trade compliance verifications – january 2018 · pdf filetrade compliance verifications...

Trade Compliance Verifications –

January 2018 The CBSA manages trade compliance with the Tariff Classification, Valuation, and Origin programs using the following two post-release verification processes:

1. Random verifications 2. Verification priorities

Random verifications

Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including:

Risk assessment;

Revenue assessment; and

Promoting voluntary compliance.

Verification priorities

Targeted verification priorities are determined through a risk-based, evergreen process, meaning that new targets are added throughout the year. Verification priorities may also be carried over from previous years. The current verification priorities are:

Tariff Classification:

Curling Irons (Round 3)

• The risk identified is that goods may be misclassified as curling irons, which are duty-free. However, similar goods, such as flat irons, are properly classified under tariff item 8516.32.90, which attracts a duty rate of 6.5%.

• This verification priority was released in June 2012 and a second round of verifications was released in February 2014. A total of $462k was assessed in revenue, as 36 out of 53 cases were found to be in error.

• A third round of verifications was released in October 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by

Importers ($) Penalties ($) Total ($)

15 9 2 22% $7,162 $20,545 $150 $27,857

• The results of the first two rounds show that most of the goods that were found to be misclassified were properly re-classified under tariff item 8516.32.90.

Furniture for Non-Domestic

Purposes (Round 2)

• Headings 94.01 (Seats) and 94.03 (Other furniture and parts thereof) classify furniture for domestic purposes or other furniture for non-domestic purposes. The risk identified is that goods may be misclassified as furniture for non-domestic purposes, which is duty-free, instead of furniture for domestic purposes, which attracts a duty rate up to 9.5%.

• This verification priority was released in January 2013 and $932k was assessed in revenue, as 15 out of 25 cases were found to be in error.

• The results of the first round show that most of the goods that were found to be misclassified were properly re-classified as furniture for domestic purposes.

• A second round of verifications was released in February 2017.

• Results are not yet available.

Seaweed (Round 4)

• The risk identified is that prepared seaweed, which attracts a duty rate of 6%, could be misclassified under Heading 12.12 as unprepared seaweed, which is duty-free.

• This verification priority was released in September 2011 and $257k was assessed in revenue, as 6 out of 7 cases were found to be in error.

• A second round of verifications was released in May 2013 and $227k was assessed in revenue, as 32 out of 39 cases were found to be in error.

• A third round of verifications was released in March 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


30 29 25 86% $89,923 $133,672 $19,125 $242,720

• The results of the first three rounds show that most of the

goods that were found to be misclassified were properly re-classified under classification number 2008.99.90.99 of the Customs Tariff.

• A fourth round of verifications was released in April 2017. • Results are not yet available.

Dextrins and Other

Modified Starches (Round 4)

• The risk identified is that goods could be incorrectly classified as “dextrins and other modified starches”, whereas they could be properly classified as “other sugars” of Heading 17.02. The duty rates under Heading 17.02 range from 0% to 11%.

• This verification priority was released in March 2012 and $414k was assessed in revenue, as 7 out of 11 cases were found to be in error.


• A third round of verifications was released in June 2015 and $355k was assessed in revenue, as 16 out of 23 cases were found to be in error.

• A fourth round of verifications was released in January 2017, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


25 12 7 58% $17,166 $12,009 $900 $30,075

• The results of the first three rounds show that the goods that were found to be misclassified were properly re-classified under Headings 17.02, 21.06, 35.05 and 38.24 of the Customs Tariff.

Disposable and Protective

Gloves (Round 3)

• The risk identified is that disposable and protective gloves, which are duty-free if the gloves qualify for specific end-uses, may be properly classified under tariff items 3926.20.91 or 4015.19.90, which attract a duty rate of 6.5% and 15.5% respectively.

• This verification priority was released in October 2012 and a second round of verifications was released in July 2013. A total of $1.2 million was assessed in revenue, as 36 out of 41 cases were found to be in error.

• A third round of verifications was released in January 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


8 7 7 100% $44,549 $46,569 $4,500 $95,618

• The results of the first two rounds show that the goods

that were found to be misclassified were properly re-classified under tariff items 3926.20.91 and 4015.19.90, and under Headings 48.18, 62.10 and 63.07 of the Customs Tariff.

Batteries (Round 2)

• The risk identified is that batteries may be misclassified under subheadings that are duty-free, when the batteries should be properly classified under other tariff items within those subheadings, which attract a duty rate of 7%.

