AFGTI Case Alert 3 – 2025 JT International Manufacturing South Africa (Pty) Ltd v The Commissioner for the South African Revenue Service (1330/2023) [2025] ZASCA 37 (4 April 2025
The issue in this appeal is whether s 75(10)(a) of the Customs and Excise Act 91 of 1964 (the Act) authorises the respondent, the Commissioner for the South African Revenue Service (the Commissioner), ex post facto to exempt the appellant, JT International Manufacturing South Africa (Pty) Ltd, from compliance with the conditions prescribed by rule 19A.09(c). The appellant contends that the proviso to s 75(10)(a) does empower the Commissioner to exempt non-compliance with the rule. The Commissioner disagrees. He contends that the exemption powers granted to him by the proviso do not extend to condoning such non-compliance.
According to the SCA, section 75(10)(a), properly interpreted, affords the Commissioner powers to exempt an importer/manufacturer, who has failed to comply with the requirements of rule 19A.09(c), from complying with its provisions. The non-compliance relates to the consignments of tobacco that were already entered under rebate of duty. The imported tobacco was entered on the SAD 500 form under rebate of duty. What was omitted was their entry into the RWZ within the period prescribed by rule 19A.09(c). ‘Entry’ is not an event. It is a process happening in various stages of the import duty and excise duty ecosystem. There is no indication in s 75 that non-compliance with rule 19A.09 was intended to be excluded from its operation. If that was the case, it would result in an importer/manufacturer being deprived of a right to claim a rebate. That this is not the intention of s 75 is not surprising, because the purpose of introducing rebate item 460.24 as stated in the Explanatory Memorandum was to avoid double taxation. Section 75(10)(a) provides a mechanism through which double taxation may be avoided. To interpret s 75(10)(a) as contended by the Commissioner runs counter to the purpose for which rebate provision was enacted.
The ambit of the subsection is much wider, and the Commissioner is not restricted to granting exemptions only in instances where the intended use of duly imported goods has changed after importation. Instances of non-compliance referred to in s 75(10)(a) may include failures to furnish security that may be required by the Commissioner, and to comply with other conditions as may be prescribed by the rule or in the notes to Schedule 3, 4 or 6 in respect of any goods specified in any item of such Schedule. The subsection covers the nature of the appellant’s non-compliance, namely, its failure to have complied with the requirements of a rebate item 460.24 in so far as it relates to rule 19A.09(c) appearing in Schedule 4 Part 2.
The proviso to s 75(10)(a) permits the Commissioner to decide that any one or more of the requirements that are set out in the main provisions of s 75(10)(a) need not be complied with, with or without depriving the appellant of its right to claim a rebate. The Commissioner may do so before the entry in question, or after it has already occurred. The determination that the Commissioner has a discretion under the proviso to s 75(10)(a) to exempt non-compliance does not mean that he is compelled to grant exemption. He may exercise his discretion in favour of, or against, granting exemption. Consequently, the court found that it is declared that s 75(10)(a) of the Customs and Excise Act 91 of 1964 authorises the Commissioner of the South African Revenue Service (the respondent) to ex post facto exempt the applicant from compliance with the conditions prescribed by rule 19A.09(c) .