Customs News Bulletin

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.

Latest International Trade News

NEW SOUTH AFRICAN CUSTOMS LEGISLATION

The challenges facing importers, exporters and their agents

South Africa’s customs and excise legislation is currently contained in the Customs and Excise Act 91 of 1964.

It is no secret that the current customs provisions will be repealed and replaced by two new Acts this year – as we have reported in the past Customs News Bulletins.

As promised, we will look at the implications of the Acts for traders and their service providers in this Bulletin.

South Africa has done a lot to eliminate trade barriers in compliance with WTO legislation since the WTO Agreement entered into force in 1995.  The current Customs and Excise Act already provides for customs modernisation.

Importers/exporters and their customs clearing and forwarding agents are already required to show due diligence in compliance procedures.  But these requirements will be increased under the new legislation with the most far-reaching reforms being on exports from South Africa.

Various phases of customs modernisation and reform had also been rolled out since 2009, but the most far-reaching reforms are only awaited this year in the form of the new Acts and their rules.

The new customs Acts will provide a platform for the international trade facilitation and protection of the economy and society.  It will thus create a balance between customs control and trade facilitation and will benefit both customs and the international trade community – including importers and exporters.

However, from a customs perspective the focus is on improved customs control and customs risk management. From this perspective improved compliance will thus be crucial for importers and exporters. In order to be compliant they need to be informed.

Supply chain security and improvements to the current customs accreditation system will form an integral part of the new legislation.  Although these reforms relate to voluntary compliance it is in the best interest of importers, exporters and their agents that they participate in these programmes since they will benefit from earlier release times. Security of their goods will also be in their own interest.

There will also be a bigger focus on technical aspects such as accurate customs tariff classification and customs valuation.

Traders (and their agents) must realise that there is also a negative side to relaxation of release times.  Audit-based controls (and inspections) will now play a bigger role. In other words customs control is not relaxed. The emphasis will merely shift.

The demands for the industry are increasing as global trade grows.

Initiatives are current underway to bring together numerous experts from a strong customs background to assist traders and their service providers to meet these demands.

Customs Tariff Applications and Outstanding Tariff Amendments

Notice 1129 of 2013; List 18/2013

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.       Application for creation of a rebate provision on plates, sheets, film, foil and strips of poly (methyl methacrylate)

ITAC has received an application from Libra Bathrooms for the creation of a rebate provision for other plates, sheets, film, foil and strips of poly (methyl methacrylate) non-cellular and not reinforced, laminated, supported or similarly combined with other materials, classifiable in tariff subheading 3920.51, for the manufacture of sanitary ware of plastics classifiable in tariff heading 39.22.

Enquiries: Ndivhudza Ramphabana, Tel: (012) 394 3627or e-mail: nramphabana@itac.org.za.

2.    Amendment of the duty structure for certain new pneumatic tyres of rubber

Tariff subheading 4011.10 covers new pneumatic tyres of rubber, of a kind used on motor cars, including station wagons and racing cars.

Currently the tariff subheading is not subdivided into 8-digit subheadings.  The current general rate of duty is 30%. 

ITAC has received an application to revise the duty structure by the introduction of different 8-digit subheadings with different proposed formula duties, for example 30% or 2884c/kg less 70% and 25% or 2780c/kg less 75%.

Some of the reasons for the application are that there has been a massive influx of low-priced and under-invoiced tyres, mainly from China.

The intention of the introduction of the reference price into the duty structure is to counter under-invoicing.

ITAC Reference 34/2013, Enquiries: Ms Lufuno Maliaga at (012) 394 3835 or  lmaliaga@itac.org.za or Mr Oatlhotse Madito tel. (012) 394 3692 atomadito@itac.org.za.

3.     Amendment to Rebate Item 498.00

Rebate item 498.00 provides for Imported goods admitted under rebate of duty for use in specified activities in the Customs Controlled Area (CCA) contemplated in Section 21A.

The Department of Trade and Industry (the dti) has applied for the amendment of Note 1 to rebate item 498.00 and the insertion of Note 9 to Schedule No. 3 because companies located within a CCA, intending to import manufacturing inputs are currently at a disadvantage in terms of customs duty which has to be paid on the imported content at the time the manufactured goods are declared for domestic use in terms of rebate item 498, and under Schedule No 3 which applies outside the CCA a manufacturer qualifies for a rebate of customs duty but pays Value Added Tax (VAT), if they choose to supply their finished products into the domestic market.

ITAC Ref 231/2013, Enquiries: Dumisani Mbambo, tel (012) 394 3743, dmbambo@itac.org.za, or Ndivhudza Ramphabana, tel (012) 394 3627,nramphabana@itac.org.za

Customs Tariff Application List 17/2013 was published under Notice 1090 of 2013 in Government Gazette 36996 of 8 November 2013.

ITAC recently published the preliminary investigation into the alleged dumping of frozen potato chips originating in or imported from the Belgium and Netherlands following the investigation. Download Report 458.

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.

Various tariff amendments were published on the 13^thof December 2013.  These amendments all relate the amendment of the Notes to Part 3 of Schedule No 6 resulting from refunds on distillate fuel (diesel) in various sectors (farming, mining, etc.). 

Please note that four Government Gazette notices have been published with various implementation dates.  The notices were published in Gazette No 37150 of 13 December 2013. The Notice Numbers were R. 997 to R. 1000.

The amendments were sent to subscribers under cover of Supplement 1029 which went to print on the 17^th of December 2013.

Subscribers will soon be able to view a PDF version of the amended pages at new.jacobsens.co.za.  

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. 

Two Government Gazette Notices were published to amend the Customs and Excise Rules on the 13^th of December 2013.   

Under the one amendment the Diamond Export Levy Rules under section 18 were amended. Various DL 163 forms were also amended as well as form DL 185.  Please also note the implementation and deletion dates of Rule 14.02 in Schedule No. A.

In the second amendment form DA 185.4B1 in respect of Licensing Client Type 4B1 in respect of Special Manufacturing Warehouse was amended.

The notices and amended forms were published inGovernment Gazette 37124 of 13 December 2013 under Notices R. 975 and R. 976. The SARS reference numbers for the amendments are DAR/130 and DAR/131.

Download the amendments to view the notices.