Memorandum D8-2-1

In Brief

Ottawa, March 22, 1999

Subject

Canadian goods abroad

1. This memorandum is revised to reflect changes to the legislative references in the new Customs Tariff effective January 1, 1998. The new Canadian Goods Abroad provisions are contained in sections 101 to 105 of the Customs Tariff. These sections replace sections 88 to 92 of the pre-1998 tariff.

2. The new provisions parallel the old ones, with the addition of new regulations-making authority. There is no change in the administration of these provisions. However, there are new codes for claiming relief under section 101 on Form B3, Canada Customs Coding Form, in field 26, the special authority field.

3. Appendix B, "Questionnaire for Application Under Paragraph 101(1)(c) of the Customs Tariff," has been rewritten to organize and simplify information. The applicant background now identifies the application type as a one shot for single imports, a repetitive request for several imports, or a renewal to extend the authorization period. The segment dealing with strikes is moved to the end of the questionnaire because it is not applicable in most cases.

---

Memorandum D8-2-1

Ottawa, March 22, 1999

Subject

Canadian goods abroad

This memorandum explains the conditions for obtaining partial duties relief on Canadian goods returned to Canada after being exported for repairs, equipment additions, or work done outside Canada. The emergency repair provisions for aircraft, vehicles, or vessels damaged abroad also appear in this Memorandum. The "Canadian Goods Abroad" provisions are contained in sections 101 to 105 of the Customs Tariff, which are reproduced in Appendix A under "Legislation."

TABLE OF CONTENTS

Guidelines and General Information
Appendix A
Appendix B
References

---

GUIDELINES AND GENERAL INFORMATION

Background

1. Subsection 101(1) of the Customs Tariff allows duties relief on the Canadian export value of goods when the goods are returned to Canada after being exported for repairs, equipment additions, or work done abroad, subject to the conditions in section 102. Duties are paid only on the foreign value of the repairs, additions, or work done. All required documents and goods are presented to customs at the time of export and return to Canada. Partial duties relief under subsection 101(1) is granted only when it is not practical to do the repairs, additions, or work in Canada. Subsection 101(2) of the Customs Tariff provides full duties relief on aircraft, vehicles, or vessels that have undergone emergency repairs while abroad.

2. Commercial businesses operating as producers, manufacturers, wholesalers, assemblers, or distributors, and non-commercial travellers may be eligible for duties relief, under subsection 101(1) of the Customs Tariff, on goods temporarily exported from Canada for repairs pursuant to paragraph 101(1)(a), equipment added pursuant to paragraph 101(1)(b), or work done pursuant to paragraph 101(1)(c). Both commercial and non-commercial users may obtain full duties relief in subsection 101(2) on emergency repairs to Canadian owned or registered aircraft, vehicles, or vessels repaired outside Canada, provided the repairs are reported at the time of import to Canada, and the repairs were necessary for the safe return of the conveyance to Canada.

3. There are different outward repair provisions depending on whether the country, in which the repairs were done, is a signatory to a free trade agreement with Canada. Free trade partner is defined in section 2 of the Customs Tariff as a North American Free Trade Agreement (NAFTA) country, Chile (CCFTA), or Israel or another Canada-Israel Free Trade Agreement (CIFTA) beneficiary. Repairs done in these signatory countries are eligible for the repair or alteration provisions in tariff item Nos. 9992.00.00 or 9971.00.00 of the schedule to the Customs Tariff. Repairs done in countries that are not free trade partners with Canada can use the repair provisions in paragraph 101(1)(a) subject to prescribed conditions. Work done pursuant to paragraph 101(1)(c) includes manufacturing and assembling processes in all countries, regardless of free trade agreements.

REFERENCES

4. Other outward provisions for goods exported from and returned to Canada are:

Duties

5. Section 80 of the Customs Tariff (Part 3, "Duties Relief") defines duties as, duties or taxes imposed on imported goods (excluding section 106) under Part 2 of the Excise Tax Act, the Excise Act, or the Special Import Measures Act, or under any other Act of Parliament relating to customs, but for the purpose of sections 89 and 113 does not include the goods and services tax (GST). However in this program, any reference to duties includes GST. Subsection 101(1) relieves the duties on the export value of the goods when the goods are returned to Canada. For emergency repairs abroad under subsection 101(2), all duties are relieved on the full import value of the goods.

