Court reins in SARS over seized goods

Jul 19, 2007
Author: Pre Prinsloo, Shepstone & Wylie

South African Revenue Services (SARS) may no longer drag its heels when it comes to determining the value of seized goods for duty purposes, following a recent court judgement.

Featured in Shepstone & Wylie Attorney’s latest Customs Review, ‘Customs @ Wylie’, the case concerned the seizure of three different consignments of shoes destined for sale in branches of Pep Stores by SARS, on the basis that the value of the consignments was believed to have been under-declared for duty purposes.

The importer of the shoes, Trend Finance (Pty) Limited, furnished SARS with security in exchange for the release of all three consignments, shortly after seizure.

“The problem came in after the Commissioner made a value determination in respect of the first consignment almost 2 years after seizing it, but failed to make a value determination in respect of the remaining two consignments at the same time,” comments Prè Prinsloo of Shepstone & Wylie’s International Transport, Trade & Energy division.

“The importer first approached the Cape High Court and thereafter our Supreme Court of Appeal in order to have its security released.”

The Supreme Court of Appeal then decided that the Commissioner's power to determine the value of imported goods for duty purposes must be exercised within a reasonable period of time.

“If this power is not exercised within a reasonable period of time, then the right to retain the goods or security falls away,” explains Prinsloo.

Considering that the Commissioner had not exercised its power to determine the value of the remaining two consignments within a reasonable period of time, it was ordered to return the security to the importer.

“The importance of this judgment lies in the fact that it sets a precedent for all conduct by the Commissioner for South African Revenue Services, which requires the exercise of a power or discretion,” says Prinsloo.

From now on, the Commissioner will have to ensure that it exercises any power or discretion within a reasonable period of time.