Distell Limited and Stellenbosch Farmers’ Winery Limited v Commissioner for the South African Revenue Service

Distell Limited and Stellenbosch Farmers’ Winery Limited manufactured and sold various ‘wine cooler’ products consisting of wine mixed with water, flavouring and sweetening agents, and carbonated. The Commissioner for the South African Revenue Service (SARS) issued a series of tariff determinations under the Customs and Excise Act 91 of 1964 classifying these products for excise duty purposes. Initially SARS treated the products as mixtures of fermented beverages and non‑alcoholic beverages under tariff heading (TH) 22.06, later changing its position and classifying them as ‘other fermented beverages’. This resulted in higher excise duties being levied on the full volume of the coolers rather than only on the wine component. Distell and SFW challenged the Commissioner’s determinations, seeking correction of the tariff classifications both before and after amendments to Part 2A of Schedule 1 effective 18 February 2004.

The appeal succeeded with costs. The orders of the court a quo were set aside and replaced. The Commissioner’s determinations were corrected to reflect that prior to 18 February 2004 only the wine portion of the wine coolers was liable to excise duty under item 104.15.10, and that after the amendment the wine coolers were classifiable under item 104.17.22 as mixtures of fermented beverages and non‑alcoholic beverages.

This case is a leading South African authority on tariff classification under the Customs and Excise Act, particularly regarding composite beverages and the interpretation of tariff heading 22.06. It clarifies that water constitutes a non‑alcoholic beverage for tariff purposes and affirms the structured approach to classification using the Harmonized System, influencing excise liability and rebate claims in the beverage industry.