The principal behind duty liability is that duty should only be paid on items consumed inside the Southern African Customs Union (SA, Botswana, Namibia, Lesotho and Swaziland). If goods are therefore imported and then exported outside of SACU, the duties can be claimed back. This concept is known as a drawback.
Drawbacks manifest in 1 of 2 ways.
Simple drawback (drawback item 522.00)
A simple drawback is a refund of duties when the goods imported, are exported in the same format. This means you don’t add any value to the goods apart from possibly repacking those goods. In order for goods to qualify for such a drawback, both the importer and the exporter must first register with SARS and then notify SARS before an export takes place (known as an export under supervision). SARS have the option of inspecting the goods before the export takes place to determine if these are actually the goods that were imported. Once the inspection is complete (or if SARS opts to not inspect), the export can take place and the drawback claim can be lodged.
Complex drawback (drawback item 521.00)
A complex drawback is a refund of duties on a raw material, that is further processed before the resulting manufactured product is exported outside of the SACU region.
As with the simple drawbacks, the importer and the exporter must register with SARS before being eligible for the drawback benefit. In addition the importer must apply to ITAC for a drawback permit before a drawback can be granted.
If drawbacks are happening for more than one entity, then whichever party has done the manufacturing must provide the production records to SARS to show the yield from the raw material to the finished goods.
The size of the drawback equals the amount of duty contained in the product that is finally exported outside of SACU.
Drawbacks for multiple parties
Drawbacks can be claimed if a different company imports the raw materials to the company that exports the finished goods as long as there is a golden thread allowing trace-ability between the parties. Confidentiality is an obvious concern here and so XA will set up a 3-way agreement between the importer, exporter and XA that outsources the drawback process to XA. This allows XA to see the confidential information of both parties and thus act on behalf of the consortium, ensuring confidentiality is not compromised.
Registration for drawbacks
Before a claim can be lodged, both the importer and exporter need to register with SARS for drawbacks. When the relevant goods are then imported or exported, the SAD500 must be correctly completed to show that the transaction will be connected to a future drawback claim.
Once the product is registered, the importer needs to obtain a permit that confirms that a certain volume can be imported with the duties to be claimed back as drawbacks. Once the volume on the permit has been exhausted, a new permit needs to be applied for.
The claim process
In order to lodge a claim the importer must produce the import documentation for the raw materials and the exporter must produce the export documentation once the export has happened. The claim is lodged with the port that the import was done through and the refund is paid out the importer. SARS will notify XA of the refund, but the refund can only be paid out to the entity that paid the duty.
Claims will be rejected if the paperwork is not in order.
Drawbacks have to be claimed within 2 years of the payment of the duties.