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Customs: Lack of Information or No Invoice

          Occasionally things go wrong. An invoice was issued by the supplier but the invoice is illegible. The supplier is not available to explain or has closed down.

          How do you figure out what is in the consignment? What do you Customs clear?

          In another example the consignment was shipped with the wrong goods in the container. An invoice was not issued. A month later neither the supplier nor the importer knows what was packed.

          And in yet another example the goods were supplied to the wrong destination. The would-be importer has undertaken to clear the goods for import and re-exportation but does not know what is in the consignment. What do you do?

          The answer is a Sight Inspection. A Sight Inspection is a Customs inspection held under “non-prejudice”, i.e. no bias or prejudgment is held by Customs.

          The process involves making an application to SARS Customs on a DA 22 Sight Bill of Entry. A DA 22 Sight Entry is a simplified version of an import declaration. It is a manual process. The Customs Clearing Agent would complete the form and submit it to Customs. Customs will in turn “Stop” the Sight Entry.

          A booking for a Customs examination is made and the goods are inspected. Both parties (Customs and the importer or agent) must be present during the Sight Inspection. The Customs Officer will make-out an inventory of the goods on the reverse side of the Sight Entry.

          The importer or Clearing Agent will in turn make-out an independent inventory of the goods Sighted.

          With the knowledge gained of what is in the consignment, either an invoice must be produced or three quotations for the goods must be obtained. In the case of quotations, the highest of the three must be used for clearance purposes.

          Once the goods are cleared using a proper clearance declaration, Customs will assess the declaration and compare it to their own inventory of the goods. If in order, the shipment will finally be released.

          If Customs is not satisfied with the valuation of the goods, they may launch a further investigation into the nature of the goods and value thereof. This may result in a VDN (Valuation Determination) being issued. VDN will be covered in another Blog later on.

          If any of the goods Sighted are subject to anti-dumping duties, then a VDN will almost certainly be considered.

          Sight Entries occur very seldom. Many traders do not know about the opportunity that this process presents to solve such problems. This is the reason for including this topic into a blog.

Customs Invoice Language and Translations

          All commercial invoices and supporting documents must be in one of the official languages of South Africa. SARS will only accept English as the official language for business purposes. This is also confirmed in the Rules to the Customs Control Act when referring to translations, i.e. Rule 41.29 (1).

          If any invoices, supporting documents or literature is in a foreign language and you are not able to have these changed, then translations may be used.

          However, you should evaluate the merits of any translation required before you proceed. For example, Dutch or German languages may be easily read and understood by an Afrikaans speaking person. Provided there are only a few words or there is only a sentence or two, then you should submit it to SARS and request permission from them to utilise it. In your submission you must state the purpose for which the document will be used (i.e. Clearance purposes). You must request whether SARS will accept the foreign language document without translation. Such applications must be made before attempting to use them for official purposes.

          If SARS does not accept it or if the language is not legible then you will need to have it translated. According to the various SARS guides on this matter, translations must be undertaken by a “sworn translator” certified by the South African Translators Institute. Again, before you use the translated material for official purposes, you must make an application to SARS to request permission from them to utilise it.

          This may become a costly and time- consuming exercise. Another alternative and one that is often accepted by SARS is to have it translated by an independent third party. Such a third party can be any South African registered business which has a foreign language speaker in its employ. The translation must be on a company letterhead, signed by the person doing the translation and stamped with an official company stamp. Once again, do take care to make an application to SARS to request acceptance of the translation prior to using it for official purposes. In some instances SARS may request such translation to be certified by a Commissioner of Oaths.

          Finally, any e-mail correspondence whether from a South African registered company or foreign supplier will not be accepted as a form of translation material.

Customs: Minimum Requirements on a Commercial Invoice

          Quite simply, one may not clear goods moving in to or out of South Africa through Customs without the existence of a commercial invoice.

          The new Customs legislation states that the contents of an invoice must be a “true reflection” of the goods being imported or exported.

          This concept is important especially when dealing with samples of no commercial value, goods being supplied free of charge or replacement stock. Customs still wants to know what the goods are and what value such goods would be – as if in a commercial undertaking. The purpose obviously is to establish the correct duties and taxes which must be paid. Some of these issues will be discussed in the blogs which follow.

          The concept a “true reflection” introduces another concept covered in the legislation namely, “the amount paid or payable” for the goods. The amount paid is the actual amount paid in the commercial transaction. The amount payable is the amount that would have being paid if any goods that were supplied at no charge were charged. The meaning of the concept “transaction value” is inclusive of the latter explanation; again, for duty purposes.

          When it comes to duties, Customs wants its pound of flesh so to speak.

          In a nutshell, whether the goods are charged for or supplied free of charge, or even discounted, a true reflection of the goods and their values must be present on the commercial invoice at all times.

