B228 – North American Free Trade Agreement (NAFTA) Origin Verification Questionnaire Regional Value Content – Net Cost Method

Questionnaire confidential when completed

General Information

Purpose

The purpose of this questionnaire is to request that you provide the Canada Customs and Revenue Agency (CCRA) with the information that you used to determine your eligibility for North American Free Trade Agreement (hereinafter referred to as "the NAFTA"). This information is required to conduct a verification of origin of specified goods imported into Canada, pursuant to Article 506(1) of the NAFTA, for which a claim for preferential tariff treatment was made on the basis that the goods originate in the NAFTA territory as a result of meeting a rule of origin under paragraphs 4(2)(b) or (c), or subsection 4(4), of the NAFTA Rules of Origin Regulations (hereinafter referred to as "the Regulations"), requiring that the regional value content based on the net cost of the good minus the value of non-originating materials divided by the net cost of the good is not less than a specified percentage (e.g. 50%).

Producers and suppliers of automotive goods are, in addition to the general rules, required to comply with the rules of origin set out in Part V of the Regulations and shall in accordance with those rules of origin, complete this questionnaire with such modifications as are appropriate.

CCRA may further verify the origin of the goods and/or determine the accuracy of any or all of the information provided in the completed questionnaire by sending a subsequent verification questionnaire or verification letter, and/or conducting a verification visit in accordance with Article 506(1) of the NAFTA.

Where materials used in the production of a good are obtained from suppliers in respect of which the exporter/producer claims that such materials are originating, it is incumbent upon that exporter/producer to substantiate the basis on which that claim was made. The exporter/producer may substantiate such a claim on the basis of a written representation from the supplier of the materials that the materials qualify as originating in respect of which the exporter/producer may be reasonably entitled to rely. As part of the overall verification process, the suppliers of those materials may be requested to complete a verification questionnaire and/or be the subject of a verification visit by CCRA.

A failure to maintain records relating to the origin of the goods that are the subject of the verification, for five years after the date on which the Certificate of Origin was signed, or a denial of access to such records may, pursuant to Article V(4) of the Uniform Regulations for the Interpretation, Application and Administration of Chapters Three (National Treatment and Market Access for Goods) and Five (Customs Procedures) of the NAFTA, result in a denial of preferential tariff treatment to the goods. This questionnaire must be completed and returned by the date specified in the covering letter accompanying the questionnaire.

Where CCRA does not receive the completed questionnaire within this specified time period, it may, subject to Paragraghs 16 through 18 of Article VI of the Uniform Regulations for the Interpretation, Application and Administration of Chapters Three and Five (Customs Procedures) of the NAFTA, deny preferential tariff treatment to the goods that are the subject of the verification of origin.

This questionnaire will, pursuant to Article VI (31)(a) of the Uniform Regulations for the Interpretation, Application and Administration of Chapters Three (National Treatment and Market Access for Goods) and Five (Customs Procedures) of the NAFTA, in addition to verifying the origin of the goods, also be used to verify the applicable rate of customs duty applied to an originating good in accordance with the rules set out in Annex 302.2 of the NAFTA.

Questionnaire

The questionnaire is divided into three sections:

Section A, entitled Net Cost Method, is required to be completed in all cases where the goods are claimed to originate in the territory of the NAFTA countries as a result of meeting a rule of origin under paragraphs 4(2)(b) or (c), or subsection 4(4) of the Regulations and where the net cost method is being used to determine the regional value content of the goods. A general information form is also included such that CCRA may obtain additional information about the goods that are the subject of the origin verification.

Section B, entitled Intermediate Material, is required to be completed only where the producer of the good designates as an intermediate material, in accordance with subsection 7(4) of the Regulations, any self-produced material that is used in the production of the good. Where more than one intermediate material is designated, a separate set of Section B forms are required to be completed for each intermediate material designated. Instructions on the Section B summary form should be followed to carry forward the totals to the Section A forms.

Section C, entitled De Minimis Calculation, is required to be completed by the exporter/producer of the goods only where preferential tariff treatment was claimed on the basis that the goods qualify as originating goods pursuant to section 5 (De Minimis provision) of the Regulations.

Where there is insufficient space in this questionnaire to adequately respond to a request for information, photocopy and attach the relevant page appropriately numbered and cross-referenced.

Additional Information

For additional information and/or clarification regarding the completion of this questionnaire, please contact the CCRA official identified in the covering letter accompanying the questionnaire.

Confidentiality

CCRA shall, in accordance with Article 507 of the NAFTA, protect the confidentiality of all confidential business information submitted in this questionnaire, and shall not, under any circumstances, disclose such information to a third party without prior consultation with your company.

Currency

All currencies reflected in this questionnaire shall, where the value of a good or a material is expressed in a currency other than the currency of the country in which the producer is located, be converted to the currency of the country in which the producer is located in accordance with section 3 of the Regulations. Please identify the currency used to complete the questionnaire.

Definitions

The following definitions contained in this questionnaire are intended for reference purposes only. In the event of any inconsistency with the definitions set out in section 2 or any section of the Regulations, the definitions and/or section set out in the Regulations shall take precedence.

"accumulation"

means, for purposes of determining whether a good is an originating good, the combining of production is respect of that good by one or more producers in the territory of one or more of the NAFTA countries so as to be considered the production of one producer.

"applicable change in tariff classification"

means, with respect to a non-originating material used in the production of a good, a change in tariff classification specified in a rule set out in Schedule I of the Regulations for the tariff provision under which the good is classified.

"fungible goods or fungible materials"

means goods or materials that are interchangeable for commercial purposes and the properties of which are essentially identical.

"Harmonized System"

means the Harmonized Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes and Chapter Notes as adopted and implemented by Canada under the Customs Tariff.

"intermediate material"

means a self-produced material that is used in the production of a good and is designated as an intermediate material under subsection 7(4) of the Regulations.

"net cost"

means total cost minus sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the total cost.

"net cost of the good"

means the net cost that can be reasonably allocated to a good using one of the methods set out in Schedule VII of the Regulations.

"net cost method"

means the method of calculating the regional value content of a good that is set out in subsection 6(3) of the Regulations.

"non-allowable interest costs"

means interest costs incurred by a producer on the producer's debt obligations that are more than 700 basis points above the yield on debt obligations of comparable maturities issued by the federal government of the country in which the producer is located.

"non-originating good or non-originating material"

means a good or material that does not qualify as originating under the Regulations.

"royalties"

means payments of any kind, including payments under technical assistance agreements or similar agreements, made as consideration for the use of, or right to use, any copyright, literary, artistic, or scientific work, patent, trade-mark, design, model, plan, secret formula or process, excluding those payments under technical assistance agreements or similar agreements that can be related to specific services such as:

• (a) personnel training, without regard to where performed; and
• (b) if performed in the territory of one or more of the NAFTA countries, engineering, tooling, die-setting, software design and similar computer services, or other services.

"sales promotion, marketing and after-sales service costs"

means the following costs related to sales promotion, marketing and after-sales service:

• (a) sales and marketing promotion; media advertising; advertising and market research; promotional and demonstration materials; exhibits; sales conferences, trade shows and conventions; banners; marketing displays; free samples; sales, marketing and after-sales service literature (product brochures, catalogues, technical literature, price lists, service manuals, sales aid information); establishment and protection of logos and trademarks; sponsorships; wholesale and retail restocking charges; entertainment;
• (b) sales and marketing incentives; consumer, retailer or wholesaler rebates; merchandise incentives;
• (c) salaries and wages, sales commissions, bonuses, benefits (for example, medical, insurance, pension), travelling and living expenses, membership and professional fees, for sales promotion, marketing and after-sales service personnel;
• (d) recruiting and training of sales promotion, marketing and after-sales service personnel, and after-sales training of customers' employees, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
• (e) product liability insurance;
• (f) office supplies for sales promotion, marketing and after-sales service of goods, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
• (g) telephone, mail and other communications, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer;
• (h) rent and depreciation of sales promotion, marketing and after-sales service offices and distribution centres;
• (i) property insurance premiums, taxes, cost of utilities, and repair and maintenance of sales promotion, marketing and after sales service offices and distribution centres, where such costs are identified separately for sales promotion, marketing and after-sales service of goods on the financial statements or cost accounts of the producer; and
• (j) payments by the producer to other persons for warranty repairs.

"shipping and packing costs"

means the costs incurred in packing a good for shipment and shipping the good from thepoint of direct shipment to the buyer, excluding the costs of preparing and packaging the good for retail sale.

"tariff classification"

refers to the tariff classification, to the 6th or 8th digit level, as applicable, based on the Harmonized System of tariff classification and statistical coding.

"territory"

means, with respect to:

• (a) Canada, the territory to which its customs laws apply, including any areas beyond the territorial seas of Canada within which, in accordance with international law and its domestic law, Canada may exercise rights with respect to the seabed and subsoil and their natural resources;
• (b) Mexico,
  • (i) the states of the Federation and the Federal District,
  • (ii) the islands, including the reefs and keys, in adjacent seas,
  • (iii) the islands of Guadalupe and Revillagigedo situated in the Pacific Ocean,
  • (iv) the continental shelf and the submarine shelf of such islands, keys and reefs,
  • (v) the waters of the territorial seas, in accordance with international law, and its interior maritime waters,
  • (vi) the space located above the national territory, in accordance with international law, and
  • (vii) any areas beyond the territorial seas of Mexico within which, in accordance with international law, including the United Nations Convention on the Law of the Sea and its domestic law, Mexico may exercise rights with respect to the seabed and subsoil and their natural resources; and
• (c) the United States,
  • (i) the customs territory of the United States, which includes the 50 states, the District of Columbia and Puerto Rico,
  • (ii) the foreign trade zones located in the United States and Puerto Rico, and
  • (iii) any areas beyond the territorial seas of the United States within which, in accordance with international law and its domestic law, the United States may exercise rights with respect to the seabed and subsoil and their natural resources.

"total cost"

means the total of all product costs, period costs and other costs incurred in the territory of one or more of the NAFTA countries. Note: Please refer to subsection 6(12) of the Regulations for further details on total cost and to section 2 of the Regulations for definitions of product costs, period costs, and other costs.

Completion of the Origin Verification Questionnaire – Regional Value Content – Section A – Net Cost Method

The information requested in the questionnaire may be received by CCRA in any other suitable format. For example a bill of materials indicating the origin of materials, tariff classification, whether or not a change in tariff classification has been satisfied and the respective supplier names and addresses will be acceptable to CCRA instead of reproducing the information in the questionnaire. All information should be certified.

Step 1 – Confirm the Tariff Classification and the Applicable Rule of Origin for the Good Produced

Confirm the tariff classification (to the 6th or 8th digit level, as required by the applicable rule of origin) of the good produced. Refer to Schedule I of the Regulations to verify the applicable rule of origin.

Step 2 – Complete the Net Cost Method – Value of Materials Form

(A) Complete the top part of the form (name of producer, address, telephone number, facsimile number, name of good produced and the period covered). The tariff classification section should contain the tariff classification (to the 6th digit or 8th digit level, as applicable) of the good as established in Step 1.

(B) List all materials and the respective supplier names and addresses. List all suppliers when there is more than one supplier for a particular material. If the material is a non-originating material or a material of unknown origin, list the tariff classification number (to the 6th digit or 8th digit level, as applicable) for that material in the space provided.

• Note 1: Materials purchased from manufacturers or suppliers in the territory are not necessarily originating materials (materials claimed to be originating must qualify as originating under the Regulations). Any written representations obtained from suppliers of materials that a material qualifies as an originating material must be kept on file for purposes of verification.
• Note 2: Where originating and non-originating fungible materials are used in the production of a good and the producer or the person from whom the producer acquired the materials chooses, pursuant to subsection 7(16) of the Regulations, to determine whether the materials are originating materials on the basis of any of the applicable inventory management methods set out in Schedule X of the Regulations, such producer or person must maintain sufficiently detailed records to support the application of the method chosen. CCRA may, where a producer fails to maintain the records necessary to support the application of the inventory management method, consider all fungible materials as non-originating materials.

(C) Indicate in the column provided, under the category "originating", "non-originating" or "origin unknown", the value of each material determined in accordance with subsection 7(1) of the Regulations.

• Value of a material, except as otherwise provided for non-originating materials used in the production of a light-duty automotive good or a heavy-duty automotive good, and except in the case of indirect materials, intermediate materials, packing materials and containers and self-produced packaging materials and containers, shall be:
  • (a) where the material is imported by the producer of the good into the territory of the NAFTA country in which the good is produced, the customs value in accordance with subsection 2(1) of the Regulations, of the material with respect to that importation; or
  • (b) where the material is acquired by the producer of the good from another person located in the territory of the NAFTA country in which the good is produced
    • (i) the transaction value, determined in accordance with subsection 2(1) of Schedule VIII of the Regulations, with respect to the transaction in which the producer acquired the material, or
    • (ii) the value determined in accordance with sections 6 through 11 of Schedule VIII of the Regulations, where, with respect to the transaction in which the producer acquired the material, there is no transaction value under subsection 2(2) of that Schedule or the transaction value is unacceptable under subsection 2(3) of that Schedule,
  • and shall include the following costs if they are not included under subparagraph (a) or (b):
  • (c) the costs of freight, insurance and packing and all other costs incurred in transporting the material to the location of the producer (Schedule VIII of the Regulations);
  • (d) duties and taxes paid or payable with respect to the material in the territory of one or more of the NAFTA countries, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable (Schedule VIII of the Regulations);
  • (e) customs brokerage fees, including the cost of in-house customs brokerage services, incurred with respect to the material in the territory of one or more of the NAFTA countries (Schedule VIII of the Regulations); and
  • (f) the cost of waste and spoilage resulting from the use of the material in the production of the good, minus the value of any reusable scrap or by-product (Schedule VIII of the Regulations).
• Location of the producer means:
  • (a) where the warehouse or other receiving station at which a producer receives materials for use by the producer in the production of a good is located within a radius of 75 kilometres (46.6 miles) from the place at which the producer produces the good, the location of that warehouse or other receiving station; and
  • (b) in any other case, the place at which the producer produces the good in which a material is to be used.
• It is important that the value of a material be placed in the correct column as either originating, non-originating or origin unknown.
• Note: Value of Materials totals carried forward from the Intermediate Material – Summary form(s) should be included on the Net Cost Method – Value of Materials form and cross-referenced from the appropriate Intermediate Material –Summary form.
• If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross-referenced. A running total should be carried forward to each additional Net Cost Method – Value of Materials form.

(D) Indicate in the column provided whether or not the change in tariff classification for the non-originating materials or materials of unknown origin used in the production of the good has been satisfied. The value of the materials will remain non-originating or origin unknown for the purpose of the regional value content calculation.

(E) Add each column of Value of Materials and carry forward the totals to the appropriate columns in box A on the Net Cost Method – Summary form.

Step 3 – Complete the Net Cost Method – Net Cost of the Good Form

Note: For the purpose of this questionnaire, all costs associated with the value of materials are reflected under Step 2 of Section A and are thus not to be included in the calculation required under this Step.

(A) Complete the top part of the form.

(B) Complete the section identifying the major cost categories e.g. labour, overhead, etc. (see Note 1 below) which total the amount claimed for the net cost of the good, as well as the section identifying the country in which the production took place, and the section for the corresponding unit costs.

• In order to calculate the Net Cost of the Good, the producer may (in accordance with subsections 6(11), 6(12) and 6(13) of the Regulations):
  • (a) calculate the total cost incurred with respect to all goods produced by that producer, subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in that total cost, and reasonably allocate, in accordance with Schedule VII of the Regulations, the remainder to the good;
  • (b) calculate the total cost incurred with respect to all goods produced by that producer, reasonably allocate in accordance with Schedule VII of the Regulations, that total cost to the good, and subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the amount allocated to the good; or
  • (c) reasonably allocate, in accordance with Schedule VII of the Regulations, each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs.
• Note 1: The information could also be submitted by responsibility cost centre, rather than by major cost categories.
• Note 2: The amounts computed in Section B for the Intermediate Material – Net Cost of the Good and for sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that were allocated to the intermediate material should be carried forward and cross-referenced from the Intermediate Material – Summary form(s) to the Net Cost Method – Net Cost of the Good form.
• Note 3: It is important to complete the section identifying the country in which the production took place, as this information is necessary to verify the applicable duty rates in accordance with the rules set out in Annex 302.2 of the NAFTA.
• If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross-referenced.

(C) Add all costs and carry forward the Net Cost of the Good to box B of the Net Cost Method – Summary form.

Step 4 – Complete the Net Cost Method – Summary Form

(A) Complete the top part of the form.

(B) Ensure that the Total Value of Materials from the Net Cost Method – Value of Materials form and the Net Cost of the Good from the Net Cost Method – Net Cost of the Good form have been carried forward correctly to the Net Cost Method – Summary form.

(C) Add the value in box A(4) to the value in box B and put the total in box C.

(D) Subtract the value in box A(2) and the value in box A(3) from the value in box C and put the total in box D.

(E) Divide the value in box D by the value in box C. Multiply this result by 100 to obtain the regional value content of the good produced. Place this percentage in box E.

(F) Complete the certification. This questionnaire must be completed, signed and dated by the exporter or producer of the goods or by the supplier of a material used in the production of the goods, as the case may be.

Step 5 – Complete the Net Cost Method – General Information Form

Completion of the Origin Verification Questionnaire – Regional Value Content – Section B – Intermediate Material

General Instructions

Section B is to be completed only where the producer of the good designates as an intermediate material any self-produced material that is used in the production of the good, and the specific rule of origin for that intermediate material contains a regional value-content requirement. If the rule of origin for the intermediate material contains only the tariff classification change requirement, do not proceed with this section. In this case, carry forward the costs to section A in the originating or non-originating materials column as appropriate.

• Note 1: Pursuant to subsection 7(5) of the Regulations, in order to qualify as originating, a self-produced material that is designated as an intermediate material must qualify as an originating material under the Regulations.

Step 1 – Confirm the Tariff Classification and the Applicable Rule of Origin for the Intermediate Material

Confirm the tariff classification (to the 6th or 8th digit level, as required by the applicable rule of origin) of the intermediate material. Refer to Schedule I of the Regulations to verify the applicable rule of origin.

Step 2 – Complete the Intermediate Material – Value of Materials Form

(A) Complete the top part of the form (name of producer, address, telephone number, facsimile number, name of good produced, tariff classification of the good produced, name of the intermediate material, tariff classification of the intermediate material and the period covered). The tariff classification of the intermediate material should contain the tariff classification as established in Step 1.

(B) List all materials and the respective supplier names and addresses. List all suppliers when there is more than one supplier for a particular material. If the material is a non-originating material or a material of unknown origin, list the tariff classification (to the 6th digit or 8th digit levels, as required by the rule of origin applicable to the intermediate material) for that material in the space provided.

• Note 1: Materials purchased from manufacturers or suppliers in the territory are not necessarily originating materials (materials claimed to be originating must qualify as originating und er the Regulations). Any written representations obtained from suppliers of materials that a material qualifies as an originating material must be kept on file for purposes of verification.
• Note 2: Where originating and non-originating fungible materials are used in the production of a good and the producer or the person from whom the producer acquired the materials chooses, pursuant to subsection 7(16) of the Regulations, to determine whether the materials are originating materials on the basis of any of the applicable inventory management methods set out in Schedule X of the Regulations, such producer or person must maintain sufficiently detailed records to support the application of the method chosen. CCRA may, where a producer fails to maintain the records necessary to support the application of the inventory management method, consider all fungible materials as non-originating materials.

(C) Indicate in the column provided, under the category "originating", "non-originating" or "origin unknown", the value of each material determined in accordance with section 7 of the Regulations. A running total should be carried forward to each additional Intermediate Material – Value of Materials form. It is important that the value of a material be placed in the correct column as either originating, non-originating or origin unknown.

(D) Indicate in the column provided whether or not the change in tariff classification for the non-originating materials or materials of unknown origin used in the production of the good has been satisfied. If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross-referenced.

(E) Add each column of Total Intermediate Material – Value of Materials on the Intermediate Materials – Value of Materials form. Carry forward the totals to the appropriate columns in box A on the Intermediate Material – Summary form.

Step 3 – Complete the Intermediate Material – Net Cost of the Good Form

Note: For purposes of this questionnaire, all costs associated with the value of materials are reflected under Step 2 of Section B and are thus not to be included in the calculation required under this Step.

(A) Complete the top part of the form.

(B) Complete the section identifying the major cost categories e.g. labour, overhead, etc. (see Note 2 below) which total the amount claimed for the net cost of the good, as well as the section identifying the country in which the production took place, and the section for the corresponding unit costs.

• In order to calculate the Net Cost of the Good, the producer may (in accordance with subsections 6(11), 6(12) and 6(13) of the Regulations):
• (a) calculate the total cost incurred with respect to all goods produced by that producer, subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in that total cost, and reasonably allocate, in accordance with Schedule VII of the Regulations, the remainder to the good;
• (b) calculate the total cost incurred with respect to all goods produced by that producer, reasonably allocate in accordance with Schedule VII of the Regulations, that total cost to the good, and subtract any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are included in the amount allocated to the good; or
• (c) reasonably allocate, in accordance with Schedule VII of the Regulations, each cost that forms part of the total cost incurred with respect to the good so that the aggregate of these costs does not include any sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs.
• Note 1: Specifically identify the amounts for sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are allocable to the intermediate material and that are subtracted from total cost in the calculation of net cost, since the value of the intermediate material that is carried forward, if it is considered an originating material, is total cost, which requires that these amounts for the intermediate material be included in the net cost of the good produced.
• Note 2: The information could also be submitted by responsibility cost centre, rather than by major cost categories.
• If the space provided is insufficient to provide all required information, carry forward all totals on subsequent photocopied page(s) appropriately numbered and cross-referenced.

(C) Add all costs and carry forward the Intermediate Material – Net Cost of the Good to box B of the Intermediate Material – Summary form.

Step 4 – Complete the Intermediate Material – Summary Form

(A) Complete the top part of the form.

(B) Ensure that the Total Value of Materials from the Intermediate Material – Value of Materials form and the Net Cost of the Good from the Intermediate Material – Net Cost of the Good form have been carried forward correctly to the Intermediate Material – Summary Form

(C) Add the value in box A(4) to the value in box B and put the total in box C.

(D) Subtract the value in box A(2) and the value in box A(3) from the value in box C and put the total in box D.

(E) Divide the value in box D by the value in box C. Multiply this by 100 to obtain the regional value content of the intermediate material produced. Place this percentage in box E.

• The intermediate material is considered to originate in the territory if it meets the specific rule of origin in Schedule I of the Regulations applicable to the intermediate material, and any other general rules that may be applicable.
• Where the rule of origin is met, check the appropriate box under E(1), and carry forward the value of intermediate materials to Section A. The value of the intermediate material shall be (in accordance with subsection 7(6) of the Regulations):
  • (i) the total cost incurred with respect to all goods produced by the producer, calculated on the basis of the costs that are recorded on the books of the producer, that can be reasonably allocated to the intermediate material in accordance with Schedule VII of the Regulations; or
  • (ii) the aggregate of each cost, calculated on the basis of the costs that are recorded on the books of the producer, that forms part of the total cost incurred with respect to that intermediate material that can be reasonably allocated to that intermediate material in accordance with Schedule VII of the Regulations.
• The carry forward should be performed as follows:
  • (i) The Aggregate Total Intermediate Material – Value of Materials (box A(4)) to the Net Cost Method – Value of Materials form in the column for originating materials.
  • (ii) The Total Intermediate Material – Net Cost of the Good (box B) to the Net Cost Method – Net Cost of the Good form in the unit cost column.
  • (iii) Amounts for sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs, and non allowable interest costs that are allocable to the intermediate material to the Net Cost Method – Net Cost of the Good form in the unit cost column.
• If the rule of origin is not met, check the appropriate box under E(2) and carry forward to Section A as follows:
  • (i) The Total Intermediate Materials – Value of Materials should be carried forward to the Net Cost Method – Value of Materials form so that the values are put in the appropriate column which designates origin. That is, the value in A(1) of the Intermediate Material – Summary form should be carried forward to the column for originating materials in the Net Cost Method – Value of Materials form. The value in A(2) of the Intermediate Material – Summary form should be carried forward to the column for non-originating materials in the Net Cost Method – Value of Materials form and the value in A(3) of the Intermediate Material – Summary form should be carried forward to the column for origin of materials unknown in the Net Cost Method – Value of Materials form.
  • (ii) The Intermediate Materials – Net Cost of the Good (box B) should be carried forward to the Net Cost Method – Net Cost of the Good form in the unit cost column.

Completion of the Origin Verification Questionnaire – Regional Value Content – Section C – De Minimis Calculation

General Instructions

Section C is required to be completed by the exporter/producer of the goods only where preferential tariff treatment was claimed on the basis that the goods qualify as originating pursuant to section 5 (De Minimis provision) of the Regulations.

De Minimis means that a good shall be considered to originate in the territory of a NAFTA country where the value of all non originating materials that are used in the production of the good and that do not undergo an applicable change in tariff classification as the result of production occurring entirely in the territory of one or more of the NAFTA countries is not more than seven per cent (7%):

• (a) of the transaction value of the good determined in accordance with Schedule II of the Regulations with respect to the transaction in which the producer of the good sold the good, adjusted to an FOB basis; or
• (b) of the total cost of the good, where there is no transaction value for the good under subsection 2(1) of Schedule III of the Regulations or the transaction value of the good is unacceptable under subsection 2(2) of that Schedule;
• provided that
• (c) if under the rule of origin in which the applicable change in tariff classification is specified, the good is also subject to a regional value-content requirement, the value of those non-originating materials shall be taken into account in calculating the regional value content of the good in accordance with the method set out for that good;
• (d) the good satisfies all other applicable requirements of the Regulations.

Note 1: A good that is subject to a regional value-content requirement shall be considered to originate in the territory of a NAFTA country and shall not be required to satisfy that requirement where:

• (a) the value of all non-originating materials used in the production of the good is not more than seven per cent (7%)
  • (i) of the transaction value of the good determined in accordance with Schedule II of the Regulations with respect to the transaction in which the producer of the good sold the good, adjusted to an FOB basis, or
  • (ii) of the total cost of the good, where there is no transaction value for the good under subsection 2(1) of Schedule III of the Regulations or the transaction value of the good is unacceptable under subsection 2(2) of that Schedule; and
• (b) the good satisfies all other applicable requirements of the Regulations.

Note 2: Please note that the De Minimis provision does not apply to:

• (a) a non-originating material of Chapter 4 of the Harmonized System (hereinafter referred to as "HS") or of any of tariff item Nos. 1901.90.31, 1901.90.32, 1901.90.33, 1901.90.34 and 1901.90.39 that is used in the production of a good of Chapter 4 of the HS;
• (b) a non-originating material of Chapter 4 of the HS or tariff item No. 1901.90.31, 1901.90.32, 1901.90.33, 1901.90.34 and 1901.90.39 that is used in the production of a good of any tariff item Nos. 1901.10.31, 1901.20.11, 1901.20.12, 1901.20.21, 1901.20.22, 1901.90.31, 1901.90.32, 1901.90.33, 1901.90.34 and 1901.90.39, heading No. 21.05 and tariff item Nos. 2106.90.31, 2106.90.32, 2106.90.33, 2106.90.34, 2106.90.35, 2106.90.93, 2106.90.94, 2106.90.95, 2202.90.41, 2202.90.42, 2202.90.43, 2202.90.49, 2309.90.31, 2309.90.32, 2309.90.33, 2309.90.35 and 2309.90.36;
• (c) a non-originating material of any of heading No. 08.05 and subheading Nos. 2009.11 through 2009.30 that is used in the production of a good of any of subheading Nos. 2009.11 through 2009.30 and tariff item Nos. 2106.90.91 and 2202.90.31;
• (d) a non-originating material of Chapter 9 of the HS that is used in the production of a good of tariff item No. 2101.10.11;
• (e) a non-originating material of Chapter 15 of the HS that is used in the production of a good of any of heading Nos. 15.01 through 15.08, 15.12, 15.14 and 15.15;
• (f) a non-originating material of heading 17.01 of the HS that is used in the production of a good of any of heading Nos. 17.01 through 17.03;
• (g) a non-originating material of Chapter 17 of the HS or heading No. 18.05 that is used in the production of a good of subheading No. 1806.10;
• (h) a non-originating material of any of heading Nos. 22.03 through 22.08 that is used in the production of a good of any of heading Nos. 22.07 through 22.08;
• (i) a non-originating material that is used in the production of a good of any of tariff item No. 7321.11.19, subheading Nos. 8415.10, 8415.81 through 8415.83, 8418.10 through 8418.21, 8418.29 through 8418.40, 8421.12, 8422.11, 8450.11 through 8450.20 and 8451.21 through 8451.29 and tariff item Nos. 8479.89.91 and 8516.60.20;
• (j) a printed circuit assembly that is a non-originating material used in the production of a good, where the applicable change in tariff classification for the good places restrictions on the use of that non-originating material, such as prohibiting, or limiting the quantity of, that non-originating material;
• (k) a non-originating material that is a single juice ingredient of heading No. 20.09 that is used in the production of a good of any of subheading No. 2009.90 and tariff item Nos. 2106.90.92 and 2202.90.32;
• (l) a non-originating material that is used in the production of a good of any of Chapters 1 through 27 of the HS, unless the non-originating material is of a different subheading than the good for which origin is being determined under section 5 of the Regulations; or
• (m) a non-originating material that is used in the production of a good of any of Chapters 50 through 63 of the HS.

Complete the De Minimis Calculation Form

(A) Complete the general information section of the form (name of producer, address, telephone number, facsimile number, name of the good produced and the tariff classification of the good (to the 6th or 8th digit level, as applicable)).

(B) Complete the Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification Change section of this form.

• List all non-originating materials and their values, as determined in Section A, which are used in the production of the good that do not undergo an applicable change in tariff classification as a result of production. All materials for which the origin is unknown must be considered to be non-originating and be included in this section if they do not undergo an applicable change in tariff classification.

(C) Total the Value of Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification Change and place this figure in box (A).

(D) Complete the De Minimis calculation on the form.

• For all chapters excluding Chapters 50 to 63 of the Harmonized System:
• (a) place the total Value of Non-Originating Materials That Do Not Undergo An Applicable Tariff Classification. Change into box (A) of the De Minimis calculation section;
• (b) in box (B), place either the Transaction Value of the Good Adjusted to an FOB Basis or the Total Cost of the Good, as applicable for the calculation;
• (c) divide the value in box (A) by the value in box (B). Multiply this by 100 to obtain the De Minimis Percentage. Place this percentage in box (C).
• Note: Adjusted to an FOB basis means, with respect to a good, adjusted by:
• (a) deducting
  • (i) the costs of transporting the good after it is shipped from the point of direct shipment,
  • (ii) the costs of unloading, loading, handling and insurance that are associated with that transportation, and
  • (iii) the cost of packing materials and containers, where those costs are included in the transaction value of the good; and
• (b) adding
  • (i) the costs of transporting the good from the place of production to the point of direct shipment,
  • (ii) the costs of loading, unloading, handling and insurance that are associated with that transportation, and
  • (iii) the costs of loading the good for shipment at the point of direct shipment, where those costs are not included in the transaction value of the good.

(E) Complete the certification section of the De Minimis calculation form. This form must be completed, signed and dated by the exporter or producer of the goods or by the supplier of a material used in the production of the goods, as the case may be.

Origin Verification Questionnaire – Regional Value Content – Net Cost Method (Section A)

Value of Materials

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification
• Period Covered
• Carried forward from – Value of Materials Page (Number)
• Material Name
  • Tariff Classification of Non-Originating Materials and Materials of Unknown Origin
  • Supplier Name and Address
  • Unit Value of Materials
    • Originating
    • Non-Originating
    • Origin Unknown
  • Change in Tariff Classification Satisfied (Yes/No)
• Total value of materials (A)
• Material Component – Carried forward to:
  • Summary
  • Value of Materials

Net Cost of the Good

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification
• Period Covered
• Carried forward from – Net Cost of the Good Page (Number)
• Major Cost Category
  • Country
  • Unit Cost
• Net Cost of the Good (B)
• Carried forward to:
  • Summary
  • Net Cost of the Good

Summary

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification
• Period Covered

• A. Value of Materials
  • Carried forward from – Value of Materials Page (Number)
  • Total value of materials (A)
    • Originating (1)
    • Non-Originating (2)
    • Origin Unknown (3)
    • Aggregate (1) + (2) + (3) = (4)
• B. Net Cost of the Good
  • Carried forward from – Net Cost of the Good Page (Number)
  • Net cost of the good (B)
• C. Total Net Cost of the Good
  • Total net cost of the good: (A4 + B) = (C)
• D. Total Net Cost of the Good Minus Value of Non-Originating Materials (VNM)
  • Total net cost of the good minus VNM : (C - A2 - A3) = (D)
• E. Regional Value Content
  • Regional value content: (D ÷ C X 100) = (E)%
• F. Certification
  • I certify that the information provided in response to this questionnaire is true and accurate, and I assume the responsibility of proving such representations.
  • I agree to maintain, and present upon request, all records and documentation necessary to support the representations made in response to this questionnaire.
  • Title (print or type)
    • Place (print or type)
    • Telephone No.
    • Facsimile No.
  • Authorized Signature
    • Name (print or type)
    • Date

General Information

• Name of Producer
  • Address
  • Telephone No.
• Fiscal Year
• Good Produced
  • Tariff Classification
• Sales
  • Total annual sales to Canada of the good
  • Total annual worldwide sales of the good
• Financial Statements
  • Please include a copy of the most recent financial statements as well as any subsequent quarterly statements with the completed questionnaire.
• Related Companies
  • Are there any transactions with affiliated, associated or subsidiary companies regarding either the purchase of material or the sale of goods and services?
  • If yes, please provide details on an attached sheet of paper. The details should include the name of the company, the relationship and the function or activities performed by the agent, company or persons, total annual sales of the goods to related parties, and a listing of materials purchased from related parties.
• Advanced Rulings
  • Has an advanced ruling in accordance with article VII of the Customs Procedures Regulations been issued with respect to the goods produced? (Yes/No)
• Assists
  • Are any goods, materials, services, warranties or guarantees or any other form of benefit being received or provided either without charge or at reduced cost? If yes, please provide details as to the nature and value of such benefits.
• Product Literature
  • Please enclose product brochures and promotional literature for goods under review.
• Fungible Goods and/or Fungible Materials
  • Do any of the goods produced meet the definition of fungible goods? (Yes/No)
  • Do any of the materials incorporated in the goods produced meet the definition of fungible materials? (Yes/No)
  • If so, what type of inventory management system is in place?
• Costing
  • 1) Describe the method used in costing the materials, i.e. standard cost, average cost, weighted average cost, other (please describe).
    • Standard Cost
      • a) If standard costs were used, when were the standard costs calculated? (YYYY/MM/DD)
      • (b) When will the standard costs be updated? (YYYY/MM/DD)
    • Average Cost
    • Weighted Average Cost
    • Other (please describe)
  • (2) Were there any price fluctuations exceeding 10% on the major materials? If so, for which materials?
  • (3) If the sum of the net costs incurred and the sum of the values of non-originating materials have been averaged, over what periods has this average occurred?
    • Monthly
    • Quarterly
    • Semi-annually
  • (4) Have you accumulated the production of one or more other producers? (Yes/No)
    • If yes, on a separate page, list the names and addresses of these other producers. If not already detailed, please provide the tariff classification, the description of materials imported by the other producers and whether the applicable change in tariff classification has been met.
• Production Process
  • On a separate page, list the countries in which the production takes place and describe the production process in the sequence in which it occurs.
• Authorization re: Completion of the Questionnaire
  • Was this questionnaire prepared and signed by a third party on behalf of the exporter/producer? (Yes/No)

