MAVANGIRA
JA:
This
is an appeal against part of the judgment of the High Court which
decided against the appellant on several issues on which the parties
had failed to reach agreement in an urgent chamber application. The
part appealed against is fully set out at page 10 of this judgment.
BACKGROUND
During
the period extending from January 2009 to July 2013 the appellant
imported and declared goods which were then classified as base
stations. On 3 December 2013, the second respondent wrote a letter to
the appellant informing it that the respondents had carried out a
post-clearance audit of the 'base station importations' by the
appellant during the stated period. The audit had revealed anomalies
which the second respondent attributed to misclassification of single
components or parts of base stations as complete base stations by the
appellant. The second respondent stated in the same letter that the
appellant ought to have been, and was aware, that all importations of
base stations were to be moved into bond and warehoused and the final
consumption entries of the base stations would be done inland. The
conclusion was therefore that the first respondent had been
prejudiced in the sum of $15,884,943.45 in customs duty and value
added tax. The appellant was as a consequence requested, in the said
letter, to pay the tax as well as a 300 percent penalty on the tax
due bringing the amount due to $63,539,773.84.
On
9 December 2013, the respondents placed a garnishee order against the
appellant's CBZ bank account for the amount of $63,539,773.84. A
similar process was done on the appellant's Steward Bank account in
the sum of $62,909,433.11. Both garnishee orders were placed in terms
of the Income Tax Act [Chapter
23:06].
In response, the appellant filed an urgent chamber application with
the High Court of Zimbabwe on the 10 December 2013. It sought an
interim order in the following terms:
“TERMS
OF INTERIM RELIEF GRANTED
PENDING
THE FINAL DETERMINATION OF THIS MATTER IT IS ORDERED THAT:
1.
The garnishee orders placed by the respondents on 9 December 2013 on
the applicant's accounts with Steward Bank Limited in the amount of
US$62,909,433.11 and CBZ Bank Limited in the amount of
US$63,539,733.84 be and are hereby set aside.
2.
The respondents be and are hereby interdicted from placing any
garnishee orders on applicant's accounts with any other person or
bank on the same, similar or related grounds as in this case.”
The
final order it sought was couched:
“TERMS
OF THE FINAL ORDER SOUGHT
IT
IS ORDERED THAT:
1.
The respondents' claim against the applicant for payment of duty
and Value Added Tax amounting to US$15, 884,943.46 in respect of the
importation of base station components by the applicant during the
period January 2009 to June 2013 be and is hereby set aside and
dismissed.
2.
The penalty of 300 percent amounting to US$47,654,830.38 imposed on
the applicant by the respondents be and is hereby set aside and
dismissed.”
The
appellant sought this interim order on three bases. The first was
that the garnishee orders were unprocedural as they were made in
terms of section 58 of the Income Tax Act despite the fact that the
tax claimed was due under the Customs and Excise Act [Chapter
23:02].
It argued that such a procedure for customs duty is provided in terms
of section 201A of the Customs and Excise Act. It contended that
assuming that the procedure for appointing a representative taxpayer
does apply to disputed tax liabilities, the appellant had a right to
object to an assessment in terms of section 62 of the Income Tax Act.
The appellant contended that Part IIIA of the Revenue Authority Act
[Chapter
23:11]
which provides for the procedure for the recovery of outstanding
taxes safeguards the appellant's rights to object to assessments
and to be heard in the determination of any tax claims. The same
applies to section 201A of the Customs and Excise Act, (Chapter
23:02), it argued.
The
second basis was that there was no anomaly in the clearance of the
appellant's base station components. It made reference to a letter
from the Department of Customs and Excise which was written in 1998
in response to a letter from the appellant seeking guidance on
classification of base station components. In the letter dated 5
October 1998, the Department of Customs and Excise responded and
stated:
“I
confirm that the goods on the lists that you have submitted can be
imported by your company duty free under tariff 8525.2020 as
components that make up a base station. The Collectors of Customs and
Excise at Beitbridge, Harare, Bulawayo and Plumtree have been advised
and the list circulated to them.”
The
same position was restated by the second respondent in a subsequent
letter on 24 February 2010. In this letter, the second respondent
took the position that components of a base station can be cleared
under tariff 85176100 in the quantities specified therein. The
appellant argued that the duty to classify lay with the respondents
and their duty assessments constituted pactum
de non petendo
as between them and the appellant. The third issue was that the 300
percent penalty was irregular and excessive and could only have been
levied in terms of section 200 of the Customs and Excise Act against
a party who admits to an alleged fiscal offence or if the respondents
had gone to court to obtain an order to that effect.
