Return-Path: Received: from rs10.cphost.co.za by rs10.cphost.co.za with LMTP id UDeMMjXkBGKJcwAA/iTCYQ (envelope-from ); Thu, 10 Feb 2022 12:08:53 +0200 Return-path: Envelope-to: nishen@jclcargo.co.za, lisa@jclcargo.co.za Delivery-date: Thu, 10 Feb 2022 12:08:53 +0200 Received: from [41.193.19.22] (port=50598 helo=[192.168.101.125]) by rs10.cphost.co.za with esmtpa (Exim 4.94.2) (envelope-from ) id 1nI6Nk-0003qm-MN; Thu, 10 Feb 2022 12:08:53 +0200 User-Agent: Microsoft-MacOutlook/16.57.22011101 Date: Thu, 10 Feb 2022 12:08:53 +0200 Subject: Proposal for Settlement - Zaro From: Hassan Varachia To: Nishen CC: Lisa Message-ID: Thread-Topic: Proposal for Settlement - Zaro Mime-version: 1.0 Content-type: multipart/alternative; boundary="B_3727339733_1159828671" > This message is in MIME format. Since your mail reader does not understand this format, some or all of this message may not be legible. --B_3727339733_1159828671 Content-type: text/plain; charset="UTF-8" Content-transfer-encoding: quoted-printable Dear Nishan, =20 I have drafted a proposal for settlement. Please see below =20 South African Revenue Services =20 Per email:=20 =20 08 February 2022 =20 Dear Sir =20 Reference: ITUWC21CAS0024 =E2=80=93 SARS RESPONSE TO ZARO RESPONSE LETTER=20 =20 We refer to the letter dated 31/01/2022 wherein SARS addresses the points r= aised by Zaro in the letter of response to the notice of intent to raise an = assessment, =20 SARS agrees that the initial audit engagement letter that was sent on 1 Ju= ly 2021 was for the purpose of providing clarity /explanations for the diffe= rences in Reserve bank payments when compared to the customs declarations. T= he audit covered 221 consignments over a 17 month period commencing from Nov= ember 2019 to March 2021 with a total customs declared value of R84 841 185. =20 SARS agree that Zaro did provide, complete, and reconcile all requested inf= ormation. SARS further agreed that =E2=80=9Cthe explanation given of Zaro with reg= ard to the differences was checked and confirmed to be in fact due to forex = losses/gains.=E2=80=9D =20 SARS findings that Zaro deducted the incorrect amount as freight charges re= sulting in custom value understated is solely based on 173 freight statement= s directly obtained from shipping lines that were invoiced to foreign freigh= t forwarders and not=C2=A0 directly to Zaro. =20 SARS does not dispute that Zaro had no sight of the invoices requested from= the various shipping lines. SARS does not dispute that Zaro only dealt with= a single freight forwarder for ocean freight services. However, SARS till m= aintains that =E2=80=9CZaro should have requested these invoices from the shipping= line=E2=80=9D, despite knowing Zaro is not a client of the shipping lines.=20 =20 SARS does not dispute Zaro response that those freight companies that were = invoiced by the shipping lines would have obtained preferential rates. SARS = does not dispute that Zaro response that these freight companies rely on pro= fit margins that is based on increased demand and container shortages. =20 SARS agrees that Zaro were only provided 3 freight statements out of 173 fr= eight statements but dismissed this as the statements were only provided at = the beginning of the audit for the purpose of Zaro giving explanation on the= differences between freight statements and customs worksheet. This cannot b= e an adequate reason as this effectively limited Zaro=E2=80=99s response to SARS.=20 =20 In fact, Zaro went further and did a breakdown of cost of freight per conta= iner for (refer to Annexure A). The findings further support Zaro view that = reliance cannot be placed on these rates as there are findings that SARS con= tends that Zaro understated the amounts that was supposed to be deducted on = the customs worksheet. =20 In response to ZARO letter, SARS states, =E2=80=9Cthe amount paid/payable to be d= educted/excluded and not an average amount=E2=80=9D This is a weak response as Zar= o never stated it deducted freight based on average rates, Zaro highlighted = the fact that freight rates that SARS is relying on shows that the shipping = lines pricing variances are double, treble, quadruple for consignments shipp= ed around the same time from the same port of loading. For example, DBN20201= 0145029388 SARS claims the Maersk freight rate per container was USD1 750 bu= t for entry DBN202010165033861, SARS claims the freight rate per container c= harged by Cosco was USD 480. Whilst ZARO agrees that freight rates will vary= between the shipping lines, it is highly unlikely that Maersk freight rate = will 265% higher than Cosco at any given time. =20 SARS did not provide any response to Zaro letter with respect to Penal Pro= visions in terms of Section 84 (1), It can therefore be concluded that SARS = agrees that Zaro Investments did not make any false statements. =20 The Section 91 Penalty and Forfeiture is also raised based on SARS assertio= n that Zaro =E2=80=9Cshould have requested these invoices from the shipping lines=E2= =80=9D =20 SARS is relying on Section 41(4) even though Zaro did not know, have in it= s possession, or could have obtained the freight rates charged by Shipping l= ines to other freight companies. =20 Zaro believes the potential liability of 9 871 278.53 is unjust and ignores= the fact that Zaro could not and did not have the means to deal directly wi= th the shipping lines in China. Therefore, Zaro is being punished for using = a freight forwarder. =20 Zaro further believes that it will be successful upon review of the decisio= n in the High Court. =20 However, to avoid expensive litigation fee, Zaro wish to enter into a settl= ement agreement in terms of Section 77M as an alternative to litigation. =20 The settlement does not in any way constitute an admission as to the true n= ature or the proper interpretation of any of the issues or applicable legal = principles. =20 Zaro proposes an amount of R250 000 (Two hundred and fifty thousand rand) a= s payment in full and final settlement of the dispute, the issues of the dis= pute and the amount in dispute. =20 =20 =20 --B_3727339733_1159828671 Content-type: text/html; charset="UTF-8" Content-transfer-encoding: quoted-printable

Dear Nishan,

 

I have drafted= a proposal for settlement. Please see below

 

South African Revenue Services

=  

Per email:

 

08 February 2022

&nbs= p;

Dear Sir

 

Reference: ITUWC21CAS0024 =E2=80=93 SARS RES= PONSE TO ZARO RESPONSE LETTER

 <= /i>

We r= efer to the letter dated 31/01/2022 wherein SARS addresses the points raised= by Zaro in the letter of response to the notice of intent to raise an asses= sment,

 

  1. SARS agrees that the initial audit engagement lett= er that was sent on 1 July 2021 was for the purpose of providing clarity /ex= planations for the differences in Reserve bank payments when compared to the= customs declarations. The audit covered 221 consignments over a 17 month pe= riod commencing from November 2019 to March 2021 with a total customs declar= ed value of R84 841 185.

 

  1. SARS agree that Zaro did provide, complete, and= reconcile all requested information. SARS further agreed that =E2=80=9Cthe = explanation given of Zaro with regard to the differences was checked and con= firmed to be in fact due to forex losses/gains.=E2=80=9D=

<= span lang=3DEN-US style=3D'font-size:12.0pt'> 

  1. SARS findings that Zaro= deducted the incorrect amount as freight charges resulting in custom value = understated is solely based on 173 freight statements directly obtained from= shipping lines that were invoiced to foreign freight forwarders and not=C2=A0 d= irectly to Zaro.

<= o:p> 

  1. SARS does not dispute that Zaro had no sight of the invoices requ= ested from the various shipping lines. SARS does not dispute that Zaro only = dealt with a single freight forwarder for ocean freight services. However, S= ARS till maintains that =E2=80=9CZaro should have requested these invoices f= rom the shipping line=E2=80=9D, despite knowing Zaro is not a client of th= e shipping lines.

 

  1. SARS does not dispute Zaro response that those fr= eight companies that were invoiced by the shipping lines would have obtained= preferential rates. SARS does not dispute that Zaro response that these fre= ight companies rely on profit margins that is based on increased demand and = container shortages.

 

    SARS agrees that Zaro were only provided 3 freight statements= out of 173 freight statements but dismissed this as the statements were onl= y provided at the beginning of the audit for the purpose of Zaro giving expl= anation on the differences between freight statements and customs worksheet.= This cannot be an adequate reason as this effectively limited Zaro=E2=80=99s resp= onse to SARS.

 

  1. In fact, Zaro went further and did a breakdown of cost of freight p= er container for (refer to Annexure A). The findings further support Zaro vi= ew that reliance cannot be placed on these rates as there are findings that = SARS contends that Zaro understated the amounts that was supposed to be dedu= cted on the customs worksheet.

 

  1. In response to ZARO letter, SARS states, =E2=80=9Ct= he amount paid/payable to be deducted/excluded and not an average amount=E2=80=9D<= /i> This is a weak response as Zaro never stated it deducted freight bas= ed on average rates, Zaro highlighted the fact that freight rates that SARS = is relying on shows that the shipping lines pricing variances are double, tr= eble, quadruple for consignments shipped around the same time from the same = port of loading. For example, DBN202010145029388 SARS claims the Maersk frei= ght rate per container was USD1 750 but for entry DBN202010165033861, S= ARS claims the freight rate per container charged by Cosco was USD 480. Whil= st ZARO agrees that freight rates will vary between the shipping lines, it i= s highly unlikely that Maersk freight rate will 265% higher than Cosco at an= y given time.

 

  1. SARS did not provide any response to = Zaro letter with respect to Penal Provisions in terms of Section 84 (1), It = can therefore be concluded that SARS agrees that Zaro Investments did not ma= ke any false statements.

 

  1. The Section 91 Penalty and Forfeiture is also raised bas= ed on SARS assertion that Zaro =E2=80=9Cshould have requested these invoices= from the shipping lines=E2=80=9D

 

  1. SARS is relying on Section 41(4) even though= Zaro did not know, have in its possession, or could have obtained the freig= ht rates charged by Shipping lines to other freight companies.

<= o:p> 

  1. Zaro believes the potential liability of 9 871 278.53 = is unjust and ignores the fact that Zaro could not and did not have the mean= s to deal directly with the shipping lines in China. Therefore, Zaro is bein= g punished for using a freight forwarder.

 

  1. Zaro further believes that it will be s= uccessful upon review of the decision in the High Court.

 

  1. However, to avoid expens= ive litigation fee, Zaro wish to enter into a settlement agreement in terms = of Section 77M as an alternative to litigation.
<= p class=3DMsoNormal style=3D'margin-left:36.0pt;mso-add-space:auto'> 

  1. The settlement does not in any wa= y constitute an admission as to the true nature or the proper interpretation= of any of the issues or applicable legal principles.
    2. =

 

  1. Zaro proposes an amount of = R250 000 (Two hundred and fifty thousand rand) as payment in full and f= inal settlement of the dispute, the issues of the dispute and the amount in = dispute.

&nbs= p;

 

&nb= sp;

--B_3727339733_1159828671--