to the
Minister of Finance.
The grounds of review relied on in respect
of the decisions of the Minister of Finance and of the Minister of
Trade and Industry
are under the principle of legality.
[6]    The issues to be
decided in this matter are:
[6.1]
whether the recommendation of the Commission was flawed and falls to
be set   aside, as
sought by Bosch, on the basis that the
decision:
[6.1.1]
was based on alleged mistakes of fact and is arbitrary and so
unreasonable that no reasonable
decision maker could have made it;
[6.1.2]
was made ultra vires having regard to the provisions of s 26 (1) (c)
of the International
Trade administration Act 71 of 2002.
[6.2] if they were flawed, whether a
flaw in the Commission’s investigations, once established, was
sufficiently material
as to render the entire investigation by the
Commission invalid;
[6.3] the nature and scope of the
statutory powers of the Minister of Finance, including his obligation
to thoroughly interrogate
and satisfy himself on the merits of the
application for an increase, and whether such increase would promote
economic development
and growth;
[6.4] whether the decisions of the
Minister of Finance and the Minister of Trade and Industry meet the
standard set by the principle
of legality; and
[6.5] the proper interpretation of,
inter alia
, section 26(1)(c) read with section 16(1) of the
International Trade Administration Act 71 of 2002 (“ITA Act”),
and
related matters.
[7]    One of the
purposes of import duties is to protect local industry from some of
the effects of competition
with firms outside our borders.  The
powers of the Republic of South Africa (“the Republic”)
to legislate in this
connection are shaped to a significant effect by
the International Agreements to which the Republic is a party.
[8]    The import
duties relevant for present purposes are to be found in Schedule 1,
Chapter 5 to the Customs and
Excise Act 91 of 1964 (“CEA”).
[9]    Under s 48 of
the CEA the Minister of Finance is empowered to effect changes to
import duties by notice in
the Government Gazette. In doing so the
Minister of Finance amends the national legislation, which is usually
within the province
of the Parliament.
[10]  Under national legislation
in the Republic the implementation of tariffs and trade remedies
follow the following route:
[10.1]
first, the investigating authority, currently the Commission,
investigates and   evaluates
applications for the
imposition, amendment or withdrawal of tariffs and trade remedies.
The Commission is also empowered to amend
a recommendation in terms
of
s. 48
of the
International Trade Administration Act
2002 (Act 71
of 2002) (“the ITA Act”), and to initiate its own
investigation into the amendment of customs duties in
terms of s
16(1)(d)(ii) of the ITA Act;
[10.2]
secondly, following an investigation, the Commission makes a
recommendation to the Minister
of Trade and Industry who has a
discretion to accept or reject the Commission’s recommendations
or refer a recommendation
back to the Commission for further
re-consideration;
[10.3]
thirdly, if the Minister of Trade and Industry accepts the
Commission’s recommendation,
he may request the Minister of
Finance to amend the CEA accordingly.  The Minister of Finance
may, by publication in the Government
Gazette, amend the schedules of
the CEA, to give effect to the request of the Minister of Trade and
Industry.
Currently, the executive authority
responsible for the functioning of the Commission is the Minister of
Trade and Industry.
[11]  One of the Commission’s
duties under the ITA Act, as stated in paragraph [10.1]
supra
,
is to investigate and evaluate the amendment of the customs duties.
It communicates its findings in reports. The powers of the
Commission
are circumscribed by the specific provisions of s. 26 of the ITA
Act.
[12]  The Minister of Finance is
given wide powers to legislate custom duties in terms of s 48 of the
CEA. The powers of the
Minister of Finance are circumscribed by the
provisions of the CEA and these powers would be required to be
exercised having due
regard to the principles of legality and
compliance with the ITA Act.
[13]  In terms of the provisions
of s. 48(1)(b) of the CEA, the Minister of Finance exercises his
powers at the request of
the Minister of Trade and Industry. He
exercises the statutory duties or powers in terms of sections 2, 5, 6
of the ITA Act. As
set out in paragraph [10.1]
supra
, the
Commission may initiate its own investigations in terms of s
16(1)(d)(ii) of the ITA Act and may, on its own accord, vary,
amend,
or rescind a recommendation in terms of s 48 of the ITA Act.  In
this application Bosch seeks to set aside the Minister
of Trade and
Industry’s as well as the Minister of Finance’s decision
for the reasons set out in the application.
Bosch invokes the
powers of the Court to review the decision that it contends are
irrational, unreasonable and fall outside the
ambit of the Act.
[A]
THE BACKGROUND
[14]  On or about August 2015 the
Commission received an application from Defy for an increase of the
general rate of customs
duties on Defy gas stoves for gas fuel
classifiable under tariff heading 7321.11 from 15% to 30%
ad
valorem
, by way of creating an additional 8-digit tariff
subheading.
[15]  Defy had furnished the
following reasons in support of its application:
[15.1]
because of imports from abroad, Defy is not
price competitive with
imports, considering the current levels of plants, utilisation and
economies of scale, which leads to higher
unit costs of production
and reduced profitability and employment;
[15.2]
an increase in Customs Duty would enable Defy
to compete with low
price imports into South African Customs Union (“SACU”);
[15.3]
an increase in tariffs will ensure job retention
and allow the
company to gain market share through an increase in local production
resulting in additional employment; and
[15.4]
an increase in tariffs would support future
for the introduction of
the additional gas stoves, and especially the planned production of
two new models in the factory based
in Durban.
In keeping with the requirements of
the law the application aforesaid was published in the Government
Gazette on 20 November 2015
for comment by interested parties.
[16]  Defy is one of the two
domestic manufacturers of the subject product in SACU region, the
other is the Edenvale Based
Zero Appliances (Pty) Ltd.
[17]  The relevant products which
were subject to the application for an increase in customs duties are
gas stoves for gas
fuel, having two or more plates with gas burners
and gas ovens with gross capacity not exceeding 100 litres.
[18]  Defy invested a total of R6
million in new machinery used for manufacturing of the subject
product and currently employs
a total of 26 employees whilst Zero
Appliances invested approximately R335,579 in research and
development as well as skills development
training and currently
employs a total number of 148 employees for the manufacture of the
subject product.
[19]  Defy has committed to
invest an additional R3.3 million in plant and machinery.
Furthermore,
Defy will increase production volumes by approximately
43% in the     next three years starting from 2016 and
it
is also expected that it will increase its staff component with an
additional 29 employees over the same period.
[B]
THE COMMENTS RECEIVED AS WELL AS CONSIDERATIONS BY THE COMMISSION
[20]  Stingray Group (Pty) Ltd,
D.K. Appliances (Pty) Ltd t/a Home of Living Brand (Pty) Ltd, Topaz
Tradenet (Pty) Ltd, EFBA
Electrical Home Appliances, Inc, Masstores
(Pty) Ltd and SBS Household Appliance (Pty) Ltd t/a SMEG and VSH
Appliances (Pty) Ltd
and Bosch objected to the application to
increase custom tariffs. The comments submitted by the objectors
centred on the wide scope
of Defy’s application, namely:
[20.1]
the depreciating Rand/Dollar exchange rate that should
discourage
imports;
[20.2]
the effect of the duties on low-income households;
[20.3]
the perceived dominance and price
competitiveness of Defy
in the household appliance market;
[20.4]
the confidential nature of Defy’s application
about pricing and
employment information;
[20.5]
the limited period given to stakeholders to make
submissions to the
commissions;
[20.6]
Defy’s relatively low extent of assembly/manufacturing;
[20.7]
the possible loss of employment of importers because
of import
duties, and;
[20.8]
that the tariff would encourage
inefficiencies to creating
a limited number of jobs at a relatively
high cost to the economy.
[21]  Subsequent to the comments
raised by the objectors concerning the wide scope of the application
that included other gas
stoves not manufactured domestically and the
potential negative impact of duties on low-income households, the
Commission recommended
that the investigation be limited to gas
stoves for gas fuel, having two or more plates with gas burners and
gas oven with a gross
capacity not exceeding 100 litres.  This
excludes other gas stoves such as gas stoves without an oven mostly
used by low-income
earners.
[22]     The
Commission carefully considered the objections around the
confidential nature of certain information
contained in Defy’s
application as is provided for in s 3 of the Commission Regulations
and noted that the Commission Regulations
permit the deeming of
certain information as confidential.  In terms of s 3 of the
Commission Regulations, a person may, when
submitting correspondence
to the Commission, identify certain information as confidential or
otherwise that the person wishes recognised
as confidential.
[23]  The Commission noted that
the objections centred on the depreciating Rand/Dollar exchange rate
which may provide additional
protection for Defy by further
discouraging imports. The Commission considered that several parts
used in the manufacture of the
subject product are important and
therefore also increase input costs for domestic producers.
[24]  The Commission deliberated
on the possible trade-off between employment created by importers and
manufacturing jobs because
of import duties. The Commission took a
view that manufacturing jobs require skills that are not comparable
to the jobs created
by importers.  Such skills are transferable
to similar production processes making workers more marketable and
employable
in other sectors of the economy.
[25]  Some of the objectors
indicated that assembled products cannot enjoy production because it
is a simple and basic process.
The Commission considered that
as a matter of policy and practice, assemblers have received tariff
relief before, therefore the
importation of components is a common
practice by nearly all manufacturers given the prevalence of
international supply chains.
The Commission also considered the
opportunities presented by the alleged shift of consumers of electric
to gas products because
of constraints in electricity supply.
However, the Commission noted that the growing gas products market
would not only benefit
Defy but would also increase sales from
importers. Comments supporting Defy’s application were received
from the Botswana
Minister of Trade and Industry and Zero Appliance
(Pty) Ltd.
[26]  Despite Bosch’s
written and oral submissions, and despite furthermore the numerous
other objections raised by objectors
against Defy’s
application, on 25 August 2017 a notice was published in the
Government Gazette No. 41065, regulation 901
which indicated that,
inter alia
, Defy’s application for the increase in
tariff had been approved. Accordingly, on 25 August 2017, the date on
which the Government
Gazette No. 41065, regulation 901 was published,
the rate of customs duty of gas stoves for gas fuel, having two or
more plates
with gas burners, and gas ovens with gross capacity not
exceeding 100 litres classifiable under tariff subheading 7321.11 was
increased
from 15% to 30%
ad valorem
.
[27]  On 28 August 2017 the
Commission forwarded its Report No. 534 titled “Increase in the
General Rate of Customs Duty
on Certain Gas Stoves For Gas Fuel”
to Bosch’s attorneys.  In the said report the Commission
had recommended,
for two reasons, that Defy’s application for
the tariff increase be approved to enable Defy to compete with
imports into
SACU Area and secondly, to ensure the economic viability
and sustainability of the local industry.  The Commission’s

decision to recommend Defy’s application for the tariff
increase was based on the following considerations:
[27.1]
“
the rising level of
imports and the concomitant declining market share of SACU
manufacturers of gas stoves;
[27.2]
the low level of productive
capacity utilisation and profitability of the domestic industry;
[27.3]
significant increases in the cost of steel products used in the
manufacture of gas stoves;
[27.4]
increase in the cost of imported inputs due in part to the
depreciating rand;
[27.5]
the price disadvantage experienced by the domestic industry
vis-a-vis imports of the subject product; and
[27.6]
the initial wide scope of the application covering all cooking
appliances for gas and other fuel.
The Commission decided and
recommended below that a tariff subheading be introduced covering
only those gas stoves with ovens that
are manufactured locally and
will have no negative impact on low-income earners and the poor.”
[28]  The
decision by the Commission to recommend that Defy’s application
for the increase  tariff be approved led
to Bosch launching, in
case number 12160/2018, a review application against the Commission
and the Minister of Finance  on
21 February 2018, which was
followed, in case number 67553/2019, by an application to review and
set aside the decision of the
Minister of Trade Industry to,
inter
alia
, recommend and request the
Minister of Finance to approve the recommendation of the Commission
as per its Report 534 dated 23 February
2017 at a 15% increase in the
general rate of customs duties be imposed for gas stoves classifiable
under tariff heading 732.11.
[29]
Bosch
admits that the reasons for Defy’s application recorded in the
Government Gazette are the same as the reasons described
in the
application brought by Defy but contends that they seem to have been
an embellished in certain respects.
[30]  It is Bosch’s case
that the factors which the Commission recorded as having been
considered were not supported
by the material which had been placed
before the Commission.  In brief, Bosch contends that the
economic data which was provided
by Defy does not support the
conclusions reached by the Commission.  Bosch contends
furthermore that, therefore, the absence
of evidence to support the
factors considered by the Commission renders its decision irrational
and fundamentally flawed.
[31]  Bosch submits that there is
no basis on which the Commission should have recommended that Defy’s
application for
the increase in tariff be approved by the Minister of
Finance, nor is there a basis for the said Minister to accept the
recommendation
and cause such acceptance to have been published in
the Government Gazette.
[32]  In Case Nr 12160/2019 the
decision of the Commission was challenged on the ground that there
was no basis on which the
Commission should have recommended that the
application for the increase in tariff be approved by the Minister of
Finance, nor
for the Minister of Finance to accept the recommendation
and cause such acceptance to have been published in the Government
Gazette.
[33]  Bosch contends that the
administrative action undertaken by the Commission in recommending
the approval of the application
in tariff and the administrative
action undertaken by the Commission in recommending the approval of
the application in tariff
and the administrative action undertaken by
the Minister of Finance in approving the recommendation by the
Commission is unlawful,
as:
“
1. The basis for the
decision is patently incorrect;
2.
The evidence and/or information before the Commission and the
Minister of Finance was not properly evaluated;
3.
The administrative action undertaken by the Commission and the
Minister is patently incorrect;
4.
It is also alleged that the Commission and the Minister’s
decision are factually and substantially incorrect;
5.
The Commission’s determination is illegal in that the
Commission failed to take relevant factors into account and based its

determination on irrelevant considerations;
6.
Bosch has suffered prejudice and irreparable harm as a result
of the decisions of the Commission and the Minister.”
[34]  In Case No. 6753/2018 Bosch
contends that the decision of the Minister of Trade and Industry
falls to be reviewed and
set aside on various grounds listed in s 6
of PAJA.  In the alternative, the decision of the Minister of
Trade and Industry
falls to be reviewed and set aside on the grounds
that it contravenes the conditional principle of legality.  The
grounds
upon which such decision is challenged are as follows:
[34.1]
the determination by the Minister of Trade and Industry
was not
lawful;
[34.2]
the basis for the decision was patently incorrect;
[34.3]
the evidence and information before the Minister
of Trade and
Industry was not

rigorously
evaluated;
[34.4]
the decision made by the
Commission and the Minister
of Trade and Industry was patently
incorrect;
[34.5]
the decision of the Minister of Trade and Industry
was factually and
substantially incorrect;
[34.6]
Bosch has suffered prejudice and irreparable harm
because of the
decision of

the Minister
of Trade and Industry; and
[34.7]
the Minister of Trade and
Industry has failed to
consider relevant factors as he took
irrelevant factors into consideration.,
The Minister of Trade and Industry’s
decision is not rationally connected to the reasons given by the
Administrator.
[35]  Section 46 of the ITAC Act
provides that a person affected by the determination, recommendation,
or decision of the Commission
in terms of s 16 or 17 or this chapter,
may apply to a High Court for a review of that determination or
recommendation or decision.
Bosch felt emboldened by the
judgment of
ITAC and Another v South African Tyre Manufacturers
Conference (Pty) Ltd & Others
[2011] ZASCA 137
,
in which the
Supreme Court of Appeal stated that:
“
The
manufacturers were entitled, in terms of s 46(1) of the ITAC Act, to
apply to the High Court for a review of any determination,

recommendation or decision of ITAC that affected them.  The
grounds for review are to be found in the
Promotion of Administrative
Justice Act 3 of 2000
.”
No-one
has challenged Bosch to bring this application for review in terms of
s 46(1) of the ITAC Act.
[C]
THE
COMMISSION’s CASE
[36]  The Commission denies that
its recommendation was influenced by incorrect facts.  It will
be recalled that one of
the grounds upon which Bosch challenges the
Commission’s recommendation is that the Commission failed to
consider the relevant
factors and furthermore that it considered
irrelevant factors.  The Court will go into the evidence of the
Commission to establish
the merits of this ground of review.  The
Commission submits furthermore that the fact that Bosch does not
agree with the
factors on which it made its recommendation, is not
sufficient to vitiate the legal validity of a polycentric
recommendation that
the Commission is statutorily required to make.
Provided that the Commission conducts itself rationally, it is the
Commission’s
assessment of the factors that are relevant that
counts.  The weight of those factors, in the final analysis,
constitutes
the decision of the Commission.  The Commission was
required to make the decision under attack based on the facts before
it.
It is the Commissions’ submission that in the
circumstances, its recommendation was justified.
[37]  According to the
Commission, customs duties are instruments that bear upon
international trade.  International trade
concerns transnational
commerce.  When sovereign states such as South Africa open their
markets to external contenders, they
expose their domestic market and
domestic manufacturers to the risk that they will not be able to
compete with the same goods being
brought into the domestic market by
importers, to the detriment of domestic economic growth.  The
stifling of economic growth
is harmful to the objective of any
government and has the potential to undermine the government’s
industrial policy goals
and the desired model of the country’s
economic expulsion.
[38]  In the circumstances, where
the effect of unfettered access to the domestic market would be
pernicious, the imposition
of tariffs on imported goods is a long and
accepted permissible method of protection. Tariffs may impact upon
domestic productivity,
growth, and employment.  When imposed
judiciously, these factors, and South Africa’s economy and more
generally, may
be enhanced.  The work of assessing the relevant
risks and benefits in this context is firmly within the Commission’s

area of authority and expertise.  The Commission is the
independent statutory authority responsible for tariff amendments
in
SACU.  It conducts tariff investigations within the framework of
the ITA Act, in terms of ss 16, 26, 30, of the
ITA Act, the
Amended Tariff Investigations Regulations (“the Regulations”)
and the Policy directive
on matters ITAC shall consider in
evaluating applications for amendment of custom duties (the Policy
directive). Therefore, in
its investigation and evaluation of
applications for the amendment of custom duty tariffs the Commission
must perform its statutory
duties in accordance with the ITA Act, the
Regulations, and the Policy directive. It must make sure that the
procedures which it
follows in investigating applications and making
recommendations are conducted in accordance with the ITA ACT, the
Regulations
and the Policy directive.
[39]  Section 26(1)(c) of the ITA
Act provides that any person can apply to the Commission for the
amendment of custom duties.
Ss 26(2)(b) and 30(3) of the ITA
Act provide,
inter alia
, that the Commission must evaluate and
make recommendations upon the merits of any such application. S 16(1)
provides that:
“
The
Commission must investigate and evaluate applications in terms of s
26 with regard to:
(a)…………….
(b)……………...:
(c)
applications in terms of section 26 with regard to amendment of
custom duties in the Common Customs Area;
Quite
clearly, s 16(1)(c) refers to the amendment of custom duties such as
the application brought by Defy.
S
26(2) of the ITA Act states that;
“
The
Commission must, subject to section 30(1) and (2), evaluate the
merits of every application received by it and dispose of each

application:
(a)……………...
(b)
received in terms of subsection (1)(c) or (d), in accordance with
Part C of this Chapter.”
This
is as clear as crystal that the subsection refers to an application
to amend custom duties. This is precisely what Defy’s

application was about.
To
complete the picture, s 30(1) of ITA Act states that:
“
The
Commission must, upon receipt of an application to amend custom
duties:
(a)
notify the SACU secretariat of the
application:
(b)
ascertain whether an application
dealing with a substantially similar matter pending before the
relevant SACU institution has been
decided upon the relevant SACU
institution within the previous six months from the date of the
application
(3)
if the Commission determines that an
application before it does not deal with a substantially similar
matter contemplated in subsection
1(b) the Commission must evaluate
the merits of the application and recommend to the Tariff Board that
the application be approved
or rejected.
(4)
The Commission must, when evaluating
a matter in terms of this section, apply:
4.1 any relevant
rules of analysis established by SACU Council through the

formulation
of policy mandates;
4.2 procedures;
4.3 guidelines
contemplated in Article 8(2).”
[40] In paragraph 19 of its answering
affidavit, the Commission states that Defy’s application was
brought under section 26(1)(c)
of the ITA Act. But Bosch contends, on
the contrary, that no one of the respondents contends that the
application was brought in
respect of:
[40.1]
anti-dumping duties.
[40.2]
countervailing duties.
[40.3]
safeguarding duties,
as envisaged by
section 26(1)(c) of the ITA Act or in terms of the Regulations.
Bosch contends that
consequently it is difficult to determine the basis on which the
application was brought or the reasons why
it is suggested that
Defy’s application was brought in terms of section 26(1)(c).
According to Bosch the procedures for the
determination of
applications brought under section 26(1)(c) are redefined not only in
the Act but also in the Regulations relating
to:
[40.4]
anti-dumping Regulations promulgated on 14 November
2003 under
Government Gazette number 25684 (the anti-dumping Regulations).
[40.5]
countervailing
Regulations promulgated on 15 April
2005 under Government
Gazette No.
27475.
[40.6]
safeguarding Regulations.
[41]  Bosch contends that the
application brought by Defy did not relate to anti-dumping,
countervailing or safeguarding duties.
These types of duties,
according to Bosch, are clearly defined in the Act and or Regulations
and are unrelated to the type of application
brought by Defy.
[42] This interpretation of section
26(1)(c) by Bosch is flawed and cannot be sustained. For the purposes
of this application section
26(1)(c) reads as follows and, in my
view, this is how Bosch should read it:
“
A
person may, in the prescribed manner and form, apply to the
Commission for:
(c)
the amendment of tariffs, “.
This
is precisely what Defy has done in this application. It is clear from
the said part of section 26(1)(c) that a person may apply
to the
Commissioner for the amendment of custom duties without necessarily
applying for anti-dumping, countervailing, and safeguarding
duties.
The Commission was, in my view, correct when in paragraph [19] of its
answering affidavit it stated that:
“
Section
26(1)(c) of ITA Act provides that any person can apply to the
Commission for the amendment of custom duties.”
A
person does not have to apply for anti-dumping, or countervailing
duties or safeguarding duties if he only wants to apply for
the
amendment of custom duties, such as Defy has done in the instant
matter and such as I made it clear in paragraph [39]
supra.
[43]  In his heads of argument
advocate Maenetje SC dealt extensively with the interpretation of
section 26(1)(c) of ITA Act.
I agree with him. In his heads of
argument, he pointed out to what he called Bosch's interpretative
error of section 26(1)(c) of
the ITA Act. Bosch’s
interpretative error captured in its counsel’s heads of
argument where it is stated as follows:
“
If
it is found that the application was brought by Defy under section
26(1)(c) it could only have been brought under the provisions

relating to safeguarding...
If
the application was an application of safeguarding duties under
section 26(1)(c) the Commission was required to investigate Defy’s

