THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case number : 162/06
Reportable

In the matter between :

THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE

APPELLANT

and

TREND FINANCE (PTY) LIMITED

FIRST RESPONDENT
TREND GEAR ENTERPRISES (PTY) LIMITED
SECOND RESPONDENT

CORAM :
HOWIE P, CLOETE, HEHER, VAN HEERDEN et COMBRINCK JJA

HEARD :
7 MAY 2007

DELIVERED :    23 MAY 2007

Summary: Customs and Excise Act 91 of 1964: the power conferred on the
Commissioner, SARS, to determine the value of imported goods for duty
purposes, must be exercised within a reasonable period of time; if it is not, the
right to retain goods seized or security given falls away.
Promotion of Administrative Justice Act Act 3 of 2000: The Commissioner,
SARS, has a right but not a duty to determine the value of imported goods for
duty purposes. Therefore if the Commissioner seizes imported goods pending
an investigation into whether the goods are liable for forfeiture, he or she
cannot be compelled in terms of ss 6(3) and 8(2) of PAJA to make such a
determination.

Neutral citation: This judgment may be referred to as Commissioner, SARS v
Trend Finance (Pty) Ltd [2007] SCA 59 (RSA).

_________________________________________________________

CLOETE JA/

CLOETE JA

[1] This appeal concerns three consignments of shoes imported into South Africa
from China. The first was destined for sale in branches of Pep Stores and the other
two in branches of Foschini, both well-known clothing retailers. The purchase,
importation and subsequent delivery of the shoes to Pep and Foschini were
undertaken by Trend Finance (Pty) Limited and Trend Gear Enterprises (Pty)
Limited, which are family enterprises run by Mr Ismail Essop with the assistance of
his daughters. I shall refer to both companies simply as ‘Trend’. The shoes were
manufactured in mainland China. The shipper in terms of the bills of lading, under
cover of which each consignment of the shoes was brought from Hong Kong to
South Africa, was a Hong Kong trading house, Kedah Company Limited, controlled
by a Mr Cheng.

[2] When the three consignments arrived in South Africa, the Controller of
Customs, Cape Town, acting on behalf of the Commissioner for the South African
Revenue Service, refused to release them. In each case the clearing agent retained
by Trend made payments under cover of a completed DA70 form which is headed
‘Application to Make Provisional Payment’. The reason given for the payment of
R100 000 on 12 March 1999 in the case of the first consignment was ‘provisional
payment lodged pending outcome of investigations’ and in the case of each of the
second and third consignments, where amounts of R300 000 and R600 000 were
paid on 20 August and 1 September 1999 respectively, the reason given was
‘provisional payment lodged for possible underpayment in customs duty and VAT’.
After the payments were made, the shoes were released ─ the first consignment in
March 1999 and the other two in August and September the same year.

[3] It would be convenient at this stage to summarise those provisions of the
Customs and Excise Act, 91 of 1964 which are relevant for present purposes. As
appears from its long title, one of the purposes of the Act is to ‘provide for the levying
of customs and excise duties . . . and for matters incidental thereto’. The

Commissioner for the SA Revenue Service is, in terms of s 2(1), charged with the
administration of the Act subject to the control of the Minister of Finance. The
Controller is an officer designated by the Commissioner and includes an officer
acting under the control of the Controller.

[4] Chapter II of the Act prescribes the powers of officers. An officer is authorised
in terms of s 4(4)(a), without notice, to enter any premises and make such inquiry as
he or she deems necessary and require any person then and there to produce any
book, document or thing which such officer has reasonable cause to suspect relates
to matters dealt with in the Act.1

[5] Chapter V deals with clearance of goods and liability for payment of duties.
Every importer of goods is obliged in terms of s 38(1) to make due entry of those
goods in terms of s 39. That latter section requires the person entering any imported
goods for any purpose to deliver a bill of entry to the Controller in the prescribed
form; to declare that the particulars contained in the bill of entry are correct; and to
pay all duties due on the goods. Section 40(1) provides that no entry shall be valid
unless the true value of the goods on which duty is leviable or which is required to be
declared under the provisions of the Act, has been declared; a correct invoice has
been produced to the Controller in the case of goods consigned to any person in the
Republic; and the correct duty has been paid. Section 44(6)(c) provides that in all
cases except those specifically mentioned, the liability for duty on any imported
goods is that of the importer or owner of such goods (or any person who assumes
such liability for any purpose under the provisions of the Act). Section 44(10)
provides that any duty for which any person is liable in terms of s 44 shall be payable
upon demand by the Commissioner. Section 47 provides that duty shall be paid on
all imported goods in accordance with the provisions of Schedule 1.

