Customs Act (R.S.C., 1985, c. 1 (2nd Supp.))

Denial or Withdrawal of Benefit of Preferential Tariff Treatment Under Certain Free Trade Agreements

Marginal note:Definition of identical goods

• 42.4 (1) In this section, identical goods has the meaning assigned to that expression by the provision, set out in column 2 of Part 2 of the schedule, of an agreement set out in column 1.

• Marginal note:Denial or withdrawal of benefit — specified countries

  (2) Despite section 24 of the Customs Tariff, the Minister may, subject to any prescribed conditions, deny or withdraw preferential tariff treatment under an agreement set out in column 1 of Part 2 of the schedule in respect of goods for which that treatment is claimed if the exporter, producer or prescribed importer of the goods has made false representations that identical goods exported, produced or imported by that exporter, producer or prescribed importer and for which that treatment was claimed were eligible for that treatment.

Duty Evasion

Marginal note:Definition of duty evasion

42.5 In sections 42.6 and 42.7, duty evasion means the evasion of anti-dumping, countervailing or safeguard duties that are imposed by a CUSMA country other than Canada.

Marginal note:Duty evasion verification

• 42.6 (1) If requested by a CUSMA country under paragraph 5 of Article 10.7 of CUSMA, any officer, or any officer within a class of officers, designated by the President for the purposes of this section may — for the purpose of enabling the requesting CUSMA country to determine whether goods exported from Canada to that country are subject to anti-dumping, countervailing, or safeguard duties imposed by that country — conduct a duty evasion verification that includes, among other things, obtaining information from an exporter or producer of goods in Canada.

• Marginal note:Paragraph 7(a) of Article 10.7 of CUSMA

  (2) The duty evasion verification may be conducted only if Canada and the requesting CUSMA country have mutually agreed to conditions and procedures and the verification is conducted in accordance with those conditions and procedures.

• Marginal note:Power to enter

  (3) In conducting the duty evasion verification, the officer may enter the premises of an exporter or producer of goods.

Marginal note:Report

42.7 After a duty evasion verification has been completed, an officer shall provide the requesting CUSMA country with a report that contains any relevant information obtained from an exporter or producer of goods in Canada during the verification.

Production of Documents

Marginal note:Production of records

• 43 (1) The Minister may, for any purpose related to the administration or enforcement of this Act, including the collection of any amount owing under this Act by any person, by notice served personally or sent by registered or certified mail, require any person to provide any record at a place specified by the Minister and within any reasonable time that may be stipulated in the notice.

• Marginal note:Compliance

  (2) Any person who is required to provide any records, books, letters, accounts, invoices, statements or other documents or information under subsection (1) shall, notwithstanding any other law to the contrary but subject to subsection (3), do so as required.

• Marginal note:Application of section 232 of the Income Tax Act

  (3) The definitions lawyer and solicitor-client privilege in subsection 232(1) of the Income Tax Act, and subsection 232(2) of that Act, apply with respect to a requirement under subsection (1) as if the reference in subsection 232(2) to section 231.2 of that Act were a reference to this section.

Advance Rulings

Marginal note:Advance rulings

• 43.1 (1) Any officer, or any officer within a class of officers, designated by the President for the purposes of this section shall, before goods are imported, on application by any member of a prescribed class that is made within the prescribed time, in the prescribed form and manner of filing with the prescribed information, give an advance ruling with respect to

  • (a) whether the goods qualify as originating goods and are entitled to the benefit of preferential tariff treatment under a free trade agreement;

  • (b) in the case of goods exported from a country or territory set out in column 1 of Part 3 of the schedule, any matter, other than those referred to in paragraphs (a) and (c), concerning those goods that is set out in the provision set out in column 2; and

  • (c) the tariff classification of the goods.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations respecting advance rulings, including regulations respecting

  • (a) the application of an advance ruling;

  • (b) the modification or revocation of an advance ruling, including whether the modification or revocation applies retroactively;

  • (c) the authority to request supplementary information in respect of an application for an advance ruling; and

  • (d) the circumstances in which the issuance of advance rulings may be declined or postponed.

