28 July 2017 by Tax and Exchange Control Alert

Customs and Excise Highlights

This week’s selected highlights in the Customs and Excise environment since our last instalment:

Schedule 1 Part 1 to the Act is amended to the effect that the rate of duty for “cane or beet sugar and chemically pure sucrose, in solid form” of heading 17.01 is reduced from 63,63 c/kg to a free rate of duty.

Draft Amendments relating to Excise in the Customs & Excise Act, No 91 of 1964 (Act):

  • Rule 19A3.01 – Storage of fermented ethyl alcohol in a licenced special storage warehouse for supply to rebate users;

  • Schedule 6:
    • Insertion of rebate items 621.23, 621.25, 621.27, 621.29, 621.33, 621.35 and 621.37 to provide for the movement of alcohol derived from the process of extraction;
    • Insertion of rebate items 620.18 and 620.20 to provide for the production of fermented ethyl alcohol by-product and the substitution of 620.19 and 620.21 to include the manufacture of non-alcoholic beverages by a process of extraction;
    • Substitution of 619.07 to include the manufacture of non-alcoholic beverages by a process of extraction and the insertion of 619.09 to provide for the production of fermented ethyl alcohol by-product;

  • The Explanatory Note issued by SARS provides as follows:

New technologies in the alcoholic beverages sector allow for the extraction of alcohol from beverages of a fermented origin. The current rules provide for the application of such fermented ethyl alcohol in primary or secondary spirits manufacturing, the denaturing thereof for rebated use or the export thereof. This proposed rule amendment will in addition provide for the storage of such fermented ethyl alcohol in a licenced special storage warehouse for the un-denatured supply thereof to registered rebate users. The draft rule amendment must be read together with the proposed rebate amendments.

The rebate item numbers 619.07, 620.19 and 620.21 have been amended to include wine, other fermented beverages and beer thathave undergone aprocess of extracting the alcohol, to manufacture non-alcoholic beverages.

Rebate items 621.23, 621.25, 621.33, 621.35 have been created to provide for the fermented ethyl alcohol by-product derived from the extraction process to be moved to primary (VMP) or secondary (VMS) warehouse to undergo any further processing.

In addition rebate 621.27, 621.29, 621.37, 621.39 is also created to provide for the fermented ethyl alcohol by-product derived from the extraction process to be moved to a special storage warehouse for the un-denatured supply thereof to registered rebate users or export.

In Schedule 2 to the Act, anti-dumping item 215.02/7312.10.90/04.08 [providing for “Ropes and cables, of iron or steel, not electrically insulated, of a diameter exceeding 32 mm (excluding that of wire of stainless steel, that of wire plated, coated or clad with copper and that identifiable as conveyor belt cord) …”] is amended by substituting “96%” with “93%” in the “Rate of anti-dumping duty” column (of the English Notice) with retrospective effect from 17 June 2016;

The 2017 Draft Taxation Laws Amendment Bill and 2017 Draft Tax Administration Laws Amendment Bill, as they relate to Customs & Excise, make provision for the following (not an exhaustive list):

  • Proposed amendments to the Act:
    • The continuation of certain amendments of Schedules to the Act.
    • Amendment to s4 to update the list of government entities that are allowed access to SARS’s trade statistics and the conditions for the sharing of such information.
    • Amendments to s19A and s20 are proposed to facilitate the required warehousing reforms relating to licensed storage warehousing in the liquid fuels industry.
    • Amendments to s21A:
      • clarifies the cessation of liability for duty on imported goods used in the manufacture or production of other goods by a Customs Controlled Area (CCA) enterprise. In other words, liability ceases if it can be proved that the goods have been used in the manufacturing or production of goods by the CCA enterprise and that those goods have been removed to other licensed or registered premises for manufacture or production of any other goods by the licensee or registrant of such premises in accordance with any relevant provision of the Act; and
      • makes provision for the assumption of the liability for duty that ceased as contemplated in paragraph above.

  • Amendment to s54C to refine the description of those other provisions of the Act that also apply with any necessary changes as the context may require to the environmental levy. The revised wording clarifies that the scope of this section is limited to those provisions that govern the administration of excisable goods.

  • Amendment to s75: In the 2015 Budget Review, it was announced that a comprehensive review of the administration of the diesel refund system would take place, which requires the delinking thereof from the VAT system. The 2017 Budget Review set out the legislative amendments contained in this proposal that will facilitate these reforms. Further amendments to the Schedules and Rules of the Act will be developed following public consultations to implement the outcome of the review.

  • It is also proposed that the the Customs Duty Act, No 30 of 2014 (Duty Act), the Customs Control Act, No 31 of 2014 (Control Act) and the Customs and Excise Amendment Act, 2014 will be amended. All amendments are not dealt with hereunder. However, the following proposals are of particular interest:
    • Deferments under the Act will lapse upon commencement of the Duty Act. However, current deferment holders will be given an opportunity to re-apply under the Duty Act before commencement thereof.
    • The Commissioner will be enabled to exercise certain powers in terms of the Duty Act and the Control Act before commencement thereof. The reason is to effectively implement these Acts, which include appointment of officers, delegation of powers, submission of applications (licensing, registration, etc.) before due date, etc.
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