MEMORANDUM D7-4-4

Ottawa, March 19, 2002

CUSTOMS BONDED WAREHOUSES

Memorandum D7-4-4, dated July 13, 2001, has been amended to reflect changes to the list of customs offices in Appendix D. We have also amended the Table of Contents on page 2.

MEMORANDUM D7-4-4

Ottawa, July 13, 2001

CUSTOMS BONDED WAREHOUSES

The Canada Customs and Revenue Agency (CCRA) customs bonded warehouses are facilities licensed and regulated by the CCRA, and operated by the private sector where goods can be stored duty and tax free (generally for up to four years) until they are exported or are consumed domestically.

This Memorandum outlines and explains the procedures to be followed by an individual or company when making application for a customs bonded warehouse licence, and the conditions under which such a warehouse must operate.

TABLE OF CONTENTS

• Guidelines and General Information
  • Allowable Activities
  • Display Goods
  • Permits
  • Application
  • Security
  • Licence
  • Amendment/Cancellation of Licences
  • Time Limit for Storage
  • Restrictions on Goods
  • Firearms
  • Fresh Fruits and Vegetables
  • Records
  • Penalties
  • Unlawful Removal
  • Deemed Exportation
  • NAFTA
  • Transfer
  • Shortages in Shipments
  • Damaged, Destroyed, or Deteriorated Goods
  • Disposal of Goods
• Appendix A - Form E401, Application for a Licence to Operate a Customs Bonded Warehouse
• Appendix B - Customs Bonded Warehouses Regulations
• Appendix C - Policy for the control of fresh produce moving into Customs Bonded Warehouses
• Appendix D - Regional Customs Offices
• References

GUIDELINES AND GENERAL INFORMATION

1. Customs Bonded Warehouses are facilities licensed and regulated by the CCRA, and operated by the private sector. Goods in a customs bonded warehouse are considered to be imported into Canada but have not been released from customs. Imported and domestic goods destined for export may be placed in a customs bonded warehouse.

2. These facilities provide, with a few exceptions, for the complete deferral of customs duties, anti-dumping and countervailing duties, excise duties and taxes including the GST on imported goods. This deferral continues up to the point the goods are released for Canadian domestic consumption or are exported. GST paid on domestic goods cannot be refunded by placing the goods in a customs bonded warehouse.

3. Customs bonded warehouses may consist of:

4. This program will be of benefit to persons who:

Allowable Activities

5. The Customs Bonded Warehouse Regulations allow certain activities to be carried on in a customs bonded warehouse that do not change the condition of the goods. The goods in a bonded warehouse shall not be further manufactured. Goods may be manipulated, altered, or combined with other goods only for the purpose or in the course of:

6. In addition, the following activities that do not materially alter the characteristics of the goods may be carried on in a bonded warehouse. These are:

Display Goods

7. The program provides for a temporary bonded warehouse licence for imported goods to be displayed at conventions and exhibitions as well as for marking purposes. These goods must have been properly declared and documented to enter the facility. Such goods include products on display as well as those that form part of the display such as stands, tables, backdrops, decorations, display booths, tents, and other housings or coverings. Prohibited or restricted goods are not allowed.

8. The schedule of the regulations contains provisions for marking purposes or display of goods at conventions, exhibitions, or trade shows of 90 days. An application may be made under the authority of the Customs Tariff for extensions of the time limit. The goods must then be either exported from or entered (accounted for under section 32 of the Customs Act) in Canada. Information on temporary imports may be found in Memorandum D8-1-2, Convention Services Program.

9. This provision is available for the one-time convention operator, an event planner or organizer, a convention facility hotel operator or owner, and for the importer who has imported goods that are not marked in accordance with the Marking of Imported Goods Regulations.

10. Additional information may be obtained in the publication called Welcome to Canada - Your Guide to Bringing a Convention, Meeting, Trade Show, or Exhibition Across the Canadian Border.

Permits

11. All permits, certificates, authorizations, or waivers must be presented when entering the goods into the customs bonded warehouse. It is the responsibility of the warehouse operator to inform the CCRA immediately of the revocation of such authorizations.

12. Restricted (restrained) goods without permits may not be entered into a customs bonded warehouse unless the responsible authority has issued a waiver. Since goods in a customs bonded warehouse are often subsequently exported, restricted or restrained goods must be entered into the customs bonded warehouse at the over access classification, rate of duty and/or surtax. If these goods are released into Canada (consumption entry type 20), a valid import permit must be submitted at time of accounting under section 32 of the Customs Act.

Application

13. Any person who wishes to operate a customs bonded warehouse must present a fully completed Form E401, Application for a Licence to Operate a Customs Bonded Warehouse (see Appendix A), to the customs office closest to the warehouse location. Applications and further information are available at all customs offices.

14. A detailed site plan of the location of the proposed customs bonded warehouse should accompany the application. Flexibility has been provided in the identification of the bonded area to provide for the storage of domestic and in-bond goods. The goods must be readily identifiable through your record-keeping system and be situated in the area designated on your site plan.

15. Applications for warehouses for the storage of alcoholic beverages must obtain approval from the provincial liquor authority of the province concerned, and a copy of that approval must accompany the application.

16. Applications for customs bonded warehouses where firearms and other weapons are intended for storage must obtain a "business firearms licence" to store firearms and other weapons from the chief firearms officer of the province or territory where the business is carried on, and a copy of the licence must accompany the application. Each import and export of a firearm must have authorization from the registrar of firearms in the province or territory where the import or export occurs.