The
respondents opposed the application. Regarding the irregularity of
the use of the garnishee notice with references to the Income Tax
Act, the respondents attributed this to an error on the part of the
first respondent's officers mainly due, allegedly, to the fact that
the forms for customs and excise are 'virtually identical' to
those for the Income Tax Act. It was averred that the garnishee
notices had since been withdrawn and that it was intended to issue
the correct documents in terms of the Customs and Excise Act. The
respondents denied issuing an advance tax ruling as contemplated by
the law. They contended that the appellant could not rely on
administrative correspondence between it and managers of the first
respondent. They therefore denied that the requirements of estoppel
were established. They also challenged the argument that the
respondents were functus
officio
in light of section 87 of the Customs and Excise Act which provides:
“87
Classification of goods for customs purposes
(1)
For the purpose of determining the customs duty payable in respect of
any goods that are imported, the
Commissioner
or an officer shall classify such goods into the appropriate tariff
headings, subheadings or codes
in accordance with any rules set out in the customs tariff, paying
due regard to —
(a)
the explanatory notes to the Harmonised Commodity Description and
Coding System, issued from time
to
time by the World Customs Organisation in Brussels; and
(b)
decisions of the Harmonised Commodity Description and Coding System
Committee.
(2)
The Commissioner shall vary or set aside a classification of goods
made in terms of subsection (1) if he is satisfied, whether on appeal
by the importer of the goods or otherwise, that the classification
was incorrect.
(3)
Any classification of goods made in terms of this section shall be
binding on the importer of the goods, subject to an appeal —
(a)
to the Commissioner, where the classification was made by an officer;
or
(b)
to the Fiscal Appeal Court in terms of the Fiscal Appeal Court Act
[Chapter
23:05],
where the classification was made, varied or confirmed by the
Commissioner.
(4)
The Commissioner shall ensure that at least one copy of —
(a)
the publications referred to in paragraph (a)
of subsection (1); and
(b)
any decision referred to in paragraph (b)
of subsection (1) on which he has relied for the purpose of
classifying any goods;
is
kept available for public inspection during normal business hours in
his offices and at such other offices of the Department as he
considers appropriate.
(5)
If the classification of goods for the purposes of this Act is an
issue in any proceedings before any court, a document purporting to
be a copy of a publication or decision referred to in subsection (1),
and purporting to be certified as correct by the Commissioner, shall
be admissible in the proceedings as prima facie proof of its contents
upon its production by any person.” (emphasis
added)
In
respect of the penalty, the respondents justified it on the basis
that the appellant's agents had allegedly displayed flagrant
disregard for the Customs and Excise Act. Additionally, the
respondents argued that the appellant had alternative remedies
including an appeal to the Fiscal Appeals Court. The appellant could
also lodge security under the Customs and Excise Act as well as
payment of the capital and interest claimed pending the determination
of the penalty. The respondents also argued that the correct forum
for the ventilation of the dispute was the Fiscal Appeal Court and
not the High Court.
The
court a
quo
narrowed down five issues that it had to determine in respect of the
urgent chamber application before it. These were:
(a)
Whether the importation of the base stations by the applicant during
the period January 2009 to July 2013 was conducted within the law.
(b)
Whether the respondents were prevented from reviewing the
classification for customs duty purposes of base station components
imported by the applicant during the relevant period, by the
doctrines of estoppel, waiver or functus
officio.
(c)
Whether the second respondent was entitled at law to impose and
collect a fine without the agreement of the appellant or a fine of
the magnitude imposed on the appellant.
(d)
Whether it was competent for the second respondent to collect the
fine imposed on the applicant through the garnishee procedure
provided for under section 201A of the Customs and Excise Act.
(e)
Whether the launching of an appeal or other challenge to the
classification of goods for customs purposes under section 87 of the
Customs and Excise Act precludes the respondents from collecting
customs duty under challenge under section 201A of the Act pending
the determination of the appeal or other challenge.
