THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 565/2023
In the matter between:
THE COMMISSIONER FOR THE SOUTH
AFRICAN REVENUE SERVICE APPELLANT
and
MINING PRESSURE SYSTEMS (PTY) LTD RESPONDENT
Neutral Citation: The Commi ssioner for the South African Revenue Service v
Mining Pressure Systems (Pty) Ltd (565/2023) [2026] ZASCA 21
(27 February 2026)
Coram: ZONDI DP, MATOJANE, GOOSEN and COPPIN JJA and
DAWOOD AJA
Heard: 24 November 2025
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for handing-down of the judgment
is deemed to be 27 February 2026 at 11h00.
Summary: Customs and Excise Act 91 of 1964 – tariff determination – classification
of goods for the purposes of customs duty – imported seamless carbon steel pipes
– whether the tariff heading 7304.39.35 or the tariff heading 7304.19.90 is the most
appropriate classification.
2
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: The Gauteng Division of the High Court, Pretoria (Du Plessis AJ
sitting as court of appeal in terms of s 47(9)(e) of the Customs and Excise Act 91 of
1964):
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the high court is set aside and is replaced with the following order:
‘The appeal is dismissed with costs, including the costs of two counsel where
so employed, and the qualifying expenses of Dr N D Burger are allowed.’
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Coppin JA (Zondi DP, Goosen JA and Dawood AJA concurring):
[1] This appeal concerns a dispute about the correct classification of seamless
carbon steel pipes (the pipes) for the purposes of customs duty payable in terms of
the Customs and Excise Act 91 of 1964 (the Act).
[2] The classification of the pipes for that pu rpose by the Commissioner of the
South African Revenue Service (the Commissioner) under tariff heading (TH)
7304.19.90 was taken on appeal by the respondent, Mining Pressure Systems (Pty)
Ltd, by way of an application to the Gauteng Division of the High Court, Pretoria (the
high court), in terms of s 47(9)(e) of the Act. On 15 March 2023 the high court upheld
the respondent’s appeal and made an order to the effect that (i) the Commissioner’s
determination is set aside and is replaced with a tariff determination in terms of which
the pipes are classified under TH 7304.39.35 as contended for by the respondent;
and (ii) the Commissioner is ordered to pay the costs of the application. The high
3
court granted the Commissioner leave to appeal to this Court against the whole of
its order.
[3] The respondent imported the pipes from China, where they were
manufactured. It supplies them to the mining industry where they are applied
(according to the respondent) for various purposes, including chilled water columns,
high-pressure pump columns, backfill columns and for the transmission of drinking
water. Before the Commissioner’s determination, the respondent cleared the pipes
duty free under TH 7304.39.35, which applies to ‘Tubes, pipes and hollow profiles,
seamless, of iron (excluding cast iron) or steel: other, of circular cross -section, of
iron or non -alloy steel: Other: of a wall thickness exceeding 25 mm or an outside
cross-sectional dimension exceeding 170 mm’.
[4] In May 2018 a dispute arose between the parties concerning the classification
after a shipment of the pipes cleared under the bill of entry was stopped for
inspection by customs officials. The respondent thereupon applied for a tariff
determination, and pending its outcome, caused a provisional payment to be made
as well as a voucher correction to be processed in order to secure the release of the
shipment. The respondent’s initial application was rejected , and the respondent re-
submitted the application on 18 December 2018. On 15 January 2019 the
Commissioner issued a tariff determination to the effect that the pipes were to be
classified under TH 7304.19.90 which applies to ‘Tubes, pipes and hollow profiles,
seamless of iron (excluding cast iron) or steel: line pipe of a kind used for oil or gas
pipelines: Other. ’ In terms of that classification a 10 per cent customs duty was
payable.
[5] In terms of s 47(9)( a)(i)(aa) of the Act the Commissioner may, inter alia,
determine the tariff headings, tariff subheadings (TSH), or tariff items, or other items,
or any Schedule under which any imported goods, goods manufactured in the
or any Schedule under which any imported goods, goods manufactured in the
Republic of South Africa, or goods exported, shall be classified. An appeal against
such classification lies to the high court with jurisdiction, before a single judge. It is
an appeal in the wide sense.
4
[6] It is trite that the classification of goods under appropriate tariff headings and
subheadings consists of three stages. The first is the interpretation stage, when the
meaning of the potential headings, the relevant section and chapter notes are
ascertained. The second stage is about identifying the goods in question. The third
stage is where the most appropriate heading for the goods is de cided upon in light
of the outcome of the previous two stages.1
[7] The legal sources for determining an appropriate classification are found in
Schedule 1 Parts 1 and 2 of the Act. The body of case law is another source. Part 1
of Schedule 1 of the Act contains, the tariff or item headings and subheadings and
the notes. They describe the goods to which they apply and are based on the
Harmonised System for the Classification of Goods. In Distell v Commissioner of
South African Revenue Service2 the statutory sources are described as follows:
‘The legal sources applicable to tariff classification are -
(a) Schedule 1 to the Act, Part 1 of which deals with customs duties, and Part 2 with excise
duties. Part 1 contains the wording of the tariff he adings, section notes and chapter notes.
The tariff headings in Part 1 are used in Part 2 for purposes of imposing excise duty.
Schedule 1 also contains, in section A of the General Notes, the General Rules for the
Interpretation of the Harmonized System. In the present matter Interpretative Rules 1, 3 and
6 may have relevance.
