South Africa’s garment industry has for years complained of being unfairly undermined by cheap imports.
The Supreme Court of Appeal (SCA) in Bloemfontein has upheld an appeal by the SA Revenue Service (SARS) justifying its decision to seize 19 containers of cheap clothing from China.
“There was no credible explanation for the incredibly low prices charged by the suppliers of the goods,” the court ruled on Tuesday. “The goods and the containers in which they were imported were subject to confiscation.”
The ruling means SARS was within its rights to first seize and then detain the containers. It also overturns an earlier High Court decision ordering the release of the containers.
“Unrealistic and inaccessible.”
The tax authority confiscated the goods in 2020 on the grounds that they had clearly been under-invoiced.
He argued that Gauteng-based clearing agent Dragon Freight and six other importers were unable to explain how they were able to source the goods at such low prices.
READ | SARS back in court in battle to seize cheap Chinese clothing imports
But the revenue collection agency’s seizure order was overturned in December 2020, when Justice Selby Baqwa of the North Gauteng High Court in Pretoria ordered the containers released.
Baqwa argued that SARS should have accepted the initial responses given by importers. Subsequent searches he conducted and follow-up questions he asked were “procedurally unfair” or “irrelevant”.
But the SCA concluded that Baqwa’s decision was flawed.
“The High Court erred in ignoring not only the evidence showing that the agreements were false, but also the reasons for the impugned decision, despite citing those reasons verbatim in their judgment.”
In his case, SARS had relied on evidence provided by textile expert Dr Jaywant Irkhede, who noted that importers claimed they were able to source clothing for just 0.21 $ or around R3 per item.
While the importers disputed Irkhede’s calculations, the court found that its evidence “clearly showed that the prices declared by the importers were unrealistic and unattainable”.
Get the biggest business stories sent by e-mail every day of the week.
Go to the Front page of Fin24.