The Customs & Excise Act 91 of 1964 (“the CEA”) requires self-regulation.
This means that those who are licensed and/or registered with the South African Revenue Service (SARS), specifically customs, are expected to have complete knowledge of the contents of the CEA, as well as all other customs-related legislation, policies, and directives, writes Taryn Hunkin, senior associate at Shepstone & Wylie Attorneys.
These licensees and registrants must abide by all the customs-related legislation, policies, and directives.
This is where the phrase, “ignorance of the law is no excuse”, takes root.
That said, anyone who has trawled through the CEA will know that it is exceptionally complex, requires expertise in several areas, including tariff classification and valuation in accordance with international legal instruments, and takes a lifetime to master (well for those that can master it at all).
Anyone who holds a customs and excise license and/or registration would have had to have signed the standard DA185 application form along with the related annexures. When signing the form, the entity applying for a license or registration with SARS “undertakes to comply with customs and excise laws and procedures.” This means ALL customs and excise laws and procedures.
The CEA defines customs and excise laws and procedures as including “any provision contemplated in the definition of “this Act”…; any condition or obligation imposed, any process or procedure instituted or any manual or other directive issued, by the Commissioner or a Controller for the purpose of administering any activity regulated by the Act; and any provision of any other law prohibiting or restricting or otherwise controlling the manufacture, use, importation, exportation, transit carriage, removal or other movement of goods administered under any provision of the Act.”
It is clear from the above, that SARS has its bases well covered, and just to make certain that ‘no stone is left unturned’, the CEA defines ‘this Act’ to include “any proclamation, government notice, regulation or rule issued or made or agreement concluded or deemed to have been concluded thereunder, any agreement contemplated in section 49, or any taxation proposal contemplated in section 58 which is tabled in the National Assembly”.
It’s enough to make your head spin or run for the hills.
When SARS conducts an audit of import and/or export documents of a licensed and/or registered entity and discovers that some obscure regulation hasn’t been complied with, that entity can claim that it was not aware of the regulation, but such a claim will curry little favour with SARS. SARS will use the fact that the entity agreed to comply with the laws and procedures as a stick to beat the entity with.
But be warned, SARS has also been known to pursue entities which are not licensed or registered with it.
Many of the provisions in the CEA require strict compliance. This means that fault is not required for SARS to hold an entity liable for a contravention. If, for example, an importer stores bonded cargo in a customs-licensed warehouse, and the warehouse licensee allows a transporter, which is not licensed as a remover of goods in bond (“RIB”) to collect the cargo for cross-border transport, both the importer and the warehouse licensee will be held liable by SARS for contravening the CEA.
It’s like playing cricket in the garden with your friends. The cricket ball is hit through a lounge window, and all the kids involved in the game get punished for the broken window. No one is spared. Not even the fielders.
Section 44A of the CEA allows SARS to hold more than one party liable for a contravention. This section states that where liability falls on two or more entities, each shall, unless he proves his liability has ceased, be jointly and severally liable for an amount demanded by SARS.
The CEA places the onus on the licensee and / or registrant to disprove SARS allegations. All SARS must do is allege that an entity has contravened a customs provision. That entity must disprove SARS’ allegation.
This is why it is important for entities operating in the customs and excise space to familiarise themselves with the relevant laws and procedures and to ensure that their value chain partners do the same. Entities may find a measure of commercial protection in the terms and conditions agreed to by their value chain partners, but any agreements existing between the parties hold no water with SARS. SARS will pursue all the entities involved with the ferocity of a mother whose lounge window has just been smashed by a cricket ball.
There are of course provisions in the CEA, and other legislation, that allows for an entity which finds itself on the receiving end of a SARS demand to appeal such demand. But the stress and anxiety, not to mention the cost involved in fighting the demand, is high. It’s better to avoid the ‘battle’ if at all possible. As they say in the classics – prevention is better than cure.
We are here to assist. Just consider us your troubleshooting partner, another link in the value chain.