THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 751/21
In the matter between:

COMMISSIONER FOR THE SOUTH
AFRICAN REVENUE SERVICE                                    FIRST APPELLANT
MINISTER FOR TRADE, INDUSTRY
AND COMPETITION                                                   SECOND APPELLANT
SOUTH AFRICAN APPAREL
ASSOCIATION                                                                 THIRD APPELLANT
APPAREL AND TEXTILE ASSOCIATION
OF SOUTH AFRICA                                                   FOURTH APPELLANT
SOUTHERN AFRICAN CLOTHING AND
TEXTILE WORKERS UNION                                       FIFTH APPELLANT

and

DRAGON FREIGHT (PTY) LTD                                        FIRST RESPONDENT
TIAN LE TRADING ENTERPRISE CC                    SECOND RESPONDENT
NEW FEELING FASHION DESIGN (PTY) LTD    THIRD RESPONDENT
TINGTING SECRET BEAUTY (PTY) LTD         FOURTH RESPONDENT
HIQ PACIFIC TRADING CC                                     FIFTH RESPONDENT
FFB IMPORT-EXPORT CC                                         SIXTH RESPONDENT
CALLA TRADING (PTY) LTD                            SEVENTH RESPONDENT

Neutral citation: The Commissioner for the South African Revenue Service and
Others v Dragon Freight (Pty) Ltd and Others (case no
751/21) [2022] ZASCA 84 (7 June 2022)
Coram:
SCHIPPERS, PLASKET and HUGHES JJA and TSOKA and
SALIE-HLOPHE AJJA
Heard:

24 May 2022
Delivered:            7 June 2022
Summary: Administrative Law – review of decision to seize goods under
s 88(1)(c) of the Customs and Excise Act 91 of 1964 (the Act) – transaction value
of goods under-declared – decision lawful, reasonable and procedurally fair –
interpretation of s 96(1)(a) of the Act – notice of legal proceedings – requirements
peremptory – cause of action must be set out – notice in anticipation of decision
not yet taken invalid.

________________________________________________________________
ORDER
________________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Baqwa J sitting
as court of first instance):
The application for intervention by the Southern African Textile and
Clothing Workers’ Union is struck from the roll with costs. Such costs shall
include the costs of only one junior counsel.
The appeal is upheld with costs, including the costs of two counsel where so
employed. Such costs shall be paid by the respondents jointly and severally,
the one paying the others to be absolved.
The order of the high court is set aside and replaced by the following:

‘The application is dismissed. The applicants are directed to pay the costs of
the application, including the costs of two counsel where so employed,
jointly and severally, the one paying the others to be absolved.’

________________________________________________________________
JUDGMENT
________________________________________________________________
Schippers JA (Plasket and Hughes JJA and Tsoka and Salie-Hlophe AJJA
concurring)

[1] The main issue in this appeal concerns the lawfulness of a decision taken
by the first appellant, the Commissioner for the South African Revenue Service
(the Commissioner, or SARS), to seize 19 containers of clothing (the goods), in
terms of section 88(1)(c) of the Customs and Excise Act 91 of 1964 (the Act).1
The goods were seized on the basis that the respondents had under-declared their
transaction value – the price actually paid for the goods when sold for export to
this country – which enabled the respondents to pay less customs duty than they
were lawfully required to pay. A related issue is whether the respondents
complied with s 96(1) of the Act which proscribes the institution of legal
proceedings against the Commissioner, unless the litigant delivers a written
notice setting out its cause of action at least one month before instituting those
proceedings. The appeal is before us with the leave of this Court.

[2] The second appellant, the Minister of Trade, Industry and Competition (the
Minister), intervened in an application by the respondents to review and set aside
the decision by SARS on 13 August 2020, to seize the goods in terms of s 88(1)(c)
of the Act (the impugned decision). The basic ground for the Minister’s
intervention is that customs fraud, particularly in relation to clothing imported
from China, is a systemic problem in South Africa. This problem is illustrated in
the Minister’s affidavit: in 2018 the value of the exports of textiles and clothing
goods from China to South Africa, as reported by the General Administration of

1 Section 88(1)(c) states that if goods are liable to forfeiture under the Act, the Commissioner may seize those
goods.

Customs of the People’s Republic of China (GACC) to the United Nations, was
US$ 2.4 billion, whereas the value of the imports of textiles and clothing goods
into South Africa from China, as reported by SARS to the United Nations, was
US$1.5 billion – a difference of US$900 million, even though the two values
should be substantially the same. Customs fraud has significantly contributed to
the displacement of locally manufactured goods which has resulted in the loss of
domestic production, market share, sales, profits and jobs.

[3] The third appellant, the South African Apparel Association (SAAA), and
the fourth appellant, the Apparel and Textile Association of South Africa
(ATASA), are employers’ organisations registered under the Labour Relations
Act 66 of 1995. They represent the labour interests of a large number of
employers in South Africa in the clothing and textiles industry. They opposed the
review application on the ground that the values or prices of the goods declared
by the respondents on importation – some 1000% less than the prices of similar
clothing declared to the GACC in a previous consignment imported by the
respondents from the same suppliers – are unrealistic and unattainable.

[4] The first respondent, Dragon Freight (Pty) Ltd (Dragon Freight), is a
clearing agent. The second to seventh respondents imported the goods from
China. Where appropriate, they are collectively referred to as ‘the respondents’.

[5] The impugned decision was reviewed and set aside by Baqwa J in the
Gauteng Division of the High Court, Pretoria (the high court). The court directed
SARS to immediately release the goods upon payment of the applicable customs
duties and fees, calculated in accordance with the respondents’ declared
transaction values to SARS. The appellants were ordered to pay the costs of the
application, jointly and severally.

The factual background
[6] This litigation has its origin in an earlier application which the respondents
launched in the high court in November 2019, in which they successfully
reviewed and set aside SARS’ decision to seize 11 containers of clothing (the first
application). In that application, which was decided by Tuchten J, the respondents
pre-emptively sought an order to review and set aside a decision by SARS to seize
the goods, in the event of that decision being taken. However, they did not persist
in seeking that order because it concerned, as they put it, ‘future importations and
the containers were still on the water’.

[7] It is not in dispute that the contents of the containers in the first application
were the same as the contents of the 19 containers in the present case, namely
clothing and textile goods imported from China, and that both consignments
involved the same exporters and importers. The answering papers in the first
application stated that SARS had approached the Chinese customs authorities for
assistance concerning the clothing exported in that application. Tuchten J
recorded in his judgment that when the first application was decided, the Chinese
export authorities had not responded to the request for information, and that
SARS might still be able to produce evidence to contradict the respondents’
version.