(b) The Explanatory Notes to the Harmonized System (sometimes called ‘Brussels Notes’)
issued from time to time by the World Customs Organization. In terms of s 47(8)(a) of the
Act, the interpretation of any tariff heading or sub -heading in Part 1 of Schedule 1, the
general rules for the interpretation of Schedule 1, and every section note and chapter note
in that Part, is ‘subject to’ the Explanatory Notes.’
[8] In terms of Rule 1 o f the General Rules for the Interpretation (GRI) of
[8] In terms of Rule 1 o f the General Rules for the Interpretation (GRI) of
Schedule 1 of the Act, the titles of sections, chapters and sub-chapters are provided
for ease of reference only. For legal purposes, classification is to be determined
according to the terms of the headi ngs and any relative section or chapter notes,
1 International Business Machines SA (Pty) Ltd v Commissioner for Customs and Excise 1985 (4) SA
852 (A) at 863 G-H.
2 Distell Ltd and Another v Commissioner of South African Revenue Service [2010] ZASCA 103;
[2011] 1 All SA 225 (SCA); 73 SATC 148 para 22.
5
provided they do not require otherwise. Thus, the headings and notes are paramount
in determining the classification of goods for duty purposes. The explanatory notes
merely explain or supplement those, but do not contradict them.3
[9] It is also important to bear in mind what this Court said in Samsung (Pty) Ltd
v The Commissioner for the South African Revenue Service 4 about the application
of the General Rules and the process of classification, namely:
‘The General Rules for Interpretation that are referred to in s 47(8) (a) of the Act: (i) are
applied in a hierarchical fashion – rule 1 takes precedence over rule 2, rule 2 over rule 3
etc.; (ii) establish classification principles which, unless the text of headings, sub-headings
or section or chapter notes otherwise require, are applicable throughout the Harmonised
System nomenclature; and (iii) provide a step -by-step basis for the classification of goods
within the Harmonised System so that, in every case, a product must first be classified in its
appropriate 4-digit heading, then to its appropriate 1 -dash sub-division within that heading
and only thereafter to its appropriate 2 -dash sub-heading under the 1 -dash sub-division.
This principle applies without exception throughout the Harmonised System.’
[10] Returning to the facts of this case. It is apparent that the difference between
the classification of the Commissioner and that contended for by the respondent,
essentially relates to the nature and characteristics of the pipes and, ultimately, to
the further subheading it falls under. They agree that the pipes fall under TH 73.04,
namely, ‘Tubes, pipes and hollow profiles, seamless, of iron (excluding cast iron) or
steel.’ The difference is in the fifth digit of the subheading. The Commissioner
contends that it falls under the further subheading 7304. 19. 90 , which applies to
items with the following description: ‘Line pipe of a kind used for oil and gas
pipelines: Other: Other’.
pipelines: Other: Other’.
[11] The respondent contends that the applicable subheading is 7304.3 which
applies to articles with the following description: ‘Other, of circular cross -section, of
iron or non -alloy steel’, and more specifically under the further subheading
3 Ibid and also see Secretary for Customs and Excise v Thomas Barlow and Sons Ltd 1970 (2) SA
660 (A) at 675H-676F.
4 Samsung Electronics (Pty) Ltd v The Commissioner for the South African Revenue Service [2022]
ZASCA 126; 2022 JDR 2654 (SCA); 85 SATC 24 para 8.
6
7304.39.35 which applies to articles fitting the further description: ‘Other, of a wall
thickness exceeding 25 mm or an outside cross-sectional dimension exceeding 170
mm’.
The first stage - interpretation
[12] There is a dispute regarding the meaning of some aspects of th e respective
headings and subheadings relied on by the parties. The parties agree that Chapter
73, which covers a certain number of articles in headings 73.01 to 73.24, applies to
articles made of iron or steel. The general note to this chapter deals essentially with
the meanings assigned to the expression ‘tubes and pipes’ for the purposes of that
chapter and, most importantly , regarding the respondent’s contentions, that ‘[t]he
General Explanatory Note to Chapter 72 applies’ to Chapter 73. Chapter 72 applies
to ‘iron and steel’.
[13] Regarding the meaning of TSH 7304.1, in particular, the phrase ‘Line pipe of
a kind used for oil or gas pipelines’, there is a difference of opinion concerning the
meaning of the words ‘of a kind used for oil or gas pipelines’, and the word ,
‘pipelines’. In respect of the former the respondent contends that this refers to actual
use in the South African context, but the Commissioner argues that it refers to actual
or potential use in a global context. Regarding the la tter, the respondents contend
for the Cambridge English Dictionary’s definition of ‘pipelines’, namely, ‘a very long
large tube, often underground, through which liquid or gas flows for long distances’.
On the other hand, the Commissioner contends that ‘pipelines’ ought to be given the
meaning assigned to the term in Webster’s Third New International Dictionary,
namely, ‘a line of pipes connected to pumps , valves and control devices for
conveying of liquids, gases, and finely divided solids’. With regard to the meaning of
heading 7304.3, and in particular , the phrase ‘non -alloy steel’ , in the description
‘Other, of circular cross -section, of iron or non -alloy steel’, the parties also had a
difference.
difference.
