Customs Viewpoint
A Perspective on Customs Self Assessment
I believe the majority of importers are relatively satisfied with today’s release and accounting procedures. The majority of commercial goods entering the country are processed in a timely fashion, with most imports rarely incurring a Customs intervention or related delay. In this vein, while high value goods must be accounted for within five days of being released, actual payment of any applicable duties and taxes is postponed until the last business day of the month.
Almost anyone could offer suggestions to improve the process. However, given the opportunity, I doubt many would be inclined to undertake a complete overhaul of the system. Yet, a complete overhaul is what we are about to get and, personally, I don’t believe the majority of importers will embrace this new and supposedly improved option.
| Yet, a complete overhaul is what we are about to get and, personally, I don’t believe the majority of importers will embrace this new and supposedly improved option. |
Customs is caught up in their “risk management mentality.” In this effort to better use their (reduced) human resources, they are implementing many changes to satisfy their vision. But they’re offering little benefit for the average importer. In fact, if you are not an electronically friendly importer, with meticulous accounting procedures and record keeping systems to match, then a lot of what is planned may to your detriment.
If you pass a Periodic Verification (PV) audit, or can satisfy a third-party attestation and use a registered carrier with a clean record and registered drivers, you may be entitled to have goods arriving via truck from the United States benefit from the somewhat simplified release, somewhat preferential accounting, and slightly more complicated payment option afforded under Customs Self Assessment (CSA).
Honestly, if you import commodities which are not subject to scrutiny by any other government departments such as the Canadian Food Inspection Agency (CFIA), Department of Foreign Affairs and International Trade (DFAIT) - from the United States, then CSA can hold some lure. While the report and release requirements are restrictive and will cause most participants to operate dual systems, it is the simplified accounting process that is expected to attract most participants. Some importers may opt to use CSA’s release and report process for specific vendors or product lines, but will utilize the CSA accounting system for all goods. For others however, it may be the flip side of CSA which convinces them to get on board.
As more importers use CSA’s relaxed reporting and release provisions, and given the fact that the same number of Customs officers will be available to scrutinize a reduced number of shipments reported for release under the current conventional process, the potential for intervention is likely to increase.
Additionally, effective the first quarter of 2001, all shipments not entering under CSA will be required to be classified under the Harmonized commodity description and coding System (HS) tariff to the six-digit level to effect release. While the application of HS tariff affords the Canada Customs & Revenue Agency (CCRA) the opportunity to use their tariff based electronic targeting system, this requirement will cause substantial delays at the borders. These delays will be attributable not only to the time required to physically apply the tariff, but also to increased scrutiny by Customs at the secondary inspection line. As well, given the scheduled implementation of the Administrative Monetary Penalty System (AMPS), importers could find themselves subject to increased penalties for inaccurate declarations.
Some will argue that approximately 52 percent of releases today are accomplished under the electronic release option called ACROSS. Because shipments released under ACROSS are HS classified, some would say I am exaggerating the potential impact of this requirement. However, I believe a substantial portion of the entries, which are encompassed in today’s 52 percent, belong to those few large importers who will embrace (at least partially) the CSA process. And while AMPS is still in the fine-tuning stage, it is very apparent that compliance is absolute and penalties for non–compliance escalate by frequency.
Overall, while I am concerned that few importers will be able to attempt to avail themselves of CSA, I am more concerned that even fewer are remotely capable of satisfying Customs requirements pursuant to a PV audit.
Does your firm have: a customs procedure manual; an HS tariff/product database; internal linkages between purchasing/payables/receiving and your customs department/broker, to name but a few issues? If not, you have no hope of attaining CSA approval status.
It is time to take stock of your circumstances, your relationship with your service providers and your goals in regard to conducting business in the international arena.