The Customs & Excise Act No.91 of 1964 allows for any person to lodge an appeal to the Commissioner against a decision of an officer, and Chapter XA of the Act covers Internal administrative appeals, alternate dispute resolutions and dispute settlements.
As most appeals are directly linked to possible additional duties, VAT and penalties, it is important to understand the process of lodging an appeal.
Of equal importance are the repercussions if an appeal is lost, as options are extremely limited.
An appeal may be lodged against any decision made by the Commissioner but, in general, appeals are lodged against tariff, valuation or origin decisions or an incorrect penalty amount.
These decisions may be issued either via the EDI platform or by means of a Letter of Demand, usually the result of an audit, and an appeal must be lodged within 30 days of the decision made by the Commissioner.
However, an extension may be requested.
The first step is an internal administrative appeal, which may be submitted electronically to the Customs case number or via email to the branch office that made the decision, and a provisional payment may be lodged to cover any request for payment.
A committee established at the branch will review the appeal and advise the appellant of their findings. This first appeal process is a relatively easy one, a DA 51 is submitted with supporting motivation as to why the decision is being disputed.
Tariff classification disputes would normally be supported by an application for a tariff determination.
A challenge arises, however, if the appeal is unsuccessful.
To dispute the findings of the IAA, an alternative dispute resolution (ADR) may be lodged, but it is important to note that Sars will decide if the ADR process is appropriate for the dispute. When requesting ADR, it must be considered that it is no longer the original decision in dispute, but the decision of the IAA committee.
A facilitator is appointed by Sars and the aggrieved person may have legal representation at an ADR hearing.
ADR is, in summary, a process whereby the appellant and Sars reach a mutual agreement to finalize a dispute as opposed to litigation. Unfortunately, the standard response to tariff and valuation disputes is “This dispute is not appropriate for the ADR process” with Sars citing the technical nature of the dispute as reason. A simple example of ADR working would be an appellant admitting guilt in contravening the Act but reaching an agreement with Sars on the amount of the penalty to be paid.
Finally, if ADR is not appropriate for the dispute, or the ADR process fails to resolve the dispute, the only final recourse for the appellant is to lodge a notice in terms of Section 96(1)(a) of the Act, the purpose of which is to deliver a notice of intended legal proceedings.
A carefully worded course of action must be submitted, and Sars is allowed one month to consider the case, during which time a senior official will be appointed.
Sars may settle the dispute out of court but one must be prepared for court proceedings. For obvious reasons, this is a serious step to take, which will be time consuming and extremely costly and one must therefore carefully consider the merits of the dispute before appointing legal representation.
The question must be: “Can I win the case?”.
While appeal processes are in place, they are extremely limited. Again, using a tariff dispute as an example, if the IAA process fails due to the result of a tariff determination, the appellant may well have only one remaining course of action – legal proceedings. It is therefore vitally important that when applying for a tariff determination as part of an appeal, it is fully motivated and supported by correct and appropriate literature. Losing an appeal may prove to be extremely costly for a small to medium-sized business and therefore due process must be followed correctly.