The
court a
quo
found in respect of the first issue that the importations were not
done lawfully but through false declarations. It found further, that
the appellant's agents had made such declarations and that their
transgressions lay squarely on the appellant as the principal. In
respect of the second issue, the court a
quo
found that the doctrine of estoppel did not preclude the respondents
from acting as they did especially in light of section 87(2) of the
Customs and Excise Act. The court equally found the doctrine of
waiver not applicable as it found that an error in classification did
not amount to waiver of the duty payable. Regarding the fourth issue,
the court a
quo
found that the respondents could not levy a fine without the
appellant admitting to the fiscal offence or where the court so
orders. The fifth issue was also resolved in favour of the appellant
on the basis that section 201A relates to the placing of a garnishee
for duty only and not for a fine.
The
court made the following order therefore:
“1.
The declarations made by the applicant amounted to a contravention of
the law.
2.
The respondents were entitled to reclassify good arising from the
post-clearance audit.
3.
The respondents could not waive a duty to correctly classify the
goods.
4.
The noting of the appeal to the Fiscal Appeal Court did not suspend
the decision of the second respondent.
5.
The second respondent could not impose a penalty without the consent
of the applicant.
6.
The second respondent could not collect the penalty by way of
garnishee.
7.
None of the parties completely succeeded in the arguments advanced.
It is ordered that each party shall bear their costs.”
THIS
APPEAL
The
appellant filed an appeal against part of the judgment of the court a
quo.
The part to which this appeal relates was stated in the notice of
appeal as:
“The
part of the judgment appealed against is the part whereby the court a
quo
held that:
1.
The declarations made by the applicant in the court a
quo
amounted to a contravention of the law.
2.
The first and second respondents were entitled to reclassify goods
imported by applicant in the Court a
quo
in its post clearance audit.
3.
The noting of an appeal by applicant in the court a
quo
against a decision made by second respondent under the Customs and
Excise Act did not suspend the decision of the second Respondent.
4.
Each party shall bear its own costs.”
GROUNDS
OF APPEAL
The
appellant attacked this part of the judgment by raising the following
grounds of appeal:
“1.
The court a
quo
erred in fact and at law in finding that appellant made false
declarations in the absence of a finding by second respondent that
appellant had made false declarations, or an allegation by second
respondent that appellant had made false declarations or sufficient
proof that appellant had made false declarations.
2.
The court a
quo
erred both in fact and at law in finding that second respondent was
not estopped from changing the classification for duty purposes of
the base station components imported by appellant from a duty free
tariff that had been applied by second respondent for more than 15
years to a tariff that attracted duty.
3.
The court a
quo
erred at law in finding that section 14 of the Fiscal Appeal Court
Act [Chapter
23:05]
does not suspend the decision appealed against when it in fact does,
unless second respondent orders otherwise, which he did not do in the
present case.
4.
In any event, the court a
quo
erred in finding that section 14 of the Fiscal Appeal Court Act
applies to the present case when in fact the section only applies to
Stamp Duties and Sales Tax, and does not apply to appeals relating to
Customs and Excise which are governed by Part IV of the same Act,
which part gives appellant an option to either pay the duty, or to
furnish security acceptable to second respondent as was done by
appellant in this matter.
5.
In the circumstances, the court a
quo
erred at law in not allowing the appellant's claim for costs of
suit.”
At
the commencement of the hearing of this appeal, the appellant
abandoned the third and fourth grounds of appeal. Mr Nyambirai,
for the appellant, argued the appeal on the basis of the first,
second and fifth grounds of appeal.
APPELLANT'S
SUBMISSIONS BEFORE THIS COURT
Mr
Nyambirai
urged this Court to find that the starting point is to define a base
station. He pointed to the definition of 'base station' in
section 87 of the Customs and Excise Act [Chapter
23:02]
which incorporates the Harmonised Commodity Description and Coding
System issued from time to time by the World Customs Organisation in
Brussels as well as decisions of the Harmonised Commodity Description
and Coding System Committee. He argued that a letter by the Postal
and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ)
listed what constitutes a base station. He contended that this is
consistent with the letter written by the Department of Customs and
Excise on 5 October 1998 to the effect that the specified components
of a base station be imported by the appellant duty free.
A
letter dated 24 February 2010 was referred to, where the respondents
wrote to the appellant and indicated that components of base stations
could be cleared under Tariff 85176100. The rider was that the
importations of listed components would have to correspond with the
number of base stations to be installed.
