10/1/2015
Welcome to the 201516 CCS (Certified Customs Specialist) Course!
Published on CSCB National Office (http://cscb.ca) Home > 201516 CCS Home
Welcome to the 201516 CCS (Certified Customs Specialist) Course! Bookmark this The CCS course is a oneyear online course. Once you have successfully completed this course and the final examination, you may call yourself a CCS (Certified Customs Specialist). For more information on maintaining the CCS designation, please refer to Maintenance of CCS designation.
The CCS Online Course The CCS online course consists of four parts, broken down into modules, lessons and topics, as follows: Part Modules Lessons Topics It includes interactive exercises, links to reference materials, and knowledge selfchecks and quizzes that allow for better understanding of the material. To access the course materials, please click on a Part from the Part menu above or links below. CCS Course Part 1 CCS Course Part 2 CCS Course Part 3 CCS Course Part 4
Bookmarks If you wish to bookmark a page, click on the Bookmark this link, shown at the bottom of each http://cscb.ca/print/book/export/html/183223
1/3
10/1/2015
Welcome to the 201516 CCS (Certified Customs Specialist) Course!
page. You may retrieve your bookmarks through the Bookmarks section of My Profile in your CSCB account.
Mobilefriendly The CCS online course is now available for viewing on any mobile device.
Print Version You have a variety of options with respect to printing. If you wish to print the entire part, please click on the Printerfriendly version link at the bottom of the Introduction to Part page. If you wish to print a module, please click on the Printerfriendly version link at the bottom of the Module Overview page. If you wish to print one lesson, please click on the Printerfriendly version link at the bottom of the Lesson Overview page. We recommend that you print a module at a time to ensure you have the most uptodate content.
Part Tests Part tests and results will be available in the Student Services tab in your CSCB account. There are four part tests in the CCS course. The result of each test is worth 5% of your final mark. Part 1 Test will be available January 14, 2016, due January 28, 2016 at 2 p.m. EST Part 2 Test will be available March 24, 2016, due April 7, 2016 at 2 p.m. EDT Part 3 Test will be available June 2, 2016, due June 16, 2016 at 2 p.m. EDT Part 4 Test will be available July 28, 2016, due August 11, 2016 at 2 p.m. EDT
Final Examination The final examination will take place between 9:30 a.m. and 12 noon on Saturday, September 24, 2016. You will be provided with the location of the exam two weeks prior to the exam date.
Student Forum The discussion forum is available in the Student Services tab in your CSCB account, displaying the most recent discussions in the Student Discussion Forum menu.
Questions/Comments Your feedback is very important to us, so please don't hesitate to contact us at
[email protected]. We wish you all the best in your studies! http://cscb.ca/print/book/export/html/183223
2/3
10/1/2015
Welcome to the 201516 CCS (Certified Customs Specialist) Course!
Source URL (modified on 20150930 15:25): http://cscb.ca/repository/welcome201516ccscertifiedcustoms specialistcourse
http://cscb.ca/print/book/export/html/183223
3/3
10/1/2015
201516 CCS Course Part 2
Published on CSCB National Office (http://cscb.ca) Home > Part 2
201516 CCS Course Part 2 Bookmark this
Introduction to Part 2 Part 2 of the CCS course includes the following six modules: 8. Invoice Requriements; Advance Commercial Information; Reporting of Goods 9. Classification of Goods 10. Determining Tariff Treatments 11. The North American Free Trade Agreement 12. Valuation and Calculation of Duty 13. Calculating Taxes Payable It is recommended that you view these modules sequentially. Selfchecks and quizzes are included. On March 24, 2016, you will be provided with information on how to access the final test on the contents of Part 2, which must be completed by April 7, 2016. Responses must be submitted by 2 p.m. EDT (for example, 11 a.m. PDT in Vancouver and 3 p.m. ADT in Halifax). Once you access the test, please print a copy for your records. You will need a copy when it comes time to study for the final examination. The result of this test is worth 5% of your final mark.
Module 8: Invoice Requirements; Advance Commercial Information; Conveyance and Cargo Reporting Bookmark this This module provides information on invoice requirements for imported goods, the requirement to provide Advance Commercial Information about imported goods, and the legislative requirement for reporting conveyances and cargo in all modes of transportation. Penalties for failure to report are also included. This module also introduces bills of lading and letters of credit.
Module Objective When you have completed this module, you will be familiar with the basic document used to list imported goods, the process by which Advance Commercial Information is provided to CBSA, and how conveyance and cargo are reported to CBSA. You will also be aware of penalties that can be assessed for failing to report imported goods and for incorrect reporting of goods.
Lesson 1: Invoice Requirements Bookmark this In this lesson, you will learn about the invoice requirements for imported goods.
Rationale In your job as a CCS, you may be required to complete an invoice for goods entering Canada.
Lesson Objective At the end of Lesson 1, you will be able to recognize and meet the invoice requirements for goods entering Canada.
Topic 1: Invoice Requirements Bookmark this For all goods entering Canada, CBSA requires various pieces of information. For commercial goods, this information is often included on a commercial invoice, it may also be listed on a Canada Customs Invoice (CCI), or both. You may wish to print a copy of the CCI, as we will later describe each of its http://cscb.ca/print/book/export/html/182530
1/87
10/1/2015
201516 CCS Course Part 2
fields. Information on an invoice can be used by CBSA to determine the risk of certain shipments. For example, the country of origin may be known as a source of illicit drugs and the importer of the goods may not be known to CBSA. CBSA may then identify the shipment as high risk and select the goods for examination. Invoice requirements can be met by providing CBSA with: a commercial invoice, prepared by any means (handwritten, typed, or computer generated), and containing all required data; a commercial invoice, prepared by any means, and indicating the buyer and seller of the goods, the price paid or payable for the goods, and an accurate description including quantity of the goods contained in the shipment, plus a Canada Customs Invoice (CCI, Form CI1), containing the balance of information required; or a fully completed Canada Customs Invoice (CCI). The value for duty of goods is usually based on the information provided on the invoices that correspond to the imported goods. The exporter, importer, owner of the goods, or a customs broker may complete a CCI.
Topic 1: Invoice Requirements (cont. 2) Bookmark this The following includes a description of each field on the CCI. Roll over each field to see a description. You may want to print a CCI to follow along.
http://cscb.ca/print/book/export/html/182530
2/87
10/1/2015
201516 CCS Course Part 2
Topic 1: Invoice Requirements (cont. 3) Bookmark this
Field 1: Vendor (name and address) This field may include the seller, sold by, remit to, consignor, or shipper. Indicates the name and address of: a) the person selling the goods to the purchaser, or b) the person consigning the goods to Canada.
Field 2: Date of Direct Shipment to Canada Shows the date on which the goods began their continuous journey to Canada. This is the date upon which the exchange rate for foreign currency conversion is based. http://cscb.ca/print/book/export/html/182530
3/87
10/1/2015
201516 CCS Course Part 2
Field 3: Other References May be used to record other useful information such as a commercial invoice number or purchase order number.
Field 4: Consignee Indicates the name and address of the party in Canada to whom the goods are shipped. Note that this party may or may not be the actual importer of the goods.
Field 5: Purchaser's Name and Address This is the party to whom the goods are sold by the vendor. The party shown in this field is the importer. They may also be identified as the buyer.
Field 6: Country of Transhipment This is the country through which the goods were shipped in transit to Canada under customs control. If transhipment has not occurred, for example, if goods are shipped directly to Canada from the United States, this field is left blank.
Field 7: Country of Origin of Goods For customs purposes, the country of origin of the goods is the country where the goods are grown, produced or manufactured. A criterion for this field is set out in the Customs Tariff Act and through quantitative restrictions. Manufactured goods must have been significantly transformed in the country specified as the country of origin into its form ready for export to Canada.
Topic 1: Invoice Requirements (cont. 4) Bookmark this
Field 8: Transportation Indicate the mode of transportation used, for example, vessel, rail, etc. and the place from which the goods began their continuous journey to Canada.
Field 9: Conditions of Sale and Terms of Payment Describe the terms and the conditions agreed upon by the vendor and the purchaser. For example, sale, lease, or 3% net 10 days. 3% net 10 days means that the purchaser is entitled to a 3% discount if payment is made within 10 days.
Field 10: Currency of Settlement Indicate the currency in which the vendor's demand for payment is made. For goods that are exported from the United States, it would likely say USD. Careful attention must be paid to this field, since in cases where the currency is not Canadian, it must be converted to Canadian dollars.
Field 11: Number of Packages Indicate the number of packages. Only a number is listed in this field, for example, 1, 3, 30, etc.
Field 12: Specification of Commodities This field must show the kind of packages, marks and numbers, general description, and characteristics of the goods. For example: Kinds of packages could be skids, cartons, barrels, or boxes. Marks and numbers could be serial numbers or part numbers. General description and characteristics could be fresh strawberries, number 1 grade; or men’s 100 % wool suits, sizes 40 and 42. If the goods are not new, one of the following might be indicated: not prime quality goods, remnants, job lots, closeouts, discontinued, obsolete, or used.
Topic 1: Invoice Requirements (cont. 5) Bookmark this
Field 13: Quantity The quantity of each item included in the description field must be indicated in the appropriate unit of measure. For example, if the goods were 100 pairs of shoes, the quantity would be 100 and if you had 1,000 barrels of oil, the quantity would be 1,000.
Field 14: Unit Price This field shows a value in the currency of settlement for each item specified in the description. For shoes, you would show the price per pair and for oil you would show the price per barrel. If the currency in field 10 indicates USD, the unit price is in US dollars.
Field 15: Total http://cscb.ca/print/book/export/html/182530
4/87
10/1/2015
201516 CCS Course Part 2
Indicate the price paid or payable in the currency of settlement for the number of items recorded in the quantity field. This is the result of multiplying the quantity in field 13 by the unit price in field 14.
Field 16: Total Weight Show both net and gross weights. Net weight is the weight of the goods excluding the packaging or the container.
Field 17: Invoice Total This is the total price paid or payable for all goods listed on the invoice and on any continuation sheet(s) if used. If the goods were not sold, N/A (not applicable) can be shown; however, fields 10 and 15 must be completed so that duty and taxes can be calculated.
Field 18: If any of fields 1 to 17 are included on an attached commercial invoice, check this box Commercial Invoice No. This field is checked if any of fields 1 to 17 are included on an attached commercial invoice. If so, the commercial invoice number must be noted.
Field 19: Exporter's Name and Address (if other than vendor) Indicate the name and address of the person or organization shipping the goods, if they are not the vendor.
Field 20: Originator Where the invoice is completed on behalf of the vendor, the name and address of the company completing the invoice must be indicated. The name of the person completing the invoice may also be indicated. Invoices completed on behalf of individuals must indicate the name and address of the person completing the invoice. This field may be left blank if this information is provided elsewhere on the invoice.
Topic 1: Invoice Requirements (cont. 6) Bookmark this
Field 21: Agency Ruling Provide the number and date of any CBSA ruling applicable to the goods being imported.
Field 22 Field 22 is checked when there are no items listed in fields 23, 24, or 25.
Fields 23 25 These fields can be confusing and careful attention must be paid to the wording of each. When fields 23 25 are completed, the currency must be noted. Field 23 of the CCI reads: “If included in field 17 indicate amount:” The key word in field 23 is included. Field 23(i) is completed when there are transportation charges, expenses and insurance from the place of direct shipment to Canada and these charges have been included in the amount shown in field 17. Field 23(ii) is completed when there are costs for construction, erection and assembly that are incurred after importation into Canada and these costs have been included in the amount shown in field 17. Field 23(iii) is completed when there is export packing and the packing charges have been included in the amount shown in field 17. If there are figures quoted in fields 23(i) or 23(ii), they may be deducted from the invoice total shown in field 17, since these charges are not dutiable. However, export packing, field 23(iii), is a dutiable item and if the cost of export packing has been included in field 17, it may not be deducted.
Topic 1: Invoice Requirements (cont. 7) Bookmark this Field 24 of the Canada Customs Invoice reads: “If not included in field 17 indicate amount:" The key words in field 24 are not included. Field 24(i) is completed when there are transportation charges, expenses and insurance, to the place of direct shipment to Canada and these charges have not been included in the amount shown in field 17. http://cscb.ca/print/book/export/html/182530
5/87
10/1/2015
201516 CCS Course Part 2
Field 24(ii) is completed when there are charges for amounts for commissions, other than buying commissions, and these charges have not been included in the amount shown in field 17. Field 24(iii) is completed when there is export packing and the packing charges have not been included in the amount shown in field 17. If there are figures quoted in fields 24(i), 24(ii), or 24(iii), they must be added to the invoice total shown in field 17, since each item listed in field 24 is dutiable. Field 25 of the Canada Customs Invoice reads: "Check (if applicable): (i) Royalty payments or subsequent proceeds are paid or payable by the purchaser, or (ii) The purchaser has supplied goods or services for use in the production of these goods". The key words in field 25(i) are paid or payable by the purchaser. These are dutiable charges. The key words in field 25(ii) are the purchaser has supplied. This field allows CBSA to see whether or not the purchaser has been responsible for any goods and services to do with the production of the goods being imported. These too are dutiable charges.
Lesson 1 Summary: Invoice Requirements Bookmark this In this lesson you learned about the invoice requirements for imported goods and how to complete a Canada Customs Invoice. Key points in this lesson are: CBSA requires information on all goods entering Canada; Information can be provided in more than one way; The value for duty of imported goods is generally based on the information provided on the invoices for those imported goods; and If a CCI is used, careful attention must be paid to fields 23 and 24.
Lesson 2: Advance Commercial Information Bookmark this In Lesson 2, you will learn about the requirements for providing Advance Commercial Information. The timeframes for providing this information will depend on the mode of transportation.
Rationale It is very important that CBSA is aware of all goods entering Canada. Significant penalties can apply advance information is not provided, and, as a CCS, you will need to be aware of the obligation to provide advance information to CBSA.
Lesson Objective You will be able to advise carriers, importers, and exporters, of the requirement to provide, and the timeframes in which to provide, advance information to CBSA.
Topic 1: Advance Commercial Information Bookmark this Advance Commercial Information (ACI) is a reporting process whereby mandatory conveyance and cargo data is transmitted electronically to CBSA prior to the arrival of goods. Conveyance data is information about the truck, ship, plane or rail that is carrying the goods and cargo data is information about the goods they are carrying. Having information about the goods before they reach the border, and, in some cases, even before they are loaded on to the conveyance, helps protect Canadians from health, safety, security, terrorist and contraband threats. ACI allows CBSA to make informed decisions about whether to examine shipments at the first point of arrival or in the foreign port before they are shipped. The implementation of ACI is a multiphase project. The first mode of transportation to implement ACI was marine in April 2004. Air followed in June of 2006. The final phase of the project is eManifest and it was implemented on May 6, 2015. This phase requires the electronic transmission of cargo and conveyance information for all highway and rail shipments. Full implementation of the third phase, which includes the issuing of penalties for non compliance, will be on January 10, 2016.
Topic 1: Advance Commercial Information (cont. 2) Bookmark this Marine ACI, Conveyance Reporting All vessels carrying commercial goods, whether those goods are being imported, travelling intransit or remaining on board, and that are loaded in a country other than Canada and arriving at a Canadian port, must transmit electronic conveyance and cargo reports in advance of the arrival of the goods. Conveyance data is based on the information from the A6, the paper general declaration, and includes details such as vessel identification, its capabilities, trade chain partners, and scheduling and routing information. The carrier must send the conveyance data to CBSA. http://cscb.ca/print/book/export/html/182530
6/87
10/1/2015
201516 CCS Course Part 2
Conveyance data time limits are impacted by where the loading of the vessel occurs. We will look at each separately.
Topic 1: Advance Commercial Information (cont. 3) Bookmark this Reporting Timeframes for Conveyances Loaded in a Country Other than the United States If all goods on board the vessel are within cargo containers, the conveyance data must be transmitted electronically to CBSA at least 96 hours before the arrival of the vessel at the first Canadian port of arrival. If all goods on board the vessel are bulk cargo, the conveyance data must be transmitted electronically to CBSA at least 24 hours before the arrival of the vessel at the first Canadian port of arrival. If all goods on board the vessel are nonexempt break bulk cargo, the conveyance data must be transmitted electronically to CBSA at least 96 hours before the arrival of the vessel at the first Canadian port of arrival. If all goods on board the vessel are exempt break bulk cargo, the conveyance data must be transmitted electronically to CBSA at least 24 hours before the arrival of the vessel at the first Canadian port of arrival. If the vessel is laden solely with empty cargo containers that are in international shuttle service, the conveyance data must be transmitted electronically to CBSA at least 96 hours before the arrival of the vessel at the first Canadian port of arrival. If the goods on board the vessel are a combination of goods described above, conveyance data must be transmitted within the most advanced (longest) time frame required. The conveyance report must indicate if a supplementary cargo report will follow or not.
Topic 1: Advance Commercial Information (cont. 4) Bookmark this Reporting Timeframe for Conveyances Loaded in the United States Conveyance data must be transmitted electronically to CBSA at least 24 hours before the arrival of the vessel at the first Canadian port of arrival. The conveyance data shall be transmitted at the time of the vessel's departure from the U.S. Port if the length of the voyage to Canada is less than the required reporting timeframe as specified above. Reporting Timeframes for Conveyances Loaded in both a Country Other than the United States and the United States Conveyance data must be transmitted electronically to CBSA as per the timeframes specified for conveyances loaded in a country other than the United States. In the case of unscheduled stops in the U.S., an updated conveyance report including any changes, such as the U.S. Port of call/ETA at the Canada port of arrival, must be transmitted electronically to CBSA as soon as the carrier is aware of the changes.
Topic 1: Advance Commercial Information (cont. 5) Bookmark this Marine ACI, Cargo Reporting All cargo descriptions must be clear and accurate. Descriptions such as “Freight of All Kinds” (FAK), “Shippers Load and Count”, and “Said to Contain” are not acceptable. The description of the goods should be a plain language description that is sufficient to identify them for customs purposes. The carrier/freight forwarder must identify any dangerous goods using the UN Dangerous Goods code or the Materials Hazardous only in Bulk (MHB) code when applicable. MHB is only applicable in the marine mode. Reporting Timeframes for Cargo Loaded in the United States Cargo data must be transmitted electronically to CBSA at least 24 hours before the arrival of the vessel at the first Canadian port of arrival regardless of the type of cargo. The cargo data shall be transmitted at the time of the vessel's departure from the U.S. port if the length of the voyage to Canada is less than the required reporting timeframe.
Topic 1: Advance Commercial Information (cont. 6) Bookmark this Reporting Timeframes for Empty Cargo Containers Loaded in a Country Other than the United States Must be transmitted to CBSA electronically at least 96 hours prior to the arrival of the vessel at the first Canada port of arrival. If the voyage is less than 96 hours, then the report is required before departure from the foreign port. Reporting Timeframes for Empty Cargo Containers Loaded in the United States Must be transmitted electronically to CBSA at least 4 hours before the arrival of the vessel at the first Canadian port of arrival. If the length of the voyage is less than 4 hours, the transmission is required at the time of departure.
Topic 1: Advance Commercial Information (cont. 7) Bookmark this For Cargo Loaded in a Country Other than the United States http://cscb.ca/print/book/export/html/182530
7/87
10/1/2015
201516 CCS Course Part 2
For containerized cargo, the cargo data must be transmitted electronically to CBSA at least 24 hours prior to the loading of the goods on board the vessel. For bulk goods, the cargo data must be transmitted electronically to CBSA at least 24 hours prior to the arrival of the vessel at the first Canadian port of arrival. For nonexempt breakbulk cargo, the cargo data must be transmitted electronically to CBSA at least 24 hours prior to the loading of the goods on board the vessel. For exempt breakbulk cargo, the cargo data must be transmitted electronically to CBSA at least 24 hours prior to the arrival of the vessel at the first Canadian port of arrival. The cargo data shall be transmitted before the vessel's departure from a foreign port if the length of the voyage is less than the required reporting timeframe as specified above.
Topic 1: Advance Commercial Information (cont. 8) Bookmark this Electronic Messaging from CBSA There are three types of response messages that clients can expect to receive from CBSA when transmitting marine cargo/conveyance reports. 1. Positive Response Messages These messages are issued in the form of acknowledgements. There are two types of acknowledgements: Functional and Application. Functional Acknowledgement: An acknowledgement that notifies the sender that CBSA has received the message and the message was syntactically correct. This acknowledgement is generated before the validation is performed. Application Acknowledgement: An acknowledgement that notifies the sender that CBSA has received and successfully validated the data and found no error. Validation occurs when the transmitted data has been validated for specific edits by CBSA systems and has passed those edits.
Topic 1: Advance Commercial Information (cont. 9) Bookmark this 2. Error and Match Response Messages Error messages are issued in the form of Reject Notices and can be either Syntax or Validation. A specific error will cause only the specific message within which it occurred to be rejected. When a successful link is made between a supplementary report and a cargo report, a pair of “Match” notices is generated. For each set of notices, one notice is sent to the originator of the supplementary cargo report and the other notice is sent to the originator of the primary cargo report. The A6 is considered the primary cargo report but in cases where there is not enough information included, a supplementary cargo report must also be issued. 3. Risk Assessment Notices These notices may be issued when CBSA requires the client to provide more information regarding the cargo or to provide the client with specific instructions regarding the loading/unloading of the cargo. Risk Assessment notices may also include free text remarks providing external clients with additional information and instructions. CBSA systems will send out “Do Not Load”, “Hold”, “Do Not Unload” and “Cancellation” messages back to the sender and relevant parties. These messages will reference the CCN, and/or container numbers where applicable.
Topic 1: Advance Commercial Information (cont. 10) Bookmark this Do Not Load Messages This type of message may be transmitted to the client prior to the loading of the cargo on the vessel. If a Do Not Load message is received, the cargo is not authorized to be loaded on the vessel. **NOTE**: Do Not Load Messages will not be issued for marine cargo loaded in the United States as they are not applicable. Possible Reasons for a Do Not Load Message There are several reasons that a “Do Not Load” message could be issued by CBSA. 1. CBSA requires information pertaining to the cargo such as description of goods, ultimate consignee or shipper. 2. CBSA requires the carrier to await instructions from the foreign Customs administration. 3. CBSA advises that the goods are not to be loaded on any vessel bound for Canada. If a Do Not Load Message is issued, the carrier must not load the cargo until authorization is granted by CBSA in the form of a “Cancellation” message for the “Do Not Load”. In the case of an A6A cargo report, if a “Cancellation” message is to be issued, the carrier can expect to receive it prior to the actual date and time of loading.
Topic 1: Advance Commercial Information (cont.11) http://cscb.ca/print/book/export/html/182530
8/87
10/1/2015
201516 CCS Course Part 2
Bookmark this Hold Messages This type of message may be transmitted to the client subsequent to the loading of the cargo on the vessel in the foreign port. A “Hold” message may be issued subsequent to the lading of the cargo on the vessel in the foreign port where: 1. CBSA requires information pertaining to the cargo such as delivery address or the notify party. 2. CBSA may require an examination of the cargo upon arrival. In both cases the cargo may be unloaded from the vessel in Canada but is not authorized to move until permission is granted by CBSA in the form of a “Hold Cancellation” message. Do Not Unload Messages This type of message may be transmitted to the client subsequent to the loading of the cargo on the vessel. If a “Do Not Unload” message is received, the cargo is not authorized to be unloaded from the vessel in Canada. Cancellation Message This type of message may be transmitted to the client any time subsequent to the issuance of ”Do Not Load”, “Hold” and “Do Not Unload” messages in order to cancel these instructions. The EDI System receives and processes transmitted cargo, cargo and conveyance information 24 hours a day, 7 days a week.
Topic 1: Advance Commercial Information (cont. 12) Bookmark this CBSA's EDI System will, under normal conditions, endeavour to send acknowledgement and error messages back through the respective method of transmission from the client within 15 minutes from the receipt of the transmitted message. CBSA will endeavour to send the EDI response message for Risk Assessment Notices prior to the estimated time of arrival to identify a “Hold” on a shipment, and within 24 hours of the estimated date and time of loading to identify a “Do Not Load” for marine cargo loaded in a country other than the U.S. In the case of a “Do Not Load” message not sent prior to the cargo being loaded, the cargo would be held upon arrival in Canada. In the case of a “Hold” message not sent prior to the estimated time of arrival, the cargo would be considered authorized to move unless a significant risk was associated with the cargo.
Topic 1: Advance Commercial Information (cont.13) Bookmark this The Bay Plan The bay plan, or stowage plan, is a document used by parties in the marine transportation industry to identify all the containers and their locations on a container vessel. This information is used to plan the loading and discharge of the containers and cargo for each port. Providing electronic bay plans will aid CBSA in identifying unreported containers, and/or containers which pose significant risk to national security. Vessel Operating Carriers are required to include the Conveyance Reference Number (CRN) in their bay plan submissions. The CRN is required to ensure that the vessel bay plan, conveyance report (A6), and related cargo documents are linked correctly. CBSA requires Vessel Operating Carriers to electronically submit the entire vessel bay plan within 48 hours of departure from the vessel's last foreign port of call, prior to sailing to Canada. When the voyage is less than 48 hours in duration, bay plans are required to be submitted to CBSA prior to the vessel's arrival at the first Canadian port. Beginning November 6, 2015 and until May 6, 2016, marine carriers who do not comply with Bay Plan requirements may be issued zerorated penalties (nonmonetary) under CBSA's Administrative Monetary Penalty System (AMPS). After May 6, 2016, marine carriers who do not comply with Bay Plan requirements may be issued monetary AMPS penalties.
Topic 1: Advance Commercial Information (cont. 14) Bookmark this Air ACI, Conveyance and Cargo Data Air carriers and freight forwarders are required to transmit conveyance, cargo, and supplementary data to CBSA at least 4 hours prior to its arrival at the first point of arrival in Canada. If the duration of the flight is less than four hours, conveyance and cargo data must be sent to CBSA before the time of departure. An estimated time of arrival, in Eastern Time Zone (EST), must be provided. Shipments travelling by air from foreign countries may only enter Canada at authorized international airports. Air carriers who are not bonded carriers must report their goods at the first point of arrival (FPOA). The FPOA is the first airport in Canada where the aircraft will land. This is regardless of the reason for landing, including a stop for fuel, crew change, or diversion. The transporting carrier will be required to transmit a change to the Air Conveyance Report to amend the FPOA and/or Estimated Date and Time of Arrival to CBSA if there are any unscheduled reroutes, changes to the ETA greater than 30 minutes, or changes to the aircraft's itinerary. http://cscb.ca/print/book/export/html/182530
9/87
10/1/2015
201516 CCS Course Part 2
Topic 1: Advance Commercial Information (cont.15) Bookmark this Highway ACI, Conveyance and Cargo Data Cargo and conveyance data must be received and validated by the CBSA no later than one hour before arrival at the FPOA. Cargo and conveyance data may be presented up to 30 days before arrival. A change to the conveyance report must be made if the estimated time of arrival (ETA) is 30 minutes (or more) earlier, or if the ETA is 8 hours (or more) than what was stated on the original conveyance report. Shipments that qualify for CSA (Customs SelfAssessment) clearance are exempt from the requirement for to provide ACI. However, where there is a mixed load of both CSA exempt and CSA nonexempt cargo, CSA clients will be required to send conveyance data and cargo data for the nonexempt cargo. Transition Period Beginning May 6, 2015 and ending July 10, 2015, CBSA will provide carriers with a period of transition during which penalties for noncompliance with eManifest regulations will not be issued. From July 20, 2015 to January 10, 2016, carriers who do not comply with eManifest requirements will be issued zerorated penalties (nonmonetary) under the CBSA's Administrative Monetary Penalty System (AMPS) The grace period will come to a close January 10, 2016 and carriers who do not comply with eManifest may be issued monetary AMPS penalties.
Topic 1: Advance Commercial Information (cont.16) Bookmark this Rail ACI, Conveyance and Cargo Data Rail carriers transporting goods into Canada are required to transmit cargo and conveyance data electronically to the CBSA prior to arrival. The cargo and conveyance data must be received and validated by the CBSA a minimum of two hours before the conveyance arrives at the border. From July 10, 2015, to January 10, 2016, carriers who do not comply with eManifest requirements may be issued zerorated penalties (nonmonetary) under the CBSA's Administrative Monetary Penalty System (AMPS). And, beginning January 11, 2016, carriers who do not comply with eManifest requirements may be issued monetary AMPS penalties.
Lesson 2 Summary: Advance Commercial Information Bookmark this In this lesson you learned about the requirement to provide Advance Commercial Information to CBSA. Key points covered in this lesson include: ACI allows CBSA to make informed decisions about whether to examine goods; all modes of transportation must transmit conveyance and cargo data within specified time frames; for goods shipped by sea, the type of goods and place of lading will determine the time frames for providing ACI; CBSA will provide various responses messages to marine ACI reports; CBSA’s EDI System receives and processes transmitted cargo, cargo and conveyance information 24 hours a day, 7 days a week; a bay or stowage plan is used by marine carriers to identify the location of containers on the vessel; goods travelling by air from foreign countries may only enter Canada at authorized international airports; for air carriers, the First Point of Arrival (FPOA) is the first airport in Canada, regardless of the reason for landing; and shipments that qualify for CSA (Customs SelfAssessment) clearance are exempt from the requirement for advance commercial information of cargo and conveyance. See if you can answer the following questions about Advance Commercial Information.
Lesson 3: Conveyance and Cargo Reporting Bookmark this In this lesson, you will learn about the requirement to report all conveyance and imported goods to CBSA upon their arrival. The manner of reporting will vary, depending on the mode of transportation.
Rationale It is very important that CBSA is aware of all conveyances and goods entering Canada. Significant penalties can apply for nonreport. As a CCS, you will need to be aware of the obligation to report goods.
Lesson Objective You will be able to advise carriers, importers, and exporters, of the requirement to report goods, and the proper manner in which converyances and cargo are reported.
http://cscb.ca/print/book/export/html/182530
10/87
10/1/2015
201516 CCS Course Part 2
Topic 1: Conveyance Arrival Bookmark this Conveyance Arrival Certification Messages Under Section 12 of the Customs Act, all goods that are imported, moving in transit through Canada, or freight remaining on board (FROB) must be reported to CBSA at the first port of arrival in Canada, even if they are exempt from providing Advance Commercial Information (ACI). FROB refers to goods that remain on board a conveyance, usually a vessel, which the ship stops and/or discharges other cargo. Reporting takes place when the conveyance arrives in Canada and a report is made to CBSA by way of submitting a Conveyance Arrival Certification Message (CACM). Marine CACM The CACM must be transmitted electronically to the CBSA when the marine vessel lands at a CBSA office upon arrival in Canada. The marine vessel will meet the definition of landing when it first comes to rest in Canada; whether at anchor, at dock or berthed alongside at the nearest CBSA office designated for that purpose. The CACM can be transmitted and received by the CBSA within a two (2) hour window prior to arrival, allowing marine carriers to transmit their arrival request up to two hours in advance of their actual arrival at a Canadian port. This twohour window is conditional on the vessel being within Canadian waters at the time the arrival request is submitted to the CBSA.
Topic 1: Conveyance Arrival (cont. 2) Bookmark this Air CACM For air, the CACM must be transmitted electronically to the CBSA without delay after the aircraft that is transporting cargo (specified goods) is cleared by NAV Canada to land at an airport following arrival in Canada. Rail CACM To advise the CBSA that the train has physically arrived in Canada, the carrier operating the conveyance must transmit his CACM as soon as the train crosses the U.S./Canadian border. Highway CACM Highway carriers report to CBSA at the PIL (Primary Inspection Line). Highway carriers who are using eManifest must present a lead sheet to the BSO at the PIL. A Lead Sheet includes: a barcoded Conveyance Reference Number (CRN), or a barcoded Cargo Control Number (CCN) with a handwritten CRN, or a handwritten CRN if an alternate barcoded document is also being presented with the lead sheet. The CRN is a unique reference number assigned by the carrier to identify a particular voyage for a particular conveyance. The CCN is a number that begins with a fourdigit code that identifies the carrier, followed by a unique number, assigned by the carrier. The BSO will stamp the lead sheet as proof of report and return it to the driver. Important: Please be aware that the reporting of goods to CBSA does not mean that the goods have been released. EDI arrival became mandatory on May 6, 2015. Beginning on July 10, 2015, carriers who do not comply will be issued zerorated penalties. This grace period will end on January 10, 2016 and carriers who do not comply after this date may be issued monetary penalties.
Topic 2: Reporting of Goods Bookmark this There are five basic steps involved in the proper importation of commercial goods. These steps are: 1. 2. 3. 4.
Prearrival notice is provided to CBSA. Goods are reported to CBSA. Goods are released by CBSA (this may also be called “interim accounting”). Goods are accounted for (that is, all shipment details, including the amount of duty and taxes payable, is communicated to Customs), by the customs broker or importer. 5. Duties and taxes are paid, by the customs broker or importer. The reporting of goods entering Canada is mandatory and is provided for in Section 12 of the Customs Act. Section 12 states: "...all goods that are imported shall, except in such circumstances and subject to such conditions as may be prescribed, be reported at the nearest customs office designated for that purpose that is open for business." This means that all imported goods must be reported at the closest customs office that is open, within a particular time frame and in a particular manner, and by one of the persons referred to in Section 12 of the Customs Act.
http://cscb.ca/print/book/export/html/182530
11/87
10/1/2015
201516 CCS Course Part 2
Topic 2: Reporting of Goods (cont. 2) Bookmark this Generally, for commercial goods, it is the carrier who is responsible for reporting. Commercial goods are goods imported into Canada for sale or for any industrial, occupational, commercial, institutional or other like use. Others that are responsible for reporting imported goods are: in the case of goods that accompany their owner, or that form part of his baggage, by that person (in other words, a traveller carrying their own baggage or a tradesman carrying their tools); in the case of goods that are imported by courier or by mail, by the person who exported the goods; in the case of goods not included in the first two examples, it is the responsibility of the carrier to report the goods; and in any other case, by the person on behalf of whom the goods are imported.
Topic 2: Reporting of Goods (cont. 3) Bookmark this Carriers Exempt from eManifest In some instances, a highway carrier may be exempt from filing ACI and using eManifest, or he may be travelling inland for clearance. In that case, a paper Cargo Control Document (CCD) must be completed and presented at the PIL. The standard CCD for goods entering Canada by highway is the A8A(B). An A8A(B) can also be used by other modes. You may want to print a copy of this form since we will be discussing each of the fields. The fields on the A8A(B) are as follows: U.S. Port of Exit This is the port where cargo crosses the United States border into Canada. Both city and state must be indicated. United States port of exit codes may be used instead of city and state. For transborder air shipments that enter Canada in the service of a highway carrier, indicate the US CBP port at which or nearest to which the highway carrier crosses the border of the United States into Canada. In Transit The country of destination is noted here. When goods are travelling through Canada, "Canada" is noted in this field. Manifest From This is the customs office where goods are reported to CBSA, that is, the first point of entry into Canada. This is where the carrier advises CBSA of the goods he is carryin
Topic 2: Reporting of Goods (cont. 4) Bookmark this
To This is the CBSA office where the goods will be released. Goods are not always released at the same port at which they enter Canada. For example, they may be travelling inland for clearance at a CBSA office other than at the first point of arrival. When this is the case, this field will indicate a different CBSA office than the one indicated in the "manifest from" field.
Consignee Name and Address Indicate the name of the person and address of the place to where the goods are being delivered. In certain cases, one company will be the importer (responsible for the payment of any applicable duties and taxes) and the goods will in fact be delivered to the importer's customer or an alternate location. In this case, it is important that the CCD show the delivery address, not the importer's address.
Shipper’s Name and Address Indicate the name and address of the person or firm shipping the goods.
Acquittal No. This field is completed by the importer, customs broker, or CBSA. The acquittal number may also be called the transaction number. This number is in a bar coded format and its first five digits are the account security number of the importer or customs broker. This number references a particular shipment throughout the reporting, release, accounting and payment processes.
Carrier Code/Cargo Control No. The fourdigit carrier code and cargo control number is indicated in this field. All commercial carriers must have a fourdigit carrier code. Carriers must apply to CBSA for a carrier code and the carrier code is assigned by CBSA.
Previous Cargo Control No. http://cscb.ca/print/book/export/html/182530
12/87
10/1/2015
201516 CCS Course Part 2
If goods have been listed on another CCD for one reason or another, and now have a different cargo control number, the previous cargo control number is indicated in this field.
No. of pkgs. The quantity of goods being reported is indicated in this field. Only numbers are shown. There is no text in this field. For example, a shipment consisting of 22 boxes of picture frames, 30 rolls of paper, and 3 sheets of glass would indicate the following under number of packages: 22 30 3 55 A total must be indicated if more than one package is being shipped.
Topic 2: Reporting of Goods (cont. 5) Bookmark this
Description and Marks Using the above example, the description and marks field would read like this: boxes of picture frames rolls of paper sheets of glass The method of packaging (boxes, rolls, and sheets) must be indicated, as well as a clear description of the goods. If the goods are in a container, the container number must be noted in this field.
Weight Selfexplanatory. If more than one item is listed, a total weight must be indicated. Have a look at a partially completed A8A(B) CCD showing the fields that are described on this page with a cargo control number.
Foreign Point of Lading This field is only completed by freight forwarders and marine carriers and indicates the city and country where the goods were loaded onto the ship, aircraft, vehicle, or rail conveyance.
Location of Goods If goods are to be stored at a sufferance warehouse awaiting release, the name of the agent handling the load and the sufferance warehouse name and location must be indicated.
Name of Carrier The name of the transporting company must be indicated.
Topic 2: Reporting of Goods (cont. 6) Bookmark this
Conveyance Identification For road carriers, the licence number, province or state, year, and trailer number must be indicated. Other carriers should indicate other identifiers such as rail car initials or vessel number. It may be necessary for a broker, importer, or carrier to make amendments to a completed cargo control document. If the document is rewritten, the rewritten document must indicate the same cargo control number as the original and the field labelled "description and marks" must indicate the reason for amendment, for example, "rewritten to indicate proper shipper". The original cargo control document, and the rewritten cargo control document, must be presented to CBSA. Regulations exist which allow carriers to transport goods "in bond", that is, to transport goods to an inland port for release, and "in transit", which is to carry goods through an intermediary country. In order to transport goods in bond or in transit, security must be posted with the CBSA on either a one time or ongoing basis. Goods may travel in bond for a variety of reasons, such as: delivery to a bonded warehouse; or personal effects of someone moving to Canada that are destined to a warehouse for examination and release. Carriers who wish to transport goods in bond apply to do so on form E370, an Application to Transact Bonded Carrier and Forwarding Operations.
Topic 2: Reporting of Goods (cont. 7) http://cscb.ca/print/book/export/html/182530
13/87
10/1/2015
201516 CCS Course Part 2
Bookmark this
Customs Cargo Control Abstract A10 In some cases, the goods listed on the CCD will be accounted for on more than one accounting document. For example, one carrier may be carrying goods for several importers, but has listed all goods on a single CCD. Since each importer will be accounting for goods separately and in their own name, it becomes necessary to split, or abstract, the original CCD. The CCD used to report goods that have been included on a single CCD is an A10, Customs Cargo Control Abstract. An explanation of each field of form A10 follows.
U.S. Port of Exit Same as port of exit for the original CCD.
CBSA Office The customs office where the A10s are being presented. This could be at the border, or, if the driver proceeds inland, they can be presented at an inland customs office.
Consignee Name and Address Same format as consignee name and address for the A8A(B) CCD. However, this field may be different if the consignee has changed.
Shipper's Name and Address Same as shipper's name and address for the A8A(B) CCD.
Topic 2: Reporting of Goods (cont. 8) Bookmark this
Waybilled From or Point Loaded City and country where the goods were loaded on the conveyance.
Acquittal No. Each of the A10s will have a different acquittal or transaction number.
Carrier Code The same carrier code is indicated as that which is shown on the original A8A(B) CCD.
Cargo Control No. The same number that is indicated on the master cargo control document followed by the letter "x" and an identifier. For example, if the original CCD number is 1234 56789543 and the goods will be accounted for on three separate accounting documents, three A10s must be prepared. The cargo control numbers on the three A10s are: 1234 56789543 X 1 1234 56789543 X 2 1234 56789543 X 3
Topic 2: Reporting of Goods (cont. 9) Bookmark this The cargo control number indicated on the initial cargo control document that is now being abstracted. In our example, it would be 1234 56789543. Using the example of the previous A8A(B), have a look at the three A10s created from the A8A(B). 1234 56789543 X 1 1234 56789543 X 2 1234 56789543 X 3 Important! All amounts in the number of packages field on all of the A10s must add up to the number on the A8A(B).
Location of Goods Same as the A8A(B) CCD. http://cscb.ca/print/book/export/html/182530
14/87
10/1/2015
201516 CCS Course Part 2
No. of Pieces Complete the same way as the A8A(B) CCD. Remember the total number of pieces on each A10 must add up to the number of pieces on the A8A(B) CCD.
Description and Marks Completed the same way as the A8A(B) CCD.
Weight Same as the A8A(B) CCD.
Name and Address of deconsolidator/ broker/ importer Indicate the name and address of the deconsolidator, broker or importer preparing the A10s.
Topic 2: Reporting of Goods (cont. 10) Bookmark this The Freight Forwarder The role of the freight forwarder is to arrange for the international movement of goods in the most economical, timely and safe fashion. They will book space with a carrier and can recommend appropriate packing, marking, and labelling. They can arrange for insurance, and storage and delivery. Freight forwarders also consolidate freight, that is, group shipments together as one and include them on one bill of lading and one CCD. In most cases, freight is consolidated in order to get better transportation rates from the carrier since transportation companies offer the best rates for full containers or conveyances. At some point, the shipment will have to be broken down into individual shipments, or "deconsolidated". Shipments that are deconsolidated in Canada must be documented on approved CCD's. Freight forwarders who are bonded, that is, who have posted security with CBSA in order that they may ship goods in bond to various points in Canada, may use the standard form A8A(B), or have their own CCD’s privately printed. Freight forwarders who are not bonded must use form A10 to report deconsolidations to customs. As well as consolidating and deconsolidating freight, and arranging for the transportation of goods, many freight forwarders are also customs brokers.
Lesson 3 Summary: Conveyance and Cargo Reporting Bookmark this In Lesson 3 you learned about reporting goods and cargo control documents. Key points in this lesson are: conveyances must be reported upon their arrival; conveyance arrival time frames vary, according to mode; the reporting of goods entering Canada is mandatory and is provided for in Section 12 of the Customs Act; all imported goods must be reported at the closest customs office that is open, within a particular time frame and in a particular manner, and by one of the persons referred to in Section 12 of the Customs Act; it is usually the carrier who is responsible for reporting; commercial goods are goods imported into Canada for sale or for any industrial, occupational, commercial, institutional or other like use; even goods for which ACI is not required must be reported; reporting takes place when the conveyance arrives in Canada and a report is made to CBSA by way of submitting a Conveyance Arrival Certification Message (CACM); the CACM must be transmitted to CBSA within time frames specified for each mode; highway carriers report to CBSA at the PIL (Primary Inspection Line); highway carriers using eManifest must present a lead sheet to the Border Services Officer at the PIL; carriers not using eManifest will present a paper Cargo Control Document (CCD); the standard CCD for goods entering Canada by highway is the A8A(B); and an A8A(B) can be broken down by using an A10 (Abstract Manifest). Now take some time and answer some questions to test your knowledge of Lesson 3.
Module 8: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
0 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. Start quiz
http://cscb.ca/print/book/export/html/182530
15/87
10/1/2015
201516 CCS Course Part 2
Lesson 4: Other Documentation Bookmark this In this lesson you will learn about bills of lading and letters of credit.
Rationale You should understand the purpose of a bill of lading and letter of credit.
Lesson Objective At the end of Lesson 4, you should be able to explain when a billing of a lading, and letter of credit, are used.
Topic 1: Bill of Lading Bookmark this A bill of lading is a contract between the carrier and the shipper to transport goods. It is issued by the carrier to the shipper. A bill of lading may also be used: as a receipt for goods received by the carrier and describes the condition in which the goods were loaded on board; to support a claim against the carrier for loss or damage; and to support a specific tariff treatment, since it indicates the point where the goods originated and any transhipment. Bills of lading are either order bills of lading (negotiable) or straight bills of lading (nonnegotiable).
Order Bill of Lading An order bill of lading is one that is made out to the order of a party, usually the seller. This type of bill of lading can be bought, sold, or traded while the goods are in transit, an unlimited number of times. An order bill must be surrendered to the carrier in order for the consignee to obtain possession of the goods.
Straight Bill of Lading A straight or nonnegotiable bill of lading is made out to a specifically named consignee and provides for delivery to that consignee and no one else. This bill of lading does not provide title to the goods, and, in order to claim the goods, the consignee must identify himself. A straight bill does not have to be surrendered to the carrier in order for the consignee to obtain possession of the goods. A bill of lading contains the name of the shipper, the consignee, the name of the party that is to be notified when the goods arrive, and the mode of transportation. Other fields include a description of the goods, weight, terms of payment for shipping, and any references to other bills of lading used to carry the same goods. Once the goods begin their journey, the carrier will send the importer at least two copies of the bill of lading to serve as notice of imminent arrival of the goods. To collect the goods, the importer, or owner, must present the carrier with the original, endorsed (signed) bill of lading. A “clean” bill of lading is one that does not contain any notations or comments that indicate that the goods being carried are damaged in any way.
Topic 2: Letter of Credit Bookmark this A letter of credit is a guarantee of payment. It is a commitment by a financial institution to pay an agreed amount to a vendor under precise terms and conditions. Typical conditions that are documented on the letter of credit might include: that the goods must arrive within a specified time; that proper documentation, or certificates, necessary for customs clearance, will be provided by the supplier; and/or that the goods ordered will be the goods shipped (that is, no substitutions). Letters of credit act as security for the exporter since a letter of credit assures them that they will be paid for their goods. It also assures the importer that payment for the goods will be made only after the terms outlined in the letter of credit have been met. The buyer (importer) of the goods is the applicant for the letter of credit and the seller (exporter) is the beneficiary. The letter of credit is issued by a bank (issuing bank) at the request of the importer, and the bank agrees to pay the exporter (beneficiary) for the goods, once the terms in the letter of credit have been met. The exporter of the goods is the party in whose favour a letter of credit is issued. The advising bank is the bank in the exporter’s country. The sequence of events for a typical transaction involving a letter of credit would be as follows: The buyer and the seller agree on a price for goods; The seller asks the buyer for a letter of credit to guarantee payment; The buyer applies to his bank (the issuing bank) for a letter of credit in favour of the seller; http://cscb.ca/print/book/export/html/182530
16/87
10/1/2015
201516 CCS Course Part 2
The bank approves the letter of credit application, based on the credit risk of the buyer, and forwards the letter of credit to the advising bank; The advising bank authenticates the letter of credit and advises the seller; The seller/exporter ships the goods, and complies with any requirements noted in the letter of credit; The seller sends any required documents to the advising bank, including a bill of lading, in order that payment for the goods is processed; If all is in order, the advising bank will claim the funds from the issuing bank; Documents will be forwarded from the advising bank to the issuing bank; and The issuing bank will debit the buyer's account and provide the buyer with any required documents. The advising bank will provide the issuing bank with the bill of lading. The buyer is provided with a copy of the bill of lading, which they will need in order to take delivery of the goods. To obtain release of the goods at the port of arrival, the original endorsed bill of lading must be presented.
Lesson 4 Summary: Other Documentation Bookmark this In Lesson 4 you learned about the bill of lading, letter of credit, and role of the freight forwarder. Key points covered in this lesson include: A bill of lading: is a contract between the carrier and the shipper/exporter to carry goods, and is issued by the carrier to the shipper or exporter; can act as a receipt for goods received by the carrier and describes the condition in which the goods were loaded on board; contains shipping instructions; can be used to support a claim against the carrier for loss or damage; and can be used to support a specific tariff treatment; bills of lading are either negotiable (order bill of lading) or nonnegotiable (straight bill of lading); a clean bill of lading is one that does not contain any markings or notations indicating damage to the goods; a letter of credit is a guarantee of payment to the seller; the freight forwarder usually arranges for the international movement of goods; freight forwarders also consolidate freight, that is, group shipments together as one and include them on one bill of lading and one CCD; at some point, the shipment will have to be broken down into individual shipments, or "deconsolidated". shipments that are deconsolidated in Canada must be documented on approved CCDs; freight forwarders who are bonded, that is, who have posted security with CBSA in order that they may ship goods in bond to various points in Canada, may use the standard form A8A(B), or have their own CCD’s privately printed; and many freight forwarders are also customs brokers. Now take a few minutes and test what you have learned about bills of lading and letters of credit.
Module 8: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
0 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. Start quiz
Module 8 Summary: Invoice Requirements; Advance Commercial Information; Conveyance and Cargo Reporting Bookmark this Invoice Requirements Information must be provided to CBSA for all goods entering Canada. This information is usually contained on a commercial invoice or Canada Customs Invoice. Invoice information: allows CBSA to determine the risk of goods entering Canada; provides the date of direct shipment for currency exchange purposes; and allows the value for duty to be determined. The exporter, importer, owner of the goods, or a customs broker may complete the invoice. Careful attention must be paid to information on fields 23 and 24 of the Canada Customs Invoice. Advance Commercial Information (ACI) Marine and Air Advance Commercial Information (ACI) is a reporting process whereby mandatory data is transmitted electronically to CBSA. ACI data is sent to CBSA prior to the arrival of goods. Time frames for submitting data vary for each mode of transportation. If CBSA does not authorize the loading of goods on to the marine conveyance, they will issue a Do Not Load message. If a Do Not Load message is not sent by CBSA in the 24hour period after the cargo data is transmitted, the cargo can be loaded.
http://cscb.ca/print/book/export/html/182530
17/87
10/1/2015
201516 CCS Course Part 2
Module 8 Summary: Invoice Requirements; Advance Commercial Information; Conveyance and Cargo Reporting (cont. 2) Bookmark this Conveyance Reporting When a conveyance arrives at its First Point of Arrival in Canada, it must indicate its arrival to CBSA. Arrival messages must be sent using EDI. Marine arrival messages must be transmitted when the vessel lands at a CBSA office upon arrival in Canada and may be transmitted and received by the CBSA within a two (2) hour window prior to arrival, as long as the the vessel is in Canadian waters. Air arrival messages are transmitted as soon at the NAVCAN has cleared the aircraft to land. Rail arrivals messages are transmitted up to 30 minutes in advance of the actual arrival of the conveyance at the Canadian border. Highway carriers report their arrival when they stop at the Primary Inspection Line. Cargo Reporting Reporting of goods entering Canada is mandatory and is provided for in Section 12 of the Customs Act. Goods must be reported at the closest customs office that is open, within a particular time frame and in a particular manner, and by one of the persons referred to in Section 12. Generally, for commercial goods, it is the carrier who is responsible for reporting goods. Reporting is done through use of CACM (Conveyance Arrival Certification Message), via EDI. In some cases, a paper Cargo Control Document (CCD) is used to report goods. The standard CCD is the A8A(B). Information on the A8A(B) may be broken down into two or more A10 CCD's if the goods on the A8A(B) will be accounted for on more than one accounting document. Highway and Rail Reporting Highway cargo must be reported by the carrier, to Customs, at the first point of arrival. Failure to report goods to CBSA can result in penalties issued to the carrier. When a train arrives in Canada, an arrival message is sent to CBSA electronically (CACM). Bill of Lading A bill of lading is a contract between the carrier and the shipper to transport goods. A bill of lading is issued by the carrier to the shipper. A bill of lading may also be used: as a receipt for goods received by the carrier which describes the condition in which the goods were loaded on board; to support a claim against the carrier for loss or damage; and to support a specific tariff treatment, since it indicates the point where the goods originated and any transhipment. A bill of lading is either an order bill of lading (negotiable) or a straight bill of lading (nonnegotiable). A clean bill of lading is one that does not contain any notations or comments that indicate that the goods being carried are damaged in any way. Letter of Credit Is a commitment by a financial institution to pay an agreed amount to a vendor under precise terms and conditions. Acts as security for the exporter. Assures the importer that payment for the goods will be made only after the terms outlined in the letter of credit have been met. Is issued by a bank at the request of the importer, and the bank agrees to pay the exporter for the goods once the terms in the letter of credit have been met. Freight Forwarders Arrange for the international movement of goods in the most economical, timely and safe fashion. Book space with a carrier, and can recommend appropriate packaging, marking, and labelling. Can arrange for insurance, and subsequent storage and delivery. May consolidate freight in order to get better transportation rates from the carrier. A short quiz on what you have learned in Module 8 follows.
Module 8: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
20 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
http://cscb.ca/print/book/export/html/182530
18/87
10/1/2015
201516 CCS Course Part 2
Module 9: Classification of Goods Bookmark this Module 5 provided you with an explanation of the tools you need to classify goods and an overview of the structure of the Customs Tariff. This module will teach you how to use these tools in order to properly classify goods.
Module Objective You will be able to classify goods under the Harmonized System of Tariff Classification.
Lesson 1: Gathering Information on the Imported Goods Bookmark this In order to properly classify goods, it is important to know as much as possible about the goods being classified.
Rationale Unless you know what exactly is being imported, it is impossible to determine the correct classification.
Lesson Objective At the end of Lesson 1, you should be able to describe the goods in terms that will enable you to determine the correct classification.
Topic 1: Gathering Information on the Imported Goods Bookmark this Before you can attempt to classify goods, you must know what they are. For example, let’s say you are asked to classify fish. You will need to ask yourself the following questions: What kind of fish? Is the fish fresh? Frozen? Canned? Is it whole? Steaks? Fillets? What will it be used for? Human consumption? For commercial sale? Canning? Pet food? The more you know about a product, the easier it will be to find the correct classification. Here are some ways to gather as much information as you can on the imported goods. Sometimes, the invoice that accompanies imported goods is vague and may even only contain a part number. Unless you have a catalogue that describes each item according to part number, you must contact the importer or the supplier to determine the nature of the goods. Ask your client or the supplier for descriptive literature. Machinery and mechanical items often come with a brochure that helps identify the goods. You can also look on the Internet – it can be a good source of information since many products can be purchased online and are fully described on the vendor’s website. Ask your client if they have ever been advised by CBSA on what classification they should use. We will discuss penalties later in this course, but if the CBSA has advised the importer of the tariff classification they believe is correct, a penalty will be issued against the importer if another classification is used. Ask your client how the goods will be used. In many cases, the enduse of the goods can determine the tariff classification. For example, there may be a reduction in duty for goods being manufactured in Canada for specific industry sectors.
Lesson 1 Summary: Gathering Information on the Imported Goods Bookmark this Lesson 1 stressed that in order to properly classify goods, you must be absolutely sure of what it is you are classifying. Key points from this lesson are: descriptive literature supplied by the vendor or the importer, trade catalogues, and Internet research may be used to help you determine the nature of the goods you are attempting to classify; check with your client to see if there are any previous rulings supplied to the importer regarding the imported goods; and importers may be penalized for incorrect tariff classification. You should now know how to obtain information that will enable you to classify goods.
Lesson 2: HS Classification Numbers http://cscb.ca/print/book/export/html/182530
19/87
10/1/2015
201516 CCS Course Part 2
Bookmark this In Module 5, you learned about the Customs Tariff. In this lesson, we will learn more about the HS classification number.
Rationale In order to select the correct HS classification number, you will need to know its structure.
Lesson Objective At the end of Lesson 2, you will be able to identify the parts of a tariff classification number.
Topic 1: What the HS Classification Number Tells Us Bookmark this Within the Harmonized System, goods are classified numerically in a hierarchical manner. Hierarchical means the least processed goods are found in the earlier sections and chapters of the Customs Tariff and the more complex goods are found towards the back. There are twentyone sections in the Customs Tariff , listed in Roman numerals from I to XXI. These sections are further divided into ninetynine chapters. A complete HS classification consists of a tendigit number, and looks like this: 0801.22.00.00 This example refers to Brazil nuts (shelled), and the number is broken down in the following manner: Chapter (first 2 digits) = 08 Heading (first 4 digits) = 08.01 Subheading (first 6 digits) = 0801.22 Tariff Item (first 8 digits) = 0801.22.00 Classification Number (all ten digits) = 0801.22.00.00 Note: The section number does not form part of the tariff classification number.
Chapter The first two digits of the complete HS classification number are the chapter. For example, tariff classification number 1504.10.10.10 is in Chapter 15.
Heading The first four digits of a complete HS classification number are the heading, 08.01 is an example. The first two digits: 08 indicate the chapter. The last two digits: 01 indicate where to find the heading in the chapter. Note that when a heading is used on its own, it is presented as 08.01 (a period is added after the chapter number).
Topic 1: What the HS Classification Number Tells Us (cont. 2) Bookmark this
Subheading Each sixdigit subheading includes text that is preceded by either one or two dashes. The first six digits are the same for all countries adhering to the Harmonized Commodity Description and Coding System. Subheadings further describe the heading. Information in any subheading relates only to the goods in its heading. Have a look at the subheadings beneath heading 06.01. These are onedash subheadings, since they are each preceded by one dash. 06.01 Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, dormant, in growth or in flower; chicory plants and roots other than roots of heading 12.12. Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, dormant Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, in growth or in flower; chicory plants and roots Since they are each preceded by one dash, these two subheadings may only be compared to each other. The goods being classified must fit into one of these two subheadings, and also into the heading (06.01). Here is another example of onedash subheadings. 27.08 Pitch and pitch coke, obtained from coal tar or from other mineral tars. Pitch Pitch coke http://cscb.ca/print/book/export/html/182530
20/87
10/1/2015
201516 CCS Course Part 2
In this example, pitch and pitch coke are onedash subheadings that fall under the heading 27.08.
Topic 1: What the HS Classification Number Tells Us (cont. 3) Bookmark this There are also subheadings with two dashes (). Subheadings at this level must fit into the single dash subheading that precedes it. This is an example of the numbering protocol for coconuts, and how subheadings are presented in the tariff classification number. Subheadings with one dash can only be compared to other subheadings with one dash. All onedash subheadings fall into the same fourdigit heading. Subheadings with two dashes can only be compared to other subheadings with two dashes. They must also fall within the scope of the preceding onedash subheading, as well as the fourdigit heading. In the coconuts example, you would check to see what subheading the coconuts would fall under, either "Dessicated", “—In the inner shell (endocarp)”, or "Other".
Topic 1: What the HS Classification Number Tells Us (cont. 4) Bookmark this
Tariff Item The seventh and eighth digits of the tariff classification, as well as the first six, make up the tariff item. The tariff item includes the chapter, the heading, and the subheading. Tariff items are preceded by three or four dashes. An example of a threedash tariff item, included in heading 64.01, follows. For illustrative purposes, not all items in the hierarchy are shown. 64.01 Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes (heading). Footwear incorporating a protective metal toecap (onedash subheading) Other footwear: (onedash subheading) Covering the ankle but not covering the knee (twodash subheading) Riding boots: (threedash tariff item)
Topic 1: What the HS Classification Number Tells Us (cont. 5) Bookmark this As an example, following is a tariff classification exercise for unfinished bamboo furniture for use in the manufacture of furniture for the home. Click on the Play button to look at a tariff classification exercise for unfinished bamboo furniture for use in the manufacture of furniture for the home. To play the video, click on the Play button
http://cscb.ca/print/book/export/html/182530
. To pause the video, click on the Pause button
.
21/87
10/1/2015
201516 CCS Course Part 2
Topic 1: What the HS Classification Number Tells Us (cont. 6) Bookmark this An example of a fourdash tariff item, included in 94.03, follows: Furniture of other materials, including cane, osier, bamboo or similar materials (onedash subheading) 9403.81 Of bamboo or rattan (twodash subheading) For domestic purposes (threedash tariff item) 9403.81.11.00 Unfinished and unassembled, for use in the manufacture of furniture of bamboo or rattan (fourdash tariff item) The tariff item is 9403.81.11. Tariff items with three dashes can only be compared to other tariff items with three dashes, and those with four dashes can only be compared to others with four dashes.
Topic 1: What the HS Classification Number Tells Us (cont. 7) Bookmark this Another example of a fourdash tariff item follows. In order to make the illustration clear, not all items in the hierarchy are shown. 94.01 Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof. (heading) Other seats, with metal frames: (onedash subheading) Upholstered (twodash subheading) For domestic purposes (threedash tariff item) Parts (onedash subheading) Of seats for domestic purposes, excluding those convertible...(threedash tariff item) Cut and sewn leather and vinyl covers, of a value not...(fourdash tariff item)
Topic 1: What the HS Classification Number Tells Us (cont. 8) Bookmark this
Comparing Subheadings and Tariff Item Numbers http://cscb.ca/print/book/export/html/182530
22/87
10/1/2015
201516 CCS Course Part 2
To determine the tariff classification number, you must find the proper subheading and tariff item. To do this, you follow this sequence: a) Compare all onedash subheading descriptions. Which best describes your goods? b) Once you locate the onedash subheading, compare any twodash subheadings. Which best describes your goods? c) If there are threedash tariff item descriptions, compare your goods against each of those. d) Continue comparing items with the same number of dashes until you find the appropriate description, and you will then be able to piece together the full, tendigit tariff classification number.
Topic 1: What the HS Classification Number Tells Us (cont. 9) Bookmark this
Statistical Suffix The last two digits, the ninth and tenth, are the statistical suffix. The statistical suffix consists of two digits that are specifically Canadian and provides a more detailed product description that is required by Statistics Canada. CBSA provides the classification numbers of all imported goods to Statistics Canada. This information is subsequently used, among other things, to assess Canada’s economic situation. It can also be used internationally by foreign investors who are considering Canada for potential business. If there are no Canadian statistical requirements, these digits are zeros.
Classification Number The final tendigit number is the classification number and provides the most detailed description of the goods. It is this number that is submitted to the Canada Border Services Agency when providing them with details on imported goods.
Lesson 2 Summary: Classification of Goods Bookmark this In Lesson 2 you learned about the parts of the classification number and the legal notes. Key points covered in this lesson include: the first two digits of the tariff classification number are the chapter; the third and fourth digits, together with the chapter, make up the heading; the fifth and sixth digits, together with the heading, make up the subheading; the subheading, plus two additional digits, make up the tariff item; a complete tariff classification number consists of a tendigit number; the last two digits are for statistical purposes; subheadings can be preceded by one or two dashes; tariff items are preceded by three or four dashes; and subheadings with one dash can only be compared to other subheadings with one dash. Take a few minutes now and answer the questions that follow.
Module 9: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Selecting the Appropriate Tariff Classification Bookmark this Lesson 3 will demonstrate the steps to take in selecting the tariff classification.
Rationale http://cscb.ca/print/book/export/html/182530
23/87
10/1/2015
201516 CCS Course Part 2
When classifying goods, it is important that it be done correctly. If errors are made, penalties may be assessed.
Lesson Objective At the end of Lesson 3 you should be able to correctly classify goods.
Topic 1: Selecting the Appropriate Tariff Classification Bookmark this Once you know as much as you can about the goods you are classifying, the first step in classifying the goods is determining in which section of the Customs Tariff the goods might fall. Let’s use an example of an umbrella. You’ve gathered information about the umbrella and you know that the umbrella is the collapsible type with an extendable handle, used in the rain. From the Table of Contents, have a look at the 21 sections to see where these goods might fit. Sections of the Customs Tariff tend to be organized in the order of their technological complexity. Thus, live animals and other agricultural products are in Section I, while more complex goods such as machinery and precision instruments are in the later sections. By looking at the table of contents, you probably selected Section XII: Footwear, Headgear, Umbrellas, Sun Umbrellas, Walkingsticks, Seatsticks, Whips, Ridingcrops and Parts Thereof; Prepared Feathers and Articles Made Therewith; Artificial Flowers; Articles of Human Hair. If you did, that is correct; umbrellas are listed in the section title. Before you go too much further, have a look at Section XII and see if there are any section notes. Next, look at the chapters within Section XII. Listed below are the four chapters in Section XII. 64. Footwear, gaiters and the like; parts of such articles 65. Headgear and parts thereof 66. Umbrellas, sun umbrellas, walkingsticks, seatsticks, whips, ridingcrops and parts thereof 67. Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair Chapter 66 certainly deserves a closer look. But first, are there any chapter notes that may affect the classification? Have a look at the chapter notes.
Topic 1: Selecting the Appropriate Tariff Classification (cont. 2) Bookmark this There are no chapter notes that would prevent you from classifying the goods in Chapter 66. The next step is to have a look at the each of the headings in the chapter you have selected. Note: Remember from Module 6, you can only compare headings with headings. 66.01 Umbrellas and sun umbrellas (including walkingstick umbrellas, garden umbrellas and similar umbrellas). 66.02 Walkingsticks, seatsticks, whips, ridingcrops and the like. 66.03 Parts, trimmings and accessories of articles of heading 66.01 or 66.02. After reading these headings, you can now restrict your search to those tariff items that begin with heading 66.01. Next, compare all the subheadings preceded by onedash. Remember: you can only compare subheadings with one dash to other subheadings with one dash. There are two onedash subheadings in heading 66.01. These are: 6601.10.00.00 Garden or similar umbrellas Other: Now you must choose between these two onedash subheadings. Since you know that they are umbrellas for use in the rain, and not garden or similar umbrellas, you must check to see if there is anything after " Other: " From Module 6, you know that other information follows, since there is a colon (:) after " Other: “. Important: In many cases, there are no onedash subheadings. If there are no onedash subheadings, you immediately go to any twodash subheadings following the heading. The same holds true of tariff items. If there are no threedash tariff items, you go directly to the fourdash tariff items that follow the subheading or subheadings. You must look at the section, chapter, heading, onedash subheading, twodash subheading, threedash tariff item and fourdash tariff item, and statistical suffix in that order.
http://cscb.ca/print/book/export/html/182530
24/87
10/1/2015
201516 CCS Course Part 2
Topic 1: Selecting the Appropriate Tariff Classification (cont. 3) Bookmark this Under “ Other” there are two twodash subheadings: 6601.91.00.00 Having a telescopic shaft 6601.99.00.00 Other Neither of these twodash subheadings have information that follows. The two tendigit classifications that you must choose between are 6601.91.00.00 and 6601.99.00.00. What have you decided? The answer is 6601.91.00.00. What about the General Interpretive Rules? Let’s have a look.
GIR 1 This rule states that titles of Sections, Chapters and subChapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions. Explanation The title of Section XII and the title of Chapter 66 are for reference only, and there are no subchapters. However, the title of the heading and any relative section or chapter notes must be considered. Heading 66.01 says: Umbrellas and sun umbrellas (including walkingstick umbrellas, garden umbrellas and similar umbrellas). So far, so good. According to GIR 1, the goods are classified correctly in heading 66.01 since umbrellas are specifically named. Did the section or chapter notes contradict anything in this heading? No, they did not. The GIRs are applied sequentially and it appears that we have correctly classified the goods according to GIR1. To better understand the GIRs, let's look at the rest of them with respect to the umbrella you are classifying.
Topic 1: Selecting the Appropriate Tariff Classification (cont. 4) Bookmark this
GIR 2 (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. The umbrellas were not incomplete or unfinished, nor were they mixtures. GIR 2 does not apply.
GIR 3 GIR 3 is used when, by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings. Explanation GIR 3 provides three methods, applied in order, to determine the tariff classification of goods that appear to be equally suited to more than one heading. Since we have not found any other heading that suits the umbrella as well as heading 66.01, GIR 3 does not apply.
Topic 1: Selecting the Appropriate Tariff Classification (cont. 5) Bookmark this
GIR 4 Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin. http://cscb.ca/print/book/export/html/182530
25/87
10/1/2015
201516 CCS Course Part 2
Explanation If GIRS 1, 2, or 3 cannot be used, then the umbrella can be classified under the heading for goods to which the umbrella is most alike, or akin. Is it necessary to look for another heading? No, it is not; the umbrellas were clearly named in heading 66.01 and it is not necessary to find another item that is most like an umbrella.
GIR 5 In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for longterm use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This Rule does not, however, apply to containers which give the whole its essential character. (b) Subject to the provisions of Rule 5 (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use. Explanation Are the goods of a type listed in GIR 5? Absolutely not.
Topic 1: Selecting the Appropriate Tariff Classification (cont. 6) Bookmark this
GIR 6 For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purpose of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. Explanation Did we remember to compare only those subheadings at the same level? Yes, we did – we compared the following: Garden or similar umbrellas with Other: And we compared: Having a telescopic shaft with Other We can now satisfy ourselves that the correct tendigit tariff classification is 6601.91.00.00. Do any of the three specifically Canadian GIRs apply? 1. For legal purposes, the classification of goods in the tariff items of a subheading or of a heading shall be determined according to the terms of those tariff items and any related Supplementary Notes and, mutatis mutandis, to the General Rules for the Interpretation of the Harmonized System, on the understanding that only tariff items at the same level are comparable. For the purpose of this Rule the relative Section, Chapter and Subheading Notes also apply, unless the context otherwise requires.
Topic 1: Selecting the Appropriate Tariff Classification (cont. 7) Bookmark this Explanation Did we have to compare threedash or fourdash tariff items? We did not. 2. Where both a Canadian term and an international term are presented in this Nomenclature, the commonly accepted meaning and scope of the international term shall take precedence. Explanation Were there any specifically Canadian terms in the tariff? There were not. Explanation http://cscb.ca/print/book/export/html/182530
26/87
10/1/2015
201516 CCS Course Part 2
Were we classifying packing materials or packing containers? We were not. Let’s try another example by finding the tariff classification for ladies' leather handbags. Remember: look at the section titles first. By looking at the table of contents, you should be able to determine that these goods would likely be classified in Section VIII. Raw Hides and Skins, Leather, Furskins and Articles Thereof; Saddlery and Harness; Travel Goods, Handbags and Similar Containers; Articles of Animal Gut (Other than Silk worm Gut) Are there any relevant section notes? Let’s look next at the chapters. There are three chapters in this section. 41. Raw hides and skins (other than furskins) and leather 42. Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut) 43. Furskins and artificial fur; manufactures thereof Which chapter do you think should be looked at more closely? Now, are there any Chapter 42 notes that would preclude you from classifying these goods in Chapter 42?
Topic 1: Selecting the Appropriate Tariff Classification (cont. 8) Bookmark this None of the exclusions in the notes to Chapter 42 apply. Let’s look now at the headings that are included in Chapter 42. Remember, you can only compare headings with headings. The headings are: 42.01 Saddlery and harness for any animal (including traces, leads, knee pads, muzzles, saddle cloths, saddle bags, dog coats and the like), of any material. 42.02 Trunks, suitcases, vanitycases, executivecases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toilet bags, rucksacks, handbags, shopping bags, wallets, purses, mapcases, cigarettecases, tobaccopouches, tool bags, sports bags, bottlecases, jewellery boxes, powderboxes, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fibre or of paperboard, or wholly or mainly covered with such materials or with paper. 42.03 Articles of apparel and clothing accessories, of leather or of composition leather. 42.05 Other articles of leather or of composition leather. 42.06 Articles of gut (other than silkworm gut), of goldbeater's skin, of bladders or of tendons. Of these,which looks like it might be the one to look at more closely? What are the onedash subheadings under Heading 42.02? They are: 4202.11 Trunks, suitcases, vanitycases, executivecases, briefcases, school satchels and similar containers: 4202.21 Handbags, whether or not with shoulder strap, including those without handle: 4202.31 Articles of a kind normally carried in the pocket or in the handbag: 4202.91 Other Compare each of the onedash subheadings. Remember: you can only compare subheadings with one dash to other subheadings with one dash. After reviewing the onedash subheadings included in heading 42.02, you likely determined that the correct subheading is 4202.21. Let’s now look at the twodash subheadings under this onedash subheading. The twodash subheadings following 4202.21 are: 4202.21.00.00 With outer surface of leather, of composition leather or of patent leather 4202.22 With outer surface of sheeting of plastics or of textile materials 4202.29.00 Other
Topic 1: Selecting the Appropriate Tariff Classification (Cont. 9) Bookmark this Now you must compare these three twodash subheadings. Since the handbags are leather, the first is the most accurate. http://cscb.ca/print/book/export/html/182530
27/87
10/1/2015
201516 CCS Course Part 2
Does anything follow this twodash subheading? No, there is nothing that follows this twodash subheading. Another way of recognizing that nothing follows the twodash subheading is that the balance of the classification number is made up of zeros. It looks like the classification number might be 4202.21.00.00. From our previous example, what do you do next? What about the General Interpretive Rules? Have a look at them, and see if you still think that the classification you have selected is correct. Is it? Let’s try another example. We are going to classify children’s picture books, made of plastic. What section should be looked at first? There are no sections that specifically name books, so we might want to look at Section VII: Plastics and Articles Thereof; Rubber and Articles Thereof. Remember: according to GIR 1, the titles of sections, chapters and subchapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to GIRs 2 through 6. Let’s look at the section notes for Section VII. Do any of the section notes make you think you should look elsewhere? Note 2 to Section VII provides some guidance. This note states that: Except for the goods of heading 39.18 or 39.19, plastics, rubber, and articles thereof, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49. This means that unless the goods are classified in heading 39.18 or 39.19, goods that are made of plastic or rubber and that are printed with motifs, characters or pictorial representations that are not incidental to the use of the goods, they are classified in Chapter 49.
Topic 1: Selecting the Appropriate Tariff Classification (Cont. 10) Bookmark this Pictures in picture books cannot be considered incidental, and, since headings 39.18 and 39.19 are not correct, we should have a look at Chapter 49. Chapter 49 is entitled: Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans. Are there any notes to Chapter 49 that are helpful? None of the notes to Chapter 49 indicates that Chapter 49 cannot be used. Remember: According to GIR 1, for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions, that is, GIRs 2 through 6. Let’s look at the headings in Chapter 49. The headings in Chapter 49 are: 49.01 Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets. 49.02 Newspapers, journals and periodicals, whether or not illustrated or containing advertising material. 49.03 Children's picture, drawing or colouring books. 49.04 Music, printed or in manuscript, whether or not bound or illustrated. 49.05 Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed. 49.06 Plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes, being originals drawn by hand; hand written texts; photographic reproductions on sensitized paper and carbon copies of the foregoing. 49.07 Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognized face value; stampimpressed paper; banknotes; cheque forms; stock, share or bond certificates and similar documents of title. 49.08 Transfers (decalcomanias). 49.09 Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings. 49.10 Calendars of any kind, printed, including calendar blocks. 49.11 Other printed matter, including printed pictures and photographs. Which one should you consider? Let’s look at heading 49.03 and anything that falls after 49.03 and before 49.04. 4903.00 Children's picture, drawing or colouring books. 4903.00.00.10 Picture books 4903.00.00.20 Drawing or colouring books There are no subheadings. There are two fivedash tariff items but no sixdash tariff items. The final tariff classification is either 4903.00.00.10 or 4903.00.00.20. Which one have you selected?
http://cscb.ca/print/book/export/html/182530
28/87
10/1/2015
201516 CCS Course Part 2
Topic 1: Selecting the Appropriate Tariff Classification (cont. 11) Bookmark this Try this example. Roll over the line that describes whole dried chili peppers. Remember to check any section and chapter notes first.
Lesson 3 Summary: Selecting the Appropriate Tariff Classification Bookmark this Lesson 3 summarizes the steps you must take when classifying goods: start by selecting the section or sections in the Customs Tariff that best describe the goods you are classifying; consult the section notes to see if there is any reason you may not use the section or sections you have selected; determine the section, or sections, applicable; look at the titles of each chapter in that section or sections; consult the chapter notes to see if there is any reason you may not use the chapter you have selected; determine the chapter; look at the onedash subheadings in that chapter and compare them to each other; determine the correct onedash subheading; look at any twodash subheadings and compare them to each other; determine the correct twodash subheading; look at any threedash tariff items and compare them to each other; determine the correct threedash tariff item; look at any fourdash tariff items and compare them to each other; determine the correct fourdash tariff item; review the General Interpretive Rules; and assign the correct tendigit tariff classification number Take a few minutes to answer the questions on the online version to see how much you have learned.
Module 9: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
11 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before http://cscb.ca/print/book/export/html/182530
29/87
10/1/2015
201516 CCS Course Part 2
you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Classification of Parts Bookmark this Goods are not always imported in their entirety. In many cases, parts are shipped to Canada to repair or maintain goods that have already been imported.
Rationale Along with classifying goods, you will also need to know how to classify parts.
Lesson Objective At the end of Lesson 4, you will be able to classify parts.
Topic 1: Establishing the Tariff Classification of Parts Bookmark this Parts are generally classified in the same manner as complete articles and the General Interpretative Rules, Canadian Rules, and Legal Notes must be consulted. The classification of parts can be difficult. It is important to understand that there is a distinction made between parts of a specific machine and parts of general use. Parts and accessories fall into one of the following four categories: parts or accessories specifically named in a heading or falling within a generic class named in a heading; parts of general use, as defined in Section XV, Note 2; parts or accessories suitable for use solely or principally with a particular kind of machine or with machines of the same heading; or multipurpose parts and accessories. For parts or accessories specifically named in a heading or falling within a generic class named in a heading, GIR 1 is applied. This GIR states that the classification of goods is determined according to the terms of the headings and any relative section or chapter notes, and, where appropriate, provided the headings or notes do not otherwise require, according to the provisions of GIRs 2, 3, 4, and 5. According to this GIR, any parts or accessories referred to in a heading, or classified in a particular heading due to a legal note, must be classified under that heading.
Topic 1: Establishing the Tariff Classification of Parts (cont. 2) Bookmark this An example of this is heading 40.11 New pneumatic tires, of rubber. Since “rubber tires” are specifically provided for in heading 40.11, they will always be classified under 40.11. They will never be classified as a part or accessory of another item. Parts of general use are defined in Note 2 of Section XV: Base Metals and Articles of Base Metal This note reads: 2. Throughout the Nomenclature, the expression "parts of general use'' means: (a) Articles of heading 73.07, 73.12, 73.15, 73.17 or 73.18 and similar articles of other base metal; (b) Springs and leaves for springs, of base metal, other than clock or watch springs (heading 91.14); and (c) Articles of headings 83.01, 83.02, 83.08, 83.10 and frames and mirrors, of base metal, of heading 83.06. In Chapters 73 to 76 and 78 to 82 (but not in heading 73.15) references to parts of goods do not include references to parts of general use as defined above. Subject to the preceding paragraph and to Note 1 to Chapter 83, the articles of Chapter 82 or 83 are excluded from Chapters 72 to 76 and 78 to 81. An example of this is a shipment of stainlesssteel screws. Screws are classified in heading 73.18, and, according to note 2(a) to Section XV, you must classify them in heading 73.18 as “screws” and not as a machine part. Parts of general use cannot be classified as parts of the machine for which they are intended.
Topic 1: Establishing the Tariff Classification of Parts (cont. 3) http://cscb.ca/print/book/export/html/182530
30/87
10/1/2015
201516 CCS Course Part 2
Bookmark this Parts of general use are also noted in note 1(g) to Section XVI, Machinery and mechanical appliances; electrical equipment; parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles. Note 1(g) states: Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39). This means that the goods described in Note 2 to Section XV as parts of general use, (such as tube or pipe fittings, screws, bolts, and nuts) are not limited to goods made of base metal. Another reference to parts of general use is found in Note 2 of Chapter 82.
Topic 1: Establishing the Tariff Classification of Parts (cont. 4) Bookmark this In summary, goods described as parts of general use cannot be classified as machinery parts but must be classified in their respective classifications. An example of parts that are suitable for use solely or principally with a particular kind of machine is in heading 88.03. 88.03 Parts of goods of heading 88.01 or 88.02. 8803.10.00.00 Propellers and rotors and parts thereof 8803.20.00.00 Undercarriages and parts thereof 8803.30.00.00 Other parts of airplanes or helicopters 8803.90.00 Other The parts included in subheadings 8803.10, 20, 30, and 90 must all be parts for goods of heading 88.01 or 88.02. Note 3 to Section XVII clarifies this: References in Chapters 86 to 88 to ''parts'' or ''accessories'' do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. In other words, the reference to “parts” in 88.03 only applies to parts that are suitable for goods found in Chapter 88. And, if you were to find “Propellers and rotors and parts thereof” in another heading in chapter 88, the heading ultimately selected for the parts is the one that refers to the principal use of that part, in this case, goods of 88.01 or 88.02 only.
Topic 1: Establishing the Tariff Classification of Parts (cont. 5) Bookmark this An example of parts that are classified in the same heading as the goods is 8804.00.30.00; the parts and the goods are both included. 8804.00 Parachutes (including dirigible parachutes and paragliders) and rotochutes; parts thereof and accessories thereto. 8804.00.10.00 Parachutes (including dirigible parachutes) and rotochutes 8804.00.20.00 Parts and accessories for parachutes (including dirigible parachutes) and rotochutes 8804.00.30.00 Paragliders; parts thereof and accessories thereto Important: When “parts” are noted in the Tariff, it never includes parts of general use. Parts of general use are always classified according to what they are. In the example above, any bolts, nuts, or screws, or other parts of general use described in Note 2 to Section XV cannot be classified in 8804.00.30.00. Multipurpose parts and accessories are those that do not fall into any of the preceding categories. These parts are classified according to chapter notes. As an example, look at note 2(c) of Chapter 90.
Lesson 4 Summary: Classification of Parts Bookmark this Lesson 4 showed you the steps used to classify parts. Points to remember: parts of general use are never classified as parts of machines; there is a distinction between parts of a specific machine and parts of general use; and parts and parts or accessories specifically named in a heading or falling within a generic class named in a heading are classified in that heading. Take a few minutes to answer the questions on online version to see how much you have learned about classifying parts.
Module 9: Lesson 4 SelfCheck Questions:
4
http://cscb.ca/print/book/export/html/182530
31/87
10/1/2015
Attempts allowed: Available: Pass rate: Backwards navigation:
201516 CCS Course Part 2
Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 5: Chapters 98 and 99 of the Customs Tariff Bookmark this Chapters 98 or 99 of the Customs Tariff may be applied if goods have a conditional or enduse.
Rationale After you have correctly classified goods to the tendigit level, you may be able to reduce the duty payable if the goods meet the requirements of Chapter 98 or 99. Neglecting to check these chapters may result in too much duty being paid. Chapter 98 of the Customs Tariff is reserved for noncommercial goods. Like the goods of Chapter 99, the goods classified in Chapter 98 also have an enduse provision.
Lesson Objective At the end of Lesson 5, you should be able to apply the provisions of Chapter 98 or 99 of the Customs Tariff.
Topic 1: Chapter 99 of the Customs Tariff Bookmark this Chapter 99 of the Customs Tariff contains a list of goods whose duty rate may be reduced or removed if certain conditions are met. The following are a few examples from Chapter 99; note that the conditions which must be met have been italicized. 9920.00.00 Materials for use in the manufacture of adhesive or surgical dressings, plasters, slabs or bandages or of textile fabrics coated with plaster of Paris compound. 9933.00.00 Fabrics of Section XI for use by costumers or professional organizations for the performing arts, in the manufacture of costumes for the performing arts or television representations. 9935.00.00 Woven fabrics of cotton (excluding denim or unbleached fabrics), containing 85% or more by weight of cotton, of Chapter 52, for use in the manufacture of apparel or apparel accessories. If the end use or condition is not met, Chapter 99 may not be used. The words "for use in" appear throughout Chapter 99. Goods listed in Chapter 99 must be used for a specific purpose. The Customs Tariff Act defines "for use in" as follows: wherever it appears in a tariff item, in respect of goods classified in the tariff item, means that the goods must be wrought or incorporated into, or attached to, other goods referred to in that tariff item. In order to prove enduse, and that the required conditions have been met, CBSA may require a copy of a contract or purchase order. Before applying a code found in Chapter 99, the tariff classification number of the goods must be selected from chapters 197. Once the tariff classification number has been selected, the first four digits of the Chapter 99 classification are added after the statistical suffix. These four digits are referred to as the tariff code. Example: if imported cotton, knit fabric will be used to manufacture surgical trusses, tariff classification 6003.20.90.00 is indicated in field 27 of the B3 accounting document and tariff code 9915 is shown in field 28. The the B3 accounting document is described in Part 3 of this course. The duty rates applicable to goods qualifying for entry under the terms of Chapter 99 vary.
Topic 2: Chapter 98 of the Customs Tariff Bookmark this Chapter 98 of the Customs Tariff is reserved for noncommercial goods. Like the goods of Chapter 99, the goods classified in Chapter 98 also have an enduse provision. If goods in Chapter 98 meet the provisions of one of the items of Chapter 99, Chapter 98 takes precedence over Chapter 99 and Chapter 98 must be selected. http://cscb.ca/print/book/export/html/182530
32/87
10/1/2015
201516 CCS Course Part 2
Unlike Chapter 99, where goods are first classified in Chapters 1 97, the goods of Chapter 98 are not first classified in Chapters 1 97. When using a classification number from Chapter 98, all tendigits of the Chapter 98 item are shown.
Lesson 5 Summary: Chapters 98 and 99 of the Customs Tariff Bookmark this This lesson showed you when Chapter 98 or 99 of the Customs Tariff may be used. Key points in this lesson are: chapter 98 or 99 of the Customs Tariff may be applied if goods have a conditional or enduse; neglecting to consider the provisions of Chapter 99 may result in too much duty being paid; “for use in”, wherever it appears in a tariff item, in respect of goods classified in the tariff item, means that the goods must be wrought or incorporated into, or attached to, other goods referred to in that tariff item; in order to prove enduse, and that the required conditions of Chapter 99 have been met, CBSA may require a copy of a contract or purchase order; goods must first be classified into a tariff classification number in chapters 1 97 before consulting Chapter 99; and the first four digits (the tariff code) of the Chapter 99 tariff item are appended to the 10digit tariff classification.wWhen using a classification number from Chapter 98, all tendigits of the Chapter 98 item are shown. Answer the questions in the online version to see how much you have learned about the application of Chapter 98 and 99.
Module 9: Lesson 5 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 9 Summary: Classifying Goods Bookmark this Classification of Goods get as much information as possible about the goods being classified. (Remember to keep a record of where the information came from); select the section of the Customs Tariff that best applies to the imported goods; titles of sections and chapters are provided for reference only; classification is determined according to the heading and any relative section or chapter notes; read section notes; select the chapter, and read any chapter notes; select the heading; compare with each other, any onedash subheadings under the heading; compare with each other, any twodash subheadings under the onedash subheading; compare with each other, any threedash tariff items under the twodash subheading; compare with each other, any fourdash tariff items under the threedash tariff items; and refer to the General Interpretive Rules. Classification of Parts parts are generally classified in the same manner as complete articles; general Interpretative Rules, Canadian Rules, and Legal Notes must be consulted; there is distinction made between parts of a specific machine and parts of general use; parts of general use are defined in the tariff; and parts of general use cannot be classified as parts of the machine for which they are intended. Chapters 98 and 99 chapter 98 or 99 may be applied if goods have a conditional or enduse; before using a tariff code found in Chapter 99 for a particular good, the tariff classification number in Chapters 1 97 must be assigned; because CBSA may ask for proof to satisfy the enduse or conditions of Chapter 99, records must be kept that relate to enduse; the first four digits (tariff code) of the Chapter 99 tariff item is appended to the tendigit tariff classification; if goods in Chapter 98 meet the provisions of one of the items of Chapter 99, Chapter 98 takes precedence over Chapter 99 and Chapter 98 must be selected; unlike Chapter 99, where goods are first classified in Chapters 1 97, the goods of Chapter 98 are not first classified in Chapters 1 97; and when using a classification number from Chapter 98, all tendigits of the Chapter 98 item are shown. http://cscb.ca/print/book/export/html/182530
33/87
10/1/2015
201516 CCS Course Part 2
A short quiz on what you have learned in this module is available online.
