Zimbabwe Platinum Mines (Pvt) Ltd v The Zimbabwe Revenue Authority (ZIMRA) and The Commissioner General of the Zimbabwe Revenue Authority

### Preamble
1
HH 508-18
HC 7278/15
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ZIMBABWE PLATINUM MINES (PVT) LTD

versus

THE ZIMBABWE REVENUE AUTHORITY (ZIMRA)

and

THE COMMISSIONER GENERAL OF THE ZIMBABWE

REVENUE AUTHORITY

HIGH COURT OF ZIMBABWE

MUREMBA J

HARARE, 9 April 2018 & 5 September 2018

Opposed Application

T Mpofu, for applicant

T Magwaliba, for the respondents

MUREMBA J: The applicant Zimbabwe Platinum Mines (Pvt) Ltd (Zimplats) is suing the Zimbabwe Revenue Authority, the first respondent (ZIMRA) which is the tax collecting agent of the Government of Zimbabwe (the Government) and the second respondent, the Commissioner-General of the first respondent (the Commissioner-General) who is conferred with the powers of supervising and managing the first respondent’s staff, activities, funds and property. The first respondent’s activities which are managed and supervised by the second respondent include the functions of collecting duties and paying refunds under the Customs and Excise Act [Chapter 23:02].

This is an application in which the applicant seeks declaraturs and consequential reliefs to the effect that:

“1.	The rebates provided for under s 138 of the Customs and Excise (General) Regulations, 2001 (Statutory Instrument 154 of 2001) (“the Customs & Excise (General) Regulations”) are independent of the rebates provided for under clause 8.1 of the mining agreement between the Government and the applicant.

The applicant is entitled to apply for and to be granted customs duty rebates under s 138 of the Customs & Excise (General) Regulations notwithstanding the expiry of the five year period set out in clause 8.1 of the mining agreement between the Government and the applicant.

The applicant was entitled to all the customs duty rebates which it applied for and was granted under ss 138 and 144 of the Customs & Excise (General) Regulations between the years 2009 to 2013 in respect of all the imported goods for which the applicant applied for and was granted customs duty rebates.

All the special warrants issued by the respondents against the applicant in respect of the rebates granted to applicant under ss 138 and 144 of the Customs & Excise (General) Regulations between the years 2009 to 2013 are null and void.

The second respondent has no power to impose a fine, where a contravention of the Customs & Excise Act has not been admitted.

The fines imposed by the second respondent are null and void.

The respondents can only recover from the applicant the customs duties which it believes were wrongly rebated, any interest thereon and fines through court proceedings instituted in the High Court by the respondents and against the applicant.

The respondents be and are hereby interdicted from recovering the rebated customs duties granted to the applicant, in terms of ss 138 and 144 of the Customs & Excise (General) Regulations between 2009 and 2013, any interest thereon and fines from the applicant by use of any recovery method (including the setting off of the rebated customs duties, interest thereon and fines) against the refunds due to the respondents against applicant, in the event that they believe that the rebates were wrongly granted.

The respondents be and are hereby ordered to refund to the applicant all refunds which were due to the applicant but which were set-off by the respondents against the rebated customs duties, interest thereon and fines.

The respondents should be ordered to pay the costs of suit.”

The applicant in its founding affidavit averred the following. It is in the business of mining and processing platinum in Ngezi and Selous areas in Zimbabwe in terms of a Special Mining Lease (SML) which was issued in terms of the Mines and Minerals Act [Chapter 21:05] on 24 August 1994. The SML is supported by a mining agreement which was entered into on 24 August 1994. The 2 agreements are not in the applicant’s name but the applicant assumed all mining rights and obligations under the SML and the mining agreement from 2001 onwards.

During the years 2009 to 2013 the applicant was involved in mine development operations and it periodically applied to be granted customs duty rebates on goods that it was importing for use in the mine development operations. During the period 2009 and 2010 the applicant applied for and was granted customs duty rebates in terms of s 144 of the Customs & Excise (General) Regulations. In doing so it would apply for rebates by way of a letter addressed to the Ministry of Mines and Mining Development. The Secretary for the Ministry would issue a certificate addressed to the first respondent confirming that the goods to be imported by the applicant were eligible for a rebate. The second respondent would then grant the customs duty rebate. Section 144 was subsequently repealed in December 2010. Unaware of this development, the applicant continued to apply for rebates under s 144 in January 2011 and the rebates claim was rejected by the respondents. Pursuant to this, the applicant’s representatives held a meeting with the first respondent’s rebates manager Mr Homera and it was agreed that the applicant should reapply for the rebates in terms of s 138 of the Customs & Excise (General) Regulations. Accordingly, from January 2011 onwards, the applicant started to apply for rebates under s 138. During the years 2011 to 2013 the applicant applied for and was granted rebates under s 138. In doing so the applicant would apply for rebates by way of a letter addressed to the Ministry of Mines. The Secretary for the Ministry would issue a certificate addressed to the first respondent confirming that the goods to be imported by the applicant were eligible for a rebate. The second respondent would then grant the rebate.

In February 2013 the first respondent’s Investigations Department, did an investigation into the applicant’s tax and other affairs. It did investigations into the rebates claimed by, and granted to the applicant over the years. It queried why the applicant was applying for rebates under s 138 of the Customs & Excise (General) Regulations and this marked the beginning of the present dispute.

In March 2013 the first respondent stopped processing the applicant’s rebate applications. On 14 October 2013 the first respondent’s Investigation Department wrote to the applicant saying that all rebates claimed after the 5 year period set out in the Mining Agreement were contrary to law and that the applicant should pay the rebated customs duties, import value added tax, interest and penalties. On 21 November 2014 the first respondent issued 3 special warrants for the recovery of the rebated customs duties. In those warrants the second respondent claimed repayment by the applicant of a principal amount (customs rebates and import value added tax) of US$28 664 861.45 with interest in the sum of US$6 898 258.65. In addition 3 fines totaling US$9 554 215.67 were imposed against the applicant.

