Commissioner for the South African Revenue Service v Levi Strauss South Africa (Pty) Ltd

Levi Strauss South Africa (Pty) Ltd (Levi SA), a subsidiary of the Levi Strauss group, imported clothing into South Africa between 2010 and 2014, largely from manufacturers in Mauritius and Madagascar, both members of the Southern African Development Community (SADC). Levi SA claimed preferential customs duty (0%) under the SADC Protocol on Trade, supported by SADC certificates of origin. SARS conducted an audit and in March 2014 determined that the certificates of origin were invalid because, under a revised procurement structure, the goods were sold to Levi SA by a related Hong Kong company (Levi GTC), even though they were physically shipped directly from SADC producers to South Africa. SARS also determined that certain commissions paid to a related buying agent (Levi APD) and royalties paid under a trademark licence agreement should be added to the transaction value of the imported goods for customs and VAT purposes. Levi SA appealed under sections 49(7) and 65(6) of the Customs and Excise Act 91 of 1964. The High Court upheld Levi SA’s appeals in full, and SARS appealed to the Supreme Court of Appeal.

The appeal by SARS was upheld with costs. The High Court order was set aside and replaced with an order upholding Levi SA’s appeal against the origin determination, setting aside SARS’s determination and demand for payment of R52 466 124.19 and R87 240 129.71, dismissing the remainder of the s 65(6) appeal, and ordering Levi SA to pay SARS’s costs in respect of the dismissed portion.

The judgment provides authoritative guidance on the interpretation of the SADC Rules of Origin, confirming that origin depends on the physical movement and production of goods rather than the commercial structure of multinational supply chains. It limits SARS’s ability to deny preferential trade benefits based on intra‑group arrangements and clarifies the correct approach to certificates of origin in SADC trade. The case is significant for importers using regional trade agreements and for the administration of customs law in South Africa.