A debate is continuing to rage around whether importers should have to fork out for VAT and duties on goods stolen from bonded warehouses. While a recent court judgment indicates not, the South African Revenue Service (Sars) disagrees. Sars is appealing after the High Court ruled in favour of the Da Encarnaçäo Trust, a registered importer, held liable for R1 million in duties and VAT after an armed robbery at their bonded warehouse in Johannesburg in August 2009. At least 200 cases of cigarettes were stolen during the heist. Sars later reduced the amount to R910 171.42 and later deducted R58 877.52 from the Trust’s bank account for the outstanding duties. The Trust, however, contended that the armed robbery constituted vis major and that in terms of rebate item 412.09 of the customs act it was entitled to a full rebate of excise duty on the stolen cigarettes. Sars maintained that the obligation to pay duties and taxes only fell away when goods were completely destroyed or rendered useless such as in a fire or flooding. The revenue authority told the court that once goods “enter the market and ‘enter into consumption’, whether lawful or unlawful, and whether as a result of theft, a hijack, a robbery or a burglary then the customs duties and taxes on those goods must be paid.” The court disagreed and upheld that in the case of an armed robbery vis major could be declared. According to Freek van Rooyen, a partner at law firm Shepstone & Wylie, the Commissioner was granted leave to appeal against the judgment. “Notwithstanding the judgment being the subject of an appeal it did give some indication of the meaning of the requirement that the goods hijacked should not have entered into consumption at the time of the incident. The judge held that the loss or destruction or damage thereof should have happened while still in the customs and excise warehouse and not after,” said Van Rooyen. “While still in the warehouse the goods have not yet entered consumption. The interpretation of this requirement is one of the grounds for appealing the judgment. The Commissioner contends that when goods are stolen and enter into consumption, the rebate item cannot find application. The person liable for the duties and levies generally has no knowledge of what has happened to the goods after such a hijacking or armed robbery. It is totally out of his control. Therefore if the Commissioner’s interpretation should be followed, a hijacking or armed robbery can never qualify for the rebate item as the inference will be drawn that the goods went into consumption. Surely that could never have been the intention of the legislature.” According to Van Rooyen this judgment is extremely important as it addresses the meaning of when goods are lost and how the requirement of “entering into consumption” should be interpreted. Vis major is defined as some force, power or agency that cannot be resisted or controlled by the ordinary individual, and includes not only the act of nature or act of God, but also the acts of man – and can therefore be called in an armed robbery. Theft of the goods without the use of firearms for example will not qualify as vis major. “Obviously a person must ensure that within reason all safety and security measures are in place to prevent a hijacking or armed robbery,” said Van Rooyen.
The Commissioner contends that when goods are stolen and enter into consumption, the rebate item cannot find application. – Freek van Rooyen
.PNG)
