Customs Notice 24-36: China Surtax Order (2024) – Steel and Aluminum
1. This notice provides information on the application of the China Surtax Order (2024), specifically regarding surtax provisions effective October 22, 2024, on steel and aluminum goods made in China.
2. The surtaxes are introduced by Canada to protect Canadian workers and steel and aluminum supply chains from unfair trade practices.
3. The administration of the surtax order is the responsibility of the Canada Border Services Agency (CBSA).
Application
4. Effective October 22, 2024, steel and aluminum goods produced in China are subject to a surtax in the amount of 25% of the value for duty in accordance with the China Surtax Order (2024) and sections 47 to 55 of the Customs Act. Schedule 2 of the China Surtax Order (2024) contains a complete list of goods subject to the surtax.
5. The surtax will only apply to goods that originate in China, which shall be considered as those goods eligible to be marked as goods of China, in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (Non-CUSMA Countries) Regulations.
6. The surtax will apply to commercial and personal importations of goods, even when shipped to Canada from a country other than China.
7. The surtax will apply on goods released from a Customs Bonded Warehouse or Sufferance Warehouse on or after October 22, 2024, regardless of the date of importation.
8. The surtax applies to goods eligible for classification in the tariff items of Chapter 99 of the Schedule to Canada’s Customs Tariff – with the exception of goods that are temporarily imported for repair in Canada or re-imported into Canada after being exported for repair – even though they are entitled to the Most-Favoured-Nation zero customs duty rate under that Chapter.
9. The surtax does not apply to goods eligible for classification in the tariff items of Chapter 98 of the Schedule to the Customs Tariff, other than the prohibited importation tariff items of 9897.00.00, 9898.00.00 and 9899.00.00.
10. Canada’s Duties Relief and Duty Drawback Programs will be available to importers for surtax paid or owed by Canadian businesses, subject to the provisions of the Canada-United States-Mexico Agreement (CUSMA).
Proof of Origin
11. Pursuant to subsection 35.1(1) of the Customs Act and the Proof of Origin of Imported Goods Regulations, proof of origin must be furnished for all imported goods.
12. For commercial goods, proof of origin may be in the form of a commercial invoice, a Canada Customs Invoice or any other documentation that indicates the country of origin of the goods.
13. Personal importations of goods, also known as casual goods (meaning goods that are imported into Canada other than commercial goods) are deemed to originate in China when the goods are marked as a good of China, or the goods have no country of origin marking and there is no evidence that the goods are the product of a country other than China.
14. Casual goods imported from a country other than China that are marked as made in, produced in or originating in China are deemed to originate in China.
Calculation of Surtax when Accounting for Commercial Importations
15. The amount of surtax payable is calculated in the amount of 25% of the value for duty of the imported good in accordance with the China Surtax Order (2024). This is in addition to any other duties owing (i.e. in addition to anti-dumping duties that may be applicable).
Example 1:
The value for duty (VFD) of an imported good subject to a surtax is $150. The imported good has a Most Favoured Nation (MFN) duty rate of zero per cent. The applicable surtax is 25 per cent, as per the Schedule to the China Surtax Order (2024).
The amount of surtax is calculated as follows: $150 (VFD) x 0.25 (per cent surtax) = $37.50 (surtax payable).
Example 2:
The same imported good is subject to anti-dumping duties of $34.
The amount of surtax is calculated as follows: $150 (VFD) x 0.25 (per cent surtax) = $37.50 (surtax payable).
The anti-dumping duties remain $34 and are separate from the surtax calculation.
Exceptions to Surtax
16. The surtaxes will not apply to Chinese goods that are in transit to Canada on the day on which these surtaxes come into force. For the purpose of this Customs Notice, ‘in transit to Canada’ refers to goods bound for Canada under the control of a carrier. Importers must have proof in their possession that such goods were in transit to Canada. Such proof may include, but is not limited to, the following documentation: shipping documents (for example, a bill of lading), report of entry documents, and cargo control documents. Such proof may be requested at any time by a CBSA officer.
