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Association of Meat Importers v ITAC (769, 770, 771/12) [2013] ZASCA 108 (13 SEPTEMBER 2013)

23 September 2013   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Introduction

Anti-dumping duties imposed under the Customs and Excise Act 91 of 1964 – termination – effect of World Trade Organisation Agreement – effect of regulations promulgated under the International Trade Administration Act 71 of 2002.

This appeal concerns the validity of various anti-dumping duties imposed under the Customs and Excise Act 91 of 1964. The proceedings were prompted by the decision of this court in Progress Office Machines CC v The South African Revenue Service, which has caused some concern to the customs and revenue authorities. They say the decision has significant and far-reaching implications for the discharge of their statutory powers and functions, and that its implications for South Africa‘s international obligations are considerable. Those sentiments are echoed in a critical commentary on the case by G F Brink, who describes it as having ‗far-reaching implications for the administration of the law of unfair international trade‘. The reason for the present proceedings, say the authorities, rather euphemistically, was to regularise the position. The judge thought it was more accurate to say its purpose was to overcome the consequences of that decision.

Facts

Goods upon which anti-dumping duties are imposed are specified in Schedule 2 to the Customs and Excise Act. Under s 55(1) goods specified in that schedule are, upon entry for home consumption, liable to the specified anti-dumping duty if they are imported from a supplier, or originate in a territory, specified in respect of the goods.

The Board on Tariffs and Trade was formerly the body charged with investigating dumping. This case concerns a number of anti-dumping duties that were imposed by amendment of Schedule 2 before the International Trade Administration Act came into effect. Only three were the subject of contestation before us although the others are also relevant to the order that was made.

The first is an anti-dumping duty imposed on chicken meat portions emanating from the United States of America. An investigation into dumping was initiated by the former Board on Tariffs and Trade on 5 November 199915 and a provisional payment was imposed on 5 July 2000. The anti-dumping duty was introduced into Schedule 2, with effect from that date, by notice published in the Gazette on 27 December 2000.17 A sunset review of the anti-dumping duty was initiated by ITAC on 16 September 2005, and on 27 October 2006 ITAC gave notice in the Gazette that it had recommended that the anti-dumping duty be maintained, and that the Minister of Trade and Industry had approved the recommendation.

The second is an anti-dumping duty imposed on garlic imported from China after an investigation by the former Board on Tariffs and Trade. A provisional payment was imposed on 24 March 2000. The anti-dumping duty was introduced into Schedule 2, with effect from that date, by notice published in the Gazette on 20 October 2000. A sunset review of the anti-dumping duty was initiated by ITAC on 23 September 2005, ITAC gave notice in the Gazette on 10 March 2006 that it had recommended that the anti-dumping duty be maintained, and that the Minister of Trade and Industry had approved the recommendation.

What the judge has called the third is really more than one duty but because they share the same material characteristics the judge has treated them for convenience as one. It is an anti-dumping duty imposed on various categories of glass from China and India. On 5 June 1998 the Board onTariffs and Trade initiated an enquiry, and provisional payments were imposed on 27 November 1998.26 Anti-dumping duties were introduced into Schedule 2, with effect from that date, by notice published in the Gazette on 28 May 1999.27 On 19 March 2004 ITAC initiated a sunset review. On 5 November 2004 ITAC gave notice in the Gazette that it had recommended that the anti-dumping duty be maintained and that the Minister of Trade and Industry had approved the recommendation

A second sunset review of this duty was initiated by ITAC on 21 August 2009.29 It recommended that some of the duties be maintained, and that others be increased. Its recommendations were approved by the Minister of Trade and Industry, and notice to that effect was given on 16 April 2010. The duties that were to be increased were amended in Schedule 2 by notice given by the Minister of Finance in the Gazette on 26 March 2010.

All those anti-dumping duties have certain features in common. First, they were all introduced into Schedule 2 by notice in the Gazette before the International Trade Administration Act and the regulations came into effect. Secondly, they were all introduced with effect from the date provisional payments had been imposed. Thirdly, in each case a sunset review was initiated more than five years after the anti-dumping duty took effect, but within five years of it being introduced into Schedule 2 by notice in the Gazette. Fourthly, a sunset review was initiated in each case, which culminated in each case with a recommendation by ITAC that the anti-dumping duty be maintained, the approval of that recommendation by the Minister of Trade and Industry, and notice to that effect in the Gazette.

The fate of that anti-dumping duty came under consideration in Progress Office Machines. In that case it was found by this court that the date of imposition‘ of the anti-dumping duty as that term is used in Article 11.3 of the WTO Agreement was the date it took effect – in that case 27 November 1998 – and it declared the anti-dumping duty to have no force or effect five years later.

Until then the authorities had conducted their affairs in the belief that an anti-dumping duty terminated five years from the date it was introduced by notice in the Gazette, and not the date it took effect where it was ante-dated. Acting in that belief sunset reviews of other antidumping duties were initiated more than five years after the duty took effect (but within five years of the duty being introduced by notice in the Gazette). The effect of the decision in Progress Office Machines, as the authorities see it, is that in consequence of their mistaken belief, those duties inadvertently lapsed, notwithstanding that injurious dumping was still occurring or threatened. The duties in issue in this case all fall within that category.

The reasoning in Progress Office Machines applied not only to the antidumping duties imposed on the importation of paper products in issue in that case, but to all eleven products that were the subject of anti-dumping duties in this case. In each case ITAC calculated the duration of the dutiesinitially imposed as a result of the Board‘s recommendations under the BTT Act on the basis that the starting point for the calculation was the date of promulgation of the duties and not the date from which they were retrospectively made payable. This created the problem that the authorities sought to resolve by the orders they sought in this litigation.

That problem arises from the fact that the Anti-Dumping Agreement recognises that, while such duties are primarily directed at short term problems of dumping and should remain in force only so long as and to the extent necessary to counteract dumping which is causing injury,87 dumping sometimes continues after the expiry of the initial period of anti-dumping duties. In order to prevent the recurrence of the harm against which they were originally imposed it may be necessary for them to be continued. Accordingly the Anti-Dumping Agreement provides for a review of whether the expiry of the duty may lead to a continuation or recurrence of the dumping. If such a review is initiated before the expiry of the original five year period then the duty will remain in force while the review is being conducted.

The review must normally be completed within a period of 12 months from its initiation. Only if the steps taken to maintain, increase or amend the scope of these anti-dumping duties were of no force and effect that it can be said that the duties were no longer in force when this application was brought and argued. By that stage the initial period for which they had been imposed had long since expired. Accordingly the foundation for the continued imposition of the duties had to lie in the sunset reviews and the steps taken by ITAC, the two Ministers and Parliament pursuant thereto. If the following steps were effective for that purpose, namely:

  1. ITAC initiating and conducting a sunset review of the duties;
  2. ITAC making recommendations to the Minister of Trade and Industry pursuant to such review; and
  3. the Minister accepting their recommendations and either giving notice of that fact when what was recommended was the continuation of the duty or requesting the Minister of Finance to amend the duties by way of an amendment to the Second Schedule;and
  4. the Minister of Finance amending the Second Schedule where requested to do so; and
  5. Parliament providing that such amendments would remain in force; then the fact that the initial period of operation of the duties had expired before the commencement of the first sunset review is irrelevant.

The assumption underpinning the present application is that all these steps were ineffective because the sunset reviews were commenced after the expiry of the initial period for which the duties in issue in this case were in operation. In the founding affidavit the Minster of Trade and Industry said that this was due to an error of law in computing the relevant period and pointed out that on the basis of computation adopted by ITAC all the sunset reviews would have been commenced timeously. He went on to submit that the effect of the error was that the initiation of the sunset reviews was invalid and that the relevant Ministers erroneously failed to cause the Second Schedule to the Act to be amended to reflect the withdrawal of the duties. Accordingly he submitted that the initiation of the sunset reviews and the failure of the two Ministers to cause the Second Schedule to be amended fell to be set aside. He based this submission first on the proposition that both the initiation of the sunset reviews and the failures by the two Ministers constituted invalid administrative action and second on the principle of legality.

It was suggested in the founding affidavit, and in argument, that causality formed no part of this latter inquiry, but that cannot be correct. It is only material injury to local industry caused by dumping that can attract anti-dumping duties. One cannot investigate material injury to local industry in the absence of a causal relationship between the anticipated continuation or recurrence of dumping and its impact on local industry. The fact that the material originally considered by ITAC as establishing such causal link is again relied on by assuming a causal connection does not remove this from consideration. If there is no causality the continuation of the duties is impermissible. To continue to impose anti-dumping duties in the absence of any causal connection between the dumping and the material injury would conflict with the basis on which the Anti-Dumping Agreement was concluded and its fundamental purpose.

