MTSHIYA J: The applicant herein seeks the following
order:
“WHEREUPON after reading the papers
filed of record and hearing Counsel: IT IS ORDERED AND DECLARED THAT:
(a) The
applicant duly paid all import duties and taxes for the motor vehicle:
Make Toyota Landcruiser
Model 200 series
Engine No. IVD 0032379
Chassis No. JTMHV05J004018755
(b) That
the payment of duty released the motor vehicle from any and all encumbrances
connected with the immigrant's rebate.
(c) That
the first respondent is not entitled to demand, seize or impound the motor
vehicle.
(d) That
the first respondent shall not demand the surrender of the motor vehicle to
itself for whatever reason or cause.
(e) That
first respondent shall pay the costs of suit”.
The relief sought is based on the
following background facts which are adequately captured by the respondent in its
heads of argument.
The
applicant, a returning resident, spent six years working in the United Kingdom.
He returned to Zimbabwe
on 8 August 2008. Upon his return to Zimbabwe, the applicant imported a
Toyota Land Cruiser Chassis number JTM05J004018755. On 19 November 2008 the
applicant applied for a returning resident's rebate in respect of the said
vehicle. The applicant, as a returning resident, qualified for the rebate in terms
of s 105 of the Customs and Excise (General) Regulations 2001 (the Regulations).
After complying with all the necessary requirements for the application, the
applicant was granted a rebate by the respondent. The rebate granted was
$5907601660-00 (old currency). This followed a valuation of the vehicle on 28
November 2008 by the respondent. On the basis of a Customs Clearance
Certificate, the vehicle was duly registered in Zimbabwe on 5 December 2008 with
the following endorsement: “Not to be sold or disposed of without authority by
customs before 29 November 2010”. The respondent conducted a physical
examination of the vehicle before it was released to the applicant for his own
use.
On
26 January 2009 the applicant paid the entire rebated duty to the respondent in
local currency. This was in order to free the vehicle from any and all
encumbrances resulting from the endorsement referred to above. The payment, effected
in local currency (Zimbabwe
dollars), was duly accepted by the first respondent.
On
23 February 2009 the first respondent's officers interviewed the applicant
seeking a clarification on a payment for the vehicle made by one Dr E Nhodza
(Nhodza) through transfers from Standard Band Zimbabwe. The applicant agreed that
the payment had indeed been made by Nhodza but explained that the funds in
Nhodza's account were his as per arrangement between the two. The applicant
also advised the first respondent's officers during the interview that the
vehicle was at that time in South
Africa for “an after sales service and check
up”.
On
24 February 2009 the first respondent wrote to the applicant in the following
terms:
“I
refer to the above subject and the interview held in your office on 23 February
2009.
The objective of the audit is to
verify whether you qualify to clear the Motor Vehicle under immigrant rebate in
terms of Customs and Excise (General) Regulations 2001”.
After quoting the relevant sections
of the Regulations the first respondent went on to state as follows:
“The post clearance audit that I am
conducting has revealed your application for immigrant rebate does not satisfy
the conditions as set in the general regulations in that payment for the motor
vehicle is from a different source from what you submitted. This is a serious issue
which demands your urgent attention. The validity of the Barclays Bank
statement is questionable and I am considering using British Revenue Authority
to verify the bank statement.
Please kindly explain the following
audit queries -
1. Why
was Barclays Bank Statement submitted as proof of payment when it does not
relate to the purchase of the motor vehicle cleared under immigrant rebate.
2. Why
did you not disclose at the time of application that the payment for Toyota
Land Cruiser 200 Chassis Number JTM HV05J904014994 was effected by Dr Eric
Nhodza through transfers from Standard Chartered Bank Zimbabwe. Please kindly explain the
relationship between the two accounts.
3. All
correspondences between you or your agent and the supplier indicate that
purchase was done in Zimbabwe
and payments logical done by a person in Zimbabwe.
4. The
car was cleared under immigrant rebate for use in Zimbabwe but at the time of
interview the car was said to be in South Africa where it is used for business
and private purposes in violation of s 105 (3)(b) of the Customs and Excise
(Gen) Regulations 2001.
