Finestra Shower Doors, a division of Casso Cabinets (Pty) Ltd (“applicant” or “Finestra”), applied for an increase in the rate of customs duty on aluminium shower doors, classifiable under tariff subheadings 7610.10 and 7020.00, from 10% ad valorem and free of duty, respectively, to the World Trade Organisation (“WTO”) bound rate of 15% ad valorem, by way of creating an additional 8-digit tariff subheading.
The International Trade Administration Commission (“ITAC” or the “Commission”) considered the application in light of all the information at its disposal. In particular, the Commission considered the following factors into account:
• The subject products are watertight structures used in bathrooms to prevent water from spilling outside the shower or bathtub. The subject products are end-products which are typically sold in building stores and to residential construction companies. The main inputs used in the assembly of the subject products are glass and aluminium extrusions, attracting a general rate of customs duty of 30% ad valorem and 15% ad valorem, respectively.
• There are at least seven domestic assemblers of the subject products, who are predominately small-to-medium size businesses.
• Prior to the High Court Ruling of 27 September 2021, SARS classified the subject products under tariff subheading 7610.10, which attracted a general rate of customs duty of 10% ad valorem. The duty provided tariff protection to the domestic industry. However, following the High Court ruling, the subject products are now classified under tariff subheading 7020.00, which is free of duty and the WTO bound rate for the subject products is 15% ad valorem.
• The applicant is currently operating at significantly low levels of capacity utilisation.
• This industry is viewed as strategic in terms of investment and employment as the assembly process of the subject products is very labour intensive.
• In terms of investment, the applicant made significant investment in machinery for the manufacturing of shower enclosures.
• The domestic industry assembling the subject products is experiencing price disadvantages in relation to similar imported products, resulting in the possible erosion of the market share in the SACU. In terms of the reciprocal commitments submitted, the applicant committed to increase capital expenditure for an additional production line used for the manufacture of products that are currently not manufactured. The applicant further committed to retain employment and not retrench any employees in the three years following tariff support. Additionally, the applicant committed to train additional learners to assist with skills development.
The Commission concluded that the tariff support should enable the industry manufacturing the shower enclosures, shower doors and shower panels to utilise its existing under-utilised production capacity, achieve economies of scale, resulting in increased volumes with a concomitant reduction in the marginal cost of production.
In the light of the foregoing, the Commission recommended that the rate of customs duty on shower enclosures, shower doors and panels, classifiable under tariff subheading 7020.00, be increased from free of duty to the WTO bound rate of 15% ad valorem, by way of creating additional 8-digit tariff subheading for “Shower enclosures, including shower doors and shower panels as provided for in Additional Note 3 to Chapter 70”.
“Additional Note:
3. Shower enclosures of tariff subheading 7020.00.10 are classified in this subheading whether or not framed, trimmed, fitted with hinges, door handles and the like.”
The Commission further recommended that the duty be reviewed to determine its impact on the industry value chain after three years from the date of implementation, or such other period as decided by the Commission.
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ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA