Changes in Customs duty – buyers and sellers are protected

The Customs Act 91 of 1964
(“the Act”) provides a measure of
protection to buyers and sellers
of imported or excisable goods
affected by an amendment in the
rate of duty.
A contract may be entered into
between two parties based on the
duties in place at the time of the
signing of the contract. However,
as we know, the rate of customs
duty or any other duty imposed
under any of the schedules to
the Act may be amended at any
time. This will alter the actual
“landed” cost of goods.
Section 59 (1) of the Act gives
the seller of goods the right to
recover from the buyer, as an
addition to the contract price, a
sum equal to any amount paid
by him/her as a result of any
increase in duty, in the absence
of agreement to the contrary.
Say for example an importer
purchases pencils from an
exporter in Ireland. He and the
exporter enter into a contract of
sale, using the DDP Incoterm.
When the contract is concluded
the rate of duty is set at 15%.
However, while the first shipment
is on the water, the rate of duty
increases to 20%. The exporter
is obliged to pay the additional
duty to Customs. However, the
importer argues that since they
signed the contract of sale at a
15% rate of duty that is all he is
willing to pay.
In such a scenario, the exporter
could rely on Section 59 (1) of the
Act to support his claim that the
importer is obliged to pay him
the additional 5% duty.
Section 59 (2) affords the same
level of protection to the buyer
in that it makes provision for the
buyer to deduct from the price
payable an amount equal to the
decrease in duty since the time of
signing the contract to the date of
customs clearance.
Not only does the Act protect
buyers and sellers but Section 59
(3) also protects signatories to
a contract involving the hiring
of goods. This section reads as
follows:
“The provisions of this
section shall also apply to a
contract for the hiring of any
goods or the use of any goods in
rendering a service at a contract
price, and the expressions
“seller” and “purchaser” shall
correspondingly be construed as
including the person by whom
and the person to whom the
goods are hired or the service
rendered.”
Section 59 of the Act
theoretically provides for easy
adjudication in situations where
either party stands to lose out
as a result of an amendment
to one of the schedules to the
Act. However, it is an entirely
different matter in practice when
trying to convince a foreign
supplier to conform to our Act.