PART IIICalculation of Duty

Duties Based on Percentage Rates

Valuation for Duty

Marginal note:Ad valorem rates of duty

44 If duties, other than duties or taxes levied under the Excise Tax Act, the Excise Act, 2001 or the Select Luxury Items Tax Act, are imposed on goods at a percentage rate, such duties shall be calculated by applying the rate to a value determined in accordance with sections 45 to 55.

Interpretation

Marginal note:Definitions

• 45 (1) In this section and sections 46 to 55,

  computed value

  computed value means, in respect of goods, the value of the goods determined in accordance with section 52; (valeur reconstituée)

  country of export

  country of export means, in respect of goods, the country from which the goods are shipped directly to Canada; (pays d’exportation)

  deductive value

  deductive value means, in respect of goods, the value of the goods determined in accordance with subsection 51(2); (valeur de référence)

  goods of the same class or kind

  goods of the same class or kind, in relation to goods being appraised, means imported goods that

  • (a) are within a group or range of imported goods produced by a particular industry or industry sector that includes identical goods and similar goods in relation to the goods being appraised, and

  • (b) for the purposes of

    • (i) section 51, were produced in any country and exported from any country, and

    • (ii) section 52, were produced in and exported from the same country as the country in and from which the goods being appraised were produced and exported; (marchandises de même nature ou de même espèce)

  identical goods

  identical goods, in relation to goods being appraised, means imported goods that

  • (a) are the same in all respects, including physical characteristics, quality and reputation, as the goods being appraised, except for minor differences in appearance that do not affect the value of the goods,

  • (b) were produced in the same country as the country in which the goods being appraised were produced, and

  • (c) were produced by or on behalf of the person by or on behalf of whom the goods being appraised were produced,

  but does not include imported goods where engineering, development work, art work, design work, plans or sketches undertaken in Canada were supplied, directly or indirectly, by the purchaser of those imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of those imported goods; (marchandises identiques)

  price paid or payable

  price paid or payable, in respect of the sale of goods for export to Canada, means the aggregate of all payments made or to be made, directly or indirectly, in respect of the goods by the purchaser to or for the benefit of the vendor; (prix payé ou à payer)

  produce

  produce includes grow, manufacture and mine; (produit)

  purchaser in Canada

  purchaser in Canada has the meaning assigned by the regulations; (acheteur au Canada)

  similar goods

  similar goods, in relation to goods being appraised, means imported goods that

  • (a) closely resemble the goods being appraised in respect of their component materials and characteristics,

  • (b) are capable of performing the same functions as, and of being commercially interchangeable with, the goods being appraised,

  • (c) were produced in the same country as the country in which the goods being appraised were produced, and

  • (d) were produced by or on behalf of the person by or on behalf of whom the goods being appraised were produced,

  but does not include imported goods where engineering, development work, art work, design work, plans or sketches undertaken in Canada were supplied, directly or indirectly, by the purchaser of those imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of those imported goods; (marchandises semblables)

  sufficient information

  sufficient information, in respect of the determination of any amount, difference or adjustment, means objective and quantifiable information that establishes the accuracy of the amount, difference or adjustment; (renseignements suffisants)

  transaction value

  transaction value, in respect of goods, means the value of the goods determined in accordance with subsection 48(4). (valeur transactionnelle)

• Marginal note:Goods deemed to be identical goods or similar goods

  (2) For the purposes of this section and sections 46 to 55, where there are no identical goods or similar goods, as the case may be, in relation to goods being appraised but there are goods that would be identical goods or similar goods, as the case may be, if they were produced by or on behalf of the person by or on behalf of whom the goods being appraised were produced, those goods shall be deemed to be identical goods or similar goods, as the case may be.

