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Customs Refund and Drawback Process | Policy, Procedures, and Compliance

Engage with clients to address concerns in the refund and drawback processing, ensuring compliance with Customs legislation and regulations.

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Customs Refund and Drawback Process | Policy, Procedures, and Compliance

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  1. REFUND AND DRAWBACK PROCESS 28 MAY 2019

  2. Purpose To engage with the clients to address concerns which have an impact on service delivery with regards to the refund and drawback processing. To familiarise Customs clients with the content of policies, procedures and completion manuals available on the Intranet.

  3. Customs Customs Control within the Refunds and Drawback environment – Are measures applied to ensure compliance with the Customs and Excise legislation and procedures and has the meaning assigned thereto in Sections 75, 76 and 76B The legislative and procedural aspects include – 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 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 All refunds/drawbacks are limited in terms of Section 76B

  4. Applicable Refunds & Drawback Legislation CUSTOMS Sections 38, 39, 40, 41, 43, 45, 47, 58, 75, 76, 76A-C, 77I 3(1), 77B(2), 80, 91, 92, 98, 99, 99A, 101A, 100, and 119A Rules 19A4.04 (viii);38; 39; 40, 41, 43, 44, 49, 59, 75, 76, 77I .01 to 77I.23, 106, 101A.01A, 119A.00, 202.00 and 202.02.05 Schedule 5 VAT Applicable Sections (Sections 7, 11, 13, 16, 39, 40 and 54) Revenue Laws Amendment Act No. 45 of 2003: Sections 77J and 77L Revenue Laws Amendment Act No. 60 of 2008: Sections 99 and 100

  5. Applicable Refunds & Drawback Legislation Excise Sections 47(9), 64F, 65, 69, 75(14), 76, 76B, 99(2)(a) and 100 Rules 39.04, 39.05, 49.01 to 49.04, 64F.04, 64F.05, 64F.07, 65.01, 65.02 to 65.03, 69.01, 75.00 to 75.24, 76.01 to 76.04 and 99.01

  6. Policies, Procedures, Manuals The following documents must be read in conjunction with the Refund and Drawback policy (SC-DT-C-13). (http://www.sars.gov.za/ClientSegments/Customs-Excise/Pages/Refunds-and-Drawbacks.aspx) Recent amendments to the Refund and Drawback policy: Permit / certificate number and date issued must be endorsed on page 2 of DA66 Importation supporting documents may be stored on a compact disc Clearing instructions - Drawbacks Item 537.02 is removed Proof of payment from a financial institution - Trade Agreement Refund applications. SC-CF-04 : Completion of Declarations SC-CF-55 : Clearance Declaration SC-DT-C-06 : DA 66 completion manual

  7. Applicable Policies SC-DT-C-09 : DA 63 completion manual SC-DT-C-08 : DA 64 completion manual SC-DT-C-18 : CR1 completion manual SC-CR-A-03 : Valuation of Imports SC-CR-A-09 : Tariff Classification SC-CC-24 : Internal Administrative Appeal SC-CC-26 : Alternative Dispute Resolution SC-DT- B-02: Deferment SE-REF-02: Refunds – External Policy (Excise)

  8. Refunds and Drawback forms used FORMS CR1 – VOCs DA 66 - Drawbacks DA 63 - Drawbacks 522.03 DA 64 - Drawbacks 501.00 – 521.00, 551.02, 551.03, 561.02

  9. Refunds to Specialised Sections Only in exceptional circumstances after the Branch Office has exhausted all resources then claim may be forwarded to Specialised Sections. (general refund claims) relating to Tariff, Valuation or Origin – forward via share email and pend case (SC- SC-CR-A-03 : Valuation of Imports, SC-CR-A-09 : Tariff) before finalisation Branch Office to complete the DA314 and submit to the Specialised Sections for a Tariff Determination (TDN)

  10. Clearance channels ELECTRONIC – Electronic Data Interchange Submission of electronic amended declarations and supporting documents – CR1 Client must be authenticated – electronic payments MANUAL – Paper Based Drawbacks – DA66 (CER) All documents must be retained by the client for 5 years

  11. Drawbacks Drawbacks are applied for on a DA 66 supported by the necessary documentation Drawbacks is currently a manual process. Certain information is captured on the Customs and Excise Refund System to conduct various validations. Drawbacks items 501.00 - 521.00 requires, registration prior to the export of goods Submitted to the Controller/Branch manager in whose control area the importer conducts his/her business

  12. Drawbacks continue Export declarations must have the correct CPC and drawback item inserted prior to the goods exported from South Africa No amended declaration is allowed amending drawback, quantity, tariff heading or CPC after the goods left South Africa and are not readily available for inspection All goods cleared under Schedule 5 does not need to be exported under customs supervision. It remains the prerogative of the Branch Manager. Application to export goods in terms of item 522.02, 522.03, 522.04 and 522.06 before the goods are exported to verify that the goods in question are the same as imported. 522.02 is the only compulsory examination that must done at the Branch Office e.g. Cape Town (source office)

  13. Drawbacks continue Examinations are conducted at the source office Land port of exit may do a supervision/verification on risk base With the implementation of the HBL the forms DA63, DA64 and DA66 were amended and published on 1 April 2018. The Completion Guides and the Refund and Drawback Policy were amended accordingly and published on 20 April 2018. The CER System was also upgraded to accommodate more than one duty tax type. The time period is limited to an application received by the Controller / Branch Manager within the periods prescribed in Section 76B

  14. Drawback Item 521.00 This part provides for the drawback of duties / levies paid on imported goods used in the manufacture, processing, finishing, equipment or packing of any goods exported. Claimants claiming in terms of the above mentioned drawback items must be registered with the Controller / Branch Manager in whose control area they conduct their business, prior to exportation The import and export period on the ITAC Permit must have a start and end date which must cover the date on which the importation and export declaration was. It is the responsibility of applicants to ensure that they keep proper records of balances, as and when they submit claims.

  15. Drawback Item 522.02 Which are found to be not legally saleable in South Africa because they do not conform to a standard prescribed by law; or Which, at the time of importation were not in accordance with the terms of the contract in respect of their description, quality, state or condition and documentary evidence confirming the dispute in this respect between the supplier and importer, is furnished; or Which have been landed damaged It is compulsory that an examination in terms of drawback item 522.02 (EWP) must be conducted prior to exportation to verify whether the goods returned comply with the conditions of drawback item 522.02

  16. Abandonment/Destruction/Disposal Importers may apply for abandonment to Customs or destruction of goods on which duty was paid Application to Customs Destruction under Customs supervision Refund Item 522.02 (412.07) Subject to the conditions of the item 522.00 No amended import CCD is required

  17. Drawback Item 522.03 Item 522.03 applies to goods “in the same condition as imported” or “in condition in which the essential character of the imported goods has been retained”. This provision does not apply to goods which have gone into home consumption or exported as used goods. An application letter requesting an examination without prejudice (EWP), as approval must be obtained from Customs before the goods are exported from South Africa. The DA 63 and a copy of the export CCD must be presented on the same day to the Controller / Branch Manager’s office in whose area of control the declarant conducts his / her business.

  18. Drawback Item 522.03 continue To confirm that the DA 63 / DA 63A and the export CCD was received by Customs on the same day the Registry / Enquiry Officer must date stamp the date of receipt on the original DA 63 / DA 63A and the tracking copy in the top-middle of the DA 63 / DA 63A.

  19. Drawback Item 536.00 Refund item 536.00/02.00 - Goods of any description as permitted by ITAC on which duty has been paid for use in the manufacture of motor vehicles provided proof is submitted to the Commissioner six (6) months after the date of issue of the permit that such motor vehicle complies with TH 8702.10.10. Refund item 536.00/00.00/03.00 and 04.00 – APDP: Automotive components on which duty has been paid and which have been supplied to a vehicle manufacturer for use as original equipment components in the manufacture of specified vehicles as defined in Rebate Item 317.03 or 317.07 or which have been incorporated in original equipment components supplied to vehicle manufacturers provided: Such component manufacturer or supplier can produce proof by means of copies of bills of materials reflecting the actual number of imported automotive components used in the manufacture of specific original equipment components supplied;

  20. Drawback Item 537.00 Claims under this item may be considered, provided that the conditions as prescribed under Refund Item 537.03 of the SARS Customs and Excise Tariff are complied with. Completely built-up (CBU) motor vehicles are imported and duty paid or warehoused and on removal (ex-warehouse) duty paid. To claim back these duties, the importer must be in possession of a valid Production Rebate Credit Certificate (PRCC) on which the importer is the beneficiary. The Import declarations must fall within the validity period of the PRCC. It is the responsibility of applicants to ensure that they keep proper records of balances, as and when they submit claims.

  21. Drawback Item 538.00 Claims under this item may be considered, provided that the conditions as prescribed under Refund Item 538.00/03.00 of the SARS Customs and Excise Tariff are complied with. These claims are in respect of automotive components imported and duty paid or warehoused and on removal (ex-warehouse) duty paid. To claim back these duties, the importer must be in possession of a valid PRCC on which the importer is the beneficiary. The A 11-00, 11-40 declaration date must fall within the validity period of the PRCC. It is the responsibility of applicants to ensure that they keep proper records of balances, as and when they submit claims.

  22. Environmental Levy / HPL Environmental or health promotion levy (HPL) is paid on imported goods. The importer will be in possession of the declaration as well as the release of these goods. The goods are in free circulation under the control of the importer and may be dealt with as the importer wishes. The importer can supply the goods to dealers or traders – the sales transaction between these entities has no Customs impact Refund item 551.02 (vehicles exported to BLNS) Refund item 551.03 and 561.02 (export to BLNS) The goods (excluding vehicles) in respect of which environmental or health promotion levy has been paid must have been new, imported and cleared for home consumption i.e. going into free circulation

  23. Environmental Levy / HPL continue Refund item 561.03 This refund item related to the goods in respect of which health promotion levy has been paid and that have been imported and used by a licensee: Of a warehouse licensed for the manufacture of goods subject to health promotion levy; or An excise manufacturing warehouse licensed for the manufacture of goods not subject to health promotion levy. The applicant must only submit one (1) refund application in respect of the health promotion levy per import declaration after the goods have been used and accounted for in the Excise account.

  24. Refunds (Amended declarations) Declarations must be amended electronically. Submitted via EDI to SARS Case will be generated and notify client to submit documents CR1 and supporting documents must be scanned and attached to case. General refunds (VOCs) must be checked and verified on SSM. 100% check and verification – no risk base refunds or drawbacks allowed Only the payment is “automatic”– SAP

  25. Refunds The client must submit the amended CCD in accordance with SC-CF-55. The client receives a message to submit the supporting documents listed in SC-DT-C-13-A01 including the CR 1, electronically. Additional supporting documents or sample(s) may be requested to prove the claim. When a sample is requested to prove the claim, the Sample policy must be adhered to (SC-CF-49). Applicants may enquire about the status of their refunds after thirty (30) working days from submission by calling the specific Branch Office where the claims were handed in or the Call Centre.

  26. Substitution A substitution refund application will only be considered if the requirements for substitution as prescribed in Section 40(3) read with Rules 40.01 and 40.02 have been complied with. Applications for a substitution of a CCD must be received by Customs within a period of six (6) months from the date of original duty paid CCD. A replacement – code 5 Replacement is to be selected and submitted electronically. No manual process effective 7 November 2018 (refer to par 2.28 of SC-CF-55 Clearance declaration policy) Permission to substitute must be obtained from Customs. The declarant must ensure that the goods are covered by a CCD at all times [Rule 40.02(b)]

  27. Dual clearances Dual clearances normally occur when an applicant submits a declaration for the same invoice to SARS Customs for clearance and only realise after the amount was settled on the deferment scheme or paid cash that the duty and VAT were paid twice. From time to time, it also happens when a specific line on an invoice has been cleared twice on a declaration and needs to be cancelled. (This is a dual clearance of a line and there will be no unused release notification. It is merely an error that can be amended by means of an amended CCD.)

  28. Tariff An EWP is done for identification purposes only, and not to make a tariff determination. Descriptive literature/identifiable sample/catalogue/blue prints (must always correspond with the invoice and properly cross referenced or marked) The sample(s) submitted with the refund application for tariff purposes must adhere to the provisions as prescribed in SC-CF-49.

  29. Trade Agreements (Preferential Rates) Duty can be refunded if paid at the general rate of duty as specified in Schedule 1 Part 1 provided that proof is produced that the goods concerned qualify for a preferential rate of duty. EUR1 Movement certificate or SADC Certificate of origin (SCO) number must be inserted in the additional information column (SC-CF-04). Invoice declaration: Article 19 of Protocol 1 of the SA/EU Free Trade Agreement The exporter of the products covered by this document (Customs authorisation No (1)) declares that, except where otherwise clearly indicated, these products are of preferential origin (2).

  30. Invoices / Valuation A claim will only be granted where an incorrect invoice was supplied by the supplier to the importer in terms of Section 41. Refer to the Valuation of Imports or Invoice Requirement for Customs Policies (SC-CR-A-03, SC-CRA-05 or SC-CF-30)

  31. Value-added tax (VAT) SARS Customs only has the mandate to authorise a refund of the VAT after it has been paid by means of a CR 1 (General Application for Refund) in the following instances: The importer is a non- registered VAT vendor; or Duplicate clearance – i.e. more than one (1) import declaration has been processed in respect of the importation of the same goods; or The clearing agent has invoiced and processed the import documentation in the incorrect importer’s name (not include a clearing agent who has invoiced and processed the import documentation incorrectly in the name of the correct importer); or Substitution – i.e. the goods have been cleared under the incorrect CPC resulting in the original import declaration being substituted by a new import declaration reflecting the correct CPC and VAT is paid a second time

  32. Customs Appeals The right of appeal in Customs matters originates from the Kyoto Convention (Chapter 10 of the General Annex) and is provided for in the legislation and procedures of many Customs administrations. In South Africa the right to lawful, reasonable and procedurally fair administrative action and the right to be given written reasons when one’s rights have been adversely affected by administrative action are also provided for in the Constitution and the Promotion of Administrative Justice Act. The legal provisions for the Internal Administrative Appeal Process are contained in Sections 77A to H of the Customs and Excise Act and Rules 77H.01 to 77H.16. In addition to the Internal Administrative Appeals Process, provision was also made for: an Alternative Dispute Resolution Process, which can be used as recourse againsta final decision made under the Internal Administrative Appeals Process or as an alternative to litigation. This process is provided for inSection 771 of the Act,and a Settlement Process (sections 77J to P of the Act).

  33. Common errors made on SSM refunds Non submission of LOA. Incorrect MRN details on the LOA LOA not done by importer. Non submission of CR1 Incorrect case number / LRN / MRN inserted on CR1. ON CR1: No value inserted, no reason for claim. Reason for Refund on VOC does not correspond to CR1. Not all clearance supporting documents submitted. (5 mandatory docs).

  34. Common errors made on SSM refunds continued Non submission of the release notification. Not full SAD500 produced. Dual clearance not both clearances submitted. Incorrect TDN attached for tariff claims. Ex warehouse clearance amendments – Not all previous warehouse documents submitted.

  35. Drawback Common errors made Drawback to be submitted to the Controller/ Branch Manager in whose are the importer conducts his / her business Original or certified copy of Letter of Authority to be produced Correct amount of duty /levy must be inserted against the duty type –field B3 Indemnity and grounds for claim to be completed and signed –field B7 and B8

  36. Drawback Common errors made continued Worksheet required Booking reference number in lieu of the transport document number on the export CCD Not all supporting documents received with the DA66 Rebate item not included/inserted on the export CCD DA63 and Export CCD not submitted on the same day. Duties and levies to be reflected individually on SAD500 – Completion of Declarations (SC-CF-04)

  37. The End - Questions • We welcome your “questions” and “comments”.

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