1 Since the events relevant to this appeal further powers, inter alia to detain any goods in order to
determine whether the provisions of the Act or any other law have been complied with as
contemplated in s 107(2)(a) of the Act, have been conferred on officers in terms of s 4(8A), inserted
into the Act by s 133(b) of Act 45 of 2003.

[6] Chapter IX deals with value. Section 65(1) provides that the value for customs
duty purposes of any imported goods shall, at the time of entry, be the transaction
value thereof within the meaning of s 66; and that section stipulates that the
transaction value is the price actually paid or payable for the goods when sold for
export to the Republic (adjusted in terms of s 67). Section 65(4)(a) provides that the
Commissioner may in writing determine the transaction value of any imported goods,
which is required to be ascertained or may be determined as provided in s 66.2
Section 65(6)(a) provides that an appeal against any such determination shall lie to
the division of the High Court of South Africa having jurisdiction to hear appeals in
the area wherein the determination was made, or the goods in question were
entered for home consumption.

[7] The penal provisions of the Act are contained in chapter XI. Section 78(1) is in
extremely wide terms. It provides that any person who contravenes or fails to comply
with any provision of the Act shall be guilty of an offence. In addition s 83(a) provides
that any person who deals with any goods contrary to the provisions of the Act shall
be guilty of an offence. Apart from those (and other) criminal provisions, s 87(1)
provides that goods imported contrary to the provisions of the Act are liable to
forfeiture. Section 88(1)(a) provides that any officer may detain any goods at any
place for the purpose of establishing whether the goods are liable to forfeiture.
Section 88(2)(a) provides that if any goods liable to forfeiture cannot readily be
found, the Commissioner may demand from any person who imported such goods
contrary to the provisions of the Act, payment of an amount equal to the value for
duty purposes of the goods plus any unpaid duty thereon. Section 93(1)(c) provides
that the Commissioner may, on good cause shown by the owner thereof, direct that
any goods detained or seized under the Act be delivered to such owner, subject to
such conditions as the Commissioner may determine including conditions providing
for the payment of an amount not exceeding the value for duty purposes of the

2 Section 128 of Act 60 of 2001 which amended s 65(4)(a) reads ‘and may be determined’ not ‘or may
be determined’. If regard is had to s 128(a) of that Act as it appears in Government Gazette 22923 of
12 December 2001, it is clear that the word ‘and’ was inserted accidentally in place of the word ‘or’.
The Afrikaans version of the amending Act still reads ‘of’.

goods plus any unpaid duty thereon.

[8] On 29 March 2001 the Controller wrote a letter to Trend in regard to the first
consignment. The essential part of the letter read:
‘Arising from an inspection of books and documents, under payments in Customs Duty and VAT
amounting to R363 371.09 were found as reflected on the attached schedule. The schedule refers to
various imports, which were incorrectly invoiced and incorrectly entered for customs duty purposes.
In view of the circumstances here prevailing, the goods were irregularly dealt with contrary to the
provisions inter alia section 38(1), read with sections 39(1), 40(1), 47(1), 47A(1), 65, 66 and 67 of the
Customs and Excise Act no 91 of 1964 (the Act) which constitute offences in terms of sections 83 and
84 of the Act.
As the importer/owner of the goods reflected on the attached schedule you are liable for the duty and
VAT due thereon in terms of section 44(6)(c) and the duty due is hereby demanded in terms of
section 44(10) of the Act.
In view of the circumstances here prevailing the goods were irregularly dealt with contrary to the
provisions of the Act. The goods are therefore liable to forfeiture and seizure in terms of section 87(1)
and 88 of the Act. If goods liable to forfeiture cannot readily be found the Commissioner of South
African Revenue Service may demanded from the importer, payment of an amount equal to the value
for duty purposes of such goods plus any unpaid duty thereon. In the circumstances an amount of
R732 903.00 is demanded in lieu of forfeiture.
The total sum to be remitted to this office is as follows:
. . .
Underpayment of Customs Duty

R219 780.90
Underpayment VAT

R143 590.19
Total underpayment of duty

R363 371.09
Forfeiture in terms of section 88(2)(a)

R732 903.00.’

