Archive for the ‘AMPS’ Category


 

The Cost of Customs Compliance Part 2 | Not as Expensive as One Might Think

Image: The Cost of Customs Compliance Part 2 | Not as Expensive as One Might Think

Carrying on from last week’s Part 1 article, a customs compliance penalty often brings into question whether the customs broker can be held accountable if the importer is found to have errors in their import declarations. Since customs holds the importer of record (IOR) ultimately responsible for customs compliance, it is rare that an importer can shift the blame to their service providers or vendors who offered incorrect advice, submitted the declaration with erroneous information or lacked the expertise to catch potential problems with an imported item. Therefore, it is important to ensure your service provider evaluation includes the following:

  1. Does the customs broker have a process in place to review customs declarations for incomplete or inaccurate documentation prior to submission to customs?
  2. Does the customs broker offer Trade Advisory Services which can help with binding ruling applications on unclear product classifications or on new product purchases to determine any additional duties required and/or reporting requirements to other government departments?
  3. Does the customs broker clear all modes of transportation including courier shipments therefore ensuring consistency in both process and tariff classification?
  4. What is the level of certification, education and experience of the entry staff who are reviewing and submitting declarations on your behalf?
  5. Is your customs broker open during your hours of operation? If so, will they have an experienced representative available to answer questions about your specific account?

If your company’s supply chain requires the use of multiple customs brokers, we advise you to look into the following possible areas of inconsistencies.

Multiple Customs Brokers = Multiple Inconsistencies

We previously published an article on the Downside of Using Multiple Customs Brokers in which we highlighted two things to look out for when using multiple customs brokers.

Inconsistency between your chosen customs brokers:
Customs Broker ‘A’, who clears your incoming air shipments, may use a slightly different tariff classification code for your imported item than Customs Broker ‘B’ who clears the same item via highway transport. During our trade compliance seminars we often tell the tale of the outcome of three customs brokers classifying the same item and each coming up with their own justifiable explanation for their classification. This is a result of a highly complex harmonized system tariff schedule, the different experiences each of those brokers have had in their classification practice, as well as their understanding and application of the General Rules of Interpretation (GRI) as they relate to the item.

Difference in business process:
Not all customs brokers are created equal. Each has its own area of expertise and therefore business process. A courier company who offers customs brokerage as an added service has a priority to ensure speed and accuracy with the parcel delivery. A compliance broker, like us, Pacific Customs Brokers, specializes in ensuring their clients trading practices fall within Customs law. Our process differs in the the attention given to detail.

Review Your Entries to Mitigate Risk

As you can see from the areas of concern we have addressed in this article, and despite best efforts, an importer may be completely unaware of their shortfall in customs compliance. One way to review your customs broker’s accuracy is to review the declaration summary provided with the invoice against the following checklist:

  1. Has your vendor provided a full and accurate description of goods for classification purposes?
  2. Is the value declared on your vendor’s invoice correct and will it match your reconciliation to the vendor?
  3. Will you be receiving any additional invoices for value added costs such as royalties or commissions?
  4. Have all applicable discounts been declared and taken where applicable?
  5. Has the country of manufacture been declared correctly for all items on the invoice?
  6. Were all the items listed on the invoice received? Were there shortages or overages?
  7. Do you have properly completed certificates on hand for all items declared under a preferential tariff treatment, including North American Free Trade Agreement (NAFTA) Certificates of Origin?
  8. Has the Goods and Services Tax (GST) been correctly accounted for on all items?

 

We encourage you to reach out to our Trade Advisory team with any questions you may have regarding your customs compliance practices at askyourbroker@pcb.ca. We are here to help!

TOP 5 MISTAKES WHEN COMPLETING A NAFTA CERTIFICATE OF ORIGIN

Packing slips, commercial invoices, customs invoices they are all documents that can be easily completed unlike a NAFTA Certificate! What I mean is… you are simply taking shipping or invoicing data – shipper, consignee, carrier name, description of goods, etc. and plugging it into the respective area on one of these documents.

How about the North American Free Trade Agreement (NAFTA) Certificate of Origin? Can you use the same document completion philosophy?  There is much more to a NAFTA Certificate than just “completing another form”.

At a quick glance at a NAFTA Certificate, one might assume that the answer is yes. Exporter — yes. Producer — yes. Importer, description of goods, blanket period — yes, yes, yes. Sounds like we”re on a roll! We read the NAFTA completion instructions, understand what data is required and we”ll just finish this form off to satisfy the foreign purchaser’s request. Right?

