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Memorandum D7-2-3
In Brief
Ottawa, May 31, 1999
Subject
Obsolete or surplus goods
This memorandum has been revised to reflect the amendments to the Customs Tariff and the new regulations effective January 1, 1998.
Memorandum D7-2-3
Ottawa, May 31, 1999
Subject
Obsolete or surplus goods
This memorandum outlines and explains the conditions under which a refund of duties, other than the goods and services tax (GST), may be paid on obsolete or surplus goods destroyed in Canada.
Guidelines and general information
1. The obsolete or surplus goods program allows for a refund of duties paid when imported goods, which have not been used in Canada and are either obsolete or surplus, are destroyed under the direction of a customs officer. There is no provision for the relief of GST under this program.
2. The purpose of this program is to assist the Canadian industry to compete by reducing costs on goods which will not enter the domestic market. By allowing the destruction of obsolete or surplus goods, the necessity of exporting imported goods to qualify for an export drawback is removed. As such, this program is similar to the duty drawback program. Refer to Memorandum D7-4-2, Duty Drawback Program.
3. A refund of the duties paid is provided for the following scenarios when imported goods are:
(a) found to be obsolete or surplus to requirements by their importer or owner;
(b) used in processing of goods in Canada that have been found to be obsolete or surplus to requirements by their processor or owner; or
(c) other than fuel or plant equipment, directly consumed in the processing in Canada of goods that have been found to be obsolete or surplus to requirements by their processor or owner.
Note: In all cases, the goods cannot be used in Canada or damaged prior to their destruction.
4. Goods imported under the duties relief program for subsequent exportation, may also be destroyed under the direction of a customs officer and qualify for this program. The destruction of goods should be adequately documented to show that the goods did qualify, when a verification is conducted. The supporting documents should be held at the claimant’s premises for subsequent verification.
5. All obsolete or surplus goods must be destroyed under the direction of a customs officer, or sufficient documentation must be supplied to enable the customs officer to determine that the obsolete or surplus goods have been destroyed.
6. The method of destruction will depend on the nature of the goods being destroyed. Any questions regarding how to destroy the goods should be addressed to the local Trade Administration Services (TAS) office prior to their destruction.
7. The Refunds of Duties on Obsolete or Surplus Goods Regulations (see Appendix A) may also be used where it can be ascertained that used clothing imported in bulk, in bales, sacks, or similar packing do not enter the Canadian economy by way of resale, fibre recovery, or use in the manufacture of wipers or rags, and is determined to be unsaleable.
How to Apply
8. The claimant must complete, in duplicate, a Form K 32 or K 32-1, Drawback Claim, and file it, together with supporting documentation to the nearest TAS office. The claim should be typed or legibly written in ink. Completion instructions are on the back of the form. A sample claim can be found in Appendix B. The goods must be destroyed prior to filing a claim.
9. A copy of Form K 32 or K 32-1 will be returned to the claimant where a claim has been rejected for lack of supporting documentation. Revenue Canada will indicate what documentation is missing. The claimant must present a new claim form with the necessary information. The date of original filing does not protect the statutory time limits. Therefore, the new claim must be received by Revenue Canada within the prescribed time limits.
Supporting Documentation
10. The following documents must accompany the claim:
(a) a certified copy of Form E15, Certificate of Destruction/Exportation;
(b) the original and one copy of any Form K32A, Certificate of Importation, Sale or Transfer, where the claimant is not the importer.
11. Computer printouts or other suitable computer medium can be utilized where the claim is lengthy.
12. The documents shall contain a complete description of the goods detailed in the transaction.
13. Additional information or documents may be required in order to establish the validity of the claim and must be provided upon request.
14. When a supporting document is not available, a claim may be accompanied by a document containing information equivalent to that on the missing document.
Certificates and Waivers
15. A waiver is required from all other eligible claimants waiving their rights to claim a refund, and must be filed with the claim. A claim cannot be filed if such a waiver is required but not included.
16. It should be noted there is no legal obligation to sign a waiver. However, claims will be rejected where a waiver is required and is not provided. To claim goods from a certificate or waiver that was submitted with a prior claim, the claimantonly needs to identify, on the new claim, the claim number to which the original waiver was attached.
17. To assist claimants, the Department has created a waiver certificate, Form K32A, Certificate of Importation, Sale or Transfer, which is used to waive the duties to someone other than the importer.
Filing Time Limits
18. A claim for refund must be filed within five years of the date the goods were released from customs.
19. Claims filed at any Revenue Canada office will be date-stamped immediately on receipt and forwarded to the appropriate TAS office of Revenue Canada.
20. The date-stamp or the date of registration, if sent by registered mail, will be the date used for calculating time limits for submission of a claim.
21. In instances where the claim is forwarded to the TAS office by regular mail or courier, the date that the claim is received in the TAS office will be the date of filing.
22. The Department will process the claim as soon as it is received. We may authorize an interim payment of up to 100% of the amount filed, pending final verification by the Department.
Scrap or Waste
23. Normally a claim would include any scrap or waste resulting from a processing operation or the destruction of goods, provided the scrap or waste is not subject to duties, when imported as scrap or waste, and does not have a merchantable (sales) value.
24. When the scrap or waste has a sales value and would be subject to duties, if it were imported as such, only claim a refund if the scrap or waste is exported or destroyed. Otherwise, the claim must be reduced by the amount of duty that would be applicable to the sales value of the scrap or waste.
Interest
25. Any person who receives a refund of duties, other than duties levied under the Special Import Measures Act, shall receive, in addition to the refund, interest at the prescribed rate starting on the ninety-first day after the application for the refund is received by Revenue Canada, and ending on the day the refund is granted.
26. Any person granted a refund of duties levied under the Special Import Measures Act will be granted interest at the prescribed rate for each month or fraction of a month beginning on the ninety-first day after an application is received by Revenue Canada, and ending on the day the refund is granted.
Non-compliance
27. For the purposes of this program, where a refund is paid on goods thought to be destroyed which are not destroyed, the amount of the refund must be repaid.
28. Any money which is overpaid by the Department, including interest overpaid, will be recovered. Interest will be charged on the overpayment from the time the refund was paid until the full amount is repaid.
29. Detailed information regarding refunds may be obtained at a Revenue Canada TAS office listed in Appendix C.
Appendix A
Refunds of duties on obsolete or surplus goods regulations Application for a Refund
1. (1) Subject to subsection (2), an application for a refund under section 110 of the Customs Tariff must be accompanied by:
(a) a document certified by an officer that identifies the obsolete or surplus goods; and
(b) a list of the documents required under Part I of the Accounting for Imported Goods and Payment of Duties Regulations that relate to the importation of those goods.
(2) Where an officer is not available to certify the document referred to in paragraph (1)(a), other non-certified documentation that contains similar information may be substituted for it.
Coming Into Force
2. These regulations come into force on January 1, 1998.
Appendix B
FORM K 32, DRAWBACK CLAIM
[You can view this form in PDF format]
Appendix C
LISTING OF TRADE ADMINISTRATION SERVICES (TAS) OFFICES
ATLANTIC REGION
5th floor
CIBC Building
1809 Barrington Street
Halifax NS B3J 3K8
QUEBEC REGION
130 Dalhousie Street
P.O. Box 2267
Québec QC G1K 7P6
50 Place de la Cité
P.O. Box 127
Sherbrooke QC J1H 5L8
400 Place d’Youville
Montréal QC H2Y 2C2
NORTHERN ONTARIO REGION
11th floor
333 Laurier Avenue West
Ottawa ON K1A 0L9
SOUTHERN ONTARIO REGION
1 Front Street West
P.O. Box 10
Station A
Toronto ON M5W 1A3
312 Simcoe Street South
Oshawa ON L1H 4H7
199 County Court Boulevard
Brampton ON L6W 4P3
26 Arrowsmith Road
P.O. Box 2989
Hamilton ON L8N 3V8
451 Talbot Street
P.O. Box 5940
Station A
London ON N6A 4T9
Dominion Public Building
185 Ouellette Avenue
P.O. Box 1655
Windsor ON N9A 5S8
PRAIRIE REGION
Federal Building
269 Main Street
Winnipeg MB R3C 1B3
Bay 32
3033 – 34th Avenue North East
Calgary AB T1Y 6X2
PACIFIC REGION
333 Dunsmuir Street
Vancouver BC V6B 5R4
REFERENCES
ISSUING OFFICE
Duties Relief Programs
LEGISLATIVE REFERENCES
Customs Tariff, sections 109 to 112
P.C. 1997-2028
HEADQUARTERS FILE
6550-0
SUPERSEDED MEMORANDA "D"
D7-2-3, September 30, 1996
OTHER REFERENCES
D17-1-19, D7-4-2, D6-2-3
