252423 Learner Guide

The following guide to compleAtioDn VshoAulNd CbeEstDudied in conjunction with the marked

document in Annexure 4.

Block 1 The importer’s name and address are entered here

Block 2 Portnet insert their “order” reference number here.

Block 3 This space is for the reference number of the clearing agent or importer.
Block 4
The clearing agent’s nameRis iInSseKrtedMinAthis box.

Block 5 Space for the name of the consignee/importer and the consignee/importer’s
reference if a clearing agent is completing the form.

Blocks 6/7 Spaces for the Customs bill of entry number and the bill of lading number.

Blocks 8-11Four blocks to record the name of the ship, the voyage number and the port of entry
and the country of origin.

Block 12 The value for wharfage purposes is entered here. Remember that this is the same as
the Customs value declared on the bill of entry.

Block 13 Enter the container number(s) with its prefix(es) in this box.

Block 14 The number of packages is in effect the number of containers with the total recorded
at the bottom of the column.

Block 15 A description of the goods is given in this box.

Block 16 The transport options from the port are either road or rail. (Not all wharfage
clearance documents have this block)

Block 17 The mass and volume of the contents of the containers are entered here.

Block 18 This set of nine boxes can be ignored.

Block 19 This block can be ignored.

Block 20 This block is for Portnet’s stamp indicating the date the wharfage clearance is
passed.

Block 21 This block is for the calculation of the wharfage. The Rand value is entered in the
“wharfage factor” column. The rate (1.70% in July 2001) is recorded in the rate
column. VAT must be applied and the total amount payable inserted.

In the event of importers successfully negotiating special concessions from Portnet,
these would be shown as a “rebate”. This hardly ever happens.

The columns “sub code” and “rate code” can be ignored.

Block 22 The account number which the party responsible for payment of the wharfage
(clearing agent or importer) has with Portnet must be recorded here.

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Block 23 The party completing the AdoDcumVeAntNmuCstEsigDn it.

• Damaged Goods Reports

When goods are landed off a ship in a damaged condition, Portnet record the details on a
document referred to as a “T 918”. This is an internal document to Portnet and a copy is not

made available to the importer or hRis IagSeKnt. MA

Portnet nonetheless require the importer to indemnify it against any claims and a form
referred to as a “T 896” must be completed. (See Annexure 5) Details of the damage are
recorded on the T 896 and the document is then signed by the importer/agent and by
Portnet. The T 896 is the official evidence that the goods have been examined by Portnet.

The wording of the indemnity is as follows:

“In consideration of you delivering the undermentioned packages ex (the name of the
vessel is recorded) in accordance with the instructions on the Forwarding and
Delivery Order in the same outward condition as they are handed to Portnet after
examination by the Transnet Limited representative and myself/ourselves, subject to
the regulations of Transnet Limited and the conditions set forth in Transnet’s official
tariff book, I/we indemnify you and your employees against all claims which may be
made upon you or them by reason of the delivery of the goods mentioned herein.”

Depending on the seriousness of the damage, the goods may have to be re-packed or the
original packaging may have to be repaired. This would take place in the port prior to
collection and delivery by road or rail.

For the interest of the student, Spoornet’s Standard Conditions of Carriage place the onus
on the consignor to ensure that all goods have been properly and sufficiently packed to
withstand all modes of transport. Inadequate packaging or packing may result in any claim
for damages being rejected by the insurers.

Importers will be advised by their clearing agents when break-bulk goods have been landed
damaged so that they will be aware of it when the goods are delivered to their premises.

If damaged packaging has not been repaired prior to delivery of the goods to the importer,
a note of the damage should still be made on the delivery document.

Some shipping lines employ their own tally services whereby check cargo off-loaded
from their ships is checked against the manifests of those vessels and any discrepancies
noted. Where a tally count has been conducted and a discrepancy found, it is important that
the relevant section of the tally report accompanies a priced claim.

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ADVANCED

Transport Documents

When a bill of entry is submitted to Customs it must be supported by a transport document,
a supplier’s invoice, the importer’s written clearing instructions, and, for certain
commodities, an import permit.

For imports by sea, a number of traRnsIpoSrtKdoMcumAents are acceptable to Customs.

• Shipping Line (Ocean/Marine) Bill of Lading

When goods are loaded on board a vessel, a certificate of receipt is issued which is known
as a bill of lading. A bill of lading which has been physically signed and has not been endorsed
"copy" or “not-negotiable” is referred to as an original bill of lading. A signed original bill of
lading is negotiable and can be used to claim title to the goods. By “negotiable” is meant the
transferability of ownership of the goods from one party to another. (See Annexure 6)

Bills of lading are normally issued in sets consisting of three “originals” (i.e. carrying an
original signature, and not stamped “copy” or “non-negotiable” or “copy non-negotiable”)
and between six and ten “copies” marked “copy” or “non-negotiable” or “copy non-
negotiable”.

A bill of lading may show the name of the consignee or it may be made "to the order" of any
party. It is often signed to the order of the shipper who passes title to the consignee or his
agent by endorsing the reverse side of the document.

To obtain release of goods after Customs clearance an original bill of lading must be
presented to `the shipping line and/or Portnet Revenue as proof of entitlement.

A bill of lading indicates whether freight is payable at the port of discharge (i.e. collect
freight) or whether it has been prepaid by the supplier/shipper prior to shipment. The
consignee, or the party to whom the bill of lading is endorsed, is responsible for the payment
of freight to the shipping line, when freight is payable at destination (collect). Under normal
circumstances the consignee or endorsee is the importer.

In South Africa, shipping lines do not generally give credit on freight which means that
the freight must be paid before goods are released.

• House Bill of Lading

A house bill of lading is issued by a freight forwarder or groupage operator and normally
contains the same type of detail as a shipping line's bill of lading. Original, signed house bills
of lading are documents of title.

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House bills of lading on their owAn aDreVnoAt aNcceCptEabDle as a transport document and must be

accompanied by a copy of the ocean bill of lading showing the “shipped on board” (SOB)
details.

• Non-Negotiable Waybill (See Annexure 7)

The non-negotiable waybill provideRs eIviSdeKnceMofAa contract of carriage and serves as a cargo

receipt. Unlike a bill of lading, it is not a document of title and is non-negotiable. It is
acceptable to Customs as a transport document provided it shows the SOB date.

Following Customs clearance, the non-negotiable waybill allows for automatic release of
cargo from the shipping line without the surrender of the document of title. It is only
available from certain shipping lines operating fully containerised services.

The use of this transport document is most appropriate for shipments between divisions of
the same organisation.

Only one signed original of a non-negotiable waybill needs to be issued and there is no
urgency in getting it delivered from the port of shipment to the port of discharge for cargo
release purposes. However, in the absence of this document, an arrival notification needs
to be obtained from the shipping line for presentation to Customs as a transport document.

Non-negotiable waybills would be received either from the overseas forwarder or from the
importer.

• Arrival Notification (See Annexure 8)

The arrival notification (ANF) is a document issued by a shipping line in the country of
destination to notify the consignee and the notify party recorded on the bill of lading of the
arrival, or anticipated arrival, of the vessel at the port of discharge.

The arrival notification is acceptable to Customs as a transport document provided it shows
the correct shipped on board date.

Arrival Notifications would be received directly from the shipping line or via the importer.

• Source of Bills of Lading

The source of the original bill of lading (i.e. the party from which the clearing agent will
receive it) will depend on two main factors:

Whether or not the clearing agent’s overseas forwarder (i.e. the nominated
forwarder) handles the forwarding in the country of supply, and

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Whether or not the paymAenDt aVrraAngNemCenEtsDbetween the importer and the exporter

make it necessary for originals of the bill of lading to go via the banking system.

When the nominated overseas forwarder does the forwarding, and the importer and
exporter deal on open account terms, then it is possible for the overseas forwarder to
dispatch one or all of the original bills of lading (ocean or house) directly to the clearing
agent.

When a letter of credit is involved, Ror IaSbaKnk Mis reAquired to make a documentary collection,

then original bills of lading will be obtained from the importer. (A documentary collection is
an operation in which a bank collects payment on behalf of a foreign seller by delivering
documents of title to the South African buyer and securing payment in accordance with
agreed conditions, e.g. immediate payment or payment on credit.)

Note that it is always possible for the nominated forwarder to fax and/or post “copy” bills
of lading to the clearing agent.

• Bank Guarantees and Letters of Indemnity
When an original ocean bill of lading or original house bill of lading is not to hand at the time
release is required from a shipping line or groupage operator, it is possible to obtain release
on presentation to the “carrier” of a bank guarantee or bank underwritten letter of
indemnity.

These documents serve the purpose of indemnifying the shipping line or groupage operator
from any claims and losses which may arise out of the release of the goods to the wrong
party.

• Rail Consignment Note
The transport document for imports by rail is the rail consignment note. This document
travels with the goods

• Road Consignment Note

In the case of road imports, clearance is generally done at the border and Customs accept the
manifest of the vehicle contents as the transport document.

As with the rail consignment note, this document travels with the goods.

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Supplier’s Invoice ADVANCED

The Customs Act [Section 41(1)] stipulates that an invoice from the supplier must
accompany the bill of entry when presented to Customs for clearance.

Invoice details must relate to the goods in the condition in which they are imported.

All particulars required to prepare aRvaIliSd KentrMy anAd to determine the transaction value of the

imported goods, must be declared on the invoice by the foreign exporter.

In addition to any proprietary or trade name, the invoice must give a full description of the
nature and characteristics of the goods.

In the event of any of these details changing after the date of issue of the invoice, the
exporter must immediately issue an amended invoice to the importer, who has one month
in which to present the amended invoice to Customs.

Any false declaration on an invoice is subject to a fine or imprisonment, or both. Any
person, who has in his possession blank or incomplete invoices, or similar documents
capable of being completed here and used as an invoice, will be guilty of an offence. It is
also an offence to:

Withhold information, or omit to record information on invoices

Issue more than one invoice for the same goods

Fail to issue amended invoices

Fail to advise the Controller of amended invoices or the existence of credit notes
which affect the value reflected on invoices.

In addition to the normal details such as date, number and the addresses, a supplier's invoice
should show:

✓ Full description of the goods (trade names are not sufficient)

✓ Price of the goods including unit prices

✓ Discounts applicable

✓ Interest cost included in the price (this figure is deductible from the value for duty purposes)
(See note 1 below)

✓ Currency in which the price is quoted

✓ Country of origin

✓ Terms of sale (e.g. ex-Works, FOB etc)

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✓ Payment terms (e.g. 90 days) ADVANCED

✓ Number of packages (See note 2 below)
✓ Quantity (e.g. litres) and package type (e.g. drums) (See note 2 below)
✓ Identification marks and numbers (See note 2 below)
✓ Mass and dimension of packages (See note 2 below)

✓ Contents of individual packages (SeRe nIoSteK2 bMelowA)

✓ Where applicable, (e.g. ex-Works price), transport, loading, handling, insurance and other
costs involved in getting the goods from the supplier to the port or place of export, and
placing them on board a ship, vehicle or in a container. (See note 3 below)

✓ Freight and insurance costs when the price is based on CIF terms (See note 4 below)
✓ Other information required for the determination of the value for customs duty purposes
✓ Exporter's signature.