Mr
Nyambirai
made reference to the letter dated 3 December 2013 and highlighted
that the allegation therein was that of the appellant having made a
misclassification as opposed to making a false declaration.
He
argued that issues of false declarations were not part of the
respondents' case against the appellant as stated in their letter
and that that issue was therefore not properly before the court a
quo.
Mr Nyambirai
further argued that the classification done by the respondents was
correct as it is consistent with Rule 2(a) of the Explanatory Notes
to the Harmonised Commodity Description and Coding System.
Mr
Nyambirai
further argued that as a bonded warehouse facility is intended for
goods that are classified under a dutiable tariff it followed
logically therefore, that goods that are classified under a duty-free
tariff did not need to be put in a bonded warehouse.
He
submitted that the base stations in issue were imported as
unassembled or disassembled components because of the impossibility
of importing an assembled base station. He argued that the rule
applicable in terms of section 87 of the Customs and Excise Act is
Rule 2(a) of Statutory Instrument 245/2002. Mr Nyambirai
argued that the second respondent did not carry out a reconciliation
of the unassembled components imported by the appellant to establish
whether they were in excess of the requirements for a base station.
He further argued that the court a
quo's
finding that the appellant made false declarations was wrong as the
issue was not before the court a
quo
and the finding was in any event incorrect.
It
was also argued on behalf of the appellant that the court a
quo
erred both in fact and at law in not finding that the second
respondent was estopped from changing classification of the imported
base station components.
He
submitted that the classifications during the period extending from
October 1998 to 24 February 2010 had been done by the second
respondent's predecessor under the letter of 5 October 1998 and the
second respondent under his letter dated 24 February 2010,
respectively. Both letters classified the components of a base
station which are unassembled or disassembled under the tariff
heading “Base Stations”.
Mr
Nyambirai
argued that the classifications during the period extending from
October 1998 to 24 February 2010 were done by the second respondent's
predecessor under the letter of 5 October 1998 and the second
respondent under his letter dated 24 February 2010, respectively.
Both letters classified the components of a base station which are
unassembled and disassembled under the tariff heading 'Base
stations'. Both letters, it was argued, were authored by officers
who had ostensible authority to write them on behalf of the second
respondent and that the respondents ought therefore to be estopped
from varying or setting aside the given classifications with
retrospective effect. The second respondent thus became functus
officio
when the classification decisions were made.
In
motivating the fifth ground of appeal relating to costs, the argument
was that as a result of the foregoing, the court a
quo
ought to have granted the appellant's application with costs.
RESPONDENTS'
ARGUMENTS
Mr
Mazonde,
for the respondents, submitted that the appellant purported to import
base stations but it did not. It imported various components and
items of telecommunications equipment under the guise of importing
base stations thereby benefitting from improper classification. He
contended that this resulted in the number of base stations allegedly
imported by the appellant to exceed 491142 base stations compared to
the number given by POTRAZ that the appellant has set up 2440 base
stations.
He
argued that these so called components were not imported in
compliance with Rule 3(b) of Classification Rules which states that
composite goods made up of different components shall be classified
as if they consist of a component which gives them their essential
character. As a result, for the various components imported in
'complete knock down form' to be deemed as a base station, all
parts should be imported at the same time to constitute the essential
character of a base station. He argued therefore that the components
in this case were not imported or cleared at the same time meaning
they did not constitute the essential character of a base station.
Therefore the respondents were correct in levying tax on each
individual component.
He
submitted additionally that base station batteries are excluded from
the tariff heading 8517 in terms of the Explanatory Notes, 5th
Edition, 2012, volume 5. The point he sought to make was that not all
components are duty free. He further stated that the appellant's
clearing agents therefore violated the law in the manner in which
they imported the base stations for the appellant. He submitted that
the agents admitted to the same and were suspended from operating and
further that the appellant itself admitted to these anomalies arising
from the conduct of these agents and paid the assessed duty and
penalty. The classification from 2009 to 2013 was carried out by
various clearing agents, some lodging correct declarations and others
misclassifying the components. He argued that the finding of the
court a
quo
that the importation had been irregular, unlawful and illegal was a
factual finding which this appellate court cannot set aside in the
absence of a finding that there has been a grave misdirection on the
part of the court a
quo.
He argued that the appeal must fail on this point.
On
the question of estoppel, Mr Mazonde
submitted that the court a
quo
was correct in finding that the respondents are entitled to carry out
post-clearance audits in terms of the law. He submitted that in terms
of section 87(2) of the Customs and Excise Act, the second
respondents can set aside or vary his or her own classifications. He
argued that estoppel does not arise in matters relating to statutory
obligations or rights. Furthermore, that such power was also reposed
in the second respondent in terms of section 223A(4) of the Customs
and Excise Act. Mr Mazonde
argued that in
casu
there was no dispute that the post clearance audit took place within
the prescribed time limits. He also submitted that the respondents
are entitled to take remedial action where anomalies arise after an
audit. He argued therefore that estoppel has no application in the
circumstances.
Mr
Mazonde
argued
that reliance on the letters referred to was misplaced as the letters
did not constitute a 'revenue advance tax ruling', no formalities
or procedure having been followed by the appellant to acquire such an
advance tax ruling.
He
also submitted that the requirement for the bonded warehouse was to
ease the appellant's plight of having to source the components from
different suppliers across the world and hence being unable to
present the components for classification as per Rule 2(a) at the
time of importation. He underscored that it was a suggestion made for
the convenience of the appellant. He argued that Rule 2(a) deals with
the classification of incomplete or unfinished articles presented
unassembled or disassembled and that base station components imported
separately are liable for duty in accordance with the tariffs that
apply to such separate components.
He
contended that the appellant cannot benefit from the zero duty
applicable to a base station importation. He argued that the simple
issue for determination was whether the cleared components made up a
complete base station and if not, they could not be classified as
base stations. He reiterated that the respondents' position is that
the Commodity Code 8517.6100 does not include unassembled or
disassembled parts or components. On these bases, he prayed for the
dismissal of the appeal with costs as the decision of the court a
quo
was correct.
ISSUES
Three
issues arise for determination before this Court. These are:
1.
Whether the issue regarding false declarations was an issue that was
properly before the court a
quo and
on which it was required to make a determination.
2.
Whether the classification was done in terms of the law.
3.
Whether the order of costs made by the court a
quo
ought to be interfered with.
THE
LAW AND THE FACTS
1.
Whether the issue regarding false declarations was properly before
the court a
quo
It
is the appellant's argument before this court that the court a
quo
determined an issue which was not properly before it by finding that
the appellant's declarations had contravened the law. In
determining this issue the starting point is the letter of 3 December
2013. This is the letter which triggered the litigation that has
culminated in this appeal. This letter from the respondents to the
appellant alleged that there were anomalies in the clearances of
'base station' importations and that “(T)he anomalies arose as
a result of the fact that Econet
Wireless was misclassifying
single components/units or parts of Base Stations as complete base
stations.” (emphasis added) The respondents further arrogated an
error on the appellant of failing to move all the base station
importations in bond.
In
the founding affidavit of its application in the court a
quo the
appellant contended that the duty to classify did not lie with it.
This was in response to the case which the respondents laid at its
door in the said letter. Put differently, the decision which was
being reviewed by the court a
quo
was the decision embodied in that letter. It was never the
respondents' case in that letter that the appellant had falsely
declared its importations.
In
opposing the application in the court a
quo,
the respondents sought to argue that its post clearance audits had
shown that the declarations by the appellant and its agents had been
irregular. This was not the case that the respondents had laid
against the appellant when it wrote the letter of 3 December 2013 and
subsequently garnished the appellant's bank accounts. The issue
that culminated in the litigation in this matter was that of alleged
misclassification and not one of false declarations.
If
the respondents had changed their case to one of false declarations,
it ought to have informed the appellants accordingly and set aside
its initial position. The fact stands that these proceedings were set
in motion by the letter alleging misclassification. Proceedings ought
to be disposed of on the basis on which they are brought. It is
unclear how the proceedings mutated from being based on
classification to being based on false declarations. The court a
quo
ought to have decided the matter without losing sight of the root or
trigger of the litigation which was the letter of 3 December 2013.
No
evidence was brought before the court a
quo
to justify the finding that false declarations had been made by the
appellant. In Ruturi
v Heritage Clothing (Pvt) Ltd
1994 (2) ZLR 374 (S), this Court found that to make any finding in
the absence of evidence is to err. In the absence of evidence of
false declarations being made, the court a
quo
ought not to have made that finding. The respondents made these
allegations in the court a
quo
and the various agents that they mentioned in their notice of
opposition as having acted on the appellant's behalf were not party
to the proceedings for proper findings to be made on whether the
declarations had been false. In any event, the issue ought not to
have been related to by the court a
quo
as it was not properly before it.
