SARS was right to seize containers of cheap Chinese clothes, SCA rules

By Jan Cronje for Fin24

The Supreme Court of Appeal (SCA) in Bloemfontein has upheld an appeal by the SA Revenue Service (SARS) justifying its decision to seize 19 containers of cheap clothes from China.

“There was no credible explanation for the unbelievably low prices charged by the suppliers of the goods,” the court ruled on Tuesday. “The goods and the containers in which they were imported were liable to forfeiture.”

The ruling means that SARS was within its rights to first seize and then detain the containers. It also overturns a previous high court ruling ordering that the containers be released.

‘Unrealistic and unattainable’

The tax agency confiscated the goods in 2020 on the basis that they had been clearly under-invoiced.

It argued that Gauteng-based clearing agent Dragon Freight and six other importers had been unable to explain how they were able to source the goods at such low prices.

But the revenue collections agency’s seizure order was overturned in December 2020, when Judge Selby Baqwa of the North Gauteng High Court in Pretoria ordered that the containers be released.

Baqwa argued that SARS should have accepted the initial answers given by the importers. The subsequent research it conducted and the follow-up questions it posed were “procedurally unfair” or “irrelevant”.

But the SCA found Baqwa’s decision was flawed.

“The high court erred in disregarding not only the evidence showing that the agreements were false, but also the reasons for the impugned decision, despite quoting those reasons verbatim in its judgment.”

In its case, SARS had relied on evidence provided by textile expert Dr Jaywant Irkhede, who noted that the importers claimed they were able to source clothes for just $0.21 or around R3 per item.

While the importers disputed Irkhede’s calculations, the court found that his evidence “makes it clear that the prices declared by the importers were unrealistic and unattainable”.

Johann Baard of the SA Apparel Association welcomed the SCA verdict.

“We sincerely hope that this sends a strong message to those who do not play by the rules,” he said. “Illegal imports and illicit trade pose a significant threat to the sustainability of compliant clothing manufacturers who employ many thousands of people domestically.”

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