Concerns raised over penalties in latest Customs Act rules

The South African Revenue Service (Sars) has extended its deadline for comments on the fourth batch of rules guiding the Customs Control Act. While Sars has already provided feedback and commentary on the first 30 chapters – on which industry has commented – it has given an extension until February 20 for submissions on the last ten chapters. This is due to the holiday period and to allow all commentators sufficient time to give input on the rules and regulations. Experts expect that once the process around the Customs Control Act is complete the rules and regulations for the Customs Duty Act and the Customs and Excise Amendment Act will start. Government officials and industry experts have been working together in what has been described as a “smooth process”, but there is still major concern over the impact the new legislation will have on the country. “These rules are very complex and the process has been quite rushed despite the current extension of the deadline,” said one source. “There is a growing feeling that the process is being rushed forward and there is real concern that crucial aspects will be overlooked.” In the latest set of rules concern has also been raised over the compulsory large fixed penalties proposed for shipping lines and airlines entering South Africa. These penalties are generally all concerned with complying with a procedure within a specified time frame. “The penalty guideline on its own is a problem as not all the penalties have been seen,” said another commentator. “We have seen some penalties relating to some of the sections but not all of them. We have also only been privy to the non prosecutable penalties.” In the latest batch of rules fixed penalties are generally set at either R7 500 or R10 000 (depending on the breach), and that will affect the bottom line of the lines (both sea and air) unless they adhere to the narrow dictates imposed by the new legislation. For example, failure to move goods to a relevant terminal within a specific time frame carries a fine of R10 000 while the failure to report an advance arrival notice within an applicable time frame is R7 500. “The only customs penalty system in the present customs legislation is one where customs is required to make a departmental offer in lieu of legal prosecution. The accused person is therefore entitled to refuse the penalty, which compels customs to legally prosecute the alleged perpetrator if it believes that a court will rule in its favour. But in the Customs Control Act, an additional penalty is introduced for which the alleged perpetrator cannot be prosecuted. However, the legislation now compels him to pay a substantial penalty for a mere “breach”, non-prosecutable. The question is whether penalties typically of R7 500 or R10 000 per alleged breach, are appropriate, or are these penalties totally unrealistic and far too harsh? In other words, does the “punishment really fit the crime?” The problem is these are not “crimes”, since they are ‘non-prosecutable breaches’,” said the source.