2.
Whether the classification was done in terms of the law
As
argument progressed before us it became very clear, from both
counsel's submissions, that the dispute between the parties was not
about the description of the imported goods but their classification.
Classification is generally dealt with by section 87 of the Customs
and Excise Act. For ease of reference the relevant portion of the
section is quoted again below:
“87
Classification of goods for customs purposes
(1)
For the purpose of determining the customs duty payable in respect of
any goods that are imported, the
Commissioner
or an officer shall classify such goods into the appropriate tariff
headings, subheadings or codes in
accordance
with any rules set out in the customs tariff, paying due regard
to—
(a)
the explanatory notes to the Harmonised Commodity Description and
Coding System, issued from time
to
time by the World Customs Organisation in Brussels; and
(b)
decisions of the Harmonised Commodity Description and Coding System
Committee.
(2)
The Commissioner shall vary or set aside a classification of goods
made in terms of subsection (1) if he is
satisfied,
whether on appeal by the importer of the goods or otherwise, that the
classification was incorrect.”
From
the foregoing, it is clear that the duty and obligation to classify
goods for customs purposes lies with the 'Commissioner or an
officer'. The Customs and Excise Act defines 'Commissioner' as:
“'Commissioner'
means —
(a)
the Commissioner in charge of the department of the Zimbabwe Revenue
Authority which is declared in terms of the Revenue Authority Act
[Chapter
23:11]
to be responsible for assessing, collecting and enforcing the payment
of duties in terms of this Act; or
(b)
the Commissioner-General of the Zimbabwe Revenue Authority, in
relation to any function which he has been authorised under the
Revenue Authority Act [Chapter
23:11]
to exercise;”
It
defines an 'officer' thus:
“'officer'—
(a)
means an officer of the department of the Zimbabwe Revenue Authority
which is declared in terms of the Revenue Authority Act [Chapter
23:11]
to be responsible for assessing, Collecting and enforcing the payment
of duties in terms of this Act;
(b)
includes a person exercising the powers or performing the duties of
an officer conferred or imposed upon him in terms of subsection (4)
of section three;”
Whatever
else these two terms may mean definitely excludes the taxpayer. It is
not the duty of a taxpayer to classify his, her or its own imports
for the purposes of customs duty assessments. In casu,
the respondents classified the components of base stations as base
stations. Technically, the matter could be disposed of at this
juncture because the letter which led to all this litigation was
premised on the contention that the appellant misclassified its own
imports. There was not and cannot be such an obligation on a taxpayer
and thus on the appellant. It thus cannot be alleged to have
classified its own goods for custom purposes. The legal syllogism
upon which the respondents' case rested fell.
It
was also Mr Nyambirai's
unchallenged submission that the exercise of that duty by the
respondents is reflected and therefore confirmed by the Bills of
Entry that were processed by the second respondent and his officers.
In
addition, the fact that the respondents have the duty to reclassify
in terms of section 87(2), presupposes, as also specifically stated
in section 87(1), that they are the ones who would have made the
classification in the first place.
In
the letter of 3 December 2013 and in the proceedings in the court a
quo,
the respondents contended that for the appellant to import the
components as base stations, the components had to be moved in bond.
They have since changed their position and now state that that
earlier position had been suggested for the ease or convenience of
the appellant and not as a strict rule of law. In other words, there
was no requirement at law that the imported components be moved into
bond. Mr Mazonde's
earlier submission that all the components had to be imported at once
for the components to be taxed as a base station and not disparately
at different times was thus effectively retracted.
Even
if it existed, such a requirement would be impracticable. This is so
given the appellant's unchallenged submission that the components
are imported from different countries and through different modes of
transport and therefore entering the country at different ports of
entry. The said submission is thus not supported by the reality of
the situation on the ground. It is not tenable. In any event, there
does not appear to be any wrongdoing on the part of the appellant.
Even if it had certain components in excess of the base stations that
it has already set up, that would not detract from the
impracticability of the alleged requirement for all components to be
imported and brought into the country at the same time.
The
letter of 24 February 2010 states in part:
“Reference
is made to your letter dated 18 February 2010 and several subsequent
meetings held in connection with the abovementioned subject.
Please
be advised that the components and quantities listed below constitute
a base station and can be cleared under tariff 8517.6100.
ONE
BASE STATION CONSISTS OF THE FOLLOWING COMPONENTS:
Description
Quantity
1.1
Container 1
1.2
Airconditioning 2
1.3
Power equipment (rectifiers) 1
1.4
Batteries 48
1.5
Battery rack 2
1.5
Cellular radio equipment (cabinet) (sic) 1
1.6
Transmission radio equipment (indoor) 4
1.7
Connectors 48
2.0
GSM antennae 6
3.0
WCDMA (3G) antennae 6
4.0
Microwave antennae and outdoor unit 3
5.0
Waveguides cables 150m
6.0
Feeder cables (mtrs)/ connectors (unit) 600m
7.0
Tower 1
8.0
Cables trays – metres 16
9.0
Cable clamps (mtrs)/ installation equipment 1
(unit)/accessories unit
This
means that the listed components constitute one base station and it
is important that your importations correspond with the number of
base stations to be installed.”
The
appellant has not stopped operating. Thus, even if there were to be
extra components of base stations in addition to the set-up or
operative or active base stations, there is no indication that there
is a bar to how many base stations it is to import and set up or
install. Those extra components may be for more base stations to be
set up in the future when all necessary components have been gathered
or when it finds it necessary or economic to set them up. The
respondents' contention is not convincing. There appears to be no
law that that the appellant has broken.
The
submission was made by Mr Nyambirai
that the respondents appear to be disowning the letters that emanated
from their offices and have been referred to earlier in this
judgment, by stating that they were not advance tax rulings nor
tariff rulings. This, as well as Mr Nyambirai's
further submission that the letters have never been said to have been
issued in error nor have the respondents stated what other purpose
the letters sought to achieve, remained unchallenged.
That
the classifications done from October 1998 to 24 February 2010 were
done by the second respondent's predecessor under the letter of 5
October 1998 and the second respondent under his letter dated 24
February 2010 respectively, also stands unchallenged. It is clear
that in terms of section 87 of the Customs and Excise Act, these
decisions by the second respondent and his officers lawfully stand as
such and do not need to be related to or compared with an advance tax
ruling.
Another
submission by Mr Nyambirai
that also remained unchallenged was that in order to discharge his
duties of classification as required by section 87 of the Customs and
Excise Act, the second respondent did not need the powers under
section 34D of the Revenue Act [Chapter
23:11]
that relate to the making of an advance tax ruling. A classification
done under section 87 has no connection to an advance tax ruling
under section 34D and must therefore not be confused with the same.
It
follows that the letters under discussion were therefore competent as
they were written by agents of the second respondent. The case of
Gwafa v Small Enterprises Development Corporation & Anor
1999 (2) ZLR 261 (SC) at pages 263-264
that was referred to by the appellant's counsel sheds some light on
this aspect. On the reasoning therein, the authors of the letters
related to had the ostensible authority to write them on behalf of
the second respondent.
The
letters did not require that the components be presented together at
the same time nor did they require that the components be moved in
bond to earn their classification. As observed earlier, it would be
impossible for these components to be presented at the same time or
to be presented after being assembled as they are manufactured by
different suppliers from different countries at different times and
moved from different ports of entry into the country.
The
impracticability of the respondents' stance lends credence to the
contention by the appellants that the respondents can only be taken
to have misunderstood their schedules thereby creating the
misconception that the appellant imported 491142 base stations
whereas the schedules in fact show the various components and not
complete base stations.
A
reconciliation by the respondents of the base station components that
were imported by the appellant would have revealed the correct number
of base stations imported as the base stations that have been
installed by the appellant are in
situ.
This was not done hence the misconception that the number was 491,142
base stations, which arose from counting base station components as
base stations.
For
the appellant to succeed in proving estoppel, it has to prove, and
the authority for this proposition is the case of Andrew
Phillips (Pvt) Ltd v GDR Pneumatics (Pvt) Ltd 1986 (2)
ZLR 65 (SC) 67, that the respondents or their officers made a
representation in word or deed which might have reasonably misled the
appellant; that the appellant was misled and that the representation
induced the appellant to act as it did.
