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Memorandum D17-1-5

Ottawa, June 16, 2000

SECTION 3 - ACCOUNTING

TABLE OF CONTENTS

• General
• Hard Copy Entry Processing System (CCEPS)
• Customs Cash Entry Processing System (CCEPS)
• Electronic Accounting Information
• Virtual Customs Office (VCO)
• Time Limits
  • High Value Shipments
  • Low Value Shipments
  • Provincial Civic Holidays
  • Extensions
• Invoice/Billing Documents
  • Cash
  • Account Security
  • Statutory Holiday
• Corrections
• Penalties
  • Release Notification Report
  • Overdue Release Report
• Cancellation or Waiver of Interest and Penalties

GENERAL

142. Customs needs information to verify the value, classification, country of origin, tariff treatment, and exchange rate on imported goods. This data, as well as a breakdown of the duties and taxes owing must be shown on Form B3,Canada Customs Coding Form. Most of this can be found on the invoice completed when the goods were purchased. It may be conveyed either on hard copy (paper) or electronically.

143. If the importer or broker has posted security with customs for release of goods prior to payment, the account security number must appear as the first five digits of the transaction number on all accounting documentation. The transaction number is a 14 digit number assigned by customs, which must be in bar code format. Information on the transaction number and coding instructions for this form are available in Memorandum D17-1-10, Coding of Customs Accounting Documents.

Note: Customs will apply the 14 digit bar-coded transaction number to accounting documents submitted by clients who do not have security.

HARD COPY ACCOUNTING DOCUMENTS

144. The hard copy (paper) accounting document must be given to the customs office of release. It may be either typed or handwritten. Copies of the form are available at CCRA offices, or it may be privately printed. Specifications are found in Memorandum D17-1-11, Private Printing Policy and Procedures. A copy of the form may also be obtained through the Virtual Customs Office. A sample is contained in Appendix 3A.

CUSTOMS CASH ENTRY PROCESSING SYSTEM (CCEPS)

145. CCEPS is a self-serve automated system for individuals or small businesses who import commercial goods. Clients can use CCEPS at a computer station in certain customs offices to complete Form B3. The system helps clients complete the form through a series of prompts, calculates applicable duties and taxes, and generates a printed accounting form. A list of offices that provide CCEPS is contained in Appendix 3B.

ELECTRONIC ACCOUNTING INFORMATION

Note: An importer or broker must have security for release prior to payment in order to transact business electronically with customs.

146. Accounting data may be transmitted from a company's office to the customs system using the Customs Automated Data Exchange (CADEX) system or a value-added network via the CUSDEC B3 Entry System. The "Accounting Office" record field must be the same office code as the "Release Office" on the electronic transmission. For more information on how to participate in electronic commerce accounting, contact the Manager, Electronic Commerce Unit.

VIRTUAL CUSTOMS OFFICE (VCO)

147. VCO is a CCRA Internet site that contains general information on importing and exporting, including tariff treatments, duty rates, an exchange rate converter, Customs Notices, and news releases. Other Internet sites that may support a company's customs operations can be accessed directly from the VCO Web site. The VCO also includes a printing facility that will print such forms as the Certificate of Origin and Form B3. VCO Web site is www.ccra-adrc.gc.ca/vco/

TIME LIMITS

148. Final accounting documentation for goods released on the basis of interim accounting documents must be presented to customs within a prescribed time limit.

149. Customs makes a distinction between "high value" and "low value" shipments for the purpose of establishing time limits for submitting this information.

High Value Shipments

150. High value shipments are goods valued at $1,600 or more. The calculation of the time limit for high value shipments is based on regular business days and does not include Saturdays, Sundays, and federal and provincial holidays.

151. Accounting information must be presented or transmitted and accepted by the customs automated system within five business days of the date customs releases the goods. When goods are released on a Saturday, Sunday, or holiday, the accounting period starts on the first business day after release. Importers or brokers have until one half hour before the end of the day shift, on the fifth day to submit their accounting data. If the data is transmitted electronically, CADEX must receive and validate the data prior to 8:00 p.m. E.S.T. on the fifth day.

Example / Exemple

Low Value Shipments

152. Low value shipments are goods valued at $1,599.99 or less. Accounting information must be presented or transmitted and accepted by the customs system by the 24th day of each month following the month in which the goods were released. Accounting documents must be present/transmitted for each shipment released in the previous month. If the 24th day falls on a weekend or statutory/civic holiday, goods must be accounted for on the previous business day. Importers or brokers have until one half hour before the end of the day shift on the 24th to present their accounting data. If the data is transmitted electronically, CADEX must receive and validate the data prior to 8:00 p.m. E.S.T.