Module 9: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
11 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 10: Determining Tariff Treatments Bookmark this This module provides information on determining the tariff treatment of imported goods. The tariff classification number, plus the applicable tariff treatment, will determine the rate of duty that is applied to imported goods.
Module Objective You will be able to determine the tariff treatment that is applied to goods imported into Canada.
Lesson 1: Tariff Treatments and Trade Agreements Bookmark this In this lesson you will learn about the various tariff treatments, trade agreements and other trade arrangements in which Canada is involved. You will also learn about the codes used to identify the tariff treatment. The tariff classification number, together with the tariff treatment, determines the rate of duty payable.
Rationale As a CCS, you will be required to determine the correct tariff treatment that is applied to imported goods.
Lesson Objective At the end of Lesson 1, you should be able to describe the various tariff treatments and their codes, as well as describe a trade agreement, or arrangement.
Topic 1: Tariff Treatments and Trade Agreements Bookmark this A tariff treatment determines the rate of duty applied to imported goods. The tariff treatment is determined by the terms of a particular trade agreement, or a trade arrangement. A trade agreement is a legal agreement between two or more countries that provides benefits to all countries that are signatories to it. As well as reducing the rate of duty on imported goods, a trade agreement may also include provisions on: government procurement (government contracts), services, intellectual property, labour, investment, and the environment. This module focuses on duty rate reduction or elimination under various trade agreements. Canada is also involved with other trade arrangements. A trade relationship can be bilateral in which the parties have agreed to grant each other preferential tariff rates on a limited number of products. Canada has such a relationship with Australia and New Zealand. Canada also gives preferential tariff rates unilaterally to least developed countries. In this arrangement, the preferential rates are not provided in return to Canada. http://cscb.ca/print/book/export/html/182530
34/87
10/1/2015
201516 CCS Course Part 2
Canada has signed a number of trade agreements including: the Agreement on Internal Trade (AIT), an agreement between the Federal Government and the Provinces; the North American Free Trade Agreement (NAFTA), an agreement between Canada, the United States and Mexico; and the World Trade Organization Agreement on Government Procurement (GPA), an agreement between a number of countries worldwide. Our focus is on the following trade agreements and trade arrangements: World Trade Organization General Agreement on Tariffs and Trade (GATT) Australian bilateral trade arrangement New Zealand bilateral trade arrangement Commonwealth Caribbean Countries trade arrangement North American Free Trade Agreement (NAFTA) CanadaIsrael Free Trade Agreement (CIFTA) CanadaChile Free Trade Agreement (CCFTA) CanadaCosta Rica Free Trade Agreement (CCRFTA) CanadaEuropean Free Trade Association Free Trade Agreement (CEFTA) CanadaHonduras Free Trade Agreement (CHFTA) CanadaKorea Free Trade Agreement (CKFTA) CanadaPeru Free Trade Agreement (CPFTA) CanadaColombia Free Trade Agreement (CCOFTA) CanadaJordan Free Trade Agreement (CJFTA) CanadaPanama Free Trade Agreement (CPAFTA)
Topic 1: Tariff Treatments and Trade Agreements (cont. 2) Bookmark this On January 26, 2008, Canada signed a free trade agreement with the European Free Trade Association (EFTA).The CanadaEuropean Free Trade Association Free Trade Agreement (CEFTA) aims at liberalizing and facilitating trade in goods in conformity with WTO provisions, and most industrial goods, including fish and other marine products, are benefitting from dutyfree access to their respective markets. On July 1, 2009 this CEFTA entered into force. For ships, boats and floating structures imported into Canada, customs duties are to be eliminated after a transitional period of up to 15 years. CEFTA Rules of Origin are used to determine whether a product is eligible for preferential treatment. On May 29, 2008, Canada entered into a free trade agreement with the Republic of Peru. Major Canadian merchandise exports to Peru are cereals, leguminous vegetables (pulses), paper, technical instruments and machinery. Major imports from Peru consist of gold, zinc and copper ores, oil, animal feed and vegetables. Immediately upon implementation of the agreement, Peru eliminated tariffs on 95 per cent of current Canadian exports, with the remaining tariffs to be eliminated over a five to tenyear period. Products that have enjoyed immediate dutyfree access to Peru include wheat, barley, lentils, peas and selected boneless beef cuts, as well as a variety of paper products, machinery and equipment. Canada immediately eliminated 97 per cent of its tariffs on Peruvian imports. The rest will be eliminated over a three or sevenyear period, with the exception of overquota tariffs on dairy, poultry, eggs and refined sugar, which are excluded from tariff reductions. For refined sugar, a tariffrate quota will apply. On January 1, 2009 this agreement entered into force.
Topic 1: Tariff Treatments and Trade Agreements (cont. 3) Bookmark this On June 7, 2008, Canada concluded free trade agreement negotiations with Colombia. Colombia is an established and growing market for Canadian exporters of wheat, pulses, barley, chemicals, paper products, and heavy equipment, and service providers in the mining, oil and gas, engineering, information and communication sectors. On March 26, 2009, the Government of Canada introduced legislation to implement the CanadaColombia Free Trade Agreement, and on August 15, 2011 this agreement entered into force. On May 14, 2010, the CanadaPanama Free Trade Agreement was signed. Once implemented, this FTA will benefit Canadian exporters through the elimination of Panamanian tariffs, including: agriculture and agrifood products; pharmaceuticals; wood, pulp and paper products; electrical and industrial machinery; vehicles and auto parts; information and communication technology; aerospace; plastic products; fish and seafood; and iron and steel products. On August 12, 2011 negotiations for a CanadaHonduras Free Trade Agreement were concluded. This will benefit Canadian businesses in many sectors including agriculture, professional services, value added food processing and manufacturing, as well as commodity and resourcebased industries. On October 1, 2012, the CanadaJordan Free Trade Agreement came into force. Key Canadian sectors that benefitted from immediate dutyfree access include forest products, manufacturing and agriculture and agrifood. On January 1, 2015, the CanadaKorea Free Trade Agreement came into force.
Topic 2: Codes for Tariff Treatments Bookmark this http://cscb.ca/print/book/export/html/182530
35/87
10/1/2015
201516 CCS Course Part 2
The specific tariff treatment used on an importation is identified to CBSA by use of a code. The following table shows the trade agreement, trade arrangement (OrderinCouncil) the tariff treatment resulting from that trade agreement, and its code. Trade Agreement or Arrangement, where applicable
Tariff Treatment
Tariff Treatment Codes
World Trade Organization (GATT)
Most Favoured Nation (MFN)
2
Australia Trade Agreement (CANATA)
Australian (AUT)
4
New Zealand
New Zealand (NZT)
5
Commonwealth Caribbean Countries
Commonwealth Caribbean Countries (CCCT) 7
Least Developed Country (LDCT)*
8
General Preferential (GPT)*
9
North American Free Trade Agreement (NAFTA)
United States (UST)
10
Mexico (MT)
11
MexicoUnited States (MUST)
12
CanadaIsrael Free Trade Agreement (CIFTA)
CanadaIsrael (CIAT)
13
CanadaChile Free Trade Agreement (CCFTA)
Chile (CT)
14
CanadaCosta Rica Free Trade Agreement (CCRFTA)
Costa Rica (CRT)
21
CanadaEuropean Free Trade Association Free Trade Agreement (CEFTA) Iceland Tariff (IT)
22
Norway Tariff (NT)
23
SwitzerlandLiechtenstein Tariff (SLT)
24
CanadaPeru Free Trade Agreement (CPFTA)
Peru Tariff (PT)
25
CanadaColombia Free Trade Agreement (CCOFTA)
Colombia Tariff (COLT)
26
CanadaJordan Free Trade Agreement (CJFTA)
Jordan Tariff (JT)
27
CanadaPanama Free Trade Agreement
Panama Tariff (PAT)
28
CanadaHonduras Free Trade Agreement (CHFTA)
Honduras (HNT)
29
CanadaKorea Free Trade Agreement (CKFTA)
Korea (KRT)
30
The North American Free Trade Agreement (NAFTA), and the United States, Mexico, and MexicoUnited States Tariff treatments are discussed in Module 11. Click here for *.
Topic 3: List of Countries and Applicable Tariff Treatments Bookmark this In order to determine the tariff treatment or treatments that can apply to goods from a specific country, you must consult the List of Countries and Applicable Tariff Treatments. As an example, let’s have a look at Italy. Here is link to the list. If you follow down the alphabetical list under the heading "Country Name" to Italy, you will see an "X" in the column under MFN (MostFavouredNation Tariff treatment). This means that the only Tariff treatment available to goods that originate in Italy is the MostFavouredNation Tariff treatment. What about Mongolia? What tariff treatment(s) may be used for goods that originate in Mongolia? How do you know which tariff treatment to select for Mongolia? MostFavouredNation or General Preferential? In order to use a particular Tariff treatment, certain requirements must be met. The requirements for each Tariff treatment are described in the following lesson. If the requirements for more than one tariff treatment are met, select the tariff treatment with the lowest duty rate.
Lesson 1 Summary: The Tariff Treatments and Trade Agreements Bookmark this In this lesson you learned that the tariff classification number, together with the Tariff treatment, determines the rate of duty payable. Key points covered in this lesson include: tariff treatment is determined by the terms of a trade agreement, or trade arrangement; trade agreements or arrangements may be between two or more countries; trade agreements and arrangements can affect more than just the rate of duty; the CBSA identifies which Tariff treatment is being applied by the use of the appropriate Tariff treatment code; the Tariff treatment(s) for goods from a particular country are found in the List of Countries and Applicable Tariff Treatments; goods may be eligible for more than one Tariff treatment; certain requirements must be met in order to use a particular Tariff treatment; and if the requirements for more than one Tariff treatment are met, select the Tariff treatment with the lowest duty rate. Have a look at the following questions to see how much you have learned about Tariff treatments, trade agreements, and trade arrangements. http://cscb.ca/print/book/export/html/182530
36/87
10/1/2015
201516 CCS Course Part 2
Module 10: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Tariff Treatment Essentials Bookmark this Lesson 2 will provide you with essential information that is common to most Tariff treatments.
Rationale Before you select a particular Tariff treatment, you must be aware of basic information and common terms used in describing a particular Tariff treatment. As well, there are requirements that are common to most Tariff treatments.
Lesson Objective At the end of this lesson you will recognize the basic requirements that must be met for most Tariff treatments.
Topic 1: Legislative Authorities Bookmark this The following legislative authorities are the ones most often consulted when determining the tariff treatment of imported goods. They are taken directly from the Customs Tariff Act. Section 24.(1) of the Customs Tariff Act states: Conditions 24.(1) Unless otherwise provided in an order made under subsection (2) or otherwise specified in a tariff item, goods are entitled to a tariff treatment, other than the General Tariff, under this Act only if (a) proof of origin of the goods is given in accordance with the Customs Act; and (b) the goods are entitled to that tariff treatment in accordance with regulations made under section 16 or an order made under any of the following provisions: (i) paragraph 31(1)(a), (ii) paragraph 34(1)(a), (iii) paragraph 38(1)(a), (iv) paragraph 42(1)(a), (v) subsection 45(13),(vi) subsection 48, (vii) subsection 49.01(8), (viii) section 49.2, (ix) subsection 49.5(8). This means that in order to use a particular tariff treatment, other than the General Tariff, proof of origin must be provided and other origin requirements must be met. Note: The General Tariff, while not technically a Tariff treatment, will be discussed later in this module. Section 25 of the Customs Tariff Act states: Most favourable tariff 25. If, under this Act, goods are entitled to both the MostFavouredNation Tariff and another Tariff and the amount of customs duty imposed under the MostFavouredNation Tariff is lower than the amount imposed under the other Tariff, the rate of customs duty under the MostFavouredNation Tariff applies to those goods in lieu of the rate under the other Tariff. This section means that if both the Most Favoured Nation Tariff treatment and another tariff treatment applies, and the Most Favoured Nation duty rate is lower, then the Most Favoured Nation rate of duty may be used. Section 28 of the Customs Tariff Act states: If rate not specified 28. The symbol "N/A", if it is set out in the column entitled "MostFavouredNation Tariff" in the List of Tariff Provisions, or in the column entitled "Preferential Tariff" in that List in combination with an abbreviation designating a preferential tariff treatment of a tariff item, indicates that that tariff treatment does not apply to that tariff item. This means that if "N/A" is indicated in the column under “MFN Tariff” or it is found next to a particular tariff treatment in the column “Applicable Preferential Tariffs” in the Customs Tariff, then that tariff item cannot be used with that tariff treatment and an alternate tariff treatment must be selected. http://cscb.ca/print/book/export/html/182530
37/87
10/1/2015
201516 CCS Course Part 2
Have a look at tariff item 9938.00.00. N/A is quoted in the MFN Tariff column; this means there is no applicable MFN duty rate for this tariff item. For classification number 0604.20.10.40, NZT is not listed in the Applicable Preferential Tariffs column; this means that there is no applicable NZT duty rate for tariff item 0604.20.10.40.
Topic 2: Direct Shipment and Transhipment Bookmark this Direct shipment and transhipment, which are both defined in the Customs Tariff Act, must be considered when determining the origin, and ultimately the tariff treatment, of imported goods. Direct shipment takes place when goods are shipped directly to a consignee in Canada on a through bill of lading. Goods may pass through another country on their way to Canada, but the journey must be uninterrupted. The transfer of goods from one carrier to another carrier is not considered an interruption of the journey. Transhipment is the shipment of goods to an intermediate destination, and then from that destination to another destination. Transhipment is allowed when determining origin if certain conditions are met. These conditions are: the goods remain under customs transit control (this means that when the goods are in the intermediate country they must remain under the control of customs in that country); the goods may not undergo any process in the intermediate country other than unloading, reloading, splitting up of loads, or other process necessary to keep the goods in good condition; the goods must not be used in the intermediate country; or the goods must not remain in the intermediate country for longer than six months.
Topic 3: Cost of Production Bookmark this Costs of production are any specific costs that are included in the cost to manufacture goods. The cost of production includes: materials (but not including any duties or taxes paid on imported materials used to manufacture the finished good), labour, and factory overhead. The cost of production does not include: any duties and taxes paid or payable on imported materials used to manufacture the finished good, outside packing and expenses related thereto, required for the transportation of the goods, gross profit of the manufacturer or exporter and the profit or remuneration of any person dealing in the article in its finished manufactured condition, royalties, customs or excise duty or tax paid or payable on imported materials, carriage, insurance and other charges from the place of production or manufacture in the country of origin to the port of shipment, and any other costs or charges incurred or to be incurred subsequent to the completion of the manufacture of the goods.
Topic 4: Rules of Origin Bookmark this In order to be eligible to use a particular tariff treatment, the imported goods must originate in a country that is a party to that particular tariff treatment. Section 16(1) of the Customs Tariff Act provides the following definition of “originate”: Subject to any regulations made under subsection (2), for the purposes of this Act, goods originate in a country if the whole of the value of the goods is produced in that country. This means that unless regulations made under subsection 16(2) states something to the contrary, goods originate in a particular country if the entire value of the goods has derived from production in that country. Subsection 16(2) of the Customs Tariff Act states: (2) Rules of origin regulations — The Governor in Council may, on the recommendation of the Minister, make regulations (a) respecting the origin of goods, including regulations (i) deeming goods, the whole or a portion of which is produced outside a country, to originate in that country for the purposes of this Act or any other Act of Parliament, subject to such conditions as are specified in the regulations, (ii) deeming goods, the whole or a portion of which is produced within a geographic area of a country, not to originate in that country for the purposes of this Act or any other Act of Parliament and not to be entitled to the preferential tariff treatment otherwise applicable under this Act, subject to such conditions as are specified in the regulations, and (iii) for determining when goods originate in a country for the purposes of this Act or any other Act of Parliament; and (b) for determining when goods are entitled to a tariff treatment under this Act. http://cscb.ca/print/book/export/html/182530
38/87
10/1/2015
201516 CCS Course Part 2
Subsection 16(2) means that the Governor in Council may make regulations regarding the origin of goods that are not entirely produced in a particular country.
Topic 4: Rules of Origin (cont. 2) Bookmark this When goods are not entirely produced in a particular country, there are specific rules that are used to determine the origin under specific tariff treatments. A specific rule of origin can look like this: 72.01 A change to heading No. 72.01 from any other chapter. The heading on the left, 72.01, is the heading of the finished good. In this case, it might be pig iron. This particular rule means that nonoriginating parts and materials that are classified in any other chapter (not chapter 72) can be incorporated into the finished good and the finished good will still be considered as originating. For example, the pig iron might contain nonoriginating coke (chapter 27) and still originate in the country in which the finished good was manufactured. This is called a tariff shift rule, since the nonoriginating parts and materials underwent a change, or shift, in classification. Here is another example of a specific rule of origin. 8410.11 8410.13 A change to subheading Nos. 8410.11 through 8410.13 from any other heading number. The subheadings on the left, 8410.11 8410.13, are the subheadings for the finished good. Nonoriginating parts and materials that are in any other heading (not heading 84.10) can be included and the goods will retain the origin of the country of manufacture. For example, nonoriginating parts and materials of headings 73.26 and 39.20 would be allowed. Nonoriginating parts and materials of heading 84.10 would not. This is another example of a tariff shift rule.
Topic 5: Regional Value Content Bookmark this When reading the specific rules of origin for a particular tariff treatment, the phrase "Regional Value Content" is common. The Regional Value Content (RVC) is always expressed as a percentage. A specific rule of origin that has a regional value content requirement might look like this:
74.13
A change to heading No. 74.13 from heading Nos. 74.07 through 74.08, whether or not there is also a change from any other heading No., provided there is a regional value content of not less than: (a) 60 percent where the transaction value method is used, or (b) 50 percent where the net cost method is used.
Remember that the heading on the left is the heading of the finished good. In this case, if the finished good contains nonoriginating parts and materials from any heading other than 74.13 AND meets the RVC requirement, the finished good originates in the country of manufacture. There are two formulae used to determine RVC. One uses the transaction value method of the finished good and the other uses the net cost method of the finished good. The formula for the RVC when using the Transaction Value (TV) method is: RVC = TV Value of Nonoriginating Materials X 100 TV The formula for the RVC when using the Net Cost (NC) method is: RVC = NC Value of Nonoriginating Materials X 100 NC Let’s use the following figures and calculate the RVC required for this particular rule of origin for goods of heading 74.13. Transaction Value (TV) = $200.00 Net Cost (NC) = $180.00 Value of nonoriginating materials included in the finished product = $90.00
Topic 5: Regional Value Content (cont. 2) Bookmark this Using the TV, our calculation is: http://cscb.ca/print/book/export/html/182530
39/87
10/1/2015
201516 CCS Course Part 2
RVC = 200.00 90.00 X 100 200.00 RVC = 110.00 X 100 200.00 RVC = 55% The goods have not met the RVC requirement of 60% when using the transaction value method. You now have the option of checking to see if the goods qualify as originating using the net cost method. Using the NC, our calculation is: RVC = 180 90.00 X 100 180.00 RVC = 90.00 X 100 180.00 RVC = 50% The goods have met the RVC requirement of 50% when using the NC method. The goods are considered to be originating in the country of manufacture even though nonoriginating parts and materials (outside of heading 74.13) were incorporated into the finished good.
Topic 6: De Minimis Rule Bookmark this Certain tariff treatments allow the de minimis rule to be used when determining origin. The de minimis rule excludes a certain percentage of nonoriginating parts and materials from meeting the tariff shift requirement. However, if there is both a tariff shift requirement and a regional value content requirement, the nonoriginating parts and materials are included when calculating the regional value content part of the rule. But, if there is only a regional value content requirement, that is, there is no required tariff shift, the de minimis value of all nonoriginating materials must be considered when calculating the regional value content requirement. The percentage allowed for de minimis varies between tariff treatments and can also vary within a tariff treatment according to the tariff item of the finished good.
Lesson 2 Summary: Tariff Treatment Essentials Bookmark this This lesson described some of the terms and conditions that are common to most tariff treatments. It also taught you how to apply the specific rules of origin. Key points covered in this lesson include: certain requirements must be met in order to use a specific tariff treatment; direct shipment can be a condition for a particular tariff treatment; transhipment can be a condition for a particular tariff treatment; some tariff treatments cannot be used with specific tariff items; the cost of production may be a factor in determining origin; one of the ways in which goods may originate in a particular country is if the entire value of the goods is derived from production in that country; certain tariff treatments have specific rules of origin that must be consulted to determine origin.Specific rules of origin may involve a tariff shift or regional value content requirement; there are two formulae that can be used to determine regional value content; the de minimis rule excludes a certain percentage of nonoriginating parts and materials when looking at a tariff shift rule; and the de minimis rule excludes a certain percentage of nonoriginating parts and materials when calculating the regional value content requirement. Take a few minutes and answer the following questions to see how much you have learned about tariff treatment essentials.
Module 10: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
9 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. http://cscb.ca/print/book/export/html/182530
40/87
10/1/2015
201516 CCS Course Part 2
Start quiz
Lesson 3: Specific Tariff Treatments and the General Tariff Bookmark this In order to select the correct tariff treatment, you must be aware of any requirements that must be met for that tariff treatment.
Rationale As well as determining the tariff classification number, you must also be able to determine the correct tariff treatment since it is the tariff treatment, in combination with the tariff classification number that determines the rate of duty that is applied.
Lesson Objective In this lesson you will be able to describe the requirements for the most commonly used tariff treatments. You will also learn about the General Tariff and when it is used.
Topic 1: Most Favoured Nation Tariff Treatment Bookmark this Countries that are entitled to use the Most Favoured Nation (MFN) Tariff treatment are those that are signatories to the General Agreement on Tariffs and Trade, or GATT. GATT was first negotiated in 1947 after World War II. Its objective was to reduce barriers to international trade. Several “rounds” of GATT took place, with various outcomes. For example, the first round, the Torquay Round, dealt with identifying the goods that would be contained in GATT and established an agreement to continue existing tariff levels. A second round of GATT, the Accecy Round, focused on reducing duty rates, and the third, the Uruguay Round, extended GATT to include trade in intellectual property, services, and agriculture. This round, completed in 1994, resulted in the formation of the World Trade Organization. From that point forward, the WTO has been tasked with implementing the agreements that were made under the terms of GATT. Article 1 of GATT includes the principle of Most Favoured Nation. This principle states that all members of GATT will guarantee Most Favoured Nation Tariff treatment to goods from member countries and that concessions that are granted to products from one member country must be extended to the products of all other GATT member countries. As well as import duties, these concessions may include other import or export charges. The MFN Tariff treatment prevents member countries from being subject to customs duty rates that are higher than those granted to other GATT signatories. The requirement to extend MFN Tariff treatment to all GATT member countries does not, however, prevent member countries from entering into separate trade agreements with each other. Goods originate in a country that is a beneficiary of the Most Favoured Nation Tariff if: not less than 50% of the cost of production of the goods is incurred by the industry of one or more countries that are beneficiaries of the Most Favoured Nation Tariff, or by the industry of Canada; and the goods were finished in a country that is a beneficiary of the Most Favoured Nation Tariff in the form in which they are imported into Canada. That is, at least 50% of the cost of producing the goods took place in one or more countries, including Canada, that are subject to the Most Favoured Nation Tariff treatment. Furthermore, the country that finishes the goods in the condition in which they will be shipped to Canada must be entitled to use the Most Favoured Nation Tariff treatment. As well, to qualify for MFN Tariff treatment, goods must be shipped directly to Canada from a country that is a MFN beneficiary country, with or without transhipment.
Topic 1: Most Favoured Nation Tariff Treatment (cont. 2) Bookmark this
Proof of Origin In order to claim the benefits of the MFN tariff treatment, the owner or importer of the goods must provide: a Canada Customs Invoice, completed in English or French by the importer or owner that indicates that the goods originate in the applicable beneficiary country; where the Canada Customs Invoice does not indicate that the goods originate in the applicable beneficiary country, a commercial invoice, completed in English or French by the vendor or the transferee in the country of export, that indicates that the goods originate in the applicable beneficiary country; or any other documentation, completed in English or French that indicates that the goods originate in the applicable beneficiary country.
Topic 2: New Zealand and Australia Tariff Treatments http://cscb.ca/print/book/export/html/182530
41/87
10/1/2015
201516 CCS Course Part 2
Bookmark this Goods originate in Australia if not less than 50 per cent of the cost of production of the goods is incurred by the industry of Australia or Canada or both and the goods were finished in Australia in the form in which they are imported into Canada. Goods are entitled to the Australia Tariff (AUT) only if the goods are shipped directly to Canada, with or without transhipment, from Australia. Goods originate in New Zealand if not less than 50 per cent of the cost of production of the goods is incurred by the industry of New Zealand or Canada or both and the goods were finished in New Zealand in the form in which they are imported into Canada. Goods are entitled to the New Zealand Tariff (NZ) only if the goods are shipped directly to Canada, with or without transhipment, from New Zealand. Generally speaking, when tariff classification numbers do not include a duty rate for AUT or NZ, the MFN rate applies.
Proof of Origin order to claim the benefits of the Australia or New Zealand Tariff treatments, the owner or importer of the goods must provide: a Canada Customs Invoice, completed in English or French by the importer or owner that indicates that the goods originate in the applicable beneficiary country; where the Canada Customs Invoice does not indicate that the goods originate in the applicable beneficiary country, a commercial invoice, completed in English or French by the vendor or the transferee in the country of export, that indicates that the goods originate in the applicable beneficiary country; or any other documentation, completed in English or French that indicates that the goods originate in the applicable beneficiary country.
Topic 3: CanadaIsrael Agreement Tariff Bookmark this Countries that are entitled to use the CanadaIsrael Agreement Tariff (CIAT) are Israel and any other country to which the laws of Israel apply. These include the West Bank and the Gaza Strip. The CanadaIsrael Free Trade Agreement (CIFTA) was implemented on January 1, 1997. CIFTA Rules of Origin are used to determine if goods originate under this trade agreement. Note that none of the CIFTA specific rules of origin contain a regional value requirement.
Proof of Origin Once it has been determined that the goods qualify under the CIFTA, the exporter, producer or manufacturer must complete a Certificate of Origin. For CIFTA goods exported from Canada, the Certificate of Origin can be completed by the exporter, producer or manufacturer in Canada. The Certificate of Origin for CIFTA goods may be completed in English, French, Hebrew or Arabic. The “Origin Criteria” must be noted in field 7 of the certificate.
Origin Criteria Regardless of the specific tariff treatment being used, when there is a requirement for a Certificate of Origin, the origin criteria must be stated on the certificate. Depending on the certificate that is used, one of the criteria could be this: Criterion A The good is "wholly obtained or produced entirely" in the freetrade area.
Explanation Criterion A includes goods such as apples that are grown in the freetrade area, an animal that is born and raised in the area, and minerals that are mined in the area. There must be absolutely no foreign parts or materials included in the exported or imported item. Keep in mind that simply purchasing goods in a country that has a free trade agreement with Canada does not entitle the goods to a preferential rate of duty. Another example of an origin criterion is: Criterion B The good is produced entirely in the freetrade area and satisfies the specific rule of origin that applies to its tariff classification. The good must also satisfy all other applicable requirements.
Explanation Criterion B means that the imported or exported good must meet the specific rule of origin for that good. This can be either the tariff shift rule or the regional value content rule. The criterion that can be applied to a particular tariff treatment is noted on page two of the corresponding certificate of origin.
Topic 4: Chile Tariff Treatment Bookmark this http://cscb.ca/print/book/export/html/182530
42/87
10/1/2015
201516 CCS Course Part 2
Canada and Chile are signatories to the CanadaChile Free Trade Agreement (CCFTA). Originating goods are entitled to use the Chile Tariff treatment (CT), implemented on July 5, 1997.
Rules of Origin CCFTA Rules of Origin are used to determine if goods originate under this trade agreement.
Proof of Origin A Certificate of Origin must be completed for goods qualifying under the CCFTA rates of duty. For imported goods, it is completed by the exporter, producer or manufacturer and for qualifying goods exported from Canada; it must be completed by the exporter, producer or manufacturer in Canada. The Certificate of Origin for CCFTA goods may be completed in English, French or Spanish. Specific origin criteria must be noted when completing the Certificate of Origin.
Topic 5: Costa Rica Tariff Treatment Bookmark this Canada and Costa Rica are signatories to the CanadaCosta Rica Free Trade Agreement (CCRFTA). Originating goods are entitled to use the Costa Rica Tariff treatment (CRT), implemented on November 1, 2002.
Rules of Origin CCRFTA Rules of Origin are used to determine if goods originate under this trade agreement.
Proof of Origin A Certificate of Origin must be completed for goods qualifying under the CCRFTA rates of duty. For imported goods, it is completed by the exporter, producer or manufacturer and for qualifying goods exported from Canada, it must be completed by the exporter, producer or manufacturer in Canada. The Certificate of Origin may be completed in English, French or Spanish. Specific origin criteria must be noted when completing the Certificate of Origin.
Topic 6: British Preferential Tariff Treatment Bookmark this The former British Preferential Tariff (BPT) treatment was an agreement that stemmed from an international agreement signed by Canada. It granted British Commonwealth countries the benefit of more favourable customs duty rates on goods produced in these countries when exported to Canada under certain conditions. BPT treatment was accorded to goods produced in British Commonwealth countries. It did not include goods from the United Kingdom or Northern Ireland; these countries were subject to MFN rates. In 1998, the BPT was rescinded since the 1998 tariff revisions included MFN duty rates that were equal to those under BPT. For those few cases where the BPT rate was less than that under the MFN, however, an Order in Council was created to allow the use of the favourable BPT rates of duty. When using this Order in Council, the import document must show "1" as the tariff treatment code. The Order in Council number does not need to be indicated.
Rules of Origin In order to use the British Preferential Tariff treatment, at least 50% of the cost of product must be incurred in one or more countries eligible for the BPT rates or Canada. Goods must be finished in the beneficiary country in the form in which they are imported into Canada.
Proof of Origin A commercial invoice or Canada Customs Invoice prepared by the vendor and clearly indicating the country of origin of the goods provides proof of origin for BPT goods. Other documentation that confirms the origin of the goods may also be used.
Topic 7: General Preferential Tariff Treatment Bookmark this Implemented in July 1974, the General Preferential Tariff (GPT) treatment was to have been in effect for a period of ten years; this has since been extended until June 2014.
http://cscb.ca/print/book/export/html/182530
43/87
10/1/2015
201516 CCS Course Part 2
Rules of Origin In order to use the GPT rates of duty, goods must meet the GPT Rules of Origin; be finished in the GPT beneficiary country in the form in which they were imported into Canada; and be shipped directly to Canada, with or without transhipment, from a beneficiary country.
Proof of Origin All originating goods must be documented on either Form A – Certificate of Origin or an Exporter's Statement of Origin.
Topic 8: Least Developed Country Tariff Treatment Bookmark this The GPT and the Least Developed Country Tariff treatment are closely related. Goods from countries entitled to use the LDCT may also use the GPT.
Rules of Origin In order to use the LDCT rates of duty, goods must meet the LDCT Rules of Origin; be finished in a LDCT beneficiary country in the form in which they were imported into Canada; and be shipped directly to Canada, with or without transhipment from a least developed country.
Proof of Origin Other than for originating goods found in chapter 50 63 of the Customs Tariff, either a Form A, Certificate of Origin or an Exporter's Statement of Origin may be submitted as proof of origin. For originating goods of chapters 50 63 (textiles and apparel), a Certificate of Origin Textile and Apparel Goods Originating in a Least Developed Country, form B255, must be submitted as proof of origin
Topic 9: Commonwealth Caribbean Countries Tariff Treatment Bookmark this This tariff treatment may be known as CCCT or Caribcan.
Rules of Origin In order to use the CCCT rates of duty, goods must meet the CCCT Rules of Origin; be finished in the beneficiary country in the form in which they were imported into Canada; and be shipped directly to Canada, with or without transhipment, from a beneficiary country.
Proof of Origin All originating goods must be documented on either Form A – Certificate of Origin or an Exporter's Statement of Origin.
Topic 10: The General Tariff Bookmark this The General Tariff is not a Tariff treatment. Goods that originate in countries that are not included in the List of Countries and Applicable Tariff Treatments or which originate in a country included on this list but do not meet the requirements for another tariff treatment, including MFN, are subject to the General Tariff rate of duty. The rate of duty under the General Tariff is 35%, and the code used on the import document to indicate use of this tariff is 3.
Topic 11: European Free Trade Association Tariff Treatments Bookmark this On July 1, 2009 Canada implemented the CanadaEuropean Free Trade Association Free Trade Agreement (CEFTA). Four countries make up the European Free Trade Association (EFTA): Iceland, Norway, Switzerland, and Liechtenstein. CEFTA consists of a central agreement, which includes industrial products and selected processed agricultural products. Three bilateral agreements on agriculture were signed with Norway, Iceland and Switzerland. http://cscb.ca/print/book/export/html/182530
44/87
10/1/2015
201516 CCS Course Part 2
Rules of Origin In order to use the CEFTA rates of duty, goods must meet the CEFTA Rules of Origin; must be shipped directly from the EFTA country in which the good originates, with or without transshipment, to Canada for each respective agriculture bilateral agreement; and other than those contained in the agriculture bilateral agreements, may be shipped directly from any of the EFTA countries, with or without transshipment, to Canada.
Proof of Origin The required proof of origin is a statement and is referred to in the CEFTA as the Origin Declaration.
Topic 12: Peru Tariff Treatment (PT) Bookmark this Canada and Peru are signatories to the CanadaPeru Free Trade Agreement (CPFTA). Originating goods are entitled to use the Peru Tariff treatment (PT), implemented on August 1, 2009.
Rules of Origin Peru Rules of Origin are used to determine if goods originate under this trade agreement.
Proof of Origin The required proof of origin is the CanadaPeru Certificate of Origin available in English, French or Spanish. In order to claim the preferential tariff treatment accorded under the CPFTA, importers must have in their possession the CanadaPeru Certificate of Origin completed by the exporter in Peru. Goods may be shipped directly from Peru, with or without transshipment, to Canada.
Topic 13: Colombia Tariff Treatment (COLT) Bookmark this Canada and Colombia are signatories to the CanadaColombia Free Trade Agreement (CCOFTA). Originating goods are entitled to use the Colombia Tariff treatment (COLT).
Rules of Origin Colombia Rules of Origin are used to determine if goods originate under this trade agreement.
Proof of Origin The required proof of origin is the CanadaColombia Certificate of Origin available in English, French or Spanish. In order to claim the preferential tariff treatment accorded under the CCOFTA, importers must have in their possession the CanadaColombia Certificate of Origin completed by the exporter in Colombia Goods may be shipped directly from Colombia, with or without transshipment, to Canada.
Topic 14: Jordan Tariff Treatment (JT) Bookmark this Canada and Jordan are signatories to the CanadaJordan Free Trade Agreement (CJFTA). Originating goods are entitled to use the Jordan Tariff treatment (JT).
Rules of Origin Jordan Rules of Origin are used to determine if goods originate under this trade agreement.
Proof of Origin The required proof of origin is the CanadaJordan Certificate of Origin available in English, French or Arabic. In order to claim the preferential tariff treatment accorded under the CJFTA, importers must have in their possession the CanadaJordan Certificate of Origin completed by the exporter in Jordan. Goods may be shipped directly from Jordan, with or without transshipment, to Canada.
http://cscb.ca/print/book/export/html/182530
45/87
10/1/2015
201516 CCS Course Part 2
Lesson 3 Summary: Specific Tariff Treatments and the General Tariff Bookmark this This lesson described the specific requirements for certain tariff treatments and the General Tariff. Key points in Lesson 3 are: Most Favoured Nation Tariff Treatment countries that are signatories to GATT are entitled to use MFN Tariff treatment; signatories to GATT may enter into separate trade agreements outside of MFN; to qualify for MFN, goods must be finished in a country that is entitled to MFN in the form in which they are imported; to qualify for MFN, not less than 50% of the cost of production of the goods is incurred by the industry of one or more countries that are beneficiaries of the Most Favoured Nation Tariff, or by the industry of Canada; and proof of MFN origin can be a Canada Customs Invoice, a commercial invoice, or other document that indicates origin. Australia Tariff Treatment goods originate in Australia if not less than 50 per cent of the cost of production of the goods is incurred by the industry of Australia or Canada or both and the goods were finished in Australia in the form in which they are imported into Canada; goods are entitled to the Australia Tariff (AUT) if the goods are shipped directly to Canada, with or without transhipment, from Australia; and proof of AUT origin can be by way of a Canada Customs Invoice, a commercial invoice, or other document that indicates origin. New Zealand Tariff Treatment goods originate in New Zealand if not less than 50 per cent of the cost of production of the goods is incurred by the industry of New Zealand or Canada or both and the goods were finished in New Zealand in the form in which they are imported into Canada; goods are entitled to the New Zealand Tariff (NZ) only if the goods are shipped directly to Canada, with or without transhipment, from New Zealand; and proof of NZ origin can be by way of a Canada Customs Invoice, a commercial invoice, or other document that indicates origin. CanadaIsrael Tariff Treatment CIFTA specific rules of origin are used to determine if goods qualify for the CIFTA rates of duty; proof of origin for CIFTA goods is provided by a Certificate of Origin; and origin criteria must be noted on the Certificate of Origin. Chile Tariff Treatment CCFTA specific rules of origin are used to determine if goods qualify for the CCFTA rates of duty; proof of origin for CCFTA goods is provided by a Certificate of Origin; and origin criteria must be noted on the Certificate of Origin. Costa Rica Tariff Treatment CCRFTA specific rules of origin are used to determine if goods qualify for the CCRFTA rates of duty; proof of origin for CCRFTA goods is provided by a Certificate of Origin; and origin criteria must be noted on the Certificate of Origin.
Lesson 3 Summary: Specific Tariff Treatments and the General Tariff (Cont.) Bookmark this Peru Tariff Treatment CPFTA specific rules of origin are used to determine if goods qualify for the CPFTA rates of duty; Proof of origin for CPFTA goods is provided by a Certificate of Origin; and Origin criteria must be noted on the Certificate of Origin. Colombia Tariff Treatment CCOFTA specific rules of origin are used to determine if goods qualify for the CCOFTA rates of duty; proof of origin for CCOFTA goods is provided by a Certificate of Origin; and origin criteria must be noted on the Certificate of Origin. Jordan Tariff Treatment CJFTA specific rules of origin are used to determine if goods qualify for the CJFTA rates of duty; proof of origin for CJFTA goods is provided by a Certificate of Origin; and origin criteria must be noted on the Certificate of Origin. Other not all Tariff treatments apply to all tariff classification numbers; BPT is in place for certain qualifying goods whose duty rate is higher under MFN than it was under the former BPT rates; to use GPT, goods must meet the rules of origin, be finished in the GPT beneficiary country in the form in which they were imported into Canada, and be shipped directly to Canada, with or without transhipment, from a beneficiary country; http://cscb.ca/print/book/export/html/182530
46/87
10/1/2015
201516 CCS Course Part 2
proof of origin for GPT goods is provided by a Form A Certificate of Origin or an Exporter’s Statement of Origin; goods from countries entitled to use the LDCT may also use GPT; to use LDCT, goods must meet the rules of origin, be finished in the LDCT beneficiary country in the form in which they were imported into Canada, and be shipped directly to Canada, with or without transhipment, from a beneficiary country; proof of origin for LDCT goods is provided by a Form A Certificate of Origin, an Exporter’s Statement of Origin, or, for originating goods of chapter 50 63, a Certificate of Origin Textile and Apparel Goods originating in a Least Developed Country; to use CCCT, goods must meet the rules of origin and be shipped directly to Canada, with or without transhipment, from a beneficiary country; the General Tariff is not a Tariff treatment; goods that originate in countries that are not included on the List of Countries and Applicable Tariff Treatments or which originate in a country included on this list but do not meet the requirements for another Tariff treatment, including MFN, are subject to the General Tariff rate of duty; the rate of duty under the General Tariff is 35%; and in addition to CEFTA, CPFTA, COOFTA, Canada has implemented the CJFTA. Take some time and answer the following questions on specific Tariff treatments.
Module 10: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Duty Rates Bookmark this In this lesson you will learn that the rate of duty varies according to the tariff treatment of the goods.
Rationale Once you have determined the correct tariff classification of goods, you must then select the correct duty rate.
Lesson Objective You will be able to select the correct duty rate based on the tariff treatment of the goods.
Topic 1: Duty Rates Bookmark this Now that you have learned how to determine the correct tariff treatment, let’s go back to the Customs Tariff and see the various duty rates under the specific tariff treatments. As an example, for tariff classification number 3209.10.00.10, the following rates of duty could apply. Duty Rate Tariff Treatment 6.5%
MFN
free
CCCT, LDCT, UST, MT, MUST, CIAT, CT, CRT, IT, NT, SLT, PT, COLT, JT
3%
GPT
Let’s have a look at another example from the Customs Tariff. This time, let’s look at tariff classification number 9503.00.10.10. In this case, the following rates of duty could apply. Duty Rate Tariff Treatment 8%
MFN
free
CCCT, LDCT, UST, MT, MUST, CIAT, CT, CRT, IT, NT, SLT, PT, COLT, JT
5%
GPT
As well, the General Tariff rate of 35% might apply.
http://cscb.ca/print/book/export/html/182530
47/87
10/1/2015
201516 CCS Course Part 2
Lesson 4 Summary: Duty Rates Bookmark this This lesson demonstrated that the tariff treatment has an effect on the duty rate of imported goods. Take some time and answer the following questions to test what you have learned in this lesson.
Module 10: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 10 Summary: Determining Tariff Treatments Bookmark this In this module you learned about the various trade agreements and trade arrangements that Canada has with other countries, and how the Tariff treatment affects the rate of duty. You also learned about the conditions that must be met to use a particular tariff treatment, and how proof of origin is provided. Each tariff treatment was described, as was the General Tariff. You should now be able to determine the rate of duty on imported goods based on both the tariff classification number and the tariff treatment. Following is a short quiz on what you have learned about tariff treatments and trade agreements.
Module 10: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
14 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 11: The North American Free Trade Agreement Bookmark this This module provides information on the North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico. It replaced the former Free Trade Agreement (FTA) between Canada and the United States. Although Mexico is included in NAFTA, the United States is Canada’s largest trading partner and this trade agreement affects the duty rate of many goods traded between Canada and the United States.
Module Objective You will learn about the North American Free Trade Agreement, how to determine how goods qualify for reduced rates of duty under NAFTA, and how to complete a NAFTA Certificate of Origin.
Lesson 1: NAFTA Bookmark this http://cscb.ca/print/book/export/html/182530
48/87
10/1/2015
201516 CCS Course Part 2
In this lesson you will learn about NAFTA. This is a trade agreement signed by the governments of Canada, the United States and Mexico.
Rationale In your job as a CCS, you will be required to know how to determine the origin of goods under NAFTA. The United States Tariff treatment (UST) is one of the tariff treatments used most often for goods imported into Canada.
Lesson Objective At the end of Lesson 1, you should be able to describe NAFTA.
Topic 1: About NAFTA Bookmark this The North American Free Trade Agreement (NAFTA) took effect on January 1, 1994 and replaced the former Free Trade Agreement (FTA) between Canada and the United States. NAFTA is a trilateral trade agreement among Canada, the United States and Mexico. To the importing community and the customs brokerage industry, the most relevant and therefore, most important aspects of the Agreement are those portions involving the movement of goods among the three countries. However, you should be aware of the overall purpose and objective of this trade agreement. NAFTA has provided for accelerated elimination of duty on goods traded between the three countries, subject to consultation between the governments of the three countries involved. Any one of the three countries could have decided against eliminating its tariffs more quickly than the other two, but it could not prevent the other two from proceeding with accelerated tariff elimination. The preamble to the Agreement establishes that: the Government of Canada, the Government of the United Mexican States, and the Government of the United States of America, resolved to: STRENGTHEN the special bonds of friendship and cooperation among their nations; CONTRIBUTE to the harmonious development and expansion of world trade and provide a catalyst to broader international cooperation; CREATE an expanded and secure market for the goods and services produced in their territories; REDUCE distortions to trade; ESTABLISH clear and mutually advantageous rules governing their trade; ENSURE a predictable commercial framework for business planning and investment; BUILD on their respective rights and obligations under the General Agreement on Tariffs and Trade and other multilateral and bilateral instruments of cooperation; ENHANCE the competitiveness of their firms in global markets; FOSTER creativity and innovation, and promote trade in goods and services that are the subject of intellectual property rights; CREATE new employment opportunities and improve working conditions and living standards in their respective territories; UNDERTAKE each of the preceding in a manner consistent with environmental protection and conservation; PRESERVE their flexibility to safeguard the public welfare; PROMOTE sustainable development; STRENGTHEN the development and enforcement of environmental laws and regulations; and PROTECT, enhance, and enforce basic worker's rights.
Topic 1: About NAFTA (cont. 2) Bookmark this The objectives of the Agreement, found in paragraph 1 of Article 102, are to: Eliminate barriers to trade in, and facilitate the crossborder movement of, goods and services between the territories of the parties; Promote conditions of fair competition in the free trade area; Increase substantially investment opportunities in the territories of the Parties; Provide adequate and effective protection and enforcement of intellectual property rights in each Party's territory; Create effective procedures for the implementation and application of this Agreement, for its joint administration and for resolution of disputes; and Establish a framework for further trilateral, regional, and multilateral cooperation to expand and enhance the benefits of this Agreement. The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with applicable rules of international law. As outlined in the table of contents found at the beginning of NAFTA, the text is divided into the following eight parts: Part One: General Part Part Two: Trade in Goods Part Three: Technical Barriers to Trade Part Four: Government Procurement Part Five: Investment, Services and Related Matters Part Six: Intellectual Property Part Seven: Administrative and Institutional Provisions Part Eight: Other Provisions Each of the eight parts is further divided into chapters and each chapter is divided into articles. The articles in turn are divided into numbered paragraphs. Articles are numbered according to the chapter in which they are found. For example, Article 201 is the first article in Chapter 2. At the end of each chapter there is a list of annexes. Each of these annexes has been referred to in that particular chapter and provides details and clarification of information found in the chapter. To ensure that the Agreement is correctly interpreted, definitions of the terms used in the Agreement are provided. The following are definitions that are http://cscb.ca/print/book/export/html/182530
49/87
10/1/2015
201516 CCS Course Part 2
essential to those using the Agreement.
Topic 1: About NAFTA (cont. 3) Bookmark this TERRITORY means: a) with respect to Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international laws and its domestic law, Canada may exercise rights with respect to the seabed and subsoil and their natural resources; b) with respect to Mexico, (i) the states of the Federation and the Federal District, (ii) the islands, including the reefs and keys, in adjacent seas, (iii) the island of Guadalupe and Revillagigedo situated in the Pacific Ocean, (iv) the continental shelf and the submarine shelf of such islands, keys and reefs, (v) the waters of the territorial seas, in accordance with international law, and its interior maritime waters, (vi) the space located above the national territory, in accordance with international law, and Annex 201.1 (vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea, and its domestic law, Mexico may exercise rights with respect to the seabed and subsoil and their natural resources; and c) with respect to the United States, (i) the customs territory of the United States, which includes the 50 states, the District of Columbia and Puerto Rico, (ii) the foreign trade zones located in the United States and Puerto Rico, and (iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natural resources. ORIGINATING means: qualifying under the rules of origin set out in Chapter 4 (Rules of Origin). (Note: This refers to the specific NAFTA rules of origin. In the previous lesson, we learned about the rules of origin when applied to trade agreements other than NAFTA. The NAFTA rules of origin are discussed in Lesson 2 of this module). MATERIAL means: a good that is used in the production of another good, and includes a part or an ingredient.
Topic 2: NAFTA Tariff Treatments Bookmark this There are three tariff treatments that can be used under NAFTA: Tariff Treatment
Tariff Treatment Code Abbreviation
United States
10
UST
Mexico
11
MT
MexicoUnited States 12
MUST
In order to determine if goods qualify for a NAFTA tariff treatment, NAFTA eligibility is first established. Once that occurs, a second determination must be made as to which of the three NAFTA tariff treatments apply.
Lesson 1 Summary: NAFTA Bookmark this In this lesson you learned about NAFTA, a trade agreement signed by the governments of Canada, the United States and Mexico, and the three tariff treatments under NAFTA. Key points in lesson 1 are: NAFTA is a trilateral agreement; NAFTA has provided for duty reductions on goods traded between Canada, Mexico, and the United States; simplified trade in goods is not the only objective of NAFTA; originating means qualifying under the NAFTA rules of origin; material means a good that is used in the production of another good, and includes a part or an ingredient; and there are three tariff treatments under NAFTA: UST, MT, and MUST. Now take a few minutes and answer the following questions to see how much you have learned.
Module 11: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
http://cscb.ca/print/book/export/html/182530
50/87
10/1/2015
201516 CCS Course Part 2
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: NAFTA Rules of Origin Bookmark this In this lesson you will learn about the rules of origin that are specific to the North American Free Trade Agreement. You will also learn about origin criteria and the de minimis rule.
Rationale In order to determine if goods qualify for entry under one of the NAFTA tariff treatments, you must be able to apply the NAFTA rules of origin.
Lesson Objective You will be able to determine origin using the NAFTA rules of origin.
Topic 1: Tariff Treatment and Casual Goods Bookmark this Goods qualify under NAFTA if they fall under specific origin criteria. Nevertheless, before origin criteria can be determined, it is imperative that the correct tariff classification be applied. Once the correct tariff classification has been determined, the rules of origin must be reviewed to determine NAFTA eligibility. The rules of origin are based on the tariff classification of the finished good, and an error in tariff classification could make a difference in whether goods qualify for NAFTA duty rates or not. NAFTA rules of origin are in Annex 401 of the Agreement. Casual goods that are acquired in the United States are deemed to originate in the United States and are entitled to the United States Tariff treatment (UST) if: the marking of the goods is in accordance with the marking laws of the United States and indicates that the goods are the product of the United States or Canada; or the goods do not bear a mark and there is no evidence to indicate that the goods are not the product of the United States or Canada. In other words, if the goods imported from the United States are casual goods and are marked "made in the United States", the UST can be used. The rules of origin do not have to be consulted. As well, if the goods do not state that they were made in the United States, but also do not state that they were made somewhere other than Canada or the United States, the UST can be used. It is important to note that this does not apply to commercial goods. Casual goods acquired in Mexico are deemed to originate in Mexico and are entitled to the Mexico Tariff treatment (MT) if: the marking of the goods is in accordance with the marking laws of Mexico and indicate that the goods are the product of Mexico or Canada; or the goods do not bear a mark and there is no evidence to indicate that the goods are not the product of Mexico or Canada. In other words, if the goods imported from Mexico are casual goods and are marked “made in Mexico”, the MT can be used. The rules of origin do not have to be consulted. As well, if the goods do not state that they were made in Mexico, but also do not state that they were made somewhere other than Canada or Mexico, the MT can be used.
Topic 2: Criterion A Bookmark this
Origin Criteria Goods that qualify as NAFTA goods do so according to one of six origin criteria. Criterion A indicates that the good is "wholly obtained or produced entirely" in the territory of one or more of the NAFTA countries. "Wholly obtained" means that the goods contain no foreign materials or parts from outside Canada, the United States or Mexico. Simply purchasing the good in one of the NAFTA countries does not render it "wholly produced or obtained". Examples of goods that qualify under Criterion A are: mineral goods extracted in Canada, Mexico, or the United States, http://cscb.ca/print/book/export/html/182530
51/87
10/1/2015
201516 CCS Course Part 2
vegetables harvested in Canada, Mexico or the United States, live animals born and raised in Canada, Mexico, or the United States, and goods produced in Canada, Mexico, or the United States exclusively from any goods "wholly produced or obtained". Although Criterion A is the most straightforward criterion, it is the one most often misused. You should be aware that goods such as machinery and electronic items seldom qualify under Criterion A.
Topic 3: Criterion B Bookmark this Criterion B indicates that the goods are produced entirely in Canada, Mexico, or the United States, and satisfy a specific NAFTA rule of origin. Use of Criterion B on the NAFTA Certificate of Origin indicates that one of the specific NAFTA rules of origin was met. The rule of origin may include a tariff shift, a Regional Value Content (RVC) requirement, or a combination of the two. Rules of origin tariff treatments other than NAFTA may also require a that a tariff shift rule and/or regional value content be met. Example Have a look at heading 73.09 to 73.11 in the NAFTA rules of origin: 73.09 73.11 A change to heading 73.09 through 73.11 from any heading outside that group. This means that goods classified in headings 73.09 to 73.11 may contain parts (or raw materials) from a nonNAFTA country and still qualify for entry under NAFTA, as long as the nonNAFTA parts (or raw materials) are themselves classified under any heading other than headings 73.09 to 73.11. It is important to keep in mind that each nonNAFTA part (or raw material) must undergo the tariff change indicated as a result of production occurring entirely in the territory of Canada, the United States, or Mexico. An example of a specific rule involving an RVC requirement is the following rule that applies to goods of subheading 9015.90. 9015.90 A change to subheading 9015.90 from any other heading; or No required change in tariff classification to subheading 9015.90, provided there is a regional value content of not less than: a. 60 per cent where the transaction value method is used, or b. 50 per cent where the net cost method is used. In this case, the goods may qualify for NAFTA under the first part of the rule of origin. However, if first part does not apply, the producer may attempt to qualify goods under the second part. In the second part of this rule, no tariff classification change is required as long as the RVC requirement is met.
Topic 4: Criterion C Bookmark this Criterion C requires that the goods be produced entirely in the territory of one or more of the NAFTA countries exclusively from originating materials. A nonoriginating material which itself undergoes transformation in a NAFTA country may be considered as originating. Example A firm in Mexico manufactures wooden office desks of tariff item 9403.30.00. All components of the desk are wholly obtained or produced in Mexico except one metal hinge of tariff item 8302.10.90. The hinge was manufactured in Mexico from nonoriginating iron ore (heading 26.01). The rule of origin for 83.02 (the metal hinge) requires a change from any other heading. 83.02 83.04 A change to heading 83.02 through 83.04 from any other heading, including another heading within that group. The change from 26.01 to 83.02 meets this rule. Accordingly, the hinge originates under Criterion B and the other components of the desk originate under Criterion A. The desk therefore is considered made exclusively from originating materials and qualifies under Criterion C. The difference between Criterion B and C is: Criterion B is used when goods are produced in a NAFTA country partly or completely with nonNAFTA materials and one of the specific NAFTA Rules or Origin was met. Criterion C is used when the materials used to produce the final product are originating. Each component of the good must qualify for NAFTA first.
Topic 5: Criterion D Bookmark this Criterion D covers goods that are produced in the territory of one or more of the NAFTA countries but do not meet the applicable rule of origin set out in Annex 401, since certain nonoriginating materials do not undergo the required tariff change due to one of the following reasons: 1. the goods were imported into a NAFTA country in an unassembled or disassembled form but were classified pursuant to General Interpretive Rule 2(a) as an assembled good, or 2. the goods incorporate one or more nonoriginating materials, classified as "parts" under the HS and therefore could not undergo a tariff classification change because the heading or subheading used provides for both the good and its parts. http://cscb.ca/print/book/export/html/182530
52/87
10/1/2015
201516 CCS Course Part 2
In both instances, the Regional Value Content (RVC) of the good cannot be less than 60% when the transaction value method is used, or 50% when the net cost method is used. Example – Reason 1 Consider a bicycle of tariff item 8712.00.00 that is manufactured in France, but shipped to the United States in an unassembled state. While in the United States, the bicycle is assembled, and originating components are added. According to General Interpretive Rule 2(a), whether assembled or unassembled, the bicycle is classified under 8712.00. The rule of origin for 87.12 is: 87.1187.13 A change to heading 87.11 through 87.13 from any other heading, including another heading within that group, except from heading 87.14; or A change to heading 87.11 through 87.13 from heading 87.14, whether or not there is also a change from any other heading, including another heading within that group, provided there is a regional value content of not less than: 60 percent where the transaction value method is used, or 50 percent where the net cost method is used. Neither rule can be met, since there was no tariff shift. However, since the finished bicycle and bicycle parts are classified under the same heading, due to the application of General Interpretive Rule 2(a), the bicycle may qualify if the RVC requirement is met. Example – Reason 2 To illustrate part 2 of Criterion D, consider a barber’s chair, produced in the United States and shipped to Canada. The tariff item for the chair is 9402.10.00. The rule of origin for 94.02 is: 94.02 A change to heading 94.02 from any other chapter. However, the barber’s chair contains nonoriginating parts and the tariff shift requirement cannot be met. Criterion D allows the goods to be considered as originating, since heading 94.02 provides for both the chair and parts. The RVC requirement must be met. Criterion D is rarely used. As well, it cannot be used for wearing apparel of chapters 61 and 62 or for textile articles of chapter 63.
Topic 6: Criterion E Bookmark this Criterion E provides for certain automatic data processing goods and their parts that do not originate in one of the NAFTA countries. A list of applicable tariff items for Criterion E is found in Annex 308.1 of the Agreement. When all three NAFTA countries charge the same rate of duty for any of the goods listed in Annex 308.1, goods imported into one of the NAFTA countries from any other NAFTA country are considered originating.
Topic 7: Criterion F Bookmark this Agricultural provisions of NAFTA were not negotiated trilaterally that is, there are separate agreements between the U.S. and Mexico, and Canada and Mexico. For agricultural goods imported into Canada, Criterion F applies only to those agricultural goods originating in Mexico that: also qualify under origin criteria A, B, or C; are not subject to a quantitative restriction in Canada; and are listed in Annex 703.2, Section B (Canada and Mexico) of NAFTA. This criterion does not apply to agricultural goods traded between Canada and the United States; these are covered by Criteria A, B, or C. Note: A tariff rate quota is not a quantitative restriction.
Topic 8: De Minimis Rule Bookmark this When a NAFTA rule of origin requires a tariff shift, all nonoriginating parts and materials must undergo the required tariff change. However, if even a very small and insignificant part or material did not undergo the tariff change, the goods are prevented from qualifying under NAFTA. To circumvent this problem, NAFTA contains a "de minimis" provision that allows goods to qualify as originating as long as the nonoriginating parts and http://cscb.ca/print/book/export/html/182530
53/87
10/1/2015
201516 CCS Course Part 2
materials that do not undergo the required tariff change are no more than a certain percentage. This percentage is 7% by value for most products and 7% by weight for textiles. There are some exceptions to using the de minimis rule; in particular, it cannot be applied to certain products of chapters 1 to 27 and to certain chapter 73, 84, and 85 items.
Topic 8: De Minimis Rule (cont. 2) Bookmark this An example of the de minimis rule is a watch that is made in the United States from the following components: Part
Origin Subheading Value
Battery
China 8506.80
$ .25
Watchband Korea 9113.10
$ .70
The transaction value of the watch is $16.00; the subheading of the watch is 9101.19. The specific rule of origin for the finished watch is: 91.0191.06 [1] A change to heading 91.01 through 91.06 from any other chapter; or [2] A change to heading 91.01 through 91.06 from heading 91.14, whether or not there is also a change from any other chapter, provided there is a regional value content of not less than: 60 percent where the transaction value method is used, or 50 percent where the net cost method is used. Do the nonoriginating parts and materials (the battery and the watchband) undergo the required tariff change to satisfy part (1) of the rule of origin? The battery does, as there is a change from chapter 85 (the battery) to chapter 91 (the finished watch). However, since the watchband and the finished watch are both in chapter 91, the required tariff change for the watchband cannot be met. And, because the watchband is not included in heading 91.14, part (2) of the rule of origin cannot be met either.
Topic 9: Fungible Goods and Materials Bookmark this Fungible goods are goods that are interchangeable for commercial purposes and have essentially identical properties. For example, fungible goods can include nuts, bolts, and screws, or products such as sand, oil, sugar, or natural gas. When a producer mixes originating and nonoriginating fungible goods, and physical identification of originating goods is impossible, the producer may determine the origin of the goods based on one of the following standard inventory accounting methods.
Specific Identification Method To use this method, the producer must physically segregate, in their inventory, originating materials that are fungible materials from nonoriginating materials that are fungible materials. Where originating materials or nonoriginating materials that are fungible materials are marked with their origin, the producer does not have to physically segregate the goods as long as the origin remains visible throughout production. The goods that are originating will be eligible for NAFTA duty rates.
FIFO (First In, First Out) The FIFO method means the method by which the origin of fungible materials first received in inventory is considered to be the origin of fungible materials first withdrawn from inventory. In other words, the origin of the goods that first enter inventory is the origin of the goods that are removed first from inventory.
LIFO (Last In, First Out) The LIFO method means the method by which the origin of fungible materials last received in inventory is considered to be the origin of fungible materials first withdrawn from inventory. In other words, the origin of the goods that are placed last in inventory is the origin for the goods that are removed first from inventory. For both FIFO and LIFO, strict tracking must take place to ensure that what is taken out of inventory and considered originating is the same quantity of those goods entering the warehouse and of the same origin.
Average Method This means that the origin of fungible materials withdrawn from inventory is based on the ratio of originating materials and nonoriginating materials in inventory. For example, if a specific percentage of inventory is originating, then the same percentage of goods is considered originating when removed from inventory. As with FIFO and LIFO, strict tracking is an absolute necessity in the event of a customs audit.
http://cscb.ca/print/book/export/html/182530
54/87
10/1/2015
201516 CCS Course Part 2
Topic 10: Accessories, Spare Parts and Tools Bookmark this Accessories, spare parts and tools that are delivered with goods and are standard accessories for those goods, are considered originating if the good originates. The accessories, spare parts and tools are disregarded when there is a tariff shift requirement for the goods to which they belong. host good, better explanatin requied a tariff shift rule is required by the NAFTA rules of origin, that is, if the accessories, spare parts or tools are nonoriginating, they do not have to undergo the tariff shift rule. However, this only applies if: the accessories, spare parts or tools are not invoiced separately from the good; the quantities and value of the accessories, spare parts or tools are customary for the good; and the good is subject to an RVC requirement, the value of the accessories, spare parts or tools are taken into account as originating or non originating materials, as the case may be, in calculating the regional value content of the good.
Topic 11: Packaging and Packing Materials Bookmark this For the purposes of NAFTA, the term packaging is used when referring to retail sale, while packing is used for shipping purposes. Packaging materials and containers in which the goods are packaged for retail sale, if classified with the goods, are disregarded when determining whether all the nonoriginating materials used in the production of the goods fall under the applicable change in tariff required. However, if the goods are subject to a regional value content requirement, the value of the retail packaging materials and containers is taken into account as either originating or nonoriginating, whichever is applicable, when calculating the regional value content of the goods. Packing materials and containers in which goods are packed for shipping are disregarded when determining whether the nonoriginating materials used in the production of the goods undergo an applicable tariff change. They are also disregarded when determining whether the goods satisfy a regional value content requirement.
Topic 12: Transhipment Bookmark this Paragraph 18.(1) of the Customs Tariff Act defines transhipment as: 18.(1) Transhipment — Notwithstanding section 17, for the purposes of this Act, if goods that are exported to Canada from a country have been transhipped in an intermediate country, the goods are deemed not to have been shipped directly to Canada from the firstmentioned country if: (a) the goods do not remain under customs transit control in the intermediate country; (b) the goods undergo an operation in the intermediate country other than unloading, reloading or splitting up of loads, or any other operation required to keep the goods in good condition; (c) the goods enter into trade or consumption in the intermediate country; or (d) the goods remain in temporary storage, under any conditions as may be prescribed, in the intermediate country for a period exceeding the prescribed period.
Topic 13: UST, MT, or MUST? Bookmark this Once it has been determined that goods qualify as originating under NAFTA, and there are both American and Mexican parts and materials included in the finished good, you will have to determine whether UST, MT, or MUST applies. For example, let’s say that you are asked to determine the origin of a wooden desk (tariff item 9403.30.00) that has been manufactured in the United States from the following: Part
Origin
Wood
United States 4407.91
Subheading Value $200.00
Wood
Mexico
4407.91
$100.00
Hardware Japan
7318.12
$ 30.00
Glue
3503.00
$ 10.00
China
The transaction value of the desk is $480.00. The first step is to determine if the goods qualify as originating under NAFTA. The specific rule of origin for 9403.30 is: 9403.10 9403.80 (1) A change to subheading Nos. 9403.10 through 9403.80 from any other chapter; or http://cscb.ca/print/book/export/html/182530
55/87
10/1/2015
201516 CCS Course Part 2
(2) A change to subheading Nos. 9403.10 through 9403.80 from subheading No. 9403.90, whether or not there is also a change from any other chapter, provided there is a regional value content of not less than: (a) 60 per cent where the transaction value method is used, or (b) 50 per cent where the net cost method is used. Looking at part (1) of the rule, do the goods qualify? Remember it is only the nonoriginating parts and materials that must undergo the tariff shift. The nonoriginating parts and materials are the hardware, 7318.12, and the glue, 3503.00. Since a change from any chapter other than chapter 94 is allowed, part (1) has been satisfied and the goods qualify. There is no need to look at part (2), regional value content requirement. However, since some of the wood is from Mexico, are the goods subject to the UST, the MT, or the MUST? To determine which of the three NAFTA tariff treatments should be used, a second calculation must be performed.
Topic 13: UST, MT, or MUST? (cont. 2) Bookmark this The UST is used when the goods satisfy the rules of origin considering only U.S. and Canadian parts and materials as originating. In other words, any parts and materials originating in Mexico are treated as nonoriginating. In our example, the wood from Mexico, the hardware from Japan, and the glue from China are considered nonoriginating when calculating the RVC. This RVC calculation would look like this: RVC = TV – Nonoriginating materials X 100 TV RVC = 480 – (100 + 30 + 10) X 100 480 RVC = 480 – 140 X 100 480 RVC = 340 X 100 480 RVC = 70.8% Since the RVC requirement has been met considering only U.S. goods as originating, the origin of the goods is the U.S. and the UST can be used. Conversely, goods are entitled to the MT when the goods satisfy the rules of origin considering only Mexican and Canadian materials as originating. That is, if parts and materials from the U.S. are considered nonoriginating, and the goods still originate, the goods are eligible for MT treatment. For example, consider articles of iron of subheading 8402.90, manufactured in the United States. The net cost of the goods is $2,000.00. Parts and materials that go into the manufacture of these goods are: Material
Origin
Subheading Value
Material A Mexico
72.04
$1000.00
Material B Brazil
84.02
$ 100.00
Material C United States 73.26
$ 200.00
Topic 13: UST, MT, or MUST? (cont. 3) Bookmark this The rule of origin for 8402.90 is: 8402.90 (1) A change to subheading No. 8402.90 from any other heading No.; or (2) No required change in tariff classification to subheading No. 8402.90, provided there is a regional value content of not less than: (a) 60 per cent where the transaction value method is used, or (b) 50 per cent where the net cost method is used. The tariff change required in part (1) has not been met since the material from Brazil is in the same subheading as the finished item. The next step is to calculate the regional value content. The RVC calculation is as follows: RVC = 2000 100 X 100 2000 RVC = 1900 X 100 2000 RVC = 95% http://cscb.ca/print/book/export/html/182530
56/87
10/1/2015
201516 CCS Course Part 2
Clearly the RVC requirement has been met, and the goods qualify for one of the NAFTA tariff treatments. But which one? To determine if the UST applies, the RVC is calculated with the materials from Mexico treated as nonoriginating, as follows: RVC = 2000 (1000 + 100) X 100 2000 RVC = 900 X 100 2000 RVC = 45% The goods do not meet the RVC requirement and the UST cannot be considered. You must now calculate the RVC to see if the MT applies; in this case, the U.S. materials are treated as nonoriginating. The RVC calculation is as follows: RVC = 2000 (200 + 100) X 100 2000 RVC = 1700 X 100 2000 RVC = 85% Since the goods originate when the U.S. materials are considered nonoriginating, the MT applies.
Topic 13: UST, MT, or MUST? (cont. 4) Bookmark this
Mexico U.S. Tariff Treatment (MUST) Goods are entitled to the MUST when they are not entitled to either the UST treatment or the MT treatment, but still originate in accordance with the NAFTA rules of origin. For example, consider goods of subheading 2903.21, made in the U.S. The transaction value of the goods is $300.00. Parts and materials that go into the manufacture of these goods are: Material
Origin
Subheading Value
Material A China
29.01
$80.00
Material B Mexico
29.01
$90.00
Material C United States 28.49
$65.00
The rule of origin for 2903.21 is: 2903.212903.30 (1) A change to subheadings 2903.21 through 2903.30 from any other subheading, including another subheading within that group, except from headings 29.01 through 29.02; or (2) A change to subheadings 2903.21 through 2903.30 from headings 29.01 through 29.02, whether or not there is also a change from any other subheading, including another subheading within subheadings 2903.21 through 2903.30, provided there is a regional value content of not less than: (a) 60 per cent where the transaction value method is used, or (b) 50 per cent where the net cost method is used. Part (1) of the rule of origin has not been met since materials of heading 29.01 have not undergone the required tariff change. Using part (2) of the rule of origin, do the goods meet the RVC requirement?
Topic 13: UST, MT, or MUST? (cont. 5) Bookmark this
NAFTA Tariff Treatments The RVC calculation is: RVC = 300 80 X 100 300 RVC = 220 X 100 300 RVC = 73% The goods definitely qualify as NAFTA goods since the RVC requirement has been met. But, because there are both U.S. and Mexican materials, you http://cscb.ca/print/book/export/html/182530
57/87
10/1/2015
201516 CCS Course Part 2
must now determine if the UST, MT, or MUST applies. To determine if the UST applies, the RVC is calculated with Mexican materials considered nonoriginating, as follows: RVC = 300 (90 + 80) X 100 300 RVC = 130 X 100 300 RVC = 43% The goods do not qualify under the UST. To see if the goods qualify under the MT, the RVC is calculated with U.S. materials considered nonoriginating, as follows: RVC = 300 (65 + 80) X 100 300 RVC = 300 145 X 100 300 RVC = 52% The goods also do not qualify under the MT; the MUST is therefore used.
Lesson 2 Summary: NAFTA Rules of Origin Bookmark this In this lesson you learned about the various origin criteria under NAFTA. You also learned how to use the specific NAFTA rules of origin, as well as the de minimis rule. Key points in Lesson 2 are: assigning the correct tariff classification must be done before origin can be determined; one of six origin criteria must be satisfied for goods to originate under NAFTA; for casual goods only, marking may be used to determine origin; the NAFTA rules of origin require either: a tariff change, a regional value content requirement, or both a tariff change and a regional value content requirement; the de minimis rule allows goods to qualify as originating as long as the nonoriginating parts and materials that do not undergo the required tariff change are not more than a certain percentage; the de minimis rule cannot be used for all HS chapters; fungible goods are goods that are interchangeable for commercial purposes and have essentially identical properties; under certain conditions, accessories, spare parts or tools that are delivered with goods and form part of the good's standard accessories, spare parts, or tools, are considered originating if the good originates; the term packaging, for purposes of NAFTA, is used when referring to retail sale, while packing is used for shipping purposes; goods are nonoriginating if they have undergone a final phase of production outside the territories of any of the NAFTA countries; and if U.S. and Mexico parts and materials are included in a finished product, a second calculation must be made to determine if UST, MT, or MUST applies. Take a few minutes now and answer the following questions to see what you have learned.
Module 11: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: NAFTA Certificate of Origin Bookmark this In this lesson you will learn about the NAFTA Certificate of Origin.
http://cscb.ca/print/book/export/html/182530
58/87
10/1/2015
201516 CCS Course Part 2
Rationale In your job as a CCS, you may be asked to assist a client in completing the NAFTA Certificate of Origin for goods being exported from Canada. You will also be required to recognize when a Certificate of Origin that has been completed by a foreign supplier has been incorrectly completed. Stating that goods qualify for a particular tariff treatment when they do not can result in a penalty.
Lesson Objective At the end of Lesson 3 you should be able to describe and complete a NAFTA Certificate of Origin.
Topic 1: Statements of Origin Bookmark this Exporters of goods valued at $2,500 CAD or less may provide the importer with an Exporter's Statement of Origin. This is an informal document and the following format may be used: "I certify that the goods referenced in this invoice/sales contract originate under the rules of origin specified for these goods in the North American Free Trade Agreement (NAFTA), and that further production or any other operation outside the territories of the Parties has not occurred subsequent to production in the territories." NAME: ___________________________________________________________________ TITLE: ____________________________________________________________________ COMPANY: _______________________________________________________________ STATUS: EXPORTER _____________PRODUCER ___________ OF THE CERTIFIED GOODS TELEPHONE: _____________________________ FAX: ___________________________ COUNTRY OF ORIGIN: UNITED STATES:_______________ MEXICO: _________________ MEXICO AND UNITED STATES: __________ (For purposes of determining the applicable preferential rate of duty as set out in Annex 302.2, in accordance with the Marking Rules or in each Party's schedule of tariff elimination.) SIGNATURE: ________________________________________ DATE: _________________ Statements of origin for goods valued at $2,500.00 CAD or less may be handwritten, stamped, or typed on the commercial contract or actual invoice covering the goods for which the benefits of the NAFTA are being claimed. Exporters are not required to complete a Certificate of Origin for goods considered to be casual or noncommercial. These goods are exempt from the formal certification process and are instead given preferential tariff treatment on the basis of marking. In the case of goods that are not marked, there must be no indication that the goods are from other than a NAFTA country.
Topic 2: Certificate of Origin Bookmark this Commercial shipments valued more than $2,500.00 CAD must be listed on a properly completed form B232E, North American Free Trade Agreement Certificate of Origin, in order to be entered at the lower duty rates provided under NAFTA. You may find it helpful to print out a copy of the Certificate of Origin to use as a reference throughout this topic. The Certificate of Origin is uniform among Canada, the United States, and Mexico and is acceptable for use in any of the countries. For goods imported into Canada, the Certificate of Origin can be completed in English, French, or Spanish. When the certificate has been completed in Spanish, CBSA may ask the importer to have the certificate translated. In Canada, the Certificate of Origin must be completed by the exporter or producer in English or French. The exporter or producer may, in addition to the English or French certificate, complete one in Spanish for use by the importer in another NAFTA country. Commercial importers seeking NAFTA benefits must have in their possession at the time the goods are imported a properly completed Certificate of Origin pertaining to the imported goods. Although it is not necessary to present the Certificate of Origin to CBSA, the importer must be able to provide a copy of the certificate to CBSA upon request. Failure to provide the Certificate of Origin within the stated time limit can result in penalties. As well, the NAFTA tariff treatment may not be used.
Completing the Certificate of Origin Each field of the Certificate of Origin is described below. Field 1 http://cscb.ca/print/book/export/html/182530
59/87
10/1/2015
201516 CCS Course Part 2
The full legal name, address (including country) and legal tax identification number of the exporter must be indicated. In Canada, the legal tax identification number is either the employer number or the importer/exporter number (Business Number) assigned by the Agency. In Mexico, it is the federal taxpayer's registry number. In the United States, it is the employer's identification number or Social Security Number. Field 2 If the Certificate of Origin is a blanket certificate, that is, if it covers multiple shipments of identical goods, it may be completed for a period of one year. "From" is the date the certificate becomes valid; "to" is the date upon which the certificate expires. The importation of the goods listed on the certificate must take place between these dates.
Topic 2: Certificate of Origin (cont. 2) Bookmark this Field 3 This field must be completed with one of the following: a) the full legal name, address (including country) and legal tax identification number of the producer/manufacturer of the goods. b) "SAME" if the exporter and the manufacturer/producer are one and the same. c) "UNKNOWN" if the producer or manufacturer of the goods in question are unknown to the exporter. d) “Available to Customs upon request” if the exporter is aware of the producer/manufacturer, but for reasons of confidentiality does not wish the importer to know the producer/manufacturer of the product being sold. Field 4 The full legal name, address (including country) and legal tax identification number of the importer. It is possible that the manufacturer/producer of the goods listed on the certificate is unaware of the party that will eventually be claiming NAFTA duty rates. Or, the manufacturer/ producer wishes to have more than one party take advantage of NAFTA rates of duty. In these cases, it is permissible for the Certificate of Origin to show "UNKNOWN" or "VARIOUS" in Field 4. Field 5 Goods should be fully described. The description should be clear enough to relate it to the tariff item. If not a blanket certificate, the invoice number of the commercial invoice, or another unique reference number should be quoted. Field 6 For each item listed in field 5, the tariff classification to six digits must be shown. Some specific rules of origin require that the tariff classification to eight digits must be shown. In these cases, the eightdigit classification used is the one applicable to the country into whose territory the goods are being imported. Field 7 For each item listed in field 5, criterion A through F must be stated. These relate to the rules of origin.
Topic 2: Certificate of Origin (cont. 3) Bookmark this Field 8 For each item listed in Field 5, state "YES" if the party completing the Certificate of Origin is the producer of the goods. If that party is not the producer, state "NO" followed by (1), (2), or (3) depending upon which of the following the origin criterion was based: (1) their knowledge of whether the goods qualify as originating goods; (2) their reliance on the producer's written representation (other than a Certificate of Origin) that the goods qualify as originating goods; or (3) a completed and signed Certificate of Origin for the goods, voluntarily provided to the exporter by the producer.
Field 9 For each item listed in Field 5, where the goods are subject to a regional value content (RVC) requirement, indicate "NC" if the RVC is calculated according to the net cost method; otherwise state "NO". If the RVC is calculated according to the net cost method over a period of time, identify the beginning and ending dates of that period. Field 10 Identify the name of the country (MX or US for agricultural and textile goods exported to Canada; US or CA for all goods exported to Mexico; or CA or MX for all goods exported to the United States) to which the preferential rate of customs duty applies in accordance with the Marking Rules or in each Party's schedule of tariff elimination. For all other originating goods exported to Canada, indicate MX or US if the goods originate in that NAFTA country, within the meaning of the NAFTA Rules of Origin, and any subsequent processing in the other NAFTA country does not increase the transaction value of the goods by more than 7%; otherwise indicate "JNT" for joint production. Field 11 http://cscb.ca/print/book/export/html/182530
60/87
10/1/2015
201516 CCS Course Part 2
This field is to be completed, signed and dated by the exporter. If completed by the producer/manufacturer for use by the exporter, it is to be completed, signed and dated by the producer/manufacturer. The date is to be the date the certificate is actually completed and signed.
Lesson 3 Summary: NAFTA Certificate of Origin Bookmark this In this lesson you learned how to complete a NAFTA Certificate of Origin. Key points in Lesson 3 are: exporters of goods valued at $2,500 CAD or less may provide the importer with an Exporter's Statement of Origin. Statements of Origin for goods valued at $2,500 CAD or less may be handwritten, stamped, or typed on the commercial contract or actual invoice for the goods for which the benefits of the NAFTA are being claimed; commercial shipments valued at more than $2,500.00 CAD must be listed on a properly completed Certificate of Origin; the certificate is uniform among Canada, the United States, and Mexico and is acceptable for use in any of the countries; for goods imported into Canada, the certificate can be completed in English, French, or Spanish; in Canada, the certificate must be completed by the exporter or producer, in English or French; if requested by CBSA, the importer must be able to provide a copy of the certificate; and failure to present a certificate when requested may result in a penalty. Take a few minutes now and answer the following questions about NAFTA Statements of Origin and Certificates of Origin.
Module 11: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Textiles Bookmark this In this lesson you will learn about how textiles can qualify for NAFTA rates of duty.
Rationale In order to apply NAFTA rates of duty to textiles, there are certain conditions that must be met.
Lesson Objective At the end of Lesson 4 you should be able to describe how textiles can qualify for NAFTA as well as describe a Tariff Preference Level under NAFTA.
Topic 1: Conditions Bookmark this Textiles, textile articles, and apparel are listed in Annex 300B of NAFTA. The majority of these goods are listed in chapters 50 63 of the NAFTA rules of origin. However, these are not the only chapters that may apply. As with all determinations of origin, it is very important that the correct tariff classification be used. The NAFTA provisions on trade in textiles and apparel are quite detailed. The rules of origin attempt to ensure that most of the production of textiles and apparel occurs in Canada, the United States or Mexico. Basically, in order to originate, most textiles and apparel must be produced (for apparel, this means both cut and sewn) in a NAFTA country from yarn made in a NAFTA country. These goods will qualify as originating when: they meet one of the NAFTA rules of origin, or when a specified quantity of certain yarns, fabrics, apparel, and textile articles meet Tariff Preference Levels (TPLs), but do not meet the rules of origin of NAFTA.
http://cscb.ca/print/book/export/html/182530
61/87
10/1/2015
201516 CCS Course Part 2
Topic 2: Tariff Preference Levels Bookmark this A Tariff Preference Level (TPL) is a NAFTA mechanism that provides for duty at the NAFTA rate for particular goods up to a specified quantity, and at a higher rate of duty after that quantity is exceeded. In order to use the TPL, goods must undergo specific manufacturing processes in one or more of the NAFTA countries. To identify goods that are being imported under a TPL, the importer must have a completed Exporter's Certification of NonOriginating Textile Goods on hand at time of importation. (To identify goods that are imported under a CCFTA, or CCRFTA the importer must complete also complete an Exporter’s Certification of NonOriginating Textile Goods declaration.) Since TPL goods do not originate under NAFTA, CCFTA, or CCRFTA, the applicable Certificate of Origin is not required.
Lesson 4 Summary: Textiles Bookmark this In this lesson you learned about textiles, textile articles, and apparel under NAFTA. Key points from Lesson 4 are: the rules of origin attempt to ensure that most of the production of textiles and apparel occurs in Canada, the United States or Mexico; basically, in order to originate, most textiles and apparel must be produced (for apparel, this means both cut and sewn) in a NAFTA country from yarn made in a NAFTA country; these goods will qualify as originating when they meet one of the NAFTA rules of origin, or when a specified quantity of certain yarns, fabrics, apparel, and textile articles meet Tariff Preference Levels (TPLs); a Tariff Preference Level (TPL) is a NAFTA mechanism that provides for duty at the NAFTA rate for particular goods up to a specified quantity, and at a higher rate of duty after that quantity is exceeded; in order to use the TPL, goods must undergo specific manufacturing processes in one or more of the NAFTA countries; to identify goods that are being imported under a TPL, the importer must have a completed Exporter's Certification of NonOriginating Textile Goods on hand at time of importation; since TPL goods do not originate under NAFTA, a Certificate of Origin is not required; and TPLs also apply under the CanadaChile Free Trade Agreement (CCFTA) and the CanadaCosta Rica Free Trade Agreement (CCRTFA). Take a few minutes now and answer the following questions about textiles, textile articles, and apparel under NAFTA.
Module 11: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
2 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 5: Automotive Products Bookmark this In this lesson you will learn how automotive products are treated under NAFTA.
Rationale Canada is the world’s thirdlargest exporter of automotive products, after Japan and the United States. Over 80 per cent of the vehicles built in Canada are exported with the U.S. being the primary destination. Today, Canada’s automotive goods account for 16 per cent of the total North American production. Given the volume of trade in automotive products, it is important to understand how automotive goods are treated under NAFTA.
Lesson Objective At the end of Lesson 5 you will be able to describe how automotive products are treated under NAFTA.
Topic 1: Automotive Products Bookmark this http://cscb.ca/print/book/export/html/182530
62/87
10/1/2015
201516 CCS Course Part 2
Prior to the implementation of NAFTA, the Free Trade Agreement (FTA) between Canada and the United States and the Auto Pact determined the treatment, with respect to duty and trade, of imported and exported automotive goods. Part V of the NAFTA Rules of Origin Regulations pertains to automotive goods. It contains definitions and other information that must be read before consulting the specific rule of origin for automotive goods. As with most other goods, the rules of origin are used to determine the origin of automotive goods. The rules of origin for automotive goods are based on either a tariff change alone, or a tariff change plus an Regional Value Content (RVC) requirement. NAFTA requires the RVC for automotive goods to be calculated using the net cost method; that is, the transaction value method cannot be used. The RVC requirement for automobiles and light vehicles and their engines and transmissions is 62.5%. The RVC requirement for other vehicles (e.g., tractors, vehicles for the transport of 16 or more persons, trucks), and their engines and transmissions is 60%. The NAFTA rules of origin provide that in order to qualify for preferential tariff treatment, automotive goods must contain a specified percentage of North American content, based on the net cost. When calculating the RVC, the term “traced materials” is often used. Traced material means a material, produced outside the territories of the NAFTA countries, that is imported from outside the territories of the NAFTA countries and is, when imported, of a tariff provision listed in Schedule IV. In order to see how traced goods are treated, Part V of the NAFTA Rules of Origin Regulations must be consulted. For those components subject to tracing, any nonoriginating value will remain nonoriginating through all stages of assembly to the time of calculation of the regional value content of the motor vehicle or auto part destined for original equipment use. Tracing ensures greater accuracy in calculating the regional value content by tracking the value of major automotive components and subassemblies imported into the NAFTA region, so that the nonoriginating value of these components and subassemblies is reflected in the regional value content.
Topic 1: Automotive Products (cont. 2) Bookmark this
Election to Average Producers of automotive goods can elect to average their costs when calculating the regional value content. Motor vehicle producers can average the calculation over their fiscal year, either by all motor vehicles or only those motor vehicles in a category that are exported to another NAFTA party. The four categories are: the same model line of motor vehicles in the same class of vehicles produced in the same plant; the same class of motor vehicles produced in the same plant; the same model line of motor vehicles produced; or special averaging rules for CAMI Automotive, Inc. The treatment of automotive products under NAFTA is quite complex; those wishing additional information may wish to consult the NAFTA Rules of Origin Regulations.
Lesson 5 Summary: Automotive Products Bookmark this This lesson provided a brief overview on automotive products under NAFTA. Key points from Lesson 5 are: under NAFTA, originating automotive goods traded between the NAFTA countries became duty free; rules of origin are used to determine the origin of automotive goods; when calculating the RVC, only the net cost method may be used; the RVC requirement for automobiles and light vehicles and their engines and transmissions is 62.5%; the RVC requirement for other vehicles (e.g., tractors, vehicles for the transport of 16 or more persons, trucks), and their engines and transmissions is 60%; traced materials are those produced outside the territories of the NAFTA countries and listed in Schedule IV of the Agreement; and producers of automotive goods can elect to average their costs when calculating the regional value content. Take a few minutes and answer the following questions about automotive products.
Module 11: Lesson 5 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct http://cscb.ca/print/book/export/html/182530
63/87
10/1/2015
201516 CCS Course Part 2
answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 6: Advance Rulings Bookmark this In this lesson you will learn about advance rulings under NAFTA and other free trade agreements.
Rationale At some point you may recommend to a client that an advance ruling be obtained.
Lesson Objective At the end of Lesson 6 you will be able to describe when an advance ruling is required and how to request one.
