Zimra demands US$7m fuel import duty

DIRECT Fuel Imports Group Zimbabwe (DFIGZ), a grouping of small-scale fuel procurement firms, is seeking a relief order from the High Court that will nullify demands by the Zimbabwe Revenue Authority (Zimra) compelling them to pay US$7 million cited as claims for outstanding duty.

According to a court application lodged by the petroleum firms at the High Court under case number HC 56/10/20, the applicant objects to paying US$7 million that is being claimed by Zimra in unpaid duty following promulgation of Statutory Instrument (SI) 161 which compels fuel importing firms to pay duty in foreign currency.

Zimra and Finance minister Mthuli Ncube are cited first and second respondents, respectively, according to the High Court application, which was lodged on October 6.

Prior to the court application, Zimra, according to documents seen by this newspaper, wrote to various firms constituting DFIGZ, demanding payment of varying amounts in foreign currency for fuel imports brought into the country in line with legal instrument SI 161 promulgated in August.

However, the petroleum firms, as highlighted by the court application say that Zimra's demand is void, since the imports in question were shipped into the country before the legal instrument came into effect.

The application reads: "This is an application for a declarator and consequential relief in terms of Section 14 of the High Court Act (Chapter 7:06). The basis of the application is that the first respondent (Zimra) is acting unlawfully and is threatening applicant's members with demands to pay duties on fuel imports in foreign currency retrospectively. The first respondent has no right to do so as the applicant's members paid the duties in the Zimbabwean dollar equivalent on time and in full.

"The total being claimed from the members of this class is in excess of US$7 000 000,00 as fully appears from the letters addressed to applicant's members annexed hereto marked 'C1-C7'. The first respondent is seeking this figure in addition to what applicant's members have already paid in Zimbabwean dollars equivalent."

The grouping in its application contends that Zimra does not have the locus standi to demand duty payment in foreign currency since the imports in question were made at a time the central bank did not allow its members to "settle local liabilities in foreign currency".

"The conditions laid out by the reserve bank of Zimbabwe (rbZ) for applicant members to operate Special FCA Nostro transitory accounts at the relevant period did not allow them to settle local liabilities in foreign currency. The rbZ only authorised local payments from Nostro accounts in circular number 3 of April 2020 in its Covid-19 mitigation measures," the court application reads.

"Further to the foregoing, section 4C of Statutory Instrument 212 of 2019 is also very clear on who should pay duties in foreign currency. It reads that transactions which can be done in foreign currency are payments of duty at ports of entry by individual travellers who opt to pay such duties in foreign currency despite the fact that the dutiable goods are not designated goods."

According to the application, DFIG suggested that by writing to specific members demanding payment in foreign currency, Zimra sought to "divide and rule" the group's members.

The application reads: "The first respondent further suggested that it would deal with applicant's members on an individual capacity... This is an attempt to divide and rule applicant's members."

DFIG is being represented by Nyangani Law Chambers.

The court application comes after a recent High Court ruling that now allows the smallscale firms to import fuel after the Zimbabwe energy regulatory Authority (Zera) had issued import licenses to only eight major fuel companies.