Application in terms of the Safeguarding Regulations.”
[44]  As the Commission is an
organ of state it is accepted that as such it “
may exercise
no power and perform no function beyond that conferred it by the
law”
. Mr Maenetje submitted that interpretation of section
26(1)(c) contended for by Bosch is incorrect. It his further
submission that
the source of such an error emanates from the reading
of section 26(1)(c) incorrectly:
[44.1]
on Bush's
interpretation of the provision, the amendment of custom duties may
only occur where it is concerned with one of three
trade remedies,
namely, anti-dumping duties: countervailing duties or safeguard
duties
;
[44.2]
t
he
contention that the Commission is empowered to accept applications in
respect of the latter three trade remedies is similarly
not disputed.
What Bosch overlooks is the fact that over and above being
permitted to investigate applications in respect
of the three trade
remedies referred to above, s 26(1)(c) also explicitly permits for an
application to be made for the amendment
of customs duties;
[44.3]
a
ccording
to Adv Maenetje SC the error appears to proceed from misapprehension
of the language of section 26(1)(c) of the word “
including
”,
although Bosch appears to interpret the word as it is used in s
26(1)(c) as providing for an exhaustive list. Mr Maenetje
submits
that there is no basis for a conclusion that this is the case. He
submitted furthermore that it is also consistent with
trite
principles of statutory interpretation.  His submission is
supported by the relevant case law on the matter in which
the word
“
includes”
falls to be interpreted. In support of his submission, he referred
the Court to the judgment of
Nieuco
Properties 1005 and Another v Trustees for the time being of
Inkululeko Community Trust and Others [2018] ZASCA paragraph
[123]
in which the Supreme Court of Appeal (“SCA”) pertinently
held that “
[a]s a general rule,
the word “includes” is used as a term of extension”.
Accordingly, this means that the
general rule is that the three remedies referred to in s 26(1)(c) are
not exhaustive of the amendments
of the “
amendments
of customs duties”
;
[44.4]
h
e also pointed out that the same general
rule applied by the SCA in Nieuco Properties follows on the
application of the same principle
by the SCA in
Ndlovu
v Ngcobo, Bekker and Another v Jika (1)
[2002] 4 All SA 384
(SCA)
at para. [20]
.
[44.5]
t
he Constitutional Court weighed in on the
application of the general rule in
relation
to the meaning of the word “includes” in
De
Reuck v Director of Public Prosecutions (Witwatersrand Local
Division) and Others
[2003] ZACC 19
;
2004 (1) SA 406
(CC).
In the said judgment the court made it clear that:
“
The
correct sense of “includes” in a statute must be
ascertained from the context in which it is used. Debele provides

useful guidelines for this determination. If the primary meaning of
the term is well known and not in need of definition and the
items in
the list introduced by “includes” go beyond that primary
meaning, the purpose of that list is then usually
taken to be to add
to their primary meanings so that “includes” is
non-exhaustive. If, as in this case, the primary
meaning already
encompasses all the items in the list, then the purpose of the list
is to make the definition more precise. In
such a case
“includes” is used exhaustively. Between these two
situations there
is a third, where the drafters have for convenience
grouped together several things in the definition of one term, whose
primary
meaning- if it is a word in ordinary, non-legal usage- fits
some of them better than others. Such a list may also be intended as

exhaustive, if only to avoid what was referred to in Debele (R v
Debele
1956 (4) SA 570
AD at 575) as “‘n moeras van
onsekerheid” (a quagmire of uncertainty) in the application of
the term.”
[44.6]
In my view, applying the principles set out
in the above judgments,
the use of the term “
including”
in section
26(1)(c) is clearly non-exhaustive, in that the three trade remedies
referred to in the provision are not exhaustive
of the definition of
customs duties, in other words, the phrase “custom duties”
is not confined to the three trade
remedies referred to in the said
section.
[44.7]

The term falls to be interpreted in accordance with the general rule.
For instance:
[44.7.1]    the term
“
customs duties”
is defined in section one of the
ITA Act, as being custom duties as defined in section 1 of the CEA.
[44.7.2]    “
customs
duties
” are defined in the CEA as being any duty leviable
under Schedule number 1 or 2 on goods imported into the Republic.
[44.7.3]    “
the
customs duties leviable
” in terms of schedule 1 or 2 of the
CEA include more than simply those duties which may be levied as
anti-dumping duties,
countervailing duties, or safeguarding duties.
It is the Commission’s case that it is therefore entitled to
accept applications
for the amendment of custom duties which go
beyond the three trade remedies.  I accordingly disagree with
the contrary contention
held by Bosch.
[44.8]
Counsel for Defy, Advocate MA
Wesley, joined issue
with adv Maenetje SC in the way in which s
26(1)(c) of the ITA Act should be interpreted.  He disagreed
with Bosch’s
interpretation of the said section.
According to him, s 26(1)(c) of the ITA Act provides for an
application for “
the amendment of customs duties”.
On its face, this includes an application for the amendment of
any of the duties set out in Schedule 1 of the CEA.  Bosch
contends
though that this right is qualified by the phrase “
with
regard to”
at the end of the sub-section and the three
types of duties specifically identified in sub-sections (i) –
(iii).  This
is an error.  The phrase “
with regard
to”
is a continuation of the phrase that begins with the
word “
including”
after the general phrase at the
start of s 26(1)(c).
[44.9]
He argued that what Bosch does not appear to appreciate the
difference between a general customs
duty, contemplated in the
opening phrase in the sub-section and the three specific forms of
duty identified in sub-sections (i)
– (iii).  The former
applies to all countries in the world automatically, while the latter
three only apply to a specified
country or countries (generally based
on conduct by that country, for example dumping, subsidized imports
or a surge of imports
into the SACU).  The latter are therefore
duties in respect of goods imported “
from a country that is
not a Member State”
.  The latter three duties are best
understood as trade remedy instruments, in contrast to ordinary
customs tariffs imposed
in line with the maximum tariff levels agreed
to during the so-called Uruguay Round of trade negotiations in 1994.
[44.10]     According
to him when read properly, the phrase “
with regard to”
in s 26(1)(c) of the ITA Act qualifies the types of duty that may be
imposed on goods being imported from a specific country or
countries,
not a general customs duty at all.
Confirmation of the distinction
between the two types of duties appears in the Schedules to the CEA.
Schedule 1 contains the
general customs duties applicable to products
from all countries. Schedule 2 contains the duties imposed as trade
remedies (i.e.,
Safeguard duties, anti-dumping duties, countervailing
duties) and applicable to products imported from specified countries.
Further confirmation of this
distinction appears from s16 of the ITA Act.  The heading of the
section distinguishes “
customs duties”, “antidumping
duties”, “countervailing duties”
and “
safeguard
measures”
. The various sub-sections then deal with each of
these four types of duty.  S 16(1)(c) identifies applications
for the “
amendment of customs duties”
as separate
applications.
[44.11]     In the
circumstances, there is no merit in Bosch’s argument that the
Commission    acted
ultra vires
in considering
Defy’s application for an increase in the general tariff and in
recommending an increase in that tariff in
the manner it did. A
decision suffers from procedural impropriety if in the process of its
making the procedures prescribed by
the statute have not been
complied with or followed or if the rule of natural justice has not
been adhered to. In this instant
matter, the court cannot intervene
to overturn the decision of the Commission simply because of the
divergent views regarding the
interpretation of section 26(1) (c) of
the ITAC Act. I am satisfied that the Commission acted within its
statutory powers when
it classified Defy’s application as one
falling under s 26(1)(c) of ITA ACT.
[45]  The process involved in
completing an evaluation of applications for the amendment of tariffs
is inherently polycentric.
The object of the ITA Act is
instructive in appreciating the policy laid in nature of the work
that the Commission performs.
Section 2 of the ITA Act
describes the object as being:
“
To
foster economic growth and development in order to raise income and
promote investment and employment in the Republic and within
the
Common Customs area by establishing an efficient and effective system
for the administration of internal trade subject to this
Act and the
SACU agreement.”
[46]  Several types of tariff
amendments are administered by the Tariff Investigations Unit of the
Commission:  investigations
regarding potential increases or
reductions in ordinary customs duties and the creation of rebate and
drawback provisions.
To ensure that custom duties can meet
their intended economic objectives, they are permitted to take a
variety of forms.
These include the following:
[46.1]
Ad valorem
duties; these
duties are expressed as a percentage of the free on board of the
value of the imported goods;
[46.2]
Specific
duties; the duties are mostly expressed in rand per
kilogram or a
unit.
[47]  Tariff investigations,
consistent with the policy laid such enquiries, are conducted on a
case-by-case basis.  They
are informed by the particularities of
a sector. Section 16(1)(c) of the ITA Act directs the Commission to
investigate and evaluate,
among others, applications which it
receives regarding the amendment of custom duties.  S. 16(1)(c)
of the ITA Act provides
that:
“
The
Commission must
investigate
and
evaluate
–
(c)    applications
in terms of section 26 with regard to amendment of customs duties in
the Common Customs Area.”
As instruments of policy tariffs are a
different kettle of fish to other instruments that form part of the
treaty formwork created
under the World Trade Organisation (“WTO”).
Antidumping and countervailing duties, for example, are, if anything,

less policy laden not least because, under the WTO agreements, the
latter two instruments are reactive and remedial measures by
their
definition but because they are regulated far more specifically.
[48]  As set forth in the
regulations, the Commission’s evaluation of applications
concerning the amendments to tariffs
and its findings in
investigations are informed by the industrial policy and economic
objectives of Government (in this regard
see Regulation 10.1).
In this way, the Regulations echo and reinforce the objects that the
ITA Act sets out.
[49]  The Regulations provide
further flash to the objectives of the ITA Act, in several ways.
Importantly for present
purposes they provide,
inter alia
,
that tariff support is conditioned on how the domestic industry “will
perform against the government’s set policy
objectives,
including its plans to increase production, investment and
employment.”  In other words, in return for government

support, applicants are expected to foster economic growth,
particularly in areas identified by the executives and strategically

important areas for the regional economy, through increased economic
activity.
[50]  The fact that regard to
Government policies is necessary in relating to tariffs as a legal
obligation makes it necessary
for the Commission to stay abreast of
such policies.  The Commission did so, in relation to the
decisions that Bosch is attacking.
One critically important
consideration in this regard was a Policy Directive (entitled “
Policy
Directive” on matters [the Commission] shall consider in
evaluating applications for amendment of customs”
)
published in the Government Gazette by the Minister of Economic
Affairs on 21 April 2016 (“the Policy Directive”)

attached to the Commission’s answering affidavit and marked
‘AA1’.  The following points in the Policy Directive

are of utmost importance:
[50.1]
the Policy Directive reiterates an important
purpose of the ITA Act,
which is to “
foster economic growth and development in order
to raise incomes and promote investment and employment in the
Republic and common
customs area” of SACU”;
[50.2]

the Policy
Directive underlines that:
“
economic
growth and development” where “particularly pressing
problems at that time”.
The Policy Directive makes explicit
that it was issued by the Minister of Economic Development to address
these issues and “improve
the realisation of the objects of the
Act”.
[50.3]
“In relation to an application for amendment
of custom duties”,
the Policy Directive goes on to state, it is “preferable that
the Commission should consult with
the Applicant” with regards
to the following matters:
[50.3.1]    the
“desirability of the Applicant to making an objectively
verifiable and binding commitment as
to what action it will take in
order to ensure the raising of incomes, the promotion of investment
or the promotion of employment,
if the proposed measure is
implemented”;
[50.3.2]    “what
such commitments, if any, the Applicant has made in that regard”;
and
[50.3.3]    the “likely
impact of those commitments on incomes, investments, or employment”.
The Policy Directive explicitly calls
upon the Commission, in the context of the economy, to determine
whether such commitments
would be desirable.  Surprisingly,
Bosch does not deal with the overall industrial policy directives
that guided the Commission
in its decision-making or the commitment
made by Defy as part of its application to increase production,
investment and employment
Commission also considered or the support
expressed for Defy’s application by Botswana, another member of
SACU, by Zero Appliances,
the only other local manufacturer of the
subject product and finally by the DTI.
[51]  In a further demonstration
of the central importance of the current Industrial Policy, the
Policy Directive provides
that the Commission must, in “each
instance” assess the likely impact of the commitments made on
the following factors:
[51.1]
“job creation or job retention, including commitments for
specified categories such
as youth employment”;
[51.2]

“industrial
output”;
[51.3]

“investment
in plant, equipment, skills and research and development”;
[51.4]
“economic investment, such as support
for participation in
manufacturing and related activities by small businesses, black owned
or black managed enterprises, and common
customs area supply chains”;
and
[51.5]

“pricing
of outputs”.
[52]  On the aforegoing basis the
Commission submits that quite clearly prior to making the decision
under attack, the Commission
considered all the necessary factors
which the Commission, in its discretion, deemed to be relevant.
In doing so, the Commission
did no less than what the law requires.
Further factors over and above those set out above were considered by
the Commission
as well.  In addition, the Commission was
required to consider various other factors such as they relate to the
product under
investigation.  Specifically, the Commission was
at large to consider the following:
[52.1]
the domestic industry production capacity and potential;
[52.2]
employment, including
considerations of labour intensity
and labour demographics of the
relevant industries;
[52.3]

investment;
[52.4]
price differentials between the
domestically manufactured
product and the imported product;
[52.5]

market shares;
[52.6]

import and
export data;
[52.7]

demand in supply conditions;
[52.8]
the financial state of the domestic industry
including the
profitability and return ratios;
[52.9]

price and cost structures;
[52.10]  the rate of effective
production; and;
[52.11]  the availability of
domestically manufactured identical or substitute products.
[53]  Mr Mbambo states that,
among other things, the regulatory formwork permits the Commission to
consider the operational
and financial condition of the applicant.
However, support for the applicant is not conditioned on finding that
the applicant
is doing poorly or that it is suffering material harm
from imports or otherwise.  The sole conditionality expressed in
the
Regulations in the commitment to perform as against governments
“set policy objectives”.
[54]  In addition to more general
policy related considerations, the Regulations permit the Commission
to consider a long list
of other polycentric factors.  See in
this regard Regulation 10.2. As further evidence of the breath of the
Commission’s
discretionary permit, the Regulations make it
clear that in deciding in any given case,
the Commission may go
beyond even this long list of considerations
(my underlining).
The Regulations themselves state explicitly that this list of factors
“is not exhaustive” and
that the Commission “will
decide the relative weight to be given to any one factor on a
case-by-case basis”.
This process is followed where
amendments to custom duties are effected.
[55]  An amendment to a custom
duty requires compliance, not only with the ITA Act but also with
other legislation as well.
Custom duties, for example, are
regulated under the provisions of the CEA legislation which falls
under the executive authority
of the Minister of Finance.  Where
any amendment to custom duties occurs, it follows a three-tiered
process:
[55.1]
the Commission evaluates an application in terms
of,
inter alia
,
sections 16 and 26 of the ITA Act and makes a recommendation to the
Minister of Trade and Industry;
[55.2]
the Minister of Trade and Industry may accept
or reject the
Commission’s recommendation or refer the matter back to the
Commission for reconsideration in terms of s 4(2)(a)
of the Board of
Tariffs and Trade Act 107 of 1986 (“the BTT Act”).
If the Minister accepts the Commission’s
recommendation, he
requests the Minister of Finance to amend the relevant schedule to
the CEA as provided for in s 4(2)(b) of the
BTT Act;
[55.3]
the Minister of Finance may amend Schedule 1
to the CEA to give
effect to any request by the Minister of Trade and Industry in terms
of s 48(1)(b) of the CEA.  Exhibit
‘KT1’ in case no.
67553/18 is an example of such a request.
[56]  In regard to the role of
the Minister of Finance, the third step, the Commission states that
it should be noted that
ordinary customs duties are levied under the
CEA, which falls under the executive authority of the Minister of
Finance.  Schedule
1 to the CEA contains the rates of duties.
The products are categorised under various chapters, sections, and
tariff headings (4-digit
headings).  Each product is classified
under the most appropriate tariff subheading (6-digit heading).
The 6-digit tariff
subheadings in Schedule 1 are set out in
accordance with the Harmonised Commodity Description and Coding
System (Harmonised System)
of tariff nomenclature, maintained by the
World Customs Organisation.  The Harmonised System is an
internationally standardised
system of names and numbers to classify
traded products.  Under the World Trade Organisation, of which
South Africa is a member,
each country can create its own 8-digit
tariff headings to allow the country self-flexibility in the
administration of customs
duties, other duties, service, and rebates.
[57]  The South African Revenue
Service (“SARS”), which is subject to the executive
oversight of the Minister of
Finance, is an organ of state
responsible for administering the clearance of imported products.
SARS is empowered to classify
products and make tariff determinations
under s 47 of the CEA.  Tariff classifications fall outside the
scope of the Commissioner’s
expertise, powers, and duties.
Consequently, when the Commission investigates the product, SARS is
consulted on the appropriate
tariff classification of the product.
[D]
THE RELEVANT FACTS
THE
BASIS FOR DEFY’s APPLICATION
[58]  There are only two domestic
manufacturers of the subject product in South Africa.  Defy is
one of the two.
As the former importer, Defy commenced the
domestic manufacturing of gas stoves in the Republic of South Africa
in 2014.
This is not in dispute.  Defy applied for an
increase to the customs duty on the subject product,
inter alia
,
for these reasons.  Further reasons recorded in Defy’s
application and considered by the Commission in its Final Findings

were as follows:
[58.1]
Defy’s inability to be
price competitive arose
from “current levels of plant
utilization and economies of scale”, which was leading to
“higher unit costs of
production and reduced profitability and
employment”;
[58.2]
“an increase in customs duty would enable
Defy to compete with
low priced imports into SACU”;
[58.3]
“an increase in tariffs which supports
future plans from
introduction of additional ranges of gas stoves and especially the
planned production of two new models in the
factory based in Durban”.
Bosch admits the contents hereof
insofar as they correspond to the contents of the final findings.
[59]  According to the
Commission, Defy had invested a total amount of R6 million in new
machinery for the manufacture of the
subject product and at the time
of the Commissioner’s Final Findings, it had employed a total
of 26 employees.  In motivation
of its application Defy stated
that:
“
The
increase of tariff will not only ensure job retention, but also will
allow the Company to gain additional market share and therefore

increase local production which will result in additional
employment.  The increase in tariffs will also support future
plans
for the introduction or additional gas stoves into the range,
and especially the planned production of two new models in the second

half of 2015 in Durban.”
BOSCH
denied the contents hereof simply on the basis that it had no
knowledge thereof.  Defy had made certain undertakings
to the
Commission.  Such undertakings were:
[59.1]
to invest an
additional R3.3 million in plant machinery;
[59.2]
to increase production volumes
by approximately
43% over the following two years starting from 2016;
and finally,
[59.3]

to add an additional 29 employees during the same period.
It is Bosch’s contention that
the Commission ought not to have had no regards to the purported
undertakings and to have dismissed
Defy’s application.
The Commission was required to evaluate Defy’s application on
its merits and in accordance
with the applicable regulatory
framework, including the relevant industrial policy objective.
Defy’s application for
the tariff increase was submitted on 17
August 2015.  On 20 November 2015, the application was published
for comment by interested
parties in the Government Gazette.
[E]
THE COMMISSION
HAS MET OR EXCEEDED THE PROCEDURAL REQUIREMENTS OF THE REGULATORY
PROCESS
[60]  The Commission submitted
that in coming to its recommendations it followed a rigorous and
legally valid process.
It went ahead and summarised such
process as follows:
[60.1]
on 28 and 29 September 2015 the
Commission, through
its staff, conducted a verification inspection of
Defy’s premises.  The Commission’s staff prepared a
verification
report on 20 October 2015, a non-confidential version of
which is attached hereto as ‘AA2’;
[60.2]
on the same date as the completion of the verification
report, the
Commission sent a letter to the Department of Trade and Industry
(“DTI”) asking for its comments on the
application.
The Commission then sent a similar letter to Zero Appliances (Pty)
Ltd (“Zero Appliances”).
Both parties supported the
application;
[60.3]
on 10 November 2015 at a meeting
of the Commission,
it was resolved to publish Defy’s
application for the comments of interested parties.  That was
done on 20 November
2015;
[60.4]
thereafter, the Commission received submissions
and objections from
interested parties up until May 2016.  One of the letters of
support that the Commission received was
from Botswana Minister of
Trade and Industry.  During this process, the Commission raised
queries with Defy in relation to
its application,
inter alia
,
based on the submissions the Commission had received.  Defy
responded to the queries;
[60.5]
DK Gas Appliances CC t/a Total (“Total”)
was one of the
firms that objected to Defy’s application.  Total was
afforded an opportunity to make an oral presentation
explaining its
objections in August 2016;
[60.6]
the Commission staff considered all objections
and responses and
incorporated these into a submission supporting an increase in the
customs duty.  The submission was presented
at a meeting of the
Commission on 16 August 2016.  On the strength,
inter alia
,
of the report, the Commission resolved, to recommend an increase in
the customs duty;
[60.7]
Bosch objected that it had not been granted an opportunity to make an
oral representation
thereafter.  Even though there was no
requirement in principle that demanded Bosch to be afforded such an
opportunity, the
Commission decided to grant Bosch an opportunity to
submit its objections to the application;
[60.8]
on 20 October 2016 the Commission held a meeting with Bosch to better
understand Bosch’s
concerns.  The Commission allowed Bosch
to make oral representations on 6 December 2016.  By this time,
the Commission
had also permitted BOSCH to deliver a further written
objection.  Bosch did so on 2 August 2016;
[60.9]
the Commission went as far as it possibly could to accommodate
Bosch’s concerns.
After hearing Bosch’s oral
presentation and meeting to consider this representation on the same
day the Commission decided
to rescind the previous decision to
recommend an increase in the custom duty;
[60.10]     Bosch then
proceeded to furnish the Commission with further information in
writing on 22 December 2016.
The Commission considered this
information.  It prepared the Final Findings in a report dated 7
February 2017 which is attached
to the supplementary finding
affidavits as Annexure ‘DG15’.  The Commission
considered the further information
submitted by Bosch.  However,
as the final findings made to it, the Commission was not influenced
by the further information
received;
[60.11]     the Final
Findings were presented at a meeting of the Commission on the same
date of 7 February 2017.
As recorded in the minute attached
hereto marked ‘AA7’ the Commission resolved to recommend
that the increase sought
by Defy should be granted;
[60.12]     on 12
February 2017 the Chief Commissioner of the Commission sent a
submission to the Minister of Trade
and Industry, recommending an
increase in custom duty, in line with the Resolution of 7 February
2017.  While Bosch admits
that the Commission was required to
follow a rigorous and legally valid process in coming to its
recommendations, it denies that
this was done in the instant case.
[61]  On 28 February 2017 the
Minister of Trade and Industry agreed with and approved the
Commission’s recommendation.
He signed it.  He then
submitted a request to the Minister of Finance on the same date.
The request was for the Minister
to amend Part 1 of Schedule 1 of the
CEA to make provision for the increased duty.  The request of
the Minister of Trade and
Industry was then independently considered
by SARS.  On 20 July 2017, the Minister of Finance approved the
request by signing
the recommendation.  The requested amendment
was promulgated in the Government Gazette on 25 August 2017.
[F]
THE COMMISSION’S FINAL FINDINGS
[62]  The centrepiece of Bosch’s
attack in this application is the Commission’s Final Findings.
As already
pointed out somewhere
supra
, the law requires the
Commission to make polycentric and discretionary decisions on a
case-by-case basis.  In the instant
application Bosch contends
that the recommendation of the Commission was unlawful.  Counsel
for the Commission submitted that
this was incorrect.  The
starting point in this regard is the content of Defy’s
application.  There the challenges
facing the domestic industry
at an operational level were described as including “high
manufacturing costs, transport costs
and financing costs”.
“In addition,”, Defy explained that challenges specific
to its local enterprise and
the domestic industry were “increases
in electricity prices as well as labour costs”, both of which
are self-evidently
peculiar to domestic production in this country.
[63]  Defy contended furthermore
that the increase in duty sought would not only have benefits for the
domestic industry but
would also permit the Commission to protect the
South African consumer.  If the duty were to be increased Defy
anticipated
that it could avoid price increases by reducing its unit
cost of production. The Commission considered all the evidence that
it
received.  In weighing up its decision, the Commission
considered the nature of the domestic industry and having done so,
concluded that,
inter alia
, Chinese imports of the subject
product from most of the imports under the relevant tariff heading
and that they were rapidly increasing.
This is what paragraph 8.1.2
of the Commission’s Recommendation stated:
“
Imports
of the subject product originate mainly from China, Turkey and Italy,
with China accountable for about 44% on average annually,
despite
contractions in 2013.”
The
Commission then concluded that the tariff subheading included other
products that did not conflate part of the investigation.
Based
on that it concluded that it did not have any sufficient information
before it to make a reliable final determination as
to imports or
exports of the subject product itself.  In this respect the
Commission could go no further than to conclude
that there were
significant imports of substitute products. To assist with future
analysis in this regard the Commission instead
recommended the
creation of a separate tariff subheading:
“
the
creation of a separate tariff subheading for the subject product
would assist the Commission with accurate trade data in future

investigations.”
[64]  Earlier it was pointed out
that Mr Mbambo mentioned the fact that the Minister of Trade and
Industry of Botswana supported
the application.  According to Mr
Mbambo the position of the DTI, as fellow functionary required to
implement the industry
policy, was one of the important
considerations that the Commission had to consider.  The
Department of Trade and Industry
supported the application, among
others, for the following reasons (in this regard reference is made
to paragraph 10.3 of the Commission’s
recommendation):
[64.1]
in the IPAPs of 2014/2015 and 2016/2017, the
facilitation of a
favourable tariff regime was one of the key milestones identified as
being salutary to the local manufacturing
of Whites Goods and
products;
[64.2]
the positive outcomes of the tariff would accord
with the key
milestones in the IPAPs, and it would therefore facilitate growth of
the local industry; and
[64.3]
the tariffs would incentivise local manufacturing
over imports of the
subject product, which would result in the creation of additional
jobs and strengthen local manufacturing,
inter alia
, by
improving the competitiveness of local manufacturers.  According
to Mr Mbambo on the Commission’s assessment of
evidence before
it, it agreed with the DTI, among others, that in the circumstances
where there were indeed substitutable imports
that were constraining
the subject product – the tariff would indeed have the positive
effects listed by the DTI.  In
so doing the Commission rejected
the objections received concerning the potential employment benefits
of the requested increase:
“
The
respondent raises concerns regarding the lack of comparison in the
application of manufacturing jobs that will be created against

possible job losses on the part of importers because of the proposed
customs duty increase on the subject products.  However,
such a
simplistic comparison would not be sufficient for the purposes of
tariff setting.  Manufacturing jobs require certain
skills that
are not comparable to jobs created by importers.  Manufacturing
skills may result in decent jobs for employees.
Such skills are
also permanent and transferable to other similar production
professions making the workers more marketable and
employable in
other sectors of the economy.”
The Commission concluded that the cost
benefit analysis concerning employment favoured the grant of the
requested increase:
“
The
Commission deliberated on the possible trade-off between employment
created by importers and manufacturing jobs as a result
of import
duties.  The Commission took a view that manufacturing jobs
require skills that are not comparable to the jobs created
by
importers.  Such skills are transferable to similar processes
making workers more marketable and employable in other sectors
of the
economy.”
[65]  [65.1]
In the exercise of its
discretion,
the Commission considered several various factors that it
is permitted to consider in terms of the ITA Act and the
Regulations.
Some of these are listed in the Final Findings.
Considering all the relevant evidence, the Commission concluded that
the application
met the requisite requirements and that an increase
in the relevant duty would be good policy:
“
The
Commission concluded that additional staff support would
significantly improve the competitive position of the subject
product,
thereby ensuring economic viability and sustainability of
the local industry.”
[65.2]
In contradistinction Bosch ignores these other
factors that
influenced the Commission. At the same time, it asks the Court to
ignore the undisputed effect of the imposition of
the tariff, despite
the fact that it acknowledges that the effects of the increase in
tariff on both Defy and Bosch are precisely
the effects that had been
intended.
[65.3]
As pointed out supra, in considering several
various factors other
factors that it was permitted to consider by the ITAC Act and the
Regulations, the Commission exercised its
discretion properly in law.
A discretion must be exercised reasonably. The phraseology “
exercised
reasonably
” has frequently been used and is frequently used
as a general description of things that should not be done. A person
or
body entrusted with a discretion must direct himself or itself
properly in law. For instance, the Commission will be regarded as

having acted properly in law if it is allowed by the ITA ACT and or
the Regulations to take certain factors into account even if
such
factors were not mentioned in the application. When the Commission
has acted properly there cannot be a complaint that the
Commission
has decided an application on factors which were not mentioned in the
application.
[65.4]
A person who has been entrusted with a discretion, such as the
Commission was, must call all
his or its attention to the matter
which it is bound to consider. It must exclude from its consideration
matters which are irrelevant
to what it must consider. The factors
the Commission is permitted to consider by the provisions of ITA ACT
or the Regulations,
even if not referred to in any application, and
which matters are within its discretion, can never be irrelevant. If
the Commission
fails to obey the provisions of the ITA ACT or the
rules of the Regulations, it may truly be said, and is often said, to
be acting
unreasonably. Similarly, there may be something so absurd
that no sensible person could ever dream that it within the powers of

the Commission.
[65.5]
I am therefore satisfied that the Commission exercised its discretion
reasonably when it considered
various other factors not mentioned in
Defy’s application but which it was obligated by the provisions
of the ITA ACT and
the Regulations to consider. Investigating an
application is by that nature highly technical. Such an investigation
involves a
conceptual and an appraisal of facts and demands expertise
of a special kind. For this reason, the Commission, as a special
agency,
will investigate and draw up recommendations.
[66]  Accordingly, the Commission
was correct when it recommended that the Minister of Trade and
Industry approve an increase
in the rate of customs duty on a subject
product from 15% to 30%
ad valorem
, by way of creating an
additional “8-digit tariff subheading”.  The
Minister of Trade and Industry and the Minister
of Finance ostensibly
agreed with the Commissions’ proposed cause of action,
inter
alia
, by SARS was the cause of action that was ultimately
followed.  It is these decisions of the Ministers of Finance and
of Trade
and Industry that are the target of Bosch’s
application for review and set aside. I deal separately with each
Minister’s
case hereunder.
[G]
BOSCH’s PURPORTED GROUNDS OF REVIEW
[67]  Bosch’s challenge to
the legal validity of the decision under attack is predicated to an
exceptionally large extent
on the analysis of Genesis Analytics (Pty)
Ltd (“Genesis”).  That attack is confined to the
co-reasoning in the
Final Findings that have been referred to.
Bosch cannot legitimately contend, for example, that the Commission
was wrong
to reach any of the following conclusions that:
[67.1]
there were significant imports of substitute
products and theses
products had a bearing on Defy’s ability to make a profit;
[67.2]
the increase of the duty sought
by Defy would permit
Defy to increase production and employment,
resulting in potential growth in the market;
[67.3]
Defy’s claims that it
could and its undertaking
that it would indeed increase production,
investment, and employment, as it promised to do, were credible;
[67.4]
the increase of the duty sought
by Defy would accord
with the industrial policy and economic
objectives which the government sought to advance.
It was submitted by counsel for the
Commission that the aforegoing reasons were sufficient to dismiss the
current application.
[68]  I now turn to the
submission by the Commission that the five main criticisms levelled
by Bosch against the decision of
the Commission do not meet the
required standards.
[69]  I proceed to deal singly,
as the Commission did, with the several complaints raised by Bosch:
Complaint A:
there was no basis for the Commission to conclude that Defy’s
profits were low
;
[69.1]
the Commission, based on the
conflict analysis of
the evidence before it, concluded that Defy’s
margin of profit in 2015 was 5%. Mr. Mbambo concluded that the
Commission concluded
that Defy was experiencing low profitability
informed its final findings.  Bosch, through Genesis, criticises
this conclusion
on three bases. These criticisms, and the reasons why
the Commission submit that they are without merit, may be summarised
as follows:
[69.1.1]    first,
Genesis attempts to demonstrate that the Commission’s
assessment of profitability diverges
from Genesis own assessment of
Defy’s return on investment. The Commission did not use this
calculation and Mr Mbambo advise
and submits that it was not required
to do so.  He was also advised that there are different ways to
calculate profitability
with the return on investment being only one.
It was advised and is submitted that the Commission was perfectly at
liberty to apply
the standard that it did and not the return on
investments standard;
[69.1.2]    second,
Genesis criticises the Commission for relying on only a single year’s
data to form its
assessment.  This ignores the imperfect
circumstances in which the Commission was required to make its
decision.  Because
Defy had only recently commenced production,
it was only able to furnish the Commission with one year’s data
to consider.
If the Commission had declined to decide based on
this reality, it would necessarily mean that it could only decide
once Defy had
been manufacturing for several years by which time Defy
may have elected to pull out of the domestic industry and returned to
imports;
[69.1.3]    Genesis
argues that the Commission’s assessment of the profit as being
low is “highly subjective”.
It does not, however,
contest that the facts on which the Commission made its assessment
are correct.  Mr Mbambo was advised,
denuded of the meritless
criticism he had addressed above, the criticism is not valid;
[69.1.3.1]  the assertion raised
by Genesis goes no further than to suggest that Genesis disagrees
with the Commission that
the 5% profit margin is low;
[69.1.3.2]  the question of
whether a 5% profit margin is low or high is a decision which the law
requires the Commission to
make.  It is a question for the
Commission’s discretion or opinion provided that the Commission
exercises the discretion
in a rational manner;
[69.1.3.3]  the complaint does
not begin to rise to the level that the Commission’s assessment
was irrational.
Complaint B:  The
Commission was wrong to conclude that low costs were increasing
[70]  The assessment of the
Commission that is relevant under this heading is its conclusion that
local manufacturers had experienced
cost increases in the period 2013
to 2015.  But Genesis’s does not dispute that this
conclusion is correct, as a matter
of fact.  Instead, Genesis’
sole criticism in this regard is that the increase of local costs
does not lead to the conclusion
that local producers were unable to
compete with imports.
[71]  This purported criticism of
the Commission’s reasoning process attracts a strawman.
It criticises the Commission
based on something that the Commission
did not say.  Furthermore, the alleged failure relates to the
finding that the Commission
was not required to make.
[72]  All that the Commission was
required to assess was whether the local producers had high costs and
whether their prices
were constrained by imports, resulting in low
profitability.  However, as had been explained, this was
precisely what the
Commission did.
[73]  Even if this Court were to
hold otherwise, Mr Mbambo still submits that there is no merit to the
three complaints raised
by Genesis under the subheading.  He
said that because of the following:
[73.1]
first, Genesis suggests, because
of Table 5 of the
Final Findings, that Defy’s profits increased
by more than its costs between 2014 and 2015.  This contention
is factually
incorrect.  The Table contains an erroneous expert
reselling price for Defy for 2014.  The Commission made its
decision
based on the correct expert reselling price.  Once the
error is corrected it becomes clear that the complaint of Genesis has

no merit;
[73.2]
second, Genesis objects to the
imposition of customs
duty on imports because of the existence of the
rebate provision.  The contention ignores the fact that,
pre-rebate, the existing
costs would already have had an impact on
Defy’s costs structure.  The contention is also wrong in
fact, because not
all the steel components used in the manufacture
process were subject to the rebate;
[73.3]
third, Genesis suggests that increases in costs of importers may have
been higher than those
of local producers.  Mr Mbambo denied
that this is the case.  On the facts he was advised, and he
submits that Genesis’
contention to the contrary cannot be
established.
Complaint C:  The
Commission was wrong to rely on SARS import data and to conclude that
imports were rising
[74]  Similarly to the latter
complaint, Bosch’s complaint under the heading also appears to
attack a strawman.
The Commission states that it was at all
times acutely aware of difficulties presented by SARS’ data.
This appears quite
evidently from its Final Findings:
“
Tariff
Subheading 7321.11 includes other products that are not part of the
investigation and therefore a logical conclusion cannot
be made
regarding the import and export trends.  The market share of the
domestic industry on the subject product is also
not accurate because
Tariff Subheading 7321.11 includes a wide range of stoves.”
[75]  According to the Commission
the fact that the SARS data was unreliable did not mean that it could
not decide.  In
making the decision, it had regards to several
factors, which included what could usefully be extracted from the
admitted imperfect
data.  In investigations generally, this is
what it does.  It examines the environment in which the domestic
industry
operates.  Where, as in this case, there are issues
complicating the evaluation of certain data, regulation 10.2 of the
Regulations,
permits it to grant such data little or no weight.
Regarding SARS data, the Commission did no more than to take
cognisance
of relevant trends.
[76]  The Commission is satisfied
that it had sufficient data before it to make a legally valid
conclusion and it did so. Genesis
refers to information that was not
before the Commission to undermine this conclusion. Such extraneous
information is not relevant.
Complaint
D:  The Commission was wrong to conclude that domestic producers
were suffering from the price disadvantage when
compared to imports
[77]  Mr Mbambo testified that
under this heading, Genesis and Bosch take issue with the conclusion
that the Final Findings
made clear was not central
or critical
to the Commission’s reasoning.  This is made clear at
paragraph 11.6 of the Findings:
“
An
analysis of import prices can be misleading because the FOB values
from SARS include other stoves that are not covered by the

investigation.  Further, actual invoices are also not reliable
for purposes of realising the price competitiveness of the
local
industry because of the wide range of band names to subject
products.  This is also complicated by the varying in range
of
input materials used to manufacture similar stoves.”
[78]  Mr Mbambo does not admit
the contention that Defy was not suffering from a price
disadvantage.  He submits that
this contention has not been
established.  However, he holds the view that even if this Court
were to disagree, he would submit
that nothing turns on this issue.
Given the peripheral importance of the assessment, he was advised,
and he submits, that
this does not affect the conclusion that the
Commission ultimately reached.  To the extent that an error was
made in the Final
Findings in this regard, which he did not admit, it
is according to him, not material to the rationality of the decision,
given
that it did not inform the Commission’s conclusion,
insubstantial.
Complaint
E:  The Commission misinterpreted the implications of the fact
that Total decided to localise manufacturing
[79]  Under this finding Genesis
argues that the Commission incorrectly ignored the import of Total’s
conduct.
In effect Genesis argues that Total’s decision
to localise its manufacturing of gas stoves demonstrated that Total
considered
it profitable to manufacture locally at existing tariff
levels.  This, Genesis argues, is “further evidence”
that
the Commission’s Recommendation for an increase in
existing tariff was unnecessary.
[80]  Once regard is had to the
true facts, Mr Mbambo submitted that Total’s conduct undermines
the argument of Bosch,
as opposed to the Recommendation of the
Commission. He submitted that Total’s conduct supports the
Commission’s Recommendation
in that:
[80.1]
Total
initially strongly objected to the increase
that Defy proposed;
[80.2]
Total informed the Commission
that it intended to
localise its manufacturing during the
investigation period, when it became apparent that an increase in the
duty was lacking;
[80.3]
the fact that Total decided to
change its position
based on the increased duty is evidence that the
increase in the duty, giving that it has acted as an incentive for
Total, is likely
to have the desired effect.
It is for the aforegoing reasons that
the Commission contends that Bosch’s complaints are unfounded,
and that this application
should be dismissed.
[81]  In my view, the decision of
the Commission to recommend to the Minister of Trade and Industry to
approve Defy’s
application was taken in a consistent, uniform,
impartial and reasonable manner.  The Commission properly
applied its mind
to the application.  It made sure that in the
execution of its duties in terms of s 16 of the ITA Act, it ensured
that the
purpose of its exercise satisfied the requirements of s 2 of
the ITA Act; that the tariff investigation unit, as it normally did