• This verification priority was released in November 2013 and $35k was assessed in revenue, as 6 out of 7 cases were found to be in error.

• A second round of verifications was released in August 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


19 7 7 100% $12,274 $65,741 $1,350 $79,365

• The results of the first two rounds show that the goods that were found to be misclassified were properly re-classified under tariff item 8506.10.90 of the Customs Tariff.

Footwear ($30 or more

per pair) (Round 3)

• The risk identified is that footwear subject to a duty rate of 18% could be misclassified under other related tariff items, such as women’s footwear valued at $30 or more per pair, which attracts a duty rate of 11%.

• This verification priority was released in March 2014 and $585k was assessed in revenue, as all 10 cases were found to be in error.

• A second round of verifications was released in May 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


75 46 33 72% $74,369 $400,044 $14,100 $488,513

• The results of the first two rounds show that the goods

that were found to be misclassified were properly re-classified under various tariff items of Heading 64.03 of the Customs Tariff.

• A third round of verifications was released in July 2017. • Results are not yet available.

Hair Extensions

(Round 3)

• The risk identified is that hair extensions could be misclassified under Heading 67.03, which is duty-free, instead of being properly classified under Heading 67.04 (e.g., wigs, false beards, etc.), which attracts a duty rate of 15.5%.

• This verification priority was released in March 2014 and $1.2 million was assessed in revenue, as 29 out of 32 cases were found to be in error.

• A second round of verifications was released in November 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


19 17 16 94% $261,769 $524,234 $9,000 $795,003

• The results of the first two rounds show that the goods that were found to be misclassified were properly re-classified under Heading 67.04 of the Customs Tariff.

• A third round of verifications was released in January 2017.


Special Purpose Motor

Vehicles (Round 2)

• The risk identified is that special purpose motor vehicles could be misclassified under duty-free tariff items instead of being properly classified under various tariff items of Heading 87.05, which attract a duty rate between 6.1% and 6.7%.

• This verification priority was released in July 2014 and $240k was assessed in revenue, as 24 out of 42 cases were found to be in error.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


20 19 7 37% $64,462 $6,443 $750 $71,655

• The results of the first two rounds show that most of the goods that were found to be misclassified were properly re-classified under various dutiable tariff items of Heading 87.05 of the Customs Tariff.

Parts for Power Trains

(Round 2)

• The risk identified is that goods could be incorrectly classified within Heading 87.08, instead of being properly classified under tariff item 8708.99.15 (parts for power trains for the vehicles of Heading 87.03), which attracts a duty rate of 6%.

• This verification priority was released in August 2014 and $84k was assessed in revenue, as 10 out of 10 cases were found to be in error.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


8 2 1 50% $0 $0 $150 $150

The results of the first round show that most of the goods

that were found to be misclassified were properly

re-classified under various tariff items within Heading 87.08 of the Customs Tariff.

Geophysical and

Oceanographic Instruments

• The risk identified is that various instruments could be incorrectly classified within Heading 90.15, whereas the accurate tariff items could potentially fall outside of Heading 90.15 and/or be subject to various duty rates depending on the appropriate classification that may be determined.

• This verification priority was released in November 2014, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


25 22 17 77% $55,035 $207,973 $1,650 $264,658

The results show that the goods that were found to be misclassified were properly re-classified under various tariff items within Chapters 84, 85 and 90 of the

Customs Tariff.

Articles of Apparel and

Clothing Accessories (Round 3) • The risk identified is that goods could be incorrectly

classified within Heading 39.26, which attracts lower duty rates, instead of being properly classified under tariff item 6210.40.90 (other men's or boys' garments) or 6210.50.90 (other women's or girls' garments), which are subject to the significantly higher duty rate of 18%.

• The issue is that clothing containing a layer of plastic, combined with textile fabric that is not considered as reinforcement to the plastic, should not be classified under Chapter 39.

• This verification priority was released in December 2014, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


134 132 95 72% $963,959 $1,795,686 $39,100 $2,798,745

• A second round of verifications was released in May 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


51 37 26 70% $116,688 $127,692 $5,400 $249,780

The results of the first two rounds show that most of the goods that were found to be misclassified were properly re-classified under various tariff items within Chapters 42, 61, 62 and 65 of the Customs Tariff.

• A third round of verifications was released in October 2017.


Bicycle Parts (Round 2) • The risk identified is that bicycle related goods could be

incorrectly classified within Heading 87.14, instead of being properly classified elsewhere within the same Chapter, and potentially be subject to various duty rates up to 13%.

