Victory for Sars after court refuses release of company's attached stock

A company which failed to account for goods it allegedly exported to Mozambique in December 2022 has failed in its bit to partially uplift a lien imposed over its goods by Sars as security for an admitted debt. 

Karino Homeland Distribution contended the value of the goods attached by Sars in terms of the lien far exceeded the debt of over R3m it owed Sars. 

The company sought an interdict in the Western Cape High Court compelling Sars to reduce the lien to an amount sufficient to serve as security for the debt in respect of which it was imposed.   

It also sought an order for Sars to release a portion of the goods in bond to enable it to trade and generate sufficient income to discharge its indebtedness to Sars. Sars opposed the application.   

Karino, which imports luxury liquor brands, had on December 20 2022 imported into South Africa from Namibia a shipment of alcohol that was declared to be in transit to Mozambique. 

The customs value of the consignment was R839,089 and the consignment was never destined for domestic sale or consumption.

The court said as a result, no levies or VAT was raised on import to South Africa. On importation to South Africa, under such circumstances, there is liability for duties and VAT is incurred but is deferred. When proof of due export — in this case to Mozambique — is provided to Sars, such liability is extinguished in terms of the Customs and Excise Act. 

In this case, Sars requested Karino, via e-mail, to provide the consignment's whereabouts and the liquor's full delivery address in Mozambique.  

Karino indicated through its official that it was unaware of the shipment but would check it and revert.  

“Despite several correspondences and e-mail exchanges between the parties, [Karino] failed to provide Sars with proof that the consignment imported from Namibia was indeed exported to Mozambique,” judge James Lekhuleni said in his judgment, passed on Wednesday, dismissing Karino’s application with costs. 

Sars believed Karino diverted the consignment into local consumption in South Africa without duties and VAT being paid to the fiscus. Sars then informed the company in February it intended to hold them liable for duties and VAT totalling R3m.

After the company failed to provide Sars with documents about the shipment, Sars issued a letter of demand for R3m in June. A month later, Sars detained the total stock value of Karino’s goods at a warehouse facility and imposed a lien. The value of the goods subject to the lien was approximately R10m.  

On July 27, Karino, realising that it could not produce proof of exportation of the consignment to Mozambique that Sars required, admitted liability and submitted a proposal request to settle the debt due to Sars in instalments, which Sars rejected. It then approached the court. 

In court, counsel for Karino said the urgency in this matter arose from the company’s need to access the goods to trade during the festive season in December.  

Counsel said should Karino not be able to sell the goods, it will have disastrous consequences for its continued operation.

Lekhuleni said Karino admitted the debt with respect to the Mozambique consignment. “As a result, any goods that have been seized must be held as collateral until the debt is fully settled.”

He said section 114 of the Customs and Excise Act empowers Sars to detain imported or excisable goods which are owned by the person by whom the debt is due.

“Where such detention is effected, the goods are subject to a lien until the debt is paid.”

He said it was concerning to note Karino could not provide proof of the export regarding the Mozambique consignment. He said if this shipment was exported, relevant documents and delivery notes would have been readily available.

“While I appreciate that [Karino] wants to trade to remain commercially viable, I must, however, stress that the applicant must ensure that it pays its taxes or proverbially gives Caesar what belongs to Caesar.” 

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