New Customs Legislation FAQs - South African Revenue Service

1. Why modernise customs law?

In an ever changing and complex international, regional and national environment, Customs plays a critical role in supporting Government’s programmes to promote economic growth, job creation and social cohesion. The Customs and Excise Act, 1964, has not kept pace with the changing focus of customs work or with the radical changes to the environment in which international trade is conducted, particularly the rapid growth in the use of information technology and the exchange of electronic data. In its current form, our customs legislation is unable to respond to new risks, it is furthermore not business friendly and also needs to be easier to understand and use in order to provide certainty to traders and travellers as well as to Customs.

2. What are some of the benefits of the new Acts?

The CCA and CDA are modern pieces of legislation aiming to simplify customs administration and to provide a platform for customs modernisation. They are aligned to the Constitution and were benchmarked against other customs administrations and international conventions such as the Revised Kyoto Convention, which aim to harmonise, secure and facilitate international trade. The Acts provide end-to-end supply chain visibility for SARS, due to mandatory electronic submission of communications, advance cargo reporting, improved sealing provisions and the requirement of various electronic notifications throughout the process. The Acts are furthermore written in plain language and the material covered is arranged in a logical and systematic way, with topic-specific Chapters. The Rules also follow the arrangement of the Acts and each rule is linked to a specific enabling provision in the relevant Act. This enables people to whom the Acts apply to find provisions applicable to specific subject matters, for example a specific customs procedure, in an easier manner. The Acts provide flexible warehousing and manufacturing options which will enhance South Africa’s role as a distribution hub and stimulate industrialisation. The Acts also support the National Development Plan to promote exports and business competiveness, stimulating domestic manufacturing and supporting SMMEs.

3. What will be the impact of the new legislation on customs stakeholders?

When the Acts are implemented, there will be an impact on all customs clients, particularly in relation to system, process and policy changes. There will also be new compliance measures for traders and changes to the penalties regime. An example of the type of impact that the new legislative regime may have on trade can be illustrated by the Chapter on warehousing. Various stakeholders, including warehouse licensees, licensed carriers, importers and exporters, customs brokers and owners of goods and agents representing foreign clients will be impacted by the changes in the warehousing regime. These changes include the following:

Application for new licences
New receipt and delivery notification requirements by public and private warehouse licensees and licensed carriers
Storage of free circulation goods with goods not in free circulation
Electronic inventory management system
Periodic goods accounting reporting
Permissible operations in a warehouse.

4. What is the importance of reporting and what are its benefits?

Reporting of information by third parties enables Customs to risk assess information about vessels, aircraft, trains, vehicles, passengers, crew and cargo entering or leaving the Republic. The benefits of the reporting requirements include the following:

It enhances supply chain security, enabling Customs to detect the importation or exportation of prohibited goods into and out of the Republic
It contributes to fiscal assurance
It supports effective customs control over the movement of means of transport and cargo
It enables planning by the customs authority
It establishes cargo visibility to determine the physical status of goods
It gives an indication of which cargo is landed, short shipped, damaged, destroyed, lost, unaccounted for and in excess.

5. Why does SA want to introduce the 24 hour advance cargo loading notice for containerised cargo?

The 24 hour advance loading notice rule is aligned to the SAFE Framework of Standards and shows South Africa’s commitment to secure the supply chain. This policy further allows potential threats to be identified before a container is loaded at the foreign seaport, which enables Customs to i.a. prevent the cargo, if posing a threat, from entering the port in the Republic.

6. Why was the period for submission of import clearance declarations reduced from seven days to three days after arrival?

The decision to reduce the period for submission of clearance declarations in the CCA is informed by technological advances since 1964 when the current Act was drafted. Trade and the way business is conducted have dramatically changed since then and in the current electronic environment information required for clearing goods is available instantly. To mitigate the effect of the reduced timeframe, provision is also made for clearance and release of goods on submission of incomplete or provisional clearance information.

7. Why is there a requirement to submit clearance declarations for containerised cargo three days prior to arrival of goods consigned for delivery to a licensed container terminal or depot situated inland?

