Retaliatory Tariff Q & A

The Canadian Society of Customs Brokers (CSCB) has been gathering questions regarding retaliatory tariffs and posing them to the CBSA for answers. Although not all questions posed have been addressed at this point, a list of answers to the initial list has been released by the CSCB. We have posted them below for your reference.

Q1. Does the surtax apply to goods imported under the Postal Imports Remission Order (PIRO) and the Courier Imports Remission Order (CIRO)?

A1. Good released under these remission orders are subject to the surtax. CBSA is aware of the operational challenges and will be discussing with Finance the impact on all parties. The CSCB participated in a conference call with CBSA and other affected parties on July 4 and CBSA will be bringing concerns to Finance.

Q2.  Will we be advised of an Order-in-Council?

A2. The Order in Council will be included in the July 11 issue of the Canada Gazette. However, it will not be mandatory to include the O.I.C. on release or accounting documents. CBSA will use the code shown in field 26 of the B3, together with the HS and description of goods, to identify when the surtax applies. Members who wish to include an O.I.C. or other numbers/characters in field 26 for programming purposes may do so. This is considered a free-text field and will not result in CADEX rejects regardless of the information in this field.

Q3. Please clarify the date that the surtax becomes applicable.

A3. The surtax applies to goods as of midnight June 30. It does not apply to goods that are in transit before midnight June 30.

Q4. Paragraph 7 of Customs Notice 08-18 regarding goods removed from a warehouse and paragraph 19 contradict each other.

A4. CBSA has confirmed that the surtax will apply to ALL goods removed from a Customs Bonded Warehouse or Sufferance Warehouse after midnight June 30, 2018. We believe such goods should be considered “in transit” prior to July 1 but CBSA does not agree.

Q5. Are goods shipped to Canada from a place other than the U.S. subject to surtax?

A5. Commercial goods that are eligible to be marked as goods from the U.S. and shipped to Canada from a country other than the U.S. are subject to the surtax.

Q6. Are goods that originate in Puerto Rico subject to the surtax?

A6. Yes

Q7. Does the surtax apply on goods imported temporarily and documented on a B3, E29B, or Carnet?

A7. Yes. The surtax applies to goods of Chapter 99, including goods imported temporarily. When accounting for a temporary importation which is subject to the surtax, in addition to the E29B the goods must be accounted for on a Form B3-3. On the form B3-3, importers must report the surtax order code in field 32 “SIMA Code” of the B3 Form by inserting code “51” for the surtax and importers must enter the amount of surtax owing in field 39 “SIMA Assessment” of the B3 Form.

Q8. How are non-U.S. goods sent from Canada to the U.S. for processing treated?

A8. If non-U.S. goods are sent from Canada to the U.S. for processing, surtax is payable on the cost of the processing when the goods return to Canada if the origin of the goods has changed to U.S. and if the goods are included in one of the tariff items subject to the surtax.

Q9. How are U.S. goods sent from Canada to the U.S. for processing treated?

A9. If U.S. goods are sent from Canada to the U.S. for processing, surtax is payable on the value of the goods plus the cost of the processing if the goods maintain their U.S. origin and are included in one of the tariff items subject to the surtax.

Q10. Goods which originate under NAFTA are imported into Canada duty-free; however, they are subject to the surtax. These goods are further manufactured or incorporated into goods which are then exported to the US where they enter duty free under NAFTA. Is the entire amount of surtax eligible for drawback?

A10.  The Duties Relief Program and the Drawback Program respectively relieve or refund duties and surtaxes on imported goods on the condition that the goods are subsequently exported within four years. They provide Canadian companies with the ability to better compete internationally by allowing them to purchase and use raw materials and manufacturing imports for goods subsequently exported at world market prices and without including customs duties or surtaxes in the price of the exported goods. In this instance, when goods are further manufactured or incorporated into goods which are then exported to the U.S. where they enter duty free under NAFTA, the entire amount of surtax may be eligible for a drawback, subject to compliance of program requirements.

Q11. Are goods that are repaired in the U.S. and eligible for re-entry into Canada under heading 9992 subject to surtax?

A11. Paragraph 8 of Custom Notice 18-08 provides guidance on the application of Chapter 99 as it relates to the surtax orders by stating that goods listed in the surtax orders which are also eligible under a provision of Chapter 99 are subject to the surtaxes even though they are entitled to a preferential tariff rate of customs duty under this Chapter. The surtax only applies to goods listed in the surtax orders. If a good is not subject to a surtax, repairs for these goods in the U.S. would not be subject to a surtax.

Q12. Paragraph 10 of Customs Notice 18-08 indicates that the Duties Relief and Duty Drawback Programs continue to be available for duties and surtaxes paid or owed by Canadian businesses.  Does the fact that the term “Canadian businesses” was used in the Customs Notice indicate that it is only a Canadian business that can make a drawback claim, and not necessarily the eligible parties listed in D7-4-2?

A12. There are no restrictions specific to the surtax with respect to who may utilize the Duties Relief and Duty Drawback Programs. The criteria in paragraph 5 of D7-4-2 continues to apply.

Q13. Please clarify when goods imported under heading 9814 are subject to the surtax?

A13. Goods eligible under heading 9814 are not excluded from surtax application and would be subject to the application of the surtax if they are originating from the US and are listed among those targeted for surtax application.

Note: We still are waiting for clarification of a few points and have asked CBSA to specifically state whether goods not listed in the surtax schedule remain outside the surtax’s scope when entered under 9814.  We believe that this is the intention but do not see that guidance in the Customs Notice.

Q14. What is the authority to file for a refund of overpayment of surtax?

A14. The authority under which a refund claim would be filed is the same as for any other similar overpayment of duties, i.e. section 74 of the Customs Act.

Q15.  Given the circumstances of the July 1 implementation, we have asked to CBSA to waive penalties for late accounting.

A15.  No answer received yet.

Buckland is pleased to bring you this update and we hope that you will find it to be useful. For over 70 years Buckland has been working to help companies across the world experience global trade in a better way. In order to ensure your individual requirements are met and your shipping concerns are always getting the personal attention they deserve, we employ a unique approach to global trade that focuses on combining trusted technologies and talented people that know how to use them. As a customer-focused company, we provide you with a single source of unmatched Customs Brokerage (Canadian, US, Mexican), Trade Managed Solutions, Freight Forwarding, Trade Technologies and Warehousing / Distribution Services.