High Court sets aside N$8.23m penalty hike against start-up

The High Court has ruled that the Namibia Revenue Agency (Namra) acted unlawfully after it retrospectively increased a customs penalty against First Edge Technology Distribution by N$8.23 million, 20 months after the original penalty had been imposed and paid.

The company was fined N$793 793.18 in March 2022, but Namra revised the penalty to N$9 019 096.82 in November 2023.

The matter stems from a February 2022 cellphone import consignment in which First Edge, a new Namibian company expanding across Southern Africa, mistakenly attached an old invoice from an earlier pilot shipment.

While the delivery note correctly reflected 8 946 cellphones valued at more than N$3.26 million, the wrong invoice reflected only 250 phones valued at N$92 457.50, leading Namra to detain the goods and impose a penalty of N$793 793.18.

Deputy judge president Hannelie Prinsloo delivered the judgment on 15 May in an unopposed review application brought by the Windhoek-based company against Namra.

At the centre of the ruling was the legal principle of functus officio, which means a public authority exhausts its powers over a matter once it has made a final decision.

“It is common cause that on 9 March 2022, the respondent imposed an administrative penalty calculated at 25% of the value of the undeclared goods, and that the applicant paid that penalty in full two days later,” Prinsloo stated.

The ruling noted that the shipment followed an earlier successful pilot consignment aimed at testing logistics processes involving the fulfilment partner, the courier, and the linehaul agent before the company scaled up operations.

Fair and reasonable

First Edge subsequently sought leniency, explaining that it was a new company and that the under-declaration arose from a clerical invoicing error rather than an attempt to evade customs obligations.

The court found that the hefty penalty increase reinforced the irrationality of the decision, particularly because Namra relied on facts it already knew in March 2022, before the new penalty was imposed in November 2023.

Prinsloo further noted that Namra had advanced no allegation of fraud, misrepresentation or material non-disclosure.

The absence of fraud became central to the ruling because fraud is among the few recognised grounds that can justify reopening a completed administrative determination.

The court found that Namra attempted to rely on section 3(2) of the Customs and Excise Act to amend the earlier penalty but ruled that the provision could not lawfully be used to reopen a completed section 101 determination retrospectively.

The judgment repeatedly stressed the constitutional protections contained in Article 18, which requires administrative bodies to act lawfully, reasonably and fairly.

Prinsloo held that the matter was not merely a customs dispute but also involved constitutional principles.

She warned that businesses must be able to arrange their affairs with confidence once administrative decisions have been finalised.

The court said retrospective reopening of completed regulatory penalties without fraud or exceptional circumstances undermines legal certainty and lawful administration.

The court also found that the tax authority failed to give First Edge sufficient warning.

“The applicant was not afforded notice of the intended amendment, nor an opportunity to make representations before a materially more onerous penalty was imposed.”

No order was made as to costs.