27 November 2003

Section 32.2 of the Customs Act

The CCRA has recently responded to two questions raised by members regarding section 32.2 of the Customs Act. The information provided by the CCRA follows; members who have questions or comments may address them to the CSCB at [email protected].

1. The first question concerned of non-dutiable goods that are entered using a GST exemption code and which are later found to be subject to GST.

The CCRA has confirmed that a correction under 32.2 must be filed within 90 days of having reason to believe that the entry is in error.

According to section 216(2) of the Excise Tax Act, determinations of the GST tax status of imported goods is to be treated as if it were a tariff classification of the goods.

This section of the Act reads as follows: (2) Subject to subsections (4) to (6), the Customs Act (other than subsections 67(2) and (3) and sections 68 and 70) and the regulations made under that Act apply, with such modifications as the circumstances require, to the determination of the tax status of goods for the purposes of this Division as if it were the determination, re-determination or further re-determination, as the case requires, of the tariff classification of the goods.

Therefore, corrections to GST are required in the same manner as would a correction to the tariff classification of the goods.

2. The second question from the CSCB was presented in the form of the following scenario:

"If an officer asks for a NAFTA certificate of origin to be produced for goods released prior to October 7, 2002, and said certificate is not available, a penalty for not keeping proper books and records can be assessed. However, it stands to reason that the importer now has reason to believe that the original entry is incorrect and under 32.2 of the Customs Act, he is obligated to make a correction. But, are we correct in assuming in this situation (that is, a pre-October 7, 2002 date) that a penalty under AMPS will not be issued for incorrect tariff treatment?"

The CCRA's response is as follows:

An officer may indeed ask for a NAFTA Certificate to be produced for goods released, and\or accounted, for prior to October 7, 2002, the date of the implementation of AMPS. If the importer fails to produce the NAFTA Certificate, an AMPS penalty may be applied for the failure to furnish proof of origin upon request (ref. C152) or for the failure to keep, maintain or make available books and records (C153, C154 and C155), (depending on the request to produce documents, for example if the request is to produce a certificate of origin then only C152 may be applied). The failure to produce books and records are infractions of the Customs Act and can only occur after a request to produce or provide them is made by Customs. Importers are reminded that they are obligated to maintain and keep records for six years and that they may be asked to produce these records at any time.

In the scenario you have described, if the reason to believe is established as a result of the officer's request to produce the NAFTA certificate, then the importer is required to file a correction within 90 days of having reason to believe.

Failure to file such corrections to a declaration of origin for goods accounted for on or before the date of the implementation of AMPS would not be subject to penalties under AMPS contraventions C080 or C350. However, the importer would receive a Detailed Adjustment Statement (DAS) and be obligated to pay any interest, duties and taxes owing as a result of the correction. As well, other Customs Act enforcement measures may be utilised where applicable, including but not limited to ascertained forfeiture.