6. Goods and services tax (GST) means the tax imposed under Part IX of the Excise Tax Act. The legislative references for the GST on imported goods are in sections 212 to 216 of the Excise Tax Act, Schedule VII, Non-Taxable Imported Goods (GST) Regulations, and the Value of Imported Goods (GST) Regulations. Paragraph 3(j) of the Non-Taxable Imported Goods (GST) Regulations prescribes that goods imported after being exported for warranty repairs are non taxable. The 15% harmonized sales tax (HST), for non-commercial importers, was implemented April 1, 1997, and applies to goods imported by residents of a participating province, namely Nova Scotia, New Brunswick, or Newfoundland, regardless of where the resident or the goods enter Canada. The 15% HST tax is paid at the time of import of non-commercial goods by the importer resident in a participating province.

Proof of Export

7. The Duties Relief Regulations contain proof of export requirements for all goods temporarily exported and re-entered into Canada under subsection 101(1). An application under section 101 requires proof of export in the form of:

8. Goods presented at an inland customs office must move in bond to the point of exit unless transported by a commercial bonded carrier on a through bill of lading under a cargo control document. At the examining office, Form E15 is signed, stamped, and returned to the claimant, and it accompanies the goods to the point of exit. Refer to Memorandum D3-1-1, Regulations Respecting the Importation, Transportation and Exportation of Goods. Export procedures are in Memorandum D20-1-1, Export Declaration, and in Memorandum D20-1-4, Proof of Export, Canadian Ownership and Destruction of Commercial Goods.

Relief Applications

9. Under subsection 101(1), relief applications require evidence that the goods were exported, that the repairs could not be done within the place of export in Canada, and the equipment added and work done could not practicably be done in Canada. The goods must re-enter Canada within one year of the export date.

10. The importer presents the goods to customs for selective examination with all supporting documents including:

11. For equipment additions or work done, the company must apply to the closest regional customs office of Revenue Canada in advance of exporting the goods. The region approves all applications for equipment additions.

12. All applications for work done pursuant to paragraph 101(1)(c) require a properly completed questionnaire, included in Appendix B. The region approves all one shots for single trips but forwards all repetitive type applications involving several imports and extension requests to Headquarters, Trade Incentives Program, for further review. Extensions must be received before the original expires. Headquarters advises the region of the decision and the region writes to the applicant with the response. If approved, the region issues a remission authorization letter granting relief for a specified period which the importer attaches to Form B3 when the goods re-enter Canada.

13. Relief under subsection 101(2) is granted when the conveyance returns to Canada. It requires evidence that the emergency repairs were the result of an unforeseen contingency that occurred outside Canada, and were necessary for the safe return to Canada of the aircraft, vehicle, or vessel. Repair and emergency repair relief are authorized when the goods are imported and accounted for under subsection 32(1), (3), or (5) of the Customs Act.

Accounting

14. Supporting documents to accompany accounting Form B3 may include invoices (customs or commercial), price lists, permits, licences, certificates, remission authorizations, and cargo control documents (e.g., manifests, waybills) presented at the time of release as explained in Memorandum D17-1-0, Accounting for Imported Goods and Payment of Duties Regulations.

15. Invoices contain a complete description and costs of the foreign processing with values. The invoice's selling price column is the total value of the imported goods meaning the export value and the foreign value added. The body of the invoice shows the value of the repair, addition, or work done abroad which includes product costs associated with the production for materials, direct labour, direct overhead, and profit charged by the foreign processor. Material costs include freight, insurance, packing, and all other costs to transport the material to the location of the producer. Sales, marketing, and after service costs are excluded.

16. The import accounting Form B3 is used to account and pay any applicable duties and taxes, and is prepared as follows:

17. The value for duty of the imported goods pursuant to paragraph 16(b) above is determined in sections 45 to 55 of the Customs Act. The price paid or payable for the repair, addition, or processing forms the basis of the value for duty. The price paid or payable is the aggregate of all payments made, directly or indirectly, by the purchaser to or for the benefit of the vendor. The transaction value uses the price paid or payable and adjusts the price under subsection 48(5). Transportation costs incurred from the point of exiting Canada to and at the foreign processor's premises are added to the value referred to in paragraph 16(b). Refer to the section called "Determination of the Value for Duty of Imported Goods" in Memorandum D13-1-1, Valuation for Duty Regulations.