on the case-by-case basis, worked within the requirements of the law.
[82]  There is no doubt that the
Commission considered the regulations in its decision.  The
Commission was required to
have regard to the Government Policy and
Policy Directive in the formulation of its decision.  The
Commission has acted regarding
all the factors that it had to
consider.
[83]  The principle of procedural
fairness was observed by the Commission.  The recommendation of
the Commission was made
only after a careful analysis of the issues
that were relevant to the Commission in making a recommendation.
Judged against
these considerations, fairness did not demand that
every objection should be considered from those functions.
[84]  The principle means by
which the Commission achieves its objects by conducting
investigations:  S 16(1)(c) of the
ITA Act by using the word
“must”, the legislature imposed a duty on the Commission
to perform these functions.
The law required these duties to
conform.  The Commission has no discretion.  The Commission
has two fundamental functions
to perform in terms of s 16(1) of the
ITA Act;
(i)
to investigate;
(ii)
to evaluate and to make recommendations.
These
two functions are general to the work performed by the Commission and
not specific to Customs Duties.
[85]  Upon a proper
interpretation of the ITA Act and the wide powers vested on the
Commission, the Commission has both an
investigative function and a
determinative function in deciding whether to request the Minister of
Trade and Industry to request
the Minister of Finance to impose
custom duties and in making it file a report to the Minister of Trade
and Industry.
[86]  It is of paramount
importance to point out that while the Commission has a duty to act
fairly it does not follow that
it must discharge that duty precisely
in the same respect regarding the different functions performed by
it.  When the Commission
exercises its deliberative function,
interested parties, especially objectors, such as Bosch, have a right
to know the substance
of the application that they must meet.
Objectors are entitled to representations, like in the instant case,
Bosch was given
an opportunity to make written and oral submissions.
This was relevant to the scope of the
audi alteram partem
principle in following its investigative powers, the Commission must
not act vexatiously or oppressively towards those persons
or subject
to its investigation. To the applicants and the objectors alike there
is an administrative duty on the part of the Commission
to perform
its functions with an even hand. Decisions made using a statutory
power must be reached fairly. All the statutory powers
are given with
implicit assumption that they will be wielded fairly.
[87]  In
the Chairman Board of
Tariffs and Trade v Bruno Inc. 2001(4) SA 511 at 527 paragraph 30
the Court, in dealing with fairness stated that:
[30]
In the context of enquiries in terms of s 417 and 418 of the
Companies Act 61 of 1973,
investigatory, proceedings which have been
recognised to be absolutely essential to achieve important policy
objectives, are nevertheless
subject to the constraint that the
powers of investigations are not exercised in the exertions,
oppressive or unfair manner.”
[88]  By analogy on the facts of
this matter, when the Commission carried out its investigative
functions, it listened to a
variety of views or objections. It gave
credence to the principle of
audi alteram partem
.  In
that manner it acted fairly.  It will be recalled that Bosch was
not the only objector.  There were many of
them.  Bosch’s
participation is singled out because it was given an opportunity not
only to make written submissions
but, on its request, also to make
oral submissions, a quintessential example of the fairness of the
process.
[H]
THE
REASONABLENESS UNDER S 46 OF THE ITA ACT READ WITH THE GGATT ACT AND
GATT 1947
[89]  According to Bosch’s
counsel, the principles of reasonableness uniformity and impartiality
were incorporated into
the South African Trade Legislation by virtue
of the provisions of GATT 1947 (Article X) read with the GGATT Act.
He submitted
that the review process envisaged under s 46 of the ITA
Act, read with the aforesaid International Agreements and the GGATT
Act,
requires a court judicially reviewing decisions of the
Commission to demonstrate the reasonableness of that decision.
[90]  For the aforegoing reasons,
he submitted that the decision of the Commission was unreasonable and
contravened the provisions
of the legislation.  In this regard,
it is Bosch’ case that the factors recorded by the Commission
in its recommendation
were unsupported and unfounded.
Therefore, a reasonable administrator would not have decided
recommending Defy’s application
in the circumstances.
This is one of the fundamental flaws that, according to Bosch, taint
the entire process and render
all three decisions subject to review.
[91]  Counsel for the Commission
disagrees.  He contends that the purported basis for the
conclusion terms upon Bosch’
interpretation of the distinction
between International and Municipal law.  According to Bosch’
version, the reason
for applying the “
reasonableness
”
standard is that the provisions of GATT were incorporated into South
African trade legislation by virtue of the provisions
of GATT 1947
(Article X) read with the GGATT Act.
[92]  He argued that s 46 of the
ITA Act makes no mention at all of “
reasonableness”
as a requirement.  S 46 provides that:
“
A
person affected by a determination, recommendation or decision of the
Commission in terms of s 16 or 17 or of this chapter, may
apply to a
High Court for review of that determination, recommendation or
decision.”
Counsel
for the Commission, argued, in addition, that Bosch has referred this
Court to no authority in support of this contention.

Furthermore, he submitted that, on a proper analysis, the requirement
of “
reasonableness”
was not incorporated into the South African municipal law, for the
following reasons:
[92.1]
“Traditionally, there are two approaches
to the incorporation
of International Agreements:  the monist approach (which holds
that international treaties are domestically
enforceable without any
need for an act of domestic adoption) and the dualist approach (which
requires that international treaties
may apply domestically only if
they have been adopted domestically, through the enactment of
domestic legislation.”
In this regard, counsel for the
Commission relies on International Law; The South African Perspective
(2000) 43 by Professor Dugard.
He also relies on JG Starke
Monism and Dualism in the Theory of International Law (1936) 17 BYLL
66 and C Roodt; National Law and
Treaties (1987-1988) 17 SAYIL 72.
[92.2]
According to Adv Maenetje SC
South Africa turns
towards the latter.  S 231 of the
Constitution provides as follows:
“
231(2)
An International Agreement bind the Republic only after it has been
approved by resolution in both
the National Assembly and the National
Council of Provinces, unless it is an agreement referred in
subsection (3).
(3)    An
International Agreement of a technical, administrative, or executive
nature, or an agreement which does
not require either rectification
or accession, entered into by the National Executive, bind the
Republic without approval by the
National Assembly and the National
Council of Provinces but must be tabled in Assembly and the Council
within a reasonable time.
(4)    Any
International Agreement becomes law in the Republic when it is
enacted into law by National Legislation;
by the same executing
provision of an agreement that has been approved by parliament is law
in the Republic unless it is inconsistent
with the Constitution or an
Act of Parliament.
(5)    The Republic
is bound by International Agreements which were binding on the
Republic when the Constitution
took effect.”
[92.3]
S 231 is the Constitutional
provisions especially
concerned with International negotiations and
incorporation of International Agreements.  This means that the
National Executive
is responsible for negotiating and entering into
International Agreements.  International Agreements which are
not of a technical
administrative or executory nature, and which are
referred to in s 231 (3) of the Constitution, become binding upon the
Republic
on the International plane once they have approved by
resolution in both houses of parliament.  In the ordinary
course, for
an International Agreement to have domestic effect, it
must be specifically enacted, as legislation.  He submitted that
this
was confirmed by the SCA in Progress Office Machines CC v South
African Revenue Services and Others
[2007] 4 ALL SA 1358
(SCA) where
the Court had the following to say:
“
South
Africa is a founding member of the World Trade Organisation Agreement
(“WTO”) and also a signatory to the General
Agreement on
Tariffs and Trade of 1947 (“GATT”).  The South
African Government acceded to GATT and its accession
was published in
the Government Gazette.  Parliament
approved
the Agreement in the Geneva General Agreement on Tariffs and Trade
Act 29 of 1948.  The learned Trade Organisation Agreement
was
the outcome of the so-called Uruguay Round of GATT negotiations and
was concluded in Marrakesh by the signing of some 27 agreements
and
instruments in April 1994 by the members, including South Africa.
The WTO Agreement on the Implementation of Article
VI of the General
Agreement on Tariffs and Trade 1994 (the Anti-Dumping Agreement)
forms part of the WTO Agreement.”
The effect of international treaties
on municipal law is regulated by ss 231, 232 and 233 of the
Constitution.  S 231(4) provides
that:
“
Any
international agreement becomes law in the Republic when it is
enacted into law by national legislation.”
The WTO Agreement was approved by
parliament on 6 April 1995 and is thus binding on the Republic in
international law, but it has
not been enacted into the municipal
law, nor has the Agreement on Implementation Article VI of the
General Agreement on
Tariffs and Trade been made part of municipal
law.  “
No rights are therefore derived from the
International Agreements themselves
.  However, the
passing of the International Trade Administration Act 71 of 2002
(“ITAA”) creating ITAC and the
promulgation of the
Anti-Dumping Regulation made under s 59 of ITAA are indicative of an
intention to give effect to the provisions
of the treaties binding on
the Republic in international law.
The text to be
interpreted, however, remains the South African legislation and its
construction must be in conformity with s 233
of the Constitution
.”
[93]  Statutes must be construed
consistently with South Africa’s international obligations.
This is, however,
subject to a caveat articulated by the
Constitutional Court in the following way:
“
The
Constitution is the supreme law of the Republic and, in entering into
International Agreements, South Africa must ensure that
its
obligations in terms of those agreements are not in breach of its
international obligations.  This Court cannot be precluded
by an
International Agreement to which South Africa may be a signatory from
declaring a statutory provision to be inconsistent
with the
Constitution.  Of course, it is correct that, in interpreting
legislation, an interpretation that allow South Africa
to comply with
its international obligations will be preferred to one that is not,
provided this does not strain the language of
a statutory provision.”
In
this regard counsel relied on the case of
Minister
of Justice and Constitutional Development v Prins (Clark & Others
Intervening)
;
National
Director Public Prosecutions v Rubin
;
National Director Public Prosecutions v
Acton
2018 (10) BCLR 1220
(CC) at par. 82
.
[94]  It is the Commission’s
counsel’s submission that to impute a standard of
“reasonableness” into
legislation which makes no mention
at all, namely s 46 of the ITA Act, would be a clear example of
“straining the language
of the statutory provision”.
Accordingly, Adv Maenetje SC submits that Bosch’ complaint is
therefore without
any merit. I agree.
[I]
REVIEW UNDER THE PRINCIPLE OF LEGALITY
[95]  It is Bosch’s case
that the decisions of both the Ministers were tainted by the lack of
legality of the underlying
process and decision and that for this
reason the decision should, on this basis alone, be set aside.
The reason for making
these allegations arises from Bosch’s
interpretations of the provisions of s 26(1)(c) of the ITA Act.
I have dealt
with this Bosch interpretation of s 26(1)(c) in
paragraphs [29] to [34]
supra
.  Counsel for Bosch
contended, in my view, for a wrong interpretation of the said
section. The finding that I made was that
Bosch’s
interpretation of the said section was flawed.  I must point out
that in the result the safeguarding regulations
did not apply in this
matter.  Accordingly, the Commission did not have to apply the
procedure and factual investigations
of factors included in the
safeguard regulations.
[96]  Counsel for the Commission
referred the Court to the judgment of
Minister of Defence and
Military Veterans v Motau and Others 2014(5) SA 69 CC paragraph [27]
,
in which the Court had the following to say:
“
[27]
Does the Minister’s decision amount to an administrative or
executive action?  Answering
this question is important.
If it amounts to administrative action, it is subject to the higher
level of scrutiny in terms
of PAJA.  If it is executive action,
it is subject to or the less exacting constraints imposed by the
principle of legality.”
In
President of the Republic of South
Africa and Others v South African Rugby Football Union and Others
2000 (1) SA 1
(CC) [SARFU]
the Court
stated in paragraph 148 that the exercise of executive powers of the
President of the Republic of South Africa “is
also constrained
by the principle of legality.”  The Constitutional has
held that the principle of legality requires
that:
[96.1]
“
the entity exercising powers must act within the powers
conferred upon it (otherwise it will be acting ultra vires) see
Fedsure Life Assurance v Greater Johannesburg Metropolitan
Council 1999(1) SA 374 CC at paras [56] and [58]
.  In
this judgment the Constitutional Court identified the principle of
legality and described it as an aspect of the rule
of law.  Here
the principle was held to imply that a body exercising public power
had to act within the powers lawfully conferred
on it”;
[96.2]
the holder of power must act in good faith and not misconstrue his or
her powers.
See in this regard paragraph 148 of SARFU Judgment
or unduly fetter its discretion;
[96.3]
the exercise of public power must not be arbitrary or irrational.
See
Pharmaceutical Manufacturers Ass of South Africa in Re Ex
Parte President of the Republic of South Africa 2000 [2] (SA) 674 CC
para
[85]
;
[96.4]
the other sides of public power must be procedurally fair.  In
this regard sees
Albutt v Centre for the Study of Violence and
Reconciliation and Others 2010(3) SA 293 paras [72] and [74]
.
[97]  It must be recalled that
this reference to the legality arises mainly from Bosch’s
flawed interpretation of the
provisions of s 26(1)(c) of the ITA
Act.  Counsel for the Commission has spotted three contentions
which Bosch seeks to put
across under the principle of legality.
All these three contentions are, in so far as it relates to Adv
Maenetje SC, without
merit.  According to him Bosch’s
attack on the decision of the Commission under this ground is aimed
at the factors
which the Commission considered in reaching its
conclusion.  It is unclear, from Bosch’s heads of
argument, as to the
factors that rendered the decision of the
Commission irrational.
[98]  In his heads of argument
counsel for Bosch states that in the absence of any supporting
evidence, the only conclusion
one can reach is that the Commission
manufactured the figure of 29.3%.  This irrational and erroneous
averment goes to the
heart of the Commission’s decision.
It was a factor the Commission purportedly considered which motivates
its ultimate
decision to support Defy’s application.  Adv.
Maenetje SC argued that in trying to prove that the decision of the
Commission
was irrational, Bosch limited this challenge to the
following sweeping statements:
“
It
is the Applicant’s case that ITAC’s decision overstepped
the boundaries of rationality in a number of respects.
ITAC
purportedly took into account various factors which were unsupported
by evidence and had no factual foundation.”
And
“
The
absence of any evidence leads to the irrefutable conclusion that
ITAC’s decision was irrational, arbitrary and contra
to the
principle of legality.”
[99]  In my view, it is incorrect
for Bosch to contend that the Commission had no evidence when it
reached its conclusions.
It is also incorrect for Bosch to
contend that the Commission had no evidence when it reached some of
its conclusions.  The
feet of clay in Bosch’s counsel’s
argument are that Bosch made sweeping statements.  Because of
the nature of
these statements the Commission was unable to deal with
them.
[100] Counsel for the Commission
submitted that in so far as the issue of price disadvantage is
concerned, Bosch’s contention
that it renders the statistics
irrational and thus unlawful, should be rejected for two reasons:
[100.1]
it has not been established by the evidence before this Court
why the
Commission, on the other hand, has denied it.  Accordingly
applying the principle set out in
Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd 1984(3) SA 623 A
, this dispute falls to
be resolved in favour of the Commission, and;
[100.2]
even if Bosch’s contention that the Commission’s

calculation is inaccurate was correct, the Commission stated that it
was of a peripheral importance to its overall assessment.
The
Commission made it clear that it did not mean that the factors that
SARS’s data was unreliable it meant that the Commission
could
not decide.  In making its decision the Commission had regard to
several factors which it regarded as useful factors.
Not all
the data placed before it for its decision was useful.  Some of
it may not be of any help to the Commission.
[101] Consequently, Adv Maenetje SC
submits that based on the applicable legal principles, the standard
required to render a decision
irrational has not been satisfied.
The judgment of
Democratic Alliance v President of the Republic of
South Africa and Others 2013(1) SA 248 CC
, to which the Court was
referred by Mr Maenetje, sets out a standard to be applied when the
legal validity of a decision is challenged
based on irrationality.
In paragraph [73] the Constitutional Court had to say:
“
Rationality
view is really concerned with the evaluation of a relationship
between means and ends:  the relationship, connection
or link
(as it is variously referred to) between the means employed to
achieve a particular purpose on the one hand and the purpose
or
itself.  The aim of the evaluation of the rationality is not to
determine whether some means will achieve the purpose better
than
others but only whether the means employed are rationally related to
the purpose for which the power is conferred.  Once
there is a
rational relationship, an executive decision of the kind with which
we are here concerned is constitutional.”
The
Constitutional Court held, in the same case, that ignoring facts
which are relevant to a decision, where the legality of that
decision
has been challenged will not render the decision irrational and
unlawful in every instance.  It had the following
to say:
“
I
must explain that there may rarely be circumstances in which the
facts ignored may be strictly relevant but ignoring these facts
would
not render the entire decision irrational in the sense that the means
might nevertheless bear a rational link to the end
sought to be
achieved.  A decision to ignore relevant material that does not
render the final decision irrational is of no
consequence to the
validity of the executive decision.  It also follows that if the
failure to take into account relevant
material is inconsistent with
the purpose for which the powers conferred, there can be no rational
relationship between the means
employed and the purpose.”
Referring
to the judgment of
MEC for Environmental
Affairs and Development Planning v Clairison CC
2013 (6) SA 235
(CC)
Adv Maenetje SC submitted that it is trite that the Commission was
empowered to give the factor of price advantage little weight.