The total sum claimed amounted to R1 096 274,09. No similar letter was sent in
respect of the second and third consignments and the amounts of R300 000 and
R600 000 provisionally paid in respect of those consignments have not been repaid
by the Commissioner.

[9] In terms of a notice of motion dated 9 October 2001 the Trend companies, as
applicants, commenced motion proceedings in the Cape Town High Court against
the Commissioner for the South African Revenue Service as the first respondent and
the Controller of Customs, Cape Town, as the second respondent. The main relief

sought by Trend was the following:
1.
In terms of s 65(6) of the Act, an order setting aside the determination
contained in the Controller’s letter dated 29 March 2001.
2.
An order reviewing and setting aside the penalty of R732 903 (which the
Commissioner later reduced to R695 508) imposed in terms of s 88(2)(a) in lieu of
forfeiture.
3.
An order directing the Commissioner to repay to Trend:
3.1
R100 000 (ie the provisional payment made in respect of the first
consignment) together with interest thereon at the prescribed rate from 12
March 1999 to date of payment;
3.2
R300 000 (ie the provisional payment made in respect of the second
consignment) together with interest thereon at the prescribed rate from 20
August 1999 to date of payment; and
3.3
R600 000 (ie the provisional payment made in respect of the third
consignment) together with interest thereon at the prescribed rate from 1
September 1999 to date of payment.

[10] In respect of the first consignment, therefore, Trend sought to have the
penalty of R695 508 set aside. It also appealed in terms of s 65(4)(a) read with s
65(6) of the Act against the determination made by the Commissioner in respect of
that consignment. The basis of the appeal was that the true transaction values had
been declared in the Bills of Entry, being the amounts paid by Trend to its supplier,
Textrade (another Hong Kong trading house who it alleged had obtained the shoes
from Kedah), whereas the Commissioner had calculated the true transaction values
on the basis of higher prices contained in pro forma invoices which Kedah had sent
to Pep. The court a quo (Van Reenen J) referred to evidence two disputes, namely:
(1)
from which entity Trend purchased the shoes comprising the first
consignment; and
(2)
the transaction value of such shoes.

[11] The court a quo ultimately found in favour of the Commissioner on both issues

referred to evidence. It nevertheless set aside the penalty of R695 508 imposed in
lieu of forfeiture in terms of s 88(2)(a) of the Act. (The reason it did so is not relevant
as the Commissioner has not sought to appeal against that part of the order.) The
relief sought in para 1 of the notice of motion (the appeal against the determination
by the Commissioner) was refused, as was para 3.1 in terms of which repayment of
the R100 000 provisionally paid a security in respect of the first consignment, was
claimed. Trend contended in this court that the court a quo should have determined
the issues referred to evidence in its favour, and it accordingly sought to set aside
the whole of the Commissioner’s determination in the letter of 29 May 2001 relating
to the first consignment. It also sought repayment of the R100 000 provisionally paid
in respect of that consignment. These contentions form the subject matter of Trend’s
cross-appeal.

[12] The court a quo granted the relief sought in paras 3.2 and 3.3 of the notice of
motion and ordered the Commissioner to repay the amounts of R300 000 and
R600 000 paid to the Commissioner as security in respect of the second and third
consignments together with interest, but subject to the Commissioner’s right of set-
off. The Commissioner appealed to this court against that order. Both the appeal and
the cross-appeal are with the leave of the court a quo.

[13] I shall deal first with Trend’s cross-appeal which concerns the first
consignment. It was correctly conceded on behalf of Trend that in terms of s 102(4)
of the Act, it bore the onus of proving that the proper duty had been paid. The
relevant part of the section reads:
‘If . . .  in any dispute in which . . .  the Commissioner is a party, the question arises whether the
proper duty has been paid . . .  it shall be presumed that such duty has not been paid . . . unless the
contrary is proved.’

