One of the cornerstones of customs duty and excise duty is tariff classification. The other two are valuation and origin.

This column regularly informs of developments regarding these cornerstones, besides others. For example, a tariff classification court case was the focus of the March 29 instalment of this column, headlined ‘Tariff classification not a walkover’. As the South African Revenue Service (Sars) states, tariff classification is the process through which any imported or exported commodity (should include a South African product) is put into a certain category by virtue of what it is or how it is made or what it is used for. Once determined, the tariff classification serves to indicate, besides others, the applicable rate of duty and whether it is subject to any permits or other import or export requirements.

Owing to the importance of tariff classification, any Sars publication on the subject should be compulsory reading. Sars has published its six-page External Policy for Tariff Classification, dated June 7. The sections of the publication include Scope, Policy, What is Tariff Classification?, The Explanatory Notes to the Harmonised System, Determining a Tariff Heading, Staged Consignments, Analysis Fees, Record Keeping, Penalties, Appeals against Decisions, References, Legislation, Cross References, Definitions and Acronyms, and Document Management.

According to the scope of the policy, all import and export transactions require declarations falling under an appropriate tariff heading. (The declaration should also include reference to South African manufactured products.) The tariff classification code is directly linked to the rate of duty payable on that commodity. Items are classified in terms of the International Harmonised Commodity and Coding System, under the World Customs Organisation’s Harmonised System Convention. This policy is for all clients dealing with the pre- or postclearance verification and classification of imported or exported goods. It specifically focuses on the provisions of Section 47(9) of the Customs and Excise Act and the rules of classification. The policy explains how the Sars customs division interprets the law and rules that relate to the classification of imported or exported goods. Customs samples are dealt with in SC-CF-49 (dated July 13, 2012).

Stage Consignment External Policy
Owing to the sheer size of certain machinery and equipment, it is not possible to import these types of machinery and equipment as a complete unit or a single functional unit. Instead of completing separate customs entries for each consignment, this may be cleared as component parts of a single functional unit. As a consequence, the rate of duty of the single functional unit applies instead of that of the separate parts.

Tariff classification of staged consign- ments differs from the norm. Goods are normally classified as presented at the time of importation by a specific importer. With staged consignments, only one tariff heading is used and is determined according to the essential character of the finished plants/machinery/factory. The requirements that have to be met for goods to be imported in more than one consignment are contained in Addi- tional Note 1 to Section XVI (Tariff Chapters 85 and 84) the Harmonised System (HS) Tariff. The authorisation of staged consignments can only be granted by the Sars tariff section, based at head office and will only be issued in terms of machines or equipment classified in either Tariff Chapters 84 or 85 of the HS. Companies that intend to make use of this facility must direct their enquiries to the Sars group manager: tariff.

Sars has published a four-page external policy for staged consignments dated June 7 and divided into these sections: Scope, Policy, References, Legislation, Cross Reference, Definitions and Acronyms, and Document Management.

This Policy applies to staged consignments and the requirements that have to be met for goods to be imported in more than one consignment. This policy is for all customs clients who must apply for authorisation of staged consignments and then declare such consignments on a customs declaration. The policy does not apply to goods in transit/bond through South Africa or goods exported from South Africa.

Creation Notice – Screws, Bolts and Nuts Increase
Comment is due by July 5 in respect of the proposed increase in the rate of customs duty on certain screws, bolts and nuts classifiable under tariff subheadings 7318.15.39, 7318.15.43 and 7318.16.80 from the existing 10% ad valorem to the 30% ad valorem bound rate. The customs duty increase on other hexagon nuts would be effected by creating an eight-digit tariff subheading, 7318.16.80.

Laminates Customs Duty Reduction
Comment is due on June 28 in respect of the proposed reduction in the rate of customs duty on laminates of phenolic resins with a basis of paper, classifiable in tariff subheading 3921.90.05 from 10% ad valorem to free of customs duty by the creation of a new eight-digit tariff subheading under 3921.90 for ‘laminates of phenolic resins with a basis of paper, thermosetting’.

Dust Masks Customs Duty Rebate
Comment is due by June 28 in respect of the proposed rebate of the customs duty on:

• polyurethane flat shapes with dimensions not exceeding 50 mm × 10 mm, self-adhesive on one side only, in rolls of a width not exceeding 20 cm, classifiable under tariff subheading 3919.10.07, for the manufacture of dust masks;
• silicone elastomeric straps with a length not exceeding 315 mm and with a width not exceeding 7 mm, classifiable under tariff subheading 3926.90.90, for the manufacture of dust masks;
• natural rubber straps with a length not exceeding 315 mm, with a width not exceeding 7 mm, classifiable under tariff subheading 4016.99.90, for the manufacture of dust masks; and
• inner and outer shells of nonwoven material, classifiable under tariff subheading 6307.90.10, for the manufacture of dust masks.