When importing goods into South Africa, importers have two options: clear the goods for home consumption, or another customs procedure for example to enter goods for storage in a bonded facility with the deferment of duties and VAT.
If the goods are cleared with the deferment of duty and VAT under a customs procedure e.g., E40 00 which is “Clearance of imported goods in a customs warehouse under the Warehousing Procedure.” The goods will be removed from the port or place of importation to the nominated customs and excise bonded warehouse.
Before agreeing to store the goods in his warehouse, the warehouse licensee must check his license to ensure that the goods the importer wants to store in the warehouse are specifically covered by the license. Additionally, the licensee must issue a letter to the clearing agent or importer confirming that he consents to the storage of the cargo in his warehouse. It is important that a warehouse licensees ensure that it has good standard trading conditions (“STC”) in place and that each person storing cargo in the warehouse has signed the STCs.
The licensee may be held liable by SARS either, jointly and severally or entirely for VAT, duty, and penalties etc., if the cargo goes missing or is stolen from the warehouse.
The licensee must keep a proper record of all the cargo entering and leaving his warehouse, including a record of how long the cargo has remained in the warehouse for. Generally, cargo may not remain in the warehouse for longer than 2 years from the date of first entry. If SARS finds that cargo has been in the warehouse for 2 years or longer, SARS will look to the licensee for recovery of VAT, duties and penalties. When the licensee notices the 2 year period is approaching, it must alert SARS to this fact well in advance of the expiry of the 2 year period. SARS will then advise the licensee how to deal with the cargo. Unfortunately, the licensee is not able to remove the cargo from its warehouse, or sell it as he is not the owner of the cargo.
When the licensee receives notification from either the importer or clearing agent that the cargo is to be removed from the warehouse for re-warehousing, exportation or another customs procedure, the licensee must not allow the goods to leave his premises until he is in possession of the exiting SAD500. The licensee must additionally ensure that the transporter collecting the cargo is the transporter reflected on the DA502 or DA505.
Certain goods must be transported by a licensed remover of goods in bond (“ROG”) and the licensee needs to check that the details of the ROG that arrives to collect the cargo correspond with the information contained in the customs clearance documents. It is also highly recommended that the warehouse license request either a DA188 from the transporter or proof that the transporter is a ROG.
If the transporter collecting the cargo is not the transporter reflected on the DA documents or if the transporter is not a licensed remover of goods, SARS may hold the warehouse liable for VAT, duty and penalties in respect of the cargo.
Warehouse licensees have a heavy burden to bear. But the burden can be made easier if proper procedures are put in place to limit the licensee’s liability. It is recommended that warehouse licensees peruse the relevant sections of the Customs & Excise Act 91 of 1964 (“Act”), in particular sections 19 – 21 and the corresponding rules. Licensees should conduct regular internal audits to ensure compliance with the Act. If any discrepancies or inconsistencies are found, the licensee should inform its legal representative who can guide them on the necessary steps to take to rectify any issues and to assist in ensuring SARS is informed where necessary.
As is clear from the above summary of the potential liability facing a warehouse licensee, many entities prefer to run warehouse which only stores duty paid cargo as opposed to licensing with SARS as a customs and excise storage warehouse.