Beware the minefield of tariff classification!

The complexity surrounding the tariff classification of goods in terms of Schedule No 1 to the Customs Act was highlighted recently in a judgment handed down by the Supreme Court of Appeal (SCA) in the matter between Sars and Fascination Wigs. It all started back in 2005 when a dispute arose as to the correct classification of synthetic hair products. Sars contended that the goods should be classified under tariff sub-heading 67.04, which carries duty, while the importer argued that the goods fell under tariff sub-heading 67.03, which is duty free. In September 2008 Sars lost the case in the provincial division of the High Court and then lodged an appeal with the Supreme Court of Appeal. On 4 March 2010, the SCA upheld the appeal by Sars. The cost of protracted litigation together with the demand for duties by Sars will result in dire consequences for the importer. This case highlights the fact that classification must not be taken lightly since even the "experts" often disagree. We therefore stress the importance of: • applying for a tariff determination from the Commissioner's office and, in the event that such determination be disputed; • abiding by the determination until such a determination is amended. It is not good enough to assume that verbal or written advice received from a Customs branch office will protect you. Nor should one incorrectly conclude that if goods are released by Customs after having been stopped, it sets a legal precedent for the tariff classification of the goods. We re-emphasise the fact that the only time the matter can be beyond doubt is when an official tariff determination has been issued by the Commissioner's office.