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[1999] ZASCA 17
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Engen Petroleum Ltd and Others v Commissioner for Customs and Excise and Another (171/97) [1999] ZASCA 17; [1999] 2 All SA 335 (A); 1999 (3) SA 690 (SCA) (25 March 1999)
Case No: 171/97
IN THE SUPREME COURT
OF APPEAL
OF SOUTH AFRICA
REPORTABLE
In the matter of:
ENGEN PETROLEUM
LIMITED
First
Appellant
BP SOUTHERN AFRICA
(PTY) LIMITED
Second Appellant
CALTEX OIL SA (PTY)
LIMITED
Third Appellant
SHELL OIL SA (PTY)
LIMITED
Fourth Appellant
and
THE COMMISSIONER
FOR CUSTOMS AND EXCISE
First Respondent
THE MINISTER OF
FINANCE
Second Respondent
Coram: Mahomed CJ,
Hefer, Olivier, Streicher JJA and Farlam AJA
Date of hearing: 12
March 1999
Date of Delivery: 25
March 1999
Customs and Excise - Rebates of Excise
duty and fuel levy - Rebate items 603.02.01 and 640/06 in Schedule 6
applicable in respect
of distillate fuel supplied as stores to
foreign fishing vessels plying their trade in South African waters
.
_____________________________________________________
J U D G M E N T
_____________________________________________________
Hefer JA
[1] A wide variety of
goods are subject to excise duty and fuel levy under the Customs and
Excise Act 91 of 1964. On some of
them rebates of the full duty and
levy are allowed. The present case relates to the rebates
pertaining to distillate fuel supplied
as stores for fishing vessels
not recognised as South African ships.
[2] The dispute arose
from an amendment during October 1993
to
Schedule
6
to the Act where the rebates are listed.
Previously
full rebates of excise duty and fuel levy were allowed on distillate
fuel supplied as stores for ‘foreign-going’
ships. With
retrospective effect from 1 January 1988, the amendment extended the
rebates to fishing vessels not recognised as
ships of South African
nationality in terms of the Merchant Shipping Act, 1951
.
[3] Before the
amendment, but after the effective date thereof, appellants had
supplied diesel oil (a distillate fuel) to fishing
vessels
registered in Namibia. These vessels were not regarded as
foreign-going ships and the supplies did not originally qualify
for
rebates. But they were not recognised as South African ships
either. For this reason, the appellants, after the promulgation
of
the amendment, claimed to be entitled to full rebates under the new
items 603.02.01 and 640.06
in
Schedule 6. First respondent disagreed and the appellants
approached the Transvaal Provincial Division for relief. In the
notice of motion as eventually amended they claimed an order
declaring that -
‘
1.1 the right to
a rebate of excise duty under rebate item 603.02.01, and the right
to a rebate of fuel levy under rebate item
640.06, in each case of
Schedule 6 to the Customs and Excise Act, 1964, in respect of the
supply of distillate fuel as stores
for a fishing vessel, is not,
and since 21 March 1990 (and 1 January 1988 in the case of 1.1(b)(i)
below) has not been, precluded
merely -
(a) by reason of the
fact that such fishing vessel may be (or at the time of supply might
have been) registered in Namibia; or
(b) by reason of the
fact that the distillate fuel supplied to such fishing vessel may be
(or might have been) used by that vessel
-
(i) for the purpose of
catching fish and bringing the catch back to the Republic, or
(ii) for the purpose of
plying between a port
in the Republic and a
port in Namibia;
1.2 distillate fuel may
validly be, and have been, taken from a customs and excise warehouse
and supplied as stores for a fishing
vessel not recognised as a ship
of South African nationality in terms of the Merchant Shipping Act,
1951, under rebate of duty
as contemplated in 1.1 above.’
[4] The respondents did
not oppose prayer 1.1(a) but counter-claimed for two orders which
were essentially the obverse of those
sought by the appellants in
prayers 1.1(b)(i) and (ii) of the notice of motion. The Court
a
quo
(Preiss J) granted the unopposed prayer, refused the other prayers
in the notice of motion, allowed the counter-application
and
granted the appellants leave to appeal to this Court.
[5] The appeal turns on
prayer 1.1(b)(i). Preiss J did not address the real issues which
this prayer raised because, as respondents’
counsel conceded,
he misconceived the case put up by the appellants and the extent of
the relief claimed by them. It is plain
however that the learned
judge accepted the respondents’ contention that Items
603.02.01 and 640.06 envisage cases where
distillate fuel is
exported and, for this reason, do not apply to the supply of diesel
oil to fishing vessels in the case contemplated
in prayer 1.1(b)(i).
[6] In this Court the
argument on behalf of the respondents followed the same lines. To
understand their contention it is necessary
to know that goods
which are subject to excise duty and fuel levy may only be
manufactured in licensed customs and excise warehouses
and, in terms
of s 20(4), may only be removed for the purpose of
‘(a) home
consumption and payment of duty due thereon;
(b) rewarehousing in
another customs and excise warehouse in bond as provided in section
18;
(c) .....
(d) export from customs
and excise warehouse (including supply as stores for foreign-going
ships or aircraft).’
[7] The distinction in s
20(4) between
home
consumption
(which is defined as ‘consumption or use in the Republic’)
and
export
(a term which is not defined) is a prominent and important feature
of the Act. A corresponding and equally important distinction
is
that between
excise
duty and fuel levy
,
on the one hand, and
export
duty
,
on the other. Export duty may be imposed by the Minister of Finance
in terms of s 48(4) on goods intended for export. Excise
duty and
fuel levy are imposed by the Act itself on goods entered for home
consumption. S 47(1) provides that
‘
[s]ubject to the
provisions of this Act, duty shall be paid for the benefit of the
National Revenue Fund on all imported goods,
all surcharge goods and
all fuel levy goods in accordance with the provisions of Schedule No
1
at
the time of entry for home consumption of such goods
.’
The relevant parts of s
37 read as follows:
‘
(1) In respect of
any goods manufactured in a customs and excise warehouse there shall
be paid, subject to the provisions of section
seventy-five
,
on
entry for home consumption thereof
,
duty at the undermentioned rates, namely -
(a) ...
(b) if such goods are
liable to excise duty, the excise rate of duty applicable in terms
of Schedule No 1 on such manufactured
goods.
(8) There shall be paid
on
entry for home consumption
,
in addition to any duty payable in terms of this section and subject
to the provisions of sections 27(3) and 75, surcharge or
fuel levy
at the rate applicable in terms of Schedule No 1 ...’
[9] Rebates are provided
for in s 75 in the following terms:
’75(1) Subject to
the provisions of this Act and to any conditions which the
Commissioner may impose -
(a) ...
(b) ...
(c) ...
(d) in respect of any
excisable goods or fuel levy goods described in Schedule No 6, a
rebate of the excise duty ... or of the
fuel levy ... in respect of
such goods
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
...’
(The emphasis in all the
foregoing provisions is mine.)
[10] Turning to Schedule
6 one finds Item 603.02.01 (the rebate of excise duty payable on
distillate fuel) in Part 1 and Item
640.06 (the rebate of fuel levy)
in Part 3. The relevant portions of the Schedule read as follows:
Rebate
item
603.00
603.01
.........
603.02
.01
Tariff
item
105.10
Code
01.00
C
D
5
Description
EXPORTS
Excisable
goods exported from a customs and excise warehouse (including
supply as stores for foreign-going ships or aircraft
but
excluding fishing vessels provided for in rebate item 603.02):
...............
Excisable
goods supplied as stores to any fishing vessel not recognised as
a ship of South African nationality in terms
of the Merchant
Shipping Act, 1951 (Act No 57 of 1951):
Distillate
fuel
Extent
of rebate
Full
duty
Rebate
item
640.04
640.06
Tariff
item
195.00
195.00
Code
01.00
01.00
C
D
5
5
Description
Fuel
levy goods exported (including supply as stores for foreign-going
ships or aircraft but excluding fishing vessels provided
for in
item 640.06)
Fuel
levy goods supplied as stores for any fishing vessel not
recognised as a ship of South African nationality in terms
of the
Merchant Shipping Act, 1951 (Act 57 of 1951):
Distillate
fuel
Extent
of rebate
Full
fuel levy
Full
fuel levy
[11] Preiss J found the
key to the dispute in the fact that goods supplied as stores for
foreign-going ships are expressly mentioned
as exports in Items
603.01 and 640.04 and that Item 603.02.01 appears under the same
heading. The learned judge ascribed the
fact that the fuel levy was
not treated in similar fashion in Item 640.06 to an ‘accidental
omission’ and concluded
that the rebates are not allowed in
cases where the fuel is not exported.
[12] It is immediately
apparent that the notion of rebates of excise duty or fuel levy on
exported
goods is completely incongruous with the provisions of the Act which
I have mentioned. Apart from ss 37(1) and (8), 47(1) and
75(1)(d),
Note 1 to Part 1 of the very Schedule tells us that the goods
described in Part 1 may be entered under rebate of excise
duty in
respect thereof
at
the time of entry for home consumption
;
and Note 7 to Part 3 is to the effect that the rebate of fuel levy
shall be allowed
subject
to s 75
which,
it will be recalled, only provides for rebates in respect of goods
entered for home consumption. The fact of the matter
is simply that
exported goods are not subject to, nor can they qualify for rebates
granted on excise duty and fuel levy; they
are simply not ‘excisable
goods or fuel levy goods’ in respect of which, in the express
words of s 75(1)(d), rebates
are granted.
[13] I am not prepared
to accept a submission by respondents’ counsel that, by
including them in the list of full rebate
items, the legislature
merely sought to ensure that excise duty and fuel levy are not
payable in respect of exported goods.
The distinction between
exported goods and goods entered for home consumption is so clear,
and the imposition of excise duty
and fuel levy only on the latter
so explicit, that it is inconceivable that the legislature would
have selected such a tortuous
method of informing us of something
which is so obvious. It is significant moreover that, after the
1993 amendment, thirteen
other items appeared between Items 603.01
and 603.02 in the portion of Part 1 of Schedule 6 that I quoted.
