Part 1
Introductory provisions
Purpose of this Chapter
453. The purpose of this Chapter is to regulate the outward processing procedure. Outward processing procedure330
454. (1) Outward processing is a customs procedure that allows—
(a) goods to be exported from the Republic under this procedure for processing abroad; and
(b) products obtained from the processing of those goods to be imported into the Republic and cleared and released for home use under this procedure as outward processed compensating products.
(2) The outward processing procedure is available only for goods referred to in section 458(a).
Commencement and completion of outward processing procedure
455. (1) (a) Goods come under the outward processing procedure when the goods are
cleared for export under the outward processing procedure.
(b) The outward processing procedure is, subject to subsection (2), completed when products obtained from those goods are imported into the Republic and cleared and released for home use as outward processed compensating products.
(2) The outward processing procedure ends before its completion if completion of the procedure is interrupted by an occurrence referred to in section 109(2).
Extent to which Chapters 4 and 7 apply
456. Chapters 4 and 7, except insofar as a provision of those Chapters is modified,
qualified or deviated from in this Chapter, apply to all goods under the outward processing procedure,331including to the clearance and release of—
(a) goods for export for outward processing; and
(b) imported goods for home use as outward processed compensating products.
Part 2
Clearance and release of goods for outward processing
Clearance of goods for outward processing procedure
457. Goods to be cleared for outward processing must be cleared for export for
outward processing in accordance with Chapter 16332read with section 456(a).
Conditions for clearance of goods for outward processing 458. Goods may be cleared for outward processing only if—
(a) those goods are of a class or kind authorised in any of the tax levying Acts as goods that may be cleared for outward processing;
330. For tax status of goods under the outward processing procedure, see section 150.
331. In the case of an inconsistency between a provision of this Chapter and a general provision contained in Chapter 4 or 7 the provision of this Chapter prevails. See sections 88(3) and 162(3). 332. See also section 361(2)(b)(iii) which states that Chapter 16 applies to goods destined for export
under the outward processing procedure.
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(b) the requirements applicable to the clearance for outward processing of goods of that class or kind have been complied with, including requirements and conditions as may be—
(i) prescribed by rule;
(ii) specified in a tax levying Act referred to in paragraph (a); or (iii) determined in terms of any other applicable legislation; (c) the person who clears the goods for outward processing—
(i) undertakes to comply with the requirements applicable to the outward processing of goods and the importation of outward processed compen- sating products obtained from those goods, including requirements and conditions as may be prescribed by rule, specified in a tax levying Act referred to in paragraph (a) or determined in terms of any other applicable legislation; and
(ii) gives security for the payment of any export tax that may become payable on the goods; and
(d) measures have been taken to ensure that when goods are cleared for home use as outward processed compensating products obtained from the exported goods, those goods could be verified as compensating products obtained from those goods.
Persons entitled to submit clearance declarations for export of goods for outward processing
459. Only the following persons may, subject section 165(2), submit clearance
declarations to clear goods for export under the outward processing procedure:333
(a) The exporter of the goods, if that exporter is located in the Republic; (b) the agent in the Republic of the exporter, if that exporter is not located in the
Republic; or
(c) a customs broker referred to in section 165(1)(b).
Contents of clearance declarations for export of goods for outward processing 460. An export clearance declaration submitted in terms of Part 2 of Chapter 16 for
the export of goods for outward processing must, in addition to the information required in terms of section 167, state—
(a) that the goods are cleared for export for outward processing;
(b) the item number in a tax levying Act referred to in section 458(a) authorising the clearance of goods of the relevant class or kind for outward processing; (c) details of any permit, permission or authorisation granted in respect of the
goods in terms of any condition prescribed by rule or specified in a tax levying Act referred to in section 458(a) or determined in terms of any other applicable legislation;
(d) the name and street address of the person to whom any such permit, permission or authorisation was granted; and
(e) the kind of compensating products that will be obtained from the outward processing of those goods.
Release not to be limited to owners of goods
461. The customs authority may not limit the release of goods for export for outward
processing to the owner of the goods, but may grant such release to any person complying with the requirements applicable to the outward processing of goods of that class or kind, including any requirements and conditions as may be prescribed by rule, specified in a tax levying Act referred to in section 458(a) or determined in terms of any other applicable legislation.
333. See section 165(1)(a).
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Release of goods for export under outward processing procedure
462. The release of the goods for export under the outward processing procedure is
subject to compliance with any conditions or requirements— (a) referred to in section 458(c);
(b) as may be prescribed by rule; or
(c) as may be determined by the customs authority in terms of section 104 in a specific case.
Part 3
Clearance and release for home use of outward processed compensating products
Clearance of imported goods for home use as outward processed compensating products
463. Imported goods to be cleared for home use as outward processed compensating
products must be cleared in accordance with section 456(b).
Conditions for clearance for home use of outward processed compensating products
464. Goods may be cleared for home use as outward processed compensating
products only if—
(a) those goods were obtained from goods exported from the Republic under the outward processing procedure;
(b) the requirements applicable to the outward processing of the goods from which the compensating products were obtained have been complied with; and
(c) any conditions subject to which those goods were released for export under the outward processing procedure in terms of section 462 have been complied with.