[14] Although the high court purported to differentiate between the different stages
of classification it somewhat conflated the first two. Even though it did not identify
the nature of the use as being in dispute, it found, seemingly relying on the view of
7
the respondents’ expert, Prof Mostert, that the use contemplated in the phrase ‘of a
kind used for oil or gas pipelines’ was confined to local, South African use. The high
court criticized the Commissioner for not providing ‘any evidence on the kind of line
pipe used for pipelines in South Africa’. The high court, seemingly, mistakenly, said
that the parties were in agreement concerning the meanings to be given to the
phrases ‘of a kind’ and ‘pipelines’, whereas that was not the case. When it was
considering the third stage the high court referred to the matter of HMT Projects (Pty)
Ltd v The Commissioner of the South African Revenue Service (HMT Projects)5
where the court interpreted the word ‘pipeline’ as follows:
‘. . . in Tariff Heading 7304.19, a "pipeline" appears to be a continuous line of pipes,
constructed to form a pipeline for the conveyance of gas or petroleum. This may be from a
refinery to storage tanks, from either of those to "a market" or from oil fields to a refinery. As
these various elements may be close to each other or some distance apart, on the same
premises or connected to the same plant or not, the distance appears to be immaterial.
Where it is notionally possible that a pipeline may be constructed anywhere within the
petrochemical or mining industry (to use the Applicant's words) one would not know the
length (or distance) of the actual pipeline prior to its construction when one examines
sections of line pipe upon importation. Whether the pipeline would be of a short or long
distance would be of no consequence. To import a "long" distance into the meaning of the
word "pipeline" does therefore not appear to be justified.’
[15] The high court does not state whether the court’s interpretation in HMT
Projects was right or wrong, bu t, instead, conflated the determination of that issue
with the second and third stages. It also seems to imply that the meaning of the word
‘pipelines’ would be different because the pipes in that case were made of ‘alloy
‘pipelines’ would be different because the pipes in that case were made of ‘alloy
steel’ whereas the pipes in this c ase are of ‘non -alloy steel’. In my view, the
interpretation of ‘pipelines’ by the court in HMT Projects was correct. Length is
immaterial. This is underscored by the definition of the term ‘pipeline’ in the Oxford
English Dictionary (Oxford University Press), namely as ‘a continuous line of pipes;
a conduct of iron pipes for conveying petroleum from the oil -wells to the market or
refinery or for supplying water to a town or district’ (emphasis added). The line does
5 HMT Projects (Pty) Ltd v Commissioner South African Revenue Service [2020] ZAGPPHC 143 ;
2020 JDR 0811 (GP) para 4.9.
8
not have to be long to make it a ‘pipelin e’. Confining the use to local South African
use was also not justified. In light of the global Harmonised system, and in the
absence of express wording in support of it, such confinement is inappropriate. The
use contemplated is global use in oil or gas pipelines.
[16] The term ‘non -alloy steel’ in heading 7304.3 is not defined anywhere in the
Act. In order to come to its meaning the high court considered Chapter Note 72(f)
which defines ‘other alloy steel’ as follows:
‘steel not complying with the definition of stainless steel and containing by mass one or more
of the following elements in the proportion shown:
- 0.3 per cent or more of aluminium
- 0.0008 per cent or more of boron
- 0.3 per cent or more of chromium
- 0.3 per cent or more of cobalt
- 0.4 per cent or more of copper
- 0.4 per cent or more of lead
- 1.65 per cent or more of manganese
- 0.08 per cent or more of molybdenum
- 0.3 per cent or more of nickel
- 0.06 per cent or more of niobium
- 0.6 per cent or more of silicon
- 0.05 per cent or more of titanium
- 0.3 per cent or more of tungsten (wolfram)
- 0.1 per cent or more of vanadium
- 0.05 per cent or more of zirconium
- per cent or more of other elements (except sul phur, phosphorus, carbon and
nitrogen), taken separately.’
[17] The high court effectively reasoned that a steel that did not fall within the
definition of ‘stainless steel’ and which contained by mass one or more of the
elements listed, but in lesser pro portions than those shown for ‘other alloy steel’,
was a ‘non-alloy steel’. The difficulty with the high court’s approach is that it not only
performed that exercise when (a) purportedly it was considering the third stage, and
not at the first stage, where it was obliged to interpret the meaning of the headings
and description; but (b) seemed to be legislating a meaning for the phrase ‘non-alloy
9
steel’. The high court should have interpreted the phrase with reference to its actual
words. The meaning it assigned to the phrase is more appropriately assigned to the
phrase ‘alloy steel’. It makes more sense that an ‘alloy steel’ would not be a stainless
steel and would have one or more of the elements listed in lesser proportions than
those shown. A ‘non-alloy steel’ means a steel that is not an alloy. An ‘alloy steel’ or
‘other alloy steel’ is an alloy, it seems, precisely because it contains one or more of
the elements listed. The proportion of those elements in the alloy steel determines
whether it is merely an ‘alloy steel’ or a ‘other alloy steel’.
[18] In Chapter Note 72(e) ‘stainless steel’ is defined. In terms of the definition , it
is an ‘alloy steel’ and it differs from ‘other alloy steel’. The word ‘steel’ is defined in
Chapter Note 72(d) as ‘ferrous materials (excluding those of heading 72.03) which
(with the exception of certain types produced in the form of castings) are usefully
malleable and which contain by mass 2 per cent or less of carbon. However,
chromium steels may contain higher proportions of carbon.’ Therefore, a ‘non-alloy
steel’ is not a ‘stainless steel’, nor a ‘other alloy - steel’ as defined. Ultimately though,
this exercise is academic in light of the conclusion reached in this judgment in
considering the third stage of classification.