In conclusion you are advised to
make arrangement to surrender the motor vehicle to my offices on or before 26 February
2009”.
The
above letter prompted the following reply from the applicant's then legal
practitioners:
“We refer to your letter dated the
24th instant which has been handed to us by our client and the
contents therein have been noted. We respectfully are of the view that the
contents of your letter and the sections of law you have quoted have been
overtaken by events. Our client duly paid the rebated duty on the 26th
of January 2009 which duty was to the value of $5 907 601 660-00. This amount
was confirmed to be gracefully settled in the Zimra account on the 27th
January 2009. Attached is the processed Rtgs application form for your perusal.
If you have further concerns
concerning this matter kindly address them to the writer in tandem with the
mandate bestowed upon us.
We duly advise that our client will
take the necessary legal steps to protect its interest should you decide to
seize the said motor vehicle.
We trust this clarifies any issues
you might have entertained concerning this case”
The
above letter did not win favour with the first respondent who, on 9 March 2009,
wrote back to the applicant's legal practitioners in the following terms:
“I
refer to your letter of 9 March 2009.
You are kindly requested to avail
the motor vehicle that bear the Chassis Number JTM055004018755 and the Engine
No. IVD0032379 on or before 20 March 2009 for me to conclude my verifications
and thereafter advise you of my decision.
May your client further submit proof
of the source of funds and mode of payment of the purchase price of the
vehicle. I would appreciate certified copies of the said proof.
Your usual cooperation will be
greatly appreciated.
The applicant did not surrender the
vehicle and on 18 March 2009 the first respondent again addressed the following
letter to the applicant's legal practitioners:
“I
refer to your letter of 17th March 2009.
I hope you are not overlooking the
fact that I carrying out a post clearance. The Exhibit 2 that you attached to
your letter is possibly a copy of the evaluation of the vehicle in question,
the exercise which is subject to post clearance hence the request for the
vehicle for verification with the documents.
Please be advised that the final
position on the payment of duty is intertwined to this verification since there
are underlying conditions for the payment of duty for imports of persons
accorded the immigrants rebate.
It is in your interest that you
avail the motor vehicle and respond to all issues within the time frame
accorded in my mail of 9 March 2009 so that we can come to a logical conclusion
of the audit.
Your urgent co-operation will be
greatly appreciated”.
On 18 June 2009, having noted the
first respondent's stance on the issue of surrendering the vehicle, the
applicant filed this application seeking the relief indicated on page 1 of this
judgment. The first respondent had, up to the time of this application, not
taken any further action.
The
first respondent, in its heads of argument filed by its legal practitioner on 8
September 2009 initially raised a point in
limine. The point was that the applicant should have, in terms of s 196(1)
of the Customs and Excise Act [Cap 23:02]
(“the Act”) given notice of intention to institute legal proceedings against
the first respondent. The said section provides as follows:
“(1) No civil proceedings shall be instituted
against the State, the Commissioner or an officer for anything done or omitted
to be done by the Commissioner or an officer under this Act or any other law
relating to customs and excise until sixty days after notice has been given in
terms of the State Liabilities Act [Cap
8:15]”.
The
applicant countered the point in limine
by correctly stating that the relief sought was declaratory and therefore the
issue of notice was not relevant. I agree. The first respondent, in any case,
did not pursue that argument in court. The point in limine therefore fell way.
In
seeking the declaratory relief the applicant argued that as a returning
resident, he had fully complied with all the requirements of s 105 of the regulations.
The rebated duty had been paid as required by s 105(5) of the Regulations. It
was further submitted that as shown by annexures BB1, BB2 and D the applicant
owned the vehicle at the time of his arrival. The vehicle, it was argued, had
been bought through the use of personal funds as per arrangements between the
applicant and Nhodza. Payment for the vehicle was routed through an authorised
dealer, namely Standard Chartered Bank Zimbabwe Limited as required by exchange
control regulations. It was therefore argued that the first respondent's attempt
to retrospectively alter the position which freed the vehicle from all and any encumbrances
was without basis and should therefore be rejected.
At the hearing of this matter, the
first respondent's legal practitioners conceded that:
(i) the applicant was indeed of returning
resident entitled to a rebate; and
(ii) the applicant had indeed effected payment
of the rebated amount.
