Administration of the Designer Remission Order, 2001

Memorandum D8-11-8

ISSN 2369-2391

Ottawa, December 18, 2015

This document is also available in PDF (83 Kb) [help with PDF files]

In Brief

  • 1. This document reflects amendments made to the Designer Remission Order, 2001, by P.C. 2006-1024 and P.C. 2010-1414.
  • 2. This document also contains editing revisions which do not affect or change existing policies or procedures and includes changes to the Canada Border Services Agency organizational structure.

This memorandum outlines the application of the Designer Remission Order, 2001, which was designed for producers of original designer apparel who met certain criteria. The producers were eligible for relief of customs duties at the time of importation until December 31, 2014, or a remission by way of drawback within four years of the date of importation of the fabrics and duty has been paid.


Guidelines and General Information

Definitions

1. In addition to the definitions found in the Remission Order, the following definitions apply for the purpose of administering this Remission Order:

aramid fibres
fibres that have high strength, fatigue resistance, dimensional stability, heat resistance, chemical resistance. The aramid fibres are used under the names of Kevlar, Twaron and Technora for firefighting uniforms, work gloves, car racing suits, soft body armour, sailcloth, tires, tennis racket strings.
equivalent proficiency
  • (a) any accreditation from any foreign educational institutions, government, fashion houses, apparel or fashion designers
  • (b) story books/portofolios of past collections, features from fashion magazines, events such as shows and festivals
  • (c) depth and breath of experience in carrying out activities of a “recognized apparel designer” as defined in the Remission Order
  • (d) any other pertinent information the applicant wishes to submit for consideration.
innovative apparel

apparel that results from an ongoing creative process that primarily entails the establishment of new relationships among the principal elements of fabric, colour, assembly, shape and function.

Note: Apparel that is primarily created to accommodate function such as sporting and exercise apparel is not considered to fall under this definition.

producers of original designer apparel
are producers who:
  • (a) are engaged in the creation, the manufacture, or the contracting of the manufacture, and the sale of original designer apparel; and
  • (b) they are a sole proprietorship, corporation or partnership that employs at least one apparel designer or recognized apparel designers or are themselves recognized apparel designers; and
  • (c) generate a minimum of 85 per cent of their total net sales revenue from the sale of their original designer apparel for each calendar year for which they claim a remission.
  • Note: Producers of original designer apparel are not excluded from this Remission Order, if they would be considered solely engaged in the creation, manufacture or contracting of the manufacture, and sale of original designer apparel but for the fact that they are also engaged in the sale of limited quantities of articles such as footwear, handbags and other articles of leather, scarves or jewellery to complement a collection.
semi-annual report
this should be understood to designate reports to be submitted to the Canada Border Services Agency (CBSA) in January and July of every year with the following information:
  • (a) business number
  • (b) importer’s name
  • (c) authorization number
  • (d) transaction number
  • (e) dates (period covered by the report)
  • (f) date of importation
  • (g) classification number
  • (h) linear metre quantity
  • (i) linear metre quantity of fabric used in manufacturing
  • (j) total values for duty
  • (k) duties remitted
  • (l) number of styles
  • (m) number of articles of apparel per style
swimwear
means articles of clothing of subheading Nos. 6112.31, 6112.39, 6112.41, 6112.49, 6211.11 and 6211.12 in the List of Tariff Provisions set out in the Schedule to the Customs Tariff.

Who Qualifies

2. Eligibility for the program is restricted to producers of original designer apparel (swimwear included) who:

  • (a) are solely engaged in the creation, manufacture or contracting of the manufacture, and the sale of original designer apparel;
  • (b) are a sole proprietorship, corporation or partnership that employs at least one apparel designer or recognized apparel designer or who are recognized apparel designers;
  • (c) generate a minimum of 85 percent of total net sales revenue from the sale of original designer apparel for each calendar year for which the designer claims a remission; and
  • (d) use eligible fabrics for the manufacture of original designer apparel, in limited quantities, as listed in the Remission Order.

3. Producers of original designer apparel are not excluded from this Remission Order if they would be considered solely engaged in the creation, manufacture or the contracting of the manufacture, and sale of original designer apparel but for the fact that they are also engaged in the sale of articles such as footwear, handbags and other articles of leather, scarves or jewellery to complement a collection.

Eligible Goods

4. The fabrics imported by a producer of original designer apparel are used by the producer of original designer apparel solely for the manufacture of men’s or women’s original designer apparel except for the items specified under that definition. In the case of fabrics for swimwear (as specified under “swimwear” in the definition, section 2 above), the fabrics imported by a producer of original designer apparel are used by the producer of original designer apparel solely for the manufacture of swimwear classified under the heading specified in section 2 above.

Amount of Remission

5. The annual remission entitlement granted under this Remission Order is the customs duties paid or payable under the Customs Tariff with regard to fabrics imported into Canada between December 13, 2001, and December 31, 2014, and for which a claim for remission is made to the Minister of Public Safety and Emergency Preparedness within four years of the date of importation.

6. For swimwear, the annual remission entitlement granted under this Remission Order is the customs duties paid or payable under the Customs Tariff with regard to fabrics imported into Canada between November 1, 2002 and December 31, 2014, and for which a claim for remission is made to the Minister of Public Safety and Emergency Preparedness within four years of the date of importation.

How to Apply for Remission

7. A producer of original designer apparel may choose to access the program by applying for remission at the time of importation or by claiming remission by way of drawback.

8. All claims for remission by way of drawback must be submitted to a CBSA Trade Operations office within four years following the day the fabric was imported into Canada.

Applying for Remission at Time of Importation

9. If a producer of original designer apparel intends to have duties remitted at the time of importation, at the beginning of each calendar year, the original designer apparel producer must submit to the CBSA Trade Operations office serving where the company’s operations are located, an application by letter of intent, confirming that the company:

  • (a) is a producer of original designer apparel;
  • (b) will not exceed the amount of duties that may be claimed for remission on imported fabric;
  • (c) will maintain records that are satisfactory to the CBSA;
  • (d) will meet all the conditions of the Remission Order;
  • (e) will provide the CBSA, in January and July, with reports that contain information as specified under the definition of “semi-annual report” in section 2, with regard to which a claim for remission was made, and any relevant information necessary to the administration of this Remission Order; and
  • (f) will include the name and address of the designer of original apparel or the design house for which the production is done.

10. Upon receipt of the application, the CBSA will review the information submitted to confirm:

  • (a) that the producer is a sole proprietorship, corporation or partnership that employs at least one apparel designer or recognized apparel designers or is a recognized apparel designer;
  • (b) the description of business activities and organizational structure;
  • (c) the name of the designer engaged or the design house contracting production;
  • (d) the presence of a copy of the degree or diploma in fashion or apparel design, or proof of equivalent proficiency;
  • (e) the existence of charts of accounts, and most recent financial statements, including an income statement and balance sheet;
  • (f) the presence of a sample of the designer label with trademark;
  • (g) the presence of a collections catalogue for the year;
  • (h) all locations where original designer apparel under the Remission Order are being manufactured; and
  • (i) compliance with all requirements of the Remission Order.

11. If no adjustments are required, the CBSA will approve the application in writing and notify the producer of original designer apparel of such approval. The CBSA will provide the applicant with an authorization number that is to be indicated on all customs accounting documents that are presented, to claim remission under the Remission Order. The authorization number advises the CBSA of the fabric producer’s eligibility under the Remission Order. Provided that compliance with all the conditions of the Remission Orderand with other related legislation and regulations is established, the producer will not be required to pay any duties on imported fabric.

12. Additional information on the completion of customs accounting documents may be found in Memorandum D17-1-10, Coding of Customs Accounting Documents.

13. The CBSA will inform the company that, at the end of the calendar year, border services officers may exercise the powers granted to them under section 42 of the Customs Act and perform a compliance verification audit to:

  • (a) ensure that, during the preceding calendar year, all conditions of the Remission Order were observed;
  • (b) ensure that the remission entitlement was not exceeded;
  • (c) ensure that only eligible fabrics were claimed;
  • (d) ensure that all the imported fabrics were used to produce men’s or women’s apparel, as specified under the definition of apparel stated above;
  • (e) ensure that any duties remitted where the conditions of the Remission Order were not met will be reassessed under the provision of section 118(1) of the Customs Tariff. The applicable interest and penalty may also be charged in accordance with section 123(2) of the Customs Tariff and section 109.11(2) of the Customs Act, respectively; and
  • (f) verify the company’s application to use the provisions of the Remission Order during the next calendar year.

Claiming Remission by Way of Drawback

14. With the exception of not having to submit a letter of intent at the beginning of the calendar year to obtain an authorization number, a producer of original designer apparel claiming remission by way of drawback must meet the same requirements as a producer applying for remission at the time of importation.

15. A producer of original designer apparel using the drawback procedure must pay customs duties on imported fabric at the time of accounting.

16. The producer may subsequently file a claim for remission of duties on Form K32, Drawback Claim. This form and all substantiating documentation are to be submitted to the CBSA Trade Operations office serving where the company’s operations are located.

