The Commissioner for the South African Revenue Service v Encarnaçâo N.O.

A consignment of imported cigarettes destined for the DA Encarnacao Trust was stolen during an armed robbery before the goods entered the South African market. SARS notified the trustees that they were liable for outstanding customs duties and VAT on the stolen goods. The trustees disputed liability, contending that they qualified for a full rebate of customs duty under Rebate item 412.09 in Schedule 4/Part 1 of the Customs and Excise Act 91 of 1904, on the basis that the goods did not enter into consumption. The Gauteng Division of the High Court (Pretoria) found in favour of the trust, and SARS appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, and the High Court’s order confirming the trust’s entitlement to a full rebate of customs duty was upheld.

The case clarifies the interpretation of Rebate item 412.09 in the Customs and Excise Act and confirms that imported goods stolen through vis major before entering consumption may qualify for a full customs duty rebate. It provides important guidance on the treatment of losses caused by armed robbery in customs law.