The
first respondent, however, insisted that it had a right to carry out a post
importation clearance audit because it was not satisfied that:
(a) the
applicant was the owner of the vehicle at the time of arrival;
(b) the
applicant had purchased the vehicle through his own free funds; and
(c) the applicant was exempted from paying duty in
foreign currency.
As for (c) above, I think the law
stands clearly pronounced in the case of (1)
Zimbabwe Revenue Authority and (2) The Minister of Finance v Murowa Diamonds (Pvt) Ltd SC 41/09 where
GARWE JA confirmed that 'as a matter of law if a Zimbabwean resident obtains
the funds from an authorised dealer then he or she becomes exempt from paying
duty in foreign currency'.
The relevant provision of the law
(i.e. ss 2 and 3 of Customs & Excise (designation of luxury items) Notice
2007, S.I. 80A/07 relied on by the applicant and given a different meaning by
the first respondent provides as follows:
2 (1) Subject to s 3, the Minister of Finance
designates the items of goods whose tariff codes and rates of customs
duty are listed in the first and third columns of the schedule below as luxury items
for the purpose of s 115 (2) of the Act.
(2) Payment of customs duty and
value-added tax on the importation of any item of goods designated as luxury
item under subs (1) shall be payable in United States dollars, Euros or any
other currency denominated under The Exchange Control (General) Order, 1996 (SI
110 of 1996).
3. The following persons shall be
liable to pay duty and value added tax on luxury items in terms of s 2:
(a) every resident of Zimbabwe who imports luxury items
that were purchased using funds obtained otherwise than through an authorised
dealer; and
(b) …”
It is not disputed that in casu the execution of the financial
arrangement between the applicant and Nhodza was through an authorised dealer.
Given the Supreme Court's interpretation
of the above provisions of the law and the acceptance that the applicant was
indeed a returning resident whose financial dealings were through an authorized
dealer, there can therefore be no doubt that the applicant fell within the
ambit of the exemption clause. He was therefore entitled to pay duty in local
currency and that is exactly what he did through lawful channels.
The first respondent submitted that
the applicant did not own the vehicle at the time of his arrival or return to Zimbabwe on 8
August 2008. The first respondent based his argument on the fact that payment,
as evidenced by annexures B and C1-C4, was effected on 15 and 18 August 2008.
This submission by the first respondent is also linked to the submission that
the funds for the purchase of the vehicle did not belong to the applicant. It
was argued the funds belonged to Nhodza.
With regards to the question of
funds I do not find the first respondent's argument sustainable because there
is no suggestion that the applicant handled his funds in an illegal manner. There is also no suggestion that the applicant
lacked free funds. The applicant did not deny that the funds indeed came from
Nhodza's account. The applicant gave the following explanation:
“I also explained that the funds
used to purchase the vehicle were my own and held in account Dr E Nhodza. The
payment indeed was effected through Standard Chartered Bank Zimbabwe, an authorized dealer in
terms of SI 80A/07”.
I do not find anything in the
regulations barring the applicant from entering into legal financial
arrangements with any other person for the importation of the vehicle into Zimbabwe. The
law merely requires the parties to proceed through an authorised dealer. In casu there is no evidence that the
applicant offended the law. I therefore see no reason to reject the applicant's
explanation as given above.
Ownership as indicated in Mazarura v Director of Customs and Excise SC 98/02 and Mahammed v Director of Customs and
Excise 1998(1) ZLR 60 (H) can be acquired in various forms. Annexure D
conveys to me that there was indeed a binding arrangement between the applicant
and the vehicle supplier (ADC (Export) Services Limited). That arrangement
existed at the time the vehicle was imported and indeed it finally arrived under
the applicant's name. I do not therefore see value in the argument that the
vehicle was paid for after his arrival.
The importation of the vehicle by
the applicant brought in a number of players such as Nhodza, authorised dealer
(Standard Chartered Bank), the supplier of the vehicle (ADC (Export) Services
Limited), Shipper (Safmarine) and the first respondent itself. Documentation
from all these players led to the final registration of the vehicle in the
applicant's name on 5 December 2008. There is nothing, throughout the process,
to show that the applicant's ownership of the vehicle was questionable.
