EU proof of origin issue raises hackles in CT

Cape Town industry has raised
serious objection after several
companies were scheduled by
customs over proof of origin
documentation in the city.
“It is absolutely scandalous
what is happening,” said a
consultant for a company that
was scheduled for two years
retrospectively for underpayments
of duty, VAT and
penalties, with a threat of
forfeiture for good measure.
A customs expert
approached by FTW said
the problem related to the
interpretation of the current
legislation, but added that
the problem was unlikely to
go away any time soon as the
new customs legislation now
set to be implemented in 2017
provided for the same oversight.
“The allegations of
contravention of the customs
act levelled by customs against
importers and warehouse
licensees are related to proof of
origin for goods of European
origin where South Africa has a
trade agreement allowing for a
preferential rate of duty.”
The expert said that
to enable a claim for the
preferential rate of duty,
the Cape Town customs
office was insisting that all
European community origin
goods had to be entered for
home use within four months
of the proof of origin being
issued. This was even though
customs warehousing allowed
for storage of goods with
full suspension of any duties
and VAT for up to two years
from the date of the initial
import customs warehousing
declaration.
“In other words an importer
has to enter the goods for
home consumption within
four months of the date of
issue of the proof of origin or
will forfeit the preferential
duty rate,” he said. “This is
despite the customs legislation
providing specifically that
the proof of origin must only
accompany any customs
clearance documents when the
goods are entered for home use
from a customs warehouse.
There is an apparent gap in the
legislation and the Cape Town
customs office feels no apparent
hesitation to exploit this clearly
unintended consequence.”
He said companies were
worried as it had a major cost
impact.
“Trade’s understanding
is that the proof of origin
applies for the full two years
granted for warehousing
while customs officials in
Cape Town are of the opinion
that anyone wanting to
apply the preferential rate
has to enter their goods for
home consumption within
four months of the proof of
origin being issued in the
community.”
Sars spokesman Sandile
Memela told FTW this week
that they were aware of the
concerns around the proof
of origin documentation for
goods of European community
origin.
“We are not in a position to
comment at this stage as our
legal team is interrogating the
issue,” he said.
In the meantime an industry
source told FTW the matter
was looking increasingly
positive for industry as it was
believed that Sars head office
was set to intervene shortly in
the matter bringing an end to
the costly assessments.