17. If a producer of original designer apparel has paid duties on fabric imported during a calendar year before the determination of eligibility under this Remission Order, the company may claim a remission of duties by filing Form K32, Drawback Claim.

Record Keeping Requirements

18. Whether a producer of original designer apparel intends to apply for remission at the time of importation or claim remission by way of drawback, section 40 of the Customs Act requires the producer to maintain records that are satisfactory to the CBSA. These records must be maintained in a manner that facilitates the audit by the CBSA and be of a quality sufficient to substantiate a claim for remission. Memorandum D17-1-21, Maintenance of Records in Canada by Importers, contains information on record keeping. If necessary, the regional CBSA office can provide additional information and advice on how a company’s record keeping systems may be modified, to meet the above objectives.

19. A producer of original designer apparel must maintain records of:

  • (a) business number
  • (b) importer’s name
  • (c) authorization number
  • (d) transaction number
  • (e) dates (period covered by the report)
  • (f) date of importation
  • (g) classification number
  • (h) linear metre quantity
  • (i) linear metre quantity of fabric used in manufacturing
  • (j) total values for duty
  • (k) duties remitted
  • (l) number of styles
  • (m) number of articles of apparel per style

Purchase Records

20. These records must allow the CBSA to identify the fabric purchased and imported, the producer, the original designer and the original designer apparel produced.

Production Records

21. These must be of a type which allows the CBSA to identify the:

  • (a) site where the designer apparel was produced
  • (b) date the apparel were produced
  • (c) volume, size and style of the original designer apparel produced.

Importation Records

22. The producer of original designer apparel must maintain the CBSA records of the fabric that it has imported under the provisions of this Remission Order. The invoices must clearly indicate the volume, style or type of fabric imported. These records must include copies of the customs accounting documents and the purchase invoice for the imported fabric.

23. The invoices and samples of fabric attached to the accounting documents must be in accordance with CBSA departmental Memorandum D10-17-15, Information Requirements for Textiles and Textile Products.

Additional Information

24. If compliance with a condition to which the remission is subject to is not effected, the producer of original designer apparel must report the failure to comply with an officer at a CBSA office. In accordance with subsection 118(1) of the Customs Tariff, the producer must pay an amount equal to the amount of the duties for the remission granted, within 90 days after the failure to comply, unless he/she can prove that:

  • (a) at the time of the failure to comply with the condition, a refund or drawback would otherwise have been granted, if duties had been paid; or
  • (b) the goods for which the relief or remission was granted qualify in some other manner for relief or remission under the Customs Act or the Financial Administration Act.

25. A producer of original designer apparel who did not comply and is liable to pay an amount must, in accordance with subsection 123(2) of the Customs Tariff, pay, in addition to the amount, interest at the specified rate for the period beginning on the day that the liability was incurred and ending on the day the amount is paid in full, calculated on the amount of the balance outstanding.

26. A producer who fails to report to the CBSA a failure to comply with a condition of a duty-relief provision or remission order, within 90 days or such other period as may be prescribed, may be subject to a penalty of $100 at the first level, $200 at the second level and $400 at the third and subsequent levels.

27. A producer who fails to pay the amount of duties with respect to relief or remission granted, within 90 days or such period as may have been prescribed, unless the provisions of subparagraph 118(1)(b)(i) or (ii) were met, may be subject to a penalty of $100 or five percent of the value of the relief or remission at the first level, whichever is greater; $200 or 10% of the value of the relief or remission at the second level, whichever is greater; $400 or 20% of the value of the relief or remission, whichever is greater, at the third and subsequent levels.

28. If a producer removes fabric from a customs bonded warehouse during the period beginning December 13, 2001, and ending on December 31, 2014, the producer may use the remission entitlement to have the duties remitted on these goods in the year the goods are removed from the customs bonded warehouse.

29. Producers, designers or design houses undergoing a change of operations, for example, a change of ownership or name, amalgamation, receivership, sale or dissolution, are required to inform the CBSA at the following address:

Manager
Trade Incentives Unit
Trade Compliance Division
Trade and Anti-dumping Programs Directorate
222 Queen Street, 11th floor
Ottawa, Ontario
K1A 0L8

30. Each case will be reviewed and evaluated on its merits and particular circumstances to determine its eligibility under the Remission Order.

31. For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time / except holidays). TTY is also available within Canada: 1-866-335-3237.

References

Issuing office
Trade and Anti-dumping Programs Directorate
Headquarters file
6512-0, 6566-0, 6566-1, 6587-0
Other references
Superseded memorandum D
D8-11-8 dated July 14, 2006
Date modified: