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Notice to Importers
Items 117 to 134 and 141 to 160 - Dairy products on the import control list: supplementary import permits
Serial No. 803
Date: October 14, 2011
Table of Contents
1.1 The purpose of this Notice is to outline the Minister's policies and practices respecting supplementary imports of dairy products.
1.2 This Notice should be read with the Export and Import Permits Act (EIPA) and the EIPA Regulations. Where elements of the present Notice augment relevant sections of the EIPA and EIPA Regulations, those elements are to be read as expressions of the Minister's normal practices and procedures.
2.1 This Notice replaces Notice to Importers No. 783 dated November 2, 2010. It refers to Items 117 to 134 inclusive, and Items 141 to 160 inclusive, of the Import Control List (ICL), and to the applicable tariff items in the List of Tariff Provisions set out in the Schedule to the Customs Tariff. These products and the applicable EIPA codes are listed in Appendix 3 and are referred to in this Notice as "dairy products".
2.2 Importers who require a determination as to whether the tariff classification of the product they intend to import is within the scope of this Notice are to contact the Canada Border Services Agency, Trade Programs and CARM Directorate at 613-957-1468, fax: 613-952-3971.
3.1 This Notice will remain in effect until further notice.
4.1 Items 117 to 134 inclusive, excluding Item 125.2, and Items 141 to 160 inclusive, covered by this Notice were added to the Import Control List (ICL) pursuant to paragraphs 5(1)(a), (b), (d) and (e) and sections 5.3 and 6 of the Export and Import Permits Act (EIPA) in order to implement a Canadian commitment under the World Trade Organization (WTO) Agreement on Agriculture.
4.2 Item 125.2 was placed on the Import Control List on September 8, 2008, in order to implement a change in Canada's World Trade Organization obligations subsequent to a re-negotiation of a tariff concession outlined in an intergovernmental arrangement, pursuant to paragraph 5(1)(e) and section 6.2 of the Export and Import Permits Act (EIPA).
4.3 Under TRQs, imports are subject to low "within access commitment" rates of duty up to a predetermined limit (i.e., until the import access quantity has been reached); imports over this limit are subject to higher "over access commitment" rates of duty. Under section 6.2 of the EIPA, the Minister may: a) determine an import access quantity allowed entry at the low rate of duty; b) establish a method of allocating the import access quantity; and c) issue an import allocation to any resident of Canada that applies for an allocation, subject to the regulations and any terms and conditions the Minister may specify in the allocation. Also pursuant to section 6.2 of the EIPA, the Minister may consent to the transfer of import allocations. Having established an import access quantity, the Minister shall, under subsection 8.3(1) of the EIPA, issue import permits to allocation holders that apply for permits, up to the limit of that quantity, subject to compliance and application of regulations made under section 12 of the EIPA. These permits shall entitle the goods to which they apply to be subject to the low "within access commitment" rates of duty. Subsection 8.3(3) allows the Minister to issue permits in excess of the access quantity.
4.4 When deciding whether to authorize a request for supplementary imports, the Minister will take into account whether the applicant has furnished false or misleading information in connection with any reports required by the Act or the regulations made under the Act or by any condition of a supplementary import permit during the 12-month period preceding the period in respect of which the supplementary import authorization is to apply.
4.5 Pursuant to subsection 10.(1) of the EIPA, the Minister may amend, suspend, cancel or reinstate any permit or import allocation issued or granted under the Act.
5.0 Authorization of Supplementary Imports
5.1 Applications for an authorization for supplementary imports should follow the applicable procedures set out in this Notice. Applications for permits for supplementary imports made pursuant to such authorization should be made according to the procedures described in section 6.0 of this Notice. In all cases, the appropriate EIPA commodity codes must be used (see Appendix 4).
5.2 The various categories of authorization for supplementary imports, each subject to different policies and procedures, are outlined below.
5.3 To import dairy products for further processing and re-export (Import For Re-Export Program or IREP)
This program is limited to Canadian processors which import dairy products for processing in Canada, and subsequently re-export the product. Companies who hold an authorization to import dairy products under IREP must be the importer of record of those products. Product imported under IREP must be used exclusively to manufacture products that are subsequently exported. Diversion of product imported under IREP to the Canadian market is prohibited.
B) Application Process
- To be eligible to participate in IREP, a company must apply for an authorization for supplementary imports each authorization year commencing June 1 to May 31 of the following year. The application, included in Appendix 5, should indicate: import quantities sought; information concerning products to be manufactured, including ingredient specifications, HS code, the U.S. Department of Agriculture product code (or the company product code for non-U.S. destinations); and other information.
- Applications for an authorization to import fluid milk under IREP must additionally submit a usage plan for each type of dairy product, including bi-products, being manufactured from the imported fluid milk.