Example / Exemple

Provincial Civic Holidays

153. Time limits are affected by provincial civic holidays for goods released in that province. For example, June 24, Quebec's "Fête nationale," is not a recognized civic holiday in Ontario. As a result, high value goods released at Ottawa on June 18 must be accounted for on June 24, even though the central payment office or transmission site is Montréal. The customs automated system will not generate the daily Form K84, Importer/Broker Account Statement, on a civic holiday.

154. If the importer or broker accounts or transmits accounting documentation on a civic holiday, customs will assume the intent was to account without the benefit of the holiday and process the transaction normally (i.e., it will appear on the current monthly Form K84).

Extensions

155. An application may be made for an extension of the time limit of up to three business days where a customs error or delay may have contributed to a failure to account on time. Some examples might be:

(a) customs supplied erroneous information to the importer or broker;

(b) customs did not supply essential information to the importer or broker;

(c) an error or delay occurred in the manual processing by CCRA; or

(d) a serious error or delay occurred in customs automated processing.

156. The application should be made on Form E571, Late Accounting Penalties Application for Waiver, Cancellation or Extension, or in a letter that provides sufficient information. The application or letter must be submitted to the customs office where the goods were released. A sample of this form is contained in Appendix 3C.

INVOICE/BILLING DOCUMENTS

157. Form B3 is the official invoice for both cash clients and account security holders and represents an obligation for the duties and taxes owing on the goods. All corrections, audits, and appeals are based on the data submitted on this document.

158. This is the only document cash clients use for their payment; however, Form K84 is issued by customs on a daily and monthly basis to assist account security holders.

Cash

159. Data from the accounting document is entered into the customs automated system which generates a Form B3-1, Canada Customs - Detailed Coding Statement (DCS). The DCS notifies of errors and serves as a receipt when the data is accurate. A sample of this form is contained in Appendix 3D.

160. If corrections are required, the customs cashier returns the accounting package and the DCS to the importer or broker.

161. If the system accepts the accounting document, the cashier will collect the duties and taxes owing, stamp the importer's copy of the DCS and Form B3 "duty paid," and return the DCS as receipt of payment. Customs will then release the goods.

Account Security

162. The daily and monthly account statements are generated by the customs office where the Form B3 was received. Statements will be redirected to central payment offices. The statements may be picked up at the payment office on a daily basis. Samples of these Forms K84 are contained in Appendices 3E and 3F.

163. The customs system generates an account statement (daily notice) for each account security number, identifying the accounting documents accepted by the system the previous business day by transaction number, sorted by office of release. The transactions on a broker's daily notice are also sorted by importer.

164. Brokers may obtain a separate page of the daily notice for clients under the Importer Direct Security Option, if an "I" is indicated in payment mode code, Field No. 6 on Form B3. A separate page is not provided for clients under the GST Security Option.

165. On the second-last business day of the month, the system generates a monthly statement, which provides a summary of all the daily notices processed during the deferred payment period (i.e., from the 25th day of the previous month to the 24th day of the current month inclusive). This statement shows the total amount of duties and taxes owed, including any late accounting penalties, late transaction interest payments, and interim payments made during that period.

166. The monthly statement is provided to the account security holder for whom the statement was generated. A customs broker is responsible for determining amounts owed by clients and advising them accordingly.

167. Importers or brokers who submit accounting documents electronically receive an electronic copy of the daily notice and monthly statement in addition to the hard copy. If a discrepancy exists between the electronic and hard copy versions, the hard copy version will take precedence.

Statutory Holiday

168. Accounting data electronically transmitted to customs on a statutory holiday is not loaded into the automated system until the next working day. Accounting data transmitted on the holiday and on the following business day will appear on a daily notice dated the second business day following the holiday.

169. Separate daily notices are generated, since the entry data was transmitted to customs on two separate accounting dates. The first notice shows the transactions transmitted on the holiday and the second notice the transactions transmitted on the following working day. The first notice ends with an Accounting Day Total and Account Total but no Grand Total. The second notice ends with an Account Total and the Grand Total. The Grand Total shown on the second notice includes the Account Total from the first and second notices, combining the two amounts.

Note: A daily notice without a Grand Total is not complete.

170. Transactions from both days for clients receiving accounting information electronically will be displayed on a single daily notice with the same statement date.

171. Clients making interim payments on a daily notice should pay the Grand Total amount shown on the second notice.

Illustration of Statement Generation for April for High Value Shipments

CORRECTIONS

172. Corrections by customs to daily notices and monthly statements are referred to as accounting overrides. This type of correction will update the total duties and taxes owing for statement purposes only and does not update the actual accounting information. Accounting overrides are performed at the payment office.

173. The original accounting information must be corrected to support any subsequent adjustments or as proof of the changes in the case of an audit.

174. Corrections required as a result of a customs keying error or an obvious duplicate Form B3 already paid or payable will be done for the client by customs and Form B2, Canada Customs - Adjustment Request, is not necessary. Proof of the payment or duplicate transaction is required.

