On 17 December 2021, the International Trade Administration Commission of South Africa (ITAC) invited comment on an application for the creation of a temporary rebate facility in Schedule No.4 of the Customs and Excise Act, 1964 for the rebate of the full customs duty, which reads “Tall Oil Fatty Acids classifiable in tariff subheading 3823.13, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the products are not available in the Southern African Customs Union (SACU) market.”, on which comment is due by 15 January 2022.
The application was lodged by Ferro Coating Resins (Pty) Ltd who reasoned that:
- In 2020 Industrial Oleo Chemicals (Pty) Ltd closed its Tall Oil Fractionation plant. Therefore, there is no local manufacturer of TOFA. The only option is to import this vital raw material.
- Ferro Coating Resin (FCR) cannot substitute TOFA with any other product to manufacture alkyd resins. The company intends to source all required TOFA from non-European Union countries as these provide more competitive pricing. There is currently a 10% general Customs duty on TOFA imported from countries other than those in the European Union (EU), the Southern African Development Community (SADC), and the European Free Trade Association (EFTA).
- The existing duty no longer serves to protect any local manufacturer but rather to unnecessarily increase the landed cost of this key raw material. The high cost of importing TOFA consequently increases the cost of manufacturing alkyd resins.
- Alkyd resins are a key raw material for the SACU paint and coatings industry.
- FCR remains committed to local manufacturing and investing locally. Importantly, the company remains committed to procuring its raw materials from local manufacturers where possible. It is for this reason that it opted for a temporary rebate rather than a duty removal.