Security

17. Security to be posted with the CCRA for purposes of subsection 91(4) of the Customs Tariff shall be deposited with the chief officer of customs.

18. The amount of security will be the maximum amount of duties and taxes that would otherwise be payable at any time in the year following the issuance of the licence for the customs bonded warehouse. Security will be reviewed not less than annually and may be decreased or increased according to the largest amount of duties and taxes that would otherwise be payable at any time during the past fiscal year.

19. One bond may be filed for all warehouses operated by an individual or company within the same customs office area, provided the amount of the bond is the total of those amounts required under subsection 4 of the Regulations for each warehouse. The address of each warehouse and the proportion of the total bond value allocated to that warehouse shall be indicated on an attached bond rider. The original bonds will be retained on file at the local customs office. Any updates and/or changes should be referred to the regional office where the customs bonded warehouse is located. All securities are to be handled in accordance with Memorandum D1-7-1, Posting Security for Transacting Bonded Operations.

Licence

20. A licensing fee is payable annually which covers costs associated with licensing the warehouse, including audit and verifications (subsection 5 of the Regulations). The licence fee is to be paid by the warehouse operator (licensee) prior to the warehousing of any goods. No special service charges will be assessed for service provided during regular business hours. Customs offices and their hours of operation are outlined in Memorandum D1-1-1, List of Customs Offices.

21. The licence fee will not be refunded if a warehouse operator ceases operations prior to the end of the fiscal year. The transfer of a warehouse operation to another location requires that a new application and new security be submitted and approved by customs.

22. When the applicant has met the requirements of the program, a customs bonded warehouse licence with a unique licence number will be issued. The licence number will consist of the customs office code, the letter "W" and a three digit number assigned by the customs office. When the licence includes authority to store in bond domestic alcohol or tobacco (field 20, form E401), an "E" suffix will be added to the licence number. The licence number is required when completing field No. 44 of Form B3, Canada Customs Coding Form, warehouse type.

Amendment/Cancellation of Licences

23. For licence cancellation purposes the nearest CCRA customs office must be advised in writing at least 60 days prior to the effective date of cancellation. Customs will acknowledge receipt of the cancellation notice. Transfer or ownership of the goods stored in the bonded warehouse must be reported to customs using Form B3 type 30. Change of ownership of the bonded facilities or a change of activities or type of goods may be reported to customs by letter.

24. The Minister may, subject to regulations, amend, suspend, renew, cancel, or reinstate a customs bonded warehouse licence.

25. When a licence is to be cancelled by the Minister, the licensee will be advised by registered mail of the effective date and the reasons for the cancellation. The licensee has 90 days after the date of cancellation to make representation as to why the licence should not be cancelled.

26. When the Minister is satisfied that the cause for cancellation no longer exists, the notice of cancellation may be withdrawn.

27. When a licence is to be suspended by the Minister, the licensee will be advised of the immediate suspension and the reasons for the suspension by registered mail. The licensee has 90 days after the date of suspension to make representation as to why the licence should not be suspended.

28. When corrective action by the operator is required, the suspension may be withdrawn when customs is satisfied that the cause of the suspension no longer exists.

29. Licensees will be advised by registered mail when a suspended licence has been reinstated.

Time Limit for Storage

30. Generally, goods may be stored in the customs bonded warehouse for a period of four years from the date they were entered into the warehouse. However, these time limits vary depending on the type of merchandise, for example, goods such as intoxicating liquor and tobacco products, have a five-year time limit.

31. Where extenuating circumstances preclude the removal of goods within the specified time limits outlined in the attached Regulations (see Appendix A), the CCRA may grant an extension under authority of subsection 37(2) of the Customs Act, provided a written request is received from the importer, owner or their agent prior to the expiration of the specified time limit.

Restrictions on Goods

32. No licensee shall receive in, or transfer from a customs bonded warehouse in a province intoxicating liquor unless the licensee has obtained written approval to receive or transfer the intoxicating liquor from the board, commission, or agency authorized by the laws of that province to sell or authorize the sale of intoxicating liquor in that province.

33. Provincial liquor authorities operating warehouses may:

34. Tobacco products may only be received or removed from a customs bonded warehouse for the following reasons:

35. Domestic tobacco products may only be placed into, or removed from a customs bonded warehouse on condition that they are to be removed for use as ships' stores. Subsection 92(3) of the Customs Tariff states that the excise tax imposed under Part III of the Excise Tax Act is not relieved by placing manufactured tobacco that is manufactured or produced in Canada in a customs bonded warehouse.

36. Tobacco products are a prescribed class of goods that are forfeit if they have not been removed from the customs bonded warehouse within five years after the day on which the goods are described in the form prescribed under subsection 19(2) of the Customs Act.

Firearms

37. Under the Firearms Act, a customs bonded warehouse operator will be required to possess a business firearms licence to store firearms and other weapons. The business licence will be issued by the Chief Firearms Officer of the province or territory where the business is carried on. Every employee of the business who, in the course of their duties of employment handles or would handle firearms, restricted weapons, other similar devices, or controlled ammunition will also need to be licensed under subsection 9(3) of the Firearms Act.

38. Firearms and other weapons must be stored in accordance with the Storage, Display and Transportation of Firearms and Other Weapons by Businesses Regulations. The requirements are in addition to current customs requirements.