The foregoing demonstrates that upon
payment of the rebated amount on 26 January 2009 the applicant, as owner of the
vehicle, was freed from any and all encumbrances relating to the vehicle. The
temporary export of any vehicle outside this country is subject to the control
of the first respondent. It is therefore logical to assume that the first
respondent sanctioned the temporary export of the vehicle when it was taken to South Africa
for 'an after sales service and check up'.
It indeed makes a lot of sense for
the first respondent to have in place a mechanism called post importation
clearance audit. That arrangement ensures that non deserving cases are properly
dealt with. However, in order not to interfere with a citizen's rights arising
from a legal process of the importation goods into the country, such an
exercise should only be undertaken where sustainable and reasonable grounds
exist. Where such grounds exist, it would be counter productive for a court to
grant the relief such as the one sought by the applicant herein. It would in reality
stifle the operations of the first respondent. Accordingly the legitimate
operations of the first respondent should always enjoy the protection of the
law.
However, it is clear to me that in casu the first respondent's
insistence on a post importation clearance audit is based on mere suspicion.
That suspicion is based on its finding that the source of funds used by the
applicant came from Nhodza's account. In its opposing affidavit the first
respondent states, in part,
“This is admitted save to add that
the first respondent's officers subsequently established that the details of
the vehicle paid for Mr Eric Nhodza were exactly the same as those of the
vehicle that was referred to in the proforma invoice that applicant had
submitted with his application for an immigrant's rebate.
The request by the first
respondent's officer was necessitated by the discoveries made as stated above.
… Subsequent investigations by the
first respondent revealed that the vehicle for which the applicant had applied
for and been granted an immigrant rebate had been paid for by Mr Eric Nhodza
through Standard Chartered Bank. The payments had been made on the 15th
and 18 of August 2008, as stated in the letter (attached hereto as Annexure B)
by Mr Nhodza to the car dealer through whom purchase of the vehicle was
facilitated. This was confirmed in the statements of account for Mr Nhodza's account
indicating the dates when the money was transferred from the account. I attach
hereto the statements as Annexure C1 to C4”.
The
above was in line with the import of the first respondent's letter of 24
February 2009. It is the above finding that led to the raising of more issues
which the applicant, in my view, adequately dealt with on 23 February 2009 when
the first respondent's officers interviewed him at his offices. The first
respondent does not deny that prior to the release of the vehicle from its
custody at Bak Storage, a physical examination of the said vehicle was
undertaken and a release note was thereafter issued.
My view is that once proper
explanations had been given by the applicant on all issues that were anchored
on suspicions ignited by the issue of funds used for the purchase of the
vehicle, no sustainable and reasonable grounds remained to warrant the
applicant's surrender of the vehicle to the first respondent. There is no
evidence that the respondent ever cared to interview Nhodza in order to confirm
or deny the applicant's explanation on the issue of funds. The
first respondent should not, in my view, be allowed to deprive the applicant of
the use of the vehicle on the basis of mere suspicions. The applicant, like all
citizens, must have faith and confidence in the first respondent's operations.
This means that in the absence of any sustainable and reasonable grounds, the
first respondent cannot simply withdraw its authorisations which were legitimately
granted in terms of the law.
I therefore come to the conclusion
that this application has merit and the applicant is entitled to the relief he
seeks.
Accordingly
I make the following order:
IT IS HEREBY DECLARED THAT:
(a) The
applicant duly paid all import duties and taxes for the motor vehicle whose
particulars are as follows:
Make Toyota Landcruiser
Model 200 series
Engine No. IVD 0032379
Chassis No. JTMHV05J004018755
(b) The
payment of duty released the motor vehicle from any and all encumbrances
connected with the immigrant's rebate and accordingly the first respondent is
not entitled to demand, seek the surrender, seize or impound the said motor
vehicle from the applicant; and
(c) The
first respondent shall pay the costs of suit.
Muringi Kamdefwere, applicant's legal practitioners
Zimbabwe
Revenue Authority – Legal and Corporate Services Division, 1st respondent's legal practitioners
