Vol. 139, No. 14 — July 13, 2005

Registration
SOR/2005-210 June 28, 2005

CUSTOMS ACT

Regulations Amending the Accounting for Imported Goods and Payment of Duties Regulations

P.C. 2005-1277 June 28, 2005

Whereas, pursuant to paragraph 167.1(b) (see footnote a) of the Customs Act (see footnote b), the annexed Regulations give effect, in part, to a public announcement made on June 25, 2003;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to sections 33 (see footnote c) and 35 (see footnote d) and paragraphs 164(1)(i) (see footnote e), 166(1)(b) and 167.1(b) (see footnote f) of the Customs Act (see footnote g), hereby makes the annexed Regulations Amending the Accounting for Imported Goods and Payment of Duties Regulations.

REGULATIONS AMENDING THE ACCOUNTING FOR IMPORTED GOODS AND PAYMENT OF DUTIES REGULATIONS

AMENDMENTS

1. (1) The definition "intoxicating liquors" in section 2 of the Accounting for Imported Goods and Payment of Duties Regulations (see footnote 1) is repealed.

(2) The definition "participants' requirements document" in section 2 of the Regulations is replaced by the following:

"participants' requirements document" means a document produced by the Agency that sets out the specifications, terms and conditions for accounting for goods by electronic means; (énoncé des besoins des participants)

(3) Paragraph (a) of the definition "release period" in section 2 of the Regulations is repealed.

2. Paragraph 7.2(d) of the Regulations is replaced by the following:

(d) upon request of the Minister, Commissioner or a Director General of the Agency, the courier presents evidence indicating that the courier meets the conditions set out in paragraph 7.1(b) and paragraphs (a) and (c).

3. (1) Paragraph 10(1)(a) of the Regulations is repealed.

(2) The portion of paragraph 10(1)(b) of the Regulations before subparagraph (i) is replaced by the following:

(b) in the case of goods other than goods referred to in paragraph (a.1),

(3) Subsection 10(2) of the Regulations is repealed.

4. The Regulations are amended by replacing the words "Deputy Minister" with the word "Commissioner" wherever they occur in the following provisions:

(a) subparagraph 7.1(a)(iii);

(b) paragraph 11(3)(c);

(c) paragraph 11(4)(b);

(d) paragraphs 14(2)(b) and (c); and

(e) section 17.

COMING INTO FORCE

5. These Regulations are deemed to have come into force on July 1, 2003.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The purpose of the Excise Act Review undertaken in 1997 was to replace the old and outdated administrative and enforcement structure governing alcohol and tobacco with a modern regime reflecting current practices. Although the Excise Act, 2001 was implemented before the Smart Regulation Initiative it is nevertheless consistent with the principles set out in the Smart Regulation by reducing cost and streamlining administration.

As a result, Bill C-47 was tabled in the House of Commons in December 2001, and the Excise Act, 2001, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, received Royal Assent on June 13, 2002 and came into force on July 1, 2003.

Consequently, certain regulations made pursuant to the Customs Act for which the Canada Border Services Agency (CBSA) has the legislated authority require amendments, to ensure consistency with the structure and terminology of the Excise Act, 2001. The regulatory amendments were publicly announced in a Customs Notice published on June 25, 2003. Due to the administrative nature of these amendments and the fact that they have already been publicly announced these amendments were not considered to be a high priority in lieu of other more pressing issues such as the CBSA Act and are thus now just been processed for publication.

Other regulatory amendments are being made to respond to requests from stakeholders, or are technical in nature. Since implementation we have not received any further comments from stakeholders.

The modifications reflect no substantive changes to the instruments or policies, other than those already introduced by the Excise Act, 2001. They are, for the most part, minor or technical in nature.

The amendments were publicly announced in Customs Notice N-520, on June 25, 2003, pursuant to paragraph 167.1(b) of the Customs Act. As a result, these amendments would come into effect on July 1, 2003, the date announced in the Customs Notice.