Topic 1: Advance Rulings Bookmark this An advance ruling is a written statement issued by CBSA and designated as an advance ruling by them. Under Section 43.1 of the Customs Act, an advance ruling may be issued with respect to any matter in the case of goods exported from a NAFTA country, from Chile or from Costa Rica, from an EFTA state, from Peru or from Colombia any other matter concerning those goods that is set out in paragraph 1 of Article 509 of NAFTA, in paragraph 1 of Article E09 of CCFTA or in paragraph 1 of Article V.9 or paragraph 10 of Article IX.2 of CCRFTA, in Article 28(2) of Annex C of CEFTA, in paragraph 1 of Article 419 of CPFTA or in paragraph 1 of Article 419 of CCOFTA. For example, an advance ruling may be requested to determine whether: materials imported from a nonParty used in the production of a goods undergo an applicable change in tariff classification; a good satisfies a regional value content requirement; goods qualify as originating; the proposed or actual marking of goods satisfies country of origin marking requirements; an originating good qualifies as goods of a Party under Annex 300B (textile and apparel); Annex 302.2 (tariff elimination) or Chapter Seven (Agriculture and Sanitary Phytosanitary Measures); or an advance ruling does not eliminate the requirement for an importer to have a Certificate of Origin in the importer's possession at the time goods are imported if they are claiming a preferential rate of duty. An application for an advance ruling on goods to be imported into Canada may be made by the following classes of persons: importers of those goods in Canada; persons who are authorized to account for those goods under paragraph 32(6)(a) or subsection 32(7) of the Act; exporters and producers of those goods in a free trade partner other than Canada; where the goods are produced in a NAFTA country other than Canada, in Chile or in Costa Rica, producers in a NAFTA country other than Canada, in Chile or in Costa Rica, of a material that is used in the production of those goods; and where the goods are produced in Israel or another CIFTA beneficiary, producers in Israel or another CIFTA beneficiary or in the United States of a material that is used in the production of those goods.
Topic 1: Advance Rulings (cont. 2) Bookmark this A request for an advance ruling is done in writing, and is sent to the CBSA region in which the bulk of the importations is expected to occur. If this cannot be determined, the request should be sent to the region in which the majority of the importers, or potential importers, of the product is located. Where the request involves goods which are subject to a regional value content requirement, the request is sent directly to the Origin and Valuation Division at CBSA Headquarters. The addresses for the CBSA Regional and Headquarters offices are available in Appendix C of D11416. An advance ruling may be appealed before the goods are imported. However, if the goods are imported, and the advance ruling has not been rescinded or changed, the goods must be imported in accordance with the advance ruling. For example, if CBSA issues an advance ruling stating that a particular tariff classification number must be used, penalties may be assessed if this number is not used when these goods are imported. An appeal can be filed once the goods have been imported.
Lesson 6 Summary: Advance Rulings Bookmark this This lesson provided information on advance rulings. Key points are: http://cscb.ca/print/book/export/html/182530
64/87
10/1/2015
201516 CCS Course Part 2
an advance ruling is issued by CBSA; an advance ruling may be issued with respect to any matter in the case of goods exported from a NAFTA country, Chile, or Costa Rica, an EFTA state, or from Peru or Colombia; an advance ruling may be requested to determine whether: materials imported from a nonParty used in the production of goods undergo an applicable change in tariff classification; a good satisfies a regional value content requirement; goods qualify as originating; the proposed or actual marking of goods satisfies country of origin marking requirements; or an originating good qualifies as goods of a Party under Annex 300B (textile and apparel); Annex 302.2 (tariff elimination) or Chapter Seven (Agriculture and Sanitary Phytosanitary Measures); an advance ruling does not negate the requirement for an importer to have a Certificate of Origin on hand at the time goods are imported if they are claiming a NAFTA rate of duty; a request for an advance ruling is done in writing; and information provided in an advance ruling must be followed. Take a few minutes now and answer the following questions about advance rulings.
Module 11: Lesson 6 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 11 Summary: The North American Free Trade Agreement Bookmark this NAFTA is a trilateral agreement; has provided for duty reductions on goods traded between Canada, Mexico, and the United States. provides for more than reduced rates of duty on originating goods; and includes three tariff treatments: UST, MT, and MUST. De Minimis Rule allows goods to qualify as originating as long as the nonoriginating parts and materials that do not undergo the required tariff change are not more than a certain percentage; and cannot be used for all HS chapters. Fungible Goods are goods that are interchangeable for commercial purposes and have essentially identical properties. Accessories, Spare Parts or Tools that are delivered with goods and form part of the good's standard accessories, spare parts, or tools, are considered originating if the good originates, under certain conditions. Originating Goods must be correctly classified; must meet one of six origin criteria; cannot have undergone a final phase of production outside the territories of any of the NAFTA countries; and that include U.S. and Mexico parts and materials must undergo a second calculation to determine if UST, MT, or MUST applies. Casual Goods are goods other than goods imported for sale or for any industrial, occupational, commercial or institutional or other like use; are not required to be listed on a Certificate of Origin; and may be considered originating on the basis of their marking. Commercial Goods are goods imported into Canada for sale or for any commercial, industrial, occupational, institutional, or other similar use; and must be listed on a formal Certificate of Origin if the benefits of NAFTA are being claimed.
Module 11 Summary: The North American Free Trade Agreement http://cscb.ca/print/book/export/html/182530
65/87
10/1/2015
201516 CCS Course Part 2
(cont. 2) Bookmark this Certificate of Origin is uniform among Canada, the United States, and Mexico; is completed in English, French , or Spanish for goods imported into Canada; is completed in English or French for goods exported from Canada; and must be provided to CBSA upon request (failure to do so may result in a penalty). Textiles and Apparel will qualify as originating if they meet one of the NAFTA rules of origin; or when a specified quantity of certain yarns, fabrics, apparel, and textile articles meet Tariff Preference Levels (TPLs). Tariff Preference Level (TPL) is a NAFTA mechanism that provides for duty at the NAFTA rate for particular goods up to a specified quantity, and at a higher rate of duty after that quantity is exceeded; to identify goods that are being imported under a TPL, the importer must have a completed Exporter's Certification of NonOriginating Textile Goods on hand at time of importation; and TPL goods do not require a Certificate of Origin. TPLs also apply under the CanadaChile Free Trade Agreement (CCFTA) and the CanadaCosta Rica Free Trade Agreement (CCRFTA).
Module 11 Summary: The North American Free Trade Agreement (cont. 3) Bookmark this Automotive Goods rules of origin are used to determine the origin of automotive goods; when calculating the RVC, only the net cost may be used; RVC requirement for automobiles and light vehicles and their engines and transmissions is 62.5%; RVC requirement for other vehicles (e.g., tractors, vehicles for the transport of 16 or more persons, trucks), and their engines and transmissions is 60%; producers of automotive goods can elect to average their costs when calculating the regional value content. Advance Rulings are issued by CBSA; may be issued with respect to any matter in the case of goods exported from a NAFTA country, Chile, or Costa Rica, an EFTA state, or from Peru; may be requested to determine whether: materials imported from a nonParty used in the production of a goods undergo an applicable change in tariff classification; a good satisfies a regional value content requirement; goods qualify as originating; the proposed or actual marking of goods satisfies country of origin marking requirements; or an originating good qualifies as goods of a Party under Annex 300B (textile and apparel); Annex 302.2 (tariff elimination) or Chapter Seven (Agriculture and Sanitary Phytosanitary Measures); do not eliminate the requirement for an importer to have a Certificate of Origin in the importer's possession at the time goods are imported if they are claiming a NAFTA rate of duty; applications for advance rulings may be made by: importers who are Canadians importing goods; producers in Mexico or the United States who are the persons who produce the goods or materials that are incorporated into the goods; exporters in Mexico or the United States who are the person exporting the goods Canada; or authorized agents of importers, producers, or exporters; requests are made in writing; and, must be followed, even if appealed.
Module 11: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
11 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 12: Valuation and Calculation of Duty Bookmark this http://cscb.ca/print/book/export/html/182530
66/87
10/1/2015
201516 CCS Course Part 2
In this module you will learn about the various valuation methods, how to determine the value upon which duty is calculated, how to calculate the duty, and how to apply the valuation codes.
Module Objective As a CCS, you may be required to submit import data to CBSA. To do so, you must be familiar with the methods used to determine the value for duty, how to calculate the duty, and you must apply the correct value for duty code. Value for duty is particularly important because it is the value upon which duties and/or taxes are calculated.
Lesson 1: Determining Value for Duty Bookmark this In this lesson, you will be introduced to the six methods of valuation, learn how to determine the value for duty, and become familiar with the valuation codes.
Rationale A value for duty is required for all goods imported into Canada. You should understand the method by which the value for duty is established. Because the value for duty of a product has an impact on how much duty and/or tax is paid, you need to know what costs may be added to or deducted from the price paid for the goods.
Lesson Objective At the end of this lesson, you should be familiar with the various methods of valuation, know how to determine the value for duty, and understand the valuation codes used to identify the method of valuation used. You must be able to ensure that the legitimate amount of duty and taxes are paid on any shipment.
Topic 1: Valuation Methods and Codes Bookmark this At the end of the Tokyo Round of GATT in the late 1970s, Canada agreed to adopt the General Agreement on Tariffs and Trade (GATT) valuation code, under certain conditions. Though other countries adopting the code agreed to a one year implementation schedule, Canada asked for and was granted an additional four years to study and evaluate the impact of such changes on Canada's economy. After studying the impact, and ensuring that Canada’s proposed legislation was in accordance with GATT, the Minister of Finance introduced the new code in November of 1984. The GATT valuation code is intended to provide a fair, uniform, and neutral system of valuation that conforms to commercial realities and prohibits the application of arbitrary or fictitious customs values. It is generally referred to as the Transaction Value System of Customs Valuation and focuses on the price actually paid for goods when sold for export to Canada, to a purchaser in Canada.
Determining the Value for Duty There are six methods that may be used to determine the value for duty of imported goods. Listed in the order in which they must be applied, these methods are: 1. Transaction Value of the Goods (Section 48 of the Customs Act, D1341) 2. Transaction Value of Identical Goods (Section 49 of the Customs Act, D1351) 3. Transaction Value of Similar Goods (Section 50 of the Customs Act, D1351) 4. Deductive Value (Section 51 of the Customs Act, D1371) 5. Computed Value (Section 52 of the Customs Act, D1381) 6. Residual Method (Section 53 of the Customs Act, D1391). If the transaction value of the goods cannot be used, the value for duty is determined by one of the five remaining methods. They must be considered in sequential order with the exception of the deductive and computed value. An importer may choose to apply these two methods in reverse order as long as they have advised a Canada Border Services Agency (CBSA) Client Services Office in writing.
Topic 1: Valuation Methods and Codes (cont. 2) Bookmark this The value for duty code is a twodigit code. It is used when submitting import data to CBSA and indicates the method of valuation used to determine the value for duty. The first digit signifies the relationship between the vendor and the importer, and the second indicates the method of valuation used.
First Digit 1 the vendor and importer are not related http://cscb.ca/print/book/export/html/182530
67/87
10/1/2015
201516 CCS Course Part 2
2 the vendor and importer are related
Second Digit 3 the price paid, or payable, for the goods without adjustments 4 the price paid, or payable, for the goods with adjustments 5 the transaction value of identical goods 6 the transaction value of similar goods 7 the deductive value 8 the computed value 9 the residual method The above information is generally known by the importer. If you do not have this information on file, and it is not evident on the documents that accompany the goods, you must contact the importer. It is the responsibility of the importer to review all the terms of sale and determine how the value for duty is determined. CBSA will, in the course of a normal review, select transactions on a random basis and request that importers provide evidence to support their valuation declaration. If CBSA decides to reappraise the value for duty and issues a request for additional duty based on a higher value, the importer is entitled to appeal this decision.
Topic 2: Transaction Value of the Goods Bookmark this The transaction value of the goods is the one that is most often used as the value for duty. Set out in Section 48 of the Customs Act, the transaction value may be used for sales between nonrelated parties. Related parties may also use it as long as the relationship has not influenced the price. A test value may be used to determine whether the relationship has influenced the price. There are four requirements that must be met before the transaction value may be used: the imported goods were sold; the sale was for export to Canada; the purchaser in the sale for export is the purchaser in Canada; and the price paid or payable for the goods can be determined. The price paid or payable can only be used as the value for duty when certain conditions have been met: with some exceptions, there must be no restrictions respecting the disposition or use of the goods by the purchaser; the sale of the goods by the vendor to the purchaser or the price paid or payable for the goods is not subject to some condition or consideration for which a value cannot be determined; where any part of the proceeds of the resale, disposal, or use of the goods accrues to the vendor, the price paid or payable must include the value of those proceeds; and where the purchaser and vendor are related, the relationship did not influence the price paid or payable for the goods.
Topic 2: Transaction Value of the Goods (cont. 2) Bookmark this
Additions to the Price Paid or Payable Certain costs, if not already included, must be added to the price paid or payable in order to arrive at the transaction value. The following additions apply to all six methods of valuation. The following costs are all items that must be included in, or added to, the price paid or payable: commissions brokerage packing costs and charges assists royalties and licence fees subsequent proceeds transportation costs
Commissions In determining whether payments of commissions to an agent should or should not be added to the price paid or payable, it is necessary to determine whether the agent is a selling agent, a buying agent, or a broker. A selling agent is a person who acts for the vendor. They look for customers, take orders, and, in some cases, arrange for the delivery and storage of goods. Their earnings are usually called selling commissions. Goods purchased through a selling agent generally cannot be bought unless the selling commission is paid. The selling commission is usually paid to the agent by the vendor. In this case, the cost of the goods will include the selling commission, and the selling commission does not have to be added. If the terms of the sale require the Canadian purchaser to pay the selling agent separately, this commission is usually not included in the price paid or payable and therefore must be added. http://cscb.ca/print/book/export/html/182530
68/87
10/1/2015
201516 CCS Course Part 2
A buying agent acts on behalf of the purchaser. A buying agent may find suppliers, place orders, inspect goods, and may ensure the delivery of the goods. Their payment, or buying commission, is paid by the purchaser and is usually separate from the payment made for the goods. Buying commissions are not included in the transaction value of the goods.
Topic 2: Transaction Value of the Goods (cont. 3) Bookmark this
Brokerage A broker is an agent who can act for either the vendor and purchaser, or both, and generally has no role other than to put the parties in touch with each other. The broker's remuneration is called brokerage, and is usually calculated as a percentage of the business concluded as a result of their activities. The percentage received by brokers usually reflects their limited risks and responsibilities. Brokerage means payments made to intermediaries for their participation in concluding a contract of sale. If the vendor pays the broker, the brokerage will usually be included in the invoice price. In such cases, it is treated like a selling commission, that is, it is either included in or added to the transaction value. Brokerage does not mean charges by a customs broker for services rendered to clear goods through Customs. Where the brokerage is paid by the vendor and charged separately to the purchaser, it must be added to the price paid or payable. It is also possible that the broker may be paid by either the purchaser alone, or each of the parties to the transaction may pay part of the total brokerage. In these cases, the brokerage must be added to the price paid or payable to the extent that it is paid by the purchaser and not already included in the price of the goods.
Topic 2: Transaction Value of the Goods (cont. 4) Bookmark this
Packing Costs and Charges In Module 5 you first encountered the term "packing" under the General Interpretive Rules (GIRs). All costs and charges incurred by the purchaser relating to packing, including labour and materials, are dutiable and must be included in the value for duty. The packing may be entered under the same tariff classification of the goods, if it is of the kind normally used for packing such goods, according to GIR 5(b). However, if the packing materials or packing containers are suitable for repetitive use, they are classified under their own tariff item.
Assists The term assists includes items such as materials, tools, dies, art work, development work and any materials that are consumed in the production of the imported goods, and that have been supplied by the purchaser of the goods at a reduced cost, or at no cost, for use in the manufacture of the imported goods. These items are dutiable and must have their true value determined before including it in the transaction value of the imported goods.
Royalties and Licence Fees Royalties and licence fees are regarded for customs purposes as payments made, or to be made, for acquiring or using a protected right. Examples of such payments include (but are not limited to): payments made to an author (copyright holder) to acquire the right to sell the author's book within a geographic region; payments made to an inventor (patent holder) of a production process for the use of that process during a specified period of time; and payments made to a license holder of a trademarked name or brand for the right to sell goods that are so marked.
Place of direct shipment The place of direct shipment is the place from which goods begin their direct and uninterrupted journey to Canada. This continuous journey may only be broken for reasons of transhipment (see D1334).
Topic 2: Transaction Value of the Goods (cont. 5) Bookmark this
Subsequent Proceeds If any part of the proceeds from any subsequent resale, disposal or use of the goods by the purchaser accrues, or will accrue, to the vendor, they must be added to the price paid or payable. If the value of the subsequent proceeds cannot be determined, then the transaction method of valuation cannot be used. An example of subsequent proceeds is a fee paid by the Canadian purchaser to the foreign vendor based on a percentage of sales of the goods in Canada.
Transportation Costs The Customs Act provides for two distinct treatments of transportation and associated costs incurred in shipping goods to Canada. Transportation costs that relate to the transportation of goods TO the place of direct shipment in the country of export are to be included in the value for http://cscb.ca/print/book/export/html/182530
69/87
10/1/2015
201516 CCS Course Part 2
duty. If they are not included, then they must be added. The shipper’s bill of lading is the primary document used to establish the place within the country of export from which the goods are shipped directly to Canada. If the vendor incurs transportation related expenses such as local cartage fees or storage charges on the goods prior to being laden for export directly to Canada, those costs must be added to or included in the value for duty. The following is an example. A Canadian importer has an agreement to buy furniture from a manufacturer in China. The goods are manufactured and sent to a warehouse in Hong Kong where they will be stored until the importer decides to have them shipped directly to Canada. Because the warehouse is considered the place of direct shipment, the transportation costs between the manufacturer’s location in China and the warehouse in Hong Kong are included in the value for duty since they are transportation costs that relate to the transportation of the goods TO the place of direct shipment to Canada. Important! Transportation costs used for valuation purposes cannot be estimates. You may be asked to submit proof of the actual transportation costs you deduct.
Deductions from the Price Paid or Payable Certain costs, if they have been included, may be deducted from the price paid or payable in order to arrive at the transaction value. The following deductions apply to all six methods of valuation.The following costs may be deducted from the price paid or payable: transportation costs costs incurred in Canada duty and taxes discounts
Topic 2: Transaction Value of the Goods (cont. 6) Bookmark this
Transportation Costs The cost of transportation and associated costs relating to the transportation of the goods FROM the place within the country of export from which the goods are shipped directly to Canada are not dutiable. If they are included in the selling price, they may be deducted. If we look again at our example of the Canadian importer who purchased furniture from a manufacturer in China, if transportation charges for shipping the goods from Hong Kong to Canada were included in the selling price, they may be deducted.
Costs Incurred in Canada Any reasonable cost or expense identified separately from the price paid or payable that is incurred for the construction, erection, assembly or maintenance of, or technical assistance provided in respect of the goods after they are imported, may be deducted.
Duties and Taxes Any Canadian duties and taxes, paid or payable by reason of the importation of the goods or sale of the goods in Canada, are not included in the value for duty. Duties and taxes may be deducted if included and identified separately.
Discounts Certain discounts given to the Canadian purchaser by the foreign vendor are allowable deductions from the transaction value. If the condition necessary for the discount is fulfilled or met prior to importation, the discount is an allowable deduction when calculating the value for duty. If the condition is met after importation, the discount is not allowed. The crux of taking the deduction is when the condition is "effected". Students should review D13 and ensure the most current legislation is consulted when a deduction is agreed too prior to importation but affected after importation occurs.
Order of Adjustments The transaction value is calculated by adding any applicable addition to the price paid or payable. From that subtotal, any applicable deductions are subtracted from the subtotal. (See also Appendix A of D1331). Price Paid or Payable + Additions = Subtotal Subtotal Deductions = Value for Duty
Topic 2: Transaction Value of the Goods (cont. 7) Bookmark this
Direct Shipment and Treatment of Transportation Costs http://cscb.ca/print/book/export/html/182530
70/87
10/1/2015
201516 CCS Course Part 2
A Canadian importer buys goods from an American manufacturer in Ohio. The goods are made in Ohio but stored in a warehouse in New York until they are purchased. When the Canadian importer requires the goods, she sends a release order to New York, and the warehouse ships the goods to Canada. The importer’s most recent shipment was valued at $1,000.00 Canadian dollars (CAD), which did not include the $50.00 shipping cost from Ohio to New York, or the $200.00 shipping cost from New York to Montreal. Click on the Play button to see how the transportation costs are treated. To play the video, click on the Play button
. To pause the video, click on the Pause button
.
Topic 2: Transaction Value of the Goods (cont. 8) Bookmark this
Calculating Transportation Costs Transportation costs, whether they are additions or deductions, can be apportioned among the value of the imported goods. For example, suppose that on one shipment there are two types of goods being imported, one at a cost of $500.00 and the other at a cost of $1,000.00. The total cost is $1,500.00 and there is also a deductible transportation cost of $100.00. $100.00 (the transportation cost) divided by $1,500.00 (the cost of the goods) is .0666. $100 ÷ $1,500 = .0666 You can multiply the cost of each item by .0666 to obtain the amount of transportation that can be deducted from each. $500.00 X .0666 = $33.33 $500.00 $33.33 = $466.67 $1,000.00 X .0666 = $66.67 $1,000.00 $66.67 = $933.33 A greater amount of freight can be deducted from the higher costing item, as long as the ratio remains the same. As well, CBSA will also allow transportation costs to be added, or deducted, according to weight or volume, rather than value. For example, consider the same goods as in the above example with a weight of 200 tons for the item valued at $500.00 and a weight of 700 tons for the item valued at $1,000.00. The total weight of the goods is 900 tons and the transportation cost remains $100.00. $100.00 (the transportation cost) divided by 900 (the weight) is .11111. 200 X .11111 = $22.22 $500.00 $22.22 = $477.78 700 X .11111 = $77.78 http://cscb.ca/print/book/export/html/182530
71/87
10/1/2015
201516 CCS Course Part 2
$1,000.00 $77.78 = $922.22 A greater amount of freight can be deducted from the item that weighs the most, as long as the ratio remains the same.
Topic 2: Transaction Value of the Goods (cont. 9) Bookmark this
Valuation Methods and Codes Exercise 1 A company in Canada purchases goods from a firm in California. The firm in California orders the goods from a manufacturer in Mexico. Price paid or payable: $14,000.00 CAD Transportation cost between Mexico and California: $40.00 CAD (included in the price paid) Transportation cost between California and the company in Canada: $80.00 CAD (included in the price paid) Packing cost: $50.00 CAD (included in the price paid) Now determine the allowable deductions from the price paid or price payable. Click on the Play button to see short video demonstrating this process. To play the video, click on the Play button
. To pause the video, click on the Pause button
.
Click here to see how we arrived at the value for duty
Topic 2: Transaction Value of the Goods (cont. 10) Bookmark this
Valuation Methods and Codes Exercise 2 A company in Germany sells machinery to a company in Canada. The machine travels directly to Canada from Germany. Price paid or payable: $120,000.00 CAD Ocean freight from Germany to Canada: $6,000.00 CAD (included in the price). Subsequent proceeds: $10,000 CAD (not included in the price) Cost for a Canadian company to install the machinery in Canada: $12,000.00 CAD (included in the price). Review the costs and determine if they must be added to the price paid or payable, or not. Click on the Play button to see a short video demonstrating this process. To play the video, click on the Play button http://cscb.ca/print/book/export/html/182530
. To pause the video, click on the Pause button
. 72/87
10/1/2015
201516 CCS Course Part 2
Click here to see how we arrived at the value for duty
Topic 3: Transaction Value of Identical Goods Bookmark this When the transaction value of the goods cannot be used to determine the value for duty, you may be able to use the transaction value of identical goods. With the transaction value of identical goods, the value for duty is based on the value of identical goods that have been: exported to Canada at the same time as those now being appraised; sold to a purchaser at the same or substantially the same trade level as the purchaser of the goods now being appraised; and sold in the same or substantially the same quantity as the goods now being appraised. For the purpose of determining the value for duty of goods being appraised, the transaction value of identical goods is adjusted to account for differences attributable to transportation costs, trade levels and quantities. Where there is more than one transaction value of identical goods, then the lowest transaction value of identical goods should be used as a basis for appraisal of the value for duty.
Topic 4: Transaction Value of Similar Goods Bookmark this The transaction value of similar goods is essentially the same as the transaction value of identical goods, except that the value is based on goods that closely resemble the goods being appraised, that is, on similar goods. The goods must be: capable of performing the same functions; commercially interchangeable; produced in the same country as the goods being appraised; produced by the same person/manufacturer as the goods now being appraised; and considered for the quality, reputation, and existence of a trademark. The same conditions, allowances and adjustments as provided for under the identical goods method are used by simply substituting the expression similar goods where applicable. The transaction value of similar goods and the transaction value of identical goods are most often used when goods are imported temporarily into Canada and not sold.
Topic 5: Deductive Value Bookmark this Use of the deductive value and the computed value may at the importer's request, be reversed in their order of application as long as the importer has advised CBSA in writing before submitting import data. The deductive value is based on the Canadian importer's most common selling price of the goods to Canadian customers. From this resale figure, or price per unit, certain amounts are then deducted. The first step that must be taken before making use of the deductive value is to determine the price per unit of the goods being appraised. The sales http://cscb.ca/print/book/export/html/182530
73/87
10/1/2015
201516 CCS Course Part 2
used to determine the price per unit must be made to persons at the first level of trade after importation who: are not related to the persons from whom they buy such goods; and, have not supplied, directly or indirectly, free of charge or at a reduced cost any of the goods or services (assists) referred to in subparagraph 48(5) (a)(iii) of the Customs Act. There must also have been, in the opinion of the Minister or any person authorized by him, a sufficient number of sales to permit a determination of the price per unit. With the deductive value, general expenses that may be deducted which therefore adjust the price per unit are: Canadian duty and taxes; commissions, profits and general expenses incurred in Canada; transportation, insurance and other costs related to the sale of the goods in Canada; and transportation, insurance and related costs incurred from the place of direct shipment to Canada, and/or costs of assembly, packaging, or further processing after importation. While the deductive value is not frequently used, it is most often used for goods being sold on consignment.
Topic 6: Computed Value Bookmark this The computed value is based on the cost of the imported goods plus an amount for normal profit and general expenses experienced by vendors in the exporting country when selling the same type of goods to Canadian customers. The computed value of the goods being appraised is the aggregate of amounts equal to: a) the costs, charges and expenses incurred in respect of, or the value of: materials employed in the production of the goods;and the production (including an amount for profit and general expenses) or other processing of the goods being appraised; b) the amount for profit and general expenses, considered together as a whole. Generally, the amount added is reflected in sales for export to Canada of goods of the same class or kind as the goods being appraised made by producers in the country of export. The costs, charges, expenses and value referred to in (a) include: the costs, charges and expenses referred to in subparagraph 48(5)(a)(ii); the value of any of the goods and services referred to in subparagraph 48(5)(a)(iii), determined and apportioned to the goods being appraised as referred to in that subparagraph, whether or not such goods and services have been supplied free of charge or at a reduced cost; and the costs, charges and expenses incurred by the producer in respect of engineering, development work, art work, design work, plans or sketches undertaken in Canada that were supplied directly or indirectly, by the purchaser of the goods being appraised for use in connection with the production and sale for export of those goods. Since this method of valuation depends on indepth knowledge of the costs of producing the actual imported goods, it is generally limited to those importers who are related to the vendor and where the vendor is the manufacturer of the goods in question.
Topic 7: Residual Method Bookmark this If all five previous methods do not apply to the goods being appraised, the residual method is applied. The residual method does not provide specific rules for determining a value for duty but advises that the value for duty shall be appraised on the basis of: 1. the value derived from the method, from among the methods in the order set out, when applied in a flexible manner conforms closer to that method than any other method, and 2. information available in Canada. D Memo 1391 provides examples of when the residual method might be applied. For example: if there were no sales of similar goods produced in the same country as the country in which the goods being appraised were produced, but there are sales of similar goods produced in another country, it may be possible to use the transaction value of similar goods as the basis for determining the residual value provided the requirements of section 50 are otherwise met; or if there are no sales that meet the 90day requirement under section 51 (see subparagraph 51(2)(b)), but there are sales which occurred 100 days after the importation of the goods being appraised, it might be possible to use the deductive value as the basis for determining the residual value provided the requirements of section 51 are otherwise met. In applying the provisions of sections 48 to 53 of the Customs Act, Customs will be guided to the greatest extent possible by the principles and spirit of GATT and the International Agreement on Customs Valuation. Under the provisions of section 53 of the Customs Act, the following cannot be used to determine the value for duty: the selling price in Canada of goods produced in Canada; a system which provides for the acceptance for customs purposes of the higher of two alternative values; the price of goods on the domestic market of the country of exportation; the cost of production other than computed values which have been determined for identical or similar goods in accordance with the provisions of http://cscb.ca/print/book/export/html/182530
74/87
10/1/2015
201516 CCS Course Part 2
section 52; the price of the goods for export to a country other than Canada; minimum customs values; or arbitrary or fictitious values
Lesson 1 Summary: Determining Value for Duty Bookmark this You now have an understanding of valuation, the various methods available to determine value for duty and the value for duty codes used on import documents. Key points in this lesson are: Canada’s system of valuation is based on the GATT valuation code; The valuation code is intended to provide a fair, uniform and neutral system of valuation; There are six methods used to determine the value for duty of imported goods, outlined in sections 48 to 53 of the Customs Act; The methods must be used in sequential order with the exception of the "deductive" or "computed" value, which may be reversed; and Additions and deductions to the price paid or payable must be considered. Take a few minutes now and answer the following questions about determining value for duty.
Module 12: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
7 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Calculate Customs Duty Payable Bookmark this In this lesson, you will learn how to calculate customs duty.
Rationale It is important to know how to calculate the amount of duty that is paid or payable so that your client pays the minimum but correct amount of duty. In the case of an underpayment, a penalty can be assessed by CBSA.
Lesson Objective To learn how to calculate duty.
Topic 1: Currency Conversion Bookmark this
Step 1: Currency Conversion According to Section 55 of the Customs Act, the value for duty of goods entering Canada is always calculated in Canadian dollars. However, goods purchased outside Canada are not always priced at, or sold in, Canadian dollars. The currency used for a particular sale is generally indicated on the Canada Customs Invoice or commercial invoice that accompanies the goods. Some examples of currency that you might see are: U.S. Dollars (USD) Euros (EUR) Pounds Sterling (GBP) Mexican Pesos (MXN) Indian Rupees (INR) All currency codes are listed in Appendix H to Memorandum D17110 in List 2. http://cscb.ca/print/book/export/html/182530
75/87
10/1/2015
201516 CCS Course Part 2
Important! Remember to convert foreign currency to Canadian dollars. Date of Direct Shipment The date the goods begin their uninterrupted journey to Canada. The "date of direct shipment" is the only date that can be used to establish the prevailing rate of exchange. To convert foreign currency to Canadian dollars, multiply the value (this is called the value for currency conversion) by the exchange rate in effect on the date of direct shipment. If you don’t have access to daily currency exchange updates, they are available by contacting the Border Information Service (BIS) office at the CBSA at 18004619999. The following examples show how to convert three types of currency using the direct shipment date of December 7, 2012: $2000.00 USD x 0.9910 (the exchange rate for US dollars) = $1,982.00 CAD 5,000,000 ¥ x 0.01204 (the exchange rate for Japanese Yen) = $60,200.00 CAD 24500.42 CHF x 1.0622 (the exchange rate for Swiss Francs) = $26,024.35 CAD Here are some examples for you to try. A shipment from Germany is invoiced for 1000.00 EUR. If the direct date of shipment on the invoice is December 7, 2012, what is the value of the shipment in Canadian dollars? A shipment from Brazil has been invoiced in U.S. dollars. The total value of the shipment is $4,500.00 USD. A transportation charge of $500.00 USD, from the place of direct shipment to Canada, is included. The goods were shipped directly to Canada on December 6th, 2012. What is the value for duty?
Topic 2: Calculating Duty Bookmark this
Step 2: Calculate the amount of duty payable There are three ways to calculate customs duty: Ad Valorem, specific and a combination of the two. Ad Valorem duty is based on a percentage of the value of the goods. For example, 6%, 7%, or 10%. Specific duty is based on a specified amount per unit of measure. For example, .08 cents per litre; $2.00 per board foot; or $4.59 per kilogram. A combination of the two looks like this: 9.5% and .08 cents per kilogram or this; 5.42¢/kg plus 4%. In Module 10, you learned about the various tariff treatments. By returning to the Customs Tariff and reviewing the List of Countries and Applicable Tariff Treatments, determining the correct tariff classification and rate of duty, you will be able to calculate the customs duty.
Ad Valorem Duty Rates We will go through some examples to practice calculating the amount of duty payable. Let’s suppose a shipment from Germany contains watches, classified under 9101.29.00.00. We know that shipments from Germany only qualify under the Most Favoured Nation Tariff treatment after having reviewed the List of Countries and Applicable Tariff Treatments. The MFN duty rate for this classification number is 5%, an Ad Valorem rate. As our shipment from Germany was worth 1000.00 euros, we converted it to Canadian dollars by multiplying 1000.00 euros by the exchange rate of 1.5000. 1000 € x 1.5000 = $1,500.00 CAD The value for duty is $1,500.00. To calculate the duty, multiple the value for duty by the duty rate of 5%. Our answer is $75.00; this is amount of duty payable. Duty is always payable in Canadian dollars. $1,500.00 CAD x 5% = $75.00 CAD
Topic 2: Calculating Duty (cont. 2) Bookmark this
Specific Duty Rates Now let’s look at a specific duty rate calculation and calculate the duty on a product where the duty is based on the unit of measure. Brown sugar, for retail sale, is shipped to Canada from Brazil. From our studies in Module 9, we know the tariff classification for sugar is in Chapter 17. After establishing the classification of 1701.91.90.11 we then turn to the List of Countries and Applicable Tariff Treatments. Brazil is entitled to both the GPT and MFN Treatments. Since GPT is not mentioned under the applicable Tariff treatments for tariff classification number 1701.91.90.11, we must use the MFN duty rate of $30.86 per tonne (metric ton/TNE). If the importer’s shipment weighs 2.5 TNE, the duty is $77.15. http://cscb.ca/print/book/export/html/182530
76/87
10/1/2015
201516 CCS Course Part 2
The duty rate is not based on the value but a unit of measure, in this case tonnes. When a specific rate of customs duty applies, customs duty is obtained by multiplying the quantity by the rate. 2.5 TNE x $30.86 = $77.15 CAD
Combination Duty Rate There is one other way of calculating the duty on goods, a combination of the Ad Valorem and specific rates. An example of a combination type of calculation is biscuits rated under 1905.31.93.00. For MFN we see 5.42¢/kg plus 4%. If the shipment weighs 50 kg and has a value of $200.00 CAD, we can calculate a portion of the duty by multiplying the duty rate of 5.42¢ by 50kg. This equals $271.00 Next we multiply $200.00 CAD by 4% and get the second portion of duty, $8.00. To calculate the total amount of duty, we add $271.00 and $8.00 to get the answer $10.71 CAD 5.42¢ x 50 kg = $2.71 CAD $200.00 CAD x 4% = $8.00 CAD $2.71 + $8.00 = $10.71
Lesson 2 Summary: Calculate Customs Duty Payable Bookmark this In this lesson you learned how to convert foreign currency to Canadian dollars and three ways of calculating duty. Key points in this lesson are: while transactions can take place in any currency, the value for duty is always calculated in Canadian dollars; the three ways to calculate duty are Ad Valorem, specific or a combination of the two; Ad Valorem duty is calculated by multiplying the value for duty by the percentage rate of customs duty applicable; and Specific duty is calculated by multiplying the rate of duty by the quantity specified for that rate. Now take a few minutes and answer the following questions to see how much you have learned.
Module 12: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
7 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 12 Summary: Valuation and Calculation of Duty Bookmark this In this module you studied the way to determine the value for duty, the legislative authorities from the Customs Act, and the order in which the methods of valuation are applied. You were introduced to the additions and deductions that must be considered when establishing the value for duty. You learned how to convert any currency to Canadian dollars and calculate customs duties. You were also shown the value for duty codes that identify the relationship between the vendor and purchaser and the method of valuation used.
Module 12: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
11 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. http://cscb.ca/print/book/export/html/182530
77/87
10/1/2015
201516 CCS Course Part 2
Start quiz
Module 13: Calculating Taxes Payable Bookmark this This module provides information on the various types of taxes that are applicable to imported goods.
Module Objective You will be able to determine the type of tax that applies to imported goods and know how to calculate the amount of tax payable.
Lesson 1: The Goods and Services Tax and the Harmonized Sales Tax Bookmark this In this lesson you will learn about the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) and how they are applied to imported goods.
Rationale In your job as a CCS, you must be able to determine whether or not GST or HST applies to imported goods and how to calculate the amount of GST or HST that must be paid. You will also need to know how to identify which goods are not subject to these taxes.
Lesson Objective At the end of Lesson 1 you should be able to determine if GST or HST is payable or not, and how to calculate the tax payable.
Topic 1: Goods and Services Tax Bookmark this The Goods and Services Tax (GST) is a 5% tax which, unless specifically exempted, applies to all goods sold in Canada or imported into Canada. It also applies to services provided in Canada. The GST is structured so that the ultimate purchaser of the goods pays the tax. The GST is a multistage tax that is collected by vendors and businesses, including customs brokers, at each level in the production and distribution chain. Businesses and vendors who collect the GST must register to do so. The registrant, in effect, becomes an agent of the federal government in collecting the GST on the value of each sale they make or service they provide. The legislation that governs the GST is the Excise Tax Act. A party must register for the GST if: it provides taxable supplies in Canada; and it is not a small supplier. Supplies are goods and services. Taxable supplies are goods and services that are subject to GST. A person can be defined as a small supplier, during a particular calendar quarter and the following month, when their annual gross revenues are less than $30,000.00 over the previous four consecutive calendar quarters. A public service body such as a college, nonprofit organization, charity or hospital, can be defined as a small supplier under the same conditions if their annual gross revenues are less than $50,000.00. A party does not have to register for the GST if: its only commercial activity is the sale of real property, otherwise than in the course of a business; or if it is a nonresident that does not carry on business in Canada. When a party registers for the GST, they are also registered for the Harmonized Sales Tax (HST).
Topic 2: Input Tax Credits Bookmark this Businesses, like other consumers, are charged GST when they purchase goods and services. However, when a business is registered for the GST, it is entitled to subtract the tax that it has paid (an input tax credit, or ITC) from the tax that it has collected. The difference between the two is either a negative amount (refund) or an additional amount of tax that must be remitted to the federal government after each reporting period. This method ensures that the GST applies only on the value of sales to the final consumer.
Topic 3: GST – Exempt or Zerorated http://cscb.ca/print/book/export/html/182530
78/87
10/1/2015
201516 CCS Course Part 2
Bookmark this The general rule is that all supplies, including all goods and services, are taxable. However, there are certain exceptions to the general rule. Supplies that do not attract GST are exempt, zerorated, or nontaxable. Exempt supplies are those on which there is no GST paid by the purchaser, and the registrant does not collect or charge tax. With exempt supplies, input tax credits are not claimed. Exempt supplies are listed in Schedule V of the Excise Tax Act. Some examples of exempt supplies are real property, health care services, educational services, and child and personal care services. Zerorated supplies are those on which there is no GST paid by the purchaser, however, the registrant supplier of the goods may claim an input tax credit for tax paid on purchases which were used to create the zerorated supply. Zerorated supplies are listed in Schedule VI of the Excise Tax Act and include prescription drugs and biologicals, basic groceries, medical and assistive devices, exports, and financial services.
Topic 4: GST NonTaxable Importations Bookmark this GST is not payable on importations of goods that are described in Schedule VII to the Excise Tax Act. Some of these goods are: goods that are classified under specific tariff items; medals, trophies and other prizes, not including usual merchantable goods that are won outside Canada in competitions that are bestowed, received or accepted outside Canada or that are donated by persons outside Canada, for heroic deeds, valour or distinction; goods that are imported by a charity or by a public institution in Canada and that have been donated to that charity or institution; goods that are imported solely for the purpose of fulfilling an obligation under a warranty to repair or replace the goods if defective, where replacement goods are supplied for no additional consideration, other than shipping and handling charges, and exported without being consumed or used in Canada except to the extent reasonably necessary or incidental to the transportation of the goods; and prescribed goods imported in prescribed circumstances and under prescribed terms and conditions. Prescribed goods imported in prescribed circumstances and under prescribed terms and conditions are listed in the NonTaxable Imported Goods (GST/HST) Regulations. Note: changes are made from time to time to the Customs Tariff and to other Acts and regulations. These changes may not have been incorporated into the NonTaxable Imported Goods (GST/HST) Regulations, and, as a result, the references to tariff items and headings may not reflect the current tariff. However, the goods listed remain nontaxable.
Topic 5: Harmonized Sales Tax (HST) Bookmark this The federal government and the governments of three provinces, Nova Scotia, New Brunswick, and Newfoundland and Labrador, agreed to combine the GST and provincial sales tax to create the Harmonized Sales Tax (HST). The HST was implemented on April 1, 1997. On July 1st, 2010, Ontario implemented a single sales tax in that province, and on April 1st, 2013, Prince Edward Island implemented a single sales tax. As of April 1, 2013, the HST at the rate of 12% (5% federal part and 7% provincial part) no longer applies in British Columbia (as it did from July 1, 2010 to the end of March 2013). The HST at the rate of 12% has been replaced by the GST at the rate of 5% and a provincial sales tax. In New Brunswick, Ontario, and Newfoundland and Labrador, the HST is applied at a rate of 13% (5% GST + 8% provincial tax) on the same goods and services that are taxable under the GST. In Price Edward Island, the HST is applied at a rate of 14% (5% GST + 9% provincial tax). In Nova Scotia, the HST is applied at a rate of 15% (5% GST + 10% provincial tax). It is important to note that goods are subject to either the GST or the HST, never both. If a company has registered for the GST, they are also registered for the HST. The HST applies to all imported casual goods that are destined to the participating provinces regardless of their point of entry or release into Canada. Imported commercial goods destined for one of the participating provinces are only subject to the 5% GST portion of the HST at the time of importation. The remaining 8%, 9% or 10% provincial component is paid through selfassessment.
Topic 6: Calculating GST and HST Bookmark this In Module 12 you learned how to determine the value for duty of imported goods. Once the duty has been calculated, it is added to the value for duty and the sum of the duty plus the value for duty becomes the duty paid value (DPV). The GST or HST is calculated on the DPV. When you indicate to CBSA how much duty and tax you are paying, this information is transmitted electronically and certain fields in the electronic transmission indicate the amount of duty and tax that is being paid or will be paid at a later date. The field for the rate of GST or HST must indicate either 5 (for GST), or 13, 14 or 15 (for HST). If goods are exempt from the payment of GST, an exemption code is shown. These codes are found in D17110. If the goods are nontaxable, this field is left blank. Keep in mind that imported commercial goods destined for one of the participating provinces are only subject to the 5% GST portion of the HST. When considering HST on services such as customs brokerage or freight transportation services one must consult the “Place of Supply Rules”.
http://cscb.ca/print/book/export/html/182530
79/87
10/1/2015
201516 CCS Course Part 2
Topic 6: Calculating GST and HST (cont. 2) Bookmark this
Place of Supply Rules The Place of Supply Rules clarify whether a supply of a good or a service is made in a province for the purpose of determining whether the good or service is subject to the provincial component of the HST in addition to the federal component of the HST. The Department of Finance has created the Place of Supply Rules, and the Canada Revenue Agency has written GST/HST Technical Information Bulletin B103, to assist in determining the place of supply. The amount of GST applicable is 5% of the duty paid value of the goods or service. For example, if the duty paid value of imported goods is $1,000.00, the GST is $50.00. What is the GST if the duty value of imported goods is $5,000.00? $1,250.00? $35,999.00? In participating provinces, the amount of HST applicable is 13%, 14% or 15% of the duty paid value of the goods or service. If the duty paid value of imported goods is $1,000.00, the HST rate for New Brunswick, Newfoundland and Labrador, and Ontario is $130.00. If the duty paid value of imported goods is $1,000.00, the HST for Prince Edward Island is $140.00. If the duty paid value of imported goods is $1,000.00, the HST rate for Nova Scotia is $150.00. What is the HST if the duty paid value of imported goods is: $5,000.00 for goods supplied in New Brunswick? $35,999.00 for goods supplied Nova Scotia? Remember: only GST or HST applies never both.
Lesson 1 Summary: The Goods and Services Tax and the Harmonized Sales Tax Bookmark this In this lesson you learned about the GST and the HST. Key points of this lesson are: the GST is a 5% tax on most goods sold in Canada; in New Brunswick, Ontario, and Newfoundland and Labrador the HST is a 13% tax that includes 5% GST and 8% provincial sales tax; as of April 1, 2013, the HST at the rate of 12% (5% federal part and 7% provincial part) no longer applies in British Columbia. The HST at the rate of 12% has been replaced by the GST at the rate of 5% and a provincial sales tax; in PEI, the HST is a 14% tax that includes 5% GST and 9% provincial sales tax; in Nova Scotia, the HST is a 15% tax that includes 5% GST and 10% provincial sales tax; HST applies in Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and PEI; goods and services not subject to the GST or HST are zerorated, taxexempt, or nontaxable; the Excise Tax Act is the legislation that provides for the GST and HST; in order to claim input tax credits for GST, a business must be registered for the GST; registering for the GST registers a business for the HST as well; a party must register for the GST if it provides taxable supplies in Canada and it is not a small supplier; a party does not have to register for the GST if its only commercial activity is the sale of real property, otherwise than in the course of a business; or if it is a nonresident who does not carry on business in Canada; HST applies to all imported casual goods that are destined to the participating provinces regardless of their point of entry or release into Canada; and GST and HST are calculated on the duty paid value of imported goods. Take a few minutes to see what you learned.
Module 13: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
11 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
http://cscb.ca/print/book/export/html/182530
80/87
10/1/2015
201516 CCS Course Part 2
Lesson 2: GST, HST, and the NonResident Importer Bookmark this In this lesson you will learn about nonresident importers and how the payment and collection of GST/HST affects them.
Rationale In many cases, suppliers outside of Canada wish to bear the cost of importing goods that they sell to purchasers in Canada. When you come across such a supplier, you will need to know how to handle the importation with respect to the collection of Canadian taxes.
Lesson Objective You will be able to advise a nonresident importer of the regulations concerning the payment of taxes imposed on goods that they import and they sell to buyers in Canada.
Topic 1: Requirement for Registration Bookmark this There are many exporters located outside of Canada who regularly ship goods to customers in Canada and choose to be responsible for any applicable duties and taxes. These exporters are referred to as nonresident importers. In these cases, the Canadian duty and tax is often included in the selling price, and, as noted in Module 12, they are deducted in order to arrive at the value for duty. It is only by registering for the GST/HST that a nonresident importer can claim input tax credits on GST/HST that they have paid on imported goods. Nonresidents must register for the GST/HST when: they provide taxable, including zerorated, goods or services in Canada in the course of carrying on commercial activity in Canada and they are not a small supplier; they make taxable supplies of admissions in Canada for a place of amusement, a seminar, an activity, or an event held in Canada, even if they are a small supplier; they host a convention in Canada, and more than 25% of the delegates are residents of Canada; or they are not a small supplier and they solicit sales for books, newspapers, magazines, periodicals, or similar printed publications in Canada or they offer such goods for sale in Canada, either through an employee or agent, or by means of advertising directed at the Canadian market, and send the publications by mail or courier to the recipient at an address in Canada. Nonresidents are not required to register for the GST/HST if: they do not carry on business in Canada; they carry on business in Canada but qualify as a small supplier (except if making taxable supplies of admission in Canada for a place of amusement, a seminar, an activity, or an event held in Canada); or they sell taxable real property located in Canada other than in the usual course of business.
Topic 2: Recovering GST/HST Paid Bookmark this Although a nonresident importer may not be obligated to register for the GST/HST, he is still obligated, like any other importer, to pay any applicable duty and GST/HST on imported goods. Since a nonregistrant cannot take advantage of input tax credits, a method for nonregistered, nonresident importers to recover the GST/HST that they have paid is available. This method is known as the "flow through method of tax recovery". Under the flow through method, the nonregistered, nonresident importer charges his Canadian customer an amount that is equal to the GST/HST paid by the nonregistered, nonresident importer at the time of importation. In effect, the Canadian party is simply repaying the GST/HST that has been paid on his behalf. The Canadian customer is now eligible to use the GST/HST amount paid to the nonregistered, nonresident importer as an input tax credit. In order to claim the input tax credit, the Canadian purchaser, when filing his tax return, must provide a copy of the import document that shows the tax was paid.
Lesson 2 Summary: GST, HST, and the NonResident Importer Bookmark this In this lesson you learned about nonresident importers and how the payment and collection of GST/HST affects them. Key points of this lesson are: nonresident importers are suppliers outside of Canada who choose to be responsible for any applicable duties and taxes on goods they sell to Canadian purchasers; nonresident importers must register for the GST/HST in order to claim input tax credits; and a nonresident, nonregistrant may use the flow through method to recover tax paid on imported goods. Take a few minutes and answer the following questions about GST, HST and the nonresident importer. http://cscb.ca/print/book/export/html/182530
81/87
10/1/2015
201516 CCS Course Part 2
Module 13: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Provincial Taxes Bookmark this In Lesson 3 you will learn about the payment and collection of provincial taxes.
Rationale You may be required to remit provincial sales tax for imported casual goods.
Lesson Objective At the end of this lesson you will know when the payment of provincial taxes is required.
Topic 1: Provincial Taxes Bookmark this Unless otherwise noted, provincial taxes include: provincial sales tax (PST); provincial tobacco tax; alcohol markups or fees; and, in Québec only, alcohol specific tax. Provincial taxes are only collected on goods that are subject to GST or other federal duties, unless the province has specifically exempted the good from the provincial tax. Applicable provincial taxes are payable at the time of importation on casual goods that are: destined for individual use; and not imported into Canada for sale or for any commercial, industrial, occupational, institutional or other like use. PST, provincial tobacco tax and alcohol markups or fees are assessed and collected on casual goods when an agreement exists between the province and CBSA to collect the tax on behalf of the province. Provincial taxes are not collected on commercial goods at the time of importation. Residents of Saskatchewan, Manitoba, British Colombia or Québec, who import casual goods into Canada, are subject to the PST when the goods are imported into their province of residence. The five provinces that have a harmonized sales tax (HST) in place Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario and Prince Edward Island include their provincial sales tax in the HST. Residents of participating provinces are assessed HST on all taxable casual importations. In 2013, British Columbia reverted back to GST and PST at the end of March 2013. Alberta is unique in that it does not have a provincial sales tax. D17122 contains instructions for the collection of the harmonized sales tax, as well as for the collection of provincial sales tax, provincial tobacco taxes, and alcohol markups/fees on all casual goods.
Topic 1: Provincial Taxes (cont. 2) Bookmark this The following chart is helpful in determining the provincial taxes on casual goods, collected by CBSA at the time of importation, on behalf of the various provinces.
http://cscb.ca/print/book/export/html/182530
82/87
10/1/2015
Province
201516 CCS Course Part 2
PST/HST
Newfoundland 13% HST and Labrador (5% GST + 8% provincial tax)
Tobacco Alcohol Exemptions from Tax Markup PST/HST Fee
No
No
See D236
Nova Scotia
15% HST (5% GST + 10% provincial tax)
No
No
See D236
New Brunswick
13% HST (5% GST + 8% provincial tax)
Yes
Yes
See D236
Prince Edward 14% HST Island (5% GST + 9% provincial tax)
No
No
See http://www.peihst.ca/index.php3?number=1043686&lang=E
Québec
9,975% QST
Yes
No
See D236
Manitoba
8% PST
Yes
Yes
See D236
Ontario
13% HST (5% GST + 8% provincial tax)
No
No
See D236
British Columbia
7% PST See also: http://www2.gov.bc.ca/gov/topic.page? Yes id=589542DDDB6347F7A7C80C1783F4BA6D
No
See http://www2.gov.bc.ca/gov/topic.page? id=78521DE3BD5D46C9A3B17631207A0AD7&title=Tax%20Exemptions
Saskatchewan 5% PST
No
No
See D236
Alberta
Yes
No
N/A
No PST
Topic 1: Provincial Taxes (cont. 3) Bookmark this Québec Sales Tax (QST) Under an agreement reached between the federal and Québec governments, Revenu Québec administers the GST/QST in Québec. This includes the processing of applications for registration for those carrying on commercial activities in Québec. QST is payable only on imported casual goods; imported commercial goods are not subject to QST. Goods subject to GST are also subject to QST. First, the GST at 5% is calculated on the duty paid value of the goods. The GST is then added to the duty paid value and the 9.975% QST is calculated on that amount. In other words, the QST also applies to the GST.
Lesson 3 Summary: Provincial Taxes Bookmark this In this lesson you learned about provincial taxes, some of which are paid at time of importation. The following are key points from Lesson 3: Provincial taxes generally include: provincial sales tax; provincial tobacco tax; alcohol markups or fees and; in Québec, alcohol specific tax; applicable provincial taxes are payable at the time of importation on casual goods that are destined for individual use; provincial taxes are not collected at time of importation of commercial goods; and Revenu Québec administers the GST/QST in Québec. http://cscb.ca/print/book/export/html/182530
83/87
10/1/2015
201516 CCS Course Part 2
Take a few minutes to see what you learned about provincial taxes.
Module 13: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Excise Tax Bookmark this In this lesson you will learn about excise tax. Certain goods, both imported and domestic, are subject to excise tax.
Rationale In your job as a CCS, you will be required to know how to determine whether or not excise tax applies to goods that are being imported.
Lesson Objective At the end of Lesson 4 you should be able to determine if excise tax is payable or not, and how to calculate the tax payable.
Topic 1: About Excise Tax Bookmark this The Excise Tax Act is the authority for the imposition of excise tax on specified goods at various rates. GST, HST and excise tax are charged in addition to all other duties and taxes. Both GST or HST, and excise tax, may apply to the same goods. Goods subject to excise tax are listed in Schedule I of the Excise Tax Act. Excise tax currently applies to certain petroleum products, fuelinefficient vehicles and air conditioners designed for automobiles. When certain goods are manufactured in Canada, excise tax is payable at the time the goods are delivered to the purchaser. When these goods are imported, excise tax is payable by the importer, at the time the goods are imported. Manufacturers of goods subject to excise tax must have an excise tax licence ("E" licence) unless they are a small manufacturer. A small manufacturer is one whose total annual sales do not exceed $50,000.00. A wholesaler's licence ("W" licence) allows the purchase of goods (subject to excise tax) for resale without paying excise tax at the time of purchase or importation. In this case, the excise tax is collected and remitted when the goods are sold.
Topic 2: Calculating Excise Tax Bookmark this Where a percentage rate of excise tax applies, the amount of tax payable is calculated by multiplying the excise tax rate by the duty paid value (DPV). If GST or HST applies, the excise tax is added to the DPV before calculating the GST or HST. Consider imported goods that have a duty paid value of $700.00, an excise tax rate of 10% and are also subject to GST of 5%. The excise tax is $70.00 (10% of $700.00) and the GST is $38.50 (5% of $770.00).
Lesson 4 Summary: Excise Tax Bookmark this In this lesson you learned about excise tax. Key points in this lesson are: both domestic and imported goods can be subject to excise tax; the Excise Tax Act is the legislation for the imposition and collection of excise tax, GST, and HST; excise tax is calculated on the DPV; http://cscb.ca/print/book/export/html/182530
84/87
10/1/2015
201516 CCS Course Part 2
if excise tax applies, it is added to the DPV before calculating the GST or HST; GST or HST, and excise tax, may apply to the same goods; a manufacturer of goods subject to excise tax whose total annual sales exceed $50,000.00 must have an “E” licence; and a “W” licence allows an importer of goods subject to excise tax to pay the tax when the goods are sold, rather than at the time of importation. Take a few minutes to answer the following questions about excise tax.
Module 13: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 5: Excise Duty Bookmark this In this lesson you will learn about excise duty. Excise duty can apply to both imported and domestic goods.
Rationale In your job as a CCS, you will be required to know how to determine which goods are subject to excise duty and how to calculate the amount payable.
Lesson Objective At the end of Lesson 5 you should be able to determine if excise duty is payable and how to calculate the excise duty payable.
Topic 1: About Excise Duty Bookmark this Excise duty is imposed under the Excise Act, 2001 on spirits, wine, and tobacco products made in Canada. Excise duty is imposed under the Excise Act on beer that is made in Canada. Note that these are two separate acts and both provide for the imposition of excise duty. The Excise Act, 2001 also contains requirements for items such as licensing, record keeping, accounting, and payment of excise duty. When these goods are manufactured in Canada, duty is payable on the goods at the point of packaging rather than the point of sale. When spirits, wine, tobacco and beer are imported into Canada, sections 21.1(1), 21.2(1) and 21.3 of the Customs Tariff impose an additional duty on them that is equal to the amount of excise duty that would be payable if the goods had been manufactured in Canada. On March 21, 2013, the Minister of Finance tabled a Notice of Ways and Means Motion that proposed amendments to the Excise Act, 2001 to increase the rates of excise duty on manufactured tobacco other than cigarettes and tobacco sticks. The changes were outlined in Excise Duty Notice – EDN33 available here: http://www.craarc.gc.ca/E/pub/em/edn33/edn33e.html.
Topic 2: Calculating Excise Duty Bookmark this Excise duty on imported goods is paid at the same time as ordinary duty is paid or payable. Excise duty is calculated on the same figure as regular duty and is included in the duty paid value. For example, for goods that have a $700.00 value for duty, a 15% duty rate, a 10% rate of excise duty, and GST of 5% applies, the calculation is as follows: $700.00 (value for duty) X 15% (rate of duty) = $105.00 (customs duty) $700.00 (value for duty) X 10% (excise duty) = $70.00 (excise duty) $700.00 (value for duty) + $105.00 (customs duty) + $70.00 (excise duty) = $875.00 (duty paid value) $875.00 (duty paid value) X 5% (GST) = $43.75. The total amount payable is:
http://cscb.ca/print/book/export/html/182530
85/87
10/1/2015
201516 CCS Course Part 2
$105.00 (duty) $ 70.00 (excise duty) $ 43.75 (GST) $218.75
Lesson 5 Summary: Excise Duty Bookmark this In this lesson you learned about excise duty. The following are key points from this lesson: excise duty is imposed under the Excise Act, 2001 on spirits, wine, and tobacco products made in Canada; excise duty is imposed under the Excise Act on beer that is made in Canada; when goods subject to excise duty are imported, an additional duty on them, equal to the amount of excise duty that would be payable if the goods had been manufactured in Canada, is assessed; excise duty on imported goods is paid at the same time as ordinary duty is paid or payable; and excise duty on imported goods is calculated on the value for duty. Now take a few minutes to answer the following questions about excise duty.
Module 13: Lesson 5 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 13 Summary: Calculating Taxes Payable Bookmark this GST and HST are legislated by the Excise Tax Act; GST is applied at a rate of 5%; HST is applied at a rate of 13% in New Brunswick, Ontario, and Newfoundland and Labrador; HST is applied at a rate of 14% in PEI; HST is applied at a rate of 15% in Nova Scotia; do not apply together; that is, only one or the other is collected; are calculated on the duty paid value of imported goods; apply to goods and services unless they are: exempt, zerorated, or nontaxable; registration is required in order to collect and remit the GST and HST, and claim input tax credits; that is paid by registrants may be used as an input tax credit (ITC); and may be recovered by nonresident importers by use of the flow through method of tax recovery. Provincial Taxes include provincial sales tax (PST), provincial tobacco tax, alcohol markups or fees, and, in Québec only, alcohol specific tax; are payable at the time of importation on casual goods that are destined for individual use and not imported into Canada for sale or for any commercial, industrial, occupational, institutional or other like use; are only collected on goods that are subject to GST or other federal duties, unless the province has specifically exempted the good from the provincial tax; Provincial taxes are not collected at the time of importation on commercial goods; and PST, provincial tobacco tax and alcohol markups or fees are assessed and collected on casual goods when an agreement exists between the province and CBSA to collect the tax on behalf of the province.
Module 13 Summary: Calculating Taxes Payable (Cont. 2) Bookmark this Excise Tax is legislated by the Excise Tax Act; applies to certain automobiles, air conditioners for automobiles, and certain petroleum products; may apply as well as GST or HST. But remember: GST and HST never apply at the same time; http://cscb.ca/print/book/export/html/182530
86/87
10/1/2015
201516 CCS Course Part 2
is calculated on the duty paid value of imported goods; manufacturers of goods subject to excise tax whose total annual sales exceed $50,000.00 must have an “E” licence; and a “W” licence allows an importer of goods subject to excise tax to pay the tax when the goods are sold, rather than at the time of importation. Excise Duty is legislated by the Excise Act, 2001 for spirits, wine, and tobacco products made in Canada; is legislated by the Excise Act for beer made in Canada; on imported goods, an additional duty is collected on an amount equal to the amount of excise duty that would be payable if the goods had been made in Canada; is paid on imported goods at the same time as ordinary duty is paid; and is calculated on the value for duty of imported goods. Following is a short quiz on what you have learned in Module 12.
Module 13: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
13 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz Source URL (modified on 20150715 16:09): http://cscb.ca/repository/201516ccscoursepart2
http://cscb.ca/print/book/export/html/182530
87/87
10/1/2015
201516 CCS Course Part 3
Published on CSCB National Office (http://cscb.ca) Home > Part 3
201516 CCS Course Part 3 Bookmark this
Introduction to Part 3 Part 3 of the CCS course includes the following 8 modules: 14. Other Government Departments & Agencies 15. SIMA 16. Import Permits 17. Marking of Imported Goods 18. Release of Goods 19. Temporary Importations 20. Accounting 21. Payment of Duties These modules provide detailed information on requirements for certain imported goods, and the processes for reporting, release, accounting, and payment of duty on imported goods. It is recommended that you view these modules sequentially. Selfchecks and quizzes are included. On June 2, 2016, you will be provided with information on how to access the final test on the contents of Part 3, which must be completed by June 16, 2016. Responses must be submitted by 2 p.m. EDT (for example, 11 a.m. PDT in Vancouver and 3 p.m. ADT in Halifax). Once you access the test, please print a copy for your records. You will need a copy when it comes time to study for the final examination and the test will not be available after the deadline date for submission. The result of this test is worth 5% of your final mark.
Module 14: Other Government Departments & Agencies Bookmark this In Module 3 you learned that the Canada Border Services Agency (CBSA) manages Canada’s borders by enforcing Canadian laws governing trade and travel. In Module 4 you learned the principal Acts involved in the importation and exportation of goods. This module will describe the authority the CBSA has to control and detain goods on behalf of other government departments. As well, it will describe other government departments and associated regulations. Working through this module will enable you to recognize regulated goods.
Module Objective Upon completion of this module, you should be able to describe how the CBSA administers legislation on behalf of http://cscb.ca/print/book/export/html/182769
1/118
10/1/2015
201516 CCS Course Part 3
other government departments and agencies and recognize the requirements of other government departments.
Lesson 1: CBSA Authority and the Customs Act Bookmark this As part of its role, the CBSA has the legislative mandate to control and detain goods on behalf of Other Government Departments (OGDs). In this first lesson you will learn about where this authority is vested, the other government departments that are involved, and how to find a list of regulated goods.
Rationale You need to know the regulations of other government departments that affect the importation and exportation of goods, since many of these requirements must be met before goods can be imported or exported.
Lesson Objective You will be able to identify the legislation that permits CBSA to regulate goods on behalf of other government departments, and where to find a list of regulated goods.
Topic 1: CBSA Authority and the Customs Act Bookmark this The CBSA administers several pieces of legislation as part of its legal mandate. You will recall from Module 4 that the Customs Act provides for control over the movement of goods and persons into and out of Canada. There are various regulations in place regarding imported and exported goods. These regulations have been put into place in order to protect Canadians against potential threats to health, security and the economy. If the eligibility of imported goods is in question, the goods can be detained at the border by CBSA. It is Section 101 of the Customs Act that gives the CBSA the authority to detain goods on behalf of Other Government Departments (OGDs). Some of the OGDs and agencies for which CBSA often inspects or detains goods are: Canadian Food Inspection Agency (CFIA); Industry Canada (IC); Foreign Affairs, Trade and Development Canada (DFATD); Environment Canada (EC); Health Canada (HC); Transport Canada (TC); and Public Safety Canada (PS) The document in which you will find the most comprehensive list of goods regulated by these other government departments is Operational Group 19 of the Customs D Memoranda. The Customs D Memoranda are issued by the CBSA and contain policies regarding imported and exported goods. This D Memorandum lists: the commodities that are controlled by other government departments or agencies, and all documents required to import or export these commodities, such as permits, licences and certificates.
Lesson 1 Summary: CBSA Authority and the Customs Act http://cscb.ca/print/book/export/html/182769
2/118
10/1/2015
201516 CCS Course Part 3
Bookmark this This lesson demonstrated that the CBSA has the power to regulate goods on behalf of other government departments. It also introduced you to the use of the Customs D Memoranda to obtain information on the requirements for goods regulated by other government departments and agencies. Key points covered in this lesson include: the CBSA has the power to detain goods on behalf of other government departments and agencies; this power is vested in the Customs Act; and operational group 19 of the Customs D Memoranda lists goods that are regulated by other government departments and agencies.
Module 14: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
0 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Canadian Food Inspection Agency Bookmark this In this lesson you will learn about the Canadian Food Inspection Agency (CFIA) and the role that it plays in the importation of food and agricultural goods. You will also learn how the CBSA carries out some of the requirements of the CFIA and the tool that an importer or customs broker can use to determine the documentation requirements for goods regulated by the CFIA.
Rationale You need to know what foods and agricultural goods are not allowed entry into Canada. You also need to know if any foods and agricultural goods must meet certain documentation requirements before they can be imported.
Lesson Objective You will be able to identify the Acts for which the CFIA is responsible. You will also be able to identify the goods that are regulated by the CFIA and use the Automated Import Reference System (AIRS) tool to determine their import requirements.
Topic 1: Canadian Food Inspection Agency Bookmark this The Canadian Food Inspection Agency (CFIA) is committed to: http://cscb.ca/print/book/export/html/182769
3/118
10/1/2015
201516 CCS Course Part 3
protecting Canadians from preventable health risks; protecting consumers through a fair and effective food, animal and plant regulatory regime that supports competitive domestic and international markets; sustaining the plant and animal resource base; contributing to the security of Canada's food supply and agricultural resource base; and providing sound agency management. The CFIA's activities range from the inspection of federally registered meat processing facilities to border inspections for foreign pests and diseases, to the enforcement of practices related to fraudulent labelling. In addition, the CFIA verifies the humane transportation of animals, conducts food investigations and recalls, and performs laboratory testing and environmental assessments of seeds, plants, feeds, and fertilizers. The CFIA also has responsibility for the administration of all importrelated legislation relating to food, animals and plants. The CFIA is responsible for the administration and enforcement of the following Acts: Agriculture and AgriFood Administrative Monetary Penalties Act; Canada Agricultural Products Act; Canadian Food Inspection Agency Act; Consumer Packaging and Labelling Act (as it relates to food); Feeds Act Fertilizers Act; Fish Inspection Act; Food and Drugs Act (as it relates to food); Health of Animals Act; Meat Inspection Act; Plant Breeders' Rights Act; Plant Protection Act; and Seeds Act These Acts have enabled various regulations. On behalf of the CFIA, the CBSA performs passenger and import inspection services at airports and other Canadian border points, other than the Import Service Centre. For goods that require specific documentation, such as an import permit, a CFIA officer at an Import Service Centre will review the documentation and then advise CBSA if the goods may be released. An important tool that is used to determine CFIA requirements for imported goods is the Automated Import Reference System (AIRS).
Topic 2: Automated Import Reference System (AIRS) Bookmark this The Automated Import Reference System (AIRS) tool is a CFIA automated import reference system. Using a series of questions and answer, AIRS will eventually confirm the regulations, policies, and import requirements for CFIA regulated commodities. AIRS provides recommendations to CBSA. CBSA officers are authorized to release some regulated commodities upon presentation of specific documentation; the recommendations to CBSA lists the specific documentation. As well, AIRS provides detailed information to the importer/customs broker regarding the specific documentation. You can click here to access AIRS online, but we will show you how it works in this section. The video on the following page demonstrates how AIRS works.
Topic 2: Show Me AIRS Example 1 http://cscb.ca/print/book/export/html/182769
4/118
10/1/2015
201516 CCS Course Part 3
Bookmark this To play the video, click on the Play button
. To pause the video, click on the Pause button
.
Topic 2: Show Me AIRS Example 2 Bookmark this Here’s one more example: let’s find out what is required to import cheddar cheese, from the state of Wisconsin, for human consumption. To play the video, click on the Play button
http://cscb.ca/print/book/export/html/182769
. To pause the video, click on the Pause button
.
5/118
10/1/2015
201516 CCS Course Part 3
Topic 2: Try AIRS Example #1 Bookmark this Here is an example that you can try using the AIRS tool online. Find the CFIA recommendations to CBSA with the following criteria: Find Commodity: Tuna Type:Albacore tuna (fresh or chilled) (Thunnus alalunga) End use:Further processing for human consumption If you worked through this correctly, the recommendations to CBSA are: "Approved, (must be accompanied by the following documents/registrations)." The various documents and registrations are listed. As well, the importer/broker instructions state that: "The importer must have a valid Fish Import Licence or a Qualify Management Program Import Licence. Fish and fish products imported without a valid import licence will be refused entry into Canada. Contact the Regional Fish Inspection Office to obtain a Fish Import Licence or a Quality Management Program Import Licence. "
Topic 2: Try AIRS Example #2 Bookmark this Here is another example that you can try using the AIRS tool online. http://cscb.ca/print/book/export/html/182769
6/118
10/1/2015
201516 CCS Course Part 3
Find the CFIA recommendations to CBSA for importations of live chicks: Find Commodity: Chicks Origin: New York state (U.S.) Age: Over 3 days old End use: Breeding If you worked through this correctly, the recommendations to CBSA are: "Refer to CFIA veterinary inspection (must be accompanied by the following documents/ registrations): Zoosanitary Export Certificate for Poultry." The importer/broker instructions go on to provide additional details regarding the Zoosanitary Export Certificate for Poultry, such as the number of the form used and who may issue the certificate.
Topic 2: Try AIRS Example #3 Bookmark this Here is one more example that you can try using the AIRS tool online. Find the CFIA recommendations to CBSA with the following criteria: Find Commodity: Apples Type: Fresh Origin: Asia (China) End use: Human Consumption Weight:Over 200 kg (other Chinese provinces) If you work through it correctly, the recommendation to CBSA is to "Refuse Entry".
Topic 2: Automated Import Reference System (AIRS) (cont. 2) Bookmark this
Confirmation of Sale (COS) The Confirmation of Sale form must be completed for imports of fresh fruit and vegetables. It is used to confirm that a sale actually took place. This form is required at the time of entry for all commercial shipments of fruits and vegetables and must: be obtained from CFIA prior to importation; include vendor and purchaser information; include a description of commodity, including quantity and price; and be completed and signed either by the purchaser, vendor, the importer or their respective representative prior to the importation of the fresh produce and must accompany the load at the port of entry. Importers must keep a copy of the COS. Have a look at a COS.
Ministerial Exemption Application A Ministerial Exemption is a request for an exemption from the Fresh Fruit and Vegetable Regulations. Among other things, these regulations prescribe standards for containers, labelling, and grade. http://cscb.ca/print/book/export/html/182769
7/118
10/1/2015
201516 CCS Course Part 3
Section 5.(2) of these regulations states: (2) No produce for which a grade is established shall be marketed in import or interprovincial trade in a container that has a capacity exceeding (a) 25 kg net weight, in the case of apples; or (b) 50 kg net weight, in the case of any other produce. Since the peaches in the AIRS example are in a container that exceeds 50kg, an exemption is required. A ministerial exemption may be issued if the goods are in short supply in Canada in order to provide food packers and processors with a supply necessary to meet their needs. A Ministerial Exemption Application: requires an original signature; is required for bulk (fresh fruits and vegetables) shipments (containers exceeding 50 kg); is obtained from CFIA and must be submitted prior to importation; is issued by CFIA offices; must accompany the goods; and is valid until the stated expiry date. Have a look at the application.
Topic 2: Automated Import Reference System (AIRS) (cont. 3) Bookmark this
Import Declaration In some cases, the AIRS tool may indicate that an import declaration is required. An import declaration must accompany the goods. The import declaration must contain the following information: name of the exporter; name of the consignee; a description of the product and any identification marks; the number, kind, and net weight of containers; where applicable, a statement that the goods were manufactured from sound raw materials and were prepared under sanitary conditions; a statement verifying that the goods, at the time of shipment, were sound and fit for human consumption; and an accurate identification of the manufacturer or authorized agent.
Lesson 2 Summary: Canadian Food Inspection Agency Bookmark this In this lesson you learned about the responsibilities of the Canadian Food Inspection Agency, the relationship between the CFIA and the CBSA, and how to use the AIRS tool. Key points covered in this lesson include: CFIA mandate is to enforce standards relating to food safety and nutritional quality; http://cscb.ca/print/book/export/html/182769
8/118
10/1/2015
201516 CCS Course Part 3
is responsible for the administration of all importrelated legislation relating to food, animals, and plants; provides the Automated Import Reference System (AIRS) tool; requires the Confirmation of Sale (COS) form; may require a Ministerial Exemption Application; and import Service Centres process import documentation for goods regulated by the CFIA. CBSA administers a number of Acts and regulations on behalf of the CFIA; performs passenger and import inspection services at airports and other Canadian border points, other than at Import Service Centres; and will release goods AFTER goods regulated by the CFIA have been released by the CFIA. A short quiz on what you have learned in this module is available online.
Lesson 3: Industry Canada Bookmark this In this lesson you will learn about the Acts and regulations of Industry Canada and how they affect the importation of goods.
Rationale On behalf of your client, you will want to ensure that goods being imported are in compliance with Industry Canada regulations, since the cost of ensuring compliance after importation may be prohibitive.
Lesson Objective You will be able to describe the purpose and objectives of the Acts and regulations administered by Industry Canada as they relate to the importation of goods.
Topic 1: Industry Canada Mandate Bookmark this Industry Canada’s mandate is to help make Canadian industry more productive and competitive in the global economy, thus improving the economic and social wellbeing of Canadians. To accomplish this, IC: ...fosters competitiveness by developing and administering economic framework policies that promote competition and innovation; support investment and entrepreneurial activity; and instill consumer, investor and business confidence; ...invests in science and technology to generate knowledge and equip Canadians with the skills and training they need to compete and prosper in the global, knowledgebased economy. These investments help ensure that discoveries and breakthroughs take place here in Canada and that Canadians realize the social and economic benefits; and ...encourages business innovation and productivity because businesses generate jobs and wealth creation. Promoting economic development in communities encourages the development of skills, ideas and opportunities across the country. Industry Canada focuses on a broad range of matters including: industry and technology, trade and commerce, science, consumer affairs, competition of trade, weights and measures, bankruptcy, intellectual property, investment, small business, and tourism, but for the purposes of this course, we will focus on two pieces of legislation governing imported goods: the Consumer Packaging and Labelling Act and the Textile Labelling Act. Here is a full list of Acts for which Industry Canada is responsible.
http://cscb.ca/print/book/export/html/182769
9/118
10/1/2015
201516 CCS Course Part 3
Topic 2: Consumer Packaging and Labelling Act Bookmark this According to the Act itself, the Consumer Packaging and Labelling Act (CPLA) is: "An Act respecting the packaging, labelling, sale, importation and advertising of prepackaged and certain other products." The Act applies to any person who is a retailer, manufacturer, processor or producer of a product, or a person who is engaged in the business of importing, packing or selling any product. For imported goods, the Act applies to goods that are sold in prepackaged containers. The CPLA defines “prepackaged products” as any product that is packaged in a container in such a manner that it is ordinarily sold to, used, or purchased by the consumer without being repackaged. For example, bottles of shampoo will need to be labelled since the shampoo is in a container that is purchased by the consumer. The Act specifies that the following information must appear on the product label: the common or generic name of the product; a declaration of net quantity, generally in numerical count or metric units of measurement (although supplementary nonmetric measurements may also be used); and the identity and address of the person by or for whom the product was manufactured, sold or imported (i.e. the dealer identification). If the goods are imported, one of the following formats must be used to meet the dealer identification requirement: the name and address of the Canadian dealer, preceded by the words “imported by” or “imported for”, or; the country of origin adjacent to the name and address of the Canadian dealer, or; the name and address of the dealer located outside of Canada. The country of origin marking is not a requirement of the Consumer Packaging and Labelling Act, BUT the CBSA requires country of origin marking on specific goods. Country of origin marking will be discussed in later of this course.
Topic 2: Consumer Packaging and Labelling Act (cont. 2) Bookmark this Along with the Consumer Packaging and Labelling Act are the Consumer Packaging and Labelling Regulations. The following goods are exempted from the requirements of the CPLA or regulations: drugs and medical devices; products for commercial, industrial, or institutional use; products for export only; products sold only to a dutyfree store; prepackaged textile articles; replacement parts for consumer durables (cars, appliances) if not displayed to the consumer; and certain artists' supplies.
Bilingual Labelling Requirements All information required by the Act and these regulations to be shown on the label of a prepackaged product must be shown in both official languages, English and French. However, there is an exception: the dealer's name and address can appear in either language. http://cscb.ca/print/book/export/html/182769
10/118
10/1/2015
201516 CCS Course Part 3
There are a few other exceptions to the bilingual labelling requirements; these can be seen in paragraph 6 of the regulations. Dealers and/or persons who contravene this Act are subject to penalties and even imprisonment.
Topic 3: Textile Labelling Act Bookmark this The Textile Labelling Act (TLA) regulates the labelling, sale, importation and advertising of consumer textile articles. A consumer textile article means: (a) any textile fibre, yarn or fabric, or (b) any product made in whole or in part from a textile fibre, yarn or fabric that is in the form in which it is or is to be sold to any person for consumption or use, other than consumption or use in the manufacturing, processing or finishing of any product for sale. Dealers may not sell, import into Canada, or advertise: a prescribed consumer textile article unless the article has applied to it a label containing a representation with respect to the textile fibre content of the article; or any consumer textile article that has applied to it a label containing a representation with respect to the textile fibre content of the article unless the label is applied to it in accordance with and complies with all applicable provisions of this Act. Not only must the textile articles be labeled with the fibre content, they must be labelled in a particular manner. Dealers and/or persons who contravene this Act are subject to penalties and even imprisonment.
Lesson 3 Summary: Industry Canada Bookmark this In this lesson you learned about the responsibilities of Industry Canada and the requirements of the Consumer Packaging and Labelling Act (CPLA) and the Textile Labelling Act (TLA). Key points covered in this lesson include: the CPLA regulates the packaging, labelling, sale, importation and advertising of prepackaged and certain other products; the CPLA applies to domestic and imported goods; for imported goods, the CPLA applies to goods later sold in prepackaged containers; there are some exceptions to the bilingual labelling requirements; the Textile Labelling Act regulates the labelling, sale, importation and advertising of consumer textile articles; textile articles must be labeled with the fibre content and in a particular manner, and dealers and/or persons who contravene either of these Acts are subject to penalties and even imprisonment.
Module 14: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on.
http://cscb.ca/print/book/export/html/182769
11/118
10/1/2015
201516 CCS Course Part 3
Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Foreign Affairs, Trade and Development Canada Bookmark this In this lesson you will learn about the Acts and regulations of Foreign Affairs, Trade and Development Canada and how they affect the importation and exportation of goods.
Rationale In order that goods move across the border easily, you will need to know the requirements of Foreign Affairs, Trade and Development Canada for imported and exported goods.
Lesson Objective You will be able to describe the purpose and objectives of the acts and regulations administered by Foreign Affairs, Trade and Development Canada.
Topic 1: Foreign Affairs, Trade and Development Canada Mandate Bookmark this The mandate of Foreign Affairs, Trade and Development Canada is: ensuring that Canada's foreign policy reflects true Canadian values and advances Canada's national interests; strengthening rulesbased trading arrangements and expanding free and fair market access at bilateral, regional and global levels; working with a range of partners inside and outside government to achieve increased economic opportunity and enhanced security for Canada and for Canadians at home and abroad; managing Canada's support and resources effectively and accountably to achieve meaningful, sustainable international development and humanitarian results; and engaging in policy development in Canada and internationally, enabling Canada's effort to realize its international development and humanitarian objectives. This government department has five Ministers. This course is focused on the international trade area of the department. Ed Fast is the current Minister of International Trade.
Topic 2: The Trade Controls Bureau (formerly the EICB) Bookmark this The Trade Controls Bureau (formerly the EICB) is part of Foreign Affairs, Trade and Development Canada. The Trade Controls Bureau authorizes the import and export of goods that are restricted by quotas and/or tariffs. It also monitors trade in certain goods and ensures the personal security of Canadians and citizens of other countries by restricting trade in dangerous goods and other materials. http://cscb.ca/print/book/export/html/182769
12/118
10/1/2015
201516 CCS Course Part 3
Goods that are restricted by quotas and/or tariffs are managed by a system of import and export permits. The Trade Controls Bureau is responsible for administering the Export and Import Permits Act (EIPA).
Topic 3: Export and Import Permits Act (EIPA) Bookmark this The Export and Import Permits Act (EIPA) is an Act respecting the export and transfer of goods and technology and the import of goods. The Export and Import Permits Act (EIPA) contains four lists that are used to identify goods whose trade is restricted. The lists are the: Import Control List (ICL); Export Control List (ECL); Automatic Firearms Country Control List (AFCCL); and Area Control List (ACL). The Import Control List is a list of goods whose import has been deemed necessary to control. Goods on this list generally need an import permit in order for them to be imported. However, in some cases, the goods will be allowed entry into Canada without an import permit but at a duty rate that is very high. The Export Control List is a list of goods whose export has been deemed necessary to control. The Export Control List consists of seven groups of goods. An export permit is required for goods listed on the Export Control List, with the exception of certain goods destined to the United States. The Area Control List is a list of countries to which the export of goods is controlled. Permits are required for all goods exported to countries on the Area Control List, even if the goods are not listed on the Export Control List. At this time, only Belarus and North Korea are on this list. The Automatic Firearms Country Control List (AFCCL) is a list of countries. Certain prohibited firearms, weapons, devices, or components thereof that are included on the Export Control List may be exported only to destinations in the Automatic Firearms Country Control List (AFCCL) under the authority of an export permit issued by the Minister of Foreign Affairs under the authority of the Export and Import Permits Act. Please note that these lists are subject to change and it is imperative that these lists be consulted on a regular basis.
Lesson 4 Summary: Foreign Affairs, Trade and Development Canada Bookmark this In this lesson you learned about the responsibilities of Foreign Affairs, Trade and Development Canada and the Trade Controls Bureau. You also learned about the Export and Import Permits Act. Key points covered in this lesson include: Trade Controls Bureau is part of Foreign Affairs, Trade and Development Canada; authorizes the import and export of goods that are restricted by quotas and/or tariffs; restricts trade in dangerous goods and other materials; uses a system of import and export permits to manage goods that are restricted by quotas and/or tariffs; http://cscb.ca/print/book/export/html/182769
13/118
10/1/2015
201516 CCS Course Part 3
is responsible for administering the Export and Import Permits Act (EIPA); and the Trade Controls Bureau is responsible for administering the Export and Import Permits Act (EIPA). EIPA contains four lists that are used to identify goods whose trade is restricted; and these lists are the Import Control List, the Export Control List, the Automatic Firearms Country Control List and the Area Control List.
Lesson 5: Environment Canada Bookmark this This lesson will explain the role of Environment Canada (EC) and the Acts and regulations for which it is responsible.
Rationale Environment Canada has requirements that must be met before goods may be brought into Canada.
Lesson Objective You will be able to describe the purpose, objectives, and application of the acts and regulations administered by Environment Canada and identify goods that may require certificates in order to be imported, or be prohibited from import.
Topic 1: Environment Canada Mandate Bookmark this Environment Canada’s (EC) mandate is to: preserve and enhance the quality of the natural environment; conserve Canada's renewable resources; conserve and protect Canada's water resources; forecast weather and environmental change; enforce rules relating to boundary waters; and coordinate environmental policies and programs for the federal government. Some of the acts and regulations that are under the mandate of EC include: Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES); Ozonedepleting Substances Regulations; Canadian Environmental Protection Act, 1999; Migratory Birds Convention Act; Fisheries Act; Canada Shipping Act;and Wild Animal and Plant Trade Regulations The responsibilities for the administration of these acts may be shared with other government departments and agencies and may not be the sole responsibility of Environment Canada
Topic 2: Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES) Bookmark this http://cscb.ca/print/book/export/html/182769
14/118
10/1/2015
201516 CCS Course Part 3
CITES is an international agreement between governments whose aim is to ensure that international trade in specimens of wild animals and plants does not threaten their survival. Because the trade in wild animals and plants crosses borders between countries, the effort to regulate it requires international cooperation to safeguard certain species from overexploitation. CITES offers varying degrees of protection to more than 30,000 species of animals and plants, whether they are traded as live specimens, fur coats or dried herbs. Participation in CITES is voluntary. Countries that are part of CITES are known as "parties'; Canada is a party to CITES. CITES does not replace the laws of a specific country, but "parties" must implement the Convention. The species covered by CITES are listed in three Appendices, according to the degree of protection required. Appendix I Appendix II Appendix III Parties have agreed that all import, export, and reexport of a species covered by the Convention must be authorized through a licensing system. Typically this involves a CITES permit being issued for the importation as well as a CITES permit from the exporting country authorizing the export of the goods.
Topic 3: Ozonedepleting Substances Regulations Bookmark this The Ozonedepleting Substances Regulations control the import, manufacture, use (in some cases), sale, and export of ozonedepleting substances (ODS) that are not contained in products. That is, they do not apply if the substance is produced incidentally in the manufacture of substances (other than controlled substances) or the controlled substance is incidentally present in a mixture, a product, or equipment. Ozonedepleting substances (ODS) break down and release chlorine or bromine, which destroy the stratospheric ozone layer. Most ODS are also greenhouse gases. The most well known ODS are Chlorofluorocarbons (CFCs). CFCs were developed as a substitute for ammonia in refrigerators and air conditioners and have also been used as cleaning solvents for electrical components, in aerosol sprays, and in hospital sterilization procedures. The regulations prohibit importing and exporting controlled substances from or to a place that is not a Party. “Party” refers to a signatory of the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer, or any state which is not party to the Protocol but meets certain conditions of the Protocol. These conditions allow imports and exports of specific goods as long as the state is in compliance with the Protocol. The Protocol requires gradual reductions of the production and import of these substances according to a fixed schedule.
Topic 3: Ozonedepleting Substances Regulations (cont. 2) Bookmark this The manufacture, import and export of ODS are regulated through a system of permits,transfers, and allowances. A Party may not import or export an amount greater than their allowance, and unused allowances from one year cannot be carried forward to the following year. Parties must have a permit in order to import a controlled substance that is recovered, recycled, reclaimed, used, or for destruction. Parties are also required to have a permit in order to export controlled substances. Any person or business that has a consumption allowance or has been issued a permit must submit an annual report to the Minister. http://cscb.ca/print/book/export/html/182769
15/118
10/1/2015
201516 CCS Course Part 3
As well, any individual or business who imports or exports a controlled substance in any year must maintain records for the year and keep the records at a place in Canada for a period of five years after the records are made.
