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COMPULSORY TARIFF DETERMINATIONS ON ALCOHOLIC BEVERAGES (with effect from 1 April 2015)

Clause 15 in the Tax Administration Laws Amendment Bill, B14 of 2014 imposes compulsory tariff determinations for alcoholic beverages.

Rules have been published on the SARS website to give effect to the amendment by amending section 47(9)(a)(iv) and the Rules thereto and provide clarity on the phasing in thereof.

The rule amendment (Notice R. 226) was published in Government Gazette 38575 of 20 March 2015 (DAR/143) with effect from 1 April 2015.

In accordance with section 47(9)(a)(iv)(ee) any alcoholic beverage that will be imported for the first time, or newly manufactured, on or after 1 April 2015 must be submitted for tariff classification through the office of the Controller at the place where the beverage is imported or manufactured before application of the procedures respectively specified in items (A) and (B) of that section.

In accordance with section 47(9)(a)(iv)(ff)(A) the order and periods for submissions of applications for tariff determinations in respect of the classes of all kinds of alcoholic  shall be:

• Alcoholic beverages for which no tariff determination was issued prior to 1 April 2015
• Subheading 2208.90: 1 April 2015 to 30 September 2015
• Other fermented beverages (subheading 2206.00.90): 1 October 2015 to 31 March 2016
• Liqueurs and cordials (subheading 2208.70) and other fermented alcoholic beverages (subheadings 2206.00.83, 2208.00.84 and 2206.00.87): 1 April 2016 to 30 September 2016
• Beer made from malt (subheading 2203.00.90) and cider, perry and mead (subheading 2206.00.81, 2206.00.82 and 2206.00.85): 1 October 2016 to 31 March 2017
• All other classes or kinds of alcoholic beverages not mentioned above: 1 April 2017 to 31 March 2018
• Alcoholic beverages for which a tariff determination was issued 24 months or more prior to 1 April 2015, after a period of 36 months (1 April 2018) but not later than 31 March 2019
• Alcoholic beverages for which a tariff determination was issued within 24 months prior to 1 April 2015: 1 April 2019 to 31 March 2020

It should be noted that no new tariff determination application in respect of any existing determination is required for any change in the alcoholic strength of beverages classified under any subheading of heading 22.04 or 22.05, provided the alcoholic strength remains within the range specified in the subheading  of the existing tariff determination.

It should be noted that applications for tariff determinations should be submitted to the Office of Customs Controllers in the normal manner.  Applications should be fully motivated and reference should be made to the relevant Explanatory Notes, which is available in the 5^th edition of the World Customs Organization Explanatory Notes (2012 version).

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.

ITAC received and published three applications to amend the tariff:

1. The notice relates to the review of rebate item 316.17 for semi-knocked down television assembling.

ITAC Ref. 23/2014.

Enquiries:

Mr Njabulo Mahlalela -

Tel: (012) 394 3684

E-mail: nmahlalela@itac.org.za

Mr Dumisani Mbambo -

Tel: (012) 394 3743

E-mail dmbambo@itac.org.za

2. Increase in the rate of customs duty on adhesive bandages classifiable under tariff subheading 3005.10 from free to 20%.

ITAC Ref. 14/2014.

Enquiries:

Dolly Ngobeni -

Tel: (012) 394 3667

Fax: (012) 394 4667

E-mail: ngobeni@itac.org.za

Barbara Moeng -

Tel: (012) 394 3623

Fax (012) 394 4623

E-mail. bmoeng@itac.org.za

3. Creation of rebate of full duty on steel panels with an inner core of Portland cement classifiable in tariff subheading 7308.90.90 for the manufacture of elevated (raised) flooring systems for buildings classifiable in tariff subheading 7308.90.90.

ITAC Ref. 21/2014.

Mr S Tsabalala -

Tel. (012) 394 3739

E-mail stsabalala@itac.org.za

The Notice (Government Notice R. 245 of 2015) was published in Government Gazette 38574 on 20 March 2015. Comments are due by 17 April 2015.

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 two tariff amendments at time of publication.

The tariff amendments were published in Government Gazette 38681 on 10 April 2015.

The rate of customs duty on lithium batteries classifiable in tariff subheading 8506.50.25 is reduced from 10% to free as recommended in ITAC Report 493.

Government Gazette 38681, R. 307, 10.04.2015, A1/1/1515

Tariff subheading 8507.10 is amended by the creation of two eight digit subheadings (8507.10.05 and 8507.10.10) to give effect to ITAC’s recommendation in Report No 491 to increase the rate of customs duty on lead acid batteries of a kind used for starting piston engines from 5% to 15%.

Government Gazette 38681, R. 308, 10.04.2015, A1/1/1516 

The tariff amendments were sent to subscribers under cover of Supplement 1047.

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. 

The rule amendment (DAR/144) was published on 27 March 2015 in Government Gazette 38603 under Notice R. 246.

Download the latest Customs Watch to have access to the latest tariff and rule amendments.