Pro-forma invoices… the subject of much debate and contention. May you use them? Will Customs accept them? Under what circumstances may they be used for clearance purposes?
It is not true that pro-forma invoices are always not acceptable for clearance purposes. One just cannot use them willy-nilly.
I am sure that on occasion you have received samples free of charge, replacement stock for defective goods, or goods supplied for testing purposes. You will likely not be paying the supplier for these goods. Why then is it so important to produce a realistic value for them, if at all.
This question was covered in the Blog “Customs Minimum Requirements on a Commercial Invoices”. In particular, we discussed the concepts of “true reflection” and “transaction value”. We concluded that a realistic value for such goods must be produced as if the goods were subject to a normal commercial transaction.
While such goods may be cleared using a commercial invoice, a pro-forma invoice may also be used for this purpose.
But how will Customs react when a pro-forma invoice is present? Customs does not condone the use of a pro-forma however; it is their reaction to its use which must be noted.
The new Customs legislation defines a pro-forma invoice [Rule 1.1(1) of the Control Act] as… “an abridged, estimated or preliminary invoice issued by a supplier to a buyer in advance of a delivery of goods otherwise than for purposes of payment…”.
The Customs operating procedures guide Customs Officials to stop consignments where pro-forma invoices are present. Such consignments become subject to inspection where-after the nature and value of the goods will be assessed. SARS Customs will look to see whether realistic values were supplied on the invoice, amongst other things.
There is certain information (other than standard information) that must be supplied on the pro-forma invoice. This also applies when goods are supplied free of charge on a commercial invoice.
If produced, this information will help to minimise negative consequences of a lack of understanding during an assessment by Customs Officials. On the invoice you should include:
- A realistic value for the goods.
- The reason for goods supplied at no charge.
- An endorsement that the goods are being supplied at no charge.
When using endorsements indicating no charge items (point c), it should typically read as… “Goods supplied free of charge – value for Customs purposes only”.
A discussion around ‘samples’ in particular will be made in a separate blog later on. Samples, the value, markings, reasons for their use and quantities too can be a bone of contention. These must be understood.
In the new Customs legislation, pro-forma invoices will also be allowed for incomplete or provisional clearances.