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Surprise! It’s End Use

Posted by Rob Moore

11/5/14 4:28 PM

End_UseIt’s that time of year where you get out the fall or winter jacket as the temperatures begin to drop. Well at least they do in Canada. There is almost nothing better than reaching into one of the pockets and finding a 10 or 20 dollar bill. The thoughts race through your mind as you gaze upon your new found treasure. Ahh found money.

Maybe I could buy something nice for someone….

Maybe I could place a bet on my favorite team….Or better still the underdog….

Maybe I could save it for a rainy day…Nah that’s just way too sensible.

Found money can turn up in the most unlikely places. The Canadian Customs Tariff has a whole chapter dedicated to found money, but most people never think to look there. Chapter 99 is titled “Special Classifications – Commercial”. What exactly does that mean? Housed in Chapter 99 are Harmonized System (H.S.) classifications that are tied to certain conditions; for the most part a specific end use. Goods imported into Canada that are normally dutiable may have an applicable Chapter 99 classification that would render them duty free provided they meet the criteria of the Chapter 99 classification.

The classifications are generally written to say “Articles for use in the manufacture of” or “Goods of section XV and XVI for use in the manufacture, repair, or maintenance of” or “Goods for use in or with.”  The classification will describe the type of machine, vehicle or article that parts can be used in. An importer could be importing something as common as a battery that is specifically made for a tool or instrument that is used in an industry that has a Canadian end-use provision. The importer will look at the classification of the item that they have been importing for years. They will validate that it is correctly classified and never consider that where it ends up may have an effect on the duty they pay at the time of import.

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The Canada Border Services Agency (CBSA) will allow you to use these end use provisions at the time of import with little or no proof of their end use. Wow free money!!! Well, not exactly. The importer should be able to validate the use of chapter 99 through end use certificates, purchase orders or affidavits from their customers in the targeted industry. If you are an importer of a chapter 99 eligible good or part you can certify the end use yourself or obtain a ruling from the CBSA for the end use classification of the article and its parts/components. Furthermore, once you can successfully prove that your imported item(s) is eligible for a duty free end use import the Customs Act allows you to file refund claims to recover 100% the duty paid on imports as far back as four years.  You don’t pay any duty on future imports.

The next time you are vacuuming behind the chesterfield and hear the happy jingle of change going up the vacuum pipe; thoughts of found money will race through your mind. The use of chapter 99 in Canada has some conditions, but if you meet them it is a sure bet. 

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Written by Rob Moore

As Principal of Consulting for Tradewin's Canadian practice, Rob brings expertise in H.S. Classification, Valuation, North American Free Trade Agreement (NAFTA), Least Developed Country Tariff (LDCT), and General Preferential Tariff (GPT), as well as extensive experience with the automotive and textile industries.