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[2007] ZASCA 100
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Commissioner for the South African Revenue Service v Baking Tin (Pty) Ltd (431/06) [2007] ZASCA 100; [2007] 4 All SA 1352 (SCA); 2007 (6) SA 545 (SCA); 69 SATC 220 (14 September 2007)
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
CASE NO: 431/06
Reportable
In the
matter between
THE
COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
.......................
APPELLANT
and
THE
BAKING TIN (PTY) LTD
.......................
RESPONDENT
CORAM:
SCOTT, BRAND, LEWIS, MAYA JJA, MHLANTLA AJA
HEARD:
17 AUGUST 2007
DELIVERED
:
14 September 2007
SUMMARY:
Tariff determination by Commissioner in respect of aluminium
containers confirmed: intention of importer as to use not a
determinant of objective characteristics of containers.
This
case may be referred to as CSARS v The Baking Tin [2007] SCA 100
(RSA)
JUDGMENT
LEWIS JA
[1] When is an aluminium container used for cooking or baking not a
kitchen article? That is the question raised in this appeal.
More
precisely, are aluminium foil containers imported by the respondent,
The Baking Tin (Pty) Ltd, table, kitchen or other household
articles
for the purpose of levying customs and anti-dumping duties under the
Customs and Excise Act 91 of 1964? The Baking Tin imported
the
aluminium containers from Hong Kong as ‘catering consumables’
which were supplied to manufacturers for the preparation
and
packaging of pies and other pre-cooked foods. The dispute between the
parties centres on the customs tariff applicable to the
containers.
The Baking Tin contends that they are not dutiable, being
consumables. The appellant, the Commissioner, who is charged
with the
implementation of the Act, determined, on the other hand, that the
aluminium containers constituted hollowware for table
or kitchen use,
dutiable at the rate of 30 per cent and liable to anti-dumping duty.
[2] An appeal to the Commissioner against that determination failed,
but an appeal in terms of s 47(9)(e) of the Act to the Cape
High
Court succeeded. The Commissioner’s determination was set aside
by Foxcroft J. It is against his decision that the Commissioner
now
appeals, with leave of this court.
[3] The relevant chapter (76) of the Schedule to the Act is headed
‘Aluminium and Articles Thereof’. The heading in issue
is
76.15. It reads:
‘
Table,
kitchen or other household articles and parts thereof, of aluminium;
Pot scourers and scouring or
polishing pads, gloves and the like, of aluminium; sanitary ware and
parts thereof, of aluminium:
. . .
7615.19.20 -
- - Hollowware for table or kitchen use (
excluding
buckets
)
- 30%
7615.19.90 - - - Other - - -
20%’
[4] The explanatory notes to 76.15 state that the heading covers the
same type of articles as are described in the explanatory notes
to
headings 73.23 and 73.24, ‘particularly the kitchen utensils,
sanitary and toilet articles described therein’. Heading
73.23
deals with table, kitchen or other household articles and parts
thereof, of iron or steel. The note to ‘Table, kitchen
or other
household articles and parts thereof’ state:
‘
This
group comprises a wide range of iron or steel articles, not more
specifically covered by other headings of the Nomenclature,
used for
table, kitchen or other household purposes; it includes the same
goods for use in hotels, restaurants, boarding-houses,
hospitals,
canteens, barracks, etc.’
Further: ‘The group includes
Articles for
kitchen use such as saucepans, steamers, pressure cookers,
preserving pans, stew pans, casseroles, fish kettles; basins;
frying
pans, roasting or
baking
dishes
and
plates; . . .
Articles for
table use such as trays,
dishes,
plates
,
soup or vegetable dishes . . .’ (my emphasis).
[5] The principles applicable in determining
whether articles fall under a particular classification are by now
well-settled. In
International Business
Machines SA (Pty) Ltd
v Commissioner
for Customs and Excise
1
Nicholas AJA said:
‘
The process of classification
Classification
as between headings is a three-stage process: first, interpretation –
the ascertainment of the meaning of the
words used in the headings
(and relevant section and chapter notes) which may be relevant to the
classification of the goods concerned;
second, consideration of the
nature and characteristics of those goods; and third, the selection
of the heading which is most appropriate
to such goods.’
The court also had regard, as one must, to the General Rules for the
Interpretation of the Harmonized System (the Brussels Notes),
Rule 1
of which states that ‘for legal purposes, classification shall
be determined according to the terms of the headings
and any relative
section or chapter notes and, provided such headings or notes do not
otherwise require, according to the following
provisions.’
[6] The explanatory notes are not, however,
peremptory injunctions. In
Secretary for
Customs and Excise v Thomas Barlow & Sons Ltd
2
Trollip JA said that ‘they are not worded
with the linguistic precision usually characteristic of statutory
precepts; on the
contrary they consist mainly of discursive comment
and illustrations’. See also
Lewis
Stores (Pty) Ltd v Minister of Finance.
3
[7] The contentions of The Baking Tin are, first,
that the containers imported by them are not durable, and therefore
do not fall
under 76.15: they are not table, kitchen or other
household articles. Second, even if they do fall under the heading,
they do not
constitute ‘hollowware’. The essence of the
first argument is that they are not intended for ongoing household
use. The
aluminium containers are consumables, contends The Baking
Tin: they are supplied to manufacturers of food for the purpose of
preparing
food for the consumer who ordinarily disposes of them once
the food is consumed. They cannot thus be classified as kitchen or
household
articles.
[8] This argument was accepted by Foxcroft J in the high court who
considered that the articles described in the notes to 73.23 (above),
by contrast, are of a ‘permanent or semi-permanent nature’.
He said:
‘
Durability
is a feature of all these items and speaks for itself. Obviously, for
example, teapots made out of thin aluminium foil
would not last very
long. When one has regard to the category of items listed, it becomes
clear that to call a container usually
coming into the kitchen as
packaging, a roasting pan after it has fulfilled its primary purpose,
is not only a distortion of language,
but a denial of the nature and
characteristics of this container.’
The learned judge accordingly
found
that the articles in question did not fall under tariff heading 76.15
and thus made no finding as to whether the containers
constituted
hollowware.
[9] The court found that the items imported by The Baking Tin fell
under tariff sub-heading 76.16.99.90 – ‘Other articles
of
aluminium …. Other’ which attract neither anti-dumping
nor customs duty. It thus set aside the Commissioner’s
determination.
[10] The Baking Tin argues that this finding is correct: the
containers are designed for the purpose of packaging and intended for
use once, when the consumer uses the food prepared in it, even if the
food in the container is cooked or heated up. It contends that
these
containers are different from those available for use in kitchens
where the consumer buys the container and prepares and cooks
food in
it. It contrasts its imports with those of a local manufacturer which
are sold in supermarkets and are ‘more durable
and therefore
more suitable for use in the household and kitchen’. The Baking
Tin does not claim that the containers imported
by it cannot be used
more than once – only that that is not their primary purpose.
[11] There are two difficulties with the finding of the court below.
First, nowhere in the tariff heading 76.15 is there any requirement
of durability and permanence. Although support for the finding was
found by the court in comparing the aluminium containers with
the
items described in the explanatory notes, which it regarded as items
for permanent or semi-permanent kitchen use, there is nothing
to
suggest that these containers were not durable or at least of a
semi-permanent nature, nor that they need to be such in order
to be
articles for use in a kitchen. Counsel for The Baking Tin argued that
the containers were intended to be disposable. He did
concede that
they could be used more than once when the food initially prepared in
them had been consumed. But that, The Baking Tin
contends, was not
their primary purpose, which is for the baking of pies and other
food, and as packaging for pre-prepared food.
[12] The second difficulty with the reasoning of
the high court is that it is well-established that the intention of
the manufacturer
or importer of goods is not a determinant of the
appropriate classification for the purpose of the Act.
4
Thus the purpose for which they are manufactured
is not a criterion to be taken into account in classification. In
Commissioner, SARS v Komatsu Southern
Africa (Pty) Ltd
5
this court said:
‘
It is
clear from the authorities that the decisive criterion for the
customs classification of goods is the objective characteristics
and
properties of the goods as determined at the time of their
presentation for customs clearance. This is an internationally
recognised
principle of tariff classification. The subjective
intention of the designer or what the importer does with the goods
after importation
are, generally, irrelevant considerations. But they
need not be because they may in a given situation be relevant in
determining
the nature, characteristics and properties of the
goods.’
6
[13] The last sentence of this passage is invoked by The Baking Tin
in support of its argument that the intention of the designer,
or the
use to which the goods are put, may affect what appear to be the
objective characteristics of the goods and thus change their
classification. It seems to me, however, that the court was
suggesting no more than that light may be thrown on the
characteristics
of the article by subjective factors. The principle
remains the same: it is not the intention with which they are made,
nor the use
to which they may be put, that characterise the
containers in question. It is their objective characteristics. Thus
the mere fact
that the containers are regarded as disposable by The
Baking Tin, and perhaps other suppliers and manufacturers in the
chain, does
not necessarily make them disposable by nature.
[14] The chapter notes set out above do not, as I have said, indicate
that in order for the containers to fall under the heading
they must
be durable or of a permanent nature. And in any event the objective
characteristics of the articles do not preclude re-use
as a kitchen
article. The heading, moreover, includes items such as pot scourers,
scouring or polishing pads, and gloves. It is clear
to me, therefore,
that it was not intended to apply only to rigid articles of a durable
nature.
[15] A connected argument raised by The Baking Tin
was that in the explanatory notes relating to iron and steel
kitchenware and household
articles, the items are said to be for
household use, and then list a number of other places where they may
be used, such as hotels,
hospitals, canteens, restaurants . . .
‘etc’. The Baking Tin, however, supplies the containers
to wholesalers, who in
turn supply to manufacturers who use them in
‘industrial kitchens’, which are not specified in the
notes. However, apart
from the fact that the notes are not
exhaustive, and are but guides to interpreting the headings
(
International Business Machines
7
)
they make it plain, by the use of the term ‘etcetera’
that articles used in other environments may be included. There
is
thus no merit in this contention. In my view, therefore, the court
below was incorrect in finding that the containers did not
fall under
tariff heading 76.15.
[16] The second question remains: are these
containers ‘hollowware’? Various dictionary definitions
were placed before
us. The simplest is in
The
New Oxford Dictionary of English
which
defines it as ‘hollow articles of cookware or crockery, such as
pots, kettles and jugs’. Hollowware is to be contrasted
with
‘flatware’, defined (in the same dictionary) as
‘relatively flat items of crockery such as plates and saucers’.
Counsel for The Baking Tin conceded that the containers are not
flatware: their depth differs, but is not insignificant, ranging
up
to three centimetres in height: they have sides and none is flat.
There is no minimum depth that the ‘hollow’ must
have.
The aluminium containers are in my view hollowware. Accordingly, the
Commissioner’s determination in this regard was
also correct.
[17] The appeal is upheld with costs. The order of the court below is
set aside and replaced by:
‘
The tariff determination of the imported
goods under tariff heading 7615.19.20 is confirmed.
The appeal is dismissed with costs.’
_____________
C H Lewis
Judge of Appeal
Concur:
Scott JA
Brand JA
Maya JA
Mhlantla
AJA
1
1985
(4) SA 852
(A) at 863F-H.
2
1970
(2) SA 660
(A) at 676C-D.
3
65
(2003) SATC 172
paras 3-9.
4
See,
for example,
African Oxygen Ltd v
Secretary, Customs & Excise
1969
(3) SA 391
(T) at 394D-E and 397B-C.
5
2007
(2) SA 157
(SCA) para 8. See the further authorities cited in the
footnotes to para 8.
6
See
African Oxygen
above
at 397F-G, where the court said that tariff headings may themselves
refer to the intention of the importer or prospective
user of the
goods.
7
The
passage cited above.