17. In the following scenarios, the importation would not be subject to the surtax:
- Returning goods that are made in China and previously imported into Canada and duty-paid – for example, a Canadian tourist or businessperson is returning from the U.S. with steel or aluminum goods (such goods would have previously been released and accounted for under the Customs Act before its sale to the Canadian owner).
- Goods that are made in China and are repaired or altered across the border – for example, a specialized steel or aluminum good in the U.S. might require repair in Canada, or vice versa. Again, if the good were in Canada, it would need to already be duty paid.
Accounting
18. Effective October 21, 2024 the CBSA Assessment and Revenue Management (CARM) system will become the official system of record for importers and other trade chain partners (TCPs) to account for their goods and pay for their duties and taxes owed to the CBSA.
19. CARM does not automatically calculate surtax amounts owing. Importers must calculate and self-declare surtax amounts owing. The surtax codes are 24187B for steel and 24187C for aluminum. The amount of surtax owing is entered in field 85 “Surtax” of the Commercial Accounting Declaration in the CARM.
20. Accounting for surtax under the China Surtax Order (2024) will follow the instructions outlined in Memorandum D16-1-1, Information pertaining to the application, collection, and adjustment of a surtax.
21. When an amount of surtax is being declared at importation, refer to Memorandum D17-1-10, Coding of Customs Accounting Documents for additional information on completing the Commercial Accounting Declaration. This also applies to goods being released and accounted for by Courier Low Value Shipment (CLVS) program participants. Non-commercial (casual) goods will be accounted for in accordance with Memorandum D17-1-3 – Casual Importations.
Corrections, Re-Determinations, and Refunds
22. Corrections or adjustments to original declarations and requests for re-determinations are to be made in the prescribed form and manner under the relevant provisions of the Customs Act, in accordance with the procedures outlined in Memorandum D11-6-6, “Reason to Believe” and Self-Adjustments to Declarations of Origin, Tariff Classification, and Value for Duty, Memorandum D6-2-3, Refund of Duties and Memorandum D6-2-6, Refund of Duties and Taxes on Non-commercial Importations. This includes also goods released an accounted for in the CLVS program.
23. Where an overpayment of surtax has been identified, adjustment to the Commercial Accounting Declaration (CAD) may be submitted via the CARM Client Portal (CCP) or via EDI/API requesting a refund of the overpaid amount. If accounting information is being self-adjusted for a surtax refund or surtax payable to the CBSA, refer to Memorandum D17-2-1, Adjusting Commercial Accounting Declarations.
24. Where an overpayment of surtax has been identified for goods released and accounted for in the CLVS program, an adjustment may be submitted in the form and manner described in Memorandum D17-2-1, Adjusting Commercial Accounting Declarations. Adjustments for non-commercial goods cannot be submitted through CARM and must be made through Form B2G, CBSA Informal Adjustment Request or through CREDITS for approved participants. For more information on non-commercial refunds please refer to Memorandum D6-2-6, Refund of Duties and Taxes on Non-Commercial Importations.
25. The CBSA may re-determine or further re-determine the origin, tariff classification, and/or value for duty on its own initiative or in response to a self-adjustment in accordance the Customs Act and the Determination, Re-determination and Further Re-determination of Origin, Tariff Classification and Value for Duty Regulations. In so doing, as with customs duties and taxes, the CBSA may assess any undeclared amount of surtax.
Examinations and Verifications
26. Importations may be subject to examination at the time of importation and to post-release verification for compliance with the Tariff Classification, Valuation, Origin, and any other applicable provisions administered by the CBSA. If non-compliance is encountered by the CBSA, in addition to assessments of surtax, customs duties and taxes, penalties and interest will be assessed, where applicable.
Advance Rulings for Commercial Importations
27. For predictability and certainty on how goods are to be accounted for, an Origin National Customs Rulings in advance of the importation of goods can be requested from the CBSA. Refer to Memorandum D11-11-1 National Customs Rulings for additional information. Refer to Memorandum D11-11-3, Advance Rulings for Tariff Classification, for additional information on requesting an advance ruling on the tariff classification of goods.
Source: Canada Border Services Agency
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