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INFONEX 14th Annual Customs Compliance and Border Security Delta Toronto Airport West January 20, 20


January 20, 2009. How to Avoid Customs Penalties: AMPS. Greg Kanargelidis ... Source: CBSA, Presentation by Rachel Auclair and Colleen McGonigle, October 28, 2008 ... – PowerPoint PPT presentation

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Title: INFONEX 14th Annual Customs Compliance and Border Security Delta Toronto Airport West January 20, 20

INFONEX14th Annual Customs Compliance and Border
SecurityDelta Toronto Airport WestJanuary 20,
2009How to Avoid Customs Penalties AMPSGreg
KanargelidisBlake, Cassels Graydon

Order of Presentation
  • 1. Introduction to AMPS
  • 2. Status of AMPS Revised Structure
  • 3. Emerging Jurisprudence

  • PART I

What is AMPS?
  • Comprehensive sanctions regime designed to ensure
    compliance with trade and border legislation and
    to level the playing field among traders
  • Enforced through a series of graduated civil
    penalties that match the severity and frequency
    of contravention
  • Intended to be corrective rather than punitive
  • Seizures and forfeitures are reserved for only
    the most serious contraventions, such as drug or
    weapons smuggling

Legal and Regulatory Framework
  • AMPS regime enacted through section 109.1 of the
    Customs Act
  • 109.1 (1) Every person who fails to comply with
    any provision of an Act or a regulation
    designated by the regulations made under
    subsection (3) is liable to a penalty of not more
    than twenty-five thousand dollars, as the
    Minister may direct.
  • (2) Every person who fails to comply with any
    term of condition of a licence issued under this
    Act or the Customs Tariff or any obligation
    undertaken under section 4.1 is liable to a
    penalty of not more than twenty-five thousand
    dollars, as the Minister may direct.

Legal and Regulatory Framework
  • 109.1(3) The Governor in Council may make
  • (a) designating any provisions of this Act, the
    Customs Tariff or the Special Import Measures Act
    or of any regulation made under any of those
    Acts and
  • (b) establishing short-form descriptions of the
    provisions designated under paragraph (a) and
    providing for the use of those descriptions

Legal and Regulatory Framework
  • The Designated Provisions (Customs) Regulations
    bring into effect the AMPS by setting out the
    sections that are subject to penalty
  • Master Penalty Document contains details of each
    contravention, including Backgrounders, a
    source of confusion for traders

Notice of Penalty Assessment
  • When AMPS penalty is to be assessed, a customs
    officer issues a Notice of Penalty Assessment
    which includes
  • Client details
  • Penalty assessment data
  • Contravention and penalty details
  • Correction/redress information
  • Payment and interest information

Options for Dealing With a NPA
  • Options after NPA is issued
  • Pay Penalty
  • Request Correction
  • Formal Review/Appeal
  • Mitigation
  • Penalty Reduction Agreement

Payment of Penalty
  • Penalty payable on the day notice is issued
  • Interest is calculated beginning on the day the
    notice is issued and ending on the day notice is
  • No interest payable if paid in full within 30
    days of notice served

Review of AMPS Penalties
  • Two types of review of an NPA are available
  • (1) Corrections
  • (2) Formal Appeal
  • It is not necessary to pay the penalty assessment
    amount before requesting correction or appealing

Request for Correction
  • Requests for correction of errors made in NPAs
    are pursuant to section 127.1 of the Customs Act
  • Request for correction must be made within 30
    days of NPA
  • Correction will be made if
  • (a) CBSA is satisfied there was no
    contravention or
  • (b) there was a contravention but the CBSA
    considers that
  • there was an error with respect to the amount
  • Corrected at point of issuance regional or
    local office
  • TIP file request ASAP because CBSA must act
    within the 30 day limit

Formal Review/Appeal
  • Request for formal review made pursuant to
    section 129(1) of the Customs Act
  • Request must be filed within 90 days
  • Extenuating circumstances will allow time limits
    up to a year
  • Formal reviews handled by Recourse Directorate at
    CBSA Headquarters in Ottawa
  • Jurisdiction of Recourse Directorate limited to
    whether the contravention occurred generally no
    reductions in penalty amount assessed are
  • Since 2007, Recourse Directorate now has
    jurisdiction over Penalty Reduction Agreements

Penalty Reduction Agreements
  • PRA represents an undertaking by the importer to
    take appropriate corrective measures or systems
    changes to achieve compliance
  • In return, the CBSA will reduce all or a portion
    of penalty
  • assessments on a dollar-for-dollar basis
  • A Penalty Reduction Agreement sets out
  • the nature of the problem that lead to
  • the corrective action that will be undertaken
  • timeframes to effect correction
  • evaluation, review criteria

