ARCHIVED — Vol. 148, No. 9 — April 23, 2014

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Registration

SOR/2014-88 April 11, 2014

CUSTOMS TARIFF

Certain Televisions Remission Order

P.C. 2014-422 April 10, 2014

His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to section 115 (see footnote a) of the Customs Tariff (see footnote b), makes the annexed Certain Televisions Remission Order.

CERTAIN TELEVISIONS REMISSION ORDER

REMISSION

1. Subject to section 2, remission is granted to the importers listed in the schedule of the duties paid or payable under the Customs Tariff in respect of televisions under tariff heading 85.28 and other similar goods that were imported by them before June 28, 2013 and for which duty relief under tariff item 9948.00.00 was either denied as a result of a verification conducted by the Canada Border Services Agency during the period beginning on January 1, 2012 and ending on June 27, 2013, or not claimed following such a denial.

CONDITIONS

2. Remission is granted on condition that

  • (a) the importer files all evidence that is required by the Canada Border Services Agency to determine eligibility for remission;
  • (b) a claim for remission is made to the Minister of Public Safety and Emergency Preparedness within 90 days after the day on which this Order comes into force; and
  • (c) no claim for refund or drawback under the Customs Act, Customs Tariff or Excise Tax Act has been granted with respect to the goods on which remission is claimed.

COMING INTO FORCE

3. This Order comes into force on the day on which it is registered.

SCHEDULE
(Section 1)

  • Aaron’s Inc.
  • Advanced Presentation Products Inc.
  • Ameublement Tanguay Inc.
  • Canada Computers
  • Canadian Tire Corporation Ltd.
  • Coby Electronics Corp.
  • Costco Wholesale Canada Ltd.
  • Curtis International Ltd.
  • D & H Canada ULC
  • Haier America Trading
  • London Drugs Ltd.
  • Newlink.ca Inc.
  • Overrunz International Inc.
  • Panasonic Canada Inc.
  • Samsung Electronics America Inc.
  • Sanyo Canada Inc.
  • Sharp Electronics of Canada
  • Sony of Canada Ltd.
  • Synnex Canada Ltd.
  • Tech Data Canada Corp.
  • Tigerdirect.ca Inc.
  • Toshiba of Canada Ltd.
  • Wal-Mart Canada Corp.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Executive summary

Issues: In fiscal year (FY) 2012–13, the Canada Border Services Agency (CBSA) audited 23 companies that had imported televisions into Canada duty-free under tariff item 9948.00.00. Tariff item 9948.00.00 allows for the duty-free importation of goods subject to certain conditions, including specific record-keeping requirements.

Further to those audits, customs duties were assessed on past importations made by these companies based on what the CBSA interpreted as those companies’ non-compliance with the record-keeping requirements, under the Imported Goods Records Regulations (IGRR).

April 2013 consultations with the Department of Finance, which has policy responsibility for the Customs Tariff, clarified that it was never the policy intent of the 9948.00.00 tariff provision that end-use was to be certified by individual consumers. On June 28, 2013, a Customs Notice was issued to clarify the requirements of the IGRR, specifically that end-use certificates related to tariff item 9948.00.00 will not be required at the consumer level but rather at the importer level. The Customs Notice also announced regulatory amendments with retroactive effect, as provided for under section 167.1 of the Customs Act, to this clarification.

Given that the audits of the 23 companies importing televisions were undertaken before the record-keeping requirements were clarified on June 28, 2013, the CBSA has subsequently determined that the duty assessments of the 23 companies should be refunded or forgiven.

The appropriate mechanism to provide such relief of the duties paid or owing by the 23 companies is by an order in council that provides for remission in an amount not exceeding $26,965,456, under section 115 of the Customs Tariff.

Description: Remission will be provided to 23 importers in light of the June 28, 2013, clarification of the IGRR.

Cost-benefit statement: This Order refunds duties paid and forgives duties owing by 23 importers as a result of the above-noted audits further to a clarification and upcoming amendments to the IGRR.

“One-for-One” Rule and small business lens: The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business. The small business lens does not apply to this proposal, as there are no costs to small business.

Background

General legislative and regulatory framework

There are three framework components that are relevant to understanding the nature of the proposed remission order: (i) the Customs Tariff, (ii) the Customs Act, and (iii) the Imported Goods Records Regulations.

(i) Customs Tariff

Customs duties are levied under the Customs Tariff. Section 115 of the Customs Tariff provides authority to the Governor in Council to remit duties. The departmental consolidation of the Customs Tariff is available at http://cbsa.gc.ca/trade-commerce/tariff-tarif/menu-eng.html.

(ii) Customs Act

Subsection 40(1) of the Customs Act obligates importers to maintain records of goods that they have imported into Canada.

(iii) Imported Goods Records Regulations

The Imported Goods Records Regulations (IGRR), made under the Customs Act, describe the type of records that must be kept by the importer. These records are required as evidence to levy duties upon goods imported into Canada. The records required under the IGRR can also be used by importers to provide evidence for obtaining tariff relief, if applicable, on those goods.

The Department of Finance is responsible for the Customs Tariff which the CBSA administers on its behalf. The CBSA is responsible for amending the Customs Act and the IGRR.

On June 28, 2013, the CBSA issued a Customs Notice that offers clarification with respect to the record-keeping requirements relating to goods imported duty-free under tariff item 9948.00.00 (http://cbsa.gc.ca/publications/cn-ad/cn13-015-eng.html).

Issues

In fiscal year (FY) 2012–13, the Canada Border Services Agency (CBSA) audited 23 companies that had imported televisions into Canada duty-free under tariff item 9948.00.00. Tariff item 9948.00.00 allows for the duty-free importation of goods subject to certain conditions, including specific record-keeping requirements.