The respondents alleged that the applicant was not entitled to be granted rebates under s 144 during the period 18 September 2009 to 31 May 2010 as its mining area was not listed in any statutory instrument during that period. It was further alleged that the applicant was not entitled to be granted rebates under s 138 during the years 2011 to 2013 for the 5 year period set out in clause 8:1 of the Mining Agreement had expired. The respondents started to unlawfully set off the amount of the rebates, fines and interest against some funds which were due to the applicant which the respondents were holding.

It is the applicant’s position that:

the rebates granted to it in 2009 and 2010 are valid since the certificates under which the rebates were issued have not been revoked and they subsist to this day.

it was entitled to claim and be granted rebates under s 138 between 2011 and 2013 for the reasons that:

for a rebate to be granted under this section, the Secretary for Mines is required to certify eligibility which he did and his certification still subsists and it has not been set aside. It is his sole and exclusive function to determine the eligibility of goods.

by issuing its certification the Ministry of Mines confirmed that the applicant was entitled to claim rebates in terms of s 138.

the right to rebates conferred in terms of s 138 is independent of the right conferred in terms of clause 8:1 of the Mining Agreement. The former is a statutory right while the latter is a contractual right. The contractual right might have had a limited lifespan while the statutory right has no such limitation.

it was entitled to be granted rebates that were availed to it from 2009 to 2013 and it remains entitled to apply for and be granted rebates in terms of s 138 of the Customs & Excise (General) Regulations .

the second respondent has no power vested in him to impose fines as he did to the applicant  unless there has been an admission of contravening the Customs & Excise Act and the applicant made no such admission.

Unlike the powers that the respondents have under the Income Tax Act [Chapter 23:06] and the Value Added Tax Act [ Chapter 23:12] the respondents have no power to seek to recover the rebated customs duties, fines and interest by any other means other than through court proceedings instituted in the High Court against the applicant.

The applicant further averred that in terms of the Customs & Excise Act there is no power given to the respondents to raise assessments or any other form of demand which has the effect of a civil judgment. It is only through court process that the respondents can seek to collect customs duty, fines and interest that they allege to be due by the applicant. The respondents’ unilateral withholding of the applicant’s refunds and the set off of these funds against the customs duties, fines and interest that they allege to be payable by the applicant is unlawful and they  should be interdicted from recovering them in that manner against the applicant. This will cause irreparable harm to the applicant and there is no other remedy available to it to protect it against the respondents’ actions.

In their notice of opposition the respondents averred as follows. Clause 8:1 of the mining agreement provides that a rebate shall be granted to the applicant for a period of 5 years on certain goods, but it is not correct that this is a contractual rebate. No rebate can be grounded on the basis of a mining agreement alone. There has to be a law that supports the granting of the rebate mentioned in the mining agreement for the respondents to grant same to a person or entity. An important part of s 138 of the Customs & Excise (General) Regulations provides for the granting of a rebate of duty to a special mining lessee on goods which the Secretary for Mines certifies are eligible for a rebate in terms of an agreement entered into pursuant to a special mining lease. This s 138 is the law that will allow the respondents to grant the rebates of duty mentioned in clause 8:1 of the agreement. It is correct that s 144 of the Regulations was repealed on 31 December 2010 and this provision was taken over wholesale by S.I. 190/2010 which came into effect on 31 December 2010.

The respondent admitted that during the period 2009 to 2013 the applicant was involved in mine development operations and it periodically applied to be granted customs duty rebates on goods it was importing for these operations. Unfortunately, in some of the applications it made, the applicant was not complying with the law as it was applying on the basis of expired statutory instruments or on the basis of sections of the law that no longer applied to it.

The respondent admitted that during the period 2009 to 2010 the applicant applied for and was granted rebates under s 144 of the Regulations. However, some of the applications were made on the basis of statutory instruments that were expired. The procedure for applying for a rebate under s 144 is that the importer should first apply for its mining area or location to be gazetted as a statutory instrument. The statutory instrument will define the mining area/location to which the operations apply as well as the specific period for which the rebate will apply (known as the specified period). Once gazetted the mining location will become an amendment to the fourth schedule of the Regulations and rebates can be claimed in respect of importations of eligible goods for that mine location during the period specified in the S.I. gazetting the mine location. In making the application for the rebates of duty, the mine location owner will cite the statutory instrument that was gazetted for its mining location. For the application to be valid it should be made within the currency of the specified period. The applicant was well aware of this as evidenced by the two mining locations that were duly gazetted at its instance, namely S.I. 239 of 2006 and S.I. 125 of 2010. The specified period for S.I 239 of 2006 ran from 18 September 2006 to 17 September 2009 whilst that of s 125 of 2010 ran from 1 June 2010 to 31 May 2011. This means that the period between 18 September 2009 and 31 May 2010 was not covered by any S.I yet the applicant was applying for rebates during this period in terms of s 144 citing and relying on S.I. 239 of 2006 which had expired. To the extent that applications for rebate were made and granted in terms of s 144 during this period then it was without legal basis and was erroneously granted. The respondents further averred that the other error the applicant made was that despite the expiry of S.I. 239 of 2006 on 17 September 2009, the applicant continued to cite S.I. 239/2006 during the currency of S.I. 125 of 2010 as its basis for applying for rebates which again was irregular. They however averred that all that the applicant is required to do is to regularize those applications by citing S.I 125 of 2010 in place of S.I. 239/2006 that it cited in its applications. This will make the applications made and granted during this period legal.

The respondents averred that in terms of procedure the applicant would apply for a rebate through a letter addressed to the first respondent and not to the Ministry of Mines Secretary as the applicant averred because it is the first respondent who has power to grant or deny a rebate not the Ministry of Mines. However, the application would only be made after the applicant had already applied for and obtained a certificate from the Secretary for Mines certifying the eligibility of the goods for rebate purposes. This certificate would be attached to the application for rebate to the second respondent in compliance with s 144 of the Regulations. The second respondent would grant the rebate after processing the application. The granting of rebates of duty that was done in respect of the applications for rebates that form the subject matter of this application were erroneously granted by the respondents’ officers. This has to be corrected and it is the process of correcting same that has led to the current proceedings.

