Creation of a temporary rebate provision for the importation of certain air conditioning machines

10 May 2023

The International Trade Administration Commission of South Africa (the “Commission” or “ITAC”) initiated an investigation for the creation of a temporary rebate provision for the importation of certain air conditioning machines having a rated cooling capacity not exceeding 8,8 kilowatts, classifiable under tariff subheading 8415.10.10.

The subject products are commonly used inside buildings to achieve a more comfortable interior environment by removing heat and moisture from the interior of an occupied space to improve the comfort of occupants. Additionally, air conditioning machines are also used to cool and dehumidify rooms filled with heat-producing electronic devices, such as computer servers and power amplifiers. The main users of the subject products include hotels, learning institutions, office parks, and private residents.

Based on the information available at its disposal, the Commission found that there are currently no domestic manufacturers of subject products and as such the current duty of 15% ad valorem customs duty payable on the subject product imposes an unnecessary cost-raising effect on the price at which the product is sold to consumers. However, the Commission further found that there exists potential for the localisation of the subject product in the short-medium term. In this regard, the Commission found that a domestic investor had commenced work to assemble the subject air conditioners in the SACU region.

Comments in support of the application were received from Mr Jean Pool; Beijer Ref (Pty) Ltd; FC Dubbelman & Associates on behalf of Defy Appliances (Pty) Ltd; Turner Shipping (Pty) Ltd on behalf of GMC Air Conditioning cc; and Sir Air (Pty) Ltd. The support centred on the unavailability of the subject products in the SACU region and that the duty imposes an unnecessary cost-raising effect on the end users. Further comments in support of the creation of the rebate provision were received from the Republic of Namibia’s Ministry of Industrialisation and Trade.

The Commission concluded that the duty relief, through the creation of a Schedule 4 temporary rebate provision, will allow for a temporary waiver of the full customs duty arising from the import of the subject product, whilst the customs duty will remain in place and serve as incentive for potential manufacturers to commence with the manufacturing of the subject product in the SACU.

The rebate provision will be made subject to an ITAC permit issued in terms of the guidelines, rules and conditions on the link below:

Guidelines, rules and conditions for temporary rebate provision on air-conditioning machines

As such, the Commission will be able to discontinue issuing a rebate provision as soon as local production commences. The rebate provision will be reviewed following a period of three (3) years (unless otherwise determined by the Commission), principally to monitor whether manufacturing activity has begun.

Please click on the link below to access Report 681:

Report 681