About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1984
>>
[1984] ZASCA 140
|
|
BP Southern Africa (Pty) Ltd. and Others v Secretary for Customs and Excise and Another (79/1983) [1984] ZASCA 140; [1985] 1 All SA 398 (A) (26 November 1984)
LL
Case No. 79/1983
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
BP SOUTHERN AFRICA (PROPRIETARY) LIMITED
CALTEX OIL (SA) (PROPRIETARY) LIMITED
ESSO STANDARD SOUTH AFRICA (PROPRIETARY) LIMITED
MOBIL OIL SOUTHERN AFRICA (PROPRIETARY) LIMITED
SHELL SOUTH
AFRICA (PROPRIETARY) LIMITED
SONAREP (SOUTH AFRICA) (PROPRIETARY)
LIMITED
TOTAL SOUTH AFRICA (PROPRIETARY) LIMITED
TREK
PETROLEUM (PROPRIETARY) LIMITED
Appellants
and
THE SECRETARY FOR CUSTOMS AND EXCISE
First Respondent
and
THE
MINISTER OF FINANCE
Second Respondent
CORAM
: KOTZé, MILLER, VAN HEERDEN JJA, GALGUT
et
ELOFF
AJJA
HEARD
: 15 NOVEMBER 1984
DELIVERED
: 26 NOVEMBER 1984
/JUDGMENT ...
2. JUDGMENT
VAN HEERDEN, JA
:
This appeal concerns the interpretation of a number of the provisions of the
Customs and Excise Act (Act 91 of 1964) and of the regulations
promulgated under
that Act. Amendments subsequent to the end of June 1978 are not relevant, but
for convenience I shall use the present
tense when referring to such provisions
even though they may later have been amended.
By virtue of the definition of "excise duty" in s. 1 read with the provisions
of Part 2 of Schedule 1 of the Act excise duty is payable
on the proceeds of
sales of mineral oil products manufactured in the Republic. The duty is payable
"at the time of entry for home
consumption" of such products, being
excisable
/goods ...
3.
goods (s. 47 (1)). "Home consumption" means consumption for
use in the Republic (s. 1). Liability for the payment of duty is imposed
on the
manufacturer or owner of the goods (s. 44 (8)).
S. 37 (1) makes provision for the rates at
which, subject to the
provisions of s. 75, duty on
goods manufactured in a customs and excise
warehouse
is payable on entry for home consumption. In so far
as it is
material, s. 27 (1) provides that goods
liable to excise duty may not be
manufactured except
in such a warehouse,which is licensed under the
Act.
Goods so manufactured may be entered for storage in
a customs and
excise warehouse with deferment of pay
ment of duty (s. 20 (1) (a)). But no
goods stored
or manufactured in a customs and excise warehouse may
be
taken or delivered therefrom except upon due entry
for one of
/a ...
4.
a number of purposes, the relevant one being "(a) home
consumption and payment of any duty thereon." (s. 20 (4)).
The Act therefore provides that goods manufactured locally and subject to
excise duty may not be delivered from a customs and excise
warehouse to, e.g., a
purchaser for consumption in the Republic unless such goods have been entered
for home consumption and unless
excise duty has been paid. The only exception is
to be found in s. 38 (4). I shall revert to that subsection.
S. 75 (1) (d) provides that, subject to the provisions of the Act and to any
conditions which the Secretary may impose:
"in respect of any excisable goods described in Schedule No. 6, a rebate of
the excise duty specified in Part 2 of Schedule No. 1
/in ...
5.
in respect of such goods at the time of entry for home consumption thereof or a
refund of the excise duty actually paid at the time
of entry for home
consumption shall be granted to the extent and in the circumstances stated in
the item of Schedule No. 6 in which
such goods are specified, subject to
compliance with the provisions of the said item
..."
Schedule 6 to the Act contains an item (609.
05.10) providing for a rebate of duty on distillate fuels for use for certain
purposes
(hereinafter referred to as reduced rate purposes). Diesel oil is a
distillate fuel.