The requirement was inserted to facilitate planning of the supply chain. SARS will be in a position to determine the risks the goods pose before arrival if a clearance declaration is submitted three days prior to arrival. Once SARS has determined the risk, SARS will issue a notification (provisional release) to inform parties where the container must be removed to upon arrival i.e. to a depot in Durban or a terminal in Johannesburg.
The trader can therefore make the necessary logistical arrangements for transport of the goods with certainty prior to the arrival of goods. Upon arrival, the goods will be released to or detained at the place indicated in the provisional release. The provisional release falls away if the goods are detained and is replaced by the notice of detention which will indicate the place where the goods are to be removed to.

8. What is the difference between home use and a customs procedure?

The difference can best be described with reference to the consequence of release. Goods released for home use become goods in free circulation, in other words goods over which Customs no longer exercises control. Goods released for a customs procedure will remain subject to customs control (as goods not in free circulation) and the provisions of the Act which are applicable to that procedure must be complied with.

9. Why is release in terms of the CCA granted only upon arrival of the goods?

The customs authority cannot release goods that have not physically arrived at a place of entry of entry or exit.

10. What is meant by the tax status of goods?

The tax status of goods is either tax due or tax free. A tax due status indicates that tax will be payable on goods if tax is imposed in terms of a tax levying Act on goods of that kind. A tax free status indicates that while goods have a tax free status, no tax will be payable on the goods if tax is imposed in terms of a tax levying Act on goods of that kind. Tax includes customs duty, excise duty, VAT and any other tax payable on the import or export of goods.

11. Why is a clearance declaration now required for transit instead of a manifest/transport document?

The rationale for changing the existing policy is based on the fact that SARS can only effectively control the movement of goods across our borders and the risk it poses if it has the necessary information. A manifest is a summary of cargo on board a vessel and it only provides a general description of the goods e.g. “said to contain” or “freight of all kinds”. It does not contain the tariff, value and origin information which is required to determine risk. The information on the transport document is merely based on information supplied to the carrier by a person in a foreign jurisdiction. In contrast, a clearance declaration is submitted by a registered person or licensee or a registered agent located in the Republic and contains the tariff, value and origin information necessary to determine risk. That person also declares the truth of the information in a clearance declaration. The declaration is submitted in electronic format and runs through SARS’s risk engine within seconds. As that person commits to the correctness of the information relating to the clearance of the goods, he can be held liable if a false declaration is made.

12. What informed the requirement that movements from and into SACU are now imports and exports respectively?

In the 1964 Act, goods that crossed the border between the BLNS countries and the RSA were termed “movements” with their own supporting legal framework and policy and procedure, as opposed to goods imported or exported from non-BLNS countries. Business had to be conversant with two different regulatory frameworks. The CCA now simplifies the regulatory framework by providing that all good entering or leaving the Republic are imports and exports subject to a uniform set of rules. Furthermore, in other Customs Unions, goods entering or leaving member states are regarded as imports and exports respectively.

13. What is meant by a permissible customs procedure?

Although an importer may choose to clear goods for home use or a customs procedure, that choice must be “permissible” in the circumstances, which means that the choice must be consistent with the provisions of the CCA and authorised by Customs. Clearances for some customs procedures in certain circumstances are not permissible e.g. international transit is not permissible after warehousing, but the goods should rather be cleared for export.

14. Must existing customs clients re-apply for registration and/or licensing?

Yes, as existing customs registrations and licences will lapse 30 days after the effective date of the CCA if the holder thereof has not submitted a new application for registration or licence within that period. Existing excise registrations or licences are not affected by the enactment of the CCA and such clients do not have to apply for registration or licensing in respect of activities regulated under the Excise Duty Act after the effective date.

15. Will clients be able to apply for registration or licensing before the effective date?

Yes, but only once the development of SARS’s electronic registration and licensing system capability has been completed. SARS anticipates opening applications for registration and licensing a reasonable period before the effective date of the CCA.

16. Will SARS be able to process all applications timeously?

SARS anticipates opening up a new electronic channel for the submission of new registration/licensing applications via eFiling some time before the new Acts go live. An existing registration or licence continues to be effective in terms of section 932 or 933 of the CCA until the new application is finalised. Provided clients submit their new applications within 30 days after the effective date, they can continue to operate under their existing registration or licence. SARS will be planning our capacity and service channel offerings to ensure optimal efficiency during this time.