Accounting for Imported Goods and Payment of Duties Regulations

The Regulations are being amended to repeal certain provisions that relate to the extended "release period" in respect of intoxicating liquors imported by a department, board, commission, or agency of the government of a province. These provisions pre-date the Customs Commercial System (CCS) and were carried over when CCS was implemented, without any consultations as to whether the provisions should remain in effect. The Customs Commercial System is a mainframe system through which most commercial shipments are processed. In addition, Provincial Liquor Jurisdictions have been using the Customs Bonded Warehouses Program rather than the provisions being repealed. However, this will no longer be possible under the new Excise Act, 2001 regime. Since these provisions are not compatible with the modern administration of Customs and since there are no business reasons to maintain the special status afforded to the Provincial Liquor Jurisdictions, they are being repealed at the request of the Provincial Liquor Jurisdictions. This will enable Provincial Liquor Jurisdictions to follow the same customs procedures as those in place for all other commercial importations by establishing and maintaining electronic data interchange with the CBSA. The Regulations are also being amended to replace obsolete wording.

Customs Sufferance Warehouses Regulations

Sufferance warehouses are facilities used by customs officers for the examination of imported goods that have not yet been released. The Regulations are being amended to modify the list of goods that are forfeit if they are not removed from a sufferance warehouse within 14 days after the day of reporting under section 12 of the Customs Act. As for spirits, the time period within which spirits are allowed to remain in a customs sufferance warehouse is being extended from 14 to 21 days, in response to a request from stakeholders. Also, since the definition of "spirits" included in the Excise Act, 2001 covers "distilled spirits", the word "distilled" is being removed as it is no longer necessary.

The Regulations are further amended to allow for the marking of special containers of spirits or wine, imported by an excise warehouse licensee, that are placed in a sufferance warehouse in accordance with section 80 or 85 of the Excise Act, 2001 and the stamping of imported raw leaf tobacco and packaged raw leaf tobacco that is placed in a sufferance warehouse in accordance with section 39 of the Excise Act, 2001. Special containers are, in respect of spirits, containers of a capacity of more than 100 L but not more than 1,500 L and, in respect of wine, containers of a capacity of more than 100 L.

Other amendments are also being made in order to incorporate by reference definitions included in other statutes, to replace obsolete or unnecessary wording, to remove an unnecessary provision (section 14.2), to make consequential renumbering changes due to the addition of new subsections in the Regulations or to the fact that some provisions were transferred from the current Excise Act to the Excise Act, 2001, to correct a grammatical error in the French version of the Regulations and an error in the spelling of a word in the English version of the Regulations, and to improve the wording of some provisions for clarity purposes.

Duty Free Shop Regulations

The Regulations are being amended to ensure that both imported and domestic goods are covered by the Regulations. To that effect, the term "excisable goods" is now defined in terms of the goods covered, rather than by reference to the Excise Act and Excise Act, 2001.

The Regulations are also being amended to provide for the return of wine and spirits from a duty free shop to an excise warehouse, as provided for in the Excise Act, 2001.

In addition, amendments are made to incorporate by reference definitions included in other statutes, to replace the words "excisable goods and wine" with "excisable goods" wherever they appear in the Regulations (since "wine" is now included in the definition of "excisable goods"), and to correct a translation error and the spelling of a word.

Refund of Duties Regulations

The Regulations are being amended to allow a person to file an application for a refund when additional duties levied under the new section 21.1 of the Customs Tariff are paid, in error, under the Customs Act rather than under the Excise Act, 2001. As a consequence, a new provision is being added to cover the evidence requirement in support of such an application.

The Regulations are also being amended to ensure that refunds of duties levied under the new section 21.1 of the Customs Tariff (duties equivalent to excise duties, which are to be paid and collected under the Excise Act, 2001) are not refunded twice under both the Excise Act, 2001 and the Customs Act.

In addition, since the CBSA has access to Customs accounting documents, an amendment removes the requirement to submit a copy of the accounting document in support of an application for refund when the application is based on the fact that the duties were reduced or removed by a retroactive order or regulation made under the Customs Tariff.

The Regulations are also being amended to correct a grammatical error in the French version of the Regulations.

Sale of Goods Regulations

The Regulations are being amended to exclude raw leaf tobacco and tobacco products, specially denatured alcohols, spirits, and wines from its application, since these goods are excluded from the application of the enabling legislative provision (section 142 of the Customs Act, as amended by the Excise Act, 2001).

Storage of Goods Regulations

The Regulations are being amended to modify the list of goods that are forfeit if they are not removed from a customs office within 14 days after the day of reporting under section 12 of the Customs Act. Spirits will now be forfeit if they are not removed from a customs office within 21 days after the day of reporting under section 12 of the Customs Act. These changes are required to mirror similar provisions contained in the Customs Sufferance Warehouses Regulations that deal with these high-risk commodities.

In addition, the Regulations are being amended to harmonize their wording with that of the Customs Sufferance Warehouses Regulations, to remove an unnecessary provision (section 2.1), to incorporate by reference definitions included in other statutes, to make consequential renumbering changes as a result of the addition of new subsections in the Regulations, and to correct the spelling of a word.

Alternatives

There are no other practical alternatives to these amendments. These amendments are, for the most part, consequential to the enactment of the Excise Act, 2001.

Benefits and Costs

These amendments are, for the most part, integral and consequential to the Excise Act, 2001 regime and are necessary in order to bring the customs regime in line with the changes brought about by the passage of that Act. There will not be any additional costs to the Agency as a result of these amendments. The new Act gives affected businesses more flexibility to organize their commercial affairs and respond more quickly to market changes. As an example, the new structure anticipates fewer requirements and a more streamlined process for approval and issuance of a licence. The benefit of these amendments to clients will be that the possibility of errors will be reduced due to the clearer definitions and simplification of the processes. This should result in improved efficiency in the clients' processes resulting in a cost saving. Consumers will not be affected by the regulatory changes.

Consultation

The Agency carried out extensive consultations with stakeholders affected by the Excise Act, 2001, such as other federal departments, affected industries, provincial governments, liquor boards, and enforcement agencies. Personal presentations and meetings were also held with industry groups expressing interest, and their comments and suggestions were actively sought and taken into consideration. For example, the definitions of "spirits" and "wine" have been modified, in both the Act and the Regulations, to provide greater certainty as to the types of products that fall within the definitions and to ensure there is no overlap between the definitions. The definitions of "packaged" and "special container", in both the Act and the Regulations, have also been modified to recognize the types of containers currently in use in Canada. Under the proposed legislation, "packaged" alcohol would mean alcohol packaged in a container not larger than 100 litres that is ordinarily sold to consumers without the alcohol being repackaged. It would also mean alcohol packaged in a marked special container.

Compliance and Enforcement

The CBSA has resources in place dedicated to the implementation of the Excise Act, 2001.

Ensuring compliance with Customs Act legislation and Regulations will be the responsibility of the CBSA. The Agency will continue to protect Canadian society by carrying out inspection activities and verifying the information provided by clients. Existing CBSA mechanisms will ensure compliance with these amendments. Compliance and Enforcement will be enhanced because the possibility for confusion will be reduced due to clearer definitions and the streamlined system.

Contact

Candace Breakwell
Director
Legislative Affairs and ATIP
Strategy and Coordination Branch
Canada Border Services Agency
191 Laurier West, 6th Floor
Ottawa, Ontario
K1A 0L8
Telephone: (613) 952-5268
FAX: (613) 952-8839
E-mail: Candace.Breakwell@cbsa-asfc.gc.ca

Footnote a

S.C. 1992, c. 28, s. 31(1)

Footnote b

R.S., c. 1 (2nd Supp.)

Footnote c

S.C. 2002, c. 22, s. 334

Footnote d

S.C. 1995, c. 41, s. 11

Footnote e

S.C. 1992, c. 28, s. 30(1)

Footnote f

S.C. 1992, c. 28, s. 31(1)

Footnote g

R.S., c. 1 (2nd Supp.)

Footnote 1

SOR/86-1062

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