Distell Ltd and Another v Commissioner of South African Revenue Service (416/09) [2010] ZASCA 103; [2011] 1 All SA 225 (SCA); 73 SATC 148 (13 September 2010)

Distell Ltd and Another v Commissioner of South African Revenue Service (416/09) [2010] ZASCA 103; [2011] 1 All SA 225 (SCA); 73 SATC 148 (13 September 2010)

The Supreme Court of Appeal held that wine coolers are not 'other fermented beverages' as contemplated by the first part of tariff heading 22.06, since they are not the end product of a fermentation process but rather mixtures of wine (a fermented beverage) and water (a non-alcoholic beverage). The recipes and manufacturing process show that fermentation does not occur in the creation of the coolers. The Court found that water qualifies as a 'non-alcoholic beverage' within the context of the tariff headings, supported by dictionary definitions, explanatory notes, and commercial rationale. Accordingly, prior to 18 February 2004, only the wine portion used in the manufacture of wine coolers...

Citation
[2010] ZASCA 103
Parties
Appellant: Distell Limited; Appellant: Stellenbosch Farmers' Winery Limited; Respondent: Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
13 September 2010
Case Number
416/09
Procedural Posture
Civil Appeal / Appeal From Full Court Decision; Supreme Court of Appeal Judgment
Outcome
Appeal upheld; Commissioner’s determinations set aside and corrected; costs awarded to appellants including costs of two counsel.
Judges
Harms, Heher, Mhlantla, Ebrahim, K Pillay
Legal Topics
Customs and Excise Act, Tariff Classification, Excise Duty, Rebate Entitlement, Interpretation of Statutes
Tax Law Commercial and Corporate Customs and Excise Act Tariff Classification Excise Duty Rebate Entitlement Interpretation of Statutes

Case Brief

Summary, issues, holding and outcome

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Parties

Distell Limited

Appellant

Stellenbosch Farmers' Winery Limited

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From Full Court Decision; Supreme Court of Appeal Judgment

Legal Issues

  1. 1 Whether wine coolers are 'other fermented beverages' or 'mixtures of fermented beverages and non-alcoholic beverages' for excise duty purposes.
  2. 2 Whether water qualifies as a 'non-alcoholic beverage' under the relevant tariff headings.
  3. 3 Whether the Commissioner’s determinations regarding excise classification were substantively correct.

Ratio Decidendi

The Supreme Court of Appeal held that wine coolers are not 'other fermented beverages' as contemplated by the first part of tariff heading 22.06, since they are not the end product of a fermentation process but rather mixtures of wine (a fermented beverage) and water (a non-alcoholic beverage). The recipes and manufacturing process show that fermentation does not occur in the creation of the coolers. The Court found that water qualifies as a 'non-alcoholic beverage' within the context of the tariff headings, supported by dictionary definitions, explanatory notes, and commercial rationale. Accordingly, prior to 18 February 2004, only the wine portion used in the manufacture of wine coolers...

Court Disposition

Appeal upheld; Commissioner’s determinations set aside and corrected; costs awarded to appellants including costs of two counsel.

Orders

  • The appeal succeeds with costs including the costs of two counsel.
  • The order of the court a quo is set aside and replaced by the specified corrected determinations regarding the excise classification of wine coolers, Bernini Sparkling Grape Beverage, and Crown Premium.