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[2009] ZAGPPHC 258
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Smith Mining equipment (Pty) Ltd v Commissioner: South African Revenue Service (16254/08) [2009] ZAGPPHC 258 (3 July 2009)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
NORTH
GAUTENG PROVINCIAL DIVISION PRETORIA
DATE:
3/07/2009
CASE
NUMBER: 16254/08
In
the matter between:
SMITH
MINING EQUIPMENT (PTY)
LTD
..............................................
Applicant
and
THE
COMMISSIONER: SOUTH
AFRICAN
REVENUE SERVICE
….....................................................
Respondent
JUDGMENT
INTRODUCTION
1.
On the 25th January 2007 the respondent classified an imported
utility vehicle, known as the Kubota RTV 900, for duty purposes
under
Tariff Heading 8704.21.80 of Part 1 of Schedule No 1 to the Customs
and Excise Act 91 of 1964, (‘the Act”).
2.
The applicant is the importer of the vehicle and seeks an order
setting aside this classification, alternatively an order compelling
the respondent to issue a new determination classifying the vehicle
for duty purposes under Tariff Heading 8709.19 of Part 1 of
Schedule
No 1 to the Act; together with an appropriate costs order.
3.
The respondent opposes the application.
THE
PARTIES
4.
The applicant is Smith Mining Equipment (Pty) Ltd, a company with
limited liability, duly incorporated in terms of the Company
Laws of
South Africa with principal place of business at 2 Lascelles Road,
Meadowbrook, Edenvale. The applicant imports the Kubota
RTV 900
Utility Vehicle (‘the vehicle”).
5.
The respondent is the Commissioner for the South African Revenue
Service, charged with the administration of the Act, with principal
offices at 299 Bronkhorst Street, Nieuw Muckleneuk, Pretoria.
THE ISSUE
6.
As set out in the introduction, the question for the Court’s
decision is the correctness or otherwise of the respondent’s
determination of the Tariff Heading 8704.21.80 as the most
appropriate heading for the imposition of duty upon the vehicle. If
the determination is correct, the vehicle will attract 30% duty.
7.
The applicant contends that the appropriate Tariff Heading for the
determination of duty upon the vehicle is TH 8709.19, which
would
render the vehicle free of duty.
8.
Under the heading applied by the respondent, the vehicle is
classified as one for the transport of goods, whereas the applicant’s
preferred heading would classify the vehicle as a self-propelled
works truck.
9.
The Explanatory Notes to Tariff Heading 87.04 are headed
“
MOTOR
VEHICLES DESIGNED FOR THE TRANSPORT OF GOODS”.
This
heading includes dumpers and other trucks powered by diesel engines
or spark-ignition internal combustion engines with a gross
vehicle
weight that may or may not exceed 20 tonnes, with sub-classifications
that do or do not exceed 5 tonnes of g.v.w.
10.
Several defining features listed in these Notes include
(a)
Bench - type seats without safety belts and with fold-away seats for
passengers in the rear area;
(b)
A separate cabin for the driver and passengers and a separate open
platform with side panels and a drop-down tailgate;
(c)
The absence of rear-view windows on side panels with sliding,
swing-out or lift-up doors for the loading of goods;
(d)
The presence of a permanent barrier between the area for the diver
and passengers and the rear area;
(e)
The absence of comfort features for the passengers.
11.
Motor vehicle chassis fitted with an engine and cab are also included
under this heading.
12.
The Explanatory Notes to Tariff Heading 87.09, the heading contended
for by the applicant, is headed:
“
Works
trucks, self-propelled, not fitted with lifting or handling
equipment, of the type used in factories, warehouses, dock areas
or
airports for short-distance transport of goods; tractors of the type
used on railway station platforms; parts of the foregoing
vehicles.”
13.
The heading acknowledges that these vehicles may be of many types and
sizes and propelled by combustion engines, electricity
or other
engines.
14.
They are defined as being generally unsuited for the transport of
passengers or for the transport of goods by road or other
public
ways, with a top speed generally not exceeding 30 to 35 km/h when
laden, a turning radius approximately equal to the length
of the
vehicle and the absence of a closed driving cab.
15.
The question whether the respondent was correct in concluding that
the former Tariff Heading is the most appropriate classification
for
the vehicle must therefore be decided with reference to the type,
description and nature of the vehicle and the purpose for
which it
was imported.
THE
DESCRIPTION OF THE VEHICLE
16.
The parties are agreed that the vehicle is manufactured by the Kubota
Corporation of Osaka in Japan and imported as a multi-purpose
vehicle
of the type RTV 900 SG-EU KSD.
17.
Both parties have annexed photographs of the imported vehicle to
their affidavits, the respondent having inspected the vehicle
through
its tax lawyers.
18.
These photos show a sturdy, low-slung, basic load-carrying vehicle
with a minimum of creature comforts, used in what appear
to be
factory, airport or similar surroundings and apparently unregistered
for use on a public road, but capable of towing a smaller
than
average, compact trailer.
19.
