Baking Tin (Pty) Limited v Minister of Finance NO and Anothe (6067/05) [2006] ZAWCHC 11; [2007] 1 All SA 477 (C) (22 March 2006)

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[2006] ZAWCHC 11
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Baking Tin (Pty) Limited v Minister of Finance NO and Anothe (6067/05) [2006] ZAWCHC 11; [2007] 1 All SA 477 (C); 69 SATC 171 (22 March 2006)

IN THE HIGH
COURT OF SOUTH AFRICA
CAPE
OF GOOD HOPE PROVINCIAL DIVISION
CASE
NO :
6067/2005
In the matter
between :
THE
BAKING TIN [PROPRIETARY] LIMITED
Applicant
and
THE
MINISTER OF FINANCE N.O
First Respondent
THE
COMMISSIONER FOR THE SOUTH
AFRICAN
REVENUE SERVICE
Second Respondent
_______________________________________________________________________________
JUDGMENT
DELIVERED THIS 22
nd
DAY OF MARCH, 2006
_______________________________________________________________________________
FOXCROFT, J :
This is an appeal
in terms of section 47(9)(e) of the Customs and Excise Act, No 91 of
1964
[‘the Customs Act’]
against determinations made by
the Commissioner for the South African Revenue Service
[‘the
Commissioner’].
The Commissioner is Second Respondent in this
appeal and First Respondent abides the judgment of this Court.
The case concerns three determinations made by the
Commissioner on 4 May 2004, 27 August 2004 and 3 February 2005 in
connection with
aluminium products which Applicant describes as
‘catering consumables’
. These goods were imported, and
the issue in this matter is
their correct classification for customs duty
purposes in terms of the Customs Act. Applicant contends that the
imported goods are
not subject to excise duty since, so Applicant
contends, they fall to be classified as goods described under heading
76.16.99.90
of Schedule 1 of the Customs Act
[‘the
Schedule’].
The applicable parts of the Schedule appear at
page 248-249 of the papers. The various items under heading 76.15
are as follows
:
“
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: …”
Under that heading, individual items are
classified under further sub-categories, including 76.15 19 20
entitled
‘Hollowware’
for table or kitchen use (excluding
buckets). 76.15 19 90 is described as
‘Other’
.
Heading 76.16, is entitled
‘
Other
articles of aluminium’,
and the last item under that heading being
76.16 99 90
is also described as
‘Other’
.
It is this last sub-heading which Applicant
contends governs the goods which it imported and which are therefore
duty free.
Ms R R Cremore, a Tariff Specialist in the employ
of the South African Revenue Service
[‘SARS’]
sets out
in her answering affidavit that she
“
made
two tariff determinations in connection with the aluminium foil
containers imported by the Applicant under bill of entry No 5894
dated 17 March 2004. The first tariff determination was made on 4
May 2004 …
I
determined that tariff sub-heading 76.15.19.20 applies to the goods
imported by the applicant.”
She adds that after a re-submission for a
determination in respect of the same goods, something which
frequently occurs, she was
“
afforded
an opportunity to consider [the] matter afresh and to amend a tariff
determination if an earlier determination is shown to
be incorrect.”
She also carefully considered submissions
contained in the application for a new tariff determination prepared
by Mr Quintus van
der Merwe of Shepstone & Wylie
“wherein
it was contended that tariff heading 7615.19.90 applies.”
She continued :
“
There
was nothing in the submission to call into question the tariff
determination made by me on 4 May 2004 and I subsequently confirmed
it when I made the second tariff determination. I note,
en passant,
that the applicant has since shifted from the
stance adopted by Shepstone & Wylie in that it now contends in
the notice of motion
that the goods should be classified under tariff
heading 7616.99.90.”
The third determination referred to above, was
made on 3 February 2005 by Mr Jan Pool [Record, p.292].
In his Replying Affidavit, Mr
Spence
(on
behalf of Applicant) states that
“I am advised that the right of appeal described
in section 47(9)(e) of the Customs Act can logically only arise when
the Commissioner
has made a final determination. If a tariff
determination has been resubmitted to the Commissioner for his
reconsideration in terms
of section 47(9)(d)(bb) then the date of the
determination will be the date upon which the final determination is
made. This will
be the date upon which the Commissioner either
amends the determination which has been submitted to him for
reconsideration, or advises
the importer that his earlier
determination is final and will not be amended.”
I entirely agree with the advice given to Mr
Spence. Any other construction would, in my view, be unfair,
unworkable and contrary
to the provision for reconsideration of
determinations, apparently a frequent occurrence.
The matter was certainly prosecuted within the
period of one year commencing on 3 February 2005, and was in fact set
down for hearing
in the Third Division of this Court on 23 August
2005. On that day an order of this Court provided for the further
conduct of the
matter.
The period of one year within which to commence
appeal proceedings is, in any event, not cast in stone. Section 96
of the Customs
Act provides in subsection (1)(c) as follows :
“
(i) The
State, the Minister, the Commissioner or an officer may on good cause
shown reduce the period specified in paragraph (a) or
extend the
period specified in paragraph (b) by agreement with the litigant.
If
the State, the Minister, the Commissioner or an officer refuses to
reduce or to extend any period as contemplated in subparagraph
(i),
a High Court having jurisdiction may, upon application of the
litigant, reduce or extend any such period where the interest
of
justice so requires.”
The first period referred to is the period of one
month during which time legal proceedings may not be commenced. The
latter period
referred to, which the Court may extend, is the period
of a year and which is in dispute in the present matter. If I were
to be
wrong in regarding Applicant to be properly within the period
of one year allowed by the Customs Act to commence the appeal, I
would
most certainly exercise the discretion conferred upon me by the
Customs Act to extend the period of one year for the few months
required
to prevent extinctive prescription, if the year were
notionally to commence on the date of the first determination,
viz.
4 May 2004.
On the merits of the matter, Mr Spence, the
Managing Director of the Applicant, refers to a letter from the
Controller Customs: Cape
Town dated 4 February 2005 in which a sample
of the commodity being assessed was referred to as
“
a
rectangular aluminium foil container, disposable, with the following
dimensions :
Base: (approximately)
13cm wide x 18.5cm.
The
sides are approximately 3.1cm high and incline outwards from the
base.”
It is then stated that
“
Protestant
states that the commodity is primarily used in the baking industry:
The food is placed in the foil container during the
production and
cooking phase. Counsel avers that the essence of the product is that
it is designed to be used once, and once used,
is discarded.”
The Controller clearly did not agree with the
protestant’s view, and treated the items as
‘articles for
kitchen use’
. The Controller added :
“
It
is submitted that the article in issue is used as a baking tin or
baking dish, either during the cooking phase of the food contained
therein e.g. a bakery or in the home in the case of an uncooked food
product.”
After referring to usage in hotels, restaurants,
boarding houses etc., the letter continues :
“
The
EN’s do not specify any requirements as to durability.”
I take it that the reference
‘EN’
is to
the term
‘Explanatory Notes’
,
which features
throughout the Schedule previously referred to.
In the fairly recent case of
LEWIS
STORES [PTY] LTD v MINISTER OF FINANCE & ANOTHER,
65 SATC 172
,
the goods in issue were pots and pans and therefore clearly
hollowware within the meaning of that word as it appears in the
Shorter
Oxford English Dictionary - where it is still printed with a
hyphen – and a year of origin 1416 is given. The word is defined
as
‘bowl or tube shaped ware of earthen ware, wood or (now esp.)
metal’.
In the New Concise Oxford English Dictionary the
hyphen has disappeared, as befits the normal progression of such
constructions,
and the word is defined as
‘hollow cookware or
crockery, such as pots or jugs’.
In essence, the customs officials considered that
the containers which had been imported in this case were cookware -
or were at
least capable of being used as cookware – and the
importers regarded them as consumables.
Mr Jonkers, in his affidavit on behalf of Second
Respondent, maintains that the aluminium foil containers imported by
Applicant
cannot be likened to
‘consumables’
as defined by
the New Oxford Dictionary published in 1998 as
‘a commodity that
is intended to be used up relatively quickly: drugs and other medical
consumables’
. Mr Jonkers then attaches extracts from that
dictionary and the third edition of the Shorter Oxford English
Dictionary.
No reason is provided for his view that the
aluminium foil containers imported by Applicant
‘cannot be
likened to consumables’
. If it is true that the imported
articles are intended to be disposed of and replaced rapidly, as
contended for by Applicant, then
they are certainly, in my view,
intended to be used up relatively quickly. Mr Jonkers, in answering
this allegation, merely says
that the correct customs classification
has been convincingly displayed.
Reverting to
LEWIS
STORES v MINISTER OF FINANCE
[supra],
SCHUTZ, JA
referred to
an earlier decision in the Appellate Division, where
TROLLIP,
JA
in
SECRETARY FOR
CUSTOMS AND EXCISE v THOMAS BARLOW & SONS LTD, 1970[2] SA 660 [A]
at 675 D-F
dealt with
the structure of that part of the Customs and Excise Act which was
relevant, and which is relevant before me in the present matter.
TROLLIP, JA
explained how
Schedule 1 of the Customs Act is grouped in sections, chapters and
sub-chapters, given titles indicating as concisely
as possible the
broad class of goods each covers.
TROLLIP,
JA
went on :
“
Within
each chapter and sub-chapter the specific type of goods within the
particular class is itemized by description of the goods
printed in
bold type. That description is defined in the Schedule as a
“heading”. Under the heading appear sub-headings of
the species
of the goods in respect of which the duty payable is expressed. The
Schedule itself and each section and chapter are
headed by “notes”,
that is, rules for interpreting their provisions.”
There was no difficulty about pots and pans being
hollowware in the matter before
SCHUTZ,
JA,
and his reference to the decision of
NICHOLAS,
AJA
(as he then was) in
INTERNATIONAL
BUSINESS MACHINES SA [PTY] LTD v COMMISSIONER FOR CUSTOMS AND EXCISE,
1985[4] SA 852 [AD] at 863.
“
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.”
[Emphasis applied].