[14] At the hearing Essop testified that he had been approached by Pep towards
the end of 1998. Pep informed him that it had sourced shoes, manufactured in
China, from Kedah in Hong Kong. Pep wanted to bring consignments of those shoes
into South Africa. It was unable to do so itself because the Department of Trade and

Industry regulated importation of shoes from China by permits and Pep did not itself
have enough permits. Trend however had access to a number of small entities that
did have such permits. Trend and Pep entered into an agreement in terms of which
Trend would purchase the shoes from Kedah, transport the shoes to South Africa,
clear them through customs and deliver them to a Pep warehouse in the Cape. None
of this evidence is contentious. What was contentious was the evidence of Essop
and his daughters that Trend had retained the services of a Mr Wan of Textrade to
negotiate with Kedah for the purchase of the shoes comprising the first consignment;
and that Trend had paid a third party, Assanmal (another Hong Kong entity), as
directed by Textrade, US $3,20 per pair and US $2.95 per pair respectively for the
men’s and youths’ size shoes. The Essops had no personal knowledge of what had
transpired between Wan, Assanmal and Kedah. Trend delivered no affidavit by Wan
and he was not called to give evidence.

[15] The Commissioner’s case was that the alleged transaction with Wan/Textrade
was fictitious and that the documents produced in support of it were false. The
Commissioner pointed to pro forma invoices sent by Kedah to Pep dated 16 and 17
December 1998 which reflected that Kedah would supply men’s shoes at US $5 and
youths’ shoes at US $4.45 per pair. The prices referred to in those pro forma
invoices were proved in evidence by Mr Atkins, who was employed at the time by
Pep as the senior buyer for male footwear and who in that capacity personally
negotiated the prices with Cheng of Kedah towards the end of 1998 in Hong Kong.
As I have said, the learned judge in the court below found in favour of the
Commissioner on both points referred to evidence ie he found that Trend had
purchased the shoes from Kedah (and not Wan of Textrade) and that the transaction
value of the shoes was US $5 and 4.45, not US $3.20 and 2.95.

[16] In coming to this conclusion, the learned judge had regard to an affidavit
obtained by officials of SARS from Cheng in Hong Kong, and documents annexed
thereto, which he admitted in evidence (despite opposition from Trend) in terms of
the provisions of s 34 of the Civil Proceedings Evidence Act, 25 of 1965. In the

affidavit Cheng averred that Trend had, through letters of credit arranged by its own
agent, Assanmal, paid Kedah the amount per pair of shoes agreed upon with Atkins
of Pep; that he had negotiated directly with Essop; and that he had never had any
communication with Wan or anyone else from Textrade. On appeal, counsel
representing Trend submitted that Cheng’s affidavit had been wrongly admitted and
that the learned judge a quo had in addition misdirected himself on the facts. It
seems to me, however, that the conclusion reached by the court a quo is amply
justified even if the affidavit by Cheng is left out of account.

[17] Kedah (represented by Cheng) and Pep (represented by Atkins) had reached
a firm agreement as to the price at which Kedah would supply shoes to Pep. That
price was achieved only after negotiations which spanned several days. Atkins’s
target prices, communicated to Cheng, were originally US $4.70 for the men’s shoes
and 4.20 for the youths’ shoes. Cheng countered with prices of US $5.20 and 4.65.
The prices were ultimately agreed at US $5 and 4.25, after Cheng had had a spirited
telephone conversation with a person he told Atkins was a representative of the
factory in mainland China that was going to manufacture the shoes and sell them to
Kedah. Having achieved these prices after thorough negotiation, the question arises:
Why would Cheng subsequently have agreed substantially lower prices of US $3.20
and 2.95 with Wan of Textrade, or anyone else on behalf of Trend?

[18] Essop suggested two reasons. First, he said that according to Pep, Kedah
had on hand about 1.3 million pairs of surplus or excess stock which it had been
struggling to sell for a year or eighteen months. Essop’s daughter Khaironesa
supported this explanation. She said:
‘Kedah, at that point, was sitting with the shoes, they wanted to get rid of them.’
Essop testified that the excess stock was reflected in a schedule sent to him by Pep
which reflected the style numbers Pep required and Kedah’s dollar price which Pep
was prepared to pay. Included in the schedule were the men’s and youths’ shoes
which formed part of the first consignment and which were reflected at US $4.70 and
4.25 respectively. All of this evidence was conclusively refuted by the evidence of

Atkins. Atkins had personally, at the end of 1998 ─ ie shortly before Pep contacted
Essop ─ negotiated with Cheng the design and price of the very shoes that
comprised the first consignment. They were a new line for Pep produced exclusively
for Pep and they bore Pep’s registered trademark ‘New Yorker’. They were indeed
reflected in the schedule sent to Essop which he produced in evidence; but that
schedule, according to Atkins, reflected the shoes in respect of which Pep did not
have import permits and the prices on the schedule were Pep’s target prices, not the
prices Atkins ultimately agreed with Cheng. The shoes reflected in the schedule
were therefore, according to Atkins, not surplus stock, nor was it possible that Kedah
had been trying to sell them for over a year or more. The reason Pep approached
Trend, said Atkins, was not to secure a job lot of cheap shoes for sale in South Africa
as Essop suggested, but in order to transport the shoes, once they had been
manufactured, from Hong Kong to South Africa under permits to which Trend had
access and Pep did not. Atkins said categorically that it was ‘impossible’ for the
shoes in the first consignment to have been surplus stock and he was not challenged
on this in cross-examination.

[19] The second reason advanced by Essop as to why Kedah may have been
prepared to drop its prices, was this. Essop and both his daughters emphasised that
at the time Pep wanted to bring the shoes to South Africa, import permits were a
scarce and valuable commodity. This evidence was confirmed by Atkins. The
suggestion was therefore that, although Cheng of Kedah had agreed the shoe prices
with Atkins, the shoes still had to be imported into South Africa ─ and that placed the
party negotiating on behalf of Trend, Wan of Textrade, in a strong position to
negotiate with Cheng because, whatever price had been agreed between Pep and
Kedah, the shoes could simply not be imported into South Africa without permits.
The first problem with this explanation is that there is no evidence whatever to
suggest that Wan did negotiate with Cheng on this basis. The second problem is that
the explanation is highly improbable. Kedah had, after careful negotiation, agreed a
firm price with Atkins of Pep. There was never at any stage a suggestion that the
supply of shoes by Kedah to Pep was dependent upon permits being obtained. The

price agreed upon between Cheng and Atkins was FOB Hong Kong. Kedah’s
responsibility therefore ceased when it delivered the shoes to the ship. Had
someone such as Wan of Textrade attempted to negotiate a lower price with Kedah
because of a shortage of permits, the probabilities are overwhelming that Cheng
would have contacted Pep, both to complain about an attempt to renegotiate the
price and to question the basis upon which this was being attempted. And Pep, in
turn, would have required an explanation from Essop as to why Trend’s agent was
attempting to renegotiate the price which it had negotiated with Cheng, which
Essop’s own evidence established had been communicated to him and which Pep
required Essop to take into account in fixing Trend’s price to Pep for purchasing,
importing and delivering the shoes to Pep. None of this happened.

[20] Counsel representing Trend emphasised that the number of shoes imported
in the first consignment (60 228) was not significant when regard is had to the total
number of shoes Kedah had agreed to supply to Pep for 1999 (some 40 million); and
counsel also emphasised that the price at which Kedah purchased the goods from
the factory in mainland China was not known. But none of this explains why Cheng
would have been prepared to reduce his profit at all (the difference between the price
agreed with Atkins of Pep and the price Trend contends must have been negotiated
by Textrade amounts to nearly US $100 000) or to submit to a questionable business
practice consisting in an attempt to renegotiate an agreed price ─ especially when
the basis on which the supposed negotiation took place (shortage of permits) was
not his concern.

[21] Then there is the expert evidence of Atkins. Atkins was an extremely
experienced shoe buyer. He had been employed by Pep for 19 years in its factory
producing footwear and a further 21 years as senior buyer for all male footwear. The
function of a buyer, in his own words, was to ‘acquire the right product at the right
price at the right time’ and he went all over the world, as he put it, to ‘ferret out or
look for . . . markets or areas that produced cheap footwear’. In the middle of the
negotiations he held with Cheng towards the end of 1998, he attended a product fair

at Guangzhou for the primary purpose of ensuring that the estimated prices he had
given Cheng, which were slightly less than the prices later agreed upon, were
realistic. Atkins expressed the opinion in his evidence in chief that it was ‘impossible’
for Trend to have paid the prices it said it paid to Textrade. In cross-examination he
said:
‘As far as I am concerned the prices quoted [ie those which Trend said it paid to Textrade] as I said
earlier on, were totally and completely improbable, whether out of China, whether out of India,
whether out of Pakistan. And the exposure that we got in the middle trip to go to China, to . . . look at
prices of styles or leather casuals or whatever [at the trade fair in Guangzhou], we never, ever came
close to those prices. They [the Guangzhou prices] were far above the prices that we [ie Pep]
eventually paid.’
Atkins made a positive impression on the court a quo. His evidence, born of
considerable experience worldwide and based in particular on the price of shoes in
mainland China at about the time Wan of Textrade would (according to Essop) have
been negotiating with Cheng of Kedah, was not called into question and there is no
reason why it should not be accepted.

[22] There is a feature of the case which favours Trend’s version. The SARS
investigators have not, despite the wide powers conferred in them by s 4(4)(a) of the
Act, been able to show that Trend paid anything more for the shoes than the
amounts reflected in the Textrade invoices, and this despite the fact that they knew
Trend’s contentions and had access to Trend’s records and directly to its bank for a
number of years before evidence was heard in the court below. Essop and his two
daughters explained in detail how the documents sent to them by Textrade were
used to clear the shoes through customs and to make payment through Trend’s
bank to the beneficiary designated by Textrade, and denied that there had been any
further payment. Had the SARS inspectors been able to show the contrary, the case
against Trend would have been proved conclusively. But not even the criminal law
requires conclusive proof.

[23] I bear in mind that a finding in favour of the Commissioner of necessity
involves finding that Trend attempted to defraud the fiscus, that false documents had

been produced and that Essop and his daughters committed perjury; and that illegal
conduct is inherently unlikely. I am nevertheless of the view that this notwithstanding,
the probabilities constituted by the absence of any reason why Kedah should drop
the prices it had agreed with Pep and the expert evidence of Atkins that the prices
contended for by Trend are impossibly low, together with the fact that Essop did not
favourably impress the court a quo as a witness, tilt the scales in favour of the
Commissioner. I accordingly conclude that Trend did not discharge the onus on it
and that its cross-appeal against the assessment by the Commissioner of the
transaction value of the first consignment should be dismissed.

[24] I turn to consider the appeal lodged by the Commissioner against the order of
the court a quo that the amounts of R300 000 and R600 000 paid as security for the
possible underpayment of customs duty and VAT in respect of the second and third
consignments, should be refunded. The court a quo found that there was an
agreement
between
the
representatives
of
the
Commissioner
and
the
representatives of Trend that, if the amounts concerned were paid, the shoes would
be released; and that it was a tacit term of that agreement that if a determination in
respect of Trend’s liability for underpayment were not made within a reasonable
time, the amounts would be refunded. With respect, I cannot agree with this analysis
of the legal position.

[25] The Commissioner acted in terms of s 93(1)(c) of the Act3 by  releasing the
second and third consignments subject to the condition that payments of R300 000
and R600 000 be lodged.4 In so doing, the Commissioner acted from a position of
authority and implemented the legislation which conferred on him the power to
impose conditions should he direct that goods detained or seized be delivered to

3 ‘93(1) The Commissioner may on good cause shown by the owner thereof, direct that any . . . goods
seized . . .  under this Act be delivered to such owner, subject to ─
. . .
(c) such conditions as the Commissioner may determine, including conditions providing for the
payment of an amount not exceeding the value for duty purposes of such . . . goods plus any unpaid
duty thereon.’
4 It is not necessary to consider whether the Commissioner could also have acted in terms of s
107(2)(a) of the Act.

their owner. The Commissioner was an organ of State as defined in s 239 of the
Constitution because he was a ‘functionary . . . exercising a public power  . . . in
terms of any legislation’ and he performed an administrative action, as defined in s 1
of the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’), the relevant part of
which reads:
‘”Administrative action” means any decision taken, or failure to take a decision, by . . .  an organ or
State, when . . . exercising a public power . . .  which adversely affects the rights of any person and
which has a direct, external legal effect . . .’.
There may have been a contractual element in the exercise by the Commissioner of
his statutory powers (in as much as Trend was free to accept or reject the condition
imposed) but that does not derogate from the fact that the Commissioner performed
an administrative action.5

[26] Counsel representing the Commissioner submitted that the proper order
would be one directing the Commissioner to determine the transaction value of the
goods forming part of the second and third consignments, as he did in the case of
the first consignment. Counsel relied on that part of the definition of ‘administrative
action’ in PAJA which includes any failure to take a decision, and on the provisions
of ss 6(2)(g) and (3) and 8(2)(a) of PAJA. Those sections provide:
‘6(2)
A court . . . has the power to judicially review an administrative action if ─

. . .
(g)
the action concerned consists of a failure to take a decision.
. . .
(3)
If any person relies on the ground of review referred to in subsection (2)(g), he or she may in
respect of a failure to take a decision, where ─
(a)(i)
an administrator has a duty to take a decision;
(ii)
there is no law that prescribes a period within which the administrator is required to
take that decision; and
(iii)
the administrator has failed to take that decision,
institute proceedings in a court . . . for judicial review of the failure to take the decision on the
ground that there has been unreasonable delay in taking the decision’; or
‘(b)(i)
an administrator has a duty to take a decision;

5 cf Logbro Properties CC v Bedderson NO 2003 (2) SA 460 (SCA) para 9; Bullock NO v Provincial
Government, North West Province 2004 (5) SA 262 (SCA) paras 11 and 12.