Time limits on clearance for home use of outward processed compensating products
465. (1) Compensating products obtained from goods exported from the Republic
under the outward processing procedure may be cleared for home use as outward processed compensating products only if those compensating products were imported into the Republic —
(a) within a timeframe as may be determined in a tax levying Act referred to in section 458(a) for the class or kind of goods from which those products were obtained or, if two or more tax levying Acts authorise the same class or kind of goods to be cleared for outward processing, within a period determined uniformly in those tax levying Acts for that class or kind of goods; or (b) if no period is in terms of paragraph (a) determined for the relevant class or
kind of goods, within two years from the time of clearance334 for outward
processing of the goods from which those compensating products were obtained.
(2) A timeframe referred to in subsection (1)(a) or (b) is subject to extension or shortening in terms of section 908 or 909.
Importation of outward processed compensating products
466. Goods may be cleared and released for home use as outward processed
compensating products despite the fact that—
(a) only a part of the compensating products obtained from the goods exported for outward processing are imported;
334. See section 173 for time of clearance.
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(b) the compensating products are imported in separate consignments, provided that a separate clearance declaration must be submitted in respect of each consignment; or
(c) the compensating products are imported at a place of entry other than the place of exit from where the goods from which the products were obtained were originally exported.
Persons entitled to submit home use clearance declarations for outward processed compensating products
467. Only the following persons may, subject to section 165(2), submit clearance
declarations to clear goods for home use as outward processed compensating products:335
(a) The person who originally cleared the goods from which the compensating products were obtained for outward processing; or
(b) a customs broker referred to in section 165(1)(b).
Contents of home use clearance declarations for outward processed compensating products
468. (1) A clearance declaration to clear goods for home use as outward processed
compensating products must, in addition to the matters required in terms of section 167, state—
(a) that the goods are cleared for home use as outward processed compensating products;
(b) the reference number and date of the clearance declaration submitted in respect of the export for outward processing of the goods from which those compensating products were obtained;
(c) the street address of the person to whom the compensating products are consigned; and
(d) the date, number and particulars of any permit or other authorisation issued in terms of any legislation in respect of the import of the compensating products, if such a permit or authorisation is a requirement for the import of the products.
(2) The person clearing goods for home use as outward processed compensating products must on request by the customs authority submit a statement stating in relation to the exported goods from which those compensating products were obtained—
(a) whether the exporter or any other person reclaimed any import or domestic tax paid on the goods when exported, and if so—
(i) the kind of tax; and
(ii) the amount of tax reclaimed; and
(b) if any benefit was paid to the exporter or other person under any export incentive scheme applicable to the goods, whether in the form of a tax reduction or relief, an export or other subsidy, a rebate or reward or other benefit.
Part 4
Provisions regulating outward processing procedure
Conversion rates for goods to compensating products
469. (1) The customs authority may in respect of any goods exported under the
outward processing procedure approve a conversion rate that must for purposes of this Chapter be used for determining—
(a) the quantity of compensating products that should in the ordinary course of processing the exported goods for the relevant purpose be obtained from those goods; or
335. See section 165(1)(a).
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(b) the quantity of those exported goods that, in the ordinary course of processing the goods for the relevant purpose, would have been used in order to obtain a specific quantity of compensating products.
(2) Quantities may for purposes of subsection (1) be determined by number, weight, volume or any other measuring unit, as may be appropriate.
(3) In determining a conversion rate, account must be taken of any— (a) evaporation;
(b) drying-out;
(c) any other losses that may result from the nature of the goods used; or (d) any other relevant factors.
Identification measures
470. The customs authority may take such steps as are necessary for the accurate
identification of compensating products obtained from goods exported under the outward processing procedure when those products are cleared for home use as outward processed compensating products, including by—
(a) recording any specific marks or numbers on goods exported under the outward processing procedure before their export;
(b) taking any samples or making use of any illustrations or technical descriptions; and
(c) requesting any documentary evidence concerning the processing abroad of the exported goods.
Part 5 Other matters
Specific grounds for regarding goods exported under outward processing proce- dure to be cleared for outright export336
471. Goods exported under the outward processing procedure must in terms of section
114(1) for tax purposes be regarded to be cleared for outright export337if—
(a) the exported goods are not used for outward processing; (b) ownership of—
(i) the exported goods is transferred after the goods have been exported from the Republic; or
(ii) compensating products obtained from the processing of those exported goods is transferred before import of the products into the Republic; (c) compensating products obtained from the processing of those exported
goods—
(i) are not cleared for home use as outward processed compensating products within the timeframe applicable to the goods in terms of section 465; or
(ii) are cleared but after clearance are damaged, destroyed, lost or unaccounted for and it is not proved in accordance with Part 2 of Chapter 25—
(aa) that the compensating products were damaged, destroyed, lost or unaccounted for due to a recognised cause338; or
(bb) in the case of compensating products lost due to a recognised cause, that the products, after having been lost, have not gone into home use in any way;
(d) imported goods are cleared for home use as outward processed compensating products obtained from those exported goods and the customs authority refuses339to release those imported goods for home use as outward processed
compensating products;
336. See section 114 for general grounds on which goods must or may be regarded to be cleared for outright export.
337. For tax implications if goods are regarded to be cleared for outright export, see section 159. 338. See definition of ‘‘recognised cause’’ in section 1.
339. See sections 99 and 100.
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