[8] In order to counter customs fraud and other illegal activities, SARS uses a
customs electronic system with built-in risk and identification analysis
capabilities. This system utilises information furnished in, amongst others,
customs declarations to identify potential risks. For example, the system
compares the declared value of a product with the international price of the yarn
used to produce the constituent materials of that product. A declared customs
value lower than the risk price will automatically flag the consignment on the
SARS system for further investigation. The 19 containers were so flagged and

consequently detained under s 88(1)(a) of the Act, between 4 November and
20 December 2019.

[9] The goods were detained by SARS because it suspected that the
respondents had under-declared their value. SARS proceeded to investigate and
engage with the respondents in order to determine whether the goods were liable
to seizure. They were requested to complete SARS’ standard Trader
Questionnaire – a request for information in terms of s 4 of the Act. The
respondents were asked to furnish the following information:
‘8.
How did the importer source this foreign supplier and establish a trading relationship?
9.
Trips abroad to negotiate trade must be substantiated with a copy of the
importers/buyers passport showing all his trips overseas to meet with the suppliers.
Copies of all correspondence with the foreign supplier in terms of negotiating the price,
quality and terms and conditions of sale must be presented.’

[10] The respondents did not answer questions 8 and 9. They simply replied that
the importer acquired suppliers during his trips abroad and that they were unable
to obtain a copy of passport evidence at the time. This failure to respond must be
seen in the light of further allegations in the founding papers that employees of
the importers obtained clothing at reduced prices from factories in China which
were closing down and trying to get rid of stock; that they bought ‘old’ stock
(clothing out of season); and that they also bought clothing, at substantially
reduced prices, from manufacturers and sellers whose orders had been cancelled
at the last minute.

[11] The respondents never provided any passport evidence of the trips to China
to purchase the goods. When questioned on this issue, they conceded that the
goods were sourced from only three suppliers that were named in the sale
agreements. This concession contradicted the respondents’ initial explanation

that their employees had bought the goods at various markets in China at very
low prices.

[12] On 21 January 2020 and in terms of a customs mutual assistance
agreement, the GACC, provided SARS with the Chinese export declarations
submitted to the GACC in relation to eight of the 11 containers in the first
application (the export declarations). These declarations showed that the invoice
prices furnished by the respondents to SARS were impossibly low – the prices
stated in the export declarations were 1000% more than the prices declared to
SARS. It was not disputed that the export declarations relate to eight containers
that formed the subject matter of the first application.

[13] On 24 February 2020 the respondents launched an application in the high
court to review and set aside SARS’ decision to detain the 19 containers, and that
it be ordered to release the goods. They also sought an order that the one-month
period specified in s 96(1)(a)(i) of the Act be reduced so as to render the
application compliant with that provision, alternatively that non-compliance with
the time period be condoned.

[14] On 6 March 2020 the export declarations were furnished to the respondents
as attachments to notices of intent in relation to the containers in the first
application. The respondents were informed that SARS intended to hold them
liable for underpaid customs duty and VAT, to declare the goods liable to
forfeiture under s 87 of the Act, and to impose an amount in lieu of forfeiture in
terms of s 88(2) of the Act. They were given an opportunity to submit evidence
and make submissions concerning the intended action. Their attention was drawn
to the reverse onus provisions in s 102(4) of the Act, namely that in any dispute

as to whether the proper duty has been paid, it shall be presumed that such duty
has not been paid, unless the contrary is proved.2

[15] On 13 March 2020 SARS received a report by Dr Jaywant Irkhede, an
expert in textile technology. He was instructed to examine and compare samples
of clothing taken from each of the 19 containers with samples previously taken
from eight containers in the first application, to determine whether they were
similar, and to assess their value. Dr Irkhede concluded that the samples of the
two consignments were similar, and that the values which he had determined were
similar to or in the same range as the prices or values declared in the Chinese
export declarations. Dr Irkhede’s valuation was prepared independently of the
export declarations.

[16] On 16 March 2020 the respondents were issued with a second notice of
intent concerning the 19 containers. They were informed of SARS intention to
seize the goods in terms of s 88(1)(c) of the Act. As with the first notice of intent,
the respondents were given an opportunity to present evidence, make written
submissions, and referred to s 102(4) of the Act.

[17] On 30 March 2020 the respondents’ attorney made written representations
in respect of both notices of intent. Statements and affidavits by the Chinese
suppliers were attached to the representations. It was clear from these affidavits
that the Chinese suppliers were willing to assist the respondents, and the
agreements allegedly concluded between the suppliers and the importers were

2 Section 102(4) of the Act states:
‘If in any prosecution under this Act or in any dispute in which the State, the Minister or the Commissioner or an
officer is a party, the question arises whether the proper duty has been paid or whether any goods or plant have
been lawfully used, imported, exported, manufactured, removed or otherwise dealt with or in, or whether any
books, accounts, documents, forms or invoices required by rule to be completed and kept, exist or have been duly
completed and kept or have been furnished to any officer, it shall be presumed that such duty has not been paid
or that such goods or plant have not been lawfully used, imported, exported, manufactured, removed or otherwise
dealt with or in, or that such books, accounts, documents, forms or invoices do not exist or have not been duly
completed and kept or have not been so furnished, as the case may be, unless the contrary is proved.’

furnished to SARS. The suppliers alleged that the importers did not pay the higher
values in the export declarations. In their representations the respondents
contended that the export declarations were ‘demonstrably false’ and
‘inadmissible and irrelevant’ for various reasons.

[18] The reason given by the respondents for the vast difference between the
Chinese export values and the values declared to SARS, was this:
‘SARS knows, or should know, for it is a notorious fact, that many Chinese export agents
inflate the pricing of exported goods when declaring to the General Administration of Customs
of the People’s Republic of China. The purpose of inflating the price on the export declarations
is for applying for loans from the banks as well as receiving national export tax rebates from
the Chinese government, calculated at 16% of the declared export price on the export
declarations. In consequence, SARS should have been alerted to the prospect of this kind of
fraud before jumping to the conclusions it did before issuing its letters of intent.’
The respondents went on to say:
‘The Importers are aware of the 16% export tax rebate and they are aware that export agents
sometimes inflate the value on the export documents in order to obtain larger rebates. We
enclose hereto an affidavit of a Chinese/South African importer and exporter – Mr Li Xinzhu
and wherein he describes in detail the inflation of the value on exports from China in order for
export agents to obtain export tax rebates from the Chinese government.’