175. Corrections for clerical errors or changes required for tariff classification, origin, value for duty, or tax status must be submitted to customs on Form B2. This form, along with a copy of the daily notice/monthly statement must be given to the customs cashier at the payment office. Customs will do the accounting override to reflect changes to the statements. The form will be forwarded to the Trade and Administration Services (TAS) in the location where the goods were released. The TAS officer will make a decision on the request. Form B2-1, Canada Customs - Detailed Adjustment Statement, will be issued to advise if the claim is accepted or rejected. If Form B2 is rejected by the TAS officer, interest will be assessed. Refer to Memorandum D17-2-1, Coding of Adjustment Request Forms, for the legislative reference code to be used on the Adjustment Request. Samples of Form B2 and Form B2-1 are contained in Appendices 3G and 3H.

176. Clients should check each daily notice to ensure that corrections are made in time to change the monthly statement. Corrections made after the third-last business day of the month will not affect the monthly statement and must be administered manually.

PENALTIES

177. Final accounting documentation must be presented and accepted by the customs system within the prescribed time limit or a $100 late accounting penalty will be applied to each overdue transaction.

178. Penalties assessed against high value shipments (over $1,600) released at an automated office will appear on the daily notice/monthly statement. Penalties assessed against low value shipments, and high value shipments released at non-automated offices will be assessed manually and issued on Form K23, Invoice. A sample of this form is contained in Section 4 - Payment, Appendix 4B.

Release Notification Report

179. This report is printed at automated customs offices each business day, and distributed to all account security holders. EDI participants have access to an electronic version. The report contains information concerning all shipments released the previous business day or earlier which were not entered into the customs automated system. Importers and customs brokers should monitor these reports and ensure that the final accounting is submitted on time.

Note: Transaction queried on an electronic release notification will not be produced on the hard copy release notification report.

Overdue Release Report

180. This report lists all transactions released by customs but for which no accounting data was received within the prescribed time limits. It includes transactions that were rejected when no revised accounting information was received. A penalty of $100 for each overdue transaction is assessed on the daily notice once final accounting is provided.

181. If accounting information is presented late and transactions move from one deferred payment period to the next, late transaction payment interest is charged from the first calendar day following the date the duties and taxes should have been paid (the last business day of the previous month). Interest ends when the total outstanding duties and taxes have been paid.

182. Clients who fail to observe accounting time limits on a regular basis may be assessed additional penalties of $250 or 5 per cent of the duties and taxes per transaction, whichever is greater (Customs Act, Section 33.3).

Illustration of Assessment of Late Accounting Penalty(ies) and Late Payment Transaction Interest Against High Value Shipments (April)

CANCELLATION OR WAIVER OF INTEREST AND PENALTIES

183. Penalties and interest may be cancelled, in whole or in part, as a result of circumstances beyond a client's control such as:

(a) customs supplied erroneous information to the importer or broker;

(b) customs did not supply essential information to the importer or broker;

(c) an error or delay occurred in the manual processing by customs;

(d) a serious error or delay occurred in customs automated processing;

(e) natural or human-created disasters such as flood or fire;

(f) civil disturbances or disruptions in services such as a system breakdown;

(g) a serious illness or accident; or

(h) a distress such as a death in the family of a key employee.

184. A letter of request or Form E571, is used to apply for a cancellation or waiver of interest and penalties and sent to the office where the goods were released. If possible, the request should be submitted before the monthly statement is generated to ensure that the penalty will not appear on the statement if waived.

185. If the monthly statement has already been generated, the importer or broker may:

(a) pay the penalty amount on the due date and submit the request for cancellation. If the request is approved, a cheque will be issued for that amount; or

(b) short remit by the amount in question and submit a request for cancellation. If the request is approved by customs, a signed copy of this form will be returned as a receipt. If it is not approved, Form K23 will be issued which will include interest at the specified rate from the first business day after the due date, up to and including the day payment is made.

186. All requests must be referred to the customs office where the goods were released. Requests which involve transactions from various releasing offices may be forwarded under a single request form to the Manager, Entry and Accounting Policy Unit, Ottawa ON  K1A 0L5.

187. A decision made by the local customs office may be appealed by forwarding the request to the above-noted address. The original Form E571 must be attached with the local office response.

188. The $100 late accounting penalties issued as a result of a national customs system outage lasting more than four hours will be cancelled by customs without a request. Electronic commerce clients will be notified through a CADEX broadcast message the day after the system problem.

189. Non-CADEX clients will be advised by the local customs office. Questions about the cancellation of penalties as a result of a CCRA's system problem should be directed to the Manager, Entry and Accounting Policy Unit.

190. Due to the volume of penalties, customs may not cancel a penalty and it will appear on the monthly statement. A copy of the daily notice on which the penalty appears should be provided to the payment office. The payment office will verify whether the penalty should have been cancelled.