39. If the Chief Firearms Officer revokes the business firearms licence of a warehouse operator, it is the responsibility of the warehouse operator to inform the CCRA immediately of the revocation of his licence. Memorandum D19-13-2, Customs Tariff - Criminal Code - Importation of Offensive Weapons, contains further information concerning firearms and other weapons.

Fresh Fruits and Vegetables

40. Canadian produce packers are offered a flexible mechanism to meet their peak export market demands, especially during periods when there are domestic produce shortages. Information on agricultural quotas may be found in Memorandum D10-18-5, Customs Bonded Warehouses TRQ - Agricultural Goods.

41. In conjunction with the Canada Food Inspection Agency (CFIA), provisions have been made for the importation of regulated foreign produce by Canadian packers without having to:

42. These imported goods will enter Canada in bond:

Note: The policy in Appendix C does not alter the present Canadian phytosanitary requirements for imported fresh fruit and vegetables.

Records

43. Record keeping systems must be able to track the movement of all goods under the CCRA's control in the bonded warehouse including:

44. A customs bonded warehouse operator must acknowledge receipt of goods into the warehouse providing the importer/broker with a signed copy of the accounting document, which will confirm the operator's liability for duties owing on the goods until their eventual release.

45. Only similar goods of equal unit or package value may be shown on any one line of Form B3 for entry into a customs bonded warehouse. Whenever applicable, model and serial numbers must be included with the description of goods.

46. Ex-warehouse accounting documents for goods exempt of duties for sale to accredited diplomats must be accompanied by a written application, signed by a person designated on the list of Diplomatic, Consular and Other Representatives in Canada The list can be verified by contacting Rita DiFranco, CCRA, at (613) 954-5718. You may also contact the Office of Protocol, DFAIT, at the following telephone numbers, or visit the Web site at www.dfai-maeci.gc.ca/ protocol/:

For persons from countries or organizations starting with the letters

A to G (613) 996-8687
H to PA (613) 995-5957
Others (613) 943-1076

47. Warehoused goods may be temporarily removed from warehouse for exhibition provided that the conditions set forth in Memorandum D8-1-1, Temporary Importation (Tariff Item No. 9993.00.00) Regulations, are met. Documentation requirements are outlined in Memorandum D17-1-1, Documentation Requirements for Commercial Shipments.

48. Failure to provide books and records on request is a criminal offense under section 160 of the Customs Act.

Penalties

49. Failure to comply with the Customs Bonded Warehouse Regulations and policies results in the application of a monetary penalty and in the case of continued non-compliance, possible suspension and/or cancellation of your licence. Legislation on penalties and interest may be found under section 109 of the Customs Act.

50. Failure to maintain the records required to participate in this program by the Imported Goods Records Regulations may also result in sanctions being applied.

51. In addition to the fine for inadequate records, failure to report non-compliance (goods that no longer qualify for the program), within the legislated time limits, will result in application of penalties and interest.

52. Failure to provide books and records when requested is a criminal offense under section 160 of the Customs Act and may result in a summary conviction and/or imprisonment.

53. Coding instructions for the completion of all warehouse types of form B3 are contained in Appendix C to Memorandum D17-1-10, Coding of Customs Accounting Documents.

54. The CCRA will make every effort to utilize your current record-keeping system to eliminate unnecessary duplication of records.

55. Periodic verifications will be conducted to monitor compliance. This verification will be based on risk analysis and will be conducted a minimum of once per year.

Unlawful Removal

56. Goods unlawfully removed from a warehouse may be seized as forfeit pursuant to section 110 of the Customs Act. If the goods are not found, a sum equal to the ascertained duty paid value may be forfeited pursuant to section 124 of the Customs Act. Goods remaining in the warehouse may be detained under subsection 146(1) until the sum is paid.

57. The Minister may direct that lesser penalties may be applied under section 124 of the Customs Act. In most instances in accordance with the following:

58. In assessing the penalties, a violation will remain on record for a period of three years. In the event that no further infractions are found within three years of the last infraction, a subsequent infraction will be subject to those penalties applicable to first offences.

59. The value for duty should be determined as shown on the Form B3 for warehouse. The rates of duties on the date shown on Form B3 for warehouse will apply (subsection 28(2) of the Customs Act).

Deemed Exportation

60. Subsection 89(3) of the Customs Tariff contains a list of when goods are deemed to be exported. This means that goods placed in a customs bonded warehouse as ships stores, for supply to a duty free-shop or for export are considered deemed exportation.

61. Imported goods that have been duty paid, goods imported under the Duties Relief Program, and domestic goods (produced from imported materials) are considered to be exported when they enter a customs bonded warehouse. Upon entry into the customs bonded warehouse, these goods are eligible for a drawback of duties. For goods delivered to a customs bonded warehouse or duty-free shop for exportation, documentation must include a copy of Form B3 or Form B116, Canada Customs Duty Free Shop Accounting Document.

NAFTA

62. Sections 95 to 98 of the Customs Tariff explain how NAFTA affects goods imported from non-NAFTA countries and used in the production of another product that is subsequently exported to a NAFTA country. The provisions of Article 303 of NAFTA (Restrictions on Drawback and Duty Deferral Programs) apply to processed goods exported to the United States on or after January 1, 1996, and processed goods exported to Mexico on or after January 1, 2001.

63. NAFTA defines the programs affected to include such measures as those governing foreign-trade zones, temporary importation's under bond, bonded warehouses, "maquiladoras," and inward processing programs.

64. NAFTA limits drawback or duties relief, on non-NAFTA imported goods subsequently exported, to the lesser of the duties (converted into Canadian dollars) paid on imported materials, or the duties paid on the end products when imported into another NAFTA country. This simply means that you may relieve duties in an amount that is the lesser of these two amounts. This is commonly referred to as the "lesser of" concept.

65. Please note that goods leaving the customs bonded warehouse for export or duty paid goods entered into a bonded warehouse as "deemed export" and seeking drawback may be affected by NAFTA. If an affected end product is placed in a customs bonded warehouse and exported to a NAFTA country, relief of duties must be paid within 60 days of export.

66. NAFTA also limits relief of anti-dumping and countervailing duties (Special Import Measures Act (SIMA)). Relief of SIMA duties is not permitted on goods that are subject to Article 303 of NAFTA. The lesser of concept does not apply and all SIMA duties relieved must be paid within 60 days of export.

67. NAFTA does not affect relief or deferral of customs duties on products exported to non-NAFTA countries. The lesser of formula does not apply to such exports. Additional information may be found in Memorandum D7-4-3, NAFTA Requirements for Drawback and Duty Deferral.

Transfer

68. "Transfer" means the change of ownership or the movement of goods between bonded warehouses, or between a bonded warehouse and a duty-free shop, or both. The importer or owner of the goods shall submit a transfer document in the prescribed form to an officer at the customs office where the goods were reported under subsection 19(2) of the Customs Act.

69. The types of transfers and documentation procedures are outlined in Appendix C (examples 15 to 19) of Memorandum D17-1-10. Procedures for the removal of excisable goods from an excise bonding warehouse to a customs bonded warehouse are outlined in Memorandum D4-2-1, Ships Stores Regulations. Information on the transfer of goods between programs (Duty Relief Program, Drawbacks Program, Customs Bonded Warehouse Program) is outlined in Memorandum D7-4-1, Duty Deferral Program.

Shortages in Shipments

70. Where shipments involving shortages are accounted for and delivered to the bonded warehouse, a "Nil" Form B3 ex-warehouse shall be presented for the quantity short-shipped, provided that evidence has been produced to verify the shortage. Form B3 for warehouse will account for the total quantity of goods with a notation indicating the quantity and value of goods short. Procedures for shortages in split shipments (part for consumption, part for warehouse) and for goods to arrive are outlined in Memorandum D17-1-1.

71. Where evidence of short-shipment is not presented within 60 days of the date of warehousing, Form B3 ex-warehouse shall be presented accounting for duties on the quantity of goods short-shipped. Where any quantity of warehoused goods will be ex-warehoused prior to the end of the 60 days, the Form B3 ex-warehouse must also account for any shortage which has not been properly verified. Further information regarding shortages may found in Memorandum D17-1-5, Importing Commercial Goods.

Damaged, Destroyed, or Deteriorated Goods

72. The importer is entitled to a reduction of the duty and tax payable when goods suffer damage, deterioration, or destruction in a customs bonded warehouse. Form B3, type 20, supported by an approved Form K11, Certificate of Damaged Goods submitted to customs will account for the reduction in the quantity and value of the goods and to adjust inventory records. Details may be found in Memorandum D6-2-5, Abatement of Customs Duties, and Memorandum D6-2-3, Refund of Duties. Documentation details may be found in Memorandum D17-1-10.

Disposal of Goods

73. If goods remain in the customs bonded warehouse at the end of the specified time limit, without authorization for an extension of the allowable time limits, the CCRA will remove the goods and arrange for disposal. Goods may be either transferred to the local Queen's warehouse or sent to a Queen's warehouse at a central point. Customs will issue an unclaimed list number and complete Form E44, Customs Notice - Unclaimed Goods, for each shipment. Further information may be obtained in Memorandum D4-1-6, Disposal of Abandoned and Forfeited Goods.

APPENDIX A

APPLICATION FOR A LICENCE TO OPERATE A CUSTOMS BONDED WAREHOUSE

APPENDIX B

CUSTOMS BONDED WAREHOUSES REGULATIONS

SOR/96-46

REGULATIONS RESPECTING CUSTOMS BONDED WAREHOUSESS

Short title

1. These Regulations may be cited as the Customs Bonded Warehouses Regulations.

Interpretation

2. In these Regulations,

"applicant" means a person who applies for a licence; (demandeur) "bonded warehouse" means a place licensed as a bonded warehouse by the Minister under subsection 91(1) of the Customs Tariff; (entrepôt de stockage) "chief officer of customs", with respect to a bonded warehouse or a proposed bonded warehouse, means the manager of the customs office or customs offices that serve the area in which the bonded warehouse is located or is proposed to be located; (agent en chef des douanes) "Department" means the Department of National Revenue; (ministère) "excise bonding warehouse" means a bonding warehouse within the meaning of section 2 of the Excise Act; (entrepôt d'accise) "intoxicating liquor" has the same meaning as in subsection 2(1) of the Importation of Intoxicating Liquors Act; (boissons enivrantes) "licence" means a licence to operate a place as a bonded warehouse; (agrément) "licensee" means a person who is the operator of a bonded warehouse and to whom a licence has been issued; (exploitant) "Minister" means the Minister of National Revenue; (ministre) "preserving" means the preserving of goods by the application of preservative, including lubricants, protective encapsulation and preservation paint, and, if the condition of the goods is not changed, by other means such as freezing, drying and freeze-drying. (préservation)

PART I

LICENSING OF BONDED WAREHOUSES

Issuance of Licence

3. (1) Subject to subsection (4), the Minister may issue a licence to any person who

(2) Any person who wishes to apply for a licence in respect of a proposed bonded warehouse shall submit a completed application in the prescribed form, together with a detailed plan of the proposed bonded warehouse, to the chief officer of customs.