[19] In support of these assertions all three Chinese exporters involved made
affidavits in which they said:
‘The Chinese export agent industry often “inflate[s]” the actual price of the commercial
invoices for the purposes of applying for loans from banks as well as receiving export tax
rebates from our Chinese government.’ (Emphasis in the original.)
The exporters gave general and similar explanations for the low selling prices.
These were that at the end of a season, unsold clothing stock is sold at reduced
prices; overruns and order cancellations are also sold cheaply; and ‘dead stock’
is often sold at prices well below the cost of production.

[20] The difficulty with the respondents’ new explanation for the low prices of
the goods – fraud by Chinese export agents – was immediately apparent. Any
export tax rebate would accrue to Chinese exporters, not their agents. That much
is clear from Mr Xinzhu’s affidavit. He said that in China, exported goods are
subject to a zero tax rate and that VAT paid to the State by upstream enterprises
during the domestic circulation of export goods must be refunded to the export
enterprise at the export stage. Further, it is unlikely that by committing fraud,
export agents would be able to obtain loans from banks.

[21] SARS therefore, on 29 May 2020, requested further particulars and
documents from the respondents, which included the following: an explanation
for the identical format, font and terms of the written agreements in respect of
both consignments (the eight containers relating to the export declarations and
the 19 containers) concluded between three different suppliers and the importers;
the originals or copies of each of the three agreements; the particulars of the
individuals who signed each agreement on behalf of the Chinese supplier and the
importer, and their identity and passport numbers; and details of the invoices
issued by the suppliers in respect of each of the consignments and how they were
rendered to the importers.

[22] In their reply dated 12 June 2020, the respondents contended that the
request for further particulars was ‘unlawful’. They refused to provide an
explanation for the identical format, font and terms of the written agreements, the
particulars of the sellers and buyers who signed them, and any details regarding
the invoices issued by the suppliers.

[23] Upon receipt of the three agreements furnished by the respondents, SARS
engaged the services of Mr Jannie Bester, a forensic document examiner, to
ascertain whether the signatures on the agreements had been appended

individually. Mr Bester identified identical handwriting similarities in the
signatures of the buyer and seller, and concluded that the agreements originated
from the same source document, because they contain the same spelling and
spacing errors. Mr Bester’s reports were given to the respondents on 19 June
2020.

[24] On 10 July 2020 the respondents provided SARS with an affidavit by their
own document examiner, Mr Ludwig Du Toit. He considered Mr Bester’s reports
and concluded that the identical signature of the buyer and seller, which appeared
on each of the agreements of the different importers, was an electronic signature.
Mr Du Toit however did not challenge Mr Bester’s conclusion that all three
agreements originated from the same source document.

[25] On 13 August 2020 SARS informed Dragon Freight of the impugned
decision. The reason given was that SARS had considered the evidence and
submissions by the respondents and was satisfied that the goods had not been
entered as required by ss 38(1), 39(1), 40(1) and (2) read with ss 65(1) and 66 of
the Act. Consequently, the goods and the containers in which they were imported
were liable to forfeiture as contemplated in s 87(1) and (2) of the Act. Dragon
Freight was also informed that it was entitled to written reasons for the impugned
decision. The respondents however did not request written reasons for the
decision.

[26] On 10 September 2020 the respondents delivered a supplementary affidavit
in support of the relief foreshadowed in paragraph 4 of the notice of motion,
namely that the decision to seize any of the containers referred to in the founding
papers, where applicable, be reviewed and set aside, and that SARS be ordered
to immediately release the 19 containers and the goods contained therein. As
stated earlier, the high court granted these orders, together with costs. The

appellants contend that the orders are incompetent because the respondents failed
to comply with the peremptory provisions of s 96(1) of the Act.

Section 96(1) of the Act
[27] Section 96(1) of the Act, so far as is relevant, provides:
‘(1)(a)(i) No process by which any legal proceedings are instituted against the State, the
Minister, the Commissioner or an officer for anything done in pursuance of this Act may be
served before the expiry of the period of one month after delivery of a notice in writing setting
forth clearly and explicitly the cause of action, the name and place of abode of the person who
is to institute such proceedings (in this section referred to as the “litigant”) and the name and
address of his or her attorney or agent if any.
. . .
(iii)
No such notice shall be valid unless it complies with the requirements prescribed in the
section . . .’.
. . .
(c)(i) The State, the Minister, the Commissioner an officer may on good cause shown reduce
the period specified in paragraph (a) . . .
(ii)
If the State, the Minister, the Commissioner or an officer refuses to reduce any period
as contemplated in subparagraph (i), a High Court having jurisdiction may upon application of
the litigant, reduce or extend any such period where the interests of justice so requires.’

[28] The respondents did not deliver a s 96(1) notice of their intention to review
the impugned decision. Instead, they relied on a notice by Dragon Freight to
SARS dated 17 February 2020, of its intention to bring legal proceedings against
SARS (the February notice). It read:
‘In the event of the detained containers having been seized by SARS or at any stage hereafter,
the Applicants claim that such seizure(s) be reviewed and set aside and that it be ordered that
the goods overseas be released immediately by the Respondent.’

[29] In the notice of motion, the respondents asked for an order that the one-
month period in s 96(1)(a)(i) be reduced; alternatively, that their failure to comply

with the requirements of the section be condoned. The high court granted this
relief. It made an order that the one-month notice period,
‘be reduced to such an extent that this application is then construed as being compliant with
section 96 of the Act; alternatively, that non-compliance with the time period specified in
section 96(1)(a)(i) be condoned’.

[30] The starting point for an understanding of the meaning and effect of s 96(1)
is the language of the provision, in the light of its context and purpose.3 In this
regard the dictum of Unterhalter AJA in Capitec Bank Holdings Limited,4 bears
repetition:
‘The much-cited passages from Natal Joint Municipal Pension Fund v Endumeni
Municipality (“Endumeni”) offer guidance as to how to approach the interpretation of the
words used in a document. It is the language used, understood in the context in which it is used,
and having regard to the purpose of the provision that constitutes the unitary exercise of
interpretation. I would only add that the triad of text, context and purpose should not be used
in a mechanical fashion. It is the relationship between the words used, the concepts expressed
by those words and the place of the contested provision within the scheme of the agreement (or
instrument) as a whole that constitutes the enterprise by recourse to which a coherent and
salient interpretation is determined. As Endumeni emphasised, citing well-known cases, “[t]he
inevitable point of departure is the language of the provision itself”.’

