Application of Sections 32.2 and 74 of the Customs Act to amend Tariff Treatment from Most Favoured Nation (MFN) to NAFTA
Customs Notice 16-32

1. The purpose of this notice is to advise the trading community on how B2 requests for a NAFTA tariff treatment, on goods that were originally declared on a B3 under the MFN tariff treatment, will be processed, following the October 21, 2016 decision of the Federal Court of Appeal (FCA) in Canada (Attorney General) v. Bri-Chem Supply Ltd., 2016 FCA 257 (CanLII).

2. This notice replaces Customs Notice N-16-04 – Requests to Amend Tariff Treatment from Most-Favoured-Nation (MFN) to NAFTA, published January 29, 2016.

3. The FCA upheld the September 18, 2015 decision of the Canadian International Trade Tribunal (CITT) in Bri-Chem Supply Ltd. v. President of the Canada Border Services Agency (AP-2014-017), in particular the finding that section 32.2 of the Customs Act is the appropriate authority under which an importer may make corrections to tariff treatment declarations, provided the correction does not give rise to a claim for a refund.

4. Section 32.2 of the Customs Act places the responsibility on the importer to make a correction to an accounting declaration of tariff treatment when the importer has reason to believe that the declaration was incorrect. The declaration to a preferential tariff treatment is not an obligation imposed on the importer; it is to be made voluntarily as MFN tariff treatment is correct.

5. If an importer chooses to self-correct the tariff treatment from an MFN tariff treatment to a NAFTA preferential tariff treatment that would result in a revenue-neutral correction pursuant to subsection 32.2(2) of the Customs Act, this correction will be processed. The importer must make the correction within 90 days from the date where they have reason to believe that the goods qualify for this preferential tariff treatment. This correction will constitute a re-determination under section 59 of the Customs Act.

6. Pursuant to subsection 24(1) of the Customs Tariff, for imported goods to be entitled to the United States Tariff(UST), Mexico Tariff (MT), or Mexico-United States Tariff (MUST), an importer must provide the Canada Border Services Agency (CBSA) with valid NAFTA proof of origin, as per the Proof of Origin of Imported Goods Regulations and the goods must meet the requirements contained in the NAFTA Rules of Origin Regulations. To this end, a declaration containing a United States of America country of origin code (e.g. UNY) in field 12 of the Form B3-3, Canada Customs Coding Form, does not automatically entitle the declared goods to UST.

7. Subsections 32.2(2) and (5) of the Customs Act do not provide legislative grounds for a refund of duties. Any request of this nature must be made pursuant to section 74 of the Customs Act.

8. Requests made pursuant to section 74 of the Customs Act, where an importer is requesting a change in tariff treatment from MFN to NAFTA within one year of accounting, will be processed and a refund will be issued, granted valid proof of origin is provided and the goods meet the rules of origin. Such requests made outside the legislated one-year time limit will be rejected and will not constitute a re-determination pursuant to section 59 of the Customs Act.

9. The CBSA will update its respective D-Memoranda to reflect the above changes to its administrative policies in the coming months.

10. Note that the legislation and regulations found in the Customs Tariff and the Customs Act still apply and the CBSA reserves the right to further re-determine the goods if they are found to not qualify for NAFTA.

Date modified:

2016-12-21