In this regard the said judgment states as follows:
“
It
has always been the law, and we see no reason to think that PAJA has
altered the position that the weight or lack of it to be
attached to
the various considerations that go to making up a decision, is that
of the decision maker.  As it was stated by
Baxter:
“
The
court will merely require the decision maker to take the relevant
considerations into account; it will not prejudice the weight
that
must be accorded to each consideration, for to do so would constitute
usurpation of the decision maker’s discretion”.”
The
same view was expressed as follows in
Durban
Rand Board and Another v Edgemount Investments (Pty) Ltd
,
1946 AD 962
,
in relation to the discretion of the Rand Board to determine a
reasonable rent:
“
In
determining what a reasonable rent it is entitled to and ought to
take into consideration all matters which a reasonable man
would take
into consideration in order to arrive at a fair and just decision in
all the circumstances of the case … How
much weight a rent
board will attach to particular factors or how far it will allow any
particular factor to affect its eventual
determination of a
reasonable rent is a matter for it to decide in the exercise of a
discretion entrusted to it and, so long as
it acts bona fide, a court
of law cannot interfere.”
This
Court accepts accordingly the Commission’s contention that the
factor of price disadvantage was of peripheral importance
to the
recommendation by the Commission.  The Court agrees with counsel
for the Commission that no irrationality arises even
if this Court
were to agree with Bosch’s contentions on price advantage.
In the circumstances the Court finds that
Bosch’s ground of
review of the Commission’s recommendation is without merit.
[101.1]
Counsel for Defy states in his heads of argument that this is
emblematic of Bosch’s approach.
It does not approach the
Court to remedy any serious unlawful conduct by the Commission.
It simply seeks to set aside a decision
that has caused it commercial
harm, based on a “point scoring” review of a single set
of factors set out by the Commission
in a single paragraph of a much
more comprehensive document, which factors it insists must be viewed
in isolation from the rest
of the document, and from the contents of
the other findings documents prepared by the Commission, and treated
as the only relevant
facts before the Commission for purposes of
considering the reasonableness of the Commission’s decision.
[101.2]     Even
in respect of this extremely limited challenge, and as discussed in
detail below, Bosch has
only been able to establish that two of the
seven statements of fact made by the Commission are not supported by
the evidence set
out by the Commission (Bosch is not able to
demonstrate that the statements are in fact wrong, only that the
evidence relied on
by the Commission does not support the
statements). The Commission has explained in the answering affidavit
though that it did
not place significant reliance on these facts in
reaching its decision because it understood at the time that the
calculations
it had performed were of limited usefulness. This caveat
appears in the documents the Commission prepared at the time.
[101.3]     He
submitted that, in the circumstances, Bosch has not established any
basis to set aside the Commission’s
decision, which was
undoubtedly reasonable having regard to all the evidence before it
and all the factors the Commission considered
in making its decision.
I conclude that the finding of the Commission was not vitiated by any
disregard of the requirements of
the ITA Act or Regulations or Policy
directive. On this basis, both applications by Bosch fall to be
dismissed.  This Court
can find nothing in the Commission’s
recommendation which is in conflict with the prescribed procedure set
out in the ITA
Act or Regulations or Policy directive. Accordingly,
the recommendation of the Commission was not flawed.
[J]
THE CASE OF THE MINISTER OF FINANCE
[102] The Minister of Finance played a
crucial part in the process that led to the decisions challenged in
the first application.
The version of the Minister of Finance as
placed on record by the Director-General, Dondo Mohajane, is that
this application, as
pointed out earlier, arises because of the
amendment made to Part 1 of Schedule 1 (Schedule 1 of the CEA 91 of
1961), the CEA as
recorded in Government Gazette No. 41065 by the
Minister of Finance on 25 August 2017. The said amendment was
precipitated by Defy
lodging with the Commission an application for
an increase in the rate of customs duty on gas stoves for gas fuel
classifiable
under tariff subheading 7321.11 from 15%
ad valorem
to 30%
ad valorem
by way of creating an additional 8-digit
tariff subheading.
[103] The original application by Defy
was lodged with the Commission during August 2015.  This
application by Defy was made
in accordance with the prescribed
legislative provisions that govern such applications.  In terms
of the CEA the Minister
of Finance is the public functionary who is
empowered to authorise the adjustment of the tariff that Defy
sought.  This he
does by publishing an amended Schedule 1 in the
Government Gazette.
[104] This executive act which is
triggered by a request from the Minister of Trade and
Industry,
is one that the Minister of Finance discharges personally
or by way of a delegation of authorities to the Deputy Minister of
Finance.
It is important to emphasize that the Commission and the
Minister of Trade and Industry are central to the prescribed process
that
leads to the adjustment of a tariff in terms of s 48 of the
CEA.  In addition, the South African Revenue Services (SARS)
gives
a view on the impact of an adjustment on their statutory
functions and thereafter acts on the instructions of the Minister of
Finance
in implementing the adjustment by way of the publication of
an amended Schedule 1 and the collection of any resultant revenue.
[105] According to law, however, the
statutory powers of the Minister of Finance are triggered by a
request from the Minister of
Trade and Industry.  The Minister
of Finance only acts once he receives a request from the Minister of
Trade and Industry.
There is no legislative authority that
empowers the Commission to approach the Minister of Finance directly
for an adjustment to
Schedule 1 of the CEA, which is the instrument
through which the Minister of Finance makes a tariff adjustment. The
Minister of
Finance only acts at the instance of the Minister of
Trade and Industry.
[106] In context, with respect to the
Minister of Finance, the relief sought by Bosch in these proceedings
and the grounds of review
pleaded are elements that go to the heart
of the conditional legislative and policy driven competencies that he
is obligated to
take into consideration once he receives a request
from the Minister of Trade and Industry to amend Schedule 1 of the
CEA.
I deal with these matters below.
[107] Due to the fact that there are
three distinct decisions that are being impugned by Bosch’s
under the consolidated applications,
the input of the Minister of
Finance will be confined to issues raised by Bosch with respect to
the adjustment of Schedule 1 to
the CEA only.  This is apposite
given that though the Minister of Finance is aware of the processes
undertaken by the Commission
and the Minister of Trade and Industry,
he has no personal knowledge of the steps taken by these two
respondents in executing their
functions with regards to the
application made by Defy.  Any reference herein therefore to the
other decisions is for purposes
of creating context to the
rationality, lawfulness of instructions of SARS on Schedule 1 as
recorded in Government Gazette No.
41065. Firstly, the ultimate
decision to make the adjustment to the tariff was taken by the
Minister of Finance and not the Deputy
Minister of Finance as
evidenced by the signature of the Minister of Finance on Government
Gazette No. 41065.  The reasons
for the decision that are
recorded in the Minister of Finance as evidenced by the signature of
the Minister of Finance on Government
Gazette No. 41065 which amended
Schedule 1.
[108]
In essence the order sought by Bosch is,
inter alia
:
[108.1]      with
respect to the first review application, reviewing and or setting
aside the       decisions
made by the
Commission and the Minister of Finance in respect of Defy’s
application for an increase in the general rate of
customs duties on
gas stoves classified under Tariff Heading 7321.11 as set out in
Report 534 dated 23 February 2017;
[108.2]      with
respect to the second review application, reviewing and setting aside
of the Minister of Trade
and Industry’s decision in respect of
Defy’s tariff increase, and;
[108.3]
that Defy’s tariff increase application be dismissed.
[109]
With respect to the Minister of Finance Bosch complains, on
the following

grounds of review in its founding and thereafter in its confidential

supplementary affidavit that;
[109.1] the basis for the decision was
factually and substantially incorrect;
[109.2]      the
evidence and/or information before the Minister of Finance was not
rigorously evaluated;
[109.3]
irrelevant considerations were considered and/or relevant
considerations were not considered, and
the decision is not
rationally connected to the reasons given by the administrator;
[109.4] the decision was taken
arbitrarily or capriciously;
[109.5]      the
decision itself was not rationally connected to the purpose for which
it was taken, the purpose
of the empowering provisions, the
information before the Minister of Finance, or the reasons given for
it by the Minister of Finance.;
[109.6]      the
exercise of the power or the performance of the function authorised
by the empowering provision
in pursuance of which a decision was
purportedly taken, was so unreasonable that no reasonable person
could have so exercised the
power or performed the function, and;
[109.7] the decision was otherwise
unconstitutional or unlawful.
In the alternative, Bosch seeks to
review the impugned decision under the principle of legality in that
the decision was irrational
or unlawful or because the Minister of
Finance failed to apply his mind to the decision.
[110] The Minister of Finance opposes
this application vigorously on the basis that his decision was
lawful, reasonable, and rational
in the circumstances. He contends
that Bosch is accordingly not entitled to the relief that it seeks.
[111]
In summary, the Minister of Finance submits that the decision was
reasonable and
rational and taken
within the legislative and policy framework of:
[111.1]      the
equivocal request by the Minister of Trade and Industry, which was
supported,
inter alia
, by the contents of Report 534 and the
Commission’s letter to the Minister of Trade and Industry;
[111.2]      the
objective fact that any matter which relates to the imposition of
tariffs, levies or duties
which falls within the provisions of s 77
of the Constitution;
[111.3]      the
fact that tariffs, being a duty imposed by the fiscus, are an
instrument of industrial policy;
[111.4] the use of tariffs must be
aligned to the economic objectives of the Government;
[111.5]      the
fact that though an application for a tariff adjustment is lodged
with, and initially processed
by, the Commission, the Minister of
Finance is the functionary with the statutory authority to amend the
relevant Schedule to the
CEA;
[111.6]      the
statutory requirement that the imposition of, or adjustment to,
tariffs is administered by
the Commissioner of the South African
Revenue Services (SARS), as provided for in s 2 of the CEA;
[111.7]      the
provisions of the Public Finance Management Act 1 of 1999 (“PFMA”)
about the responsibilities
of the Minister of Finance and those of
National Treasury to,
inter alia
, promote Government’s
fiscal policy or framework and coordination of macro-economic policy
and coordinate inter-governmental
financial and fiscal relations;
[111.8]      the
analysis and consequent comments of functionaries within National
Treasury who had the competencies
and institutional expertise to make
the necessary evaluations, including the Economic Policy Unit of
National Treasury, the Deputy
Director-General in the Tax and
Financial Sector Policy Unit within which the Legal Tax Design and
Chief Directorate is situated,
and his overreaching input as the
Director-General and Accounting Officer at National Treasury;  (see
Annexure NN2 to the
Second Respondent’s Reasons for Decisions
at p 49 File 8 of 25).
[111.9]      the
comprehensive memorandum from SARS which considered factors relevant
to the mandate of SARS
when assessing the impact of an adjustment in
tariff; (In this regard see annexure NN1 to the second Respondent
reasons for Decision
page 16 File 8 of 25).
[111.10]    the absence of
financial implications or any breaches of the law with existing trade
covenants;
[111.11]    the strategy to
limit the increase of customs duty to gas stoves having one or more
plates with gas burners,
including limitations on gross capacity;
[111.12]    the scope given
to review the decision after a period of three years to ensure that
it is achieving the objective
for which it was made; and
[111.13]    the inherent
discretion that the Minister of Finance must consider all factors
that promote the public interest.
[112] Considering the above synopsis
of applicable legislative prescripts, the level of expertise that was
brought into play when
the application by Defy was evaluated and the
factors that were considered, demonstrate that due consideration was
given to whether
the tariff adjustment sought was merited. The above
considerations gave due weighting to competing interests of economic
policies,
including those of industry players within the SACU region
and the consumers.  Many of the implications arise when an
application
for a tariff increase made are of a technical expert
nature.  It is for these reasons that National Treasury has,
within its
establishment, professional team functionaries who apply
their respective minds to the task of assessing and evaluating all
the
relevant facts.  In the result, it is the Minister of
Finance’s case that he was satisfied that the recommendations
made by those who advised him were sound and that the tariff
adjustment sought was warranted.
[113] The Minister of Finance had
regard to the assessment and recommendations of those functionaries
when he approved the amendment
to Schedule 1 of the CEA.
[K]
THE SOURCES OF POWER OF THE MINISTER OF FINANCE IN RELATION TO THE
INCREASE IN
TARIFFS
[114] The Minister of Finance derives
his powers to increase tariffs from several statutes, namely, the
Constitution; the CEA; the
ITA Act; the South African Revenue Service
Act 34 of 1997(SARS Act) and the PFMA. In fact, it is not in dispute
that the abovementioned
legislations are the sources of the Minister
of Finance’s powers in respect of the tariffs.  I
therefore do not deem
it necessary to point out how each statute sets
out such powers.
[115] Originally, Bosch’s case
against the Minister of Finance, as pointed in its founding papers,
was based on the prejudice
and irreparable harm it contended it had
suffered because of the decisions of the Commission and the Minister
of Finance. In broadening
its challenge with respect to the Minister
of Finance’s decision, Bosch’s challenge to the Minister
of Finance was
that the decision of the Minister of Finance was
simply based on the summary provided to him of the contents of Report
No. 534
and the Commission’s letter to him.
[116] Bosch states that it would seem
from the Minister of Finance’s reasons for the decision that
his decision to exercise
his powers in terms of s 48(1)(b) of the CEA
was based on:
[116.1]     a
memorandum received from SARS dated 6 June 2017, which sought to give
effect to the Commissioner’s
recommendation as approved by the
Minister of Trade and Industry; and
[116.2] a submission by the Economic
Policy Unit of National Treasury.
[117] Bosch’s misgivings about
SARS’s report that it simply summarised Report No. 534 and the
Commission’s letter
to the Minister of Trade and Industry and
contains a letter from the Minister of Trade and Industry in which it
is stated that
a copy of Report No. 534 had been provided, the latter
Minister that he had approved the Report and the Commission’s
effect
to the recommendation and that she requested the Minister of
Finance to give effect to the recommendation is without merit.
[118] Bosch’s gripe is that
neither SARS nor the letter from the Minister of Trade and Industry
contains any substantive interrogation
or analysis of the facts
contained in Report No. 534 and the Commission’s letter to the
Minister of Trade and Industry.
According to Bosch the Minister
simply accepted Report No. 534 and the Commission’s letter at
face value. Bosch complained
furthermore that the Minister of Finance
failed to apply his mind to the decision taken by him.
[119] In the heads of argument,
Bosch’s counsel’s main attack is based on what is
referred to as the fundamentally flawed
recommendation of the
Commission, which recommendation taints and invalidates all three
decisions taken.  Bosch is of the
view,
inter alia
, that
the Minister of Finance’s decision stands to be set aside as
“
the Minister accepted that summary at face value and did
not conduct any separate analysis or interrogation of the facts
alleged
in the summary.”
For that reason, so contends
Bosch, it follows that the decision of the Minister of Finance was
unlawful as the Commission’s
recommendation was unlawful.
[120] Again in his heads of argument,
Bosch’s counsel introduces the interpretation of s 26(1(c) of
the ITA Act. I have already
dealt in paragraphs [39-44]
supra
with the issue of the interpretation of s 26(1)(c) of the ITA Act and
I have already made a ruling on it.  Relying on its
own
interpretation of s 26(1)(c) of the ITA Act, Bosch concluded by
arguing that, because the Minister of Finance’s reliance
on the
underlying decision of the Commission, coupled with the Commission’s
erroneous reliance on s 26(1)(c) of the ITA Act
and the Minister of
Finance’s failure to have regard to the provisions of Article X
of GATT of 1947, read with Geneva General
Agreement on Tariffs and
Trade Act, 29 of 1948 (“the GATT Act”), that decision was
arbitrary, irrational or suffering
from procedural irregularity,
alternatively, inconsistent with the principle of legality.
[121] The Minister of Finance disputes
all these allegations levelled against him by Bosch.  According
to the Minister of Finance,
the means employed by him to reach the
conclusion that led to the adjustment to the tariffs went beyond the
facts presented by
the Commission.  It is not correct, according
to him, that the Minister of Finance relied only on the Report No.
534 and a
letter by the Commission to the Minister of Trade and
Industry.  In her heads of argument, Adv G Lea Gcabashe SC,
counsel
for the Minister of Finance, argued that Bosch conveniently
glossed over this element of the interrogation of the facts by the
Minister of Finance.  She broadened her argument and stated that
Bosch misconstrues the contents of,
inter alia
, paragraph [49]
of the Minister of Finance’s answering affidavit.  Furthermore,
she argued that Bosch misinterprets
the status of the International
Agreements.
[122] The starting point is s 48(1)(b)
of the CEA.  It provides that:
“
The
Minister may from time to time in the Gazette amend the general notes
to Schedule 1 and Part 1 of the said Schedule or substitutes
the said
Part 1 and amend Part 2 of the said Schedule in so far as it relates
to imported goods –
(a)……….
(b)    in order to
give effect to any request by the Minister of Trade and Industry and
for economic co-ordination.”
The CEA is central to the decision
taken by the Minister of Finance to give effect to the request of the
Minister of Trade and Industry
by acceding to the adjustment to the
customs duty as recommended by the Commission. This decision was
competent within legal framework
of this indictment which provides
for the levying of customs and excise duties, fuel levy, Road
Accident Fund levy, air passengers
tax and environmental levy, the
prohibition and control of the importation, export and manufacture or
use of certain goods and
for matters incidental hereto. The CEA deals
with the principles by which the Minister of Finance exercises his
authority. The
CEA gives the Minister of Finance specific powers as
set out in the preceding sentence.
[123] Different functionaries are
involved in the process that ultimately leads to the amendment of
Schedule 1 of the CEA.
The Commission, the Minister of Trade
and Industry, SARS, and the Minister of Finance, who is the ultimate
functionary in the process,
each has an independent function to
discharge in the decision-making process that leads to the making of
the amendment. In this
section of the judgment, I will deal only with
the role played by the Minister of Finance. The statutory functions
of the Minister
of Finance and National Treasury compliment and
conclude the extensive considerations of the application for tariff
increase made
by an applicant and the subsequent request by the
Minister of Trade and Industry. There are several variables that the
Minister
of Finance considers prior to a final decision being taken
to amend Schedule 1.
[124] Once he receives a request from
the Minister of Trade and Industry made in terms of s 48(1)(b) of the
CEA, the Minister of
Finance does not act alone.  After
receiving a request from the Minister of Trade and Industry, an
extensive process of internal
evaluation is undertaken by a team of
functionaries within SARS and the National Treasury. Relying on their
statutory obligations
and technical expertise, these functionaries
assist the Minister of Finance in the assessment and valuation of the
request to increase
or amend Schedule 1.
[125] The Minister of Finance follows
the following procedure.  On receipt of the Minister of Trade
and Industry’s request
in terms of s 48(1)(b) of the CEA, the
office of the Minister of Finance refers the request to the office of
the Commissioner of
SARS.  In terms of s 4(1)(b) of the SARS
Act, SARS advises the Minister of Finance on all matters concerning
revenue. Tariffs,
being a duty imposed by the fiscus, are regulated
in terms of a money bill. For this reason alone, SARS, as the revenue
collecting
organ of the State, must participate in an assessment and
evaluation of a request concerning tariffs.
[126] At SARS, the Strategy, Legal
Policy Unit is responsible for the implementation of adjustments to
customs duties. This Unit
reviews the request of the Minister of
Trade and Industry, including due consideration to the
recommendations of the Commission.
It keeps a historical record of
previous justifications of tariff subheadings for various products
and that of trade statistics
based on import classified under
specific tariff subheadings.  Essentially, the role this Unit is
to ascertain whether there
are any financial and administrative
implications that will arise from the proposed adjustment, because
the status obligation to
appreciate, accommodate and administer the
impact of a tariff increase on revenue collection streams is the
responsibility of this
Unit.
[127] Four other Units within SARS
considered the request for an increase. The other Units are
Functional Speciality; the Manager,
Tariff Amendment; the Senior
Specialist Customs Policy; the Specialist Custom Legislative Policy
and the Executive Customs Legal
Policy.  Once SARS has
discharged its statutory duties by reviewing the request for the
Minister of Trade and Industry, it
prepares its final recommendations
and submit them to the Minister of Finance.
[128] The information placed by SARS
before the Minister of Finance is finally reviewed by the Group
Executive Legislative Research
and Development and the Chief Officer
Legal Council.  Their recommendations are a crucial fact that
the Minister of Finance
considers.
[L]
HOW
WAS DEFY’S APPLICATION PROCESSED BY THE MINISTER OF FINANCE
?
[129] On 6 June 2017 the Minister of
Finance received from SARS a memorandum with annexures. Contained in
the memorandum and annexures
from SARS, was a recommendation from
SARS which sought to give effect to the recommendation made by the
Commission and approved
by the Minister of Trade and Industry.
The purpose of the recommendation was to increase the general rate of
customs duty
on certain gas fuel, classified under tariff subheading
7321.11 from 15% to 30% by way of creating an additional 8-digit
tariff
subheading 7321.11.10.
[130] On receipt of this submission
from SARS, the Minister of Finance referred it to the Economic Policy
Unit of National Treasury
for its comments.  Within that Unit,
the Macro-Economic Policy Chief Directorate interrogates the request
with its annexures
and SARS’s submission to the Minister of
Finance.  It is important to point out that the economic
analysis undertaken
by the Economic Policy Unit of National Treasury
reviews the submissions within the context of the prevailing economic
strategies
and the challenges facing the government.  It is
important, furthermore, to highlight that when this economic analysis
is
undertaken, the specific features and variables relating to the
subject matter product are considered.
[131] In conducting its analysis, the
Unit has access to the following documents before it:
[131.1]     the
background to the matter giving rise to the Commission’s
recommendation recommending the increase
to the general rate of
custom duties;
[131.2]  the reasons behind the
application by Defy for the proposed increase;
[131.3]
the objections received by other manufacturers to Defy’s

application and the comments received;
[131.4]
the specific factors considered by the Commission in considering
the
application by Defy;
[131.5]
the exclusion of certain gas stoves to prevent any negative
impact on
lower income earners and the poor; and
[131.6]  the financial
implications of the increase of the general rate customs duty.
[132]
In summary, the unit analyses the following matters:
[132.1]     an
assessment of the impact of trade to support on the product within
the SADC region;
[132.2]  the implications for
industrial policy priorities;
[132.3]  market players and
issues of competition within the specific product category;
[132.4]
the impact of tariff increases on the downstream and the upstream