17. Could you kindly clarify whether the Customs and Excise Amendment Act, 2014 will cover excise or what will be covering this?

The Customs and Excise Amendment Act, 2014, takes effect on the “effective date”, which is the date when the Customs Control Act and the Customs Duty Act take effect. This date is still to be determined by the President. On that date the Customs and Excise Act, 1964, will in its amended form, be renamed the Excise Duty Act, 1964. It will cover matters relating to excise, fuel levy, RAF levy, environmental levy as well as air passenger tax. In other words, the two new Customs Acts will replace the provisions of the current Customs and Excise Act, 1964, in relation to customs only and the amended 1964 Act will continue to apply to excise duties and the other levies and taxes mentioned.

18. Will it be mandatory for all exporters and importers to re-register every three years for their import and export codes (I am aware of the initial need to re-register once the acts go live)? Or will the “every three year” rule apply only to inactive traders?

No, it is not mandatory to re-register every three years, see section 614 of the CCA which deals with the period of validity of registration certificates. Subsection (1) expressly provides that a registration certificate remains in force unless it is withdrawn or it expires due to the inactivity of the registered person for a period of three years. In the case of an inactive registered person referred to in section 614(2), an application for renewal must be made in terms of section 615(1).

19. Will existing TDNs and VDNs remain in force and effective after the new Acts are implemented and will they not need to be reapplied for?

This is a “measure” that will continue after the effective date in terms of section 928 of the CCA.

20. Will the current fixed penalties under the new Customs Act be reduced when the new Act goes live?

No, a lenient approach will be applied for a limited period but the amounts as contained in the penalty table will not be reduced. Initial feedback from trade on the fixed penalty table was considered. We also performed a benchmarking exercise in relation to other jurisdictions and an inflation analysis, whereafter the fixed penalty amounts were reduced by 50%. It is to be noted that the fixed amount penalty tables for the Customs Duty Act, the Customs Control Rules, and the Customs Duty Rules must still be finalised and published for public comment.

21. Will existing Customs registration details, such as current Customs codes, be allowed for the purpose of new registrations under the Customs Control Act?

The CCA anticipates in sections 931(2) and 933(2) that a link will be maintained between the registration or licence in terms of the current Act and the registration or licence in terms of the CCA. How this link will be maintained is the subject of current systems development.

22. Please can you advise how the OGAs such as Port Health are going to be handled with regards to the new legislation? My understanding is that we will only get a release once the cargo is physically checked in. If this is the case and we can only then request a Port Health release, will this not delay the delivery of cargo?

The CCA provides that the customs authority is the final release authority i.e. the goods will be detained for the OGA’s (now called the “administering authority”) and after the OGA’s have requested the customs authority to terminate the detention, the goods will be released by the customs authority, provided the clearance declaration satisfies the requirements of the customs legislation. If the goods are cleared prior to arrival, the notice of detention to the OGA and the customs broker can be communicated prior to arrival to facilitate the process. Electronic communication throughout the supply chain, including with OGA’s, will be important to ensure a seamless movement of goods.

23. Can you confirm that in the new Customs Control Act under chapter 4 section 89, it states declarations must be submitted within three working days from arrival? I assume this is calculated from arrival at first port of entry and just means the entry has to be submitted, not necessarily cleared and released from customs?

Section 90(1)(a) of the CCA provides that a clearance declaration must be submitted to the customs authority if the goods were imported on board a foreign-going vessel, within three working days of arrival of the goods at the customs seaport where the goods are to be off-loaded from the vessel. However, please also note the provisions of section 90(4) which requires a clearance declaration in respect of containerised goods that are consigned for delivery to licensed container terminal or depot situated inland (e.g. City Deep) to be submitted at least three calendar days before arrival of the goods at the customs seaport. The submission of a clearance declaration within the prescribed periods does not include release but it must have been accepted by the customs authority in terms of section 171.

24. Can you also confirm that if the goods arrive by air, the same rules would apply? Also, if the declaration is submitted within three days and not released, can the goods be held in a bond store and not handed to the States Warehouse?

