Thaba Mufamadi, chairman of Parliament’s finance committee. Picture – Financial Mail

Parliment’s standing committee on finance (SCoF) has decided to postpone its deliberations on two draft customs-related bills until next year to allow importers and the freight-forwarding industry more time to comment on the proposals which threaten the status of City Deep as an inland port. This followed an appeal by the South African Association of Freight Forwarders that it had had insufficient time to consider the substantially revised draft Customs Control Bill and Customs Duty Bill, which required that imported goods would have to be cleared at the first point of entry.

The association, supported by a range of other business organisations, including the Johannesburg Chamber of Commerce and Industry, warned that the bills could be challenged on constitutional grounds if the process of consultation was deficient. All political parties supported the proposal by finance committee chairman Thaba Mufamadi on Wednesday that the deliberations on the bills be postponed until next year. He instructed stakeholders to make their submissions to the South African Revenue Service (SARS) by December 15.

Mr Mufamadi also took cognisance of concerns raised by Business Unity South Africa that parliamentary processes did not allow sufficient time to comment, for example, on the medium-term budget policy statement. Industry has warned of port delays and trade disruption if the proposals were to be adopted. The Customs Control Bill proposes that goods be cleared at the first port of entry into South Africa. This will mean that inland ports such as City Deep in Johannesburg would no longer be designated places of entry or exit for customs purposes. In the past, containerised cargo could move directly to inland ports on arrival in the country under cover of a manifest. A new declaration — of the nature, value, origin and duty payable on the goods — would replace the manifests.

SARS said these did not provide sufficient information to undertake a risk assessment. Another bone of contention for industry was the “extremely severe” penalties proposed in the draft Customs Duty Bill. Following the uproar about the proposals SARS offered a compromise earlier this week as a way out of the impasse. Instead of a clearance at the port of entry, a mandatory advance customs clearance of the goods three days before their arrival at the first port of entry would be required. Goods consigned to inland terminals such as City Deep would be released conditionally. The system would be tested for the whole of next year to iron out any problems.

An alternative option would be for the goods to undergo a lesser form of clearance at the first point of entry. This would still entail providing customs authorities with the same level of information on the tariff, value and origin of goods, which would be submitted by electronic data interchange. The importer would be held accountable for the information that was provided. SARS official Kosie Louw said that because this document would not have the formal status of a clearance certificate, it would not disrupt existing legal contractual arrangements, as claimed. The goods would still move CIF (cost insurance and freight) from the port to City Deep. SARS has also proposed softening the penalty provisions so that errors not resulting in any prejudice to customs revenue will be subject to penalties only after three warnings. These penalties will be discretionary and applied leniently in the first 12 months of the bill coming into force to allow business time to properly prepare for the change. An appeal process has been included. Source: Business Day Live. 

Related articles covering all the twists and turns

• SARS to address Stakeholders on Customs Control proposals (mpoverello.com)
• Draft Customs Bills in Parliment (mpoverello.com)
• SARS intent on scrapping inland ports (Financial Mail)
• Flaws slow the flow (Financial Mail)
• Streamline trade customs (Financial Mail)
• Inland ports can stay — South African Revenue Service (Financial Mail)
• A practical solution to City Deep debate? (FTW Online)