Media Summary – COMMISSIONER, SOUTH AFRICAN REVENUE SERVICE v MULTICHOICE AFRICA (PTY) LTD AND ANOTHER

1. The SCA today held that for purposes of tariff classification in terms of Schedule 1 to the Customs and Excise Act, 91 of 1964, a decoder has a principal function which is the reception of a television signal. It should therefore be classified under tariff heading 8528.12.90 of Part 1 of the said Schedule.

2. The Commissioner for Customs and Excise had classified the decoder under the aforementioned heading, but on appeal to the North Gauteng High Court, Pretoria, the determination was set aside and the Commissioner was ordered to reclassify the decoder under tariff heading 8479.89.90. On appeal, the SCA held that tariff heading 8479.89.90 was not appropriate, since on the facts agreed between the parties’ respective experts, decoders cannot be mechanical devices since they do not have any moving parts. Tariff heading 8479.89.90 applies to machines and mechanical appliances.

3. The SCA held further that the decoder can also not be classified under Tariff Heading 85.43 since this heading applies to machines and devices with individual functions which a decoder is not, as conceded by one of the respondents’ expert witnesses.

4. The SCA held that an ad valorem excise duty of 7% is payable on the decoder in terms of Tariff Item 124.75 of Part 2B of Schedule 1 to the aforementioned Act. It held that the word ‘reproducing’ in the Item is a clear mistake on the part of the Legislature which, if literally interpreted, leads to a glaring absurdity and repugnance in the enactment. The word ‘reproducing’ should therefore read ‘reception’ in Item 124.75.

5. The appeal by the Commissioner was therefore upheld with costs and the Commissioner’s original determination was confirmed.

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