Seizure Policy for Undervaluations in the Courier Low Value Shipments (CLVS) Program

The CBSA will be implementing a new seizure policy for undervalued shipments imported through the Courier Low Value Shipment (CLVS) program. The CLVS program allows many international couriers who transport large volumes of low-value goods participate in the Courier LVS Program.  It allows expedited release of qualifying goods that are valued at $2,500 CAD or less.

See below link to the proposed Customs Notice.
http://cscb.ca/sites/cscb.ca/files/uploads/Undervaluation%20CN_New_Requirements_rev.docx

Here are a few excerpts from the Notice:

In circumstances where physical evidence has been discovered that an undervaluation has been made by the foreign exporter with respect to the value of the goods imported via the CLVS Program…..a seizure action may be taken under the exporter’s name.

When a seizure action is undertaken, the Canadian importer will be provided with the Notice of Seizure.

The exporter could pay the Terms of Release that will be noted on the seizure receipt, in order to obtain release of the seized goods.
If the importer received a written authorization from the foreign exporter, it can pay the Terms of Release noted on the seizure receipt.

To avoid this type of seizure, please ensure you advise your vendors to use the value based on the sale to Canada.  If there is no sale (samples, etc.), please contact us and we will help you with the appropriate valuation method based the CBSA's regulations.

Please contact me if you have any questions.

Bruce White, CCS
Manager, Customs
Fraser Direct Logistics
100 Armstrong Ave, Georgetown ON  L7G 5S4
Direct: 905-877-4411 Ext 230 | Fax: 905-877-2053
This email address is being protected from spambots. You need JavaScript enabled to view it. | www.fraserdirect.ca

Partners in Protection (PIP) member

Prime Minister Stephen Harper is touting a free-trade deal with South Korea as a major boost for Canadian exporters looking for a toehold into the lucrative Asian marketplace.

The announcement puts an end to nearly a decade of on-again, off-again talks, and marks Canada's first free-trade foray into the Asia-Pacific region, which the governing Conservatives have targeted as essential for the country's economic well-being...

Once in force, it will eliminate virtually all tariffs between the countries, with Korea cutting 81.9% of duties upon the first day of the deal coming into force, and Canada removing 76.4% of levies.

Some tariffs, particularly in agriculture, will take more than a dozen years be fully phased out.

Government documents noted that Canadian firms stand to make gains because South Korean tariffs currently average about three times Canada's—13.3% as opposed to 4.3% respectively.

Officials say the pact is fully fleshed and not an agreement in principle, as was the case with the European Union deal, and could come into effect within a year.

The agreement is also different in that it does not involve sub-national procurement, so Ottawa will not require provincial approval...

Stakeholders representing the aerospace, pork and beef industries ... were enthusiastic with what the elimination of South Korean tariff potentially could mean for their producers.

According to the government release, the deal is expected to increase Canadian exports to South Korea by 32% and expand the economy by $1.7 billion...

The biggest winners from the Canadian side will likely be in the agriculture sector, particularly beef and pork, the forest industry and seafood exporters, all of whom face stiff tariffs for shipping into the Korea market of 50 million people.

But Ottawa was already bracing for blow-back from Ontario and the domestic auto sector, which will see a 6.1% duty on Korean exports of Hyundai and Kia vehicles eliminated over two years once implemented, making the strong-selling brands even more competitive in the Canadian market.

... early Tuesday when one of Canada's leading automakers announced it refuses to support the deal, saying South Korea will remain "one of the most closed automotive markets in the world."

Ford of Canada Ltd. said previous South Korean free trade pacts signed with the United States and European Union "have failed to reverse this one-sided automotive trade flow."

The automaker said South Korea maintains a closed market through non-tariff trade barriers and "actively intervenes in its currency to unfairly subsidize its exports."...

Ontario had asked Ottawa to at least match the U.S. negotiated deal with Korea by securing a five-year phaseout of tariffs, and to include a "snap-back" provision by which tariff reductions could be rolled back if it was shown that Seoul was using non-tariff barriers to thwart Canadian exports of autos and parts into the country. But the deal fell short on both counts...

Material provided by the federal government estimated that damage to the Ontario auto sector would be limited to about 0.2% of production, or 45,000 vehicles annually, noting that 88% of cars produced in Canada are for export...

The successful conclusion, the second significant deal within a year, likely sends a signal to other potential free-trade partners that Ottawa is currently negotiating with, including India, Japan, and the countries of the TransPacific Partnership, that it is a serious negotiator, said Paul Evans, director of the Institute of Asian Research at the University of British Columbia.

This has been excerpted from the 11 March 2014 article by the Profit Guide and is available in its entirety at http://www.profitguide.com/manage-grow/international-trade/inside-canadas-new-free-trade-deal-with-south-korea-63014

Bruce White, CCS
Manager, Customs
Fraser Direct Logistics
100 Armstrong Ave, Georgetown ON  L7G 5S4
Direct: 905-877-4411 Ext 230 | Fax: 905-877-2053
This email address is being protected from spambots. You need JavaScript enabled to view it. | www.fraserdirect.ca

Partners in Protection (PIP) member

CBSA  memorandum D13-3-1 outlines and explains the role of importers and/or their authorized agents with respect to the calculation and declaration of value for duty of imported goods.

Guidelines and General Information

1. Importers and/or their authorized agents are responsible for the calculation and declaration of the value for duty of imported goods in accordance with the valuation provisions of the Customs Act (the Act).