(3) The plan referred to in subsection (2) must indicate

(4) The Minister shall not issue a licence to an applicant unless

(5) The terms and conditions under which a licence may be issued include the extent to which and circumstances in which, in accordance with section 20, goods may be manipulated, unpacked, packed, altered or combined with other goods while in bonded warehouses.

Security

4. For the purposes of subsection 91(4) of the Customs Tariff, security shall be deposited with the chief officer of customs and shall be in the form of

*Pending regulatory amendment

Licence Fees

5. (1) Subject to subsection (2), every licensee shall pay to the chief officer of customs an annual fee for the licence, for the period beginning on the day on which the licence is issued and ending on March 31 in the same fiscal year and for each fiscal year of operation thereafter, determined on the basis of the amount of security deposited under section 4, in accordance with the table to this subsection.

Table

(2) Where a licence is issued on or after October 1 of a fiscal year, the fee payable for that fiscal year shall be half the applicable fee but not less than $100.

(3) The fee payable under subsections (1) and (2) for the period beginning on the day on which the licence is issued and ending on March 31 in the same fiscal year shall be paid on or before the issuance of the licence and the fee for each fiscal year of operation thereafter shall be paid on or before April 1 of that fiscal year of operation.

(4) For the purposes of this section, "fiscal year" means the period beginning on April 1 and ending on March 31 in the following year.

Amendment of Licence

6. The Minister may amend a licence only where the name of the licensee has been changed legally.

Cancellation or Suspension of Licences

7. The Minister may cancel a licence where the licensee

8. (1) Subject to section 9, the Minister may suspend or cancel a licence where the licensee

(2) Subject to section 9, the Minister may cancel a licence where

(3) Where a licence is suspended, an officer may lock and seal the bonded warehouse and keep it locked and sealed during the period of suspension.

9. (1) The Minister shall, immediately after suspending a licence, give to the licensee a notice confirming the suspension and providing all relevant information concerning the grounds on which the Minister has suspended the licence.

(2) The licensee may, within 90 days after the day on which the licence is suspended, make representations to the Minister regarding why the licence should be reinstated.

(3) The Minister shall, before cancelling a licence under section 8, give the licensee 90 days notice of the proposed cancellation and provide the licensee with all relevant information concerning the grounds on which the Minister proposes to cancel the licence.

(4) The licensee may, within 90 days after the day on which the notice referred to in subsection (3) is given, make representations to the Minister regarding why the licence should not be cancelled.

Reinstatement of Licences

10. The Minister may reinstate a suspended licence where the cause for the suspension no longer exists.

PART II

OPERATION OF BONDED WAREHOUSES

Facilities, Equipment and Personnel

11. (1) Every licensee shall provide at the bonded warehouse in respect of which the licence was issued

(2) Where a bonded warehouse forms only part of a building, the licensee shall, if so requested by the chief officer of customs, keep the bonded warehouse separate from the remainder of the building by a partition or other structure.

Operation and Maintenance Standards

12. (1) Every licensee shall ensure that the goods received in the bonded warehouse are

(2) No person, other than the licensee, an employee of the licensee or an employee of a carrier engaged in the delivery of goods to or the removal of goods from the bonded warehouse, shall enter any place in it where goods are stored, without the written authorisation or the attendance of an officer.

(3) Every licensee of a bonded warehouse shall have in place

(4) A bonded warehouse may be locked and sealed by an officer where the chief officer of customs requests that the bonded warehouse be locked and sealed, for the purpose of verifying the goods received or the warehouse documentation.

Restrictions on Goods

13. No licensee shall receive in or transfer from a bonded warehouse in a province intoxicating liquor unless the licensee has obtained written approval to receive or transfer the intoxicating liquor from the board, commission or agency authorized by the laws of that province to sell or authorise the sale of intoxicating liquor in that province.

14. No licensee shall receive imported tobacco products into a bonded warehouse unless

15. No licensee shall remove imported tobacco products from a bonded warehouse unless

16. (1) No licensee shall receive domestic tobacco products into a bonded warehouse unless the domestic tobacco products are to be removed for use as ships' stores.

(2) No person shall remove domestic tobacco products from a bonded warehouse unless the domestic tobacco products are being removed for use as ships' stores.

Receipt of Goods

17. Every licensee shall

Prescribed Class of Goods and Period of Time

18. For the purposes of subsections 37(2) and 39.1(2) of the Customs Act, tobacco products are a prescribed class of goods that are forfeit if they have not been removed from the bonded warehouse within five years after the day on which the goods are described in the form prescribed under subsection 19(2) of the Customs Act.

Time Limits

19. For the purposes of subsection 37(2) of the Customs Act, the prescribed time in respect of goods referred to in column I of an item of the schedule is the time set out in column II of that item, which time begins on the day on which the goods are described in the form prescribed under subsection 19(2) of the Customs  Act.

Manipulation, Alteration, Packing, Unpacking, Combination of Goods

20. Goods shall not be manipulated, altered or combined with other goods while in a bonded warehouse except for the purpose of or in the course of

Transfer and Removal of Goods

21. Where there is a transfer of ownership of goods stored in a bonded warehouse, the importer or owner of the goods shall submit a transfer document in the prescribed form to an officer at the customs office where the goods were described under subsection 19(2) of the Customs Act.