Penalty Reduction Agreements, Contd
  • Considered on a case-by-case basis
  • Designed to provide relief to companies assessed
    large AMPS penalties resulting from repetitive,
    systemic errors in their Customs Information
    Systems (automated or manual)
  • NPA must total at least 5,000 CBSA has recently
    proposed to eliminate this requirement
  • CBSA may accept or reject a proposed PRA at its

CCRAs Voluntary Disclosure Policy
  • Aim
  • to promote voluntary compliance with the
    accounting and payment of duty and tax provisions
    under the Customs Act and Customs Tariff
  • Legislative authority in 3.3(1) of the Customs
    Act and 126(1) of the Customs Tariff

Voluntary Disclosure Policy - Principles
  • Importers/exporters can make disclosures to
    correct inaccurate or incomplete information, or
    to disclose information not previously reported
    to the CBSA
  • Persons making a valid voluntary disclosure are
    required to pay taxes and duties, plus interest
  • CBSA can relieve monetary penalties and
    prosecution that would otherwise be imposed, as
    well as from specified interest
  • Prescribed interest may also be waived for
    importers eligible for the GST wash
    transactions policy
  • Policy does not apply to goods subject to
    forfeiture and/or seizure under the Customs Act

Conditions for Valid Disclosure
  • Must be voluntary and be initiated by the person
    (this excludes disclosures made with knowledge of
    a CBSA audit or investigation)
  • Must be complete (i.e., a full and accurate
    reporting of all previously inaccurate,
    incomplete or unreported information and cannot
    contain any material errors or omissions)
  • Must involve at least one monetary penalty
  • Can involve disclosures less than one year overdue

Voluntary Disclosure Policy - If Unsure
  • You can discuss your situation on a no-name or
    hypothetical basis with an officer responsible
    for handling voluntary disclosures
  • Customs will be bound by no-name opinions for a
    period of 30 calendar days after the date of the
  • If a Voluntary Disclosure is made following
    receiving a no-names opinion, the effective date
    of disclosure will be the date the request was

Voluntary Disclosure Policy -Exclusions
  • Does not apply to penalties associated with
    legislation administered by Customs on behalf of
    other government departments and agencies
  • May still be subject to seizure actions (i.e.,
    prohibited or controlled goods)
  • No right of appeal to challenge the CBSAs
    refusal to waive interest and penalty, but a
    second review to Recourse Directorate is
    available, or judicial review to Federal Court

  • Source CBSA, Presentation by Rachel Auclair and
    Colleen McGonigle, October 28, 2008

AMPS Review
  • Since implementation, numerous issues/concern
    raised by both clients and employees
  • too many penalties
  • penalty structure too complex
  • some penalties/backgrounders not clear

AMPS Review, contd
  • Fundamental review of penalty regime
  • review of existing penalties to ensure fairness
    and consistency
  • identify and correct inconsistencies with future
  • extensive consultations (internal and external)
    throughout process
  • Results 10 recommendations approved in May 2007
    and currently being implemented in consultation
    with the private sector (BCCC, AMPS Subcommittee)

Top 10 Trade Contraventions
  • C082 Importer failed to correct tariff
    classification within 90 days.
  • C353 Importer failed to pay duties as a result of
    a required correction- Valuation.
  • C352 Importer failed to pay duties as a result of
    a required correction- Tariff.
  • C070 Importer failed to account for goods in
    prescribed time.
  • C214 Person failed to report non-compliance with
    term-condition of duty relief or remission
  • C083 Importer failed to correct value for duty
    within 90 days.
  • C004 Person failed to provide the correct SIMA
  • C215 Person failed to repay duties relief not
    entitled to.
  • C152 Person failed to furnish proof of origin.
  • C350 Importer failed to pay duties as a result of
    a required correction- FTA origin.

Top 10 Border Contraventions
  • C336 Person failed to pay duties on accounted
  • C005 Person failed to provide true, accurate and
    complete information.
  • C008 Carrier used incorrect carrier code or
    failed to use bar code for CCN.
  • C348 Person intentionally provided false
  • C018 Failure to transport passengers and crew to
    Customs Office.
  • C358 Person removed unreleased goods from customs
    office or sufferance warehouse
  • C033 Carrier moved, delivered or exported goods
    without authorization.
  • C071 Person failed to provide permit/certificate
    or information before goods released.
  • C021 Carrier failed to report regular goods
    (1,600 or greater).
  • C274 Goods reported as arrived when they are not

AMPS Penalty Appeals DataTrade Statistics
  • AMPs contraventions 15,024
  • Appeals filed 2,103 14
  • Decisions taken 1,546
  • Penalty upheld 1,086 70
  • Penalty cancelled 438 28
  • Administrative closure 22 2
  • Corrections completed 495
  • Net contraventions 14,091

CBSA Recommendations
  • 1. Reduce Contraventions
  • Currently too many penalties (246)
  • lack of clarity, too complex, duplication
  • Collapse current contraventions where possible,
    based on legislation
  • Prepare new guidelines to match

CBSA Recommendations
  • 2. Risk-based contraventions and penalty amounts
  • Contraventions will be assessed on risk
    associated with potential harm of non-compliance
    (i.e., national security, health safety,
    economy, and int. reputation)
  • Penalty amounts will be set accordingly
  • Limited number of penalty structures (currently
    29) based on risk
  • Future contraventions will follow model

CBSA Recommendations
  • 3. Volumetric Fairness
  • Large clients and transporters may be more
    vulnerable to AMPS due to high volumes
  • Requesting accommodation based on high compliance
    (may apply only to CSA and PIP approved clients)
  • Must ensure fairness for all clients regardless
    of volume
  • Increased delay before escalation from level 1 to
    level 2, for low-risk contraventions only

CBSA Recommendations
  • 4. Third Party Liability
  • Originally requested by customs brokers
  • Brokers are paying penalties assessed against
    clients resulting from broker error
  • Remain part of clients compliance history
  • Issuing to brokers would ensure penalties would
    not adversely affect clients
  • No easy solution probably maintain status quo

CBSA Recommendations
  • 5. Regional Review Committees
  • All regions originally had review committees
  • Reinstate regional review committees to ensure
    consistency and accuracy

CBSA Recommendations
  • 6. Periodic Reports Made Public
  • Quarterly report providing statistics, analyses,
    trends, and recommendations
  • Public version of report will be posted on the
    CBSA Website
  • National AMPS statistics and trend analysis,
    penalties assessed by client type, by mode and
    penalties appealed, overturned and upheld

CBSA Recommendations
  • 7. Enhance Appeals Process
  • Client concerns that time frames for decisions
    are too long
  • Financial impact for client if penalty is upheld
    a significant amount of time after issuance
  • Timeframes include legislated times to complete
    certain steps, (redress review is available
    within the first 90 days, under section 129(1) of
    the Customs Act), that are not changeable
  • Proposals to include time frames for decisions,
    increase consistency, improve transparency and
    issue more substantive decisions.

CBSA Recommendations
  • 8. Update AMPS automated system
  • Necessary to implement modified contraventions
  • System will be easier and faster to use
  • Resolve current technical issues

CBSA Recommendations
  • 9. Training CBSA officers
  • Extensive training required once updated system
    is available
  • New regime and system
  • Will include border, trade and appeals officers
  • Centralization and clear guidelines for
    application of correction option

CBSA Recommendations
  • 10. Ongoing communications
  • provide ongoing information to clients/stakeholder
    s regarding new AMPS program
  • consultations to continue through BCCC and AMPS
  • information sessions will be held for trade
    community prior to implementation
  • prior notice to trade community of contraventions
    and penalty amounts


Appeals to Federal Court
  • an appeal from a decision of the Recourse
    Directorate is available to the Federal Court of
    Canada ss. 135(1) Customs Act
  • appeal must be filed within 90 days of the
  • appeal is by way of action

Judicial Review
  • Statutory appeal by action before Federal Court
    Trial Division limited to validity of the NPA
    issuance vs. quantum of the amount of the penalty
  • Amount of AMPS penalty must be challenged by
    separate proceeding in Federal Court
  • application for judicial review FC will accord
    a high degree of deference to CBSA

Recent Case Law
  • Jean-Pierre Samson
  • first substantive AMPS decision
  • released on September 28, 2007
  • Court deflects issue of whether due diligence
    defence applies
  • Marimac Inc.
  • deals with time extensions, namely, importance of
    acting within statutory time limits and/or
    showing bona fide intention to appeal
  • The Brick Warehouse Corp.
  • deals with importance for legal counsel to obtain
    all NPAs from client and to appeal each
    individual NPA

The Case for a Due Diligence Defence
  • CBSA position that due diligence defence does not
    apply to AMPS penalties
  • position is contrary to GST and other customs
  • leading GST case is Consolidated Canadian
    Contractors Inc.
  • leading customs seizure case is Cata
    International Inc.

INFONEX14th Annual Customs Compliance and Border
SecurityDelta Toronto Airport WestJanuary 20,
2009How to Avoid Customs Penalties AMPSGreg
KanargelidisBlake, Cassels Graydon