Lesson 5 Summary: Environment Canada Bookmark this In this lesson you learned about the responsibilities of Environment Canada and you also learned about CITES and the Ozonedepleting Substances Regulations. Key points covered in this lesson include: Environment Canada is concerned with the preservation and enhancement of the natural environment; coordinates environmental policies and programs for the federal government; administers the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES); and administers the Ozonedepleting Substances Regulations.
Module 14: Lesson 5 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 6: Other Government Departments and Agencies Bookmark this This lesson will explain the role of several other government departments and the legislation for which they are responsible.
Rationale If you are working with importers or exporters, or if you are an importer or exporter yourself, you will be able to determine if your goods are subject to the regulations of any other government departments prior to or after importation or exportation.
Lesson Objective This lesson will discuss Health Canada, Transport Canada, and Public Safety Canada (other than CBSA), and how their regulations affect the importation and exportation of goods. http://cscb.ca/print/book/export/html/182769
16/118
10/1/2015
201516 CCS Course Part 3
Topic 1: Health Canada Bookmark this Some of the acts for which Health Canada has total or partial responsibility include: Canadian Environmental Protection Act, 1999; Controlled Drugs and Substances Act; Food and Drugs Act; Hazardous Products Act; Pest Control Products Act; Quarantine Act; Radiation Emitting Devices Act; and Tobacco Act
Controlled Drugs and Substances Act The Controlled Drugs and Substances Act is an “Act respecting the control of certain drugs, their precursors and other substances and to amend certain other Acts and repeal the Narcotic Control Act in consequence thereof.” Health Canada develops regulations for the import, export, production, distribution, possession and sale of controlled substances and precursor chemicals. Import permits are required before these goods may be imported.
Topic 2: Transport Canada Bookmark this Transport Canada administers many Acts relating to transportation. Here are a few examples: International Bridges and Tunnels Act; Motor Vehicle Safety Act; Railway Safety Act;and Transportation of Dangerous Goods Act.
Motor Vehicle Safety Act The Motor Vehicle Safety Act is the legislation used to regulate the manufacture and importation of motor vehicles and motor vehicle equipment. Vehicles that are imported in Canada must meet the standards of Canadian manufactured vehicles. If not, they must be brought up to that standard. Under the authority of Transport Canada, the Registrar of Imported Vehicles, (RIV), operates a national program of vehicle inspection and certification. This program ensures that motor vehicles manufactured in the United States and imported into Canada meet Canadian safety standards. It should be noted that, due to their design, some vehicles will never be able to comply with Canadian safety standards, and vehicles that cannot be modified must be exported. It's a good idea to check for compliance before entering into negotiations to purchase a vehicle from outside Canada. Designated customs offices, or ports, are those at which there is an agent of the Registrar of Imported Vehicles available to process importations of vehicles from the United States. There are a few exceptions to the RIV program. You may import a vehicle from the United States without entering it into the RIV Program if it is: at least 15 years old; http://cscb.ca/print/book/export/html/182769
17/118
10/1/2015
201516 CCS Course Part 3
a bus built before January 1, 1971; entering Canada temporarily; or manufactured to meet Canadian safety standards.
Topic 2: Transport Canada (cont. 2) Bookmark this For vehicles acquired in foreign countries other than the U.S.: IF the vehicles are designed, built, tested and certified to meet either all applicable Canada Motor Vehicle Safety Standards OR all applicable United States Federal Motor Vehicle Safety Standards AND bear a statement of compliance label affixed by the original manufacturer, as required by the regulations, MAY be eligible for importation into Canada PROVIDED the vehicle has not been altered and the certification from the original manufacturer is maintained. This may be subject to verification at the time of importation. A vehicle imported under these conditions remains subject to the Registrar of Imported Vehicles program.
Topic 2: Transport Canada (cont. 3) Bookmark this
Transportation of Dangerous Goods Act The Transportation of Dangerous Goods Act is the legislation for public safety in the transportation of dangerous goods. Dangerous goods are those listed in the schedule to the Act and regulations and includes things such as: explosives; gases; flammable and combustible liquids; and poisonous and infectious substances. Dangerous goods cannot be handled, offered for transport, transported or imported unless: the person complies with all applicable prescribed safety requirements; the goods are accompanied by all applicable prescribed documents; and the means of containment and transport comply with all applicable prescribed safety standards and display all applicable prescribed safety marks.
Topic 3: Public Safety Canada Bookmark this Public Safety Canada is responsible for the Canadian Firearms Program. http://cscb.ca/print/book/export/html/182769
18/118
10/1/2015
201516 CCS Course Part 3
Firearms can be restricted, nonrestricted, or prohibited. Individuals who hold valid Possession and Acquisition Licences (PALs) may import either restricted or nonrestricted firearms, depending on the PAL. Prohibited firearms cannot be imported. However, the export of firearms from the U.S. is closely controlled by the U.S. government, and the U.S. must issue an export licence to the U.S. exporter. Prior to the export licence being issued, the U.S. government requires the Canadian importer to present a document from Canada that allows this transaction to take place. This requirement is satisfied if the Canadian importer has an International Import Certificate (IIC). All firearms brought into Canada must be declared. In the event they are not declared, they will be seized and forfeited and criminal charges may be laid. The Firearms Act is a federal law and applies all across the country. Provinces may have additional requirements, especially with respect to hunting, although these are not applied at the border.
Lesson 6 Summary: Other Government Departments and Agencies Bookmark this This lesson explained the role of three other government departments and the legislation for which they are responsible. Key points covered in this lesson include: Health Canada is responsible for the administration of the Controlled Drugs and Substances Act; Import permits are required for controlled drugs and substances to be imported; Transport Canada administers the Motor Vehicle Safety Act; The Motor Vehicle Safety Act is the legislation used to regulate the manufacture and importation of motor vehicles and motor vehicle equipment; Vehicles that are imported into Canada must meet the same standards as vehicles manufactured in Canada; The Registrar of Imported Vehicles operates a national program of vehicle inspection and certification; The Transportation of Dangerous Goods Act is the legislation for public safety in the transportation of dangerous goods;and Public Safety Canada is responsible for the Canadian Firearms Program.
Module 14: Lesson 6 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 14 Summary: Other Government Departments & Agencies http://cscb.ca/print/book/export/html/182769
19/118
10/1/2015
201516 CCS Course Part 3
Bookmark this
CBSA has the legislative mandate to control and detain goods on behalf of other government departments; and D19 lists goods regulated by other government departments.
CFIA plays a role in the importation of foods, animals, and plants; officers at Import Service Centres review import documentation for goods regulated by CFIA; must approve CFIA regulated goods for release before they can be released by CBSA; provides the AIRS tool; and AIRS tool is used to determine import requirements for goods regulated by CFIA.
Industry Canada responsible for the Consumer Packaging and Labelling Act and the Textile Labelling Act.
Foreign Affairs, Trade and Development Canada responsible for the Trade Controls Bureau; and the Import and Export Permits Act establishes the Import Control List, the Export Control List, the Automatic Firearms Country Control List, and the Area Control List.
Module 14 Summary: Other Government Departments & Agencies Bookmark this
Environment Canada mandate includes administration of CITES and the Ozonedepleting Substances Regulations, 1999; CITES is an international agreement whose aim is to ensure that international trade in certain wild animals and plants does not threaten their species; and the Ozonedepleting Substances Regulations, 1999 control the import of ozonedepleting substances that are not contained in products.
Health Canada develops regulations for the import and export of controlled substances and precursor chemicals.
Transport Canada responsible for the Motor Vehicle Safety Act and the Transportation of Dangerous Goods Act.
Public Safety Canada responsible for the Canadian Firearms Program. Following is a short quiz on what you have learned in this module.
http://cscb.ca/print/book/export/html/182769
20/118
10/1/2015
201516 CCS Course Part 3
Module 14: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
0 Unlimited Always 60 % Allowed
To conclude this module, see if you can answer the following questions. Indicate your answer by clicking on the correct response. Click on the Start quiz button to start. Start quiz
Module 15: SIMA Bookmark this add content
Module Objective
Lesson 1: The SIMA Investigation Process Bookmark this In this lesson, you will be shown how the investigation process determines if there is injury and how injury is remedied. You will learn how goods become the subject of an investigation, how the roles of the CBSA and the CITT in that process differ and how investigations are carried out.
Rationale As a CCS, you could be asked to handle an importation of goods subject to provisional, antidumping or countervailing duties. Understanding the background information is important when discussing SIMA issues with your clients and for your daytoday work.
Lesson Objective At the end of this lesson, you should be able to explain the different roles of the CBSA and the CITT. You should know how investigations are initiated and be familiar with how investigations are carried out.
Topic 1: Initiation of Investigations Bookmark this To begin an investigation into dumping, the Canadian industry that believes their business is suffering as a result of dumped or subsidized goods must make a formal complaint to the CBSA Antidumping and Countervailing Directorate. To help the producer file a complaint, the CBSA has created an information package called a "Complainant’s Kit". It contains the details a producer needs to know before making a complaint and the guidelines for preparing one. One of the most important things to know before filing the complaint is to understand that it has to represent more than 25 per cent of production of the goods and the number of producers supporting the claim must be greater than the http://cscb.ca/print/book/export/html/182769
21/118
10/1/2015
201516 CCS Course Part 3
number of producers opposed. The complaint can be submitted to the CBSA by manufacturers' or producers' associations on behalf of their members. It must be persuasive in its argument. The injury suffered by an industry must be caused by dumping or subsidizing and must not be the result of other unrelated factors. If the importer has evidence of injury involving lost sales and/or a decline in profit or other economic difficulties from dumped goods, it must elaborate and demonstrate the adverse effects experienced by the company or industry.
Topic 2: Roles Bookmark this Both the CBSA and the Canadian International Trade Tribunal (CITT) have a role in the SIMA process. The CBSA determines whether there is evidence of dumping or subsidizing. It is the CITT’s responsibility to determine whether dumped or subsidized imports have caused material injury, or are threatening to cause material injury, to Canadian producers of like goods.
The Role of CBSA Once a complaint is received, CBSA has 21 business days to decide if the complaint is properly documented. If it is not, the CBSA asks for missing details in writing. Once the complaint is properly completed, CBSA has 30 days to make a decision whether an investigation should be started or not. If an investigation is warranted, a notice announcing the initiation of an investigation must be published in the Canada Gazette, Part 1. Within 90 days of the opening of an investigation, CBSA is usually in a position to either end the investigation or to issue a preliminary determination (an early decision) of dumping or subsidizing. Though rarely used, extenuating circumstances may cause a delay, in which case CBSA may take up to an additional 45 days to render a preliminary determination. A flow chart illustrates the process involved in an antidumping and countervailing duty investigation. A preliminary determination usually indicates the preliminary margin of dumping (the amount by which the normal value exceeds the exporter’s export price) or the amount of the subsidy, the percentage of imports that are dumped or subsidized and whether there continues to be a reasonable indication of injury. If a preliminary determination is issued, CBSA begins to collect provisional duties on the dumped or subsidized imports.
Topic 2: Roles (cont. 2) Bookmark this
The Role of CITT Upon receipt of a notice of preliminary determination of dumping, the Canadian International Trade Tribunal (CITT) begins its inquiry into injury. As part of the inquiry, the CITT obtains information through questionnaires and interviews with manufacturers, importers of the goods and purchasers. This data forms the basis of a report that sets out information to be examined by the CITT in arriving at its decision. This report becomes part of the case record and is made available to counsel and participants in the inquiry. The CITT is required to make a finding (a verdict) within 120 days from the date of receipt of the preliminary determination, and has another 15 days to issue a statement of reasons explaining its finding. The finding and the statement of reasons are sent to all interested parties, and the finding is published in Part 1 of the Canada Gazette. The types of inquiries and orders or findings to be made by the CITT are contained in Sections 42 and 43 of the Special Import Measures Act. Every decision of the CITT is final, subject only to review by the CITT itself. When the CITT finds that there is no injury, the investigation is terminated and all provisional duties are returned to the importer. If the provisional duty was paid by cash or certified cheque, the refund will include interest. http://cscb.ca/print/book/export/html/182769
22/118
10/1/2015
201516 CCS Course Part 3
Should the CITT make a finding of past injury, the CBSA may, within 6 months of the finding, demand a retroactive antidumping assessment of duties against imports prior to the date of preliminary determination. This action would not normally be undertaken unless massive dumping caused severe injury or an undertaking had been violated.
Lesson 1 Summary: The SIMA Investigation Process Bookmark this This lesson described the SIMA investigative process. Key points in this lesson include: the SIMA process starts with a letter of complaint; the Canada Border Services Agency (CBSA) and the Canadian International Trade Tribunal (CITT) are jointly responsible for administering SIMA; CBSA determines whether there is evidence of dumping or subsidizing; the Canadian International Trade Tribunal’s responsibility is to decide whether dumped or subsidized imports have caused material injury, or are threatening to cause material injury to Canadian producers of like goods; the investigation carried out by CBSA into the matter of dumping precedes the injury inquiry by the CITT;and the CITT initiates its inquiry after CBSA has made a preliminary determination of dumping. Now it’s time to test what you’ve learned.
Module 15: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Assessment of Duty Under SIMA Bookmark this Now that you have been introduced to the process of an investigation under SIMA and have become familiar with antidumping, countervailing and provisional duty, this lesson will discuss the application of SIMA and how anti dumping and countervailing duties are assessed. You will also learn about normal value, export price and margin of dumping.
Rationale Countervailing duty is simply based on the subsidy of the goods, but because the assessment of antidumping is based on normal value, export price, and margin of dumping, it is important to understand these terms. To properly assess duties under SIMA and avoid penalties, it will be crucial to know how to identify which goods are subject to SIMA and how to assess duty under SIMA.
http://cscb.ca/print/book/export/html/182769
23/118
10/1/2015
201516 CCS Course Part 3
Lesson Objective You will be able to assess antidumping and countervailing duty.
Topic 1: Assessment of Antidumping and Countervailing Duty Bookmark this There is comprehensive information on the assessment of antidumping and countervailing duty. In order to become familiar with goods that are subject to dumping duties, the following should be consulted. Review Memoranda D15 series: Special Import Measures Act/Investigations. This D Memo provides details such as product description and tariff classification of goods subject to duties under SIMA. Subscribe to CBSA’s SIMA Email Alert Service. By doing so, you will be alerted each time the Antidumping and Countervailing Directorate of CBSA publishes new information. Consult the Measures in Force of goods subject to SIMA, issued by CBSA. This is a list of the Antidumping and Countervailing Measures in force at the beginning of each month. Review Memorandum D1412: Disclosure of Normal Value, Export Price, and Amount of Subsidy Established under the Special Imports Measures Act to Importers. This D Memo provides details of departmental policy concerning disclosure of normal values and export price information so that importers/customs brokers can calculate the SIMA duties and taxes. You should also take into account any special instructions in letters to exporters, importers and brokers issued by CBSA at various stages in the SIMA process. These instructions outline how subject goods are to be described and advise the importer of his responsibility to properly calculate and pay SIMA duties and taxes.
Topic 1: Assessment of Antidumping and Countervailing Duty (cont. 2) Bookmark this
Normal Value The normal value is generally the net price at which the goods in question are sold in the country of export to unrelated purchasers, so long as the sales are profitable. When this method cannot be used, normal value can be estimated using constructed values or the selling price to a third country. In determining normal values, consideration is given to differences between the price at which the exporter sells domestically and that which is charged on exports to Canada. Terms and conditions of sale, trade levels, quantity, construction, design, and material can all influence value. When the exporter sells goods solely or primarily for the export market, domestic sales of like goods by other vendors in the country of export are used in determining normal values. Where there is not a sufficient number of domestic sales to permit a proper comparison, normal values are based on the exporter's selling price of like goods to importers in other countries, or on the basis of the cost of production plus an amount for administrative, selling and other related costs, as well as a margin of profit.
Export Price The export price is the price that the Canadian importer pays to the foreign exporter for the goods. The export price http://cscb.ca/print/book/export/html/182769
24/118
10/1/2015
201516 CCS Course Part 3
may be adjusted by deducting those costs, charges, and expenses that are over and above expenses incurred on sales for domestic consumption. These costs might include special export packing, export risk insurance, and charges and expenses incurred by the exporter simply by shipping the goods to Canada.
Topic 1: Assessment of Antidumping and Countervailing Duty (cont. 3) Bookmark this
Margin of Dumping The margin of dumping is the amount by which the normal value exceeds the exporter's export price for the goods. The antidumping duty assessed is equal to the margin of dumping.
Time Limit Antidumping and countervailing measures ordinarily lapse at the end of the five years, unless a finding or order is reviewed and continued, in which case the duties will be collected for another five years.
Lesson 2 Summary: Assessment of Duty Under SIMA Bookmark this In Lesson 2 you learned about the assessment of antidumping and countervailing duty. Key points in this lesson include: there are publications available that list goods subject to antidumping or countervailing duty; the normal value is generally the net price at which the goods in question are sold in the country of export to unrelated purchasers; the export price is the price that the Canadian importer pays to the foreign exporter for the goods; the margin of dumping is the amount by which the normal value exceeds the exporter's export price for the goods; the assessment of antidumping duty is based on the margin of dumping;and the assessment of countervailing duty is based on the subsidy of the goods. Now it’s time to test what you’ve learned. See how you do on the following questions.
Module 15: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
2 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. http://cscb.ca/print/book/export/html/182769
25/118
10/1/2015
201516 CCS Course Part 3
Start quiz
Lesson 3: SIMA Codes Bookmark this In this lesson you will become familiar with SIMA codes.
Rationale As a CCS, you may be asked to submit import data to CBSA when duty under SIMA applies. Neglecting to apply antidumping, countervailing, provisional duties and/or surtax can result in a penalty.
Lesson Objective To become familiar with SIMA codes for imported goods subject to duty under SIMA.
Topic 1: SIMA Codes Bookmark this If imported goods are subject to additional duty – antidumping, countervailing, provisional and/or surtax or they share a classification of goods that are subject to additional duty– it must be noted when submitting import data. This is done by use of a twodigit code. This code is to be included on the accounting document. On a B3 Canada Customs Coding Form it appears in field 32. On a B2 Canada Customs – Adjustment Request it appears in field 26. The first digit is the SIMA assessment type: 1 Goods, that are specifically exempted from a CITT injury finding or from a Surtax Order under the Customs Tariff. 2 Goods are subject to an undertaking. 3 Goods are subject to provisional duty. 4 Goods are subject to a CITT finding and no SIMA duty is payable. 5 Goods are subject to a CITT finding and/or surtax order and SIMA duties and/or surtax is payable. The second digit is the method of payment, that is, how the additional duty under SIMA will be remitted: 0 no liablility (no money is owed). 1 cash, (this includes credit card, or debit etc.) or 2 – security bond.
Topic 1: SIMA Codes (cont. 2) Bookmark this The following are the possible codes that can be used: 10 to identify goods on a single shipment that are not subject to antidumping or countervailing duty but are classified in the same tariff classification as goods that are subject to antidumping or countervailing duty 20 for goods covered by a price undertaking. 30 for goods where the provisional duty assessment is nil. 31 for goods where the provisional duty assessment is covered by cash. 32 for goods where the provisional duty assessment is covered by a SIMA bond. 40 for subject goods where the SIMA duty assessment is nil. 50 for subject goods where the SIMA duty assessment is covered by a valid Order in Council number. 51 for goods where the SIMA duty assessment and/or the surtax amount is covered by cash. 52 for subject goods under an expedited review where the SIMA duty assessment is covered by a SIMA bond. http://cscb.ca/print/book/export/html/182769
26/118
10/1/2015
201516 CCS Course Part 3
Neglecting to apply antidumping, countervailing, provisional duties and/or surtax can result in a penalty.
Lesson 3 Summary: SIMA Codes Bookmark this In this lesson you learned about SIMA codes and the requirement to provide the code to CBSA. Key points in this lesson include:; and The SIMA code is a twodigit code; The SIMA code indicates the type of assessment and the method of payment used; and SIMA codes can be required on goods that are not subject to antidumping or countervailing duties.
Module 15 Summary: Special Import Measures Act Bookmark this In this module, you studied the Special Import Measures Act. You can now describe the different roles of the CBSA and CITT under SIMA. You also learned that provisional, antidumping and/or countervailing duties are applied to imported goods if they are subject to a finding of injury. This is identified by application of a SIMA code. Most importantly, by knowing how and where to find information on goods that are subject to SIMA, you will be able to ensure compliance with SIMA requirements, saving your clients time and money.
Module 15: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 16: Import Permits Bookmark this In this module you will learn about import permits and how they are used to control the importation of certain types of goods under the Export and Import Permits Act. You will learn the difference between general and individual import permits, and the module will end with descriptions of Tariff Preference Levels, EXCAPS (Foreign Affairs/Customs Automated Permit System) and Tariff Rate Quotas.
Module Objective When you have completed this module, you will be familiar with the purpose of import permits, the need for import controls, and the difference between general and individual import permits. http://cscb.ca/print/book/export/html/182769
27/118
10/1/2015
201516 CCS Course Part 3
Lesson 1: Import Controls Bookmark this In this lesson, you will be introduced to import permits under the Export and Import Permits Act.
Rationale Import permits are required on only a limited number of goods. As a CCS, you need to know which goods, and under what circumstances, an import permit is required.
Lesson Objective At the end of this lesson, you should be able to explain what an import permit is and why it is necessary.
Topic 1: The Need for Import Permits Bookmark this There are many reasons why countries apply strict controls on goods that are imported. For example, the importation of goods such as military goods, nonrenewable resources, endangered species, and goods that compete with vulnerable Canadian industries must be controlled for economic, ecological, and security reasons. One of the easiest ways to control the import of goods is by the use of import permits. Goods that require import permits are found in specific lists contained in the Export and Import Permits Act (EIPA). The Trade Controls & Technical Barriers Bureau (TCTBB) (formerly the EICB) is responsible for administering the Export and Import Permits Act (EIPA) and the Minister of International Trade Canada (ITCan), has the power to issue import permits, and, under certain conditions, to alter, suspend, cancel, and reinstate any permit issued under the Act. As well, the EIPA: provides the legislation for the Governor in Council to establish various lists of goods whose importation or exportation may be restricted or prohibited; lists offences and penalties for contraventions of the Act; and, gives the Governor in Council the authority to establish regulations pertaining to the administration of the Act.
Topic 2: Import Permits Regulations Bookmark this As with any Act, there are associated regulations. The Import Permits Regulations are one set of regulations relating to the Export and Import Permits Act. The Import Permits Regulations: define the terms used in the regulations; indicate who may apply for an import permit; state what must be included on an import permit application; indicate the responsibility of the person to whom the permit has been issued; and, indicate what to do in the case of a lost permit.
Topic 3: Import Control List Bookmark this http://cscb.ca/print/book/export/html/182769
28/118
10/1/2015
201516 CCS Course Part 3
The Governor in Council is empowered under section 5.(1) of the Export and Import Permits Act, to establish a list of goods, called an Import Control List, which will include any articles the importation of which the Governor in Council deems it necessary to control. The import control list is not a list of every single item that may require an import permit. The import control list is national in scope, while permits issued under CITES and the Ozone depleting Substances Regulations, for example, are global concerns and international commitments. CITES and the Ozonedepleting Substances Regulations are described in Module 14. The following is taken directly from section 5.(1) of the Act and lists reasons why goods may be included on the Import Control List: a) to ensure, in accordance with the needs of Canada, the best possible supply and distribution of an article that is scarce in world markets or in Canada or is subject to governmental controls in the countries of origin or to allocation by intergovernmental arrangement; b) to restrict, for the purposes of supporting any action taken under the Farm Products Agencies Act, the importation in any form of a like article to one produced or marketed in Canada the quantities of which are fixed or determined under that Act; c) REPEALED c.1) to restrict the importation of arms, ammunition, implements or munitions of war, army, naval or air stores, or any articles deemed capable of being converted there into or made useful in the production thereof; d) to implement any action taken under the Agricultural Marketing Programs Act or the Canadian Dairy Commission Act, with the object or effect of supporting the price of the article; e) to implement an intergovernmental arrangement or commitment; or f) to prevent the frustration or circumvention of the Agreement on Textiles and Clothing in Annex 1A of the World Trade Organization Agreement by the importation of goods that are like or directly competitive with goods to which the Agreement on Textiles and Clothing applies.
Lesson 1 Summary: Import Controls Bookmark this In this lesson you learned about import controls and the need for import permits. Key points in this lesson include: import permits are used to control the importation of certain goods; goods that require import permits are found in specific lists contained in the Export and Import Permits Act (EIPA); the Trade Controls & Technical Barriers Bureau (TCTBB, formerly the EICB) is responsible for administering the EIPA; the Import Permit Regulations provide specific details about the EIPA;and, section 5.(1) of the EIPA lists reasons why goods may be included on the Import Control List. Following is a short quiz on what you have learned in Lesson 1.
Lesson 2: General and Individual Import Permits Bookmark this In this lesson you will be introduced to general and individual import permits.
Rationale Using a general import permit is much less complicated than applying for an individual import permit. As a CCS, you can reduce your own workload and eliminate the cost of acquiring an individual import permit by knowing when a http://cscb.ca/print/book/export/html/182769
29/118
10/1/2015
201516 CCS Course Part 3
general import permit can be used.
Lesson Objective At the end of this lesson, you should be able to explain when to use an individual import permit and when to use a general import permit.
Topic 1: General Import Permits Bookmark this An import permit is required for any good mentioned on the Import Control List (ICL). The ICL includes many products: firearms, weapons, Chemical Weapons Convention items, certain carbon steel products, specialty steel products, textiles and apparel items and a wide range of agricultural products. Goods requiring an individual import permit usually fall into one of the following categories: agricultural products, and firearms, related goods, and ammunition. Until 2005, apparel and textile products required import permits. They are no longer required due to Canada signing in 1995 the Agreement on Textiles and Clothing (ATC) with the World Trade Organization (WTO). Textile and apparel quota restrictions were phased out over a tenyear period in an effort to liberalize trade. Once all quotas were removed, Foreign Affairs and International Trade Canada withdrew the import permit requirement. Note: There is one circumstance where import permits are required for apparel and textile products. The exception is Tariff Preference Levels (TPL) which will be reviewed later in this module. In 2012, Foreign Affairs and International Trade Canada (DFAIT) advised that they no longer required individual import permits for steel. Critical trade data will continue to be monitored and posted by DFAIT using data already collected by CBSA on imported goods. Section 8 (1.1) of the Export and Import Permits Act states: …the Minister may, by order, issue generally to all residents of Canada a general permit to import any goods included on the Import Control List that are specified in the permit… In order to determine whether a general or individual import permit is required; you must consult the Handbook of Export and Import Commodity Codes. The handbook contains a list of the general import permits.
Topic 1: General Import Permits (cont. 2) Bookmark this Here are a few examples of goods requiring general import permits and the corresponding general import permit number. General Import Permit No. 1 Dairy Products for Personal Use General Import Permit No. 3 Wheat and Wheat Products and Barley and Barley Products for personal use General Import Permit No. 6 Roses for Personal Use General Import Permit No. 100 Eligible Agriculture Goods When presenting import documentation to CBSA, general import permit numbers must be quoted on the cargo control document or release documentation. To use a General Import Permit (GIP), the import must meet the terms of the general import permit. Each general import permit has its own specifications. For example, chicken eggs may be imported under GIP No. 8 as long as the importation doesn't contain more than two dozen eggs and they are for the importer's personal use. Dairy products may be imported under GIP No. 1 as long as the value of the importation doesn't exceed $20.00 and they are for the importer's own use. It is important to know the limitations of each of the general import permits. When http://cscb.ca/print/book/export/html/182769
30/118
10/1/2015
201516 CCS Course Part 3
handling the documentation of goods from the Import Control List, one must review the specific criteria listed under that GIP before taking advantage of a general import permit.
Topic 2: Individual Import Permits Bookmark this Once you have consulted the Import Control List and determined whether or not the goods you are importing require an import permit, goods not covered under a general import permit, require an individual import permit. If you have determined that you will require an individual import permit, you must then consult the Handbook of Export and Import Commodity Codes. Import permit applications must contain a commodity code. The first six digits of the commodity code are the same as the first six digits of the tariff classification number, the same number used to classify goods entering Canada for the purposes of determining the rate of duty. There is no list that crossreferences the commodity codes in the Handbook with the tariff classification numbers found in the Customs Tariff. The following is an example of commodity codes that would be used on an import permit: Hatching Eggs, for broilers of fowls of the species Gallus domesticus that are classified under tariff item No. 0407.11.11 or 0407.11.12 in the List of Tariff Provisions set out in the schedule to the Customs Tariff. 04.07 Birds' eggs, in shell, fresh, preserved or cooked. Fertilized eggs for incubation: 0407.11 Of fowls of the species Gallus domesticus Hatching, for broilers: 0407.11.11 00 Within access commitment DZN 1.51¢/dozen CCCT, LDCT, UST, CT, CRT, PT, JT: Free COLT: 0.43¢/dozen PAT: 0.6¢/dozen 0407.11.12 00 Over access commitment DZN 238% but not less than $2.91/dozen
Topic 2: Individual Import Permits (cont. 2) Bookmark this Note: The Item, hatching eggs are subject to a Tariff Rate Quota. An application for an import permit is made on form EXT 1466. The permit application may be sent to a customs broker who is online and who is authorized to issue permits on behalf of Trade Controls & Technical Barriers Bureau (TCTBB, formerly the Export Import Controls Bureau (EICB). The application can also be sent to the Export Import Controls System (EICS) by mail or fax. Currently there is no online mechanism for importers to submit permit applications. Permit applicants must have an EIPA file number (formerly EICB file number). To obtain a number, applicants are requested to submit an application which includes their company’s name, email address, address, postal code, the name of the contact person, telephone number, facsimile number, GST number and business number. Once completed, the application is faxed to the department of Foreign Affairs and International Trade Canada. Note that a permit issued in one person's name may not be transferred to another person. Giving a false declaration or misleading information constitutes a violation of the EIPA.
Lesson 2 Summary: General and Individual Import Permits Bookmark this http://cscb.ca/print/book/export/html/182769
31/118
10/1/2015
201516 CCS Course Part 3
In this lesson you learned about general and individual import permits. Key points in this lesson include: a permit is required for goods listed on the Import Control List; the Handbook of Export and Import Commodity Codes contains the list of general import permit numbers and the products to which they relate; goods on the Import Control List that do not meet the requirements for a general import permit require an individual import permit; import permit applications must contain a commodity code; the first six digits of ITCan’s commodity code are the same as the first six digits of the HS tariff classification number; and, an application for an import permit is made on form EXT 1466. Take a few minutes and see how you have learned about general and individual import permits.
Module 16: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Tariff Preference Levels, Tariff Rate Quotas and EXCAPS Bookmark this In this lesson, you will be introduced to Tariff Preference Levels (TPL) and Tariff Rate Quotas (TRQ). EXCAPS (Foreign Affairs/Customs Automated Permit System) is also explained.
Rationale As a CCS, you may be asked to apply for import permits for a variety of goods. Knowing that the import requirements for goods such as clothing, textiles and agricultural products may be different than the requirements for other goods will help keep the importation of such goods flowing smoothly.
Lesson Objective At the end of this lesson, you should be able to define the terms Tariff Preference Level and Tariff Rate Quotas and have an understanding of EXCAPS.
Topic 1: Tariff Preference Level Bookmark this http://cscb.ca/print/book/export/html/182769
32/118
10/1/2015
201516 CCS Course Part 3
The Tariff Preference Level (TPL) is a mechanism under the North American Free Trade Agreement (NAFTA), the CanadaChile Free Trade Agreement (CCFTA) and the CanadaCosta Rica Free Trade Agreement (CCRFTA). These parties have agreed to extend the preferential duty rates to a certain quantity of yarns, fabrics, and non originating clothing and textile products traded between the parties. Since a quota is in effect, import permits are required for these goods. TPL goods are allowed the NAFTA, CCFTA and CCRFTA rates of duty by virtue of an Order in Council (OIC). No NAFTA Certificate of Origin or other Certificate of Origin is required since it is not necessary for the goods to qualify under the rules of origin. However, a NAFTA, CCFTA, or CCRFTA Exporter's Certification of NonOriginating Textile Goods is required.
Clothing and Textile Products Since April 1, 2005, only those clothing and textile products that are eligible for a Tariff Preference Level (TPL) benefit (established under NAFTA, CCFTA and CCRFTA) are subject to import permit requirements. Other than for TPL imports, import permits for clothing and textiles are not required.
Topic 2: Tariff Rate Quotas Bookmark this As a signatory to the World Trade Organization (WTO) Agreement, Canada has committed itself to reducing the MostFavouredNation rates of duty on agricultural products. Some reductions took place in 1995 when Canada made this commitment, while other reductions will occur on an ongoing annual basis. Measures previously used by Canada to control the importation of specific agricultural products have been replaced with a system of Tariff Rate Quotas (TRQ). A tariff rate quota is a mechanism which provides for the application of customs duty at a certain rate to imports of a particular good up to a specified quantity. This is referred to as being "within access commitment". A different, and higher, duty rate applies to goods that exceed the specific quantity. This is considered "over access commitment". The appendix to D10181 contains a list of agricultural products that are subject to Tariff Rate Quotas. Imports of these goods within the quota amount are subject to the lower rate of duty under the within access commitment tariff items and imports over the quota amount are classified under the higher rates of duty under the over access commitment tariff items. The Minister of Foreign Affairs, Trade and Development Canada (DFATD) is responsible for allocating quotas for goods under a TRQ. Control of within access goods is maintained in one of two ways: a) through permits issued by DFATD and based on quota allocations to importers or permit applications received, or b) on a firstcome, firstserve basis administered by CBSA. Any importer may import goods on the TRQ list; however, if they have no previous quota allocation, or do not have an import permit, the goods are assessed the over access duty rate. In order to be entitled to the within access tariff classification, import permits must be in the importer's possession at the time that goods are released and must be made available to CBSA upon request. Important! DFATD will not issue permits for any goods after importation has occurred.
Topic 3: Export Import Controls System (EICS) Bookmark this The Trade Controls & Technical Barriers Bureau (TCTBB, formerly the Export and Import Controls Bureau, EICB) http://cscb.ca/print/book/export/html/182769
33/118
10/1/2015
201516 CCS Course Part 3
provides an electronic commerce business solution to licensed Canadian customs brokers to facilitate the process of acquiring an individual import permit. The system is commonly known as the Export Import Controls System (EICS). This process may also be used to apply for export permits. Export permits will be discussed in Part 4 of the course. EICS supports two distinct methods for customs brokers to access the system. Brokers who deal with low volumes (less than 50 100 permits per day) may prefer to use a secure webbased interface that allows them to apply for and receive import and export permits on a transaction by transaction basis. The second method was developed to support the higher volume brokers and is based on transaction exchange via an electronic data interchange (EDI) (system to system). The EICS receives applications and delivers permits to online brokers over the internet. Permits are delivered in the form of a PDF (Portable Document Format) document in the case of the Web interface and as email attachments in the case of EDI. The EICS application is PKIenabled: as a security measure, users can only gain access to the EICS web interface by logging in using their PKI Certificate. The issuance of a PKI Certificate to an enduser requires a facetoface meeting between the Bureau’s Registrar and the Certificate Owner for identification and authentication. Brokers interested in accessing the system are encouraged to read the Participant's Requirements Document and contact Foreign Affairs and International Trade.
Topic 4: EXCAPS Bookmark this An automated system called EXCAPS (Foreign Affairs/Customs Automated Permit System) is in place to allow the transmission of permit information directly from DFATD to CBSA. This eliminates the need for importers or brokers to present hard copy permits to CBSA when requesting release of goods requiring a permit. A transaction record is issued to the importer or broker to serve as a receipt showing that the permit has been issued. An import permit becomes valid when DFATD has transmitted the permit information electronically to CBSA. In the event that EXCAPS is not available to transmit permit data to CBSA's Accelerated Commercial Release Operations Support System (ACROSS), importers and brokers may submit a paper copy of the transaction record to CBSA to obtain release of the goods.
Topic 5: Penalties Bookmark this Under the Administrative Monetary Penalty System (AMPS), a penalty can be applied for failing to provide a permit before goods are released. The contravention is C071. In the case of import permits, the penalty is on a “per document” basis against the importer. That is, a penalty is assessed for each missing import permit.
Lesson 3 Summary: Tariff Preference Levels, Tariff Rate Quotas and EXCAPS Bookmark this In this lesson you learned about Tariff Preference Levels, Tariff Rate Quotas and EXCAPS. http://cscb.ca/print/book/export/html/182769
34/118
10/1/2015
201516 CCS Course Part 3
Key points in this lesson include: the Tariff Preference Level is a mechanism under NAFTA, CCFTA and CCRFTA whereby the preferential duty rates are extended to specific quantities of apparel and textile products traded between the parties; TPL goods are allowed the NAFTA, CCFTA and CCRFTA rates of duty by virtue of an OIC; since goods under a TPL do not have to originate under NAFTA, CCFTA or CCRFTA, a Certificate of Origin is not required; a Tariff Rate Quota provides for the application of duty at a certain rate to certain goods up to a specified quantity, and a different rate to imports of that good that exceed that quantity, during a specific time period; and, EXCAPS is in place to allow the transmission of permit information directly from DFAIT to CBSA. Now take a few minutes to see what you have learned in this lesson.
Module 16: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 16 Summary: Import Permits Bookmark this In this module, you were introduced to general and individual import permits under the Export and Import Permits Act, the goods that require permits, and the process to apply for a permit. You learned that importations of clothing and textiles require extra attention since a Tariff Preference Level may apply and that Tariff Rate Quotas are in place for importations of agricultural goods. By reviewing the material in this module, your knowledge of import permits will help prevent unnecessary delays in the importation of controlled goods. Now it’s time to test what you’ve learned.
Module 16: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have http://cscb.ca/print/book/export/html/182769
35/118
10/1/2015
201516 CCS Course Part 3
the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 17: Marking of Imported Goods Bookmark this If you or your client has ever had a shipment held by CBSA because of missing labels or improper marking, you will know how much extra work is involved in getting the shipment cleared. This module will explain the purpose of marking goods, the requirements under the marking regulations, and the penalties that can be assessed against the importer for incorrect marking. Special marking rules for NAFTA goods will also discussed.
Module Objective When you have completed this module you will know why and how goods are marked. You will understand the difference between the marking rules for NAFTA and nonNAFTA goods, and the penalties associated with non compliance.
Lesson 1: Marking of Imported Goods Bookmark this In this lesson, you will be introduced to the marking requirements for imported goods. You will become familiar with country of origin marking and the types of goods that need to be marked.
Rationale Because goods may not be released until they are properly marked, it is important for you as a CCS, to understand Canada’s marking requirements.
Lesson Objective At the end of this lesson, you should be able to explain why and how goods are marked.
Topic 1: The Purpose of Marking Bookmark this Section 35.01 of the Customs Act states: “No person shall import goods that are required to be marked by any regulations made under section 19 of the Customs Tariff unless the goods are marked in accordance with those regulations.” Section 19 of the Customs Tariff requires that goods be marked with their country of origin. Although Section 35.01 of the Customs Act and this module relate to the requirement for country of origin marking and should not be confused with the labelling requirements of other government departments, importers and brokers must also be aware of the labelling requirements of other departments. Importers are encouraged to contact other departments such the Canadian Food Inspection Agency, Health Canada, or Industry Canada to determine labelling requirements before purchasing goods outside of Canada. Knowing the requirements of other government departments will make it easier to import goods. By marking goods with their country of origin as specified in the regulations of Section 19 of the Customs Tariff, the http://cscb.ca/print/book/export/html/182769
36/118
10/1/2015
201516 CCS Course Part 3
consumer and CBSA are aware of the origin of the goods.
Topic 2: Regulations Bookmark this Depending on whether the goods are imported from a NAFTA or nonNAFTA country, there are different marking requirements. Requirements for the determination of the country of origin, for marking purposes, of goods from nonNAFTA countries are found in the Determination of Country of Origin for the Purpose of Marking Goods (NonNAFTA countries) Regulations. Requirements for the determination of the country of origin, for marking purposes, of goods from NAFTA countries are found in the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations. These specific requirements will be covered in greater detail in Lesson 2 of this module. Important! It is important to remember that the marking regulations for goods imported from a NAFTA country apply to all goods imported from a NAFTA country and there is no requirement for the goods to "originate" within the meaning of the NAFTA Rules of Origin Regulations. (i.e. NAFTA Rules of Origin need not apply).
Topic 3: How Goods are Marked Bookmark this The country of origin marking of all goods must be: legible; permanent, in so far as the nature of the goods will allow; and, capable of being seen easily during normal handling of the goods or their container. In most cases, the country of origin marking must appear on the “point of sale” packaging, that is, the marking must be shown on the item that is sold to the purchaser. For example, if you have a box of pens and each pen is sold separately, each pen must be marked. However, if the pens are sold as a box, only the box must show the country of origin of the pens. Section 19. (1) of the Customs Tariff grants the Governor in Council the authority to make regulations requiring imported goods to be marked, as well as regulations governing which goods have to be marked. The regulations also include guidelines for determining the appropriate country or geographical area of origin of imported goods for marking purposes. Section 19. (2) of the Customs Tariff allows the Minister to make regulations regarding the marking of imported goods and the manner in which they must be marked, as well as regulations prescribing when the imported goods must be marked. In many instances, noncompliance with the marking regulations is discovered after the goods arrive in Canada and they have been examined by CBSA. When it is found that goods are incorrectly marked or are not marked, the importer may: export the goods; abandon the goods to the Crown; or mark the goods in Canada as long as conditions listed under Authorization to Mark Goods in Canada found in D1131 are met.
Topic 4: NonCompliance and Penalties Bookmark this http://cscb.ca/print/book/export/html/182769
37/118
10/1/2015
201516 CCS Course Part 3
If the importer elects to mark the goods in Canada (after importation but before release), the conditions are as follows: the goods cannot be imported as mail; a notice of noncompliance pursuant to subsection 35.02(2) of the Customs Act must not have been issued to the importer on similar or identical goods more than 30 days before the importation of the goods or less than two years before importation of the goods; if authorization is required prior to importation, the importer gives written notice to CBSA that the goods will be marked in Canada; if authorization is not requested prior to importation, the importer gives written notification at the time of importation to CBSA that the goods will be marked in Canada and demonstrates that it was not possible to give prior notice; and transfer of ownership of the goods cannot take place until the goods are marked properly. In other words, if the importer decides to mark the goods (instead of exporting or abandoning them), they may only do so if the goods have not been shipped through the mail, the importer has not received prior notice for failing to mark similar goods (within a certain time frame), the importer gives CBSA written notice (again, within a certain time frame) and the goods are not sold before they are marked. Once written notice is given from the importer to CBSA saying that they will mark the goods in Canada, CBSA will respond with written instructions indicating: the place where the marking is to be done; the time in which the marking must be completed; and the place where the marked goods are to be made available for examination by an officer.
Topic 4: NonCompliance and Penalties (cont. 2) Bookmark this In most cases, an officer will issue the written notification to the importer and/or their customs broker indicating that the goods must be marked in accordance with the marking regulations, found in D1131. The usual response is for the importer to have the goods marked in Canada, either at their premises, a public or private bonded warehouse, a CBSA office or at an established customs bonded warehouse. In order to have the goods marked at their premises and, if the premises are not already an existing warehouse, the importer must fill out form E401, an Application for a Licence to Operate a Customs Bonded Warehouse. The completed application is then submitted to the CBSA office where the goods are being held. A fee of $100.00 must accompany the application. The importer is then issued a temporary bonded warehouse number, and his premises are treated as if they are a customs bonded warehouse. In order to place the goods in a bonded warehouse, a completed form B3, type 10 is created. The goods may not be sold or disposed of until the marking is completed and CBSA has reexamined the goods to ensure that they now comply with the marking regulations. Once CBSA is satisfied that the goods are marked properly, a B3, type 20 is created to request the release of the goods from the bonded warehouse. Given the cost involved in marking goods once they are in Canada, and the threat of penalties for noncompliance, it is important to ensure that goods comply with the marking regulations before they are shipped to Canada. In cases where the importer knows that several shipments are on their way and that they do not comply with the marking regulations, the importer may request a blanket preauthorization to mark the goods in Canada. The Administrative Monetary Penalty System (AMPS) includes infractions against the marking regulations. AMPS contravention C377 applies to marking infractions. Please note that in the AMPS Master Penalty Document additional text is provided for this item.
Topic 4: NonCompliance and Penalties (cont. 3) http://cscb.ca/print/book/export/html/182769
38/118
10/1/2015
201516 CCS Course Part 3
Bookmark this
C377 It is considered a contravention under AMPS if a person failed: 1. to mark the goods, or mark the goods with the correct country of origin, or 2. to mark the goods in the appropriate method and manner, prior to importing the goods, if arrangements were not made to mark the goods in Canada prior to requesting release. The penalties under AMPS are graduated, and the following reflects the first, second, third, and fourth instance: 1st $150.00 2nd $225.00 3rd and subsequent $450.00 Retention Period: 12 months Goods that must be marked are listed in Schedule I of Determination of Country of Origin for the Purpose of Marking Goods (NonNAFTA Countries) Regulations and Schedule I of Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations. The AMPS marking penalties are applied against the importer and are issued by a compliance verification officer or CBSA regional marking expert (RME). When reviewing the marking of goods, there are three considerations: 1. Is the good required to be marked with its country of origin? 2. What country of origin must be marked on the good? 3. What is the acceptable method and manner of marking the good? Compliance verification officers are responsible for making decisions with respect to the first and second considerations. The RME is responsible for the third and will provide guidance on the first and second.
Topic 4: NonCompliance and Penalties (cont. 4) Bookmark this If a shipment arrives unmarked or improperly marked and the country of origin to be marked on the goods is known, the officer must reject the import transaction and ensure that the shipment meets marking requirements prior to release. At this time the officer will likely issue a penalty at the first level. The penalty notice must state that the penalty is a result of the shipment not being marked and/or being marked improperly. If the importer chooses to export the goods, normal export procedures apply. If there is uncertainty or disagreement as to what country of origin should be marked on the goods, the officer must contact the RME for a ruling. The RME’s ruling is considered to be a decision, and must be followed for future importations of identical or similar goods. A first level penalty will be issued. The officer will apply second level and subsequent penalties for contraventions concerning identical and similar goods. In cases where fraud is suspected, such as situations where goods are marked in a deceptive way, a penalty will be issued and there may also be criminal prosecution.
Topic 5: Categories of Goods Bookmark this http://cscb.ca/print/book/export/html/182769
39/118
10/1/2015
201516 CCS Course Part 3
Appendix A of D1131 lists goods that are required to be marked, regardless of their country of origin. This appendix lists both NAFTA and nonNAFTA goods and is divided into six categories. These categories, with a few examples from each, follow. 1. Goods for Personal or Household Use Examples: Bakeware and cookware made of aluminum; batteries, dry cell; cutlery, chromeplated or stainless steel 2. Hardware Examples: Copper tubing; files and rasps; tubes, electronic 3. Novelties and Sporting goods Examples: Bicycles; toys, games and athletic and sporting goods 4. Paper Products Examples: Paper matter and products, lithographed or printed 5. Apparel Examples: Boots, shoes, and slippers; gloves made partially or wholly of leather; knitted garments 6. Horticultural Products Examples: Bulbs, dormant or in growth, except tulip bulbs; Christmas trees, rooted or unrooted, when in a usual container Appendix B of D1131 provides additional examples and clarification of the goods that are in Appendix A. When referring to Appendices A and B, it is important to keep in mind that: if an article does not fall under a specific class of good, it may fall under a more general one. For example, cotton gloves are not specifically mentioned but would fall under wearing apparel; and, there are exceptions according to end use, for example, blankets are required to be marked, but if they are going to be used in a hospital, they do not need to be marked.
Lesson 1 Summary: Marking of Import Goods Bookmark this In this lesson you learned about the marking requirements under the Customs Act and the Customs Tariff. Key points in this lesson include: certain goods must be marked with a country of origin; marking regulations for goods imported from a NAFTA country apply to all goods imported from a NAFTA country and there is no requirement for the goods to "originate" within the meaning of the NAFTA Rules of Origin Regulations; section 19. (1) of the Customs Tariff grants the Governor in Council the authority to make regulations requiring imported goods to be marked, as well as regulations governing which goods have to be marked; marking regulations are found in D1131; appendix A of D1131 lists goods that are required to be marked, regardless of their country of origin;and, AMPS contravention C377 applies to marking infractions. Take a few minutes to answer the online questions to see how much you have learned about the marking of imported goods.
Module 17: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
http://cscb.ca/print/book/export/html/182769
40/118
10/1/2015
201516 CCS Course Part 3
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Marking Rules Bookmark this In this lesson, you will be introduced to the marking rules for both nonNAFTA and NAFTA goods and you will learn about the tariff shift rules, the tariff preference override and how NAFTA goods are marked if their country of origin cannot be determined.
Rationale As a CCS you may be asked to explain the marking rules to your clients, or if you are an importer, to your vendors. Knowledge of the marking rules will help keep the importation of goods flowing smoothly.
Lesson Objective At the end of this lesson, you should be able to distinguish between the marking rules for nonNAFTA goods and NAFTA goods and know what to do if the country of origin for marking purposes cannot be determined.
Topic 1: Marking of NonNAFTA Goods Bookmark this Under the Determination of Country of Origin for the Purpose of Marking Goods (NonNAFTA Countries) Regulations, the country of origin to be marked on nonNAFTA goods is the country in which the goods were substantially manufactured. This means the country where the major part of production or manufacturing took place, and includes accumulated costs of material, labor and overhead. Goods from nonNAFTA countries may be marked in English or French. D1131 lists goods that are exempt from marking. The following goods from nonNAFTA countries do not need to be marked: 1. Donations for charitable purposes and not for the purpose of sale. 2. Gifts or bequests. 3. Antiques. 4. Used goods, with the exception of iron or steel pipes and tubes. 5. Goods for the exclusive use of the importer or that importer's employees and not for resale to the general public, with the exception of iron or steel pipes and tubes. 6. Goods that are imported under tariff items Nos. 9808.00.00, 9809.00.00, or 9810.00.00 of the List of Tariff Provisions set out in the schedule to the Customs Tariff. 7. Goods imported for subsequent exportation from Canada, with the exception of iron or steel pipes and tubes. When considering an exemption from the marking requirements, importers, exporters and producers are encouraged to contact a marking expert in the region where the goods will be imported to find out more information about the use of exemptions. Depending on the circumstances, they may be asked to provide proof that the goods qualify for an exemption.
http://cscb.ca/print/book/export/html/182769
41/118
10/1/2015
201516 CCS Course Part 3
Topic 2: Marking of NAFTA Goods Bookmark this Annex 311 of the North American Free Trade Agreement (NAFTA) requires that Canada, Mexico, and the United States each establish marking rules to determine the country of origin of goods from a NAFTA country for marking purposes. Section 4 of the Determination of Country of Origin for the Purpose of Marking Goods (NAFTA Countries) Regulations indicates that the country of origin of goods is the country in which: a) the goods are wholly obtained or produced; b) the goods are produced exclusively from domestic materials; c) each of the foreign materials incorporated into the goods undergoes an applicable change in tariff classification and satisfies any other applicable requirements of these regulations; or d) a good is considered to originate under a Chapter Note set out in Schedule III [of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations]. In other words, this is a sequential checklist one can use when determining the country or countries of origin to be marked on the goods.
Topic 2: Marking of NAFTA Goods (cont. 2) Bookmark this When determining the country of origin for the marking of goods imported from a NAFTA country and one has established that the goods cannot be marked according to Section 4 items (a) and (b), they must ask, "Does each foreign material undergo an applicable change in tariff classification or any other applicable provision of the NAFTA Marking Regulations?" In other words is the "tariff shift" rule used? The tariff shift rules are technical rules that are applied systematically to determine the country or countries of origin to be marked on NAFTA goods. These rules are found in Schedule III of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations. When applying the tariff shift rules, some materials are disregarded when determining whether goods undergo an applicable change in tariff classification or satisfy any other applicable requirements of the regulations. These materials are: packaging materials and containers in which the goods are packaged for retail sale and that are classified with the goods; accessories, spare parts or tools that are delivered, classified and shipped with the goods; packing materials and containers in which the goods are packed for shipment; and indirect materials.
Topic 2: Marking of NAFTA Goods (cont. 3) Bookmark this In situations when the country of origin of NAFTA goods cannot be determined under Section 4 of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations, the following applies: section 5 of the regulations states that where the country of origin cannot be determined under section 4, the country or countries of origin shall be the country or countries of origin of the single material that imparts the essential character of the goods; section 6 of the regulations states that where the country or countries of origin of goods cannot be determined http://cscb.ca/print/book/export/html/182769
42/118
10/1/2015
201516 CCS Course Part 3
under section 4 or 5 and the goods are described as a set or mixture, or are classified as a set or mixture, the country or countries of origin of the goods shall be the country or countries of origin of all the materials that merit equal consideration as imparting the essential character of the goods; and Where the country or countries of origin of goods cannot be determined under any of Sections 4, 5 or 6, the country or countries of origin shall be: a) if the goods are produced by only minor processing, the country or countries of origin of all the materials that merit equal consideration as imparting the essential character of the goods; b) if the production of the goods is by simple assembly and the parts that merit equal consideration as imparting the essential character of the goods have the same country of origin, the country of origin of those parts; or c) in any other case the last country in which goods underwent production (section 7). The Tariff Preference Override found in Section 8 of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations, states that: … Where any goods are originating goods under the NAFTA Rules of Origin Regulations and the country of origin of the goods is not determined to be a single NAFTA country under section 4 or 5, the country of origin of those goods shall be the last NAFTA country in which the goods underwent production; other than by minor processing, if a Certificate of Origin under the Proof of Origin of Imported Goods Regulations has been completed and signed for the goods. In other words, where goods are originating under the NAFTA Rules of Origin AND a Certificate of Origin is available AND where a single country of origin for marking purposes cannot be determined, the country of origin, for marking purposes, is the country in which the goods last underwent production.
Topic 2: Marking of NAFTA Goods (cont. 4) Bookmark this
Production Outside Canada Section 9 of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations states that, after reviewing sections 4 to 7 of the regulations and determining that the country of origin of the imported goods is Canada and the goods have undergone production that involves more than minor processing in another NAFTA country prior to their importation, the country of origin of the goods shall be the last NAFTA country in which the goods underwent that production. A foreign material incorporated into goods shall not be considered to have undergone an applicable change in tariff classification or to satisfy any other applicable requirements of the regulations by reason of: the change from one tariff classification to any other merely as the result of a change in the end use of the goods; the change from one tariff classification to any other merely as the result of the dismantling or disassembly of the good; the mere packing, repacking, packaging or repackaging of the goods; the mere dilution with water or any other substance that does not materially alter the characteristics of the material; or the mere collection of parts so that the collection of parts is classified as if it were an assembled good pursuant to Rule 2(a) of the General Interpertive Rules. In other words any of the above operations can disqualify foreign materials from having undergone the necessary tariff classification change or other requirement. Appendix C of D1131 contains a list of goods from NAFTA countries that do not need to be marked. Goods from NAFTA countries may be marked in English, French or Spanish.
Lesson 2 Summary: Marking of Imported Goods http://cscb.ca/print/book/export/html/182769
43/118
10/1/2015
201516 CCS Course Part 3
Bookmark this In this lesson you learned about the marking of goods from NAFTA countries and goods from nonNAFTA countries. While the origin of nonNAFTA goods is simply decided by the country of origin in which the goods were substantially manufactured, the origin of NAFTA goods; for marking purposes, is decided by a process of elimination based on Sections 4 to 7 of the NAFTA Marking Regulations. Key points in this lesson include: appendix C of D1131 lists goods that are exempt from marking; goods from nonNAFTA countries may be marked in English or French; goods from NAFTA countries may be marked in English, French or Spanish; the tariff shift rules are quite separate and distinct from the NAFTA Rules of Origin; and the tariff preference override says that when a country of origin cannot be determined (for goods from a NAFTA country) by any other means, then the country of origin is the last NAFTA country in which the goods underwent production, other than by minor processing, as long as they qualify under the NAFTA rules of origin and a certificate is available. Have a look at the following questions to see to see how much you have learned about the marking rules for NAFTA and nonNAFTA goods.
Module 17: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
0 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. Start quiz
Module 17 Summary: Marking of Imported Goods Bookmark this In this module you learned about the marking of goods in relation to the Customs Act and the Customs Tariff. Key points are: certain goods must be marked with a country of origin; marking regulations for goods imported from a NAFTA country apply to all goods imported from a NAFTA country and there is no requirement for the goods to "originate" within the meaning of the NAFTA Rules of Origin Regulations. section 19. (1) of the Customs Tariff grants the Governor in Council the authority to make regulations requiring imported goods to be marked, as well as regulations governing which goods have to be marked; marking regulations are found in D1131; appendix A of D1131 lists goods that are required to be marked, regardless of their country of origin; goods from nonNAFTA countries may be marked in English or French; the country of origin, for goods from nonNAFTA countries, is the country in which the goods were substantially manufactured; goods from NAFTA countries may be marked in English, French or Spanish; the country of origin to be marked on the goods from NAFTA countries is defined in Section 4, 5, 6 and 7 of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations; and The tariff shift rules are quite separate and distinct from the NAFTA Rules of Origin. http://cscb.ca/print/book/export/html/182769
44/118
10/1/2015
201516 CCS Course Part 3
You should now be able to describe what types of goods must be marked with the country of origin and explain the differences between the marking rules for goods from NAFTA and nonNAFTA countries. If you are faced with goods that have not been marked properly you will be able to instruct others about the choices in dealing with unmarked goods. Your knowledge will help avoid AMPS penalties and keep shipments moving. A short quiz on what you have learned in this module is available online.
Module 17: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
11 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 18: Release of Goods Bookmark this This module provides information on one of the most important steps in importing commercial goods the release process. Once CBSA releases the goods, they may continue to their final destination in Canada.
Module Objective You will be able to describe the various ways in which a request for release may be made.
Lesson 1: Posting of Security Bookmark this Most commercial goods are released before any duties and taxes are paid to CBSA. In order to do this, security must be posted by the customs broker or the importer which acts as a guarantee to CBSA that duties and taxes will be paid at a later date.
Rationale As a CCS working for a customs broker, you may need to advise clients of their security options. If you are an importer, you will have to determine your own security requirements and options.
Lesson Objective At the end of Lesson 1 you should be able to describe the security requirements for release of goods prior to the payment of duties and taxes.
Topic 1: Forms of Security http://cscb.ca/print/book/export/html/182769
45/118
10/1/2015
201516 CCS Course Part 3
Bookmark this Section 35 of the Customs Act states that goods will not be released before duties and taxes have been paid unless security has been posted. The Accounting for Imported Goods and Payment of Duties Regulations sets out the security requirement for release of commercial goods prior to the payment of duties.
Commercial Goods For commercial goods, either the importer or his customs broker must post security to allow the release of goods prior to the payment of duties. Security can be in the form of: (a) cash; (b) a certified cheque; (c) a transferable bond issued by the Government of Canada; (d) a bond issued by; (i) a company that is registered and holds a certificate of registry to carry on the fidelity or surety class of insurance business and that is approved by the President of the Treasury Board as a company whose bonds may be accepted by the Government of Canada, (ii) a member of the Canadian Payments Association referred to in section 4 of the Canadian Payments Association Act, (iii) a corporation that accepts deposits insured by the Canada Deposit Insurance Corporation or the Régie de l’assurancedépôts du Québec to the maximum amounts permitted by the statutes under which those institutions were established, (iv) a credit union as defined in subsection 137(6) of the Income Tax Act, or (v) a corporation that accepts deposits from the public, if repayment of the deposits is guaranteed by Her Majesty in right of a province, or (e) a credit card.
Casual Goods Casual goods may be released prior to the payment of duties if the importer or owner of the goods provides, as conditional payment of an amount equal to the amount of these duties: a remittance by credit card in respect of which the importer or owner of the goods is the cardholder or authorized user, where the issuer of the credit card has entered into an agreement with the Government of Canada establishing the conditions of its acceptance and use; or a traveller's cheque, a money order or a certified cheque.
Topic 2: Amount of Security Bookmark this The manner in which security is calculated for importers is different than the calculation used for customs brokers. For importers who are resident in Canada, security is based on their average monthly duties and taxes less the GST, up to a maximum of $10 million. For importers who are nonresident, security is based on their average monthly duties and taxes including GST, up to a maximum of $10 million. It should also be noted that: the minimum security requirement for an importer to transact business at all customs offices in Canada is $5,000; the minimum security requirement for an importer to transact business at one customs office is $250; and An importer of unconditionally duty free and tax free goods (including GST) is not required to post security. http://cscb.ca/print/book/export/html/182769
46/118
10/1/2015
201516 CCS Course Part 3
For customs brokers, security for the release of goods prior to the payment of duties and taxes is based on average monthly duties and taxes (including GST) up to a maximum of $10 million. It should also be noted that: the minimum security required for release of goods prior to the payment of duties and taxes, by a customs broker transacting business at all offices in Canada is $25,000.00; and the minimum security required for release of goods prior to the payment of duties and taxes, by a customs broker transacting business at one customs office is $5,000.00. Once security has been issued, a fivedigit security identification number is assigned by CBSA to the security holder. These digits are the first five digits of the transaction number that is quoted when the release of goods is requested.
Topic 3: Reducing Security Required Bookmark this Security holders must ensure that their levels of security are adequate to cover their debt to the Crown. In order to reduce the amount of security required, customs brokers may choose to: make interim payments throughout the month to reduce their outstanding monthly balance; arrange for some clients to obtain their own security and make their payments for duties and taxes directly to the Receiver General; or arrange for some clients to assume the responsibility of paying the GST, with the broker providing security and payment for the balance of the clients' duties and taxes.
Topic 4: GST Letter Bookmark this Importers who pay their GST directly must have a GST letter on file with their customs broker. The letter indicates that the importer (the broker's client) and the broker have an agreement in place that indicates that the importer is responsible for the payment of GST. With a GST letter in place, the importer can write a cheque directly to the Receiver General or make the GST payment to the customs broker. The broker's security will continue to be used for any duties payable.
Topic 5: NonCompliance Bookmark this Importers or customs brokers who do not pay duties and taxes owing by the date they are due are subject to a penalty under the Administrative Monetary Penalty System (AMPS), contravention number C336. Form K23 is issued by CBSA to indicate any outstanding duties and taxes. When a customs broker is not paid by his client for whom he has a GST letter, the customs broker may short pay the taxes that are owed. In such cases, the broker must provide CBSA with a copy of the GST letter to support his short payment.
Lesson 1 Summary: Posting of Security Bookmark this Lesson 1 provided you with information regarding security that must be posted in order for goods to be released http://cscb.ca/print/book/export/html/182769
47/118
10/1/2015
201516 CCS Course Part 3
prior to the payment of duties and taxes. Key points in this lesson are: section 35 of the Customs Act states that goods will not be released before duties and taxes have been paid unless security has been posted; most commercial goods are released before any duties and taxes are paid to CBSA; security can take the form of cash, certified cheque, bond, or, in some cases, credit card; for importers who are resident in Canada, security is based on their average monthly duties and taxes (less the GST), up to a maximum of $10 million; for importers who are nonresident, security is based on their average monthly duties and taxes (including GST), up to a maximum of $10 million; an importer of unconditionally duty free and tax free goods (including GST) is not required to post security; for customs brokers, security is based on average monthly duties and taxes (including GST) up to a maximum of $10 million; the minimum security requirement for a broker to transact business at all customs offices in Canada is $25,000; the minimum security requirement for a broker to transact business at one customs office is $5,000; once security has been issued, a fivedigit security identification number is assigned; security holders have options available to reduce the amount of security required;and importers or customs brokers who do not pay the duty and taxes owing by the date they are due are subject to a penalty under AMPS. Now take some time and answer a few questions about security.
Module 18: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Release Bookmark this Goods must be released by CBSA in order for them to continue to their destination in Canada; it is crucial step in the importation of goods.
Rationale Only licensed customs brokers can release goods on behalf of more than one importer. As an employee of a customs broker, you may be asked to perform this task. And, if you are employed by an importer, you may be asked to obtain the release of goods for your employer.
Lesson Objective You will be able to request the release of goods. http://cscb.ca/print/book/export/html/182769
48/118
10/1/2015
201516 CCS Course Part 3
Topic 1: Definition of Release Bookmark this Once goods have arrived in Canada and been reported to Customs by the carrier, they must be "released". A word that is often used instead of released is "cleared". Release does not necessarily mean that any applicable import duties and taxes have been paid, in fact, it is quite common to have goods delivered and in use before any duties and taxes are paid. This occurs because the Customs Act and Regulations allow for "interim accounting" the practice of releasing goods prior to the payment of duties and taxes as long as security has been posted. Paragraph 2.(1) of the Customs Act defines release as: (a) in respect of goods, to authorize the removal of the goods from a customs office, sufferance warehouse, bonded warehouse or duty free shop for use in Canada, and (b) in respect of goods to which paragraph 32(2)(b) applies, to receive the goods at the place of business of the importer, owner or consignee. Paragraph 2.(1)(a) is selfexplanatory. Paragraph (b) refers to goods that are authorized by CBSA to be delivered to the premises of the importer, owner or consignee. Included are items such as traveller's baggage and gifts of small value.
Topic 2: Release Requests Bookmark this Most commercial shipments are released before duty and taxes are paid. A request for the release of commercial goods is most often made by presenting one of the following "release packages": Release on Minimum Documentation (RMD) or PreArrival Review System (PARS). Release on Full Documentation (RFD) is another option, but not as common as RMD or PARS. In some cases, goods can be released and duty and taxes paid at the same time. This type of release request is made on Form B3, type C or type D. A description of each release option follows. Important! With very specific exceptions, release request data must be submitted to CBSA electronically.
Topic 2: Release on Minimum Documentation (RMD) Bookmark this
Release on Minimum Documentation (RMD) Using the RMD process enables goods to be released upon presentation of a minimum number of data elements. With very few exceptions, RMD requests must be made electronically. Exceptions to an electronic RMD are listed on a lead sheet which must be completed and submitted with the paper release request. Since goods are being released prior to accounting and prior to the payment of duties and taxes, an RMD release package is considered interim accounting. RMD requests are made when the goods have already arrived, as opposed to PARS requests (described later in http://cscb.ca/print/book/export/html/182769
49/118
10/1/2015
201516 CCS Course Part 3
this lesson), which are made prior to the arrival of the goods.
Topic 2: PARS (PreArrival Review System) Bookmark this
PreArrival Review System (PARS) The PARS process requires planning and cooperation on the part of the exporter, carrier, importer, customs broker and CBSA. Each party has specific responsibilities that must be carried out in a timely sequence in order for the system to work. Importers and customs brokers can provide release information for PARS processing for goods sent by various methods of transport. The terms used for modes other than highway are: RAIL PARS (for goods arriving by rail); MARINE PARS (for marine freight); AIR PARS (for air freight); and INPARS (for goods traveling in bond for release inland). The key to PARS is the PARS cargo control number bar code label, or PARS bar code. Carriers with their own carrier code may print their own PARS bar code labels, incorporating their carrier code and company name if they wish. The bar code must also indicate PARS. In the following PARS bar code illustration, the four Xs represent the carrier code assigned to Joe's Trucking.
Topic 2: PARS (cont. 2) Bookmark this In order to begin the PARS process, the exporter prepares the usual customs invoices and any other required documents. When the exporting carrier arrives to pick up the goods at the exporter's premises, the exporter or carrier affixes a PARS bar code to the top righthand corner of the original invoice. The driver will take the original bar coded invoice with him, plus one copy for use as a delivery receipt. Information concerning the shipment is sent by the exporter or the carrier to the importer or customs broker. This information can be sent electronically or by fax, and must include a copy of the bar coded customs invoice. The customs broker or importer prepares the PARS release package from the information received from the exporter or carrier and transmits it to CBSA. Unless there is a specific exception, the PARS release data must be sent electronically. PARS release requests must identify any invoices, permits, licenses or certificates that are required and on hand. Some government departments are able to communicate electronically with CBSA and if a permit is required from one of these departments, the release request must be made electronically. When the other government department is unable to communicate electronically with CBSA, a paper PARS request can be made. http://cscb.ca/print/book/export/html/182769
50/118
10/1/2015
201516 CCS Course Part 3
The electronic version of the PARS release package must be submitted a minimum of one hour and a maximum of 30 calendar days before the goods arrive in Canada, and an estimated date and time of arrival (ETA) must be provided. A paper version must be submitted a minimum of at least two hours before arrival. It should be noted that a Customs Cargo Control Document, Form A8A, is not required for highway EDI PARS. Important! The customs officer reviews the PARS release information and makes a decision whether to release the goods or have them examined when they arrive in Canada. The decision is entered into customs automated system and is not available to anyone outside of CBSA.
Topic 2: PARS (cont. 3) Bookmark this At the point where the carrier enters Canada, the driver presents the original PARS bar coded customs invoice to the officer at the Primary Inspection Line (PIL). The officer wands the bar code and ACROSS will display the previously determined status of the shipment: to be released, to be referred, or not on file. If the status is "to be released" the officer updates the system, date stamps and retains the original invoice, and date stamps and returns the invoice copy to the driver. The shipment has been released and the driver may proceed to deliver the goods. Note that the officer at the PIL may make a decision not to release the goods if he is suspicious and feels that the goods should be examined or the driver should be questioned further. If the goods are released, a Release Notification Message (RNS) is sent to the importer, carrier, and/or customs broker, if they are RNS participants. If the status is not on file or referred, the driver is instructed to report to the customs office. .
Topic 2: EDI Bookmark this
EDI For release information provided electronically, the importer or broker must follow the requirements listed in the ACROSS Participants' Requirements Document (PRD), provided by CBSA. ACROSS stands for the Accelerated Commercial Release Operations Support System. This system allows brokers and importers to transmit release and invoice data to CBSA. The following are the steps involved in the EDI release process. 1. The shipper or exporter prepares documentation for the shipment and forwards this information to the importer or customs broker. 2. The importer or customs broker prepares release information electronically. The release information includes data about the shipment, including any required tariff classification numbers. With respect to the tariff classification number, for both RMD and PARS release requests, the 10digit classification number must be transmitted along with the invoice page and line number. As of January 1, 2013, classification numbers are required for all lines.
Topic 2: EDI (cont. 2) http://cscb.ca/print/book/export/html/182769
51/118
10/1/2015
201516 CCS Course Part 3
Bookmark this Release requests are either AQ (Appraisal Quality) or nonAQ (AQ to follow). AQ means that all data is included with the release request, and nonAQ indicates to CBSA that additional data will follow. This additional data for non AQ release requests must be submitted to CBSA within 5 days of the release request. Please note that if there are goods regulated by other government departments, AQ to follow is not permitted. Both AQ and nonAQ release requests require all goods to be declared. With AQ, this means that all goods have their full tariff classification number noted. For nonAQ, a recap of the data can be made. The goods that are recapped are sorted in order by: a) vendor, b) country of origin, and c) HS classifiction.
Topic 2: EDI (cont. 3) Bookmark this 3. Information is then transmitted to CBSA. 4. The data is edited by CBSA for syntax errors. If syntax errors are detected, the transaction will be rejected, and a reject message will be transmitted back to the sender. The entire corrected transaction (using the same transaction number) must be resent once the syntax error has been corrected. 5. If the data passes the syntax editing, it is posted in the ACROSS database where it is further edited for items such as country code validation, HS classification number(s), quantities and units of measure. If errors are detected, the transaction will be rejected and a message will be generated by the system. Reject messages are transmitted back to the sender. 6. After the data has passed all its validations, it is posted for ACROSS release processing. The ACROSS application will perform an edit to determine if machine release is applicable to the transaction. Machine release is a CBSA automated release process. If machine release applies and all edits are passed, a release or acknowledgement message will be generated and returned to the sender. 7. Transactions that are not machine released are reviewed by an officer. The officer selects EDI release transactions individually and reviews the data elements transmitted. 8. If the officer determines that insufficient data has been presented or that the data requires an amendment, an automated reject Y50 will be completed and transmitted back to the sender. The release transaction and the Y50 will be stored in the ACROSS database pending receipt of a corrected transmission. Note: The entire transaction must be resent using the same transaction number. The corrected transaction and the Y50 message will be reviewed again by an officer. 9. In the case of goods for which prearrival data has not been sent, a release reqest can be made once the goods have arrived. The officer will make a release decision and an Release Notification Message (RNS) will be sent to the sender. If the decision by the officer is to refer the goods for examination, a message will be sent to the sender advising them of the status of the goods.
Topic 2: Paper Release Requests Bookmark this For paper release requests, the following must be submitted as well as a completed lead sheet indicating why EDI is not being used: (a) two copies of the cargo control document (the Customs delivery authority copy and the longroom copy); (b) an invoice that contains all required information, plus the HS tariff classification number, or numbers. The same requirements for the classification number in an EDI format apply in the paper environment; and http://cscb.ca/print/book/export/html/182769
52/118
10/1/2015
201516 CCS Course Part 3
(c) any permits, licenses, certificates and authorizations required by other government departments or agencies. The lead sheet contains: the importer’s business number; the number of invoice pages; and the transaction number (assigned by the customs broker or importer, the transaction number includes confirmation of security) in bar coded format. If the goods are containerized, the container number must be shown.
Topic 2: Release on Full Documentation Bookmark this
Release on Full Documentation (RFD) Release on Full Documentation (RFD), or onestep process, is a service option that allows the release of goods by submitting both release and accounting information in a single EDI transmission. If security has been posted, the payment of duties and taxes is deferred until a later date, and usually paid on a monthly basis. Release and accounting information is sent to CBSA at the same time, and can be sent either before or when the goods arrive. The benefit of the onestep process is that data does not have to be entered more than once. The RFD process can be used for the following shipments: transborder (highway, air, or rail) and overseas (air or marine); highvalue and lowvalue; Special Import Measures Act goods; special authority goods; tariff rate quota (TRQ); Canadian goods returned; and goods requiring an International Trade Canada import permit (EXCAPS). The RFD process cannot be used for the following types of shipments: goods that require processing by other government departments, with the exception of an International Trade Canada import permit (EXCAPS); casual importation of personal goods; used goods; goods imported temporarily; goods shipped using the postal system; goods entering a bonded warehouse; goods requiring payment of the harmonized sales tax; and goods requiring payment of the provincial sales tax. In order to use RFD, you must register with CBSA. Registration is done by completing Form E686. As well, an EDI Memorandum of Understanding for RFD must be completed. With RFD, full AQ data must be provided, including all applicable tariff classification numbers.
Topic 2: B3, Types C and D Bookmark this
Form B3, Types C and D The B3 indicates, among other things, the name of the importer, a description of the goods that are being imported, the tariff classification number(s), and the amount of duties and taxes to be paid. For types C and D, security does not need to be posted since the goods are being released at the same time that duties and taxes are being paid. http://cscb.ca/print/book/export/html/182769
53/118
10/1/2015
201516 CCS Course Part 3
This is the method most often used for casual importations.
Type C Type C is used to request release, account for goods, and pay duty, all at the same time. It is presented in hard copy, and once completed, the following is submitted to CBSA: one copy of the B3; an additional copy of the B3 if it is being submitted at a nonautomated CBSA office; commercial invoices; cargo control document (note that a CCD is not required if the goods are being carried by the importer); and any required permits, certificates, licenses or authorizations.
Type D A type D is prepared if all the required information to prepare a complete B3 is not available. However, enough information must be provided so that an officer can verify the tariff classification and value for duty of the goods. A security deposit is required, in addition to the estimated duties owing on the goods. The deposit must be equal to 10% of the value for duty of the goods and at least $100.00 CDN, but not more than $1,000.00 CDN, regardless of the value of the goods. The supporting documents are the same as for type C.
Topic 3: Accelerated Commercial Release Operations Support System (ACROSS) Bookmark this ACROSS stands for the Accelerated Commercial Release Operations Support System. Under ACROSS, importers and customs brokers exchange information electronically with CBSA. It is the system used by CBSA to process release requests, including RMD and PARS. The benefits of ACROSS include: the ability to exchange information 24 hours a day; the ability to exchange data without having to rekey information; the ability to exchange permit data electronically; and a decrease in paper and related handling costs.
Topic 4: Form C6 Permission for Special Purposes Bookmark this In some cases, the importer or broker may need to open a package in order to access documents that are required to prepare a release request. A request for permission to open the package is made on a Form C6. However, in the case of release of goods prior to payment of duties, unless security has been posted, a C6 can only be used under the following circumstances: to allow raw leaf tobacco to be delivered directly to a licensed packer or licensed manufacturer to determine the standard weight prior to preparation of the final accounting; to allow imported spirits to be delivered directly to a distillery to determine the quantity and strength prior to preparation of the final accounting; and to allow release of imported bulk cargoes which have to be weighed or gauged prior to preparation of the final accounting documentation It must be stated on the C6 why permission is being requested.
http://cscb.ca/print/book/export/html/182769
54/118
10/1/2015
201516 CCS Course Part 3
Lesson 2 Summary: Release Bookmark this Key points in Lesson 2 include: most commercial shipments are released before duty and taxes are paid; release requests are most often made by presenting an RMD or PARS package; in some cases, the release request and payment of duty and taxes can be made at the same time; with PARS, a release package is prepared by the importer or customs broker and presented to CBSA in advance of the arrival of the goods; CBSA will make a release recommendation, but will not disclose their recommendation in advance of the arrival of the goods; PARS may be used for any mode of transportation; exceptions to an electronic release request are listed on a lead sheet that must be completed and submitted with the paper release request; RMD requests are made when the goods have already arrived, as opposed to a PARS release request; ACROSS is a CBSA system that allows importers and customs broker to present release and invoice data to CBSA electronically; and permission to open packages before they are released is requested by completing Form C6. Now let's take a few minutes to test what you have learned about the release of goods.
Module 18: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: FAST (Free and Secure Trade) Bookmark this Importers, carriers, and drivers who meet certain requirements can benefit from another release option, FAST.
Rationale You will need to identify parties eligible for the benefits of FAST, therefore expediting the release process for them.
Lesson Objective At the end of Lesson 3 you should be able to explain the requirements for, and benefits of, FAST.
Topic 1: FAST http://cscb.ca/print/book/export/html/182769
55/118
10/1/2015
201516 CCS Course Part 3
Bookmark this The Free and Secure Trade (FAST) program is a joint Canada–United States initiative involving the Canada Border Services Agency and the United States Customs and Border Protection (CBP). In Canada, FAST offers an expedited clearance process, for eligible goods, to a preauthorized importer, carrier, and driver. It builds on Customs Self Assessment (CSA), a Canadian program that is described in detail in Module 26, Compliance. Comprehensive risk assessments are undertaken by CBSA to ensure that drivers, carriers, and importers are low risk before allowing them to participate in FAST. By providing a streamlined clearance for preapproved importers, carriers, and drivers moving eligible goods from the United States into Canada, CBSA is able to focus its efforts on shipments of high or unknown risk. When all requirements for FAST have been met, goods travelling by highway may enter Canada through designated FAST lanes.
Topic 1: FAST (cont. 2) Bookmark this
Process For FAST clearance that involves the use of the FAST lane where available, the following must apply: 1. Goods must be CSA eligible goods. 2. The importer must be FAST approved that is, both CSA and PIP. 3. The carrier must be a FAST authorized carrier that is, both CSA and PIP. 4. The driver must be authorized under the FAST driver program or the Commercial Driver Registration Program (CDRP). For CSA clearance which does not involve the use of the FAST lane, the following must apply: 1. Goods must be CSA eligible goods. 2. The importer must be a CSA importer. [Note that participation in PIP is not a requirement] 3. The carrier must be a CSA carrier. [Note that participation in PIP is not a requirement] 4. The driver must be authorized under the FAST driver program or the Commercial Driver Registration Program (CDRP).
Topic 1: FAST (cont. 3) Bookmark this The following chart is helpful in explaining FAST and CSA clearance options for goods entering Canada. All requirements in each column must be met. FAST Clearance Eligible for FAST Lanes
CSA Clearance Not Eligible for FAST Lanes
Importer: CSA and PIP Approved
Importer: CSA Approved
Carrier: CSA and PIP Approved
Carrier: CSA Approved
Driver: FAST Approved or Approved under CDRP Driver: FAST Approved or Approved under CDRP Goods: CSA Eligible
Goods: CSA Eligible
However, whether the FAST lane or the nonFAST lane is used, and CSA eligible goods are being imported, the driver presents the following data elements to CBSA at the Primary Inspection Line (PIL): 1. identification of the approved importer, http://cscb.ca/print/book/export/html/182769
56/118
10/1/2015
201516 CCS Course Part 3
2. identification of the approved carrier, and 3. identification of the approved driver. This information is electronically verified at the PIL and the driver is "authorized to deliver". For customs purposes, the time of release is when the importer, owner or consignee receives the shipment and the carrier has a signed proof of delivery. Advance notification of the arrival of the goods does not have to be provided to CBSA. However, in the case of a mixed load, Advance Commercial Information must be sent for the nonCSA portion.
Topic 1: FAST (cont. 4) Bookmark this
Importers Importers who wish to use FAST clearance must: be a Customs Self Assessment (CSA) approved importer; be Partners in Protection (PIP) approved; use carriers who are FAST approved and PIP participants; and use drivers that are FAST approved, or approved under CDRP.
Carriers In order to use FAST clearance, highway carriers must: be CSA approved; be PIP approved; and use drivers that are FAST approved, or CDRP approved.
Topic 1: FAST (cont. 5) Bookmark this
Drivers Drivers who wish to use the FAST clearance option must be FAST approved or authorized under the CDRP. Once approved, they will receive a card that allows them to: use FAST dedicated lanes in Canada and the United States (where available); cross the border with accelerated customs and immigration processing; and, transport eligible goods for FAST approved carriers and importers. Drivers using the FAST clearance option must: be citizens or permanent residents of the United States or Canada; be 18 or over; possess a valid driver’s license; and be admissible to Canada and the United States under applicable immigration laws. Drivers will not qualify for FAST if they: provide false or incomplete information on the FAST application; have been convicted of a criminal offence; have been found in violation of customs or immigration law; or fail to meet other requirements of the FAST Commercial Driver program. http://cscb.ca/print/book/export/html/182769
57/118
10/1/2015
201516 CCS Course Part 3
Both Canada and the United States must approve the driver’s FAST application. If a driver does not meet the requirements of both countries, the application will be denied.
Lesson 3 Summary: FAST (Free and Secure Trade) Bookmark this Key points in Lesson 3 include: FAST is a joint Canada–United States initiative involving the Canada Border Services Agency (CBSA) and the United States Customs and Border Protection (CBP); FAST allows the movement of approved eligible goods across the border quickly and allows verification of trade compliance away from the border; CSA is a Canadian program that includes a streamlined accounting and clearance option for CSA eligible goods; in order to use the FAST lanes, the importer must be CSA and PIP approved, the carrier must be CSA and PIP approved, and the driver must be registered; CSA eligible goods are commercial goods that have been shipped directly from the United States OR commercial goods that have been shipped directly from Mexico to an importer who is a vehicle manufacturer in the automotive industry; and goods that require, under any act of Parliament or of the legislature of a province, a permit, licence or other similar document to be provided to the CBSA before the goods are released, are not eligible for FAST. Now take a few minutes to test what you have learned about FAST by answering the following questions.
Module 18: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Courier and Mail Shipments Bookmark this The release process for goods shipped and carried by a courier or sent by mail differs from the release process for goods carried by other modes.
Rationale You should be aware of the release options for goods shipped and carried by a courier or sent as mail as you may have to request the release of goods carried by courier or sent by mail.
Lesson Objective http://cscb.ca/print/book/export/html/182769
58/118
10/1/2015
201516 CCS Course Part 3
At the end of this lesson you will be able to describe release processes for goods that are shipped and carried by a courier or sent by mail.
Topic 1: Courier Bookmark this Goods carried by a courier may be identified as either high value or low value for Customs purposes. The Courier/LVS (Low Value Shipment) Program streamlines the reporting, release, and accounting procedures for certain goods imported by approved couriers. Couriers wishing to participate in the program must have authorization from CBSA to do so. As well, they must be bonded carriers who have posted security for the release of goods prior to the payment of duties and taxes. A summary cargo/release list for participants of the Courier/LVS Program is used in place of a cargo control document. This list is often called a consist sheet and will be called a consist sheet throughout this lesson. The consist sheet summarizes for CBSA what is included in that particular shipment. Keep in mind that a great number of parcels carried by a courier are for individuals, many of whom do not have a customs broker. As well, there is usually a variety of goods, from many different exporters, carried by couriers. The consist sheet must be presented to Customs by the courier prior to, or immediately upon, arrival of the courier in Canada. A transaction number does not have to appear on the consist sheet.
Topic 1: Courier (cont. 2) Bookmark this The heading of the consist sheet must contain the following: carrier code; carrier name; a unique reference identifier, which incorporates the approved courier’s fourdigit carrier code; foreign country office of exit; vehicle identification number (for shipments arriving by highway, use the licence plate details and the trailer number, or shipments by air, the aircraft registration number or the flight number); office of release; and date of report. For each shipment on the consist sheet, the following must be shown: a unique identifier number generated by the courier; consignee name and address; importer name and address, if different from consignee; name of shipper/exporter/vendor; number of packages; weight; estimated value for duty; description; and country of origin.
Topic 1: Courier (cont. 3) Bookmark this Goods that are valued at greater than $2,500.00 CDN or subject to import control (e.g., import permits, agriculture certificates, etc.), and shipments that are being held pending the importer's authorization for release, cannot be included on the consist sheet and are removed from the consist sheet by the courier. The consist sheet is prescreened by CBSA. If all is in order, the consist sheet is stamped "released" and all goods http://cscb.ca/print/book/export/html/182769
59/118
10/1/2015
201516 CCS Course Part 3
listed on the consist sheet can be delivered. If, however, an officer has concerns about one or more shipments listed on the consist sheet, he will highlight any shipments that require examination and those shipments will be removed from the consist sheet and referred for examination. When goods are removed by CBSA from the consist sheet, form Y50, Reject Document Control, is issued to the courier, and the courier must now prepare a cargo control document for those goods. For goods that have not been removed from the consist sheet by either the courier or CBSA the courier prepares separate consist sheets according to the customs broker who will handle the release for goods identified as being for that customs broker's clients. The courier will also forward any supporting documentation, such as invoices or packing lists that are affixed to the package, to the customs broker that will allow the customs broker to classify and determine the value for duty for each shipment before requesting release of the goods.
Topic 1: Courier (cont. 4) Bookmark this
Courier Imports Remission Order The Courier Imports Remission Order (CIRO) states that, with certain exceptions, goods that are imported by courier and have a value that does not exceed $20.00 CDN are exempt from the payment of duties and tax. Goods that are not eligible under the CIRO include: alcoholic beverages, cigars, cigarettes and other tobacco products, regardless of value; or books, newspapers, periodicals and magazines shipped from suppliers abroad who should be registered with the CRA, but are not. This order cannot be used in connection with tariff item 9816.00.00 which provides for an exemption from duties and taxes on gifts valued at $60.00 Canadian or less; nor does this order apply to commercial transactions in which goods are ordered by a Canadian consumer from a Canadian intermediary who, in turn, causes the goods to be shipped directly from the foreign supplier to the Canadian purchaser. In order for courier shipments to receive the benefits of the CIRO, the total shipment must be the subject of a single transaction. That is, a shipment cannot be divided into several packages so that each portion has a value of $20.00 CDN or less. Goods qualifying for the CIRO are included on the consist sheet and released by CBSA.
Topic 1: Courier (cont. 5) Bookmark this Following is a stepby step process of a typical chain of events for a courier shipment from the U.S. to Canada. Day 1: Goods are prepared for shipping to Canada. This includes the preparation of documentation and packing of the goods by the exporter. A call to a courier company is made and the package is assigned a bar coded tracking number. This number is entered into the courier's tracking system, and each time the package changes hands, the bar code is wanded so that the courier is aware at all times of the location of the goods. All packages that have been picked up are sent to a hub in the United States where they are sorted according to delivery location. Day 2: If the paperwork appears to be in order, and a Canadian customs broker is indicated, the packages are sent to a Canadian hub that is closest to its final destination. When they arrive at the Canadian hub, those that qualify for the Courier/LVS system are released and the packages are put on delivery trucks. If the goods are not released, they will remain in the courier’s warehouse until the CCD is printed. This CCD and consist sheets are turned over to the appropriate customs broker. As long as the goods are not held for examination by CBSA, the entire process can take as little as 24 hours. http://cscb.ca/print/book/export/html/182769
60/118
10/1/2015
201516 CCS Course Part 3
Topic 2: Mail Shipments Bookmark this The Customs International Mail Processing System allows Canada Post to deliver and collect duties and taxes for goods sent by mail. International mail is received at Canada Post processing facilities. It may enter the domestic stream for delivery or be directed for customs review. If the mail is directed for review, CBSA will exam the mail to verify the country of origin, quantity, value, type, and admissibility of the goods and to determine if there are any other government requirements, such as permits or certificates. An officer also screens the mail items to determine if they are duty free and nontaxable and therefore do not require further action. These items are stamped Cleared Customs and released to Canada Post for delivery. Goods that would be immediately released include those that are eligible under the Postal Imports Remission Order (PIRO) and gifts, which qualify under tariff item 9816.00.00. Goods which are not immediately released are separated, bar coded, and have data concerning the item entered into the Postal Import Control System (PICS). An officer reviews these items, and, in some cases, the package may be opened. Where duties and taxes are found to be applicable, the officer determines the tariff classification and value, based on a customs declaration or invoices attached to the item by the shipper.
Topic 2: Mail Shipments (cont. 2) Bookmark this An assessment of the duties and taxes, plus a $9.95 CDN handling fee, are printed on Form E14, Customs Postal Import Form. This form is attached to the item by Canada Post for delivery. Canada Post is responsible for the delivery of the item and the collection of duties and taxes. For goods with a value greater than $2,500.00 CAD, proper customs documentation must be provided. If the importer has posted security for release of goods prior to the payment of duties and taxes, they may submit an RMD package to obtain release of the goods. If they have not posted security, a B3 accounting document, type M, may be submitted along with the payment for duties and taxes. The RMD package may be presented to a local customs office for processing. Once processed, the local customs office will notify the mail centre and the mail item will be released to Canada Post for delivery. In some cases, goods shipped by mail will be released without Form E14 being issued and no duty and tax being paid. When this happens, the importer must prepare Form B3, type V [for voluntary], or, in the case of casual goods, Form B15, Casual Goods Accounting Document, in order to account for the goods and pay duties and taxes owing. Form B151 may also used to account for, and pay duties and taxes on, casual goods. The B151 is an automated form and generated by CBSA.
Lesson 4 Summary: Courier and Mail Shipments Bookmark this Key points in Lesson 4 include: high value goods are those that are valued at $2,500.00 CAD* or more; low value goods are those that are valued at less than $2,500.00 CAD; the Courier/LVS (Low Value Shipment) Program is designed to streamline the reporting, release, and accounting procedures for eligible goods imported by approved couriers; summary cargo/release lists (consist sheets) for participants of the Courier/LVS Program are used in place of http://cscb.ca/print/book/export/html/182769
61/118
10/1/2015
201516 CCS Course Part 3
cargo control documents; goods that are valued at greater than $2,500.00 CAD or subject to import control will be removed from the consist sheet; paperwork for goods removed from the consist sheet is provided to the appropriate customs broker or importer; Form Y50, Reject Document Control, is issued to the courier by CBSA when CBSA has removed goods from the consist sheet; the Courier Imports Remission Order allows certain goods that are imported by courier with a value that does not exceed $20.00 CDN an exemption from the payment of duties and taxes; goods sent by mail to Canada may be directed to CBSA for review or they may be delivered without CBSA review; goods sent by mail that are reviewed and found to be duty free and nontaxable will be delivered by Canada Post; the Postal Imports Remission Order allows certain goods that are of a value not exceeding $20.00 CDN per item, and not subject to the payment of duties and taxes, to be delivered; when duties and taxes are found to be applicable to goods sent by mail, an officer determines the tariff classification and value, based on a customs declaration or invoices attached to the item by the shipper; the goods will be delivered by Canada Post; Canada Post will collect any duties and taxes and a $9.95 CDN handling fee; and for goods sent by mail with a value greater than $2,500.00 CAD, an RMD (if security has been posted) or B3 type M is used. Now it's time to test what you have learned. See how you do on the following questions.
Module 18 Summary: Release of Goods Bookmark this Security security must be posted in order to have goods released prior to the payment of duties and taxes; both importers and customs brokers can post security; for importers who are resident in Canada, security is based on their average monthly duties and taxes (less the GST), up to a maximum of $10 million; for importers who are nonresident, security is based on their average monthly duties and taxes (including GST), up to a maximum of $10 million; the minimum security requirement for an importer to transact business at all customs offices in Canada is $5,000; the minimum security requirement for an importer to transact business at one customs office is $250; an importer of unconditionally duty free and tax free goods (including GST) only is not required to post security; for customs brokers, security is based on their average monthly duties and taxes (including GST) up to a maximum of $10 million; the minimum security requirement for a broker to transact business at all customs offices in Canada is $25,000; the minimum security requirement for a broker to transact business at one customs office is $5,000; the fivedigit account security number is contained in the transaction number; there are various ways in which customs brokers can reduce the amount of security required for release prior to payment; and importers or customs brokers who do not pay duties and taxes owing by the date they are due are subject to a penalty. Release of Goods goods must be released by CBSA before they can continue to their destination in Canada; most commercial shipments are released before duty and taxes are paid; goods can be released using RMD, PARS, RFD, B3 types C and D, CSA, and FAST; with very few exceptions, release requests must be made electronically; RMD requests are made when the goods have already arrived; PARS requests are made prior to the arrival of the goods; ACROSS allows brokers and importers to transmit release and invoice data to CBSA; http://cscb.ca/print/book/export/html/182769
62/118
10/1/2015
201516 CCS Course Part 3
AQ release requests include all data; NonAQ release requests do not contain full data and full data must be provided within 5 days of the release of the goods; whether the release request is AQ or nonAQ, all goods must be declared; for goods whose release has been requested using PARS, goods can be released by CBSA at the PIL; there are specific time frames in which the release of goods can be requested; for PARS purposes, there are specific time frames in which CBSA can be advised that goods are on hand; and form C6 is used to request that a package be opened before it is released.
Module 18 Summary: Release of Goods (cont. 2) Bookmark this FAST FAST supports moving preapproved eligible goods across the border quickly and verifying trade compliance away from the border; FAST is an expedited release process that is available when certain requirements have been met; Carriers, drivers, and importers must meet specific requirements in order to participate in FAST; CSA eligible goods are commercial goods that have been shipped directly from the United States OR Mexico; and goods that require, under any act of Parliament or of the legislature of a province, a permit, licence or other similar document to be provided to the CBSA before the goods are released, are not eligible for FAST. Goods Shipped by Courier and Mail couriers can apply to participate in the Courier/LVS Program which streamlines the reporting, release, and accounting procedures for eligible goods; a summary cargo/release list (consist sheet) for participants of the Courier/LVS Program is used in place of a cargo control document; goods that are valued at greater than $2,500.00 CAD*, subject to import control, or held pending the importer's authorization for release, cannot be included on the consist sheet; CBSA screens the consist sheet and either releases the goods or removes them from the list for further review; the courier will advise customs brokers of goods on the consist sheet for which the customs broker will later account; the Courier Imports Remission Order (CIRO) allows eligible goods with a value that is not more than $20.00 CDN and imported by courier an exemption from the payment of duties and tax; goods imported by mail may be directed to CBSA for review; the officer will review the paperwork for these goods and release them if they are duty and tax free; these goods will be delivered by Canada Post; if duties and taxes are applicable, an officer will determine the amount owing; and Canada Post will deliver the goods and collect the duties and/or tax from the recipient as well as collecting a fee of $9.95 CDN. A short quiz on what you have learned in this module follows.
Module 18: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
12 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but http://cscb.ca/print/book/export/html/182769
63/118
10/1/2015
201516 CCS Course Part 3
you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 19: Temporary Importations Bookmark this From time to time, importers bring goods into Canada temporarily. Sometimes the goods are needed for emergencies, sometimes they are goods that need repair, they could be goods for display, or they may be goods that a customer just wants to try out. This module will explain how to handle the temporary importation of goods and the documents required. In this module, you will learn how to request the release of goods that are being temporarily imported. You will continue to develop your rating expertise by learning how to classify these goods, and you will be made aware of documentation and security requirements. The module will finish with an explanation of commercial samples and display goods.
Module Objective When you have completed this module, you will be familiar with the requirements for goods considered temporary imports, as well as the requirements for commercial samples and display goods.
Lesson 1 Overview: Temporary Importations Bookmark this In this lesson, you will be introduced to temporary importations. You will see how goods temporarily imported are classified, what kind of security is required for these goods, and whether or not the payment of GST/HST is required.
Rationale As a CCS, you need to know that goods temporarily imported are treated differently than goods consumed or expended in Canada. Becoming familiar with this type of importation will eliminate duties and taxes being paid unnecessarily and having to correct documentation for goods that should have been imported on a temporary basis.
Lesson Objective At the end of this lesson, you should be able to explain how to classify goods that are temporarily imported into Canada. You will also have an understanding of the security requirements for such goods and recognize if GST is applicable.
Topic 1: Classification of Goods Imported Temporarily Bookmark this In general, all goods being temporarily imported, as long as they are not being imported for sale, lease, further manufacturing or processing, will qualify for duty free entry under tariff item 9993.00.00. This tariff item reads as follows: Goods, not including conveyances, containers or baggage of Tariff item No. 9801.10.00 or 9801.20.00, 9801.10.30 or accredited 9801.20.00, or of Chapter 89 (except when imported for the purpose of repair, overhaul, alteration, http://cscb.ca/print/book/export/html/182769
64/118
10/1/2015
201516 CCS Course Part 3
adjustment, storage, display at an exhibition of similar manufacturers, racing, testing, certification by an accredited organization, or to be employed in the production of films or commercials, or in response to an emergency or emergency response training exercise, or for intransit movement through Canada, or as a commercial sample, or when imported by nonresident teams or athletes, or their support personnel, for their use in professional or organized amateur sports activities, or when imported by nonresidents for their use in providing live entertainment such as aquatic displays), when imported on a temporary basis, on condition that (a) the goods are not sold or further manufactured or processed in Canada; (a.1) the goods are not leased except where imported for use (i) in an emergency or emergency response training exercise, (ii) on loan pending delivery of new machinery or equipment on order, or (iii) as temporary replacements for machines or other equipment previously accounted for and undergoing repairs;
Topic 1: Classification of Goods Imported Temporarily (cont. 2) Bookmark this b) the use of the goods is specified by the importer at the time of reporting of the goods under the Customs Act, that use is not limited or restricted by regulation, and the goods are released for that specified use; c) the goods are imported in no greater quantity than is reasonable, in the view of the Minister of Public Safety and Emergency Preparedness or a designated customs officer, for the use specified under paragraph (b); d) the goods are accompanied, in prescribed circumstances, by prescribed documents and by security of a nature and in an amount satisfactory to the Minister of Public Safety and Emergency Preparedness or a designated customs officer, unless otherwise provided by regulation; e) the goods are not diverted to a use that is limited or restricted by regulation, or to a use that would preclude the goods from being classified under this tariff item; and, f) within eighteen months of the date of the reporting of the goods under the Customs Act or within any other period prescribed for those goods, the goods are: (i) exported from Canada and evidence, satisfactory to the Minister of Public Safety and Emergency Preparedness or a designated customs officer, of the exportation is provided to the Minister of Public Safety and Emergency Preparedness or the designated customs officer, (ii) destroyed and the destruction is certified by a customs officer or by another person designated by the Minister of Public Safety and Emergency Preparedness, or (iii) consumed or expended under prescribed circumstances.
Topic 1: Classification of Goods Imported Temporarily (cont. 3) Bookmark this Goods that are temporarily imported and subject to Other Government Department (OGD) requirements cannot be released by CBSA until all necessary inspections are completed and any required documents, permits, or certificates are produced. The Temporary Importation (Tariff Item No. 9993.00.00) Regulations consolidate into one document all requirements for the temporary importation of goods, including security requirements, the period of time that temporarily imported goods may remain in Canada, and the waiver of documentation requirements. Termporarily imported goods must first be classified under an item in chapters 1 to 97 before Chapter 99 can be considered. The duty rate of the goods when classified in an item in Chapters 1 to 97, and the amount of GST that may have to be paid, will influence the type of documentation used. http://cscb.ca/print/book/export/html/182769
65/118
10/1/2015
201516 CCS Course Part 3
Topic 2: Security Requirements Bookmark this To ensure that goods temporarily imported are subsequently exported, CBSA usually requires a deposit in an amount that does not exceed the duty and the GST that would otherwise be payable. The security may be in the form of cash, certified cheque, or bond acceptable to CBSA. Certified cheques tendered as security deposits must be in Canadian funds, and made payable to the Receiver General for Canada. The maximum amount of security that is required is equal to the amount of duties and taxes that would be payable if the goods remain in Canada. Security is not required in the following instances: where the goods are "originating" under the terms of the NAFTA, the CCFTA, or the CCRFTA, and a Certificate of Origin is presented; where the goods will be displayed or demonstrated at a convention or exhibition held in Canada by any level of government of Canada or of a foreign state; where there is evidence that the goods will be exported; where the applicable customs duties are equal to or less than $100 CDN; or where the goods are commercial samples or advertising films imported from the United States, Mexico, Chile or Costa Rica.
Topic 3: GST/HST Bookmark this Once it has been determined that goods are indeed eligible for importation under 9993.00.00, the next step is to decide whether or not tax is payable. Goods temporarily imported may be: subject to full GST/HST; entitled to partial relief of the GST/HST at a 1/60th rate; or entitled to relief of the GST/HST in full. Appendix A of D811 provides a table to assist in determining whether or not the goods being temporarily imported are eligible for any GST/HST relief. For example, academic regalia are allowed 1/60th GST/HST relief and animals are entitled to full GST/HST relief. If the goods are not listed on the table, they are likely subject to full GST or HST. The "maximum period of importation" referred to in Appendix A is the maximum period of time for GST relief. If this period differs from the period of temporary importation, the shorter time frame will take precedence.
Lesson 1 Summary: Temporary Importations Bookmark this In this lesson you learned about the classification of temporary imports using tariff item 9993.00.00. Key points in this lesson include: in general, all goods being temporarily imported, as long as they are not being imported for sale, lease, further manufacturing or processing, will qualify for duty free entry under tariff item 9993.00.00; goods temporarily imported are subject to the same OGD requirements as goods consumed or expended in Canada, and will not be released until all necessary inspections are completed and any required documents, permits, or certificates are produced; goods eligible for entry under any of the chapter 99 classifications, including tariff item 9993.00.00, are actually subject to two tariff determinations; goods must first be classified under a tariff item in chapters 1 to 97 before chapter 99 can be considered; to ensure that goods temporarily imported are subsequently exported, CBSA may require a deposit in an amount not exceeding the duties, including the GST, otherwise payable; and http://cscb.ca/print/book/export/html/182769
66/118
10/1/2015
201516 CCS Course Part 3
goods temporarily imported may be subject to GST/HST, entitled to partial relief of GST/HST at a 1/60th rate, or entitled to full GST/HST relief. Now take a few minutes and answer the following questions to see how much you have learned about temporary imports.
Module 19: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Documentation Requirements Bookmark this In this lesson, you will be introduced to form E29B and an A.T.A. Carnet. You will also be provided with an explanation of the procedures involved when exporting goods that have been temporarily imported.
Rationale As a CCS, you will need to determine if goods are being temporarily imported and you must be aware of the processes required to ensure the goods are properly released and continue to their destination. You may also have to advise your client of the correct export procedures or present documentation to CBSA so that they are aware that the goods have left Canada.
Lesson Objective At the end of this lesson, you will be familiar with the necessary forms used to document goods temporarily imported, in particular the E29B and the A.T.A. Carnet. You will also understand what is required to export goods that have been imported temporarily.
Topic 1: Forms Bookmark this Goods temporarily imported may be documented on an E29B, a B3, both a B3 and an E29B, or an A.T.A. Carnet. The following table outlines the usual documentation requirements based on GST/HST treatment and whether the goods are dutyfree or not, when classified in Chapters 1 to 97 of the Customs Tariff. Tariff code 9993 is used on the B3 to indicate duty relief. If CBSA has not requested a security deposit, their automated system will ensure that duties are collected if the goods are not exported. Goods http://cscb.ca/print/book/export/html/182769
GST/HST Fully Relieved
GST/HST Partially
GST/HST Fully Payable 67/118
10/1/2015
201516 CCS Course Part 3
Relieved Duty free when classified in chapters 1 97 of the Customs Tariff
E29B or Carnet
B3
B3
Dutiable when classified in chapters 1 97 of the E29B or Carnet Customs Tariff
B3
E29B or Carnet, and B3
Goods entering temporarily will not be released until CBSA determines that the goods are eligible for temporary importation, that arrangements for security have been made, and that form E29B, when required, has been properly completed. The E29B number is assigned by CBSA.
Topic 2: Temporary Importation Permit Form E29B Bookmark this Although the form E29B can be completed online, an E29B cannot be submitted to CBSA electronically. The following is a stepbystep guide to completing the document. If the form is completed by hand, it must be submitted on legal size paper. If the form is completed electronically, it may be submitted on letter sized paper.
Field 1 Indicate the name, full address, and telephone number of the importer.
Field 2 If a customs broker or other individual is acting on behalf of the importer, indicate the name, full address, and telephone number of the broker or the representative.
Field 3 Indicate the full address of the place to which the goods are being shipped in Canada.
Field 4 Not to be completed by CBSA. Broker’s use only. This is used by the customs broker for their own internal reference number.
Field 5 Indicate how the goods will be used while in Canada.
Field 6 This field is used to indicate the specific heading (e.g., 9831) or DMemorandum (e.g., D322) that provides authority for the temporary importation. Where applicable, indicate the remission order or regulation that provides GST/HST relief for the temporary importation (e.g. 853606 or 32089Z1663). These numbers are found under “Special Authority Code” in the Goods and Services Tax Relief table in Appendix A of D811.
Topic 2: Temporary Importation Permit Form E29B (cont. 2) Bookmark this
Field 7a Indicate the quantity of each article imported. http://cscb.ca/print/book/export/html/182769
68/118
10/1/2015
201516 CCS Course Part 3
Field 7b Indicate the gross and net weight of each type of article imported.
Field 8 Describe in detail the goods being imported, including all trade names, model numbers, and serial numbers.
Field 9 Indicate the classification number, according to the Customs Tariff (chapters 197), under which each of the goods are being imported into Canada.
Field 10 Indicate the value of the goods, in Canadian funds, to which the rate of duty specified in the Customs Tariff will be applied.
Field 11 Indicate the applicable tariff treatment code.
Field 12 Indicate the applicable rate of duty for the goods being imported.
Field 13 Indicate the amount of duty payable.
Field 14 If applicable, indicate the amount of excise tax payable.
Field 15 Indicate the total value for duty (field 10), customs duties (field 13), and excise tax (field 14). GST or HST is calculated on this amount.
Topic 2: Temporary Importation Permit Form E29B (cont. 3) Bookmark this
Field 16 Depending on the authority used in field 6 of the E29B to temporarily import the goods, GST or HST will be either: a) fully remitted and indicated in field 16 of the E29B only to calculate the deposit required; or b) payable and accounted for and collected on form B3 (the transaction number will be recorded in field 23 of the E29B for audit purposes). For those importers/brokers who have posted security for the release of goods prior to payment of duties, a release on minimum documentation (RMD) package may be presented with the E29B. When full GST or GST on a proportionate basis (i.e. 1/60th) is collected, field 16 of the E29B should be left blank. The deposit required in this case should be calculated based on the customs duties (field 13) and excise tax (field 14) only. http://cscb.ca/print/book/export/html/182769
69/118
10/1/2015
201516 CCS Course Part 3
Field 17 Enter the total amounts of customs duties (field 13), excise tax (field 14), and GST/HST (field 16) payable on all goods listed on the E29B.
Field 18 Signature block for the importer or broker. Mark an X in the appropriate box to indicate if the signature is that of the importer or broker.
Field 19 Each E29B is assigned a permit number by the CBSA. Each CBSA office has two sets of their own numbers. One set indicates cash was used as security and the other indicates surety was used. Show the handwritten number assigned by CBSA to the E29B.
Field 20 Indicate the last day of the intended period of temporary importation of the goods.
Field 21 If the time limit shown in field 20 has been extended, indicate the new expiry date. This supersedes the date shown in field 20.
Field 22 Indicate the cargo control number as shown on the cargo control document relating to the goods imported into Canada.
Field 23 Indicate the transaction number of the B3 used to collect GST/HST, if applicable.
Field 24 Indicate the full name and address of the party to which any refund of the security deposit is to be made.
Topic 2: Temporary Importation Permit Form E29B (cont. 4) Bookmark this
Field 25 If security has been deposited, indicate: a) the dollar value of the deposit, in Canadian funds. If required, the amount should be determined by multiplying the U.S. funds that have been tendered by the exchange rate for that day; b) an X in the appropriate box to indicate the type of security deposited; and c) the bond number, if a bond has been deposited as security.
Field 26 Space is provided here for a customs office stamp indicating the date on which the goods were imported into Canada. http://cscb.ca/print/book/export/html/182769
70/118
10/1/2015
201516 CCS Course Part 3
Field 27 Signature of border services officer allowing release of the goods into Canada. Each of the five copies must be signed.
Fields 28 34 CBSA use only.
Field 35 37 Not used at this time.
Field 38 Space is provided here for a customs office stamp indicating the date on which the goods were exported, dutypaid, destroyed, or abandoned.
Field 39 Signature of border services officer confirming cancellation of the E29B.
Field 40 Space is provided here for any remarks the border services officer may wish to make with respect to the cancellation of the E29B. Further details on E29Bs can be found in D814.
Topic 3: Export Procedures Bookmark this An E29B is cancelled and any applicable monies refunded when the goods have been exported within the proper time frame. The goods, together with the importer's copy and importer's receipt copy of the E29B, must be presented to CBSA for verification and cancellation at the CBSA office at either the port of exit or at an inland CBSA office for goods that are traveling in bond. At the CBSA office where the goods are reported for export, the goods will be examined and compared with the goods listed on the E29B. If the officer is satisfied that the goods being exported are those covered by the E29B, the officer cancels the E29B by completing the appropriate fields of the importer's copy and importer's receipt copy, and signs and date stamps the E29B. The cancelled importer's receipt copy is returned to the importer or customs broker, and the importer's copy is forwarded to the CBSA office that initially accepted and processed the E29B. If all the goods covered by an E29B are not exported at the same time, details of each partial exportation are to be noted at the CBSA office of exit on the importer's and importer's receipt copies of the E29B. A photocopy or certified true copy of the duly noted importer's copy is forwarded to the CBSA office that initially accepted and processed the E29B. The original importer's copy and importer's receipt copy are returned to the importer or customs broker.
Topic 4: Duty Paid Goods Bookmark this If goods that have been temporarily imported are to remain in Canada, for example, if they have been sold or leased, or if they no longer qualify for GST/HST relief, a properly completed accounting document should be presented to CBSA immediately. The accounting document, most often a B3, cancels the E29B and allows the goods to remain in Canada. http://cscb.ca/print/book/export/html/182769
71/118
10/1/2015
201516 CCS Course Part 3
The N3, and any supporting documentation, must be accompanied by all copies of the E29B. The date for determining the value for duty, the classification number and the rate of duty for goods remaining in Canada is the date the goods entered Canada. Because the E29B and the B3 are compared, it is critical that both documents be presented together. CBSA must be convinced the B3 agrees with the E29B, matching values, pieces, descriptions etc. If the B3 and E29B are comparable, the E29B will be closed. Where cash or certified cheque was used as security, and the deposit is equal to or exceeds the amount of duties payable, any money in excess of the amount payable is returned to the party indicated in field 24 of the E29B. Where the deposit is less than the duties payable, the difference must be paid to CBSA. Once it has been paid, CBSA will issue a K21 Cash Receipt and the permit will be cancelled. However, the requirement to pay duties immediately is waived if the importer or customs broker has posted release prior to payment security and is authorized for monthly payment.
Topic 5: A.T.A. Carnet Bookmark this An A.T.A. (Admission Temporaire – Temporary Admission) Carnet is an international customs document designed to simplify and streamline temporary importation procedures. Carnets are particularly useful for goods that will be temporarily imported into more than one country during the period of validity of the carnet. Most articles qualifying for a temporary importation may be documented on a carnet. Some exceptions are leased goods, products imported for additional processing or repair, and goods such as plants, food, and other consumable items that may be given away, disposed of, or consumed. As well, since a carnet, itself, is a guarantee that duty will be paid should the goods not be exported, security is not required. The carnet serves two purposes: it acts as the documentation for goods being imported temporarily, and it provides a guarantee for duties, should the goods not be exported. Carnets are not issued by the CBSA or customs in the exporting country; the Canadian Chamber of Commerce or the Chamber of Commerce in the country of export generally issues them. Carnets are valid for one year from the date of issue. A carnet will not be accepted after its expiry date. If the goods are not exported before the expiry date, duty and taxes will apply. For further information on A.T.A. Carnets, see D817.
Lesson 2 Summary: Temporary Importations Bookmark this In this lesson you learned about the forms used to document goods temporarily imported. Key points in this lesson include: the tax status of the goods at the time of temporary importation – GST/HST not payable, partly payable, or fully payable will determine if an E29B, a B3, or both, is used; goods temporarily imported may be documented on an E29B, a B3, both a B3 and an E29B, or an A.T.A. Carnet; goods entering temporarily will not be released until CBSA determines that the goods are eligible for temporary importation; once an E29B is cancelled in the proper time frame, any applicable monies will be refunded; goods originally temporarily imported that are not exported must be accounted for and duty paid immediately; A.T.A. Carnets are international customs documents used to simplify and streamline customs temporary entry procedures; A.T.A. Carnets can replace temporary entry documents; A.T.A. Carnets are used for goods travelling to more than one country; and A.T.A. Carnets provide a guarantee for duties, should the goods not be exported. http://cscb.ca/print/book/export/html/182769
72/118
10/1/2015
201516 CCS Course Part 3
Now take a few minutes to see what you have learned about the documentation requirements for temporary importations.
Module 19: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Commercial Samples Bookmark this In this lesson, commercial samples will be discussed. Here you will see that certain importers are entitled to duty and GST relief on commercial samples, that under some circumstances security must be posted, and that special treatment is accorded to commercial samples that are imported from a NAFTA country, Chile, Colombia, Costa Rica, Honduras, Korea, Panama or Peru.
Rationale As a CCS, you may have to answer questions from a client wanting to know if they have to pay duty and GST on commercial samples.
Lesson Objective At the end of this lesson, you will have learned about the temporary importation of commercial samples. You will know how duty and GST are treated and any security that is required. You will also understand how commercial samples from a NAFTA country, Chile, Colombia, Costa Rica, Honduras, Korea, Panama or Peru are treated.
Topic 1: Commercial Samples Bookmark this Commercial samples are: any goods that are representative of a particular category of goods produced outside Canada and that are imported solely for the purpose of being exhibited or demonstrated to solicit orders for similar goods to be supplied from outside Canada, and any films, charts, projectors and scale models, and similar items, imported solely for the purpose of illustrating a particular category of goods produced outside Canada to solicit orders for similar goods to be supplied from outside Canada.
Topic 2: Relief of Duty and GST/HST http://cscb.ca/print/book/export/html/182769
73/118
10/1/2015
201516 CCS Course Part 3
Bookmark this Goods that qualify as commercial samples may be imported temporarily with full relief of duty and GST/HST. Tariff item 9993.00.00 is used to relieve the duty. Relief of duty and GST/HST is granted: a) when the importer: is a nonresident of Canada, or a resident of Canada who is an employee or agent of a foreign supplier, acting on behalf of the foreign supplier and negotiates sales contracts only in the name of the foreign supplier; maintains ownership of the goods while they are in Canada; and b) when the value exceeds $1,000.00 CDN and the importer: states where he intends to exhibit or demonstrate the sample; can prove the goods are at the stated location; maintains records of the commercial samples; ensures the commercial sample will not be exhibited or demonstrated in Canada by anyone other than himself; ensures the samples will not be supplied from within Canada; and ensures the samples will be exported from Canada within one year of the date of importation.
Topic 3: Security for Commercial Samples Bookmark this If the commercial samples are not documented on an A.T.A. Carnet, CBSA may request security for duty and/or GST/HST. Security may be posted in the form of cash, certified cheque, a transferable bond issued by the Government of Canada, or a bond in a form that is satisfactory to the Minister of National Revenue.
Topic 4: Commercial Samples Imported from a NAFTA Country, Chile, Colombia, Costa Rica, Honduras, Korea, Panama, or Peru Bookmark this Commercial samples imported from a NAFTA country, Chile, Colombia, Costa Rica, Honduras, Korea, Panama or Peru may be entered under tariff item 9990.00.00, after first being classified under a tariff item between chapters 1 and 97. Tariff item 9990.00.00 is reproduced below: Commercial samples imported from one of the countries listed below, regardless of the country of origin or tariff treatment, solely for the solicitation of orders for goods or services provided from a country other than Canada, and (i) having a value, individually or in the aggregate as shipped, of not more than one United States dollar or the equivalent amount in Canadian currency or the currency of the country from which it was imported, or (ii) that are so marked, torn, perforated or otherwise treated that they are unsuitable for sale or for use except as commercial samples, on condition that any person authorized to account for the commercial samples in accordance with the Customs Act shall submit: (a) an invoice, bill of lading or written statement from the foreign supplier of the samples indicating their value; and (b) any documentation establishing that the importer is a representative of the foreign supplier, or is acting on behalf of such a representative. Countries: Chile Colombia Costa Rica http://cscb.ca/print/book/export/html/182769
74/118
10/1/2015
201516 CCS Course Part 3
Honduras Korea Mexico Panama Peru United States Note that neither the country of origin nor tariff treatment of the goods is taken into account when using this classification. Form B3 is used to document these commercial samples. Both the tendigit classification number from chapters 1 – 97 and "9990" will be noted on the B3. Order in Council 762984 is also noted on the B3 if the goods are entitled to relief of GST/HST, or any other tax.
Lesson 3 Summary: Commercial Samples Bookmark this In this lesson you learned about commercial samples. You read about duty and GST/HST relief and the security that may have to be posted for commercial samples, and learned that commercial samples from Chile, Costa Rica, Colombia, Honduras, Korea, Panama, Peru and NAFTA countries are treated differently than commercial samples from other countries. Key points in this lesson include: commercial samples are goods imported solely for the purpose of being exhibited or demonstrated to solicit orders for similar goods to be supplied from outside Canada; tariff item 9993.00.00 applies to commercial samples; relief of duty and GST/HST is granted when the importer of commercial samples is a nonresident of Canada; relief of duty and GST/HST is granted to a resident of Canada who: is an employee or agent of a foreign supplier, acts on behalf of the foreign supplier and negotiates sales contracts only in the name of the foreign supplier; security may be posted in the form of cash, certified cheque, a transferable bond issued by the Government of Canada, or a bond in a form that is satisfactory to the Minister of National Revenue; and tariff item 9990.00.00 applies to commercial samples imported from a NAFTA country, Chile, Colombia, Costa Rica, Honduras, Korea, Panama or Peru. Take a few minutes to see what you have learned about commercial samples.
Module 19: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
http://cscb.ca/print/book/export/html/182769
75/118
10/1/2015
201516 CCS Course Part 3
Lesson 4: Display Goods at a Public Exhibition or Convention Bookmark this In this lesson, you will learn about the procedures for goods being imported temporarily for public exhibitions, meetings, trade shows, or conventions.
Rationale While goods brought into Canada for display are often handled by a single customs broker the “show broker” you may be asked to handle the importation of goods for display at an exhibition or a convention. As a CCS, you will need to know what the procedures are for importing these goods, how long they can stay in Canada, and whether or not GST/HST is paid.
Lesson Objective At the end of this lesson, you will be aware of the definition of display goods, how long display goods may remain in Canada, and how CBSA has streamlined border procedures for display goods.
Topic 1: Display Goods Bookmark this Display goods are products being imported temporarily to be shown at conventions, trade shows or public exhibitions. These items are imported for display at events where the goods of various manufacturers will be displayed. Included are the products on display, as well as items that form part of the display such as booths, tables, carpeting, and other decorative items. All are classified under tariff item 9993.00.00. Display goods may be temporarily imported for a maximum period of 18 consecutive months; however, they are only granted six months of GST/HST relief (with no possibility of extension). Display goods are nontaxable when imported temporarily as per section 1 of Schedule VII to the Excise Tax Act. Form E29B or an A.T.A. Carnet may be used to document their entry. Although a show broker may be designated to handle the entry of all display goods, each exhibitor may use his own broker if he wishes.
Topic 2: Streamlined Border Procedures Bookmark this CBSA has streamlined border procedures in order to make it easy for those outside Canada to hold conventions, meetings, trade shows, and exhibitions in Canada. Once the site has been established, the first step is to provide CBSA with the location of the event. The following details should be provided: when and where the meeting will take place; how many participants, both Canadian and foreign, are expected; who will be on site and responsible for processing the necessary CBSA documents when the goods arrive – this could be an employee, a customs broker, or a delegated (unpaid) representative; a list of goods that will likely be brought into Canada, their origin and intended use, as well as details on when, where and how they will be arriving; if any prohibited or controlled goods will be part of the shipment; a request for the goods to be considered for the Foreign Organizations Remission Order or any other remission provisions (if they apply); and a request that the event be considered for onsite/bordertoshow clearance privileges, that is, that the goods be allowed to travel in bond for customs clearance at their destination. http://cscb.ca/print/book/export/html/182769
76/118
10/1/2015
201516 CCS Course Part 3
CBSA in turn will advise: the tariff classification of the goods listed that are destined for Canada; if any security deposits are required; if the event will be granted onsite customs clearance privileges; and any federal government requirements for the event. CBSA will provide a letter of recognition to the event organizer. This letter should: accompany each shipment of goods to the event; be provided to the event’s customs broker; and be carried across the border by each exhibitor, delegate, and speaker coming to the event. The letter of recognition does not waive requirements for other documents that may be necessary at the time of entry.
Topic 2: Streamlined Border Procedures (cont. 2) Bookmark this If the foreign organization holding the event in Canada qualifies as a “foreign organization”, certain goods may be allowed entry on a duty free basis under tariff item 9830.00.00. A foreign organization is a corporation whose head office is outside Canada (but not a Canadian branch of that corporation) or an unincorporated association whose membership is totally foreign. Although all goods must be reported at time of import, a partial list of goods that may be imported duty free follows: banners and flags; papers; stationery, paper clips, pens, pencils, and similar items; identification badges; lapel buttons, Tshirts, mugs, jewelry and other souvenirs; and official paraphernalia. Generally, most goods being imported temporarily by a foreign or nonforeign organization will qualify for duty and tax free entry as long as the goods are not being imported for sale, lease, further manufacturing, or processing. Acceptable documentation for the temporary importation of goods can include a B3, an E29B, an A.T.A. Carnet or a Taiwan Carnet. A Taiwan Carnet is simply a carnet that is designed to simplify and streamline customs temporary importation procedures between Canada and Taiwan.
Topic 2: Streamlined Border Procedures (cont. 3) Bookmark this Goods brought into Canada to be sold at any event must be duty and tax paid at the time of importation. Duty paid on unsold goods that are exported are eligible for a refund. Should CBSA require a security deposit, the customs broker's security can be used or security can be posted by the importer. If not posted by a customs broker, security can be posted using cash, a certified cheque, a surety bond, or a transferable bond issued by the Government of Canada. Unless the event has been authorized for onsite clearance, the goods must clear at the border or inland at a sufferance warehouse. If the goods are approved for onsite clearance either at the show or at a customs bonded warehouse the goods can be shipped directly to the event site. CBSA will have an officer onsite to review documentation and perform any necessary examinations. Goods can also be released at a customs bonded warehouse. By using a bonded warehouse, the payment of customs duties, countervailing duties, antidumping duties, and excise duties and taxes including the GST/HST can be deferred until the goods are removed from the warehouse and entered into the Canadian market to be consumed or expended. When using this option, the event must be held at a site that has been licensed as a bonded warehouse. http://cscb.ca/print/book/export/html/182769
77/118
10/1/2015
201516 CCS Course Part 3
Lesson 4 Summary: Display Goods at a Public Exhibition or Convention Bookmark this In this lesson you learned about how display goods are treated when they are imported temporarily for a public exhibition or convention. You also studied the procedures for goods being imported by foreign organizations for conventions, meetings and trade shows. Key points in this lesson include: display goods are those that are imported temporarily to be shown at a convention or public exhibition at which the goods of various manufacturers will be displayed; display goods include items that form part of the display such as booths, tables, carpeting, and other decorative items; display goods may be temporarily imported for a maximum period of eighteen months; display goods, imported temporarily, are granted six months of GST/HST relief; display goods are classified under tariff item 9993.00.00; form E29B or a carnet may be used to document the entry of display goods; CBSA has streamlined border procedures to make it easier for those outside Canada to hold conventions and trade shows in Canada; once CBSA has all event details, they will provide information on the tariff classification number of the display goods, any security deposits that will be required and whether or not the event will have onsite customs clearance privileges; CBSA will issue a letter of recognition for qualifying goods to the event organizer; goods brought into Canada to be sold at an event must be duty and tax paid at the time of importation; and CBSA may require a security deposit for display goods. Take a few minutes to see what you have learned about display goods.
Module 19: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
0 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 19 Summary: Temporary Importations Bookmark this In this module, you studied temporary importations. You have been introduced to the E29B and the A.T.A. Carnet. You learned that most temporary importations including commercial samples and display goods can be classified under tariff item 9993.00.00 and that tax status determines which document must be used. You now realize that cancelling temporary import documents is just as important as releasing the goods. This module also covered the security required for each type of temporary importation. Having this knowledge at http://cscb.ca/print/book/export/html/182769
78/118
10/1/2015
201516 CCS Course Part 3
your fingertips will improve your customer service skills, prevent duties and taxes from being paid unnecessarily, and avoid having to correct documentation for goods that should have been imported on a temporary basis. By reviewing this material, you will be able to clear shipments of temporary goods in an efficient manner. Now it's time to test what you've learned.
Module 19: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 20: Accounting Bookmark this Once goods have been reported and released, they must be accounted for. Accounting for imported goods involves submitting or transmitting to CBSA complete information relating to the imported goods, including the amount of duties and taxes payable.
Module Objective This module will show you how to account for imported goods.
Lesson 1: Background Bookmark this In this lesson you will learn about the legislation for the accounting of imported goods, interim accounting, and the difference between high value and low value shipments for accounting purposes.
Rationale After goods have been reported and released, the third step accounting is performed. As a CCS, you may have to account for goods on behalf of a client or your employer.
Lesson Objective At the end of Lesson 1, you will be aware of the requirements and regulations for the accounting of imported goods.
Topic 1: Legislation http://cscb.ca/print/book/export/html/182769
79/118
10/1/2015
201516 CCS Course Part 3
Bookmark this Section 32.(1) of the Customs Act states: Subject to subsections (2) and (4) and any regulations made under subsection (6), and to section 33, no goods shall be released until (a) they have been accounted for by the importer or owner thereof in the prescribed manner and, where they are to be accounted for in writing, in the prescribed form containing the prescribed information; and (b) all duties thereon have been paid. This section means that unless there are exceptions, goods cannot be released until they have been accounted for AND duties have been paid. However, the Customs Act goes on to state how goods can be released prior to the payment of duties and taxes – the usual practice for commercial goods. Section 32.(2) states: In prescribed circumstances and under prescribed conditions, goods may be released prior to the accounting required under subsection (1) if (a) the importer or owner of the goods makes an interim accounting in the prescribed manner and form and containing the prescribed information, or in the form and containing the information that is satisfactory to the Minister; or (b) the goods have been authorized by an officer or by any prescribed means for delivery to, and have been received at, the place of business of the importer, owner or consignee of the goods. Section 32.(2)(a) indicates that an interim accounting, that is, an RMD or PARS, allows goods to be released prior to accounting. The usual conditions for RMD and PARS, such as the posting of security, must be met. Section 32.(2)(b) means that release prior to accounting can take place if the goods have been authorized for delivery prior to accounting.
Topic 1: Legislation (cont. 2) Bookmark this Section 32.(3) states: If goods are released under subsection (2), they shall be accounted for within the prescribed time and in the manner described in paragraph (1)(a) by, in the case of goods to which paragraph (2)(a) applies, the person who made the interim accounting under that paragraph in respect of the goods and, in the case of goods to which paragraph (2)(b) applies, by the importer or owner of the goods. This section means that when goods are released prior to accounting, there is a specific time frame in which the accounting must take place. It also states that in the case of goods that have been released using interim accounting, the accounting must be made by the party that submitted the interim accounting. In the case of goods that do not require an interim accounting, the importer or owner of the goods will submit the accounting information to CBSA. Section 32(4) states: In such circumstances, and under such conditions, as may be prescribed, goods imported by courier or as mail may be released prior to the accounting required under subsection (1) and prior to the payment of duties thereon. This section allows goods that are shipped by courier or imported by mail to be released prior to accounting and prior to the payment of duties and taxes.
http://cscb.ca/print/book/export/html/182769
80/118
10/1/2015
201516 CCS Course Part 3
Topic 1: Legislation (cont. 3) Bookmark this Section 32(5) states: Where goods are released under subsection (4), (a) the person who is authorized under paragraph (6)(a) or subsection (7) to account for the goods shall, within the prescribed time, account for the goods in the manner described in paragraph (1)(a) and that person or the importer or owner of the goods shall, within the prescribed time, pay duties on the goods, or (b) where there is no person authorized under paragraph (6)(a) or subsection (7) to account for the goods, the importer or owner of the goods shall, within the prescribed time, account for the goods in the manner described in paragraph (1)(a) and shall, within the prescribed time, pay duties on the goods. This section means that, when goods shipped by courier or mail have been released prior to accounting and prior to the payment of duties and taxes, the person authorized under (6)(a) or (7) to account for the goods will account for the goods and pay duties and taxes within a certain time frame. And, where there is no person authorized under (6) (a) or (7) to account for the goods, the importer or owner of the goods must account for the goods and pay duties and taxes within a certain time frame. The Accounting for Imported Goods and Payment of Duties Regulations includes definitions; the time frames in which accounting documents must be submitted or transmitted to CBSA; and other requirements. These regulations will be referred to throughout this module.
Topic 2: Time Frames Bookmark this For high value shipments, accounting data must be presented in hard copy or transmitted electronically, and accepted by CBSA, within five business days of the date the goods were released. The accounting period starts on the first business day after release and does not include Saturdays, Sundays, and federal and provincial holidays. Accounting data for low value shipments must be presented in hard copy or transmitted electronically, and accepted by CBSA, by the 24th day of each month following the month in which the goods were released. In order to determine which shipments have been released and when, Release Notification System (RNS) reports should be reviewed.
Lesson 1 Summary: Background Bookmark this Lesson 1 outlined the legislation for accounting of imported goods. It also explained interim accounting and the difference between high value and low value shipments for accounting purposes. Key points from Lesson 1 include: accounting for imported goods means providing to CBSA complete information relating to the imported goods, including the amount of duties and taxes payable; section 32 of the Customs Act provides the legislative requirement to account for imported goods.RMD and PARS release requests are considered "interim accounting"; interim accounting allows goods to be released prior to accounting; in some cases, release and accounting data are provided at the same time, for example, B3 type C or one step process; once released, goods must be accounted for within a specific time frame; for high value shipments (valued at $2,500.000 CDN and over), accounting data must be presented in hard http://cscb.ca/print/book/export/html/182769
81/118
10/1/2015
201516 CCS Course Part 3
copy or transmitted electronically, and accepted by CBSA, within five business days from the date the goods were released; and for low value shipments released under the Courier/Low Value Shipment Program (valued at $2,499.99 CDN and less), accounting data must be presented in hard copy or transmitted electronically, and accepted by CBSA, by the 24th day of each month following the month in which the goods were released. Take a few minutes now to answer the questions on the following screens to see how much you have learned.
Module 20: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: B3, Canada Customs Coding Form Bookmark this Lesson 2 describes the B3, Canada Customs Coding Form. This is the form that is submitted to CBSA when a paper entry is required. When EDI is used, data as per the B3 fields is transmitted. If the importer wishes, both the release request and accounting information can be submitted or transmitted at the same time, using the same B3 format.
Rationale As a CCS, you should be able to identify the information that is required by CBSA to account for goods.
Lesson Objective You will be able to complete a hard copy B3, or submit B3 data to CBSA, to account for goods.
Topic 1: B3, Canada Customs Coding Form Bookmark this Goods may be accounted for by sending an electronic transmission of the accounting data to CBSA over telecommunication lines or by submitting a hard copy B3, Canada Customs Coding Form. The Customs Automated Data Exchange (CADEX) system is a CBSA system that can be used to transmit accounting data to CBSA. In more than 95% of commercial transactions, B3 data is provided to CBSA using EDI. If accounting data will be sent (transmitted) using EDI, any paper release packages must note "CADEX" so that CBSA knows accounting data will be transmitted. The CADEX notation is placed on the top copy of the CBSA invoice set of a hard copy RMD package or on the release information sheet (lead sheet). http://cscb.ca/print/book/export/html/182769
82/118
10/1/2015
201516 CCS Course Part 3
The same information that is required on the hard copy B3 is also required when sending data using EDI. We will discuss each field of the B3, so you may want to print a B3 before we start. You may also want to print Appendix H from D17110.
Topic 1: B3 (cont. 2) Bookmark this The following includes a description of each field on the B3. Roll over each field to see a description.
http://cscb.ca/print/book/export/html/182769
83/118
10/1/2015
201516 CCS Course Part 3
Topic 1: B3 (cont. 3) http://cscb.ca/print/book/export/html/182769
84/118
10/1/2015
201516 CCS Course Part 3
Bookmark this
Field 1: Importer Name and Address Indicate the name and address of the importer. The importer is the party responsible for the payment of duties and taxes. In cases where the foreign vendor is the nonresident importer, the importer and vendor names will be the same. No. The business number is indicated in the smaller box labelled “No.” contained within field 1.
Field 2: Transaction No. A transaction number is fourteen digits in length and in bar coded format. The first five digits represent the account security number of the party that requested the release of the goods; the next eight digits represent a number assigned by either customs or the broker/importer; and finally a check digit. This number is the same transaction number that was used on the release request.
Topic 1: B3 (cont. 4) Bookmark this
Field 3: Type There are several types of B3 accounting documents; a complete list is available in Appendix B of D17110. The most common types are the AB and the C.
Type AB Final accounting for goods that have been released.
Type C Final accounting for: (a) release of goods prior to the payment of duties and taxes (if security has been posted); or (b) release of goods and payment of duties and taxes.
Type F Consolidated entry for goods that were released under the Courier/LVS Program.
Type H Supplementary B3. Used to voluntarily account for goods that have been released and reported, but not accounted for at time of final accounting. For example, a line may have been inadvertently omitted from the original B3 accounting document.
Type V Voluntary B3. Used to voluntarily account for goods that were delivered without having been released.
Field 4: Office No. Identifies the customs office where the goods were released. A list of the codes for each customs office is found in Appendix H of D17110. http://cscb.ca/print/book/export/html/182769
85/118
10/1/2015
201516 CCS Course Part 3
Field 5: GST Registration No. This field is completed when there is no business number shown in field 1.
Topic 1: B3 (cont. 5) Bookmark this
Field 6: Payment Code If an importer has posted security and the goods have been released under the account security number of a customs broker, "I" (for importer) is indicated in this field. In all other cases including when an importer has posted security and used their own account security number, it is left blank.
Field 7: Mode of Transport If goods are valued at greater than $2,500.00 CDN and exported from the U.S., this field must be completed. Exceptions are B3 types H, M, and V. Valid codes are as follows: Air 1 Highway 2 Rail 6 Pipeline 7 Air/Marine No Carrier Code 8 Marine 9
Field 8: Port of Unlading If goods are valued at greater than $2,500.00 CDN and shipped by vessel, this field is completed with the applicable port code that indicates where the goods were unloaded. Port codes are found in Appendix H of D171 10. Exceptions are B3 types F, H, M, and V.
Field 9: Total Value for Duty The value of all goods in Canadian dollars. This figure is rounded off to the nearest dollar and decimal points are not indicated. If the B3 has two or more pages, this field is completed only on the first page.
Field 10: Subheader No. The first page of the B3 will always indicate "1" in the subheader number field. If any of fields 11, 12, 13, 14, 16, 17 or 18 change while still accounting for goods released under one transaction number, a new page must be started that will indicate subheader "2". When second, or subsequent, subheaders are necessary, all fields 11, 12, 13, 14, 16, 17, and 18 must be completed.
Topic 1: B3 (cont. 6) Bookmark this
Field 11: Vendor Name The name of the actual vendor of the goods is shown and this may not always be the same name as the party shipping the goods. Each new vendor must be shown on a new subheader. Show the name of the vendor or the consignor of the goods as it appears on the supporting invoice(s). Do not abbreviate the name. If the goods are sold from the United States, the name, threedigit state code, and fivedigit zip code of the vendor must be indicated. These codes are found in Appendix H of D17110. http://cscb.ca/print/book/export/html/182769
86/118
10/1/2015
201516 CCS Course Part 3
If goods are sold from a country other than the United States, but exported from the United States, the name of the foreign vendor is indicated followed by the state code and zip code of the U.S. exporter. For example: Goods sold by New York Textiles, 123 Main Street, Brooklyn, New York, 87654, and shipped from New York Textiles in Brooklyn, New York would indicate: New York Textiles UNY 87654 Goods are sold by Dusseldorff Machine Works, Dusseldorff, Germany, but shipped by their U. S. affiliate, Pennsylvania Boilers, Pittsburgh, PA, 12345 would indicate: Dusseldorf Machine Works UPA 12345 The vendor number field contained within field 11 is left blank.
Field 12: Country of Origin If the country of origin of the goods is the United States, the threedigit state code is shown. If the goods originate in a country other than the United States, the twodigit country code, as per Appendix H to D17110, is indicated.
Field 13: Place of Export If the goods are exported from the United States, the threedigit state code is shown. If the goods are exported from a country other than the United States, the twodigit country code, as per Appendix H to D17110, is indicated.
Topic 1: B3 (cont. 7) Bookmark this
Field 14: Tariff Treatment As noted in Module 8, Canada has entered into trade agreements with many countries. The tariff treatment code that reflects the tariff treatment used is noted in this field, for example: 2, 9, 10, 11, or 12. If the tariff treatment changes, a new page and new subheader must be created.
Field 15: U.S. Port of Exit This field is completed on the first page of each subheader for types AB, AD, C, and D, for shipments valued at greater than $2,500.00 CDN and exported from the U.S. The U.S. port of exit is defined as the U.S. Customs port at which or nearest to which the land surface carrier transporting the merchandise crosses the border of the United States into Canada, or in the case of exportation by vessel or air, the U.S. Customs port where the merchandise is loaded on the vessel or aircraft which is to carry the merchandise to Canada. The fourdigit port of exit codes are listed in Appendix H of D17110.
Field 16: Direct Shipment Date This is the date when the goods began their journey to Canada. This date determines the rate of exchange applied to the goods. If the currency shown is in Canadian dollars, this field may be left blank. The date is shown as two numerals for the month and two numerals for the day. For example, August 23 would look like this: 23 08. If the date changes, a new subheader must be created.
Field 17: Currency Code The currency code for the type of currency shown on the invoice must be indicated in this field. Currency codes can be found in Appendix H to Memorandum D17110. Each new currency must be shown on a new subheader. http://cscb.ca/print/book/export/html/182769
87/118
10/1/2015
201516 CCS Course Part 3
Field 18: Time Limit In the case of goods that are entering Canada temporarily, the length of time that the goods will stay in Canada is indicated in this field. This field is also completed in the case of B3 types D and sometimes 10. Type 10 is for goods entering a warehouse. Examples of how the time limit must be shown are: Time Limit Shown 1 week
1 W
1 month
1 M
1 year
1 Y or 12 M
30 days
30 D
Topic 1: B3 (cont. 8) Bookmark this
Field 19: Freight If goods are valued at greater than $2,500.00 CDN and shipped from the U.S., this field indicates, to the nearest dollar and in Canadian funds, the cost to transport the goods from the place of direct shipment in the U.S. to their final destination in Canada. If more than one subheader is involved, the total amount of the freight may be shown on the first subheader page or each subheader may show its own portion of the freight cost. If an individual is transporting their own goods and not using a commercial carrier, they must indicate an estimated freight cost.
Field 20: Release Date Left blank, except for type F. Type F is used to account for goods released under the Courier/LVS system and is discussed later in this module.
Field 21: Line Fields 21 through 42 are completed for each line of tariff classification on the B3. Each page of the B3 can reflect five lines of tariff classification. If goods will be accounted for with eight lines of classification, then the lines would be numbered 01, 02, 03, 04, 05 on page 1 of the B3, and 06, 07, and 08 on the second page. Line numbers remain consecutive, even if the subheader changes.
Field 22: Description A description of the goods must be indicated in this field, as well as any permit numbers or rulings.
Field 23: Weight/KGM For all goods exported from the U.S. by air or marine and valued at $2,500.00 CDN or more, the weight of the goods, in kilograms, must be shown. This field can be left blank for B3 types H, M, and V.
Field 24: Previous Transaction No. This field is only to be completed on type H entries. H type entries are those that account for goods that have been released and reported, but inadvertently omitted from the original B3 accounting document. The transaction number of the original B3 accounting document is indicated in this field.
http://cscb.ca/print/book/export/html/182769
88/118
10/1/2015
201516 CCS Course Part 3
Topic 1: B3 (cont. 9) Bookmark this
Field 25: Previous Transaction Line Left blank.
Field 26: Special Authority This field indicates any special authority number, such as an Order in Council that reduces or remits the amount of duty ordinarily payable.
Field 27: Classification No. Indicate the tariff classification number (10 digits), from the Customs Tariff, for each of the items included on the shipment. Decimal points must be included.
Field 28: Tariff Code The first four digits of the tariff item from chapter 99 are quoted in this field when the imported goods are used for the specific purpose outlined in the chapter 99 tariff item.
Field 29: Quantity If the tariff classification number that you are using indicates a unit of measure in the Unit of Measures column of the Customs Tariff, this field must be completed. The quantity is shown as a numeral only.
Field 30: U M (Unit of Measure) The unit of measure, as it appears in the Customs Tariff, is indicated in this field. Metric measures must be used.
Field 31: VFD Code The value for duty code is a twodigit code. The codes were discussed in Module 10 and are reproduced below: First Digit 1 the vendor and importer are not related 2 the vendor and importer are related Second Digit 3 the price paid, or payable, for the goods without adjustments 4 the price paid, or payable, for the goods with adjustments 5 transaction value of identical goods 6 transaction value of similar goods 7 deductive value of the goods 8 computed value of the goods 9 residual method of valuation
Topic 1: B3 (cont. 10) Bookmark this
Field 32: SIMA Code http://cscb.ca/print/book/export/html/182769
89/118
10/1/2015
201516 CCS Course Part 3
The Special Import Measures Act was discussed in Module 11. If the goods being imported are subject to duties imposed under the Special Import Measures Act, this field must be completed. The first digit of payment represents the type of SIMA assessment and the second digit is a nil assessment or a method of payment.
Field 33: Rate of Customs Duty The rate of duty applicable to the HS classification number is indicated in this field. Where both percentage and specific duties apply, the percentage rate of duty is shown on one line and the specific rate of duty is shown on the next line. The line number is not completed for the line that indicates the specific rate of duty. If an additional rate of duty equivalent to the excise duty applies, this rate of duty is shown on the line following the line that indicates the regular duty rate. The line number is not completed for the line that indicates the excise duty. The format used to indicate the duty rate is shown below: Duty Rate Shown Duty Free "free", "0" or leave blank 20%
20 or 20.00
9.2%
9.2
Field 34: E.T. Rate Unless excise tax applies to the product being imported, this field is not completed. If the goods are subject to excise tax, then the excise tax rate is shown; if the goods are exempt from the payment of excise tax, then an exemption code must be shown. Excise exemption codes are found in Appendix H of D17110. The format used to indicate the excise tax is shown below: Excise Tax Rate Shown 4¢ per hundred
.04
10¢ each
.10
44.72¢ per litre
.4472
$.0205/L
.0205
10%
10 or 10.0
Field 35: Rate of GST Either the rate of GST, currently 5%, or a GST exemption code must be indicated in this field. When GST is applicable, it is indicated as either 5 or 5.0. GST exemption codes are found in Appendix H of D17110.
Topic 1: B3 (cont. 11) Bookmark this
Field 36: Value for Currency Conversion The value of the goods, in the currency indicated on the accompanying invoice, is indicated in this field. The value for currency conversion is shown to a maximum of two decimal places, for example, 505.00 or 12876.98. An example that we will use and follow through will be for machinery that has a duty rate of 9.2%. The value of the machinery is 660,000 Japanese yen. As a result, field 36 indicates 660000.00. Field 17 will indicate JPY. http://cscb.ca/print/book/export/html/182769
90/118
10/1/2015
201516 CCS Course Part 3
Field 37: Value for Duty This field indicates the value of the goods in Canadian dollars. This is calculated by multiplying the figure in field 36 by the exchange rate applicable to the currency code shown in field 17. Dollar signs and commas are not shown in this field. Using our example, the exchange rate for Japanese yen is .01014. Since 660000 Japanese yen multiplied by .01014 equals $6,692.40 Canadian dollars, field 37 will indicate 6692.40.
Field 38: Customs Duties If customs duty is applicable, this field must be completed. To calculate the amount of duty payable, the value for duty from field 37 is multiplied by the rate of duty. Since $6,692.40 multiplied by 9.2% equals $615.70, field 38 will indicate 615.70.
Field 39: SIMA Assessment Complete field 39 by indicating the amount of surtax, provisional, antidumping, or countervailing duty payable.
Field 40: Excise Tax If excise tax is payable, this field must be completed. Where the excise tax is calculated as a percentage, the amount is determined by adding together the value for duty in field 37; the customs duty in field 38; and any SIMA assessment in field 39. The total of these three figures is multiplied by the rate of excise tax to determine the amount of excise tax payable.
Topic 1: B3 (cont. 12) Bookmark this
Field 41: Value for Tax This field shows the total of the value for duty; any customs duties; any SIMA assessment, and excise tax. This is the figure upon which GST is calculated. Using our example, we add 6692.40 (VFD) and 615.70 (duty) to arrive at a value for tax of 7308.10.
Field 42: GST The actual amount of GST payable is shown in this field. Using our example, multiply 7308.10 (the value for tax from field 41) by 5% (the rate of GST) to arrive at GST of 365.41.
Field 43: Deposit This field is only completed on B3 types D and AD and indicates the deposit required.
Field 44: Warehouse No. This field is completed when the goods have been entered into a customs bonded warehouse. The last two digits of the warehouse number, which is assigned by CBSA, are shown.
Field 45: Cargo Control No. This field is completed on B3 types C, D, M, AB, and AD and left blank for types H and V. The cargo control number, including the carrier code as it appears on the cargo control document, is indicated in http://cscb.ca/print/book/export/html/182769
91/118
10/1/2015
201516 CCS Course Part 3
this field. For a multipage B3, this field is completed on the last page only. Only one cargo control number can be shown. If you are including goods from more than one cargo control document on a single B3, indicate B3B in this field. Form B3B is used to indicate all cargo control numbers included on a single accounting document.
Topic 1: B3 (cont. 13) Bookmark this
Field 46: Carrier Code at Importation Completed on all shipments valued at more than $2,500.00 CDN and exported from the U.S. by air or marine only. Only the fourdigit carrier code of the carrier on which the goods were laden at the time of their importation into Canada is required. Where there are only three characters in the code, as in the case of some air carriers, show the three character code plus a hyphen.
Field 47: Customs Duties The total amount of customs duties payable from field 38, plus any excise duties, is indicated in field 47. If no duty is payable, this field may indicate zeros or be left blank. On a multipage B3, this field is completed on the last page only. Using our example, field 47 will show 615.70.
Field 48: SIMA Assessment If a SIMA assessment is payable, then the total from all completed field 39s is indicated. On a multipage B3, this field is completed on the last page only.
Field 49: Excise Tax This field is completed if excise tax is payable, otherwise it is left blank or shows zeros. The total from all completed field 40s will be indicated. On a multipage B3, this field is completed on the last page only.
Field 50: GST This field shows the total amount of GST payable. If none is payable, the field is left blank or reflects zeros. The total from all completed field 42s is shown. On a multipage B3, this field is completed on the last page only. Using our example, field 50 will indicate 365.41.
Field 51: Total The total of all duties and taxes payable from fields 47, 48, 49, and 50. On a multipage B3, this field is completed on the last page only. Using our example, this field will indicate 981.11.
Declaration Field The name of the individual preparing the B3 is shown. If the individual making the declaration is doing so on behalf of an importer, or on behalf of a licensed customs broker, the importer or customs broker's name must be indicated. This field must include a date and signature.
Lesson 2 Summary: B3, Canada Customs Coding Form http://cscb.ca/print/book/export/html/182769
92/118
10/1/2015
201516 CCS Course Part 3
Bookmark this Lesson 2 described the fields of the B3. Following is a short summary of key points from this lesson. the importer shown on the B3 is the party responsible for the payment of duties and taxes; the first five digits of the transaction number represent the security number of the party that released the goods; the next eight digits represent a number assigned by either customs or the broker/importer; and finally a check digit; the transaction number used on the B3 accounting document is the same transaction number that was used on the release request; B3 type H is used to voluntarily account for goods that have been released and reported, but not accounted for at time of final accounting; B3 type V is used to voluntarily account for goods that were delivered without having been released; the currency code shown on the B3 is the currency code for the type of currency shown on the invoice; the twodigit value for duty code is noted as the VFD code on the B3; where both a percentage and specific duty applies, the percentage rate of duty is shown on one line and the specific rate of duty is shown on the next line. The line number is not completed for the line that indicates the specific rate of duty; if an additional rate of duty equivalent to the excise duty applies, this rate of duty is shown on the line following the line that indicates the regular duty rate. The line number is not completed for the line that indicates the excise duty; either the rate of GST, currently 5%, or a GST exemption code must be indicated in field 35; the value for duty field indicates the value of the goods in Canadian dollars; and the total in field 51 is the total of all duties and taxes. Take some time now and answer the following questions about the B3.
Module 20: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Courier/Low Value Shipment Program Bookmark this In this lesson you will learn how to account for goods that were released under the Courier/Low Value Shipment (LVS) Program.
Rationale You may be required to account for goods that were released under the Courier/LVS Program.
Lesson Objective http://cscb.ca/print/book/export/html/182769
93/118
10/1/2015
201516 CCS Course Part 3
At the end of Lesson 3, you should be able to describe how to account for goods that were released under the Courier/LVS Program.
Topic 1: Courier/Low Value Shipment Program Bookmark this You will recall that items may be removed from the courier's consist sheet if the goods do not qualify for release under the Courier/LVS Program or if an officer determines that further review is required. Once items that are listed on the consist sheet have been released, accounting data must be provided. The accounting data can be provided by the importer, the importer’s customs broker or by the courier, if they are licensed as a customs broker and another customs broker has not been designated by the importer. For goods listed on the consist sheet and released under the Courier/LVS Program, accounting data must be provided to CBSA by the 24th day of each month following the month in which the goods were released. For example, goods released on February 10th must be accounted for by March 24th. However, if goods valued at an amount greater than $2,500.00 CAD are released in error under the Courier/LVS Program, form B3, type V, must be submitted within five days of release. And, if controlled, prohibited, or regulated goods are released in error under the Courier/LVS Program, regardless of value, the importer or broker must immediately notify CBSA of the release error by submitting form B3 type V. Goods that are released under the Courier/LVS Program may be accounted for on a B3 type F. Type F may be completed in one of three ways: total consolidation, consolidation according to importer, or in a group of special authority shipments. An explanation of each follows.
Topic 2: Total Consolidation Bookmark this With a total consolidation, the customs broker or courier prepares a monthly consolidation to account for all goods released in a specific period of time. A B3 type F is prepared, with only the first line of the B3 completed. The B3 type F is completed very much like the B3 previously described. Only those fields that are completed differently will be described.
Field 1: Importer Name and Address Indicate "various" for the importer's name. If a broker is preparing the B3, the broker's business number and import/export (RM) account are shown in the space provided in the small box labelled "No." in field 1.
Field 3: Type Indicate F.
Field 5: GST Registration No. Leave blank.
Field 6: Payment Code Leave blank.
Field 7: Mode of Transport http://cscb.ca/print/book/export/html/182769
94/118
10/1/2015
201516 CCS Course Part 3
Indicate 2.
Field 8: Port of Unlading Leave blank.
Field 11: Vendor Name and No. Indicate "various" in the name field and UNY 12345 on a second line in the name field, and leave the "No." field blank.
Field 12: Country of Origin Indicate UNY for goods entitled to tariff treatments 2 (Most Favoured Nation Tariff); 10 (United States Tariff); 12 (MexicoUnited States Tariff); and 13 (CanadaIsrael Agreement Tariff). For all other tariff treatments, indicate the country of origin. Show the threedigit alphabetic state code if the country of origin is the United States. Show the twodigit alphabetic code for other countries.
Field 13: Place of Export Indicate UNY for goods entitled to tariff treatments 2 (Most Favoured Nation Tariff); 10 (United States Tariff); 12 (MexicoUnited States Tariff); and 13 (CanadaIsrael Agreement Tariff). For all other countries, indicate the country of export. Show the threedigit alphabetic state code if the country of export is the United States. Show the twodigit alphabetic code if the country of export is other than the United States.
Topic 2: Total Consolidation (cont. 2) Bookmark this
Field 14: Tariff Treatment Indicate the tariff treatment code for the goods (duties and taxes must be calculated using the appropriate tariff treatment). Each new tariff treatment must be shown on a new subheader.
Field 15: U.S. Port of Exit Indicate 1001.
Field 16: Direct Shipment Date Leave blank.
Field 17: Currency Code Indicate CAD. However, any currency conversions will have to be calculated.
Field 18: Time Limit Leave blank.
Field 19: Freight Indicate 1.
Field 20: Release Date Indicate the first day of the current month. http://cscb.ca/print/book/export/html/182769
95/118
10/1/2015
201516 CCS Course Part 3
Field 21: Line Indicate 1.
Field 22: Description Indicate LVS.
Field 23: Weight in Kilograms Indicate 1.
Field 24: Previous Transaction No. Leave blank.
Topic 2: Total Consolidation (cont. 3) Bookmark this
Field 26: Special Authority Leave blank.
Field 27: Classification No. Use the dummy classification number 0000.99.99.00.
Field 28: Tariff Code Leave blank.
Field 29: Quantity Show the number of consolidated shipments on this line.
Field 30: Unit of Measure Leave blank.
Field 31: Value for Duty Code Indicate 13.
Field 32: SIMA Code Indicate 51 if the SIMA is applicable; otherwise, leave blank.
Field 33: Rate of Customs Duty Indicate 1.0. However, duties and taxes must be calculated using the appropriate rate.
Topic 2: Total Consolidation (cont. 4) Bookmark this http://cscb.ca/print/book/export/html/182769
96/118
10/1/2015
201516 CCS Course Part 3
Field 34: Excise Tax Rate Indicate 44.0. However, excise tax must be calculated using the appropriate rate.
Field 35: Rate of GST Indicate 39.0. However, GST must be calculated.
Field 36: Value for Currency Conversion Use CAD. However, any currency conversion must be calculated.
Field 37: Value for Duty Use CAD.
Field 38: Customs Duties Indicate the amount of customs duty.
Field 42: GST Enter the total GST payable.
Field 43: Deposit Leave blank.
Field 44: Warehouse No. Leave blank.
Field 45: Cargo Control No. Leave blank.
Field 46: Carrier Code at Importation Leave blank.
Topic 3: Consolidation by Importer Bookmark this With consolidation by importer, the courier or broker prepares a monthly accounting summarizing the duties and taxes payable for a single importer. Only those fields that differ from a standard B3 are described.
Field 1: Importer Name and Address Use actual business number of the importer. If a customs broker is preparing the B3, his business number and import/export (RM account) is shown in the small box labelled "No." in field 1.
Field 3: Type Indicate F.
Field 5: GST Registration No. http://cscb.ca/print/book/export/html/182769
97/118
10/1/2015
201516 CCS Course Part 3
Leave blank.
Field 6: Payment Code Leave blank.
Field 7: Mode of Transport Indicate 2.
Field 8: Port of Unlading Leave blank.
Field 10: Subheader number Indicate 1.
Field 11: Vendor Name and No. Indicate "various" and UNY 12345 on a second line in the name field and leave the "No." field blank.
Field 12: Country of Origin Indicate UNY for goods entitled to tariff treatments 2 (Most Favoured Nation Tariff); 10 (United States Tariff); 12 (MexicoUnited States Tariff); and 13 (CanadaIsrael Agreement Tariff). For all other tariff treatments, indicate the country of origin. Show the threedigit alphabetic state code if the country of origin is the United States. Show the twodigit alphabetic code for other countries.
Topic 3: Consolidation by Importer (cont. 2) Bookmark this
Field 13: Place of Export Indicate UNY for goods entitled to tariff treatments 2 (Most Favoured Nation Tariff); 10 (United States Tariff); 12 (MexicoUnited States Tariff); and 13 (CanadaIsrael Agreement Tariff). For all other countries, indicate the country of export. Show the threedigit alphabetic state code if the country of export is the United States. Show the twodigit alphabetic code if the country of export is other than the United States.
Field 15: U.S. Port of Exit Indicate 1001.
Field 16: Direct Shipment Date Leave blank.
Field 17: Currency Code Indicate CAD. However, any currency conversions will have to be calculated.
Field 18: Time Limit Leave blank.
Field 19: Freight http://cscb.ca/print/book/export/html/182769
98/118
10/1/2015
201516 CCS Course Part 3
Indicate 1.
Field 20: Release Date Indicate the first day of the current month.
Field 22: Description Indicate LVS.
Field 23: Weight in Kilograms Indicate 1.
Field 24: Previous Transaction No. Leave blank.
Field 26: Special Authority Leave blank.
Topic 3: Consolidation by Importer (cont. 3) Bookmark this
Field 27: Classification No. Use the dummy classification number 0000.99.99.00.
Field 28: Tariff Code Leave blank.
Field 29: Quantity Show the number of consolidated shipments on this line.
Field 30: Unit of Measure Leave blank.
Field 31: Value for Duty Code Indicate 13.
Field 32: SIMA Code Indicate 51 if SIMA is applicable; otherwise, leave blank.
Field 33: Rate of Customs Duty Indicate 1.0. However, duty must be calculated using the appropriate rate.
Field 34: Excise Tax Rate Indicate 44.0. However, excise tax must be calculated using the appropriate rate. http://cscb.ca/print/book/export/html/182769
99/118
10/1/2015
201516 CCS Course Part 3
Topic 3: Consolidation by Importer (cont. 4) Bookmark this
Field 35: Rate of GST Indicate 39.0. However, GST must be calculated using the appropriate rate.
Field 36: Value for Currency Conversion Indicate CAD. However, any currency conversions will have to be calculated.
Field 37: Value for Duty Use CAD.
Field 41: Value for Tax Use CAD.
Field 42: GST Enter the total GST payable.
Field 43: Deposit Leave blank.
Field 44: Warehouse No. Leave blank.
Field 45: Cargo Control No. Leave blank.
Field 46: Carrier Code at Importation Leave blank.
Topic 4: Special Authority Shipments Bookmark this Shipments released under the Courier/LVS Program that are accounted for using a special authority number, such as an Order in Council, must be accounted for separately, either individually on a transactionbytransaction basis or consolidated by importer. Multiple transactions using the same special authority for an importer can be combined into one line if the following information is the same for each transaction: Business Number (import/export account), special authority (OIC), classification number, tariff treatment, customs duty rate, excise tax rate, and http://cscb.ca/print/book/export/html/182769
100/118
10/1/2015
201516 CCS Course Part 3
rate of GST. Additional information for this type of accounting document is available in Appendix J of D17110.
Lesson 3 Summary: Courier/Low Value Shipment Program Bookmark this Lesson 3 explained how to account for goods that were released under the Courier/LVS Program. Key points from Lesson 3 are: accounting for goods released under the Courier/LVS Program can be submitted by the importer, the importer’s customs broker or by the courier, if they are licensed as a customs broker and another customs broker has not been appointed by the importer; for goods on the consist sheet released under the Courier/LVS Program, accounting data must be provided to CBSA by the 24th day of each month following the month in which the goods were released; if goods valued at an amount greater than $2,500.00 CDN are released in error under the Courier/LVS Program, form B3, type V, must be submitted within five days of release; if controlled, prohibited, or regulated goods are released in error under the Courier/LVS Program, regardless of value, the importer or broker must immediately notify CBSA of the release error by submitting form B3 type V; goods that are released under the Courier/LVS Program may be accounted for on a B3 type F; and B3 type F may be completed in one of three ways: total consolidation; consolidation according to importer; or in a group of special authority shipments. Now take a few minutes to see how much you have learned about accounting for goods that were released under the Courier/LVS Program.
Module 20: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Providing B3 Data Bookmark this In this lesson you will be shown how accounting data is transmitted or submitted to CBSA.
Rationale http://cscb.ca/print/book/export/html/182769
101/118
10/1/2015
201516 CCS Course Part 3
As a CCS, it may be your responsibility to ensure that accounting data is sent to CSBA, both accurately and within the legislated time frames. Failure to do so can result in penalties.
Lesson Objective At the end of this lesson, you will be aware of how accounting data is provided to CBSA.
Topic 1: Providing B3 Data Bookmark this CADEX can be used to transmit B3 data to CBSA electronically, however, due to the limitations and age of the system, CADEX is being phased out. CADEX users are being contacted by CBSA to discuss alternatives, which include Value Added Networks (VAN); Third Party Service Providers; Customs Internet Gateway; or Direct Connect to the CBSA. Only accounting documents for B3 types AB, F, S, 13, 20, 21, 22 and 30 can be transmitted all others must be presented in hard copy. If goods have been released using a hard copy RMD, accounting data may be transmitted electronically as long as the RMD package clearly stated "CADEX" and the B3 type is one that can be transmitted. Those who use CADEX must follow the EDI format noted in the CADEX Participants' Requirements Document (PRD). Using a B3 format, the importer or customs broker transmits the data for goods released since the last transmission of accounting data. Corrections to previously submitted data can also be submitted. Customs will also transmit data back to the sender. This can include the K84 Daily Notice and Monthly Statement, error messages, and confirmation of receipt messages relating to previous transactions.
Topic 1: Providing B3 Data (cont. 2) Bookmark this
CrossReferencing Invoice Data Those using EDI must transmit corresponding invoice crossreference data for each B3 line on a multiline B3. The invoice crossreference shows the relationship between each of the invoice page(s) and lines, and the appropriate B3 line. The invoice cross reference includes: the B3 line number; the invoice page and line numbers, in the same order as they were presented to obtain release; and the invoice value for each invoice line as it appears on the invoice, i.e., without any deductions made for transportation or insurance. Customs brokers or importers who present accounting documents in hard copy must present accounting packages that include the following: two copies of the completed hardcopy B3; any supporting documents that were used to obtain release of the goods; the Canada Customs Invoice, if applicable, or commercial invoice; and any other document or certificate required by CBSA or other government department. When the B3 is presented in hard copy, CBSA will input all data except for those fields that show any duties and taxes. If all of the data entered into the system is valid, and the calculated duties and taxes agree with the amounts declared on the accounting document, the accounting document is accepted and the transaction will appear on the importer/broker's next daily K84. http://cscb.ca/print/book/export/html/182769
102/118
10/1/2015
201516 CCS Course Part 3
If the B3 contains errors, a Detailed Coding Statement (DCS) identifying the errors is generated. The accounting document and a copy of the DCS are returned to the importer/broker for correction. The DCS must be reviewed carefully and, if necessary, corrections made before attaching the DCS behind the customs copy (first copy) of the B3 and resubmitting the accounting document, identifying the corrected field(s), if any.
Lesson 4 Summary: Providing B3 Data Bookmark this Lesson 4 provided information on how to submit accounting data using EDI or a hard copy B3. Key points from Lesson 4 include: accounting data must be sent to CBSA within a legislated time frame; if goods are released using a hard copy release request, they may be accounted for using EDI as long as the RMD package clearly stated “CADEX”; data that CBSA will transmit data back to the sender includes K84 notices, error messages and confirmation of receipt messages relating to previous transactions; those using EDI must transmit corresponding invoice crossreference data for each B3 line on a multiline B3; and if a hard copy B3 contains errors, CBSA will issue a Detailed Coding Statement (DCS) identifying the errors. Now take some time and answer a few questions about providing accounting information to CBSA.
Module 20: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 5: Corrections Bookmark this In some cases, accounting information that is sent to CBSA is not correct. This lesson will explain how corrections to accounting information are made.
Rationale You may be required to correct accounting information that has been provided to CBSA. Incorrect information that has been provided to CBSA must be corrected. If not, an incorrect amount of duties and taxes may be paid; as well, CBSA can issue penalties if incorrect information is provided.
Lesson Objective http://cscb.ca/print/book/export/html/182769
103/118
10/1/2015
201516 CCS Course Part 3
You will be aware of the process to correct accounting information.
Topic 1: Corrections Bookmark this You are obligated to use the correct accounting information even if you aware that information provided to CBSA at the time of release is incorrect. It is often possible to make corrections to an RMD after release but prior to accounting. Requests for a change to RMD information is made on form A48, RMD Correction. Note that the RMD must be presented within the time frame for presentation of final accounting documents. Changes that can be requested on an RMD include changes to the: Business Number; transaction number; cargo control number(s); container number(s); sublocation code; or customs office.
Topic 1: Corrections (cont. 2) Bookmark this If changes other than those listed on the RMD are required, the following applies: for invoice changes to RMD information that was transmitted electronically, changes can be made through ACROSS, and for invoices changes to RMD information that was submitted in hard copy, the importer or customs broker can submit the request in writing, with supporting documentation, to the CBSA office where the goods were released. After B3 accounting data is submitted and before the monthly K84 is issued, errors can be corrected through the Customs Commercial System (CCS) K84 override procedures, prior to the payment of duties and taxes. The override may only be used when a calculation or transposition error has occurred or where CBSA has keyed the B3 incorrectly. Daily K84s should be reviewed carefully so that corrections can be made as soon as possible. Requests for corrections will usually be accepted by CBSA up until the third last business day of the month so that the corrections are reflected on the monthly K84.
Topic 1: Corrections (cont. 3) Bookmark this CBSA requires a written explanation of the clerical, typographical, or customs keying error to be submitted with the request for change. Other conditions must also be met. At automated CBSA offices and where a correction is required to correct a customs keying error, the importer/broker must present a copy of the daily K84 and the corresponding B3. For errors made by importers or brokers, the importer/broker must present: a copy of the daily K84; an explanation of the error, including a letter of authorization to change an importer name or business number; http://cscb.ca/print/book/export/html/182769
104/118
10/1/2015
201516 CCS Course Part 3
a corrected B3 with the same transaction number as the original incorrect B3; and a copy of the original B3 accounting package, including the releasestamped copy of the release on minimum documentation (RMD) package. Even if the original accounting information was sent electronically, a hard copy B3 is required when requesting a correction. If the change is approved by customs, CBSA will perform an accounting override. The override will update the monthly K84 with the new corrected totals. A copy of the override screen will be given to the importer/broker as confirmation of the correction. When the importer/broker's monthly K84 is generated, a section will appear listing each approved override transaction and reflecting the corrected duties and taxes payable.
Topic 4: Corrections (cont. 4) Bookmark this At nonautomated CBSA offices the importer/broker must present the following documentation to the customs office where duties and taxes are paid: a copy of the daily K84; an explanation of the error, including a letter of authorization to change an importer name or business number; two copies of the corrected B3 with the same transaction number as the incorrect B3; and a copy of the original B3 accounting package, including the releasestamped copy of the RMD package. If the change is approved by CBSA, the B3 line on the importer/broker's copy of the daily K84 will be changed, stamped with the customs office stamp, signed by the cash supervisor, and returned to the importer/broker. Because it is a nonautomated CBSA office, corrections made by this office to the B3 and to K84 daily notices cannot be reflected on the monthly K84. Therefore, copies of the corrected daily K84s and B3s must be part of the importer/broker's reconciliation process.
Topic 2: ShortShipped Goods Bookmark this Shortages occur when: a. the total number of packages reported does not match the number of packages received by the consignee or importer. These are called Entered to Arrive (ETA) Shortages; and b. the number of articles reported as contained in a package does not match what is actually inside. These shortages are called Value Included (VI). Both are considered shortages except in the following situations: (a) the customs broker and/or importer is aware that the entire quantity of the goods reported on the invoice will not be in the shipment when it arrives in Canada; (b) the Border Services Officer finds that the quantity reported to be inside the package does not match the quantity found during examination of the goods; (c) the goods are reported to be on backorder; or (d) the goods are bonded warehouse shortages. In the above four instances, only those goods that are actually shipped are documented on the RMD package and any shortshipped goods will be processed separately when they arrive.
Topic 2: Shortshipped Goods (cont. 2) http://cscb.ca/print/book/export/html/182769
105/118
10/1/2015
201516 CCS Course Part 3
Bookmark this If a shortage is found after release but before final accounting, there are two options: (a) account for the total quantity and have the balance of the goods released as an ETA or VI when they arrive; or (b) provide customs with evidence of the shortage with the final accounting document and account for only those goods on hand. When the remaining goods arrive, they should not be reported as a shortage and the usual release procedures will apply. If a shortage is found after final accounting, either the balance of the shortshipped goods may be released as an ETA or VI, or a claim may be made for a refund if the goods are not expected to be shipped at a later date.
Topic 2: ShortShipped Goods (cont. 3) Bookmark this The following are required so that shortshipped goods can be released as Entered to Arrive (ETA): (a) one copy of the documentation supporting the claim for the shortage; (b) one copy of a new cargo control document showing the number of pieces shortshipped and a reference to the cargo control number of the original shipment in the description field; (c) when more than one carrier is involved, a loading sheet from the original carrier is required to substantiate the shortage; (d) two copies of the invoices covering the original shipment. This invoice should contain the following information: (1) importer/exporter account number or business number of the importer; (2) transaction number of the original shipment; (3) notation “ETA Shortage” and detail which goods were short shipped; (4) original customs release office; and (e) documents must be presented in a gold wrapper if final accounting will be done using CADEX. ETA and VI release requests must be presented in hard copy; they cannot be transmitted.
Topic 2: Shortshipped Goods (cont. 4) Bookmark this The following are required so that shortshipped goods can be released as a Value Included (VI) transaction: (a) two copies of the original documentation to support the claim for the shortage; (b) one copy of a new cargo control document; and (c) two copies of an invoice containing an accurate description of the shortshipped goods. This invoice should contain the following information: (1) importer/exporter account number or BN of the importer; (2) transaction number of the original shipment (a new transaction number is not acceptable); (3) a notation “VI Shortage”; (4) customs office where the goods were released; and (5) invoice page and line number for the original transaction relating to the shortshipped goods.
Lesson 5 Summary: Corrections Bookmark this Lesson 5 explained how corrections can be made to information provided to CBSA on an RMD request, and before the daily or monthly K84 is issued. Following is a summary of Lesson 5. http://cscb.ca/print/book/export/html/182769
106/118
10/1/2015
201516 CCS Course Part 3
incorrect information that has been provided to CBSA must be corrected; CBSA may issue penalties if incorrect information is provided; if information provided to CBSA at the time of release is incorrect, you must provide the correct information when accounting for the goods; requests for changes to RMD information is made on form A48; requirements differ when requesting corrections at automated and nonautomated CBSA offices; shortages occur when: the total number of packages reported does not match the number of packages received by the consignee or importer. These are called Entered to Arrive (ETA) Shortages; and the number of articles reported as contained in a package does not match what is actually inside. These shortages are called Value Included (VI). the following are not considered shortages: the customs broker and/or importer/customs broker is aware that the entire quantity of the goods reported on the invoice will not be in the shipment when it arrives in Canada; the customs inspector finds that the quantity reported to be inside the package does not match the quantity found during examination of the goods; the goods are reported to be on backorder; or the goods are bonded warehouse shortages. if a shortage is found after final accounting, either the balance of the shortshipped goods may be released as an ETA or VI, or a claim may be made for a refund if the goods are not expected to be shipped at a later date; documentation is required so that shortshipped goods can be released as Entered to Arrive (ETA) and Value Included (VI); and ETA and VI release requests must be presented in hard copy; they cannot be transmitted. Now take some time and answer a few questions about lesson 5.
Module 20: Lesson 5 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 6: Penalties Bookmark this Lesson 6 will explain the penalties issued by CBSA when accounting information is submitted after its legislated time frame.
Rationale If you are aware that there are penalties for submitting accounting information after its legislated time frame, you will ensure that accounting information is submitted in time in order to avoid these penalties.
Lesson Objective http://cscb.ca/print/book/export/html/182769
107/118
10/1/2015
201516 CCS Course Part 3
You will be aware of the penalties for submitting late accounting information.
Topic 1: Penalties Bookmark this In the Administrative Monetary Penalty System (AMPS) Master Penalty Document (MPD), the following penalties apply to late accounting: C244, C246, C288, C292, C330, and C331. The differences in these penalties are based on the type of accounting document, the value of the goods, and the status of the importer. Let's have a look at C288 and C331.
Topic 1: Penalties (cont. 2) Bookmark this C288 This penalty is assessed against the importer when goods are valued at greater than $2,500 CAD and the accounting information has not been submitted within the legislated 5day time frame. The information in the guidelines portion of this chart includes additional information for the officer. Not all text has been included. Note that this penalty, and others, is assessed against the importer, regardless of the party that was responsible for the error that caused the penalty to be issued.
Topic 1: Penalties (cont. 3) Bookmark this C331 This penalty can be assessed against the importer or the courier when the goods are valued at less than $2.500 CAD and are included on a consolidated B3, and the accounting information has not been submitted by the 24th day of the month following their month of release.
