Further to our electronic newsflash from 16. September 2009 we would like to highlight again changes to the customs act affecting valuation of containerized goods.

Customs valuation by definition is the process where customs authorities assign a monetary value to a product or service for the purposes of the calculations of Vat and Duties on goods being imported.

South African Revenue Services (SARS) Valuation:  Legislative Interpretation division have advised as follows (please remember that Section 66 of the Customs and Excise Act (the Act) refers to the “Transaction Value: and Section 67 of the Act to “Adjustments to Price Actually Paid or Payable”):
“The changes to Sections 66 (11) (a), 67 (1) (e) and 67 (4) (a) of the Customs Act, which were promulgated and published in the Government Gazette 31781 date 8 January 2009, have come into operation.

The amendment removes the words “in a container as defined in section 1 (2)” and “are packed in a container as defined in section 1 (2)”, "if not so packed in a container” from the current wording of Sections 66 (11) (a);  67 (1) (e) and 67 (4) (a) of the said Act.The effect of this amendment is that the place where the goods were packed into a container in a foreign country, for export to the Republic, will no longer be regarded as the port or place of export and the full cost of transporting the goods from an exporter’s premises to the port or place where they are to be loaded on board a ship or any vehicle (e.g. inland freight charges) will be dutiable, thereby bringing it into line with break bulk cargo.

Services and costs for packing, handling, inland freight and the like will thus be deemed dutiable as it was incurred prior to the cargo being loaded onto the vessel.

Charges for insurance and international freight are still excluded as such and under the C- and D inco terms such as CIF, CFR, CPT, DDU, DDP may still be deducted from the value for Customs purposes provided that they are separately specified on the commercial invoice.

It would be advisable to request your suppliers to show all charges incurred separately on the invoice to enable one to tell the actual EXW/FCA/FOB/CFR etc value accurately for customs purposes.

Deductions and additions made without the necessary substantiating documentation may be viewed by customs as fraudulent declarations and penalties will be issued accordingly.

Please see the below breakdown as an example of such:

Shipment with a value of US$ 100 000.00 from XYZ Distributers, USA to XXX Productions South Africa on a CIF Durban Basis.

EXW Value:                             US$ 100 000.00
Packing:                                   US$     1 250.00
Inland freight:                           US$     2 150.00
Customs formalities:                US$        200.00
_____________________________________
FOB New York:                      US$ 103 600.00
Insurance:                               US$     3 500.00
Ocean Freight:                        US$     6 500.00
_____________________________________
CIF Durban:                           US$ 113 600.00

The FOB value of US$ 103 600.00 will be used as the Customs value for Duty purposes. This amount will be converted to Rands based on the ruling rate of exchange on the date the cargo was shipped on board the vessel for transport to the country of destination.

Please feel free to contact us for any further information or assistance you may require in this regard.