Customs News Bulletin

	26 February 2015

Latest Amendments and News
SOUTH AFRICAN NATIONAL BUDGET 2015 Finance Minister Nhlanhla Nene will table the 2015 Budget in Parliament at 14h00 today, 25 February 2015. HOW GLOBAL TRADE COMPLIANCE CAN HELP IMPORTERS AND EXPORTERS TO MAXIMIZE THEIR PROFITS Successful importers and exporters are those traders that are able to minimize risks and maximize their profits. Without global trade compliance, importers and exporters are not able to succeed. Unexpected delays in the supply chain, fines and penalties associated with non-compliance can easily erase expected revenue gains from offshoring. Compliance is needed to: • Deliver goods in a timely manner • Maximize supply chain efficiencies • Lower costs • Increase revenues • Decrease cycle times and • Lower inventory levels Global supply chains are costly and complex, involving multiple parties, longer lead times and higher transportation costs. Estimated transit time for a container vessel from China to the port of Durban in South Africa is 22 days. Customs requirements, non-tariff barriers (such as the requirement for special permits) handling and transhipment can extend the period. Trade compliance can affect supply chain management efficiency, time and cost. Postponed Shipments Documents in international trade are interlinked and inter-related and can cause delays in the supply chain. The Customs Control Act 31 of 2014 requires importers to provide shipment information before the goods are shipped. Without this information shipments will be delayed. Importers can pre-clear goods three days prior to arrival under the Customs Control Act. Goods cannot be exported prior to acceptance of an export declaration. Exporters are advised to provide importers with the required documentation as soon as it becomes available. The supply chain will become longer if the exporter and importer makes use of freight forwarders and customs clearing agents (customs brokers) and they have to make sure that the documents flow through the supply chain as quickly as possible in order not to delay customs clearance. Delays in customs clearance can also lead to delay in payment, depending on the agreed upon method of payment. Hence, the faster an exporter submits a valid export clearance declaration to Customs in the exporting country, the quicker the product will be exported, increasing supply chain speed. On the other hand, if a company cannot provide the required paperwork for a shipment, the cargo cannot be loaded, resulting in supply chain delays. Customs Delay Customs administrations around the globe are gatekeepers in that they are present at the last point of exit in the exporting country and at the first point of entry in the importing country. Exports and imports – as well as the valid export and import customs clearance declarations that accompany them need to be approved by Customs. If the information required to clear these gates is not available at the time of declaration or if a document is not presented, the goods are stopped or detained and the supply chain stops. If, for example, containerised goods are stopped by SARS Customs for inspection there may be costs involved for the importer. The goods will be re-routed from the container terminal to the container depot and unloaded there for the examination. You, as the importer, you will be liable for the storage, movement and loading/unloading of your freight. Most examinations and the resultant delays are tariff classification, customs valuation and origin. Fortunately the new South African Customs legislation provides for advance rulings on tariff classification, customs valuation and origin. Under the new legislation, which is expected to enter into force towards the second half of this year, importers will be wise to apply for advance rulings and avoid payment of unnecessary storage, movement and handling charges - and possible penalties as well. Penalties The consequences of not complying with Customs legislation can be catastrophic. New penalty guidelines have been published under the draft Rules to the Customs Control Act 31 of 2014. Once an importer or exporter have been found non-compliant, that importer or exporter will be targeted for inspections of future shipments, causing further monetary costs and delivery delays. Audits will also be conducted on shipments dating back two years. Under the Customs Control Act 31 of 2014 this period will be extended to three years. Become an Accredited Client In terms of Chapter 30 of the Customs Control Act 31 of 2014 importers are rated for their compliance performance. If a company has a high rating its goods will be inspected less frequently than if it has a low rating. Under the new Customs Control Act 31 of 2014 there will be an additional benefit to the traders who will be able to demonstrate to Customs that his/her company has a secure supply chain. Under the Authorized Economic Operator (AEO) the