18. For relief under section 101, the customs accounting Form B3 must contain the appropriate code in the special authority field on the first classification line as follows:

Code Legislative Reference

98-01-0101 repairs under paragraph 101(1)(a)

98-02-0101 emergency repairs under subsection 101(2)

98-03-0101 equipment additions under paragraph 101(1)(b)

98-04-0101 work done under paragraph 101(1)(c)

19. Form B2, Canada Customs Adjustment Request, amends a paid assessment for commercial goods allowing for refunds, adjustments, or appeals. An automated Form B2-1, Detailed Adjustment Statement (DAS), records the adjustment, refund, or money owing. Subsection 32.2(2) of the Customs Act allows corrections or adjustments to declarations of tariff classification, value for duty, and origin within 90 days of the original declaration. Subsection 32.2(4) allows the applicant four years from the date of accounting under subsection 32(1), (3), or (5) to make such corrections. Refund applications, on Form B2G, Customs Informal Adjustment Request, or Form B2, also have a four-year time limit under sections 74 and 76 of the Customs Act. For NAFTA/CCFTA goods, Form B2 must be submitted within one year of the accounting date as per subparagraph 74(3)(b) (ii). Refunds are allowed for clerical errors, duties overpaid from an error in tariff classification or value for duty, or for any other reason.

20. To request an adjustment, non-commercial importers use Form B2G. GST non-registrants use either Form B2G or Excise/GST Form 189, General Application for Rebate of GST. GST registrants should contact their district excise tax office for refunds under the input tax credit.

Export for Repairs

21. Paragraph 101(1)(a) authorizes export for repairs. This provision partially relieves the duties on goods exported for repair and re-entered into Canada on condition that no suitable Canadian company can do the repairs. Customs may accept a verbal report or request written evidence that the service could not be done in Canada within a reasonable distance of where the goods were located before export. Goods exported for the purpose of repair are either Canadian-produced or foreign goods on which Canadian duty and tax were paid. Duties are paid based on the value of the repair on Form B3. Customs may issue Form B2-1 for duties owing if all relief conditions are not met.

22. The importer reports the repairs at the customs office of first arrival in Canada with the following documents:

23. Repair is the adjustment of a machine, instrument, electrical device, or other article, including replacing or refitting parts to restore the article to its original operating condition. Alteration is a modification, other than a repair, that does not include an operation or process that either destroys the essential characteristics of a good or creates a new or commercially different good. Refer to paragraph 101(1)(c) if the foreign processing exceeds a repair or creates a different commercial article through a manufacturing process that substantially changes the original character, purpose, or function of a good.

24. Canadian and U.S. government agencies have lists of approved repair firms for certain articles for use at defense establishments that are manufactured to rigid specifications. These lists are accepted as evidence that the repairs could not be done in Canada.

25. Memorandum D8-4-2, Summary Reporting of Vehicle Repairs by Highway Carriers, allows pre-approved highway carriers to report repairs quarterly under paragraph 101(1)(a) and emergency repairs under subsection 101(2). This relieves the importer from documenting and reporting each vehicle repaired abroad when returned to Canada. Highway carriers may apply for periodic reporting privileges to their regional customs manager conditional on the carrier filing quarterly reports. The reports include recap sheets of the repair work, Form B3 to pay the duties on the value of the repairs, and invoices or work orders. Memorandum D8-4-2 contains an Appendix listing pre-approved highway carriers.

Emergency Repairs on Aircraft, Vehicles, or Vessels

26. Paragraph 101(2) of the Customs Tariff provides full relief on the returned aircraft, vehicle, or vessel repaired outside Canada including relief on the value of the repairs provided the repairs:

27. If a vehicle is irreparably damaged and replaced while abroad, the importer is not eligible for the Canadian goods abroad provisions. Full duty and taxes would be owing at the time of importation. In addition, there are restrictions in the Customs Tariff and the Motor Vehicle Safety Act on vehicles purchased outside Canada when imported into Canada.

