Computer Investors Group Inc and Another v Minister of Finance

• Jurisdiction: South Africa
• Citation: 1979 (1) SA 879 (T)

Computer Investors Group Inc and Another v Minister of Finance
1979 (1) SA 879 (T)

1979 (1) SA p879

Citation	1979 (1) SA 879 (T)
Court	Transvaal Provincial Division
Judge	Human J
Heard	March 2, 1978
Judgment	November 22, 1978

Flynote : Sleutelwoorde

Revenue — Sales duty — On imported goods — "Domestic value" of such goods B in terms of s 66 of Act 91 of 1964 — Determination of — "Free on board price of goods" to be determined under s 67 — Value for sales duty purposes to be determined in accordance with s 70 (1) (a) of Act — Minister holding that it was not relevant whether Secretary, in determining sales duty value, acted in terms of s 66 or 67 and that Act did not prescribe manner or method of calculation of value — Such view in C conflict with s 70 (1) (a) — Secretary and Minister determining value on the basis of aggregate of monthly rental of goods over 72 months in terms of paper issued by Customs Co-operation Council, Brussels — Accordingly FOB price under s 67 and s 66 value not determined — Such constituting a disregard of provisions of Act and failure to decide the matter — "Price D charged... by an exporter" in s 67 of Act — Cannot be applied to a lease — FOB price in s 67 relates to an actual sale and the actual price charged — Minister holding that domestic value of goods in terms of s 66 cannot be based on a single transaction — No substance therein — In accepting Customs Co-operation Council formula Minister precluding himself from E judging matter on the merits and in accordance with the Act — Guidelines in such formula not to be treated as a hard and fast rule to be applied in every case — No onus on importer to persuade Secretary and Minister as to the proper value of the goods — Minister's decision dismissing appeal from Secretary's determination of value of imported goods set aside on review. F

Review — Proceedings of a public body — When Court will set proceedings aside discussed.

Headnote : Kopnota

Where a discretion has been conferred upon a public body by a statutory provision, such a body may lay down a general principle for its general guidance, but it may not treat this principle as a hard and fast rule to be applied invariably in every case. At most it can only be a guiding G principle, in no way decisive. Every case that is presented to the public body for its decision must be considered on its merits. In considering the matter the public body may have regard to a general principle, but only as a guide, not as a decisive factor. If the principle is regarded as a decisive factor, then the public body will not have considered the matter, but will have pre-judged the case, without having regard to its merits. The public body will not have applied the provisions of the statutory enactment.

H As to when the Court will set a decision of a public body aside in review proceedings discussed.

First applicant, an American corporation carrying on business as lessors of computer equipment, acquired used computer equipment in the USA, and engaged the second applicant, a Swiss subsidiary of the first applicant, to lease the equipment to an oil company in the Republic at a monthly rental of R6 176,16. On importation of the equipment into the Republic first applicant paid sales duty to the Secretary for Customs and Excise in the sum of R13 265, 10, which amount was calculated on a sales duty value of R88 434. Thereafter the Secretary assessed the sales duty at R54 972,30, which was calculated on the basis of the FOB price of the equipment (R76 899) plus 15 per cent, plus the lease rental for a period of