Wrong!

The main difference between a NAFTA Certificate and the aforementioned documents is that all the products you list on this document must qualify under the NAFTA Rules of Origin. That’s right – do not simply complete the document. There are rules that must be observed.

As we already noted, some fields on the NAFTA Certificate of Origin are fairly basic and you can easily fill them in. The focus of this article is to provide clarification on the less understood areas to raise awareness of their complexity.

Field 6 — Harmonized System (H.S.) Tariff Classification Number

As emphasized in a previous article, it is very important that the H.S. tariff classification is correctly assigned to each product, as the first six digits will determine which of the NAFTA “Specific Rules of Origin” will apply. In order to correctly qualify the product under these Rules, you must be sure the tariff classification is correct. If you are unsure regarding the tariff classification, please contact a customs broker for assistance.

Field 7 — Preference Criterion

The completion of this field is going to depend on where a product was sourced or manufactured, the extent of the manufacturing and transformation process, and/or the source and place of manufacturing for any raw materials. Note that the preference criterion chosen for one product might not be the same as for another, and each situation will need to be evaluated on its own merit.

Field 8 — Producer

Hey, you get a lucky break! This is one of the easier ones. YES, NO(1), NO(2), and NO(3) are your options. The ‘NO’ options of (1), (2), and (3) refer to what you are basing your NAFTA claim on — whether you ‘just know it is NAFTA eligible’ (1), or you have documentation from the producer that it is NAFTA eligible (other than an NAFTA) (2), or you have a voluntarily provided & accurately completed NAFTA Certificate from the manufacturer (3). We respectfully advise that you go for (3), as this assures that the actual producer has done his due diligence in confirming NAFTA eligibility of the product he is providing to you.

Field 9 — Net Cost

In order to properly complete this field, you will need to understand the NAFTA Specific Rule of Origin applying to a product to determine if Regional Value Content is a factor and whether the Net Cost method will be used. In this field, you will either show ‘NC’ if the Net Cost method was used, or ‘NO’ (all other situations). By the way…NEVER place a dollar amount in this field, as this merely indicates to a customs agency that you did not read the instructions!

Field 10 — Country of Origin

This one sounds simple, doesn”t it? You would be amazed, however, at the number of NAFTA Certificates we receive that indicate countries other than the U.S., Canada or Mexico (remember, it’s the North American Free Trade Agreement). Another common mistake is for someone to automatically assume that just because certain products are made in Canada, the U.S., or Mexico they qualify for NAFTA. In fact, if they do not qualify, they must not be listed on this document.

Sound complicated? In some cases, it is straight forward, but in so many others (for example, products with many foreign components), NAFTA qualification can be an onerous task. The point we are making is for companies and individuals to realize that much care needs to be exercised (before signing, please read the disclaimer at the bottom of the form so you understand your responsibilities).

Repercussions

Lets say we have a NAFTA Certificate that has all the boxes completed with what appears to be correct data.  We clear and account for the goods and bill you.  No duty is paid.  Then 11 months later or more (up to 4 years after the date of release),  Canada Border Services Agency (CBSA)  decides to audit that NAFTA.  They will go to the exporter with a NAFTA Verification questionnaire.  Let’s say CBSA comes to the decision that the goods actually do not qualify.  Guess who suffers for the exporter incorrectly completing the NAFTA?  Your Company.  You get the penalty applied to your importing profile and you have to remit the unpaid duty with interest.

 

So keep that in mind when you see NAFTA Certificates that are not properly completed.  Its a red flag that the supplier actually has no clue whether or not the goods qualify.

 

It should be noted that similar rules apply for any Certificate of Origin relating to a free trade agreement. For instance, if you grab a copy of a Canada-Chile FTA Certificate of Origin, you will notice many similarities.

Still baffled over the completion of this document, or whether or not your goods qualify under NAFTA? If you require advice or have questions related to NAFTA,   feel free to contact our Trade Compliance Department.

 

A Review of AMPS Issued by CBSA January – June 2016

A Review of Administrative Monetary Penalty System (AMPS) Issued by Canada Border Services Agency (CBSA) January – June 2016

AMPS Issued by CBSA 06-12-2016

Risk Management continues to be a high priority of the Canada Border Services Agency. The CBSA continues to modernize and streamline the method of risk assessment as seen in their Commercial Vision Document: “ Beyond 2020 – The Commercial Vision.” Today’s business needs  are driving the CBSA to innovate with effective, efficient and automated clearance processes that are risk based, minimize delay and reduce costs.