The continuation of anti-dumping duties after the initial period for which they were imposed, whether because of a continuation or recurrence of dumping, serves the same purpose and emphatically requires causality, however that may be established and whatever material is taken into account for that purpose.

Had the judge not reached the conclusion that the anti-dumping duties in issue in this case were valid and in force when these proceedings were commenced, it would have been necessary to consider whether a challenge to them could validly have been brought without an application to set aside not only the initiation of the sunset reviews but also the steps taken pursuant to the recommendations of ITAC following upon such reviews. It is readily conceivable that a court asked to review and set aside the initiation of the sunset reviews would in the exercise of its discretion have held that there had been undue delay in bringing review proceedings. The appropriateness of setting aside these duties in the exercise of any discretion vested in the court would have had to be considered. I mention this merely to indicate that even if my view on the validity of these anti-dumping duties had been different that would not necessarily have meant that the duties would have been set aside.

It is unnecessary to address the consequences of any periods when there were no duties in place during the subsistence of a sunset review, save in respect of the counter application by the fifth and sixth appellants for repayment of the anti-dumping duties paid by them during the period from 16 August 2005 to 8 March 2010. The claim was originally advanced for a longer period, but the claim was limited in the light of these appellants accepting that an increase in anti-dumping duty pursuant to an interim review and effected by an amendment to the Second Schedule effected on 26 March 2010 was valid.104 Most of the claim relates to the period after 10 March 2006 when the Minister of Trade and Industry published a notice approving ITAC‘s recommendation after the first sunset review that the anti-dumping duty on garlic imports from China be maintained. As in my opinion the duties were lawfully in place from 10 March 2006 that portion of the claim falls away. It leaves only a claim for R378 700, in respect of two consignments of garlic imported by the fifth appellant on 16 and 30 August 2005 respectively.

The basis for any claim to recover these amounts would be a condictio indebiti. Such a claim can be made if a payment is made in respect of a non-existent debt but in the bona fide but mistaken belief that the payment is due. A claim for repayment can be defeated if the claimant was inexcusably slack in making the payment and a defence of prescription may also be available. In order to advance the claim it is accordingly necessary for evidence to be led as to the circumstances in which the payment was made and how the error arose.

As Hefer JA pointed out in Willis Faber much will depend on the relationship between the parties and their state of knowledge in relation to the cause of the payment as well as the reasons for making it. However, no such evidence has been placed before us in the affidavits on behalf of the fifth and sixth appellants. Instead they appear to have adopted the stance that if the duties had lapsed they were entitled as of right to reclaim them. Mr du Preez who deposed to the affidavit on their behalf simply said that the levying of duties after the expiry of the initial period is ultra vires and void and entitles Shoprite to reclaim anti-dumping duties since that date‘. Whilst it may be correct that a properly formulated claim supported by appropriate evidence would have given rise to a condictio indebiti, the manner in which it was formulated in this application falls short of what was necessary. This is not mere technicality. Had a proper claim been formulated and supported by evidence a proper reply could have been formulated including very possibly a defence of prescription. For those reasons I think that the balance of this claim has not been properly proved in these proceedings and it was correctly dismissed. However, in the light of the reasons for rejecting this portion of the claim that dismissal amounts to no more than a judgment of absolution from the instance.

Held

For those reasons the judge concurred with Nugent JA that the appeals be upheld and that a declaratory order be issued. The judge confined that order to one declaring that at the time these proceedings were commenced the anti-dumping duties in issue in this case as incorporated in the Second Schedule to the Customs and Excise Act were valid and of full force and effect. As to costs the 6th to 21st appellants have been largely successful in securing the dismissal of the application and an order that the duties they sought to support are valid and of full force and effect. The authorities should be ordered to pay their costs including the costs of two counsel, where two counsel were employed. As regards the remaining appellants whilst they have been successful in having the application dismissed, they have failed to do so for the reasons they advanced and the declaratory order that the court grants is fundamentally contrary to their submissions and their aim in participating in these proceedings. In fairness the judge thought it appropriate that they and the authorities should each be liable for their own costs.

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