The Pretoria division of the High Court on 14 February 2025 delivered judgment in Woods Warehousing (Pty) Ltd v Commissioner for the South African Revenue Services and Others. The judgment is of interest to licensees of customs and excise warehouses and addresses the release of goods to removers of goods in bond. 

Woods, the applicant, was licensed to operate a customs and excise storage warehouse. It sought to review and set aside four letters of demand issued against it by the South African Revenue Services (SARS). SARS demanded approximately R7 million from the applicant, being the value of missing goods, plus further unpaid duties. The demand was based on the applicant’s failure to demonstrate, by means of due entry, that goods removed from its warehouse for export were removed by a licensed remover of goods in bond and were delivered in terms of such entry or were exported.

A remover of goods in bond was reflected on the relevant bills of entry (i.e. the SAD505) (the authorised haulier). The applicant then reported to the importer and the clearing agent that a different haulier (the unauthorised haulier) had arrived at its warehouse to uplift the goods. Following the applicant’s notification in this regard, it appears that the records of the importer and the clearing agent were amended to reflect the details of the unauthorised haulier. The goods were then released by the applicant to the unauthorised haulier. The goods could not be traced after they were removed by the unauthorised haulier.

During the SARS investigation, it initially appeared that the authorised haulier had provided the unauthorised haulier with its bond code. However, the authorised haulier later denied this and denied that it had any knowledge of the transaction. 

SARS took the position that the applicant had released goods to an unauthorised person. It recorded that the SARS entry and exit system through which export entries are acquitted at the border, reflected the status, “Manual manifest ready to mark on arrival”, which meant that the goods had not exited the border; that the goods were diverted; and the goods remain un-acquitted.

SARS found that liability on the part of the applicant as licensee had not ceased as there was no proof that the goods had been duly entered and delivered or exported in terms of such entry. As the goods could not be found, the applicant became liable for an amount equal to the value for duty purposes or the export value of such goods, plus any unpaid duty.  

SARS took the view that the informal amendment that was effected between the applicant, the importer and the clearing agent was a subversion of the correct process and that a voucher of correction ought to have been formally passed to reflect the change in the details of the remover of goods in bond, in order that SARS’ records would also be updated.

The Court emphasised that the Act requires the licensee of the warehouse to prove that the goods were either delivered in terms of the bills of entry or that the goods had been exported.

By releasing the goods to the unauthorised haulier, being a different haulier to that recorded on the bills of entry, the Court found that the goods had been diverted and had therefore been dealt with contrary to the provisions of the Act. Accordingly, the goods were liable for forfeiture and the review of the letter of demand was unsuccessful.

In considering the liability of the applicant, the Court focused on the duties of a licensee and highlighted that “Imported goods are thus meant only ever to leave a controlled environment upon due entry for home consumption with payment of duty or (upon provision of security) for removal in bond or export.” It emphasised that the Customs and Excise Act is underpinned by a system of self-regulation. 

The judgment contains a useful exposition of the duties of a licensee and a reminder of the strict obligations that arise on the part of a licensee.

The judgment can be downloaded here.