 

As we move into 2017, CBSA will continue to assess risks away from the border by targeting high risk travellers and goods as early as possible in the trade and traveller programs. Carriers, freight forwarders and importers of all modes of transportation are required to electronically transmit Advance Commercial Information (ACI) to CBSA. This information allows the CBSA to conduct pre-arrival risk assessments of goods into Canada. In 2017 we will see the extension of ACI to importers in all modes through Advance Trade Data requirements.

In reviewing the contraventions of non-compliance for the period of January to June of 2016, CBSA issued 3367 AMPs nationally.   Contravention 378 accounted for 1198 AMPs or 36% of the AMPs issued.


In order to understand this further, let us take a look at what each contravention means.

Contravention C378

Person failed to submit the prescribed pre-load/pre-arrival information relating to their cargo and/or conveyance.

Non-compliance occurs when the responsible party fails to provide the CBSA with the required pre-arrival or pre-load data prior to arrival in Canada.  One C378 penalty is issued per instance. This contravention generally occurs when a carrier fails to transmit an electronic conveyance report or a freight forwarder failed to transmit an electronic house bill.  The penalty carries a $2000.00 fine for the first occurrence, $4000.00 for the second and $8000.00 for the third and subsequent occurrence.

The next highest single contravention was C005 in which 533 AMPS were issued and represented 16% of the total.

Contravention C005

Person provided information to an officer that is not true, accurate and complete.  The information required to be provided in any permit, certificate, license, document or declaration in respect of imported or exported goods is incomplete.

Non-compliance occurs when mandatory prescribed information required to be provided by electronic or written  means, in respect of imported or exported goods is untrue, inaccurate or incomplete.

An officer will generally ask for clarification or an opportunity to provide the missing information and if the client fails to comply or correct then a penalty is applied per declaration or document.  The officer will specify that a penalty will be issued in the reject notice.

The contravention applies when carriers, exporters, or importers who have reported goods but have provided incorrect, incomplete or untrue information in the mandatory fields of the permit, license, certificate, cargo control document etc.

The penalty carries a $150.00 penalty for the first offense, $225.00 for the second and $450.00 for the third and subsequent offenses.

Contravention 336

Person failed to pay duties on goods accounted for under subsections 32(2) and 32(3) of the Customs Act.

The Third highest single contravention for this period was Contravention 336. 330 AMPS were issued for this contravention and this represented 7% of the total.

 

Non-Compliance occurs when an importer fails to pay their K84 in full by the date specified on the K84 or their customs broker short remits the K84 when the importer uses the Importer Direct Security or GST Direct Payment Options and the Importer does not pay.

The penalty is a flat rate of $100.00 per instance.

It is important to conduct compliance checks within your company to ensure that data provided to and from your trade chain partners is correct and complete to avoid costly penalties and delays in the delivery and payment of goods.

Pacific Customs Brokers is a Compliance Broker and offers services with providing ACI data on your behalf to CBSA or Accounting Documents and payment.

Contact us directly and we can help ensure that you or your company meets all the compliance  requirements of CBSA pre-arrival and post arrival.

 

 

 

  Have one of our experts provide a quote to review or execute your import on your behalf:

Why Carriers Care… about Cargo Control Numbers Matching Across All Submissions to CBSA

Why Carriers Care… about Cargo Control Numbers Matching Across All Submissions to CBSA

 

 

 

 

 

 

 

 

 

 

 

 

Highway Carriers will experience delays at the border or risk not reporting cargo they are carrying if the Cargo Control barcodes presented do NOT match the Cargo Control Numbers (CCN) transmitted via ACI eManifest to Canada Border Services Agency (CBSA). Inaccurate CCN transmission by carriers could result in sanctions for non-compliance by the Administrative Monetary Penalty System (AMPS).

It is very important that carriers presenting barcoded PARS numbers on arrival at the port ensure that the CCN transmitted to CBSA is identical to the PARS number. The PARS number must include the acronym “PARS” if this was used. It is not a requirement to embed the letter “PARS” into a PARS number, but if a carrier does embed letters into the PARS number that the driver provides at the border, then the carrier must use the identical number in their eManifest electronic cargo transmission.