industries; and
[132.5]  whether various avenues
to new entrants would be created.
[133] The third step that was followed
was that the Economic Policy Unit of National Treasury returned the
submissions to the Deputy
Director-General of the Economic Policy
Unit of National Treasury, who in his turn considered the matters
that had been analysed.
Thereafter, he recommended the tariff
increase. This recommendation by the Deputy Director-General of the
Economic Policy Unit
was then forwarded to the Tax and Financial
Section Policy Unit which,
inter alia
, advises on the tax
policy implications that may arise from the tariff increase. The
analysis done by this Unit considered institutional
policy
considerations that spanned all three levels of Government.
[134] The Tax and Financial Sector
Policy Unit considered whether the tariff increase would impact on
the current or proposed tax
policy.  This Unit also interrogated
the submission from SARS with respect to the financial impact of the
increase and whether
there was a consistent application of the
commodity codes used by SARS.  Once this analysis was done, the
Deputy Director-General:
Tax and Financial Sector Policy Unit made
its recommendation.  The recommendation of the Deputy Director-
General:  Tax
and Financial Sector Policy Unit, included a
comment with respect to the need for more economic analysis. This
comment was simply
intended to emphasize National Treasury’s
sensitivity to the impact of tariff adjustments on consumers and
employment opportunities.
The prevailing thinking at the time
was that the correct balance must be struck among a host of competing
variables.  It is
the Minister’s case that getting the
right balance was thus a constant preference when tariff adjustment
applications are
under consideration.
[135] Bosch latches to the following
statement in the answering affidavit of the Minister of Finance
that
:  “it is patently clear … that ITAC Act is
integral to the entire process that leads to the amendment of
Schedule
1 of the Customs and Excise Act”
and concludes,
wrongly, that it is evident that both the Minister of Trade and
Industry and the Minister of Finance relied extensively,
if not
exclusively, on the ITAC Report No. 534 when making their decision to
recommend the introduction of the new 8-digit tariff
code and
increasing the tariff under such code.
[136] The internal processes set out
above are designed to enable the Minister of Finance to comply with
the statutory duty imposed
upon him; that before he amends the
tariffs or performs his statutory duties, he must satisfy himself
that amending the tariff
would not have a detrimental effect on the
country.
[137] In so acceding to the request of
the Minister of Trade and Industry, which in turn is informed by the
Commissions’ decision,
the Minister of Finance did not merely
rubber stamp the decision of the Commission, as alleged by Bosch, nor
did he slavishly accede
to the request of the Minister of Trade and
Industry.  In the interest of interrogating the soundness of the
request made
by the Minister of Trade and Industry, the Minister of
Finance, trusts specialised services of officials in the afore
mentioned
Units of the National Treasury and conducted his own
separate and unique assessment to perform his functions under s
48(1)(b) of
the CEA.  About the approach to the way this Court
ought to apply any enquiry into the interrogation process of the
Minister
of Finance, this Court was informed that it was consistent
with the view taken in
Bell de Porto
[2002] ZACC 2
;
2002 (3) SA 265
(CC) at paras
[45]
where the Court stated that:
“
[t]he
fact that there may be more than one rational way of dealing with a
particular problem does not make the choice of one rather
than the
others an irrational decision.  This making of such choices is
in the domain of the executive.  Courts cannot
interfere with
rational decisions of the executive that have been made lawfully, on
the grounds that they consider that a different
decision would have
been preferable.”
In
the matter of
Pioneer Foods v Minister of Finance and Others
2019(1) SA 273 (CC) at paras [28 – 30]
the Court found that
the Minister of Finance, in exercising his powers under s 48(1)(b),
is engaged in policy exercise in which
he has regard to several
issues including fiscal and economic matters.
In
South Africa Sugar Association v Minister of Trade and Industry
and Others 2017 [4] ALLSA 555 in paragraph [33],
the judgment to
which I was again referred by Counsel for the Minister of Finance,
the Court found that the Minister, acting in
terms of s 48(1)(b),
acts as a legislature and that as a legislature, he acts in a
fiduciary capacity and must so carry out the
duties imposed on him in
the interest of the Republic.  The Court found further that a
fiduciary is obliged to carry out all
such investigations as are
rationally required to enable him to discharge a legislative tasks
conferred on him. The Minister of
Finance is obligated to observe the
rule of law as and when he executes his powers in terms of the s
48(1)(a) of the CEA
[138] In the heads of argument,
counsel for the Minister of Finance submitted that the power enjoyed
by the Minister of Finance
did not entitle him to simply implement a
request by the Minister of Trade and Industry.  The Minister of
Finance is conferred
with the power to exercise his discretion
whether to effect the amendment. He must observe the absolute
supremacy of the law and
not be influenced by arbitrary power. About
this, the Constitutional Court has found in the case of
International
Trade Administration Commission v Scaw SA (Pty) Ltd 2012(4) SA 618
(CC)
that:
“
[98]
The statutory discretion the Minister commands is indeed wide.
Barring the predictable requirement that he must wield the power

subject to the Constitution and the law, he or she may accept or
reject the recommendation, or remit it to ITAC.  Nothing
obliges
the minister to follow slavishly the reasoning and findings of ITAC.
It is open to them minister, in making a decision,
to weigh in
polycentric considerations such as diplomatic relations, the
country’s balance of payments, the regional or global
trading
conditions, goods needed to foster economic growth and so forth.
Thus, the recommendation of ITAC may be important
but it is not the
sole predictor of what the minister is likely to decide.”
The
Court continued further as follows at paragraph [100]:
“
[100]
ITAC accordingly urged us to decide that the order of the high court
breaches the doctrine
of separation of powers.  It particular,
it sought us to find that a court may not interfere with the
discretionary and polycentric
discretion conferred on ITAC and on
both Ministers and the BTT Act.  They argued that courts are not
well suited to judge
international trade policy and related
polycentric decisions, properly suited to specialist bodies such as
ITAC and the executive
government.
[101]
That submission is well made.  When a court is invited to
intrude into the
terrain of the executive, especially when the
executive decision-making process is still uncompleted, it must do so
only in the
clearest of cases and only when irreparable harm is
likely to ensue if interdictory relief is not granted. This is
particularly
true when the decision entails multiple considerations
of national policy choices and specialist knowledge, in regard to
which
courts are ill-suited to judge.”
[139] The aforegoing authorities
relate to the irrefutable conclusion that the Minister of Finance’s
participation in the
decision-making process was not merely to
implement what has already been formulated and approved by the
Minister of Trade and
Industry.  On the contrary, the Minister
of Finance is vested with wide discretionary powers to legislate
amendments to custom
tariffs, which exercise must be consonant with
the Constitution and in particular the principle of legality.
Nothing, therefore,
precludes the Minister of Finance from conducting
his own investigations and analysis. He is not obliged to accede to
the request
of the Minister of Trade and Industry without the
originality of his own decision.
[140] The Court was furthermore
referred to the judgment of
Tshwane City v Afriforum and Another
2016 (6) SA 279
CC
where a similar issue was the subject of a
cautionary note.  In the said judgment the Court stated the
following:
“
[68] Sight should never be
lost of the fact that courts are not meant or empowered to shoulder
all the governance responsibilities
of the South African state.
They are co-equal partners with two other arms of state in the
discharge of that constitutional
mandate.
Orders that
have the effect of altogether derailing policy-laden and polycentric
decisions of the other arms of the State should
not be easily made
.
Comity among branches of the government requires extra vigilance, but
obviously not undue self-censorship, against constitutionally

forbidden encroachments into the operational enclosure of other
arms.”
[141] Accordingly, the ultimate
decision of the Minister of Finance to sign Government Gazette No.
41065 was in full compliance
with this legislative framework and
complied with the principle of legality.
[142] I now turn to individual grounds
of review raised by Bosch against the decision of the Minister of
Finance.  I will proceed
to deal with them singly:
[142.1]
The
basis for the Minister of Finance’s decision was factually and
substantially incorrect
According to the Minister of Finance’s
counsel’s heads of argument, Bosch complaint that the basis for
the Minister
of Finance’s decision was factually and
substantially incorrect assumed that the Minister of Finance
mechanically acceded
to the request of the Minister of Trade and
Industry.  This basis seems to lack merit.  This is so
because the Minister
of Finance has demonstrated in his evidence the
procedure, he followed in making sure that the matter was thoroughly
investigated.
In his replying affidavit Bosch had not discredited the
procedure set out by the Minister of Finance. In the circumstances,
Bosch
cannot complain, once again in the replying affidavit that this
basis was factually and substantially incorrect.
[142.2]
The
evidence and/or information before the Minister of Finance was not
rigorously evaluated
There is no definition of what “
proper
evaluation of evidence
” is. The fact that one person
evaluates the evidence or information in one way while another person
evaluates it in another
way is not indicative of improper evaluation
of the evidence. It is a manifestation of the difference in opinion.
It does not necessarily
follow that the evaluation of the same
information by different people or otherwise must always produce the
same results.
[142.3]
The irrelevant
considerations were considered
Bosch still has not complained about
the information the Minister of Finance testified about. In his
testimony the Minister of Finance
stated that in conducting its
analysis, the Economic Policy Unit of the National Treasury had
access to certain information.
He then went out to set out the
information.  Bosch has not contradicted this evidence. Bosch
has not set out the information
that this Unit did not have to enable
it to properly analyse the application.
[142.4]
The
irrelevant considerations were considered, or relevant considerations
were not considered, and the decision is not rationally
connected to
the reasons given
Again, this Court finds no merit in
this ground of complaint. Bosch still has not explained the
irrelevant considerations considered
in the whole procedure set out
in the evidence of the Minister of Finance nor did Bosch indicate the
relevant considerations left
out of contention.
According to the Minister of Finance’s
counsel, the relevance of this ground is found in the contention that
the role of the
Minister of Finance is mechanically designed only to
give effect to the requests submitted by the Minister of Trade and
Industry.
The additional financial and policy perspective
assessed by SARS and by the officials in National Treasury supported
the fact that
the Minister of Trade and Industry placed before the
Minister of Finance.  It was submitted on behalf of the Minister
of Finance
that where the Minister of Finance gives effect to the
request of the Minister of Trade and Industry, without applying his
mind
to the issue, he acts outside the principle of legality. The
Court was, in this regard, referred to the judgment of
Democratic
Alliance v President of South Africa and Others 2013(1) SA 248 CC
where the Constitutional Court stated, in relation to rationality,
that:
“
[36]
The conclusion that the process must also be rational in that it must

be rationally related to the achievement of the purpose for which the
power is conferred, is inescapable and an inevitable consequence
of
the understanding that rationality review is an evaluation of the
relationship between means and ends. The means for achieving
the
purpose for which the power was conferred must include everything
that is done to achieve the purpose.  Not only the decision

employed to achieve the purpose, but also everything done in the
process of taking that decision, constitute means towards the

attainment of the purpose for which the power is conferred.
[39] That is not to say that
ignoring relevant factors can have nothing to do with rationality.
If in the circumstances of
a case, there is a failure to take into
account relevant material that failure would constitute part of the
means to achieve the
purpose for which the power was conferred.
And if that failure had an impact on the rationality of the entire
process, then
the final decision may be rendered irrational and
invalid by the irrationality of the process as a whole.  There
is therefore
a three-stage enquiry to be made when a court is faced
with an executive decision where certain factors were ignored.
The
first is whether the factors ignored are relevant; the second
requires us to consider whether the failure to consider the material

concerned (the means) is rationally related to the purpose for which
the power was conferred; and the third, which arises only
if the
answer to the second stage of the enquiry is negative, is whether
ignoring relevant facts is of a kind that colours the
entire process
with irrationality and thus renders the final decision irrational.”
[142.5]
The decision was taken arbitrarily or
capriciously
It is a settled principle of our law
that a tribunal or a minister must not act unreasonably or
capriciously or in bad faith.
There are two main applications
of this rule of natural justice:
[142.5.1]   the adjudicator,
such as the Minister of Finance, must be impartial. I have pointed
out somewhere supra that
the Minister of Finance must observe the
absolute supremacy of the law and avoid being influenced by arbitrary
powers.
[142.5.2] everyone is entitled to
present his case.
The statement that the Minister of
Finance’s decision was taken arbitrarily or capriciously lacks
merit. In my view, Bosch’s
case was treated fairly and
impartially. The Minister of Finance took unbiased consideration to
the Defy’s application.
It is unknown on what grounds the
allegation is made that the decision was arbitrarily or capriciously
made.
[142.6]
The
decision itself was not rationally connected to the purpose for which
it was taken, the purpose of the overpowering provisions,
the
information before the Minister of Finance or the reasons given it by
the Minister of Finance
This ground is flawed.  The
Minister of Finance acted in terms of s 48(1)(b) of the CEA.  He
was satisfied that the purpose
of adjust the general rate of customs
duties on specified gas stoves was justifiable in the circumstances.
The purpose of
adjusting the general rate of customs duties is
consistent with the powers vested on the Minister of Finance by the
provisions
of s 48(1)(b) of the CEA. The means the Minister of
Finance selected to scrutinise the information presented to him were
rationally
related to the objective sought to be achieved by the
adjustment.  See in this regard the
Minister of Defence and
Military Veterans v Mudau and Others
2014 (5) SA 69
CC
.  It
is the information placed before him by the Minister of Trade and
Industry and the National Treasury that persuaded him
to accede to
the request of the Minister of Trade and Industry. The request to
adjust the customs duties was accompanied by a full
explanation.
[142.7]
The
exercise of the power or the performance of the function authorised
by empowering provision, in pursuance to which the decision
was
purportedly taken, was so unreasonable that no reasonable person
could have so exercised the power or performed the function
This charge, in my
view, lacks merit.  It is not supported by any evidence.
[142.8]
The decision was
otherwise unconstitutional or unlawful
An act carried out in terms of the
empowering legislation can never be unlawful.  It will only be
unlawful if such powers are
exceeded.
[143] Finally, the Court was referred,
on this issue of justifiability, to two judgments, one of which
predates the current Constitution.
The first of these two
judgments is
Kotze v Minister of Health
1996 (3) BCLR 417
(T)
,
in which the Court found that a justifiable decision is a correct or
just decision.  By this is meant that the decision maker
must,
inter alia
, interpret his or her authoritative power precisely
in that the correct assessment of the surrounding facts and
circumstances must
be made, relevant factors must be considered, and
irrelevant factors must be disregarded.  The Court had the
following to
say:
“
The
word ‘justifiable’ as used in s 24(d) of the Constitution
will receive proper judicial consideration in the years
to come.
Its meaning will become clearer as it becomes more
definite/precise/better defined by such careful deliberation.

According to the Shorter English Dictionary, ‘justifiable’
means ‘capable of being justified or shown to be just’.

The Afrikaans text uses the word “regverdigbaar”.
These words denote something that can be defended. As I understand

it, the section requires that the reasons advanced for the
administrative action must show that the action is adequately just or

right.  In other words, it must appear from the reasons that the
action is based on accurate findings of fact and a correct

application of the law.  In this regard the difference between a
review and an appeal may have been largely eroded.
If a review
under this section is to succeed, a court of review must be satisfied
that the reasons advanced for the action under
review are not
supported by the facts or the law or both.”
The
second one is
Trinity Broadcasting,
Ciskei v Independent Communications Authority of South Africa
[2003]
4 ALLSA 589
(SCA) at p 596
where the
Court held that:
“
In
the application of a rationality test relevant court will ask: is
there a rational objective basis justifying the connection
made by
the administrative decision maker between the material made available
and the conclusion arrived at?”
[144] In conclusion, I agree with the
conclusions arrived at by counsel for the Minister of Finance that
the process that led to
the decision taken to approve and give effect
to the request of the Minister of Trade and Industry was extensively
described in
the Minister of Finance’s answering affidavit;
that extensive processes are designed to enable the Minister of
Finance to
comply with the statutory duty imposed upon him: that
before he amended the tariffs or performed his statutory duty he
satisfied
himself that amending the tariff would not have detrimental
consequences for the country.
[145] Furthermore, I agree with
counsel for the Minister of Finance that original charge that the
Minister of Finance simply based
his decision on the summary provided
in the Commission’s Report No. 534 lacks merit.
Similarly, the subsequent charge
that the Minister of Finance
accepted the summary slavishly and did not conduct any separate
analysis or interrogation of the facts
alleged in summary is flawed.
In the premises it is my considered view that the Minister of
Finance’s decision was
rational, objectively sound in law and
justifiable on the facts and consistent with the purpose for which
the legislation was enacted.
[M]
THE
CASE OF THE MINISTER OF TRADE AND INDUSTRY
[146] In the review proceedings in
Case Number 12160/2018 it was contend by Bosch that the decision of
the Minister of Trade and
Industry to approve, recommend and request
that the Minister of Finance approve the recommendation of the
Commission is unlawful.
The Minister of Trade and Industry’s
decision under review is reflected in a letter from him to the
Minister of Finance dated
the 28 February 2017.  It states,
inter alia,
as follows:
“
I have
approved the Commission’s report and recommendation and hereby
request that you in terms of section 48 of the Customs
and Excise
Act, 1964, amend Schedule 1 in order to give effect to the
recommendation.”
[147] The said decision was taken by
the Minister of Trade and Industry in terms of s 5 read with s 72 of
the ITAC Act. S 5 of the
ITAC Act provides that: “
The
Minister may, by notice in the Government Gazette and in accordance
with procedures and requirement established by the Constitution
or by
any other relevant law issue Trade Policy Statements or Directives.”
[148] Bosch is correct when it states
that the decision of the Minister of Trade and Industry to approve
and request the Minister
of Finance to approve the recommendation of
the Commission was taken in terms of s 5 of the ITAC Act. The said
section refers to
the Minister of Trade and Industry. Section 48 of
the CEA provides that:
“
48.1 The
Minister may from time to time by notice in a Gazette and the General
Notes to Schedule No. 1 and Part 1 of the said Schedule
or substitute
the said Part 1 and amend Part 2 of the said schedule in so far as it
laid to important goods-
(b) to give
effect to any amendment by the Minister of Trade and Industry of
Economic coordination.”
The
minister referred to herein is the Minister of Finance.
[149] It was contended initially by
Bosch that the decision of the Minister of Trade and Industry
constitutes administrative action
and falls to be reviewed and set
aside on various grounds set out in s 6 of PAJA.  The grounds of
challenge of the decision
of the Minister of Trade and Industry has
since shifted to legality.
[150] Mr Lionel October, the Director
General of the Department of Trade and Industry, deposed to the
answering affidavit on behalf
of the Minister of his Department. In
his answering affidavit he responded to the affidavits of Karsten
Traeger and the supplementary
affidavit of Alper Sangul.
[151] In the preceding paragraphs or
elsewhere in this judgment I set out the route that the
implementation of tariffs in particular
follows until the Commission
places its recommendation and a letter before the Minister of Trade
and Industry.  If the Minister
of Trade and Industry accepts the
Commission’s recommendation, he may request the Minister of
Finance to amend the CEA accordingly.
The role of the Minister
of Finance has been explained elsewhere in this judgment.
[152] The Minister of Trade and
Industry can only approve the Commission’s recommendation after
he has satisfied himself that
the Commission has performed its duty
in terms of the ITA Act to thoroughly investigate and evaluate an
application.  He is
by law not required to have access to any
document other than a report and a letter from the Commission to
satisfy himself that
the Commission has executed its duties properly
nor does he have to interview the Commission to establish that it has
carried out
its duties properly.  Because the Commission places
a report before him, this Court can only assume that it is from the
said
report that the Minister is able to satisfy himself that the
Commission has done its duties properly.
[153] In paragraph [98] of the
judgment
of ITAC v Scaw South Africa (Pty) Ltd
2012 (4) SA 618
(CC)
the Court described the powers of the Minister of Trade and
Industry as being wide and permissibly subject to polycentric
considerations.
It stated as follows at paragraph 32:
“
19.
Furthermore, the ITA Act clothes the Minister with far-reaching
authority in relation to trade policy.  It includes
the power to
issue, subject to the Constitution and the law, trade policy
statements or directives and the power to regulate imports
and
exports.  ITAC exercises its functions subject to these powers
of the Minister.”
The statutory discretion of the
Minister of Trade and Industry is indeed wide. Baring the predictable
requirement that he must wield
the power subject to the Constitution
and the law, he or she may accept, or reject the recommendation or
remit it to the Commission.
It is open to the Minister, when
deciding, wherein polycentric considerations such as diplomatic
decisions, the country’s
balance of payments, the national or
global trading conditions, goods needed to foster economic growth and
so forth.  Thus,
the recommendation of the Commission may be
important, but it is not the sole determinative considerations for
the Minister’s
decision.
[154] The Minister of Trade and
Industry denies that his decision or a decision of the former
Minister of Trade and Industry was
unlawful.  He submits that
his predecessor exercised his statutory powers which fell within the
exercise terrain of the executive.
The Commission submitted its
recommendation to his predecessor. After he was satisfied with the
investigation and the findings
made by the Commission, the Minister
of Trade and Industry approved the recommendation.  The Minister
of Trade and Industry
is entitled to rely on the expertise and the
ability of the Commission to carry out its investigative and
determinative duties
efficiently, and properly. The Minister of Trade
and Industry does not have the powers in law to carry out the
investigation in
the same way as the Commission.
[155] The Minister of Trade and
Industry submits that his decision to accept the recommendation of
the Commission was lawful and
carried out within the confines of his
powers. The decision was taken lawfully in compliance with the
principle of legality after
having considered the information and the
report compiled by the Commission. He approved the Commission’s
recommendation
after he was satisfied that the increase of the
customs duties as requested by Defy was justified as that increase
would ensure
economic viability and sustainability of the local
industry. This clearly shows the considerations that the Minister
considered.
[N]
DEFY’S
CASE
[156] Bosch has not levelled any
specific allegations against Defy.  In expressing its
displeasure at the way the other Respondents
reached their decisions,
Bosch asked for,
inter alia
, an order in terms of which Defy’s
application for the tariff increase is dismissed. In the alternative,
Bosch asked that
Defy’s application be referred to the
Commission for reconsideration.
[157] The basis for Bosch’s
application against Defy was not so much that there was anything
wrong with Defy or anything wrong
Defy did as it was the fact that
Bosch had misgivings about the decisions of the other Respondents.
To achieve the relief
sought against Defy’s application, Bosch
had to attack the decisions of the other Respondents as having been
wrongly taken.
Bosch’ grounds of review are founded (page
9 paras 30-33 herein supra).
[158] While Bosch did not seek any
order directly against Defy, the relief sought by Bosch in this
application is to set aside the
decision conferring rights on Defy in
the form of an entitlement to tariff protection in consequence of an
application made by
Defy, and to substitute it with the decision to
refuse to gratify the tariff reduction sought by it.
[159] Mr Allison van den Berg (“Ms
van den Berg”) deposed to an answering affidavit on behalf of
Defy. This affidavit
was prepared and delivered in response to the
founding affidavit by Karsten Traeger and the supplementary founding
affidavit of
Diedre Elizabeth Goosen.  She repeated the same
sentiments expressed by Mr Mbambo of the Commission that the
imposition of
the customs duties on imported goods has long been
recognised in international trade law as a permissible method of
protecting
domestic industries from imports, including protecting
infant industries and facilitating import substitution
industrialisation.
[160] According to Defy, the Amended
Tariff Investigations Regulations, promulgated in 2015 by the
Minister of Trade and Industry
in terms of s 59 of the ITA Act as
GNR652 in the Government Gazette 39035 dated 31 July 2015, provide
further details on the process
to be followed by the Commission and
the factors it is required to consider in evaluating an application.
Regulation 10 sets
out the assessment criteria that the Commission is
to use in evaluating such application.
[161] Furthermore, according to Defy,
Regulation 10 makes it clear that in its assessment of applications,
which must be done on
a case-by-case basis, the Commission is given a
broad discretion in this regard.  The main criterions are that
the assessment
must be “
informed by the industrial policy
and economic objectives of the Government”
and conditional
on a commitment by the beneficiary as to how it will perform against
those policies “
including plans to increase production,
investments and employment.”
What is of utmost
importance to observe is that Regulation 10.2 sets out several other
factors that the Commission may consider
as applicable; the list is
expressly stated not to be exhaustive.  Therefore, the
Commission is permitted to decide the relative
weight to be given to
any one factor or on a case-by-case basis.  Bosch does not
challenge these allegations by Defy.
[162] In terms of Regulation 22 of the
Amended Tariff Investigations Regulations, once the Commission has
evaluated an application,
it must forward a final finding in the form
of a recommendation to approve or reject the application to the
Minister of Trade and
Industry, who must then decide whether to
approve the application or not.  This is his powers in terms of
Regulation 22.2A.
[O]
THE BASIS ON
WHICH DEFY APPLIED FOR AN INCREASE IN CUSTOMS DUTY AND THE
COMMISSION’S RECOMMENDATION THAT THE APPLICATION BE
GRANTED
[163] Defy contends that its
application was not complicated.  In July 2014 Defy commenced
manufacturing a gas stove with a
small gas oven it its factory in
Jacobs, Durban, in replacement of a similar product then being
imported from Brazil.  Defy
invested some R3 million in tooling
and equipment and employed 24 staff directly to manufacture the
product.  Defy completed
visibility studies for two other
similar products.
[164] Defy contends that it struggled
to compete effectively on price against similar imported products
because its costs of production
were high, which was at least in
part, since it could not achieve economies of scale in production and
secondly, because its costs
had been rising faster than its prices.
In August 2015, therefore, Defy applied for an increase in the rate
of custom duties
on these competing imported products.
[165] In its application Defy
indicated that it anticipated that if the duty rate were increased
then it could, without increasing
its prices, not only sustain its
existing business, and so ensure retention of the existing jobs, but
in fact capture more sales
from imports because they would be more
expensive.  The result of this would be that Defy’s
production would increase
and that its unit costs would be reduced.
In consequence, Defy would be able to employ more staff and invest
further in local
manufacturing and extend the range of products it
was manufacturing locally, specifically to include the two additional
stoves
that had been the subject of its feasibility studies.
According to Ms van den Berg, to assess Defy’s application, the