22. Where the importer or owner of goods stored in a bonded warehouse wants the goods removed from the bonded warehouse in smaller units than those described under subsection 19(2) of the Customs Act, the importer or owner shall submit to the chief officer of customs

SCHEDULE (Section 19)

APPENDIX C

POLICY FOR THE CONTROL OF FRESH PRODUCE MOVING INTO CUSTOMS BONDED WAREHOUSES

Principles

1. Imported produce moving into a customs bonded warehouse must be stored in a sealable room and must be kept separate from domestic produce and non-bonded imported produce.

2. The Canada Customs and Revenue Agency (CCRA) has the responsibility to maintain and manage seals on bonded bulk storage rooms. However, the Canada Food Inspection Agency (CFIA) may assist wherever possible. The CCRA will provide information on seals status to the CFIA.

3. When importers wish to remove produce from a customs bonded bulk storage room, they must contact a local customs officer for permission to remove the seal and open the bonded storage room.

4. Control of the movement of the bonded produce occurs at the bonded sealed bulk storage room point. Produce cannot move outside of the bonded bulk storage room without customs consent and control.

5. A customs officer may release into domestic consumption the bonded produce provided that the requirements of both the CFIA and the CCRA are met (may include permits, waivers, surtaxes).

6. Once produce has been removed from the bonded bulk storage room, it can be exported in its original container, packed through a bonded packing line, released to a non-bonded packing line, returned to a bonded bulk storage site, released to a domestic processor, or disposed of. These scenarios are further elaborated in this document.

7. When goods are returned to a bonded bulk storage room, this storage room must be resealed, and the seal number must be provided to the CCRA.

8. The CCRA offers these privileges in order to assist Canadian packers to meet market demands by ensuring ready access to product supply.

9. Any abuse of these privileges will result in suspension and/or cancellation of these bonded warehouse operations.

CCRA's Tasks

10. "In-bond" produce must be transported to a bonded warehouse by an approved sealed bonded carrier provide that all the CCRA regulatory requirements are met.

11. Movement of "in-bond" produce from the border to a customs bonded warehouse, between customs bonded warehouses, or between a customs bonded warehouse to a bonded packing line will be controlled by the CCRA.

12. Only in-bond produce can be stored in a bonded bulk storage room. Domestic produce and duty-paid (non-bonded) imported produce will be stored outside of the bonded area, thereby removing the possibility of mixing domestic produce with non-inspected "in-bond" produce.

13. The bonded bulk storage rooms must be sealed by the CCRA or done under the authority of the CCRA. The seal must only be broken upon the authorization of the CCRA. The CFIA may assist the CCRA in the sealing and opening of these bonded storage rooms. A customs control log book will be maintained by the importer at the bonded bulk storage site where all seal numbers, dates, time, name of the customs officer who gave the authorization to break the seal and product movements are entered.

14. The CCRA, with the assistance of the CFIA, will verify records of weight of produce imported, weight of packed product, pack-out percentages, weight of culls, weight of bonded produce that date, and mode of transport for exported produce.

15. In the case of bonded pack lines, the CCRA, with the assistance of the CFIA, may ensure that:

CFIA's Tasks

16. As prescribed in subsection 34(1) of the Fresh Fruit and Vegetable Regulations, no person shall market any produce in import trade unless the produce is properly packaged, labeled, and meets the applicable grade standards.

17. The CFIA may only seal/open bonded bulk storage rooms at the specific request of the CCRA.

18. The CFIA may assist the CCRA to ensure that unpack/packed "in-bond" produce is not mixed with domestic or "released imported" unpack/packed produce in storage or on packing lines.

19. The CFIA may assist the CCRA to verify records of weight of produce imported, weight of packed produce, pack-out percentages, weight of culls, weight of bonded produce, date and mode of transport for exported produce.

Importer's Tasks for Produce Stored in Customs Bonded Warehouses

20. The importer of unpacked, packed, and cull "in-bond" produce will maintain separate access bulk storage rooms for "in-bond" produce and domestic produce or duty-paid (non-bonded) imported produce.

21. The importer of in-bond produce will keep complete records of the following:

Records Presented for Verification Upon Request of the CCRA and/or the CFIA

22. The importer must obtain permission from the CCRA prior to moving "in-bond" produce. For example, from one bonded warehouse to another, or from a bonded warehouse to a packing line.

23. To dispose of (dump) "in-bond" produce, the importer must obtain permission from the CCRA and the CFIA. The disposition of the produce will be done under the supervision of the CCRA or the CFIA and at the expense of the importer.

24. Before exporting, releasing, or disposing "in-bond" produce, the importer must complete all required customs control documents.

Situation I - "In-Bond" Produce Moving From a Bonded Warehouse to a Foreign Destination in Original Containers

25. The importer must obtain permission from the CCRA and complete all required customs control documents prior to movement of "in-bond" produce from a bonded bulk storage room.

26. Customs will control the movement of "in-bond" produce from the bonded warehouse to the Canadian border. In addition, the CCRA, with the assistance of the CFIA, will verify records of weight of imports, weights of exports, date and mode of transport for exported produce.

27. As the produce is "in bond" and has not entered Canada (by definition of the Fresh Fruit and Vegetable Regulations), no CFIA quality (grade) inspection is required. However, plant health inspection and certification may be required.

Situation II - "In-Bond" Produce Moving From a Bonded Warehouse, Packed on a "Bonded" Packing Line, and Destined for Export Markets

28. The importer must obtain permission from customs prior to the movement of "in-bond" produce from a bonded bulk storage room to a "bonded" packing line.

29. The CCRA with the assistance of the CFIA may ensure that:

30. Packed "in-bond" produce must be correctly labeled in accordance with the importing country labeling requirements, more particularly, the country where the produce was grown must be declared on the packages.

31. Packed "in-bond" produce for export will be shipped out of the country under customs control. However, prior to exportation, the importer must complete all required customs control documents.

32. As this packed product is "in bond" and has not entered Canada (by definition of the Fresh Fruit and Vegetable Regulations), no CFIA quality (grade) inspection is required. However, plant health inspection and certification may be required.

33. The CFIA may perform, at the applicant's request (and as resources permit), a quality (grade) inspection of "in-bond" packed produce destined to markets outside of Canada.

34. If, for some reasons, the importer wishes to release packed "in-bond" produce into domestic market, paragraph 40(b) of Situation III, will be applicable.

35. Cull "in-bond" produce may be:

36. The CCRA, with the assistance of the CFIA, will verify records of weight of produce imported, weight of packed product exported, pack-out percentages, weight of culls, date and mode of transport for exported produce.

Situation III - "In-bond" produce moving from a bonded warehouse and packed under a "bonded" packing line for domestic sales

Note: Requirements from the previous situation apply, in addition to the following requirements.

37. The importer must obtain permission from the CCRA and the CFIA prior to the movement of
"in-bond" produce from a bonded bulk storage room to a "bonded" packing line. This permission will be granted when submitted evidence demonstrates that a domestic shortage of the product exists.

38. Packed "in-bond" produce must be packaged and labeled as per the requirements of the Fresh Fruit and Vegetable Regulations, more particularly, the country where the produce was grown must be declared on the packages.

39. Packed "in-bond" produce for domestic sales must be subject to the CFIA inspection. Only produce that meets Canadian import requirements may proceed to the domestic market.

40. "In-bond" packed produce that fails to meet Canadian import requirements may not be removed from the customs bonded warehouse unless the produce:

Situation IV - "In-Bond" Produce Moving From a Bonded Warehouse and Packed Under a "Non-Bonded" Packing Line for Domestic or Export Market

41. "In-bond" produce may move from a bonded bulk storage room to a non-bonded packing line only if:

42. Only "in-bond" produce that meets Canadian import requirements and has been released by the CCRA may proceed to a non-bonded packing line.

43. When "in-bond" produce meets Canadian import requirements, the CCRA, with the assistance of the CFIA, will verify records of weight of imports and weight of produce released.

44. "In-bond" produce that fails to meet Canadian import requirements may not be removed from the customs bonded warehouse unless the produce:

45. Packed "in-bond" produce must be packaged and labeled as per the requirements of the Fresh Fruit and Vegetable Regulations, more particularly, the country where the produce was grown must be declared on the packages.

Situation V - "In-Bond" Produce Shipped From a Bonded Warehouse to a Domestic Processor

46. "In-bond" produce may be shipped to a processor only if the importer:

47. When apples are destined for peeling or cooking, the apples must be inspected by the CFIA for their compliance with the Fresh Fruit and Vegetable Regulations. Only apples that meet the Canada No. 1 Peelers, Canada No. 2 Peelers, or Canada Commercial Cookers are allowed to be released by the CCRA.

48. The CCRA, with the assistance of the CFIA, will verify records of weight of produce imported and weight of produce released.

Situation VI - "In-Bond" Produce is Released From a Bonded Warehouse to Be Disposed Of (Dump)

49. "In-bond" produce may be released from a bonded warehouse and disposed of, at a dump site, only if the importer:

50. The disposition of the produce will be conducted under the supervision of the CCRA or the CFIA and at the expense of the importer.

51. The CCRA, with the assistance of the CFIA, will verify records of weight of produce imported and weight of produce disposed of.

APPENDIX D

DISTRICT CUSTOMS OFFICES

For answers to your customs enquiries, or to locate your nearest district customs office, please call our information line.

From within Canada, call:
1-800-461-9999
(toll free)

From outside Canada, call:
(204) 983-3500 or
(506) 636-5067
(long distance charges apply)

• Personal service: If you call during office hours (8 a.m. to 4 p.m., across Canada), you can speak directly to an agent.
• Anytime, anywhere: If your enquiry is of a general nature, our 24-hour phone service automatically answers all incoming calls and provides recorded information on many common topics.

Atlantic Region

Newfoundland and Labrador
165 Duckworth Street
P.O. Box 12075
St. John's NF  A1B 4R5

Telephone: (709) 772-4335
Fax: (709) 772-0241

Nova Scotia
1583 Hollis Street
P.O. Box 520
Halifax NS  B3J 2R7

Telephone: (902) 426-9554
Fax: (902) 426-2129

Northern New Brunswick
Room 210
66 St. Francis Street
Edmundston NB  E3V 1E6

Telephone: (506) 739-1835
Fax: (506) 739-1841

Central New Brunswick
849 Main Street
Woodstock NB  E7M 2G6

Telephone: (506) 328-9211
Fax: (506) 328-4734

Southern New Brunswick and Prince Edward Island
4th floor
126 Prince William Street
Saint John NB  E2L 4H9

