EBN Trading (Pty) Ltd v Commissioner of Customs and Excise and Another

• Jurisdiction: South Africa
• Citation: 2001 (2) SA 1210 (SCA)

EBN Trading (Pty) Ltd v Commissioner of Customs and Excise and Another
2001 (2) SA 1210 (SCA)

2001 (2) SA p1210

Citation	2001 (2) SA 1210 (SCA)
Case No	653/98
Court	Supreme Court of Appeal
Judge	Schutz JA, Melunsky AJA and Nugent AJA
Heard	February 20, 2001
Judgment	March 2, 2001
Counsel	A Findlay SC (with M M Roseman) for the appellant.; A P Joubert SC (with H H Steyn) for the respondent.

Flynote : Sleutelwoorde B

Revenue — Customs and excise — Detention of goods in terms of s 114 of the Customs and Excise Act 91 of 1964 — Whether appellant 'importer' of goods as defined in s 1 of Act and liable to pay duty — Appellant contending that it acted as mere financier and had no C beneficial interest in goods — Appellant to receive possession of one of original bills of lading upon manufacturer of goods being paid its fob price — Bill of lading entitling appellant to receive possession of goods in order to deliver them to traders and receive payment from them — Payment appellant to make to manufacturer not made against D receipt of purchase price from traders but before such receipt — If goods not delivered in South Africa, appellant having no means to obtain payment from traders and possibly liable to them for damages — Receipt of goods relieving appellant from burden of collecting money outside of South Africa and serving as security for its being re-imbursed its outlays — Appellant having lively interest in goods E which was both advantageous and profitable to it — Appellant having beneficial interest in goods and could be classified as 'importer'.

Headnote : Kopnota

In April 1995 certain goods entered the country through Durban harbour. A Hong Kong company, Dragon Best Investment Ltd (Dragon) was the importer of the goods. The respondents, however, relying on an F extended meaning of the word 'importer' as contained in s 1 of the Customs and Excise Act 91 of 1964, sought to label the appellant as the importer of the goods due to the impossibility of pursuing the revenue claim arising in the matter in a foreign court. The appellant contended that it had acted as a mere financier and had had no beneficial interest in the goods.

The factual background to the matter was that two traders, Pick 'n G Pay and Tom Distributors, wished to import VCRs from Daewoo Corporation, Korea, the manufacturer. Dragon was to procure the VCRs from Daewoo and pay for them as well as to arrange and pay for the shipping of the goods so that they would be delivered duty paid to the designated warehouse in Johannesburg. The appellant was to provide the finance needed between the time the goods were shipped at the Korean port of H Busan until they were delivered to Pick 'n Pay and Tom Distributors. This was done by the appellant procuring irrevocable letters of credit, split between Dragon and Daewoo. The appellant did not use its own money but availed itself of a facility which an intermediary, CTS, had with ABSA Bank Ltd. After delivery to Pick 'n Pay and Tom Distributors, the purchasers would pay the appellant the agreed I purchase price, from which it would meet its commitments to CTS and take its fee.

The respondents' case was that the imported goods had entered the country without customs duty being paid. It was alleged that the duty had been evaded by the goods entering the country under two bills of entry containing false information. Those bills had indicated that the country of destination was Zaire, which would have meant that the goods would be J

2001 (2) SA p1211

re-exported without any South African duty having to be paid. A The appellant argued that it had not been shown that the goods reflected on the false bills of entry were the same goods later delivered to Pick 'n Pay and Tom Distributors.

The respondents, acting in terms of s 114 of the Act, had detained other imported goods with which the appellant was connected as security for the amounts in issue in the case. The appellant brought an urgent application for the release of the detained goods on the basis that it B was not a party liable to pay the duty in respect of the VCRs because it was not the importer. The Court a quo had found for the respondents but granted leave to appeal. In an appeal,

Held, after a detailed examination of the facts of the matter, that it appeared that the appellant was correct in saying that its role was that of financier but that such a broadly descriptive and C imprecise term could not necessarily determine whether the appellant was beneficially interested in the imported goods. Such determination depended on a more exact examination of the contractual role that it had fulfilled. (Paragraph [4] at 1214C - D.)

Held, further, that there was no suggestion that the appellant had been a party to a fraud on the respondents. As the D contractual obligation to pay duty had rested on Dragon and not the appellant, the latter had had nothing to gain by such a fraud. (Paragraph [5] at 1214H.)

Held, further, that the appellant was to receive possession of one of the original bills of lading upon Daewoo being paid its fob price and was to be notified of the arrival of the goods. The bill of lading entitled the appellant to receive possession of the goods in E order to deliver them to the two traders and receive payment from them. The payment the appellant was to make to Daewoo was, however, not made against receipt of the purchase price from the traders but before such receipt. If the goods had accordingly for some reason not been delivered in South Africa, the appellant would not have had the means to obtain payment from the traders and may even have been liable to F them for damages. The receipt of the goods had relieved the appellant from the burden of collecting money in Hong Kong and served as security for its being re-imbursed its outlays. (Paragraph [24] at 1220E - H.)

