Law closes in on ‘modified’ vehicle imports

Duty loophole closed for grey importers ALAN PEAT A COURT finding should put the screws on certain “grey importers” of passenger vehicles – and directly close the door on one specific customs duty loophole. “The quest for greater profits sometimes causes entrepreneurs to exploit a grey area in the law,” said Quintus van der Merwe, head of the international transport and trade department at Durban-based lawyers, Shepstone and Wylie. “In a recent decision by the Supreme Court of Appeal, the court came down heavily on what it described as a superficial and unsophisticated manner of concealing the true nature of goods.” The case dealt with certain parties importing top of the range Toyota Land Cruisers that were modified from the standard 8-seater configuration – as manufactured by Toyota – to a 10-seater configuration. The purpose of the modification, Van der Merwe added, was simply to move the vehicles from a tariff classification requiring customs duty of 40% to be paid, to a new tariff heading requiring only 20% duty to be paid. “These importers went so far as to get a legal opinion to the effect that such imports could not be challenged,” he said. Van der Merwe also pointed out that these grey imports had long been the nemesis of Toyota. “It allowed the grey importers to compete unfairly with the very manufacturer of the vehicle who was not prepared to bend the rules. “What is clear from the judgment is that the courts will ignore “window dressing” and will look to the true nature of the goods.”