Duties can make up a significant portion of landed costs for imports into Canada. End-use tariff codes can help importers reduce or even eliminate duties, and in some cases, importers can legally reduce or eliminate these duties using end-use tariff codes.
Also known as conditional relief tariffs, these tariff provisions grant duty relief if the goods are imported for a specific qualifying use and if all conditions of relief are met. However, because these benefits depend on what happens after importation, importers must be careful to follow the rules, produce the right records, and correct declarations if the end-use changes.
End-use tariff codes, or conditional relief tariff items, are special Canadian customs provisions that allow duty reduction or exemptions based on the intended or actual use of imported goods. For example, rubber gloves used with protective suits in a noxious atmosphere are duty-free, while surgical gloves are subject to duties.
End-use tariff codes contain distinctive phrases that define how the goods must be used, such as:
If the purpose of your goods match the conditions stated in the tariff item, you may qualify for reduced or zero duty.
The Canada Border Services Agency (CBSA) allows importers to claim conditional relief at the time of importation, even before the end-use conditions are fully met. When you do this, you are making a formal declaration that the imported goods are capable of meeting the conditions for relief, and you have a reasonable expectation that they will indeed be used in that qualifying manner.
For instance, an importer of automotive paint that supplies car manufacturers could claim relief under a tariff item on materials “for use in the manufacture of passenger automobiles.” However, if that same paint were sold to repair shops instead, the use would no longer qualify. In that case, the importer must correct the customs declaration and pay the duties owed.
In some cases, importers may not be sure of the end use until after importation. If the qualifying use is confirmed later, CBSA allows a refund claim under paragraph 74(1)(f) of the Customs Act.
To apply, you must:
If the goods are later used for a purpose that no longer meets the conditions of relief, CBSA considers this to be a diversion of goods. Diversions must be reported, and duties must be repaid.
Examples of diversions include farm equipment imported for use on a farm, but later sold to an urban retailer. Industrial materials imported for manufacturing, but used for retail repair work, is another example of a diversion.
Under the Customs Act, both the importer and any subsequent owners of the goods share responsibility for reporting diversions. If a business buys conditionally relieved goods from you, you must obtain records verifying how they use them and ensure they notify you of any changes. Failure to correct declarations after a diversion can result in penalties under the Administrative Monetary Penalty System (AMPS).
Many importers lose eligibility for duty relief or face penalties because of avoidable errors. The most common include:
CBSA regularly conducts compliance verification audits to confirm importers are following these rules, so it’s vital to hold on to documentation.
Importers claiming conditional relief must maintain proper documentation as per the Imported Goods Records Regulations.
Records should include:
You must keep these records for at least four years after the import date and make them available upon CBSA’s request.
End-use tariff codes can be a valuable tool for Canadian importers looking to reduce landed costs and stay competitive. However, these benefits come with strict compliance requirements. By understanding how conditional relief works, keeping accurate documentation, and correcting declarations when end use changes, importers can confidently take advantage of duty relief opportunities while avoiding costly errors and penalties.
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