chances of having their goods inspected will be lower than in the case of the trader who are not able to demonstrate the same to Customs. Delivery times of the AEO supply chain will thus be faster than that of the supply chain with a non-AEO company. Automation If a company generates consistent and informative supporting documents (such as the commercial invoice), it reduces the likelihood of its goods being delayed at Customs. Centralized global trade management (GTM) solution automates the creation of import and export documents, minimizing rekeying errors and enabling consistent, complete and auditable records and documentation, reducing the potential for inspections. The benefits of an automated system include: · The ability to leverage a single view of product information throughout the supply chain, across the company and with trading partners · It ensures that products are classified correctly and comply with trade, regulatory and license requirements such as import and export prohibitions and restrictions · Calculate and compare total landed cost to and from multiple locations · Manage critical supply chain issues and expedite resolution of issues or bottlenecks Manage Landed Costs Importing goods from countries with which South Africa as a single country (or the Southern African Customs Union (SACU) as a customs union) have preferential trade agreements can reduce the landed cost of imported goods significantly. Similarly special economic zones (SEZ’s), industrial development zones (IDZ’s) and Export Processing Zones (EPZ’s) (in Namibia) and industrial rebate provisions for manufacturers who are importers can be sources of significant cost savings for importers. Many companies forego these benefits because of the perceived effort to manually administer them. Conclusion A company must comply with international global trade regulations to maximize efficiency, reduce costs, lower cycle times and generate profits. Without proper compliance, that company risks fines, penalties, increased cycle times, lower revenues and poor customer service levels.
Customs Tariff Applications and Outstanding Tariff Amendments
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. The International Trade Administration Commission (ITAC) has published the first amendment applications to the Southern African Customs Union Tariff for 2015. The Southern African Customs Union comprises of South Africa and Botswana, Lesotho, Namibia and Swaziland. The Notice (Government Notice R.74 of 2015) was published in Government Gazette 38419 on 30 January 2015. Comments are due by 27 February 2015. Both applications are in relation to amendments to Part 1 of Schedule No. 3. The first application relates to the creation of two rebate provisions for the upholstered furniture sector, namely: Woven fabrics, containing 85% or more by mass of synthetic filaments, of yarns of different colours, classifiable in tariff subheading 5407.73, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, for use in the manufacture of upholstered furniture classifiable in tariff heading 94.01; and Woven fabrics of polyester staple fibres, (excluding that mixed mainly or solely with wool or fine animal hair) , in such quantities, classifiable in tariff subheading 5515.1, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, for use in the manufacture of upholstered furniture classifiable in tariff heading 94.01. (ITAC Reference 10/2014. Enquiries: Ms T. Morale. Telephone: (012) 394 3694. Fax (012) 394 4694. E-mail: tmorale@itac.org.za. The second application relates to the creation of a rebate provision for: "Goods of any description (excluding mounted or populated circuit boards) for the manufacture of prepayment electricity supply meters classifiable in tariff subheading 9028.30, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the Commission is satisfied that the circuit boards are mounted and populated in the SACU region." (ITAC Reference 20/2014. Enquiries and correspondence to be directed to Ms Lufuno Maliaga. Telephone: (012) 394 3845. Email: lmaliaga@itac.org.za.
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 the time of publication. The last tariff amendments (dated 6 February 2015)  have been sent to subscribers under cover of Supplement 1043 which should reach subscribers soon. Download the latest Customs Watch to have access to the latest tariff 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.	Forms are also prescribed by rule, and are published in the Schedule to the Rules.  There were no rule amendments at time of publication. The last amendment (DAR/140) was published on 8 August 2014. Download the latest Customs Watch to have access to the latest tariff and rule amendments.

Contact Information: Mayuri Govender Jacobsens Editor Tel: 031-268 3273 e-mail: jacobsen@lexisnexis.co.za

Contact the Author: Leon Marais  GMLS Associate: Customs Specialist Tel: 053-2030727 e-mail: leon.marais@intekom.co.za/