The respondents further averred that section 144 was repealed on 31 December 2010 and replaced by S.I. 190 of 2010 which provided almost the same relief except that importers were now required to pay Value Added Tax (VAT) on importations unlike under s 144 where both customs duty and VAT were suppressed. Despite the repeal of s 144 on 31 December 2010, the applicant’s importations were still covered until May 2011 by S.I 125 of 2010 whose specified period ran up to 31 May 2011. The respondents contended that they are not aware of any of applicant’s applications for a rebate of duty which was made in terms of s 144 of the regulations in January 2011 which they rejected. The respondents disputed that there were meetings that were held between the applicant and respondents in which it was agreed that the applicant utilizes s 138 of the regulations to claim rebates after the repeal of s 144. They averred that there is no confirmation correspondence by any of the first respondent’s employees to this effect. If such agreement was entered into with the first respondent’s then supervisor, Mr Homera as the applicant contends, then such an agreement was without legal foundation as it had no backing of the law. The applicant was well aware that it could not use s 138 of the regulations anymore because clause 8:1 of the Mining Agreement which gave the applicant the right to be granted rebates of duty for a period of 5 years had expired in 2005. This is why the applicant started applying for the gazetting of statutory instruments for use in applying for rebates of duty in terms of s144 of the regulations in 2006. Its first statutory instrument was S.I. 239/2006.

The respondents further averred that it is correct that from 2011 to 2013 the applicant applied for and was granted rebates under s 138. However, the granting of such rebates was done in error. Again the applications for the rebates were made to the first respondent upon the recommendation of the Secretary for Mines who would issue a certificate certifying that the goods the applicant was applying for a rebate of duty were goods eligible for rebate.

The respondents admitted that they set off the VAT refunds that were due to the applicant against the taxes due to the fiscus in the form of customs duty, VAT and interests thereon in terms of s 44 (6) of the Value Added Tax Act [Chapter 23:12]. They further averred that in any event even if set off in terms of s 44 (6) of the VAT Act were to apply to VAT indebtedness only, the applicant’s indebtedness on VAT on importations alone, which is chargeable in terms of s 6 (1) (b) of the VAT Act far exceeded the VAT refunds that were owed to it by the respondents. The set off that was done  was therefore perfectly legal.

The respondents contended that the certificates that were issued by the Secretary for Mines only certified that the goods in question were eligible for rebate of duty in terms of the law, they did not mean that the applicant was entitled to a rebate of duty. The Secretary would check to see whether the goods specified qualified for use in mining developments operations. However, despite the goods qualifying, rebate of duty would only be granted to an applicant or importer who met the requirements of the law. Therefore the fact that the goods were certified to be eligible for rebate of duty by the Secretary for Mines did not mean that the applicant was automatically entitled to rebate of duty. The respondents averred that in light of this it is not necessary to have the Secretary’s certificates revoked first before the rebates that were granted can be nullified. The respondents contended that in the alternative, if it is the position of the law that the Secretary was supposed to check and certify the eligibility of the applicant for the rebate as well before issuing the certificate, then during the period in question the Secretary failed to do so and wrongly issued certificates because the law did not authorise him to do so. Such certificates were thus a nullity by operation of law and need not be revoked before the respondents can call for payment of duty by the applicant.

The respondents averred that in terms of s 138 of the regulations for a rebate to be granted to an applicant, the Secretary for Mines is required to certify eligibility of the goods in terms of the Mining Agreement. The Secretary would have to check if the goods to be imported fall within the category of goods specified in clause 8:1 of the mining agreement as eligible for rebate. It was the first respondent who would then check if the applicant qualified for the rebate and approve that rebate be granted. In casu the approvals were made but they were wrong since clause 8:1 in the mining agreement had lapsed. The respondents lawfully revoked the rebates because the applicant was no longer eligible for rebate in terms of s 138.

The respondents contended that the right to a rebate under s 138 of the regulations is not independent of the right given in clause 8:1 of the mining agreement. Section 138 makes it clear that the rebate of duty granted under it is to be in terms of an agreement entered into pursuant to a special mining lease. The right to a rebate in s 138 is therefore dependent upon the terms of the mining agreement. No rebate will be granted on the basis of an agreement alone. The mining agreement and s 138 of the regulation are dependent on each other. This is why the applicant claimed rebates in terms of s 138 between 2001 and 2006 when clause 8:1 of the agreement was still in force. Annexure 24 was one such application which was made during that period.

The respondents averred that the applicant contravened s 184 (g) of the Customs and Excise Act by claiming rebates when it knew that it was not entitled to the rebates. The fine it was ordered to pay was due. As such the first respondent has a right to recover the rebated customs duties, vat and interests thereon without having to go to court first. The duty is assessed using the bill of entry and once that is done, the amount becomes due and payable. The first respondent can recover it using any of the ways provided by law including appointing agents for collection (garnishees) in terms of s 210 A of the Customs & Excise Act or set off against VAT refund amounts in terms of s 44 (6) of the VAT Act. It was contended that where goods have already passed customs control, the first respondent raises special warrants (which are forms authorised by the second respondent in terms of s 3(4) of the regulations) which are manual bills of entry which are prepared by the respondents to establish an importer’s indebtedness. Once raised, these warrants will demand payment of the duties due and same can be collected in any of the ways provided by law.

In its answering affidavit the applicant averred the following. It maintained that the rebates provided for under s 138 of the regulations are independent of the rebates provided for under clause 8.1 of the mining agreement. The applicant is entitled to claim and to be granted rebates under s 138 notwithstanding the expiry of the 5 year period set out in clause 8.1 of the mining agreement. The right to a contractual rebate was granted on 24 August 1994 when the mining agreement was signed. However, the statutory rebate granted in terms of s 138 of the regulations was a fresh rebate which was introduced in 2001 when the Statutory Instrument was promulgated. Thus the contractual rebate set out in clause 8.1 of the mining agreement preceded the statutory rebate. The rebate granted in clause 8.1 of the mining agreement had a limited life span of which the statutory rebate has no such limitation. A fresh rebate was conferred by s 138 of the regulations on goods imported by holders of special mining leases in general, whereas the rebate set out in clause 8.1 of the mining agreement was specifically granted to the applicant as a contractual party to the mining agreement. The applicant was entitled to the rebates it claimed and was granted under s 138 and 144 of the regulations from 2009 to 2013. In any event the respondents can only recover from the applicant rebated custom duties they believe were wrongly rebated through court proceedings. They should be interdicted form recovering these by use of any recovery method including set off against VAT refunds due to the applicant. The respondents should be ordered to refund to the applicant all VAT refunds which were due to it which were set off against the rebated customs duties. It was wrong for the respondents to issue special warrants demanding payment of the rebated customs duties.