 

Tips to ensure compliance:

  1. Carriers should provide the driver with the barcoded PARS number specific to each shipment so the carrier knows which PARS is being used and will also use the same number when transmitting their eManifest cargo data prior to arrival.
  2. The driver should contact the carrier as soon as the PARS number is used for a shipment therefore providing the carrier certainty of which number must be electronically transmitted to the CBSA.
  3. Carriers transmitting cargo numbers MUST pay close attention to the letter “l” and “O” and the numbers “1” and “0” in their CCN and PARS numbers. The transmission MUST match the release documents presented by the customs broker and/or importer. If they don’t match the release document will NOT align with the cargo transmission and the cargo will have been marked “Reported” but not “Released” at the First Port of Arrival (FPOA).

 

Drivers and carriers are invited to call our Carrier Help Desk with any eManifest or border crossing questions they may have or review the many posts we’ve written on the subject within this Blog. We can be reached by phone at 855.542.6644 or by emails at carrierhelpdesk@pcb.ca. We are here to help!

AMPS Changes to ACI eManifest Effective November 1, 2016

 

 

 

Canada Border Services (CBSA) has announced changes to the Administrative Monetary Penalty System (AMPS) in the Third Phase of ACI, known as eManifest. These changes will take effect November 1st, 2016.

CBSA’s Advance Commercial Information System (ACI) introduced an effective risk management process to identify threats prior to arrival of cargo and conveyance into Canada. eManifest is the third phase of the ACI program.

Carriers in all modes of transportation are required to transmit cargo and conveyance data electronically to the CBSA prior to arrival. CBSA will issue monetary penalties to any carriers identified for non-compliance.

Penalties for ACI contraventions range from $250 to $8000 depending on the contravention and risk applied. The AMPS system is a graduated system and monetary penalties increase with continued non-compliance. Below is the grid of Penalties:

Contravention 1st Penalty 2nd Penalty 3rd and Subsequent Penalty
Person failed to submit pre-arrival information relating to their cargo and/or conveyance $2000 $4000 $8000 (and in all likelihood the conveyance will be turned around to submit the ACI information from the US in the prescribed format and timeframes)
Person failed to submit advance information in the prescribed time or prescribed manner to the Agency. $250 $375 $750
Person failed to notify the Agency within the prescribed timeframes and without delay of any correction to any pre-arrival information sent to the Agency. $500 $750 $1500
Person submitted information prescribed by the Reporting of Imported Goods Regulations that was not true, accurate and complete. $500 $750 $1500
Person failed to comply with notification issued by the CBSA regarding the goods on board or expected to be on board the conveyance. $2000 $4000 $8000


CBSA recognized the potential impact to clients of the monetary penalties and since January 2016, when they were implemented, CBSA mitigated penalty levels to just Level 1 regardless of repeated non-compliance. This was done in an effort to provide additional time for carriers to make appropriate changes to their processes and training requirements. CBSA is now moving forward with the graduated ACI penalties.

Effective November 1,2016:

  • Carriers who have never received a penalty will receive a penalty at level I if non-compliant.
  • Carriers who have received a penalty at level I will receive a penalty at level 2 for repeated non-compliance.

Effective December 1,2016

  • Carriers who have not received a penalty will receive a penalty at level I if non-compliant.
  • Carriers who have received a penalty at level 1 will receive a penalty at level 2 for repeated non-compliance.
  • Carriers who have received a penalty at level 2 will receive a penalty at level 3 for continued non-compliance.

Carriers must be compliant for at least 12 months to return to level 1.

CBSA has announced to the Canadian Trucking Alliance “that a letter will be sent to individual carriers and their company contacts most at risk for non-compliance or ACI contraventions. These letters will outline the AMPS penalty system and the number of instances of non-compliance for the carrier and an offer from CBSA to assist these carriers in correcting their issues. CBSA encourages these carriers to respond to these offers of assistance to take corrective action.” (http://Cantruck.ca/compliance)

Carriers are reminded that with the implementation of eManifest, transmission of highway pre-arrival cargo and conveyance data is in addition to the release requirements. If carriers are seeking the release of their goods at the first point of arrival (FPOA), they must contact the importer/broker prior to arriving at the FPOA to ensure the release request is submitted and accepted in the CBSA system. Having the ACI/eManifest data on file as per the requirements, as well as the release request on file will help ensure a faster and more efficient border crossing.