Question

You are to select a real Canadian firm and address the following:

1. Identify an imported product/product.

2. Identify the country of export (where was the product purchased from) of your product; address the Tariff Treatment used.

3. Identify and state the tariff classification code.

4. Prepare and attach a B3 and CCI form; you can enter hypothetical values, but the rate of duty should be correct as per the HS Code.

5. Advise as to the Transaction Value Method used.

6. Calculate the VCC, VFD, TVFD VFT, Amount of Customs Duties an GST.

7. Further, please discuss sections 32 and 74 of the Customs Act, and provide one example each for each section.

Answer 1

Green Space Brand is a Canada based company which deals in food products. Companies import their product from New Zealand and like others companies need to follow the rules and regulations set by authority to import and export goods. A real Canadian firm, which I am going to be discussing is Green Space Brand. The company was founded in 2003, and has headquarters in Toronto, Canada. Green Space Brand, company deals in creating and spreading well being by innovation, education and provides natural, and organic food products to consumers.

1. The Green Space sells its premium natural food to the consumers across Canada. The products of the company's are made from the combination of grass fed dairy and pasture raised meat which they imported and the main imported product is grass fed butter.

2. Green Space purchases their products from New Zealand, Tariff treatment used by New Zealand to export goods to Canada is following:

(a) The products should be shipped directly to Canada in a consignee through bill of lading.

(b) The products should be finished in which form they imported into Canada.

(c) The products should remain in permanent storage in intermediate countries and the goods must not be entered for trade or consumption in the intermediate countries.

3. The tariff classification code:

The tariff classification is a process that determines the correct tariff codes for the both import and export goods. It is very necessary for the custom point of view because it gives an impact on excise duty, custom duty, import and export restriction, and preferential duties.

Canada Border Service Agency (CBSA) allows the goods, which are imported to Canada. They allow only import which is available in Canadian import database and they are available in import form B3-3 in Canada custom coding form in field 27 and classification number.

Field 27 needs to fill the 10 digit number that is import tariff classification number. The classification number should correspond to the imported product.

Export form B13A, which is a declaration of export in field 18.

Field 18 needs to fill an 8 digit code which is export tariff classification number. This classification number should correspond to the export product description. The description should be found in Statistic Canadian Export Classification.

4. B3 form:

B3 form includes 51 points and they are as follows:

1.Importer name and address:

2. Transaction no.

3. Type

4. Office no.

5. GST no

6. Payment code

7. Mode of

8. Port of unloading

9. Total VFD

10. Sub HDR no

11. Vendor name

12. Country of origin

13. Place of export

14. Tariff treatment

15. Port of exit

16. Direct shipment date

17. Crcy code

18. Time limit

19. Freight

20. Release date

21. Line

22. Description

23. Weight

Previous transaction

24. Number

25. Line

26. Special authority

27. Classification no

28. tariff code

29. Qty

30. U/M

31. VFD code

32. SIMA code

33. Rate of custom duty

34. ET rate

35. GST rate

36. Value for currency conversion

37. Value for duty

38. Custom duties

39. SIMA assessment

40. Excise tax

41. Value for tax

42. GST

Declaration with date and signature

43. Deposit

44. Warehouse no.

45. Cargo control no.

46. Carrier code of importation

47. Custom duties

48. SIMA assessment

49. Excise tax

50. GST

51. Total

CCI (Canada Custom Invoice) form:

Example of some of component as follows:

1.Vendor's Name: Subco from New Zealand

2. Date of shipment to Canada:

3. Purchase order number with other references.

4. Consignee- Green Space Brand Canada

5. Country to shipment : Canada

6. Country of origin of goods- New Zealand

7. Transportation- Through Shipment

8. Terms and conditions on sales and payment (if any)

9. Currency of settlement: New Zealand Dollar

10. Number of packages

11. Specification of products- Grass fed dairy product.

12. Quantity

13. Selling price per unit

5. Transaction value method:

This is the preferred method of calculating the custom values. This method relies on the total value of the goods which shows on the shipments invoice. The invoice value also reflected in ledgers as well.

The major elements of consideration are there must be in a formal document that must state that there is a trade agreement between both the parties like Canada and New Zealand.

The buyers have the freedom to decide the future value of the product. Transaction value should include all the taxes and duties assigned to it.

6. Duty for the Butter and cheese product is 7 % and GST is not applicable

VCC means vehicle clearance certificate. This service provides their customers to obtain this certificate for the vehicle entry after completing the necessary clearance product.

VFD means value for duty. The value of the duty is based on the price paid for the goods.

TVFD VFT: Value for tax means the total value of VFD plus applicable duties. GST taxes are based on VFT.

7. Section 32 of the Custom Act is all about the accounting and payment of duties. According to this section goods shall not be released until importer or owner don't accounted all the prescribed form containing the prescribed information and all the duties have been paid.

Example: Green Space need to pay the duties for the consignee from New Zealand. And Custom can not give consignment to Canada before making the payment.

Under Section 74 of the custom act, Importers can claim a refund of duty within four years of accounting for the imported goods under certain circumstances. In section 74(1), any refund claims under the North America Free Trade Agreement must be made within one year of accounting with Canada Border Service Agency.

Example: If Canada found any mismatch related to the tax and duties, Canada can claim for the refund. But it should not be over the four year of accounting.