We live in a fast-evolving society, where technological advancements have been exponential. Such advancements result in significantly transformed or developed products which are vastly different to earlier versions. These advancements are not always catered for by the Harmonised System Nomenclature ("HS") and its corresponding Explanatory Notes ("EN"), which often need to be amended to provide for new or advanced products.

One such product is the Smartphone. Cell phones went from being devices for making calls and sending messages to devices capable of the reception, conversion, transmission or regeneration of voice, images or other data, data processing and various other functions.

In the Samsung Electronics SA (Pty) Ltd v The Commissioner for the South African Revenue Service (Case no 764/2021) [2022] ZASCA 126 (28 September 2022) case, the Supreme court of appeal ("SCA") had to determine whether the Samsung Galaxy S7 smartphone ("the Product") was a:

1."Machine for the reception, conversion and transmission or regeneration of voice, images or other data" classified in tariff subheading ("TH") 8517.62.90 as argued by Samsung; or

2."Telephone for cellular networks or for other wireless networks, designed for use when carried in the hand or on the person", as determined by SARS.

Samsung's case rested on two essential propositions:

• Firstly, although the Product performs the function of a cellular telephone, it is a multifunctional machine.
• Secondly, (which is linked to the first preposition), because of its multifunctional nature, the product's principal function is not that of a telephone for cellular networks.

In the alternative, if the principal function could not be identified, the general rule of interpretation ("GRI") 3(c) would be invoked, which requires a product to be classified in the TH appearing last in numerical order.

The court, in this case, held the following (which is equally applicable to other products which have seen significant technological advances):

• Samsung, in attempting to identify a "principal function", overlooked the objective characteristics of the product, which identify its principal function as a telephone for cellular networks.
• The description of the product as a "smartphone" is not a colloquialism. The concept of a "smartphone" is a word in the English language which has been established over a period relative to a rapidly evolving technology.
• Contrary to the thesis advanced by Samsung that a smartphone is an apparatus that has evolved to the point of no longer being a cellular phone, but rather some other apparatus that operates over a cellular network, the language of Samsung and its literature clearly indicates that a smartphone is simply an evolved and more advanced cell phone than earlier cell phones.
• The fact that the product can connect to the internet and browse the internet like a computer, either over a cellular network or WLAN (Wireless Local Area Network), does not make it more like a traditional laptop or desktop computer, with which it shares internet browsing functionality. Its size, construction and SIM card capacity dictate that it is still a telephone. It is merely an advanced telephone following the natural progression of rapid technological advancement, and although it shares many features of communication technology common to computers, it clearly identifies as a telephone and not as some other apparatus.

The above principles and reasoning are equally applicable to other products which have seen similar technological changes. However, SARS does not appear to be applying the principles laid down by the SCA in the Samsung case to other products which have had similar advancements.  This is irrational and unreasonable, and must thus be contested by the imports/exports of such products.

Should one be faced with a similar issue, Shepstone & Wylie is uniquely positioned to assist.