THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 543/2017
In the matter between:
THE COMMISSIONER FOR THE SOUTH AFRICAN

APPELLANT
REVENUE SERVICE

and

JM DA ENCARNAÇÂO N.O.

FIRST RESPONDENT

MZ DA ENCARNAÇÂO N.O.

SECOND RESPONDENT

Neutral citation: SARS v Encarnacao N.O. (543/2017) [2018] ZASCA 71 (29 May
2018)
Coram:
Navsa, Willis and Mocumie JJA, Davis and Plasket AJJA
Heard:
16 May 2018
Delivered:  29 May 2018
Summary: Rebate item 412.09 in Schedule 4/Part 1 of the Customs and Excise Act
91 of 1964 – what occurrences fall within vis major – the meaning of ‘such goods did
not enter into consumption’.

___________________________________________________________________

ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Prinsloo J sitting as a
court of first instance):

The appeal is dismissed with costs.
___________________________________________________________________

JUDGMENT
___________________________________________________________________
Davis AJA (Navsa, Willis and Mocumie JJA and Plasket AJA concurring):

[1] This case concerns the requirements which are necessary to claim a rebate of
customs duty in terms of Rebate item 412.09 in Schedule 4/Part 1 to the Customs
and Excise Act 91 of 1964 (the Act). It follows upon an allegation that two
consignments of Remington Gold cigarettes, which were imported into South Africa
from Zimbabwe, were stolen on 15 August 2009 by unknown armed robbers during a
robbery from a customs and excise warehouse as described in s 19(2) of the Act.

[2] On 26 August 2009, appellant notified respondents, the trustees of the DA
Encarnacao Trust (the trust), that they were liable for outstanding customs duties and
VAT in the amount of R910 171.42 in respect of these consignments of imported
cigarettes. On 3 September 2009, appellant made a further demand for payment.

[3] The trust disputed this liability for payment of the outstanding amount on the
basis that it qualified for a full rebate of the duty together with VAT in terms of Rebate
item 412.09.

[4] Following a dispute concerning the applicability of Rebate item 412.09, the
trust launched an application in the court a quo to compel appellant to repay an
amount of R58 877.52, which appellant had obtained from the trust’s bank account in

terms of s 114 A of the Act, together with a declaratory order that the trust qualified
for the full rebate.

The decision of the court a quo
[5] The court a quo upheld the application bought by the trust. Its order was
predicated on two essential findings. In the first place, it found that an armed robbery
could amount to vis major as provided for in Rebate item 412.09. This would result in
the importer of goods which are the subject of a robbery qualifying for the rebate.

[6] The court a quo was satisfied that the evidence provided by the trust, showed
on the probabilities, that the two consignments of cigarettes were stolen as a result of
an armed robbery. The consignments were never found; hence the trust was entitled
to a rebate paid in terms of the provisions of Rebate item 412.09 for the customs duty
which it had paid.

Appellant’s case
[7] On appeal, with the leave of the court a quo, appellant contended that, on the
facts of the case as accepted by the court a quo, the respondent was not entitled to a
rebate. Appellant’s counsel contended in their heads of argument that much of
respondents’ case had only been set out in its replying affidavit and that it was
impermissible for respondent to so introduce new matter in reply. However, before
this court the appellant’s argument focused exclusively on the proper interpretation of
Rebate item 412.09 and did not proceed with argument concerning the admissibility
of parts of the replying affidavit. Thus, the appeal is concerned with one issue,
namely the meaning and scope of Rebate item 412.09 within the context of a
consignment of cigarettes being taken from a registered bonded warehouse by way
of an armed robbery.

Rebate item 412.09 in Schedule 4
[8] Rebate item 412.09 deals with circumstances under which goods qualify for a
rebate It provides as follows:
‘Goods, excluding goods contemplated in Rebate Item 497.02, in respect of which the
customs duty, together with the fuel levy (where applicable), amounts to not less than

R2 500.00, proved 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 whilst such goods are:
(a) in any customs and excise warehouse or in any appointed transit shed or under the
control of the Commissioner;
(b) being removed with deferment of payment of duty or under rebate of duty from a
place in the Republic to any other place in terms of the provisions of this Act; or
(c) being stored in any rebate storeroom, provided-
i)
no compensation in respect of the customs duty or fuel levy on such goods has
been paid or is due to the owner by any other person;
ii)
such loss, destruction or damage was not due to any negligence or fraud on the
part of the person liable for the duty; and
iii)
such goods did not enter into consumption’.

[9] For the purposes of this case, the requirements contained in this rebate, which
are cumulative, can be set out thus:
1. the goods involved are in the amount of not less than R2500;
2. they have been proved to have been lost, destroyed or damaged on any single
occasion;
3. in circumstances of vis major, alternatively in such other circumstances as the
Commissioner deems exceptional;
4. the vis major or the circumstances, which are deemed exceptional by the
Commissioner took place while the goods were in a custom and excise
warehouse;
5. no compensation in respect of the customs duty or fuel levy on the goods has
been paid or is due to the owner by any other person;
6. the loss, destruction or damage was not due to any negligence or fraud on the
part of the person liable for the duty ; and
7. the goods did not enter into consumption.

[10] Notwithstanding an initial dispute between the parties about the interpretation
of these requirements, it was correctly conceded by respondents’ counsel that all of
these requirements had to be met before a rebate under this item could be claimed.
The dispute then reduced to one central question: what was meant by ‘such goods
did not enter into consumption’?