The applicant emphasizes the vehicle’s features that underline
its use and usefulness as a factory truck or works vehicle:
It is
fitted with a 21 horsepower three-cylinder diesel engine; has a cargo
bed for transportation of goods; is not fitted with
lifting or
handling equipment; there is an absence of features or optional
extras that would allow the vehicle to be registered
for use on a
public road, such as doors, a windshield, mirrors, safety belts or a
speedometer; the top speed of the vehicle is
40km/h unladen and 30 to
35 km/h when fully laden; its fuel tank has limited capacity; there
is no cab and it is fitted with heavy-duty
tyres.
20.
In answer to the applicant’s description, while generally
accepting the correctness of this description of the vehicle,
the
respondent annexed to its answering affidavit a wide-ranging array of
pamphlets, internet advertisements and descriptions advocating
alternative uses of models in the same range such as gardening and
outdoor activities, maintenance of golf courses, recreational
activities and the like to illustrate the fact that the vehicle was
not imported as a works truck, but was equally suited to be
classified as vehicle that could be registered for use on a public
road and was therefore of a type that should be classified as
determined by the respondent. In addition, pamphlets and photos of
other trucks were annexed to illustrate differences between
the
various uses these and the vehicle under discussion could be put to.
21.
The applicant took grave exception to this approach and launched a
comprehensive application to strike out all the material
obtained
from sources not verified by confirmatory affidavits by properly
qualified deponents dealing directly and issuably with
the
applicant’s averments in the founding affidavit. This
application is dealt with infra.
22.
When the vehicle described above is considered against the background
of the Tariff Headings, it would seem at first blush that
it could be
classified under either heading.
23.
This fact has been amply illustrated by the extensive debate in the
parties’ heads of argument and in their submissions
to this
court of the proper classification of the imported vehicle, the
careful analysis of the individual words used in the two
Tariff
Headings in issue, the copious reference to dictionary meanings of
the terminology employed in them and the use to which
the imported
vehicle is, and could be put.
24.
In the light of the court’s finding on the correct approach to
the classification of the vehicle it is not necessary to
deal in
detail with the arguments advanced by the parties, although they were
of great assistance to the court.
25.
In deciding which Tariff Heading is the most appropriate, the court
must be guided in the first instance by the correct interpretation
of
the Headings as assisted by the notes thereto - see: Secretary for
Customs and Excise v Thomas Barlow & Sons Ltd
1970 (2) SA 660
(A)
at 675 D to 676 F; International Business Machines SA (Pty) Ltd v
Commissioner for Customs and Excise
1985 (4) SA 852
(AD) - and then
to determine the objective characteristics of the vehicle at the time
of its importation and use those to find
the appropriate Tariff
Heading, see Commissioner, South African Revenue Service v The Baking
Tin (Pty) Ltd
2007 (6) SA 545
(SCA) at 549 at [13] to [15].
26.
The intention that the importer or manufacturer may have had for the
use of the imported article concerned is usually irrelevant
and may
only assume some importance if the Tariff Heading makes allowance for
the consideration of such intention: Commissioner,
South African
Revenue Service v Komatsu Southern Africa (Pty) Ltd
2007 (2) SA 157
(SCA).
27.
Once these principles are applied, it becomes clear that the vehicle
in question is not one imported for purposes of carrying
loads on
public roads, highways or byways, but as a transporter of goods in a
factory or airport setting. The principal features
of the vehicle set
out above, when considered objectively, are such that they are rather
to be sought in works trucks in a factory
setting than in goods
transporters on a road, open or otherwise.
28.
It follows that the applicant is entitled to succeed and that the
respondent’s determination must be set aside.
THE
APPLICATION TO STRIKE OUT
29.
If the above reasoning is correct, the respondent erred in annexing
the extracts from the websites already referred to as well
as the
photographs of different trucks in different settings.
30.
These documents and the paragraphs referring thereto in the answering
affidavit in support of the respondent’s position
are either
opinion evidence not given by a qualified expert or are inadmissible
as being irrelevant because the author has neither
sworn to an
affidavit, nor do the documents shed light on the interpretation the
court has to perform.
31
The following documents are therefore struck out:
a)
Annexure LM 14 on pp 272- 303;
b)
Annexure LM 16 on pp 305- 317;
c)
Annexure LM 18 on pp 386- 389;
d)
Annexure LM 19 on pp 399- 419;
e)
Annexure LM 20 on pp 420- 443;
As
well as the following paragraphs in the answering affidavit: 12.2;
13.10; 13.11; 13.12; 13.17;13.18; 13.19
32.
The applicant has sought a punitive costs order, but such is not
justifies in the court ‘s opinion.
33.
The respondents is to pay the applicant’s taxed costs of the
application to strike out on the arty and party scale, such
costs to
include the costs of two counsel.
THE
ORDER IN THE PRINCIPAL APPLICATION
34.
An order is granted in terms of prayers 1 and 3 of the Notice of
Motion, while prayer 2 is granted, but the words “alternatively
the respondent is ordered to issue a new determination” are
deleted therefrom.
35.
The costs are to include the cost of two counsel.
Dated
at Pretoria on this 1st day of July 2009
E
Bertelsmann
Judge
of the High Court