END-USE TARIFF PROVISIONS AND PENALTIES FOR NON-COMPLIANCE
Importers need to be aware of their responsibilities related to duty-free or reduced H.S. tariff classifications applied to materials imported for specific uses.
Canada Customs Compliance Verification Officers can assess duty, interest, and AMPS penalties up to 4 years from date of importation, and are currently reviewing the classifications of several thousand duty-free entries.
Failure to keep end-use certificates or production records indicating the use of the goods is subject to AMPS penalty# C156. Once discovered in a customs verification review, this contravention attracts penalties of $1,000 per written request for the first offence, $2,000 for the second, $10,000 for the third, and $25,000 for subsequent requests.
Diversions (i.e. changes in use away from the duty-free or reduced tariff provision) must be reported on form B2 within 90 days of diversion. Failure to report a diversion away from the intended or use as declared on the entry within 90 days is subject to AMPS penalty# C168 in which the maximum penalty is $400 per instance.
Importers must re-pay refunds granted on goods that no longer qualify within 90 days of diversion. Failure to repay that duty is subject to penalty# C169 in which the maximum penalty is the greater of $400 or 20% of the unpaid duty.
Wholesalers should be especially cognizant of record-keeping requirements when goods are imported at a reduced rate of duty applicable to a specific end-use.
Companies must ensure they can track the end-use of all importations, and report any diversions and required adjustments to our Technical Department immediately.
A complete outline and explanation of the conditions under which goods may be imported under end-use provisions of the Customs Tariff is available from our technical consulting group.