Further to those audits, customs duties were assessed on past importations made by these companies based on what the CBSA interpreted as those companies’ non-compliance with the record-keeping requirements, under the Imported Goods Records Regulations (IGRR).

April 2013 consultations with the Department of Finance, which has policy responsibility for the Customs Tariff, clarified that it was never the policy intent of the 9948.00.00 tariff provision that end-use was to be certified by individual consumers. On June 28, 2013, a Customs Notice was issued to clarify the requirements of the IGRR, specifically that end-use certificates related to tariff item 9948.00.00 will not be required at the consumer level but rather at the importer level. The Customs Notice also announced regulatory amendments with retroactive effect, as provided for under section 167.1 of the Customs Act, to this clarification.

Given that the audits of the 23 companies importing televisions were undertaken before the record-keeping requirements were clarified on June 28, 2013, the CBSA has subsequently determined that the duty assessments of the 23 companies should be refunded or forgiven.

Objectives

To provide remission to 23 television importers who were impacted by the CBSA compliance verifications of certain importations made under tariff item 9948.00.00. Remission is being provided in recognition that the related record-keeping requirements set out in the IGRR were subsequently clarified so that end-use certificates related to this tariff item are not required at the consumer level but rather at the importer level.

Description

The remission (or refund) of duties will be given to the 23 importers on condition that

  • (a) the televisions or similar goods were imported into Canada before June 28, 2013;
  • (b) duty relief pursuant to tariff item 9948.00.00 was denied as a result of the 2012–2013 verifications, or was not claimed as a result of such denial;
  • (c) the importer files such evidence as may be required by the CBSA to determine eligibility for remission;
  • (d) a claim for remission is made to the Minister of Public Safety and Emergency Preparedness within 90 days after the day on which this Order comes into force; and
  • (e) no claim for refund or drawback under the Customs Act, Customs Tariff or Excise Tax Act has been granted with respect to the goods on which remission is claimed.

Regulatory and non-regulatory options considered

It has been determined that the most appropriate mechanism to provide remission of the duties paid and/or owing to the CBSA by the 23 companies is an order in council made under section 115 of the Customs Tariff. In fiscal year (FY) 2012–13, the CBSA audited 23 companies that had imported televisions into Canada duty-free under tariff item 9948.00.00. Tariff item 9948.00.00 allows for the duty-free importation of goods subject to certain conditions, including specific record-keeping requirements.

Further to those audits, customs duties were assessed on past importations made by these companies based on what the CBSA interpreted as those companies’ non-compliance with the record-keeping requirements, under the IGRR.

April 2013 consultations with the Department of Finance, which has policy responsibility for the Customs Tariff, clarified that it was never the policy intent of the 9948.00.00 tariff provision that end-use was to be certified by individual consumers. On June 28, 2013, a Customs Notice was issued to clarify the requirements of the IGRR, specifically that end-use certificates related to tariff item 9948.00.00 will not be required at the consumer level but rather at the importer level. The Customs Notice also announced regulatory amendments with retroactive effect, as provided for under section 167.1 of the Customs Act, to this clarification.

Given that the audits of the 23 companies importing televisions were undertaken before the record-keeping requirements were clarified on June 28, 2013, the CBSA has subsequently determined that the duty assessments of the 23 companies should be refunded or forgiven.

Benefits and costs

This Order refunds duties paid and forgives duties owing by 23 importers as a result of the above noted audits, further to a clarification of, and upcoming amendments to, the IGRR.

The benefits of the Order are limited to the 23 importers named in the Schedule to the Order. These companies will no longer have duties owing to the CBSA and will be refunded the duties that were paid as a direct result of a prior interpretation of tariff item 9948.00.00 and in light of the June 28, 2013, clarification of, and upcoming amendments to, the IGRR.

This will ensure that these importers are not adversely affected by the duties assessed on certain past importations of televisions on the basis of the importers’ non-compliance with record-keeping regulations under the IGRR that were subsequently clarified and will be amended retroactively to June 28, 2013.

Therefore, this Order in Council provides for the remission of duties paid or owing in an amount not exceeding $26,965,456.

Cost-benefit statement
  Refund of Payments Forgiveness of Debt Maximum Refunds re: Adjustment Requests Total
A. Quantified impacts (in Canadian dollars, 2014 price level / constant dollars)
Benefits 23 impacted companies $10,599,360 $6,191,757 $10,174,339 $26,965,456
B. Quantified impacts in non-dollars (e.g. from a risk assessment)
Positive impacts N/A N/A N/A N/A
Negative impacts N/A N/A N/A N/A
C. Qualitative impacts
As noted above, the benefits of the Order are limited to the 23 importers named in the Schedule to the Order. These companies will no longer have duties owing to the CBSA and will be refunded the duties that were paid as a direct result of the CBSA’s verification of tariff item 9948.00.00 and in light of the June 28, 2013, clarification of, and upcoming amendments to, the IGRR.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no costs to small business.

Consultation

No consultations were necessary. The 23 companies impacted by the remission order will be informed by the CBSA of the issuance of the Order and its conditions for a refund of duties paid or forgiveness of duties owing.

Rationale

Remission will be provided to importers who were impacted by the CBSA’s compliance verification of tariff item 9948.00.00 in recognition that the related record-keeping requirements were subsequently clarified on June 28, 2013, given evolving technologies and changes in the import business and retail market since their implementation.

Contact

Anne Kline
Director General
Trade Programs Directorate
Canada Border Services Agency
150 Isabella Street, 11th Floor
Ottawa, Ontario
K1A 0L8
Telephone: 613-954-7338
Fax: 613-954-4494
Teletypewriter: 1-866-335-3237
Email: Anne.Kline@cbsa-asfc.gc.ca