Note 1: The interest amount figure is deductible from the value for duty purposes but is
Note 2: very rarely shown by suppliers.
Note 3:
These details may be more effectively shown on a packing list.
Note 4:
The value for Customs duty purposes is the value of the goods when loaded onto
the vehicle (which includes containers) that carries the goods over the border of
the country of supply. Thus, if a consignment is loaded into a container at a depot,
or the supplier’s premises, 1000km away from the sea port from which it is shipped
to South Africa, the cost of the transport from the depot or supply point to the port
of shipment need not be included in the transaction used to determine the value
for duty purposes. If this type of information is not declared it becomes difficult for
the entry clerk to accurately determine the Customs value for the benefit of the
importer.

When break-bulk or bulk cargo is loaded onto a ship for carriage to South Africa
the value for duty purposes is equivalent to the free on board (FOB) value of the
goods.

Customs may stamp one copy of a supplier's invoice to indicate clearance for home
consumption, but they are not obliged to do so.

Where a nominated forwarder is involved, suppliers’ invoices should be faxed to the clearing
agent, together with a copy of the bill of lading, so that the preparation of the bill of entry
can commence prior to the receipt of the actual documents.

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The original and copies of this doAcuDmVentAwNouCld bEeDsent with the original bills of lading.

Importer’s Written Clearing Instructions

In terms of the Customs Act it is the importer who has the responsibility of declaring his
goods correctly and in the prescribed manner.

When an importer uses an agenRt, IitSiKs reMquiAred of the importer to produce written

instructions and to sign them. In terms of Section 39 (1) (c) of the Act, written clearing
instructions must accompany the bill of entry presented to Customs.

There is no prescribed format for such instructions and they are often given on pre-printed
forms which are designed and provided free of charge by the clearing agent.

Some of the important details to include in the instructions are:
➢ Purpose code
➢ Valuation code
➢ Valuation method
➢ Valuation Determination Number if applicable
➢ Tariff Determination Number if applicable
➢ Reference to permits to be used
➢ Delivery Address
➢ Tariff heading

Rule 39.01 to the Customs Act reads as follows:

In respect of clearing instructions prescribed in sub-section 39(1)(c), the Controller may, in
the case of:

(a) repetitive clearances of stock ex a licensed Customs & Excise warehouse and provided the
circumstances and purpose of each subsequent clearance is identical to the first one,
accept copies of the original written clearing instruction;

(b) a single consignment being cleared on more than one bill of entry (split consignment),
accept a Photostat copy of the written clearing instruction used to clear the first part of
the consignment

(c) airfreight, imports by road overland and clearances on behalf of ship’s chandlers
……………………, accept importers’ telephonic or faxed instructions;

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(d) goods destined for an inlandAceDntrVe bAutNcleCarEedDat the coast, accept a faxed instruction;

(e) project work, where the main contractor has not yet set up an office in the Republic, but
goods have already been shipped, accept a letter of instruction or faxed instructions from
the contractor overseas.

Other Documents RISK MA
• Delivery Release Order

A Delivery Release Order (DRO) is the document issued by a shipping line or groupage
operator, on containerised shipments, authorising the container depot holding the goods to
release them to the importer or his agent.

• Certificate of Origin

When the rate of duty is determined by the country of origin and is lower than the general
rate (e.g. in the case of a trade agreement with a foreign country) the importer must present
to Customs Certificate of Origin (form DA 59). These certificates are normally obtained from
a Chamber of Commerce in the country of export.

For a country to be accepted as the country of origin for duty purposes, a minimum
percentage of the production costs of the goods must be represented by materials produced
and labour performed in that territory. Secondly, the last process of production must have
taken place there.

The conditions which apply to the inclusion and exclusion of costs, for the purposes of
verifying the qualification of "origin", (i.e. the minimum percentage of production costs
which must be represented by labour performed and materials produced in the origin
country), are recorded in the Rules applicable to Section 46 of the Customs Act.

In terms of these Rules, only the following production costs may be included:
➢ The cost to the manufacturer of all materials
➢ Manufacturing wages and salaries
➢ Direct manufacturing expenses
➢ Cost of inside containers

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The following may not be includAed:DVANCED

o Outside packages and expenses in connection with the packing of goods therein
o Manufacturer's or exporter's profit, or the profit or remuneration of any trader, broker

or other person dealing with the article in its finished condition
o Royalties

o Carriage, insurance and other cRostIsSfrKomMtheAplace of production in the territory to the

place of final despatch
o Any other cost incurred subsequent to the completion of manufacture.

Certificates of Origin would normally be sent with the original bills of lading.

• Packing List

A packing list or specification is required when the supplier's invoice does not provide
sufficient details regarding the mass, dimensions and contents of individual packages.

Packing lists would follow the same route as the original bills of lading although they could
be faxed and/or posted separately to the clearing agent.

• Shipper’s Covering Statement

On occasions an importer will place an order with an overseas shipper who purchases the
goods from a number of different suppliers. On behalf of his South African customer the
shipper will consolidate the various different orders into one consignment, arrange for
shipment, and pay all charges to the port of shipment/destination. The shipper (or buying
agent) will raise a charge for these services which is dutiable.

When the shipper is someone other than the supplier, the Customs Department insists on
receiving a Covering Statement which shows all the shipper's charges.

As with packing lists, Covering Statements would follow the same route as the original bills
of lading although they could be faxed and/or posted separately to the clearing agent.

• Certificates and Permits

When appropriate, one or more of the following documents will be required:

Veterinary Certificate (live animals)

Phytosanitary Certificate (flowers, fruit, plants)

Health Inspector’s Certificate (animal products)

Explosive’s Certificate

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Drugs Certificate Police PermAit D(amVmAunNitiCon)ED

Chemical Analysis

All these documents would normally be obtained from the importer.

IMPORTATION OF GOODS – CLEARANCE/CROIMSPLKIANMCEA

OVERVIEW OF THE CLEARING PROCESS FOR THE IMPORTATION OF GOODS BY AIR TRANSPORT.
The overview for the air freight shipment clearing process principles are the same as for surface
freight covered under the surface freight section above: –

• Customs process -Customs and Excise Act No. 91 of 1964, as amended rules
• Documents are still required – product specific and air freight specific
• Authority body documentation and processes still need to be followed – product and air

freight specific
• Cargo release
• Cargo delivery

STRUCTURE AND FUNCTIONING OF INFORMATION TECHNOLOGY SYSTEMS
Let us look at some basic concepts and terminology that are generally used in IT and which are
applicable to international trade and freight forwarding:
Mainframe and personal networks, hardware and software

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Prior to the advent of the personal cAomDpuVteAr, NtheCdEomDinant computing model was the large

mainframe computer serving multiple users. By time-sharing, a mainframe computer divided its

attention among several users, who logged onto the mainframe at dumb terminals. Software

applications were stored on disks attached to the mainframe computer, allowing multiple users to

share the same applications while they shared the same Central Processing Unit (CPU). A drawback

of this model was that if one user ran a CPU-intensive job, all other users would experience

degraded performance. RISK MA

The appearance of the microprocessor led to the proliferation of the personal computer. This

change in the hardware status quo changed the software paradigm as well. Rather than sharing

software applications stored at a mainframe computer, individual users had individual copies of

software applications stored at each personal computer. Because each user ran software on a

dedicated CPU, this new model of computing addressed the difficulties of dividing CPU-time among

many users attempting to share one mainframe CPU.

Initially, personal computers operated as unconnected islands of computing. The dominant
software model was of isolated executable running on isolated personal computers. But soon,
personal computers began to be connected to networks. Because a personal computer gave its user
undivided attention, it addressed the CPU-time sharing difficulties of mainframes. But unless
personal computers were connected to a network, they couldn't replicate the mainframe's ability
to let multiple users view and manipulate a central repository of data.

As personal computers connected to networks became the norm, another software model began
to increase in importance: client/server. The client/server model divided work between two
processes running on two different computers: a client process ran on the end-user's personal
computer, and a server process ran on some other computer hooked to the same network. The
client and server processes communicated with one another by sending data back and forth across
the network. The server process often simply accepted data query commands from clients across
the network, retrieved the requested data from a central database, and sent the retrieved data back
across the network to the client. Upon receiving the data, the client processed, displayed, and
allowed the user to manipulate the data. This model allowed users of personal computers to view
and manipulate data stored at a central repository, while not forcing them to share a central CPU
for all of the processing of that data. Users did share the CPU running the server process, but to the
extent that data processing was performed by the clients, the burden on the central CPU hosting
the server process was lessened.

The client/server architecture was soon extended to include more than two processes. The original
client/server model began to be called 2-tier client/server, to indicate two processes: one client and
one server. More elaborate architectures were called 3-tier, to indicate three processes, 4-tier, to
indicate four processes, or N-tier, to indicate people were getting tired of counting processes.
Eventually, as more processes became involved, the distinction between client and server blurred,
and people just started using the term distributed processing to encompass all of these schemes.

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The distributed processing model leveAragDedVthAe NnetCwoErkDand the proliferation of processors by

dividing processing workloads among many processors while allowing those processors to share

data. Although this model had many advantages over the mainframe model, there was one notable

disadvantage: distributed processing systems were more difficult to administer than mainframe

systems. On mainframe systems, software applications were stored on a disk attached to the

mainframe. Even though an application could serve many users, it only needed to be installed and

maintained in one place. sWtahretendatnhaepapplipclaictRiaotniIowSn.aKBsyupcMognratArdaesdt,, all users got the new version the next
time they logged on and the software executable for different

components of a distributed processing system were usually stored on many different disks. In a

client / server architecture, for example, each computer that hosted a client process usually had its

own copy of the client software stored on its local disk. As a result, a system administrator had to

install and maintain the various components of a distributed software system in many different

places. When a software component was upgraded, the system administrator had to physically

upgrade each copy of the component on each computer that hosted it. As a result, system

administration was more difficult for the distributed processing model than for the mainframe

model.

The arrival of programmes like Java, with architectures that enabled the network-mobility of
software, heralded yet another model for computing. Building on the prevailing distributed
processing model, the new model added the automatic delivery of software across networks to
computers that ran the software.

This addressed the difficulties involved in system administration of distributed processing systems.
For example, in a client/server system, client software could be stored at one central computer
attached to the network. Whenever an end-user needed to use the client software, the binary
executable would be sent from the central computer across the network to the end-user's
computer, where the software would run.

Network-mobility of software therefore represented another step in the evolution of the computing
model. In particular, it addressed the difficulty of administering a distributed processing system. It
simplified the job of distributing any software that was to be used on more than one CPU. It allowed
data to be delivered together with the software that knows how to manipulate or display the data.
Because code was sent along with data, end-users would always have the most up-to-date version
of the code. Thus, because of network- mobility, software can be administered from a central
computer, reminiscent of the mainframe model, but processing can still be distributed among many
CPUs.

The shift away from the mainframe model towards the distributed processing model was a
consequence of the personal computer revolution, which was made possible by the rapidly
increasing capabilities and decreasing costs of processors. Similarly, lurking underneath the latest
software paradigm shift towards distributed processing with network-mobile code is another
hardware trend - the increasing capabilities and decreasing costs of network bandwidth.

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As bandwidth, the amount of informatiAonDthVat AcanNbCe cEarDried by a network, increases, it becomes

practical to send new kinds of information across a network; and with each new kind of information
a network carries, the network takes on a new character. Thus, as bandwidth grows, simple text
sent across a network can become enhanced with graphics, and the network begins to take on an
appearance reminiscent of newspapers or magazines. Once bandwidth expands enough to support
live streams of audio data, the network begins to act like a radio, a CD-player, or a telephone. With

sVtCilRl smfoorretbhaenadtwteidntthio,nviodfeocobuecchompoetsatpooesssR.ibBlIueSt, rtKehseurlMetinisgAsitnillaonneetwoothrkerthkaintdcoomf bpaentedswwiditthh-ThVunagnrdy

content that becomes increasingly practical as bandwidth improves: computer software. Because
networks by definition interconnect processors, one processor can, given enough bandwidth, send
code across a network for another processor to execute. Once networks begin to move software as
well as data, the network begins to look like a computer in its own right.

As software begins to travel across networks, not only does the network begin to take on a new
character, but so does the software itself. Network-mobile code makes it easier to ensure that an
end-user has the necessary software to view or manipulate some data sent across the network,
because the software can be sent along with the data. In the old model, software executable from
a local disk were invoked to view data that came across the network, thus the software application
was usually a distinct entity, easily discernible from the data. In the new model, because software
and data are both sent across the network, the distinction between software and data is not as
stark--software and data blur together to become "content."

As the nature of software evolves, the end-user's relationship to software evolves as well. Prior to
network-mobility, an end-user had to think in terms of software applications and version numbers.
Software was generally distributed on media such as tapes, floppy disks, or CD-ROMs. To use an
application, an end- user had to get the installation media, physically insert them into a drive or
reader attached to the computer, and run an installation program that copied files from the
installation media to the computer's hard disk. Moreover, the end-user often did this process
multiple times for each application, because software applications were routinely replaced by new
versions that fixed old bugs and added new features (and usually added new bugs too). When a new
version was released, end-users had to decide whether or not to upgrade. If an end-user decided to
upgrade, the installation process had to be repeated. Thus, end-users had to think in terms of
software applications and version numbers, and take deliberate action to keep their software
applications up-to-date.

In the new model, end-users think less in terms of software applications with discrete versions, and
more in terms of self-evolving "content services." Whereas installing a traditional software
application or an upgrade was a deliberate act on the part of the end-user, network-mobility of
software enables installation and upgrading that is more automatic. Network-delivered software
need not have discrete version numbers that are known to the end-user. The end-user need not
decide whether to upgrade, and need not take any special action to upgrade. Network-delivered
software can just evolve of its own accord.

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Instead of buying discrete versions of aAsoDftwVarAe aNppClicaEtiDon, end-users can subscribe to a content

service--software that is delivered across a network along with relevant data--and watch as both
the software and data evolve automatically over time.

Once you move away from delivering software in discrete versions towards delivering software as
self- evolving streams of interactive content, your end-user loses some control. In the old model, if
a new version appeared that had serious bugs, an end-user could simply opt not to upgrade. But in

the new model, an end- user can't necessaRrilyISwaKit uMntilAthe bugs are worked out of a new version

before upgrading to the new version, because the end-user may have no control over the upgrading
process.

For certain kinds of products, especially those that are large and full-featured (e.g. Microsoft Office),
end-users may prefer to retain control over whether and when to upgrade. Consequently, in some
situations software vendors may publish discrete versions of a content service over the network. At
the very least, a vendor can publish two branches of a service: a beta branch and a released branch.
End-users that want to stay on the leading edge can subscribe to the beta service, and the rest can
subscribe to the released service that, although it may not have all the newest features, is likely
more robust.

Yet for many content services, especially simple ones, most end-users won't want to have to worry
about versions, because worrying about versions makes software harder to use. The end-user has
to have knowledge about the differences between versions, make decisions about when and if to
upgrade, and take deliberate action to cause an upgrade. Content services that are not chopped up
into discrete versions are easier to use, because they evolve automatically. Such a content service,
because the end-user doesn't have to maintain it but can just simply use it, takes on the feel of a
"software appliance."

Many self-evolving content services will share two fundamental characteristics with common
household appliances: a focused functionality and a simple user-interface. Consider the toaster. A
toaster's functionality is focused exclusively on the job of preparing toast, and it has a simple user-
interface. When you walk up to a toaster, you don't expect to have to read a manual. You expect to
put the bread in at the top and push down a handle until it clicks. You expect to be able to peer in
and see orange wires glowing, and after a moment, to hear that satisfying pop and see your bread
transformed into toast. If the result is too light or too dark, you expect to be able to slide a knob to
indicate to the toaster that the next time, you want your toast a bit darker or lighter. That's the
extent of the functionality and user-interface of a toaster. Likewise, the functionality of many
content services will be as focused and the user-interface will be as simple. If you want to order a
movie through the network, for example, you don't want to worry whether you have the correct
version of movie-ordering software. You don't want to have to install it. You just want to switch on
the movie-ordering content service, and through a simple user-interface, order your movie. Then
you can sit back and enjoy your network-delivered movie as you eat your toast.

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A good example of a content service is aAWDorVld WAiNdeCWeEbDpage. If you look at an HTML file, it looks

like a source file for some kind of program. But if you see the browser as the program, the HTML

file looks more like data. Thus, the distinction between code and data is blurred. Also, people who

browse the World Wide Web expect web pages to evolve over time, without any deliberate action

on their part. They don't expect to see discrete version numbers for web pages. They don't expect

to have to do anything to upgrade to the latest version of a page besides simply revisiting the page

in their browser. RISK MA

In the coming years, many of today's media may to some extent be assimilated by the network and

transformed into content services. (As with the Borg from Star Trek, resistance is futile.) Broadcast

radio, broadcast and cable TV, telephones, answering machines, faxes, video rental stores,

newspapers, magazines, books, computer software--all of these will be affected by the proliferation

of networks. But just as TV didn't supplant radio entirely, network-delivered content services will

not entirely supplant existing media. Instead, content services will likely take over some aspects of

existing media, leaving the existing media to adjust accordingly, and create some new forms that

didn't previously exist.

In the computer software domain, the content service model will not completely replace the old
models either. Instead, it will likely take over certain aspects of the old models that fit better in the
new model, add new forms that didn't exist before, and leave the old models to adjust their focus
slightly in light of the newcomer.

The crux of the new software paradigm, therefore, is that software begins to act more like
appliances. End-users no longer have to worry about installation, version numbers, or upgrading.
As code is sent along with data across the network, software delivery and updating become
automatic. In this way, simply by making code mobile, we enter a whole new way to think about
software development, delivery, and use.

Particular applications in the transport industry:

EDIFOR – EDIFACT

EDIFACT is the recognised international standard for EDI trading in a wide range of commercial and
non-commercial sectors. Its established applications are in store-and-forward “batch”
communication of transaction messages of many kinds. EDIFACT begins with an underlying syntax,
which is an ISO standard. Within that syntax, there are directories of data elements, composite
data elements, segments, and messages; and there are conventions for placing messages in an
“envelope” which identifies the sender and receiver and other attributes of a transmission.

EDIFACT itself does not define the medium by which the message is sent, or the protocols which are
used in any particular form of communication. The standards are completely neutral in this respect
- they define messages and their contents: nothing else.

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EDIFACT is an enabling standard which pAroDvidVesAa gNreaCt dEeaDl of flexibility - some might say too much

- for individual application requirements to be accommodated. For this reason, very precise
application guidelines are needed in addition to the basic standards. For book and serials trading,
from publishers, through wholesalers, booksellers and subscription agents, to libraries, EDItEUR is
the agency which develops and maintains those guidelines.

This paper outlines the context in which EDI trading messages have developed; describes the

underlying EDIFACT standards, and illustrRateIsStKhemMwAith some very basic examples. It briefly

explains the processes by which both the EDIFACT standards and relevant implementations are
maintained; and identifies the agencies which are responsible for supporting them.

EDI - Electronic Data Interchange - is defined in this context as the exchange of transaction messages
from computer to computer, using structures based on a recognised national or international
standard.

Early developments of EDI were driven primarily by large buying organisations - supermarkets, chain
stores, health services - which had the financial muscle to influence their trading partners to adopt
a standard method of electronic trading, initially largely to the benefit of the buyer, though
ultimately with benefits for both sides. The typical application would be based on a “hub and spoke”
model, the hub being the buying organisation, and the spokes its suppliers. Messages would be
transported over dial-up or, for large users, leased line connection, to a value-added network (VAN),
using proprietary protocols for assuring integrity, security and end-to-end audit trail. Each party
would have a mailbox on the VAN.

The economics of this form of communication would certainly involve a volume charge for
communication, so that the message standards aimed for conciseness, the fullest possible use of
coded data, and minimal use of text.

Since the real payoff from EDI came not just from more efficient communication, but also from
faster and more efficient processing and turnaround of transactions at each end, it was important
that a message could be processed automatically, and this was and is another powerful factor
favouring coded data rather than text.

Early applications did nothing more than automate the existing way of doing simple transactions
like orders, delivery notes and invoices, so that the benefits came from speed, accuracy, removal of
duplicate keyboarding and elimination of paper and postage. More sophistication has crept in as
companies have realised that continuous electronic communication between supplier and
customer can bring additional benefits, e.g. by anticipating and planning for demand rather than
waiting for orders, or even by allowing the supplier to take control of the maintenance of
appropriate stock levels in stores (so-called “vendor-managed inventory”).

The consequence of the widespread adoption of EDI messaging standards - now increasingly
focused on EDIFACT - is that there is an equally wide range of software and systems available to
support their use. Most commercial users do not develop their own EDI front-ends.

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They buy in a package which typically hAandDleVs mAapNpiCngEbeDtween the EDI standard and internal file

formats defined by the user; the management of trading partner relationships, by maintaining a
database of who’s who and what messages are enabled as part of the trading agreement; and the
timetabling and automatic running of online sessions to send and receive messages.

Increasingly, the Internet is now being used for sending and receiving EDI messages, either by FTP

or by email transfer.

EDIFOR RISK MA

EDIFOR (EDI for the Forwarding Industries) is a subset of UN/EDIFACT, the sector specific standards
for goods transport, EDIFOR is developed by FIATA in order to use EDI messages based on
UN/EDIFACT for all FIATA transport documents.

Types of EDIFOR messages
EDIFOR messages include the following as examples:

• Forwarding Order
Based on EDIFACT Standard IFTMIN (International Forwarding and/or Transport Message
Instruction)

• Cargo Manifest
Based on EDIFACT Standard IFCSUM (International Forwarding and/or Transport Message
Consolidation Summary)

• Unloading Report
Based on EDIFACT Standard IFTSTA (Multimodal Status Report
Message)

• Status Report
Based on EDIFACT Standard IFTSTA (Multimodal Status Report
Message)

• Forwarding Invoice
Based on UN / EDIFACT message invoice.

E-forwarding

In the ever-changing world of mergers, acquisitions, company name changes and the movement of
people between organisations, it is inevitable that individuals’ (or even whole group’s) email
addresses may change.

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For business, this can cause problems.AInDorVdeAr tNo sColvEe Dthis, the e- forwarding facility has been

created which automatically forwards emails from a redundant email address to the individual’s
new address. This facility can be accessed at http://www.eforwarding.com/.

The three essential documents required to clear and deliver imported shipments by air are:

Supplier's Invoice The supplier's invoiRceIiSs Kthe MkeyAdocument in the determination of the

Customs value and the correct tariff heading. The document establishes the
origin and type of goods being imported. It is against the supplier’s invoice
that Customs verify that the details declared on the bill of entry are correct.
It is important, therefore, that all relevant details are recorded on the
supplier’s invoice.

Air Waybill Section 39(1) (c) of the Customs Act also requires importers to submit a
transport document with the bill of entry. In the case of airfreight imports the
transport document is the air waybill.

Import Permit An import permit is required for a limited number of commodities. It is illegal
to import goods which are subject to permit, without first obtaining one from
the authorities in Pretoria. Permits are valid for one calendar year. When an
importer uses more than one port of entry, the main permit should be "split"
into smaller permits of smaller quantities.

The Customs Act [Section 39(1) (c)] specifically requires that importers produce written clearing
instructions with the bill of entry. The instructions must indicate the clearance procedure desired,
e.g. must duty be paid, or the goods placed in bond, or should the goods be cleared under rebate
etc. In the case of airfreight, Rule 39.01 to the Customs Act permits importers to submit their
clearing instructions telephonically or by fax.

It is preferable for goods which are imported by air to be Customs cleared and ready for release
before the carrying aircraft arrives at the airport of destination. With the implementation of the
EDI (Electronic) process the time frames for documents submitted to customs and released by
customs is a matter of hours and to avoid VOC’s (Vouchers of correction) being done one can
afford to wait for the original documents these days.

When goods are damaged, lost or incorrectly delivered, special procedures are followed in order to
protect the interests of the importer and other parties involved in the transport chain. Importers or
their agents must submit claims promptly and within prescribed periods to avoid those being time
barred. Importers may clear their imported goods through Customs themselves. But most
companies elect to use clearing agents for their knowledge of the Customs Act, Customs Tariff and
clearance procedures. Agents provide representation throughout the country, and offer a variety
of services in a cost-effective manner, including credit facilities.

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Many agents belong to the South AfricaAn ADssVociAatiNonCofEFrDeight Forwarders, SAAFF, which provides

excellent assistance and know-how in dealing with the Government and other bodies involved in
the importation process.

AIR IMPORT DOCUMENTS -SOURCE AND/OR PREPARATION

The role of the forwarder/clearing agent isRtoIsSucKcessMfulAly arrange for imported goods to be:

• Cleared through Customs
• Released by the airline
• Collected and delivered to the importer.
The process, commonly known as “clearing”, is “document-intensive”. Some of the documents are
prepared by the clearing agent others are obtained from external sources.

Customs Documents
All the Customs documents referred to below are prepared by the importer or his clearing
agent. Clearing agents employ specialist entry clerks to carry out this function. Most of the
entries will be prepared on computer (i.e. not manually written out.)

Customs Bill of Entry
The bill of entry is the document on which the importer declares goods and duties to
Customs, and applies for Customs clearance.
The most commonly used bill of entry is the SAD 500, titled “Bill of Entry (direct)”. A glance
at this will tell you student that there are many details which have to be declared on the
document. Some of the more significant details are:
• Description of the goods
• Tariff code (i.e. the tariff heading)
• Customs value
• Transport document number and other information relating to this document
• Customs duty and other amounts payable to Customs
• Customs code
• Purpose code

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The SAD 500 is used for a numbeAr oDf dViffeAreNntC“pErocDedures” at the time of importation. Each

“procedure” or purpose is identified by a “Purpose Code” which must be inserted in the box
situated in the top left-hand corner of the document.

Procedures for which the SAD 500 is used:

i. When duty is paid for/or admitted at the time of clearance, or when goods are duty

free. (Purpose code "DP") RISK MA

ii. When an importer is not going to use his goods immediately and elects to have them
cleared into a bonded warehouse. (Purpose code "WH"). This entry procedure is useful
when an importer wants to postpone payment of duty or anticipates a reduction in the
rate of duty applicable.

iii. For clearance into a bonded warehouse pending subsequent export. (Purpose code
"WE")

iv. When imports of raw materials for use in local manufacture, in certain specified
industries, are subject to a rebate under Schedule No.3 to the Customs Act. (Purpose
code "IR")

v. For imported goods specified in Schedule No.4 to the Customs Act which are subject to
a General Rebate. (Purpose code "GR")

Customs endorse one copy only of the bill of entry with the words “release copy” or “release
authorised” (or similar). This is a very important document because it must be surrendered
to the airline or consolidator holding the goods in order to obtain release for collection and
delivery to the importer.

When goods have been detained by Customs for examination, and subsequently released,
the release document is the Customs form DA 74 titled “Release Order for Goods Originally
Detained.” (See Annexure 1)

Bonded Goods

Whilst goods may be cleared into bond on importation, using the SAD 500 form with

purpose code “WH”, the subsequent clearance of the goods out of a bonded warehouse is
achieved using the bill of entry form DA 600, titled “Bill of Entry (ex-warehouse) Imported
Goods”, with one of the purpose codes “XDP”, “XIR”, “XGR” etc.

Goods may be moved from one bonded warehouse to another; and exported from a bonded
warehouse.

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Sight Entries ADVANCED

An importer, who is unable to give an adequate description of goods being imported, may
request Customs to allow an examination to take place under a Bill of Entry Sight (Form DA
22). (See Annexure 1) This is a temporary measure and a proper entry must follow after the
examination. Duty is not declared on a Bill of Entry Sight.

Removal in Bond (RIB) Entries RISK MA

Undeclared goods entering the country at an airport such as Johannesburg International
may be "removed in bond" to another Customs controlled airport area such as Durban
International, for final clearance at the latter.

The bill of entry used for this purpose is the form DA 570. No duty is declared or made
payable on a RIB entry.

Provisional Payments

A "provisional payment" (P/P) or cash deposit may be made to Customs, to obtain early
release of goods in the event of commercial documents not being immediately available to
determine precisely the correct tariff heading and duty, or descriptive literature is being
awaited for by Customs for the same purpose. Provisional payments are also made to cover
duty liabilities on goods which are imported on a temporary basis.

One has to apply for permission to make a provisional payment and this is done on the

form DA 70, titled “Application to Make Provisional Payment”.

Provisional payments of the type described here are temporary outlays and must be
recovered from Customs. In industry parlance one “liquidates” a provisional payment. To
liquidate a provisional payment the importer/clearing agent has to meet the obligations
under which the P/P was permitted.

The provisional payment form is also used to pay penalties to Customs. Understandably,
these payments are not “provisional”. They are permanent outlays and are not refundable
by Customs.

Vouchers of Correction (VOC)

Corrections to bills of entry prepared on the form SAD 500 are made on an entry called a
"Voucher of Correction". (Form DA 504). As an example, should duty have been under-
declared on a SAD 500, then a DA 504 would have to be issued to correct the position and
to bring the shortfall in duty to account.

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Similarly, corrections to the formADDA V60A0 aNreCmaEdeDon the Voucher of Correction, form DA

604.

Transport Document/Air Waybill
When a bill of entry is submitted to Customs on a shipment imported by air, it must be

supported by an air waybill, a supRpliIerS’sKinvMoiceAand, for certain commodities, an import

permit. (See later comments regarding written clearing instructions.)
The air waybill is a non-negotiable document and serves a number of purposes. It is:

• a document evidencing a contract of carriage
• proof of receipt of the goods by the airline
• an invoice or bill of freight
• a certificate of insurance if the carrier is to arrange insurance
• an instruction as to how the goods are to be shipped and delivered

Non-negotiability means that title to the goods cannot be transferred from one party to
another by means of endorsing the document in favour of a second party. Unlike original
ocean bills of lading, air waybills are never made out to the order of any party. Possession
of an original air waybill does not infer or imply ownership of the goods in the same way as
an original bill of lading does. The words “not negotiable” which are printed on air waybills
should never be crossed out or modified.

An air waybill contract of carriage is valid from the time it is signed by the shipper and carrier,
or their agents, to the time the consignment is delivered to the named consignee.

Airline air waybills are issued in sets with three originals and between five and nine copies.
TACT sets the minimum number of copies at five, which makes a set of eight with the three
originals. The individual waybills making up a set indicate the party they are intended for.
The three originals are designed to be distributed as follows:

Original 1 (green) for the issuing carrier

This is used principally for accounting purposes and provides documentary evidence
of the signatures of the airline and the shipper (or forwarding agent). These
signatures confirm acceptance of the air waybill as the contract of carriage.

Original 2 (pink) for the consignee.

The consignee’s copy accompanies the goods. Original 3 (blue) for the shipper.

Original 3 (blue) for the shipper

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The TACT states that the copy oAf thDe VairAwaNybCill EmaDrked “8” is normally for the cargo agent

(forwarder). However, it is possible to obtain neutral air waybill sets in South Africa with a
total of both eight or twelve waybills, and a pre-determined distribution as follows:

8-copy Variety

Three originals as above

Copy 4 Delivery Receipt RISK MA
Copy 5
Extra copy

Copy 6 Extra copy

Copy 7 Extra copy for Carrier

Copy 8 For Agent

12-copy Variety

Three originals as above

Copy 4 Delivery Receipt Copy 9 For Agent

Copy 5 For Airport at Destination Copy 10 Extra copy for Carrier

Copy 6 For third Carrier Copy 11 Extra copy for Carrier

Copy 7 For second Carrier Copy 12 Extra copy for Carrier

Copy 8 For first Carrier

An air waybill set issued by SAA has nine copies as follows:

Three originals as above

Copy 4 Delivery Receipt

Copy 5 For Airport at Destination

Copy 6 For third Carrier

Copy 7 For second Carrier

Copy 8 For first Carrier

Copy 9 For Agent

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Airline air waybills are known as “mastAer”DaiVr wAayNbilCls.EHiDstorically every airline had its air waybill

printed on its own stationery. Nowadays the “neutral” air waybill is in common use, both by airlines
and forwarders.

• It is a receipt for the goods, described on the document, by the forwarder
• It is documentary evidence of a contract of carriage

• It records the requirementRs oIf SthKe shMippeAr/ consignor/exporter in respect of the party

responsible for the payment of freight; airports of departure and destination etc.
• It can act as an accounting document

The neutral air waybill is a versatile blank document which can be completed on a computer.

