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[2018] ZASCA 71
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Commissioner for the South African Revenue Service v Encarnacao (543/2017) [2018] ZASCA 71; 80 SATC 324 (29 May 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 543/2017
In the matter between:
THE
COMMISSIONER FOR THE SOUTH AFRICAN
APPELLANT
REVENUE
SERVICE
and
JM
DA ENCARNAÇÂO
N.O.
FIRST RESPONDENT
MZ
DA ENCARNAÇÂO
N.O.
SECOND RESPONDENT
Neutral
citation:
SARS
v Encarnacao N.O.
(543/2017)
[2018] ZASCA 71
(29 May 2018)
Coram:
Navsa,
Willis and Mocumie JJA, Davis and Plasket AJJA
Heard:
16
May 2018
Delivered:
29
May 2018
Summary:
Rebate
item 412.09 in Schedule 4/Part 1 of the Customs and Excise Act 91 of
1964 – what occurrences fall within
vis
major
– the meaning of ‘such goods did not enter into
consumption’.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Prinsloo J sitting as a court
of first instance):
The
appeal is dismissed with costs.
JUDGMENT
Davis
AJA (Navsa, Willis and Mocumie JJA and Plasket AJA concurring):
[1]
This
case concerns the requirements which are necessary to claim a rebate
of customs duty in terms of Rebate item 412.09 in Schedule
4/Part 1
to the Customs and Excise Act 91 of 1964 (the Act). It follows upon
an allegation that two consignments of Remington Gold
cigarettes,
which were imported into South Africa from Zimbabwe, were stolen on
15 August 2009
by
unknown armed robbers during a robbery from a customs and excise
warehouse as described in s 19(2) of the Act.
[2]
On
26 August 2009, appellant notified respondents, the trustees of the
DA Encarnacao Trust (the trust), that they were liable for
outstanding customs duties and VAT in the amount of R910 171.42
in respect of these consignments of imported cigarettes. On
3
September 2009, appellant made a further demand for payment.
[3]
The
trust disputed this liability for payment of the outstanding amount
on the basis that it qualified for a full rebate of the
duty together
with VAT in terms of Rebate item 412.09.
[4]
Following
a dispute concerning the applicability of Rebate item 412.09, the
trust launched an application in the court
a
quo
to compel appellant to repay an amount of R58 877.52, which
appellant had obtained from the trust’s bank account in
terms
of s 114 A of the Act, together with a declaratory order that the
trust qualified for the full rebate.
The
decision of the court a quo
[5]
The
court
a
quo
upheld the application bought by the trust. Its order was predicated
on two essential findings. In the first place, it found that
an armed
robbery could amount to
vis
major
as provided for in Rebate item 412.09. This would result in the
importer of goods which are the subject of a robbery qualifying
for
the rebate.
[6]
The
court
a
quo
was satisfied that the evidence provided by the trust, showed on the
probabilities, that the two consignments of cigarettes were
stolen as
a result of an armed robbery. The consignments were never found;
hence the trust was entitled to a rebate paid in terms
of the
provisions of Rebate item 412.09 for the customs duty which it had
paid.
Appellant’s
case
[7]
On
appeal, with the leave of the court
a
quo
,
appellant contended that, on the facts of the case as accepted by the
court a quo, the respondent was not entitled to a rebate.
Appellant’s
counsel contended in their heads of argument that much of
respondents’ case had only been set out in its
replying
affidavit and that it was impermissible for respondent to so
introduce new matter in reply. However, before this court
the
appellant’s argument focused exclusively on the proper
interpretation of Rebate item 412.09 and did not proceed with
argument concerning the admissibility of parts of the replying
affidavit. Thus, the appeal is concerned with one issue, namely
the
meaning and scope of Rebate item 412.09 within the context of a
consignment of cigarettes being taken from a registered bonded
warehouse by way of an armed robbery.
Rebate
item 412.09 in Schedule 4
[8]
Rebate
item 412.09 deals with circumstances under which goods qualify for a
rebate It provides as follows:
‘
Goods,
excluding goods contemplated in Rebate Item 497.02, in respect of
which the customs duty, together with the fuel levy (where
applicable), amounts to not less than R2 500.00, proved to have
been lost, destroyed or damaged on any single occasion in
circumstances of
vis
major
or in such other circumstances as the Commissioner deems exceptional
whilst such goods are:
(a)
in
any customs and excise warehouse or in any appointed transit shed or
under the control of the Commissioner;
(b)
being
removed with deferment of payment of duty or under rebate of duty
from a place in the Republic to any other place in terms
of the
provisions of this Act; or
(c)
being
stored in any rebate storeroom, provided-
i)
no
compensation in respect of the customs duty or fuel levy on such
goods has been paid or is due to the owner by any other person;
ii)
such
loss, destruction or damage was not due to any negligence or fraud on
the part of the person liable for the duty; and
iii)
such
goods did not enter into consumption’.
[9]
For
the purposes of this case, the requirements contained in this rebate,
which are cumulative, can be set out thus:
1. the goods
involved are in the amount of not less than R2500;
2. they have been
proved to have been lost, destroyed or damaged on any single
occasion;
3. in circumstances
of
vis major
, alternatively in such other circumstances as the
Commissioner deems exceptional;
4. the
vis major
or the circumstances, which are deemed exceptional by the
Commissioner took place while the goods were in a custom and excise
warehouse;
5. no compensation
in respect of the customs duty or fuel levy on the goods has been
paid or is due to the owner by any other
person;
6. the loss,
destruction or damage was not due to any negligence or fraud on the
part of the person liable for the duty ;
and
7.
the goods did not enter into consumption.
[10]
Notwithstanding
an initial dispute between the parties about the interpretation of
these requirements, it was correctly conceded
by respondents’
counsel that all of these requirements had to be met before a rebate
under this item could be claimed. The
dispute then reduced to one
central question: what was meant by ‘such goods did not enter
into consumption’?
[11]
Appellant’s
counsel contended that, once the goods in question entered the
relevant market which led to the consumption thereof,
the duty must
be paid. It did not matter in which way the goods entered the market,
that is by the importer selling the consignments
or by robbers
illegally inserting the stolen consignments into the market. In this
connection, he referred to the provisions of
s 45(1) of the Act:
‘
(1)
(a) Notwithstanding anything to the contrary in this Act contained,
all goods consigned to or imported into the Republic or
stored or
manufactured in a customs and excise warehouse or removed in bond
shall upon being entered for home consumption be liable
to such
duties (including anti-dumping duties, countervailing duties and
safeguard duties specified in Schedule 2 and new or increased
duties
referred to in section 58 (1) and duties imposed under the provisions
of section 53) as may at the time of such entry be
leviable upon such
goods.
(b)
Notwithstanding the provisions of paragraph (a) but subject to the
provisions of section 40, any dutiable goods imported into
or
manufactured in the Republic and which were removed, taken or
delivered without due entry for home consumption having been made
in
respect of such goods, shall be liable to such duties as may be
leviable upon such goods at the time of such removal, taking
or
delivery or at the time of assessment by an officer, whichever yields
the greater amount of duty.’
[12]
Appellant’s
counsel submitted that s 45(1)
(b)
of
the Act envisaged the exact situation that occurred in the present
case. Dutiable goods which were imported into South Africa
were
removed, taken or delivered without due entry for home consumption
having been made. Nonetheless, the goods attracted the
applicable
duty at the time of their removal. Hence, s 45(1)
(b)
covered the case of goods entering consumption by way of the action
of robbers who had seized the goods.
[13]
This
provision has to be read together with the balance of the Act,
including s 76(2)
(d)
of the Act. This provides:
‘
The
Commissioner shall, subject to the provisions of subsection (4),
consider any application for a refund or payment from any applicant
who contends that he has paid any duty or other charge for which he
was not liable and that he is entitled to any payment under
this Act
by reason of –
…
(d)
The goods concerned having been
damaged, destroyed or irrevocably lost by circumstances beyond his
control prior to the release
thereof for home consumption.’
While this provision
caters for refunds, it does so in circumstances where the goods for
which duty has been paid have been damaged,
destroyed or irrevocably
lost in circumstances beyond the control of the importer prior to the
release thereof for home consumption.
Appellant contended that this
section provides exclusively for refunds of duty already paid and did
not concern rebates.
[14]
It
is difficult to see why an importer, who has prematurely paid duty
while the goods are in a customs and excise warehouse, can
obtain a
refund if the goods are irrevocably lost due to a robbery while the
same person cannot claim a rebate if the goods are
lost as a result
of an armed robbery prior to payment of the duty.
[15]
The
interpretation contended for by appellant contains an added
difficulty. The duty is payable as set out in Schedule 4 which
contains Rebate item 412.09. On appellant’s interpretation of
the Act and the Schedule read together, it is extremely difficult
to
see how an armed robbery could ever trigger a rebate of duty to be
paid. Appellant did not argue that an armed robbery cannot
fall under
the category of
vis
major
.
That is understandable, given SARS Procedure Step of 14 March 2012 at
para 2.9(e):
‘
Robbery
by armed or dangerous attackers can be regarded as
force
majeure
,
but theft in the ordinary cause (
sic
,
should be course) will seldom be regarded as
force
majeure.’
This
guideline accords with South African law which recognizes that
vis
major
includes human acts in addition to acts of nature or acts of God.
Wille’s
Principles of South African Law
(9ed) at 850.
[16]
From
this, it must follow that an armed robbery falls within the scope of
vis
major
.
After the robbery, the goods were out of the control of both
appellant and respondent. Once respondent provided evidence, which
was accepted on the probabilities, that a robbery had occurred,
pursuant to which the dutiable goods had been lost to both parties,
there is no evidence by which the respondent could show to which use
the goods had been put. The facts of this case support this
conclusion. The application before the court
a
quo
was launched years after the robbery. There is no evidence that the
consignments were ever found. It is difficult to see what more
is
required of a party, in the position of respondent in order to claim
a rebate.
[17]
There
are a number of significant problems with the approach of appellant
in basing its case on the provisions of s 45 (1)
(b)
which refer to goods ‘removed, taken or delivered without due
entry for home consumption having been made.’ The conditions
contained in this provision are far wider than the phrase ‘damaged
destroyed or irrecoverably lost by circumstances beyond
his control’
as it set out in s 76(2)
(d)
of
the Act or ‘lost, destroyed or damaged on any single occasion
in circumstance of
vis
major’
,
as provided for in Rebate item 412.09.
[18]
These
three separate provisions need to be read together to give coherence
to the Act and the Schedule as a whole. An interpretation
that
accepts that an armed robbery can fall within the scope of
vis
major
and that goods that are lost as a result of an armed robbery fall
within the meaning of Rebate item 412.09 does not subvert the
meaning
of any of the provisions cited by appellant. In addition, it allows
for a situation whereby a rebate can be claimed where
goods are lost
to both appellant and respondent as a result of an armed robbery.
[19]
In
the result, the appeal is dismissed with costs.
___________________
D
Davis
Acting
Judge of Appeal
APPEARANCES
For
the Appellant:
C Puckrin SC with M P Van der Merwe SC
Instructed
by:
MacRobert Attorneys, Pretoria
Lovius Block,
Bloemfontein
For
the respondent:
J G Cilliers SC
Instructed
by
Frankim Attorneys, Pretoria
McIntyre Van der Post,
Bloemfontein