Stage Two – the nature and characteristics of the pipes
[19] As was pointed out in Autoware (Pty) Ltd v Secretary for Customs & Excise
(Autoware)6: There is nothing in the Act or its Schedules that indicates that ‘any
matter that is at issue is to be governed by the intentions of the designer,
manufacturer, importer, assembler or user’ of the articles to be classified, and that
the court ‘shall not be influenced by evidence of such intentions, except, perhaps, to
the extent that such evidence may help to explain technical matters’ in respect of
the extent that such evidence may help to explain technical matters’ in respect of
which technical assistance is required by the court. The court is to apply a test which
ignores intention and rests upon the nature, form, character and functions of the
article in question, objectively determined7.
6 Autoware (Pty) Ltd v Secretary for Customs & Excise 1975 (4) SA 318 (W) (Autoware) at 321E-F;
see also African Oxygen Ltd v Secretary for Customs and Excise 1969 (3) SA 391 (T) at 397B-H.
7 Autoware at 322.
10
[20] In Commissioner, South African Revenue Service v Komatsu Southern Africa
(Pty) Ltd (Komatsu)8 this Court summed up the position as follows:
‘It is clear from the authorities that the decisive criterion for the customs class ification 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.’ (Footnotes omitted).
[21] At customs clearance the invoice and Mill Test Certificate, amongst other
documents, were available that described the nature and characteristics of the
pipes. In the invoice they are described as ‘130 Bundles (199 PCS) Carbon Steel
Seamless Pipes’. They are further described in accordance with the American Iron
and Steel Institute ’s spec ifications as ‘API 5L X42 PSLI SMLS’ . In the Mill Test
Certificate issued by the manufacturer of the pipes, Hebei Aster Steel Pipe Co., the
material and chemical composition of the pipes are described. The certificate further
confirms that they are ‘carbon steel seamless pipes’ with a ‘API 5L’ specification .
The Customs Declaration Form states, amongst other things, that the wall of the
pipes exceeds 25 mm in thickness, or that they have an outside cross -sectional
dimension exceeding 170 mm.
[22] The parties respectively appointed experts to assist with the technical matters
that require explanation. The Commissioner engaged Doctor Nicolaas Daniel Burger
(Dr Burger ), a professional mechanical engineer and extraordinary university
professor of engineering, who prepared a report and deposed to affidavits in which
professor of engineering, who prepared a report and deposed to affidavits in which
he expressed his views . The respondent engaged Prof essor Roelof Johannes
Mostert (Prof Mostert) an expert metallurgical engineer and university professor who
did likewise. They do agree on ce rtain aspects but mostly disagree. They were not
cross-examined, and their evidence was not referred for an oral hearing. Dr Burger
explained that the purpose of the American Institute ’s ‘API 5L’ specification is to
8 Commissioner, South African Revenue Service v Komatsu Southern Africa (Pty) Ltd [2006] ZASCA
156; 2007 (2) SA 157 (SCA); [2007] 4 All SA 1094 (SCA); 69 SATC 9 para 8.
11
provide standards for pipe that is suitable for use in conveying gas, water and oil in
the oil and natural gas industries. The standards include seamless and welded steel
line pipe of different grades and strengths, indicated as X42, X80 and so on. He
further explains that the API 5L standard is not prescriptive regarding the qualities
or sizes to be used for particular materials. Prof Mostert differs sharply with Dr
Burger concerning the use of the pipes in this matter (an aspect that will be dealt
with later), but they agree that the pipes are as described in the documents referred
to above. They further agree on the dimensions of the pipes, their composition, their
yield and tensile strengths.
Stage 3 – the appropriate tariff heading (s) for the pipes
[23] The answer to the question, whether the pipes are of a kind used in oil or gas
pipelines, is decisive. If they are, then the Commissioner’s impugned determination
is appropriate. If not, then they would fit under the heading(s) proffered by the
respondent, and the appeal must f ail. What matters in deciding this question is the
objective position and not the subjective intention of the importer or designer. The
views of the experts are relevant in understanding the scientific or technical aspects
of the pipes.9
[24] The main di sagreement between Prof Mostert and Dr Burger concerns this
very issue. Dr Burger’s view is that the fact of the pipes having a n API 5L standard
makes them suitable for use in water, oil or gas pipelines in the oil and gas industries.
The use of an y particular strength or dimension of pipe is not prescribed by the
standards authority but would be a matter for the buyer or importer and designer of
the pipeline to decide. Prof Mostert essentially opines that compliance with the API
5L standard does not by implication mean that the specific pipe is suitable for use in
an oil or gas pipeline. According to him, ‘[t]o be suitable for use in an oil or gas
an oil or gas pipeline. According to him, ‘[t]o be suitable for use in an oil or gas
pipeline, the material used and the dimensions are of particular importance…’ Prof
Mostert’s understanding of a ‘pipeline’ is informed by his experience with pipelines
in the South African context, in particular the Sasol gas pipeline and the Transnet
pipelines. In the Sasol pipeline , high-pressure natural gas is conveyed from
9 Autoware at 321E-F.
12
Mozambique to South Africa over a distance of about 865 kilometres. He prefers the
definition given for ‘pipeline’ in the Cambridge English Dictionary, namely, ‘a very
long, large tube, often underground, through which liquid or gas can flow for long
distances’.
[25] According to Prof Mostert, the line pipe in the Sasol and Transnet pipelines
generally has an outer diameter of 610 to 660 mm and is made of high -strength
steel, with an API 5L strength standard of X70. In addition, according to him , those
pipelines are made up of welded, and not seamless, pipes because of their greater
diameters. Prof Mostert opines that the pipes in this matter, which have a much
smaller diameter, and are made with an API 5 L steel strength of X42, ‘are probably
intended for transporting water in pipi ng systems, probably over relatively short
distances.’ He gives two reasons for this view, namely (a) the full length of the pipes
if laid out (2 388m or 2.4 kilometres) – which, according to him, is relatively short if
compared to the length of the Sasol pipeline; and (b) the lower strength level of the
pipes and their small diameters, ie compared to those of the Sasol and Transnet line
pipes.
[26] In response, Dr Burger opine s that even if Prof Mostert may be correct
regarding the Sasol and Transnet line pipes and pipelines, ‘he has created an
incorrect view that pipes with dimensions lesser than 610 mm can never be used for
the [conveyance] of oil and gas.’ According to Dr Burger, API 5L line pipe is carbon
steel pipe used for oil and gas transmissions, and it includes both, welded and
seamless pipes of various grades. The line pipe could also be used for the
transmission of steam, water, slurry and such fluids. He points out that the API 5L
specification does not in any way prescribe the use of the pipe, and that the Sasol
and Transnet line pipes are not compliant with a South African regulatory standard
or requirement, but were the choices of those institutions. He explains that API 5L
or requirement, but were the choices of those institutions. He explains that API 5L
pipes come in various grades, from X42 to X80; PSL 1 and PSL 2 pipes are available
in diameters from 2 to 80 degrees (seamless) and up to 80 degrees for welded pipe.
He is adamant that line pipe of the standard, strength and with the dimensions of the
pipes in this matter can be used for the conveyance of gas or oil.
13
[27] Dr Burger states that: ‘The designation X42 – X80 is an indication of the
mechanical properties of the pipe, as per the API 5L standard. The pipeline will then
be designed, stressed and calculated to ensure that the pipeline is safe for the
operating pressure. A pipeline manufactured from X42 material and [of a] specific
schedule will obviously not handle the same pressure as a X70 with [the] same
schedule. The design criteria are very clearly specified in [the] API 5L standard.
Again, the material properties for the various grades including SPL 1 and 2 is as per
[the] API 5L standard… You might find that certain companies or certain projects will
limit the material grade that can be used for example. Pipeline projects in Russia
limit the material to X70 and the specific requirements of Transnet and SASOL .
These are all company policy and NOT the general design and/or usage guidelines.
Furthermore, nowhere in the API 5L standard is the standard prescriptive regarding
use or SPL requirements.’
[28] Despite their disparate views and the fact that their views were not subject to
testing in an oral hearing, the high court was seemingly persuaded by Prof Mostert’s
argument that the pipes were not used in oil or gas pipelines in South Africa . As
pointed out in the first stage, there is no reason , in the wording of the relevant
heading or elsewhere, for confining the use to the South African context. The South
African use is a matter of intention or election by the pipeline ’s owner or designer
and does not preclude other uses elsewhere on the globe. Prof Mostert’s views were
ultimately the product of his experience of pipelines in South , or Southern Africa.
This is underscored by his choice of dictionary definition of the term , ‘pipeline’ ,
namely, ‘a very long large tube, often underground, through which liquid and gas
can flow for long distances’. Th is resonates with his knowledge of the Sasol Gas
can flow for long distances’. Th is resonates with his knowledge of the Sasol Gas
pipeline which stretches over 865 kilometres, as well as the Transnet pipelines. For
Prof Mostert a pipe length of 2,4 kilometres was not ‘very long’. He seemingly,
overlooked the fact that the definitions in other dictionaries do not emphasise length
or distance or the dimensions of the line pipes. As pointed out earlier, in the
Webster’s Third New International Dictionary, a pipeline is defined as a ‘line of pipes.
. .’, and in the Oxford English Dictionary (Oxford University Press) it is defined as ‘a
continuous line of pipes. . .’
14
[29] It is clear that for the purposes of this exercise, the intended use of the pipes
is irrelevant. What matters is whether they are of the kind or type of line pipe used
in pipelines for oil or gas. It is a matter of objective fact that the pipes comply with
the API 5L standard which applies to pipes used for the conveyance of oil and gas.
The relative strength of the pipe does not disqualify its use for that purpose.
Ultimately, it depends on the intended use, the requirements of the user and the
design of the pipeline, including its length and diameter. While the use of a higher
strength pipe (or a wider pipe) may be called for in a particular design, a lesser
strength pipe of smaller dimension might do in another.
[30] The Commissioner’s determination has not been shown to be inappropriate.
The classification of the pipes under TH 7304.19.90, which applies to ‘Tubes, pipes
and hollow profiles, seamless of iron (excluding cast iron) or steel: line pipe of a kind
used for oil or gas pipelines: other’, fits appropriately. The pipes are indeed
seamless, of steel, of a kind used in oil or gas pipelines, and they are ‘other’, because
their wall thickness exceeds 25 mm and cross-sectional dimension exceeds 170
mm. This conclusion is decisive. It follows that the appeal must succeed. The costs
follow the result. The Commissioner has asked for the qualifying expenses of Dr
Burger to be allowed. There is no reason for refusing the request.
Response to the second judgment
[31] I have read the second judgment , and I do not agree with its conclusions,
on the basis of what is stated above, and additionally, for the following reasons. Even
though the second judgment proclaims to accept that the ‘use’ contemplated in
TH 7304.1 should not be confined to use in South Africa only, it unreservedly
accepts Prof Mostert’s thesis , which is indeed only about pipelines in the South
African context, and in particular, the Sasol and Transnet pipelines. The second
African context, and in particular, the Sasol and Transnet pipelines. The second
judgment also accepts Prof Mostert’s concept of a ‘pipeline’, which is flawed as
pointed out above. The second judgment is a lso ensconced on what it refers to as
‘[t]he Explanatory Notes (EN’s) to the HS for TH 73.04’. It contends that those notes
indicate that the line pipe contemplated in T SH 7304.1 ‘is intended for the oil and
natural gas industries, implying high -volume, hi gh-pressure, or long -distance
15
transmission networks’. It does not identify the (alleged) note it is referring to with
any precision.
[32] The main difficulty is that Chapter 73 of Schedule 1 Part only has two notes
and they do not deal at all with TH 73.04 or TSH 7304.1. Where the implication
referred to arises from , is otherwise unknown. The Chapter 7 2 notes also do not
deal at all with the topic, and the article descriptions under TH 73.04 and TSH 7304.1
do not imply anything of the sort asserted by the second judgment. One can only
assume that the second judgment was relying on Prof Mostert’s opinion. In his
affidavit dated 1 February 2021, in response to Prof Mostert’s further affidavit where
he makes the very assertions, which the second judgment ascribes to (a non -
existent ‘explanatory note’), Dr Burger, amongst other things, correctly points out
that there is no heading or note to that effect.
[33] The thesis and the second judgment ’s conclusion that the line pipe
contemplated in TSH 7304.1 can only be of a greater strength and diameter than
the pipes in this matter, is not consistent with the wording of that heading and further
sub-headings. The article descriptions under those headings in fact negate the
validity of that theory and conclusion. Under the TSH 7304.1, the following line pipes,
other than those made of stainless steel, are listed: (a) line pipe with ‘a wall thickness
exceeding 4.3 mm but not exceeding 12.7 mm and an outside cross -sectional
dimension exceeding 200 mm but not exceeding 600 mm’ (73.19.05); (b) line pipe
described as follows: ‘Other, of a wall thickness not exceeding 25 mm and an outside
cross-sectional dimension not exceeding 170 mm’ (7304.19.10); and (c) line pipe
described as ‘Other’ (7304.19.90). All those strengths and dimensions of pipe are
covered under TSH 7304.1 (‘line pipe of a kind used for oil or gas pipelines’).
[34] The pipes under consideration have a wall thickness and an outside cross-
[34] The pipes under consideration have a wall thickness and an outside cross-
sectional dimension greater than those of the line pipes referred to in (a) and (b),
therefore they would be ‘Other’, ie (c). Why would the line pipes , with the wall
thicknesses and dimensions referred to in (a) and (b), be considered as being of the
kind envisaged in TSH 7404.1, wh ile the pipes under consideration are to be
excluded, despite their greater wall thickness and cross -sectional dimension? It is
further noteworthy that the line pipes envisaged in (a) and (b) are pipes with a lesser
16
outside cross -sectional diameter than 600 mm, which further undermines Prof
Mostert’s view that line pipe for use in oil or gas pipelines exceeds 6 00 mm in
diameter.
Order
[35] In the result:
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the high court is set aside and is replaced with the following order:
‘The appeal is dismissed with costs, including the costs of two counsel wh ere so
employed, and the qualifying expenses of Dr N D Burger are allowed.’
____________
PCOPPIN
JUDGE OF APPEAL
MATOJANE JA (dissenting):
[36] I have read the judgment of my colleague (the first judgment), and I agree
with the framework he sets out for classifying goods under the Act. We part
company, however, at the point of application. In my view, the Commissioner erred
in classifying these seamless carbon steel pipes under TH 7304.19.90 as ‘line pipe
of a kind used for oil or gas pipelines ’. The high court was right to set that
determination aside.
[37] The issue is deceptively simple to state. Both parties accept that the pipes fall
under heading 73.04, which covers seamless tubes and pipes of iron or steel. The
dispute concerns the correct five -digit subheading. The Commissioner contends for
TH 7304.1 ‘line pipe of a kind used for oil or gas pipelines ’ which attracts a 10 per
cent duty. The respondent contends for TH 7304.3 ‘other, of circular cross -section,
of iron or non -alloy steel ’ and specifically TH 7304.39.35, which is duty free.
Everything turns on whether these pipes are ‘of a kind used for’ oil or gas pipelines.
17
The interpretive framework
[38] The General Rules for Interpretation (GRI) apply in strict hierarchical order.
GRI 1 directs that classification is to be determined according to the terms of the
headings and any relative section or chapter notes. It follows that the starting point
is the language of the headings themselves, with the Explanatory Notes serving a
supporting role in doubtful cases — they may explain or supplement the headings
but cannot override them: Secretary for Customs and Excise v Thomas Barlow &
Sons (Pty) Ltd10.
[39] It is equally well established that classification rests on the objective
characteristics and properties of the goods as they present at the time of customs
clearance. The subjective intentions of the importer are ordinarily irrelevant:
Komatsu.11 I accept, as the first judgment holds, that the "use" contemplated by the
phrase "of a kind used for oil or gas pipelines" is global use and not merely use in
South Africa. The Harmonised System operates uniformly across jurisdictions.