When the name of the airline is entered in the “issued by” box in the top right-hand corner,

the waybill becomes an airline or a master air waybill (abbreviated to MAWB). When the
forwarder’s name is recorded in this box the document performs the function of a house air
waybill. (See below)

Despite the fact that there are three air waybill originals, and the other copies are marked
for specific distribution, to obtain release of goods after Customs clearance any air waybill
can be attached to the release copy of the bill of entry (see later), provided it has been
stamped by Customs. This aspect will be covered in more detail in Section 6 of this course.

An air waybill indicates whether freight is payable at destination (i.e. “collect” freight) or
whether it has been “prepaid” by the supplier/shipper prior to shipment. The consignee is
responsible for the payment of freight to the airline when freight is payable at destination
(collect).

In South Africa, airlines generally give credit terms on freight which means that collect
freight becomes payable at the end of the month following the month during which the air
waybill was issued.

The House Air Waybill

A house air waybill (abbreviated to HAWB) is a waybill produced and used by freight
forwarders.

House air waybills are used in conjunction with master air waybills.

Internationally many forwarders continue to print their house air waybills on their own
stationery, incorporating their own conditions of contract. Accordingly, amongst the
hundreds of house air waybills one finds in the airfreight industry, there are variations in
design and little uniformity as to the conditions of carriage.

The house air waybill performs the same functions as airline air waybill, namely:

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ADVANCED

• It is a receipt for the goods, described on the document, by the forwarder

• It is documentary evidence of a contract of carriage

• It records the requirements of the shipper/ consignor/exporter in respect of the
party responsible for the payment of freight; airports of departure and
destination etc.

• It can act as an accountingRdIoScuKmenMt A

Unlike the airline air waybill, it is unusual for the house air waybill to be used as an insurance
certificate, although it can be depending on the conditions of contract.

As in the case of the IATA air waybill, the house air waybill is not a document of title and
cannot be made negotiable.

Nevertheless, it is possible to consign goods on a house air waybill to a bank in the
destination country to enlist their assistance in ensuring that the consignor's/sender's
invoice is paid, or security is obtained before the release of the goods.

Straights and Consolidations

When an airfreight forwarder provides a consolidation service, the contract of carriage
between the forwarder and the airline is evidenced by a master air waybill which shows the
forwarder as the consignor/shipper and his agent at destination as the consignee. When
neutral air waybills are used, the airline’s name is recorded in the box in the top right-hand
corner. Alternatively, air waybills printed on the airline’s own stationery would be used.

For each individual consignment in the consolidation the forwarder issues a house air waybill
to the sender (consignor/shipper/exporter) showing the sender as the consignor/shipper
and the overseas/foreign receiver (the buyer, importer or some other party nominated by
the sender) as the consignee. The air waybills issued to the sender are house air waybills.
Either neutral air waybill stationery or air waybills printed on the forwarder’s own stationery,
may be used.

It is not imperative for the sender of goods to use the consolidation services of a forwarder.
Goods can be sent on their own as a “straight” shipment. This would be appropriate, for
example, when there is an urgent shipment which cannot wait for the scheduled departure
of a forwarder’s weekly consolidation.

There are two documentary options when it comes to “straights”.

i. The forwarder makes out (or cuts) a master air waybill showing the sender as the shipper
and the overseas importer as the consignee, or

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ii. The forwarder cuts a masteAr aDir wVaAybiNll sChoEwiDng himself as the shipper and his overseas

agent as the consignee, and a house waybill, with the sender as the shipper and the
overseas importer as the consignee.

The arrangement under the second option, which involves both master and house air
waybills relating to the same goods and shipment, which are not being consolidated, is called
“back-to-back”.

RISK MA

Source of Air Waybills

As mentioned before, air waybills travel on the same aircraft as the goods to which they
relate and are retrieved from the airline at the destination airport.

When a shipment is co-loaded with a third-party consolidator then the air waybill will be
collected from the local offices of the consolidator.

It will be seen later that, for the purposes of early Customs clearance, copies of air waybills
are frequently faxed to the clearing agent by the overseas forwarder.

The Air Waybill Required by Customs

The air waybill required by Customs is the one which gives the names of the supplier and
the importer. This is normally the house air waybill.

Under a straight, where no back-to-back house air waybill has been issued, it would then be
the master air waybill which would be submitted to Customs with the bill of entry.

Supplier’s Invoice

The Customs Act [Section 41(1)] stipulates that an invoice from the supplier must
accompany the bill of entry when presented to Customs for clearance.

Invoice details must relate to the goods in the condition in which they are imported.

All particulars required to prepare a valid entry and to determine the transaction value of
the imported goods, must be declared on the invoice by the foreign exporter.

In addition to any proprietary or trade name, the invoice must give a full description of the
nature and characteristics of the goods.

In the event of any of these details changing after the date of issue of the invoice, the foreign
exporter must immediately issue an amended invoice to the importer, who has one month
in which to present the amended invoice to Customs.

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Any false declaration on an invoiAceDis sVubAjecNt tCo aEfinDe or imprisonment, or both. Any person,

who has in his possession blank or incomplete invoices, or similar documents capable of
being completed here and used as an invoice, will be guilty of an offence. It is also an offence
to:

• Withhold information, or omit to record information on invoices

• Issue more than one invoice forRthIeSsaKmeMgooAds

• Fail to issue amended invoices

• Fail to advise the Controller of amended invoices or the existence of credit notes which
affect the value reflected on invoices.

In addition to the normal details such as date, number and the addresses, a supplier's invoice
should show:

✓ Full description of the goods (trade names are not sufficient)
✓ Price of the goods including unit prices
✓ Discounts applicable
✓ Interest cost included in the price (this figure is deductible from the value for duty

purposes) (See note 1 below)
✓ Currency in which the price is quoted
✓ Country of origin
✓ Terms of sale (e.g. ex-Works, FCA etc)
✓ Payment terms (e.g. 90 days)
✓ Number of packages (See note 2 below)
✓ Quantity (e.g. litres) and package type (e.g. drums) (See note 2 below)
✓ Identification marks and numbers (See note 2 below)

✓ Mass and dimension of packages (See note 2 below)
✓ Contents of individual packages (See note 2 below)
✓ Where applicable, (e.g. ex-Works price), transport, loading, handling, insurance and

other costs involved in getting the goods from the supply point to the airport or place
of export, and placing them on board an aircraft, on a road vehicle or in a ULD. (See
note 3 below)
✓ Freight and insurance costs when the price is based on CIP terms (See note below)

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✓ Other information requiAredDfVor AtheNdCetEermDination of the value for customs duty

purposes

✓ Exporter's signature.

Note 1: The interest amount figure is deductible from the value for duty purposes but
Note 2:
is very rarely shownRbyIsSupKplieMrs. A

These details may be more effectively shown on a packing list.

Note 3: The value for Customs duty purposes is the value of the goods when loaded
onto the vehicle (which includes ULDs) that carries the goods over the border
of the country of supply. Thus, if a consignment of German origin goods is
loaded into a ULD at the supplier’s premises in Germany, and then
transported by road to Charles de Gaulle airport in Paris for air freighting to
Johannesburg International Airport, the cost of the transport from the supply
point to Charles de Gaulle should not be included in the transaction value
used to determine the value for duty purposes. If this type of information is
not declared it becomes difficult for the entry clerk to accurately determine
the Customs value for the benefit of the importer.

Note 4: When the transaction value is based on CIP terms, the airfreight and
insurance costs must be deducted to determine the value for duty purposes.
If these are not declared on the invoice then the entry clerk must make an
estimation which may not be to the full advantage of the importer.

Where a nominated forwarder is involved, suppliers’ invoices should be faxed by the
forwarder to the clearing agent at the same time as the air waybill, so that the preparation
of the bill of entry can commence prior to the arrival of the goods and receipt of the actual
documents, the latter travelling on the same aircraft as the goods.

Importer’s Written Clearing Instructions

In terms of the Customs Act it is the importer who has the responsibility of declaring his
goods correctly and in the prescribed manner.

When an importer uses an agent, it is required of the importer to produce written
instructions and to sign them. In terms of Section 39 (1) (c) of the Act, written clearing
instructions must accompany the bill of entry presented to Customs. However, an exception
is made in the case of imports transported by airfreight.

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Rule 39.01 to the Customs Act pArovDideVs aAs fNollCowEs:D

In respect of clearing instructions prescribed in sub-section 39(1) (c), the Controller may, in
the case of:

(a) …………………………

(b) ………………………… RISK MA

(c) airfreight, imports by road overland and clearances on behalf of ship’s
chandlers ……………………, accept importers’ telephonic or faxed instructions;

(d) …………………………

(e) …………………………

In practice no clearing instructions are submitted with the bill of entry.
Nonetheless, it is incumbent on the clearing agent to have on record the importers instructions
in the event that a Customs officer calls for them.

Some of the important details which clearing instructions should cover are:
o Purpose code
o Valuation code
o Valuation method
o Valuation Determination Number if applicable
o Tariff Determination Number if applicable
o Reference to permits to be used
o Delivery Address
o Tariff heading

Other Documents

Certificate of Origin

When the rate of duty is determined according to the country of origin and is lower than the
general rate (e.g. in the case of a trade agreement with a foreign country) the importer must
present to Customs Certificate of Origin (form DA 59). These certificates are normally
obtained from a Chamber of Commerce in the country of export.

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For a country to be accepted AasDthVe AcouNntCryEofDorigin for duty purposes, a minimum

percentage of the production costs of the goods must be represented by materials produced
and labour performed in that territory. Secondly, the last process of production must have
taken place there.
The conditions which apply to the inclusion and exclusion of costs, for the purposes of
verifying the qualification of "origin" ... (i.e. the minimum percentage of production costs

which must be represented by laRbouIrSpKerfMormAed and materials produced in the origin

country), are recorded in the Rules applicable to Section 46 of the Customs Act.
In terms of these Rules, only the following production costs may be included:

The cost to the manufacturer of all materials
Manufacturing wages and salaries
Direct manufacturing expenses
Cost of inside containers

The following may not be included:
Outside packages and expenses in connection with the packing of goods therein
Manufacturer's or exporter's profit, or the profit or remuneration of any trader,
broker or other person dealing with the article in its finished condition
Royalties
Carriage, insurance and other costs from the place of production in the territory to
the place of final despatch
Any other cost incurred subsequent to the completion of manufacture.

Certificates of Origin would normally be received with the air waybills and suppliers’
invoices.

Packing List
A packing list or specification is required when the supplier's invoice does not provide
sufficient details regarding the mass, dimensions and contents of individual packages.
Packing lists would be received with the suppliers’ invoices.

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Shipper’s Covering Statement ADVANCED

On occasions an importer will place an order with an overseas shipper who purchases the
goods from a number of different suppliers. On behalf of his South African customer the
shipper will consolidate the various different orders into one consignment, arrange for
shipment, and pay all charges to the port of shipment/destination. The shipper (or buying
agent) will raise a charge for these services which is dutiable.

Under these circumstances, the CusRtoImSsKDepMartmAent requires a Covering Statement which

shows all the shipper's charges.