The appellants are oil companies carrying on business as distributors of
inter alia
diesel oil in South Africa. For years they have been selling
diesel oil for various purposes, including reduced rate purposes. An
audit
conducted in 1977 revealed that in certain instances they had not complied with
regulation 410.04.04 (a) promulgated under
s. 120 of the Act (G.N. R.1770 of 5
October 1973 as amended by G.N. R.1088 of 6 June 1975). That regulation must be
read with regulation
609.05.10
/which ...
6.
which provides that the former regulation shall
mutatis
mutandis
apply in respect of any goods specified in and supplied under the
provisions of the aforesaid item 609.05.10.
Regulation 410.04.04 (a) reads as follows:
"Except as may be permitted by the Secretary no person shall be entitled to be
supplied with distillate fuels (for example, gas oil
and diesel oil) or residual
fuel oils (furnace oils) under rebate of duty under the provisions of paragraph
(2) of tariff heading
27.10 relating to such oils in item 410.04, unless, at the
time of purchase or delivery of such oil, he furnishes the supplier thereof
with
a declaration in a form approved by the Secretary and no supplier or re-seller
shall supply or sell oil admissible under rebate
of duty in terms of the said
paragraph unless the person to whom such oil is supplied or sold, has complied
with the provisions of
this
paragraph."
Non-compliance with the regulation
consisted of a failure to obtain the required declaration timeously in cases
where the appellants
supplied diesel
/oil ...
7
oil to users for a reduced rate purpose. Subsequent to the audit the
first respondent ("the Secretary") held the appellants liable
for the payment of
full excise duty on diesel oil supplied in such cases. The appellants then
applied to the Secretary for condonation
of their failure to obtain declarations
at the time of delivery of the oil concerned, but he considered that he was not
entitled
to accede to their requests.
After the appellants had unsuccessfully approached the second respondent,
they instituted proceedings against the respondents in the
Cape Provincial
Division. In their application they alleged that numerous claims had been made
against them by the Secretary for
payment of the difference between the full
duty payable (if a rebate did not apply) and the limited amount of duty actually
paid
on the diesel oil supplied in contravention of the regulation. In other
cases,
/so ...
8.
so the appellants also alleged, full duty had
been paid but claims for refunds by them were later disallowed by the Secretary.
The
amounts involved totalled some R3 million.
In so far as the notice of motion is still material, the appellants claimed
an order declaring that regulation 410.04.04 (a) is invalid,
or alternatively
that the Secretary is entitled to permit "a rebate and/or a refund of excise
duty paid in respect of distillate
fuel where he is satisfied that the said fuel
was used ... [for reduced rate purposes] ... notwithstanding that the prescribed
signed
declaration was not furnished at the time of delivery of the said fuel
..."
As can be inferred from the relief claimed, the appellants contended that the
regulation was ultra
/
vires
...
9.
vires
, and alternatively that the
introductory words of the regulation, viz, "[e]xcept as may be permitted by the
Secretary" conferred
upon him a discretion also in respect of cases where the
required declaration was not timeously obtained with his prior approval.
These
contentions were disputed by the Secretary and the second respondent and
rejected by the court a
quo
(Schock and Tebbutt, JJ). Hence the
application was dismissed with costs.
Prior to the hearing of the appeal the appel
lants filed an application
for leave to amend their
notice of motion by the insertion of a further
prayer
for an order declaring:
"that compliance with regulation 410.04.04 of Part 1 of the fourth schedule
to the regulations made in terms of the Customs and Excise
Act No. 91 of 1964,
is not a condition precedent to the entitlement to a rebate of excise duty on
distillate fuels or a resolutive
condition depriving Appellants of their
/entitlement ...
10.
entitlement to such rebate in terms of item
609.05.10: 105.05/105.10 of Schedule 6 to Act 91 of 1964."