[11] Appellant’s counsel contended that, once the goods in question entered the
relevant market which led to the consumption thereof, the duty must be paid. It did
not matter in which way the goods entered the market, that is by the importer selling
the consignments or by robbers illegally inserting the stolen consignments into the
market. In this connection, he referred to the provisions of s 45(1) of the Act:
‘(1) (a) Notwithstanding anything to the contrary in this Act contained, all goods consigned to
or imported into the Republic or stored or manufactured in a customs and excise warehouse
or removed in bond shall upon being entered for home consumption be liable to such duties
(including anti-dumping duties, countervailing duties and safeguard duties specified in
Schedule 2 and new or increased duties referred to in section 58 (1) and duties imposed
under the provisions of section 53) as may at the time of such entry be leviable upon such
goods.
(b) Notwithstanding the provisions of paragraph (a) but subject to the provisions of section
40, any dutiable goods imported into or manufactured in the Republic and which were
removed, taken or delivered without due entry for home consumption having been made in
respect of such goods, shall be liable to such duties as may be leviable upon such goods at
the time of such removal, taking or delivery or at the time of assessment by an officer,
whichever yields the greater amount of duty.’

[12] Appellant’s counsel submitted that s 45(1)(b) of the Act envisaged the exact
situation that occurred in the present case. Dutiable goods which were imported into
South Africa were removed, taken or delivered without due entry for home
consumption having been made. Nonetheless, the goods attracted the applicable
duty at the time of their removal. Hence, s 45(1)(b) covered the case of goods
entering consumption by way of the action of robbers who had seized the goods.

[13] This provision has to be read together with the balance of the Act, including s
76(2)(d) of the Act. This provides:
‘The Commissioner shall, subject to the provisions of subsection (4), consider any application
for a refund or payment from any applicant who contends that he has paid any duty or other
charge for which he was not liable and that he is entitled to any payment under this Act by
reason of –
…

(d) The goods concerned having been damaged, destroyed or irrevocably lost by
circumstances beyond his control prior to the release thereof for home consumption.’
While this provision caters for refunds, it does so in circumstances where the goods
for which duty has been paid have been damaged, destroyed or irrevocably lost in
circumstances beyond the control of the importer prior to the release thereof for
home consumption. Appellant contended that this section provides exclusively for
refunds of duty already paid and did not concern rebates.
[14] It is difficult to see why an importer, who has prematurely paid duty while the
goods are in a customs and excise warehouse, can obtain a refund if the goods are
irrevocably lost due to a robbery while the same person cannot claim a rebate if the
goods are lost as a result of an armed robbery prior to payment of the duty.

[15] The interpretation contended for by appellant contains an added difficulty. The
duty is payable as set out in Schedule 4 which contains Rebate item 412.09. On
appellant’s interpretation of the Act and the Schedule read together, it is extremely
difficult to see how an armed robbery could ever trigger a rebate of duty to be paid.
Appellant did not argue that an armed robbery cannot fall under the category of vis
major. That is understandable, given SARS Procedure Step of 14 March 2012 at
para 2.9(e): ‘Robbery by armed or dangerous attackers can be regarded as force majeure,
but theft in the ordinary cause (sic, should be course) will seldom be regarded as force
majeure.’
This guideline accords with South African law which recognizes that vis major
includes human acts in addition to acts of nature or acts of God. Wille’s Principles of
South African Law (9ed) at 850.

[16] From this, it must follow that an armed robbery falls within the scope of vis
major. After the robbery, the goods were out of the control of both appellant and
respondent. Once respondent provided evidence, which was accepted on the
probabilities, that a robbery had occurred, pursuant to which the dutiable goods had
been lost to both parties, there is no evidence by which the respondent could show to
which use the goods had been put. The facts of this case support this conclusion.
The application before the court a quo was launched years after the robbery. There is

no evidence that the consignments were ever found. It is difficult to see what more is
required of a party, in the position of respondent in order to claim a rebate.

[17] There are a number of significant problems with the approach of appellant in
basing its case on the provisions of s 45 (1)(b) which refer to goods ‘removed, taken
or delivered without due entry for home consumption having been made.’ The
conditions contained in this provision are far wider than the phrase ‘damaged
destroyed or irrecoverably lost by circumstances beyond his control’ as it set out in s
76(2)(d) of the Act or ‘lost, destroyed or damaged on any single occasion in
circumstance of vis major’, as provided for in Rebate item 412.09.

[18] These three separate provisions need to be read together to give coherence
to the Act and the Schedule as a whole. An interpretation that accepts that an armed
robbery can fall within the scope of vis major and that goods that are lost as a result
of an armed robbery fall within the meaning of Rebate item 412.09 does not subvert
the meaning of any of the provisions cited by appellant. In addition, it allows for a
situation whereby a rebate can be claimed where goods are lost to both appellant
and respondent as a result of an armed robbery.

[19] In the result, the appeal is dismissed with costs.

___________________

D Davis

Acting Judge of Appeal

APPEARANCES
For the Appellant:

C Puckrin SC with M P Van der Merwe SC
Instructed by:

MacRobert Attorneys, Pretoria
Lovius Block, Bloemfontein

For the respondent:

J G Cilliers SC
Instructed by

Frankim Attorneys, Pretoria
McIntyre Van der Post, Bloemfontein