28. Transport Canada's import requirements are for vehicles less than 15 years old or buses built after January 1, 1971. Some vehicles built for foreign markets cannot be modified to comply with Canadian safety standards and do not qualify for importation. The Motor Vehicle Safety Act requires that foreign vehicles meet Canadian safety standards when imported and be certified by the original manufacturer. Many new and used vehicles do not meet these standards and are prohibited entry. Importers must determine the vehicle's compliance status. Importers must register vehicles manufactured for the U.S. market with the Registrar of Imported Vehicles (RIV) prior to release by customs and complete Transport Canada Form 13-0132, Vehicle Import Form 1, unless exempted under Memorandum D19-12-1, Importation of Motor Vehicles.

29. Transport Canada's legislation allows temporary importation of motor vehicles for travelers and commercial importers. The vehicles can stay in Canada temporarily for one year if imported for exhibition, demonstration, evaluation, or testing, and the importer meets customs and transport entry procedures.

30. Contingency repairs are allowed when they are part of major repairs necessary to return the vehicle safely to Canada. They include replacing tires and tubes irreparably damaged outside Canada, replacing trim, and other minor cosmetic finishes. Radial tires can be replaced in pairs if on the same drive train even though only one was destroyed. The applicant must present satisfactory evidence that the repaired aircraft, vehicle, or vessel complies with safety, pollution prevention, and other requirements.

Export for Equipment Additions

31. Paragraph 101(1)(b) of the Customs Tariff partially relieves the duties and taxes on Canadian and duty-paid equipment exported from Canada to add foreign equipment abroad. Evidence is needed that the goods were exported and that the equipment added could not practicably have been added in Canada. Duties including GST are paid on the value of the equipment added and the cost of adding the equipment. Articles must be identifiable as Canadian goods returned.

32. The importer applies in advance to regional customs with:

33. The regional manager writes to the applicant advising of the decision. The importer presents the goods to customs with invoices, proof of export, a copy of the remission authorization, and any other required documents or certificates.

34. Equipment added in this relief provision means equipment permanently adjoined or united to other equipment. If foreign equipment is temporarily added, held with straps or chains, to a Canadian chassis, refer to tariff item Nos. 9813.00.00 or 9814.00.00 for the Canadian goods returned provisions relating to the returned chassis. The foreign equipment temporarily added may be dutiable. Equipment added generally represents a minor portion and value of the goods. When the equipment added forms a major portion and value of the goods, refer to paragraph 101(1)(c) below.

Export for Work Done

35. Paragraph 101(1)(c) is used for goods exported for work done in any country, regardless of free trade agreement. Work done includes manufacturing or assembling processes. Partial duties relief including GST is granted on Canadian goods exported for a phase of production that cannot be completed in Canada. The importer must prove that it is impractical to do the work in Canada and the exported goods must be a product of Canada. Duties are paid on the value of the foreign processing and the related work done abroad. Work means a series of changes or operations that an exported Canadian article goes through in the manufacturing process, e.g., coating, dyeing, embossing, machining, plating, or printing. This work changes the original character, purpose, or function of a machine or article.

36. For purposes of relief in subsection 101(1), the goods exported must meet the origin rules in section 16 of the Customs Tariff and qualify as a product of Canada meaning:

37. If imported non-originating material is incorporated into the goods while produced in Canada, the goods may be deemed to originate in Canada if:

38. In other words, the goods require a change of tariff classification and a minimum Canadian value-added requirement to qualify as a product of Canada. The net cost method is used when there is no transaction value or the value is unacceptable. The origin rules ensure that any non-originating materials undergo enough regional, or in this case, Canadian processing to transform the goods into an originating good. Consult Memoranda D11-4-12, United States Tariff Rules of Origin Regulations, D11-4-2, Proof of Origin,or D11-5-1, NAFTA Rules of Origin Regulations, for more information.

39. Application in subparagraph 102(a) (iii) requires evidence that the goods were exported and that it was not practical to do the work in Canada. The applicant completes the questionnaire in Appendix B and forwards the application and supporting documents to the closest Revenue Canada regional customs office for initial review. Regional officers screen all applications and research local industries to determine if they can do the work. The region obtains any missing or incomplete information before forwarding the repetitive type and renewal applications to Headquarters for approval. At time of importation, the customs officer must be able to readily identify the returned goods as the original exported goods.