Topic 1: Penalties (cont. 4) Bookmark this In some cases, late accounting penalties may be cancelled. Reasons for which a penalty can be cancelled include: documents were rejected in error by customs; documents were not processed by customs in a timely manner; or CBSA's automated system was not operational or transmission line failures were experienced. Either a letter, or form E571, Late Accounting Penalties Application for Waiver, Cancellation, or Extension, may be used to request a cancellation of a penalty. The letter or the form is presented at the CBSA office where the goods were released. The request should be submitted immediately after it appears on the daily statement and before the K84 monthly statement is issued to ensure that, if the penalty is cancelled, it does not appear on the statement.
Topic 1: Penalties (cont. 5) Bookmark this http://cscb.ca/print/book/export/html/182769
108/118
10/1/2015
201516 CCS Course Part 3
If the K84 monthly statement has already been generated, the importer or broker may: pay the penalty amount on the due date and the submit the request for cancellation. If the request is approved, a cheque will be issued; or short pay by the amount of the penalty in question then submit the request for cancellation. If the request for cancellation is approved, a stamped and signed copy of the letter or form will be returned as a receipt. If the request is not approved, Form K23 will be issued. Form K23 is an invoice issued by CBSA. It includes interest at the specified rate from the first business day after the due date, up to and including the day payment is made. Late accounting penalties issued as a result of a national customs system outage lasting more than four hours will be cancelled by customs without a request. All cancellation requests that are approved by customs are assigned a bar code. This bar code will be shown on form E571 when it is returned to the submitter. The bar code number will appear on the cheque stub when the cancellation has been approved.
Lesson 6 Summary: Penalties Bookmark this Lesson 6 described penalties that can be issued when accounting information is submitted after the legislated time frame. Following are key points from Lesson 6: penalties for late accounting can differ according to the type of accounting document, the value of the goods, and the status of the importer; the penalty assessed against the importer for late accounting for goods valued at $2,500.00 CAD or more is $100.00 per overdue B3; for a consolidated B3 for goods valued at less than $2,500.00 CAD the penalty for late accounting is $100.00 CDN per shipment to a maximum of $2,000.00 CAD; in some cases, late accounting penalties may be cancelled. Reasons for which a penalty can be cancelled include: documents were rejected in error by customs; documents were not processed by customs in a timely manner; or CBSA's automated system was not operational or transmission line failures were experienced. either a letter or form E571 can be used to request a cancellation of a penalty; the letter or the form is presented at the customs office where the goods were released; late accounting penalties issued as a result of a national customs system outage lasting more than four hours will be cancelled by CBSA; and the specified rate of interest is the rate of interest, expressed as a percentage per year, equal to 6% per year plus the prescribed rate. Now take some time and answer the following questions about penalties for late accounting.
Module 20: Lesson 6 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as http://cscb.ca/print/book/export/html/182769
109/118
10/1/2015
201516 CCS Course Part 3
many times as you wish. Start quiz
Module 20 Summary: Accounting Bookmark this In this module you learned about the third step in the process of importing commercial goods accounting. Accounting for imported goods involves submitting or transmitting to CBSA complete information relating to the imported goods, including the amount of duties and taxes payable. You learned: about the legislative requirements to account for goods; how to complete form B3; how to account for goods that were released under the Courier/LVS Program; how to provide CBSA with accounting information; how to correct accounting documents; and, finally, that penalties can be assessed for accounting for goods past the legislated time frame to do so. Following is a short quiz on what you have learned about accounting for imported goods.
Module 20: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
10 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 21: Payment of Duties Bookmark this This module will explain the final part in the process of importing commercial goods the payment of duties and taxes.
Module Objective In this module, you will be shown how to remit duties and taxes that are payable on imported goods.
Lesson 1: Legislative Requirements Bookmark this In Lesson 1, you will learn about the legislative requirements for the payment of duties and taxes on imported http://cscb.ca/print/book/export/html/182769
110/118
10/1/2015
201516 CCS Course Part 3
goods.
Rationale After goods have been reported, released, and accounted for, duties and taxes must be paid. As a CCS, you may have to remit duties and taxes on imported goods on behalf of a client or your employer.
Lesson Objective Lesson 1 outlines the legislative requirements for the payment of duties and taxes.
Topic 1: Legislative Requirements Bookmark this Section 33 of the Customs Act allows for goods to be released prior to the payment of duties and taxes, when certain conditions have been met. Once the goods have been released, duty and taxes must be paid. Section 10.1 of the Accounting for Imported Goods and Payment of Duties Regulations states that: 10.1 Where commercial goods are released under section 33 of the Act in accordance with section 9, the person required to pay duties on those goods shall do so no later than the last business day of the month in which the billing period ends. The billing period, in respect of commercial goods, is the period that begins on the 25th day of a month and ends on the 24th day of the following month. It includes the day on which the goods are accounted for, and the last day that they are required to be accounted for. The time period between the release of goods and the payment of duties and taxes can be quite long. For example, goods that are released on the 10th of the month must be duty paid by the last business day of that month. However, goods that are released on the 28th of the month must be duty paid by the last business day of the following month.
Topic 1: Legislative Requirements (cont. 2) Bookmark this You will remember that goods that have been released under Courier/Low Value Shipment Program are accounted for no later than the 24th day of the month following the month in which goods are released. These goods must have duties and taxes paid upon them no later than the last business day of the month following the month in which the goods were released. For example, if goods were released in February, duty must be paid by the last business day in March. For goods imported by mail and delivered by Canada Post, Canada Post will remit duties and taxes that they have collected from the importer upon delivery of the goods, no later than the last business day of the month following the month in which the release period ended.
Topic 1: Legislative Requirements (cont. 3) Bookmark this Section 33 of the Customs Act states the following: 33. (1) In prescribed circumstances, goods may be released prior to the payment of duties levied on them. http://cscb.ca/print/book/export/html/182769
111/118
10/1/2015
201516 CCS Course Part 3
(2) If goods are released under this section, the person who accounted for the goods under subsection 32(2) or (3) shall pay the duties levied on them within the prescribed time. (3) In subsection (2), "duties" does not include the duties levied under (a) subsection 21.1(1) of the Customs Tariff, if they are paid and collected in accordance with subsection 21.1(2) of that Act; or (b) subsections 21.2(1) and (2) of the Customs Tariff, if they are paid and collected in accordance with subsection 21.2(3) of that Act.
Lesson 1 Summary: Legislative Requirements Bookmark this In Lesson 1 you learned about the legislative requirements to pay duties and taxes. Some key points are: the Accounting for Imported Goods and Payment of Duties Regulations provide the time frame in which duties and taxes must be paid; for commercial goods that are released under Section 33 of the Customs Act, duty must be paid no later than the last business day of the month in which the billing period ends; the billing period begins on the 25th day of a month and ends on the 24th day of the following month; payment periods vary for certain goods such as bulk spirits, packaged spirits and packaged wine; and duty and taxes for bulk spirits, packaged spirits and packaged wine are generally paid when goods are packaged or removed from the excise warehouse. Take a few minutes now and answer the following questions to see how much you have learned about the legislative requirements to pay duties and taxes.
Module 21: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
2 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Payment Procedures Bookmark this In Lesson 2, you will learn about the manner in which importers and customs brokers determine the amount of duties and taxes owing and how payment is made.
Rationale If you are responsible for facilitating the payment of duties and taxes on behalf of a client or your employer, you will need to know how to interpret the statements of account issued by CBSA and how to remit any duties and taxes http://cscb.ca/print/book/export/html/182769
112/118
10/1/2015
201516 CCS Course Part 3
that are owing.
Lesson Objective Lesson 2 will provide information on statements of account and payment procedures.
Topic 1: Daily K84 Bookmark this
Daily K84 Form K84 is issued by CBSA on a daily and monthly basis to those who have posted security for release of goods prior to the payment of duties and taxes. Both daily and monthly K84s are issued in hard copy at either a central payment office or at the customs office where the B3 was received. The daily K84 summarizes the accounting transactions that were accepted by CBSA on the previous day. The transaction number is shown as well as the office of release. For customs brokers, the K84 information is also sorted by importer name. Earlier you learned about the ways that a customs broker can reduce the amount of security required for the release of goods prior to the payment of duties and taxes. One of the ways is to have clients obtain their own security and make their payments for duties and taxes directly to the Receiver General for Canada. For clients who have obtained their own security, a separate K84 page is generated for the customs broker. In order to identify these clients, "I" (for "importer") must be indicated in field 5 of the B3. Customs brokers have automated systems in place that keep track of daily K84s.
Topic 2: Monthly K84 Bookmark this On the secondlast business day of the month, CBSA issues a monthly K84. This K84 provides a summary of all daily K84s processed during the payment period, that is, from the 25th day of the previous month to the 24th day of the current month, inclusive. The monthly K84 includes the total amount of duties and taxes owing, any late accounting penalties, late transaction interest payments, and any interim payments of duties and taxes made during that period. The monthly statement is provided to the importer or customs broker whose account security number was used when accounting for the goods. Importers and brokers who present accounting documents using EDI receive both a hard copy and EDI version of the K84. If there are discrepancies in the information on the K84, the hard copy will take precedence.
Topic 3: Payment Bookmark this For those who do not have release prior to payment security, duties and taxes can be paid using any of the following: U.S. or Canadian cash, certified cheque (up to $25 million), money order, or traveller's cheque; debit cards, in some locations; http://cscb.ca/print/book/export/html/182769
113/118
10/1/2015
201516 CCS Course Part 3
Visa, MasterCard or American Express (AMEX) credit cards for amounts up to $500; uncertified cheques, including U.S. uncertified cheques, up to $2,500.00, payable to the Receiver General for Canada for payment of duties and taxes if the following conditions are met: the company's business number or a major credit card number appears on the cheque. If a credit card number is provided, the CBSA may charge the amount to the card if the financial institution does not honour the cheque. If the company's business number is on the cheque, CBSA may collect payment by offsetting a refund pending for a GST, Source Deduction, or Corporate Tax claim, if the cheque is not honoured; a client has not had more than one cheque returned due to nonsufficient funds (NSF) (over a one year period). If a cheque has been returned NSF, and the CBSA Regional Accounts Receivable Unit has confirmed that the amount owing has been paid or that no liens are outstanding; the payment is not for a penalty or made under the terms of release for seized goods; however, uncertified cheques will be accepted for the release of a seized conveyance; and the cheque is not written by or payable to a third party. If any of the uncertified cheque conditions are not met, CBSA may accept uncertified cheques for up to $500.00.
Topic 3: Payment (cont. 2) Bookmark this For those who have release prior to payment security, duties and taxes can be paid using: U.S. or Canadian cash; certified cheque or money order, payable to the Receiver General for Canada; uncertified cheque; and debit cards in some locations. Payments of monthly K84s must be received by CBSA by 4:30 local time on the last business day of the month. Importers who have obtained their own security and are transacting business using the account security number of a customs broker may pay duties and taxes with: a cheque made payable to the Receiver General for Canada at any CBSA office; a cheque made payable to the Receiver General for Canada and given to their customs broker for submission to the CBSA; or a cheque made payable to the customs broker, who will remit funds to CBSA. Note that if the broker does not remit funds to CBSA, the importer remains liable for the payment of duties and taxes.
Topic 3: Payment (cont. 3) Bookmark this Important! Account security holders may not pay duties and taxes with credit cards. Another way in which a customs broker can reduce the amount of security required for release of goods prior to payment is to have a GST letter in place with his client. The GST letter indicates that the client is responsible for the payment of GST on imported goods. Importers with a GST letter can provide a cheque for GST payable to the Receiver General for Canada either to their customs broker or directly to CBSA. The customs broker may short remit the amount owing on the monthly K84 by the amounts of GST payable by his clients using the GST option. This means that customs may detain goods until monies owing to them are paid. http://cscb.ca/print/book/export/html/182769
114/118
10/1/2015
201516 CCS Course Part 3
Interim Payments Customs brokers and importers may also make payments at any time during the billing period, before the monthly K84 is issued. This will reduce the amount of security required for release prior to payment privileges.
Lesson 2 Summary: Payment Procedures Bookmark this Lesson 2 explained how importers and customs brokers determine the amount of duties and taxes owing and how payment is made. Key points of the lesson include: CBSA issues daily and monthly K84s; Daily K84s summarize the accounting documents that were accepted by CBSA on the previous day; Monthly K84s are issued on the secondlast business day of the month; A monthly K84 includes the total amount of duties and taxes owed, any late accounting penalties, late transaction interest payments, and any interim payments of duties and taxes made during that period; In all cases, duty and taxes can be paid with U.S. or Canadian cash, certified cheque, money order, or traveller’s cheque; In some cases, debit cards may be used to pay duties and taxes; Visa, MasterCard and American Express (AMEX) credit cards can be used in some locations; however, account security holders cannot pay by credit card; and If certain conditions are met, uncertified cheques can be used. Now take some time to answer some questions about the payment of duties and taxes.
Module 21: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
3 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Penalties Bookmark this In this lesson you will learn about penalties assessed by CBSA when duties and taxes are not paid by the legislated time frame.
Rationale You should be aware of penalties assessed for late payment so that you can advise clients or your employer should delays occur in paying. http://cscb.ca/print/book/export/html/182769
115/118
10/1/2015
201516 CCS Course Part 3
Lesson Objective Lesson 3 will explain the penalties that are in place for late accounting.
Topic 1: Penalties Bookmark this For K84s that are paid after their due date, interest will apply to the outstanding balance. Interest is applied at the specified rate. Interest starts to be calculated on the calendar day immediately following the due date for the statement, and continues up to and including the date the balance is paid in full. Contravention C336 is issued when the K84 payment is late. This contravention is reproduced on the next screen.
Topic 2: Penalties (cont. 2) Bookmark this No.
C336
Contravention
Person failed to pay duties on goods accounted for under subsections 32(2) and 32(3) of the Customs Act.
Penalty
$100
Penalty Basis Per instance
Regulation
Customs Act, subsection 33(2)
Memoradum D
D1715, Registration, Accounting and Payment for Commercial Goods
Other References
D1165, Interest and Penalty Provisions – Determinations and ReDeterminations,Appraisals and ReAppraisals, and Duty Relief Accounting for Imported Goods and Payment of Duties Regulations
Noncompliance occurs and a penalty is assessed against an importer when: the importer has their own account security and fails to pay their K84 in full by the date specified on the K84; their broker shortremits their K84 when the importer uses the Importer Direct Security or GST Direct Payment Options. In these situations, brokers must have provided their central payment office with the Option Agreement and HQ acknowledgment. The penalty is applied against the importer indicated on the customs broker's reconciliation sheet. Noncompliance occurs and a penalty is assessed against a broker when: http://cscb.ca/print/book/export/html/182769
116/118
10/1/2015
201516 CCS Course Part 3
the broker does not pay their K84 in full by the date specified on the K84; the broker only partially pays their K84 (i.e. shortpays, not short remits). Penalty is applied against the broker's business number. In addition to the penalty, a K23 is still issued as a result of a latepayment on a K84. There will not be an additional penalty for the late payment of the K23. Guidelines
Noncompliance occurs and a penalty is assessed by CSA compliance manager against a CSA importer when: the total Revenue Summary Form (RSF) amount has not been remitted to a financial institution within the prescribed time limits.
If RSF received, but no payment received at financial institution, the CSA compliance manager will contact importer to determine if payment has been made at a CBSA office. No penalty should be assessed in cases where: no interim payment (subject to late payment interest only); or payment made to CBSA office by last business day of month. The following should be considered prior to issuing C336: verify if there was a notice issued by the Assessment Unit (HQ) to allow for late payment of the K84 without the interest or penalties in certain months of the year, and determine whether or not the procedures in the notice were followed properly; verify if a payment was made at another CBSA office. Failure to remit duties, taxes, interest charges, and penalties owing to customs directly to financial institution, see C251. Failure to provide the RSF to customs in the prescribed manner or within the prescribed time, see C250.
Lesson 3 Summary: Penalties Bookmark this Lesson 3 showed you that penalties and interest are applied when duties and taxes are not paid within the legislated time frame. Key points in this lesson are: interest applies to the outstanding balance when duties and taxes are not paid in full; interest is applied at the specific rate; interest starts to be calculated on the calendar day immediately following the due date for the statement, and continues up to and including the date the balance is paid in full; and the penalty for late payment is $100.00 per instance. Now take a few minutes to answer some questions about penalties for late payment.
Module 21: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
2 Unlimited Always 60 % Allowed
http://cscb.ca/print/book/export/html/182769
117/118
10/1/2015
201516 CCS Course Part 3
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 21 Summary: Payment of Duties Bookmark this In Module 21 you learned about the final part in the process of importing commercial goods the payment of duties and taxes. You learned about the legislative requirements to pay duties and taxes, how to remit duties and taxes to CBSA, and the consequences of late payment. Following is a short quiz on Module 21.
Module 21: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz Source URL (modified on 20150930 15:18): http://cscb.ca/repository/201516ccscoursepart3
http://cscb.ca/print/book/export/html/182769
118/118
10/1/2015
201516 CCS Course Part 4
Published on CSCB National Office (http://cscb.ca) Home > Part 4
201516 CCS Course Part 4 Bookmark this
Introduction to Part 4 Part 4 of the CCS course includes the following 6 modules: 22. Duty Relief 23. Duty Deferral Program 24. Adjustments After Payment 25. Exporting From Canada 26. Compliance 27. Supply Chain Security and Trade Facilitation These modules provide information related to programs that relieve or reduce the amount of duty payable, show you how to correct accounting documents and explain the export process. Last, the issues of security and compliance are introduced. It is recommended that you view these modules sequentially. Selfchecks and quizzes are included. On July 28, 2016, you will be provided with information on how to access the final test on the contents of Part 4, which must be completed by August 11, 2016. Responses must be submitted by 2 p.m. EDT (for example, 11 a.m. PDT in Vancouver and 3 p.m. ADT in Halifax). Once you access the test, please print a copy for your records. You will need a copy when it comes time to study for the final examination and the test will not be available after the deadline date for submission. The result of this test is worth 5% of your final mark. The final examination will be held on Saturday, September 24, 2016 and is worth 80% of your final mark. You will be contacted at least two weeks prior to September 24 with details on where you will write the final examination. If we have not contacted you by September 10, please send an email to
[email protected]
Module 22: Duty Relief Bookmark this Many goods imported into Canada, even those imported temporarily, are subject to duties and taxes. When we talk about duty relief, we are referring to the nonpayment of duty that is ordinarily payable on imported goods. In this module, you will learn about specific circumstances under which the importer is not obligated to pay the duty that would normally apply. We will examine Canadian goods that are returned to Canada after having been exported, goods that were exported from Canada for repairs and are returned, and alterations and work done on exported goods while outside of Canada. We will study how goods are treated when they are returning from countries with which Canada has a trade agreement after having been repaired. Finally, we will look at how these goods are accounted for.
Module Objective As a CCS, you need to be aware that certain conditions allow for duty relief. You need to know how to account for goods http://cscb.ca/print/book/export/html/182986
1/107
10/1/2015
201516 CCS Course Part 4
eligible for duty relief and the differences between documentation for goods imported from our trading partners and the documentation required for goods coming from other countries.
Lesson 1: Canadian Goods Returned Bookmark this In this lesson, you will learn about the conditions under which imported goods are eligible for duty relief when they return to Canada after having been exported. Under certain conditions, these goods qualify for duty relief.
Rationale As a CCS, you will have to recognize when goods may be classified as Canadian goods returned. If you are able to identify conditions for duty relief, know what documents are required, and understand what tariff classification to use, your client will be able to avoid paying duty needlessly.
Lesson Objective At the end of this lesson you should be able to name the tariff items and tax status that apply to Canadian goods returned. You should also be familiar with the documentation required.
Topic 1: Canadian Goods Returned Bookmark this The expression "Canadian goods returned" may be interpreted as meaning "all goods grown, produced or fabricated in Canada, exported from Canada and subsequently returned". However, to enable the correct administration and interpretation of the Customs Tariff, many departures are made from this strict interpretation. In this lesson, we will deal with the reimportation of goods exported from Canada and returned without having been enhanced in value or improved in condition, or subjected to any other type of modification while abroad. There are two tariff items which provide for the duty free importation of goods that have previously been exported from Canada: 9813.00.00 and 9814.00.00. The last two digits of the tariff classification, known as the statistical suffix, provide a bit more information about the item being imported. The statistical suffix depends on the classification of the goods in chapters 1 97.
Topic 2: Tariff Items 9813.00.00 and 9814.00.00 Bookmark this
Tariff Item 9813.00.00 Tariff item 9813.00.00 is reproduced below: Goods, including containers or coverings filled or empty, originating in Canada, after having been exported there from, if the goods are returned without having been advanced in value or improved in condition by any process of manufacture or other means, or combined with any other article abroad. For the purpose of this tariff item: a) goods on which a refund of customs duty or drawback of customs duty has been made shall not be classified under this tariff item except upon payment of the customs duty equal to the refund or drawback allowed; and b) goods manufactured in bond or under excise regulations in Canada and exported shall not be classified under this tariff item except upon payment of the customs duty to which they would have been liable had they not been exported from Canada. Part (a) is simply saying that if duty on the goods has already been refunded or repaid, then the goods cannot be imported http://cscb.ca/print/book/export/html/182986
2/107
10/1/2015
201516 CCS Course Part 4
on a duty free basis as Canadian goods returned under tariff item 9813.00.00. Part (b) states that exported goods that are subject to excise duty but, because they were exported did not have excise duty collected, are not subject to reentry into Canada under 9813.00.00.
Topic 2: Tariff Items 9813.00.00 and 9814.00.00 (cont. 2) Bookmark this
Tariff Item 9814.00.00 Tariff 9814.00.00 is reproduced below: Goods, including containers or coverings filled or empty, which have once been released and accounted for under Section 32 of the Customs Act and have been exported, if the goods are returned without having been advanced in value or improved in condition by any process of manufacture or other means, or combined with any other article abroad. For the purpose of this tariff item: a) goods on which a refund of customs duty or drawback of customs duty has been made shall not be classified under this tariff item except upon payment of the customs duty equal to the refund or drawback allowed; and b) goods manufactured in bond or under excise regulations in Canada and exported shall not be classified under this tariff item except upon payment of the customs duty to which they would have been liable had they not been exported from Canada. The provisions of tariff item 9814.00.00 are basically the same as tariff item 9813.00.00, except that the goods of tariff item 9814.00.00 are not of Canadian origin. Rather, the goods were imported into Canada, accounted for in accordance with Section 32 of the Customs Act, subsequently exported from Canada and reimported into Canada at a later date, not having been enhanced in value or improved in condition while abroad.
Topic 2: Tariff Items 9813.00.00 and 9814.00.00 (cont. 3) Bookmark this
Containers Section 129 of the Customs Tariff states that the Minister of Public Safety and Emergency Preparedness may permit the free importation of nonoriginating coverings and containers, under tariff item 9813.00.00 or 9814.00.00, as long as he is satisfied that a similar quantity of usable containers has been exported. The process described above provides for the operation of the "container bank". Container banks are defined as: An inventory of containers or similar containers that is based on the maximum quantity or value of each type of a company's container actually in Canada during a period of time mutually agreed upon between the company and local CBSA officials, where, unless exempted under the Excise Tax Act, the tax payable on the containers pursuant to that Act has been paid and where the containers: have been accounted for under the Customs Act and released, or originated in Canada. In order to operate a container bank, a company must apply to CBSA for authorization.
Topic 3: Tax Status Bookmark this Goods that are classified under headings 98.13 or 98.14 may qualify for an exemption from GST at time of import. Code 66 is the exemption code quoted on the import document for eligible goods. http://cscb.ca/print/book/export/html/182986
3/107
10/1/2015
201516 CCS Course Part 4
Goods classified under headings 98.13 or 98.14 are subject to GST, if, prior to importation, they were supplied: i) outside of Canada by way of sale; ii) outside of Canada by way of lease, licence or similar arrangement; or iii) in Canada in circumstances to which Part V of Schedule VI (Supplies/ZeroRated Exports) applies. Let's clarify each of the preceding situations: i) When a Canadian company sells goods to a nonresident and the goods are delivered to the nonresident outside of Canada, the goods are not subject to GST. However, if the goods return to Canada, they are subject to GST at time of importation. ii) If the goods are exported by the owner for lease outside of Canada and reimported by the same owner at the end of the lease, the goods are not subject to GST. However, if the goods are imported into Canada by someone other than their owner, GST applies. These circumstances are similar to those in i), however, it covers goods that are leased, licensed or part of a similar arrangement. iii) The third situation refers to exported goods, all of which are zerorated. If a Canadian company exports goods which are later returned to Canada, GST applies. Containers that qualify for entry under heading 98.13 or 98.14 are exempt from GST as per item 9 of Schedule VII of the Excise Tax Act.
Topic 4: Proof of Export Bookmark this In addition to the usual customs documents required, the importer should be in possession of proof of export from Canada when using tariff items 9813.00.00 and 9814.00.00. Such proof may be in the form of: Canadian customs documents verifying the goods were exported; transportation company documents, such as a bill of lading or freight invoice; customs accounting documents of a foreign country; or a declaration by the importer/exporter supported by commercial documentation identifying the goods as having originated in Canada or as having been previously imported. Proof of export does not have to be provided at the time the request for release is made; however, it must be available to CBSA upon request.
Lesson 1 Summary: Canadian Goods Returned Bookmark this In this lesson you learned about Canadian goods returned. You now have a better understanding of tariff items 9813.00.00 and 9814.00.00 and the tax status of Canadian goods returned. You also understand that proof of export is critical to receive the benefits of these tariff items. Key points covered in this lesson include: There are two tariff items which provide for the duty free importation of goods that have previously been exported from Canada: 9813.00.00 and 9814.00.00. Tariff item 9813.00.00 is for goods that have originated in Canada. Tariff item 9814.00.00 is for goods that have been imported into Canada (duty paid) and exported. In order to use tariff items 9813.00.00 and 9814.00.00, the returned goods must not have been enhanced in value or improved in condition, or had any other type of modification while outside of Canada. The last two digits of the tariff classification number provide additional details about the imported goods. Containers may be imported under tariff items 9813.00.00 and 9814.00.00 as long as a similar quantity of reuseable containers are exported. GST is exempt on certain qualifying goods of headings 98.13 and 98.14. Code 66 is the GST code used on accounting documents for goods of headings 98.13 and 98.14 that are eligible for the GST exemption. Take few minutes to answer the questions on the following screens to see how much you have learned.
http://cscb.ca/print/book/export/html/182986
4/107
10/1/2015
201516 CCS Course Part 4
Module 22: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Canadian Goods Abroad Bookmark this In this lesson you will learn about the entry process for goods that have been exported for repair or modification and returned to Canada. This module will also discuss the remission of a portion of the duties ordinarily payable on these goods.
Rationale In your job as a CCS, you may be responsible for completing the documentation for goods that are returning to Canada after having been exported for repair or modification and you will need to know how to account for these goods.
Lesson Objective At the end of this lesson, you will be aware of duty relief that may allowed on goods that are exported for repairs or modification and the documentation required.
Topic 1: Canadian Goods Abroad Bookmark this For customs purposes, Canadian goods abroad refers to the practice of exporting goods from Canada in order that they be repaired or modified, or have parts added to them, while outside of Canada. For some goods, it is possible that there is no local expertise that can perform the necessary repairs or modifications. And, in other situations, the repairs or modifications could be performed in Canada, but for practical reasons are not. Perhaps the site where the goods could be repaired is not within a reasonable distance of the goods or the parts to be added to the goods are not available in Canada. For these reasons, goods are often exported from Canada for the purpose of being repaired or modified. When these goods are returned to Canada, they are obviously not in the same state as when they left, and therefore, not eligible for entry under tariff items 9813.00.00 or 9814.00.00. However, the goods may qualify for duty relief, usually with the provision that the additions or repairs could not have been done in Canada and other specific conditions are met.
Topic 2: Remission Bookmark this http://cscb.ca/print/book/export/html/182986
5/107
10/1/2015
201516 CCS Course Part 4
In accordance with Section 101(1) of the Customs Tariff, a remission of a portion of the duties ordinarily payable may be granted on certain goods exported and subsequently imported. Remission may be granted where: i) the returned goods were repaired outside Canada after being exported for the declared purpose of being repaired, (subparagraph 101(1)(a)); ii) equipment was added to the goods outside of Canada, (subparagraph 101(1)(b)); or iii) the goods were the product of Canada and work was done outside Canada on the goods, (subparagraph 101(1)(c)).
Lesson 2 Summary: Canadian Goods Abroad Bookmark this In this lesson you learned that when goods are exported from Canada and imported with their value increased due to an addition or repair, they may qualify for relief if the additions or repairs could not have been practically done in Canada. Key points covered in this lesson include: Canadian goods abroad refers to the practice of exporting goods from Canada in order that they be repaired or modified, or have parts added to them, while outside of Canada. There are three situations where duty is relieved under the Canadian goods abroad provisions. Section 101(1) of the Customs Tariff lists these situations: the goods were exported for repair; the goods were exported so that equipment could be added to them; or, the goods were the product of Canada and exported so that work could be done to them. Take few minutes to answer the questions on the following screens to see how much you have learned about Canadian goods abroad.
Module 22: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Goods Exported for Repair Bookmark this In Lesson 2 you were introduced to the Canadian Goods Abroad Program. In this lesson we will be examining in greater detail the process for imported goods that have been exported from Canada for repair.
Rationale In your job as a CCS, you need to be able to decide if goods that are returned to Canada after having been exported for repair qualify for duty relief. And, if they do qualify, you will have to know the amount of relief they are entitled to. http://cscb.ca/print/book/export/html/182986
6/107
10/1/2015
201516 CCS Course Part 4
Lesson Objective At the end of this lesson you will understand when Canadian goods shipped abroad for repair qualify for duty relief and what portion of the duty is eligible for relief.
Topic 1: Requirements for Qualifying for Relief Bookmark this This lesson provides more detail on subparagraph 101(1)(a) of the Customs Tariff. This section covers goods that are exported from Canada for the purpose of being repaired. Goods exported for repair may be entitled to relief from the payment of duties on the Canadian portion of goods where the goods: were exported from Canada for the purpose of being repaired; and, are returned to Canada within one year. Permission must be granted in order for duty to be relieved on the Canadian portion of the goods that are returning after having been repaired. Note that where the goods are duty free there may not be need to request permission to have repairs performed outside of Canada. Situations where permission is not necessary are elsewhere in this course. In order to have the duty relieved on the Canadian portion of repaired goods, CBSA must be satisfied that the repairs could not be done in Canada. This evidence could include proving the repair facilities in Canada that are capable of performing the repair are located far away; a strike has occurred and repair specialists are unavailable; or the foreign facility has proprietary rights to all repairs.
Topic 1: Requirements for Qualifying for Relief (cont. 2) Bookmark this If CBSA has reason to believe that repair facilities exist in Canada, the importer is advised that the goods will be subject to duty on their full value (Canadian portion plus cost of repairs). Upon the return of the repaired goods to Canada, the customs or commercial invoice must indicate the full value of the goods, that is, the value of the goods at time of export value plus any value added while outside of Canada. A statement on the invoice should show the value of the repair, addition, or work done abroad and include any associated production costs such as materials, direct labour, direct overhead, and profit charged by the foreign repair facility. These costs must be indicated whether or not there is a charge for the services or if they are performed under warranty.
Topic 1: Portion Eligible for Relief (cont.3) Bookmark this The amount of tax relief will depend on whether or not the repairs were done under warranty. Warranty Repairs – Tax Status Good that are returned to Canada after they have been repaired under warranty are not subject to GST. This is according to paragraph 3(j) of the NonTaxable Imported Goods (GST/HST) Regulations. NonWarranty Repairs – Tax Status When repairs done outside of Canada have not been performed under warranty, tax is payable only on the repair cost as long as other conditions are met. The conditions that must be met are found in paragraph 13 of the Value of Imported Goods (GSTT/HST) Regulations. Essentially this paragraph means that tax is not payable on the Canadian portion of the goods if full tax has been paid on the goods at one time and there have not been any refunds or drawback of the tax paid. If this condition is not met, tax is payable on the full cost; that is, the cost of the Canadian portion of the goods plus the cost of repair.
Topic 2: Accounting http://cscb.ca/print/book/export/html/182986
7/107
10/1/2015
201516 CCS Course Part 4
Bookmark this For dutiable goods eligible for the Canadian Goods Abroad Program under warranty, a twoline entry is prepared. The first line shows the value of the goods, excluding the cost of repair. Special authorization code 98010101 is indicated in field 26. This code relieves the payment of duty and tax. The second line shows the same tariff classification and the value of the repairs only. Since the goods are under warranty, GST code 66 is indicated. Duty is payable on the cost of repairs. For dutiable goods eligible for the Canadian Goods Abroad Program and not under warranty, a twoline entry is prepared. The first line shows the value of the goods, excluding the cost of repair. Special authorization code 98010101 is indicated in field 26. This code relieves the payment of duty and tax. The second line shows the same tariff classification and the value of the repairs only. Since the goods are not under warranty, duty and GST are payable.
Lesson 3 Summary: Goods Exported for Repair Bookmark this In this lesson you learned that if goods are exported from Canada for the purpose of repair, they may be eligible for duty relief under certain circumstances. Key points covered in this lesson include: goods may be entitled to duty relief if they were exported for repair and returned to Canada within one year; CBSA must be satisfied the goods could not be repaired in Canada; if CBSA is not satisfied, they may demand proof from the importer that the repairs could not have been done in Canada; importers who cannot provide proof that repairs could not have been done in Canada will have to pay duty on the full value of the goods, including the cost of repairs, when the goods return to Canada; a fully completed invoice, showing the cost of repairs, is required when the repaired goods are returned to Canada; and the invoice must also indicate whether or not the repair was performed under warranty. Take few minutes to answer the questions on the following screens to see how much you have learned about goods exported from Canada for repair.
Module 22: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. Start quiz
Lesson 4: Additions Made Outside of Canada Bookmark this Canadian goods or goods that have had duty paid upon them can be exported in order to have additions made to them. These additions include parts, materials, and equipment. This lesson will discuss the conditions under which these goods qualify for duty relief when returning to Canada, and the extent of the relief.
Rationale In your job as a CCS, you must be able to determine if goods qualify for duty relief when they return to Canada after having http://cscb.ca/print/book/export/html/182986
8/107
10/1/2015
201516 CCS Course Part 4
additions made to them.
Lesson Objective At the end of this lesson, you will understand the conditions under which Canadian goods exported for additions are eligible for duty relief and to what extent.
Topic 1: Requirements for Qualifying for Relief Bookmark this Pursuant to subparagraph 101(1)(b) of the Customs Tariff, Canadian goods, and goods that have been duty paid into Canada and subsequently exported for the purpose of having additions made to them while outside Canada, may be entitled to a partial relief of duty and taxes upon their return to Canada. Approval for use of this subsection of the tariff must be obtained prior to importation. The application must be submitted three months before the goods are to be exported. This is done by writing to the closest CBSA office, providing: a detailed description of the equipment and the proposed additions in order that CBSA may search domestic producers and manufacturers to evaluate if it is practical to add the equipment in Canada; and names, addresses, and telephone numbers of Canadian companies contacted to do the additions and copies of the rejected bids received from Canadian companies; copies of work orders or contacts with the foreign supplier of the equipment that will be added; and authorization to share information with other government departments. Duties and taxes are payable on the value of the article or equipment added and the cost of having the article or equipment added to the goods. Relief will not be granted on articles that cannot be identified as Canadian goods at the time of importation or reimportation. Proof of export or previous duty payment may be requested by CBSA.
Topic 2: Portion Eligible for Relief Bookmark this Where goods are dutiable when classified in chapters 1 to 97 of the tariff, the accounting document must indicate two lines. The first line shows the Canadian value of the goods at time of export. Special authorization code 98030101 is entered in field 26 and 5 is indicated in field 35, as the rate of GST. The special authorization code provides relief from duty and GST. The second line shows the value of the article or equipment that was added while outside Canada; duty and tax is payable on this amount. Where the goods are duty free when classified in chapters 1 to 97 of the tariff, the accounting document must also indicate two lines. The first line shows the Canadian value of the goods at time of export. In order to provide relief from the GST, code 50 is indicated in field 35. The second line shows the value of the article or equipment added to the goods; only GST is payable, since the goods are duty free.
Lesson 4 Summary: Additions Made Outside of Canada Bookmark this In this lesson you learned that if goods are exported from Canada for the purpose of having equipment added to them, duty relief may be permitted. Key points covered in this lesson include: Goods exported for the purpose of having an article or equipment added to them may be eligible for duty relief upon their return to Canada. Approval for duty relief under these circumstances must be obtained prior to importation. The following steps apply: the importer must supply CBSA with a description of the goods and the proposed additions; http://cscb.ca/print/book/export/html/182986
9/107
10/1/2015
201516 CCS Course Part 4
the importer must supply CBSA with the names, addresses and telephone numbers of the Canadian companies contacted to do the additions; CBSA will determine if the addition could have been done in Canada; and CBSA will advise the importer of the decision. Proof of export or previous duty payment may be requested by CBSA at the time of importation. A copy of the remission authorization may be requested by CBSA. Where the goods are dutiable when classified in chapters 1 to 97 of the tariff, the accounting document indicates two lines: the first line shows the Canadian value of the goods at the time of export; a special authorization code 98030101 is used on the accounting document and provides relief from the duty and from the GST; the second line shows the value of the article or equipment that was added while outside Canada and duty and tax is payable on this amount. Where the goods are duty free when classified in chapters 1 to 97 of the tariff, the accounting document must also indicate two lines: the first line shows the Canadian value of the goods at the time of export; to provide GST relief, GST code 50 is used in field 35 of the B3; and the second line shows the value of the article or equipment added to the goods, only GST is payable on this amount. Take few minutes to answer the following questions to see how much you have learned about the duty relief of goods exported to have equipment added to them.
Module 22: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 5: Goods Exported from Canada for Additional Work Bookmark this This lesson will discuss the final item mentioned in subparagraph 101(1) of the Customs Tariff work done on Canadian goods outside of Canada. This work does not include repairs or goods that have been exported for the purpose of having additions made to them.
Rationale In your job as a CCS, you need to know how to differentiate between repairs, equipment added and "work done" outside Canada. You must be able to determine if imported goods qualify under one of these categories.
Lesson Objective At the end of this lesson you will understand what is meant by goods exported from Canada for additional work. You will be familiar with the requirements, and the conditions of duty relief for these goods upon their return to Canada.
http://cscb.ca/print/book/export/html/182986
10/107
10/1/2015
201516 CCS Course Part 4
Topic 1: Requirements for Relief Bookmark this Goods referred to in subparagraph 101(1)(c) of the Customs Tariff are those that have been exported from Canada in order to have additional work done to them. Additional work done to a product includes, but is not limited to, manufacturing, assembling, coating, embossing, plating or printing. In order to qualify under 101(1)(c), the importer must prove that it is impracticable to do the work in Canada and that the exported goods are the product of Canada. Before using this remission, an application, including a completed questionnaire, must be forwarded to CBSA three months before the exportation of the goods. A copy of the questionnaire is available in D821, Appendix B. The application must include satisfactory evidence that it would not be practicable to do the work in Canada and that there are plans to construct or expand facilities in Canada to perform this work. The applicant must also include a list of Canadian companies that they have contacted with respect to performing the additional work. In order for the exported goods to qualify as Canadian goods, they must meet the rules of origin, as per Section 16 of the Customs Tariff.
Topic 2: Portion Eligible for Relief Bookmark this Where the goods are dutiable when classified in chapters 1 to 97 of the tariff, the accounting document must indicate two lines. The first line shows the Canadian value of the goods at time of export. Special authorization code 98040101 is entered in field 26 and 5 is entered in field 35, as the rate of GST. The special authorization code provides relief from the duties owing as well as the GST on this value. The second line shows the value of work that was done to the goods while outside Canada; duty and tax is payable on this amount. Where the goods are duty free when classified in chapters 1 to 97 of the tariff, the accounting document must also indicate two lines. The first line shows the Canadian value of the goods at time of export. In order to provide relief from the GST, code 50 is indicated in field 35. The second line shows the value of work done to the goods; GST is payable on this amount.
Topic 2: Portion Eligible for Relief (cont. 2) Bookmark this The differences between subparagraphs 101(1)(a), (b) and (c) are: 101(1)(a) The goods were repaired outside Canada after being exported for the declared purpose of being repaired. The origin of the goods is immaterial. 101(1)(b) Equipment was added to the goods outside Canada. The origin of the goods is immaterial. 101(1)(c) The goods are the product of Canada and work was done outside Canada on the goods. The following chart should be helpful. Subparagraph Special Authority Code
Origin
Purpose for Export
GST Status
101(1)(a)
98010101
Immaterial
Repair
Payable on value of repair
101(1)(b)
98030101
Immaterial
Equipment added
Payable on value of article of equipment added
http://cscb.ca/print/book/export/html/182986
11/107
10/1/2015
201516 CCS Course Part 4
101(1)(c)
98040101
Canada Work done
Payable on value of work done to goods
Topic 3: Goods That Have Been Tested Bookmark this Goods exported for testing only and which are not adjusted, altered or enhanced in value in any way, regardless of whether a charge is made for the test, may be imported under the provisions of tariff items 9813.00.00 or 9814.00.00, provided drawback has not been claimed. Since these goods are goods imported in prescribed circumstances and under prescribed terms and conditions as provided for in Section 8 of Schedule VII of the Excise Tax Act, code 66 can be used to exempt them from the payment of GST. Prescribed goods are those included in the NonTaxable Imported Goods (GST/HST) Regulations.
Lesson 5 Summary: Goods Exported from Canada for Additional Work Bookmark this In this lesson you learned that if goods are shipped abroad to have work done on them, they may be eligible for duty relief upon their return to Canada. Key points covered in this lesson include: Goods exported from Canada for the purpose of having work done outside Canada may be eligible for a remission of duty upon their return to Canada. In order to use this remission, permission must be granted by CBSA. Importers must complete a CBSA questionnaire to request permission. The exported goods must be the product of Canada. The importer must prove it is impracticable to have the work done in Canada. Subparagraph 101(1) (c) differs from 101(1)(a) and 101 (1)(b) in that the origin of the goods is immaterial for 101(1) (a) and 101(1)(b). In addition, under 101(1)(c), the goods must be the product of Canada. Work done outside Canada under 101(1)(c) does not include repairs or the adding of equipment. Where the goods are dutiable when classified in chapters 1 to 97 of the tariff: the accounting document must indicate two lines; the first line shows the Canadian value of the goods at the time of export; a special authorization code 98040101 is shown on the first line of the B3; it remits both the duty and GST; the second line shows the value of the work that was done to the goods while outside Canada; duty and tax is payable on this amount. Where the goods are duty free when classified in chapters 1 to 97 of the tariff, the accounting document must indicate two lines; the first line shows the Canadian value of the goods at the time of export; to provide GST relief, GST code 50 is used in field 35 of the B3; and the second line shows the value of work done to the goods; duty and GST is payable on this amount. Goods that have been tested but not adjusted or enhanced may be imported under 9813.00.00 or 9814.00.00 as long as a drawback has not already been claimed. Take few minutes to answer the questions on the following screens to see how much you have learned about the duty relief for goods imported after having been exported to have work done on them.
Module 22: Lesson 5 SelfCheck Questions: Attempts allowed: Available: Pass rate:
4 Unlimited Always 60 %
http://cscb.ca/print/book/export/html/182986
12/107
10/1/2015
201516 CCS Course Part 4
Backwards navigation: Allowed To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 6: Goods Exported to Trading Partners for Repair or Alteration Bookmark this In this lesson you will learn about goods exported to Chile, Colombia, Costa Rica, Honduras, Israel or another CIFTA beneficiary, Jordan, Mexico, Panama, Peru or the United States for repair or alteration.
Rationale In your job as a CCS, you need to be familiar with tariff item 9992.00.00. You need to know what is special about this tariff item and how it only applies to goods that were exported for repair or alteration to countries with which Canada has a trade agreement.
Lesson Objective At the end of this lesson you will have learned about tariff item 9992.00.00, and how it applies to goods entering Canada from Chile, Colombia, Costa Rica, Honduras, Israel or another CIFTA beneficiary, Jordan, Mexico, Panama, Peru or the United States or after having been repaired or altered.
Topic 1: Goods Exported to Trading Partners for Repair or Alternation Bookmark this Goods that have been exported from Canada to Chile, Colombia, Costa Rica, Honduras, Israel or another CIFTA beneficiary, Jordan, Mexico, Panama, Peru or the United States for repair or alteration may be imported under tariff item 9992.00.00. This tariff item applies whether or not the repair is performed under a warranty and whether or not the repair or alteration could have been performed in Canada. The returned goods are subject to full customs duty relief. This tariff item reads as follows: Goods, regardless of the country of origin or tariff treatment, other than the goods of tariff item No. 9971.00.00, returned to Canada after having been exported to one of the countries listed below for repair or alteration in that country: Countries: Chile Colombia Costa Rica Honduras Israel or another CIFTA beneficiary Jordan Mexico Panama Peru United States Important! http://cscb.ca/print/book/export/html/182986
13/107
10/1/2015
201516 CCS Course Part 4
Note that neither the country of origin nor the tariff treatment of the goods is relevant. The tariff treatment quoted in field 14 of the accounting document is the one used for the country in which the repairs or alterations were performed. For example, a Swissmade watch exported from Canada for repair in the United States would be accounted for under tariff treatment 10 and not 2 when it returns to Canada. The country of origin in field 12 will show the applicable U.S. state code where the repair took place. The tariff classification noted on the accounting document is the relevant item from chapters 1 97, and “9992” is indicated in field 28. The value for duty is the cost of repairs or alterations only, and GST is calculated on this amount. However, if the repairs are made under warranty, the goods are nontaxable under paragraph 3(j) of the Nontaxable Imported Goods (GST/HST) Regulations and code 66 is quoted in field 35 of the B3.
Lesson 6 Summary: Goods Exported to Trading Partners for Repair or Alteration Bookmark this In this lesson you learned that if goods are imported from Chile, Colombia, Costa Rica, Honduras, Israel, or other CIFTA beneficiary, Jordan, Mexico, Panama, Peru or the United States after having been repaired or altered, they are subject to full customs duty relief. Key points covered in this lesson include: Tariff item 9992.00.00 applies to goods imported from Chile, Colombia, Costa Rica, Honduras, Israel, or other CIFTA beneficiary, Jordan, Mexico, Panama, Peru or the United States after having been repaired or altered. Under tariff item 9992.00.00, the tariff treatment is irrelevant. The tariff treatment quoted on the accounting document is the one used for the country in which the repairs or alterations were performed. Under tariff item 9992.00.00 the country of origin is irrelevant. The country of origin on the accounting document is the country or the applicable U.S. state where the repair took place. The tariff classification noted on the accounting document is the relevant item from chapters 1 – 97. "9992" is indicated in field 28, under “Tariff Code” on the accounting document. The value for duty is the cost of repairs or alterations only, and GST is calculated on this amount. If the repairs or alteration were performed under warranty, GST code 66 appears in field 35, under “Rate of GST” on the accounting document. Take few minutes to answer the questions on the following screens to see how much you have learned in this lesson.
Module 22: Lesson 6 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. Start quiz
Module 22 Summary: Duty Relief Bookmark this In this module you studied the duty relief on Canadian goods that are returned to Canada. Knowing when an importer is entitled to duty relief is as important as calculating the correct amount of duty. You continued your studies of the Customs Tariff by examining tariff items 9813.00.00, 9814.00.00 and 9992.00.00. http://cscb.ca/print/book/export/html/182986
14/107
10/1/2015
201516 CCS Course Part 4
Section 101 of the Customs Tariff was introduced. You will be referring to this section when accounting for goods that have been exported for repair, alteration or to have equipment added to them. Following is short test on what you have learned about duty relief.
Module 22: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 23: Duty Deferral Program Bookmark this Under certain circumstances, importers, producers and exporters can delay or defer the payment of duties on imported goods. This can be done by storing goods in a warehouse before entering the Canadian market for consumption, it could involve goods being exported in same condition as they were imported or consumed in the processing of other goods, or goods that are further manufactured in bond for foreign markets. The Duty Deferral Program was created to help Canadian businesses be more competitive by offering relief from most duties and taxes, whether or not their goods were manufactured in Canada. Companies or individuals may defer the payment of duties by participating in the Duty Deferral Program which includes the Duties Relief Program and the Bonded Warehouse Program. We will be discussing why companies might benefit from these programs and the requirements of each.
Module Objective As a CCS, you may be required to advise a client or your employer about the advantages of the Duties Relief or Bonded Warehouse Programs. For this reason it is important to study the requirements of each program.
Lesson 1: Duties Relief Program Bookmark this In this lesson, you will be introduced to the Duties Relief Program and its purpose and requirements.
Rationale As a CCS, knowing that such a program is available can be an advantage to your clients or your company.
Lesson Objective At the end of this lesson, you should be familiar with the rationale for the Duties Relief Program and what the requirements are for participating in this program.
Topic 1: Purpose of Duties Relief Program http://cscb.ca/print/book/export/html/182986
15/107
10/1/2015
201516 CCS Course Part 4
Bookmark this The Duties Relief Program alleviates the obligation to pay duties on imported goods that will eventually be exported either in the same condition or after being used, consumed, or expended in the processing of other goods. Why are companies allowed to defer the payment of duties? The intention of the program is to give Canadian businesses an opportunity to reduce costs, and have the same advantage as companies operating in foreign trade zones around the world. Companies are freed from the obligation to pay duty on goods that will be exported or on goods entering Canada that will be processed and exported. This allows "manufacturing inbond" for the export market. Furthermore, since the goods can be processed, repaired or displayed locally without payment of duty, Canadian businesses may be able to remain in Canada rather than move offshore. Whether a company needs to manufacture, repair, display or demonstrate imported goods, or the goods are needed for development or production in Canada, participation in this program means that there are no payments of customs duties, antidumping and countervailing duties, and excise taxes, other than the Goods and Services Tax (GST). Section 89 of the Customs Tariff allows for duty to be deferred at time of importation for imported goods that are: a) released and subsequently exported in the same condition in which they were imported; b) released, processed in Canada, and subsequently exported; c) released and directly consumed or expended in the processing in Canada of goods that are subsequently exported; d) released, if the same quantity of domestic or imported goods of the same class is processed in Canada and subsequently exported; or e) released, if the same quantity of domestic or imported goods of the same class is directly consumed or expended in the processing in Canada of goods that are subsequently exported.
Topic 2: Requirements Bookmark this To request participation in the Duties Relief Program, a K90 application must be completed. When completed, the application is submitted to CBSA. The information contained in the application is treated confidentially and is required for the approval process. Once authorized by CBSA, a unique licence number is issued. When importing goods under the Duties Relief Program, the licence number has to be placed in field no. 26, "Special Authority" of the B3. This number also identifies the importer as an eligible participant should they purchase goods domestically from another participant. This program will be of benefit to persons who presently, or will: a) import goods into Canada, b) receive goods imported into Canada, or c) export imported goods from Canada, and want to defer the payment of duties at the time of importation. The goods must be exported from Canada within four years of the date of release of the goods. In the case of imported spirits used to manufacture distilled spirits, the goods must be exported within five years.
Topic 3: Exporters of Processing Services Program Bookmark this While GST is not relieved under the Duties Relief Program, it can be relieved under the Exporter of Processing Services (EOPS) program. The EOPS program relieves GST at the time of importation if the goods will be processed and exported. The goods must be exported within four years. To qualify for this program, the importer must be a GST/HSTregistered company, he or she cannot own a property interest in the goods and cannot be closely related to the nonresident on whose behalf the work is being done. If you believe that your client or employer qualifies for EOPS, then you or they may wish to contact the Canada Revenue Agency to apply for GST/HST relief of nondutiable goods or contact CBSA for relief of duties and GST/HST by completing a Form K90, Duties Relief Application. All authorizations for relief from the payment of the GST/HST under the EOPS Program are valid for three years.
Lesson 1 Summary: Duties Relief Program http://cscb.ca/print/book/export/html/182986
16/107
10/1/2015
201516 CCS Course Part 4
Bookmark this In this lesson you learned about the Duties Relief Program. You learned its purpose and the requirements for participating in the program. Key points covered in this lesson include: The Duties Relief Program relieves the payment of duties on imported goods that will eventually be exported either in the same condition or after being used, consumed or expended in the processing of other goods. In most cases, under the Duties Relief Program, there is no payment of customs duties, antidumping and countervailing duties, or excise taxes. GST is not relieved under the Duties Relief Program. To request participation in the program, one must complete a K90 application. CBSA assigns a unique certificate number for those accepted in the program. When importing goods, the certificate number is placed in field no. 26, "Special Authority" of the B3. The certificate number identifies participants of the program should they purchase goods domestically from another participant. In general, goods must be exported from Canada within four years of the date of release of the goods. The EOPS program relieves GST at the time of importation on goods that will be processed and exported. You should now be familiar with the Duties Relief Program. Take few minutes to answer the questions on the following screens to see how much you have learned.
Module 23: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Customs Bonded Warehouse Program Bookmark this In this lesson, you will be introduced to the second option under the Duty Deferral Program: the Customs Bonded Warehouse Program.
Rationale As a CCS, familiarity with the Customs Bonded Warehouse Program will put you in a better position to advise your employer, importers or exporters on how to defer the payment of duty.
Lesson Objective At the end of this lesson you should be familiar with the purpose of the Customs Bonded Warehouse Program and the requirements to participate in the program.
Topic 1: Purpose of the Customs Bonded Warehouse Program http://cscb.ca/print/book/export/html/182986
17/107
10/1/2015
201516 CCS Course Part 4
Bookmark this Customs bonded warehouses are licensed by CBSA and operated by the private sector. Goods in a bonded warehouse are considered to be imported into Canada but not released. Imported and domestic goods destined for export may be placed in a bonded warehouse before they are exported. Bonded warehouse facilities provide for the complete deferral of customs duties, antidumping and countervailing duties, and excise duties and taxes, including the GST/HST. The deferral continues until the goods are removed from the bonded warehouse and either released for Canadian domestic consumption or exported. In general, goods must be removed from the bonded warehouse within four years of the date they were entered into the warehouse. Other goods, such as intoxicating liquor and tobacco products, have a fiveyear time limit. These limits can be extended if deemed necessary. All permits or certificates are required to be presented when the goods enter the warehouse. Prohibited goods, or restricted goods without permits, may not be entered into a bonded warehouse. An annual licensing fee applies. If the CBSA identifies a need for security during the processing of an application, security may also have to be posted based on the types of goods imported and the financial compliance profile of the importer.
Topic 2: Benefits Bookmark this The Customs Bonded Warehouse Program benefits persons who: import goods into Canada and wish to defer, for up to four years, the payment of duties until the goods are released for Canadian consumption; consolidate imported and domestic goods for export; perform certain operations on the goods while in the bonded warehouse; or import goods temporarily for display at conventions, exhibitions or trade shows. Both residents and nonresidents may operate a bonded warehouse. To apply to become an operator, one must complete Form E401, Application for Licence to Operate a Customs Bonded Warehouse and present it to the CBSA office closest to the warehouse.After reviewing the application, CBSA may request additional information and may visit the premises to review the record keeping and security systems. This is done to ensure the goods are secure and readily identifiable through the records.
Topic 3: Goods Entered for Display and Marking Bookmark this
Goods entered for display The Bonded Warehouse Program provides for the importation of goods for display, inspection, and exhibition that have been reported and documented to enter the bonded warehouse. This cannot include prohibited or restricted goods. These goods include products on display in the bonded warehouse, as well as goods which form part of the display such as stands, tables, backdrops, decorations, display booths, tents, and other housings or coverings.
Goods entered for marking There is a 90day time limit for goods for display at conventions and exhibitions and for marking purposes. This is available for the onetime event organizer and for the importer who has imported goods that are not marked according to the Marking of Imported Goods Regulations. There are provisions under the Customs Act for extensions of this time limit if it is deemed necessary.
Lesson 2 Summary: Customs Bonded Warehouse Program http://cscb.ca/print/book/export/html/182986
18/107
10/1/2015
201516 CCS Course Part 4
Bookmark this In this lesson you learned about the Customs Bonded Warehouse Program. You learned its purpose and the benefits of the program. Key points covered in this lesson include: Customs bonded warehouses are licensed by CBSA and operated by the private sector. Goods in a bonded warehouse are considered to be imported into Canada but have not been released. Bonded warehouse facilities provide for the complete deferral of customs duties, antidumping and countervailing duties, excise duties and taxes, including the GST. The Customs Bonded Warehouse Program provides for the importation of goods for display, inspection, and exhibition that have been reported and documented to enter the facility, other than prohibited or restricted goods. Both residents and nonresidents may operate a bonded warehouse. To apply to become an operator, one must complete Form E401, Application for Licence to Operate a Customs Bonded Warehouse. In general, goods must be removed from the bonded warehouse within four years of the date they were entered into the warehouse. All permits or certificates are required to be presented when the goods enter the warehouse. You should now be familiar with the second option of the Duty Deferral Program: the Customs Bonded Warehouse Program. Take few minutes to answer the questions on the following screens to see how much you have learned.
Module 23: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 23 Summary: Duty Deferral Program Bookmark this In this module you studied the Duty Deferral Program. You were introduced to the Duties Relief Program and the Customs Bonded Warehouse Program and the advantages of both. You learned the circumstances under which importers, producers, and exporters are allowed to either relieve or defer the payment of duties on imported goods. You became familiar with the requirements and time limits of each program. You also studied GST relief under the Exporter of Processing Services program. Following is short test on what you have learned about the Duty Deferral Program.
Module 23: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
6 Unlimited Always 60 % Allowed
http://cscb.ca/print/book/export/html/182986
19/107
10/1/2015
201516 CCS Course Part 4
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 24: Adjustments After Payment Bookmark this In many cases, adjustments must be made to accounting documents after duties and taxes have been paid. For example, you may find out that the goods received were not the goods that were ordered or that a tariff classification number used on an accounting document is incorrect. In some cases, the adjustment will result in a refund of duty, in some cases it will result in the payment of additional duty, and in some cases the result will be no change at all in the amount of duty. This module will also explain in which cases a failure to correct will result in a penalty.
Module Objective When you have completed this module you will be able to determine whether or not an accounting document must be adjusted, and if so, how.
Lesson 1: SelfAdjustments and Refunds Bookmark this In this lesson you will learn about the requirement to make adjustments to accounting documents after duties and taxes have been paid. You will learn when and why an adjustment is required, the legislative requirements and time limits for making adjustments, and the supporting documentation required.
Rationale As a CCS, your client or employer may advise you, or you may find out for yourself during a review, that an accounting document is not correct and requires adjusting.
Lesson Objective You will understand how to make adjustments to accounting documents after duties and taxes have been paid.
Topic 1: SelfAdjustments Corrections Bookmark this
SelfAdjustments The selfadjustment process applies to errors made in one of the following areas: origin, tariff classification, value for duty, or diversion, either of the enduse or enduser, of the imported goods. Selfadjustments may result in either a payment of additional duties or a refund of duties, or neither a payment nor refund of duties. Where there is neither a payment nor a refund, the selfadjustment is termed a revenue neutral correction.
Legislation When selfadjusting, form B2 is used. Later in this module you will see how to complete a B2. The B2 must include the http://cscb.ca/print/book/export/html/182986
20/107
10/1/2015
201516 CCS Course Part 4
legislative reference that allows the selfadjustment to be filed. Legislation regarding selfadjustments and refunds is found in the Customs Act and the Refund of Duties Regulations. In cases where money is owing to CBSA or the end result is revenue neutral, selfadjustments are filed under subsections 32.2 (1); 32.2(2); or 32.2(6) of the Customs Act. This type of selfadjustment is called a correction. In cases where a selfadjustment results in a refund, the selfadjustment is filed under subsections 74(1)(c.1); 74(1)(c.11); 74(1)(e); 74(1)(f) and sometimes 74(1)(g) of the Customs Act. Refunds may also be requested under other subsections of the Customs Act, including 74(1)(a); 74(1)(b); 74(1)(c); 74(1) (d); sometimes 74(1)(g); and 76. However, these are not considered selfadjustments since they do not deal with issues of origin, tariff, value, or end use.
Topic 1: Self Adjustments Corrections (cont. 2) Bookmark this SelfAdjustments (Corrections) Under Subsections 32.2 (1); 32.2(2); or 32.2(6) Subsection 32.2(1) An importer or owner of goods for which preferential tariff treatment under a free trade agreement has been claimed or any person authorized to account for those goods under paragraph 32(6)(a) or subsection 32(7) shall, within ninety days after the importer, owner or person has reason to believe that a declaration of origin for those goods made under this Act is incorrect, (a) make a correction to the declaration of origin in the prescribed manner and in the prescribed form containing the prescribed information; and (b) pay any amount owing as duties as a result of the correction to the declaration of origin and any interest owing or that may become owing on that amount. This section of the Customs Act means that if you have accounted for goods under a tariff treatment related to a free trade agreement, and later find that the tariff treatment used is not correct, you must correct the tariff treatment within 90 days of having "reason to believe" that the original declaration of origin is incorrect. The term reason to believe will be discussed later in this lesson. This is a selfadjustment (because it deals with origin) and a correction (since the end result is either a payment of duty or revenue neutral).
Topic 1: SelfAdjustments Corrections (cont. 3) Bookmark this Subsection 32.2(2) (2) Subject to regulations made under subsection (7), an importer or owner of goods or a person who is within a prescribed class of persons in relation to goods or is authorized under paragraph 32(6)(a) or subsection 32(7) to account for goods shall, within ninety days after the importer, owner or person has reason to believe that the declaration of origin (other than a declaration of origin referred to in subsection (1)), declaration of tariff classification or declaration of value for duty made under this Act for any of those goods is incorrect, (a) make a correction to the declaration in the prescribed form and manner, with the prescribed information; and (b) pay any amount owing as duties as a result of the correction to the declaration and any interest owing or that may become owing on that amount. This section of the Customs Act means that if you have accounted for goods under any tariff treatment other than a free trade tariff treatment, and later find that the tariff treatment used is not correct, you must correct the tariff treatment within 90 days of having reason to believe that the original declaration of origin is incorrect. This subsection also provides the legislative authority to correct the accounting document for goods that have been accounted for using the incorrect tariff classification or value, regardless of the tariff treatment, as long as the outcome is a payment of duty or is revenue neutral. This is a selfadjustment (because it deals with origin, tariff classification, or value) and a correction (since the end result is http://cscb.ca/print/book/export/html/182986
21/107
10/1/2015
201516 CCS Course Part 4
either a payment of duty or revenue neutral).
Topic 1: Self Adjustments Corrections (cont. 4) Bookmark this Subsection 32.2(6) (6) The obligation under this section to make a correction to a declaration of tariff classification includes an obligation to correct a declaration of tariff classification that is rendered incorrect by a failure, after the goods are accounted for under subsection 32(1), (3) or (5) or, in the case of prescribed goods, after the goods are released without accounting, to comply with a condition imposed under a tariff item in the List of Tariff Provisions set out in the schedule to the Customs Tariff or under any regulations made under that Act in respect of a tariff item in that List. This subsection is cited when imported goods have been diverted to a nonqualifying use or user as specified under a tariff item. For example, let’s say that goods were imported using the benefits of tariff code 9973. Tariff item 9973.00.00 reads: Articles and materials, excluding antifreezing preparations of heading 38.20, for use in the manufacture of threewheeled motorcycles. If it turns out that the goods were not used in the manufacture of threewheeled motorcycles, the accounting document must be adjusted. This is a selfadjustment (because it deals with the diversion of goods) and a correction (since the end result is either a payment of duty or revenue neutral).
Topic 2: Reason to Believe Bookmark this With respect to Section 32.2 of the Customs Act, reason to believe occurs when the importer has specific information regarding the origin, tariff classification, value for duty, or diversion of imported goods that gives him reason to believe that a declaration is incorrect. Once an importer has reason to believe, they are obligated to selfadjust. And, in order to avoid penalties, corrections must be filed within 90 days of having reason to believe. CBSA has provided the following list of what it considers reason to believe as it relates to Section 32.2. Reason to believe is not necessarily limited to this list. (a) legislative provisions such as specific origin, tariff classification, or value for duty provisions that are prima facie (i.e., at first sight), evident (i.e., obvious, apparent), and transparent (i.e., clear, selfexplanatory). For detailed examples of prima facie, evident, and transparent legislative provisions, refer to Appendix; (b) formal assessment documents issued by the CBSA to the importer, relating to the imported goods, such as determinations (other than “deemed determinations”), redeterminations, further redeterminations, etc.; (c) final tribunal or court decisions in which the importer was either the appellant, respondent or intervenor; (d) information received from exporters, suppliers, etc. (e.g., cancellation of certificates of origin; vendor’s invoice indicating retroactive price increase for goods already purchased); (e) written communication, addressed directly to the importer from the CBSA, such as a ruling (e.g., national customs ruling, advance ruling issued under section 43.1 of the Act), a trade compliance verification final report, or an official notification as a result of an exporter origin verification; (f) a final report from an importerinitiated internal audit or review, or, from an external company conducting an audit or review of an importer’s company; or (g) knowledge that the goods no longer qualify or comply with a condition of relief or a restriction imposed by the concessionary tariff item declared (e.g., goods diverted to a nonqualified conditionaluse or conditionaluser).
Topic 3: Penalties Bookmark this It is important to note that penalties will apply only in cases where there is reason to believe AND the selfadjustment is revenue neutral or results in a payment of duty. Penalties are not issued for failing to request a refund. http://cscb.ca/print/book/export/html/182986
22/107
10/1/2015
201516 CCS Course Part 4
Where the end result is revenue neutral, one of the following penalties will apply: C080, C081, C082 or C083. Where the end result is a payment of duty, one of the following penalties will apply: C350, C351, C352 or C353. Following is a recap of these penalties. Penalties Issued When Result of a SelfAdjustment is Revenue Neutral
Contra vention Reason Number
Amount
Subsection of the Customs Act for Submitting a Self adjustment
1st: $150* C080
Authorized person failed to make the required corrections to a declaration of origin of imported goods subject to a free trade agreement within 90 days after having reason to believe that the declaration was incorrect.
2nd: $225** 3rd and Subsequent: $450***
32.2(1)
1st: $150* C081
Authorized person failed to make the required corrections to a declaration of origin of imported goods within 90 days after having reason to believe that the declaration was incorrect.
2nd: $225**
32.2(2) 3rd and Subsequent: $450
1st: $150*
C082
Authorized person failed to make the required corrections to a declaration of tariff classification within 90 days after having reason to believe that the declaration was incorrect.
2nd: $225** 3rd and Subsequent: $450***
32.2(2)
1st: $150*
C083
Authorized person failed to make the required corrections to a declaration of value for duty within 90 days after having reason to believe that the declaration was incorrect.
2nd: $225** 32.2(2) 3rd and Subsequent: $450***
* to a maximum of $5,000 (per issue) or $25,000 (per occurrence) ** to a maximum of $200,000 (per occurrence) *** to a maximum of $400,000 (per occurrence)
Topic 3: Penalties (cont. 2) Bookmark this http://cscb.ca/print/book/export/html/182986
23/107
10/1/2015
201516 CCS Course Part 4
Penalties Issued When Result of a SelfAdjustment is a Payment of Duty Contra vention Reason Number
Amount
Subsection of the Customs Act for Submitting a Self adjustment
1st: $150* C350
Authorized person failed to pay duties as a result of required corrections to a 2nd: $225** declaration of origin of imported goods subject to a free trade agreement 32.2(1) within 90 days after having reason to believe that the declaration was 3rd and incorrect. Subsequent: $450***
1st: $150* C351
Authorized person failed to pay duties as a result of required corrections to a 2nd: $225** declaration of origin of imported goods within 90 days after having reason to 32.2(2) 3rd and believe that the declaration was incorrect. Subsequent: $450***
1st: $150* C352
Authorized person failed to pay duties as a result of required corrections to a 2nd: $225** declaration of tariff classification within 90 days after having reason to 32.2(2) 3rd and believe that the declaration was incorrect. Subsequent: $450***
1st: $150* C353
Authorized person failed to pay duties as a result of required corrections to a 2nd: $225** declaration of value for duty within 90 days after having reason to believe 32.2(2) 3rd and that the declaration was incorrect. Subsequent: $450***
* to a maximum of $5,000 per issue or $25,000 per occurrence ** to a maximum of $200,000 per occurrence *** to a maximum of $400,000 per occurrence
Topic 4: SelfAdjustments – Refunds Bookmark this Selfadjustments can result in a refund of duty. Although considered refunds, they are also selfadjustments if they deal with origin, tariff classification, value for duty, and diversion. The legislative authority and time frame in which to file a refund depends on the reason the claim is made. It is very important to be aware of the time frames for filing refund claims. If you file a refund claim beyond the legislated time frame, the claim will be rejected by CBSA and you will have no opportunity to claim back duty that was paid in error. The relevant subsection and type of refund that can be filed under Section 74 of the Customs Act are:
http://cscb.ca/print/book/export/html/182986
24/107
10/1/2015
201516 CCS Course Part 4
Paragraph 74(1)(c.1) Legislative authority for a refund of duty on goods originating in a NAFTA country or Chile, but the NAFTA or Chile tariff treatment was not used at the time of accounting. A Certificate of Origin must be included with the refund request.
Paragraph 74(1)(c.11) Legislative authority for a refund of duty on goods originating in Israel or another CIFTA beneficiary, or Colombia, Costa Rica, an EFTA state, Honduras, Jordan, Panama or Peru but CIFTA, CCOFTA, CCRFTA, CEFTA, CHFTA, CJFTA, CPAFTA, CPFTA tariff treatment was not used at the time of accounting. The required proof of origin is a statement, or a Certificate of Origin and is referred to in the CEFTA as the Origin Declaration. This proof of origin must be submitted with the refund request.
Topic 4: SelfAdjustments – Refunds (cont. 2) Bookmark this
Paragraph 74(1)(e) Legislative authority for a refund of duty paid or overpaid as a result of an error in the origin (other than NAFTA, Chile, Costa Rica, an EFTA state, Israel or another CIFTA beneficiary, Peru, Colombia, Honduras, Jordan, or Panamatariff classification or value for duty. Documents to support this claim include evidence to support the change in tariff treatment, tariff classification, or value and can include bills of lading, product catalogues, or price lists.
Paragraph 74(1)(f) Legislative authority for a refund of duty paid on goods, or goods into which imported goods have been incorporated, which are used by a qualified enduser or for a qualified enduse. Documents to support this type of refund request should include a declaration signed by the enduser of the goods and a copy of the purchase order, sales invoice, contract or other document that relates to the sale or disposal of the goods in Canada, if applicable.
Paragraph 74(1)(g) Legislative authority for a refund of duty overpaid or paid in error for any of the following reasons: (i) the duties were reduced or removed by a retroactive order or regulation made under the Customs Tariff; (ii) the goods are prohibited for use or sale by a provincial law; or (iii) the duties levied under section 21.1 of the Customs Tariff in respect of imported bulk spirits were paid or collected under the Customs Act. Supporting documents must be provided.
Topic 5: Time Frames Bookmark this Subsection 74(3) of the Customs Act provides the time frames in which the previous refund requests must be made. This section states: No refund shall be granted under subsection (1) in respect of a claim unless (a) the person making the claim affords an officer reasonable opportunity to examine the goods in respect of which the claim is made or otherwise verify the reason for the claim; and (b) an application for the refund, including such evidence in support of the application as may be prescribed, is made to an officer in the prescribed manner and in the prescribed form containing the prescribed information within (i) in the case of an application for a refund under paragraph (1)(a), (b), (c), (c.11), (d), (e), (f) or (g), four years after the goods were accounted for under subsection 32(1), (3) or (5), and (ii) in the case of an application for a refund under paragraph (1)(c.1), one year after the goods were accounted for under subsection 32(1), (3) or (5) or such longer period as may be prescribed. http://cscb.ca/print/book/export/html/182986
25/107
10/1/2015
201516 CCS Course Part 4
Important! What this means is that refund requests to request a tariff treatment change to a NAFTA or *Chile tariff treatment (CCFTA), filed under paragraph 74(1)(c.1), must be filed within one year from the date of accounting. Refunds filed under paragraphs 74 (1)(a), (b), (c), (c.11), (d), (e), (f) or (g) must be filed within four years from the date of accounting. *NOTE: The application for refund of duties under 74(1)(c.1) for CCFTA eligible goods imported on or after March 1, 2014 may be made within four years from the date the goods were accounted for under subsection 32(1), (3), or (5) of the Customs Act.
Topic 6: Other Refunds Bookmark this Refund claims are not considered selfadjustments if they are filed for reasons other than to adjust the origin, tariff, or value of imported goods. Such claims are also not considered corrections, since they are not filed under Section 32 of the Customs Act. Other refund claims that can be filed under Sections 74 and 76 are:
Paragraph 74(1)a Legislative authority for a refund of duty on goods that have suffered damage, deterioration, or destruction from the time of shipment to Canada to the time of their release. For example, goods may have sustained water damage while they were on a ship on their way to Canada. This section is not used for goods that have been damaged, deteriorated, or destroyed after they have been released. If the goods in question are perishable, written notice must be provided to CBSA within three days of their release. The written notice that is often used is form K11, Certificate of Damaged Goods. Form K11 is submitted at, or prior to, the time of release in order for an officer to examine the goods while they are still on hand. In cases where a K11 is not completed, the written notice requirement can be met by filing a B2, Canada CustomsAdjustment Request. Information on completing the B2 is included later in this module. Supporting documents must be provided. For both perishable and nonperishable goods, the refund must be filed at any customs office in the region where the goods were released within four years from the accounting date. The amount of refund allowed for perishable or brittle goods, such as glassware or china, is 85% of the duties paid on the loss in value of the goods. As well, refunds are not granted on goods that have exceeded their manufacturer's or producer's recommended shelf life, or on iron or steel that has rusted.
Topic 6: Other Refunds (cont. 2) Bookmark this
Paragraph 74(1)(b) Legislative authority for a refund of duty on goods where the quantity of goods released is less than the quantity upon which duty was paid. For example, duty was paid on 1000 widgets, but only 100 were shipped. A distinction is made between a complete package being lost or missing and the partial contents of a package lost, missing, or not shipped. When the number of packages reported does not match the number of packages received, the shortage is called an ETA, or Entered to Arrive. When the number of articles reported to be inside a package does not match the number that is actually inside, the shortage is call VI, or Value Included. Importers or customs brokers who become aware of a shortage, after goods have been released but before they have been accounted for, may either: pay the applicable duties and taxes as if ALL of the goods have arrived and, when the balance of goods shows up, http://cscb.ca/print/book/export/html/182986
26/107
10/1/2015
201516 CCS Course Part 4
release them as an ETA or VI, whichever is applicable; or provide customs with evidence of the shortage with the final accounting document and account for only the goods that were received. If and when the balance of the goods arrive, they are treated as a separate transaction and released in the usual manner. If the goods fail to appear after full duties have been paid, a refund for 100% of the duties paid may be filed within four years after the release of the original package. The fact that the original accounting document was noted as having goods "to arrive" or "value included" will satisfy the requirement of notifying customs of the shortage. The portion of the Refund of Duties Regulations that deals with goods that are not shipped in their entirety (for example, 100 items were ordered and had duty paid upon them, but only 10 items were shipped) also applies to goods that have been stolen from a sufferance warehouse, a bonded warehouse, or a duty free shop, after they have been reported and while they were in the custody of the carrier or operator of the warehouse or duty free shop. In the latter cases, the carrier of the goods, or the operator of the sufferance warehouse, bonded warehouse, or duty free shop is liable for any duties and taxes. Supporting documents must be provided. The refund must be filed at any customs office in the region where the goods were released within four years from the accounting date.
Topic 6: Other Refunds (cont. 3) Bookmark this
Paragraph 74(1)(c) Legislative authority for a refund of a portion of the duties paid on goods that are of inferior quality. For example, duty was paid on goods that were ordered as No. 1 grade, but, upon receipt, were found to be a lesser grade. If the goods in question are perishable, written notice must be provided to CBSA within three days after the release of the goods. Form K11 may be used for this purpose. Supporting documents must be provided. For both perishable and nonperishable goods, the refund must be filed at any customs office in the region where the goods were released within four years from the accounting date.
Paragraph 74(d) Legislative authority for a refund of duty where the calculation of duty was based on a clerical, typographical or similar error. These errors can include: a clerical or typographical error on an accounting document; a clerical error on an invoice, for example, the quantity and unit price were incorrectly calculated; an error in rate of exchange; or a duplicate payment on two accounting documents. In most cases, a good explanation is sufficient evidence to support the claim. A clear, concise description of the reason for filing the claim, plus any documentary evidence that would support the claim, such as a corrected invoice showing the correct extension or a copy of the duplicate accounting document may be presented. The refund must be filed at any customs office in the region where the goods were released within 4 years from the accounting date.
Topic 6: Other Refunds (cont. 4) Bookmark this
Paragraph 74(1)(e) Legislative authority for a refund of duty paid or overpaid as a result of an error in the determination under subsection 58(2) of either: origin (other than provided for in paragraphs 74(1)(c.1) or 74(1)(c.11) of the Customs Act); http://cscb.ca/print/book/export/html/182986
27/107
10/1/2015
201516 CCS Course Part 4
an error in tariff classification; or an error in the value for duty and the determination has not been the subject of a decision under any of Sections 59 to 61. This means that if CBSA has made a previous decision under sections 59 – 61 regarding the origin, tariff classification, or value for duty, for the same goods, a refund request cannot be filed under paragraph 74(1)(e). Appeals against CBSA decisions are discussed later in this lesson. Paragraph 74(1)(e) is used to change the origin to any tariff treatment other than United States, MexicoUnited States, Mexico, Chile, Israel or another CIFTA beneficiary, Costa Rica, an EFTA state, Peru, Colombia or Jordan. For a change in tariff classification, the refund claim should be accompanied by information and supporting documents such as: descriptive illustrations, literature, drawings, catalogues and/or samples associated documents, including: end use certificates; special authorizations; and an explanation as to the nature and/or condition of the goods, when applicable. For a change in value, all of the following should accompany the refund request: proof of sale, for example, a purchase order or commercial invoice; credit note; modified commercial invoices originating from the vendor; correct customs invoice; and letter of credit, if applicable. For a change in origin, a Certificate of Origin or other proof of origin must be included with the refund request. A bill of lading may also be required. The refund must be filed at any customs office in the region where the goods were released within four years from the accounting date.
Topic 6: Other Refunds (cont. 5) Bookmark this
Paragraph 74(1)(f) Legislative authority for a refund of duty paid or overpaid where the imported goods, or goods into which the imported goods have been incorporated, are sold or otherwise disposed of to a person, or are used in compliance with a condition imposed under a tariff item in the List of Tariff Provisions set out in the schedule to the Customs Tariff, or under any regulations made under that Act in respect of a tariff item in that List, before any other use is made of the goods in Canada. In other words, a refund of duties may be filed if, before the imported goods are used in Canada, either the enduse or the enduser of the imported goods changes to a use or user entitled to a free or reduced rate of duty. Supporting documents must be provided. The refund must be filed at any customs office in the region where the goods were released within four years from the accounting date.
Topic 6: Other Refunds (cont. 6) Bookmark this
Paragraph 74(1)(g) Legislative authority to file a refund claim where: a) the duties are reduced or removed by a retroactive order made under asection 138 of the Customs Tariff; or b) the goods are prohibited for use or sale by a provincial law. http://cscb.ca/print/book/export/html/182986
28/107
10/1/2015
201516 CCS Course Part 4
Section 138 of the Customs Tariff allows the Minister to make retroactive changes to the Customs Tariff. If retroactive changes are made, refunds may be filed for duty on goods affected by the change. Refunds filed under part (a), above, must be supported by: a copy of the prescribed form containing the prescribed information required by paragraph 32(1)(a) of the Act for the goods accounted for under subsection 32(1), (3) or (5) of the Act in respect of which the application made; and a copy of the commercial invoice or similar document substantiating that the goods subject to the refund of duties are the goods for which the duties are paid. Refunds filed under part (b) must be supported by: proof of export; or proof of destruction. The refund must be filed at any customs office in the region where the goods were released within four years from the accounting date.
Topic 6: Other Refunds (cont. 7) Bookmark this
Paragraph 76(1) Legislative authority for a refund of duty paid or overpaid on goods found to be defective, inferior in quality or not the goods ordered AND the goods have been disposed of or exported from Canada. This section can apply to both perishable and nonperishable goods. If the goods in question are perishable, written notice must be provided to CBSA within three days after the release of the goods. Form K11 may be used. Supporting documents must be provided. Under this provision, the amount of the refund is an amount equal to that proportion of the duties paid on the goods that the amount of the refund or credit given by the vendor is of the value for duty of the goods. In other words, if the foreign supplier does not provide a full credit for the goods, the amount of the duty refund is based on the percentage of the credit actually given. The refund must be filed at any customs office in the region where the goods were released. Section 76(2) of the Customs Act indicates that the provisions of 74(2) and 74(3) apply, meaning that the time limit for filing this type of claim is four years from the date of accounting.
Topic 7: Effect of a Decision Bookmark this Upon review of a request for a refund, an officer will either deny or approve the refund request. Subsection 74(4) of the Customs Act states: Effect of denial of refund — A denial of an application for a refund of duties paid on goods is to be treated for the purposes of this Act as if it were a redetermination under paragraph 59(1)(a) if (a) the application is for a refund under paragraph (1)(c.1) or (c.11) and the application is denied because at the time the goods were accounted for under subsection 32(1), (3) or (5), they were not eligible for preferential tariff treatment under a free trade agreement; or (b) the application is for a refund under paragraph (1)(e), (f) or (g) and the application is denied because the origin, tariff classification or value for duty of the goods as claimed in the application is incorrect. This means that if: the refund was filed under 74(1)(c.1) or 74(1)(c.11) to change the tariff treatment and it is found that the goods are not eligible for that tariff treatment and the refund claim is denied, or the claim was filed under 74(1)(e), 74(1)(f), or 74(1)(g), and it is found that the origin, tariff classification or value for http://cscb.ca/print/book/export/html/182986
29/107
10/1/2015
201516 CCS Course Part 4
duty claimed on the refund request is incorrect and the refund claim is denied, the decision that results is treated as if it was a CBSA redetermination under paragraph 59(1)(a) of the Customs Act. However, subsection 74(5) goes on to state that if the refund request is denied due to incomplete or inaccurate documentation being provided with the claim, it is NOT treated as a redetermination. In other words, the claim may be re submitted under the original legislative authority if still within the time limits. Refund requests that are approved and that have been filed under paragraphs 74(1)(c.1), 74(1)(c.11), 74(1)(e) or 74(1)(f), or under 74(1)(g) for an issue of origin, tariff, or value, are also treated as if they are redeterminations under paragraph 59(1)(a).
Topic 7: Effect of a Decision (cont. 2) Bookmark this
Deemed Determination Before any selfadjustments can be requested, a determination by an officer, or a deemed determination, must be made. Section 58 of the Customs Act states: 58.(1) Determination by officer — Any officer, or any officer within a class of officers, designated by the President for the purposes of this section, may determine the origin, tariff classification and value for duty of imported goods at or before the time they are accounted for under subsection 32(1), (3) or (5). 58.(2) Deemed determination — If the origin, tariff classification and value for duty of imported goods are not determined under subsection (1), the origin, tariff classification and value for duty of the goods are deemed to be determined, for the purposes of this Act, to be as declared by the person accounting for the goods in the form prescribed under paragraph 32(1)(a). That determination is deemed to be made at the time the goods are accounted for under subsection 32(1), (3) or (5). Section 58.(1) means that any officer may determine the origin, tariff classification, and value of imported goods before they are accounted for under subsections 32(1), (3), or (5). This refers to interim accounting, that is, the release of goods. This section gives an officer the authority to make a determination before goods are released and usually applies in cases of individuals importing their own goods. If there is no determination made under 58.(1), which is usually the case for commercial goods, a deemed determination is considered to be made. There must be a determination, or a deemed determination, before an importer or a customs broker, on behalf of their client, can selfadjust.
Topic 7: Effect of a Decision (cont. 3) Bookmark this
Redetermination or Further Redetermination Once an officer has made a decision regarding a selfadjustment, the importer is advised by way of a Detailed Adjustment Statement (DAS). If the selfadjustment was filed by a customs broker on behalf of the importer, the customs broker will also receive a copy of the DAS. It is Section 59.(1) of the Customs Act that allows the officer to make the redetermination or further redetermination. The relevant section of the Act is noted on the DAS. Section 59.(1) of the Customs Act states: Redetermination or further redetermination — An officer, or any officer within a class of officers, designated by the President for the purposes of this section may (a) in the case of a determination under section 57.01 or 58, redetermine the origin, tariff classification, value for duty or marking determination of any imported goods at any time within (i) four years after the date of the determination, on the basis of an audit or examination under section 42, a verification http://cscb.ca/print/book/export/html/182986
30/107
10/1/2015
201516 CCS Course Part 4
under section 42.01 or a verification of origin under section 42.1, or (ii) four years after the date of the determination, if the Minister considers it advisable to make the redetermination; and (b) further redetermine the origin, tariff classification or value for duty of imported goods, within four years after the date of the determination or, if the Minister deems it advisable, within such further time as may be prescribed, on the basis of an audit or examination under section 42, a verification under section 42.01 or a verification of origin under section 42.1 that is conducted after the granting of a refund under paragraphs 74(1)(c.1), (c.11), (e), (f) or (g) that is treated by subsection 74(1.1) as a redetermination under paragraph (a) or the making of a correction under section 32.2 that is treated by subsection 32.2(3) as a redetermination under paragraph (a). Section 59.(1)(a) gives an officer the authority to redetermine the origin, tariff classification, value, or marking determination four years after the deemed determination has been made. This can be done on the basis of a CBSA audit, or without an audit if the Minister wishes to do so. Remember that refund requests that are approved and refund requests that are denied are treated as if they are redeterminations under section 59.(1), even though they are not.
Topic 7: Effect of a Decision (cont. 4) Bookmark this Section 59(1)(b) decisions are further redeterminations. These are decisions that can be made by CBSA after they have granted a refund or after they have accepted a correction. The result of a Section 58 determination, or a Section 59(1) redetermination or further redetermination, might be a requirement to pay additional duty that is owing, plus interest, or there may be a refund of duties issued, plus interest. Any amounts owing must be paid immediately. Section 59(2) of the Act requires an officer who has made a determination, redetermination, or further redetermination to give notice of the decision. Notice is given by way of a DAS. Persons to whom a notice is given under Section 59(2) may, within 90 days of the notice, request a redetermination or further redetermination. These requests are made to the President of the CBSA under Section 60 of the Customs Act. Section 60(4)(a) of the Act states that, once a request under Section 60 is received by the President, the President shall, without delay: (a) redetermine or further redetermine the origin, tariff classification or value for duty; (b) affirm, revise or reverse the advance ruling; or (c) redetermine or further redetermine the marking determination.
Topic 8: Form B2 Bookmark this Selfadjustments and refund claims are filed on form B2, Canada Customs Adjustment Request. You should print a B2 so that you can follow along as we discuss each of the fields on this form. In all cases, monetary amounts are shown in dollars and cents separated by a decimal point.
http://cscb.ca/print/book/export/html/182986
31/107
10/1/2015
http://cscb.ca/print/book/export/html/182986
201516 CCS Course Part 4
32/107
10/1/2015
201516 CCS Course Part 4
Topic 8: Form B2 (cont. 2) Bookmark this
Field 1: Importer Name and Address Indicate the name and address, including correct postal code; this must be the same information as that indicated on the original accounting document. The business number must also be included.