[31] Section 96(1)(a)(i), on its plain language, proscribes the institution of any
proceedings unless one-month’s written notice, ‘setting forth clearly and
explicitly the cause of action’, is given to the Commissioner. That is made clear
by the introductory words that no process by which legal proceedings are
instituted, may be served before the expiry of the one-month notice period. It is
reinforced by s 96(1)(a)(iii), which states that a notice that does not comply with
the requirements of the section, is invalid.

3 Natal Joint Municipality Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 para 18,
affirmed by the Constitutional Court in Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others
[2018] ZACC 33; 2019 (5) SA 1 (CC) para 29.
4 Capitec Bank Holdings Limited v Coral Lagoon Investments 194 (Pty) Ltd [2021] 3 All SA 647 para 25, footnotes
omitted.

[32]  In Evins v Shield Insurance,5 Corbett JA defined a cause of action as the
‘material facts which must be proved in order to enable the plaintiff to sue’.
Applied to the present case, it means that when a notice under s 96(1) is delivered
to SARS, the litigant must be able to make out a cause of action: it must assert
facts which it would be necessary to prove, if traversed, to support its right to the
judgment of the court. The respondents however had no cause of action when
they delivered the February notice. That this is a prerequisite is underscored by
the phrase ‘anything done in pursuance of this Act’ in s 96(1)(a)(i) – it clearly
envisages action already taken.

[33] The purpose of s 96(1) is self-evident: to allow SARS, the organ of state
charged with the administration of the Act, to investigate or review the merits of
the intended legal proceedings and decide what position to adopt in relation
thereto. It may, for example, in an appropriate case decide to resolve the dispute
before the institution of legal proceedings, so as to avoid unnecessary and costly
litigation at public expense.6

[34] SARS is a large and complex institution with extensive administrative
responsibilities and high workloads. Its functions are not confined to the levying
of customs and excise duties under the Act, but include the recovery of taxes
under the Income Tax Act 58 of 1962 and the administration of the Value-Added
Tax Act 89 of 1991. The s 96(1) notice enables SARS to ensure that a matter is
brought timeously to the attention of the appropriate official for investigation or
review. In my opinion, s 96(1)(a) of the Act promotes the efficient and economic

5 Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838H-839A.
6 See Mohlomi v Minister of Defence [1996] ZACC 20; 1997 (1) SA 124 (CC) para 9, regarding the purpose of a
notice of intended legal proceedings under the Defence Act 44 of 1957.

use of resources, in accordance with the basic values and principles governing
public administration set out in s 195 of the Constitution.7

[35] The impugned decision had not been taken when the February notice was
delivered to SARS. It was thus impossible for the respondents to set out any cause
of action in that notice: there was none. Section 96(1)(a)(i) of the Act does not
permit a notice in anticipation of a decision not yet taken, by the functionaries
referred to in that provision. Such a construction would nullify its purpose and
render the sanction of invalidity in s 96(1)(a)(iii), nugatory.

[36] What is more, when the February notice was delivered, no ‘administrative
action’ as defined in the Promotion of Administrative Justice Act 3 of 2000
(PAJA), had been taken. That definition includes a decision taken by an organ of
state when exercising a public power or performing a public function in terms of
any legislation ‘which adversely affects the rights of any person and which has a
direct, external legal effect’. This merely reinforces the absence of any cause of
action when the February notice was delivered.

[37] In SARS v Prudence Forwarding,8 the facts were essentially the same as
those in the present case. The Commissioner detained a container of blankets
imported from China on the basis that the transaction value of the goods had been
under-declared. The importers delivered a written notice in terms of s 96(1) of
the Act, of their intention to apply to the high court for an interim order directing
SARS to release the goods against payment of a provisional amount of customs
duty. The importers launched that application in November 2013. Subsequently,
the Commissioner made a decision to seize the goods. The importers then

7 Section 195(1)(b) of the Constitution provides that public administration must be governed by democratic values
and principles enshrined in the Constitution, including the promotion of efficient, economic and effective use of
resources.
8 The Commissioner for the South African Revenue Service v Prudence Forwarding (Pty) Ltd 2015 JDR 2545
(GP).

amended their notice of motion and sought an order reviewing and setting aside
the seizure decision, without delivering a s 96(1) notice in relation to that
decision. The high court reviewed and set aside the seizure decision and ordered
the release of the goods against payment of a provisional amount of customs duty.
The Commissioner appealed this order.

[38] A full bench of the high court upheld the appeal. The full court, correctly
in my view, held as follows:
‘It was therefore incumbent upon [the respondents] to serve the relevant notice and to obtain
the agreement of the Commissioner or the sanction of the court to reduce the one-month period
in respect of the new cause of action involving a review of the seizure decision. This was not
done. The respondents could not rely on the notice they served to obtain the release of the
goods from detention. Section 96(1)(a)(i) of the Act makes it plain that the notice must relate
to a specific cause of action, which is required to be set forth “clearly and explicitly” in the
written notice. And section 96(1)(a)(iii) provides that no notice shall be valid unless it complies
with the requirements prescribed in the section. Thus, since no notice was delivered in respect
of the review, and neither the Commissioner or the court agreed to a reduced period, the
jurisdictional conditions precedent were not fulfilled, and the court accordingly lacked
jurisdiction to grant the final relief it granted, in the form of an order setting aside the seizure
of the goods. For that reason alone, the appeal must succeed.’9

[39] The high court however distinguished Prudence Forwarding on the basis
that the February notice and the notice of motion provided for the review of both
the decisions to detain and seize the containers. However, the February notice did
not comply with s 96(1)(a)(i) of the Act, in that it did not, and could not, explicitly
set out a cause of action because the impugned decision had not been taken. For
the same reason, the relief sought in the notice of motion that the court reduce the
one-month period specified in s 96(1)(a)(i) in relation to the impugned decision,

9 Ibid para 28.

was incompetent. And there is no power in the Act to condone non-compliance
with this provision.

[40] In the notice advising the respondents of the impugned decision, they were
specifically informed of the peremptory notice to SARS in s 96(1) of the Act.
They chose to ignore it. The high court erred in its interpretation and application
of s 96(1) of the Act and on this basis alone, the appeal must be upheld.

The decision to detain the goods
[41] The high court reviewed and set aside SARS’ decision not to release the
19 containers and ordered SARS to immediately release those containers and the
goods held in them. This order should not have been granted because the decision
to detain the goods had been overtaken by the impugned decision.

[42]  SARS’ powers of detention and its powers of seizure are set out under
different provisions of the Act. Section 88(1)(a) provides:
‘An officer, magistrate or member of the police force may detain any ship, vehicle, plant,
material or goods at any place for the purpose of establishing whether that ship, vehicle, plant,
material or goods are liable to forfeiture under this Act.’ (Emphasis added.)

[43] By contrast, s 88(1)(c) reads:
‘If such ship, vehicle, plant, material or goods are liable to forfeiture under this Act the
Commissioner may seize that ship, vehicle, plant, material or goods.’ (Emphasis added.)

[44] The power to detain and the power to seize are discrete administrative acts,
which require two separate decisions. Detention is a temporary assertion of
control over the goods, which does not necessarily result in any seizure with a
view to ultimate forfeiture. The stated purpose of the power to detain in s 88(1)(a)
of the Act, is to establish whether the goods are liable to forfeiture. The provision
thus enables SARS to examine or secure the goods, pending an investigation to

establish whether they are liable to forfeiture, as happened in this case. It is only
once it has subsequently been established that the goods in question are liable to
forfeiture, that SARS may then seize the goods. Put differently, seizure flows
from detention if liability for forfeiture is established. The decision to detain the
goods is then overtaken by a new decision to seize.

[45]  In prayer 3 of the notice of motion the respondents sought an order that
the decision not to release the 19 containers (the detention of the goods under
s 88(1)(a)), be reviewed and set aside. In prayer 4 they sought an order reviewing
and setting aside the decision to seize any of the containers, ‘where applicable’.
Until there was a decision to seize the goods, prayer 3 remained operative, as long
as the goods were detained for a reasonable period of time in order to establish
whether they were liable to forfeiture.10

[46] The high court conflated the decision to detain the goods with the
subsequent impugned decision. In so doing the court failed to appreciate that once
the impugned decision had been taken, the separate issue of detention was
rendered moot.11  The fate of the goods then had to be decided with reference to
s 88(1)(c) of the Act and not s 88(1)(a).

[47] The only relevance of the detention relief concerns the question of costs,
but in the present case there is no basis for a separate costs award in relation to
that relief. The costs pertaining thereto should follow the result of the appeal.

The review
[48] In the founding papers the respondents alleged that the decision to detain
the goods was reviewable on ‘any and all the grounds’ in s 6(2) of the PAJA,

10 Commissioner, South African Revenue Service v Trend Finance (Pty) Ltd and Another 2007 (6) SA 117 (SCA)
para 29.
11 Commissioner: South African Revenue Service and Another v Alves [2020] ZAFSHC 123 para 11.

which tend to overlap. These grounds include bias, ulterior purpose, procedural
unfairness, arbitrariness, unreasonableness, and that the impugned decision was
otherwise unconstitutional and unlawful. However, the challenge to the impugned
decision on the grounds that the Commissioner was biased or that the decision
was taken for an ulterior purpose, has no basis in the evidence.

[49] The respondents’ case in the supplementary founding affidavit was
essentially that the impugned decision fell to be set aside on the ground of
procedural unfairness, irrationality and unreasonableness. It should be noted that
when these grounds were formulated, the respondents did not have the reasons
for the decision. They chose not to ask for the reasons, despite being informed of
their right to do so.

[50] The attack on the ground of procedural unfairness can be dealt with briefly.
It has no merit. Throughout the course of the complex administrative process that
led to the seizure, the respondents were given adequate notice of the
administrative action that SARS was considering taking and a reasonable
opportunity to make representations before any decision was taken.

[51] The supplementary founding affidavit states that the respondents were ‘left
totally uninformed as to why SARS made the decision to seize the containers’,
and that there ‘has been no fairness, accountability and transparency’. In the
supplementary replying affidavit, the following allegation is made:
‘SARS admits that it has taken an administrative decision and has failed to provide the
Applicants with any reasons therefor. The decision to seize the 19 containers is therefore
unlawful and ought to be set aside on review.’

[52] These allegations are false. Detailed reasons for the impugned decision are
recorded in SARS’ supplementary answering affidavit. The reasons, in sum, are
these. The Commissioner considered all the evidence and the respondents’ failure

to respond to requests for information, and concluded that the written agreements
submitted by the respondents could not be relied upon as proof of the prices
actually paid for the goods. The evidence demonstrated that the agreements were
false and that the values of the goods had been under-declared. The evidence
supporting these reasons is dealt with below.

[53] The respondents, in their supplementary replying affidavit and heads of
argument, submitted that it was insufficient that the seizure notice informed them
of their right to request written reasons, ‘as both PAJA as well as the Constitution
require SARS to give reasons when taking an administrative decision’, and that
if there were no reasons when the decision was taken, then the decision is
unlawful since ‘[i]t is not permissible to retrofit reasons after the event’. It was
further submitted, in reliance on s 5(3) of the PAJA, that ‘on account of SARS’
admitted failure to provide reasons and in the absence of proof to the contrary’, it
should be presumed that the impugned decision was taken without reason.12

[54] These submissions are baseless. Section 5(1) and (2) of the PAJA make it
clear that the reasons for an administrative decision need not be given
simultaneously with the notice of that decision to the affected party.13 And there
is not a shred of evidence to show that when the impugned decision was taken,
there were no reasons for it. In these circumstances, the respondents’ so-called
retrofit argument is startling.

12 Section 5(3) of the PAJA reads:
‘If an administrator fails to furnish adequate reasons for an administrative action it must, subject to subsection (4)
and in the absence of proof to the contrary, be presumed in any proceedings for judicial review that the
administrative action was taken without good reason.’
13 Section 5 of the PAJA, in relevant part, provides:
‘(1) Any person whose rights have been materially and adversely affected by administrative action and who has
not been given reasons for the action may, within 90 days after the date on which that person became aware of
the action or might reasonably have been expected to have become aware of the action, request that the
administrator concerned furnish written reasons for the action.
(2) The administrator to whom the request is made must, within 90 days after receiving the request, give that
person adequate reasons in writing for the administrative action.

[55] The respondents’ challenge of irrationality is based on s 6(2)(f)(ii) of the
PAJA, namely that the impugned decision is not rationally connected to the
purpose for which it was taken; the purpose of empowering provision; the
information before the decision-maker; and the reasons given for it.14 The
supplementary founding affidavit states that in the notices of intent, the request
for further particulars and the expert reports, SARS relied on two new issues,
namely the export declarations and an expert’s opinion that the signatures on the
agreements were forgeries.