In terms of section 181 of the CCA, the “release agent” (the licensee of the customs controlled area where the goods are located before their release) cannot deliver goods to any person other than on authority of a release notification. In other words, the goods will stay at the customs controlled area, and could be kept in temporary storage. If the customs authority for some reason decides to detain the goods in terms of Chapter 34 of the CCA, the goods must in terms of section 759 either be kept at the premises where they were detained, or removed to a State Warehouse or to licensed premises determined by the customs authority.

25. Could you please advise when the new registration date will come into effect and possibly supply the application form or website where such form may be found?

The new registration and licence application system is still in the process of development by SARS. Once the system has been tested and proven stable, SARS will give adequate notice to all stakeholders about its availability for the submission of applications in terms of the Customs Control Act, 2014.

26. Kindly provide clarity on the following:

Rule 5.7: What is the maximum period for storage of goods under a customs procedure at places other than authorised places?

It is not clear whether this question relates in particular to storage of goods under warehousing procedure at a redirected place. It is to be noted that redirections may be authorised in relation to goods under other customs procedures as well, eg. section 208 (transit), 230 (excise warehouse transit), 415 (inward processing) and 442(2) (home use processing).
Section 918 must be read with rule 5.7, which provides the procedure for obtaining customs authorisation for the various “redirections”. The effect of section 918 is that the customs authority may, when granting an authorisation, also determine the period for which the authorisation applies. This however does not mean that the customs authority may allow goods under a redirection authorisation to remain at a redirected place for a period which is in conflict with an express provision of the CCA. Section 918(1)(b) specifically states that the time period must be consistent (not in conflict) with the CCA and any applicable tax levying Act. (Please see the specific time periods applicable in relation to transit operations, warehousing, inward processing and home use processing in the relevant Chapters of the CCA).

Rule 7.2 (b): How will multiple invoice numbers be reflected on a customs declaration? Does this imply that each line on the supplier’s invoice must be declared separately even though the same tariff heading may apply?

Multiple invoice numbers could be accommodated on a declaration. Different lines on a supplier’s invoice could be consolidated on a declaration, provided that the key assessment factors are identical.

Rule 7.2 (d): On pre-clearance one only has an estimated “date of arrival” – is the actual “date of arrival” only known on arrival? An assumption is made that no amendment would be required to amend the date to the actual date of arrival.

Correct.

Rule 7.2 (d) r.t.w s 2: When does a vessel dock? Has a vessel at anchor actually docked?

A vessel docks when it arrives at a dock and drops anchor, i.e. the normal dictionary meaning of the word applies.
In relation to “arrival of goods” at a customs seaport, the following applies:

Section 167(1)(d) (i) refers to the date and time of actual or expected arrival of the goods…at a place referred to in section 90 in the case of imported goods. Section 90(1)(a) refers to arrival at a customs seaport.
Section 2(b)(ii) deals with when goods on board a vessel must be regarded to have arrived at a customs seaport, i.e. “when the vessel upon reaching the seaport docks for the first time at that seaport, whether inside the seaport or at a docking facility outside the seaport”.
9.5 (f) r.t.w. s 206(4): Who will report a failure to complete an international transit operation: the border post or SARS Customs?

The person clearing the goods: see section 217(2) of the CCA.
In an ever changing and complex international, regional and national environment, Customs plays a critical role in supporting Government’s programmes to promote economic growth, job creation and social cohesion. The Customs and Excise Act, 1964, has not kept pace with the changing focus of customs work or with the radical changes to the environment in which international trade is conducted, particularly the rapid growth in the use of information technology and the exchange of electronic data. In its current form, customs legislation is unable to respond to new risks, is not business friendly and needs to be easier to understand and use to provide certainty to traders and travellers as well as to Customs.

Please note: The Frequently Asked Questions (FAQs) and their answers are intended as general guidance in relation to the new customs legislation. They are not meant to go into the precise technical and legal detail that is often associated with customs. They should, therefore, not be used as a legal reference. SARS may update the FAQ’s as necessary during the course of implementation of the new legislation. They are compiled from queries sent in to the NewCustomsActs@sars.gov.za mailbox by members of the public. To access this page in different languages click on the links below: