We continually warn clients about the complex nature of customs duties and recently the Supreme Court of Appeal echoed our warnings. The court decision in The Commissioner for South African Revenue Service v The Baking Tin again affirms that this is indeed a complex area of international trade law and expert advice should be sought before erroneously importing or exporting products.
In this case the erroneous declaration of the wrong customs tariff was a costly mistake. The Baking Tin declared the goods, aluminium containers for pre-cooked foods, under a tariff heading which carried a zero rated (0%) duty. The Commissioner for the South African Revenue Service (or the customs officials), felt that this was the incorrect tariff heading and the correct tariff heading carries a 30% duty on the goods. In addition there was an anti-dumping duty which further increased the cost of importing the products in all probability beyond the point of making commercial sense. The Baking Tin could have resolved the matter early on and avoided the cost of litigation all the way to the Supreme Court of Appeal by seeking expert advice. The court case then also sets out the principles on which the complex interpretation of customs duties is based. Reading the case it is easy to see how a freight forwarder, clearing agent of importer can make a fatal error as most of the products, on the face of it, looks like it may easily be classifiable into the most favourable tariff heading desired.
The Supreme Court of Appeal then goes on to restate an important principle which was contained in another Supreme Court of Appeal case, namely Commissioner, SARS v Komatsue Southern Africa (Pty) Ltd. This principle holds that the intention of an importer is irrelevant for the purpose of classifying a particular good in a particular tariff heading. Accordingly regard will only be had to the objective characteristics and properties of the goods when determining the goods classification.