1979 (1) SA p880

72 months, minus certain charges, arriving at a sales duty value of R366 482. First applicant thereupon appealed to the Minister (first respondent) against the Secretary's assessment contending that the Secretary's A assessment of the value of the equipment was unfair and unrealistic, that there was some difficulty in applying ss 70 (1) (a) and 67 of the Customs and Excise Act 91 of 1964 in order to arrive at a value for sales duty purposes since there was no free on board price applicable, as there was no price charged for the goods by the exporter (first applicant), and that respondent was entitled to proceed under s 66 (2) in order to determine the domestic value of the goods. First applicant attached to its appeal B six letters from its USA competitors indicating the prices at which the computer equipment was available under competitive conditions and, taking an average of the figures contained therein, contended that the sales duty value was R127 028 and the sales duty R19 054. In dismissing the appeal, the respondent accepted that s 67 of the Act was not applicable, but held that the domestic value provided for in s 66 of the Act could not be based on a single transaction coupled with the fact that the goods imported by first applicant were second-hand, that it was competent for the Secretary to determine a value in terms of s 66 (2), which he had done and in which C he had had regard to papers issued by the Customs Co-operation Council, Brussels, as a practical guide in the valuation of computer equipment. These papers prescribed a means whereby a value could be arrived at based on the actual terms of the hire contract entered into in respect of the equipment, irrespective of whether it was new or used. The respondent held that the valuations submitted by first applicant were not acceptable as the market value of the equipment in question because they did not relate D to actual transactions. In an application for the review of the respondent's decision, respondent also contended that it was not really relevant whether the Secretary acted in terms of s 66 or in terms of s 67 as the method set out in the Customs Co-operation Council papers was a legitimate and competent manner of calculation, and as the Act did not prescribe a manner or method of calculation in the circumstances and that there was an onus on the applicants to persuade him and the Secretary as to the proper value of the equipment.

E Held, that the view that it was not really relevant whether the Secretary acted under s 66 or s 67 as the method set out in the Customs Co-operation Council papers was a legitimate and competent method of calculation and as the Act did not prescribe to the Secretary a method of calculation was in conflict with the clear and unambiguous provisions of s 70 (1) (a) of the Act.

F Held, further, that at no stage had both a s 67 FOB price (actual or deemed) and a s 66 value (actual or deemed) been determined: both the Secretary and the respondent were of the view that it was unnecessary that both such price and value be determined.

Held, accordingly, that the respondent had misinterpreted or disregarded the clear provisions of the Act and accordingly failed to apply his mind to the issues in accordance with the behests of the Act: de jure the respondent had failed to decide the matter at all.

G Held, further, that a contention by respondent that the words "the price charged... by an exporter" in s 67 of the Act could be applied to a lease was untenable: the Secretary cannot make a determination of a "deemed" FOB price under the substantive part of s 67; the FOB price referred to in the body of s 67 related to an actual sale transaction and the actual price charged.

H Held, further, that the contention that the Secretary could rely on s 66 (2) because a domestic value based on a single transaction relating to second-hand goods was unacceptable was without substance: the evidence adduced by the applicants before the Secretary was not based on a single transaction.

Held, further, that, in accepting the Customs Co-operation Council formula without considering its merits or appropriateness, the respondent had precluded himself from judging the appeal on its merits and in accordance with the Act: the formula was at most a very rough guide or check.

Held, further, that there was no onus on the applicants to persuade the respondent and the Secretary as to the proper value of the equipment: it was incumbent on the respondent, in rehearing the matter on appeal, to arrive at a fair and proper determination

1979 (1) SA p881

of the sales duty payable, and, in so doing, to call for such evidence as he might have deemed necessary.

Held, accordingly, that the respondent's decision should be set aside and the matter referred back to him for his reconsideration to determine the sales duty payable by the applicants in accordance with the provisions of A the Act.

Case Information

Application for the review of a decision of the respondent. Facts not material to this report have been omitted from the reasons for judgment.

B O'Donovan SC (with him P F Ferreira) for the applicants.

T T Spoelstra for the respondent. B

Cur adv vult.

Postea (November 22). C

Judgment

Human J:

This matter is concerned with the amount of sales duty payable by the first or second applicant, or both of them, under a determination made by the Secretary for Customs and Excise in terms of the provisions of s 66 or 67 of the Customs and Excise Act 91 of 1964 and confirmed by the respondent on appeal.

D The first applicant is a corporation organised and existing under the laws of the State of New York. Its address and principal place of business is 1351 Washington Boulevard, Stamford, Connecticut. It carries on the business of letting of computer equipment. The second applicant is a subsidiary of the first applicant and is a corporation formed under the laws of the Swiss Confederation.

E The respondent is the Minister of Finance to whom an appeal lies against any determination made by the Secretary for Customs and Excise of the free on board price of any imported goods in terms of s 67 of the Act or the domestic value in terms of s 66 (2) of the Act of imported goods.

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