40. Canadian competitors advise the Department if they are capable of doing the work. They will be asked whether they have the necessary equipment, facilities, and staff capabilities for all phases of production for the specified quantities within the established time frames. Headquarters, with Industry Canada sector experts, searches for suitable domestic companies using the Canadian Company Capabilities, trade indexes, and business publications to assess Canadian industry capabilities. Officials may visit the applicant's premises to review on-site operations. Headquarters issues a written justified decision to the regional office, which replies to the applicant in writing.

41. For economic reasons, applicants are encouraged to establish new or expand current facilities. If expansion plans exist, companies will include business plans and forecasts of proposed capital and resource expenditures for consideration with their application.

42. During strike or labour management disputes, a temporary stoppage or slowdown may result in fewer domestic goods and decreased industrial processing. Applicants should establish if substitute materials are available domestically. Also determine if there is a relationship between the foreign supplier and the strikebound company that could influence prices. If foreign supplies are imported at a lower cost than the equivalent Canadian supplies, Canadian companies may be harmed. Only reasonable quantities may be imported and stockpiling is not permitted. In strike situations, complete the appropriate fields in the questionnaire.

Corrections and Re-Determinations

43. In accordance with subsection 32.2(2) of the Customs Act, the importer is obligated to make a correction to declarations of tariff classification, value for duty, and origin within 90 days after the importer has reason to believe that the original declaration is incorrect. For example, if the importer realizes that the goods exported for further work abroad are not Canadian goods, the goods are no longer in compliance with a relief condition and the importer is obligated to adjust the accounting declaration for the goods correctly.

44. To correct a declaration, Form B2, Canada Customs - Adjustment Request, should be submitted to the appropriate regional customs office and any customs duties and taxes owing paid. A correction shall be treated for the purposes of the Customs Act as if it were a re-determination under paragraph 59(1)(a) of the Customs Act.

45. The obligation to make a correction in respect of imported goods ends four years after the goods are accounted for under subsection 32(1), (3), or (5) of the Customs Act.

46. For more information on the filing of corrections, refer to Memorandum D11-6-6, Self-Adjustments to Declarations of Origin, Tariff Classification, Value for Duty, and Diversion of Goods.

Audit, Examination, or Verification

47. If as a result of an audit, examination, or verification by the Department, goods are found to have been declared incorrectly, the goods will be subject to a re-determination or further re-determination under paragraph 59(1)(a) or (b) of the Customs Act, whichever is applicable.

Interest and Penalties

48. In accordance with subsection 33.4(1) of the Customs Act, the importer is liable to pay interest against any outstanding amount owed to the Department, until the amount is paid in full. The interest will be calculated at the specified rate beginning on the first day after the date the importer became liable to pay the customs duties and taxes. For example, where it is determined that the goods exported to have work done abroad were not Canadian goods and therefore do not qualify for relief under the Canadian Goods Abroad program, the importer is obligated to pay interest on the amount owing from the day following the original date of accounting until the amount owing is paid.

49. As per subsection 109.11(2) of the Customs Act, every person who fails to comply with section 32.2 of the Customs Act, is liable to pay a penalty of 5% of the duties owing plus an amount equal to 1% of the duties owing multiplied by the number of complete months, not exceeding 12 months, until the amount is paid in full. Continuing the example in paragraph 43, if the importer submits Form B2 to adjust the accounting declaration for the goods and pay the duty and taxes and interest owing within 90 days of the original date of accounting, no penalty will be applied. If the importer does not submit Form B2 until four months after the original date of accounting, the importer may be subject to a penalty of 5% of the duties owing plus 1% of the duties owing multiplied by four months.

50. Furthermore, where the importer again fails within three years of the original infraction under subsection 109.11(2) to comply with section 32.2 of the Customs Act, as per subsection 109.11(3) of the Customs Act, the penalty owing will be 10% of the duties owing plus an amount equal to 2% of the duties owing multiplied by the number of complete months, not exceeding 20 months, until the amount is paid in full.

51. Memorandum D11-6-5, Interest and Penalty Provisions: Determinations/Re-Determinations, Appraisals/Re-Appraisals, and Duty Relief, provides additional information on interest and penalty provisions.

Appendix A

LEGISLATION

CUSTOMS TARIFF

The following provisions of the Customs Tariff are relevant to this Memorandum and reflect amendments effective January1, 1998.

DIVISION 2

IMPORTATION WITHOUT FULL PAYMENT OF DUTIES

Canadian Goods Abroad

101.(1) Subject to section 104, if an application is made in accordance with section 102, relief shall be granted in accordance with section 105 from payment of the portion of the duties that, but for this section, would be payable in respect of goods returned to Canada within one year or such other time as may be prescribed after their exportation in the prescribed manner if

(2) Subject to section 104, if an application is made in accordance with section 102, relief shall be granted from the payment of the whole of the duties that, but for this section, would be payable in respect of aircraft, vehicles or vessels returned to Canada after their exportation if

(3) The Governor in Council may make regulations

102. An application for relief under section 101 must be

103. Subject to section 104, goods in respect of which relief is granted under section 101 before they are released may be released without any payment of duties.

104. Relief shall be granted under section 101 in respect of goods that were returned to Canada after being exported only if

105.(1) For the purposes of subsection 101(1), the portion of the duties in respect of which relief is granted under that subsection shall be

(2) For the purposes of subsection (1), the Governor in Council may, on the recommendation of the Minister of National Revenue, make regulations prescribing the method of determining the value of repairs made, equipment added and work done outside Canada.

DIVISION 4

ADDITIONAL RELIEF

113.(1) Subject to subsection (2), section 96 and any regulations made under subsection (4), a refund or drawback shall be granted of all or a portion of duties if

(2) No refund or drawback of the duties or taxes imposed or levied on tobacco products under the Excise Tax Act or section 21 shall be granted under subsection (1), except if a refund of the whole or the portion of the duties is required to be granted under Division 3.

(3) For the purposes of subsection (1), an application must

(5) Notwithstanding the exception in subsection 89(2), a refund or drawback of duties or taxes levied or imposed under section 21, the Excise Act or the Excise Tax Act shall be granted under paragraph (1)(a) on designated goods.

DIVISION 5

GENERAL

116. Relief under section 89 or 101 may be refused if, at the time the relief is authorized or required to be granted, the person to whom the relief is to be granted is indebted to

118.(1) If relief from, or remission of, duties is granted under this Act, other than under section 92, or if remission of duties is granted under section 23 of the Financial Administration Act and a condition to which the relief or remission is subject is not complied with, the person who did not comply with the condition shall, within 90 days or such other period as may be prescribed after the day of the failure to comply,

(3) An amount referred to in paragraph (1)(b) or (2)(b), while it remains unpaid, is deemed to be a debt owing to Her Majesty in right of Canada under the Customs Act.

119. An application under section 110 or 113 must be accompanied by a waiver, in the prescribed form, from every other person eligible to claim a drawback, refund or remission of the duties in respect of which the application is made, waiving that person's right to apply for the drawback, refund or remission.

123.(2) Subject to subsection (4), a person who is liable under subsection 118(1) or (2) to pay an amount, other than an amount in respect of duty levied under the Special Import Measures Act, shall 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.

(4) If a person pays an amount owing under paragraph 118(1)(b) or section 121 or 122 within the 90 day period referred to in that paragraph or section, no interest on the amount is payable by the person under subsection (2) or (3).

127.(1) A person who is granted a refund or drawback of duties under section 110 or 113, other than duty levied under the Special Import Measures Act, shall be granted, in addition to the drawback or refund, interest on the drawback or refund at the prescribed rate for the period beginning on the ninety-first day after an application for the drawback or refund is made in accordance with this Part and ending on the day the drawback or refund is granted.

(2) A person who, under a provision of this Part other than section 115, is granted a drawback or refund of an amount in respect of duty levied under the Special Import Measures Act shall be granted, in addition to the drawback or refund, interest on it at the prescribed rate in respect of each month or fraction of a month during the period beginning on the ninety-first day after the day application for the drawback or refund is made in accordance with this Part and ending on the day the drawback or refund is granted.

CUSTOMS ACT

109.11(2) Every person who fails to comply with section 31, 32.2 or 80.2 of this Act or subsection 95(1), 118(1) or (2), 121(1) or 122(1) of the Customs Tariff is liable to a penalty equal to the total of

(3) Every person who fails to comply with section 31, 32.2 or 80.2 of this Act or subsection 95(1), 118(1) or (2), 121(1) or 122(1) of the Customs Tariff and by whom, at the time of failure, a penalty was payable under this subsection or subsection (2) in respect of a failure to comply in any of the three preceding years is liable to a penalty equal to the total of

Appendix B

QUESTIONNAIRE FOR APPLICATION UNDER PARAGRAPH 101(1)(c) OF THE CUSTOMS TARIFF

Applicant Background

1. Full company name, address, contact, title, and telephone number.

2. Applicant's type of work; i.e., manufacturer, assembler, processor, distributor, warehouse operator.

3. Application type is a one shot, repetitive request, or a renewal to extend the time period.

4. If a renewal, give dates and duties relieved for prior authorizations, by year.

5. Describe the work done on the Canadian product:

6. The Department can reveal your name to potential Canadian processors; if no, give reason(s).

Goods for Export

7. Fully describe the goods and indicate if a sample is included.

8. Indicate the total and any non-originating values in (a) and (b) below, and in which paragraph the goods qualify as a product of Canada:

9. Quantity of goods and the anticipated export date(s).

10. Tariff classification of the goods and the duty rate.

11. Export value of the goods.

12. Duties relieved annually based on the export value times the duty rate.

Goods for Foreign Processing

13. Foreign processor's company name and address.

14. Fully describe all steps in the foreign processing.

15. Tariff classification of the returned goods.

16. Returned goods are identifiable as the original exported goods.

17. Value of the foreign processing abroad.

18. Duties payable annually based on the processing value times the duty rate.

19. Any relationship between the processor and applicant (see subsection 45(3) of the Customs Act).

20. The processor has proprietary rights; i.e., royalty, patent, trademark, copyright, or licence fee agreements.

21. Customs office for import accounting.

Canadian Competitors

22. List all Canadian competitors for comparable goods and industry's capacity to do the work.

23. List Canadian companies you contacted with company names, telephone numbers and supply copies of letters or faxes from them, explaining their ability/inability to do all the work.

24. Give reason(s) for processing the goods abroad rather than using the named companies.

Applicant's Operations

25. Plans to construct or expand Canadian facilities to do the work; if no, explain why.

26. If yes to 25, supply the following documents, signed by a responsible company officer:

(a) a document from the board of directors or president allocating funds to establish facilities, with the probable start-up date;

(b) copies of purchase orders for the equipment and machinery;

(c) milestone chart;

(d) a business plan of the corporate structure, employees, business environment, competition with current suppliers, market strategies, capital injections, and expenditures with detailed 3-year forecasts, risks, and opportunities assessment; and

(e) an attestation that all duties remitted will be repaid to the Receiver General for Canada if the project is not completed.

Strike Situation

27. Canadian supplier is on strike resulting in material deficiencies.

28. There is a strike at the applicant's plant or work slowdown.

29. A relationship exists between the foreign supplier and the strikebound Canadian company.

---

References

ISSUING OFFICE -

Trade Incentives Program
Customs and Trade Administration Branch

LEGISLATIVE REFERENCES -

Customs Tariff, sections 16, 80, 101 to 105, 113, 115, 116, 118, 123, and 127, and subsection 87(1)
Customs Tariff, heading Nos. 9813 and 9814, 9897, 9967 and 9968, 9971, and 9992
Customs Act, sections 32, 45 to 55, 74, 76, and 109.11
Excise Tax Act, sections 212-216
Orders in Council P.C. 1990-939, P.C. 1982-1994

HEADQUARTERS FILE -

6565-0 to 6565-4

SUPERSEDED MEMORANDA "D" -

D8-2-1, January 1, 1991

OTHER REFERENCES -

D2-6-5, D3-1-1, D3-5-7, D8-3-8, D8-4-2, D11-4-2, D11-4-14, D11-5-1, D11-6-5, D11-6-6, D13-1-1,
D17-1-0, D17-1-10, D19-12-1, D20-1-1, and D20-1-4