When are you entitled to duty refunds?

Our Supreme Court of Appeal recently had the opportunity in 3M South Africa v Sars 2010 ZA SCA 20 to consider two very important aspects of the Customs & Excise Act, No. 91 of 1964, being: • An importer’s entitlement to refunds – or rather the date from which an importer would be entitled to such refunds. • An importer’s liability for arrear import duty arising from an incorrect determination by the Commissioner In respect of the refunds, the Supreme Court of Appeal decided that an importer must appeal (what it perceives to be) a wrong tariff determination by the Commissioner, otherwise his entitlement to a refund (for over-payments of duty) would be limited to a period of two years preceding the date of the new (correct) determination. Of course it then becomes extremely important for importers to appeal against incorrect tariff determinations, otherwise he could be severely prejudiced if there are delays in obtaining a correct determination. In respect of liability for arrear import duty, the Supreme Court of Appeal decided that the Commissioner could not rely on or seek to enforce its own mistakes. In other words, the Commissioner cannot recover customs duty retrospectively, where the under-payments of Customs duty were the result of an incorrect tariff determination by the Commissioner. In this case, 3M South Africa imported mats intended for the export market. The Commissioner issued an (incorrect) tariff determination on 11 June 1990, and new determinations during April 1991 (incorrect) and January 2006 (finally correct), respectively. Following the new determinations, the Commissioner sought to recover under-payments in duty from 3M South Africa, and tried to limit 3M South Africa’s entitlement to refunds for exported consignments.