South African Revenue Service

Carnilinx voluntarily submitted a response to the allegations of illegal tobacco trading to assist the Commission in its inquiry.

“Carnilinx accordingly tenders these submissions voluntarily. It does so not to challenge the Commission’s mandate nor to relitigate historical regulatory matters with the South African Revenue Service but to assist the Commission by placing before it a balanced account of the company’s history, regulatory engagement and present position.”

Carnilinx is a South African cigarette manufacturer incorporated in May 2011, operating under license issued by SARS, contributing meaningfully to the South African economy through investment, tax payment, and employment.

“Carnilinx is a South African cigarette manufacturer duly incorporated in accordance with the laws of the Republic. Carnilinx was established in May 2011 and has for approximately 15 years operated within one of the most comprehensively regulated industries in South Africa.”

Carnilinx conducts its business within a statutory framework governed by extensive legislative and regulatory requirements administered by SARS.

“The manufacture of tobacco products is governed by an extensive legislative and regulatory framework including licensing requirements, excise controls, customs supervision, record keeping obligations, inspections, audits and enforcement powers administered by SARS. Carnilinx conducts its business within that statutory framework.”

Carnilinx engaged with SARS in 2014 in a comprehensive disclosure process concerning historical tax matters, seeking to regularise its tax affairs under applicable legislation.

“During 2014 Carnilinx engaged with SARS in a comprehensive disclosure process concerning historical tax matters with the objective of making full disclosure concerning historical tax compliance and seeking to regularise its tax affairs under the applicable tax legislation administered by SARS”

An affidavit by Carnilinx director Adriano Mazzotti related to historical tax compliance was prepared for confidential engagement with SARS, but versions quoted by media have been found inaccurate and possibly taken out of context without Carnilinx's knowledge or authority.

“The affidavit was intended to form part of a confidential engagement between Carnilinx and SARS. At some stage thereafter, information purporting to originate from that affidavit entered the public domain without Carnilinx's knowledge or authority...Carnilinx further notes that the aspects of the media reporting concerning Carnilinx, Mazzotti, and the historical tax affairs have previously been found by the press ombudsman to have been inaccurate.”

Carnilinx continues to operate as a licensed manufacturer under SARS regulatory oversight, subject to inspections, audits, verifications, and assessments, with some findings accepted and others disputed through statutory mechanisms.

“Following its engagement with SARS concerning historical tax matters, Carnilinx continued to operate as a licensed manufacturer under the regulatory oversight of SARS. The company has remained subject to inspections, audits, verifications, and assessments by SARS in the ordinary course. Certain findings have been accepted and the relevant liabilities discharged. Other findings have been disputed through the statutory objection, appeal, and review mechanisms established under the South African tax legislation.”

The South African Revenue Service (SARS) did not make Colonel Jacob aware that they were still interested in inspecting the container after drugs were found in it.

“SARS did not make us aware that they were still interested in it”

South African Revenue Service (SARS) had issued a detention notice for the container as early as June 14, 2021, although the container shipment arrived on June 21, 2021.

“On the 14th of June ... there is a stop, a detention notice for State Vet. So by the time it lands, it is been identified for detention. And if detention is by a State Agency, such as the SARS, according to this document ...”

An inconsistency exists because SARS issued a detention notice on June 23, 2021, which suggests that the container was still under customs control when it was supposedly cleared on June 21, 2021.

“How can this container be cleared already on the 21st if SARS on the 23rd issues a notice of detention on it? It suggests that it is still under the control of customs.”

The South African Revenue Service (SARS) issued a detention notice dated 23 June 2021 related to illicit trade, one day after a seizure on 22 June 2021.

“there is a detention notice from SARS, a SARS detention notice, illicit trade . It is dated the 23rd of June 2021, so that is the day after the seizure . The seizure was on the 22nd of June”

SARS issues detention notices automatically and formally from its Illicit Trade Group to import managers for containers flagged for investigation after they have been placed in the yard.

“the detention notice is placed automatically. Now they are doing a formal notice, and that is what this piece of paper is. It is a formal notice from the SARS Illicit Trade Group to the import manager, saying we want to look at those 10 containers that you have landed .”

SARS was not suspecting drugs in the containers but was looking for illicit or wrongly declared goods.

“It is not because SARS suspects that there is drugs on these. They are looking for illicit goods .”

A container involved in the case had already left the port before the investigation started, making it impossible for ORS to place a stop at the port.

“So in this instance, this one had already left the port. Although there was a SARS stop on it, but it already left the port. That is why we could not use ORS to place a stop.”