In
casu
the two letters, the conduct of the second respondent and his
officers in classifying the base station components as 'base
stations' and the passage of time before the respondents sought to
set aside the classification, all tend to buttress the appellant's
case. The appellant cannot, in the circumstances, be faulted for
believing that the base station components that it imported were
correctly classified as base stations and were therefore duty-free.
This was an administrative decision by the respondents which decision
is neither ultra-vires nor unlawful. The submission that in these
circumstances there is no barrier to the application of the doctrine
of estoppel thus finds favour with this Court.
The
fact that the respondents had been making the same classification in
the same way for fifteen years and now sought to reverse the
classification at this stage was not satisfactorily explained away by
the respondents. The respondents sought to take refuge in section 87
of the Customs and Excise Act which states that the Commissioner
shall vary or set aside a classification of goods made in terms of
subsection (1) if he is satisfied that the classification was
incorrect.
It
also appears that section 87(2) does not avail any rescue to the
respondents' conduct and that it would only do so on clear proof
that the classification was incorrect. This, the respondents have not
shown to be the case.
It
is for these reasons that the respondents ought to be estopped from
varying or setting aside the classification of the components as
'base stations' with retrospective effect.
Section
87 requires the second respondent to classify goods in accordance
with any rules set out in the customs tariff, paying due regard to
the Explanatory Notes to the Harmonised Commodity Description and
Coding System issued from time to time by the World Customs
Organisation in Brussels and to decisions of the Harmonised Commodity
Description and Coding System Committee. It was the unchallenged
contention of the appellants that regard being had to these, it is
clear that base stations under Commodity Code 8517.6100 include
unassembled or dissembled parts or components of base stations.
The
conclusion must therefore be made that the classification was done in
terms of the law.
The
third and fourth grounds of appeal having been abandoned, the appeal
must succeed, as it does, on the first and second grounds of appeal
only. No justification has been laid before this Court to depart from
the legal position that costs will follow the cause.
3.
Whether the order of costs made by the court a
quo
ought to be interfered with
The
appellant contends that the court a
quo
erred in not awarding it costs of suit. It is trite that costs are in
the discretion of the court seized with a matter. When mounting a
challenge to the exercise of discretionary power, the law has set a
threshold for a litigant to achieve in order to succeed. This Court
has made pronouncements on this issue in various cases and the
position is well settled that the exercise of discretion may only be
interfered with on limited grounds. See Mackintosh
v Chairman, Environmental Management Committee of the City of Harare
& Anor
SC12-14 and also Barros
& Anor v Chimphondah
1999 (1) ZLR 58 (S).
In
Gasela
v Constituency Elections Officer for Gweru Rural Constituency &
Ors SC54-05,
this Court held that since costs are a discretionary matter for the
court, this Court can
only interfere with the exercise of such a discretion if there has
been a misdirection or the order is so unreasonable that no
reasonable court applying its mind to the facts of the case could
have made such an order.
No
basis has been laid for interference by this Court with that
discretion as exercised by the court a
quo.
The appellant's fifth ground of appeal thus fails. The order of the
court a
quo
on costs will not be interfered with.
DISPOSITION
Accordingly,
it is ordered as follows:
1.
That the appeal succeeds in respect of the first and second grounds
of appeal.
2.
The appeal fails in respect of the fifth ground of appeal.
3.
The judgement of the court a
quo
is set aside and is substituted with the following order:
(a)
The importation of base stations by the appellant was done according
to law.
(b)
The respondents are estopped from reclassifying for duty purposes,
the base station components imported by the appellant and classified
by the second respondent under a duty free tariff.
4.
The respondents shall pay the costs of this appeal.
MALABA
CJ: I
agree
GOWORA
JA: I
agree
Mtetwa
& Nyambirai,
applicant's legal practitioners
Kantor
& Immerman,
first and second respondents' legal practitioners
1.
“The principles on which a seller can be bound by the ostensible
authority of his agent have been set out in a number
of cases which have come before this Court. In Stewart
Zagreb Properties (Pvt) Ltd 1971
1 RLR 180 (RA) at 184C-F; 1971 (2) SA 346 (RA) at 349 F-H, BEADLE CJ
said:
'The
principles on which a seller or a principal can be bound by the
ostensible authority of an agent have been set out recently by this
Court in the case of Reed
NO v Sager's Motors (Pvt) Ltd 1970
(1)
SA
521 (RA). The headnote to that case, which accurately sets out the
judgment, is as follows:
