‘Be aware of inadvertently building up debt to the state’

We continue to see situations where companies have inadvertently built up a considerable debt to the State without the possibility of recovering these amounts in the market place. This is particularly the case with clearances under the third and fourth Schedule to the Customs Act. Rebate Item 412.07, which deals with the rebate of duty on goods destroyed with the permission of the Commissioner, is a case in point. How many companies are aware that duty is payable on the remaining waste or scrap that enters home consumption subsequent to destruction of the goods? For example, the Commissioner may authorise the destruction of a motor vehicle. Once the vehicle is destroyed the scrap is sorted according to constituent material and sold. Duty is payable on the subsequent proceeds of the sale of the scrap. Another example is industrial rebate items under the third Schedule requiring permits from the International Trade Administration Commission (Itac). We have recently been contacted by registered industrial rebate manufacturers who have been "scheduled" for millions of rands in duty for failure to produce the required Itac permit. Customs also failed to detect the absence of these permits at time of Customs clearance. These manufacturers were not aware of an amendment to a particular item under the fourth Schedule which called for a permit from Itac. It is equally important for clearing and forwarding agents to ensure that their clients are registered with Sars under the third Schedule prior to submission of clearance documents under this Schedule. It is highly recommended that documentary proof of registration with Sars Customs is called for – otherwise hefty penalties can be expected. Wherever duty is rebated at time of Customs clearance, it is of utmost importance to ensure that all aspects of the Customs and ITA Acts and the schedules to these are adhered to. Where large amounts of money are involved it is certainly worth spending a little more on hiring the services of a reputable firm specialising in Customs matters to conduct regular audits on your Customs clearance documentation in order to ensure Customs compliance.