One of these has
since been deleted by way of a further amendment.
Part 1 of the Schedule thus contains under the exports heading what
seems
to be a constantly changing selection from the host of items
appearing as excisable goods in Schedule 1. We do not know what the
determinants for the selection are but the very fact that a handful
of specified exported items are selected from time to time
seems to
me to be an indication that they are included in Schedule 6 for a
reason of which we have not been informed. Be that
as it may, I
cannot imagine that the legislature would prefer to exempt exported
goods generally from excise duty and fuel levy
by ponderously
selecting certain goods and declaring them to be those in respect of
which full rebates will be allowed.
[14] The validity of the
respondents’ argument may, apart from its incongruity, be
tested by enquiring into the effect of
the 1993 amendment upon the
rebates which existed before its promulgation.
As mentioned earlier
Schedule 6 at that stage provided only for full rebates of excise
duty and fuel levy in respect of excisable
goods and fuel levy goods
‘exported (including supply as stores for foreign-going ships
or aircraft)’. The respondents
have not challenged a statement
by Mr Henderson, the deponent to one of the affidavits filed by the
appellants, that the amendment
was an attempt to clarify
uncertainty, especially as far as foreign-registered fishing vessels
are concerned, arising from the
vagueness of the term ‘foreign-going
ships’. Yet they contend that rebate items 603.02.01 and
640.06 only apply
to
foreign-going
fishing
vessels which are not recognised as South African ships. The very
essence of their case is that the amendment has achieved
nothing. I
cannot accept that the legislature would go the length of devising
the intricate system of inclusion and exclusion
adopted in the
amended Schedule 6 merely for the sake of maintaining the
status
quo ante
.
It is much more likely, as appellants’ counsel submitted, that
the intention was to grant the benefit of full rebates
to an
additional and discrete category of ships, whether foreign-going or
not.
[15] It should be
mentioned in this connection that Mr Henderson has not told us
precisely what the problem was which arose from
the uncertainty
about foreign fishing vessels; nor have the respondents.
Respondents’ counsel drew attention to the fact
that fishing
vessels from other countries are a common sight in South African
waters and suggested that the amendment was aimed
at preventing an
unfair advantage to these vessels in the form of duty-free bunkers
which our own ships do not enjoy. Items
603.02.01 and 640.06, he
submitted, were not meant to apply to foreign vessels plying their
trade along our shores.
Attractive though it
may be, the suggestion is entirely speculative. We do not know that
the amendment was meant to eliminate
any particular mischief and if
it was, we do not know what the mischief was. Judging by the facts
in
BP
Australia Ltd v Bissaker (Collector of Customs for the State of
Western Australia)
163 (1987) CLR 106
, foreign fishing vessels snarl the business of
customs officials all over the world and any number of reasons come
to mind why
a particular fiscal measure may be adopted. The
mischief aimed at is often an important consideration in the
construction of
a statute; but where, as in the present case, it is
not readily ascertainable it would be entirely wrong to grasp the
first
attractive suggestion that is proffered.
[16] Bearing all this in
mind we must apply the established canon of construction that
different parts of the same statute should,
if possible, be
construed so as to avoid a conflict between them (
Amalgamated
Packaging Industries Ltd v Hutt and Another
1975 (4) SA 943
(A) at 949 H). Items 603.02.01 and 640.06 must
accordingly be interpreted in such a way that they accord, as far as
possible,
with the principle of the Act that rebates are only
granted in respect of goods entered for home consumption. Viewing
the matter
in this way the answer to the problem becomes clear: the
immediate context in which Items 603.02.01 and 640.06 appear,
certainly
supports the respondents’ case; but, taking the
observations in paragraph 11 into account, the construction for
which
they contend, is in conflict with provisions in the body of
the Act and in Schedule 6 itself. The construction for which the
appellants contend, on the other hand, accords with the Act and the
rest of the Schedule and must be preferred. Prayer 1.1(b)(i)
of the
amended notice of motion should accordingly have been granted.
[17] Appellants’
counsel did not pursue prayer 1.1(b)(ii) and only faintly argued
that prayer 1.2. should have been granted.
In view of the concluding
words of that prayer he conceded however that an order in terms
thereof would take the matter no further
than an order in terms of
prayer 1.1(b)(i).
[18] The order to be
made does not appear with any clarity from the notice of motion,
which was drafted in a negative and cumbersome
way. In order to
address the real problem between the parties, I will make the order
that follows.
1. The appeal succeeds
with costs, including the costs of two counsel.
2. It is declared that
the Appellants are entitled to the benefit of rebate items 603.02.01
and 640.06 in respect of diesel fuel
supplied in South African ports
to any fishing vessel not recognised as a ship of South African
nationality in terms of the Merchant
Shipping Act, 57 of 1951, even
in the event of such fuel being used by the vessel in question for
the purpose of catching fish
and bringing the catch back to the
shores of the Republic of South Africa.
______________________
HEFER JA
Concurred: Mahomed CJ
Olivier JA
Streicher JA
Farlam AJA