As with packing lists, Covering Statements would be received with the suppliers’ invoices.

Certificates and Permits
When appropriate, one or more of the following documents will be required:
Veterinary Certificate (live animals)
Phytosanitary Certificate (flowers, fruit, plants)
Health Inspector’s Certificate (animal products)
Explosive’s Certificate
Drugs Certificate Police Permit (ammunition)
Chemical Analysis

All these documents would normally be obtained from the importer.

On airfreight shipments it is customary to deliver the forwarder’s tax invoice and certain documents
with the goods. These documents would include:

➢ Customs stamped bill of entry
➢ Bill of entry worksheet
➢ Voucher of correction if applicable
➢ Provisional payment (DA70) if applicable
➢ Supplier’s invoice
➢ Air waybill (master on straights and house on consolidations or back-to-backs)
➢ Supporting vouchers for disbursements such as airline storage, state warehouse rent

notes etc.

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➢ Import permit (or photocopyA) ifDapVplAicaNbleCED

➢ Costing sheet if applicable
➢ Insurance declaration if applicable
➢ Packing list if available

Documents which should be retained in thRe fiIleSinKcluMde:A

Bill of entry (notification copy and spare, Customs stamped)
Bill of entry worksheet
Voucher of correction (if applicable)
Provisional payment (DA 70) if applicable
Air waybill (master/sub master and house)
Supplier’s invoice Copy of import permit if applicable
Packing list if available
Costing sheet if applicable
Insurance declaration if applicable
Photocopies of cheque requisitions/cheques
File copy of the company’s invoice on the importer
Signed POD
Copies of all creditor invoices, i.e. overseas forwarder, airline, consolidator, road haulier
etc.
Damage reports and documents relating to claims
All other correspondence

PROCEDURES RELATING TO CUSTOMS ENSURING COMPLIANCE

The full and correct name for Customs is the Department of Customs & Excise. The functions
and responsibilities of Customs are governed by the Customs & Excise Act No. 91 of 1964.
This Act has been amended many times since 1964 and there is always the possibility of
further amendments being made. As at July 2001 there is a Customs & Excise Amendment
Bill being considered by the relevant committees of parliament. The bill proposes a number
of changes to the Act. Details of the Act and its amendments are printed in the Government
Gazette.

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In terms of Section 120(1) of theACuDstoVmAs ANct,CthEe CDommissioner may lay down Rules which

describe a multitude of procedures to be followed to give effect to the Act, and prescribe
the purposes and use of the official Customs documents.

Before an importer can take possession of goods which are entering the country, the goods
have to be “cleared” through Customs.

Clearing goods through Customs cmeRretaaIniSns CoKubstatMoinminAsgdtohceumpeernmtsishsiaovne of Customs to bring the
goods into the country. To do so to be completed. These

and other documents have to be submitted to Customs for scrutiny. There may also be

Customs duty payable on the goods. Once all the formalities have been completed and

Customs are satisfied that everything is in order they will indicate this by stamping one copy

of the bill of entry with the word “Release Authorised”. Goods are then said to be “cleared”

through Customs.

Clearance Times

Section 38 of the Act states that every importer of goods must, within seven days of the
date on which such goods are deemed to have been imported or within such further
time as the Commissioner will allow, make due entry of the goods.

In practice the Commissioner allows an additional seven days (i.e. a total of fourteen
days).

Entries may be submitted to Customs before the goods arrive at the port or place of
destination but not before the goods have been loaded onto a ship or delivered to the
carrier for transport to South Africa. In the case of airfreight this is often difficult to
adhere to, particularly when shipments are “pre-cleared” before the arrival of the
aircraft.

Once Customs have released an import consignment, importers or their agents are
further required to present the release copy of the bill of entry to the airline or de-
consolidator in possession of the goods for the purpose of having the goods delivered or
collected. This must be done within seven days.

When Goods are Deemed to be Imported

When goods are consigned to a place in the Republic and carried by air they are deemed
to have been imported at the time the aircraft first comes under the control of the
airport authority.

When consigned goods are discharged from the aircraft at a place other than that to
which they were consigned, importation is deemed to take place at the time the goods
are discharged.

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If goods are not consignedAbuDt VoffA-loNadCedEatDa place from an aircraft, the time of

importation is when the goods landed.

Customs Code Number

One of the pre-requisites of being a Customs clearing agent is having a Customs code

number. To obtain one applicatRionISisKmaMde tAo Customs in Pretoria on an official form,

the Form DA 163. The process takes less than a day to finalise.

Agents must also be licensed. An application for a license is done on the Form DA 121
and must be submitted with a small license fee.

An agent is further required to provide Customs with security in the form of a General
Bond. The amount for which security required is currently R10 000.00. The General Bond
application is done on the Customs Form DA 110E. A separate R10 000.00 bond must be
established for every Customs office at which the agent intends passing bills of entry.

Examples of the DA 163, the DA 121 and the DA 110E are given in Annexure 3.

Documentation

The prime document required by Customs is the bill of entry. This is the declaration made
by the importer as to the type and value of the goods being imported.

The person responsible for selecting the correct tariff heading and for the completion of
a bill of entry is called an entry clerk. Entry clerks are required to know how to use and
apply the Customs Tariff Book.

The bill of entry may be completed manually, but agents generally use a computerised
system.

The Customs Tariff Book is made up of a number of schedules, the main schedule being
Schedule No.1.

Schedule No.1 is itself made up of a number of “Parts”. Part 1 accounts for more than
half of the Tariff Book and is often referred to as the “Customs Tariff”. It consists of 21
Sections or main product categories. These are broken down further into 98 Chapters or
sub-categories.

Part 1 of Schedule No.1 is, in the first instance, a classification of goods. It contains a
comprehensive list of commodities which are classified in accordance with the
“Harmonised Commodity Description and Coding System”. Abbreviated to the
“Harmonised System”, this is the internationally accepted method of classifying goods
for Customs purposes.

The classification system uses a structure of codes called “Tariff Headings”.

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For example, the tariff headAingDfVor AproNduCctEs dDescribed as “Bobbins, spools, cops and

similar supports of paper pulp, paper or paperboard (whether or not hardened)” is 48.22.
There is then a sub-category called “of a kind used with textile machinery, cone-shaped”.
The full tariff heading for products falling under this description is 48.22.10.10.

The correct tariff heading for a particular commodity is the one which most accurately
describes what they are and for what purpose they are used.

Part 1 of Schedule No.1 also givResItSheKratMes Aof duty which are applicable to each tariff

heading.

Supporting Documents

The major source of information for the completion of a bill of entry is the supplier’s
invoice. It is from this document that the description of the goods is obtained. It is also
the source document for the Customs value.

If Customs are not satisfied with the description then they may call for descriptive
literature. Descriptive literature is simply catalogues, pamphlets and brochures which
give technical details on the product. The Customs officer makes use of the information
provided in the literature to check the bill of entry. Alternatively, Customs may call for
the goods to be physically examined.

Customs require proof that the goods being declared on a bill of entry have in fact been
shipped and this proof is provided by submitting an air waybill showing the flight details.

Import permits are governed by the Import and Export Control Act, No.45 of 1963, as
amended from time to time. Details of products requiring import permits are given in
the Import Control schedule to the Import and Export Control Act.

Instructions to Customs on how to handle imports requiring permits are recorded in an
official document called the Consolidated List of Prohibited and Restricted Imports. This
is commonly known as the Prohibited Goods Index.

Not many commodities require an import permit but when one does, the permit must
be submitted with the bill of entry.

Import permits are obtained from the Director of Import and Export Control based in
Pretoria.

It is clear that the responsibility for obtaining import permits rests with the importer
although clearing agents can assist their clients in this regard. Importers should be in
possession of an import permit before the goods are exported from the country of origin.

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Submission of Documents to Customs ADVANCED

With the implementation of EDI (Electronic data interchange) many of the rules listed
below don’t apply if the shipment goes through customs without a problem.

Documents are generally only submitted to customs MANUALLY now if required to do so

from customs and the process beloRw wISouKld bMe foAllowed.

Electronic releases can be done if the “lines” / SARS and the agent are all EDI approved and
accredited – this then makes the release “PAPERLESS”.

A set of documents to be presented to Customs will contain a bill of entry, the supplier’s
invoice and the air waybill. Other documents may include an import permit if applicable
to the goods in question; packing list if appropriate; and other documents referred to in
Section 2 of this course, if applicable to a shipment.

Quite a number of copies of the bill of entry must be made. Customs require a minimum
of five for their own purposes. The importer needs one copy and the agent may need up
to three for filing purposes. So, depending on the agent’s needs, more than nine copies
of the bill of entry may have to be submitted to Customs for clearance and stamping.

The first copy of any bill of entry set is stamped “Notification Copy”. (See later)

Documents are submitted to Customs in special folders of different colours as follows:

White folders are used for queries and VOC’s

Blue coloured folders are used for export entries

Pink coloured folders are used for Provisional Payments (DA70) & are placed in separate
pink folders.

Import permits are handled electronically – ITAC loads the permit onto the SARS system
and the balance on the permit is automatically deducted as import clearances are done.
Import permits are issued for specific products. They also stipulate the maximum value
of the product which may be imported.

All folders are marked with agent’s name, the agent’s Customs code number and the
agent’s allocated document box (pigeon-hole) number.

The industry term describing the process of preparing documents for presentation to
Customs is called “batching”. (Note that the file procedure and colour coding is set down
in the Rules to the Act – Rules 39.06 to 39.13.)

At every Customs office, there is an area designated by Customs for the purpose of
processing imported shipments.

Details of the shipment will then be entered into the Customs computer system and the
entry duly checked. (See later comment on electronic submissions.)

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In the case of entries whichApDlacVe gAooNdsCinEtoDbond or remove goods from a bonded

warehouse, the documents are be presented to the “Securities” desk for clearance
before going to the Permit counter. Such entries would include the SAD 500 with
purposes code “WH”, all ex-bond entries on form SAD 600, the SAD 550 (purpose code
“XE”) which is the bill of entry for “Export of imported goods (ex-warehouse)”, and the
SAD 550 (purpose code “ZE”) which is the bill of entry for “Export of South African

products (ex-warehouse)”. RISK MA

Once the entry has been accepted by Customs they will date stamp the notification copy
of the bill of entry and give it a registration number. The notification copy will then be
placed in the agent’s pigeon hole. The receipt of the registered notification copy, of the
entry, signals to the agent that payment of duty and VAT should be made to the cashier.

Agents who are not on the duty deferment scheme may make payment by bank
guaranteed cheque. Customs will supply agents who have been granted duty deferment
status with daily, weekly and monthly statements detailing the entries submitted and
accepted, and what duty is payable.

Sometime after payment has been made Customs will place the set of documents in the
pigeon hole for collection by the agent.

If the bill of entry has been adjudged in order Customs will have stamped one of the
copies of the bill of entry “Release Authorised”. The shipment has then been “cleared”
by Customs.

Each copy of the bill of entry is date stamped and is given a number different from the
registration number recorded on the notification copy. This number is the official bill of
entry number.

If on the other hand additional information is required, or a mistake has to be rectified,
or the goods have been stopped for examination, Customs will indicate their instructions
on the bill of entry, in the box titled “Instructions by Controller of Customs and Excise”.
The agent must then act accordingly. This may involve the preparation a Voucher of
Correction, the submission of a provisional payment or simply making the arrangements
for an examination of the goods.

When Customs wish to examine the goods, they will stamp the bill of entry “STOP -For
Customs Examination”. Customs may also write a brief explanation for the stop as well.

Customs do, however, complete an internal document called a “Stop Note”. (DA 310) On
this document the Checking Officer will give his instructions to the Examining Officer.
(EO)

The stop note is constructed in three sections and issued in duplicate.

The Checking Officer uses the middle section.

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The bottom section is reservAedDforVthAe ENxaCmiEninDg Officer’s report.

The top section is where the EO’s superior writes his comments and report.

After the examination the stop note report is returned to the Customs office. The bill of

entry and supporting documents are then placed in the agent’s pigeon hole with

instructions on how to proceed. The original of the top section of the Stop Note is made

available to the agent. RISK MA

If a Customs examination confirms that the goods were correctly declared the report will

state “Release as Entered” or “RAE”.

If the goods were incorrectly declared the importer may be required to pay a penalty.
This would be done on the provisional payment form, the DA70. Provisional payments
above a certain prescribed amount (e.g. R10 000.00) have to be paid by bank guaranteed
cheque. The Customs deferment scheme may not be used for provisional payments.

As a result of an examination there may be additional duty to pay. The agent would then
prepare a voucher of correction. The “under entry” or additional duty payable would be
declared on the VOC. The VOC would then be processed through Customs in the normal
way. The additional duty would be paid by cheque or on the deferment scheme.

Where Customs stops are for matters which do not require an examination, such as value
or proof of payment, the Stop Note issued by the Checking Officer is sent through to the
Customs Adjustments department who will indicate any further requirements on the
tear-off section of the Stop Note.

Customs may also “detain” goods as opposed to “stopping them for examination”. For
example, certain goods have to be inspected by the health authorities. Listed animal
products must be examined by a veterinarian and some plant species require inspection
by the appropriate plant authorities.

In these cases, Customs will stamp the bill of entry with the “release” stamp and a
“detention” stamp. The detention stamps read “Detained for Port Health”, “Detained for
State Veterinarian” and “Detained for Plant Inspector.

Examinations ordinarily take place in the examination hall at the state warehouse but, in
the case of airfreight, these take place in the airline bond store or in the off-airport
licensed bond store of a forwarder/consolidator.

In the past, bills of entry were downloaded onto disk and documents were submitted to
Customs together with the related disk. Under electronic conditions the disk has been
replaced with direct data transmission from the agents’ computer systems to Customs.

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Notification Copy of the Bill of Entry ADVANCED

From the previous paragraph you will have noted the important role played by the
Notification copy of the bill of entry. The registration date recorded on the Notification
copy is of particular significance.

This date, which is also referred to as the assessment date, is the effective date of entry

of the goods. The date on whichRthIeSeKntryMis rAeleased is not the effective date.

The following example will illustrate the point.

Assume that the assessment date of an entry was the 3 December 2002 and the release
date was the 5 December 2002, three days later. Assume further that the rate of duty
applicable to the commodity being imported was reduced from 10% to 5% on the 4
December 2002. Because the entry was registered on the 3 December 2002 the
reduction in duty would not apply to the shipment, and the importer would still have to
pay duty at the 10% level.

Customs Deferment Facility

Customs are in a position to offer agents credit facilities on their payments of duties and
VAT. Instead of paying by bank guaranteed cheque every time a batch of entries is
submitted to Customs, agents can accumulate payments for a period of a month.
Payment must then be made by bank guaranteed cheque a week later.

This arrangement is called the Customs deferment scheme. To be granted a deferment
facility, agents have to provide Customs with security in the form of bank guarantees.

Release Bill of Entry

Customs stamp one copy of a bill of entry “Release Authorised” or with similar words.

This bill of entry is the one which must be handed into the airline or the consolidator,
together with the Customs stamped air waybill, in order to obtain release of the goods.
In the case of consolidations being taken to consolidator’s off-airport bond stores, the
consolidator must collect release entries for all shipments in the consolidation and pass
these on to the airline with a copy of the consolidation manifest.

The airline needs all the release entries in order to acquit the aircraft’s manifest.

A manifest is acquitted when the airline proves to Customs that all consignments listed
on the manifest have been properly entered into country. To do this the airline must
present Customs with an authorised bill of entry for every consignment.

A manifest is a document which lists all cargo conveyed on an aircraft, or in a
consolidation.

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The manifest normally givesAaDdeVscAripNtioCn oEf Dthe goods, the weight and volume, the

number packages, and the house air waybill number. The names of the shippers and
consignees may also be shown.]

Release of Stopped Consignments

When goods are stopped by CusRtoImSsKfor MexamAination and subsequently released to the

importer, a different release form is used. This is the Customs Form DA 74, with the title
of “Release Order for Goods Originally Detained”.

A Customs stamped DA 74 plays the same role as the “release authorised” bill of entry
referred to earlier and must be presented to the airline to obtain release of the goods.

Warehousing Entries

If duty is payable on their imported goods importers need not take immediate
possession of them at the time of importation. They have the choice of placing them into
a bonded warehouse until such time as they need to use the goods.

This is achieved by passing a warehousing entry through Customs. The bill of entry form
used is the SAD 500 and the purpose code “WH” is inserted in the space provided.

When the importer decides to remove the goods from the bonded warehouse a DA 600
bill of entry must be submitted to Customs. The title of the bill of entry is “Bill of Entry
(ex-warehouse) Imported Goods”. A bill of entry removing goods from a bonded
warehouse is commonly known as an “ex bond” entry.

Removal in Bond

On occasions an importer may wish to move a consignment from one Customs area to
another, prior to clearing the goods through Customs.

For example, assume an importer has a shipment which has been discharged from an
aircraft at Johannesburg International Airport (JIA). Instead of doing the Customs
clearance through the Controller’s office at JIA the importer decides he would like to
enter the goods into a bonded warehouse in Cape Town.

To do this the importer or clearing agent would first have to pass a “removal in bond”
(RIB) entry through Customs at JIA. This would give the importer permission to move the
goods from Johannesburg to Cape Town without final clearance. Then, in Cape Town,
the importer would have to pass a warehousing entry. Within a prescribed period, a
Customs-stamped copy of the warehousing entry would have to be presented to
Customs at JIA to acquit the RIB entry.

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Pre-Clearances ADVANCED

As mentioned earlier, one of the characteristics of international airfreight transportation
is that the shipping documents travel on the same aircraft as the goods. In this way the
documents are readily available for processing through Customs.

With airfreight being the mode of transport for urgent shipments it is sometimes

ntheecedsoscaurymteonstpseceledaurepdthtehrcoleuagrhaRnCcuIesStporKmocseMpsrsioeArveton further. This can be achieved by having
the arrival of the aircraft. The industry

refers to this procedure as “pre-clearance”.

Pre-clearance is made possible by having the supplier’s invoice and the air waybill faxed
ahead of the aircraft departure from the country of export.

When clearing agents are submitting fax documents in place of originals they are
required to certify that the faxed documents represent the originals by way of a stamp
carrying wording such as:

On behalf of ……………………………… I certify that this document has been transmitted by
facsimile transmission apparatus and is produced in lieu of and for serving the purpose
of the original in terms of the Customs & Excise Act, 1964.

Name …………….. Capacity……….…….. Signature………………..

Official Customs Working Hours

The official working hours for Customs officials are published in the Rules issued by the
Commissioner for Customs. In terms of the Customs Act the Commissioner is entitled to make Rules
and these have the same force and effect as the Act itself.

The hours of business vary from one Customs office to another. There are also different times for
different types of work. The hours which apply to Johannesburg International Airport are given here
as an example.

For acceptance of bills of entry Mon - Fri

(except bills of entry for export 08:00 - 12:30

and removal in bond) and for the 13:30 - 15:00

receipt of duties and other revenue

Despite these times being stipulated in the Rules to the Act, Customs provide a service on Sundays,
only at Johannesburg International Airport, whereby they will accept and check entries.

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For the acceptance of bills of ADMVoAn -NFriCED
entry for export and removal in
bond 08:00 -12:30
13.30 -16.30

Despite these times being stipulated in the Rules to the Act, Customs provide a service on Sundays,

only at Johannesburg International AirportR, wIhSerKebyMtheAy will accept and check entries.

For the examination of passengers, and twenty-four hour baggage service

For other business Mon -Fri
08:00 – 12.45
13.30 – 16.30

Agents’ Pigeon Holes

Customs attempt to provide every clearing agent with a pigeon hole or box.

Where it is not possible because of the number agents involved, some Customs office may provide
a second set of pigeon holes marked alphabetically. Documents for agents who do not have their
own box will then be placed in the correct alphabetical pigeon hole.

Alternatively, Customs may place documents in a tray situated at the cashier’s counter. It is then up
to the agents who do not have pigeon holes to look out for their own documents and folders.

Processing Time Required for Customs Clearance

If all the information and documentation required by Customs is correct, and it is presented in the
correct manner, clearance should take place quite quickly.

Depending on the volumes of entries to be processed, an entry could be processed by Customs in
one day.

However, Customs will examine a percentage of all entries. And some entries can be extremely long.
The number of lines per bill of entry can vary from one to three thousand. It is prudent therefore to
work on airfreight entries staying in Customs for 1 to 2 days.

Students should remember that the clearing agent also needs time to prepare the bills of entries
prior to submission to Customs.

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State Warehouse ADVANCED

Undeclared goods must be removed to a state warehouse after the expiry of prescribed periods set
by Customs. On air freighted goods the time is fourteen days from the date of importation.

On receipt of the undeclared goods, the state warehouse will allocate the shipment a position
number. The number will have a prefix “UG”. The UG number must be recorded on the state

warehouse despatch note which confirms rRecIeSipKt of MtheAgoods into the warehouse.

When detained goods are not cleared within the specified times, the goods must also be removed
to a state warehouse. Detained goods will be given a position number with the prefix “DG”.

The Customs Act provides for the disposal of goods in a state warehouse. If undeclared goods have
not been released within a specified period, Customs have the right to sell them or have them
destroyed.

The specified period referred to is three months from the date of arrival of the goods in the state
warehouse. However, if the goods are perishable or dangerous the Commissioner may instruct that
the goods be sold or destroyed earlier than three months.

The money received from the sale will go to pay for duties, VAT, and airfreight etc. The Act stipulates
the order in which money from the sale will be allocated. [Section 43(3) of the Customs Act].

In the case of airfreight this order is:

• Duty (which would include VAT)

• Expenses incurred by Customs

• Charges due to Customs

• Amounts due an airport authority

• Freight and other amounts due the airline

Any amount left over, called the “over-plus”, is payable to the owner of the goods. This must be
claimed for by the owner of the goods, in writing, and in accordance with the Rule 43.03.
Applications must be made to Customs within two years of the date of sale of the goods.

The method of sale is normally by auction. Notices of such state warehouse auctions are
published in the Government Gazette.

The Importation of Samples

Due to their small quantity, product samples are normally imported by airfreight. The following is a
notice in this regard, issued by Customs in February 2001.

“CLEARANCE OF GOODS IN TERMS OF SECTION 38(1) (a) (iii) – SAMPLES

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Please be advised that as from 1 MarAchD20V01AgNooCds EimDported and cleared in terms of section

38(1)(a)(iii) “goods which in the opinion of the Commissioner are of no commercial value”, of the
Customs and Excise Act, 1964 will only be regarded as “samples” if the goods meet the under-
mentioned criteria.

(a) Goods have been mutilated to an extent where commercial gain is not possible; or extent
where it is not wearable or saleable.

(b) Goods, which have been permanRenItSlyKtagMgedAor clearly marked “sample”.

(c) Example:

(aa) Mutilation: visible hole through sole of shoe, clothing suitably cut to the extent where it is
not wearable or saleable.

(bb) Tagging or marking: garment with irremovable visible tag on the outside of such indicating
“sample”; machine marked.

The mutilation, tagging or marking shall be performed prior to shipment of the goods.

Goods landed without such marking shall be liable to duty.

This procedure deals with section 38(1) (a) (iii) and must not be confused with section 38(1) (a) (v)
“goods of a value for duty purposes not exceeding R500, and on which no duty is payable in terms
of Schedule No.1.”

Communication with Customs

When working on Customs matters it is best to know when and with whom to communicate.

For example, a query on a clearance through Durban will not be attended to by Customs personnel
based in the Cape Town office.

In principle all enquiries and problems should first be directed to the Controller’s office where the
goods are to be cleared. This applies, for example, to applications for the refund of duty, and
applications for tariff determinations. As and when necessary, the Controller’s office will refer
applications and other matters to the head office in Pretoria.

Attempting to side-step the Controller’s office by going direct to the head office in Pretoria may
only antagonise Customs. This may adversely affect their interest in the matter, and their co-
operation.

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ASSESSMENT CRITERION 2 ADVANCED

Consultancy/advice services as rendered by the clearing/compliance function are described for a
freight forwarding/customs broking operation.

A very important function within a freight forwarding organisation is “CUSTOMS BROKERING”.
Simplistically, this means “being able to advise your customers on ALL matters pertaining to customs

processes, procedures, documentation, rulRe &ISreKgulaMtioAns, tariffs, statutory changes.”

There are a few ways of handling the “customs brokering” aspect within the freight forwarding
organisation and it is up to the freight forwarding organisation to decide which method is best for
them, from a cost effective and accuracy of information point of view.

1) Employ a customs specialist

2) Contract the services of a customs consultant on a suitable basis: i.e. daily, one day a
week, ad hoc, etc.

3) Contract a company’s services – who handle all aspects of customs affairs

The customs person, consultant or company that you contract with needs to be up to date and have
a reliable method of keeping up to date, on all customs matters, all of the time. There are companies
for instance that just manage the information to do with Tariffs: i.e. changes in tariffs, amendments
to duty & surcharges, tariff rulings implemented or removed, tariff disputes, international tariff
trends, tariff protection and relief, etc.

Tariffs:

1) South Africa aligns to the international “HARMONISED SYSTEM” of tariff control although each
country may have different duty values the “tariff headings” remain consistent.

The system provides a “uniform” method of ensuring goods are described internationally in the
same manner and then expressed by an identical sequence of numbers – origination of and where
the cargo is going is irrelevant. The WCO (World Customs Organisation) is the authority body that
controls the Harmonised System worldwide.

The harmonised code has 4 digits – this can be followed by a series of 2 digits that may lead to the
tariff used being up to 8 digits long in some cases. Countries sometimes breakdown the main
heading into smaller ones and vary the rates applicable.

E.G. Chapter 34 = Soap, organic surface-active agents, washing preparations, lubricating
preparation, Artificial waxes, etc. The next step is:

34.04 = artificial waxes and prepared waxes, etc. Then 3404.90 = other Then 3404.90.10 = of
oxidised polyethylene.

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To each tariff heading there are valuAes DplaVceAd N-thCeseEvDalues become the Duty and Surcharge

amounts that importers would pay on clearing their shipment through customs. Customs

calculations are done on the FOB value of the shipment. It is important to note that customs in order

to control trade and keep trade internally safe the importer may have to have a VDN (Valuation

Determination Number). The VDN is usually introduced when “related” companies trade and they

may have unfair discounts which would place their product price at an advantage over other traders

in South Africa. If a VDN is in place thenRtIheSKdutyMcaAlculation would be done on that specific
information.

2) Tariff rulings come about when an importer feels that the tariff heading specified by customs
is not correctly aligned to their product. They query this with customs, giving detailed product
data, customs review and make a ruling or tariff determination. This tariff determination would
be the one used in the future by the importer.

3) Tariff Protection – countries can introduce tariffs to protect their local market. The tariffs
usually have very high duties payable attached to them, which would deter companies from
importing that specific product since it would be “priced out” the market place.

A good website for tariff information is www.cargoifo.co.za – you can select the tariff book tab.

Other Customs Related Items;

There are other customs related items that a freight clearing agent needs to be able to give advice
on:

• Bond Store warehousing – mainly used for as a cash flow benefit (you don’t pay the
duties and VAT on clearing the goods but only at the time of withdrawal from stock) or
goods being removed in bond – e.g. for export or from one bond store to another.

• Customs documentation for clearing import & export shipments through customs.

• Government related items: Incentive schemes / VAT and exports / special requirements
product specific / handling processes product specific / information on prohibited &
restricted items / trade agreements.

• Customs registration as an importer or exporter.

• Managing the payments required to be made to customs like Duties and VAT, deferment
and any other charges, is of high importance – failure to pay on time and in full will result
in penalties being awarded and your credibility questioned, neither of which you can
afford. It is vital that your customers are aware of the dangers of not managing their
customs related financial issues and the penalties that can occur as a result of bad
management. The exporter is a high risk due to the VAT implications around exports and
needs to ensure things are done timeously and accurately.

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Compliance ADVANCED

Following customs processes and procedures exactly is a big task and as a freight forwarding /
clearing agent you cannot afford to not comply with the law laid down, including the time frames
specified.

Penalties for non-compliance are heavy and should be avoided at all costs: i.e. Failure to comply

with conditions on a permit, any orders gisRivsueIenSd, aKbnyytMhheinAdMrainniscteerorofoTbrsatrduect&ioInndtousitnryspwecitthorrse,gfaarldses
required information, false information

representation, etc. As a freight clearing organisation it is your responsibility toward your customer

to encourage them to be complaint in every aspect of their import or export process and in all their

dealings with authority bodies.

ASSESSMENT CRITERION 3

Client service requirements of a customs clearing and compliance operation are described for a
forwarding organisation.

It has been said a number of times throughout this unit standard that client service requirements
revolve around:

✓ Doing things timeously
✓ Doing things right the first time
✓ Ensuring all documentation required locally and internationally have been prepared
✓ Ensuring all authority body specifics have been complied with
✓ Consistent, effective communication with all role-players
✓ Smooth and efficient passing of documentation throughout the process
✓ Total compliance to all government rules and regulations throughout the process
✓ Total risk and cost management throughout the process

Customs clearing and compliance is no exception, in fact it is probably here that the most
compliance risk is found and considerable attention needs to be paid to all aspects of customs
clearance to ensure compliance takes place.

Never forget the words of wisdom mentioned at the beginning of this unit standard:
✓ There is always a process to follow
✓ There are always documents required within the process
✓ There are always authority bodies regulating the process and the documents required

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✓ There are always time frames anAd dDeaVdlAineNs tCo wEorDk to

✓ There is always risk and cost to manage
✓ You must always follow procedures and accurately complete documents to have the desired

result of effective and efficient freight forwarding
✓ Make an “abbreviation or acronym” list from the start for yourself.....it’s a time/life saver

RISK MA

Customer service is giving of your best, ensuring customs clearing compliance and ensuring
functions are carried out timeously, these things result in excellent customer service.
One must not forget that you as the freight forwarding organisation need to be customs complaint
as well. This means being registered and accredited with customs as a trustworthy organisation
with high integrity. You need to obey the rules, set a good example and make sure you advise your
importer and exporter customers to do the same.

SPECIFIC OUTCOME 5
DESCRIBE TYPICAL SUPPORT FUNCTIONS WITHIN A FREIGHT FORWARDING ORGANISATION.

ASSESSMENT CRITERION 1
The role of the Human Resources/Industrial Relations Department is described in terms of the value
added to the competitiveness of a freight forwarding organisation.

Human “capital” management plays a big part in the ever-increasing global competition, and in this
regard South Africa has been slower than other continents in mastering this challenge.

HR and Industrial relations people these days in South Africa have enormous responsibilities: there
are so many government rules and regulations that need to be adhered to.

People, the way they work, how they behave, what they do, can make or break an organisation. It
must be said that “people are a company’s best asset” without a doubt – a happy worker is a
productive worker in any work environment.

Human Resource in days gone by was looked upon as a “necessary evil” to a company; it didn’t
make a visible profit as such and generally took a large amount of management.

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Thankfully, this outlook or mindset has cAhaDngVedAovNer CtheEpDast number of years and companies have

come to the realisation that HR can make a big difference in the service levels and service excellence
they give their customers if the correct tools are in place.

Human Resource functions these days include many things that need managing with considerable
thought and planning:

Corporate governance – keeping goRodIScoKntroMl ofAstrategic items.

Equity – ensuring equity is achieved within the work environment.

Labour policy framework aligned to the law – ensuring a policy is in place and ensuring the
company adheres to the law.

Job design and analysis – ensuring the job people are employed to do is well designed for
productivity & efficiency and also reviewing the design on a consistent basis to ensure
maximum service levels are achieved.

Performance management – ensuring people at all levels are performing to standard or
better, managing non-conformances effectively, reviewing and implementing
improvements on a consistent basis.

Assessing competence – monitoring each person’s skills and development and making
applicable adjustments.

Planning and people development – ensuring people have a development plan aligned to
job requirements and working towards continual improvement.

Training and skills development – making sure training and skills development programmes
are run effectively, not only job specific but also including “soft skills” like building work
relationships, literacy, body language, speech, etc.

Career management – giving employees guidance on the way forward in building a career
and seeing it through.

Employee wellness – Seeing to the well-being of the employees – work related,
environmentally, emotionally and aligned to the OHS Act/ Labour Act.

Executive search & recruitment – making sure that those “at the helm” are of the right
calibre and meet the corporate requirements of leadership and management.

Succession planning – taking care and planning for the advancement of staff internally
moving from the lower ranks into upper positions, thus developing a corporate culture of
sustainability.

Setting business strategy – reviewing, analysing and implement business strategies that
improve all HR aspects within the work environment.

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