Repositioning of Empty Containers in Canadian Waters
Customs Notice 19-07
Ottawa, May 07, 2019
1. This Customs Notice rescinds and replaces Customs Notice 19-03, Repositioning of Empty Containers in Canadian Waters, and is issued to amend the information on how shipping companies using foreign-flagged vessels to reposition empty containers (that they own or lease) in Canadian waters (on a non-revenue basis) are to be treated.
2. As part of Transportation 2030, the Government of Canada made changes to laws through the Transportation Modernization Act (Bill C-49) that will improve the transportation system. This included changes to the Coasting Trade Act.
3. The amendments to the Coasting Trade Act as a result of Bill C-49 came into effect on December 10, 2018 and allow vessels of any registry to reposition empty containers that are owned or leased by the ship’s owner, between locations in Canada (on a non-revenue basis) without the requirement of obtaining a coasting trade licence. This includes any ancillary equipment that is necessary to ensure the safety, security, containment and preservation of the goods that may be carried in those containers.
4. These amendments to the Coasting Trade Act are designed to address an on-going shortage of containers in the Canadian shipping market and provide greater logistical flexibility for marine operators. Previously, the majority of empty containers were moved between locations in Canada via rail or truck due to the restrictions in the marine mode. These changes will help address the current shortage of containers available for export and may reduce costs for trade. The provisions of this Customs Notice are retroactive to December 10, 2018.
5. It is expected that most vessels performing the repositioning of empty containers that are owned or leased by the ship’s owner, between locations in Canada (on a non-revenue basis) will be treated as vessels engaged in international commercial transportation and are subject to the same reporting requirements as international vessels which are not subject to any formal accounting requirements provided that these vessels are:
- (a) are owned or leased and imported by a person whose domicile is in a foreign country;
- (b) leave from and return to the foreign country in the normal course of operation;
- (c) are controlled from the foreign country;
- (d) are exported within 30 days of the date of their importation (for extensions to this timeframe consult Memorandum D3-1-5); and,
- (e) in compliance with the requirements of the Canada Shipping Act, 2001.
6. Vessels are considered to be engaged in the international transportation of goods from one point in Canada to another point in Canada provided the vessel:
- (a) is moving in the general direction of the delivery point of the international load;
- (b) has entered Canada empty to pick up goods for export;
- (c) will be picking up a load for export after the delivery of the international load; or,
- (d) is part of the return movement of the vessel to its country of origin.
7. The transportation from one point in Canada to another point in Canada must occur immediately before or after the vessel is used for international commercial transportation. Therefore, a foreign-based vessel is restricted to one point-to-point movement immediately before or immediately after it is used for international commercial transportation.
8. The transportation from one point in Canada to another point in Canada must follow a route that is similar and consistent with the movement of the goods in international commercial transportation.
9. For further information about the requirements for vessels engaged in international commercial transportation, consult Memorandum D3-1-5, International Commercial Transportation.
10. Operators of foreign vessels performing the repositioning of empty containers that are owned or leased by the ship’s owner, between locations in Canada (on a non-revenue basis) that do not meet the conditions listed above (i.e. vessels that do not qualify for HS 9801.10.10) can apply for a duty reduction using Form C47-1, Application for Duty Remission On a 1/120th Basis for Vessel Temporary Admission to the Coasting Trade of Canada Where a Coasting Trade Licence is Not Required.
11. This application is to be sent via e-mail to the Commercial Registration Unit (CRU) at email@example.com. The vessel operator is required to provide sufficient evidence to substantiate ownership or existing lease the containers being moved on a non-revenue basis.
12. The CRU will issue a letter of opinion to either approve or deny the request for duty reduction (for vessels repositioning empty containers not qualifying for HS 9801.10.10). Where approved, the letter will also authorize the applicant to proceed to the CBSA office of importation to complete the process. Duty reduction approval is conditional on the vessel undertaking the coasting trade activities referred to in subsections 3(2.1) of the Coasting Trade Act.
13. The CBSA office of importation will issue a Form C48-1, Authorization for Vessel Temporary Admission to the Coasting Trade of Canada without a Coasting Trade Licence, upon provision of:
- (a) a copy of the CRU’s letter of opinion;
- (b) proof of payment of any applicable duties and taxes (Form B3); and,
- (c) presentation of current safety and pollution prevention certificates.
14. Vessels may be approved for periods up to 12 months. If additional time is required, duty remission would be subject to reapplication and approval.
15. Canadian rates of duty on imported goods are set out in the Customs Tariff. For vessels providing services permitted under the Coasting Trade Act, duty reductions are calculated under the Vessel Duties Reduction or Removal Regulations.
16. For certainty regarding the tariff classification or origin of a vessel, importers may request an advance ruling. Details on how to make such a request are found in Memoranda D11-11-3, Advance Rulings for Tariff Classification, and D11-4-16, Advance Rulings for Origin Under Free Trade Agreements. The CBSA also offers rulings on non-FTA origin and the valuation of goods. Refer to Memorandum D11-11-1, National Customs Rulings.
17. Marine Safety and Pollution Prevention Regulations – This change does not affect existing regulatory requirements that apply to foreign vessels operating in Canadian waters. Contact the Transport Canada marine transportation office in your region for more information.
18. Vessels performing empty container repositioning under the aforementioned conditions are not required to provide advance notification to Transport Canada.
19. Immigration, Refugees and Citizenship Canada should be contacted regarding immigration requirements when vessels will be operated in Canada by persons who are not Canadian citizens or permanent residents of Canada. For more information, please refer to the Web site for the International Mobility Program: Authorization to work without a permit – Crew at: http://cicintranet.ci.gc.ca/connexion/tools-outils/temp/work-travail/permit-permis/crew-equipage-eng.aspx.
20. For assistance in determining whether a coasting trade licence is required, contact Transport Canada at TC.CoastingTrade-Cabotage.TC@tc.gc.ca.
21. You may send questions or concerns about the status of your application to the CBSA to firstname.lastname@example.org.
22. For more information about the temporary admission of vessels to the coasting trade of Canada, consult Memorandum D3-5-7, Temporary Importation Vessels, which will be updated to reflect this policy change.
23. Any questions relating to this Customs Notice are to be sent to the CBSA at CBSA-ASFC_Assessment_and_Licensing_Unit@cbsa-asfc.gc.ca.
24. 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.
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