The applicant averred that when it claimed rebates between 1 June 2010 and 31 December 2010 under s 144 and cited SI 239/2006 instead of SI 125/2010 it was a genuine error on its part. The applicant conceded that it was not entitled to claim rebates under s 144 during the period between 18 September 2009 and 31 May 2010 since it had no existing statutory instrument covering that period. However, it averred that it was nonetheless entitled to those rebates under s 138. Accordingly there was no prejudice to the fiscus when it was granted rebates under s 144. The Secretary for mines had certified that the goods were eligible for rebates. On the basis of this certification, the respondents issued the rebates. The rebates were properly and lawfully granted and there is no need for any correction of the same. The applicant was adamant that the meeting with Mr Homera took place. It contended that the rebate provided for in terms of s 138 and the rebate provided for in terms of s 144 are independent of each other. The applicant averred that prior to the repeal of s 144, it was eligible and entitled to utilise either of the 2 provisions. The applicant denied that it elected to use s 144 on the basis that the 5 year period stipulated in clause 8.1 of the mining agreement had lapsed. The applicant maintained that the 5 year period in clause 8.1 is not applicable to s 138 rebates. The applicant contended that it did not fraudulently claim rebate which it was not entitled to. In any event if the respondents are conferred with the power to grant rebates in terms of s 138 and s 144 of the regulations, as they claim, and they did grant the rebates, albeit mistakenly, then the applicant cannot be punished for the respondents’ mistakes. There is no provision in the Act providing for set off of VAT refunds against rebated customs duties, penalties and interest. Recovery of these without a civil judgment in the circumstances of this case is inherently unconstitutional as it violates the applicant’s rights of just administrative action, access to the courts and equality before the law.

In determining the matter I will deal with the declaraturs being sought seriatim.

Whether the rebates provided for under s 138 of the Regulations are independent of the rebates provided for under clause 8:1 of the Mining Agreement?

It is not in dispute that on 24 August 1994 Hartley Platinum Mines (Private) Limited entered into a Special Mining Lease (SML) with the Government of Zimbabwe (GoZ) as represented by the Minister of Mines in terms of s 163 of the Mines and Minerals Act [Chapter 165] then and now [Chapter 21:05]. Pursuant to that and in terms of s 67 the parties on the same day entered into a Mining Agreement (MA) to regulate aspects of the SML.

The critical question is when clause 8.1 was operational between 2001 and 2005 was it independent of the Customs & Excise Regulations of 2001? Mr Mpofu’s argument was that the clause set out a contractual rebate which was clearly different from the rebate set out under the s 138 of the regulations for the reason that the mining agreement was concluded in 1994 well before the regulations were promulgated in 2001. The mining agreement could not have related to a statutory rebate that was not yet in existence. It was an agreement not a prophecy. The agreement and the statute are distinct and conferred different rights as they related to different epochs. One did not depend on the other for validity. It was Mr Mpofu’s further argument that if the mining agreement was meant to relate to a statutory rebate, it would have said so in very clear terms. On the basis of this argument Mr. Mpofu maintained that the mining agreement provided for a contractual rebate whilst the regulations provided for a statutory rebate.

Mr. Magwaliba argued that s 138 of the regulations is not independent of clause 8.1 of the mining agreement. He submitted that in order to comply with its contractual obligations in terms of the mining agreement, the Government of Zimbabwe enacted, through parliament, the relevant legislation that allowed the applicant to receive rebates. He argued that rebates can only come from statute. He submitted that without legislation, the government cannot grant the rebates it has promised in an agreement. He argued that the 2 rebates are therefore not independent of each other.

What is not disputed between the parties is that although the special mining lease and the mining agreement were entered into in 1994 they only became operational between the parties in 2001. The critical question now is  was clause 8:1 of the mining agreement independent of s 138 of the regulations?

Clause 8 of the mining agreement provides for duty, import tax and sales tax. Clause 8:1 which is at the centre of the present dispute reads:

“Subject to clause 14, a rebate of duty shall be granted for a period of five (5 years) from the effective date of the Agreement, in respect of goods (other than foodstuffs and alcoholic beverages) including machinery and equipment of a capital nature to be itemised in an agreed list imported solely and exclusively for use in Mine Development Operations subject to compliance with such procedures and conditions as may be prescribed including certification by a responsible officer acting on behalf of the Companies that such goods were so imported and recommended for rebate by the Ministry in terms of the Agreement:”

The clause means that rebate of duty was granted on goods imported for use in mining development operations and this was to operate for 5 years from the effective date of the agreement. The effective date of the agreement according to both parties was sometime in 2001. The exact date was not given but the applicant alluded to the year 2001 in para 8.3 of its founding affidavit. The respondent alluded to the same year through and through its opposing affidavit.

In terms of clause 1 of the mining agreement which is the definitions and interpretation section the term “Duty” shall have the meaning assigned to it in clause 8.3”.

Clause 8:3 reads:

“In sub-clause 8.1 and 8.2 the term ‘Duty’ means ‘Customs duty’ and ‘surtax’ or any other duty or tax chargeable under the Customs & Excise Act [Chapter 177] on the importation of goods.”

