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SARS scores victories in fight against illegal clothing and textiles imports

Published: 16th Feb 2018

Pretoria, 18 December 2017 - The local clothing and textile industry has suffered tremendously as a result of the illegal import of counterfeit goods. More recently the industry has also borne the brunt of the import of second-hand clothing that becomes available for resale in the market.

Over the past two days (17 and 18 December 2017), Customs officials at OR Tambo International Airport (ORTIA) intercepted four consignments of suspected counterfeit goods with a combined protected value of R20.5 million. These included 2600 Nike sneakers which came from Hong Kong, 7700 Nike sneakers and 100 Louis Vuitton bags, 2000 kids Nike sneakers and 470 Gucci ladies dresses and 1600 ladies Polo and Chanel branded shoes all from China.

In another recent case, a 24-foot container filled with suspected counterfeit shoes, bags, wallets and other goods was detained by SARS Customs officials at the City Deep depot in Gauteng on Friday 8 December 2017. The goods, with a protected value of R20.7-million, were declared as furniture.

This was one of 561 busts that SARS Customs officials have carried out since a special “increased inspections” operation started at the City Deep depot in August this year. The operation focuses specifically on prohibited and restricted goods, such as counterfeit clothing and shoes.

So far, 132 busts have related to clothing and textile infringements, with these busts bringing in over R10.5-million of revenue since August.

The bust on 8 March was the second biggest suspected counterfeit clothing and textile bust since the operation began. The biggest bust took place in August when counterfeit branded goods estimated to be worth R23 000 000 were confiscated.

The importation of counterfeit clothing and textiles and various other infringements (including under-declaration and misclassification, etc) is a massive problem in South Africa. As a result, Customs is also focusing on plugging the leaks at non-designated border posts. Three weeks ago there was a bust of suspected counterfeit clothing and footwear, with a street value of about R1.2-million, at Kosi Bay.

This border post in particular was targeted for being a hotspot of smuggling due to the lack of controls. Every day since the start of the special three-week operation at non-designated border posts, Customs has detained suspected illicit or illegally smuggled goods.

“Once we have assessed the risk at these border posts, we will focus on strategy and capacity planning at non-designated ports going forward,” said Patrick Moeng, Executive: Customs Investigations. Customs currently only has a presence at commercial border posts, while non-designated ports only have a couple of representatives from other government agencies, such as SAPS and Immigration but no permanent Customs presence.

SARS Customs has a mandate to collect revenue and facilitate trade, but also to protect the local economy. That makes the issue of clothing and textiles compliance a priority for SARS and features strongly in our five-year Compliance Programme. There have also been a number of meetings with the SA Clothing and Textiles Workers Union (SACTWU) this year to explore ways in which we can improve the fight against illegally imported clothing, textiles and footwear.

These illegal imports obviously have a huge impact on the local clothing and textile industry. Many factories have closed down in the past few years due to the proliferation of cheap legitimate imports, as well as the illegal importation of second-hand clothes and counterfeit clothes and shoes, particularly from Asia.

SARS has introduced a number of measures to address clothing and textile infringements this year. One such measure is the introduction of new risk rules which have led to an increase in the number of stops and inspections of clothing and textile goods.

“We are trying to be as responsive as possible to the industry’s plight,” said Mr Moeng. “We are currently working on numerous clothing and textile cases worth millions of rands.”

One such case was the detention of suspected counterfeit clothing and shoes at the Kopfontein border post with Botswana in September this year. Well-known brand name clothes and shoes eg. Nike, Adidas, Gucci etc, were on their way from China via Zambia to Swaziland. They were stopped by SA Customs and had a declared value of only R11 727.

Samples of the goods were sent to the brand holders who recently came back to Customs to say all the goods were counterfeit with an estimated total value of R26 607 000. The case will now follow a legal process which, once finalised, would probably end with the destruction of the goods.

The importation of second-hand clothing has become a growing trend over the past few years – supposedly as a donation or in transit to neighbouring countries. However, these items end up being resold in various retail stores at reduced prices, thereby making it difficult for compliant traders and importers - who pay the correct taxes and customs duties - to compete, said Mr Moeng.

Legitimate donations are allowed as the charity organisations engage with Customs beforehand and obtain applicable permits. However, the majority of these items are imported through the Durban port, then diverted to neighbouring SACU countries and ultimately smuggled into South Africa. This is done to avoid paying the correct duties and taxes. Efforts are underway to work with neighbouring countries to clamp down on such schemes and they are beginning to bear fruit.

About a month ago, Customs destroyed goods that arrived in 45 super link trucks at the Midrand dump site. The goods were thrown into a deep hole and sprayed with sulphuric acid for easy destruction. Durban is about to complete their disposal process.

Since Customs has increased its risk management of clothing and textiles throughout the value chain, its efforts are bearing fruit.

A comparison between 2016 and 2017 shows what progress has been made in terms of busts:

  • 65 185 items of counterfeit clothing valued at R 72 601 172 (2016) compared to 73 969 items valued at R 97 168 048 (2017);

  • 65 174 items of counterfeit shoes (2016) compared to 74 480 items this year.

The Customs Tactical Intervention Unit (TIU), which conducts specialised Enforcement operations, also recorded an increase in clothing and textile between April and September 2017 compared to the same period in 2016. In total 158 888 items valued at R5 850 234 were confiscated in 2016 compared to 2 106 836 items valued at R62 818 893 that were confiscated this year.

“This is an attempt by SARS to ensure that South Africa does not become a dumpsite for second-hand goods that do not follow legal requirements,” said Mr Moeng. “Customs will always take action against smuggling of illegal second-hand clothes as it affects our local clothing industry immensely.”  

©2017 S&V Publications
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