- Applicants are apprised in writing concerning the result of their application. Companies accepted into the program for a given year must comply with the specific conditions of import permit issuance under IREP.
C) Permit Conditions
The Minister may issue import permits to participating companies, subject to conditions, including:
- Re-Export of Imported Product
All product imported under IREP must be exported within six months of the date of entry indicated on the associated supplementary import permit. Import authorizations under IREP do not include authority to sell the imported goods within Canada. Any diversion of products imported under IREP to the domestic market (e.g., sale of such products within Canada) may lead either to prosecution or to suspension or cancellation of import authorizations (see section (E) below).
- Authorization Validity
An IREP authorization is valid within the authorization year in which it is issued.
- Monthly Reporting of Exports
All companies authorized to participate under IREP must submit, electronically, monthly export summary reports for all IREP product exports (including a nil report if applicable) to the Foreign Affairs and International Trade Canada (DFAIT) (firstname.lastname@example.org) by the end of the following month. A company has 30 days following the end of the month to send in the monthly summary export report. A monthly export summary report is included in Appendix 5. These reports must be prepared in the prescribed format and include the following information for each export shipment:
Only products manufactured with inputs imported under IREP are eligible to be reported as exports under IREP. Products manufactured using controlled inputs imported under the TRQ or from domestic sources are not eligible to be reported as exports under IREP, and products exported prior to the import of a corresponding quantity of controlled inputs under IREP are not eligible to be reported as exports under IREP.
- shipment date;
- U.S. Customs Entry Number or the Bill of Lading number;
- finished product name and HS code;
- quantity, kg;
- value, C$;
- destination country;
- HS code and name of imported dairy ingredient(s) contained in the exported product;
- proportion (%) of total product weight comprised by (each) imported dairy ingredient; and
- amount (kg) of total export shipment weight comprised by (each) imported dairy ingredient.
- Year-End Letter from the Company's Chief Executive Officer
Participating companies must send a letter from their Chief Executive Officer (CEO) for each authorization year of participation in IREP, no later than November 30 each year, confirming that all imported product was exported in accordance with program conditions. The CEO letter must be in the exact format of the letter in Appendix 5 of this Notice.
- Documents Retained by the Applicant
Participating companies must retain, for a period of seven years, and provide to the EICB on demand, copies of the following documents:
- Purchase Documents for the Imported Product:
- Purchase orders
- Proof of payment (e.g. banking records)
- Descriptive literature which indicates the imported good's composition
- If available, classification rulings issued by Canada Border Services Agency (CBSA) related to imported product
- Import Documents:
Copies of complete release and accounting packages submitted to CBSA. Packages include:
- Cargo control documents (e.g., bill of lading) as required by CBSA's D3 Memorandum series
- CBSA Form B3
- Commercial invoice as described in CBSA's Memorandum D1-4-1
- Any required permits, licences, or certificates
- Export Documents:
- Transportation documents relating to the exportation of the finished product (e.g., bill of lading, freight invoices)
- Accounting documents related to the sale of exported product (e.g., purchase orders, sales contracts, commercial invoices, proof of payment)
- Any required permits, licences or certificates
- If available, copies of the importing country's Customs documentation, completed and certified by a Customs officer of the country to which the goods were exported, which fully describes the goods.
- For export destinations other than the United States, a copy of CBSA's B13A export declaration
- Documents Concerning Domestic Processing of Imported Dairy Products:
- Monthly production records to allow tracking of imported dairy product(s), including inventory levels, quantities of raw materials used and quantities of finished product(s) produced
- Descriptive literature related to manufacturing processes and products manufactured
- If applicable, records related to subcontracting
- Additional Company Documents Concerning Imported Fluid Milk:
- A monthly usage production report, signed by the company's production manager or quality assurance manager, that identifies the specific production lots manufactured using imported fluid milk; and
- A record of the volume of imported fluid milk, by tanker, including the butterfat content, the protein content and the other-solids-non-fat content of fluid milk upon delivery to the plant.
D) Additional Information
DFAIT may request additional information, including that an independent public accountant (or an accountant named by DFAIT) certify information provided to it. Should DFAIT consider this to be necessary, all costs will be borne by the applicant.
E) Sanctions: suspension and cancellation of import authorizations, and prosecution
- Failure to comply with program conditions may result in suspension from participation in IREP, cancellation of associated import permits, reduction of a company's TRQ allocation(s) and prosecution for offences against the Export and Import Permits Act. A company that is suspended from participation in IREP is not eligible to receive IREP import permits.
- Should DFAIT not receive a monthly export report, in the format prescribed, from a company for a given month by the end of the following month, the company will be suspended from the program. A company may be reinstated to the program if DFAIT determines that the situation has been rectified and that the company is in compliance with program requirements. However, if a company fails to provide a monthly export report on multiple occasions, the company may be suspended from participation in the IREP program for the remainder of the year.
- Should DFAIT not receive the requested communication (i.e. the CEO year-end letter) from a company for a given authorization year by November 30 following the end of that authorization year, the company will be suspended from the program.
- Should DFAIT's reconciliation of a company's exports and imports under IREP indicate that product imported by that company under IREP has been in Canada for more than six months, the company will be suspended from the program until DFAIT determines that the situation has been rectified and that the company is in compliance with program requirements.
5.4 To import dairy products for the purpose of test marketing..
An authorization for supplementary imports may be issued to facilitate test marketing in the Canadian market of new products that are, for example, unique or are produced with unique processes and require a substantial capital investment for their production.
- Normally, authorization for supplementary imports for purposes of test marketing will be issued only for products that are marketed directly to consumers.
- Companies that intend to conduct test marketing of a specific product may be required to plan the activity using their annual TRQ allocations. Applicants who have been issued an import allocation may be required to have exhausted this allocation before an authorization for supplementary imports may be issued. An import allocation will be considered exhausted only if all permits issued have been used and the allocation balance is zero.
- Applications made on company letterhead should contain the following information:
- A description of the product and related production processes, indicating the unique features of same;
- A description of a proposed test marketing program, identifying test market areas, market channels, timing, promotion plans and marketing costs, product quantities required for the proposed test marketing program, and an analysis showing the minimum test market results required to decide in favour of the capital investment in Canadian production facilities; and
- A detailed outline of the resulting minimum capital investment and job creation; proposed financing required to produce the product (e.g., facilities, equipment, production capacity); and the time required to bring such facilities on line from the time a DFAIT decision to approve a test marketing program is made.
- Companies are required to commence production in Canada as soon as is feasible after the successful completion of the test marketing program.
- Imports pursuant to an authorization issued under this provision shall be used only for the prescribed products to be test marketed, for the prescribed test marketing period, and for the approved quantities.
- Once these quantities or the period have been exhausted, a further authorization for supplementary imports may be issued only for the same product, in quantities sufficient to continue serving the test marketing areas during a period reasonably required for the construction of the domestic production facilities. Once such facilities have been established, no further authorization for supplementary imports will be issued for either the test marketed product or for required raw materials. An applicant may submit only one test marketing application for a given product.
- Successful applicants will be required to provide monthly statistics on the sales of imported products by test area. Failure to submit these statistics may result in suspension of import authorizations under this provision.
5.5 Other Situations
Other applications for authorization for supplementary imports due to extraordinary or unusual circumstances will be evaluated on their individual merits. In deciding whether or not to authorize supplementary imports, the Minister will consider, amongst other criteria, the availability of like or substitutable products in the Canadian market.
6.0 Import Permit Issuance
6.1 Import permits are issued, normally, pursuant to import allocations or other import authorizations. Supplementary import permits are issued, normally, pursuant to an import authorization and are required for each shipment of dairy products on the ICL, as listed in Appendix 3 of this Notice and corresponding to applicable tariff items in the List of Tariff Provisions set out in the Schedule to the Customs Tariff. An importer may invoke General Import Permit No. 100 - Eligible Agricultural Goods (GIP), a copy of which is available on request, or may present a "specific import permit" (see paragraph 4.3, above) in order to clear customs. The specific import permit must be presented to the CBSA at the time of accounting for the shipment to be eligible for the lower "within access commitment" rate of duty. Goods imported without a specific import permit (i.e., under the GIP) will be subject to the higher "over access commitment" rate of duty. Specific import permits will not be issued for shipments already imported into Canada under the authority of the GIP, regardless of the importer's import allocation.
6.2 In accordance with the Import Permit Regulations, the procedures for receiving applications for import permits are as follows:
- When requesting an import permit an applicant must submit a completed Form EXT-1466, "Application for Permit" (a copy of which is attached as Appendix 1).
- A description of the process of applying for a permit is attached as Appendix 2, including information about fees, the monthly billing system and information required from applicants. All import permits are issued either (i) through an on-line automated system in the offices of customs brokers in major centres across Canada or (ii) in the offices of Foreign Affairs and International Trade Canada.
- The EIPA commodity codes for dairy products are provided in Appendix 4. All applications must include the appropriate EIPA code for the product for which an import permit is being requested.
7.0 Permit Fees:
7.1 A fee will be levied for each permit or certificate issued in accordance with the Export and Import Permits and Certificates Fees Order (Notice to Importers No. 508 dated May 16, 1995).
8.0 Further Information
8.1 Questions with respect to supplementary imports may be addressed to:
Foreign Affairs and International Trade Canada
Trade Controls Policy Division (TIC)
125 Sussex Drive
Mrs. Ann Marie Broadbent
Policy - Import for Re-Export Program
Mr. Hugues Leroux
Policy - Dairy Products
Mrs. Adèle Brisson
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