Field 2: Transaction No. This is a new transaction number and not the transaction number used on the accounting document. The first five digits, the account security number, may be different than that used on the accounting document, if someone other than the party that submitted the accounting document is filing the refund request.
Field 3: GST Registration No. Indicates the importer’s GST registration number, if registered for the GST.
Field 4: Page Indicate the page number of the B2, starting with 1. If there will be more than one page, then you must show 1 of 2, 1 of 3, 1 of 4, etc.
Field 5: Office No. On the first page only, indicate the customs office code number used on the original accounting document. For blanket requests, indicate “VAR” unless all accounting documents are from the same Customs office. When showing “VAR”, provide the specific CBSA office code numbers on a worksheet(s) attached to the blanket B 2. A Customs office code number must be shown for each original B 3 transaction number.
Field 6: Original Transaction Number Show the transaction number assigned to the original accounting document for which the refund request is being made on the first page. If the adjustment is a blanket request, show “VAR” and provide specific transaction numbers in chronological order by date of final accounting on the attached worksheet(s).
Field 7: Date Show the date that appears in the accounting date field of the K 84 notice or statement, or, in the case of cash transactions, show the date of duty payment. This must be shown in the following format: year, month, day. Indicate “VAR” if adjustment is a blanket request. When showing “VAR”, provide the date of final accounting for each B 3 on the worksheet(s).
Topic 8: Form B2 (cont. 3) Bookmark this
Field 8: Date Received This field is date stamped by customs and is the date the refund request was received by them.
Field 9: Subheader No. This field is completed when a new subheader is being requested or when the number of the current subheader is being changed. The subheader includes fields 12, 13, 14, 15, 16, and 17 of the B2. Field 9 will show: "NS" when a new subheader is being requested (e.g., moving classification line 1 from subheader 1 to a new subheader in order to change the tariff treatment from MFN to UST); or http://cscb.ca/print/book/export/html/182986
33/107
10/1/2015
201516 CCS Course Part 4
the number of the current subheader when requesting a change in the information shown in field Nos. 12 17 for the most recent transaction, form B3 or previous DAS (e.g., to change the country of origin from Germany to the United States in field No. 12); or the number of the subheader to which a classification line or portion of one is being moved (e.g., moving a portion of classification line 1 from subheader 1 to subheader 2 in order to change the tariff treatment from MFN to UST).
Field 10: Mail To This field shows the name and address of the individual to whom the Detailed Adjustment Statement (DAS), or refund cheque, if applicable, is to be mailed. This can be the importer, or the customs broker if the importer's General Agency Agreement with his broker allows his broker to receive the DAS and /or refund cheque.
Field 11: Security No. Only completed if security is being posted. Security may be posted for an amount that is in dispute and should not be confused with security posted for the release of goods prior to payment.
Field 12: Country of Origin Complete only if a new subheader is being requested, or the country of origin is being changed from the most recent transaction, that is, the original accounting document, DAS, or previous refund claim. A threedigit state code is shown for goods exported from the United States, or if the goods originate in a country other than the United States, the twodigit country code.
Field 13: Place of Export Complete only if a new subheader is being requested, or the country of export is being changed from the most recent transaction, that is, the original accounting document, DAS, or previous refund claimed. For goods exported from the United States, show the three digit alphabetic state code of the new state when the state of export is being changed. This field is to be left blank when the foreign trade zone code is changed. Show a two digit alphabetic State code prefixed by U if the country of export is the United States. Show the two digit alphabetic ISO country code if the country of export is other than the United States.
Topic 8: Form B2 (cont. 4) Bookmark this
Field 14: Tariff Treatment Complete only if a new subheader is being requested, or the tariff treatment is being changed from the most recent transaction, that is, the original accounting document, DAS, or previous refund claim.
Field 15: Direct Shipment Date Complete only if a new subheader is being requested, or the direct shipment date is being changed from the most recent transaction, that is, the original accounting document, DAS, or previous refund claim.
Field 16: Currency Code Complete only if a new subheader is being requested, or the currency code is being changed from the most recent transaction, that is, the original accounting document, DAS, or previous refund claim.
Field 17: Time Limit Complete only if a new subheader is being requested, or the time limit is being changed from the most recent transaction, that is, the original accounting document, DAS, or previous refund claim.
http://cscb.ca/print/book/export/html/182986
34/107
10/1/2015
201516 CCS Course Part 4
Fields 1836: first 3 lines of the B2. Important! Field 19 reads: DESCRIPTION AS ACCOUNTED FOR All fields of the first three lines of the B2 are reproduced exactly as they appear on the most recent transaction, that is, the original accounting document, DAS, or previous refund claim, for each line being adjusted.
Fields 1836: next 3 lines of the B2. Important! Field 19 reads: DESCRIPTION AS CLAIMED These fields will reflect the manner in which the accounting document should have been completed. Complete the AS CLAIMED fields as described below.
Field 18: Line This must be completed on each classification line. The line number from the original B3 transaction or the line number assigned by customs for a new line or split line on a previous adjustment to the same transaction must be used. Split lines are created when a line must be split into two or more lines. For example, the AS ACCOUNTED FOR line of the accounting document might say “nuts” when the goods were actually nuts and another item, such as bolts. In this case, only a portion of the AS ACCOUNTED FOR line must be adjusted. The first line of the AS CLAIMED line would say "1” and reflect the nuts. The second AS CLAIMED line would say “1/SL" and reflect the bolts.
Topic 8: Form B2 (cont. 5) Bookmark this
Field 19: Description As claimed This must be completed on all classification lines. An accurate description of the goods must be shown, as well as references, such as D Memorandum numbers, value and classification ruling numbers, or import permit numbers.
Field 20: Special Authority Complete on all classification lines, if applicable. When the importer is authorized by an Order in Council to import goods under special conditions, the Order in Council number is to be shown in this field.
Field 21: Classification No. This must be shown on all classification lines. Show the correct classification number as indicated in the Customs Tariff for each commodity being adjusted.
Field 22: Tariff Code Complete if the conditions specified in tariff are applicable. These would be the first 4 digits of a tariff item in chapter 99.
Field 23: Quantity Complete if a quantity is associated with the tariff item being used.
Field 24: U/M Unit of Measure Complete if a unit of measure is associated with the tariff item being used.
Field 25: Value for Duty Code The twodigit VFD code is determined in the same manner as for the accounting document. http://cscb.ca/print/book/export/html/182986
35/107
10/1/2015
201516 CCS Course Part 4
Field 26: SIMA Code If applicable, the codes used are identical to those that would be used when completing a B3.
Field 27: Customs Duty Rate Complete if a rate of customs duty is applicable.
Field 28: E.T. Rate Complete if a rate of excise tax is applicable.
Topic 8: Form B2 (cont. 6) Bookmark this
Field 29: GST Rate Complete with either the rate of GST or an exemption code.
Field 30: Value for Currency Conversion Complete on each classification line. Show this amount in the currency specified on the invoice.
Field 31: Value for Duty Complete in the usual manner by multiplying the value for currency conversion by the exchange rate.
Field 32: Customs Duties Complete if customs duty is applicable.
Field 33: SIMA Assessment Complete if an amount of surtax, provisional, antidumping or countervailing duty is being adjusted, or is payable.
Field 34: Excise Tax Complete if excise tax is applicable.
Field 35: Value for Tax Complete only if: GST is payable; or GST is being rebated to a nonregistrant as a result of customs rendering a related adjustment decision.
Field 36: GST Complete only if: GST is payable; or GST is being rebated to a nonregistrant as a result of customs rendering a related adjustment decision. Note: Although instructions provided by CBSA indicate that fields 35 and 36 of the AS CLAIMED portion of the B2 should be left blank, the claim will not be rejected if these fields are completed. For importers and customs brokers with automated processes whereby the B2 data is retrieved from the B3 accounting data, these fields are automatically filled.
Topic 8: Form B2 (cont. 7) http://cscb.ca/print/book/export/html/182986
36/107
10/1/2015
201516 CCS Course Part 4
Bookmark this
Field 37: Documents Attached Complete this field with a check mark if supporting documentation is attached.
Field 38: Customs Duties To complete field 38, you must calculate the difference between field 32 in the AS ACCOUNTED FOR and AS CLAIMED lines. If customs duties are payable, this field will show the amount payable, preceded by a negative sign. If there is no customs duty payable, leave this field blank or show any combination of zeros. If there is a refund, show the amount. If the form B2 has two or more pages, this field is completed on the last page only.
Field 39: SIMA Assessment Complete if a SIMA assessment amount is payable or receivable. If a SIMA assessment is payable, show a negative sign in front of the amount shown in this field. To obtain total SIMA assessment, calculate the difference between the AS ACCOUNTED FOR and AS CLAIMED amounts shown in field 33, unless the amount is secured by a bond. This is indicated by use of SIMA assessment code 32 in field 26.
Field 40: Excise Tax Complete if excise tax is payable or receivable. If excise tax is payable, show a negative sign in front of the amount shown in this field. Where there is no excise tax payable or receivable, leave blank or show any combination of zeros. To obtain total excise tax, calculate the difference between the AS ACCOUNTED FOR and AS CLAIMED amounts shown in field 34. If the form B2 has two or more pages, show the total on the last page only.
Field 41: Subtotal Show the total of the amounts in fields 38 40. If an amount is payable, show a negative sign in front of the amount shown in this field.
Field 42: GST Complete where GST is payable, or, for nonregistrants, where GST may be rebated. If GST is payable, show a negative sign in front of the amount shown in this field. If the B2 has two or more pages, complete this field only on the last page.
Field 43: Interest It is not mandatory that this field be completed. When interest is payable or refundable, customs will show the date interest begins as well as the principal on which interest will be assessed in the "remarks section" of the resulting Detailed Adjustment Statement. If the importer or agent chooses to show the amount of interest payable or receivable, it is to be completed on the last page of the adjustment request.
Field 44: Amount Due Receiver General for Canada This must be completed only when an amount is payable to the Receiver General for Canada, and is noted on the last page only.
Field 45: Amount Due Claimant This must be completed on the last page when requesting a refund, or when requesting a complete reversal of a departmental decision that has been secured, not paid. If an amount of GST is shown in field 42, it is not included in the amount shown in this field. The Justification for Request and Explanation fields on the B2 are critical and must be completed properly. Both the http://cscb.ca/print/book/export/html/182986
37/107
10/1/2015
201516 CCS Course Part 4
legislative authority and a clear explanation must be provided.
Topic 8: Form B2 (cont. 8) Bookmark this
Justification for Request This is completed on the last page. Indicate the type of request, for example, correction, refund, redetermination, re appraisal, and the section, subsection and/or paragraph number of the applicable legislation. For example: A refund under paragraph 74(1)(a) of the Customs Act A correction under subsection 32.2 (1) of the Customs Act
Explanation Each refund request must have an explanation, supported by appropriate information and/or documentation. Clearly state the reason(s) for the request, providing as much detail as is required to defend it. Make reference to any previous departmental instructions or relevant D Memos. If sufficient space is not available, provide additional particulars on a separate sheet. Where applicable, the file number and date of the previous customs' decisions supporting the request should be indicated.
Declaration Complete on all adjustment requests. If the request has two or more pages, complete this only on the last page. Show the name and the employer of the person completing the claim. Date and sign the declaration on the B2. By signing the declaration, you are indicating that the information contained on the B2 is accurate and complete. Note that the B2 process is not an EDI process and all refunds must be submitted in hard copy.
Example Click here to view a B3 accounting document. The goods on this B3 were found to made of plastic, not leather. Have a look here for the B2 filed to change the tariff classification and pay the additional duty owing. Another example can be seen here. In this case, a B2 was filed because 400 chairs were upholstered with the incorrect fabric and returned to the vendor.
Topic 9: Taxes Overpaid/Paid in Error Bookmark this
GST Importers who are not GST/HST registrants and who have overpaid GST/HST on imported goods may request a refund of GST/HST. If they are also entitled to a refund of duty under the Customs Act, they may file a B2. If approved for a duty refund by CBSA, the Canada Revenue Agency (CRA) will issue a refund of any GST/HST that was overpaid as a result of the change in the amount of duty. However, if there is no refund requested under the Customs Act, a refund for GST is filed by using form GST189, General Application for Rebate of GST/HST. http://cscb.ca/print/book/export/html/182986
38/107
10/1/2015
201516 CCS Course Part 4
Importers who are registered for the GST must claim any overpayments of GST as input tax credits. As long as a customs broker has proper written authority from his client, he may complete, sign, and submit form GST189 on behalf of his client, the importer. The rebate cheque, made payable to the claimant, will be mailed directly to the customs broker. According to subsections 216(2) and 216(3) of the Excise Tax Act, any changes to the GST status of imported goods under Division III, Tax on Importation of Goods, are treated as if they were a determination, redetermination, or further re determination of the tariff classification, or an appraisal, reappraisal, or further reappraisal of the value for duty of the goods. As a result, corrections affecting only the GST status of the goods must be submitted under section 32.2 of the Customs Act where amounts are either owing or revenue neutral. For example, corrections must be made to change a GST status code to another GST status code.
Excise Tax Sections 68 and 69 of the Excise Tax Act provide for a refund of excise taxes paid in error or overpaid. This includes excise tax that is paid on goods that are subsequently exported. Form N15 is used to claim a refund of excise tax and must be filed within two years after the payment of excise tax.
Topic 10: CITT; Federal Court of Appeal Bookmark this
Canadian International Trade Tribunal (CITT) The Canadian International Trade Tribunal (CITT) is an independent, quasijudicial body composed of seven fulltime permanent members. The CITT is located in Ottawa and its members come from various backgrounds and areas of Canada. The Tribunal's mandate is to: inquire into whether dumped or subsidized imports have caused, or are threatening to cause, injury to a domestic industry; inquire into complaints by potential suppliers concerning procurement by the federal government that is covered by the North American Free Trade Agreement (NAFTA), the Agreement on Internal Trade (AIT), the World Trade Organization (WTO) Agreement on Government Procurement (AGP) and the CanadaChile Free Trade Agreement (CCFTA), or any other applicable trade agreement; hear appeals of decisions of the Canada Border Services Agency (CBSA) made under the Customs Act and the Special Import Measures Act (SIMA) and of the Minister of National Revenue (the Minister) under the Excise Tax Act; inquire into and provide advice on such economic, trade and tariff issues as are referred to the Tribunal by the Governor in Council or the Minister of Finance; investigate requests from Canadian producers for tariff relief on imported textile inputs that they use in their production operations and to make recommendations to the Minister of Finance on the requests; and inquire into complaints by domestic producers that increased imports are causing, or threatening to cause, injury to domestic producers and, as directed, make recommendations to the Government on an appropriate remedy. The CITT also acts as an administrative court for: Appeals of CBSA Decisions The CITT acts as a court of easy access, offering recourse to those who wish to contest decisions of the Minister and/or President with respect to tariff classification or valuation. Hearings are informal and accessible to individuals and small businesses. Injury Findings in AntiDumping and Countervailing Duty Cases The CITT holds hearings and inquiries and makes findings on whether or not imported goods being dumped or subsidized has caused or is causing material injury or retardation. If the Tribunal finds injury, CBSA levies antidumping or countervailing duties equal to the margin of dumping or subsidy.
http://cscb.ca/print/book/export/html/182986
39/107
10/1/2015
201516 CCS Course Part 4
Topic 10: CITT; Federal Court of Appeal (cont. 2) Bookmark this
Appeal Procedures Appearance before the Tribunal requires not only knowledge of the Customs Act and the Customs Tariff, but also a good background in general court procedure. Many decisions rest on interpretation of words or points of law and referrals to previous cases involving similar instances are not uncommon. Some parties may choose to be represented by legal counsel. Appeals to the CITT are filed pursuant to section 67(1) of the Customs Act. Any parties to an appeal filed under section 67(1) may appeal to the Federal Court of Appeal on any question of law. This process is authorized under section 68(1) of the Customs Act. The CITT may, under section 61.(1) of the Special Import Measures Act, hear an appeal from a person who disagrees with a redetermination of the President made pursuant to section 59 of the Customs Act. An appeal can be made to the Tribunal by filing a notice of appeal in writing with the President and the Secretary of the Tribunal within ninety days after the day on which the redetermination was made. Additional information on appeals to the CITT is available on its website.
Topic 10: CITT; Federal Court of Appeal (cont. 3) Bookmark this
Federal Court of Appeal Section 68 (1) of the Customs Act provides that: Any of the parties to an appeal under section 67, namely, (a) the person who appealed, (b) the President, or (c) any person who entered an appearance in accordance with subsection 67(2), may, within ninety days after the date a decision is made under section 67, appeal to the Federal Court of Appeal on any question of law.
Procedures When an appeal is filed with the Federal Court of Appeal, notice must be given to the President or any other party to the appeal, as well as to the Registrar of the Court. A copy of the appeal must also be filed with the CITT. The person filing an appeal must precisely identify and clearly explain the issues and facts, the statutory provisions, and the reasons in support of the appeal. Other parties who intervened during the hearing before the Tribunal and who wish to participate at this appeal are also able to do so.
Decision of the Court Subsection 68(2) of the Customs Act provides that: The Federal Court of Appeal may dispose of an appeal by making such order or finding as the nature of the matter may require or by referring the matter back to the Canadian International Trade Tribunal for rehearing. When a decision in a case is unacceptable to any parties involved, it may be appealed further to the Supreme Court of Canada. The procedures and method of filing an appeal with the Supreme Court of Canada are the same as those before the Federal Court of Appeal. Appeals to the higher courts are often long and drawn out with substantial legal fees. An appeal is only permitted to be heard when proper procedures have been followed and the appellant, other than the President, has deposited with the http://cscb.ca/print/book/export/html/182986
40/107
10/1/2015
201516 CCS Course Part 4
Registry of the Court security for the costs of the appeal.
Lesson 1 Summary: SelfAdjustments and Refunds Bookmark this Key points in Lesson 1 include: selfadjustments apply to errors made in origin, tariff classification, value for duty, or diversion, either of the enduse or enduser, of imported goods. selfadjustments may result in either a payment of additional duties, a refund of duties, or neither a payment nor refund of duties. where there is neither a payment nor a refund, the selfadjustment is termed revenue neutral. form B2 is used to make a selfadjustment. where there is additional payment required, or the B2 is revenue neutral, the selfadjustment is considered a correction and is filed under subsections 32.2 (1); 32.2(2); or 32.2(6) of the Customs Act. corrections must be made within 90 days of having reason to believe that the original declaration of origin is incorrect. if corrections are not made within 90 days, penalties will be issued. in most cases, refunds may be filed up to four years from the date of accounting. refunds to make a tariff treatment change to a NAFTA or Chile tariff treatment must be filed within one year from the date of accounting, however, the application for refund of duties under 74(1)(c.1) for CCFTA eligible goods imported on or after March 1, 2014 may be made within four years from the date the goods were accounted for under subsection 32(1), (3), or (5) of the Customs Act; officers will make determinations or deemed determinations under section 58 of the Customs Act. upon review of a refund request, officers will either deny or approve the request. refund claims filed under section 74 or 76 of the Customs Act will have decisions rendered by CBSA as if they are determinations under section 59(1)(a). once a determination is made under Section 59(1)(a), the decision can be appealed under section 60.
Lesson 1 Summary: SelfAdjustments and Refunds (cont. 2) Bookmark this notices of decision are provided by CBSA on a Detailed Adjustment Statement (DAS). supporting documentation must accompany refund requests. form K11 is a Certificate of Damaged Goods and is used to support a refund request for damaged goods. importers who are not GST/HST registrants may request a refund of GST/HST. a B2 can be used by a GST/HST nonregistrant to request a refund of GST/HST when there is also a refund of duty requested under the Customs Act. form 189E is used to request a refund of GST/HST for nonregistrants when there is no associated refund request under the Customs Act. form N15 is used to claim a refund of excise tax. the Canadian International Trade Tribunal is an independent, quasijudicial body that conducts inquiries into whether dumped or subsidized imports have caused, or are threatening to cause, material injury to a domestic industry; hears appeals of decisions of the Canada Border Services Agency; conducts inquiries and provides advice on economic, trade and tariff issues referred to them; and conducts investigations into requests from Canadian producers for tariff relief on imported textile inputs that they use in their production operations. the Federal Court of Appeal hears cases on questions of law. Following is a short test on what you have learned from Lesson 1.
Module 24: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate:
6 Unlimited Always 60 %
http://cscb.ca/print/book/export/html/182986
41/107
10/1/2015
201516 CCS Course Part 4
Backwards navigation: Allowed To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Drawback Bookmark this Under certain conditions, goods imported into Canada that are subsequently exported may be eligible for a refund of duty. This type of refund is called a drawback.
Rationale Your client or employer may advise you that goods they have imported have been subsequently exported, and, as a result, they would like a refund of duty.
Lesson Objective You will be able to determine when a drawback of duty applies and how to obtain a drawback.
Topic 1: Drawback Bookmark this The drawback program is an incentive for domestic manufacturers who produce goods for export. Drawback is a refund of customs duties, excise duties, excise tax, and antidumping and countervailing duties (except in certain cases under NAFTA) paid on imported goods that have been: further processed and subsequently exported, displayed or demonstrated in Canada and subsequently exported, used for the development or production in Canada of goods for subsequent export, or exported without having been used in Canada for any purpose other than for any of the above. Drawback may also be claimed on imported goods that are surplus or obsolete and have been disposed of in Canada. Since any GST that is paid can be used by the importer as an input tax credit, drawback does not allow for a refund of GST.
Topic 1: Drawback (cont. 2) Bookmark this
Difference Between Drawback and Duty Deferral The difference between drawback and duty deferral is that a drawback allows for a refund of duty that has been paid and duty deferral allows the importer to be exempted from, or defer, the payment of duty. If an importer is not eligible for the Duty Deferral Program, drawback allows a refund of duty that would have been deferred if the importer had participated in the Duty Deferral Program. Earlier you learned about duty relief under Section 101 of the Customs Tariff. This is relief of duty for goods that have been exported from Canada for the purposes of repair, having equipment added to them, or having had work done on goods that are the product of Canada. http://cscb.ca/print/book/export/html/182986
42/107
10/1/2015
201516 CCS Course Part 4
You also learned about duty deferral under the Duties Deferral program under Section 89 of the Customs Tariff. When these goods are imported into Canada after having been exported, you may be unaware that they qualify for duty relief and pay full duty on the goods. In this case, a drawback claim can be filed pursuant to Section 113 of the Customs Tariff.
Topic 1: Drawback (cont. 3) Bookmark this
Legislative Authority Section 113 of the Customs Tariff allows for the drawback of duty paid at time of importation. Section 113 states: 113.(1) Refund or drawback — Subject to subsection (2), section 96 and any regulations made under subsection (4), a refund or drawback shall be granted of all or a portion of duties if (a) relief or a refund of all or a portion of the duties could have been, but was not, granted under section 89 or 101; (b) all or a portion of the duties was paid; and (c) an application is made in accordance with subsection (3) and section 119. 113.(1)(a) allows for relief of duty on goods that would have been eligible for duty relief under sections 89 and 101 of the Customs Tariff. The importer, exporter, processor, owner, or producer/manufacturer of goods that were exported from Canada and for which duty was not deferred at time of importation, may file a drawback claim. Where more than one person is eligible to file a claim, for example, the importer is not the manufacturer, a waiver must be secured from all other eligible claimants waiving their rights to claim. Form K32A must be completed to support a drawback claim when the party claiming the drawback is not the importer. Form K32B must be completed to support a drawback claim when the party claiming the drawback is not the exporter.
Topic 1: Drawback (cont. 4) Bookmark this To apply for a drawback, form K32, Drawback Claim, must be filed with CBSA. Form K32 is a fillable form. Supporting documents, a list of which follows, must be submitted with the K32. One or more of the following may need to be included. copies of any export sales invoices; copies of bills of lading, signed by the carrier, or other shipping document; completed form K32A, Certificate of Importation, Sale or Transfer, when the claimant is not the importer; completed form K32B, Drawback Certificate of Sale for Exportation, when the claimant is not the exporter; or satisfactory evidence if the exports are affected by NAFTA. Satisfactory evidence is explained in D743, NAFTA Requirements for Drawback and Duty Deferral.
Time Limits The drawback claim must be filed within four years of the date of release of the goods, or, where another time is prescribed, within that other time. Where supporting documents are not included, the claim will be rejected by customs and a new K32 must be presented. If a claim is rejected for any reason, the statutory time limit is not protected.
Topic 1: Drawback (cont. 5) Bookmark this
Obsolete or Surplus Goods A drawback of duty may also be claimed on goods that have become surplus or obsolete while in Canada. An example is http://cscb.ca/print/book/export/html/182986
43/107
10/1/2015
201516 CCS Course Part 4
outdated calendars. Obsolete or surplus goods are goods that are: (a) found to be obsolete or surplus (i) in the case of imported goods, by their importer or owner, or (ii) in any other case, by their manufacturer, producer or owner; (b) not used in Canada; (c) destroyed in such manner as the Minister of Public Safety may direct; and (d) not damaged before their destruction. The goods must be destroyed under customs supervision. The following documents must accompany the claim, filed on Form K32: a) a certified copy of Form E15, Certificate of Destruction/Exportation; b) the original and one copy of any Form K32A, Certification of Importation, Sale or Transfer, where the claimant is not the importer. A drawback claim for obsolete or surplus goods must be made within five years after the imported goods were released.
Topic 1: Drawback (cont. 6) Bookmark this
Duty Drawback and the North American Free Trade Agreement In all but one situation, there is no change in the drawback requirements under NAFTA. This single situation is called "the lesser of the two duties" concept. Under this concept, drawback on imported nonNAFTA goods, or goods substituted with identical or similar goods, that are used in the production of another good that is exported to a NAFTA country is limited to a drawback amount equal to the lesser of: the relief normally allowed and the duties paid or owed on the exported product when it enters the other NAFTA country. For example, nonNAFTA goods are imported into Canada and duty of $100.00 is paid. The imported goods are used to produce goods in Canada that are then exported to the United States. The amount of duty that is paid when the goods enter the United States is $50.00. Under the lesser of two duties concept, the amount of drawback that can be claimed is $50.00.
Lesson 2 Summary: Duty Drawback Bookmark this Key points from Lesson 2 are: the drawback program is an incentive for domestic manufacturers who produce goods for export; drawback is a refund of customs duties, excise duties, excise tax, and antidumping and countervailing duties (except in certain cases under NAFTA) paid on imported goods that have been: further processed and subsequently exported; displayed or demonstrated in Canada and subsequently exported; used for the development or production in Canada of goods for subsequent export; or exported without having been used in Canada for any purpose other than for any of the above. drawback may be claimed on imported goods that are surplus or obsolete and have been disposed of in Canada; drawback does not allow for a refund of GST; drawback is allowed under section 113 of the Customs Tariff; a drawback claim may be filed by the importer, exporter, processor, owner, or producer/manufacturer of goods that were exported from Canada; where more than one person is eligible to file a claim, a waiver must be provided; form K32 or K321 is used to file a drawback claim; http://cscb.ca/print/book/export/html/182986
44/107
10/1/2015
201516 CCS Course Part 4
in most cases, drawback claims must be filed within four years of the date of release.dDrawback may be claimed on goods that have become surplus or obsolete while in Canada; and the "lesser of two duties" drawback concept was created under NAFTA. Take a few minutes and answer the following questions about Lesson 2.
Module 24: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 24 Summary: Adjustments After Payment Bookmark this In this module you learned about adjustments that are made to accounting documents after duties and taxes have been paid. You learned that there is specific legislation that must be cited when making adjustments and that there are time limits in which adjustments must be requested. You learned how to complete the B2 and also what decisions CBSA makes after the adjustment request has been received and reviewed. You learned about the importance of reason to believe and penalties that can be issued for not filing corrections that require additional duty to be paid or that are revenue neutral. Appeals to the CITT and the Federal Court of Appeal were discussed. Finally, you learned about another type of refund – the drawback.
Module 24: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
12 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 25: Exporting from Canada http://cscb.ca/print/book/export/html/182986
45/107
10/1/2015
201516 CCS Course Part 4
Bookmark this Since exporters must comply with Canadian laws regarding exports as well as the importing laws of the country to where the goods are shipped, it is important that export documentation be as clear and complete as possible. This also helps ensure that goods entering the international market from Canada do not pose a security threat to other countries. The export of dangerous goods is controlled and regulated, and accurate information on Canadian exports is collected. Canada also controls the outbound movement of goods in transit through Canada. This module will explain the procedures required for exporting goods, the maintenance of export records, and penalties for failing to comply with export requirements. It will also briefly discuss some of the documentation requirements of foreign countries to which Canadian goods are exported.
Module Objective When you have completed this module, you will be familiar with the requirements and regulations for exporting goods from Canada.
Lesson 1: Export Reporting Bookmark this In this lesson, you will be introduced to export reporting. We will look at the roles of the exporter, the carrier and the Customs Service Provider (CSP). We will examine the various types of export declarations, where exports must be reported, the penalties related to exporting, and how cancellations and amendments of export declarations are handled.
Rationale As a CCS, you may be asked to prepare export documentation. Knowing what is involved will expedite these shipments and avoid penalties.
Lesson Objective At the end of this lesson, you should know what documents are required to export goods, where and when exports are reported and how to cancel or amend export reports.
Topic 1: Parties Involved with Exporting Bookmark this According to Section 2 of the Reporting of Exported Goods Regulations, there are three different groups of people responsible for exporting: exporters, carriers, and customs service providers (CSPs). We will explain the role of each.
Exporters An exporter can be either an individual, or a firm. This individual or firm exports commercial goods from Canada or causes them to be exported. The exporter is required to have a Business Number (BN). An exporter does not necessarily make the transportation arrangements. The exporter may authorize another person or company to complete and/or submit export documents, but ultimately, it is the exporter who is responsible for reporting the export accurately and within the required time frames.
Carriers Carriers transport goods from Canada. Air, marine, rail and highway carriers may submit export declarations to CBSA on behalf of an exporter. Again, it must be stressed that the exporter is responsible for ensuring that accurate export documents have been delivered to CBSA on time.
Customs Service Providers http://cscb.ca/print/book/export/html/182986
46/107
10/1/2015
201516 CCS Course Part 4
CSPs can include customs brokers, freight forwarders, NVOCCs or agents. An exporter may use a CSP to submit export documentation on his behalf. CSPs who prepare the export documentation on behalf of exporters, make the transportation arrangements for the exportation of the goods, and report the export, are required to provide the exporting carrier with proof that the goods were reported to CBSA.
Topic 2: Penalties Bookmark this The Administrative Monetary Penalty System contains several contraventions for export infractions, including failure to provide an export declaration on noncontrolled goods prior to export; failure to provide an export permit, licence or certificate prior to export; failure to submit an export summary report; and failure to report goods subject to export control prior to export. AMPS will be applied against the holder of the BN that is recorded on the export declaration. The exporter will receive any penalty that is issued if the export documents are not accurate or are not submitted in the regulated time frame.
Topic 3: Reporting Bookmark this Under an agreement with the United States, the Canadian government gathers export statistics from U.S. import data. Therefore, “regular goods", that is, goods that are not controlled, prohibited or regulated, and that are shipped to the United States do not require an export declaration. Goods that are shipped in transit through the United States from Canada to a third country must be reported. The following, when shipped to a place other than the United States, must be reported: commercial goods valued at $2,000 CDN or more; restricted, controlled, regulated, or prohibited goods, regardless of their value, including goods exported under a general export permit. One exception is goods valued at less than $2,000 CDN and exported under GEP 12 (U.S. origin goods) for consumption in eligible destinations; these do not have to be reported to CBSA. goods moving in transit through the U.S. to a third destination; certain goods exported from a bonded warehouse that had entered the Canadian economy on a B3 type 10 entry; goods that have been repaired, added to, or processed in Canada and the value of the work done is $2,000 CDN or more. Only the repairs or additions must be declared as exports, unless the repairs were done under the terms of a Canadian warranty; The following, when shipped to a place other than the United States, must be reported: certain noncommercial goods valued at $2,000 CDN or more, such as gifts or donations including articles of food, clothing, medicines and other goods leaving Canada under any charity program. As well, personal possessions and household effects of emigrants valued at $2,000 CDN or more must be reported on an export declaration, as well as company transfers valued at $2,000 CDN or more; and other goods such as: contractors' equipment and tools that are being exported for one year or more, currency, items imported into Canada and returned for credit, goods that are exported under a lease for one year or more, samples, if they will be out of Canada for one year or more, and ships' stores – Canadian goods expected to be consumed during a voyage by nonCanadian carriers.
Topic 3: Reporting (cont. 2) Bookmark this Some goods do not have to be reported on an export declaration since the reporting and control of their movement falls under other CBSA regulations. If the goods are restricted, the appropriate permit must be presented. Goods that do not have to be reported are listed in D2011, paragraph 23. The minimum time frames for reporting goods for export, according to mode of transportation, are as follows: http://cscb.ca/print/book/export/html/182986
47/107
10/1/2015
201516 CCS Course Part 4
Marine Not less than 48 hours before being loaded on the vessel.
Air Not less than two hours before being loaded on the aircraft.
Rail Not less than two hours before the railcar containing the goods is assembled to form part of the train for export.
Mail Not less than two hours before being delivered to the post office where the goods will be mailed.
All Other Modes Immediately prior to the export of the goods. Live animals, bulk goods, homogeneous goods or timesensitive goods are exceptions to the reporting time frames, regardless of the mode of transportation, and can be reported immediately before they are exported. Note: If these goods are considered restricted they must be reported within the time frames listed for each mode of transport.
Topic 4: Types of Export Declarations Bookmark this There are four types of export declarations: CAED (Canadian Automated Export Declaration), G7 Electronic Data Interchange (EDI) Export Reporting, B13A, and the Export Summary Reporting program.
CAED (Canadian Automated Export Declaration) CAED enables exporters and agents to report exports electronically by using software that can be downloaded from Statistics Canada’s website at no cost. Those reporting exports via CAED must register to use CAED. As well, CAED users must have a valid business number that has been activated for exports. This is done through the Canada Revenue Agency (CRA). Those who use CAED to report goods that require a permit must present a paper copy of the CAED, along with the permit, to CBSA at the place of exit. The CAED export declaration is almost identical to the paper B13A, in that it requires the same information as the B13A.
G7 Electronic Data Interchange (EDI) Export Reporting The G7 nations agreed to simplify customs processes by harmonizing the trade data used by them. Data sets and standard data electronic messages for electronic data interchange (EDI) were developed so that the export requirements of one G7 country could meet the import requirements of another G7 country. Those who wish to participate in the G7 export reporting process must apply to Statistics Canada to do so. If they are represented by a CSP they may only register once the CSP has registered. Once the application has been accepted, the registrant must sign a Memorandum of Understanding (MOU) for G7 electronic export reporting that confirms they agree to meet the standards and conditions of an EDI participant.
Topic 4: Types of Export Declarations (cont. 2) Bookmark this http://cscb.ca/print/book/export/html/182986
48/107
10/1/2015
201516 CCS Course Part 4
Form B13A, Export Declaration Although all exporters are encouraged to sign up for an electronic reporting method such as CAED or G7 EDI Export Reporting, to facilitate their reporting, form B13A is used when submitting the export declaration in hard copy. Exporters who do not use the most recent version of the B13A may be subject to a penalty under AMPS. Among other things, the B13A must include: a proof of report number which is the date and time the B13A is stamped upon export, the export reporting office code, and a unique sixdigit reference code. The stamp machine assigns the sixdigit reference code sequentially. An example of a proof of report number is 2015/01/01 14:30 497 000321. Exporters are required to submit their export documentation within specific time frames, depending on the mode of transportation used to move the goods. Form B13A cannot be faxed to CBSA; however, the exporter may fax the B13A to a CSP who in turn will be responsible for stamping the B13A at an export reporting office, submitting it to CBSA, and returning a stamped copy to the exporter for their records. Once the B13A is stamped, either by use of a machine at the export reporting office or manually by CBSA, it is distributed as follows: copy 1 to CBSA, including all other documentation such as permits, certificates and licences; copy 2 to the exporter's carrier providing proof that the exports were reported; copy 3 to the exporter as proof that the goods were reported.
Topic 4: Types of Export Declarations (cont. 3) Bookmark this
Export Summary Reporting Program The Export Summary Reporting program was developed to enable exporters who meet certain criteria to declare export data in a single summary report. This report streamlines export data and provides international trade statistics. Exporters in this program may submit a monthly summary of their goods after they have been exported. Summary reporting was created for exporters of lowrisk goods and without special permission cannot be used for goods subject to export controls. Companies wanting to enrol in the program must contact the Regional Client Services office in the region where the company keeps its records or nearest to the place where most of the exporter’s goods will be exported. The application should include a copy of the proposed Summary Reporting. Summary reporters must submit a report covering the previous month to Statistics Canada within five business days after the end of the month in which the goods are exported. A nil report must be submitted when there is nothing to report for a particular month.
Topic 5: Cancelling and Amending Export Declarations Bookmark this Exporters may find that they need to cancel an export that has already been reported, or change information on the export declaration. Cancellations and amendments should be done as soon as possible, and the method of making the correction will depend on the type of declaration that was filed. CAED software allows a change to be made, electronically, in the system, as does the G7 EDI method of reporting. B13As are cancelled by submitting the cancelled transportation document and a copy of the original B13A to the export reporting office where the B13A was originally submitted. CBSA will notify Statistics Canada of the cancellation. When an error is found on a B13A, the corrected B13A and a copy of the original B13A must be submitted to the export reporting office where the goods were originally reported. If an error is found on a summary report or a cancellation is required, Statistics Canada must be notified. An amendment must be submitted within 30 days of an error being found.
Topic 6: Where to Report Exports http://cscb.ca/print/book/export/html/182986
49/107
10/1/2015
201516 CCS Course Part 4
Bookmark this Some CBSA offices are also called Export Reporting Offices. An export reporting office is any CBSA office that is designated under Section 5 of the Customs Act to process the exportation of goods from Canada, to receive export reports, and to examine goods destined for export, as well as being open for business at the time the goods are reported. Because goods destined for export may be examined, they must be available at the export reporting office where the export documents are presented. Exporters who report their exports electronically send their export declaration directly from their place of business to CBSA. This type of export report is considered to have been submitted to a CBSA place of report and the place of exit. B13As are submitted to the export reporting office where the exports are reported. Summary reports must be submitted directly to Statistics Canada.
Topic 7: Memorandum of Understanding (MOU) for Carrier Reporting Bookmark this To make sure all exported goods are reported, CBSA has entered into Memoranda of Understanding (MOUs) with carriers and CSPs to guarantee that they load for export only those goods that the exporter has reported to CBSA. Under the MOU, CBSA commits to ensure that the participant is living up to the MOU agreement, updating the MOU participant with information pertinent to CBSA legislation or procedures, and providing CBSA with contact information. The participant agrees to provide written proof of export and to accept only those goods that have been reported to CBSA by the exporter, and for which the participant can provide to CBSA written proof that the goods have been reported. If there is no proof of report, the MOU participant is not to load the goods. The participant is not required to verify the accuracy of the proof of report provided by the exporter or to enforce the reporting time frames in the regulations. If no export report is required, the exporter must inform the carrier and state the reason for the exemption. The MOU participant must also provide the exporter directly or indirectly with a transportation document number for each export shipment. This number is a reference number that will allow the carrier to track the shipment.
Topic 8: Other Documents Bookmark this
Bill of Lading A bill of lading is a contract between the carrier and the shipper to transport the goods. It is issued by the carrier to the shipper. It serves as evidence of the conditions of carriage agreed upon between the shipper and the carrier, and a document of title to the goods. An important function of the bill of lading is to express the conditions under which the carrier seeks to limit liability. The bill of lading takes different forms depending on the mode of transport being used, for example, when shipping by air, an air waybill; when shipping by truck, an inland bill of lading; and when shipping by sea, an ocean bill of lading.
Commercial Invoice A commercial invoice should accompany all goods exported from Canada and should satisfy most foreign customs import requirements provided it contains the following information: invoice number and date, date of shipment, terms of sale and conditions of payment, currency of value, country of origin, and full description of the goods including quantity, unit price and amount. http://cscb.ca/print/book/export/html/182986
50/107
10/1/2015
201516 CCS Course Part 4
Topic 8: Other Documents (cont. 2) Bookmark this
Certificate of Origin As countries enter into trade agreements with one another, certificates of origin become necessary in order to ensure the correct amount of duty is paid on imported goods. Though they take different forms, their purpose is to certify the place of origin or the manufacturer or producer of the goods. Depending on the country of destination, some certificates may be certified by a signing officer of the exporting company, some require certification by an authority vested with such power, i.e., Chamber of Commerce, while others may require certification by the consulate of the importing country. In considering whether or not a Certificate of Origin is necessary, determine whether or not the goods may be entitled to a lower rate of duty if accompanied by a Certificate of Origin. To qualify for NAFTA duty rates on goods exported to the United States or Mexico, the Canadian exporter must determine whether or not the goods meet the NAFTA rules of origin. They must also prepare a Certificate of Origin attesting that the goods meet the origin requirements.
Lesson 1 Summary: Export Reporting Bookmark this In this lesson you learned about export reporting. Key points in this lesson include: there are three classes of persons responsible for exporting: exporters, carriers, and Customs Service Providers; the exporter is the person or company, including a nonresident, who holds a business number (BN) and who exports commercial goods or has the legal right to cause them to be exported; the exporter will receive penalties for export documents that are not accurate or are not submitted in the regulated time frame; there are four types of export declarations: CAED (Canadian Automated Export Declaration), G7 Electronic Data Interchange (EDI) Export Reporting, B13A, and the Export Summary Reporting program; certain CBSA offices have been designated to process the exportation of goods from Canada and are referred to as export reporting offices; and in an effort to ensure that all exported goods are reported, CBSA has entered into Memoranda of Understanding with carriers and service providers to ensure that they load for export only those goods that the exporter has reported to CBSA. You should now have a clearer understanding of export reporting, who is held responsible for errors, what types of export declarations are available, and where and when exports are to be reported. Now take a few minutes and answer the following questions to see how much you have learned about export reporting.
Module 25: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. http://cscb.ca/print/book/export/html/182986
51/107
10/1/2015
201516 CCS Course Part 4
Start quiz
Lesson 2: Record Keeping and Documentation Bookmark this In this lesson you will study the section of the Customs Act that governs the maintenance of records in Canada by exporters. You will also be briefly introduced to the documentation requirements of foreign countries.
Rationale As a CCS, you will need to be familiar with the requirements of maintaining records in Canada. You should also be aware that exporters must consider the requirements of other countries when exporting goods.
Lesson Objective At the end of this lesson, you will be familiar with requirements of the Customs Act for maintaining export records in Canada. You will also be aware that exporting to another country requires one to become familiar with the laws and regulations governing goods imported into that country.
Topic 1: Maintenance of Records in Canada by Exporters Bookmark this Section 97.2(1) of the Customs Act requires that: 97.2(1) Exporters' or producers' records — Every person who exports goods or causes them to be exported for sale or for any industrial, occupational, commercial, institutional or other like use or any other use that may be prescribed, and every other person who has completed and signed a certificate in accordance with subsection 97.1(1), shall keep at the person's place of business in Canada or at any other place that may be designated by the Minister any records in respect of those goods in the manner and for the period that may be prescribed and shall, if an officer requests, make them available to the officer, within the time specified by the officer, and answer any questions asked by the officer in respect of the records. The Exporters' and Producers' Records Regulations stipulate that records must be kept for a period of six years after the date of exportation. These records include all information that relates to the: origin, purchase, importation, cost and value of the goods, payment for the goods, use to which the goods are put in Canada, exportation of the goods, and source of all materials used in the production of the exported goods. Memorandum D2015 contains guidelines and general information with respect to the maintenance of records and books in Canada by exporters, and in particular, the record keeping requirements for the North American Free Trade Agreement.
Topic 2: Documentation Requirements of Foreign Purchaser Countries Bookmark this In addition to satisfying Canada's export requirements, customs requirements of the foreign country must also be satisfied. These documents may include certificates of origin, customs invoices, special declarations, or consular invoices. The exporter must be diligent in complying with the purchaser's requirements. For instance, goods that are exported to the United States must comply with the regulations of other U.S. government departments such as the Environmental Protection Agency (responsible for protecting human health and the environment); the Food and Drug Administration (responsible for food, cosmetics, medicine and medical devices, radiationemitting products, and feed and drugs for animals); the Federal Communications Commission (responsible for radio frequency devices); and the Department of Transportation. http://cscb.ca/print/book/export/html/182986
52/107
10/1/2015
201516 CCS Course Part 4
Lesson 2 Summary: Record Keeping and Documentation Bookmark this In this lesson you were introduced to the section of the Customs Act that relates to the maintenance of records kept in Canada by exporters. You also studied the documentation requirements of foreign purchaser countries. Key points in this lesson include: Section 97.2(1) of the Customs Act requires that records be maintained at the place of business of the exporter or producer or at any other place that may be designated by the Minister; records must be kept for a period of six years after the date of exportation; these records include all information that relates to the: origin, purchase, importation, cost and value of the goods, payment for the goods, use to which the goods are put in Canada, exportation of the goods, and source of all materials used in the production of the exported goods; when exporting, the customs import requirements of the foreign country must also be satisfied; and the requirements of other government departments of the foreign country must also be met. Now take a few minutes to see what you have learned about keeping export records and the documentation requirements of other countries.
Module 25: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
4 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: U.S. Customs Procedures Bookmark this In this lesson you will learn about the documentation, rules, and regulations for the entry of goods into the United States.
Rationale Since the United States is Canada’s largest trading partner, you may be asked by clients for basic information on how to prepare documentation for goods that are being shipped into the United States.
Lesson Objective At the end of this lesson, you will understand the documentation required and the process involved in shipping goods to the United States.
Topic 1: PreArrival Requirements http://cscb.ca/print/book/export/html/182986
53/107
10/1/2015
201516 CCS Course Part 4
Bookmark this
Automated Broker Interface The Automated Commercial System (ACS) is used by CBP to track, control, and process all goods imported into the United States. A key component of ACS is the Automated Broker Interface (ABI). ABI allows qualified participants to electronically file required import data with Customs. Among other things, ABI allows participants to: File entry release data electronically for cargo release processing. File a consolidated entry summary, combining multiple release transactions on one entry summary. File consumption entries, TIB entries, FTZ entries, and warehouse withdrawals for consumption. Transmit U.S. Customs Declaration (invoice and summary in one message) in EDIFACT syntax; summary data in CBP syntax; invoice data in CBP syntax. Receive paperless designation for general exam entry transactions. Update entry dates electronically. Designate one broker to receive all of an importer's liquidation information through the National Importer Liquidations (NILS). Receive conditional cargo release results up to five days before the ocean conveyance arrives, one day for air transport, same day for truck transport and rail transport. File drawback claims electronically. Choose from several payment options send one check for each entry summary, one check for summaries on a statement, or pay statements electronically through the Automated Clearinghouse (ACH).
Topic 1: PreArrival Requirements (cont. 2) Bookmark this
Advance Cargo Reporting Requirements The Bureau of Customs and Border Protection (CBP) has issued regulations that require shippers to electronically file cargo data for goods entering the United States. This data is sent electronically to CBP through a service centre or port authority, or the carrier may develop a direct interface with CBP. Advance cargo information must be provided to CBP according to the following schedule: Mode
Time Frame
Truck
Using Automated Broker Interface (ABI): FAST 30 minutes before arrival Using Automated Broker Interface (ABI): nonFAST 1 hour before arrival
Rail
Using the Automated Manifest System: 2 hours before arrival at designated U.S. port of entry or rail crossing
Vessel Using the Automated Manifest System: 24 hours prior to lading at foreign port
Air
Using the Automated Manifest System: 4 hours before arrival or, if from any foreign port or place in North America, including locations in Mexico, Central America, South America (from north of the Equator only), the Caribbean, and Bermuda: at time of departure (“wheelsup”)
Carriers, who fail to submit accurate data electronically in a timely manner, may be subject to a penalty or another punitive measure. (Click on each mode of transport to view penalty).
Topic 1: PreArrival Requirements (cont. 3) http://cscb.ca/print/book/export/html/182986
54/107
10/1/2015
201516 CCS Course Part 4
Bookmark this
10 + 2 Importer Security Filing In January of 2008, CBP published a notice of proposed rulemaking that requires importers and carriers to electronically submit additional information on cargo before it is brought to the U.S. by vessel. This importer security filing is known as 10 + 2 and is intended to better assess and identify highrisk goods and to prevent terrorist weapons and materials from entering the U.S. This security filing has been given the name 10 + 2 because 10 pieces of information are required from the importer (or agent) and 2 pieces are required from the carrier. The 10 data elements include: manufacturer (or supplier) name and address, seller (or owner) name and address, buyer (or owner) name and address, ship to name and address, container stuffing location, consolidator (stuffer) name and address, importer of record number/foreign trade zone applicant identification number, consignee number(s), country of origin, and Harmonized Tariff Schedule number. The 2 pieces of information from the carrier relate to the shipment's status and vessel location. They are: a vessel stow plan used to transmit information about the physical location of cargo loaded aboard a vessel bound for the U.S.; and Container Status Messages (CSM), which report container movements and changes in status, for example, empty or full. With the implementation of initiatives such as 10 + 2, the 24hour rule and Prior Notice (PN), time frames for providing cargo and conveyance information to CBP have been established.
Topic 1: PreArrival Requirements (cont. 4) Bookmark this
Food Safety Modernization Act On January 4th, 2011 the Food Safety Modernization Act (FSMA) became law in the U.S. The FSMA was created to protect public health and prevent food safety problems by giving Food and Drug Administration (FDA) officials wider authority. Among other measures, American FDA officials (or third parties designated by them) will be able to inspect foreign food facilities that come in contact with food exported to the U.S. Officials will also be able to require food testing at accredited laboratories, detain unsafe food products, and order companies to recall food. To import food into the U.S., a company must be registered with the FDA. Companies located outside the U.S. must appoint a U.S. agent for FDA communications. Under the FSMA, FDA officials will be able to suspend registration of facilities involved with unsafe food. Suspended companies cannot import food. Under the FSMA, companies will also have to: become involved with the Foreign Supplier Verification Program; write a food safety plan (and keep it uptodate); be able to trace where their food comes from; ensure their suppliers have prevention controls in place; have their food certified (if required by the FDA); and permit FDA inspections.
http://cscb.ca/print/book/export/html/182986
55/107
10/1/2015
201516 CCS Course Part 4
Topic 1: PreArrival Requirements (cont. 5) Bookmark this
Prior Notice (PN) Foods and animal products consititue nearly 20% of all importations into the United States. In 2002, the Bioterrorism Act was passed. It was created to combat terrorism by reducing the ability for international terrorists to carry out terrorist attacks in the U.S. by contaminating imported foods. Under this Act, the Food and Drug Administration (FDA) must receive Prior Notice (PN) for all food imported or offered for import into the U.S. Advance notice of import shipments allows the FDA, aided by CBP, to target import inspections more effectively and help protect the U.S. food supply against terrorist acts and other public health emergencies. Foreign and domestic facilities that manufacture, process, pack or hold food for human or animal consumption in the U.S. must register with the FDA. With Prior Notice, specific data is sent electronically to the FDA prior to the arrival of the goods at the first U.S. port of arrival.
Topic 2: Documentation Requirements Bookmark this Generally, unless goods are subject to other government department regulations, the only documents required for goods entering the United States from Canada are a commercial invoice, and, where NAFTA benefits are claimed, a properly completed NAFTA Certificate of Origin. These documents must be legible, complete and signed. The commercial invoice must contain the following information: the port of entry; if the goods were sold, or agreed to be sold, the time, place, and names of the purchaser and vendor; if on consignment, the time and origin of shipment, and name of the consignee; the IRS number of the consignee or buyer; a description of the goods, including the quality of the goods, and marks and numbers of the packages in which the goods are packed; the weight; the purchase price of each item in the currency of sale; if the goods are shipped on consignment, the value of each item, in the currency in which such transactions are usually made or, the price in such currency that the manufacturer, seller, shipper, or owner would have received, in the ordinary course of trade and in the usual wholesale quantities in the country of export; the currency, for example, U.S. dollars, Canadian dollars or Euros; all charges applicable to the goods, identified by name, such as freight, insurance, commissions, assists, duty, containers, packing materials and packing charges; if not mentioned in the foregoing, any charges, costs and expenses incurred in the process of shipping the goods to the first U.S. port of entry. Packing and inland freight charges need not be itemized if clearly shown to be included in the invoiced price; all rebates, drawbacks and bounties, separately itemized, allowed as a result of the exportation of the goods; the country of origin; and all goods or services furnished for the production of the merchandise not included in the invoice price. As a rule, the vendor and the importer must furnish CBP with all pertinent information about the goods so that the proper tariff classification and value for duty can be determined. All documentation provided to CBP must be in English or, if not in English, accompanied by an English translation.
Topic 2: Documentation Requirements (cont. 2) Bookmark this
NAFTA Certificate of Origin http://cscb.ca/print/book/export/html/182986
56/107
10/1/2015
201516 CCS Course Part 4
The North American Free Trade Agreement (NAFTA) is a trilateral trade agreement entered into by the governments of Canada, the United States and Mexico. The most visible aspect of NAFTA is the elimination of duty on goods that are manufactured or produced within the NAFTA territory. The NAFTA Rules of Origin are used to identify qualifying goods and the Canadian exporter must determine whether or not the goods meet these rules. If the goods meet the NAFTA Rules of Origin, the Canadian exporter should provide the U.S. importer with a properly completed NAFTA Certificate of Origin so that the importer can take advantage of the lower duty rates allowed under NAFTA. All qualifying NAFTA goods entering the United States will benefit from duty free entry unless other duties, such as antidumping, apply. In the U.S. a NAFTA Certificate of Origin is not required for goods valued at U.S. $2,500 or less. For commercial shipments valued at U.S. $2,500 or less, the invoice accompanying the goods must include a statement certifying the goods as originating goods.
Goods Entering the U.S. The steps for goods entering the U.S. are: advance notification; reporting of goods; entering of goods; preparation of entry summary; and liquidation of entry (performed by CBP). Some of the steps may be combined.
Topic 2: Documentation Requirements (cont. 3) Bookmark this
Reporting Once a vessel, vehicle, aircraft, or railcar arrives in the U.S., it must be reported to CBP. Vessels must report to the nearest customs facility immediately upon arrival. Upon arrival of an aircraft, documentation, including a General Declaration (CBP form 7507) must be presented to CBP immediately at the place of entry. Since the air cargo manifest data has been transmitted prior to arrival, it does not have to be presented again to CBP. Approved rail carriers can electronically arrive (report) their own conveyances at the first U.S. port of entry and submit timely updates to manifest records with the actual arrival date. Truck carriers use an inward cargo manifest, form CF7533, to report cargo at the port of entry. However, at some ports, ACE emanifest has been implemented. The Automated Commercial Environment (ACE) is a commercial trade processing system developed by CBP to facilitate trade while strengthening border security. It automates the most commonly used forms and followup communications. Part of ACE includes electronic truck manifest (emanifest) capabilities that are now fully operational at the northern and southern borders. This allows CBP to prescreen trucks and shipments to ensure the safety and security of incoming cargo. Truck carriers can file emanifests through the ACE portal or via a CBPapproved electronic data interchange, or they can use third parties, such as customs brokers or border processing centres. Deployed in phases, ACE will be expanded to provide cargo processing capabilities across all modes of transportation and will replace existing systems with a single, multimodal manifest system for land, air, rail and sea cargo.
Topic 2: Documentation Requirements (cont. 4) Bookmark this http://cscb.ca/print/book/export/html/182986
57/107
10/1/2015
201516 CCS Course Part 4
PAPS (PreArrival Processing System) In the United States, PAPS is a release mechanism that utilizes barcode technology to expedite the release of commercial shipments. With PAPS, the carrier provides the U.S. customs broker with required release information prior to departing Canada for the U.S. Each PAPS shipment requires a unique barcode, which the carrier attaches to the invoice and the truck manifest while the merchandise is still in Canada. The barcode consists of the U.S. Standard Carrier Alpha Code (unique twotofour letter code used to identify transportation companies) and ProBill number. This information is then faxed by the carrier to the customs broker in the U.S. who inputs this information into the Automated Commercial System (ACS). Upon the truck's arrival at the border, the manifest and invoice with barcodes are presented to the CBP officer at the time of primary processing. The officer scans the barcode, which automatically retrieves the entry information. If no examination is required, the inspector then releases the goods while still at the primary booth. It is important to note that for goods regulated by the FDA, release by CBP does not mean that the FDA has released the goods. It is important to verify with the customs broker if the FDA has issued a release prior to the distribution and consumption of the imported goods.
Topic 2: Documentation Requirements (cont. 5) Bookmark this
BRASS (Border Release Advanced Selectivity System) BRASS is a U.S. cargo processing system that replaced the former Line Release Cargo Processing System. It relies on prescreening of highly compliant, highvolume, repetitive cargo and uses barcode technology to save time and reduce congestion at the ports. BRASS is established on behalf of a particular importer, usually by their customs broker. The broker submits specific information to CBP regarding the importer, consignee and merchandise. Once the application is approved, CBP issues a barcode to permit release of the goods at the primary line. The driver presents the release documents and barcode to the primary officer. The officer wands the barcode, verifies the information and releases the shipment. Cargo data is then transmitted to ACS and ABI participants are provided with release information.
Topic 3: Entry Process Bookmark this Imported goods are not legally entered into the U.S. until after the goods have arrived, delivery of the merchandise has been authorized by CBP, and estimated duties have been paid. When goods reach the United States, the importer of record (i.e., the owner, purchaser, or licensed customs broker designated by the owner, purchaser, or consignee) must file entry documents. The right to make an entry is limited to the owner or purchaser of the imported goods or to a customs broker who has been appointed by the owner, purchaser or consignee. Imported goods can be entered for consumption, entered into a warehouse, admitted into a foreign trade zone, or transported in bond to another port of entry or country. We will discuss consumption entries, that is, entries for goods that will be entered into U.S. commerce. Consumption entries can be formal or informal. As a general rule, formal entries are required for goods valued over U.S. $2,000. A lower threshold value of U.S. $250 applies to certain tradesensitive articles, such as textiles. Less complex informal entries can be filed for shipments valued at U.S. $2,000 or less (or at $250 or less for shipments containing the aforementioned trade sensitive articles). The formal entry process usually involves two steps.
http://cscb.ca/print/book/export/html/182986
58/107
10/1/2015
201516 CCS Course Part 4
Step 1 Within 15 calendar days of the date that goods arrive at a U.S. port, entry documents must be filed at a location specified by the port director. These documents are: Inward Cargo Manifest (CBP Form 7533) or the application for Entry/Immediate Delivery (CBP Form 3461) or other form of merchandise release required by the port director; evidence of right to make entry; a commercial or pro forma invoice; packing lists; and any other documents needed to prove admissibility. Once CBP reviews this information, they will make a decision to examine or release the goods.
Topic 3: Entry Process (cont. 2) Bookmark this
Step 1 Within 15 calendar days of the date that goods arrive at a U.S. port, entry documents must be filed at a location specified by the port director. These documents are: Inward Cargo Manifest (CBP Form 7533) or the application for Entry/Immediate Delivery (CBP Form 3461) or other form of merchandise release required by the port director; evidence of right to make entry; a commercial or pro forma invoice; packing lists; and any other documents needed to prove admissibility. Once CBP reviews this information, they will make a decision to examine or release the goods.
Topic 3: Entry Process (cont. 3) Bookmark this
Step 2 Once the goods are released, an Entry Summay Form CF 7501 must be filed and estimated duties deposited at the port within 10 working days of the goods arriving. The entry package is returned to the importer, or customs broker. The package includes: the Entry Summary (CF 7501); and the invoices and documents necessary to assess duties, or determine that all import requirements have been met. Information provided in Forms CF 3461 and the CF 7501 may be submitted electronically using EDI. As well, CBP must be assured a bond has been posted to cover duties, taxes or additional charges. A customs broker may allow the use of his bond to provide this coverage. The bondholder is the party responsible for any duties and taxes owing on the goods. For this reason, most U.S. customs brokers prefer that their clients purchase their own annual bond or pay for a Single Entry Bond. Under the terms and conditions of the agreement between the client and the broker, there is a shared responsibility for compliance and accountability. However, it is the ultimate responsibility of the client to pay any customs duties.
Topic 3: Entry Process (cont. 4) http://cscb.ca/print/book/export/html/182986
59/107
10/1/2015
201516 CCS Course Part 4
Bookmark this As an alternative to the twostep process, the formal entry process may be done in one step. This is known as a “live entry”. A live entry occurs when a CF 7501 Entry Summary, with estimated duties attached, is filed prior to the release of merchandise. The CF 7501 in this case serves as both the entry and the entry summary. The importer also must produce more detailed information in advance. An importer may choose to file a live entry, or it may be required by CBP. CBP requires live entries in any one of the following circumstances: 1) the importer fails repeatedly to file timely entry summaries without justification; 2) the importer has not taken prompt action to settle a claim for liquidated damages; 3) the importer has repeatedly delivered entry summary documentation which is incomplete or which contains erroneous information; 4) the importer is substantially or habitually delinquent in the payment of CBP bills; or 5) the merchandise is of a special class, for example, quota. A broker may not apply for release of merchandise in the broker's name and under the broker's bond on behalf of a client who is required to file live entries. Under certain circumstances, CBP will allow certain importers to file an entry summary on a monthly basis and pay all applicable duties at the end of the month.
Topic 3: Entry Process (cont. 5) Bookmark this
Immediate Delivery To apply for immediate release, a Form 3461, Entry/Immediate Delivery is submitted before the goods arrive. If approved, the goods will be released immediately upon arrival. Once the goods are released, an entry summary is submitted and the duties must be paid within ten business days. Immediate release is limited to the following types of importations: shipments from NAFTA partners, with the port director’s permission; fresh fruit and vegetables arriving from Canada or Mexico for immediate delivery to the importer; shipments consigned to or for use by the U.S. Government; trade show goods; goods subject to tariffquota rates; under certain conditions, goods subject to specific quotas; under certain conditions, goods released from a warehouse followed within ten working days by a Warehouse Withdrawal for Consumption Entry; and shipments authorized by CBP as “immediate delivery goods”.
Liquidation Liquidation is when CBP's assessment of the rate and amount of duty is complete. A notice of liquidation is provided by CBP posting on a public bulletin board at the port of entry. If an entry is not liquidated, CBP may request that a change be made. If the change results in less duty, a refund is permitted and the entry is considered liquidated. If more duty applies, the importer will be notified of the increase and given a chance to appeal. Liquidation can take up to 300 days.
Topic 3: Entry Process (cont. 6) Bookmark this
Warehouse Entries http://cscb.ca/print/book/export/html/182986
60/107
10/1/2015
201516 CCS Course Part 4
Goods may be placed in a customs bonded warehouse for up to five years. During that time, the goods may be reexported without paying duties, or they can be released from the warehouse. While in the warehouse, the goods can be manipulated by cleaning, sorting, repacking, or otherwise changing their condition by processes that must not amount to manufacturing.
Unentered Goods If an entry has not been filed for goods after 15 calendar days, the goods will be stored in a General Order Warehouse at the importer’s expense. If an entry hasn’t been filed after six months, the goods may be sold at public auction.
FAST In the U.S., the Free and Secure Trade (FAST) program is an initiative between the United States, Canada and Mexico to ensure security and safety while increasing the economic success of all three countries. In developing this program, the trade partners have agreed to harmonize commercial processes for shipments arriving at the border. These processes include using common riskmanagement principles, making supply chain security, and industry partnership a priority, and making use of advanced technology to improve the efficiency of screening commercial traffic at the border. Under FAST there are: dedicated lanes (where available) for FAST shipments; fewer examinations; partnerships between organizations such as PIP and CTPAT; the knowledge that carriers are carrying shipments for a CTPAT approved importer; and prior notice of changes to FAST that will expand eligible electronic cargo release methods. Trucks using FAST lanes must be CTPAT approved, carrying qualifying goods from a CTPAT approved importers, and the drivers must possess a valid FASTCommercial Driver Card. FAST processing is based upon advance electronic transmission of information.
Topic 3: Entry Process (cont. 7) Bookmark this
CTPAT CustomsTrade Partnership Against Terrorism (CTPAT) is an initiative to strengthen partnerships between business and government. The program recognizes a high level of supply chain and border security can only come from a close relationship between government and members of the supply chain such as importers, carriers, brokers, warehouse operators and manufacturers. This program asks businesses to have a high standard of security practices and communicate their security guidelines to their business partners in the supply chain. Benefits of CTPAT include: a reduced number of inspections; an assigned account manager; access to other CTPAT members via the Status Verification Interface (SVI); eligibility for accountbased processes, for example, bimonthly/monthly payments; and an emphasis on selfpolicing, not customs verifications.
Topic 4: Temporary Importations Bookmark this Certain goods that are not imported for the purpose of being sold or are imported for the purpose of being sold subject to approval may be eligible for temporary entry into the United States. There are only 13 specific provisions for this, so the number of goods that qualify for a temporary entry is limited. For example, samples of merchandise may be imported temporarily, without the payment of duty, under a Temporary Importation Bond (TIB). The samples may not be sold and must be exported within one year from the date of importation. An A.T.A. Carnet may be used to document goods entering the U.S. temporarily. The carnet, as it does in Canada, serves as a guarantee against the payment of duties which may become due if the merchandise is not exported. http://cscb.ca/print/book/export/html/182986
61/107
10/1/2015
201516 CCS Course Part 4
In most cases, goods entering the U.S. temporarily must be exported within twelve months of the date of importation. Upon application to the District Director of Customs, an extension may be granted to this dutyfree period, to a maximum of three years. Examples of goods that may be entered temporarily include: goods to be repaired, altered or processed; professional equipment, tools used in trades, repair components, and camping equipment; all the foregoing (imported by or for nonresidents visiting the United States briefly, and for their exclusive use); goods of special design for use, temporarily and exclusively in the production of goods for export; works of art, photographs and equipment used in intellectual and scientific projects brought into the United States by professional artists, lecturers or scientists for use in exhibitions or to promote art, science and industry; automobiles, automobile chassis and bodies, complete or cutaways, to be used solely for the purpose of demonstration; and samples used solely for the purpose of soliciting orders.
Topic 5: Goods Imported by Mail Bookmark this It can be advantageous to ship goods to the United States by mail. This is because: customs clearance is less complicated since a postal worker may collect duties upon delivery of a parcel where the value of the parcel does not exceed $2,000 U.S.; shipping charges are less expensive; no formal entry is required on dutyfree merchandise not exceeding $2,000 U.S. in value; and personal shipments under $2,000 U.S. in value do not require formal clearance. These do not include goods subject to other government department regulations, such as food products that are regulated by the FDA and shipments of textiles, chemicals, and radio frequency devices. The same exceptions apply to goods that are shipped by courier. Under joint CBP and postal regulations, each parcelpost package must have attached a customs declaration that shows the exact description and value of the contents. Commercial invoices must be included with all commercial shipments. In the case of postal shipments exceeding $2,000, or subject to other government department reviews, notification is forwarded to the consignee advising that a formal customs declaration must be prepared and submitted.
Topic 6: Examination of Goods Bookmark this CBP may examine goods to determine: their value and applicable duty; properly marking; if the shipment contains prohibited or illegal goods; and if the quantities are correct. Certain types of goods will be carefully examined to determine whether they meet all prescribed requirements. For example, food or drinks unfit for human consumption would not qualify under the Food and Drug Administration or shipments of seeds will be detained until samples can be taken and analyzed.
Topic 7: U.S. Goods Returned Bookmark this U.S. goods returning to the U.S. without having been advanced in value or improved in condition are allowed dutyfree entry. Form 3311 is used to document these goods. Customs will accept many different types of documentary evidence as proof of U.S. origin, including a copy of the U.S. exporter's original invoice, a copy of the U.S. Exporter's Certificate of Origin, a copy of an E29B issued by CBSA, or a copy of the Canada Customs Coding Form, form B3. Goods exported from the United States for repair or alteration may be subject to duty upon their return to the U.S. based http://cscb.ca/print/book/export/html/182986
62/107
10/1/2015
201516 CCS Course Part 4
on the value of the repairs or alterations. In keeping with the terms of the North American Free Trade Agreement, goods returned to the U.S. after having been exported to Canada for repair under warranty are allowed dutyfree entry upon their return to the U.S. Special CBP procedures govern the exportation and reentry of U.S. goods. For example, manufacturers’ statements or affidavits indicating that repairs could not have been done in the U.S. may be requested by CBP.
Topic 8: Request for Binding Ruling Bookmark this It is possible to obtain a binding ruling from CBP concerning the tariff classification or value of a commodity. In order to obtain a binding ruling for tariff classification, information concerning the goods should be submitted in writing to: Director, National Commodity Specialist Division U.S. Customs and Border Protection Attn: CIE/Ruling Request One Penn Plaza10th Floor New York, NY 10119 Requests for valuation rulings should be forwarded to: The Commissioner of Customs and Border Protection Attention: Office of Regulations and Rulings Washington, DC 20229. (The Division and Branch in the Office of Regulations and Rulings to which the request should be directed may also be indicated, if known.) To request a ruling, the following information is required: the names, and addresses information of interested parties and the manufacturer ID code; the port(s) in which the goods will be entered; a description the of goods; the country of origin; confirmation that the importer is no aware of any issues on the commodity pending before CBP or any court; and confirmation of an previous classification advice sought from an officer, and if so, from whom, and what opinion was rendered, if any. To request a ruling on tariff classification, value of ingredients or materials; end use of the goods as intended in the United the commercial, or scientific name; and any other information that may be helpful for the purpose of tariff classification. For a ruling on valuation, the following information should accompany the request: a copy of the U.S. Customs invoice; description of the transaction (FOB or CIF, Ex Factory, or any other arrangement); the relationship between the transacting parties (i.e. between unrelated parties), whether any information relating to commercial aspects of the transaction (e.g. billing practices, end use of the goods, descriptions, mode of transport and all other pertinent facts). A binding ruling may also be requested online.
Topic 9: Suggestions to the Exporter Bookmark this For an expedited customs clearance, CBP recommends that exporters: include legible customs invoices, with detailed descriptions; packing list; mark and number each package so that it can be identified with the corresponding marks and numbers appearing on the invoice; http://cscb.ca/print/book/export/html/182986
63/107
10/1/2015
201516 CCS Course Part 4
mark the goods with the country of origin; review and comply any special laws, for example, laws relating to foods, drugs, cosmetics, alcoholic beverages, and radioactive materials; review shipping and invoice instructions given by the purchaser in the United States; work with CBP to develop packing standards for their goods; follow security procedures; consider a carrier using the Automated Manifest System; and CTPAT certified; consider a customs broker who participates in the Automated Broker Interface; and consider becoming CTPAT certified.
Lesson 3 Summary: U.S. Customs Procedures Bookmark this In this lesson you learned about U.S. Customs procedures. Key points in this lesson include: Generally, the only documents required for CBP purposes (for goods exported from Canada) are a commercial invoice, and, where NAFTA benefits are claimed, a properly completed NAFTA Certificate of Origin. The importer security filing 10 + 2 for ocean shipments, has been given its name because 10 pieces of information are required from the importer (or agent) and 2 pieces are required from the carrier. Informal entry summaries, that is, those valued at $2,000 and less are not subject to formal entry requirements by CBP. BRASS is a U.S. cargo processing system. It relies on prescreening of highly compliant, highvolume, repetitive cargo and uses barcode technology to save time and reduce congestion at the ports. ABI allows qualified participants to file import data electronically with CBP. Certain goods that are not imported for the purpose of being sold or are imported for the purpose of being sold subject to approval may be eligible for temporary entry into the United States. Take a few minutes to see what you have learned about U.S. Customs procedures.
Module 25: Lesson 3 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Export Permits Bookmark this An export permit is an official document that gives an exporter the authority to ship specific goods to another country or to ship goods to a specific country, which they would not otherwise be permitted to do. The Canadian government controls the movement of exported goods through various types of export permits and certificates. This lesson will focus primarily on export permits issued by the Department of Foreign Affairs, Trade and Development Canada (DFATD), but the export permits and certificates of Other Government Departments (OGDs) will be briefly discussed.
Rationale http://cscb.ca/print/book/export/html/182986
64/107
10/1/2015
201516 CCS Course Part 4
As a CCS, your employer or a client may ask you for information about exporting goods, or they may ask you to apply for an export permit on their behalf. Knowing which types of exported goods are controlled, where to find information relating to export permits, and when and how to apply for an export permit will help expedite goods, and prevent penalties, seizures, and other serious complications.
Lesson Objective At the end of this lesson, you will be able to describe the types of goods that require export permits. You should also be able to identify specific countries for which export permits are required.
Topic 1: The Need for Export Permits Bookmark this The government of Canada controls the export of certain goods for various reasons. Canada belongs to an international community. The Canadian government has implemented controls and restrictions in order to prevent the exporting community from violating intergovernmental agreements and contravening foreign policy. Our government also restricts exports that may pose a threat to international security. While enjoying the benefits of freeflowing trade, Canada has a responsibility to maintain international security. If exporters and others in the trade community practice responsible trading by following government guidelines, they will help ensure no harm comes to Canada or any other country. Controls help prevent exporters from contributing to national or regional conflicts or instability. Export controls also obstruct the conditions for the development of weapons and human rights violations. Controls are placed on exports so that Canadian exporters avoid contravening any intergovernmental agreement or policy that Canada is party to. For example, Canada has policies in place to regulate trade in rough diamonds, the sale of weapons, and the protection of endangered plants and species. Last, export statistics need to be kept and they must be accurate. The government collects data on Canadian exports, and, by having access to information on the economic conditions of international trade; the exporting community can make informed decisions on existing and developing export markets.
Topic 2: The Export and Import Permits Act Bookmark this The Export and Import Permits Act (EIPA) gives the Governor in Council the authority to establish various control lists. The Export Control List (ECL) and the Area Control List (ACL) were created under Section 3 and 4 of this Act, respectively. The Act also allows the Minister of Foreign Affairs to issue export permits.
Area Control List The Area Control List is a list of countries. Export permits are required for goods being shipped to the countries listed on the ACL. Currently two countries, Belarus, and North Korea are included on the Area Control List. Goods cannot be exported to any of these countries without an export permit. These countries have been placed on the ACL because the Government of Canada felt that abuses taking place in those countries were too serious to ignore. A request for an export permit to export goods to Belarus, or North Korea is evaluated on a casebycase basis. Requests to export goods such as food, humanitarian supplies, and medical necessities are generally approved. Most other goods, however, are not.
Export Control List Some goods require an export permit regardless of their destination. A list of these goods is found in the Export Control List. It is divided into seven chapters known as Groups. The Export Control List identifies specific goods and technology that are controlled. The seven Groups are: Group 1: Dualuse List http://cscb.ca/print/book/export/html/182986
65/107
10/1/2015
201516 CCS Course Part 4
Group 2: Munitions List Group 3: Nuclear NonProliferation List Group 4: NuclearRelated Dualuse List Group 5: Miscellaneous Goods and Technology Group 6: Missile Technology Control Regime List and Group 7: Chemical and Biological Weapons Non Proliferation List. Details of the goods listed on the Export Control List are found in a document called: A Guide to Canada's Export Controls. Particular attention must be paid to items 5400 and 5504 in Group 5 on the Export Control List.
Topic 3: Highlights of the Export Control List Bookmark this
Item 5400 of the Export Control List Under Item 5400, United States Origin Goods and Technology, goods of U.S. origin, as defined in Item 5400, require an export permit when exported from Canada. Item 5400 was designed to safeguard Canada from being used as an alternative route to circumvent laws relating to U.S. goods being shipped to a country with which the U.S. has an embargo. If the goods are destined for enduse in countries where no embargo applies, exporters may quote General Export Permit No. 12. If the goods are destined for enduse in Iran, the Sudan, Cuba, Syria or North Korea or any country on Canada's Area Control List, the exporter must apply to the Export Controls Division of DFATD for an individual export permit. General and individual export permits will be further discussed in Topic 5.
Item 5504 of the Export Control List Under item 5504, Strategic Goods and Technology, some goods of U.S. origin are subject to reexport controls imposed by the Government of the United States. Exporters need to be aware that goods of U.S. origin that have been included in a finished product while in Canada may be included in item 5504. If an exporter is unfamiliar with reexport controls that might apply to his goods, he should contact the original U.S. supplier or the Export Controls Division of DFATD. Exporters may be required to provide a copy of a valid U.S. Export licence prior to issuance of an Individual Export Permit. Proof of authorization is required for U.S. goods that fall into ECL Group 2, the Munitions List; Group 6, the Missile Technology Control Regime List; or item 5504.
Topic 4: Forest Products Bookmark this The Export Control List includes Forest Products. Items 5101 to 5104 of Group 5, Miscellaneous Goods and Technology, include logs, pulpwood, material or product of red cedar that is suitable in the manufacture of shakes, shingles, and softwood lumber products. Softwood lumber is one of Canada’s largest exports to the United States and Canadian soft wood lumber accounts for a third of the U.S. demand consumption of this product. In 2006, Canada and the United States signed the Softwood Lumber Agreement. The aim of the agreement is to promote a stable trade environment for the industry. According to D2011, permits for softwood lumber being exported to the United States do not have to be presented to the CBSA. However, permits are required for the export of certain softwood lumber products. For more information on export permits for softwood lumber, the exporting community is encouraged to contact the Softwood Lumber Division of Foreign Affairs, Trade and Development Canada at: Softwood Lumber Controls Division (TNC) Lester B. Pearson Building 125 Sussex Drive Ottawa, Ontario K1A 0G2 Fax: 6139448950 Email:
[email protected] http://cscb.ca/print/book/export/html/182986
66/107
10/1/2015
201516 CCS Course Part 4
Topic 5: Firearms Bookmark this DFATD regulates the export of firearms. Information on the application required to allow the export of firearms and related goods is found in Section J of the Export Controls Handbook. An export permit issued by the Export Controls Division of DFATD must accompany all firearms exported to countries other than the U.S. Currently, nonrestricted or restricted firearms, exported from Canada to the United States, do not require an export permit. However, the United States requires an import permit. An export permit is required to export prohibited firearms, prohibited weapons, prohibited devices, components, parts, or ammunition to the U.S. A company may export these goods if it has the proper business licence and export permit. Before exporting any of these items, individuals and companies should check with customs officials in the country to which the goods are being exported to ensure that the goods are admissible in that country. Applications for export permits are available through Export Controls Online or from any customs office or from the Department of Foreign Affairs, Trade and Development Canada. Certain prohibited firearms, weapons, devices, or components thereof that are included on the Export Control List (ECL), may be exported only to destinations listed in the Automatic Firearms Country Control List (AFCCL). Items that are not legally possessed in Canada may not be exported from Canada.
Topic 6: United Nations Security Council Embargoes Bookmark this In addition to the ACL and the ECL, international trade is also controlled by United Nations Security Council embargoes. The United Nations Security Council is responsible for maintaining international peace and security. When complaints of threats to peace are brought to the attention of the council, and an agreement for peace does not seem possible, the council will suggest means to a peaceful settlement. If a dispute leads to fighting, the council can issue ceasefire directives, send UN peacekeeping forces, or decide upon economic sanctions. Because economic sanctions can have an impact on vulnerable segments of a population, UN economic sanctions are aimed at arms embargoes, travel bans, or financial or diplomatic restrictions. In Canada, if a particular nation is subject to a United Nations Security Council embargo, additional approval for shipments going to that country from Canada are required under the United Nations Act and its associated regulations. The CBSA assists DFATD with the administration and enforcement of the United Nations Act. Any person who contravenes an order or regulation made under the United Nations Act is guilty of an offence and liable (a) on summary conviction, to a fine or not more than $100,000 or to imprisonment for a term of not more than one year, or to both; or (b) on conviction on indictment, to imprisonment for a term of not more than 10 years. Countries that are subject to Canadian economic trade sanctions are listed on the Department of Foreign Affairs, Trade and Development Canada's website. Specific sanctions against a country are also listed by country on the site.
Topic 7: General Export Permits and Individual Export Permits Bookmark this The Export Controls Division of DFATD administers two types of export permits: General Export Permits (GEPs) and Individual Export Permits (IEPs). GEPs allow an exporter to ship certain controlled goods to specific countries without the need for an IEP. GEPs are not issued to individual exporters. Instead, the GEP number is quoted in the appropriate field on the Export Declaration. No http://cscb.ca/print/book/export/html/182986
67/107
10/1/2015
201516 CCS Course Part 4
additional paperwork is required, and there is no DFATD involvement. Like general import permits, GEPs contain conditions that must be met. For example, a GEP may be conditional on an exporter reporting on the actual volume of exports made under a GEP. If an exporter takes advantage of a GEP and does not quote the General Export Permit number on the Export Declaration, CBSA may believe they are exporting a controlled good without a permit and issue a penalty. The Related Regulations section of the Table of Contents for the Export and Import Permits Act lists the General Export Permits. When an export permit is required and a GEP cannot be used, an Individual Export Permit (IEP) must be obtained. IEP applications may require the completion of two forms. An EXT1042, Application for Permit to Export Goods (General Information Form) is required and possibly a second form, depending on the type of product. In most cases, the additional form is an EXT10421, Controlled Goods Detail Form. Other additional forms may include a Firearms Detail Form, a Logs Detail Form, and a BC Logs Transition Detail Form. Exports permit applications and all supporting documents are sent to the Export Controls Division of DFATD. Information on how to complete the export permit application in either EXCOL or on forms EXT1042 and EXT 10421 is found in Section E.3 of the Export Control Handbook.
Topic 8: Export Controls Online (EXCOL) and Export and Import Controls System (EICS) Bookmark this EXCOL, or Export Controls Online, is a secure online program offered by DFATD that allows Canadian exporters to submit export permit applications, check the status of an export permit application and print permits. Permit applications may also be downloaded from DFATD’s website and mailed or faxed to DFATD. Exporters should ensure that all necessary technical and supporting documentation is included with the application. Incomplete applications may be returned to the applicant. The Export and Import Controls System (EICS) is also a secure online program offered by DFATD. It allows customs brokers to submit and process export permit applications. The EICS application is restricted to brokers, while EXCOL is available to all.
Topic 9: Other Government Departments and Agencies Bookmark this Other government departments and agencies can be involved in the administration of export controls.
Environment Canada Exporting Endangered Species Canada is a signatory to the Convention of International Trade in Endangered Species (CITES). CITES controls the import, export and transit of endangered wild flora and fauna. Environment Canada is responsible for implementing CITES in Canada. The Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act (WAPPRIITA) is the enabling legislation for CITES. WAPPRIITA prohibits the export of CITES controlled species without the proper permits. CITES contains three appendices. The species listed in each appendix are given different levels of protection: Appendix I contains a list of species that are rare or endangered because of international trade. International Trade is generally prohibited for these species. Appendix II lists species that are not currently rare or endangered but could become so if trade is not regulated. Appendix III includes species that are not necessarily endangered but are managed within a nation.
http://cscb.ca/print/book/export/html/182986
68/107
10/1/2015
201516 CCS Course Part 4
Under Appendices II and III, international trade in these species is possible, but controlled by permits. If specimens from Appendix I, II or III are exported, they must be accompanied by a Canadian CITES export permit. The export permit is retained and forwarded to the Canadian Wildlife Service (CWS). For permits issued electronically, one of the two originals of the permit is to be forwarded to CWS. The other original must be left with the exporter for presentation to customs officials at the country of destination. When exporting plants or animals or their byproducts: 1. Search the CITES Control List to see if the species or derived product is listed. 2. Obtain the CITES permit before export. 3. Make sure the CITES permit is validated and accompanied by all CITES documents. 4. Comply with CITES guidelines for the transporting and shipment of live animals and plants. More information on CITES may be found in D1971.
Topic 9: Other Government Departments and Agencies (cont. 2) Bookmark this
Exporting Hazardous Waste and Hazardous Recyclable Material In 1989, Canada signed the United Nations' Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. One of the objectives of the Basel Convention was to minimize the international movement of hazardous waste and hazardous recyclable material. Because of this, Canada has implemented the Export and Import of Hazardous Waste Regulations Recyclable Material Regulations. All requests for exporting or importing hazardous wastes or hazardous recyclable material must be submitted to Environment Canada's Waste Reduction and Management Division.
Exporting Ozone Depleting Substances Ozone depleting substances are specific chemicals that cause the breakdown in the stratosphere and release chlorine or bromine, which destroy the stratospheric ozone layer. Most of these substances are also greenhouse gases. The Montreal Protocol on Substances that Deplete the Ozone Layer has been signed by 120 countries. This agreement initiated controls on the world's consumption of ozone depleting substances. Canada has adopted regulations to meet its Montreal Protocol commitments. Unless an exporter has received written authorization from the Minister of the Environment prior to exporting a controlled substance, the exportation of controlled substances is prohibited. Controlled substances are listed on Appendix A of D19 72. To obtain a permit, exporters must contact their local Environment Canada regional office.
Topic 9: Other Government Departments and Agencies (cont. 3) Bookmark this
Canadian Food Inspection Agency Exporting Food, Animals and Plants The Canadian Food Inspection Agency’s (CFIAs) interest in export controls concerns the export of food, animals and plants. Regarding animals, CFIA’s program is designed to ensure that the export of animals, animal products, and animal by products meet the health requirements of the importing country. CFIA also regulates the transportation of livestock, and the http://cscb.ca/print/book/export/html/182986
69/107
10/1/2015
201516 CCS Course Part 4
care and handling of farm animals. Under the Health of Animals Act and Regulations, livestock, poultry, animal embryos, and animal semen exported from Canada must be accompanied by a health certificate issued or endorsed by a CFIA veterinary inspector. The CFIA is also responsible for the issuance of Phytosanitary Certificates for all agricultural and forestry products exported to foreign countries. Under the Canada Agricultural Products Act, CFIA ensures that any honey, fresh produce, processed fruits and vegetables, fish and seafood, meat and poultry, dairy, and egg products leaving the CFIA inspected establishments is safe, meets specific standards and is appropriately labeled. CFIA certifies that exported food meets foreign country requirements when there are reciprocal agreements with other countries.
Topic 9: Other Government Departments and Agencies (cont. 4) Bookmark this
Heritage Canada Exporting Cultural Property The Cultural Property Export and Import Act ensures the preservation of Canadian heritage by establishing export restrictions for objects of historical, scientific and cultural significance. The export of cultural property is governed by the Canadian Cultural Property Export Control List. It describes a range of products for which an export permit is required. The export of an item covered by the Control List can be postponed if an export permit has been refused. The delay, usually between two and six months, allows an opportunity for institutions and public authorities in Canada to purchase the goods that have been denied an export permit. If the goods are not purchased by the end of the delay period, then an export permit may be granted. The control list does not apply to objects that are less than 50 years old, or made by a person still living.
The Canadian Nuclear Safety Commission Exporting Nuclear Items Under the Nuclear Safety and Control Act, the Canadian Nuclear Safety Commission (CNSC) regulates exports (and imports) of nuclear items and nuclear related dualuse items.
