Customs News Bulletin

8 October 2013

 

Latest International Trade News

 

From time to time certain government departments publish draft legislation to inform stakeholders about their intention to amend legislation, and to invite comments. The commentary period ranges from 2 week to longer periods, depending on the urgency of the matter.

The Bulletin focuses on the publication of information relating to such matters which impact on Customs and Excise legislation and on broader import and export legislation.

 

HOW ARE CUSTOMS DUTIES LEVIED ON GOODS IMPORTED INTO THE SOUTHERN AFRICAN CUSTOMS UNION?

Professionals in the shipping industry are often asked how customs duties are levied on imports into SACU and novices are intimidated by the fact that the Jacobsens Harmonized Customs Tariff is a two-binder loose-leaf publication comprising about two thousand pages.

Generally it should not be a problem to find your way through the publication, but even specialists sometimes forget that the first two schedules of Jacobsens (and the SACU HS Tariff) comprise information on the rates of normal customs duties, excise duties, additional levies (such as environmental levies and fuel and road accident fund levies), anti-dumping duties, countervailing duties and safeguard duties. Anti-dumping duties, safeguard duties and safeguard duties are collected in terms of Schedule No. 2, and duties in Schedule No. 2 are also defined as customs duties.  From time to time provisional payments in relation to the duties in Schedule No. 2 are also levied. Often one tends to overlook these when you consult your clients.

Let’s take the example of frozen chicken meat of tariff subheading 0207.14.90.

Currently the following duties and VAT apply to this meat:

  • Normal customs duties in Schedule No 1 Part 1 (37% effective from 30 September 2013); and

  • Anti-dumping duty of R9,20 when imported from the United States of America.

This meat includes so-called IQF braai packs.

VAT on imports is calculated on the aggregate of the customs duty, 10% thereof and on any non-rebated customs duties.

If one overlooks any customs duty he will also under-declare the customs VAT.

Beware...

 

DRAFT TARIFF AMENDMENTS EFFECTIVE FROM 1 JANUARY 2013

(Comment due on 29 October 2013)

 

The South African Revenue Service published various draft notices which will give interested parties an indication of what is in stall for 2014.

 

Draft Tariff Amendments including the proposed amendments to implement the EFTA phase-downs for 2014 with effect from 1 January 2014:

 

These amendments relate to the annual phase-downs and all proposed amendments are explained in the attached Explanatory Memorandum.

 

 

Download the documents from the SARS website at http://www.sars.gov.za/Legal/Preparation-of-Legislation/Pages/Draft-Documents-for-Public-Comment.aspx .

 

PROPOSED REGULATIONS TO PHASE-OUT THE USE OF POLYCHLORINATED BIPHENYLS (PCB) AND POLYCHLORINATED BIPHENYL (PCB) CONTAMINATED MATERIAL

 

Draft regulations were published under the National Environmental Management Act to phase out the use of polychlorinated biphenyls (PCB) and polychlorinated biphenyl contaminated materials by 2023.

In the Government Notice, members of the public were invited to submit written representations or objections on the proposed regulations within 60 days of publication of the notice.

The proposed regulations contain prohibitions on the use, importation and sale of PCB materials and PCB contaminated materials.  Importers, exporters and manufacturers of PCB materials and PCB contaminated materials are encouraged to download the draft regulations in order to determine how the prohibitions will affect their businesses.

Some of the products that could be affected by these regulations are:

·        Waste oils containing PCBs, polychlorinated terphenyls (PCTs) or polybrominated biphenyls (PBBs) (subheading 2710.91); and

·         Chemical compounds containing PCBs, PCTs or PBBs.

The proposed regulations to phase-out the use of PCB materials and PCB contaminated materials were published in Government Gazette Notice No. 36749 of 15 August 2013 under Notice No. R.849 of 2013. Members of the public and interested parties are invited to submit written representations and objections to the Department of Water and Environmental Affairs by 16 October 2013.

Download the draft regulations for more information.

 

 

Customs Tariff Applications and Outstanding Tariff Amendments

Notice 945 of 2013; List 15/2013

The International Trade Administration Commission (ITAC) is responsible for tariff investigations, amendments, and trade remedies in South Africa and on behalf of SACU.

Tariff investigations include:

Increases in the customs duty rates in Schedule 
No. 1 Part 1 of Jacobsens. These applications apply to all the SACU Countries, and, if amended, thus have the potential to affect the import duty rates in Botswana, Lesotho, Namibia, Swaziland and South Africa.

Reductions in the customs duty rates in Schedule No. 1 Part 1. These applications apply to all the SACU Countries, and, if amended, thus have the potential to affect the import duty rates in Botswana, Lesotho, Namibia, Swaziland and South Africa.

Rebates of duty on products, available in the Southern African Customs Union (SACU), for use in the manufacture of goods, as published in Schedule No. 3 Part 1, and in Schedule No. 4 of Jacobsens. Schedule No. 3 Part 1 and Schedule No. 4 are identical in all the SACU Countries.

Rebates of duty on inputs used in the manufacture of goods for export, as published in Schedule No. 3 Part 2 and in item 470.00. These provisions apply to all the SACU Countries.