This clause is self-explanatory. It makes it clear that the rebate of duty that was going to be granted for 5 years in terms of clause 8.1 related to duty under the Customs and Excise Act. There was therefore no rebate of duty that was granted in the agreement. It is common cause that regulations are subsidiary legislation and are guidelines that dictate how the provisions of the Act are applied. The Act provides for the legal position or statement of the law but it is the regulations which deal with the aspect of the implementation of that law. The Customs and Excise Regulations were promulgated in terms of the Customs & Excise Act to regulate the procedures and conditions relating to payment of duty.  This therefore means that in clause 8.1 of the mining agreement where it is said ‘subject to compliance with such procedures and conditions as may be prescribed’ the clause was simply referring to procedures and conditions as may be prescribed in the relevant regulations at the time of importing goods. Clause 8.2 makes this position even clearer. It is a clause which deals with importation of goods by expatriate employees, but it is quite relevant as it explicitly makes reference to regulations that may be relevant at the time of importing goods.

Clause 8:2 reads:

“Expatriate employees shall be permitted to import for the sole use of such Expatriate Employees and their families and shall be exempt from all duty with respect to the reasonable importation of households goods, motor vehicles restricted to the number permitted per family in terms of the relevant regulations, and personal effects imported on first arrival in one supplemental shipment, provided that such property is owned by the Expatriate Employees or their families prior to relocation of such Expatriate Employees and their families in Zimbabwe for at least one year or such other period as may be prescribed by the relevant regulations” (The underling is mine for emphasis)

The effective date of the mining agreement having been in 2001, the regulations that were relevant at that time were the Customs & Excise (General Regulations, 2001 (SI 154/2001). The rebate of duty provided for under clause 8.1 was therefore regulated by these regulations. This is why s 138 of the regulations specifically provides for “rebate of duty on goods imported in terms of an agreement entered into pursuant to a special mining lease”. S 138 (1) (2) & (3) reads:

“138. Rebate of duty on goods imported in terms of an agreement entered into pursuant to a special

mining lease

(1) In this section—

“agreement” means an agreement entered into between a lessee and the Government pursuant to a special mining

lease;

“lessee” means the holder of a special mining lease;

“special mining lease” means a special mining lease issued in terms of Part VIII of the Mines and Minerals Act

[Chapter 21:05].

(2) Subject to this section, a rebate of duty shall be granted on goods which the Secretary for Mines certifies are eligible for a rebate of duty in terms of an agreement.

(3) A person claiming a rebate in terms of this section shall give to the proper officer—

(a) the certificate from the Secretary for Mines referred to in subsection (2); and

(b) a declaration signed by the lessee or a responsible representative of the lessee to the effect that the goods

concerned are to be used in conformity with the agreement, and an undertaking that, if the goods are not so

used, the duty rebated will be paid immediately to the Commissioner.”

It is clear that the agreement that the applicant and the GOZ entered into is the agreement that is being referred to in s 138 above. As was correctly submitted by Mr. Magwaliba, in order to utilise s 138 in claiming a rebate, one must have a mining agreement with a valid provision allowing for the custom duty rebate. The phrase “as may be prescribed” in clause 8:1 shows that the parties expected that the rebates would be prescribed by law.  Further, clause 8.1 makes it clear that the application for a rebate of duty made by the applicant would contain a recommendation by the Ministry of Mines and this is in sync with what is provided in s 138.

In view of the foregoing the rebates provided for under s 138 of the regulations are not independent of the rebates provided for under clause 8.1 of the mining agreement. I therefore cannot grant the declaratur the applicant is seeking.

Whether the applicant is entitled to apply and be granted rebates under s 138 of the Regulations notwithstanding the expiry of the five year period set out in clause 8.1 of the Mining Agreement?

After arguing that there is a distinction of the rebate in the mining agreement from the rebate under s 138 of the regulations, Mr Mpofu further argued that the expiry of the 5 year period set out in clause 8.1 becomes irrelevant in applications for rebates under s 138 of the regulations. He contended that this is so because rebates under s 138 of the regulations do not depend for their validity on the provisions of the agreement. Mr Mpofu did not dispute that the 5 year period referred to in cause 8.1 expired long back in 2005.

Mr Mwagwabila argued that with the expiration of the 5 year period set out in clause 8:1 of the agreement, the applicant is no longer entitled to apply and be granted rebates under s 138 of the regulations.

I have already demonstrated and concluded above that the rebates under s 138 of the regulations are not independent of the rebates under the mining agreement and that for anyone to claim a rebate under s 138 of the regulations they ought to have a mining agreement with provisions allowing for a rebate of duty. This therefore means that the provision of the mining agreement allowing for the granting of a rebate of duty should be valid. If the provision has expired due to effluxion of time then it means that the lessee in the mining agreement is disentitled from applying and being granted rebates under s 138 of the regulations. In the present matter it therefore means that the applicant is no longer entitled to apply for and to be granted rebates of duty under s 138 of the regulations. Rebates of duty it was entitled to in terms of the mining agreement ceased when the 5 year period set out in clause 8.1 expired in 2005. As it is, there is no longer an agreement between the applicant and the GOZ pertaining to rebates. The applicant can longer therefore utilise s 138 of the regulations to apply for rebates of duty. As already stated above, s 138 is a provision which specifically provides for “rebate of duty on goods imported in terms of an agreement entered into pursuant to a special mining lease”.

In the result, I cannot therefore grant this declaratur.

Whether the applicant was entitled to all the rebates it applied for under sections 138 and 144 of the Regulations between 2009 and 2013 which rebates were granted by the respondents?

That the applicant applied for rebates of duty and that the applications were recommended by the Secretary for Mines and were granted by the second respondent in terms of ss 138 and 144 of the Regulations between 2009 and 2013 is not disputed.

Mr Mpofu submitted that with the applicant having made the applications in terms of both s 138 and s 144 of the regulations and with the Secretary for Mines having issued certificates for the granting of the rebates which certificates have not been set aside in terms of a judicial process the rebates granted cannot be revoked. He submitted that it is the certificates which actuated the granting of those rebates. He further submitted that the applicant was entitled to apply for rebates in terms of s 144 because it had a special mining lease, it was involved in mining development operations, it followed all the procedures required, obtained the relevant certificates from the Secretary for Mines and rebate was duly grated by the respondents. He further submitted that after the repeal of s 144, the new legal position was governed by s 138. The context in which s 138 was enacted is not different from that in which s 144 was enacted. The applicant followed procedure as required in obtaining rebates under the new section and he was entitled to do so.

Mr Mpofu submitted that when the applicant applied for National Project Status to the Ministry of Mines, the Secretary for Mines responded to it in a letter dated 24 August 2010 saying that there was no need for this because the applicant was already entitled to rebate of duty on goods imported for specific mine development operations in terms of s 144 of the regulations. Mr Mpofu submitted that this advice and information coming from a public official entitled the applicant to rely on that information and consequently the respondents are estopped from cancelling the rebates of duty that they once granted to the applicant.

In respect of rebates granted under s 138 for the period 2011 to 2013, Mr Mpofu submitted that the first respondent’s official, Mr Homera is the one who had authorised the applicant to apply for rebates under this section after the repeal of s 144 in December 2010.  Again on this basis the respondents are estopped from cancelling those rebates.

Mr Magwaliba submitted that the granting of rebates from 2009 to 2013 was a legal nullity and it was void ab initio except for the period 1 June 2010 to 31 December 2010 when the applicant wrongly applied for rebates relying on or citing SI 239/2006 which had expired on 17 September 2009 instead of relying on SI 125/2010 which was the new statutory instrument which was operational and valid. He further submitted that all that the applicant needs to do is to regularize its applications as it was advised by the respondents and the rebates will be approved. Mr Magwaliba submitted correctly that for the rest of the period, the applicant wrongly applied for rebates under s 138 and 144 when it was not entitled to do so. He submitted that it was unfortunate that the Secretary for Mines had wrongly or erroneously recommended that rebates be granted and that the respondents had in turn wrongly granted the rebates. He further contended that wrong advice given to the applicant by the Secretary for Mines cannot bind the respondents. He also submitted that certificates which were wrongly issued cannot bind the respondents because they are a nullity and the fiscus cannot be prejudiced on that basis.

In terms of s 144 of the regulations the applicant was required to cite the Statutory Instrument that was gazetted for its mining locations and the Statutory Instrument which was valid for the specified period. It is not disputed that for the period, 2009 to 2010, the applicant had 2 Statutory Instruments gazetted, SI 239 of 2006 and SI 125 of 2010. SI 239/2006 covered the period 18 September 2006 to 17 September 2009. So up to 17 September 2009 the applicant was entitled to apply for rebates under s 144 citing SI 239/2006. SI 125/2010 covered the period 1 June 2010 to 31 May 2011. Therefore for the period 18 September 2009 to 31 May 2010 the applicant had no Statutory Instrument covering it. So if it applied for any rebates during this period it was not entitled to those rebates. It should be noted that as of 24 August 2010 when the Secretary for Mines wrote a letter to the applicant saying that the applicant was entitled to apply for rebates under s 144 of the regulations he was correct because at that time the applicant had had its mining location gazetted under SI 125/2010 whose specified period ran from 1 June 2010 to 31 May 2011. So no wrong advice was given to the applicant by a public official.

For the period 2011 to 2013 it is not disputed that the applicant applied for rebates under s 138 of the regulations. This was after the repeal of s 144 on 31 December 2010. However, as I have already discussed and concluded above, it was wrong and improper for the applicant to apply for rebates under s 138 because this provision can only be utilised by a person who has mining agreement which has a valid provision allowing for the granting of rebate of duty. In the applicant’s case, Clause 8:1 of the mining agreement which provided for rebate of duty expired long back in 2005. Therefore from 2006 this section was no longer applicable to the applicant. It goes without saying that this section was no longer applicable to it in 2011 to 2013.

About the applicant having been wrongly advised by Mr Homera, first respondent’s employee that from 2011 after the repeal of s 144, it could apply for rebates under s 138 of the regulations, I do not agree that that advice entitled the applicant to apply for rebates under s 138. I say this because the applicant knew very well that for it to utilise this section, it needed to have a mining agreement with a valid provision providing for a rebate. It knew that clause 8:1 in its mining agreement had long expired in 2005. This explains why in 2006 the applicant had had SI 239/2006 gazetted to enable it to apply for rebates under s 144. It continued to utilise s 144 and Statutory Instruments until s 144 was repealed on 31 December 2010. It is pertinent to note that all the while when the applicant was utelising s 144 from 2006 to 2010 s 138 was in existence. Mr Mpofu sought to argue that s 138 was enacted to replace s 144. This is not correct. By resorting to making applications for rebates under s 138 from 2011 to 2013 the applicant was well aware that it was flouting the law. It cannot argue that it was wrongly advised by Mr Homera, the first respondent’s employee because it knew fully well, that this advice was without legal foundation. In fact it was a breach or a contravention of the law which required that rebate of duty be only granted upon the fulfilment of certain requirements. Wrong advice could not give legal entitlement to the applicant to apply for rebates under s 138 from 2011 to 2013. In The Commissioner of Taxes v Astra Holdings (Private) Limited t/a Puzey & Payne 2003 (1) ZLR 417 it was held that the fiscus cannot be deprived of taxes due to it on the basis of wrong advice arising from an error of law. It was stated that advice which is not compatible with the law does not give rise to estoppel. It was further held that an arrangement that is entered into on the basis of wrong advice given by a public official which advice breaches a statutory duty is null and void ab initio.

In view of the foregoing, from 2009 to 2013, the applicant was not entitled to all the rebates it claimed and was granted under s 138 and s 144 of the regulations. Even for the applications made between the period 1 June 2010 and 31 December 2010 in which the applicant was entitled to apply for rebates under S.I 125 of 2010 and wrongly cited S.I 239 of 2006, I cannot grant a declaratur that the applicant was entitled to those rebates because an expired Statutory Instrument was cited and the error has not been corrected. An expired Statutory Instrument is an invalid law. As such anything and everything that is based on it is a nullity at law. It follows therefore that all the certificates that were issued by the Secretary for Mines from 2009 to 2013 were null and void ab intio. Anything that is void ab intito does not have any legal effect. In Muchakata v Netherburn Mine 1996 (1) ZLR 153 korsah JA referring to a  defective court order said,

“If the order was void ab initio it was void at all times and for all purposes. It does not 	matter when and by whom the issue of its validity is raised; nothing can depend on 	it.”

Lord Denning in Mc Foy v United Africa Co. Ltd [1961] 3 ALL ER 1169 (PC) at 11721said,

“Every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”

This equally applies to the certificates that were issued by the Secretary for Mines. They were void ab initio and no reliance could be placed on such legal nullity. In City of Gweru v Kombayi 1991 (1) ZLR 333 (S) the City of Gweru admitted that it had breached the law by granting Kombayi a procurement order. Even though it was its own mistake the court refused to condone a breach of express statutory provision. It was held that,

“The usual reason for holding a prohibited act to be invalid is …. the fact that recognition of the act by the court will bring about, or give legal sanction to the very situation which the legislature wishes to prevent.”

In casu if the respondents made an error in breach or contravention of the law, they were entitled to correct it. S 224 of the Customs & Excise Act envisages such situations. It reads,

“224 claims and refunds.

When any amount of duty has been underpaid or erroneously refunded, the person who 	should have paid such amount or to whom the refund has erroneously been made shall pay such amount or repay the amount erroneously refunded on demand being made by the 	proper officer.”

The provision serves to show that Mr Mpofu’s contention that once a mistake is made it cannot be corrected and that the person who should have paid duty ceases to be liable is not correct. The person becomes liable to pay upon demand from the respondents. This declaratur cannot therefore be granted.

Whether all the special warrants issued by the respondents in respect of the rebates granted in terms of s 138 and 144 of the regulations between 2009 and 2013 are invalid?

Mr Mpofu submitted that the special warrants which were issued by the respondents are invalid because the certificates which were issued by the Secretary for Mines recommending the granting of the rebates of duty have not been set aside and thus remain valid and extant. He submitted that the special warrants were issued on nothing and must fall. He further contended that the first respondent should set aside the certificates first in order to recall the rebate.

In response Mr Magwaliba submitted that the Secretary for Mines erroneously recommended the granting of the rebates and issued these certificates. He argued that the certificates being null and void, the second respondent was empowered to issue special warrants in terms of s 3 (4) of the regulations for use in the performance of the first respondent’s duties, i.e. in the collection of duty which had been wrongly rebated. Section 3 (4) reads,

“Notwithstanding the definition of “form” and subsection (1), the Commissioner may 	authorise the use of forms together than those prescribed for the various purposes specified in 	these regulations.”

Such forms are dependent on the existence of a valid right to collect taxes. I have already made a finding above that in terms of s 224 of the Customs and Excise Act the respondents had a right to invalidate the unlawfully granted rebates and recover the erroneously granted rebates. This means that the respondents were entitled to issue the special warrants. I will thus not grant a declaratur that the special warrants are null and void.

Whether the second respondent has power to impose a fine where a contravention of the Customs and Excise Act has not been admitted?

I will grant this declaratur because the respondents correctly conceded that the second respondent has no power to impose a fine where a contravention of the Customs and Exercise Act has not been admitted. Section 200 (1) reads,

“200 Imposition of a fine by Commissioner

If any person has contravened any provisions of this Act and has admitted to the 	contravention, he shall pay a fine determined by the Commissioner which does not exceed the 	maximum penalty provided by this Act for the offence in question.”

If a person is not admitting guilt, then a fine can only be imposed by a court of law upon conviction. It follows therefore that the fines which were imposed by the second respondent are null and void. The 6th declaratur the applicant seeks is to the effect that the fines which were imposed by the second respondent are null and void. I will grant this declaratur as well.

Whether the respondents can only recover the customs duties which they believe were wrongly rebated, any interest thereon through the institution of court proceedings?

Mr Mpofu submitted that the respondents had no right of recovery of the duties and interest by way of set off because any recovery can only be made under the authority of a court order. Mr Mpofu submitted that, there being no such court order the respondents who had recovered all the monies by the time the matter was heard, should be ordered to reimburse the applicant all that money. Mr Mpofu argued that there is no provision in the Customs & Excise Act which allows the respondents to recover any monies by summary process. He submitted that the respondents have no inherent jurisdiction and as such they can only exercise such powers as are statutorily conferred. He argued that whilst the respondents argue that set off is permissible under s 44 (6) of the Value Added Tax Act and s 201 A (2) of the Customs and Excise Act, these provisions are only applicable in cases where the person owes the crown. He submitted that in casu the applicant does not owe the crown and he further argued that since the applicant disputes that it owes the crown, the respondents cannot recover the money without approaching the court. Mr Mpofu argued that it is in this instance that the right to be heard rings loud. Citing sections s 6 (1), 68 (1) and 69 (2) of the Constitution of Zimbabwe, he contended that approaching the court is primarily a constitutional law safeguard. He argued that no man is to be judged unheard. Moreover there will be need for an assessment of the duty payable.

Mr Magwaliba submitted that whilst the option to proceed using the normal litigation route is expressly provided for in the Customs and Excise Act, it is not the only route available to the respondents. He submitted that s 201A allows the respondents to garnish the bank account of an importer using financial institutions such as banks as their collection agents. The provision reads,

“201A Power to appoint agent for collection of duty

(1) For the purpose of subsection (1)—

“person” includes—

(a) the People’s Own Savings Bank constituted in terms of the People’s Own Savings Bank Act

[Chapter 24:22] and any financial institution registered or required to be registered in terms of

the Banking Act [Chapter 24:20] or the Building Societies Act [Chapter 24:02]; and

(b) a partnership or company.

(2) The Commissioner may, if he thinks it necessary, declare any person to be the agent of any importer or

excise manufacturer, and the person so declared an agent shall be the agent of such importer or excise manufacturer for the purposes of paying any duty due in terms of this Act, and, notwithstanding anything to the contrary contained in any other law, may be required to pay any duty due from any moneys in any current account, deposit account, fixed deposit account or savings account or from any other moneys, including pensions, salary, wages or any other remuneration, which may be held by him for, or due by him to, the importer or excise manufacturer whose agent he has been declared to be.” (my underlining.)

