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Customs News Bulletin

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2 October 2017

 

 

Latest News

WHEAT AND WHEATEN FLOUR DUTY RATES INCREASED

The rates of customs duty on wheat and wheaten flour are amended frequently in terms of a variable tariff formula which is calculated as the difference between the domestic reference price of the wheat and the Three Week Moving Average US NO. 2 HRW (ord) Gulf Settlement price for wheat.

The fluctuating world prices of wheat triggers amended duty rates. However, the duty rates cannot be amended unless SARS, through a notice which is signed by the Minister of Finance implements the changed rates by arranging for publication thereof in a Government Gazette Notice.

It was reported in the Bulletin of 15 September 2017 that the South African grain industry is very concerned about the fact that there are delays in the publication of amendments. A week before that - on 8 September 2017, the rates of duty on wheat and wheaten flour were reduced from 94.72c/kg to 37.93c/kg and from 142.18c/kg to 56.90c/kg respectively.

The rates of duty on wheat and wheaten flour were amended again - through the Government Gazette of 29 September 2017. The rates on wheat and wheaten flour were increased from 37.93c/kg and 56.90c/kg to 75.24c/kg and 112.85c/kg respectively.

See the Bulletin of 15 September 2017 for more information about the previous rates of duty on wheat and wheaten flour.

 

Classification Corner                                                                                                                    

IMPORTATION OF AGRICULTURAL MACHINERY IN SEPARATE SHIPMENTS

Goods are classifiable under the Harmonized System Customs Tariff Schedule in accordance with the General Rules of Interpretation (GRI’s) to the Harmonized Commodity Description and Coding System.

There are six of these Rules. Five of them deal with classification under the headings, while GRI 6 deals with classification under the subheadings based on the principles of GRI 1 to 5.

GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 5.

Unfinished or unassembled products are classifiable under the heading for the complete/assembled product when imported unassembled, pursuant to General Rule of Interpretation GRI 2(a).

That is provided the complete machine, in the case of various components of, say an agricultural machine, is to be regarded as a functional unit by application of Note 4 to Section XV. In this regard see Notes 3 and 4 to Section XVI.

Note 3 states:

“Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function”.

Note 4 states:

“Where a machine (including a combination of machines) consists of individual components (whether separate or inter-connected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function”.

One needs to establish the essential character of the machines in question to determine what the classification of the functional unit should be.

Under GRI 2(a), an incomplete or unfinished article entered unassembled, may be classified as if it were the finished or complete article provided that, as presented at time of importation, it has the essential character of the finished or complete article. If the goods are imported in more than one consignment, it must be demonstrated that the components imported in each shipment, possess the essential character of the complete article as required by GRI 2(a). 

Subject to certain exclusions goods that are identifiable as parts of machines or apparatus of Section XV (Chapter 84 and Chapter 85) are classifiable in accordance with Section XVI, Note 2. Parts which are goods included in any of the headings of Chapters 84 and 85 are in all cases to be classified in their respective headings. See Note 2(a). Other parts, if suitable for use solely or principally with a particular machine, or with a number of machines of the same heading, are to be classified with the machines of that kind. See Note 2(b). If the components are not provided for in Section XVI, they will be excluded from that section and cannot be classified there. For example, structures of iron or steel imported separately are classifiable in heading 73.08. If the structures are imported with machinery rendering them machines of Section XVI they may be classifiable in Chapters 84 or 85.

Each individual shipment should be treated on its own merits.

 

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 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.

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.

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.

The International Trade Commission of South Africa (ITAC) also publishes Sunset Review Applications in relation to anti-dumping duty in terms of which any definitive anti-dumping duty will be terminated on a date not later than five years from the date of imposition, unless the International Trade Administration Commission determines, in a review initiated before that date on its own initiative or upon a duly substantiated request made by or on behalf of the domestic industry, that the expiry of the duty would likely lead to continuation or recurrence of dumping and material injury.

ITAC received an application for the creation of a temporary provision for the importation of certain hot rolled steel products classifiable under headings 72.08 and 72.25, which are subject to SAFEGUARD DUTIES, under rebate.

Contact Mr Pfarelo Phaswana and/or Ms Lufuno Maliagaat (012) 394 3628 or (012) 394 3835 or e-mails pphaswana@itac.org.za or lmaliaga@itac.org.za for more information.  (The ITAC Reference is 11/2017)

The notice was published under Notice 723 of 2017 in Government Gazette No. 41119 of 15 September 2017. Comments are due on 29 September 2017.

 

 

 

 

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.

The rates of duty on wheat and wheaten flour has been increased from 37.93c/kg and 56.90c/kg to 75.24c/kg and 112.85c/kg respectively, in terms of the existing variable tariff formula as recommended in ITAC Minute 10/2017.

The amendment was published in the Government Gazette of 29 September 2017.

The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff in respect of the updated sugar rates will be sent to Jacobsens subscribers under cover of Supplement 1094.

 

 

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.

There were no Rule amendments at time of publication.

The latest Rule amendment (DAR/167) was published under Notice R. 999 in Government Gazette 41115 of 15 September 2017.

 

 

 

 

 

Contact Information:

 

 

Havandren Nadasan
Jacobsens Editor

Tel: 031-268 3510
e-mail to:
jacobsens@lexisnexis.co.za

 

Leon Marais
Independent Customs Consultant
Tel: 053-203 0727
e-mail to:
leon@itacs.co.za

 

LexisNexis

 

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