• Marginal note:Related persons

  (3) For the purposes of sections 46 to 55, persons are related to each other if

  • (a) they are individuals connected by blood relationship, marriage, common-law partnership or adoption within the meaning of subsection 251(6) of the Income Tax Act;

  • (b) one is an officer or director of the other;

  • (c) each such person is an officer or director of the same two corporations, associations, partnerships or other organizations;

  • (d) they are partners;

  • (e) one is the employer of the other;

  • (f) they directly or indirectly control or are controlled by the same person;

  • (g) one directly or indirectly controls or is controlled by the other;

  • (h) any other person directly or indirectly owns, holds or controls five per cent or more of the outstanding voting stock or shares of each such person; or

  • (i) one directly or indirectly owns, holds or controls five per cent or more of the outstanding voting stock or shares of the other.

Determination of Value for Duty

Marginal note:Determination of value for duty

46 The value for duty of imported goods shall be determined in accordance with sections 47 to 55.

Order of Consideration of Methods of Valuation

Marginal note:Primary basis of appraisal

• 47 (1) The value for duty of goods shall be appraised on the basis of the transaction value of the goods in accordance with the conditions set out in section 48.

• Marginal note:Subsidiary bases of appraisal

  (2) Where the value for duty of goods is not appraised in accordance with subsection (1), it shall be appraised on the basis of the first of the following values, considered in the order set out herein, that can be determined in respect of the goods and that can, under sections 49 to 52, be the basis on which the value for duty of the goods is appraised:

  • (a) the transaction value of identical goods that meets the requirements set out in section 49;

  • (b) the transaction value of similar goods that meets the requirements set out in section 50;

  • (c) the deductive value of the goods; and

  • (d) the computed value of the goods.

• Marginal note:Request of importer

  (3) Notwithstanding subsection (2), on the written request of the importer of any goods being appraised made prior to the commencement of the appraisal of those goods, the order of consideration of the values referred to in paragraphs (2)(c) and (d) shall be reversed.

• Marginal note:Residual basis of appraisal

  (4) Where the value for duty of goods is not appraised on the basis of any of the values referred to in paragraphs (2)(a) to (d), the value for duty of those goods shall be appraised under section 53.

Transaction Value of the Goods

Marginal note:Transaction value as primary basis of appraisal

• 48 (1) Subject to subsections (6) and (7), the value for duty of goods is the transaction value of the goods if the goods are sold for export to Canada to a purchaser in Canada and the price paid or payable for the goods can be determined and if

  • (a) there are no restrictions respecting the disposition or use of the goods by the purchaser thereof, other than restrictions that

    • (i) are imposed by law,

    • (ii) limit the geographical area in which the goods may be resold, or

    • (iii) do not substantially affect the value of the goods;

  • (b) 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, with respect to the goods, in respect of which a value cannot be determined;

  • (c) when any part of the proceeds of any subsequent resale, disposal or use of the goods by the purchaser is to accrue, directly or indirectly, to the vendor, the price paid or payable for the goods includes the value of that part of the proceeds or the price is adjusted in accordance with paragraph (5)(a); and

  • (d) the purchaser and the vendor of the goods are not related to each other at the time the goods are sold for export or, where the purchaser and the vendor are related to each other at that time,

    • (i) their relationship did not influence the price paid or payable for the goods, or

    • (ii) the importer of the goods demonstrates that the transaction value of the goods meets the requirement set out in subsection (3).

• Marginal note:Procedure in application of paragraph (1)(d)

  (2) In the application of paragraph (1)(d), where the purchaser and the vendor of goods being appraised are related to each other at the time the goods are sold for export and the officer who is appraising the value for duty of the goods has grounds to believe that the requirement set out in subparagraph (1)(d)(i) is not met, the officer shall notify the importer of the goods of such grounds and, on the written request of the importer, the notification shall be in writing.

• Marginal note:Requirement for accepting transaction value where purchaser and vendor related

  (3) For the purposes of subparagraph (1)(d)(ii), the transaction value of goods being appraised shall, taking into consideration any relevant factors including, without limiting the generality of the foregoing, such factors and differences as may be prescribed, closely approximate one of the following values that is in respect of identical goods or similar goods exported at the same or substantially the same time as the goods being appraised and is the value for duty of the goods to which it relates:

  • (a) the transaction value of identical goods or similar goods in a sale of those goods for export to Canada between a vendor and purchaser who are not related to each other at the time of the sale;

  • (b) the deductive value of identical goods or similar goods; or

  • (c) the computed value of identical goods or similar goods.

• Marginal note:Determination of transaction value

  (4) The transaction value of goods shall be determined by ascertaining the price paid or payable for the goods when the goods are sold for export to Canada and adjusting the price paid or payable in accordance with subsection (5).

• Marginal note:Adjustment of price paid or payable

  (5) The price paid or payable in the sale of goods for export to Canada shall be adjusted

  • (a) by adding thereto amounts, to the extent that each such amount is not already included in the price paid or payable for the goods, equal to

    • (i) commissions and brokerage in respect of the goods incurred by the purchaser thereof, other than fees paid or payable by the purchaser to his agent for the service of representing the purchaser abroad in respect of the sale,

    • (ii) the packing costs and charges incurred by the purchaser in respect of the goods, including the cost of cartons, cases and other containers and coverings that are treated for customs purposes as being part of the imported goods and all expenses of packing incident to placing the goods in the condition in which they are shipped to Canada,

    • (iii) the value of any of the following goods and services, determined in the manner prescribed, that are supplied, directly or indirectly, by the purchaser of the goods free of charge or at a reduced cost for use in connection with the production and sale for export of the imported goods, apportioned to the imported goods in a reasonable manner and in accordance with generally accepted accounting principles:

      • (A) materials, components, parts and other goods incorporated in the imported goods,

      • (B) tools, dies, moulds and other goods utilized in the production of the imported goods,

      • (C) any materials consumed in the production of the imported goods, and

      • (D) engineering, development work, art work, design work, plans and sketches undertaken elsewhere than in Canada and necessary for the production of the imported goods,

    • (iv) royalties and licence fees, including payments for patents, trademarks and copyrights, in respect of the goods that the purchaser of the goods must pay, directly or indirectly, as a condition of the sale of the goods for export to Canada, exclusive of charges for the right to reproduce the goods in Canada,

    • (v) the value of any part of the proceeds of any subsequent resale, disposal or use of the goods by the purchaser thereof that accrues or is to accrue, directly or indirectly, to the vendor, and

    • (vi) the cost of transportation of, the loading, unloading and handling charges and other charges and expenses associated with the transportation of, and the cost of insurance relating to the transportation of, the goods to the place within the country of export from which the goods are shipped directly to Canada;

  • (b) by deducting therefrom amounts, to the extent that each such amount is included in the price paid or payable for the goods, equal to

    • (i) the cost of transportation of, the loading, unloading and handling charges and other charges and expenses associated with the transportation of, and the cost of insurance relating to the transportation of, the goods from the place within the country of export from which the goods are shipped directly to Canada, and

    • (ii) any of the following costs, charges or expenses if the cost, charge or expense is identified separately from the price paid or payable for the goods:

      • (A) any reasonable cost, charge or expense that is incurred for the construction, erection, assembly or maintenance of, or technical assistance provided in respect of, the goods after the goods are imported, and

      • (B) any duties and taxes paid or payable by reason of the importation of the goods or sale of the goods in Canada, including, without limiting the generality of the foregoing, any duties or taxes levied on the goods under the Excise Tax Act, the Special Import Measures Act, the Customs Tariff, the Excise Act, 2001, the Select Luxury Items Tax Act or any other law relating to customs; and

  • (c) by disregarding any rebate of, or other decrease in, the price paid or payable for the goods that is effected after the goods are imported.

• Marginal note:Effect of absence of sufficient information

  (6) Where there is not sufficient information to determine any of the amounts required to be added to the price paid or payable in respect of any goods being appraised, the value for duty of the goods shall not be appraised under this section.

• Marginal note:Where information inaccurate

  (7) Where an officer who is appraising the value for duty of goods believes on reasonable grounds that the information submitted in support of the transaction value of the goods as determined under subsection (4) is inaccurate, the officer shall determine, in accordance with the prescribed procedure, that the value for duty of the goods shall not be appraised under this section.