After armed robbers stole 200 cases of imported cigarettes from a bonded warehouse at OR Tambo International Airport, the importer found itself facing a hefty demand for customs and excise duties.  The matter was heard in the High Court, which held that armed robbery, in a proper case, can amount to circumstances of vis major – an event or superior/irresistible force that cannot be reasonably anticipated or controlled.  The result was that the importer qualified for a full rebate.

The outcome is likely to be of considerable interest to individuals and entities dealing in bonded goods.  It is a practical example of what is intended in terms of rebate item 412.09 of Schedule No 4 to the Customs and Excise Act 91 of 1964. 

Dispute arises after robbers steal the goods

In June 2009, Da Encarnaçäo Trust (the Trust), a registered importer and licensee of a customs bonded warehouse, imported 200 cases of Remington Gold cigarettes by air from Harare, Zimbabwe, to OR Tambo International.  The Trust appointed All Trans Logistics CC (All Trans), a licensed customs clearing agent and licensee of a registered bonded warehouse, to attend to the necessary importation entries.

The cigarettes were then stored in a bonded warehouse registered to All Trans, with deferment of payment of duties and VAT until the cigarettes were removed from the warehouse for home consumption, meaning consumption in South Africa. 

On the night of 15 and 16 August 2009, however, an armed robbery took place at the All Trans warehouse, and the 200 cases of cigarettes were stolen, together with cigarettes imported by another importer and other alcoholic items, also stored at the warehouse. 

The matter became the subject of a dispute between the Trust and SARS.

SARS assessed the duties and VAT on the stolen Remington Gold cigarettes and issued a letter of demand in the amount of ZAR 1 018 006.07.  This amount was later reduced to ZAR 910 171.42, and subsequent to this, an amount of ZAR 58 877.52 was deducted from the Trust’s bank account. 

SARS submitted that –

“the only circumstances in which the obligation to pay the duties and taxes will fall away are when the goods are somehow completely destroyed or rendered useless or ’irrevocably lost’ such as when there was a fire or the goods have been rendered useless by flooding.”

The revenue authority went on to state that –

“…it is the intention of the legislature that once the goods enter the market, ‘enter into consumption’, whether lawful or unlawful, and whether as a result of theft, a hijack, a robbery or a burglary then the customs duties and taxes on those goods must be paid.”

The Trust contended that a situation of vis major had arisen, entitling it, in terms of rebate item 412.09, to a full rebate of excise duty on the stolen cigarettes.  Accordingly, the importer appealed against the SARS determination that the cigarettes did not qualify for a full rebate, and furthermore sought a refund, together with interest, of the amount deducted from the Trust’s bank account. 

Why a rebate was due

Subject to specific conditions, rebate item 412.09 provides for a full rebate of duty on goods which are proven to have been lost, destroyed or damaged on any single occasion in circumstances of vis major or in such other circumstances as the Commissioner deems exceptional.

Briefly, the court found that the 200 stolen cases of Remington Gold cigarettes had indeed been lost, destroyed or damaged in circumstances that met the vis major requirements of rebate item 412.09.

In making its finding, the court considered the meaning of vis major, which is defined in Wille’s Principles of South African Law as –

“some force, power or agency which cannot be resisted or controlled by the ordinary individual, and includes not only the acts of nature, vis divina, or ‘act of God’, but also the acts of man.”

Furthermore, the court considered the requirement that the goods must be proved to have been lost, destroyed or damaged on any single occasion.

In this regard, the court held that goods can be “lost” if they are removed during an armed robbery, never to be retrieved again.  Therefore, contrary to SARS’ submissions, they do not have to be destroyed by fire or flooding in order to bring the situation inside the ambit of the rebate item.  Indeed, vis major may exist in the case of a robbery, which is clear from the references the court made to Wille’s Principles of South African Law, (9ed), the Customs and Excise Service at 10-34 and the SARS: External Standard Operating Procedure Removal of Goods, from which the following is quoted: “Robbery by armed or dangerous attackers can be regarded as force majeure…”

Conclusion: armed robbery can amount to circumstances of vis major

The court accepted the evidence pertaining to the armed robbery, and recognised that the occurrence had taken place and the 200 cases of cigarettes had been removed during the robbery.  The court also found that the stolen cigarettes had been stored in conditions that met the rebate requirements, and the loss was not due to negligence on the part of the importer.

Hence, the court concluded that an armed robbery, in a proper case, can amount to circumstances of vis major as intended by the provisions of the rebate item, which could qualify the importer for a rebate. 

Accordingly, the appeal was upheld, and SARS determination was replaced with a determination that the 200 cases of Remington Gold cigarettes imported into South Africa qualify for a full rebate of customs duty in terms of rebate item 412.09. 

The court also dealt with the question of whether certain evidence pleaded in the replying affidavit should be accepted as part of the record.  SARS argued that the evidence pleaded in the importer’s replying affidavit should be disregarded, and relied on the well-known case of Titty’s Bar and Bottle Store (Pty) Ltd^[1], in which it was stated that –

“it has always been the practice of the Courts in South Africa to strike out matter in replying affidavits which should have appeared in petitions or founding affidavits…”

On this, the court expressed the view that it cannot properly be argued that the importer is seeking to introduce a new case in the replying affidavit; but rather, that it is simply repeating evidence already disclosed before the launch of the application.  As such, the court held that the evidence in the replying affidavit ought to be taken into account. 

[1]     Titty’s Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd and others 1974 (4) SA 362 (T).

 By: Virusha Subban, partner, and Lee-Ann Annandale, associate at Bowmans.