Taking interpretation first, the applicable
heading is “Table, kitchen or other household articles and parts
thereof, of aluminium;
…”. One must, of course, look for
ordinary meanings of the words used, since there is no definition
section in the Customs
Act determining their meaning.
An article, in my view, used as a household
article, refers to an implement. This is defined in the Shorter
Oxford Dictionary
as having its origins in the Latin word
‘implementum’
meaning a filling up and taken as being
equivalent to
‘that which serves to fill up or stock (a house,
etc.)’.
The first meaning of the English noun given is
‘things that serve as equipment or outfit, as household
furniture, ecclesiastical vestments, etc.’
The word
‘article’
itself derives from the diminutive
‘articulus’
of
‘artus’,
meaning
‘a joint’.
The
Shorter Oxford Dictionary gives for the Latin word
‘articulus’
the meaning,
‘the parts joined on’;
whence
‘transf.
the component parts’.
Pots, pans, kettles, jugs, bowls etc. are all
obviously implements and therefore articles of household use. A
light weight metal
container capable, perhaps, of being used as a
roasting pan on a few occasions before being thrown away, is not, to
my mind, part
of one’s kitchen equipment. I would venture to
suggest that in the vast majority of households, where ready-made
foods are bought
and contained or packaged by way of thin metal
containers such as those imported by Applicant, these containers
would be discarded
immediately after use. They cannot be properly
likened to pots and pans in the ordinary sense.
I turn to the second and third criteria referred
to by NICHOLAS, AJA. These are the
nature and characteristics
of the goods, imported as Applicant says as
‘catering
consumables’
and the selection of the heading most appropriate
to the goods. Applicant contends that these aluminium foil
containers are in essence
containers used for the preparation and
packaging of pies and pre-cooked food by the catering industry, and
are not designed for
use as pans for roasting or kettle braais. [See
Record, p.349].
The important allegation is then made in reply by
Applicant that the foil pans manufactured by Hulett and depicted on
photographs
Annexures ‘J.13’, ‘J.14’ and ‘J.15’ are quite
different from those imported by Applicant.
I am fortified in my view of this case by the
Explanatory Note after the heading in 76.15, which reads as follows :
“
This
heading covers the same types 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.”
Turning to the Explanatory Notes to 73.23, which
is a heading almost identical to 76.15 - the difference being that
one is here concerned
with aluminium and not iron or steel - one
finds that the group is regarded as comprising a wide range of iron
and steel articles
used for table, kitchen or other household
purposes. Looking at the first of the groups referred to, one notes
articles for kitchen
use and a wide selection of what would properly
be called cookware or storage
ware such as milk cans, bread
bins, tea caddies, plate racks, funnels, etc.
Moving on to sub-paragraph 2 in the Explanatory
Note to 73.23, the articles for table use described are all articles
of a permanent
or semi-permanent nature. Durability is a feature of
all of these items and speaks for itself.
1
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 third category in the Explanatory Notes
relates to boilers, dustbins, buckets, coalscuttles, bootscrapers,
stands for flat irons
and other items no longer in common use, for
instance shoe trees.
The articles in the three groups are all
utensils, implements or equipment making up the kitchen, the table or
the household generally.
Aluminium foil packaging, capable of being
used on a makeshift (that is to say, a temporary or interim) basis
to heat or cook food
does not, in my view, properly fall into those
categories.
My conclusion renders it unnecessary for me to
decide how hollow a plate has to be before it properly becomes
hollowware, as opposed
to flatware, which is defined in the
dictionaries as something of a relatively flat nature. Once the
aluminium foil containers do
not properly fit the classification
contended for by Respondent, then they fall to be classified for duty
purposes under tariff sub-heading
76.16.99.90. The result is that
they are duty free.
In my view the category contended for by Applicant
is the correct one, and Second Respondent’s determinations were
incorrect.
There will accordingly be an order in terms of
paragraphs 3, 4 and 5 of the Draft Order annexed to the Replying
Affidavit of Mr Spence
(page 372) save that the date
‘3 May
2004’
in paragraph 4 should be amended to read
‘3
February 2005’
.
__________________
J G FOXCROFT
---ooo0ooo---
REPORTABLE
JUDGMENT
IN THE HIGH COURT OF
SOUTH AFRICA
CAPE
OF GOOD HOPE PROVINCIAL DIVISION
CASE
NO :
6067/2005
In the matter
between :
THE
BAKING TIN [PROPRIETARY] LIMITED
Applicant
and
THE
MINISTER OF FINANCE N.O.
First
Respondent
THE
COMMISSIONER FOR THE SOUTH
AFRICAN
REVENUE SERVICE
Second
Respondent
________________________________________________________________________________
Counsel for Appellant : M WRAGGE [SC]
Instructed by : HEUER & ASSOCIATES
Advocates for Defendant : R T WILLIAMS [SC]
C M D TSEGARIE
Instructed by : STATE ATTORNEY, CAPE TOWN
Dates of Hearing : 27
th
February, 2006
Date of Judgment : 22
nd
MAY, 2006
1
Accordingly it was not necessary for the
Explanatory Notes to require
‘durability’
[See the stance of the Controller at p33, as referred to earlier]
/
. . . . .