2. The determination of the value for duty and the selection of a particular valuation method must be based upon “sufficient information”, which supports the importer’s declaration. The term “sufficient information” is defined in subsection 45(1) of the Act, and for valuation purposes is intended as objective and quantifiable information that establishes the accuracy of any amount, difference or adjustment used in the determination of the value for duty. Sufficient information in the form of corroborating documentation may be requested by the Canada Border Services Agency (CBSA) to support the calculation and declaration of the value for duty. While this information does not form part of the documentation requirements described in Memorandum D1-4-1, CBSA Invoice Requirements, and Memorandum D17-1-1, Documentation Requirements for Commercial Shipments, it must be available at the time of importation and be kept in such a manner as to facilitate review by CBSA officials when requested.

3. Subsection 40(1) of the Act requires that any person who imports goods or causes goods to be imported for sale or for any industrial, occupational, commercial, institutional or other like use or any other that may be prescribed shall keep at their place of business in Canada or at any other place designated by the Minister any records in respect of those goods in any manner and for any period of time that may be prescribed and shall, where an officer so requests, make them available to the officer, and answer truthfully any questions asked in respect of the records.
Imported Goods Records Regulations

4. Pursuant to paragraph 164(1)(i) of the Act, the Governor in Council published the Imported Goods Records Regulations (Regulations) with respect to the maintenance and preservation of importers’ records, as mentioned in subsection 40(1) of the Act.

5. Section 2 of these Regulations specifies that every person who is required by subsection 40(1) of the Act to keep records in respect of commercial goods shall keep amongst others; all records relating to the purchase, importation, costs, value and payment for the goods. Also, this person shall keep records of the sale or disposal of the goods in Canada. Section 2 of these Regulations, also specifies that these records shall be kept for a six year period following the importation of the commercial goods.

6. Further details regarding the responsibilities of importers to maintain records are contained in Memorandum D17-1-21, Maintenance of Records in Canada by Importers.
Additional Information

7. For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time/except holidays). TTY is also available within Canada: 1-866-335-3237.

Source: CBSA

The dilemma:

            You are always getting calls from your customs broker asking for further information about your products.

When asked “why”, they respond that they need to determine the correct harmonized tariff classification.

To the uninformed observer, why care? I mean let us be honest… all you want to know is… “Do I have to pay customs duty on these goods?” Right?

Like everything, you need to peel back the layers to see what lies beneath.

First of all, let us briefly examine the complexity of the tariff schedule as defined by the harmonized system.

The Harmonized System (H.S.) Tariff Schedule:

     The H.S. Tariff Schedule is comprised of 21 sections with 96 chapters; in Canada there are over 12,000 individual tariff classifications at the ten digit level. There is a specific hierarchy (the General Rules of Interpretation) which defines the methods used to determine a product classification. Additionally, there are sections, chapters and explanatory notes to consider, plus further rules defining how to navigate the punctuation and use of dashes or hyphens. Some items can be classified easily but many require an expert with years of tariff classification experience.

Key Reasons Why “Getting It Right” Is So Important:

1. Duty rates: The tariff classification has a direct correlation to the duty rate that you will be expected to pay (and no, it is not a matter of “finding the one that says FREE”).

2. NAFTA: This is very important as one of the first steps in determining if goods qualify under NAFTA is to find the tariff classification for the product and to then check under the NAFTA Specific Rules of Origin to determine how the goods might qualify. A common misconception is that products will “automatically” qualify if they are made in Canada, the U.S. or Mexico.

3. Anti-Dumping Duty (ADD): If a government decides that they need to protect a domestic industry, they can impose an anti-dumping duty on specific imports. This is also driven by the harmonized tariff classification. Pay close attention to this area as anti-dumping duty rates are always very high – usually double or sometimes triple digit percentages. For a full list of Canadian imports subject to dumping duties visit this link » Goods subject to anti-dumping or countervailing duties.

4. Exporting to countries other than the U.S. where the shipment value exceeds $2,000.00? You or your freight forwarder will be required to complete a B13A export document (or electronic equivalent), and you will need the eight digit harmonized system export code or the Canadian 10 digit import code for each product. Once again, export restrictions and permits governed by Foreign Affairs are driven by the tariff classification. The above topics are the primary reasons for determining the correct tariff classification. In addition, we should also include the controls through other governmental agencies, such as the Canadian Food Inspection Agency, Free Trade Agreements with other countries, and also the effects on Canada’s trade statistics.
 
Remember – If your company’s name is indicated as the importer on any customs documents, you (not your customs broker) are looked upon as the responsible party to ensure all declarations are correct. You may be able to avoid any future problems by getting it right the first time!

Have questions or comments on H.S. tariff classification? 

If so, please email This email address is being protected from spambots. You need JavaScript enabled to view it..

We are available to assist.

Harmonized System Committee to Consider Customs, Tariff Classification Issues

   U.S. Customs and Border Protection has issued the draft agenda for the 52nd session of the World Customs Organization’s Harmonized System Committee, which will be held in Brussels Sept. 18-27. The HSC’s responsibilities include issuing classification decisions on the interpretation of the Harmonized Commodity Description and Coding System, which can take the   

The HSC is slated to consider a number of issues at its upcoming meeting, including the future of the Harmonized System and the percentage of national revenue represented by customs duties. Also up for consideration is the classification of various products, including the following.

- jar with instant coffee put up for retail sale in a paperboard box with a cup and saucer

- terra-cotta cladding elements

- portable air conditioning units

- steam turbine and electric generator presented together

- amplifiers combined in a single housing with loudspeakers

- LED lamps

- xanthan gum

- LED backlights for liquid crystal displays

- peach pulp concentrate

- cabinets in unassembled form with or without apparatus to be housed therein

- touch-sensitive screens

- insulated gate bipolar transistors

- cheese substitute

- equipment for harvesting olives, almonds and pistachios

- motorcycle radiators

- silvered hollow glass microspheres

- combine harvester-thresher

- textile articles

- polyester yarns, with high tenacity, textured

- multi-component integrated circuits

To read full article click here >