Ottawa, June 29, 1998
This memorandum reflects the implementation of the new Customs Tariffas of January 1, 1998. The tariff item number has been changed and the number of countries eligible to benefit from this tariff item has been expanded.
Locator Code: 180B
Ottawa, June 29, 1998
This memorandum outlines the conditions under which vessels may be imported under tariff item No. 9971.00.00 of the Customs Tariff.
1. Tariff item No. 9971.00.00 provides for the reimportation of certain Canadian vessels which were exported to the United States, Mexico, Chile, Israel, or another CIFTA beneficiary for the purpose of being repaired or altered. The tariff item allows for the payment of duty only on the value of the work performed abroad and not on the value of the vessel itself.
2. The goods and services tax is also payable only on the value of work done abroad, and not on the value of the vessel itself.
3. For the purposes of tariff item No. 9971.00.00, the value for duty shown on the accounting document is not the value of the goods. Rather, it is the value of the repair or alteration carried out in the United States, Mexico, Chile, Israel, or another CIFTA beneficiary. In determining the value of the repair, the principles of sections 47 to 55 of the Customs Actshould be followed. If an acceptable price is paid or payable for the repair or alteration, the price should form the basis of the value for duty (with the appropriate adjustments that would be made under section 48 of the Customs Act). If no price is paid or payable, or the price paid or payable is unacceptable, the value of the repair should be determined under a method of valuation under sections 49 to 55 of the Customs Act.
4. Tariff item No. 9971.00.00 relates only to Canadian vessels which are exported from Canada for the purpose of being repaired or altered in the United States, Mexico, Chile, Israel, or another CIFTA beneficiary. Canadian vessels which are repaired or altered during the course of the vessel's operations abroad may be eligible for a reduction or removal of customs duties under the Vessel Duties Reduction or Removal Regulations,P.C. 1990-939. Canadian vessels which undergo emergency repairs as a result of an unforeseen contingency may be eligible for full relief of duties under subsection 101(2) of the Customs Tariff. Memorandum D8-2-1, Canadian Goods Abroad, should be consulted.
5. For the purposes of tariff item No. 9971.00.00, repair means the restoration of a vessel or its components to good operating condition. Alteration means any operation which alters the vessel, e.g., the addition of a crane to a cargo ship, but does not include an operation which changes the essential characteristic of the vessel, e.g., the conversion of a cruise ship to a cargo ship.
6. The provisions of tariff item No. 9971.00.00 apply to qualifying vessels, regardless of whether the repair or alteration could have been performed in Canada.
7. Generally, a General Declaration, Form A6, would be the proof of export required by paragraph 2(b) of Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulationsin the case of vessels returning to Canada after being repaired or altered in the United States, Mexico, Chile, Israel, or another CIFTA beneficiary.
8. If sufficient documentation to determine eligibility for importation under tariff item No. 9971.00.00 is not provided, the vessel will be classified under the appropriate tariff item of the schedule to the Customs Tariff,and customs duties would be applied to the full value of the vessel.
Tariff item No. 9971.00.00 reads as follows:
9971.00.00 Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods, of heading No. 89.01;
Fishing vessels, factory ships and other vessels for processing or preserving fishery products, of a registered length not exceeding 30.5 m, of heading No. 89.02;
Tugs and pusher craft of heading No. 89.04;
Light-vessels, fire-floats, dredgers, floating cranes and other vessels the navigability of which is subsidiary to their main function, floating docks or floating or submersible drilling or production platforms of heading No. 89.05;
All the foregoing, regardless of the country of origin or tariff treatment, returned to Canada after having been exported to the United States, Mexico, Chile, or Israel or another CIFTA beneficiary for repair or alteration.
The Mexico Tariff rate of customs duty applicable to goods classified under this tariff item shall be, in respect of the value of the repair or alteration to the goods carried out only in Mexico, determined under section 87 of this Act, in accordance with their classification in Chapters 1 to 97.
The Mexico-United States rate of customs duty applicable to goods classified under this tariff item shall be, in respect of the value of the repair or alteration to carried out only in one or more NAFTA countries, determined under section 87 of this Act, in accordance with their classification in Chapters 1 to 97.
TARIFF ITEM NOS. 9971.00.00 AND 9992.00.00
1. In these Regulations, "goods" means goods of tariff No. 9971.00.00 or 9992.00.00 in the List of Tariff Provisions set out in the schedule to the Customs Tariff.
Accounting for Goods
2. An importer or owner of goods, or any person authorized to account for goods under paragraph 32(6)(a) or under subsection 32(7) of the Customs Act, shall, when accounting for the goods under section 32 of that Act, submit
(a) an invoice or written statement from the person who performed the repair or alteration, setting out a detailed description of and the value of the repair or alteration; and
(b) proof of exportation of the goods to the United States, Mexico, Chile or Israel or another CIFTA beneficiary.
3. The NAFTA Tariff Item Nos. 9821.00.00 and 9822.00.00 Accounting Regulationsare repealed.
4. The CIFTA and CCFTA Tariff Item No. 9827.00.00 Accounting Regulationsare repealed.
Coming Into Force
5. These Regulations come into force on January 1, 1998.
ISSUING OFFICE -
Trade Incentive Programs
Remissions Policy Unit
LEGISLATIVE REFERENCES -
Customs Tariff, tariff item No. 9971.00.00
Tariff Item Nos. 9971.00.00 and 9992.00.00 Accounting Regulations
HEADQUARTERS FILE -
SUPERSEDED MEMORANDA "D" -
D8-2-25, January 1, 1994
OTHER REFERENCES -
P.C. 1990-939, Vessel Duties Reduction or Removal Regulations