Commission needed, as a matter of principle, to consider simply
whether:
[165.1]
Defy’s claim that there were significant imports
of substitute
products was correct – to confirm that there was at least
credible evidence to suggest that Defy’s production
and pricing
was currently constraint by imports, so that the imposition of an
import tariff would assist Defy in increasing production
and
improving its profits as it alleged;
[165.2]     Defy’s
claims as to the extent and costs of its current production were
correct – the
purpose hereof was to make sure that the increase
in the duty would likely result in increased production and
employment as claimed
by Defy, and not simply in Defy making inflated
profits on existing production without any further benefits;
[165.3]     Defy’s
application, and the manufacturing it sought to protect and extend,
was supported by
any industrial policy or economic objective of the
Government that would justify the increase in duty;
[165.4]     Defy’s
claims that it would increase production, investment, and employment
if a tariff were
imposed were correct – the purpose hereof was
to make sure that the tariff amendment would meet the Government
objectives
identified in item 10.2 of the Amended Tariff Regulations.
[166] According to her evidence, the
Commission in fact did consider all these factors, as appears from
the contents of the Final
Findings, read together with the August
2016 report (which as she already has indicated, was attached to the
Final Findings as
Annexure ‘A’).  She was adamant
that the Commission relied on the contents of these documents in its
decision
to recommend that the rate of customs duty be increased as
sought by Defy although, with the agreement of Defy, on a narrower
class
of goods than originally proposed by Defy.
[167] Ms van den Berg contends that
the evidence before the Commission, as reflected in the Final
Findings, and the August 2016
report, demonstrated convincingly that
Defy’s application satisfied the threshold criteria identified
above for its grant:
[167.1]     in its
letter to the Commission dated 20 October 2015 and annexed to the
answering affidavit as
‘AV04’ the Department of Trade and
Industry confirmed from the outset that the production of Defy’s
local manufacturing
would be in line with Government’s economic
policy. The Department of Trade and Industry indicated that the
imposition of
a tariff would be in line with Government Policy
(namely IPAP – Industrial Policy Action Plan) to support local
manufacturing
of White goods.  The Department of Trade and
Industry also noted that the tariff would make importing no longer
viable and
would allow local manufacturers to compete with low priced
imports.  The Commission recorded this support from the
Department
of Trade and Industry in paragraph 10.1 of the Final
Findings.  The application was supported by Government Policy in
s 5
of the Final Findings. The Commission also recorded in paragraph
10.2 the support of the Botswana Minister of Trade and Industry,

which sent a letter to the Commission on 22 December 2015.  A
copy of the said letter is attached to the answering affidavit
of Ms
van den Berg as ‘AV06’.  The same letter was sent to
the only other local manufacturer of the subject products,
Zero
Appliances;
[167.2]     the
evidence presented by Defy manifestly established that its claims as
to its capacity and cost
of production were correct.  It is Ms
van den Berg’s case that Defy put up a detailed production cost
and capacity data
and the Commission conducted a verification
inspection at Defy’s premises to check the correctness of these
figures.
The Commission set out its analysis of capacity and
production costs in paragraph 8.2 and tables 4 and 5 of the Final
Findings;
[167.3]     there
was also clear evidence before the Commission that there were
significant volumes of imports
into this country. Defy put up
evidence of such imports from China, and indicative prices of such
imports – on 15 October
2015 Defy sent an email to the
Commission attaching evidence of low-priced products, (a copy of
which email is item ‘NC5’
in the non-confidential record
as shown in volume 1 pages 53 to 55, although Defy pointed out that
assessing the scale and prices
of imports was difficult because the
relevant tariff information included many products other than the
subject product. The Commission
also received confirmation that there
were material numbers of imports though from the firms that made
submissions on the application,
including Bosch, Totai, and SBS
Household Appliances (Pty) Ltd t/a SMEG, which all provided proof
that they were imported products
that were potential substitutes for
the subject products.  The Commission referred to the presence
of these imports in paragraph
7.2 of the Final Findings;
[167.4]
finally, the Commission investigated whether Defy’s claim that
if the rate of customs duty
increased it would increase production,
investment and employment were correct.  The Commission
concluded that they were.
The Commission’s conclusions on
this appear in s 9, and table 17, of the Final Findings.  In
particular, the Commission
looked at the potential for growth in the
industry and the potential for an increase in employment should the
customs duty be increased.
Accordingly, based on these facts, the
Commission recommended that the rate of customs duty increase as
sought by Defy although
with the agreement of Defy and SARS, on a
narrower class of goods than originally proposed by Defy.  The
Court accepts this
evidence based on this evidence. The Court is
satisfied that Defy had placed before the Commission all the relevant
information
required for the decision making of the Commission and
that, as displayed in the Final Findings report, the Commission took
them
into account.
[P]
THE EFFECT OF THE IMPOSITION OF THE TARIFF
[168] According to Defy, the increase
in duty rate has had the impact anticipated by Defy and the
Commission.  For example,
Defy has been able to increase
production of the subject products and has invested in plant and
machinery, as required under its
reciprocity commitments.
[169] The increase in duty rate also
appears to have had exactly its intended effect on importers such as
Bosch and Totai.
In this regard it was noted by Defy that Bosch
alleged in paragraph [70] of the founding affidavit that in
consequence of the imposition
of the tariff its sales have declined
by some 24%.  It is Ms van den Berg’s evidence that Bosch
has not put up any data
to support this assertion or made any attempt
to demonstrate a link between any lost sales and the increased
customs duty but if
Bosch’s statement is correct, this is
precisely the result that the imposition of the tariff was intended
to achieve –
increased local manufacturing at the expense of
the imports.  Defy has noted that the increase in customs duty
also seems
to have stimulated further local manufacturing.  In
this regard, Totai, which was one of the firms that was importing gas
stoves at the time that Defy made its application, indicated during
the process of the Commission’s investigation that it
was in
the process of localising its manufacturing of gas stove.  Totai
had initially indicated, at the start of the investigation,
that it
strongly objected to the increase in the customs duty.  The fact
that Totai subsequently changed its position suggested
that the
anticipated increase in customs duty prompted Totai also to invest in
local manufacturing capacity.
[170] Bosch’s attack on the
Commission’s recommendation is in turn focussed primarily on an
analysis performed by an
independent firm of economists, Genesis
Analytics (Pty) Ltd (“Genesis”).  It is Defy’s
case that Genesis
focusses mainly on several inconsistencies it
alleges exist between statements made by the Commission’s
recommendation and
the evidence before the Commission.
Importantly, according to Defy, Genesis only takes issue with some of
the Commission’s
reasoning. According to Defy Bosch does not
criticise the Commission’s conclusions that at the time Defy
submitted its application
and the Commission considered that
application:
[170.1]     Defy
was operating at low capacity, a point confirmed by RBB in the RBB
Report at paragraphs 64-69,
which had the effect of raising its unit
costs of production. RBB report states that; ‘
“
64
Relatively high domestic production costs can in part be attributed
to the low levels of capacity utilization. Genesis Report
does not
appear to address this issue, even though capacity utilization is a
key consideration in ITAC’s assessment of an
industry’s
ability to operate efficiently and to remain viable in the long term.
65. As a matter
of economics, low capacity utilization presents a clear opportunity
for local production to expand in response to
the imposition of
tariffs imports. An increase in tariffs would likely have the
intended effect of making imports less attractive,
and, as long as
there is unutilized domestic capacity, demand for domestic
manufactures will increase, and domestic production
will increase to
meet higher demand, and increase in local capacity utilization will
result in lower unit cots of production for
those domestic
manufacturers.
66. In regard to
profitability, lower capacity utilization results in higher per unit
costs, as fixed costs are spread over smaller
volumes. A company is
unlikely to be sustainably profitable at very low levels of capacity
utilization, and accordingly improvements
in capacity utilization are
often imperative or a local industry to survive.
67…..
68…..
69 On the basis
of these estimates………”
[170.2]     there
were significant levels of imports, as evidenced by the submissions
of Totai, SMEG, and Bosch
itself;
[170.3]     there
was potential for growth in the domestic market;
[170.4]     Defy
made several commitments in its reciprocity for the imposition of the
tariff, particularly
in relation to increased employment and
production;
[170.5]     the
protection of Defy’s local manufacture was in line with the
Government’s industrial
policies and objectives.
Based on these undisputed facts
together with the Commission’s conclusion that Defy was making
low profits, these were sufficient
to justify the Commission’s
recommendation.  Defy contends that, therefore, there was
clearly sufficient evidence before
the Commission to justify its
recommendation.  In the circumstances, Defy points out that even
if there was some merit in
those criticisms by Genesis, it seems
those criticisms do not go to the core issues, the Commission was
required to consider in
making its recommendation, they do not
demonstrate that the Commission’s recommendation was
unreasonable having regard to
the information before it.
[171]   Defy dealt in the
following manner with the specific criticisms advanced by Genesis:
[171.1]
The
complaint that there was no basis for the Commission’s finding
that Defy had low profitability
:
[171.1.1]   the Commission
concluded that the two local producers, Defy and Zero Appliances, had
low profitability, based
on the Commission’s assessment of
their costs of production compared to their prices;
[171.1.2]   Genesis does not
contest the correctness of the Commission’s calculations of
cost and price in its assessment
(with the result that Genesis does
not contest that, based on these figures, Defy’s net profit in
2015 was only 5%). Genesis
simply asserts that the Commission’s
conclusion that Defy’s profits were low is “highly
subjective” and
unsubstantiated.  This criticism of the
Commission’s conclusion as “subjective” is
according to Defy, amazing.
Defy states that the Commission has
substantial expertise in assessing issues such as profitability, and
the Commission’s
assessment should be treated with appropriate
deference by this Court.  The legislature has expressly
empowered the Commission
to make such assessments and the fact that a
third party, such as Genesis, does not agree with the Commission’s
assessment
does not give rise to any ground of review.  It is
Defy’s case that Genesis has its own view on whether Defy’s

profits are low or not does not even come close to establish that the
Commission’s own view, even if not the same as Genesis,
was
irrational, which is the test on review;
[171.1.3]   in any event,
RBB has pointed out in paragraphs 33-60 of the RBB Report, that the
basis on which Genesis asserts
that Defy’s profitability was
not low, namely its own purported calculation of Defy’s return
on investments (ROI),
is not only wrong in principle but has also not
been accurately performed by Genesis;
[171.1.4]   performing a ROI
calculation to analyse profitability in the way that it is applied in
the Genesis Report
is wrong in principle because it depends on
arbitrary accounting treatments and allocations and is overly
focussed on short-term
results and profitability.  In this
regard, I was referred to paragraph 60 of the RBB Report. Defy has
observed that the actual
calculation has been inaccurately performed
in that Genesis has not considered all the relevant accounting and
economic costs that
would be required to perform the calculation
properly (see paragraph 60 of the RBB Report);
[171.1.5]   finally, Genesis
criticises the Commission for relying on a single year’s data
to perform its conclusion
that Defy was making low profits. This
criticism ignores entirely the real test of Defy’s application,
the Commission only
had one years’ worth of information to
consider because Defy had only recently commenced production.
Genesis’
report should have acknowledged the fact that there
would be data for only one year. The implication of Genesis’
criticism
is that the Commission could never have recommended an
increase in customs duty to protect Defy’s local manufacturing
until
Defy has been manufacturing for several years, even if this
mean that Defy would have ceased manufacturing locally precisely
because
that local manufacturing was not sustainable without the
increased customs duty. It is contended by Defy that Genesis’
criticism
is nothing more than mere speculation. Genesis has,
according to Defy, not put up any facts to show that the data relied
on by
the Commission was atypical and therefore unreliable. It is
also important to bear in mind that once the Commission had
established
that there was import competition then it followed that
increase in the prices of imports by raising the customs duty would
assist
Defy as a local manufacturer.
[171.2]
The complaint that the Commission wrongly concluded that local
cost was increasing (see supplementary founding affidavit at 83-93)
:
[171.2.1]   Genesis’
complaint is not easy to follow.  Although Bosch asserts in the
supplementary founding
affidavit that Genesis concludes that there is
“no basis for the Commission’s findings on increase in
costs of local
manufacturers”, in fact, Genesis does not
dispute the Commission’s finding that local manufacturers did
experience
cost increases in the period 2013 – 2015.  In
this regard reference was made to paragraphs 47 and 48 of the Genesis
Report;
[171.2.2]   Genesis’
sole criticism of the Commission is its view that the fact that local
costs increase does not
mean that local producers were not able to
compete with imports;
[171.2.3]   as RBB has
pointed out in paragraph 70 of its report, Genesis’ criticism
is not relevant to the Commission’s
decision.  Once the
Commission had concluded (correctly), that local producers had high
costs and that their prices were constraint
by imports, resulting in
low profitability, this was sufficient basis to justify an increase
in the customs duty.  It was
not necessary for the Commission to
make any finding on whether those high costs had increased or not –
particularly since
Defy had only started manufacturing the subject
products locally in 2014;
[171.2.4]   nevertheless,
RBB has dealt with two main criticisms advanced by Genesis in
relation to the Commission’s
statements about costs;
[171.2.5]   Genesis
contends, firstly, that Defy’s prices increased by more than
its costs between 2014 and 2015.
RBB shows in paragraphs 73 and
74 of its report and table 5 that Genesis’ contention is simply
factually incorrect.
Genesis relies on what is set out in table
5 of the Final Findings to support its statement.  This reliance
is either misguided
or opportunistic because that table clearly
contains an erroneous ex-factory selling price for Defy for 2014.
Once that error
is corrected, then the table reflects that Defy’s
prices did not increase by more than its cost from 2014 – 2015;
[171.2.6]   Genesis
contends, secondly, that the Commission was wrong to say that local
manufacturers faced increased
costs because of the imposition of a
customs duty on imports of steel, because a rebate provision was
introduced in 2016.
This statement by Genesis is also simply
wrong in fact, because not all the steel components used in the
manufacture of the subject
product were subject to that rebate;
[171.2.7]   finally, RBB
shows in paragraph 71 of its report and table 5) that the increases
in costs of local manufacturers
may well have been higher than those
importers, contrary to what Genesis suggests in its report.
[171.3]
The complaint that the Commission mistakenly relied on SARS
import data and that the Commission wrongly concluded that imports
were
rising (supplementary founding affidavit at 52 to 66)
:
[171.3.1]   Genesis states
that the Commission drew conclusions about the levels of imports of
products that were substitute
of the subject product by relying on
the import data of SARS that itself recognised could not be reliably
used for that purpose
because the data was for a broader range of
products;
[171.3.2]   According to
Defy, this criticism ignores the fact that the Commission had before
it sufficient evidence from
actual importers themselves to establish
that there were significant imports of competing products.  The
Commission referred
to this evidence in paragraphs 7.2 of the Final
Findings.  As RBB points out in section 3.1 of the RBB Report,
this was sufficient
evidence to establish that imports were
constraining domestic producers.  The Commission also had before
it information from
Zero Appliances that demonstrated that it had
increased imports from 2012, even though it was not producing at full
capacity locally,
which also indicated that imports were cheaper
than, and were therefore constraining local production;
[171.3.3]   Genesis also
alleges that even using the SARS import data, the Commission’s
statement that imports were
increasing is also wrong.  Again,
Genesis’ criticisms are misplayed.  RBB demonstrates in
paragraphs 36-39 of the
RBB Report and in table 1, that the
Commission’s statement is correct for the periods 2013-2015 and
2014-2015.  The
fact that imports dropped from 2012-2013 and
2013-2014, the sole facts on which Genesis relies for its criticism,
does not alter
this.  It also bears repeating that Defy only
commenced its local production in 2014.  There was a marked
increase in
imports and after Defy commenced production from
2014-2015 as appears from Genesis’ own table 3 in its report.
[171.3.4]   RBB has shown in
paragraph [39] of its Report) that from 2012-2014

imports, even
by Zero Appliances, at that stage, the only local

manufacturer, also increased, which is
a relevant indicator that

locally
manufactured products were not able to compete effectively

with imported products at this time.
[171.3.5]   Finally, Genesis
has suggested that data from a third-party source,

