Crown Chickens (Pty) Ltd v Minister of Finance and Others

• Jurisdiction: South Africa
• Judge: Jones J
• Judgment Date: 03 January 1995
• Citation: 1996 (4) SA 389 (E)
• Docket Number: 2221/94
• Hearing Date: 08 December 1994
• Counsel: M J Lowe for the applicant. No appearance for the first respondent. A P Joubert SC for the second and third respondents.
• Court: Eastern Cape Division

Jones J:

This application was brought as a matter of urgency for reasons which will become apparent and which are entirely justified. Because of the urgency I made the following order on 13 December 1994, a few days after the matter was called and argued: G

1.

The application by the second and third respondents to strike out portions of the founding affidavit and annexures thereto is granted, and the items referred to in subparas (a), (b), (c), (d), (e), (f), (g), (h) and (i) of the notice to strike out dated 8 December 1994 are struck out.

2.

The applicant's application is dismissed. H

3.

The applicant is ordered to pay the taxed party and party costs of these proceedings.

I indicated when I did so that I would give reasons later. These are the reasons.

The applicant imports frozen mutton from Australia. Its directors consider that this is I financially worthwhile. Among its reasons is the relatively low excise duty payable on imported carcasses of frozen mutton. In terms of item 0204.41 of the Brussels harmonised system of tariffs known officially as the Harmonized Customs and Excise Tariff, which is applied in South Africa and internationally, the excise duty on frozen 'carcasses and half-carcasses' of mutton is R1,50 per kg. This J

Jones J

compares favourably with the excise duty on other frozen mutton. In terms of item 0204.42 of the Brussels A tariff, duty is levied on other 'cuts of mutton with bone in' at a rate of R4 per kg. It turns out that the applicant purchases whole carcasses of frozen mutton in Australia. But in order to package and ship the carcasses economically and efficiently, the shoulders and legs are cut off and the carcass is slit down the backbone, B so that it is in six separate pieces when it is placed into its package. The package, containing only these six pieces from the original carcass of a single sheep, is frozen and placed with other similarly cut and frozen packages into a container. The container is then shipped from Australia to Port Elizabeth. The applicant contends, therefore, that it is importing whole carcasses of Australian mutton which have for convenience of proper packaging been cut up into six pieces before they are shipped, and that the C duty on each carcass is R1,50 per kg. But the Controller of Customs and Excise, Port Elizabeth (the second respondent) considers that the applicant is importing other cuts of mutton with bone in. He sought a determination from the Commissioner for Customs and Excise (the third respondent). That determination is set out in a letter D annexure 'F' to the founding affidavit. The salient portion of the letter reads:

'. . . you are informed that the Office of the Commissioner for Customs and Excise to whom the matter was referred has in terms of s 47(9)(a)(i) of the Customs and Excise Act 91 of 1964 as amended, determined that the E carcasses having been cut otherwise than to the limit of the lengthwise splitting of a carcass they are classified within tariff subheading 0204.42 as "other cuts with bone in".'

Following upon this letter, the Controller of Customs and Excise has sealed and impounded containers of frozen mutton under lien after its arrival at Port Elizabeth. F Other shipments of frozen mutton are on the way. They face a similar fate. They will not be released to the applicant unless it pays the higher duty. Hence the urgency.

The applicant appeals to the Supreme Court in terms of s 47(9)(b) and (e) of the Customs and Excise Act 91 of 1964 ('the Act') against the Commissioner's G determination. It seeks a rule nisi correcting and substituting this determination with a determination that the frozen mutton presently held by the Controller of Customs and Excise is classified as 'carcasses and half-carcasses' under tariff heading 0204.41; ordering the release of the carcasses held by the Controller against payment of the duty H payable in terms of tariff heading 0204.41; and costs.

The Minister of Finance (the first respondent) abides the decision of the Court. But the second and third respondents (the Controller and the Commissioner) have opposed the relief sought. They have not filed any papers, and do not propose doing so. I Subject to what is said below relating to an application to strike out, they have been content to argue the application on an acceptance of the allegations in the applicant's affidavit and the annexures to it. By the time the matter came to be argued the need for a rule nisi had fallen away. The parties agreed that if the applicant was successful he should be given absolute relief.

The sole issue is whether the packages containing a carcass which has been cut up into six pieces remains a carcass within the meaning of item J

Jones J

A 0204.41 of the tariff, or whether it is to be classified as other cuts of mutton with bone in under item 0204.42. In order to establish that it is the former, the applicant has annexed three letters, annexures 'I', 'J' and 'K' to the founding affidavit. Annexure 'I' is a letter from an export officer in the Australian Customs Service indicating that his...