[40] Where, however, the parties diverge is on the meaning of ‘of a kind used for’.
The Commissioner reads that phrase functionally: if a pipe was manufactured to a
standard that permits oil and gas transmission, it is ‘of a kind used for’ that purpose.
The respondent reads it more narrowly: the phrase identifies a genus of goods
defined by their objective characteristics ; that is actually employed in oil or gas
pipelines. In my view, the respondent's reading is correct, and the Commissioner’s
approach taken to its logical conclusion, would render the qualifying language of the
heading largely meaningless.
[41] The phrase ‘of a kind used for ’ a stated purpose is not an invitation to ask
whether a pipe is theoretically capable of performing a function. It directs attention
to the class or genus of goods that are, in practice, deployed for that purpose. A pipe
10 Secretary for Customs and Excise v Thomas Barlow & Sons (Pty) Ltd 1970 (2) SA 660 (A) at 669E–
F.
F.
11 Commissioner, South African Revenue Service v Komatsu Southern Africa (Pty) Ltd [2006] ZASCA
156; [2007] 4 All SA 1094 (SCA); 2007 (2) SA 157 (SCA); 69 SATC 9
at para 10.
18
belongs to that class when its objective physical attributes , its yield and tensile
strength, its dimensions, and the specification to which it was manufactured ,
correspond to tho se of goods that pipelines of the relevant description actually
employ.
what must first be determined is the kind of goods fitting the description, and only
then whether the goods under consideration are of that kind. This is the approach
taken in Smith Mining Equipment (Pty) Ltd v Commissioner, South African Revenue
Service12 in that case the court emphasised a sequential two -step inquiry for
classification:
1. Step 1: Determine the kind of goods that fit the legal description provided in the
tariff heading.
2. Step 2: Determine whether the specific goods under consideration actually
belong to that kind.
[42] The word ‘pipeline’ is not controversial. The court in HMT Projects 13
interpreted it as a continuous line of pipes constructed for the conveyance of gas or
petroleum, and rightly observed that distance is immaterial to that concept. I
respectfully agree. A pipeline may be short or long; what distinguishes it from general
industrial piping is not length, but the nature of the medium conveyed and the
operating conditions that conveyance entails.
The expert evidence
[43] The Commissioner engaged Dr Burger, a professional mechanical engineer,
to support its case. The respondent engaged Prof Mostert, a metallurgical engineer
and university professor. They were not cross -examined. Both agreed on the
physical description of the pipes as recorded in the invoice and Mill Test Certificates.
Their disagreement was about what the ‘API 5L X42 PSL1’ designation means for
the purposes of tariff classification.
12 Smith Mining Equipment (Pty) Ltd v The Commissioner South African Revenue Service [2013]
ZASCA 145; 76 SATC 49 para 3.
13 Ibid fn 5 above.
19
[44] Dr Burger's evidence was that the API 5L standard provides specifications for
pipes used to convey gas, water and oil in the oil and natural gas industries, and that
compliance with that standard is sufficient to bring the pipes within TH 7304.1. He
stressed that the standard prescribes no minimum size or strength grade for
particular applications, those choices are left to the pipeline designer. His conclusion
was that an X42 gr ade pipe at any dimension is capable of use in an oil or gas
pipeline, depending on the design parameters.
[45] Prof Mostert took a different view. He explained that oil and gas transmission
pipelines, whether assessed by reference to South African practi ce or international
engineering norms, are designed to operate under high pressure and to handle large
volumes of combustible fluid over continuous conduits. Those operating conditions
demand high-strength steel. In the API 5L grading system itself a global standard of
the American Petroleum Institute, this means grades of X60 or X70 and above. The
pipes under consideration, manufactured to the X42 grade and at a comparatively
small diameter, fall well short of what is objectively required. His view was that they
are suited to the conveyance of water, slurry and similar fluids in industrial settings
such as mining piping systems, and not to oil or gas pipeline service.
[46] The first judgment criticises Prof Mostert's evidence as being parochially
confined to the South African context, pointing to his reliance on the Sasol pipeline
from Mozambique and the Transnet pipeline network. With respect, I read his
evidence differently. Those pipelines were examples, not the premise of his opinion.
The underlying proposition that X60 or X70 grades are what oil and gas transmission
pipelines require, is not a South African rule. It derives from the API 5L standard
itself, which is why the grading system runs from X42 to X80 and why the design of
itself, which is why the grading system runs from X42 to X80 and why the design of
any high-pressure gas or petroleum line, anywhere, will specify the higher grades.
Prof Mostert was articulating a global engineering reality, not a local preference.
[47] The first judgment proceeds on the basis that Dr Burger's evidence is to be
preferred because the API 5L standard does not prescribe minimum grades for oil
or gas applications. The very structure of the API 5L grading system ; a range from
X42 to X80 with gradua ted mechanical properties reflects the reality that different
20
grades are designed for different operating conditions. An X42 grade is not merely
a lesser version of an X70 in the same field of use; it is a specification directed at
materially different conditions. Saying that the standard does not preclude X42 pipe
from oil or gas service, is not the same as saying that X42 pipe is of the kind used
in such service.
[48] Dr Burger himself acknowledged that higher -strength grades are used in
high-pressure natural gas transmission lines, and that the choices made by Sasol
and Transnet reflect the requirements of high-pressure pipeline engineering, even if
those choices are expressed as company policy rather than regulatory prescription.