The appellants alleged that a further point of law arose which was not argued
in the court a
quo
, viz., that the regulation is intended to be an
administrative measure only and does not purport to be a condition on the
fulfilment
of which the entitlement to a rebate depends. It was also alleged
that the proposed amendment is not dependent on any issue of fact
but relates
solely to the provisions of the Act and the regulations.
The respondents filed an affidavit opposing the application and the
appellants reacted by filing a replying affidavit. I find it difficult
to
understand why it was considered necessary to file these affidavits since their
contents could have been put
/forward ...
11.
forward by counsel during argument in this court. Be that as it may, counsel
for the respondents eventually did not oppose the application
for amendment and
it was granted because the point involved concerns a purely legal question, does
not involve the presentation of
any evidence and enables this court to deal
fully with the real (main) dispute between the parties (
Trust Bank of Africa
Ltd v Imperial Garage and Filling Station
,
1963 (1) SA 123
(A) 130). In
accordance with the tender made in the application for amendment the appellants
will have to pay the costs occasioned
by that application, excluding the costs
of opposition thereto.
There were also three applications for condonation before this court. One of
these related to the late filing of the respondents'
aforesaid opposing
affidavit. In view of counsel's decision not to oppose the amendment the
application fell away but
/it ...
12.
it is clear that the respondents will have to pay the costs
occasioned by their application. The other two applications were filed
by two of
the appellants, Esso and Trek, who sought condonation of their failure to file
powers of attorney timeously. These applications
were not opposed and were
granted during the hearing of the appeal. Here, again, the applicants for
condonation will have to pay
the costs occasioned by their applications.
It is common cause that, but for the provisions of regulation 410.04.04 (a),
the appellants were entitled to rebates in those cases
where they failed to
obtain the required declarations timeously. Although not spelled out in the
application in the court a
quo
, it also appears to be common cause that
prior to delivery for reduced rate purposes the diesel oil in question was
stored in customs
and excise warehouses.
/Now ...
13
Now, regulation 410.04.04 (a) does not expressly provide that in the
absence of compliance with its provisions the supplier is not
entitled to a
rebate, or that a pre-existing entitlement to a rebate falls away. Nor, in my
view, does the regulation so provide
by implication. Indeed, the phraseology of
the regulation seems to presuppose that a rebate is applicable. All that is
provided,
is that distillate fuels
under rebate of duty
may not be
supplied or obtained unless the receiver furnishes the supplier with the
prescribed declaration at the time of purchase
or delivery. The requirement
therefore clearly relates to fuel already entered under rebate of duty. Viewed
in isolation the regulation
consequently purports to be no more than an
administrative measure designed to ensure that fuel under rebate of duty is in
fact delivered
by the supplier and used by the receiver for a reduced rate
/purpose ...
14
purpose. (By virtue of s. 78 (1), read with s. 1, of the Act, a
contravention of the regulation constitutes an offence.)
I also do not find any indication in the general scheme of the Act that
non-compliance with the regulation was intended to deprive
a supplier of his
right to a rebate. On the contrary - and subject to the provisions of s. 38 (4)
and s. 75 (5) (a) (i), to which
I shall return - duty is payable and the rate
thereof determined at the time of entry for home consumption which must take
place
prior to delivery of the product concerned. It will be recalled that in
terms of s. 20 (4) goods which have been manufactured or
stored in a customs and
excise warehouse may not be taken or delivered from the warehouse for home
consumption unless they have been
entered for such consumption and the duty
thereon has been paid, and
/that ...
15
that in terms of s. 47 (1) duty on excisable goods shall be paid at the time
of entry for home consumption. I have already mentioned
that the Act makes
provision for only one exception. This is to be found in s. 38 (4) which
provides that the Minister may by regulation
permit
inter alia
any
excisable goods to be removed from a customs and excise warehouse on the issuing
by the owner of such goods of a document prescribed
or approved by the
Secretary, and the payment of duty on such goods at a time and in a manner
specified by regulation. The subsection
further provides that, such document
shall for the purposes of s. 20 (4) - and subject to the provisions of s. 39 (2
A), which are
not material - be deemed to be a due entry from the time of
removal of those goods from the warehouse.