Origin Verification Questionnaire – Regional Value Content – Net Cost Method – Intermediate Material (Section B)

Value of Materials

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification
• Intermediate Material
  • Tariff Classification
• Period Covered
• Carried forward from – Intermediate Material – Value of Materials Page (Number)
• Material Name
  • Tariff Classification of Non-Originating Materials and Materials of Unknown Origin
  • Supplier Name and Address
  • Unit Value of Materials
    • Originating
    • Non-Originating
    • Origin Unknown
  • Change in Tariff Classification Satisfied (Yes/No)
• Total intermediate material – value of materials (A)
• Material Component – Carried forward to:
  • Intermediate Material Summary
  • Intermediate Material – Value of Materials

Net Cost of the Good

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification
• Intermediate Material
  • Tariff Classification
• Period Covered
• Carried forward from – Intermediate Material – Net Cost of the Good Page (Number)
• Major Cost Category
  • Country
  • Unit Cost
• Intermediate Material – Net Cost of the Good (B)
• Carried forward to:
  • Intermediate Material Summary
  • Intermediate Material – Net Cost of the Good

Summary

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification
• Intermediate Material
  • Tariff Classification
• Period Covered

• A. Value of Materials
  • Carried forward from – Intermediate Material – Value of Materials Page (Number)
  • Total intermediate material – value of materials = (A)
    • Originating (1)
    • Non-Originating (2)
    • Origin Unknown (3)
    • Aggregate (1) + (2) + (3) = (4)
• B. Net Cost of the Good
  • Carried forward from – Intermediate Material – Net Cost of the Good Page (Number)
  • Total intermediate material net cost of the good = (B)
• C. Intermediate Material – Total Net Cost of the Good
  • Intermediate material – total net cost of the good: (A4 + B) = (C)
• D. Total Net Cost of the Good Minus Value of Non-Originating Materials (VNM)
  • Total net cost of the good minus VNM : (C - A2 - A3) = (D)
• E. Regional Value Content
  • Regional value content: (D ÷ C X 100) = (E)%
    • E(1) - If the intermediate material qualifies as an originating material, carry forward
      • (i) The Aggregate – Total Intermediate Material – Value of Materials Box A(4) to Page (Number) Value of Materials Originating column,
      • (ii) The Total Intermediate Material – Net Cost of the Good Box B to Page (Number) Net Cost of the Good Unit Cost column, and
      • (iii) The sales promotion, marketing and after-sales service costs, royalties, shipping and packing costs and non-allowable interest costs that are allocable to the intermediate material, to Page (Number) Net Cost of the Good Unit Cost column.
    • E(2) - If the intermediate material does not qualify as an originating material, carry forward
      • (i) Originating – Total Intermediate Material – Value of Materials Box A(1) to Page (Number) Value of Materials Originating column,
      • (ii) Non-Originating – Total Intermediate Material – Value of Materials Box A(2) to Page (Number) Value of Materials Non-Originating column,
      • (iii) Origin Unknown – Total Intermediate Material – Value of Materials Box A(3) to Page (Numbers) Value of Materials Origin Unknown column, and
      • (iv) The Total Intermediate Material – Net Cost of the Good Box B to Page (Number) Net Cost of the Good.

Origin Verification Questionnaire – Regional Value Content – Net Cost Method – De Minimis Calculation (Section C)

General Information

• Name of Producer
  • Address
  • Telephone No.
  • Facsimile No.
• Good Produced
  • Tariff Classification

Non-Originating Materials That Do Not Undergo an Applicable Tariff Classification Change

• Description
• Value
• Total Value (A)

De Minimis Calculation

All Chapters Excluding Chapters 50 to 63 of the Harmonized System:

• 1. Total Value of Non-Originating Materials That Do Not Undergo an Applicable Tariff Classification Change (A)
• 2. Transaction Value of the Good Adjusted to an FOB Basis or Total Cost of the Good (B)
• De Minimis Percentage A/B X 100 = (C) %

Certification

• I certify that the information provided in response to this questionnaire is true and accurate, and I assume the responsibility of proving such representations.
• I agree to maintain, and present upon request, all records and documentation necessary to support the representations made in response to this questionnaire.
• Authorized Signature
  • Company (print or type)
  • Name (print or type)
  • Title (print or type)
  • Telephone No.
  • Facsimile No.
  • Date (YYYY/MM/DD)

Date modified:

2013-02-26