Held, accordingly, that the appellant had a lively interest in the goods which was both advantageous and profitable to it. The appellant accordingly had a beneficial interest in the goods and was able to be classified as the 'importer' of the goods. (Paragraphs G [24] and [28] at 1220H, I and 1221E/F.) Appeal dismissed.

The decision in EBN Trading (Pty) Ltd v Commissioner for Customs and Excise and Another 1999 (3) JTLR 45 (N) confirmed.

Cases Considered

Annotations

Reported cases H

Commissioner for Inland Revenue v Conhage (Pty) Ltd (formerly Tycon (Pty) Ltd) 1999 (4) SA 1149 (SCA) (1999 (12) JTLR 337): dictum at 1155H - I applied

EBN Trading (Pty) Ltd v Commissioner for Customs and Excise and Another 1999 (3) JTLR 45 (N): confirmed on appeal I

Lendalease Finance (Pty) Ltd v Corporacion De Mercadeo Agricola and Others 1976 (4) SA 464 (A): compared

Vasco Dry Cleaners v Twycross 1979 (1) SA 603 (A): dictum at 615H - 616A applied. J

2001 (2) SA p1212

Statutes Considered

Statutes A

The Customs and Excise Act 91 of 1964, ss 1 sv 'importer', 114: see Juta's Statutes of South Africa 1999 vol 3 at 2-8, 2-62 - 2-63.

Case Information

Appeal from a decision in the Natal Provincial Division (Thirion J). The facts appear from the judgment of Schutz JA.

A Findlay SC (with M M Roseman) for the B appellant.

A P Joubert SC (with H H Steyn) for the respondent.

In addition to the authorities cited in the judgment of the Court, counsel for the parties referred to the following:

Administrator, Cape Province v Direct Coffee Importing C Co 1928 CPD 148

Beaton v Baldachin Bros 1920 AD 312 at 314

Beckett & Co Ltd v Union Government (Minister of Finance) 1919 TPD 6 at 8

Beckett & Co Ltd v Union Government 1921 TPD 142 at 149, 151 and 153 D

Canada Sugar Refining Co Ltd v The Queen [1898] AC 735 (HL) at 738 - 40

Commissioner of Customs and Excise v Strauss and Others E 1998 (4) SA 593 (T) at 599F, 603I - 604B, 604D - H

Commissioner of Customs and Excise v Container Logistics (Pty) Ltd; Commissioner of Customs and Excise v Rennies Group Ltd t/a Renfreight 1999 (3) SA 771 (SCA) at para [14] - [17]

Commissioner of Stamp Duties v Livingstone [1964] 3 All ER 692 at 695f - g, 696i - 697b, 697e - f, 699g - h

D'Avigdor-Goldsmidt v Inland Revenue Commissioners [1953] 1 All ER 403 (HL) at 415g - h, F 417f - h

Estate Kemp and Others v McDonalds Trustee 1915 AD 491

Ex parte Minister of Justice: In re R v Bolon 1941 AD 345

Fish NO v Adam t/a Charter Bazaar 1978 (2) SA 313 (R) at 316G - H

In re Bradshaw [1950] 1 All ER 643 (CA) at 645h and 649d - e

Ishag v Allied Bank [1981] 1 Lloyds Rep 92 at 99 and G 102

Marine & Trade Insurance Co Ltd v Van der Schyff 1972 (1) SA 26 (A) at 37A - 40C

Re J Biddy and Sons Pension Trust Deed: Davis v IRC [1952] 2 All ER 483 (Ch) at 487A - B

Re Miller's Agreement: Uniacke v Attorney-General [1947] 2 All ER 78 (Ch) at 83F - G H

Swissborough Diamond Mines (Pty) Ltd and Others v Government of the Republic of South Africa and Others 1999 (2) SA 279 (T) at 323F - 325C

The Princess Estate and Gold Mining Co Ltd v The Registrar of Mining Titles 1911 TPD 1066 at 1075 - 7 I

Tieber v Commissioner for Customs and Excise 1992 (4) SA 844 (A) at 848H - I

Traub v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd 1983 (3) SA 619 (A) at 629E - 630 in fin

Union Government v Vianini Ferro-Concrete Pipes (Pty) Ltd 1941 AD 43

Weiner v The Master and Others NNO 1976 (2) SA 830 (T) at 841B - F J

2001 (2) SA p1213

Weintraub and Weintraub v Joseph and Others 1964 (1) SA 750 (W) at 755F - 756D A

Westminster Bank Ltd v Inland Revenue Commissioners; Wrightson and Another v Inland Revenue Commissioners [1957] 2 All ER 745 (HC) at 754D - E.

Cur adv vult. B

Postea (March 2).

Judgment

Schutz JA:

[1] The essential issue is whether the appellant, EBN Trading (Pty) Ltd (EBN), was an 'importer' in terms of the definition C contained in s 1 of the Customs and Excise...