          Minimum requirements on a commercial invoice in terms of the Customs Control Act number 31 of 2014 and the SARS Valuations on Imports Guide (SC-CR-A-03) generally include:

a.       Nature of the Transaction.

b.      Goods to which it relates.

c.       Amount (price) paid or payable.

d.      Currency.

e.       Goods marks and numbers, i.e. part numbers.

f.       Description of the goods.

g.      Any propriety or trade name of goods.

h.      Invoice number and date of issue.

i.        Name and address of issuer.

j.        Name and address of the buyer (and the consignee if different from the buyer).

k.      Any commission, discount, cost, charge, expense, royalty, freight, tax, drawback, refund, rebate, remission or other information which affects the value of the goods.

l.        Freight and insurance where applicable.

m.    Must be in the official language.

n.      Country of origin.

o.      Weights and quantities.

p.      Forward exchange contract particulars (for Rand invoicing).

The last invoice issued in respect of the goods must be supplied and used for clearance purposes, i.e. if there is more than one invoice issued for the goods. This would generally apply where buying and selling agents are involved.

          Any change in invoice particulars must be accompanied by an amended invoice, debit or credit note. Such changes must be communicated to Customs with the use of a VOC (Voucher of Correction) if the goods have already being cleared.

          Interestingly, the Customs Control Act makes mention of a “secret discount” in any form, a term not officially used before. These must also be reflected on the invoice.

Customs: Introduction to the Commercial Invoice

I like the commercial invoice. It is the one document which touches on nearly every party involved in the international trade process in one way or another. It also provides allot of information without being overly technical.

          A single commercial invoice is used and/or viewed by the exporter and importer, at least two commercial banks, the SA Reserve Bank and its equivalent overseas, two Customs authorities, the insurance broker, the transporter, and at least one Customs Clearing and Forwarding Agent. They all act as major role players in relation to the invoice.

          A commercial invoice is somewhat different from a tax invoice. Tax on international trade is zero rated. No tax is reflected on it. A commercial invoice is used for international trade transactions. It contains Customs related information such as international commercial terms, origin criteria and currency codes.

          Documents which either support or depend on the commercial invoice include the packing list, indent order, insurance document, bank payment documents, exchange control documents, forward exchange risk cover, Customs declarations and its supporting documents on each side of the border, the contract of sale, regional trade agreements, and international sales and delivery terms such as Incoterms (International Commercial Terms).

          While the invoice is central to the commercial transaction between the buyer and the seller, it must meet with a number of Customs requirements. These are legislated in the Customs Acts and documented in numerous SARS Customs SOP’ (Standard Operating Procedures). Go to www.sars.gov.za and search under “Find a Publication”.

          Importing or producing blank or incomplete invoices which are capable of being completed is an offence.

          The Customs authorities recognise the following types of invoices namely the pro-forma invoice, the commercial invoice, and consular invoices (i.e. for diplomats and ambassadors). The former two will be covered in subsequent blogs.

          Some of the larger and more complex issues which also relate to the invoice will be discussed independently from the Blogs which specifically cover invoices. However, some (i.e. tariff, valuation and rules of origin) may be covered briefly in this section from time to time.

          Minimum Customs requirements pertaining to the commercial invoice will be discussed here. It will include issues such as language, when there is a lack of information on the invoice, amended invoices such as debit and credit notes, and the like.

Knowing your Rights: The Appeals Process

          Now that we have discussed searches, the Customs demand and the pre-appeals process, we can go through the formal appeals process.

          You have received the Letter of Demand and you have decided to go with the internal appeals process with SARS Customs. Also, you have paid up all the amounts demanded which will include the outstanding duties, taxes, penalties and interest.

You will have 30 working days from the date of the Letter of Demand within which to lodge the first appeal.

          The first level of appeal is with the local Customs Branch Office which made the adverse decision. This is called the IAA (Internal Administrative Appeal) process.

If this fails, the second level of appeal will be with the Office of the Commissioner for the SARS. This is called the ADR (Alternate Dispute Resolution) appeals process. Your appeal may be mailed directly to the Commissioner’s Office or alternatively, it may be addressed via the local Customs Branch Office.

          You will have 30 working days after the IAA response letter (if unsuccessful) from SARS to appeal by ADR. In each instance, SARS is required to establish a separate and independent review committee known as the Appeals Committee. You may also (in addition to written representations) elect to make representations in person to the Appeals Committee.

          In some cases (prior to appealing) you might require SARS Customs to provide further explanations or reasons for a decision made. If so, you should, within the 30 working days in any instance, request reasons from SARS in writing. Going forward, extensions of the 30 working days within which to respond to an appeal may also be granted, upon request. A maximum of 15 calendar days may be provided.

          In the new legislation SARS will have 60 calendar days within which to respond to any appeal with a decision. The Commissioner may extend this by an additional 30 calendar days. If SARS does not respond with a decision within this timeframe, the case will automatically be won by the applicant.

          The period 16 December to 15 January (inclusive of both dates) are excluded in any periods of limitation.

          There is also provision for an Ombudsman in the new legislation.

          You are in any event advised to consult with a professional prior to attempting to appeal any matter by yourself.

          Anyone involved in the appeals process may at any time still decide to follow litigation. The period of time normally allowed for litigation following the last decision made by SARS (whether in or outside of the internal appeals process) is 12 months.

          However, there are additional time constraints involved in this process which relates to the PAJA (Promotion of Administrative Justice Act) number 3 of 2000. Traders are advised to consult with a Customs Attorney in advance. Litigation however is normally reserved as a last resort.