This
is an appeal against the judgment of the Fiscal Appeal Court setting
aside the classification and revaluation by the appellant's
Commissioner of Customs and Excise of a 2006 white box van Iveco
40C14 motor vehicle.
The
respondent imported the motor vehicle in question through the
Plumtree Border Post on 23 August 2013. Its clearing agent declared
the motor vehicle as a “2006 IVECO DAILY BOX VAN MODIFIED AS AN
AMBULANCE”. That much is not in dispute. What is in dispute is the
proper classification of the motor vehicle in question for the
purposes of calculating customs duty payable to the fiscus.
The
customs officer initially classified the motor vehicle as a minibus
falling under Customs Tariff heading 87.02 and revalued it upwards in
terms of section 111 of the Customs and Excise Act [Chapter
23:02].
Dissatisfied
with that assessment and revaluation, the respondent appealed to the
Regional Manager who held that the customs officer's classification
was wrong. He accordingly re-classified it as a goods carrying motor
vehicle under tariff heading 87.04 of the Customs and Excise (Tariff)
Notice 2012 Statutory Instrument 112 of 2012. The respondent again
disputed that classification and revaluation on the basis that what
it had imported was an ambulance passenger carrying motor vehicle
which should have been classified under tariff heading 87.03 of the
above Statutory Instrument, S.I.112 of 2012. It then appealed to the
Commissioner without success.
Aggrieved
by the dismissal of its appeal by the Commissioner, the respondent
successfully appealed to the Fiscal Appeal Court, which, on 10
November 2015, issued the following order:
“I
am satisfied that the Commissioner wrongly classified the motor
vehicle under heading 87.04. He should have classified it under
heading 87.03. Accordingly, it is ordered that:
(a)
The
appeal is allowed.
(b)
The classification imposed by the Commissioner of Customs and Excise
is set aside.
(c)
The matter is remitted back (sic) to the Commissioner for the
reclassification of the motor vehicle in accordance with the terms of
this judgment.
(d)
Each
party shall bear its own costs.”
The
crisp issue for determination is whether the court a
quo
correctly found that the motor vehicle in issue is an ambulance which
is a passenger carrying motor vehicle falling under tariff heading
87.03 and not a goods carrying motor vehicle falling under tariff
heading 87.04.
The
classification of goods for purposes of duty is governed by section
87 of the Customs and Excise Act [Chapter
23:02]
which provides as follows:
“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,
sub-headings 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.
[Subsection
amended by Act 29 of 1998 and by Act 17 of 1999]
(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.”
It
is clear that the Commissioner and his subordinates are strictly
bound by the provisions of section 87 of the Customs and Excise Act
and the relevant rules. For that reason, they have no discretion
outside the section as read with the prescribed rules. It therefore
follows that the Commissioner's classification of goods must fall
squarely within the dictates of section 87 of the Customs and Excise
Act and the rules; doing otherwise would be illegal.
Heading
87.03 provides for the description of motor vehicles falling under
that heading as follows:
“87.03
–
Motor
cars and other motor vehicles principally designed for the transport
of persons (other than those of heading 87.02) including station
wagons and racing cars…,.”
The
heading also includes:
“(1)
Motor cars (e.g.
limousines, taxis, sports cars and racing cars).
(2)
Specialised transport vehicles such as ambulances, prison vans and
hearses.
…,.
(6)…,.”
The
classification of certain motor vehicles in this heading is
determined by certain features which indicate that the vehicles are
principally designed for the transport of persons rather than the
transport of goods (heading
87.04). These
features are especially helpful in determining the classification of
motor vehicles which generally have a gross vehicle weight rating of
less than 5 tonnes and which have a single enclosed interior space
comprising an area for the driver and passengers and another area
that may be used for the transport of both persons and goods.
Included in this category of motor vehicles are those commonly known
as “multiple purpose” vehicles (e.g. van-type vehicles, sport
utility vehicles, certain pick-up vehicles). The following features
are indicative of the design characteristics generally applicable to
the vehicles which fall in this heading:
(a)
Presence of windows along the two side panels;
(b)
Presence of sliding, swing-out or lift-up door; or
(c)
Doors with windows on the side panel or in the rear;
(d)
Absence
of a permanent panel or barrier between the area for the driver and
front passengers and the rear area that may be used for the transport
of both persons and goods.
(e)
Presence
of comfort features and interior finish and fittings throughout the
vehicle interior that are associated with the passenger areas of
vehicles (e.g., floor carpeting, ventilation, interior lighting, ash
trays).
It
was the respondent's case that it imported the vehicle in question
as a decommissioned ambulance, intact, as it was principally designed
to convey the sick to and from hospital. It was also used to ferry
disabled persons and critically ill patients on life support. In
proof whereof the respondent relied on the commercial invoice filed
of record.