[56] The basic grounds for the irrationality challenge may be summarised as
follows. The export declarations are ‘inadmissible and irrelevant’, illegible and
‘demonstrably false’. SARS’ request for further particulars is not authorised by
the Act and unlawful. Had SARS in fact considered all the evidence presented by
the respondents, it would have concluded that the respondents’ evidence was a
rebuttal of SARS’ prima facie findings in the notice of intent (that the respondents
dealt with the goods irregularly, thereby rendering them liable to forfeiture).

[57] The notice of seizure states that the impugned decision was taken in terms
of s 88(1)(c) of the Act. In Saleem15 this Court held that an officer seizing goods
in terms of s 88(1)(c) is required to hold a suspicion on reasonable grounds that
such goods are imported goods; that they have been imported without compliance
with the provisions of the Act; and that they are liable to forfeiture. The notice
further states that the goods are liable to forfeiture as envisaged in s 87(1) and (2)
of the Act, since respondents failed to establish that the goods were imported in
accordance with the provisions of the Act. Section 87(1) of the Act provides that
any goods imported or otherwise dealt with contrary to the provisions of the Act,
are liable to forfeiture. In short, goods brought into the country without declaring

14 C Hoexter and G Penfold: Administrative Law in South Africa (3 ed 2021) at 464-465 and 497.
15. Commissioner, South African Revenue Service v Saleem 2008 (3) SA 655 (SCA) para 9.

them or paying the necessary customs duty are liable to forfeiture.16 Section 87(2)
renders any ship, vehicle, container or other transport equipment used in the
carriage of goods, liable to forfeiture.17

[58] The Constitutional Court has held that where a decision is challenged on
the grounds of rationality, ‘the decision must be rationally related to the purpose
for which power was conferred’, otherwise the exercise of the power would be
arbitrary.18 The question then, simply put, is whether the impugned decision is
justified, having regard to the purpose of s 88(1)(c) of the Act, the information
before the Commissioner and the reasons given for it.19

[59] The impugned decision was taken because the agreements submitted by
the respondents and consequently, the transaction values of the goods declared,
are false. In the result, the respondents failed to comply with ss 38(1), 39(1), 40(1)
and (2) read with ss 65(1) and 66 of the Act. This conduct also constitutes an
offence in terms of s 84 of the Act. It provides that any person who makes a false
statement in connection with any matter dealt with in the Act, or makes use of a
declaration or document containing any such statement for the purposes of the
Act, shall be guilty of an offence.20

16 CSARS v Saleem fn 14 para 9.
17 Section 87(2) reads: ‘(2) Any— (a) ship, vehicle, container or other transport equipment used in removal or
carriage of any goods liable to forfeiture under this Act or constructed, adapted, altered or fitted in any manner
for the purpose of concealing goods; (b) goods conveyed, mixed, packed, or found with any goods liable to
forfeiture under this Act on or in any such ship, vehicle, container or other transport equipment; and (c) ship,
vehicle, machine, machinery, plant, equipment or apparatus classifiable under any heading or subheading of
Chapters 84 to 87 and 89 of Part 1 of Schedule No. 1 in which goods liable to forfeiture under this Act are used
as fuel or in any other manner, shall be liable to forfeiture wheresoever and in possession of whomsoever found.’
18 Democratic Alliance v President of the Republic of South Africa [2012] ZACC 24; 2013 (1) SA 248 (CC) paras
27 and 29-32 (Democratic Alliance); Albutt v Centre for the Study of Violence and Reconciliation and Others
[2010] ZACC 4; 2010 (3) SA 293 (CC) para 51; Minister of Defence and Military Veterans v Motau [2014] ZACC
18; 2014 (5) SA 69 (CC) para 69 (Motau).
19 Democratic Alliance fn 18 paras 29 and 32; Motau 2014 (5) SA 69 (CC) fn 18 para 69.
20 Section 84(1) of the Act provides:
‘Any person who makes a false statement in connection with any matter dealt with in this Act, or makes use for
the purposes of this Act of a declaration or document containing any such statement shall, unless he proves that
he was ignorant of the falsity of such statement and that such ignorance was not due to negligence on his part, be
guilty of an offence and liable on conviction to a fine not exceeding R40 000 or treble the value of the goods to
which such statement, declaration or document relates, whichever is the greater, or to imprisonment for a period
not exceeding ten years, or to both such fine and such imprisonment, and the goods in respect of which such false
statement was made or such false declaration or document was used shall be liable to forfeiture.’

[60] As to the purpose of the empowering provision, s 65(1) of the Act states
that ‘the value for customs duty purposes of any imported goods shall, at the time
of entry for home consumption, be the transaction value thereof, within the
meaning of section 66’. Section 66(1) provides that ‘the transaction value of any
imported goods shall be the price actually paid or payable for the goods when
sold for export to the Republic’.

[61] Section 74A(1) of the Act provides that the interpretation of ss 65, 66 and
67 of the Act shall be subject to the Agreement on Implementation of Article VII
of the General Agreement on Tariffs and Trade (the Customs Valuation
Agreement), the interpretive notes thereto, the advisory opinions, commentaries
and explanatory notes, case studies and studies issued under the Customs
Valuation Agreement.

[62] Generally, the actual price paid or payable for imported goods should be
reflected on the invoices issued, which are held by the importers. Thus, the
transaction value method is largely dependent on the information that importers
provide. However, importers have an obvious commercial incentive to
manipulate the transaction value. The possibility of customs fraud is therefore an
inherent risk in a system of self-accounting and self-assessment upon which the
Act is based.21

[63] Article 17 of the Customs Valuation Agreement is designed to address this
risk. It provides that ‘[n]othing in this Agreement shall be construed as restricting
or calling into question the right of customs administrations to satisfy themselves
as to the truth or accuracy of any statement, document or declaration presented
for customs valuation purposes’. It is precisely this right that SARS has exercised

21 First National Bank of South Africa t/a Wesbank v Commissioner South African Revenue Service and Another
[2002] ZACC 5; 2002 (4) SA 768 (CC) para 15.

in this case. There is nothing in the Act or the Customs Valuation Agreement that
precludes SARS from taking robust enforcement measures against customs fraud.

[64] That brings me to the reasons for the impugned decision. In summary, they
are the following. There was no credible explanation for the unbelievably low
prices charged by the suppliers of the goods. The initial explanation that an
employee of the importers bought the goods at very low prices at various markets
in China is false. So too, the importers’ assertions that the low prices were
obtained because they were able to exploit the ‘trade war’ between the United
States and China; that the goods comprised old or ‘dead’ stock, or clothing not in
demand in China; and that the goods could be purchased at ridiculously low prices
on the Alibaba website. The evidence of the expert, Dr Irkhede, and that of SAAA
and ATASA, makes it clear that the prices declared by the importers were
unrealistic and unattainable.

[65] The goods were allegedly bought from only three separate Chinese
suppliers, which contradicted the importers’ initial explanation. No explanation
was furnished for the identical prices charged by the three suppliers. The
importers’ claim that they are not related in any way was not borne out by the
evidence. Their modus operandi to source and buy clothing was the same. They
obtained their stock from the same Chinese suppliers. The agreements allegedly
concluded with different Chinese suppliers are identical. The declared prices of
clothing are in the same price bracket. They used the same agents in China and
the same clearing agent in this country. All of this cast serious doubt on the
declared prices of the goods.

[66] The format, font and terms of the agreements are identical. All the sale
agreements record the payment terms as 90 days after receipt of the goods by the
importer. This is illogical since no exporter would render payment subject to

conditions over which it had no control, in another country. The respondents
refused to provide information concerning the conclusion of the sale agreements:
who signed them, and when and where they were signed. When confronted with
the expert’s report on the agreements (by Mr Bester), they said that the
purchaser’s signature on the agreements was electronically effected by Chinese
agents who represented them ‘from time to time’. They never mentioned Chinese
agents before. And if the agreements were electronically concluded, there was no
reason why they could not have been concluded directly between the suppliers
and the importers. The ineluctable inference is that the agreements were created
by the importers to support the entries, and the explanation regarding the
signatures, is false.

[67] There is no evidence to support the respondents’ claim that Chinese export
agents inflated prices on commercial invoices. The importers refused to identify
the Chinese export agency which prepared and submitted the declarations to the
Chinese customs authorities, or to furnish the export documentation given by the
suppliers to the export agents. The Chinese suppliers were prepared to assist the
respondents, who were in a position to provide objective evidence to support their
assertion that the export declarations concerning the first application, were false.
They failed to provide this evidence.

[68] And, of course, the true transaction values of the goods could have been
placed beyond question by simply producing the export declarations relating to
the 19 containers, submitted to the Chinese customs authorities by the three
exporters. The respondents failed to produce this evidence, despite being called
upon to do so.

[69] For all these reasons, the Commissioner was satisfied that the respondents
failed to prove that the goods were entered as prescribed by the provisions of the

Act, as they were required to do under s 102(4). Consequently, the goods and the
containers in which they were imported, were liable to forfeiture. Before us,
counsel for the respondents conceded, correctly, that s 102(4) applied in the
instant case.

[70] In the circumstances, can it be said that having regard to the purpose of
s 88(1)(c) of the Act, the information before the Commissioner and the reasons
given, the impugned decision is unjustified? I think not. It follows that the
decision was not arbitrary. The high court’s finding that ‘it was common cause
that SARS had been presented with the requisite documents by the applicants in
terms of the Act’, is incorrect. This was not common cause but specifically
disputed. SARS’ reasons for disputing the documents presented by the
respondents were amply explained. 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.

[71] The findings that the export declarations ‘were of poor quality and
illegible’; that ‘they had nothing to do with the 19 containers’; and that ‘SARS
was wrong . . . to rely on the Export Declarations in order to reach the seizure
decisions’, are unsustainable on the evidence. The high court ignored the fact that
the respondents were provided with legible, translated versions of the export
declarations. Further, it dismissed the respondents’ application to strike out the
export declarations on the basis that they were inadmissible. In so doing, the court
confirmed that the translator had been enrolled as a sworn translator from Chinese
into English and vice versa, and consequently, that the declarations were
understandable.

[72] The export declarations relating to eight containers in the first application,
were highly relevant to the decision to seize the goods. SARS was entitled to take

those declarations into account in arriving at its decision, and as a specialist
administrator, to decide what weight should be given to them, for the following
reasons. The clothing covered by the export declarations was materially similar
to the clothing in the 19 containers. It was not disputed that the export declarations
reflect the export values stated therein – more than 1000% of the values declared
on importation into this country by the same exporters and importers in relation
to similar goods. The respondents’ explanation for this – fraud by Chinese export
agents – is false. What is more, the respondents’ own import documentation
corroborates the export declarations. The Minister explained the reasons for this
in his supplementary answering affidavit, to which was attached a schedule
containing a detailed analysis for each of the eight containers. The respondents
did not deal with the Minister’s evidence in reply.

[73]  The high court’s conclusion that the respondents provided the relevant
information prior to requests by SARS, and that they ‘responded copiously’ to
requests for information which SARS ‘chose to ignore . . . as inadequate’, is
likewise incorrect. This conclusion is based on a landscape table furnished by the
respondents and reproduced in the judgment. However, a comparison between
this table and SARS’ request for particulars and documentation, and the
respondents’ replies (which form part of the reasons for the impugned decision),
shows that the respondents declined to answer or provide satisfactory answers to
a number of pertinent questions posed by SARS.

[74] Given that the impugned decision was not arbitrary, the respondents’
remaining challenge based on unreasonableness in terms of s 6(2)(h) of the PAJA,
must fail. The decision is not one that a reasonable decision-maker could not
reach.22

22 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others [2004] ZACC 15; 2004 (4) SA 490
(CC) para 44.

[75] Moreover, SARS made the impugned decision in its capacity as a specialist
administrator with specific expertise in the levying of customs duties. It is a
settled principle that the distinction between appeals and reviews remains
significant and that courts should be careful not to usurp the functions of
administrative agencies.23 In Bato Star O’ Regan J described judicial deference
as follows:24
‘[A] judicial willingness to appreciate the legitimate and constitutionally-ordained province of
administrative agencies; to admit the expertise of those agencies in policy laden or polycentric
issues, to accord the interpretations of fact and law due respect; and to be sensitive in general
to the interests legitimately pursued by administrative bodies and the practical and financial
constraints under which they operate. This type of deference is perfectly consistent with a
concern for individual rights and a refusal to tolerate corruption and maladministration. It ought
to be shaped . . . by a careful weighing up of the need for – and the consequences of – judicial
intervention. Above all, it ought to be shaped by a conscious determination not to usurp the
functions of administrative agencies; not to cross over from review to appeal.’

[76] For the reasons set out above, the high court erred in holding that the
impugned decision was unlawful and thus reviewable. It follows that the appeal
must succeed.

