The South African Revenue Service (SARS) today destroyed a large consignment of illegal tobacco products at Cato Ridge Farm in KwaZulu-Natal (KZN).
The cigarettes, totaling 1.2 million sticks, were seized over a period of four months this year and has an estimated market value of R720 000. The confiscations were based on the fact that:
Today's action by SARS forms part of an ongoing enforcement campaign to create awareness among consumers and businesses about the trade in illicit goods and the effect it has on the economy. Representatives from the tobacco industry have been cooperating with SARS Anti-Smuggling and Enforcement teams in identifying illegal trade and retail networks of these products.
The most common examples of cigarette smuggling SARS has uncovered include the transportation in containers and trucks with false compartments at border posts and warehouses as well as cross border smuggling. The amount of contraband cigarettes found in the South African market serves as an indication that smuggling into the country is increasing.
Since April this year close to 18 million cigarettes sticks have been confiscated by SARS Anti-Smuggling officials. The value of these goods is estimated at between R12 million to R13 million. It is estimated that cigarette smuggling cost the South African fiscus an estimated R466 million in lost excise and customs duties and VAT charges between 2002 and 2004.
Of particular concern are incidents of "round tripping" where locally manufactured cigarettes are exported and exempted from duties and taxes. These goods then find their way back into South Africa. "Ghost exports" were also uncovered by SARS where empty containers or containers with other goods are exported to neighbouring countries and re-enter the domestic market with tobacco products for which duties and taxes have not been paid.
Illegally manufactured or smuggled cigarettes can also be a serious health risk to consumers as these goods may be introduced into market without consideration for health regulations.
It further constitutes a threat to legitimate activity in the industry. Illegal imported or counterfeit tobacco products can normally distinguished by the relative low selling price to consumers. In some instances a packet of 20 cigarettes is sold in the informal market for as little as R6.00, R6.50 or R7.00. In most of these cases taxes and duties have been circumvented, the product was introduced into the market illegally or the traders were unable to provide proof of origin.
SARS wants encourage consumers to report retail outlets and vendors who sell these products to the nearest SARS branch office or the SARS Fraud and Anti-Corruption Hotline - 0800 00 28 70
For further media enquiries, please contact Adrian Lackay, SARS Communications on 012 422 6037 or 083 388 2580
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE