Monday, November 11, 2013

Shipping and Forwarding Interests vs Customs Over Clearance of Container Freight at Inland Ports

Investors and Stakeholders Await Decisions On How Import Goods are Treated in Future
Shipping News Feature

SOUTH AFRICA – When new drafts of two bills were presented in the Government Gazette just a few weeks ago the whole of the country’s shipping and freight forwarding community emitted a howl of anguish. The proposal, from the South African Revenue Service (SARS) would have seen adoption of the Customs Control and Customs Duty Bills aimed at replacing the current Customs and Excise Act and the logistics experts concerns centred on plans to remove inland port status, resulting in all incoming consignments and containers being held at their initial import point to await clearance.

As all industry experts pointed out, without the option of fast tracking uncleared goods inland, the congestion at major ports might soon reach crisis point. Intially SARS pointed to the suspected levels of fraud, with Senior Legal Policy Officer Kosie Louw stating the measure was essential to prevent illicit goods being imported, and that remained the official position until last week. Now it seems the authorities have realised the implications of introducing a regime which might well result in neighbouring countries soaking up trade which has traditionally entered via South Africa.

A major shift might well mean that excess containers in countries such as Tanzania, Namibia and Mozambique could even affect the export trade, and further concerns over the level of penalties likely to be imposed for transgression was expressed by the South African Association of Freight Forwarders,which also accused SARS of a failure to properly consult the industry, an allegation refuted by the Customs officials, with Mr Louw saying the process had been underway since 2007 and continuing:

"The inland terminal issue should be considered against the balance we try to achieve between control versus trade facilitation. The policy rationale for changing existing policy is based on the fact that SARS can only effectively control the movement of goods across our borders (and the risk that this poses) if it has the necessary information."

With Parliamentary deliberations now stretching into next year it looks likely that SARS will accept a reformed version of the draft Bills with errors by agents and importers which do not result in revenue loss not resulting in serious penalties unless the offences were repeated several times. Also provisions for appeal and a ‘bedding in’ period for the first year whilst agents adjusted to the changes will be written into the legislation. There are two proposals now under discussion, firstly that a pre-entry must be lodged three days prior to the arrival of goods which would allow immediate on carriage to an inland port, a solution favoured apparently by SARS and several shipping companies.

The alternative solution put forward seems to be an electronic declaration by the importer, having the same weight as a full clearance, showing the precise details of the goods which would allow immediate on-carriage for completion of formalities at the inland terminal. Whoever lodged such an entry would however accept legal responsibility for any misdeclaration, the SARS main bone of contention under current procedures being that misdeclaration by the overseas exporter leave the revenue services powerless to prosecute wrongdoers.

The situation has proved of special concern to those investors in the inland ports, which most see as the only logical way to ensure congestion is avoided, unlike the situation in some other African states. The development of Johannesburg’s City Deep Terminal the country’s largest inland port and which is currently undergoing expansion and improvement costing potentially £50 million is, according to Transnet, set to increase the terminal’s handling of containers from 130,000 TEU up to a maximum 1 million TEU when completed.