It seems clear that if in terms of the regulations /(4.04.02 ...
16.
(4.04.02 and 4.04.09) made under s. 38 (4) excisable goods are removed from a
customs and excise warehouse for home consumption, the
issuing of the required
document is by virtue of s. 38 (4), read with s. 20 (4), deemed to be due entry
for home consumption. And
although in such a case payment of duty may be
deferred, liability accrues and the rate of the duty is determined prior to
actual
delivery to a consumer, i.e., before regulation 410.04.04 (a) can became
operative.
Counsel for the respondents submitted, however, that although the rate of
duty payable (and therefore the applicability of a rebate)
is determined at the
time of entry for home consumption, such determination is conditional in that
full duty on goods entered under
rebate of duty may later become payable. That
much may be conceded - indeed, one of the main purposes of s. 75 (5) (a) (i) is
to
ensure that full duty is
/payable ...
17
payable on goods under rebate of duty but supplied for a purpose other
than that for which they were entered, in
casu
otherwise than for a
reduced rate purpose. As regards the disposal of goods, liability for full duty
in terms of that subsection
accrues, however, only if the goods have been
disposed of "otherwise than in accordance with the provisions of this section
[i.e.,
section 75] and of the item under which they were so entered." And since
the diesel oil in question was in fact delivered for a reduced
rate purpose,
counsel for the respondents eventually conceded that the oil was disposed of in
accordance with item 609.05.10. Nor
could he point to any provision of s. 75
which was not complied with by the appellants in disposing of the oil in
contravention of
regulation 410.04.04 (a).
Counsel for the respondents also sought to
/place ...
18.
place reliance on s. 75 (10) of the Act which
reads as follows:
"No goods may be entered or acquired under rebate of duty under this section
or the regulations until the person so entering or acquiring
them has furnished
such security as the Commissioner may require and has complied with such other
conditions (including registration
with the Commissioner of his premises and
plant) as may be prescribed by the Minister by regulation in respect of any
goods specified
in any item of Schedule No. 3, 4, 6 or 7."
The Court a
quo
found that the "acquisition" referred to in s. 75 (10)
is not the acquisition by the end user of the fuel since he is not the person
entitled to a rebate. That finding was, rightly, in my view, not challenged in
this Court. It follows that for present purposes the
subsection requires
compliance with only such regulations as are applicable up to the stage of entry
of diesel oil for home consumption
which, as already stated, takes place
prior
/to ...
19.
to delivery of the oil to a consumer. And eventually ,
counsel was constrained to concede that the subsection does not assist the
respondents.
It will be recalled that s. 75 (1) (d) makes provision for a rebate of duty
"subject to compliance with the provisions" of the relevant
item of Schedule 6,
and that the appellants in fact complied with such provisions. It is, however,
not without significance that
neither s. 75 (1) (d) nor s. 75 (5) (a) (i) makes
the provision for a rebate of duty subject to compliance with any of the
regulations.
The main contention of counsel for the respondents was based on the
introductory phrase of s. 75 (1), the material part of which reads
"[s]ubject to
the provisions of this Act". Counsel submitted that since in terms of s. 1 "this
Act" includes any regulation made
under the Act, the right to a rebate provided
for in s. 75 (1) (d) is subject to compliance
/with ...
20.
with the regulations. And since the appellants
failed to comply with regulation 410.04.04 (a), so the submission continued,
they did
not dispose of the diesel oil concerned in accordance with the
provisions of s. 75. Consequently full duty became payable under s.
75 (5) (a)
(i).
The above submission, in my view unjusti
fiably equates "subject to the
provisions of this Act"
with "subject
to compliance
with" such
provisions.
As already stated, the latter phrase was employed in
s. 75 (d)
and s. 75 (5) (a) (i) of the Act, and had
it been the legislature's intention
to make the right
to a rebate dependent on actual compliance with all
the
other sections of the Act and also the regulations,
it would no doubt have
said so. Consequently I have
little doubt that it could not have been the
intention
to grant a right to a rebate subject to compliance
/with ...
