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Customs News Bulletin

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6 October 2017

 

 

Latest News

WORLD TRADE ORGANISATION: MARRAKESH AGREEMENT: APPLICATION FOR MARKET ACCESS PERMITS FOR AGRICULTURAL PRODUCTS

In order to fulfil South Africa's commitment under the World Trade Organisation (WTO): Marrakesh Agreement (resulting from the Uruguay Round of negotiations) regarding market access, the Department of Agriculture, Forestry and Fisheries published a notice relating to the application for market access (Tariff Rate Quota (TRQ)) permits to be issued for the products specified in the table of Import Arrangements (Table 1) and under the conditions set out in the Schedule to the Notice.

Table 1 corresponds with Rebate Item 460.25 in Schedule No. 4 to the Customs and Excise Act, Act 91 of 1964, and item 460.25 of the SACU CET. Item 460.25 will be updated soon.

In terms of Notice 1058 of 29 September 2017, tariff rate quota permits will only be issued to South African importers who comply with the conditions specified in the notice and the requirements of Table 1.

The notice contains definitions, the terms and conditions of the permits, including procedures for the application of the permits.

TRQ market access permits will only be issued to importers who are registered with SARS and ITAC.

The application form for market access permits is published in annexure A of Notice 1058 of 29 September 2017. The application form is also available electronically on request from SceloM@daff.gov.za, SisiC@daff.gov.za and KhumoB@daff.gov.za or can be downloaded from the Marketing Information System (MIS) website: http://webapps.daff.gov.za/amis (Go to: Market Access>Preferential Market Access) and departmental website: www.daff.gov.za (Go to Branches>Economic Development Trade and Marketing>Marketing>Government Notices).

Notice 1058 of 2017 was published in Government Gazette 41148 of 29 September 2017.

 

Classification Corner                                                                                                                    

WHEN DO I SEEK SPECIALIST ASSISTANCE IN RESPECT OF CUSTOMS TARIFF CLASSIFICATION

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.

In most cases, goods are classified in HS-based Customs Tariffs by application of Rule 1, which states, in part, that the terms of the heading and legal Section and Chapter Notes dictate. In many instances there can be no argument about the classification.  

Classification by application of Rule 1 can sometimes by complicated too, but in most instances, it will become easier as one becomes more experienced.

Classification under GRI 2 is generally easy if one classifies goods in unassembled form (semi-knocked down or completely knocked down) for example for ease of transport. Then goods are classifiable within the same heading as the complete article. However, matters become more complex when goods are incomplete or unfinished. Then someone (the importer or his appointed agent) needs to determine if the incomplete or unfinished article has the essential character of the finished article. When in doubt matters involving incomplete or unfinished articles should be submitted to SARS Customs. The Jacobsens Guide to Classification provides assistance in this regard. LexisNexis also reports on court cases involving tariff classification (that is between SARS Customs and importers). See for example the cases of Harry P Will (plier manufacturer) against the Commissioner where blanks for pliers were classified as incomplete pliers and not as parts of pliers.

The first binder of the HS Explanatory Notes provides useful guidance (explanatory notes) on the application of the General Rules of Interpretation and should be consulted.

Subject to certain exclusions goods that are identifiable as parts of machines or apparatus of Section XV (Chapters 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.

Parts should always be classified with reference to, firstly the legal (Section and Chapter Notes), and by consulting the Harmonized System Explanatory Notes. As a rule, "parts" which are articles in themselves are classified as the article. For example, windscreens for vehicles are classified as articles of glass of Chapter 70 and not Section XVII as parts of vehicles. (This is an example of classification by application of GRI 3(a) which states that when goods are potentially classifiable in one or more headings, the goods are to be classified in the more specific heading.

Rules 3(b) states that, if goods cannot be classified by application of GRI 3(a), then one needs to determine the essential character of the goods and classify them accordingly. This is generally also a case for submission. Unless there are court cases on it. Internet search engines are useful in aiding with the classification of goods but they can also be very dangerous. A new version of the Harmonized System is published every five years. Most countries currently use the HS 2017 version of the Harmonized System. It is the 6th version of the HS since 1988. HS 2017 will be replaced by HS 2022 on 1 January 2022 in most countries.

 

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 made a final determination in respect of the investigation into remedial action in the form of a safeguard against the increased imports of cold-rolled steel products.   

The notice (Notice No. 769 of 2017) was published in Government Gazette 41141 of 29 September 2017. 

ITAC also published a final determination in respect of the sunset review of anti-dumping duty on unframed glass mirrors of thickness of 2mm or more but not exceeding 6mm originating in or imported from Indonesia.

In Notice 806 of 2017 which was published in Government Gazette 41164 of 6 September 2017 (today), ITAC recommended that the anti-dumping duties on unframed glass mirrors of thickness of 2mm or more but not exceeding 6mm originating in or imported from Indonesia be maintained.

Refer to anti-dumping duty item 213.03/7009.91/01.06 for the rates on anti-dumping duty.

Enquiries may be directed to the investigating officers Ms. Regina Peta at +27 12 394 3737 or Mr. Emmanuel Manamela at +27 12 394 3922,  fax number +27 12 394 0518

 

 

 

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 notices were published to amend the Southern African Customs Union (SACU) Common External Tariff (CET).

The rate of customs duty on thermal transfer ribbons and cartridges, classifiable in tariff subheading 9619.10.10, was reduced from 15% to free as recommended in ITAC Report 556.

The anti-dumping duties on solar glass originating in or imported from Indonesia (items 213.03/7005.29.05/02.08; 213.03/7005.29.05/05.08; 213.03/7005.29.05/07.08 and 213.03/7005.29.05/10.08) are also abolished to give effect to ITAC Report No. 557.

Parts 1 of Schedule No. 1, and Schedules numbers 2, 3, 4 and 5 are amended through Notices which are signed by the Minister of Finance, on request of the Minister of Trade and Industry, to give effect to the recommendations of the International Trade Administration Commission of South Africa (ITAC).

The other parts of the tariff (Schedule 1 Part 2A and B) in respect of excise duties, environmental levies (Part 3 of Schedule 1), fuel and road fund levies (Parts 5A and B of Schedule 1) and the rebates in Schedule No. 6 are amended by the Minister of Finance if he deems it expedient in the public interest to do so. In this regard there were amendments to various parts of Schedule No. 6 to provide for  a rebate on the excise duties of beer, wine and other fermented beverages used in the manufacture of low alcohol and non-alcoholic beverages by a process of extracting ethanol as well as the movement of the extracted ethanol by-product and consequential amendments.

The amendments were published in the Government Gazette of 6 October 2017.

The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff will be sent to Jacobsens subscribers under cover of Supplement 1095.

 

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.

The Commissioner for the South African Revenue Service (SARS) published an amendment to Rule 19A3 to facilitate the removal of extracted ethyl alcohol.

The Rule amendment (DAR/169) was published in the Government Gazette of 6 October 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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