At
page 50 of the record of proceedings, the importer of the motor
vehicle, Jetset Freight Services P/L, gave a vivid description of the
motor vehicle in graphic terms depicting it as an ambulance as
follows:
“2006
IVECO DAILY 40V14 BOX VAN MODIFIED INTO AN AMBULANCE
Vehicle
is now fitted with a compressor to purify oxygen and fitted with
pipes to distribute oxygen through to the patients on board. It has
two outlets (valves) which pass through to the oxygen masks and to
the patients.
(i)
Vehicle
has 6 seats for patients and the driver's seat is the seventh. It
also has 2 pillars for holding a stretcher when transporting
bed-ridden patients.
(ii)
Vehicle has drawers which serve as vomit bags, glove (sic) bags, and
disinfectant bags.
(iii)
Vehicle
has a rack above the driver's head which holds the stretcher.
(iv)
Vehicle is also fitted with machine to lift wheel chairs and
stretchers for the bed ridden.
(v)
Vehicle is fitted with glass windows on the sides and on the rear.
(vi)
The weight of the vehicle is given as 4,800kgs.”
The
above description, coupled with pictures of the disputed motor
vehicle, chief among them is annexure 'F' at page 37 of the
record of proceedings depicting the interior of the motor vehicle
adorned with the convenient features and passenger seats installed
for the comfort of passengers.
Undoubtedly,
the description given by the importer, and backed up by pictures of
the motor vehicle, fits that of an ambulance and the prescribed
description of motor vehicles falling under heading 87.03.
On
the evidence placed before the court a
quo,
it is not in dispute that the motor vehicle in question was
manufactured as a box van but was later modified into an ambulance.
At the time of assessment it had been modified into an ambulance and
it still bore the modified principal design that made it fit the
description of an ambulance.
The
appellant's contention is that the respondent did not import an
ambulance because its principal design, at the time of manufacture,
was not that of an ambulance but a box van suitable for the carriage
of goods falling under tariff code 87.04. In developing its argument,
the appellant forcefully submitted, in its heads of argument, that;
“Having
found that the motor vehicle was manufactured as a box van, the
inescapable conclusion was that it was principally designed for the
carriage of goods. The subsequent modification did not matter in the
principle design of the motor vehicle.”
The
appellant agued, further, that because heading 87.04 provides that it
applies to all types of vans, the 2006 white box van Iveco 40C14
motor vehicle must be classified under tariff code 87.04.
On
the other hand, the respondent's contention is that it imported an
ambulance because at the time of presentation and assessment by the
customs officials it had been modified into an ambulance and it still
bore the features of an ambulance which is a passenger-carrying motor
vehicle falling under tariff code 87.03.
The
question to be answered is; what did the respondent import on the
23rd
of
August 2013?
It
is common cause that the respondent imported a motor vehicle
manufactured as a box van suitable for the conveyance of goods that
had been subsequently converted into an ambulance for the conveyance
of sick people and the disabled. The respondent bought the motor
vehicle long after it had ceased to be a box van and was now an
ambulance.
In
the absence of fraud, common sense dictates that the respondent could
not possibly have imported a box van because, as at 23 August 2013,
the motor vehicle had ceased to be a box van and was now an
ambulance. A perusal of the record of proceedings shows that apart
from mere speculation and conjecture, the appellant came nowhere near
establishing that the respondent had fraudulently converted a box van
into an ambulance for purposes of avoiding duty. For the stronger
reason, the appellant was unable to rebut the respondent's
assertion that the motor vehicle had been used as an ambulance in its
country of origin and was imported as such, bearing the features of
an ambulance such as oxygen and stretcher handling facilities.
The
appellant's interpretation of the law and classification of the
motor vehicle in question is problematic in that it fails to
recognise fundamental change. One cannot continue to call a hen an
egg simply because at one time it was an egg; nor can a man be called
a baby simply because he was born as a baby. Likewise the
Commissioner cannot continue to call a motor vehicle a box van after
it has been converted into an ambulance.
The
contra
fiscum
rule
prescribes that the meaning that benefits the individual against the
State Treasury should be adopted. See Sekrtaris
Van Binnelandse Inkomste v Raubenheiner
1969 (4) SA 314 (A). Likewise, in the case of S
v Galguits Garage (Pty) Ltd
1969 (2) 459 (A), the court held that in cases of doubt, the most
favourable interpretation to the tax payer should be adopted.
The
mere fact that the Customs Officer, the Regional Manager, the
Commissioner and the respondent could not agree as to which category
the imported vehicle fell casts doubt on the customs officials'
classification of the motor vehicle. The court a
quo
was therefore undoubtedly correct in interpreting the law in favour
of the respondent.
In
conclusion, I am constrained to remark that in cases of doubt the
main function of customs officials is not to make extra money for the
State but to facilitate trade, hence doubts must be resolved in
favour of the taxpayer.
For
the foregoing reasons, the learned judge in the court a
quo's
finding that the motor vehicle presented at the Plumtree border post,
on 23 August 2013, by the respondent, is an ambulance falling under
tariff code 87.03 is beyond reproach. That being the case, the appeal
can only fail.
It
is accordingly ordered that the appeal be and is hereby dismissed
with costs.
