Trade Compliance

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CBSA Reminds Exporters to Properly Classify Their Goods

Posted March 18, 2014

The Canada Border Services Agency (CBSA) this week issued Customs Notice 14-005 reminding Canadian exporters of their obligation to correctly report the Harmonized System (HS) Code when completing their export declarations.

Customs Act, Sub-Section 95(4) states: “If goods are required to be reported in writing, they shall be reported in the prescribed form containing the prescribed information or in such form containing such information as is satisfactory to the Minister.” Indicating the correct HS classification code on the B13A export documentation pertaining to goods being exported is an essential part of this statutory requirement.

Non-compliance may result exporters in not being approved for the Summary Reporting program, having Summary Reporting privileges terminated and/or being fined under the Administrative Penalty System (AMPS).  The AMPS infraction in this particular case attracts a penalty of $150 per document in the first instance. If a second infraction is detected after 30 days, a penalty of $225 per document would be assessed.  Any subsequent infractions would be charged a penalty of $450 per document.

Some exporters may not give the same attention to the HS classification of goods being exported as perhaps they do to the classification of goods at the time of import when the payment of duties and taxes are involved. But it should be appreciated that even when the payment of tariffs are not at stake, the accurate classification of goods at every stage is vital to the efficient functioning of the international trading system. Not only do these HS export codes feed into the trade database of Statistics Canada (thereby helping to better inform government policy and private enterprise strategy), but in more practical terms, may also affect how goods are dealt with on the receiving end by purchasers and customs authorities when being imported into the country of final destination.