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CELLPHONE IS A PHONE, NOT A MACHINE - RULING

Samsung has come out on the wrong end of a dispute with SARS over import duties on cellphones at the Gauteng High court (Pretoria), notes Legalbrief. Judge Nomonde Mngqibisa-Thusi said Samsung had been disingenuous in arguing its product ‘is not a telephone for cellular networks but is a machine akin to a laptop or desktop’, reports TimesLIVE.


Samsung had conceded its product has ‘telephony functions’, the judge said, and the fact that it shares features with computers ‘does not detract from its principal function of being a telephone for cellular networks’. She added: ‘I am not convinced that the product is a machine other than a smartphone. Its usage through the Internet does not change its nature and objective characteristics.’


According to Mngqibisa-Thusi's judgment, Samsung originally imported its devices under the ‘telephone’ tariff. It applied for them to be reclassified after learning that Apple iPhones avoided import duty by enjoying the ‘machine’ definition. SARS officials rejected the application in September 2017, but three weeks later they changed their mind and told Samsung import duties would be refunded. But two months later they changed their minds again.


Mngqibisa-Thusi said import classifications for machines that had two or more functions were decided based on the principal function. Samsung argued that its devices' main function was to connect users to the Internet, social media, music, and games, not to make telephone calls. But SARS argued that its product is a telephone because ‘it has a speaker at one end which is audible when placed against the operator’s ear and at the other end has a microphone to receive speech or voice from the operator’s mouth’.


Mngqibisa-Thusi dismissed Samsung's application with costs.

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