There are various mechanisms to resolve disputes with SARS' Customs and Excise divisions. In this article, we consider the internal administrative appeal.
SARS' Customs and Excise divisions are responsible for administering relevant aspects of the Customs and Excise Act, 1964 (Customs Act). The Customs division's responsibilities include exercising strict control over the movement of goods and people into and out of South Africa, as well as levying and collecting customs duties (primarily on imported goods). The Excise division's responsibilities include levying and collecting excise duties on specific categories of imported and locally-manufactured goods.
The Customs Act grants significant enforcement powers to these SARS divisions, and disputes with SARS in this sphere can be extremely time-consuming and onerous. Licensed clearing agents offer crucial services to individuals and corporates affected by the Customs Act (including importers and manufacturers of excisable goods). Their services include assistance with clearing goods for import and export, procuring the release of detained goods, maintaining general customs and excise compliance, and facilitating the payment of duties and levies imposed by the Customs Act. However, significant customs and excise disputes with SARS should be referred to expert legal advisers as early as possible.
In this article, we briefly consider the main dispute resolution mechanism provided by the Customs Act, namely the internal administrative appeal. In subsequent instalments we will consider the alternative dispute resolution process, other mechanisms that may be useful in a customs and excise dispute (the request for reasons, the suspension application, and settlement by way of compromise), and customs and excise litigation against SARS.
As a basic practical example, consider a scenario where SARS concludes, following a compliance audit, that an importer has underpaid customs duty on the importation of a specified product into South Africa. SARS will notify the importer of its intention to demand the underpaid duties. Such a finding could be based on, for example, an incorrect valuation of the imported product, failure to retain and submit sufficient supporting documents, or an incorrect classification of the imported product. The importer ("aggrieved person", which might be an individual or a corporate entity) may, in turn, have valid grounds to dispute the SARS finding. These could include that it did in fact satisfy all documentary requirements, that its valuation or classification was correct, or that SARS' finding is based on factual or legal errors.
Whatever the grounds for objection, the aggrieved person can now use the internal dispute resolution remedies provided under the Customs Act. The first step is typically to make detailed legal submissions to SARS in response to the notice of intention to assess. The goal is to convince SARS that the notice of intention should be withdrawn, and no amount demanded. This is an appropriate time to instruct an expert legal adviser to assist with the dispute. If SARS does not accept those submissions, it will issue a letter of demand. At that point the debt becomes due and payable, unless a formal suspension application is submitted to and granted by SARS (a mechanism that we will consider in a subsequent instalment). The aggrieved person may then prepare and submit an internal administrative appeal in terms of Part A of Chapter XA of the Customs Act.
The internal administrative appeal should set out detailed legal arguments in support of the aggrieved person's case and should be carefully drafted as a possible precursor to litigation. This reinforces the point made earlier, namely that customs and excise disputes with SARS should be referred to expert legal advisers at the earliest possible time. Doing so is the most effective means to ensure that an aggrieved person's rights are adequately protected, and strategic missteps avoided (such as omitting crucial evidence, making legally incorrect submissions, or not using all appropriate available remedies).
If the appeal complies with the relevant rules and is accepted as valid and complete, SARS will refer it to the appropriate internal administrative appeal committee for consideration. The appeal committee may require additional information or even invite oral submissions. Usually, it will consider the appeal as submitted and issue a written decision in due course.
In a best-case scenario for the aggrieved person, the appeal committee may uphold the appeal and thus dispose of the matter (which may trigger a refund of the amount originally demanded and paid). Such a decision may be wholly or partially in favour of the aggrieved person, and it may overturn all or part of SARS' original demand. But if any amount is still found to be payable, the aggrieved person must consider whether to abide by that decision or take further steps to resolve the dispute.
If the aggrieved person is not satisfied with the appeal decision, they may apply to SARS for the matter to be resolved by means of alternative dispute resolution, or pursue one or more of the other interim mechanisms provided under the Customs Act, or proceed to litigation. As mentioned above, these topics will be covered in subsequent instalments.