Refunds of duties and drawbacks of duties as provided for in Schedule No 5. These provisions are identical in the all the SACU Countries.

Trade remedies include:

Anti-dumping duties (in Schedule No. 2 Part 1 of Jacobsens), countervailing duties to counteract subsidisation in foreign countries (in Schedule No. 2 Part 2), and safeguard duties (Schedule No. 2 Part 3), which are imposed as measures when a surge of imports is threatening to overwhelm a domestic producer, in accordance with domestic law and regulations and consistent with WTO rules.

Dumping is defined as a situation where imported goods are being sold at prices lower than in the country of origin, and also causing financial injury to domestic producers of such goods. In other words there should be a demonstrated causal link between the dumping and the injury experienced. To remedy such unfair pricing, ITAC may, at times, recommend the imposition of substantial duties on imports or duties that are equivalent to the dumping margin (or to the margin of injury, if this margin is lower).

Countervailing investigations are conducted to determine whether to impose countervailing duties to protect a domestic industry against the unfair trade practice of proven subsidised imports from foreign competitors that cause material injury to a domestic producer.

Safeguard measures, can be introduced to protect a domestic industry against unforeseen and overwhelming foreign competition and not necessarily against unfair trade, like the previous two instruments. In the WTO system, a member may take a safeguard action, which is, restricting imports temporarily in the face of a sustained increase in imports that is causing serious injury to the domestic producer of like products. Safeguard measures are universally applied to all countries, unlike anti-dumping and countervailing duties that are aimed at a specific firm or country.

Schedule No. 2 is identical in all the SACU Countries.

ITAC has received the following applications concerning amendments to the Customs Tariff of the Southern African Customs Union (SACU).  These applications related to:

1.       Increase in the domestic dollar-based reference price (DBRP) for sugar from US$ 358/ton to US$ 764/ton through an adjustment of the calculation of the DBRP for sugar by basing it on the domestic cost of production

Sugar is classifiable under various subheadings of heading No 17.01.

ITAC has received an application from the South African Sugar Association for an increase in the domestic dollar-based reference price (DBRP) for sugar from US$ 358/ton to US$ 764/ton through an adjustment of the calculation of the DBRP for sugar by basing it on the domestic cost of production.  By using the requested reference price, the variable tariff formula for sugar will trigger an increase in the London No. 5 sugar settlement price falls by US$ 20/ton below the base price, which is the 3-week moving average price for the London No. 5 settlement price.

Conversely a reduction in the duty will be triggered if the London No. 5 sugar settlement price increases by US$ 20/ton above the base price.  

Enquiries: Ms Lebogang Loate, fax (012) 394 4629 or Ms K Mzinjana , fax (012) 394 4664.

Representations should be submitted by 18 October 2013.  

2.  Comments requested on the increase in the allocation of quota levels for the importation of used overcoats under rebate item 460.11/00.00/01.00 for 2014

Rebate item 460.11 provides for a partial rebate on used over-coats, car-coats, raincoats, anoraks, ski-jackets, duffle-coats, mantles, three-quarter coats, greatcoats, hooded caps, trench coats, gabardines, padded waistcoats and parkas (excluding any other clothing articles) classifiable in tariff headings 61.01, 61.02, 62.01, 62.02 and 6309.00.13, in such quantities, at such times and subject to such conditions as ITAC may allow by specific permit.

The used coats that are admissible under this item must be imported in bales and must be designed to be worn over all other clothing as protection against the weather.

ITAC has requested interested parties to comment on a request by the Association of Importers of Worn Overcoats for a 30% increase in the level of the quota for 2014 regarding applications in terms of the provision under rebate item 460.11/00.00/01.00 for permits mention in the item.

Furthermore interested parties are requested to comment on a proposed amendment to the rebate item by the addition of the following conditions:

1.      Containers must arrive for inspection only during Monday to Friday. No arrivals may occur during Saturday, Sunday or public holidays.

2.      Importers need to provide the International Trade Administration Commission Of South Africa (ITAC) with proof of salaries being paid to temporary workers.

3.      The date for issuing permits be changed from February to an earlier period.

Enquiries: Barbara Moeng , Coert Grobbelaar Tel (012) 394 3672, Fax (012) 394 4672, or Kokami Getrude Legodi, tel (012) 394 3812, fax (012) 394 3812, email klegodi@itac.org.za

Download the Notice to view the reasons for the increase in the quota levels and amendment of the Guidelines.

Representations should be submitted by 18 October 2013.

3.       Creation of a rebate provision for full customs duty on (other) pile fabrics, knitted or crocheted, of man-mad fibres, classifiable in tariff subheading 6001.92, for the manufacture of footwear with uppers of textile materials, classifiable in Chapter 64

ITAC has received an application from Fast Fox Footwear / t/a Little Slippery Co. In Port Elizabeth for the creation of a rebate facility mentioned above.

As reasons for the application, it was stated that there are no local manufacturers, and the company is under threat from imported slippers.

ITAC Ref 37/2012, Enquiries Mr M Skenjana, tel. (012) 394 3675, fax (012) 394 4675 or e-mail  mskenjana@itac.org.za

Representations should be submitted by 18 October 2013.

4.       Withdrawal of the application for an increase in the rate of duty on Biaxially oriented polypropylene classifiable under tariff subheadings 3920.20.25 and 3920.20.30 from 10% to 20%

ITAC has decided to withdraw the application above because Fima Films (Pty) Ltd indicated that as a result of the change in the management structure, a new strategy which differs from that of the previous management was developed.  The new management has considered the application for the increase in the rate of duty and decided that it would not be beneficial for the company owing to the negative response received from the downstream industry opposing the application.

ITAC Ref 06/2013, Enquiries Mr Nkulana Phenya fax (012) 394 4677 or e-mail Nphenya@itac.org.za or Ms Ayanda Ndou at fax (012) 394 4724 or e-mail endou@itac.org.za

The applications were published under LIST 15/2013 in Notice No. 945 OF 2013 which was published in Government Gazette No. 36849 OF 20 September 2013.

 

Customs Tariff Application List 14/2013 was published under Notice 860 of 2013 in Government Gazette 36760 of 23 August 2013.

 

The following applications were published under List 14/2013:

1.       Increase in the rate of Customs duty on coated fine paper (heading 48.10, various subheadings);

2.       Increase in the rate of Customs duty on roasted chicory (subheading 2101.30.10);

3.       Increase in the general rate of Customs Duty on heat exchange units (subheading 8419.40);

4.       Creation of rebate provisions for concentrated cranberry and passion fruit juices, not containing added sugar or other sweetening matter of a Brix value exceeding 45 for use in the manufacture of mixtures of fruit juices;

5.       Reduction of the Customs Duty on poly vinyl butyral (subheading 3920.91); and

6.       Amendment of Tariff subheadings 8302.30.30, 8302.41.10 and 8302.42.10 (fittings of iron, steel or copper)

 

 

Customs Tariff Amendments

With the exception of certain parts of Schedule 
No. 1, such as Schedule No. 1 Part 2 (excise duties), Schedule No. 1 Part 3 (environmental levies) Schedule No. 1 Part 5 (fuel and road accident fund levies), the other parts of the tariff is amended by SARS based on recommendations made by ITAC resulting from the investigations relating to Customs Tariff Applications received by them. The ITAC then investigates and makes recommendations to the Minister of Trade and Industry, who requests the Minister of Finance to amend the Tariff in line with the ITAC’s recommendations. SARS is responsible for drafting the notices to amend the tariff, as well as for arranging for the publication of the notices in Government Gazettes.

During the annual budget speech by the Minister of Finance in February, it was determined that parts of the tariff that are not amended resulting from ITAC recommendations, must be amended through proposals that are tabled by the Minister of Finance.

Once a year big tariff amendments are published by SARS, which is in line with the commitments of South Africa and SACU under international trade agreements.

Under these amendments, which are either published in November or early in December, the import duties on goods are reduced under South Africa’s international trade commitments under existing trade agreements.

There were no tariff amendments at time of publication.

Subscribers can expect to receive Supplement 1025 soon.

The following amendments will cover the following: 

·         Correction Notice to amend the tariff subheading for the provisional payments in relation to safeguard duties in relation to frozen chips or French fries to subheading No. 2004.10.20.

The correction notice above was published in Government Gazette No. 36824 of 5 September 2013 under Notice number R. 667.

A notice was published on 27 September 2013 to impose provisional payments in relation to anti-dumping duties on coated paper, classifiable in heading 48.10, originating in or imported from China or the Republic of Korea up to and including 14 March 2014 as recommended in ITAC Report No. 445

This notice was published in Government Gazette No. 36866 of 27 September 2013 under Notice No. R. 706.

·         The rates of Customs duty on frozen meat of fowls of the species Gallus domesticus have also been increased. View main article for more information; and

·         Updating of Import Control Regulations.

Subscribe to the Jacobsens Customs Watch or download the latest Customs Watch to have access to the latest tariff and rule amendments.

 

Customs Rule Amendments

The Customs and Excise Act is amended by the Minister of Finance. Certain provisions of the Act are supported by Customs and Excise Rules, which are prescribed by the Commission of SARS. These provisions are numbered in accordance with the sections of the Act. The rules are more user-friendly than the Act, and help to define provisions which would otherwise be unclear and difficult to interpret.

Forms are also prescribed by rule, and are published in the Schedule to the Rules.

​Rule 19A3.03 was amended to prescribe the removal of stripped wine (fermented ethyl alcohol) from customs and excise manufacturing warehouses for wine products (SVM) to secondary customs and excise manufacturing warehouses for spirits products (VMS)

This amendment was published in Government Notice Gazette No. 36780 of 30 August 2013 under Notice No. R. 639. The SARS reference number for this amendment is DAR 125.

Download the amendments to view the notices.

 

 

 

 

 

Contact Information:

 

 

Contact the Author:

Mayuri Govender

Jacobsens Editor

Tel: 031-268 3273
e-mail:
  jacobsen@lexisnexis.co.za

 

 

Leon Marais 
Independent Customs Consultant
Tel: 053-203 0727

e-mail: leon.marais@intekom.co.za