The outcome of a ground-breaking case recently argued in the Supreme Court of Appeal (SCA) will give certainty to the application of rebate item 412.09 of Schedule 4 (rebate) to the Customs and Excise Act 91 of 1964 (the Act), says Lunga Vilakazi, senior associate, shipping and logistics, at Shepstone & Wylie Attorneys.
“Since the enactment of the rebate there has been uncertainty over whether goods stolen or hijacked qualify for the rebate,” says Vilakazi. “In the past Sars contended that such goods after the robbery or hijacking were entered for home consumption and called for duties and VAT.”
In a recent Pretoria judgement the court held that the requirements of the rebate had been met, including that the goods had not entered for home consumption prior to the incident. The rebate can be summarised as follows:
“Goods proved to have been lost, destroyed or damaged on a single occasion in circumstances of vis major or in such other circumstances as the Commissioner deems exceptional while the goods are – a. in any customs and excise warehouse etc.; b. being removed with deferment of payment; or c. being stored in any rebate store-room, provided1. no compensation in respect of the customs duty will be paid to the owner of the goods; 2. such loss, destruction or damage was not due to fraud or negligence and 3. such goods did not enter home consumption.” “The Pretoria Court held in both circumstances (vis major and exceptional circumstance) that the requirements outlined in a, b and c above, including all three provisos (namely 1, 2 and 3), must be met. More importantly that the goods must be stolen (in this instance) before they enter home consumption.”
According to Vilakazi, in the SCA the debate centred around proviso three. Sars argued that home consumption did not take place when the goods entered the market but when a bill of entry was delivered to Sars.
“The effect of Sars’ argument is that the rebate will only apply when the goods are “damaged” or “destroyed”. When the goods are “lost”, so it seems, they will not meet the requirement of proviso 3 as the goods will be deemed to have entered home consumption,” he points out.
Judgement should be handed down in three to four weeks’ time and it is of crucial importance to the logistics industry how the SCA deals with the definition of “lost” and/or “enter for home consumption” in this context.