• This verification priority was released in April 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


68 66 60 91% $176,469 $404,889 $76,275 $657,633

• A second round of verifications was released in October 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


36 15 13 87% $7,771 $108,413 $3,450 $119,634

The results of the first two rounds show that the goods that were found to be misclassified were properly

re-classified under many different Chapters, such as 40, 62, 73, 85, 87, 90 and many more, of the Customs Tariff.

Articles of Plastics (Round 2)

• The risk identified is that articles of plastics could be incorrectly classified within Heading 39.26, instead of being properly classified elsewhere within the same Heading, and potentially be subject to a duty rate of 6.5%.

• This verification priority was released in April 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


11 10 10 100% $27,377 $161,956 $3,450 $192,783

The results of the first round show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Chapter 39 of the

Customs Tariff.

• A second round of verifications was released in April 2017.


Vices and Clamps (Round 2)

• The risk identified is that vices and clamps could be incorrectly classified within Heading 82.05, instead of being properly classified elsewhere within the same Heading, and potentially be subject to a duty rate of 6.5%.

• This verification priority was released in June 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


22 20 16 80% $26,367 $99,332 $15,600 $141,299

• The results of the first round show that most of the goods that were found to be misclassified were properly re-classified under tariff item 8205.70.90 of the Customs Tariff.

• A second round of verifications was released in February 2017.


Parts for Use with Machinery

of Chapter 84 (Round 2)

• The risk identified is that parts for use with certain machinery of Chapter 84 could be incorrectly classified within Heading 84.31, instead of being properly classified under various tariff items, and potentially be subject to a duty rate of 6.5%.

• This verification priority was released in June 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


10 9 5 56% $29,503 $151,329 $750 $181,582

The results show that the goods that were found to be misclassified were properly re-classified under various tariff items within Chapters 39, 40, 70, 73, 83 and 84 of the Customs Tariff.

• A second round of verifications was released in October 2017.


Tubes, Pipes and Hoses

(Round 2)

• The risk identified is that tubes, pipes and hoses could be incorrectly classified within Heading 39.17, instead of being properly classified elsewhere within the same Heading, and potentially be subject to a duty rate of 6.5%.

• This verification priority was released in September 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


22 20 18 90% $32,879 $174,335 $2,400 $209,614

• The results of the first round show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Heading 39.17 of the Customs Tariff.

• A second round of verifications was released in October 2017.


Parts of Lamps (Round 2)

• The risk identified is that imported goods could be incorrectly classified as parts of lamps, within Heading 94.05, instead of being properly classified elsewhere within the same Heading, or under other Chapters, and potentially be subject to various duty rates.

• This verification priority was released in September 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


57 53 39 74% $138,061 $721,395 $16,200 $875,656

• A second round of verifications was released in February 2017, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


84 17 7 41% $33,611 $101,351 $1,500 $136,462

The results of the first two rounds show that most of the goods that were found to be misclassified were properly re-classified within Heading 94.05 or under Chapters 73, 76, 84 and 85 of the Customs Tariff.

Chemical Products (Round 3)

• The risk identified is that there may be misclassification due to the significant duty difference for insecticides, fungicides, herbicides, etc., of Heading 38.08, depending on weight and package size of the imported product:

• 3808.XX.10: In packages of a gross weight not exceeding 1.36 kg each (6.5% duty rate);

• 3808.XX.20: In bulk or in packages of a gross weight exceeding 1.36 kg each (duty-free).

• This verification priority was released in May 2013. A total of $252k was assessed in revenue, as 10 out of 18 cases were found to be in error.

• A second round of verifications was released in September 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


59 56 28 50% $42,505 $219,800 $2,550 $264,855

• The results of the first two rounds show that the goods that were found to be misclassified were properly reclassified under tariff item 3808.XX.10, “in packages of a gross weight not exceeding 1.36 kg each”.

• A third round of verifications was released in April 2017. • Results are not yet available.

Pasta (Round 2)

• The risk identified is that pasta could be incorrectly classified within Heading 19.02, which is subject to various duty rates, instead of being properly classified elsewhere within the same Heading, and potentially be subject to higher duty rates.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


31 30 18 60% $27,930 $363,226 $18,900 $410,056

The results of the first round show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Heading 19.02 of the

Customs Tariff.

• A second round of verifications was released in April 2017.


Hair Dryers and Electric

Smoothing Irons

• The risk identified is that imported goods could be incorrectly classified as hair dryers or smoothing irons within Heading 85.16, instead of being properly classified elsewhere within the same Heading, and potentially be subject to a duty rate of 6.5%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


35 32 13 41% $26,114 $61,248 $1,950 $89,312

The results show that most of the goods that were found to be misclassified were properly re-classified elsewhere within Heading 85.16 of the Customs Tariff.

Cell Phone Cases

• The risk identified is that cell phone cases could be incorrectly classified under various tariff items within Headings 39.26, 42.02 and 85.17, whereas the goods could potentially be properly classified under tariff item 4202.32.90 (articles of a kind normally carried in the pocket or in the handbag; with outer surface of sheeting of plastics or of textile materials; other), and be subject to a duty rate of 8%.

• This verification priority was released in January 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


23 15 15 100% $14,645 $539,758 $24,900 $579,303

The results show that most of the goods that were found to be misclassified were properly re-classified under tariff item 4202.32.90 of the Customs Tariff.

Mountings, Fittings and

Similar Articles

• The risk identified is that imported goods could be incorrectly classified as mountings, fittings and similar articles within Heading 83.02, instead of being properly classified under various tariff items within different chapters (for example, Chapters 73, 83, 84, 87 and 94), and potentially be subject to duty rates up to 8%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


41 31 19 61% $16,188 $127,486 $1,800 $145,474

The results show that the goods that were found to be misclassified were properly re-classified under various tariff items within Chapters 39, 73, 82, 83, 84, 85, 87, 94 and 98 of the Customs Tariff.

Stone Table and

Counter Tops

• The risk identified is that stone table and counter tops could be incorrectly classified under tariff item 9403.90.00, which is duty-free, instead of being properly classified under various tariff items within Heading 68.02, which attract duty rates up to 6.5%.

• This verification priority was released in March 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


13 10 10 100% $42,213 $487,620 $3,600 $533,433

The results show that the goods that were found to be misclassified were properly re-classified under Heading 68.02 or elsewhere within Heading 94.03 of the

Customs Tariff.

Prepared Meat of Swine

• The risk identified is that imported goods could be incorrectly classified as prepared meat of swine within Heading 16.02, instead of being properly classified elsewhere within the same Chapter. The duty rates for some tariff items within Chapter 16 range from 0% to 12.5%, while others are tariff rate quota (TRQ) tariff items, which are subject to duty rates as high as 253%.

• This verification priority was released in March 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


30 29 9 31% $14,199 $1,450 $150 $15,799

The results show that the goods that were found to be misclassified were properly re-classified elsewhere under Chapter 16 or within Chapters 2, 19, 20 and 21 of the Customs Tariff.

Live Plants

• The risk identified is that live plants could be incorrectly classified under a duty-free tariff item within Heading 16.02, instead of being properly classified elsewhere within the same heading and potentially be subject to a duty rate of 6%.

• This verification priority was released in May 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


10 8 2 25% $1,656 $2,481 $150 $4,287

The results show that the majority of the goods were correctly classified.

Interchangeable Tools

• The risk identified is that imported goods could be incorrectly classified as interchangeable tools within Heading 82.07, instead of being properly classified under various tariff items within different Chapters (for example, Chapters 39, 68, 82 and 84) and be subject to duty rates up to 6.5%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


20 14 5 36% $24,765 $2,055 $150 $26,970

The results show that the goods that were found to be misclassified were properly re-classified elsewhere under Chapter 82 or within Chapters 73, 83, 84, 85 and 90 of the Customs Tariff.

Air Brakes and

Parts Thereof

• The risk identified is that imported goods could be incorrectly classified as air brakes and parts thereof, within Subheading 8607.21, instead of being properly classified elsewhere within Heading 86.07, and be subject to duty rates up to 10%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


16 14 11 79% $68,360 $265,091 $3,600 $337,051

The results show that the goods that were found to be misclassified were properly re-classified elsewhere within Heading 86.07 or under Chapters 40, 73, 84, 85 and 90 of the Customs Tariff.

Handkerchiefs, Towels and

Related Paper Products

• The risk identified is that imported goods could be incorrectly classified as handkerchiefs, towels and other related paper products within Heading 48.18, instead of being properly classified under various tariff items within different Chapters (for example, Chapters 30, 33, 34, 39, 56 and 96) and be subject to duty rates up to 12%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


30 23 10 43% $13,599 $43,895 $9,375 $66,869

The results show that the goods that were found to be misclassified were properly re-classified elsewhere within Chapter 48 or under Chapter 34 of the Customs Tariff.