(ii)
a law prescribes a period within which the administrator is required to take that
decision; and

(iii)
the administrator has failed to take that decision before the expiration of that period,
institute proceedings in a court . . . for judicial review of the failure to take the decision within
that period on the ground that the administrator has a duty to take the decision
notwithstanding the expiration of that period.
8(2)
The court . . . in proceedings for judicial review in terms of s 6(3), may grant any order that is
just and equitable, including orders ─
(a)
directing the taking of the decision’.

[27] The argument put forward on behalf of the Commissioner is misconceived.
There is no duty on the Commissioner to make a decision as contemplated in s 6(3)
of PAJA whether under subsection (a) or (b), both of which (in para (i)) require the
existence of a duty for them to operate. It happens every day that goods are
imported and no determination by the Commissioner in terms of s 65(4)(a) as to their
transaction value is made ─ as was said by the Constitutional Court in the FNB
case:6 ‘the Act is premised on a system of self-action and self-assessment’. Nor
does a seizure in terms of s 88(1)(a) oblige the Commissioner to make a
determination. He has a right, but no duty, to do so. The sections of PAJA relied on
by counsel representing the Commissioner are therefore not applicable.

[28] Counsel representing the Commissioner conceded that if the Commissioner
wished in terms of s 65(4)(a) to make a determination of the transaction value of
goods detained in terms of s 88(1)(a), he would have to act within a reasonable time;
and further conceded that a reasonable time has elapsed. Both concessions were
well made. So far as the latter concession of fact is concerned, years have elapsed
since the goods were seized and there has still been no determination despite the
full co-operation of Trend in granting access to its books and despite the wide
powers enjoyed by officers under s 4(4) of the Act. The goods forming part of the
second and third consignment were seized in about August 1999. The payments to
secure their release were made on 20 August and 1 September 1999 respectively.

6 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service; First
National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) para 15.

The notice of motion commencing the proceedings in the court below was dated 9
October 2001 ─ more than two years later.

[29] So far as the concession of law is concerned, it was common cause that the
goods were detained in terms of s 88(1)(a) of the Act. In terms of the words of that
section, such detention is ‘for the purpose of establishing whether . . . goods are
liable to forfeiture under this Act’. A limitation must be read into that section to the
effect that the right to detain goods only endures for a period of time reasonable for
the investigation which the section contemplates to be made, but no longer. There is
no sufficient reason for the continued deprivation of the property once the purpose
for the deprivation (to investigate whether the property is liable for forfeiture under
the Act) is no longer justified, and the continued deprivation would accordingly be
arbitrary as meant by s 25 of the Constitution: see the FNB case.7  The
Commissioner’s right to retain provisional payments made pursuant to a condition for
the release of the goods imposed by him in terms of s 93(1)(c), must be subject to
the same limitation. I therefore conclude that once a reasonable period of time for
the necessary investigation has elapsed, the Commissioner has no further right to
retain either the goods or provisional payments made to secure their release.

[30] The order sought by counsel representing the Commissioner would direct the
Commissioner to make a determination which he is not obliged to make and which
would be incompetent because the time within which it could have been made has
expired. In view of the conclusion that the Commissioner no longer has the right to
retain the provisional payments made in respect of the second and third
consignments, the order by the court a quo directing the Commissioner to repay
them must stand and the appeal by the Commissioner must fail.

[31] The court a quo ordered the Commissioner to pay all of Trend’s costs incurred
in that court. The Commissioner appealed against that order as well. Counsel
representing Trend correctly conceded that (save for the costs of the day on 5

7 ibid para 100.

November 2002) such an order was not justified insofar as it included the costs in
connection with the application for, and hearing of, oral evidence. The issues
referred to evidence were determined in favour of the Commissioner and Trend
therefore failed on a severable issue: see Letraset Ltd v Helios Ltd (2);8 Fripp v
Gibbon and Co.9 The Commissioner’s counsel did not contest liability for the costs of
the day on 5 November 2002 but there was a dispute in regard to the costs of the
first day on which oral evidence was heard, ie 17 May 2004, and of the following day,
18 May 2004. Although some evidence was heard on 18 May, the rest of those two
days was taken up by an application for condonation made by the Commissioner for
late discovery. Those costs should be awarded to Trend but the remainder of the
costs against Trend. The taxing master must make an appropriate apportionment.
Otherwise, Trend was substantially successful: the penalty of R695 508 imposed by
the Commissioner in lieu of forfeiture in respect of the first consignment was set
aside and the Commissioner was ordered to repay the amounts of R300 000 and
R600 000 paid by Trend as security for the release of the second and third
consignments. Trend failed in respect of the determination amounting to
R363 371,09 in respect of the first consignment, but it had to come to court to obtain
the relief it did.

[32] The Commissioner has been partially successful in the appeal. The costs of
the referral to oral evidence are likely to be substantial. Liability for those costs (save
to the extent set out above) was conceded by Trend’s counsel in his heads of
argument; but the fact remains that the Commissioner had to come to this court to
have the order of the court a quo amended. Trend, on the other hand, was also
partially successful in this part of the appeal in that not all of the costs of the referral
to oral evidence will be awarded to the Commissioner. As presently advised, it
seems to me that an order directing Trend to pay half the costs of the appeal would
be fair. We have not had the benefit of argument from counsel so a provisional order
will be made in respect of the costs of the appeal. So far as the cross-appeal is

8 1972 (3) SA 605 (A) at 608B-D.
9 1913 AD 354 at 358.

concerned, the court a quo was incorrect in the reasons it gave for the order
directing the Commissioner to repay the amounts paid in respect of the second and
third consignments but the order remains unaffected. Costs should accordingly
follow the result. The complexity of the issues, both factual and legal, warranted the
employment of two counsel by the Commissioner.

[33] The following order is made:
1.
The appeal succeeds to the extent that the costs order made by the court a
quo is set aside and the following order is substituted in its place:
‘(i)
Subject to (ii) below, the applicants are ordered to pay the costs incurred in
connection with the hearing of oral evidence including the costs of two counsel save
for the costs of the day of 5 November 2002, which are to be paid by the first
respondent.
(ii)
The costs incurred on 17 and 18 May 2004 are to be apportioned between the
parties as determined by the taxing master. The costs awarded to the first
respondent shall include the costs of two counsel.
(iii)
Save as set out above, the first respondent is ordered to pay the applicants’
costs.’
2.
Save as aforesaid, the appeal is dismissed.
3(1)
The first and second respondents are provisionally ordered to pay half of the
appellant’s costs of appeal, including the costs of two counsel.
(2)
Either party may, on or before 14 June 2007, submit written argument to the
Registrar of this court in regard to the provisional order made in (1), in which event
the other party shall be entitled to reply on or before 29 June 2007. If no written
argument is forthcoming the provisional order made in (1) shall become final.
4.
The cross-appeal is dismissed, with costs, including the costs of two counsel.

Concur: Howie P

__________

Heher JA

T D CLOETE

Van Heerden JA

JUDGE OF APPEAL
Combrinck JA
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
23 May 2007
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal

THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE
SERVICE v TREND FINANCE (PTY) LTD & ANOTHER

1.
In 1999 Trend Finance (Pty) Ltd, a Cape Town based company,
imported three consignments of cheap shoes manufactured in China into
South Africa to be sold by Pep Stores and Foschini. The controller of
customs, Cape Town, seized the consignments pending an investigation
as to whether their value had been under declared, but released them
on payment of security. The controller subsequently demanded over R1
million in additional duty and VAT and penalties in respect of the first

consignment but made no determination in respect of the second and
third consignments.
2.
The Cape High Court set aside the penalty but confirmed the
Commissioner’s decision that the additional duty was payable in respect
of the first consignment. The Commissioner did not appeal the order
setting aside the penalty. Trend unsuccessfully appealed against the
additional charges imposed. The Cape High Court ordered the
Commissioner to return security in respect of the second and third
consignments. The SCA upheld the order on the basis that the
Commissioner had had more than a reasonable time to investigate
whether the value of these consignments had been under declared, and
found that the further detention of the money paid as a security was
unlawful. The Commissioner was accordingly ordered to repay the
R900 000 he had held since 1999 in respect of those consignments.

--ends--