GFK, which is
a market research company, demonstrated that Defy

did not experience a decline in market
share over the period 2012 to

2015 and was the largest firm in the brought market for general

home appliances and cookers. This
information was obviously not

before the
Commission when it made its decision and Defy

respectively submits it ought
not to be considered by the Court in

assessing the
reasonableness of the Commission’s

recommendation.
[171.3.6]   At any rate, the
evidence is not reliable.  As RBB points out in

paragraph 43 of its Report, it is remarkable that Genesis, having

criticised the Commission for using
data that includes products other

than the subject products, does the same itself in this paragraph of

the analysis.  Genesis’
conclusion that the import data
referred to by

the Commission
“cannot be informative” because it includes a

substantial amount of non-subject gas stove products (as asserted

by Bosch in
paragraph [57] of the supplementary founding affidavit)

holds equally
true for the GFK data.
[171.3.7]   Ms van den Berg
states that moreover, as RBB has also explained,

in paragraph
43 of the RBB Report, the GFK data is not reliable

because it is based on
information gathered at the retail level and

only gathered
from selected traders.  The evidence is therefore not
at

an appropriate level of the market, which is the wholesale level and

is also not
complete.  In the circumstances, Defy submits that it is
not

reliable
evidence of the actual
market share of Defy in relation to the

subject products.
[171.4]
The complaint that the Commission wholly concluded that
domestic producers were suffering a price disadvantage as against
imports
(supplementary founding affidavit at 67-79)
:
[171.4.1]   Genesis contends
that the Commission’s conclusion that local manufacturers were
suffering a price disadvantage
against importers is not supported by
its own analysis in the final findings;
[171.4.2]   RBB has
explained (in paragraphs 87 and 89 of the RBB report) that it is not
necessary to resolve this issue
because the Commission did not need
to make any detailed finding on the relative price competitiveness of
imports and locally manufactured
products once it had determined that
there were significant volumes of imports.  The Commission
itself recorded in paragraphs
11.6 of the Final Findings that not too
much reliance could be placed on its analysis of import prices versus
domestic prices.
In the circumstances Genesis’ criticism do not
go to the substance of the Commission’s decision.  In the
contrary
they simply distract from the true issues.
[171.4.3]   As for the
conclusion on prices the Commission set out in its findings, RBB
agrees with Genesis that the analysis
contained in table 6 of the
Final Findings does not demonstrate a price disadvantage as alleged
by the Commission.  RBB points
out though, firstly, in
paragraphs 95-97 of its Report, that there is an error in the table
that, once corrected, reflects that
prices of imports and locally
manufactured products were much closer than suggested in the table,
and, secondly, (see in this regard
paragraphs 99-101 of the RBB
Report), that there is other more direct evidence that was before the
Commission, provided that Defy
itself, during the application process
(and supported by relevant invoices provided by Totai), that reflects
that prices of imports
from China were significantly cheaper than
Defy’s local prices, as stated by the Commission in its final
findings.
[171.4.4]   Finally, RBB has
examined import prices using data collected after the implementation
of the tariff, see in
this regard paragraphs 104 to 107 of the RBB
Report. RBB has shown that import duties from dutiable regions
continue to be much
lower than Defy’s ex-factory prices. To the
extent that Genesis has raised a different conclusion in its report,
RBB explained
that this is because Genesis did not distinguish
between imports from dutiable and non-dutiable regions (which is
important because
countries such as China, which are the low-price
importers, are not in non-dutiable regions while products from
Europe, which includes
high price imports from firms such as SMEG).
[171.4.5]   Lastly, in
relation to the analysis performed by the Commission, RBB explains in
paragraphs 108 to 115 of
the Report, why the Commission was correct
to state that comparisons of prices at retain level is not a useful
analysis and can
be materially misleading and where Genesis’
analysis of retail pricing therefore is not relevant to an analysis
of the reasonableness
of the Commission’s conclusions.
RBB points out, firstly, that written prices are driven by pricing
strategies over
which manufacturers have no control (such as the use
of “loss leaders” or “footfall drivers”),
which means
that written prices of products may not necessarily bear
the same relationship as wholesale prices.  RBB points out,
secondly,
that retailers and end-consumers may also associate a
“brand premium” with certain brands, enabling retailers
to charge
prices of those brands higher than the wholesale price,
which is based on the cost of manufacturing or importing products.
[171.5]
The complaint that the Commission misinterpreted the
implications of the fact that Totai had decided to localise
manufacture (supplementary
founding affidavit at 80-82)
:
[171.5.1]   Genesis states
that the Commission ignored an important piece of evidence before it,
namely, that Totai indicated
during the process of the Commission’s
investigation that it was in the process of localising its
manufacturing of gas stoves.
Genesis assessed that the issue is
that Totai considered that it was profitable to manufacture locally
at the existing tariff levels.
As RBB points out though (in
paragraph 62 of the RBB Report), in fact Totai initially indicated at
the start of the investigation
that it strongly objected to the
increase in tariff precisely because it was exclusively an importer.
The fact that it subsequently
changed its position during the
investigation is more likely than indicative of a changed incentive
once it became apparent that
the custom’s duty would be
increased.  In other words, the proposed increase in tariff has
precisely the desired effect
in that it stimulated local manufacture
ahead of imports.
[172] I conclude that none of Bosch’s
criticisms alter the fundamental facts that demonstrate that the
increase in the duty
rate was in line with government policy and met
the requirements of amended tariff regulations.  In the
circumstances, I am
of the view that Bosch has not demonstrated that
the contents of the Commission’s recommendation gave rise to
any basis to
set aside the decisions of the Ministers of Trade and
Industry and Finance to approve the increase in custom duty.
[Q]
UNCORROBORATED HEARSAY
[173] In its replying affidavit Bosch
objected to the absence of any confirmatory affidavit by:
[173.1]     the
Minister of Trade and Industry to confirm the authority of Mr Lionel
October, the Director General
of the Department of Trade and Industry
at the time, to depose to the answering affidavit of the Minister of
Trade and Industry
on his behalf;
[173.2]     of the
confirmatory affidavit of the Minister of Finance to confirm the
authority of Dondo Mogajane,
the Director General and Accounting
Officer of the National Treasury to depose on behalf of the Minister
of Finance the answering
affidavit.
[174] Bosch states that neither
affidavit contains a confirmatory affidavit of the Minister for the
imposition of the tariff, namely
the erstwhile Minister of Trade and
Industry and the erstwhile Minister of Finance.  According to
Bosch, the importance here
is that the decisions that are being
reviewed here are the impugned decisions of the Ministers, the only
functionary empowered
to cause the increase of a duty in terms of s
48(1)(a) of the CEA.
[175] According to counsel for Bosch,
whilst the deponents can speak about the nature of the processes,
they cannot provide any
direct evidence relating to the specific
processes, decisions, or effect of the impugned decisions as they
were not designated
to make these determinations in terms of the
empowering legislations.  Accordingly, the evidence provided by
the offices of
the erstwhile Ministers, which are direct in nature,
amount to inadmissible hearsay evidence, so it was argued by counsel
for Bosch,
which cannot be relied upon and should for all these
reasons be rejected.  The deponents to the answering affidavits
of the
Minister of Finance and the Minister of Trade and Industry
cannot gainsay the allegations made by the representatives of the
Commission
or provide any corroborative or factual evidence as to the
process adopted in this matter.
[176] Mr Lionel October made the
following statement:
“
I
the undersigned, hereby declare under oath as follows:
1.
I am the Director General of the
Department of Trade and Industry (the DTI).  The Minister of
Trade and Industry (the Minister)
is the first respondent under case
nr 67553/2018 herein, and the executive functionary charged with the
powers and oversight functions
relevant to this application.  I
am duly authorised to depose to this affidavit on the Minister’s
behalf.
2.
The facts stated herein are within
my personal knowledge or have been obtained from the DTI records or
have been furnished to me
by the persons or sources identified and
appropriate places in this affidavit.
3.
I verily believe all the facts set
out herein to be true and correct.  Where I make submissions of
law, I do so in the advice
of my legal advisors, which advise I
verily believe to be correct.”
On the other hand, Mr Dondo Mogajane
made an affidavit in which he stated as follows:
“
I the
undersigned, Dondo Mogajane,
Do hereby make an oath and say
that:
1.
I am the Director General and
Accounting Officer in the National Treasury.  By virtue of my
office I am authorised to oppose
this application and to depose to
this affidavit on behalf of the Minister of Finance who is cited as a
party herein.
2.
The facts deposed to in this
affidavit are true and, save where the contrary appears from the
context or is otherwise stated, are
within my personal knowledge.
3.
Where I deal with questions of law
I do so on advice given by my legal representative of the Minister of
Finance.  Where appropriate
I rely on the information furnished
by officials within National Treasury in the execution of their
duties.”
[177] The Ministers of Finance and of
Trade and Industry are parties to the applications.  This is
clear from the heading of
the applications that the affidavits are
made in the names of the Ministers of Finance and Trade and
Industry.  All that was
required, in addition, was an affidavit
stating the facts on which the versions of the Ministers were based.
In the answering
affidavits by Dondo Mogajane and by Lionel October,
they both claim that the facts stated in those affidavits are within
their
personal knowledge.
[178] In dealing with the objection
raised by Bosch I would adopt the approach espoused in
Leith, N.O.
and Heath, N.O. v Fraser 1952 (2) SA (33) (O
).  The Court
held, in that judgment “
that the fact that the Applicant had
neither signed the so-called petition nor made an affidavit of his
own did not render the application
bad for non-joinder”
.
The answering affidavits clearly indicate that the affidavits were
clearly made on the Ministers’ behalf.  The
Court stated
the following at p. 36B that:
“
A
notice of motion could in a proper case be supported by an affidavit
by one not a party to it, if he were in a position to provide
the
necessary material to support the claim.”
By
analogy, an answering affidavit could, in a proper case, be made by
one not a party to the proceedings but by someone who was
able to
provide the necessary material to support the defence and to provide
the version of the events.  The Director Generals
are such
persons who can provide the necessary material in support of the
relevant Minister’s answering affidavits.
The purpose of
the affidavit is simply to provide evidence.
[179] Even if there is no confirmatory
affidavit from the relevant Ministers, this Court can certainly
assume that the Ministers
knew about the fact that the Director
Generals had made answering affidavits on their behalf. It is
important to observe that while
Bosch admits that it has no knowledge
of the activities or decisions the Deputy-Director was privy to, it
still disputes the truth
of the statement. This denial is not based
on any objective facts. This Court is accordingly disinclined to
reject these answering
affidavits.
[R]
THE LATE FILING OF THE SECOND REVIEW
[180] [180.1]
The Commission has commented that the second review application was
filed outside the applicable
180-day period. For that reason, it is
so alleged by the Commission, Bosch should have sought condonation
for the delay. The other
Respondent in the second review, the
Minister of Trade and Industry, has not raised this point.  In
both the replying affidavit
and its counsel’s heads of
argument, Bosch has disputed this allegation by the Commission. Bosch
is adamant that the second
review application was brought within the
time period set out in s 7(1) of PAJA. Which provides that “
Any proceedings for judicial review  and not later
in terms of section 6(1) must be
instituted without unreasonable delay and not later than 180  days…….
[180.2]      In
his heads of argument counsel for Bosch relies on the judgment of the
Constitutional Court in
City of Cape Town v Aurecon South Africa
(Pty) Ltd
2017 (4) SA 223
(CC)
for the calculation of the 180-day
period contemplated in s 7(1) of PAJA. He relies on para 41 of the
said judgment where the Court
had the following to say:
“
On a
textual level, the City’s contention confuses two discrete
concepts: reason and irregularities. Section 7(1) of PAJA
does not
provide that an application must be brought within 180 days after the
City became aware that the administrative action
was tainted by
irregularity. On the contrary, it provides that the clock starts to
run with reference to the date on which the
reasons for the
administrative action became known (or ought reasonably to have
become known) to an applicant.”
[180.3]      it is
Bosch’s case that it only became aware of the Minister of Trade
and Industry’s
decision on or about 19 March 2019 upon
receiving the Minister of Finance’s record. Having received the
Minister of Finance’s
record on the said date, Bosch proceeded,
on 14 September 2019, to issue and serve its second review
application, which was within
178 days of it becoming aware of the
decision of the Minister of trade and Industry.
[180.4]      the
Commissioner has not placed sufficient details why it alleges that
the second review application
was brought out of time. To succeed on
this point, the Commissioner must set out the date on which Bosch
became aware of the decision
of the Minister of Trade and Industry or
the date on which Bosch ought reasonably to have become aware of the
said decision, among
others. It is not enough just to make
allegations of delay without any indication of the commencement of
the delay.
[180.5]     Even
if the Commission has raised this point it does not look like it was
its strongest point.
It is not one of the grounds upon which
the Commission seeks a dismissal of Bosch’s application. I will
therefore not devote
any more time to it. The Court accepts that the
Commission, though having raised that point, does not desire the
application to
be dismissed on the basis that the second review
application was not brought in time.  Counsel for the Commission
did not
even argue this point and did not even ask for any relief
based on this point. In the premises this Court is inclined to accept

Bosch’s explanation. Therefore, this Court finds that the
second review application was launched and served in time.
Condonation
for the late filing of the answering affidavit of the Minister of
Trade and Industry
[181] This application by the Minister
of Trade and Industry is granted without much ado.  It was not
opposed. It was not even
referred to during argument. The Court is
satisfied that counsel for the Minister of Trade and Industry, Adv M
Mokadikoa-Chauke
SC, has furnished a reasonable explanation for the
delay.  In the absence of recklessness or wilful neglect on the
part of
the Minister of Trade and Industry, and in the absence
furthermore of any allegation of prejudice to any of the other
parties in
the proceedings, the Court sees no valid reason why the
application should not be granted.
Whether the conduct of the
Ministers amounted to administrative or executive action
[182] Without much ado, the conduct of
the Minister of Finance and the Minister of Trade and Industry or
their decision are administrative
actions and not executive actions.
This is so because the power of the Minister of Finance to vary,
amend or rescind customs
duties in terms of the CEA is sourced from
national legislation and not from the Constitution.  Similarly,
the power of the
Minister of Trade and Industry to request the
Minister of Finance to amend the CEA is sourced from national
legislation and not
from the Constitution.  Accordingly, those
decisions constitute administrative actions, reviewable under PAJA
because they
involve the implementation of national legislation.
[183] The Ministers derived their
powers to act neither from the Constitution nor from any provision of
the Constitution but from
the statutes of parliament.  In
the
Minister of Defence v Modau
2014 (5) SA 69
CC at p. 82 paragraph 31
C-D
the Court stated that:
“
This
Court has held that the implementation of legislation by a senior
member of the executive ordinarily constitutes administrative

action.”
In
making the said statement the Court confirmed what it had stated in
Permanent Secretary, Department of
Education and Welfare, Eastern Cape and Another v Ed-U-College (PE)
(Section 21) Inc.
2001 (2) SA 1
CC at paragraph [18] page 12
,
where it had the following to say:
“
In
President of the Republic of South Africa and Others v South African
Rugby Football Union and Others
2000 (1) SA 1
CC this Court held
that, in order to determine whether a particular act constitutes
administrative action, the focus is on the
enquiry should be
the
nature of the power exercised, not the identity of the actor
(my own underlining).  The Court noted that senior elected
members of the executive (such as the President), Cabinet Ministers,

in the national sphere and members of the executive councils in the
provincial sphere, exercise different functions according to
the
Constitution.  For example, they implement legislation, they
develop and implement policy and they prepare and initiate

legislation.  At times, the exercise of their functions will
involve administrative action and at other times it will not.

In particular, the Court held that when such a senior member of the
Executive is engaged upon implementation of legislation, that
will
ordinarily constitute administrative action.  However, senior
members of the Executive also have constitutional responsibilities
to
develop a policy and initial legislation and the performance of these
tasks will generally not constitute administrative action.”
The
Court continued as follows at p. 143:
“
Determining
whether an action should be characterised as the implementation of
legislation or the formulation of policy may be difficult.
It
will, as we have said above, depend primarily upon the nature of the
power.  A series of considerations may be relevant
to deciding
on which side of the line a particular action fall.  The source
of the power, though not necessarily decisive,
is a relevant factor.
So, too, is the nature of the power, its subject- matter, whether it
involves the exercise of a public
duty and how closely it is related
on the one hand to policy matters, which are not administrative, and
on the other to the implementation
of legislation, which is.
While the subject-matter of the power is not relevant to determine
whether constitutional review
is appropriate, it is relevant to
determine whether the exercise of the power constitutes
administrative action for the purposes
of section 33.  Difficult
boundaries may have to be drawn in deciding what should and what
should not be characterised as
administrative action for the purposes
of section 33.  These will need to be drawn carefully in the
light of the provisions
of the Constitution and the overall
constitutional purpose of an efficient, equitable and ethical public
administration.
This can best be done on a case-by-case basis.”
[184] In deciding whether a decision
was executive rather than administrative, the Court should have
regard to the following guidelines:
[184.1]     a
power most closely related to a formulating policy is likely to be
executive, while a power most
closely related to applying policy is
likely to be administrative;
[184.2]
pointers in deciding were:
[184.2.1]   the source of
the power;
[184.2.2]   constraints
imposed to its exercise; and
[184.2.3]   whether it was
appropriate to subject its exercise to the more vigorous standard of
administrative law review.
[185] Accordingly, I am satisfied that
the decisions of the two Ministers in this matter constitute
administrative actions reviewable
under PAJA.
[186]
The allegation that the
amendment of custom duties is a Money Bill as contemplated in s 77 of
the Constitution
.
[186.1] It is the Minister of Finance
case that;
[186.1.1]   his decision to
confirm the Commission’s recommendation and cause the
publication of the increase in tariff
amounts to a decision that was
determined by public policy ground;
[186.1.2]   the imposition of
tariffs falls squarely within the purview of s 77 of the Constitution
and cannot, for that reason,
be reviewed as it is a money bill;
[186.1.3]   thirdly and lastly,
the imposition of tariffs is not an administrative action as it
amounts to the execution of
an executive function.
[186.2]      Bosch
disagrees.  It denies that s 77 of the Constitution applies in
this application. Section
77 of the Constitution provides as follows:
“
(
1)
A Bill is a money Bill if it-
(a)
appropriates money;
(b)
imposes national taxes, levies,
duties, or surcharges;
(c)
abolishes or reduces, or grants
exemptions from, any national taxes, levies, duties or surcharges; or
(d)
authorises direct charges against
the National Revenue Fund, except a Bill envisaged in section 214
authorising direct charges.
(2)
…………..
(3)
All money Bills must be considered in accordance with the procedure
established in Section 75. An Act of Parliament
must provide for a
procedure to amend money Bills before Parliament.”
[186.3]      I
fully agree with Adv Redman SC that the imposition of tariffs is not
a Money Bill. I agree furthermore,
that on a proper interpretation,
of s 77, the decision of the Minister of Finance does not constitute
a money Bill and that the
said section 77 does not find any
application in this matter.
[186.4]
Finally I have already, in paras [182-185] supra, dealt with the
powers of the Minister of Finance
and shown, with reference to
authorities, that the Minister of Finance’s powers to vary or
amend or abolish custom duties
are sourced from national legislation,
the CEA,       and constitute,
administrative action reviewable
under PAJA.  There exists no
merit therefore, in the allegation that the amendment of the custom
duty is a Money Bill as contemplated
in s 77 of the Constitution.
[S]
CONCLUSION
[187] In conclusion, I am not
satisfied that Bosch has made out a good case for the relief that it
seeks.
Accordingly,
the application is dismissed with costs, which costs shall include
the employment of two counsel, where applicable.
PM MABUSE
JUDGE OF THE HIGH COURT
Appearances
:
Counsel for Bosch:
Adv NPG Redman SC
Instructed by:
C de Villiers
Attorneys
c/o Wiese &
Wiese Attorneys
Counsel for The
Commission (ITAC):
Adv H Maenetje SC
Adv MD Stubbs
Instructed by:
The State Attorney
Counsel for The
Minister of Finance:
Adv L Gcabashe SC
Adv N Ntuli
Adv N Kekana
Instructed by:
The State Attorney
Counsel for The
Minister of Trade and Industry:
Adv M
Mokadikoa-Chauke SC
Instructed by:
The State Attorney
Counsel for Defy:
Adv MA Wesley
Instructed by
Alison van den Berg
Attorney Inc
c/o Klagsbun
Delstein Bosman De Vries Inc
Dates heard:
29-31 October 2019
Date of Judgment:
5 January 2021