On March 11, the South African Revenue Service (Sars) published the judgment in the matter between Terraplas South Africa (the appellant) and the commissioner of Sars (the respondent). The matter was heard on August 1, 2012, and judgment was delivered on February 20, 2013.

The matter pertained to the classification of plastic tiles, described as pitch protection titles or temporary drivable roadway tiles. The tiles are 1 m2 in area, and are designed to clip together and to cover and protect the turf floor in stadiums when the stadiums are used for nonsporting events.

Initially, Sars classified the plastic tiles under tariff heading 3918, which covers “plastics and articles thereof; waste, parings and scrap; semimanufactures; articles of floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles; wall or ceiling coverings of plastics”. The commissioner of Sars accepted that the products were ‘floor coverings’.

The dispute arose with regard to whether tariff subheading 3918.90.20, encompassing “floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles; wall or ceiling coverings of plastics; of other plastics; of polyethylene terephthalates, not self-adhesive”, or tariff subheading 3918.90.40, encompassing “floor coverings of plastics, whether or not self-adhesive, in rolls or in the form of tiles; wall or ceiling coverings of plastics; of other plastics; of other condensation, polycondensation or polyaddition products”, applied.

Why did the dispute arise? Could it be because the prime motivation was to ensure that the trade statistics (import statistics in this instance) would then be accurate? Certainly not. The cause of the dispute was, essentially, financial – the duti- ability, or rate of customs duty, applicable to the imported goods, to be exact.

(The rates of customs duty quoted in this article are those applicable on March 11, 2013.)

The rate of customs duty for tariff sub- heading 3918.90.20 is zero, irrespective of the country of origin of the imported product, namely general (also known as most favoured nation (MFN), the European Union (EU), the European Free Trade Association (EFTA) and the Southern African Develop- ment Community (SADC). The general and EFTA rates of customs duty for tariff subheading 3918.90.40 are 10% ad valorem and 2.5% ad valorem respectively, while the EU and SADC rate of customs duty is zero.

Following an internal administrative appeal, Sars amended the tariff classification to tariff subheading 3926.90.90, covering “other articles of plastics and articles of other materials of headings 39.01 to 39.14: other: other”, which resulted in the general and EFTA rates of customs duty changing to 20% ad valorem and 11% ad valorem respectively, while the EU and SADC rate of customs duty remained zero.

This resulted in an appeal to the commissioner’s national appeals committee, which confirmed tariff subheading 3926.90.90 as being applicable, resulting in the initiation of legal action by Terraplas South Africa.

The judgment considered the application and use of the titles, which resulted in deliberations on the definition of ‘floor’ and ‘floor covering’.

According to the judgment, the commissioner of Sars’s tariff determination is predicated on two premises, namely that the tiles are not a ‘floor covering’ and that the tiles are not a ‘floor covering’ but a ‘floor’.

After due consideration, it was determined that the most appropriate tariff subheading was 3918.90.40, resulting in a preferential rate of customs duty of zero applying to imports from the EU and the SADC, while imports from the EFTA attracted a rate of customs duty of 2.5% ad valorem, with all other imports (under general) liable for a rate of customs duty of 10% ad valorem.

With the tariff determination (classification) tested in court, what other tariff consideration is possibly available to the appellant? Well, a tariff application to the International Trade Administration Commission of South Africa (Itac) for a reduction in the general rate of customs duty could be considered. A possible challenge in this instance would be the fact that it is a specific South African tariff subheading (eight digits) and an ‘other:other’ tariff subheading that, by implication, includes numerous other products. Alter- natively, imports could be sourced from another country of origin, since imports from the EU and the SADC enjoy a preferential rate of customs duty, while those from the EFTA attract a customs duty of 2.5% ad valorem.

Salmon and Trout Review
In the Government Gazette of March 8, Itac informed of the outcome of a review of the tariff structure for salmon and trout, which had been approved by the Minister of Trade and Industry on February 21. The review is now available in the form of a report.

Chicken Antidumping
Itac has informed, by means of a notice published in the Government Gazette on March 8, of the final decision in the investigation into the alleged dumping of frozen meat of fowls of the species gallus domesticus (whole birds and boneless cuts) originating in or imported from Brazil.

The Minister of Trade and Industry rejected Itac’s recommendation for the imposition of definitive antidumping duties, but, besides others, considered that an investigation into the increase in the general rate of customs MFN applied rate of customs duty would be a more appropriate consideration.

Frozen Potato Chips Safeguard
In the Government Gazette dated March 8, Itac published two notices, namely the termination of the investigation for remedial action in the form of a safeguard against the increased imports of frozen potato chips, classifiable under tariff subheading 2004.10.90, and the initiation of the investigation for remedial action in the form of a safeguard against the increased imports of potato chips.
The latter application was lodged by McCain and was supported by Nature’s Choice Products and Lamberts Bay Foods.
Comment is due by May 8.

Special Economic Zones Bill
The Department of Trade and Industry has informed, by means of a Government Gazette notice, that the Minister of Trade and Industry intends to introduce the Special Economic Zones Bill during March.