Telephone: 1-800-461-9999
Fax: (506) 636-4079

Quebec Region

Québec
3rd floor, Room 302
130 Dalhousie Street
P.O. Box 2267
Quebec QC  G1K 7P6

Telephone: (418) 649-6492
Fax: (418) 649-8069

Montérégie
Route 15
Lacolle QC  J0J 1J0

Telephone: (450) 246-2272
Fax: (450) 246-1184

Eastern Townships
50 Place de la Cité
P.O. Box 1300
Sherbrooke QC  J1H 5L8

Telephone: (819) 573-2080
Fax: (819) 564-4891

Metropolitan Montréal
2nd floor
400 Place d'Youville
Montréal QC  H2Y 2C2

Telephone: (514) 350-6120
Fax: (514) 283-8591

Montréal-Dorval International Airport
Office 445
975 Romeo Vachon Boulevard North
Dorval QC  H4Y 1H1

Telephone: (514) 633-7702
Fax: (514) 633-7726

Northern Ontario Region

Ottawa
1st floor
2265 St. Laurent Boulevard
Ottawa ON  K1G 4K3

Telephone: (613) 991-0501
Fax: (613) 991-1407

St. Lawrence
294 King Street East
Kingston ON  K7L 3B2

Telephone: (613) 545-8477
Fax: (613) 545-8702

Northwestern Ontario
2nd floor
22 Bay Street
Sault Ste. Marie ON  P6A 5S2

Telephone: (705) 941-3052
Fax: (705) 941-3060

Southern Ontario Region

Greater Toronto Area - Commercial
Cargo 3 Building
2720 Britannia Road
Toronto AMF
P.O. Box 40
Toronto ON  L5P 1A2

Telephone: (905) 676-3626
Fax: (905) 612-6059

Pearson International Airport - Passenger Operations
Toronto AMF
P.O. Box 40
Toronto ON  L5P 1A2

Terminal I
Telephone: (905) 676-3640
Fax: (905) 676-5120

Terminal II
Telephone: (905) 676-3537
Fax: (909) 612-5555

Terminal III
Telephone: (905) 612-5416
Fax: (905) 612-5421

Hamilton
Suite 108
400 Grays Road
Hamilton ON  L8E 3J6

Telephone: 1-800-461-9999
Fax: (905) 308-8714

Kitchener
29 Duke Street East
P.O. Box 2157, Station B
Kitchener ON  N2H 6M1

Telephone: (519) 571-5717
Fax: (519) 571-5719

London
Unit 2
2724 Roxburgh Road
R.R. 4
London ON  N6N 1K9

Telephone: (519) 451-4275
Fax: (519) 451-9200

Fort Erie
60 Walnut Street
Fort Erie ON  L2A 5N7

Telephone: (905) 994-6330 (Travellers)
(905) 994-6376 (Commercial)
Fax: (905) 994-6360

Niagara Falls
4551 Zimmerman Ave.
Niagara Falls ON  L2E 3M5

Telephone: (905) 354-4843 (Travellers)
(905) 262-4642 (Commercial)
Fax: (905) 354-4956

Windsor
P.O. Box 1655
Windsor ON  N9A 7G7

Telephone: 1-800-461-9999
Fax: (519) 257-6458

St. Clair
P.O. Box 640
Sarnia ON  N7T 7J7

Telephone: 1-800-461-9999
Fax: (519) 336-5742

Prairie Region

Winnipeg and Northwest Territories
130-1821 Wellington Avenue
Winnipeg MB  R3H 0G4

Telephone: (204) 983-3765
Fax: (204) 984-7048

Southern Manitoba
Emerson MB  R0A 0L0

Telephone: (204) 373-2342
Fax: (204) 373-2764

Saskatchewan
3rd floor
1955 Smith Street
Regina SK  S4P 2N9

Telephone: (306) 780-5218
Fax: (306) 780-6217

Southern Alberta
P.O. Box 220
Coutts AB  T0K 0N0

Telephone: (403) 344-3766
Fax: (403) 344-3094

North Central Alberta
Bay 32
3033-34th Avenue NE
Calgary AB  T1Y 6X2

Telephone: (403) 292-5200
Fax: (403) 292-4200

Pacific Region

Metropolitan Vancouver
3rd floor
333 Dunsmuir Street
Vancouver BC  V6B 5R4

Telephone: (604) 666-0371
Fax: (604) 775-6792

Vancouver International Airport
113-500 Miller Road
Richmond BC  V7B 1K6

Telephone: (604) 666-1800
Fax: (604) 666-1812

Pacific Highway
28-176th Street
Surrey BC  V4P 1M7

Telephone: (604) 538-3602
Fax: (604) 538-0293

West Coast and Yukon
Room 107
816 Government Street
Victoria BC  V8W 1X1

Telephone: (250) 363-3365
Fax: (250) 363-8261

Okanagan and Kootenay
320-277 Winnipeg Street
Penticton BC  V2A 1N6

Telephone: (250) 492-9550
Fax: (250) 492-9551

REFERENCES

ISSUING OFFICE -

Duty Deferral Unit
Trade Policy and Interpretation Directorate

LEGISLATIVE REFERENCES -

Customs Tariff

HEADQUARTERS FILE -

6514-0

SUPERSEDED MEMORANDA "D" -

D4-1-0, April 2, 1996
D4-1-2, January 1, 1991

OTHER REFERENCES -

D7-4-1, D7-4-2, D7-4-3, D17-1-1, D17-1-10

Services provided by the Canada Customs and Revenue Agency are available in both official languages.

This Memorandum is issued under the authority of the Commissioner of Customs and Revenue.