Olive Oil

The risk identified is that imported goods could be incorrectly classified as olive oil (under Heading 15.09) or others oils obtained solely from olives (under Heading 15.10), which are duty free, instead of being properly classified elsewhere within Chapter 15, and be subject to duty rates up to 11%.

• This verification priority was released in October 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


24 9 7 78% $36,018 $98,674 $2,400 $137,092


Photographic Film

• The risk identified is that imported goods could be incorrectly classified as photographic film under Heading 37.02, instead of being properly classified under Chapter 96, and be subject to a duty rate of 8.5%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


13 8 4 50% $3,215 $30,170 $18,900 $52,285

The results show that the goods that were found to be misclassified were properly re-classified elsewhere under Chapter 37 or within Chapter 96 of the Customs Tariff.

Stone Blocks and Slabs

The risk identified is that imported goods could be incorrectly classified as stone blocks and slabs under Headings 25.14, 25.15 and 25.16, which are all duty free, instead of being properly classified under various tariff items within Chapter 68, and be subject to duty rates up to 7%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


25 20 18 90% $67,839 $216,418 $4,650 $288,907

The results show that the majority of the goods that were found to be misclassified were properly re-classified under Chapter 68 of the Customs Tariff.

Railway Equipment

• The risk identified is that imported goods could be incorrectly classified as railway equipment under Heading 86.08, instead of being properly classified under various tariff items, and be subject to duty rates up to 6.5%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


18 6 3 50% $5,868 $0 $0 $5,868

The results show that most of the goods that were found to be misclassified were properly re-classified under various tariff items within Chapter 85 of the

Customs Tariff.

Sausages and

Similar Products

• The risk identified is that imported goods could be incorrectly classified as sausages and similar products under Heading 16.01, instead of being properly classified under a tariff rate quota (TRQ) tariff item, and be subject to duty rates of over 200%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


10 9 4 44% $323,186 $1,375,201 $450 $1,698,837

The results show that the majority of the goods that were found to be misclassified were properly re-classified under various tariff items - including TRQ tariff items - within Heading 16.01 of the Customs Tariff.

Sacks and Bags under Tariff

Item 9903.00.00 (Round 2)

• The risk identified is that sacks and bags classified under various tariff items and accounted for under conditional relief tariff item 9903.00.00, which is duty-free, may not comply with the usage conditions set out in this tariff item. The applicable duty rates range from 3% to 18%.

• This verification priority was released in July 2014 and $626k was assessed in revenue, as 4 out of 9 cases were found to be in error.

• A second round of verifications was released in October 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


7 4 1 25% $4,794 $14,885 $450 $20,129

• The results of the first round show that some of the goods verified did not qualify for the use of conditional relief tariff item 9903.00.00.

Yeasts and Other

Micro-Organisms

• The risk identified is that imported goods could be incorrectly classified as yeasts under Heading 21.02, whereas the goods could potentially be properly classified elsewhere within Heading 21.02, and be subject to a duty rate of 6%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


11 6 1 17% $7,258 $3,835 $0 $11,093

The results show that the majority of the goods were correctly classified.

Nails and Similar Articles

of Iron or Steel

• The risk identified is that imported goods could be incorrectly classified as nails and similar articles of iron or steel under Heading 73.17, which is duty free, whereas the goods could potentially be properly classified under dutiable tariff items, such as 8305.20.00 (staples in strips), and be subject to a duty rate of 6.5%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


39 16 3 19% $11,701 $2,040 $0 $13,741


Castors with Mountings

of Base Metal

• The risk identified is that imported goods could be incorrectly classified as castors with mountings of base metal under Heading 83.02, which is duty free, whereas the goods could potentially be properly classified under dutiable tariff items, such as 8716.90.99 (parts of not mechanically propelled vehicles), and be subject to a duty rate up to 6.5%.


Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


49 22 9 41% $15,445 $40,139 $1,650 $57,230

The results show that the goods that were found to be misclassified were properly re-classified under tariff item 8716.90.99 or under Chapters 39, 40, 73, 84 and 94 of the Customs Tariff.

Pickled Vegetables

(Round 3)

• The risk identified is that dill pickles or baby dill pickles may be misclassified within Heading 20.01.

• Misclassification results in an avoidance of the 8% duty payable for subheading 2001.10, which would be the appropriate classification for pickles.

