Prior to 1 November 2010, SARS provided for the importation of goods (by a registered importer) which could be cleared under ‘transfer of liability’ (Purpose Code TIR) to a third party who is registered to process or manufacture goods under the conditions of Schedule 3 (Industrial Rebate).

In effect this allowed an importer, having no entitlement to rebate (duty relief), to clear and deliver goods to a rebate registrant for purposes of manufacture/assembly, receive the finished product and dispose of commercially.

The Customs Modernisation approach has put into motion a means by which previous clearance procedures (Purpose Codes, prior to November 2010) could be aligned with the new Customs Procedure Codes (CPCs) introduced subsequent to 1 November. Moving forward, the treatment of such goods under the new dispensation will require that the importer of the goods be licensed to operate a home use processing premises. No allowance is made for transfer of liability to a third party at time of primary importation into the Republic. Provision is however made to allow subsequent sub-contracting of the process of manufacture/assembly.

Given the aforementioned, SARS has approached ITAC regarding the economic justification of the stance permitting transfer of liability.

Manufacturers and importers must therefore take note of this matter and consider the impact to their current business models. The basic principle is that unless an importer is properly registered or licensed (as the case may be) he/she may not be entitled to import goods under certain customs procedures, specifically ‘home use processing’ and ‘inward processing’.