Exporters of goods from Canada may be surprised to receive a Notice of Detention from the Canada Border Services Agency (CBSA), indicating that their goods have been detained on the way out of the country.
Under section 101 of the Customs Act, goods that are about to be exported may be detained by a border services officer “until he is satisfied that the goods have been appropriately dealt with in accordance with this Act, and any other Act of Parliament that prohibits, controls or regulates the importation or exportation of goods, and any regulations made thereunder”.
There are a number of possible reasons for a “detention”, ranging from errors on export forms to exports contary to Canadian export controls.
At the Notice of Detention stage, there is little recourse for the exporter, as the CBSA can detain the goods for as long as necessary to determine customs compliance. This can be a significant issue for exporters, particularly where their planned exportation of the goods is of a time-sensitive nature, or subject to commercial penalties for delay.
In some cases, the CBSA may forward the detention file to the Export Controls Division (ECD) of Global Affairs Canada for a technical assessment of the goods (i.e., to determine whether the goods are controlled for export under Canada’s Export Control List) before the CBSA makes its decision. All costs related to the detention are borne by the exporter.
If the CBSA determines that there has been an exporter infraction, it can apply an administrative monetary penalty (AMP) against the importer and/or undertake enforcement action like forfeiture. (Forfeitures can even occur after a good has been exported – called an ascertained forfeiture, which is a process used where it would be impractical or impossible to seize the goods, and may result in the assessment of a monetary penalty to the exporter in an amount up to the value of the goods.)
Fortunately there are appeal rights for these types of action, but the appeal rights vary, and bring with them different time limits, some as short as 30 days!
Preventative action is usually always the best remedy when it comes to export controls compliance, and advice ought to be obtained to determine if one’s goods are controlled for export under the Export Control List, or other domestic or international sanctions legislation. In most instances, export will be allowed, but may require export permits in advance of the export. This process can take anywhere from a few days to a few months.
All this to say that when it comes to Export Compliance, an ounce of prevention is worth many many pounds of the cure!
Best practice is to obtain advice early and often – which will help avoid detentions and penalties!
Millar Kreklewetz LLP has expertise in this area and is available to assist.
Do you require assistance with Export Compliance? If so, contact us here.