Sars on 02 October published draft rules under Section 110 to the Act, 1964 “Tobacco product counters”, for comment which is due by 04 November.
The proposed rules oblige the licensee of a customs and excise manufacturing warehouse of tobacco products to determine the quantities of all manufactured products by means of a functional product counter on each tobacco manufacturing machine.
The draft rules explain the physical requirements of the product counter system, details of which will be communicated by the Commissioner for Sars to the licensee in writing at least 30 days before the installation date. The licensee would need to further adhere to strict reporting requirements but may request approval from the Commissioner for an alternative methodology if the prescribed product counter system cannot be used.
Rules for Section 110 of the Act
Product counters on cigarette production lines
Rule 110.01 For the purposes of these rules –
(a) “cigarette packaging machine” means any machine used in the packing of any cigarettes.
(b) “cigarette production line” means any sequence or combination of machines used in the manufacture of cigarettes.
Rule 110.02 The licensee of a customs and excise manufacturing warehouse for the manufacture of cigarettes shall calculate the quantities of all cigarettes manufactured in the warehouse by means of a functional product counter on each cigarette packaging machine.
Rule 110.03 For the purposes of Rule 110.02, the licensee shall –
(a) ensure that a product counter is installed and maintained on each cigarette packaging machine according to the specifications of the manufacturer of such cigarette packaging machine and the manufacturer of such product counter respectively;
(b) ensure that a device is installed and maintained for the recording of data for each product counter on the quantities of all cigarettes manufactured;
(c) seal any inoperative cigarette packaging machine or cigarette production line with a tamper-proof security seal under the supervision of an officer;
(d) conserve any security seal and only allow the seal to be removed and replaced under the supervision of an officer;
(e) bear the cost of installing and maintaining any product counter and data recording device; and
(f) bear the cost of installing and conserving any security seal.
Rule 110.04 The licensee shall comply with the provisions of Rule 110.03 -
(a) within 30 days after the commencement of these rules;
(b) within 30 days after the acquisition of any operative cigarette packaging machine after the commencement of these rules; or
(c) within an alternative period, the Commissioner may allow upon a request in writing from such licensee.
Rule 110.05 The licensee shall record and report to the Commissioner –
(a) annually the layout in the warehouse of each product counter and its data recording device per cigarette packaging machine per cigarette production line;
(b) daily the readings of each product counter and its data recording device per cigarette packaging machine per cigarette production line and per cigarette production run;
(c) immediately upon occurrence the –
(i) resetting, deactivation or malfunction of any product counter or data recording device;
(ii) deactivation or malfunction of any operative cigarette packaging machine or cigarette production line;
(iii) breach or malfunction of any security seal;
(iv) activation of any inoperative cigarette packaging machine or cigarette production line;
(v) alteration of any cigarette packaging machine or cigarette production line that impacts on any product counter or data recording device; or
(vi) acquisition, installation, sale or removal of any cigarette packaging machine or cigarette production line; and
(d) retain the records available for inspection by the Commissioner for a period of five years calculated from the end of the calendar year in which any such record was created.
Rule 110.06 If for any reason the quantities of all cigarettes manufactured cannot be determined as prescribed in Rule 110.02, the licensee may request approval in writing from the Commissioner for an alternative methodology to be used.
Story by: Riaan de Lange