• This verification priority was released in June 2012 and $106k was assessed in revenue, as 11 out of 18 cases were found to be in error.

• A second round of verifications was released in August 2013 and $94k was assessed in revenue, as 11 out of 17 cases were found to be in error.

• A third round of verifications was released in January 2017, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by


24 11 5 45% $20,133 $74,585 $3,300 $98,018

• The results of the first two rounds show that most of the goods that were found to be misclassified were properly re-classified under tariff items 2001.10.00 (cucumbers and gherkins) and 2005.99.90 (other vegetables) of the Customs Tariff.

Mineral Waters and

Aerated Waters (new)

• The risk identified is that imported goods could be incorrectly classified as mineral waters and aerated waters within Heading 22.01, instead of being properly classified elsewhere within the same chapter, and potentially be subject to a duty rate up to 11%.

• This verification priority was released in July 2017. • Results are not yet available.

Gloves (new)

• The risk identified is that imported goods could be incorrectly classified as gloves within Headings 39.26 and 42.03, instead of being properly classified within Chapter 61 or 62, and potentially be subject to higher duty rates up to 18%.


Pebbles, Limestone and

Granules (new)

• The risk identified is that imported goods could be incorrectly classified as pebbles, limestone and granules within Heading 25.17, instead of being properly classified within Heading 68.02, and potentially be subject to a duty rate of 6.5%.


Spent Fowl (new)

• The risk identified is that imported goods could be incorrectly classified as spent fowl within Headings 02.07, 16.01 and 16.02, instead of being properly classified under tariff items subject to tariff rate quotas (TRQs) within the same chapters, and potentially be subject to very high duty rates.


Safety Headgear (Round 3)

• The risk identified is that safety headgear could be incorrectly classified under duty-free tariff items, whereas the goods could potentially be properly classified as other safety headgear under tariff item 6506.10.90, which attracts a duty rate of 8.5%.

• This verification priority was released in December 2011 and $126k was assessed in revenue, as 8 out of 8 cases were found to be in error.


• The results of the first two rounds show that the vast majority of the goods that were found to be misclassified were properly re-classified under tariff item 6506.10.90 of the Customs Tariff.

• A third round of verifications was released in July 2017. • Results are not yet available.

Bags (new)

• The risk identified is that imported goods could be incorrectly classified as bags within Heading 42.02, instead of being properly classified elsewhere within the same heading, and potentially be subject to duty rates up to 11%.

• This verification priority was released in October 2017. • Results are not yet available.

Import Permit

Numbers (new)

• The risk identified is that imported goods could be classified under “within access commitment” tariff items within Chapter 2 (meat of bovine animals and poultry) and Chapter 4 (dairy products), without the required import permit number on the declaration.

• Those chapters include goods that are subject to tariff rate quotas (TRQs) under Canada’s supply management system.

• TRQ goods imported without the required import permit number are properly classified under “over access commitment” tariff items and are subject to very high duty rates.

• This verification priority was released in October 2017. • Results are not yet available.

Valuation:

Apparel (Round 3) • The risk identified is that, given the high rates of duty

associated with the apparel industry (Chapters 61 and 62), importers of apparel may not be in compliance with the valuation provisions of the Customs Act. The duty rates vary from 10% to 18%.

• This verification priority was released in February 2012 and $9.1million was assessed in revenue, as 15 out of 24 cases were found to be in error.

• A second round of verifications was released in September 2015, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by

Importers ($)

Penalties ($)

Total ($)

119 76 36 47% $28,103 $10,294,816 $111,700 $10,434,619

• The results of the first two rounds show that many goods were found to be valued incorrectly (e.g., assists were not added to the price paid or payable).

• A third round of verifications was released in April 2017. • Results are not yet available.

Origin:

T-Shirts (Round 2)

• Previous verifications indicated that there was evidence that t-shirts of Heading 61.09 were not compliant with the NAFTA Rules of Origin for several reasons.

• This verification priority was released in June 2013 and $1.9 million was assessed in revenue, as 25 out of 51 cases were found to be in error.

• A second round of verifications was released in June 2016, and the results to date are included in the following table.

Targeted Companies

Cases Closed

Cases in Error

% Non-Compliance

DAS Issued ($)

Self-Adjustments by

Importers ($)

Penalties ($) Total ($)

33 19 8 42% $0 $356,539 $26,700 $383,239

• The results show that some goods classified as t-shirts do not qualify under NAFTA.

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