Launched in conjunction with the new safeguard measures cracking down on a surge of cheap steel imports, the Trudeau government also announced last week that certain steel, aluminum and other goods imported from the United States that had been charged with an import surtax imposed under the United States Surtax Order (Steel and Aluminum) and the United States Surtax Order (Other Goods), will now be eligible for relief from those levies.
The two surtax orders had implemented a surtax of either 25% or 10% on listed US-origin goods imported into Canada beginning July 1, 2018 in retaliation against the Trump administration’s “unjustified and counterproductive” Section 232 metals tariffs.
The government says it is taking action after receiving many requests from importers seeking a remission of surtaxes “under exceptional and compelling circumstances,” which the Department of Finance has previously defined in connection with its efforts to:
- respond to situations where there is a shortage of supply in the national or regional domestic market.
- account for contractual requirements entered into before May 31, 2018, for Canadian businesses that must use U.S. steel or aluminum in their products or projects.
- address other “exceptional circumstances” that could have potentially negative effects on the Canadian economy.
Requests submitted over the summer were reviewed by a federal inter-departmental committee, which after consulting with various interested parties, made a recommendation to the Minister of Finance to authorize a remission order providing relief from the surtaxes in certain cases where doing so is deemed beneficial to the economy.
Remission Order 2018-1272
The remission order issued by the Government of Canada on October 11, 2018, grants immediate relief to importers from the retaliatory surtax on goods:
- listed in Schedule 1 and Schedule 2 of the remission order;
- classified under tariff item no. 8903.10.00, 8903.91.00, 8903.92.00 or 8903.99.90 of the Customs Tariff, excluding those that have been exported from Canada and then subsequently re-imported into Canada; and
- imported into Canada temporarily for the purposes of repair, alteration, or storage, including those classified under tariff item no. 8903.10.00, 8903.91.00, 8903.92.00 or 8903.99.90 that have been exported from Canada
Goods listed in Schedule 1 and Schedule 2 of the remission order are those covered by the United States Surtax Order (Steel and Aluminum) that have been identified by the federal government as consistently in short supply in Canada. Schedule 1 lists goods for which relief will be granted for an indefinite period and Schedule 2 lists goods for which relief will be granted temporarily (for products imported from the U.S. during the period July 1, 2018 to December 31, 2018).
It should be noted that relief is only provided “where warranted by exceptional circumstances” and that Canadian countermeasures on U.S. imports continue to apply otherwise. The government says it will continue assessing, on a case-by-case basis, relief applications “based on market conditions including supply shortages,” and plans to form a new committee that will enable stakeholders “to provide their views on requests for relief from countermeasures.”
Claiming a Surtax Remission
In order to claim a surtax remission, importers must meet many specific criteria (click here and refer to the “template for submissions”) and include all the required documentation (e.g. for goods temporarily imported into Canada, relevant documents include storage contracts, repair invoices, alteration invoices and payment for services). The importer must also demonstrate that the goods are correctly classified in the tariff provisions captured by the remission order.
Customs Notice 18-16 describes in detail the process involved with making an application for remission of duty pursuant to Order 2018-1272.
Remission at Time of Importation
Companies that have already applied for and been granted relief can immediately import these goods without paying surtaxes. To do so at the time of import in the case of commercial importers, the remission order must be entered on the Form B3-3 Canada Customs Coding Form.
Remission Subsequent to Importation – Refund Requests
Where the remission order is applicable, and an overpayment of surtax has been identified on commercial importations, Form B2, Canada Customs – Adjustment Request may be filed in a regional CBSA office requesting a refund of the overpaid amount under section 74(1)(g) of the Customs Act.
As noted previously, in the case of certain steel products (listed in Schedule 2), relief is limited to the period from July 1, 2018 to December 31, 2018. For all other applicable goods, imported on or after July 1, 2018, the relief period is indefinite (refunds under Section 74 may be made within four years from the date of import).
How GHY Can Help
Our expert consulting and duty recovery team can help you review the tariff classification, value, and origin of your imports to determine if they are eligible for: a remission of surtaxes payable; a refund of surtaxes already paid, or the benefits of duties relief, including drawback if you qualify for the Duties Relief and Duty Drawback Programs.
As time limits are involved, especially in the case of certain steel products, acting as soon as possible is advisable, so if you feel that your company’s imports should be warranted for relief owing to “exceptional circumstances” and you need assistance obtaining a remission or processing refunds, or if you have any questions at all about this issue, don’t hesitate to contact us.