Diversion of Imported Goods Exemption

Act: Customs Act, R.S.C. 1985, c. 1, 2nd Supp.
Regulation: Diversion of Imported Goods Exemption Regulations, SOR/98-50, as amended

To Whom Does This Apply?

Importers of commercial or casual goods, persons selling or diverting these goods after importing and persons buying or acquiring diverted goods.

Summary

The Customs Act governs the administration and enforcement of customs laws.  Under the Customs Act and Customs Tariff, importers may be eligible for lower rates of duty or duty free status on certain goods depending upon the use to which the material will be put or other conditions that must be met. An importer must provide sufficient evidence to Canada Customs to prove that the item will be used, or has been used, in a certain manner or that the required condition is met or has been met.  Any good however, which is not used in a manner specified by the importer when claiming the conditional relief (that is, a good which is "diverted") will be subject to the regular rate of duties, and it must be reported to Customs on form B2, Canada Customs - Adjustment Request, within 90 days of the date of sale, disposition, or diversion.
 
These provisions are important because the person who diverted the good, the person who acquired the diverted good, and the importer may be found jointly and severally liable for ensuring that the diversion is reported and that the proper duty is paid.  Failure to report diverted goods and pay the regular customs duty within 90 days means that interest is assessed by the Canada Border Services Agency (CBSA)on the outstanding duty amount. In addition, other penalties may be incurred under the Customs Act.
 
The Customs Act and and the Diversion of Imported Goods Exemption Regulations  currently allow two exceptions from the diversion reporting and duty payment obligations summarized above:

• Imported goods, that in response to an emergency (defined as a medical emergency, fire, flood or any disaster that threatens life, property or the environment), are temporarily and necessarily diverted to a use other than that for which they were released and goods that are fully consumed in responding to the emergency.
• The obligation to report diversions of imported goods ends four years after the date on which the goods were accounted to Customs.

If you require personal assistance contact the Customs Client Services Office closest to you (see Related Reading: Customs Offices - Supplement or from Canada Border Service Agency's Web site for a list of addresses).

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DISCLAIMER
Information contained in this section is of a general nature only and is not intended to constitute advice for any specific fact situation. For particular questions, the users are invited to contact their lawyer. For additional information, see contact(s) listed below.

Quebec Contact(s):
See National Contact.

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National Contact(s):
Border Information Service - BIS
Canada Border Services Agency
Telephone: 204-983-3500 or 506-636-5064
Toll-free (information): 1-800-461-9999
Web site: http://www.cbsa.gc.ca/menu-eng.html