Surtaxes Imposed on Certain Products Originating in the United States
Customs Notice 18-08

Ottawa, June 29, 2018

Revised July 11, 2018

United States Surtax Order (Steel and Aluminum) and United States Surtax Order (Other Goods)

1. This notice provides information on the introduction and application of the United States Surtax Order (Steel and Aluminum): SOR/2018-152 and the United States Surtax Order (Other Goods): SOR/2018-153, effective July 1, 2018, regarding surtax provisions on certain products originating in the United States.

2. The surtaxes are introduced by Canada in response to the United States’ (U.S.) imposition of tariffs on imports of certain steel and aluminum products from Canada.

3. The administration of the surtax orders is the responsibility of the Canada Border Services Agency (CBSA).

Application

4. Effective July 1, 2018, certain goods originating from the U.S. are subject to surtaxes on the value for duty in accordance with the United States Surtax Order (Steel and Aluminum) and the United States Surtax Order (Other Goods).

5. The surtaxes will only apply to goods that originate from the U.S., which shall be considered as those goods eligible to be marked as goods of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations.

6. Surtaxes will apply to both commercial and personal importations of goods, even when shipped to Canada from a country other than the U.S.

7. The surtaxes will apply on goods released from a Customs Bonded Warehouse or Sufferance Warehouse on or after July 1, 2018 regardless of the date of importation.

8. Please note that that goods listed in Schedules 1 and 2 of the United States Surtax Order (Steel and Aluminum) and in the Schedule to the United States Surtax Order (Other Goods) which are also eligible under a provision in Chapter 99 of the Schedule to Canada’s Customs Tariff are subject to the surtaxes even though they are entitled to a preferential tariff rate of customs duty under this Chapter.

9. Similarly, goods listed in Schedules 1 and 2 of the United States Surtax Order (Steel and Aluminum) and in the Schedule to the United States Surtax Order (Other Goods) which are also eligible under a provision of Chapter 98 of the Schedule to the Customs Tariff will also be subject to the surtaxes, with few exceptions (see section Exceptions to Surtax below).

10. Canada’s Duties Relief and Duty Drawback Programs continue to be available to importers for duties, including surtaxes, paid or owed by Canadian businesses that meet the requirements of the programs.

Proof of Origin

11. The burden of proof that the goods are not considered originating in the United States Surtax Order (Steel and Aluminum) and the United States Surtax Order (Other Goods) lies with the importer.

12. Pursuant to subsection 35.1(1) of the Customs Act and the Proof of Origin of Imported Goods Regulations, proof of origin must be furnished for all imported goods.

13. For commercial goods, proof of origin may be in the form of a commercial invoice, a Canada Customs Invoice, a Form A - Certificate of Origin, an Exporter's Statement of Origin, or any other documentation that indicates the country of origin of the goods.

14. Personal importations of goods, also known as casual goods (meaning goods that are imported into Canada other than commercial goods) are deemed to originate in the U.S. when the goods are both acquired in the U.S and marked as made in, produced in or originating in the U.S., or the goods have no country of origin marking, but there is no evidence that the goods are the product of a country other than the U.S.

15. Casual goods imported from a country other than the U.S. that are marked as made in, produced in or originating in the U.S. are deemed to originate in the U.S.

Calculation of Surtax when Accounting for Commercial Importations

16. The amount of surtax payable is calculated as a percentage based on the value for duty of the imported good.

Example 1:

The value for duty (VFD) of an imported good subject to a surtax is $150. The imported good has a Most Favoured Nation (MFN) duty rate of zero per cent. The applicable surtax is 10 per cent, as per the Schedule to the United States Surtax Order (Other Goods).

The amount of surtax is calculated as follows: $150 (VFD) x 0.10 (per cent surtax) = $15 (surtax payable).

For the B3-3 B3-3 Canada Customs Coding Form completion, the VFD of $150 (field 37). The customs duties is $ 0 (field 38). The surtax is $15 (field 39). The value for tax is $165 (field 41).

Example of Form B3-3

Example 2:

The same imported good is subject to an MFN duty rate of 8 per cent.

The amount of customs duties is calculated as follows: $150 (VFD) x 0.08 (rate of Customs duty) = $12 (Customs duties payable)

The amount of surtax is calculated as follows:

$150 (VFD) x 0.10 (per cent surtax) = $15 (surtax payable)

For the B3-3 Canada Customs Coding Form completion, the VFD is $150 (field 37). The customs duties is $12 (field 38). The surtax is $15 (field 39). The value for tax is $177 (field 41).

Example of Form B3-3a

Exceptions to Surtax

17. The headings of Chapter 98 of the Schedule to the Customs Tariff to which the surtax would not apply are listed in the following table:

Chapter 98 - Customs Tariff Heading Unofficial Description
98.01 Conveyances or containers of Chapters 86, 87, 88 or 89, engaged in the international commercial transportation of goods or passengers
98.02 Conveyances temporarily imported by a resident of Canada for international non-commercial transportation
98.03 Conveyances and baggage temporarily imported by non-residents
98.04 (other than tariff item No. 9804.30.00) Travellers’ exemptions
98.05 Goods imported by a former resident of Canada returning to Canada to resume residence

18. In addition, these surtax orders do not apply to U.S. goods that are in transit to Canada prior to July 1, 2018.

19. Importers must have proof that such goods were in transit to Canada prior to July 1, 2018. Such proof may include, but is not limited to, the following documentation: sales orders, purchase orders, shipping documents (for example, a through bill of lading (TBL)), report of entry documents, and cargo control documents. Such proof may be requested at any time by a CBSA officer.

Proper Documentation

20. Importers must report the surtax order code in field 32 “SIMA Code” of Form B3-3 by inserting code "51" for the surtax.

21. The amount of surtax owing is entered in field 39 “SIMA Assessment” of Form B3-3.

22. Accounting for surtaxes under the United States Surtax Order (Steel and Aluminum) and the United States Surtax Order (Other Goods), will follow the instructions outlined in Memorandum D16-1-1, Information pertaining to the application, collection, and adjustment of a surtax.

23. When an amount of surtax is being declared at importation, refer to Memorandum D17-1-10, Coding of Customs Accounting Documents for additional information on completing Form B3-3.

Corrections, Re-Determinations, and Refunds

24. Corrections to original declarations and requests for re-determinations are to be made in the prescribed form and manner under the relevant provisions of the Customs Act, in accordance with the procedures outlined in Memorandum D11-6-6, “Reason to Believe” and Self-Adjustments to Declarations of Origin, Tariff Classification, and Value for Duty, Memorandum D6-2-3, Refund of Duties and Memorandum D6-2-6, Refund of Duties and Taxes on Non-commercial Importations

25. Where an overpayment of surtax has been identified, Form B2, Canada Customs – Adjustment Request may be filed in a regional CBSA office requesting a refund of the overpaid amount. If accounting information is being self-adjusted for a surtax refund or surtax payable to the CBSA, refer to Memorandum D17-2-1, The Coding, Submission and Processing of Form B2 Canada Customs Adjustment Request, for additional information on completing Form B2.

26. The CBSA may re-determine or further re-determine the origin, tariff classification, and/or value for duty on its own initiative or in response to a self-adjustment. In so doing, as with customs duties and taxes, the CBSA may assess any undeclared amount of surtax.

Examinations and Verifications

27. Importations may be subject to examination at the time of importation and to post-release verification for compliance with the Tariff Classification, Valuation, Origin and Marking programs, and any other applicable provisions administered by the CBSA. If non-compliance is encountered by the CBSA, in addition to assessments of surtax, customs duties and taxes, penalties and interest will be assessed, where applicable.

Advance Rulings for Commercial Importations

28. For predictability and certainty on how goods are to be accounted for, a binding ruling on the Free Trade Agreement (FTA) Origin, Tariff Classification, or marking of goods imported from a North American Free Trade Agreement (NAFTA) country in advance of the importation of goods can be requested from the CBSA. Refer to Memorandum D11-4-16, Advance Rulings for Origin Under Free Trade Agreements (Appendix D – NAFTA Marking – Advance Rulings), for additional information on requesting an advance ruling for marking of goods imported from a NAFTA country. Refer to Memorandum D11-11-3, Advance Rulings for Tariff Classification, for additional information on requesting an advance ruling on the tariff classification of goods.

Additional Information

29. Refer to Memorandum D16-1-1, Information pertaining to the application, collection, and adjustment of a surtax, for additional information concerning the administration and enforcement of surtax orders under sections 53(2), 55(1), 60, 63(1), 68(1), 77.1(2), 77.6(2) or 78(1) of the Customs Tariff.

30. For more information on the administration of the surtax orders, 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.

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