Distell Ltd v Commissioner for the South African Revenue Services (526/2011) [2012] ZASCA 88; 2012 (5) SA 450 (SCA); 74 SATC 272 (31 May 2012)

Distell Ltd v Commissioner for the South African Revenue Services (526/2011) [2012] ZASCA 88; 2012 (5) SA 450 (SCA); 74 SATC 272 (31 May 2012)

The court held that the beverages produced by Distell, after undergoing a stripping process that removes flavour and aroma, and subsequent fortification with cane spirits, sweeteners, flavourants, and colourants, lose their essential vinous character. Expert evidence established that the stripped wine is neutral and does not contribute to the organoleptic properties of the final products. The essential character of the beverages is determined by the spirits, not the wine. The products do not qualify as wine, vermouth, or mixtures of fermented and non-alcoholic beverages under tariff headings 22.04, 22.05, or 22.06. Instead, they are spirituous beverages classifiable under tariff heading...

Citation
[2012] ZASCA 88
Parties
Appellant: Distell Limited; Respondent: Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
31 May 2012
Case Number
526/2011
Procedural Posture
Civil Appeal / Appeal From North Gauteng High Court, Pretoria
Outcome
Appeal dismissed with costs, including the costs of two counsel.
Judges
Navsa, Heher, Van Heerden
Legal Topics
Customs and Excise Duty, Tariff Classification, Harmonised System Interpretation, Excise Liability
Tax Law Commercial and Corporate Customs and Excise Duty Tariff Classification Harmonised System Interpretation Excise Liability

Case Brief

Summary, issues, holding and outcome

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Parties

Distell Limited

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From North Gauteng High Court, Pretoria

Legal Issues

  1. 1 Whether the beverages produced by Distell are to be classified as fermented or spirituous (distilled) under the Customs and Excise Act 91 of 1964.
  2. 2 Which tariff heading under the Harmonised System is applicable to the products in question: 22.04, 22.05, 22.06, or 22.08.
  3. 3 Whether the stripping and fortification process removes the essential vinous character of the base wine.

Ratio Decidendi

The court held that the beverages produced by Distell, after undergoing a stripping process that removes flavour and aroma, and subsequent fortification with cane spirits, sweeteners, flavourants, and colourants, lose their essential vinous character. Expert evidence established that the stripped wine is neutral and does not contribute to the organoleptic properties of the final products. The essential character of the beverages is determined by the spirits, not the wine. The products do not qualify as wine, vermouth, or mixtures of fermented and non-alcoholic beverages under tariff headings 22.04, 22.05, or 22.06. Instead, they are spirituous beverages classifiable under tariff heading...

Court Disposition

Appeal dismissed with costs, including the costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.