21.
with each and every provision of the Act and the
regulations, or at any rate such provisions as have a bearing on the entry or
disposal
of goods under rebate of duty. In this regard it suffices to refer to
regulation 410.04.04 (b) which provides that a "seller ...
shall keep such books
and documents relating to such supply [i.e., supply of distillate fuel in terms
of para. (a)] as the Secretary
may require, and the said books and documents
shall at all reasonable times be available for inspection by the Controller". I
find
it difficult to believe that the legislature could have intended that a
supplier should forfeit his right to a rebate merely because,
e.g.,the relevants
books and documents were fortuitously not available for inspection at a time
which can be regarded as "reasonable".
If the phrase under consideration is read in conjunction with the operative
provisions of s. 75
/it ...
22.
it plainly means that the rebates provided for in paragraphs
(a) to (e) are subject to such other provisions of the Act (including
the
regulations) as may further qualify the entitlement to a rebate. I have already,
pointed out that regulation 410.04.04 contains
no such qualification. It does
not provide, either expressly or by implication, that a right to a rebate
conferred by s. 75 (c) is
conditional on compliance with its provisions, or that
a pre-existing right to a rebate falls away in case of non-compliance.
The regulation falls to be contrasted with a number of other regulations
which indeed qualify the right to a rebate. I mention only
the following
examples:
1) In terms of regulation 608.01.01 the granting
/of ...
23.
of a rebate or refund of duty in terms of the provisions of
item 608.01 is subject to submission to the Controller of a prescribed
application.
2) Regulation 609.04.10 provides that no person
shall be entitled to a
rebate unless he furnishes pre
scribed returns, particulars and
declarations.
3) In terms of regulation 609.04.20 any rebate
granted under item
609.04.20 "shall be subject" inter
alia
to a declaration by a responsible official of the church that the
wine supplied will be used in the church concerned solely for religious
purposes.
By contrast regulation 410.04.04 (a) is singularly silent as far as the
effect of non-compliance with its provisions on the entitlement
to a rebate , is
concerned, and hence I do not think that the introductory phrase of s. 75 (1)
assists the respondents.
/Of ...
24.
Of course, had the regulation qualified the
right to a rebate in the sense contended for by counsel for the respondents, the
question
would have arisen whether its promulgation was
intra vires
the
powers to make regulations conferred upon the Minister by s. 120 of the Act.
In the result I hold that a mere non-compliance with the provisions of
regulation 410.04.04 (d) did not deprive the appellants of
their entitlement to
rebates. It follows that their main prayer must be granted, and it is therefore
unnecessary to deal with the
bases on which the court a
quo
dismissed the
application.
The appeal succeeds with costs, including the costs of two counsel, and the
following is substituted for the order of the court a
quo
:
/1) ...
25.
1) It is declared that compliance with regula
tion
410.04.04 of Part 1 of the fourth sche
dule to the regulations made in terms
of the
Customs and Excise Act No. 91 of 1964, is
not a condition precedent
to the entitlement
to a rebate of excise duty on distillate fuels
or a
resolutive condition depriving the Applicants
of their entitlement to such
rebate in terms
of item 609.05.10: 105.05/105.10 of Schedule
6 to Act 91 of 1964.
2) The respondents are directed to pay the costs
of the application.
The following further orders are made:
(a) The appellants are directed to pay the costs
/occasioned ...
26.
occasioned by their application for amendment of their
original notice of motion, excluding the costs of opposition thereof.
(b) The respondents are directed to pay the costs
occasioned by their
application for condona
tion of the late filing of their opposing
af
fidavit in respect of the application men
tioned in (a) above.
(c) The third and eighth appellants, Esso and Trek,
are directed to pay
the costs occasioned by
their applications for condonation of the
late
filing of their powers of attorney.
H.J.O. VAN HEERDEN JA
KOTZé JA
MILLER JA
CONCUR
GALGUT AJA
ELOFF AJA