Accusatory fingers are being
pointed at SA Revenue
Service (Sars) customs,
alleging that they may be
guilty of breaking a law
that they themselves are
empowered to enforce.
The accusation was that
customs, at a State Warehouse
auction just held in Durban,
was selling counterfeit brandname
goods in a lot including
Armani, Chanel, Playboy and
Versace clothing. There was
a condition attached to the
sale – that the goods had to
be exported off the African
continent.
This doubtful deal was first
brought to FTW’s attention
by an industrialist who
had attended the sale as a
buyer, and only wanted to be
described as “a law-abiding
citizen”.
He said that he had
examined the clothing, and
was certain that some of
the items were not genuine
brand-name items. This, he
added, was further confirmed
in discussions with a lawyer
who specialises in intellectual
property rights (IPR).
“That being the case,”
said the law-abiding citizen,
“customs is effectively
continuing the counterfeit
goods supply-chain, first of
all started by the original
importer of the illegal goods.”
But neither the identity of
that original importer nor
the agent(s) who had acted to
clear the goods was available.
A simple reason, the lawyer
told FTW. Apparently all
intellectual property right
holders (IPRH) who wish
customs to seize and detain
goods that are alleged to be
counterfeit must register with
Sars. They also usually set a
minimum quantity threshold
above which customs will
act.
In this instance, the
lawyer added, the quantity of
counterfeit clothing fell below
that threshold, and the IPRH
had therefore not applied for
a warrant for customs to seize
and detain, and the identity of
the importing/clearing parties
is not recorded nor disclosed.
“We do not receive any
such information unless
the goods are seized on a
warrant,” he said. “As far as
we understand, some of these
items were genuine, and the
importer failed to pay the
duty or disappeared before
the goods were cleared.
“But some of them are
very definitely counterfeit,
although in such a small
quantity as to not exceed the
minimum quantity threshold.”
But, when asked for his
impression of Sars putting
these counterfeit items up for
public auction and demanding
“export off the African
continent”, he described
himself as “stunned”, and
added that he was strongly
of the opinion that this
contravened the Counterfeit
Goods Act, No 3 of 1997.
In terms if Section 15 of
that act, it states that: “Goods
that are counterfeit goods,
may not –
(a) Be in the possession
or under the control of any
person in the course of
business for the purpose of
dealing in those goods;
(b) Be manufactured,
produced or made except for
the private and domestic use
of the person by whom the
goods were manufactured,
produced or made;
(c) Be sold, hired out,
bartered or exchanged, or be
offered or exposed for sale
hiring out, barter or exchange;
(d) Be exhibited in public
for purposes of trade.”
“But,” said the lawyer,
“although I disagree, Sars
holds the strong view that it
has the right to auction off
the goods to try to recover the
unpaid duties on the goods,
and it has been doing this for
some time.”
Our law-abiding citizen
was equally bemused at Sars
perpetuating the sale of these
counterfeit goods in SA.
He said that he saw nothing
wrong with Sars selling
genuine goods on which the
duty had not been paid and
Sars wanted to recover, but
was adamant that counterfeit
goods should be destroyed.
And, as he only wanted
to buy such clothing for
shredding the material, he felt
he offered the best answer to
the problem of the counterfeit
items – giving Sars a payment
towards the payment of
the duty, yet effectively
destroying the counterfeit
brand-name clothing.
He based this logic on the
guidelines to customs on
Section 15 of the Act – based
on a Sars policy document –
which says: “In the event of
such goods being earmarked
for destruction and if all
customs formalities have been
complied with, it would not
be necessary for customs to
intervene in the destruction of
such goods in any way.”
However, although the
lawyer agreed with our
buyer, and fought to have
his reasoning accepted by
customs at the sale, he failed
to convince them, and the
goods were auctioned under
the “export outside the
African continent” condition.
“Whereas I was offering
to destroy the counterfeit
clothing, it seems to me that
customs is just wishing the
problem onto some overseas
country,” the buyer said.
“That’s just our customs
passing on the problem to
another country’s customs
authorities.”
And this act is just
adding to what is already a
major problem for overseas
countries. For example, last
year the European Union
(EU) customs seized almost
115 million fake designer
products compared with just
over 100m in 2010.
The retail market value
of the goods suspected of
violating intellectual property
rights (IPRs) represented
the equivalent of nearly R14
billion, according to the
European Commission (EC).
In total, 73% of all IPRinfringing
goods originated
in China.
Despite efforts to get a
comment from Sars customs,
FTW was unable to find
anyone able or willing to
speak about the matter,
although we would welcome a
response.
We would also welcome
your comments. Email joyo@nowmedia.co.za
INSERT
‘Sars holds the strong
view that it has the
right to auction off the
goods to try to recover
the unpaid duties on
the goods.’
CAPTION
Real or counterfeit? Condition of sale was that goods had to be exported off the African continent.
