The Customs Tariff

AuthorMohan Prabhu
A | Introduction
Chapter 2
The Customs Tarif‌f1
Tarif‌f rate is the second of two components in the computation of customs
duties, the f‌irst being value for duty. Customs duties are the product of the
two. The f‌irst component was the subject of Chapter 1. It should be noted
that the primary basis of valuation, namely, the transaction value, and the
f‌ive subsidiary bases, have to be modif‌ied when imported goods are shipped
from a country of export but had been processed, partly manufactured, or
added on in another country without losing their origin status. The value
for duty of components, additions, and combinations that give the product
a new character from what it was before undergoing such operations may
also have to be separately calculated.
This chapter describes the process of classifying the goods before or at
the same time as they have been appraised in accordance with the valua-
tion provisions of the Customs Act.2 Duties of customs are imposed on goods
imported into Canada, pursuant to the Customs Tarif‌f, at the rates shown
opposite the tarif‌f item under which they are classif‌ied in the Schedule to
that Act, and those rates are further determined by their country of origin.
These three additional factors, namely, the determination of the appropri-
ate classif‌ication, the rate of duty that is based on that classif‌ication, and the
country of origin of the goods on which basis a specif‌ic tarif‌f treatment is
accorded, are described in this chapter. Even where goods are entitled to the
1 SC 1997, c 36.
2 RSC 1985, c 1 (2d Supp), as am RSC 1985, c 7 (2d Supp), and subsequently.
Chapter 2: The Customs Tarif‌f
B | Administration and Enforcement
preferential or other rates set out in the Schedule, those rates are increased
when importers of goods that are subject to tarif‌f rate quotas exceed the
quotas allotted, thus making “over access” imports prohibitively expensive
in many cases.
Chapters 1 and 2 cover the revenue-raising and collection processes.
However, in addition to customs duties, duties and taxes are levied under
other federal statutes, such as the Excise Act, the Excise Act, 2001, Part IX of
the Excise Tax Act (General Sales Tax/Harmonized Sales Tax), and the Special
Import Measures Act, unless they are specif‌ically excluded.
Chapter 2 also describes the various incentives that the Canadian gov-
ernment provides to manufacturers, such as the Duty Deferral Program
and the Duties Relief Program. These incentives are independent of the du-
ty-free treatment given under Chapter 98 for goods imported for use in the
manufacture or production of other goods in Canada, and are designed to
encourage entrepôt businesses and re-exporters of imported goods that are
processed, or consumed in the processing of other imported goods, for the
purpose of exportation. The Customs Tarif‌f also accords duty-free allowan-
ces to Canadians returning from travel abroad after being away for certain
specif‌ied lengths of time. Some of the provisions in the Customs Tarif‌f pro-
vide safeguards in the form of surtaxes and tarif‌f rate quotas which, to some
extent, protect Canadian manufacturers, textiles, agriculture, and dairy
farmers from unfair competition. They are further reinforced by measures
taken under the Special Import Measures Act. By the same token, Canada can-
not violate the principles of fair trade agreed to in the World Trade Organ-
ization Agreement and embodied in the World Trade Organization Agreement
Implementation Act3 when taking restrictive or protective actions, and those
principles are embodied in all three customs-related statutes.
Five principal topics are dealt with in this chapter. They are (1) impos-
ition of duties; (2) tarif‌f classif‌ication; (3) origin of goods; (4) tarif‌f treatment;
and (5) duties relief. A separate section deals with prohibited goods classif‌ied
under tarif‌f items 9897.00.00, 9898.00.00, and 9899.00.00, to which the
international harmonized coding system (HCS) and rules do not apply.
The Minister of Public Safety and Emergency Preparedness, through the
Canada Border Services Agency (CBSA), is responsible for the administration
3 SC 1994, c 47.
C | Imposition of Duties
and enforcement of the Customs Tarif‌f and the various regulations and or-
ders prescribed under it. The provisions of the Customs Act apply. Any con-
travention of the Customs Tarif‌f or regulations, or a failure to comply with a
condition to which relief or remission, drawback, or refund under the duties
relief provisions, is subject or to which classif‌ication under a tarif‌f classif‌ica-
tion is subject, is deemed to be a contravention of the Customs Act. Sections
153 to 163 of that Act apply.
1) General Provisions
Unless otherwise indicated in Chapter 98 or 99 of the List of Tarif‌f Provi-
sions, a customs duty is imposed by section 20(1) of the Customs Tarif‌f on
all goods set out in the List of Tarif‌f Provisions at the time those goods are
imported, and the duty must be paid in accordance with the Customs Act,
at the rates set out in that List, the “F” Staging List, or section 29 that are
applicable to those goods. This levy is in addition to (1) any other duties im-
posed under the Customs Tarif‌f (namely, duty under section 21 on tobacco,
wine, beer, spirits, and so on, equivalent to the excise tax) and (2) a surtax or
temporary duty, if levied under section 22, or any other Act of Parliament
relating to customs (for example, the Special Import Measures Act and goods
and services tax/harmonized sales tax (GST/HST) under the Excise Tax Act).
For most importations, customs duties are based on the value of goods,
that is, on an ad valorem basis, but in several cases a specif‌ic duty, or in com-
bination with ad valorem, is payable. The ad valorem rate is expressed as a
percentage, and duties are calculated in accordance with the valuation sec-
tions 45 to 55 of the Customs Act described in Chapter 1. Where a rate is based
in whole or in part on weight or volume, duties imposed are calculated on
the basis of the net weight or volume of the goods, unless another basis is
provided in the Schedule.
2) Goods Taken out of Canada and Subsequently Returned
Under section 20(1), the value for duty of goods that were taken out of Can-
ada for the purpose of repairs, or to add equipment or to do work on them
outside Canada, and are subsequently returned to Canada, is the value of
the goods at the time of the subsequent return.

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