The intervention application
[77] At the hearing of this appeal, an application filed in this Court in August
2021 by the Southern African Clothing and Textile Workers Union (SACTWU),
for leave to intervene as an appellant in these proceedings, was refused with costs.
SACTWU was advised that the reasons for that order would be given in this
judgment. These are the reasons.

[78] SACTWU’s intervention application is in effect a disguised application to
this Court for leave to appeal. It was a party in the review application in the high

23 Bato Star para 45.
24 Bato Star para 46.

court. However, it failed to file an application for leave to appeal that court’s
order. Its explanation for this failure was that it needed to assess its financial
position as a result of the effects of Covid-19 on its resources. This explanation
however is superficial and unconvincing. More fundamentally, the refusal of an
application for leave to appeal under s 17(2)(a) of the Superior Courts Act 10 of
2013, is a jurisdictional fact for an appeal to this Court.25 In terms of s 17(2)(b)
of that Act, this Court’s jurisdiction to grant leave itself is dependent on the court
below having refused leave to appeal.26 Thus, s 17(2)(b) not only prescribes the
proper procedure, but also defines the jurisdiction of this Court to entertain an
application for leave to appeal.

[79] Apart from this, SACTWU has not shown that it has a legal interest in the
subject matter of the appeal which may be affected by the decision of this Court.27
This appeal is against the high court’s order reviewing and setting aside the
impugned decision. Any order that this Court might make will have no effect on
SACTWU or its avowed interest of protecting the local clothing and textile
industries. For these reasons, SACTWU’s intervention application could not be
entertained and was thus refused with costs.

The order
[80]  In the result the following order is issued:

25 National Union of Metalworkers of South Africa v Jumbo Products CC [1996] ZASCA 87; 1996 (4) SA 735
(A) at 740A-D; Pharmaceutical Society of South Africa and Others v Tshabalala-Msimang and Another NNO;
New Clicks South Africa (Pty) Ltd v Minister of Health and Another [2004] ZASCA 122; 2005 (3) SA 238 (SCA)
para 22.
26 Section 17(2) of the Superior Courts Act provides:
‘(a) Leave to appeal may be granted by the judge or judges against whose decision an appeal is to be made or, if
not readily available, by any other judge or judges of the same court or Division.
(b) If leave to appeal in terms of paragraph (a) is refused, it may be granted by the Supreme Court of Appeal on
application filed with the registrar of that court within one month after such refusal, or such longer period as may
on good cause be allowed, and the Supreme Court of Appeal may vary any order as to costs made by the judge or
judges concerned in refusing leave.’
27 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 659, affirmed Pheko and Others
v Ekurhuleni Municipality (No 2) [2015] ZACC 10; 2015 (5) SA 600 (CC) para 56.

The application for intervention by the Southern African Textile and
Clothing Workers’ Union is struck from the roll with costs. Such costs shall
include the costs of only one junior counsel.
The appeal is upheld with costs, including the costs of two counsel where so
employed. Such costs shall be paid by the respondents jointly and severally,
the one paying the others to be absolved.
The order of the high court is set aside and replaced by the following:

‘The application is dismissed. The applicants are directed to pay the costs of
the application, including the costs of two counsel where so employed,
jointly and severally, the one paying the others to be absolved.’

___________________
A SCHIPPERS
JUDGE OF APPEAL

Appearances:

For first appellant:
B H Swart SC (with him J A Meyer SC)
Instructed by:
Klagsbrun Edelstein Bosman & Du Plessis
Attorneys, Pretoria

Symington De Kok Attorneys, Bloemfontein

For second appellant:
A Cockrell SC (with him M Stubbs)
Instructed by:

Webber Wentzel, Pretoria

Symington De Kok Attorneys, Bloemfontein

For third and fourth
appellants:

E Webber
Instructed by:

Norton Rose Fulbright, Pretoria

Lovius Block, Bloemfontein

For first to seventh
respondents:

A P Joubert SC (with him L F Laughland)
Instructed by:

Richard Meaden & Associates, Pretoria

Webbers Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
7 June 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does
not form part of the judgments of the Supreme Court of Appeal
Commissioner for the South African Revenue Service and Others v Dragon Freight (Pty)
Ltd and Others [2022] ZASCA 84
The Supreme Court of Appeal (SCA) today upheld an appeal against an order by the Gauteng
Division of the High Court, Pretoria (high court), in terms of which it reviewed and set aside a
decision by the first appellant, the Commissioner for the South African Revenue Service
(SARS), to seize 19 containers of clothing imported from China (the goods), in terms of s
88(1)(c) of the Customs and Excise Act 91 of 1964 (the Act). SARS had taken this decision
because the value of the goods had been under-declared by the respondents, which allowed
them to pay a lesser amount of customs duty. The high court ordered SARS to release the
containers to the respondents.
The SCA held that the respondents had not complied with s 96(1) of the Act, which proscribes
the institution of legal proceedings against SARS, unless a litigant delivers a written notice to
SARS, setting out its cause of action clearly and explicitly, at least one month before instituting
those proceedings. On this ground alone, the appeal was upheld.
The SCA further held that SARS’ decision to seize the goods was lawful, reasonable and
procedurally fair. The agreements in terms of which the goods were allegedly bought in China,
were false. Export declarations which SARS had obtained from the General Administration of
Customs of the People’s Republic of China (GACC), showed that the prices declared to the
GACC of similar goods which the respondents had bought from the same suppliers in a

previous shipment, involving the same clearing agent, were 1000% higher than the prices of
the goods declared to SARS in the 19 containers. The respondents’ explanation for the
unbelievably low prices, which included fraud by Chinese export agents, was not credible.
They provided different explanations as to how the goods were sourced and bought at such low
prices, which were false. A textile expert engaged by SARS determined that the prices declared
by the respondents were unrealistic and unattainable. They refused to provide information and
documents concerning the conclusion of the sale agreements, and the inference drawn by SARS
that the agreements were created by the importers to support the entries on importation, was
justified.
For these reasons, the high court’s findings that SARS had been presented with the requisite
documents by the respondents in terms of the Act; that the export declarations obtained from
the GACC had nothing to do with the 19 containers; and that the respondents had responded
copiously to SARS’ requests for information and documents, was incorrect. The respondents
had not proved that the goods were imported as prescribed by the provisions of the Act, as they
were required to do under s 102(4). SARS’ decision to seize the 19 containers was thus lawful
and reasonable.
The SCA accordingly upheld the appeal. The high court’s order was set aside. It was replaced
with an order dismissing the respondents’ application to review and set aside the decision to
seize the 19 containers, with costs, including the costs of two counsel where so employed.
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