The Canada Border Services Agency recently issued a memorandum outlining and explaining the conditions under which importers may qualify for the duty remission on imported apparel available under the Outward Processing Remission Order, which took effect 1 May. It appears that this benefit is available to any company producing apparel for export to Canada.
The following conditions must be met for such a duty remission to be granted.
-The apparel must be produced in and shipped directly to Canada from countries or territories that are beneficiaries of the General Preferential Tariff, including Hong Kong and mainland China.
-The apparel must be produced in whole or in part from textiles produced in Canada.
-The apparel must be produced in the same country or territory to which the textiles produced in Canada were shipped directly, without undergoing further processing outside that country or territory.
-If the textiles produced in Canada contain imported materials (i) the imported materials must be sufficiently transformed to undergo a change in tariff classification or to be considered bleached for the purpose of tariff classification and (ii) the dutiable value of the imported materials must be less than 50 percent of the value of the textiles produced in Canada.
-No other claim for relief, refund or drawback under the customs tariff may be granted for any customs duties paid or payable with respect to the goods on which the remission is claimed.
-The apparel must be imported within two years after the day on which the textiles produced in Canada that were incorporated in the apparel are exported.
-A claim for remission must be made by the importer within two years after the day on which the apparel is imported into Canada.
-The importer must provide the CBSA with any evidence or information demonstrating that the importer is entitled to the remission.
If these criteria are met, a duty remission may be granted in an amount equal to the lesser of (i) the value of the textiles produced in Canada and incorporated in the imported apparel and (ii) the customs duties paid or payable on the imported apparel. For example, if a qualifying apparel item has a dutiable value of C$100 and is subject to an 18 percent duty rate (hence a maximum duty of C$18), the amount of duties that could be remitted would be (i) C$15 if the value of the textiles produced in Canada that are incorporated into the imported apparel is C$15 and (ii) C$18 if the value of the textiles produced in Canada that are incorporated into the imported apparel is, for example, C$30. The CBSA notes that the amount of remission available is applicable only to the specific importation at issue and is not transferable to any other.
Only customs duties paid or payable under the customs tariff may be relieved under this order. It does not apply to surtaxes or temporary duties levied under the customs tariff or to duties levied under the Special Import Measures Act or the Goods and Services Tax/Harmonised Sales Tax.