Topic 9: Other Government Departments and Agencies (cont. 5) Bookmark this
Natural Resources Canada Exporting Rough Diamonds In May of 2000, representatives from the diamond industry and from the governments of nearly 50 diamond producing countries met in Kimberley, South Africa as a response to the growing diamond trade in war zones. The meetings resulted in the Kimberley Process Certification scheme. The aim of the agreement was to stop military groups from using the trade of rough diamonds to finance their military supplies. The Kimberley Process encourages participating countries to exchange diamonds only with other Kimberley Process nations. When diamonds arrive at the border of a Kimberley Process nation, government officials are better able to approve or reject the shipments based on the use of wellsealed containers accompanied by Kimberley Process Certificates (KPC). On January 1, 2003, the Export and Import of Rough Diamonds Act became law in Canada. Natural Resources Canada (NRCan) is responsible for the legislation. The purpose of the legislation was to implement the Kimberley Process Certification Scheme in Canada. As a result of the scheme, every person who exports rough diamonds from Canada must use a tamperresistant container and the container must be accompanied by a Canadian Kimberley Process Certificate http://cscb.ca/print/book/export/html/182986
70/107
10/1/2015
201516 CCS Course Part 4
(KPC). CBSA assists in its enforcement by ensuring appropriate containers are used.
Health Canada Exporting Narcotics and Controlled Drugs CBSA assists Health Canada in administering the export of narcotics and controlled substances. Anyone involved in the export of a narcotic must be a licensed dealer and must obtain an export permit. Applications for a narcotic licence and export permits can be obtained by contacting Health Canada's Office of Controlled Substances.
Lesson 4 Summary: Export Permits Bookmark this In this lesson, you studied export permits. You were introduced to goods that require export permits and the countries with which Canada has limited trade. You also studied why Canada has limited trade with these countries. Key points in this lesson include: The government of Canada controls exports for various reasons. These include: preventing the exporting community in Canada from violating intergovernmental agreements and contravening foreign policy; maintaining international security; ensuring no harm comes to Canada or its allies; and maintaining accurate export statistics When considering an export, many questions must be asked: Is the name of the importing country on the Area Control List? Are the goods listed on the Export Control List? Are the goods subject to a UN Security Council embargo? Are the goods of U.S. origin? What is the end use of the goods? Does the shipment meet the conditions of a General Export Permit?
Module 25: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. Start quiz
Module 25 Summary: Exporting from Canada Bookmark this In this module, you studied export reporting. You learned that Canada has a responsibility to ensure that goods that enter the international market from Canada do not pose a security threat to other countries. While there are three classes of persons involved in exports, it is the exporter who is ultimately responsible for the documents and the goods he causes to be exported. You studied the various types of declarations that are available, the time limitations for making reports, the locations where reports are to be made and what must be done when an amendment is required. You learned about the maintenance of records kept in Canada by exporters and the requirements of foreign purchaser countries. http://cscb.ca/print/book/export/html/182986
71/107
10/1/2015
201516 CCS Course Part 4
Various U.S. programs, such as 10 + 2, PAPS, BRASS, FAST, and CTPAT were discussed and you studied the ways in which U.S. programs contribute to supply chain security and the free flow of goods into the U.S. The module ended with the study of export permits. The ACL, ECL, UN embargoes and the involvement of DFAIT and other departments and agencies were discussed. Now it's time to test what you’ve learned.
Module 25: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
16 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 26: Compliance Bookmark this In this module you will learn about compliance. Being compliant means acting in accordance with the law. For travellers and goods entering Canada, the CBSA is just one of the government departments or agencies responsible for ensuring compliance with Canadian laws and regulations. These laws and regulations are in effect to protect the safety, health and economic well being of all Canadians. Although the laws and regulations apply to both travellers and goods, this module focuses on commercial transactions. Throughout this course, you have been provided with the tools on how to become trade compliant. You learned how to determine the tariff classification and value for duty of imported goods, and also how to determine the country of origin so that the correct tariff treatment is used. You have also learned how to make any necessary corrections to accounting documents so that CBSA has accurate and complete trade data.
Module Objective Upon completion of this module, you will be able to describe how the CBSA promotes and ensures compliance with laws and regulations for goods entering Canada.
Lesson 1: Customs Action Plan (CAP) Bookmark this In order to ensure compliance, CBSA’s approach begins with educating and informing the public. That strategy, contained in the Customs Action Plan (CAP), is based on risk management: a focus on examining goods and travellers that pose the greatest risk.
Rationale As a CCS, you will want to ensure that your clients and your company are compliant with the law. Importers who are non compliant face serious penalties, delays at the border, and may not be eligible for certain CBSA programs.
Lesson Objective http://cscb.ca/print/book/export/html/182986
72/107
10/1/2015
201516 CCS Course Part 4
At the end of this lesson you will have an understanding of CBSA’s compliance strategy under the Customs Action Plan (CAP).
Topic 1: Purpose Bookmark this The fiveyear Customs Action Plan (CAP) was unveiled in 2000. This plan was created in order to improve and streamline the way business is done at the border and to redesign and modernize customs processes. The objectives of the plan were to make lowrisk trade and travel easier, and to give customs officers the tools to concentrate on activities that are important to compliance. Tools established under the CAP remain in place today; however, with the events of September 11, 2001, there is an added focus on security. Under the CAP, CBSA announced plans to use a riskmanagement system, supported by an expanded use of technology. The CAP consisted of 17 initiatives, with proposed implementation over five years. The initiatives were intended to address four commitments, which are the overall objectives of the CAP: improving service; ensure that business and travellers follow the laws and regulations; focus on illegal activity and threats to health and safety; and promote consistency for exporters and for Canadians travelling abroad.
Topic 2: Key Initiatives Bookmark this Some key initiatives of CAP are: preapproval (of goods and travellers); advance information (of trade data and travellers); and selfassessment (after importation). To meet these and other initiatives, the following programs were developed: 1. Customs Self Assessment (CSA) 2. Administrative Monetary Penalty System (AMPS) 3. Advance Commercial Information (ACI) These programs allow officers to concentrate on areas of high and unknown risk. As well, having as much information as possible before the arrival of goods allows customs to make release decisions in advance. This in turn results in a faster release time for goods that are of low risk. CBSA also performs post release verifications and audits. Verifications can take the form of a: questionnaire; verification letter; verification visit; or a review of any other information or articles received from an importer, owner, or person who accounted for the goods under subsection 32(1), (3), or (5) of the Act. The CBSA post release verification can be a MultiProgram Verification or a Single Program Verification.
Topic 2: Key Initiatives (cont. 2) Bookmark this MultiProgram Verification (MPV) is: traditionally referred to as Compliance Assessment Review (CAR), and involves the onsite, multiple program verification of a client’s compliance. http://cscb.ca/print/book/export/html/182986
73/107
10/1/2015
201516 CCS Course Part 4
MPVs assess an importer’s overall level of compliance of imported goods over an extended period of time. Single Program Verification (SPV) is: traditionally referred to as New Verification Process (NVP), driven through priorities assigned through HQ from other program lines and regionally generated cases, primarily done through desk verification (refers to not being onsite at the client’s premises), and onsite verification, if deemed necessary. SPVs look at a single issue within a sample of transactions.
Lesson 1 Summary: Customs Action Plan (CAP) Bookmark this In Lesson 1 you learned about the purpose of the Customs Action Plan and programs that were developed as a result of the CAP. Take a few minutes and answer a few questions to see how much you have learned in Lesson 1.
Module 26: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
2 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: Customs Self Assessment Bookmark this In this lesson you will learn about Customs Self Assessment (CSA). The CSA program provides approved importers with streamlined entry, accounting and payment processes for imported eligible goods from the United States and Mexico. These processes can end the need for importers to maintain separate standalone systems for customs processes and allows them to use their own business systems to meet CBSA requirements.
Rationale As a CCS, you may have to provide your clients, or your employer, with information on CSA why they may want to participate, whether they are eligible, and how they can apply for the program.
Lesson Objective At the end of this lesson you will have an understanding of Customs Self Assessment (CSA).
Topic 1: Importers Bookmark this http://cscb.ca/print/book/export/html/182986
74/107
10/1/2015
201516 CCS Course Part 4
Importers eligible to apply for the CSA program include those who: satisfy the residency requirement, meaning the importer ordinarily resides in Canada or one of the partners resides in Canada, or if the importer is a corporation, the head office or a branch office is located in Canada; have a history of importing commercial goods into Canada at least once prior to the 90 days before the day the application was received by CBSA; are without contraband or major commercial infractions; are prepared to make an investment in business systems; and are willing to provide to CBSA proof that commercial business processes, customs interfaces, and the required trigger, audit trails, and linkages exist or will exist in the business's books and records. If an importer wishes to take advantage of the streamlined entry process under CSA, all carriers moving eligible goods for that importer, and all drivers, must be approved. However, if the importer only wishes to take advantage of the CSA streamlined accounting and payment system, there is no need for the carrier and driver to be approved. Under CSA, an importer may take advantage of: a streamlined entry process, a streamlined accounting and payment system, or both a streamlined entry process and a streamlined accounting and payment system.
Topic 1: Importers (cont. 2) Bookmark this To request CSA approval, the importer must first complete Form E646, Customs Self Assessment Importer Part I Application. When completed, the original signed application is submitted to the Customs Self Assessment office. To apply for the second phase of the CSA approval process, the importer completes Form E655, Customs Self Assessment Program Importer Part II Application. This is also submitted to the CSA office. The applications include basic corporate information and key business activities and products, as well as information on all its Canadian divisions. This information must be certified as being correct. Importers who successfully complete this step must then demonstrate that their books, records, and business systems have internal controls, audit trails, and necessary linkages in place.The last part of the application process requires the importer to sign an undertaking, or agreement, with CBSA. This undertaking must state the following: the start date, the importer’s obligations, the accounting option selected, importerspecific operational conditions, including any conversion activities for outstanding (preCSA) releases, and action plans to improve compliance.
Topic 2: Carriers Bookmark this Carriers who wish to participate in the CSA program must first complete Form E647, Customs Self Assessment Program Carrier Application Part 1. For Part II of the CSA approval process, the carrier completes Form E656, Customs Self Assessment Program Carrier Part II Application, and forward a copy signed by an authorized officer of the company to the address listed on the form. Carriers eligible to apply to the CSA program include those who are: bonded or postaudit, have a history of transporting goods to Canada for at least 90 days, without contraband or major commercial infractions, willing to be liable for, and maintain control of, CSA shipments until delivered, and willing to provide CBSA with proof that proper commercial business processes and audit trails exist or will exist. CSA carriers are required to maintain control of and liability for the goods they are carrying until delivery. They must also demonstrate that they have systems in place that ensure all international shipments entering Canada are reported at the http://cscb.ca/print/book/export/html/182986
75/107
10/1/2015
201516 CCS Course Part 4
border and delivered to the CSA importer.
Topic 3: Drivers Bookmark this Drivers who wish to carry goods for CSA importers and be eligible for the CSA entry option must be approved under FAST or approved under the Commercial Driver Registration Program (CDRP), a joint initiative between CBSA and Citizenship and Immigration Canada. In order to apply for the CDRP, drivers must: be a citizen or permanent resident of Canada; or be a citizen or permanent resident of the United States who meets the normal visitor requirements; provide true and complete information on their application; be admissible to Canada under the Immigration Act; have not had goods seized by customs within the last five years; have no criminal record for which they have not received a pardon; have not been found in violation of customs or immigration legislation; and be deemed of good character, meaning that the CBSA is confident they will comply with program obligations. Form E645, Commercial Driver Registration Program Application is used to apply for the CDRP.
Topic 4: Entry Process and Accounting Under CSA Bookmark this If a CSA importer and carrier are also PIP approved, and the driver is approved, the carrier can enter Canada through the designated FAST lanes. If the importer and carrier are CSA approved, but not PIP approved, and the driver is approved, the CSA entry process can be used but the carrier cannot use the FAST lanes. The CSA process at the border involves the registered driver presenting his Commercial Driver Registration Card, the CSA approved carrier code and the CSA approved importer business number. These bar coded data elements are captured by the border services officer in CBSA’s automated system to verify that the driver is registered, and that the carrier and importer are both CSA approved. Spotchecks are occasionally performed; however, since the CSA option is limited to known clients with whom CBSA has established a partnership, the officer will usually authorize the shipment for delivery. In a nonCSA environment, a notice that goods have been released acts as the accounting trigger and goods must be accounted for within a particular time from the date of release. CSA clients are not notified that their goods have entered Canada. Instead, CBSA relies on the CSA importer’s internal system to trigger accounting. With CSA, the date that goods are received by the CSA importer is considered to be the date of release.
Topic 4: Entry Process and Accounting Under CSA (cont. 2) Bookmark this
Accounting for Goods Under CSA There are two accounting options for importers using CSA.
Option One Requires that all goods received in one calendar month be accounted for by the 18th of the following month. http://cscb.ca/print/book/export/html/182986
76/107
10/1/2015
201516 CCS Course Part 4
Option Two Requires that all goods received between the 19th of one month to the 18th of the second month be accounted for by the last business day of the second month.
Topic 4: Entry Process and Accounting Under CSA (cont. 3) Bookmark this
Revenue Summary Form For nonCSA importers, trade information and the amount of duties and taxes owing that is, final accounting must be presented to CBSA within 5 days from the date that goods were released. Then, at the end of the month, a K84 that lists the total amount of duties and taxes owing is issued. CSA importers are not issued a K84. Instead, CSA importers summarize and report to CBSA any CBSA debits and credits once a month on an CSA Revenue Summary (RSF), E648. If the importer finds that they are owed money, they may apply for a refund. Examples of debits that may be listed on the RSF are duties, GST, interest, and penalties. Credits might include a refund of duty, drawback, or interest. The importer has the option of either forwarding a paper copy of the RSF to customs or providing the information electronically. An RSF is required even where the net amount is zero or a credit amount is due to the importer, and failure to submit the RSF by the last business day of the month will result in a penalty. Payment of the RSF is made through a financial institution, and multiple payments may be made during the month to avoid incurring interest.
Topic 5: Penalties Bookmark this Under the Administrative Monetary Penalty System (AMPS), CSA carriers and importers can be assessed penalties. Following are two examples of contraventions that are specifically for CSA importers. Only the relevant portions of the contraventions are shown. Customs Self Assessment (CSA) importer failed to provide the detailed product description Contravention within the period specified in respect to goods liable to a Special Import Measures Act (SIMA) C224 action. Assessed 21 days after detailed product description requested.
Penalty
1st: $150 2nd: $225 3rd and Subsequent: $450
Penalty Basis
Per document
Legislation
Customs Act, subsection 40(1)
D Memo
D17110 Noncompliance occurs when a CSA importer fails to provide a detailed product description in respect of goods liable for review under the SIMA after the importer has been notified in writing. Officer must be an authorized user of the SIMA Compliance Web site to be able to apply this penalty. Applied against CSA importers.
http://cscb.ca/print/book/export/html/182986
77/107
10/1/2015
201516 CCS Course Part 4
Penalty cannot be issued unless the importer has been notified in writing that detailed product description is required. The importer will have 21 days after issuance of the letter, to provide the records. More time can be negotiated, depending on the circumstances. Guidelines
The penalty will be applied if the information is not provided after this first request. Type and extent of information required will be identified by the Antidumping and Countervailing Directorate in the notice letter to the importer. In instances where an officer finds an importer in contravention for the first time, the officer must forward this information to HQ. HQ will issue the notification to the importer. Verify that the importer has been notified regarding the product description requirements by referring to the case information on the SIMA Compliance Web site. For the first B3, apply the first level penalty; for the second B3, apply the second level penalty; for the third and subsequent B3, apply the third level penalty. Apply a penalty per document, i.e. per B3 or B2. For nonCSA importer, see C223.
Retention Period
36 months
Topic 5: Penalties (cont. 2) Bookmark this Contravention The importer or transporter failed to provide true, accurate and complete information when C234 applying to participate in the Customs Self Assessment (CSA) program.
Penalty
Flat rate: $25,000
Penalty Basis
Per Instance
Legislation
Customs Act, section 7.1
D Memo
D1717 Noncompliance occurs when the discovered errors or omissions relate to: 1. Information required on Part I of the CSA Application from importer or transporter which would have resulted in the application being denied, namely: applicant identification information on divisions of the company additional information provided for the application process, when requested 2. Importer information required for Part II of the CSA Application, which would have resulted in the application being denied namely: business date(s) that results in late or nonaccount accounting trigger(s) that results in nonaccount accounting option that results in late accounting (the importer is not using accounting option attested to
http://cscb.ca/print/book/export/html/182986
78/107
10/1/2015
201516 CCS Course Part 4
in the CSA Undertaking) descriptions provided in section B – Books and Records, that result in noncompliance 3. Transporter information required for Part II of the CSA Application which would have resulted in the application being denied namely: descriptions provided in section B – Books and Records, that result in noncompliance Normally applied by a CSA compliance manager. Guidelines
Applied against the importer or transporter, at the legal entity level. Applied at time of application or subsequent to CSA approval. Apply a penalty regardless of number of errors on application. Any information pertaining to this contravention discovered by a Senior Officer Trade Compliance should be communicated to the CSA compliance manager. No penalty for obvious clerical or administrative errors. Guidelines Transporter information required for Part II of the CSA Application which would have resulted in the application being denied namely: descriptions provided in Section B – Books and Records, that result in noncompliance Retention Period 12 months Apply a penalty regardless of number of errors on application. Any information pertaining to this contravention discovered by a Senior Officer Trade Compliance should be communicated to the CSA compliance manager. No penalty for obvious clerical or administrative errors.
Guidelines
Transporter information required for Part II of the CSA Application which would have resulted in the application being denied namely: descriptions provided in Section B – Books and Records, that result in noncompliance
Retention Period
12 months
Lesson 2 Summary: Customs Self Assessment Bookmark this Key points in Lesson 2 are: Under Customs Self Assessment, CSA, an importer may take advantage of: a streamlined entry process; a streamlined accounting and payment system; or both a streamlined entry process and a streamlined accounting and payment system. To use the streamlined entry process: goods must be eligible under CSA; carriers must be CSA approved; and drivers must be registered. The application process to become a CSA importer is a twostep process. If a CSA importer and carrier are also PIP approved, the carrier can enter Canada through one of the designated http://cscb.ca/print/book/export/html/182986
79/107
10/1/2015
201516 CCS Course Part 4
FAST lanes. If the importer and carrier are CSA approved, but not PIP approved, they are still eligible for the CSA entry process but cannot use the FAST lanes. The CSA entry process at the border involves presentation of three pieces of data: the driver’s Commercial Driver Registration Card; the CSA approved carrier code; and the CSA approved importer business number. CBSA relies on the CSA importer’s accounting system to trigger the accounting process. The date that imported goods are received by the CSA importer is considered to be the date of release. There are two accounting options for importers using CSA. CSA importers summarize and report to CBSA any CBSA debits and credits once a month on an RSF – CSA Revenue Summary. Payment of the RSF is made through a financial institution, and multiple payments may be made during the month to avoid incurring interest. CSA carriers and importers can be assessed penalties under AMPS. Now take a few minutes and answer some questions about CSA.
Module 26: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
5 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 3: Administrative Monetary Penalty System Bookmark this The Administrative Monetary Penalty System (AMPS) is a system of penalties for infractions under the Customs Act, the Customs Tariff Act, and the Special Import Measures Act, and any of the regulations made under these Acts. For each possible infraction, there is a corresponding AMPS penalty.
Rationale Being aware that penalties can be assessed for noncompliance will help you explain to your clients and employer the importance of being compliant.
Lesson Objective At the end of this lesson, you will be aware of the penalties that can be assessed for noncompliance. You will also be aware of how CBSA advises of penalties that they have assessed, and how penalties can be appealed. http://cscb.ca/print/book/export/html/182986
80/107
10/1/2015
201516 CCS Course Part 4
Topic 1: AMPS Bookmark this AMPS was implemented in December 2001. However, in order to give importers, customs brokers, carriers, and exporters an opportunity to become compliant, penalties were assessed but the payment of penalties was waived until October of 2002 when AMPS was fully enforced. The objective of AMPS is to correct noncompliance in the commercial stream and therefore ensure a level playing field for Canadian businesses. Penalties under AMPS vary from fairly small amounts to a maximum of $25,000 per single infraction. As opposed to seizures that are applied against goods, AMPS are applied against the person or business in response to their non compliance. AMPS replaces the need for most commercial seizures and ascertained forfeitures. Seizures and ascertained forfeitures will only be used for the most serious offences. Seizures and ascertained forfeitures are also applied for certain contraventions when they involve specified goods. In addition, criminal prosecution procedures continue to be available where warranted due to the seriousness of an offence or the potential for harm to society. AMPS only applies to contraventions involving commercial traders and service providers including importers, exporters, customs brokers, warehouse and duty free shop operators, carriers, and freight forwarders. Contraventions involving travellers with casual or noncommercial goods will continue to be subject to travellers’ seizure and ascertained forfeiture enforcement actions.
Topic 1: AMPS (cont. 2) Bookmark this In the case of a seizure, in order to have the conveyance, and sometimes the goods, returned, the importer or the carrier can usually pay a fine to customs. The fine is usually calculated as twice the amount of duties and taxes ordinarily payable on the goods, had they been declared. One also has the option of abandoning seized goods, which are usually sold at a later date by customs at auction. Of course seized goods that are prohibited goods cannot be sold and are usually destroyed. At the importer's option, goods subject to AMPS may be abandoned but the penalty must be paid. In most cases, the penalties under AMPS are graduated and increase each time a party repeats the identical infraction. Most penalties remain on the client's compliance record for one year, although some remain for three. Contraventions under the Administrative Monetary Penalty System are found in the AMPS Master Penalty Document (MPD). For each contravention, the MPD lists: the contravention number and description of the infraction, the monetary amount of the penalty, the basis on which the penalty is assessed, for example, per record, per line, or per instance, the legislation that has been contravened, any D Memo that is applicable, guidelines for officers assessing the penalty, and the penalty retention period, that is, how long the penalty will stay on the record of the party who is issued the penalty.
Topic 1: AMPS (cont. 3) Bookmark this Once an officer has decided that a penalty is warranted, a Notice of Penalty Assessment (NPA) is issued. The NPA will include the penalty assessment date, the contravention and penalty details, correction and redress (appeal) information, and payment and interest information. If the transaction that is subject to the penalty was submitted by a customs broker on behalf of his client, and the customs http://cscb.ca/print/book/export/html/182986
81/107
10/1/2015
201516 CCS Course Part 4
broker’s security number was used on the release or accounting document, the customs broker will also receive a copy of the NPA. After the NPA has been issued, the importer, or the customs broker on behalf of the importer, may do one of the following: pay the penalty (payable within 30 days from the date the NPA is issued); request a correction, usually for issues such as errors in calculation, name, address, contravention type, or amount assessed (his is done by contacting, within 90 days, the CBSA office that issued the penalty; pay and appeal the penalty. (The appeal must be submitted in writing to the issuing customs office within 90 days of the NPA); or enter into a Penalty Reinvestment Agreement. Since a correction must be resolved within 90 days of the penalty assessment date, any requests for cancellations should be made well before that time limit has passed. Requests for cancellations are made in writing to the CBSA at the address noted on the NPA and one should include as much information as possible and any supporting documentation. The CBSA may also cancel a penalty when they have issued a penalty incorrectly. If a penalty is assessed and does not qualify for the correction, it can be appealed under subsection 129(1) of the Customs Act. An appeal must be made within 90 days of the NPA date. Requests are made in writing to the Minister of Public Safety and are filed at the office that issued the NPA. Once the Minister has reviewed the NPA, a decision will be made to uphold, reduce, or cancel the penalty. If you are successful and the Minister cancels the penalty, the penalty amount, plus interest, is returned.
Topic 1: AMPS (cont. 4) Bookmark this A review of AMPS began in 2003. The purpose of this review was to evaluate whether AMPS levels the playing field;examine whether AMPS contributes to compliance; and identify opportunities for improvements to the AMPS. The results of the review were published in November 2003 after consultation with industry and other interested parties. Areas identified as being of concern were: some of the penalty amounts in the AMPS program were too high; the program needed to take into consideration innocent mistakes and clerical errors; the program needed to take into consideration volumetrics; customs needed to revisit the materiality of a number of penalties within the program; the program needed to deal differently with infractions caused by suppliers and service providers, considered “third parties”; retention periods for penalty calculations were too long; and the CBSA needs to do a better job of ensuring consistency across Canada in the application of penalties. There were no significant changes as a result of this review.
Topic 1: AMPS (cont. 5) Bookmark this Another AMPS review started in September of 2005. The objective of this review was to create an AMPS program that is clear and concise, appropriate, forward looking and riskbased. Consultations were held with various CBSA Headquarters policy areas, with CBSA regional management and staff, and with the private sector through a CBSA subcommittee. As a result of the second review, CBSA planned to: simplify the system by collapsing the number of contraventions to fewer than half; determine the risk of each contravention and determine the amount of the penalty accordingly; update the AMPS automated system (this is the technical system, not the administrative system); reconsider volumetrics; review third party liability; streamline the appeals process; initiate CBSA regional review committees; provide statistics, analyses, trends, and recommendations; focus on training of officers; and http://cscb.ca/print/book/export/html/182986
82/107
10/1/2015
201516 CCS Course Part 4
increase communication with clients. The review resulted in: changes in penalty amounts, and structures; changes to the Integrated Customs System (ICS) to start all penalty amounts at Level 1 for the first infraction; changes to penalty amounts according to risk criteria, and a plan to develop future contraventions according to this risk criteria; the introduction of a 30day nonescalation period of penalty levels from the first to the second level for low and medium risk contraventions; uptodate legislative references; several contraventions deleted, and two new ones created; moving the contravention guidelines from the AMPS automated system to the Master Penalty Document; related information being posted on CBSA’s website; improved access to the correction process; the reinstatement of the regional review committees; and plans to make further changes.
Topic 1: AMPS (cont. 6) Bookmark this In 2009, CBSA completed another review of the AMPS program, and, beginning in 2010, changes included: (a) changing the penalty amounts and structures, including eliminating most of the percentage of the value for duty penalties, and replacing them with graduated or flat penalty amounts; (b) resetting ICS to calculate all penalty amounts at Level 1 for the first infraction, regardless of the number of previous contraventions remaining in the contravention retention period against a client; (c) resetting penalty amounts according to risk criteria, and developing future contraventions and their penalty amounts according to this risk criteria; (d) introducing a 30day nonescalation period of penalty levels from the first to the second level for low and medium risk contraventions; (e) updating contravention legislative references and penalty basis in the MPD; (f) deleting contraventions C022, C236, C239, C245, C285, C289, C293, C344, C347, C361, C362 and C367 and creating new penalties C371 and C372 but otherwise maintaining contravention numbers as they are today; (g) removing contravention guidelines from the AMPS automated system and maintaining them solely on the CBSA’s Web site in the MPD to facilitate current and future revisions; and (h) posting information on the AMPS correction process on the CBSA Web site. (i) improving access to the AMPS correction process by adding the issuing office’s fax number on the Notice of Penalty Assessment to allow clients to fax in their correction requests. Until a system change is complete officers will add this information manually; (j) reinstating regional review committees (RRC) to ensure penalties are issued correctly and consistently; and (k) further amendments to the penalty system in 20102011 and in 20112012, including the eventual collapse of contraventions into like groupings.
Topic 2: Penalty Reinvestment Agreement Bookmark this The Penalty Reinvestment Agreement (PRA) is a mechanism by which the amount of a penalty under AMPS can be reduced. A PRA can be requested when an infraction is found to be the result of a failure in the company’s Customs Information System (CIS). The purpose of a PRA is to help the company become compliant. A company may apply for a PRA if they: (a) have been issued a Notice of Penalty Assessment (NPA); (b) have been issued one or more penalties caused by a systematic problem in their commercial information system; (c) have not been issued a Minister’s decision under section 131 of the Customs Act in respect of the NPA(s) at issue; (d) have identified the cause of the systematic problem in their CIS; and (e) are prepared to invest in corrective measures to remedy the problem and demonstrate that the measures are effective. Under a PRA, the penalty will be reduced on a dollarfordollar basis. This means that for every dollar spent in correcting http://cscb.ca/print/book/export/html/182986
83/107
10/1/2015
201516 CCS Course Part 4
the problem that resulted in the penalty, the amount of the penalty will be reduced by one dollar. AMPS penalties issued for contraventions relating to specified or prohibited goods are not eligible for a PRA.
Topic 2: Penalty Reinvestment Agreement (cont. 2) Bookmark this To start the PRA process, a request for a Minister’s decision for each Notice of Penalty Assessment is filed within 90 days from the date that the NPA was issued. This is in accordance with section 129.(1) of the Customs Act. An application for PRA is submitted at the same time as the request for the Minister’s decision and must clearly describe the errors that resulted in the noncompliance. Also required are: an outline of the proposed changes to the client’s commercial information processes and associated costs, which will result in 100% compliance associated with the penalty; specific interim procedures to ensure compliance during the time needed for the correction to be made in the client’s commercial information processes; the date that the client’s system changes will be completed; substantiation of the system change(s) and related costs that will result in 100% compliance; and provision of third party attestation, when requested by CBSA, that the costs were appropriately expended to improve compliance in the areas where penalties were imposed, including the required system changes, the costs involved and the implementation of those changes. A judicial review in accordance with section 18.1 of the Federal Courts Act can be requested if the PRA is not approved.
Lesson 3 Summary: Administrative Monetary Penalty System Bookmark this Lesson 3 concerned the Administrative Monetary Penalty System, the system used by CBSA to issue penalties in cases of noncompliance and the Penalty Reinvestment Agreement, a method by which penalties under AMPS can be reduced. Key points in Lesson 3 are: The Administrative Monetary Penalty System (AMPS) is a graduated system of penalties for infractions under the Customs Act, the Customs Tariff, and the Special Import Measures Act, and any of the regulations made under these Acts. Contraventions under AMPS are found in the AMPS Master Penalty Document (MPD). In most cases, the penalty amount increases for subsequent identical infractions. A notice of a penalty is issued on a Notice of Penalty Assessment (NPA). Once an NPA has been issued, an importer can: pay the penalty; request that the penalty be reviewed; appeal the penalty; or enter into a Penalty Reinvestment Agreement. The Penalty Reinvestment Agreement (PRA) is a mechanism by which the amount of a penalty under AMPS can be reduced. A PRA can be requested when an infraction is found to be the result of a failure in the company’s Customs Information System (CIS). Under a PRA, the penalty will be reduced on a dollarfordollar basis. AMPS penalties issued for contraventions relating to specified or prohibited goods are not eligible for a PRA. The PRA request is filed at the same time as a request for a Minister’s decision for each NPA. Now take a few minutes to answer some questions about AMPS and the PRA.
Module 26: Lesson 3 SelfCheck Questions:
4
http://cscb.ca/print/book/export/html/182986
84/107
10/1/2015
Attempts allowed: Available: Pass rate: Backwards navigation:
201516 CCS Course Part 4
Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 4: Voluntary Disclosure Program (VDP) Bookmark this The Voluntary Disclosure Program (VDP) allows corrections to be made, under certain circumstances, without incurring penalties.
Rationale As a CCS, you will want to ensure that your clients or your employer are aware of the VDP as a method of promoting compliance.
Lesson Objective At the end of this lesson you will have an understanding of the Voluntary Disclosure Program.
Topic 1: Voluntary Disclosure Program Bookmark this The Voluntary Disclosure Program (VDP) is one of the mechanisms used to contribute to voluntary compliance with customs laws and regulations. The purpose of the VDP is to promote voluntary compliance with the accounting and payment of duty and tax provisions under the Customs Act, Customs Tariff Act and Excise Tax Act. Its application is limited to penalty and interest charges resulting from infractions of the provisions governing accounting and payment. The VDP does not reduce the amount of duties owing, nor does it totally remove the amount of interest that accumulates on outstanding debts. CBSA’s clients may request access to the VDP and may receive relief from the penalties associated with noncompliance. To qualify, clients must come forward in “good faith” to voluntarily disclose past omissions and errors. In qualifying cases, clients will be required to pay the duties and taxes owing plus interest. Importers are obligated to correct their declarations under section 32.2 of the Customs Act for changes to origin, tariff classification, and value for duty, as well as for diversions of goods to another use or user. Section 32.2 of the Customs Act states that once an importer has reason to believe that the origin, tariff classification, value for duty, or diversion of goods to another user or end use, they must make a correction within 90 days of having reason to believe. If not corrected within the 90day frame, penalties under AMPS can be issued. However, under subsection 32.2(4) of the Customs Act, there is still an obligation to make a correction. That obligation ends four years after the goods are accounted for. Any corrections made after the 90day time period and before the four years from the date of accounting are subject to penalties under AMPS. The VDP provides a way of voluntarily complying with the legislation without fear of penalty. http://cscb.ca/print/book/export/html/182986
85/107
10/1/2015
201516 CCS Course Part 4
Topic 1: Voluntary Disclosure Program (cont. 2) Bookmark this A valid voluntary disclosure must meet the following conditions: (a) it is voluntary; (b) it involves the potential imposition of a penalty and/or specified interest or the potential of an action against the goods or person; (c) it is complete when all of the following are disclosed (if applicable): (i) all incidences of trade program(s) noncompliance for which the client could be subject to a trade compliance verification and reassessment; (ii) all incidences of nonreport or failure to account for the same or similar imported goods for the six years prior to the disclosure; or (iii) in the case of exported goods, all incidences of noncompliance up to six years prior to the disclosure in addition to the current year. (d) it takes account of the special considerations identified in paragraphs 19 to 24 of D1164, related to regulated or restricted imports and exports and prohibited goods; and (e) with the exception of disclosures to comply with section 32.2 of the Act: (i) it is nonrepetitive – A voluntary disclosure may be denied when a previous voluntary disclosure has been granted for the same compliance issue; and (ii) the client explains, to the satisfaction of the CBSA, how the noncompliance occurred and how it has been corrected or what measures have been put in place to reduce the risk of future noncompliance. Those wanting to make a voluntary disclosure should contact the nearest CBSA office in the region where their books and records are kept, in person or in writing, provide the details of the disclosure, and show that the conditions have been met. An interim submission may be made. The final and complete submission must be filed within a period of time specified by the CBSA, normally 90 days from the date of the initial disclosure. Each voluntary disclosure shall include enough detail to allow the facts to be verified. Clients are expected to make available upon request all books of account, records, documents, and any other required information. Clients are expected to pay the total of all amounts owing, including interest. In some cases, it is possible for clients to make special arrangements to pay these amounts. The identity of anyone making a voluntary disclosure will be protected according to the confidentiality provisions of the abovementioned Acts. Clients, representatives, and agents who are unsure whether they want to make a voluntary disclosure are entitled to discuss their situation on an anonymous or hypothetical basis with an officer responsible for handling voluntary disclosures.
Lesson 4 Summary: Voluntary Disclosure Program (VDP) Bookmark this In Lesson 4, you learned about the Voluntary Disclosure Program (VDP). The VDP is a mechanism used to support voluntary compliance with customs laws and regulations. Key points from Lesson 4 are: the VDP is limited to penalty and interest charges resulting from infractions of the provisions governing accounting and payment; the VDP does not reduce the amount of duties owing, nor does it totally remove the amount of interest that accumulates on outstanding debts; the VDP is used for corrections filed under 32.2 of the Customs Act after the 90day time frame allowed for corrections and before four years from the date of accounting; and conditions must be met in order to submit a voluntary disclosure. Now take a few minutes and answer some questions about the VDP.
http://cscb.ca/print/book/export/html/182986
86/107
10/1/2015
201516 CCS Course Part 4
Module 26: Lesson 4 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
2 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Module 26 Summary: Compliance Bookmark this In Module 26 you learned that being compliant means acting in accordance with the law. For travellers and goods entering Canada, the CBSA is just one of the government departments or agencies responsible for ensuring compliance with Canadian laws and regulations. These laws and regulations are in effect to protect the safety, health and economic well being of all Canadians. In this module you learned that: The Customs Action Plan (CAP) was created in order to improve and streamline the way business is done at the border and to redesign and modernize customs processes. preapproval (of goods and travellers); advance information (of trade data and travellers); and selfassessment (after importation). Programs developed as a result of the CAP are: Customs Self Assessment (CSA) Administrative Monetary Penalty System (AMPS) Advance Commercial Information (ACI) The Customs Self Assessment (CSA) program provides approved importers with streamlined entry, accounting and payment processes for imported goods. Under CSA, an importer may take advantage of: a streamlined entry process; a streamlined accounting and payment system; or both a streamlined entry process and a streamlined accounting and payment system. If an importer wishes to take advantage of the streamlined entry process under CSA, all carriers moving eligible goods for that importer, and all drivers, must register and be approved under CSA. If a CSA importer and carrier are also PIP approved, the carrier can enter Canada through one of the designated FAST lanes. If the importer and carrier are CSA approved, but not PIP approved, they are still eligible for the CSA entry process but cannot use the FAST lanes. The CSA entry process at the border involves presentation of: the registered driver presenting his Commercial Driver Registration Card, the CSA approved carrier code, and the CSA approved importer business number.
Module 26 Summary: Compliance (cont. 2) Bookmark this The date that the goods are received by the CSA importer is considered to be the date of release. There are two accounting options for importers using CSA. http://cscb.ca/print/book/export/html/182986
87/107
10/1/2015
201516 CCS Course Part 4
The Administrative Monetary Penalty System (AMPS) is a system of monetary penalties that was developed to deal with issues of noncompliance. Penalties under AMPS are applied for infractions under the Customs Act, the Customs Tariff Act, and the Special Import Measures Act, and any of the regulations made under these Acts. Penalties under AMPS vary from fairly small amounts to a maximum of $25,000.00 per single infraction. AMPS replaces most seizures and ascertained forfeitures. Notice of penalties under AMPS are provided on a Notice of Penalty Assessment (NPA). After the NPA has been issued, the importer, or the customs broker on behalf of the importer, may do one of the following: pay the penalty (payable within 30 days from the date the NPA is issued); request that the penalty be reviewed and cancelled (this is done by contacting, within 90 days, the CBSA office that issued the penalty. If CBSA agrees that the penalty should not have been issued, it can be cancelled); take redress action, that is, appeal the penalty. (The appeal must be submitted in writing to the issuing customs office within 90 days of the NPA); or enter into a Penalty Reinvestment Agreement. A Penalty Reinvestment Agreement (PRA) is a mechanism by which the amount of a penalty under AMPS can be reduced. A PRA can be requested when an infraction, related to compliance, is found to be the result of a failure in the company’s Customs Information System (CIS). For every dollar spent in correcting the problem that resulted in the penalty, the amount of the penalty will be reduced by one dollar. AMPS penalties issued for contraventions relating to specified or prohibited goods are not eligible for a PRA. The Voluntary Disclosure Program (VDP) encourages compliance by allowing corrections to be made outside of the allowed time frame without incurring penalties. The VDP is limited to penalty and interest charges resulting from infractions of the provisions governing accounting and payment. The VDP does not reduce the amount of duties owing, nor does it totally remove the amount of interest that accumulates on outstanding debts. The VDP is used for corrections filed under 32.2 of the Customs Act after the 90day time frame allowed for corrections and before four years from the date of accounting. Conditions must be met in order to submit a voluntary disclosure. Now take some time and complete a quiz about what you have learned in Module 25.
Module 26: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
10 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
Module 27: Supply Chain Security and Trade Facilitation Bookmark this As a result of the terrorist actions of September 11, 2001, the Canadian and U.S. governments introduced and developed a variety of border security programs and initiatives. In this module you will study these security programs and initiatives as well as some broader global initiatives.
Module Objective http://cscb.ca/print/book/export/html/182986
88/107
10/1/2015
201516 CCS Course Part 4
When you have completed this module, you will be aware of Canadian, U.S., and CanadianU.S. joint programs that are in place to ensure safe and secure global trade. You will also be aware of what is being done at the global level to implement standards to secure the international supply chain and you will learn about the various international organizations that influence international trade.
Lesson 1: Supply Chain Security – Canada and the U.S. Bookmark this In this lesson, you will be introduced to supply chain security. The Canada – U.S. Beyond the Border Action Plan will be discussed as well as Canadian and U.S. programs that are in place to protect trade between the two countries and their other trading partners.
Rationale In your role as a CCS, the care you take in your daily work can help ensure the safety and security of others. Whether by participating in security programs established in this country or by encouraging your clients or employer to get involved in programs available to them, you can help facilitate and secure the flow of international trade.
Lesson Objective At the end of this lesson, you should have an understanding of the various programs in Canada and the U.S. to ensure the security of international trade.
Topic 1: The Canada – U.S. Smart Border Declaration and the Beyond the Border Action Plan Bookmark this On December 12, 2001, Canada and the United States signed the Smart Border Declaration and its companion 30point Action Plan to enhance the security of the shared border while facilitating the legitimate flow of people and goods. The Action Plan has four pillars: the secure flow of people, the secure flow of goods, secure infrastructure, and coordination and information sharing in the enforcement of these objectives. In September of 2002, Canadian Prime Minister, Jean Chrétien, and U.S. President, George W. Bush, met to discuss progress on the Smart Border Action Plan. As a result, the following two points were added to pillar four of the now 32 point Action Plan: Biosecurity, and Science and Technology Cooperation. In December 2011, the government of Canada and the United States announced the Canada – U.S. Beyond the Border Action Plan. The intent of this plan is to create a new longterm partnership between the two countries and to expedite legitimate trade and travel across the Canada – U.S. border while enhancing security. Canada and the U.S. will develop a common approach in four areas: addressing threats early; trade facilitation, economic growth and jobs; crossborder enforcement; and critical infranstruction and cyber security.
Topic 1: The Canada – U.S. Smart Border Declaration (cont. 2) http://cscb.ca/print/book/export/html/182986
89/107
10/1/2015
201516 CCS Course Part 4
Bookmark this Each of the pillars of the 32point action plan will be examined in more detail.
Pillar #1: The Secure Flow of People This pillar is intended to: a) implement systems to collaborate in identifying security risks while expediting the flow of low risk trs; b) identify security threats before they arrive in North America through collaborative approaches to reviewing crew and passenger manifests, managing refugees, and visa policy coordination; and c) establish a secure system to allow low risk frequent travelers between our countries to move efficiently across the border. Specific points of the 32point Action plan pertaining to this pillar include: Biometric Identifiers Permanent Resident Cards Single Alternative Inspection System Refugee/Asylum Processing Managing of Refugee/Asylum Claims Visa Policy Coordination Air Preclearance Advance Passenger Information / Passenger Name Record Joint Passenger Analysis Units Ferry Terminals Compatible Immigration Databases Immigration Officers Overseas International Cooperation
Topic 1: The Canada – U.S. Smart Border Declaration (cont. 3) Bookmark this
Pillar #2: The Secure Flow of Goods This pillar develops the concept of securing the flow of goods across borders. It focuses on: a) implementing a system to collaborate in identifying highrisk goods while expediting the flow of low risk goods across borders; b) identifying security threats arriving from abroad by developing common standards for screening cargo before it arrives in North America, while working to clear goods at the first port of entry; c) adopting compatible security standards at production and distribution facilities to minimize security threats; d) expediting the flow of low risk traffic between Canada and the United States by establishing compatible commercial processes at the border; and e) expediting the flow of low risk goods between Canada and the United States by establishing secure procedures to clear goods away from the border, including at rail yards and at marine ports. Specific action plan points pertaining to this pillar include: Harmonized Commercial Processing Clearance Away from the Border Joint Facilities Customs Data Intransit Container Targeting at Seaports
http://cscb.ca/print/book/export/html/182986
90/107
10/1/2015
201516 CCS Course Part 4
Topic 1: The Canada – U.S. Smart Border Declaration (cont. 4) Bookmark this
Pillar #3: Secure Infrastructure This pillar pertains to the concept of securing the infrastructure of the borders. It focuses on: a) relieving congestion at key crossing points by investing reciprocally in border infrastructure and identifying technological solutions that can speed movement across the border; and b) identifying and minimizing threats to critical infrastructure including the airports, ports, bridges, tunnels, pipelines and power lines that link Canada and the United States. Specific action plan points pertaining to this pillar include: Intelligent Transportation Systems Critical Infrastructure Protection Aviation Security
Topic 1: The Canada – U.S. Smart Border Declaration (cont. 5) Bookmark this
Pillar #4: Coordination and Information Sharing in the Enforcement of these Objectives The final pillar pertains to the concept of coordination and information sharing. This pillar focuses on: a) developing the necessary tools and legislative framework to ensure that information and intelligence is shared in a timely and coherent way within Canada and the United States as well as between them; and b) strengthening the coordination between enforcement agencies for addressing common threats. Specific action plan points pertaining to this pillar include: Integrated Border and Marine Enforcement Teams Joint Enforcement Coordination Integrated Intelligence Fingerprints Removal of Deportees CounterTerrorism Legislation Freezing of Terrorist Assets Joint Training and Exercises Biosecurity Science and Technology Cooperation The following have been identified by CBSA as priority initiatives: Single Alternative Inspection System Air Preclearance Advance Passenger Information/Passenger Name Record Ferry Terminals Review Harmonized Commercial Processing Clearance Away from the Border Customs Data Exchange Intransit Container Targeting at Seaports http://cscb.ca/print/book/export/html/182986
91/107
10/1/2015
201516 CCS Course Part 4
Topic 2: Canadian Programs Bookmark this
NEXUS and CANPASS NEXUS is a joint customs and immigration program for frequent travellers, which both the Canadian and U.S. governments have implemented. The NEXUS program is designed to simplify border crossings for preapproved, lowrisk travellers. Participants of NEXUS may enter Canada or the U.S. using the NEXUS lane if travelling by highway, make use of the NEXUS Telephone Reporting Centre if travelling by boat, and use the selfserve NEXUS kiosks for those travelling by air, which have incorporated biometric capabilities. Biometric refers to the automatic identification of a person based on his physiological or behavioural characteristics. Once approved by both Canada and the U.S. as lowrisk travellers, NEXUS members are able to take advantage of a simplified entry process while travelling across the Canada U.S. border. Citizens and permanent residents of Canada or the United States can apply to use NEXUS. As well, business or government officials who can demonstrate a need to use the NEXUS lanes and have proper documentation under the special visa class category are eligible. CANPASS is a program that streamlines customs clearance for frequent travellers. The difference between CANPASS and NEXUS is that CANPASS is for entry into Canada only, whereas NEXUS is recognized for entry into both Canada and the United States.
Topic 2: Canadian Programs (cont. 2) Bookmark this
Harmonized Commercial Processing Free and Secure Trade Program (FAST) FAST aligns elements of the customs commercial programs along the shared border. In Canada, FAST builds on the Customs Self Assessment (CSA) program and its principles of preapproval and self assessment, as well as increased security measures under Partners in Protection (PIP). In the United States, FAST is available to carriers, manufacturers, and importers who have enrolled in the CTPAT (Customs Trade Partnership against Terrorism) program. CTPAT, like PIP, is based on collaboration between government and private business to increase cargo security without hampering trade. In Canada, the FAST program features an expedited clearance process for eligible goods that are imported by CSA and PIP approved importers using a CSA and PIP approved carrier with a FAST or CDRP approved driver. When the above requirements have been met, the authorized carrier will provide CBSA with an EDI transmission of data prior to their arrival at the border. When the goods arrive, the driver may use a dedicated FAST lane. By offering an expedited clearance option to eligible participants, customs in Canada and the U.S. are able to focus on goods and/or importers that are of high or unknown risk. Both FAST and CSA are programs that provide expedited clearance processes to preapproved importers, carriers, and drivers. CSA is a Canadian program that includes a streamlined accounting and payment process for goods imported into Canada. FAST is a joint CanadaU.S. program that streamlines the commercial clearance processes for entry into both countries. The main difference between FAST and CSA lies in the eligibility requirements. The design of the FAST program into Canada is essentially an extension of the application and importing processes that Canada has already implemented as part of CSA, with the addition of enhanced partnerships between government and business to promote legitimate trade through the signing of a Partners in Protection (PIP) Memorandum of Understanding for Canadian importers and carriers.
http://cscb.ca/print/book/export/html/182986
92/107
10/1/2015
201516 CCS Course Part 4
Topic 2: Canadian Programs (cont. 3) Bookmark this
Partners in Protection (PIP) Developed in 1995, the Partners in Protection program has been updated since September 11, 2001 and has been compared to the CTPAT program created in 2002. CBSA updated PIP on June 30, 2008 by implementing a modernized Partners in Protection. PIP focuses on border security, combating organized crime and terrorism, increasing awareness of customs compliance issues, and helping to detect and prevent contraband smuggling by combining the efforts of CBSA and private industry. The modernized PIP will require members to adhere to stricter, betterdefined and more targeted security measures. It is also more aligned with the WCO Framework of Standards (SAFE) and the Authorized Economic Operator (AEO) discussed in Lesson 2, Topic 2, and CTPAT discussed in Topic 3 of this lesson. Under PIP, CBSA has developed strategic partnerships with private industry to secure the flow of low risk, legitimate goods and travellers across our border. PIP is available to the entire trade community, including carriers, brokers, warehouse operators and associations. By signing an MOU with CBSA, a business or organization agrees to develop a joint plan of action, conduct security assessments, participate in awareness sessions, and consult with CBSA. The MOU (Memorandum of Understanding) aims to enhance the security of the partner business or organization, facilitate the exchange of information between partners, and develop joint awareness and information initiatives. When an organization signs a PIP MOU, demonstrating its commitment to the program, it will provide CBSA with a self assessment of its security systems. The CBSA will review the security measures and help to remedy any weaknesses. Organizations participating in the Modernized Partners in Protection program can benefit by: faster movement of lowrisk goods through customs; improved security levels; enhanced reputation for their organization; improved understanding of customs requirements; and better communication between their employees and CBSA.
Topic 2: Canadian Programs (cont. 4) Bookmark this
Container Security Initiative (CSI) In an effort to harmonize commercial processes, the CBSA has partnered with U.S. Customs and Border Protection (CBP) in the Container Security Initiative (CSI). CBSA and CBP signed the CSI Partnership Arrangement in October 2005. Originating in the United States, CSI is a multinational program that protects the primary system of global trade containerized shipping from being exploited or disrupted by terrorists. It is designed to safeguard global maritime trade while allowing cargo containers to move faster and more efficiently through the supply chain at seaports worldwide. The objective of this arrangement is to enhance marine security by deploying CBSA officers to foreign ports so that they can prescreen and examine cargo containers before the containers arrive in Canada. Supplemented by the Advance Commercial Information (ACI) initiative, CSI allows CBSA to target and eliminate potential terrorism threats before they reach Canadian shores. Industry must report marine data electronically to the CBSA 24 hours before loading shipping containers at foreign seaports for all Canadabound vessels (24hour rule).
Topic 3: U.S. Programs Bookmark this U.S. Customs and Border Protection’s (CBP) priority mission is keeping terrorists and terrorist weapons from entering the United States. As America’s unified border agency, CBP has strategically positioned itself at and between the ports of entry in an effort to prevent further terrorist attacks. CBP’s efforts to meet their mission statement can be grouped into the following areas: a) Strengthening the control of the United States borders: http://cscb.ca/print/book/export/html/182986
93/107
10/1/2015
201516 CCS Course Part 4
Improved radiation detection capabilities by deploying Personal Radiation Detectors to CBP officers and agents, Radiation Portal Monitors to ports of entry, and Radiation Isotope Identification Detection System to Border Patrol field locations. Deploying nonintrusive inspection systems to detect potential terrorist weapons in vehicles and cargo. Increasing the use of remotely monitored cameras and sensing systems, aircraft, helicopters, and unmanned aerial vehicles to better detect, monitor, and respond to illegal crossings. b) Improving selectivity, screening, and targeting: Established the National Targeting Center (NTC) as the centralized coordination point for all of CBP’s antiterrorism efforts. NTC also coordinates with other federal agencies such as U.S. Coast Guard, Federal Air Marshals, Federal Bureau of Investigation, Transportation Security Administration, and the Departments of Energy and Agriculture. Utilizes advance information from various systems to screen and assess all cargo, passengers, and highrisk imported food shipments before arrival into the U.S. Implemented the 24Hour Rule, effective December 2002, requiring sea carriers and nonvessel operating common carriers (NVOCCs) to provide a detailed description of container contents bound for the U.S. 24 hours before a container is loaded on a vessel.
Topic 3: U.S. Programs (cont. 2) Bookmark this c) Private, public sector, and international partnerships: Established Customs Trade Partnership Against Terrorism (CTPAT) to work with industry to emphasize a seamless security conscious environment throughout the entire commercial process. CTPAT is the largest federal government public/private partnership in U.S. history. Established the Container Security Initiative (CSI) to target, and, with counterparts in foreign countries, screen containers, prior to the container being loaded on ships destined for the United States. d) One Face at the Border: Since its creation in November of 2002, the DHS (Department of Homeland Security) has successfully integrated four different organizations from three different departments of government into CBP with no interruption in operations.
Topic 3: U.S. Programs (cont. 3) Bookmark this
Automated Commercial Environment (ACE) In early 2001, U.S. customs embarked on a multiyear effort to modernize commercial processing with the Automated Commercial Environment (ACE). ACE was designed to support the global supply chain and enhanced border security efforts. A key function of ACE is to provide CBP personnel with the tools and information they need to decide, before a shipment reaches the border, what should be targeted because it is high risk, and what should be expedited because it complies with U.S. laws. ACE supports CBP by providing an integrated, fully automated information system to enable the efficient collection, processing, and analysis of commercial import and export data. ACE simplifies dealings between CBP and the trade community by: automating timeconsuming and labourintensive transactions; moving goods through the ports and into markets faster and at lower cost; providing national processing as CBP moves away from portbyport processing; being a critical element for trade compliance and enforcement; and preventing cargo from becoming an instrument of terrorism. ACE is flexible and adaptable, and can change as business needs change and/or as new technologies become available. The ACE Secure Data Portal, the online access point to ACE, is accessible to more than 1,000 CBP and trade community users. With the implementation of ACE, CBP will modernize its operational processes and the information technology that http://cscb.ca/print/book/export/html/182986
94/107
10/1/2015
201516 CCS Course Part 4
supports them. Each major mission area will be modernized, including trade, enforcement, and administration. The first phase of modernization is focused on trade.
Topic 3: U.S. Programs (cont. 4) Bookmark this ACE will replace current CBP trade processing systems including: Automated Commercial System (ACS), Automated Export System (AES), Border Release Advance Screening and Selectivity (BRASS), and Prearrival Processing System (PAPS). ACE will interface with: Advance Passenger Information System (APIS), Automated Targeting System (ATS), Interagency Border Inspection System (IBIS),and National Crime Information Center (NCIC) Much of the design and development of ACE came from the Trade Support Network (TSN). Created in 1994 by CBP, TSN is a group of trade representatives whose aim is to provide a forum to discuss the modernization of trade. It is a collaborative effort among government, the trade community, and support contractors. By working with TSN, CBP will help ensure ACE will have the capabilities needed to facilitate an efficient, userfriendly information exchange between government and the trade community.
Topic 3: U.S. Programs (cont. 5) Bookmark this
Bioterrorism The Public Health Security Act and Bioterrorism Preparedness and Response Act of 2002, commonly known as the Bioterrorism Act (BTA), is intended to protect the health and safety of the people of the United States from an intended or actual terrorist attack on the nation's food supply. It requires that certain information be provided electronically to the U.S. Food and Drug Administration (FDA) prior to the arrival of a shipment of food in the United States. CBP officers, in conjunction with the Food and Drug Administration’s authorities, are responsible for enforcing the Bioterrorism Act at all United States ports of entry. Food is defined in the BTA as: articles used for food or drink for man or animals, articles used for components of any such article. Food imported or offered for import into the United States for human or animal consumption is covered by the Act, and the Food Safety Modernization Act; The BTA also covers: Food imported or offered for import into the United States for human or animal consumption is covered by the Act; Food stored or distributed in the United States; Gifts, excluding homemade and not accompanying a traveller, trade and quality assurance/control samples; Transshipments through United States to another country; Food imported for future export; and Food admitted into a U.S. Foreign Trade Zone (FTZ). Under Section 305 of the Bioterrorism Act, all domestic and foreign facilities that manufacture, process, pack, or hold foods for human or animal consumption in the United States are required to register with FDA, unless exempted.
http://cscb.ca/print/book/export/html/182986
95/107
10/1/2015
201516 CCS Course Part 4
Topic 3: U.S. Programs (cont. 6) Bookmark this
Container Security Initiative (CSI) Approximately 90 per cent of the world’s trade is transported in cargo containers. Because containerized shipping is a critical component of global trade, the U.S. has also implemented the Container Security Initiative (CSI). As discussed in the section on Canadian programs, this multinational program created under the Canada – United States Accord on our Shared Border is intended to help increase security for containerized cargo shipped to North America from around the world. CSI is based on the concept that extends North America’s zone of security outward so that its borders are the last line of defense, not the first. With CSI, maritime containers that pose a risk for terrorism are identified and examined at foreign ports before they are shipped to North America. CSI consists of four core elements: using intelligence and automated information to identify and target containers that pose a risk for terrorism; prescreening those containers that pose a risk at the port of departure before they arrive at U.S. and Canadian ports; using detection technology to quickly prescreen containers that pose a risk; and using smarter, tamperevident containers. The CSI program enables teams of customs officials who are deployed to work with their host nation counterparts to screen containers that pose a risk for terrorism. Currently there are 58 CSI ports. CSI may offer its participant countries the opportunity to send their customs officers to major U.S. ports to target ocean going, containerized cargo to be exported to their countries. Likewise, CBP shares information on a bilateral basis with its CSI partners. As part of reciprocal CSI agreements with Japan and Canada, those countries currently station their customs personnel in U.S. ports as part of the CSI program. (In addition to the U.S., Canada has CSI partnerships with South Africa, Panama, and Japan).
Topic 3: U.S. Programs (cont. 7) Bookmark this
24Hour Rule Effective December 2, 2002, carriers and/or automated NonVessel Operating Common Carriers (NVOCC's) are required to submit a cargo declaration to CBP 24 hours before cargo is laden aboard the vessel at a foreign port. This rule is similar to Canada’s ACI program. ACI requires marine carriers to electronically transmit marine cargo data to CBSA 24 hours prior to the loading of cargo at a foreign port. The major goal of the 24hour rule initiative is to secure the U.S.’s borders and ensure the flow of trade. By controlling shipments prior to their arrival at U.S. borders, CBP will be able to ensure greater security. They will also know where the containers were stuffed and by whom. CBP ports will be responsible for initiating "Do Not Load" messages for cargo whenever an "invalid" cargo description is used. These selected noncompliant cargo targets will be referred to the National Targeting Center (NTC) for coordination of the issuance of the “Do Not Load” message to the carrier or NVOCC. Seaports will also take enforcement action on consignee name and address violations leading to issuance of approved "Do Not Load" messages. These selected noncompliant cargo targets will be referred to the NTC for coordination and approval prior to the issuance of the “Do Not Load” message to the automated carrier or NVOCC. When selecting noncompliant cargo, CBP realizes that Foreign Remaining On Board (FROB) cargo and some inbond movements will not have a U.S. or standardized addresses. In addition, CBP ports will be authorized to issue monetary penalties for FROB cargo that has an invalid cargo description and that has been loaded on board the vessel without providing CBP a 24hour time frame to place a "Do Not Load" message on the cargo.
Automated Targeting System http://cscb.ca/print/book/export/html/182986
96/107
10/1/2015
201516 CCS Course Part 4
The Automated Targeting System (ATS) is a system that will assist customs officers in identifying and intercepting imports that pose a high risk of containing narcotics or other contraband. This program is a joint effort by CBP’s Office of Field Operations and the Office of Information and Technology. The system standardizes billoflading, entry, and entry summary data received from the Automated Commercial System (ACS), which will eventually be completely replaced by the Automated Commercial Environment (ACE). ATS creates integrated records called "shipments". These shipments are then evaluated and scored by ATS, through the use of over 300 weighted rules derived from targeting methods used by experienced customs personnel. The higher the score, the more the shipment warrants attention. Inspectors and other customs personnel responsible for targeting shipments for narcotics and other contraband use this system.
Topic 3: U.S. Programs (cont. 8) Bookmark this
US – VISIT* USVISIT enhances security for citizens and visitors while facilitating legitimate travel and trade across American borders. USVISIT helps to secure borders, facilitate the entry and exit process, and enhance the integrity of the immigration system while respecting the privacy of visitors. USVISIT is part of a continuum of security measures that begins overseas and continues through a visitor’s arrival in and departure from the United States. It incorporates eligibility determinations made by both the Department of Homeland Security and the State Department. Goals of the program are to: enhance the security of American citizens and visitors; facilitate legitimate travel and trade; ensure the integrity of the American immigration system; and protect the privacy of American visitors. USVISIT currently applies to all visitors (with limited exemptions) holding nonimmigrant visas, regardless of country of origin.
Office of Biometric Identity Management* In March 2013 the U.S. program US – VISIT was replaced by the Office of Biometric Identity Management (OBIM). As part of the National Protection and Programs Directorate, OBIM’s goals are to: Ensure the security of both citizens and visitors to the U.S.; Ease legal travel and trade; protect the probity of the immigration system; and Ensure the privacy of visitors. OBIM supplies the DHS with the technology for accumulating quality biometric data, provides analysis, and updates the watch list.
Topic 3: U.S. Programs (cont. 9) Bookmark this
CTPAT CustomsTrade Partnership Against Terrorism (CTPAT) is a joint governmentbusiness initiative to build cooperative relationships that strengthen the overall supply chain and border security. It recognizes that CBP can provide the highest level of security only through close cooperation with the ultimate owners of the supply chain, importers, carriers, brokers, warehouse operators and manufacturers. Through this initiative, CBP is asking businesses to ensure the integrity of their security practices, and communicate their security guidelines to their business partners within the supply chain. http://cscb.ca/print/book/export/html/182986
97/107
10/1/2015
201516 CCS Course Part 4
CTPAT participants sign an agreement that commits them to conducting a comprehensive self assessment of supply chain security using the CTPAT security guidelines jointly developed by CBP and the trade community. Benefits of CTPAT include: a reduced number of inspections (reduced border times); an assigned account manager (if one is not already assigned); access to other CTPAT members via the Status Verification Interface (SVI); eligibility for accountbased processes (such as bimonthly/monthly payments); and an emphasis on selfpolicing, not CBP verifications. More information on CTPAT is found in Module 26. CTPAT membership is currently open to all importers, customs brokers, carriers, marine terminal operators and freight forwarders. In addition, CTPAT is currently available to: U.S. importers of record, U.S /Canada highway carriers, U.S./Mexico highway carriers, rail carriers, sea carriers, air carriers, U.S Marine Port Authority/terminal operators, U.S. freight consolidators, ocean transportation intermediaries and NonVessel Operating Common Carriers (NVOCC), Canadian and Mexican manufacturers, Mexican longhaul carriers; certain invited foreign manufacturers, and licensed U.S. customs brokers.
Lesson 1 Summary: Supply Chain Security – Canada and the U.S. Bookmark this In this lesson you studied supply chain security. You also reviewed the action plan of the Canada – U.S. Smart Border Declaration, as well as Canadian and U.S. programs. Key points in this lesson include: Under the Canada – U.S. Smart Border Declaration The Canada – U.S. Smart Border Declaration is an action plan consisting of four pillars. The four pillars are: the secure flow of people, the secure flow of goods, secure infrastructure, and coordination and information sharing in the enforcement of these objectives. In 2002, two points were added to the forth pillar: biosecurity and science and technology cooperation. NEXUS is a joint customs and immigration program for frequent travellers. Both the Canadian and U.S. governments have implemented NEXUS. NEXUS is designed to simplify border crossings for preapproved, lowrisk travellers. Canadian Programs CANPASS is a program that streamlines customs clearance for frequent travellers. The difference between CANPASS and NEXUS is that CANPASS is for entry into Canada only, whereas NEXUS is recognized for entry into both Canada and the United States. Canada and the U.S. have established a joint program known as the Free and Secure Trade Program (FAST). FAST allows: lowrisk clearance processes for eligible participants, and customs officers to focus on importers and/or goods of high or unknown risk. http://cscb.ca/print/book/export/html/182986
98/107
10/1/2015
201516 CCS Course Part 4
In Canada, FAST is based on the Customs Self Assessment (CSA) program and its principles of preapproval and selfassessment, as well as increased security measures under Partners in Protection (PIP). The FAST clearance process is available only to those importers who are CSA approved. Both FAST and CSA are programs that provide expedited clearance processes to preapproved importers, carriers, and drivers. Under PIP, CBSA and private industry have combined efforts to enhance border security, combat organized crime and terrorism, increase awareness of customs compliance issues, and help detect and prevent contraband smuggling. In an effort to harmonize commercial processes, the CBSA has partnered with U.S. Customs and Border Protection (CBP) in the Container Security Initiative (CSI). CBSA and CBP signed the CSI Partnership Arrangement in October 2005. CSI is a multinational program that protects the primary system of global trade containerized shipping.
Lesson 1 Summary: Supply Chain Security – Canada and the U.S. (Cont.) Bookmark this U.S. Programs U.S. Customs and Border Protection’s (CBP) priority mission is keeping terrorists and terrorist weapons from entering the United States. ACE provides CBP personnel with the tools and information they need to decide, before a shipment reaches the border, what should be targeted because it is high risk, and what should be expedited because it complies with U.S. laws. The Bioterrorism Act is intended to protect the health and safety of the people of the United States from an intended or actual terrorist attack on the nation's food supply. The Bioterrorism Act requires that certain information be provided electronically to the U.S. Food and Drug Administration (FDA) prior to the arrival of a shipment of food in the United States. Effective December 2, 2002, carriers and/or automated NonVessel Operating Common Carriers (NVOCC's) are required to submit a cargo declaration 24 hours before cargo is laden aboard the vessel at a foreign port. The U.S. has implemented CSI. The Automated Targeting System (ATS) is a system that will assist customs officers in identifying imports, which pose a high risk of containing narcotics or other contraband. USVISIT enhances security for citizens and visitors while facilitating legitimate travel and trade across American borders. CTPAT is a joint U.S. governmentbusiness initiative to build cooperative relationships that strengthen overall supply chain and border security. Take a few minutes and answer a few questions to see how much you have learned in Lesson 1.
Module 27: Lesson 1 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this lesson, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the selfcheck, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the selfcheck as many times as you wish. Start quiz
Lesson 2: The International View http://cscb.ca/print/book/export/html/182986
99/107
10/1/2015
201516 CCS Course Part 4
Bookmark this In this lesson, you will study the World Trade Organization, the World Customs Organization and the International Federation of Customs Brokers Associations. You will examine the mandate of each organization and their contributions to international trade.
Rationale Understanding the larger picture of global trade will help you in your daily role as a CCS to comprehend and explain when and why changes occur in common customs practices such duty rates, import permits, exports, trade agreements and security procedures.
Lesson Objective At the end of this lesson, you will be familiar with the various international organizations governing global trade. You will also be aware of what is being done at the global level to implement standards to secure the international supply chain and you will learn how the international organizations influence international trade.
Topic 1: World Trade Organization (WTO) Bookmark this In January of 1995, the World Trade Organization (WTO) was established. The WTO is the successor to the General Agreement on Tariffs and Trade (GATT), and has evolved into an international organization that includes a Secretariat, and a Director General. One of the WTO’s responsibilities is to ensure that trade agreements established under the GATT remain in place. The WTO is the only international body dealing with the rules of trade between nations. At its heart are the agreements, negotiated and signed by most of the world’s trading nations and ratified in their Parliaments. The agreements have three main objectives: to help trade flow as freely as possible, to achieve further liberalization gradually through negotiation, and to set up an impartial means of settling disputes. GATT was first signed in 1947, but not entered into force until January 1, 1948. Its original signatories included Canada, the United States, and 21 other countries. Between 1948 and 1995 GATT helped establish a strong and prosperous multilateral trading system that became more and more liberal through rounds of trade negotiations. But by the 1980s the system needed a thorough overhaul. This led to the Uruguay Round, and ultimately to the WTO. The MostFavouredNation tariff treatment (see Module 8, Lesson 3, Topic 1) and National Treatment were two of the underlying principles of GATT. MostFavouredNation tariff treatment (MFN) ensures that goods produced by one country will be treated at the border no less favourably than those of another country. It is a principle extended unconditionally in that its benefits were available to any member of GATT. All signatories to GATT are entitled to MostFavouredNation rates of duty. A result of GATT has been the lowering of the average industrial tariffs of developed countries from over 50 per cent in 1947 to close to 5 per cent in 1990. National Treatment is the principle that addresses the issue of international discrimination between foreigners and domestic interests once the border has been crossed. It ensures that once goods have entered, they will be treated no less favourably than goods of domestic origin. It does not imply that one must treat incoming goods the same way they are treated in the exporting country.
Topic 1: World Trade Organization (WTO) (cont. 2) Bookmark this The WTO's overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by: administering trade agreements; acting as a forum for trade negotiations; settling trade disputes; http://cscb.ca/print/book/export/html/182986
100/107
10/1/2015
201516 CCS Course Part 4
reviewing national trade policies; assisting developing countries in trade policy issues, through technical assistance and training programs; and cooperating with other international organizations. Within the World Trade Organization, countries may create free trade areas or customs unions among themselves. Examples are the formation of the European Economic Community in 1957 and the North American Free Trade Agreement in 1994. Under GATT, the following trade rounds took place: 1947, Geneva, Switzerland, 1949, Annecy, France, 1951, Torquay, England, 1956, Geneva, 196061, Geneva ("The Dillon Round"), 196467, Geneva ("The Kennedy Round"), 197379, Geneva ("The Tokyo Round"), 198694, Uruguay ("The Uruguay Round"), and the most recent talks, in 2008, have stalled. In November of 2001, at Doha (Qatar), the WTO embarked on a new round of negotiations aiming to integrate the concerns of developing countries into its work. Canada is a leader in what is being called the Doha Development Agenda. In September 2003, negotiations ceased due to disagreements on agricultural issues. Discussions resumed in August of 2004 but negotiation deadlines were not met. The DirectorGeneral of the WTO suspended negotiations in July 2006.
Topic 1: World Trade Organization (WTO) (cont. 3) Bookmark this
The Tokyo Round More than 100 countries participated in the Tokyo Round. In April of 1979, the basic Tariff and Non Tariff Barrier Agreements resulting from the Tokyo Round of GATT were signed. Subjects on the table at the Tokyo Round included subsidies and countervailing measures, antidumping duties, technical barriers to trade, government procurement, import licensing and quotas, customs valuation, trade in civil aircraft, international dairy arrangements, and agreements on bovine meat. The Tokyo Round of GATT adopted and incorporated into GATT a number of previously signed agreements, including the AntiDumping Code. A Code is a term used to describe an agreement created outside of GATT and binding only on the countries that have ratified them. Codes contain their own dispute mechanisms that closely follow GATT procedures. As well as the AntiDumping Code, the Tokyo Round of GATT ratified the GATT Valuation Code. The GATT Valuation Code greatly simplified the manner of determining value for duty of imported goods. Canada adopted this method of valuation in 1984 (see Module 10 for more information on valuation); previously the method of determining value for duty was based on what was termed Fair Market Value.
Topic 1: World Trade Organization (WTO) (cont. 4) Bookmark this
The Uruguay Round The Uruguay Round negotiations of the GATT began in 1986 and concluded in December of 1993. It was the eighth round of GATT, with more than 120 governments participating. To date, the Uruguay Round has been the largest and most complex trade negotiation that has taken place. New issues tabled at the Uruguay Round included the exchange of intellectual property, traderelated investment, and the exchange of services. As well, a common set of rules governing agriculture and agricultural produce was initiated. One of the most important achievements of the Uruguay Round is the reduction or elimination of trade barriers (tariff and nontariff) between countries. http://cscb.ca/print/book/export/html/182986
101/107
10/1/2015
201516 CCS Course Part 4
Canada has agreed to broadbased tariff reductions averaging 40 per cent or more on a wide range of items. Tariffs will eventually be eliminated on the following groups of goods: paper and paper products, pharmaceuticals, beer, brandies, whiskies, construction equipment, agricultural equipment, medical equipment, office furniture and toys. Some goods became duty free immediately; others will become duty free over a period of 5 or 10 years. Although not all sectors have been included, the following is a brief recap of objectives or agreements which resulted from the Uruguay Round.
Topic 1: World Trade Organization (WTO) (cont. 5) Bookmark this
Agriculture Objectives in the agricultural sector included: improved access to markets, increased disciplines on subsidies, more predictable and secure border arrangements to preserve Canada's farm supplymanagement programs, and assurance that health and sanitary regulations would not be used as disguised barriers to trade. The Uruguay Round ensured that members opened their markets to imports by a specified starting date. It was agreed that overall tariffs on agricultural goods would be reduced by 36 percent between 1995 and 2001, in six equal annual steps. This would provide better access to global markets for Canada's exports such as grain, oilseed products, red meats and whisky, as well as compelling countries to reduce their internal support of their domestic agricultural industries. The Uruguay Round also included an agreement on health and sanitary measures, and the elimination of countryspecific rule exceptions.
Services For the first time, international rules on the conduct of international trade in services were established as part of GATT. The Uruguay Round included an obligation for countries not to grant special trading advantages to one country over another, or to discriminate against any other country. In order to do this, the Uruguay Round established a Services Council.
Textiles and Apparel Over a 10year period ending in 2005, the textiles and apparel sectors were brought under the GATT rules. During the transition period, each country was able to retain existing quotas. However, these quotas may were subject to change during the transition period. Under the World Trade Organization (WTO) Agreement on Textiles and Clothing (ATC) the limitations on the imports of textiles and apparel were to be eliminated by January 1, 2005. Canada, however, maintained its system of import permits until April 1, 2005. More information on import permits can be found in Module 13.
Government Procurement Government purchases at the federal level will be open to international competitions.
Subsidies and Countervailing Duties The Uruguay Round established a clear definition of a subsidy, and established a set of rules concerning subsidies and resulting countervailing duties (penalties imposed in retaliation for subsidies found to be unfair). More information on countervailing duties can be found in Module 11.
AntiDumping Dumping is the sale of imported goods at a lower price than when sold in the exporting country. The Uruguay Round contains a series of modifications to existing antidumping practices. More information on antidumping can be found in Module 11. The Uruguay Round included an agreement that, on January 1, 1995, established the World Trade Organization. The World Trade Organization is responsible for all agreements signed at the Uruguay Round. The WTO is overseen by a http://cscb.ca/print/book/export/html/182986
102/107
10/1/2015
201516 CCS Course Part 4
ministerial conference at least every two years.
Topic 2: World Customs Organization (WCO) Bookmark this The World Customs Organization (WCO), which was established in 1952 as the Customs Cooperation Council, is an independent intergovernmental body made up of 179 members whose mission is to enhance the effectiveness and efficiency of Customs administrations. The Customs Cooperation Council has been known as the World Customs Organization since 1994 and Canada has been a member since 1971. Unlike the WTO whose decisions become law for the international community, the WCO only makes recommendations. WCO members, who are national customs administrations, control and administer the international movement of goods and, as a result, are in a unique position to provide increased security to the global supply chain. Members also contribute to socioeconomic development through revenue collection and trade facilitation. Customs administrations have important powers that exist nowhere else in government, such as: the authority to inspect cargo and goods shipped into, through and out of a country; the authority to refuse entry or exit; and the authority to expedite entry. Customs administrations require information about goods being imported, and often require information about goods exported. They can, with appropriate legislation, require that information be provided in advance and electronically. One of the roles of the WCO is to create various conventions and committees. Some of these conventions include the Kyoto Convention (entered into force in 1974 and addressed the issue of the simplification and harmonization of customs procedures); the Nairobi Convention (entered into force in 1980 and concerned the administrative assistance for the prevention, investigation and repression of customs offences); the Istanbul Convention (entered into force in 1993 and concerned the temporary importation of goods), and the Revised Kyoto Convention (entered into force in 1999 as the plan for modern and efficient customs procedures). Recent priorities have been Electronic Data Interchange (EDI), compliance and enforcement and supply chain security.The WCO was also responsible for the development of the Harmonized Commodity Description and Coding System and the Harmonized System Committee. This committee usually meets at least twice a year to see if any amendments to the tariff classification system should be recommended. The committee also tries to clarify classification disputes that cannot be solved through bilateral negotiations.
Topic 2: World Customs Organization (WCO) (cont. 2) Bookmark this
World Customs Organization (WCO) WCO Framework of Standards to Secure and Facilitate Global Trade In 2004 consultations involving the WCO, its members, and business representatives, were held to discuss security and border challenges facing the international customs environment. As a result, the WCO SAFE Framework of Standards was developed. SAFE Framework represents the WCO’s collective efforts to secure the global trade supply chain in response to growing threats by international terrorists, organized criminals, commercial fraudsters, and others of similar ilk. While the SAFE Framework is intended to provide a structured platform for the implementation of trade security measures, it also offers the business community the chance to commit to its principles and in turn reap a number of trade facilitation benefits. The CBSA continues to consult Canadian trade in order to support the successful implementation of the SAFE Framework. WCO SAFE Framework of Standards International trade is an essential driver for economic prosperity. The global trading system is vulnerable to terrorist exploitation that would severely damage the entire global economy. As the government organizations that control and administer the international movement of goods, customs administrations are in a unique position to provide increased security to the global supply chain and to contribute to socioeconomic development through revenue collection and trade facilitation. The WCO SAFE Framework to secure and facilitate global trade sets forth the principles and the standards and presents them for adoption as a minimal threshold of what must be done by WCO Members. The WCO has membership of 173 http://cscb.ca/print/book/export/html/182986
103/107
10/1/2015
201516 CCS Course Part 4
customs administrations, representing 98 per cent of global trade. Objectives and principles of the SAFE Framework The SAFE Framework aims to: establish standards that provide supply chain security and facilitation at a global level to promote certainty and predictability; enable integrated supply chain management for all modes of transport; enhance the role, functions and capabilities of customs to meet the challenges and opportunities of the 21st century; strengthen cooperation between customs administrations to improve their capability to detect highrisk consignments; strengthen customs/business cooperation; and promote the seamless movement of goods through secure international trade supply chains.
Topic 2: World Customs Organization (WCO) (cont. 3) Bookmark this
Four Core Elements of the WCO SAFE Framework The WCO SAFE Framework consists of four core elements. 1. The SAFE Framework harmonizes the advance electronic cargo information requirements on inbound, outbound and transit shipments. 2. Each country that joins the SAFE Framework commits to employing a consistent risk management approach to address security threats. 3. The SAFE Framework requires that at the reasonable request of the receiving nation, based upon a comparable risk targeting methodology, the sending nation's customs administration will perform an outbound inspection of highrisk containers and cargo, preferably using nonintrusive detection equipment such as largescale Xray machines and radiation detectors. 4. The SAFE Framework defines benefits that customs will provide to businesses that meet minimal supply chain security standards and best practices. The WCO SAFE Framework, based on the previously described four core elements, rests on the twin pillars of customsto customs arrangements and customstobusiness partnerships. The pillars involve a set of standards that are consolidated to guarantee ease of understanding and rapid international implementation. Moreover, the SAFE Framework draws directly from existing WCO security and facilitation measures including the Revised Kyoto Convention (which incorporated best practices of member administrations resulting in better controls and efficient crossborder movement of goods and persons) and programs developed by member administrations. Pillar #1: Customs to Customs One of the main objectives of the SAFE Framework is to establish customstocustoms arrangements to promote the seamless movement of goods through secure international trade supply chains. These network arrangements will result in the exchange of timely and accurate information that will place customs administrations in the position of managing risk on a more effective basis. The expectation is that this will improve the ability of customs to detect highrisk consignments, enable customs administrations to improve their controls along the international trade supply chain and make more efficient allocation of customs resources. The customstocustoms network is designed to strengthen cooperation between customs administrations and enable administrations to carry out controls earlier in the supply chain, for example, where the administration of an importing country requests the administration of the exporting country to undertake an examination on its behalf. The SAFE Framework also provides for the mutual recognition of controls under certain circumstances. The application of the Framework will enable customs administrations to adopt a broader and more comprehensive view of the global supply chain and create the opportunity to eliminate duplication and multiple reporting requirements.
Topic 2: World Customs Organization (WCO) (cont. 4) Bookmark this http://cscb.ca/print/book/export/html/182986
104/107
10/1/2015
201516 CCS Course Part 4
Pillar #2: Customs to Business The SAFE Framework creates the conditions for securing international trade but also facilitates and promotes international trade. This encourages and makes it easier for buyers and sellers to move goods between countries. The SAFE Framework takes account of, and is based on, modern international production and distribution models. Concept of Authorized Economic Operator (AEO) The Authorized Economic Operator (AEO) concept is a benefit to the business community. Businesses that offer a high degree of security in respect of their place in the supply chain can, by meeting the criteria within the SAFE Framework, benefit by the quicker movement of low risk cargo through customs. Authorized Economic Operators (AEOs) will reap benefits, such as faster processing of goods by customs, e.g. through reduced examination rates. An AEO is a party involved in the international movement of goods in whatever function that has been approved by, or on behalf of, a national customs administration and complying with WCO or equivalent supply chain security standards. Authorized Economic Operators include manufacturers, importers, exporters, customs brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, and distributors. One of the main tenets of the SAFE Framework is to create one set of international standards establishing uniformity and predictability. It also is intended to reduce multiple and complex reporting requirements. However, it is important to note that the requirements of the SAFE Framework are subject to the interpretation and implementation by national customs administrations. Each customs administration will establish a partnership with the private sector in order to involve it in ensuring the safety and security of the international trade supply chain. The main focus is the creation of an international system for identifying private businesses that offer a high degree of security guarantees in respect of their role in the supply chain. These business partners should receive tangible benefits in the form of expedited processing and other measures. The SAFE Framework sets forth the criteria by which businesses in the supply chain can obtain authorized status as a security partner. These criteria address issues such as threat assessment, a security plan adapted to the assessed threats, a communication plan, procedural measures to prevent irregular or undocumented goods entering the international supply chain, physical security of buildings and premises used as loading or warehousing sites, security of containers and cargo, means of transport, personnel vetting, and protection of information systems. The priorities of validating or authorizing participants can be determined by a number of factors, including import volume, securityrelated anomalies, the strategic threat posed by certain geographic regions, or other riskrelated information. Deciding which factors to emphasize will inevitably change based on evolving circumstances.
Lesson 2 Summary: The International View Bookmark this In this lesson you learned about various global organizations relating to international trade. Key points in this lesson include: WTO In January of 1995, the World Trade Organization (WTO) was established. The WTO is the successor to the General Agreement on Tariffs and Trade (GATT). The WTO is the only international body dealing with the rules of trade between nations. The Most Favoured Nation Tariff treatment and National Treatment were two of the underlying principles of GATT. More than 100 countries participated in the Tokyo Round. In addition to other achievements, the Tokyo Round included: the basic Tariff and Non Tariff Barrier Agreements, the adoption and incorporation of the AntiDumping Code, and the ratification of the GATT Valuation Code. To date, the Uruguay Round has been the largest and most complex trade negotiation that has taken place. In addition to other achievements, the Uruguay Round included: the exchange of intellectual property, traderelated investment, exchange of services, a common set of rules governing agriculture and agricultural produce were initiated, and the reduction or elimination of trade barriers (tariff and nontariff) between countries. http://cscb.ca/print/book/export/html/182986
105/107
10/1/2015
201516 CCS Course Part 4
The concerns of developing countries are being negotiated within the Doha Development Agenda at the WTO. WCO The Customs Cooperation Council was established in 1952. In 1994 the Customs Cooperation Council became known as the World Customs Organization (WCO). The World Customs Organization (WCO) is an independent intergovernmental body focused on Customs matters. One of the roles of the WCO is to create various conventions and committees. These include: the Kyoto Convention, which addressed the simplification and harmonization of customs procedures; the Nairobi Convention, which addressed the issue of administrative assistance for the prevention, investigation and repression of customs offences; the Istanbul Convention, which addressed the issue of temporary importation of goods; and the Revised Kyoto Convention, which addressed the modernization of customs procedures. Recent priorities of the WCO have been Electronic Data Interchange (EDI), compliance and enforcement and supply chain security. The WCO was responsible for the development of the Harmonized System of Tariff Classification and the Harmonized System Committee.
Lesson 2 Summary: The International View (cont. 2) Bookmark this WCO Initiatives The WCO SAFE Framework of Standards was established in recognition that customs administrations are in a unique position to provide increased security to the global supply chain. The SAFE Framework sets forth the standards and presents them for adoption as a minimal threshold of what must be done by WCO members. The SAFE Framework consists of four core elements that: harmonize the advance electronic cargo information requirements on inbound, outbound and transit shipments; each country that joins commits to employing a consistent risk management approach to address security threats; at the reasonable request of the receiving nation, based upon a comparable risk targeting methodology, the sending nation's customs administration will perform an outbound inspection of highrisk containers and cargo, preferably using nonintrusive detection equipment such as largescale Xray machines and radiation detectors; and customs will provide benefits to businesses that meet minimal supply chain security standards and best practices. The four core elements rest on the twin pillars of customstocustoms arrangements and customstobusiness partnerships. The pillars involve a set of standards that are consolidated to guarantee ease of understanding and rapid international implementation. The IFCBA was established in 1990, created a permanent international forum for customs brokers, enables customs brokers to discuss common challenges and interests, has received observer status at the WCO, and has a Secretariat. Canada (CSCB) has held this position since 1996. Now take a few minutes to see what you have learned about the global organizations relating to international trade.
Module 27: Lesson 2 SelfCheck Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
Click on the Start quiz button to start. http://cscb.ca/print/book/export/html/182986
106/107
10/1/2015
201516 CCS Course Part 4
Start quiz
Module 27 Summary: Supply Chain Security and Trade Facilitation Bookmark this Over the last several years, the attention of the international trading community shifted from trade facilitation to supply chain security and regulatory compliance. In this module, you studied programs that have been implemented in Canada and the United States, as well as global initiatives taken as a result of the change in focus. You have examined the various organizations, programs and initiatives implemented to ensure the free flow of goods and people. You also studied the World Trade Organization, the World Customs Organization and the IFCBA and their contributions to international trade. Now it’s time to test what you’ve learned.
Module 27: Quiz Questions: Attempts allowed: Available: Pass rate: Backwards navigation:
8 Unlimited Always 60 % Allowed
To conclude this module, here are some questions to test your knowledge on. Click on the Start quiz button to start. You may move between questions by using the Next and Back buttons but you must provide an answer before you can move on to the next question. Once you complete the quiz, you'll have the opportunity to review your answers and view the correct answers as well. You may redo the quiz as many times as you wish. Start quiz
The End (almost…) Bookmark this Congratulations, you have now finished the CCS online course! Please make sure to print a copy of your receipts before the end of the course year. When you are logged onto the CSCB website, you will be able to access a link to the receipts. The next step to obtain your CCS designation is the final exam. You will be notified of the address at which you will write the September 24, 2016 final examination. If you have not been advised of the location by the second week of September, please send an email to
[email protected]. The examination will take place between 9:30 and 12 noon; please ensure that you arrive at the examination site by 8:45 a.m. so that the examination may begin promptly. The examination will be in the same format as the part tests, that is, all questions will be multiple choice. You are required to bring identification, a calculator with basic functions only, pencils and eraser with you to the examination. All other material will be provided and you will not be allowed access to any other materials. Please contact us at
[email protected] if you have any questions; best of luck to you on September 24th! Source URL (modified on 20150818 10:40): http://cscb.ca/repository/201516ccscoursepart4
http://cscb.ca/print/book/export/html/182986
107/107