Mr Magwaliba submitted that in terms of this provision the respondents do not have to approach any court to collect any outstanding duties. All they need to do is to appoint whoever holds money on behalf of an importer as an agent and demand that any money held by such agent be paid to them for outstanding duties. Mr Magwaliba, further argued that this provision overrides any other law that provides otherwise, that law has to give way to what is provided in s 201A.

It was Mr Magwaliba’s contention that from the papers, it is clear that the applicant was offered the opportunity to be heard by the respondents. Annexures 9 and 10 to the founding affidavit are letters from the first respondent to the applicant on 14 October 2013 and 21 November 2014 showing such proof. The applicant raised issues with the first respondent and those issues were responded to. A determination was then made that the applicant should pay and this was communicated to it.

Mr Magwaliba also referred to s 44 (6) of the Value Added Tax Act which reads,

“(6) Where any registered operator—

(a) has failed to pay to the Commissioner within the period prescribed for payment any amount of tax, additional tax, penalty or interest payable by the registered operator under this Act; or

(b) owes any amount of tax, interest or penalty levied under any Act of Parliament administered on behalf

of the Minister responsible for finance by the Commissioner and the registered operator is in default in

respect of the payment of such amount; the Commissioner may set off against the amounts referred to in paragraphs (a) and (b) any amount or part thereof which has become refundable to the registered operator under this section or any interest which has become payable to the registered operator in terms of section forty-five.”

Mr Magwaliba submitted that this provision makes it clear that the respondents do not need to approach a court of law to recover outstanding taxes. It also allows for the setting off of outstanding tax against tax refunds owed to the tax payer. The respondents were therefore entitled to use the tax refunds that were due to the applicant to set off the import tax rebate the applicant had erroneously been granted.

I am in agreement with Mr Magwabila that in terms of s 44 (6) of the Value Added Tax Act and s 201 A of the Customs and Excise Act the respondents are entitled to recover any outstanding import duty and import tax without recourse to court and in terms of these provisions it is not a requirement that the person who owes or the importer must be admitting to owing the crown. The wording of the provisions do not make it a requirement or a condition that the importer must be admitting to owing the crown for recourse to be had to these provisions. If the legislature wanted recovery of duty to be conditional upon the importer admitting, it would have made it clear in the provisions. I am strengthened in my interpretation by s 224 of the Customs and Excise Act which I have already quoted above which says that any amount of duty which has been underpaid or erroneously refunded shall be paid or repaid on demand being made by the proper officer. This means that duty will have to be paid or must be paid upon a formal request to pay or upon a call being made to pay. The word “demand” denotes that payment should or must be made irrespective of whether or not the person being asked to pay is admitting liability.

It was Mr Mpofu’s argument that in terms of s 201A of the Customs and Excise Act the respondents can employ agents to garnish money owed to it by an importer but in this case it employed no agent as it withheld the tax funds which were due for refund to the applicant. He contended that it was illegal for the first respondent to employ this provision to recover duty because it cannot be its own agent. Mr Magwaliba argued that the respondents employed the common law remedy of set off which remedy does not await the institution of legal proceedings. I am in agreement that the respondents were entitled to employ the set off remedy. This is a remedy which is available to any creditor in a case where both parties are mutually obligated to one another with both debts being liquidated and fully due. See Trinity Engineering (Pvt) Ltd v Anglo Shipping Ltd 1986 (1) SA 700. The first respondent was a creditor holding tax refunds due to the applicant, it was entitled to set off the import duty and import tax owed to it using those tax refunds.

Consequential reliefs

Whether the respondents should be interdicted from recovering the outstanding duty which they believe was wrongly granted and whether the respondents should be ordered to refund to the applicant all tax refunds which were set off against the wrongly granted rebates and interest?

Both counsels submitted that by the time this matter was heard all the monies (duty and interest) that were in issue had since been recovered by the respondents. There cannot be an interdict for a past invasion of rights. An interdict is appropriate only when future injury is feared. When the wrongful act giving rise to the injury has occurred either it must be of a continuing nature or there must be a reasonable apprehension that it will be repeated for an interdict to be granted. See Herbstein & van Winsen The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa 5 ed at p 1465.

Mr Mpofu argued that an interdict ought to be granted to interdict the respondents from such future conduct. However, as was correctly argued by Mr Magwaliba there is no factual basis warranting the granting of an interdict because the facts of this matter arose up to 2013 and all the monies due have since been recovered. There is no factual basis for the applicant to fear that the respondents will seek to recover more monies from it. I will thus not grant an interdict. I will also not order a refund of the monies that were used in setting off the rebated customs duties, tax and interest because I have already made a finding above that the respondents were entitled to recover these monies.

Costs

I will not award any costs to the applicant because it did not fully succeed in its claims. It made excessive claims and caused the filing of an unnecessarily long and voluminous application going up to about p 260. It did not succeed in 7 of the reliefs it was seeking. It only succeeded in two. In respect of the 7 claims it lost, the applicant had no good cause for making those claims. It wanted this court to grant it declaraturs entitling it not to pay duty in contravention of the law simply because the respondents had erroneously granted it some rebates of duty in contravention of the law. On the other hand, I will not award costs in favour of the respondents because the applicant partly succeeded in its application. The respondents only latter made a concession in respect of the reliefs that the applicant succeeded in much later, in the heads of argument. They had imposed fines against the applicant when it was clear to them that the applicant was not admitting guilty. This was in clear contravention of the law. Further to that, despite the later realization that they had acted contrary to the law, they did not see it prudent to refund the applicant its money. By the time this matter was heard the respondents had made no refund at all. I will thus order that each party bears its own costs.

In the result, it be and is hereby declared that:

(a) The second respondent has no power to impose a fine, where a contravention of the Customs and Excise Act [Chapter 23:02] has not been admitted.

The fines imposed by the second respondent are null and void.

The respondents are hereby ordered to refund to the applicant all the fines that were imposed and collected from it.

Each party is to bear its own costs.

Dube Manikai & Hwacha, applicant’s legal practitioners

Zimbabwe Revenue Authority Legal & Corporate Services Division, respondent’s legal practitioners