Authored by Mmathabo Lekalakala.
In April 2026, the High Court ordered the release of a foreign-flagged vessel, detained and seized by the South African Revenue Service (SARS), on condition that a guarantee of approximately ZAR 522 million be provided to cover both the vessel's estimated value and the outstanding tax exposure. The judgment offers important guidance on when a court will grant interim relief against the exercise by SARS of its powers under the Customs and Excise Act.
The vessel, a Singaporean-registered tanker, entered South African waters in September 2023 to perform coastwise transport of fuel products. No customs entry was made and no import VAT was paid. SARS detained the vessel in March 2025 and seized it in June 2025, on the basis that the fuel products had been imported in contravention of the customs act. SARS indicated an intention to hold the charterer liable for ZAR 124 million in import VAT, interest and penalties. The vessel was valued at ZAR 400 million.
The owner and the charterer applied for interim relief, offering a guarantee from an insurer as substitute security for the physical detention of the vessel.
The court found that the applicants had established a prima facie right, noting that the proper interpretation of the relevant customs provisions was "genuinely difficult" and warranted serious consideration at the later review hearing. The proportionality of the forfeiture – seizing a ZAR 400 million asset to secure a ZAR124 million tax liability – raised additional arguable grounds.
On whether there would be irreparable harm, the court accepted that the charterer was losing an estimated ZAR 31 million per month in charter costs and substitute vessel expenses, and that the vessel's detention posed a risk to regional fuel supply, given the charterer's role in supplying 75% of Cape Town International Airport's jet fuel.
SARS raised three objections to the guarantee – that it was conditional rather than on-demand, that the wrong party was named as customer, and that the quantum was insufficient – but the court rejected each of them. The court was satisfied that the guarantee provided equivalent security to the physical detention of the vessel.
Importantly, the court found that the vessel had not been forfeited by operation of law, because review proceedings had been instituted and remained pending. SARS could therefore not treat the vessel as though it had already been condemned.
The court awarded costs on the higher costs scale, citing the novelty of the customs and maritime law issues, the constitutional dimensions, and the financial magnitude of the dispute.
The judgment carries practical significance for South African companies chartering ships for local use. Foreign vessel owners and charterers operating in South African waters should ensure that proper customs entries are made and import VAT is paid when a vessel is brought in for coastwise trade. A failure to do so can expose the vessel to detention, seizure and potential forfeiture – regardless of the owner's knowledge of the contravention. The court's finding that a conditional guarantee from an insurer can serve as adequate substitute security for the physical detention of a vessel signals a positive development. It offers a viable mechanism for vessel owners and charterers to secure the release of detained vessels and limit ongoing commercial losses while the underlying dispute is resolved.
The case reinforces that forfeiture does not operate automatically once review proceedings have been instituted, meaning that vessel owners retain the ability to challenge the seizure rather than being treated as having already lost the asset. More broadly, the judgment underscores that courts will weigh the proportionality of seizing a high-value vessel against a comparatively smaller tax liability and will have regard to the wider economic consequences of prolonged vessel detention, including disruption to fuel supply chains.