That acknowledgement is important. It means that, even on the Commissioner's own
evidence, the objective characteristics of oil and gas pipeline design point to grades
above X42. The question under TH7304.1 is whether these pipes belong to the class
of goods that possess those characteristics. They do not.
Application to the tariff headings
[49] Applying GRI 1 and GRI 6, TH 7304.1 requires that the goods be ‘line pipe of
a kind used for oil or gas pipelines ’. On the objective evidence, these pipes ; X42
grade, at the dimensions d escribed in the Mill Test Certificate are not of that kind.
Their strength and dimensional profile are suitable for general industrial piping in
lower-pressure applications. The fact that they are API 5L classified does not change
this. The API 5L standard covers a spectrum of pipe grades for a range of purposes;
classifying all pipes within that spectrum under TH 7304.1 would conflate the
standard with the tariff heading, and would drain the words ‘of a kind used for oil or
gas pipelines’ of operative content. Classification concerns what goods are, not what
they might conceivably become in an unusual design scenario.
[50] The first judgment relies, at paragraphs 33 and 34, on the structure of the
subheadings under TH 7304.1. The argument is that because t hose subheadings
subheadings under TH 7304.1. The argument is that because t hose subheadings
include descriptions for pipes of smaller dimensions and lesser wall thickness
(notably TH 7304.19.10, covering pipes with a wall thickness not exceeding 25 mm
and an outside cross -sectional dimension not exceeding 170 mm), the legislature
must have intended to include pipes of the dimensions under consideration , which
21
are larger within TH 7304.1. I cannot accept this reasoning. The subheadings within
TH 7304.1 operate to organise goods that have already qualified as ‘line pipe of a
kind used for oil or gas pipelines’ at the five-digit level. Their purpose is descriptive,
not definitional. A pipe of small dimensions may well qualify as line pipe of the
relevant kind if its grade and specification place it in that genus; a pipe that does not
qualify at the five-digit threshold cannot be swept in by the existence of a subheading
that happens to accommodate its dimensions.
[51] It follows that the pipes under consideration fall under TH 7304.3. They are
seamless, of circular cross-section, and as is apparent from the Mill Test Certificates
when assessed against the definition of ‘other alloy steel’ in Chapter Note 72(f) are
of non -alloy steel. Their wall thickness exceeds 25 mm, and their outside cross -
sectional dimension exceeds 170 mm. They satisfy each element of TH 7304.39.35
without difficulty.
[52] Should it be necessary to go further , which I do not think it is , the General
Rules provide alternative support for this conclusion. GRI 3(a) applies where goods
are prima facie classifiable under two or more headings and directs that the heading
providing the most specific description is to be pref erred. TH 7304.39.35 identifies
goods by their material composition, cross -sectional form, manufacturing process
and precise dimensional criteria. TH 7304.1 identifies goods by their use.
Description by reference to objective physical and dimensional characteristics is, as
a general matter, more specific than description by reference to use, and TH
7304.39.35 must, on this basis, be preferred. If, notwithstanding the above, the
matter were evenly balanced between the two headings, the dispute is resolved by
GRI 3(c). That rule directs that where goods cannot be classified under GRI 3(a) or
3(b), they must be classified under the heading that appears last in numerical
3(b), they must be classified under the heading that appears last in numerical
sequence. In this instance, TH 7304.3 comes after TH 7304.1.
[53] There is a further consideration, though in a case of this kind it should be the
last resort. It is a settled principle of our fiscal law that genuine ambiguity in a taxing
22
provision is to be resolved against the revenue authority14. The state may not levy a
tax unless the statute clearly imposes it. Here, the Commissioner seeks to attract a
ten per cent duty on the strength of an expansive reading of the words ‘of a kind
used for oil or gas pipelines ’ — a reading that sweeps in all pipes manufactured to
any grade within the API 5L standard. That is not, in my view, the natural meaning
of the phrase. But even if some doubt remained, it would fall to be resolved in favour
of the respondent.
Conclusion
[54] The high court was right. The Commissioner's tariff determination cannot
stand. The appeal should be dismissed with costs. For these reasons, I would
dismiss the appeal.
[55] I would make the following order:
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
______________
KE MATOJANE
JUDGE OF APPEAL
14 Commissioner for Inland Revenue v Simpson 1949 (4) SA 678 (A) at 692 ; CIR v Witwatersrand
Association of Racing Clubs 1960 (3) SA 291 (A). Secretary for Inland Revenue v Gallagher 1978 (2)
SA 463 (A) at 470 ; Commissioner, SARS v Executor, Estate Late J Heller 2011 (5) SA 57 4 (SCA)
para 22. In Telkom SA SOC Limited v Commissioner for the South African Revenue Service 2020 (4)
SA 480 (SCA); 82 SATC 225; The court emphasized that while the in dubio contra fiscum rule exists,
it only comes into play as a last resort when an "irresoluble ambiguity" remains after applying the
modern, purposive approach to interpretation set out in Endumeni. It confirmed that the rule has not
been abolished but has been subordinated to the modern context-based method of interpretation.
23
Appearances:
For the appellant: MPD Chabedi SC with Mr WN Mothibe
Instructed by: Maponya Incorporated, Pretoria
Phatshoane Henny Attorneys, Bloemfontein
For the respondent: HJ Snyman
Instructed by: Shepstone Wylie Attorneys, Johannesburg
c/o Clarinda Kugel Attorneys, Pretoria
c/o Webbers Attorneys, Bloemfontein.