Vol. 148, No. 21 — October 8, 2014
SOR/2014-216 September 26, 2014
M/T Kometik and M/T Mattea Repair or Alteration Remission Order, 2014
P.C. 2014-978 September 25, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 115 (see footnote a) of the Customs Tariff (see footnote b), makes the annexed M/T Kometik and M/T Mattea Repair or Alteration Remission Order, 2014.
M/T KOMETIK AND M/T MATTEA REPAIR OR ALTERATION REMISSION ORDER, 2014
1. Remission is granted to Canship Ugland Ltd. of St. John’s, Newfoundland and Labrador, of the customs duties paid or payable under the Customs Tariff in respect of oil tankers M/T Kometik and M/T Mattea that were returned to Canada after having been exported in 2012 for repair or alteration.
2. The remission is granted on the following conditions:
- (a) the importer files, on request, all evidence that is required by the Canada Border Services Agency to determine eligibility for remission; and
- (b) a claim for remission is made by the importer to the Minister of Public Safety and Emergency Preparedness within two years after the day on which this Order comes into force.
COMING INTO FORCE
3. This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Canship Ugland Limited (Canship), a Canadian company located in St. John’s, Newfoundland and Labrador, manages shuttle tankers which transport crude oil from the Hibernia, Terra Nova and Whiterose oil fields off the coast of Newfoundland to Whiffen Head, Newfoundland and other transshipment terminal or refinery locations in Canada and the United States. Canship is seeking remission of the duties paid on the re-importation of the two tankers M/T Kometik and M/T Mattea following maintenance and repair work performed in Europe in the summer of 2012. Canship was obliged to refit and upgrade these tankers in 2012 to comply with Transport Canada regulations.
The tariff rate applicable to ship repairs performed outside Canada is 25% on tankers. Given the lack of adequate repair facilities in Canada that could accommodate tankers of the size of the M/T Kometik and M/T Mattea, Canship has asked for relief of the duties applied on the repair and maintenance work done abroad on these two vessels.
To remit customs duties paid by Canship for maintenance and repair work performed offshore since the work could not be undertaken in Canada due to a lack of facilities large enough to accommodate the two tankers.
The M/T Kometik and M/T Mattea Repair or Alteration Remission Order, 2014, remits $3.1 million in customs duties paid by Canship on the re-importation of these two tankers following maintenance and repair work performed in the summer of 2012.
The “One-for-One” Rule does not apply to this Order, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this Order, as there are no costs imposed on small business.
This regulatory-mandated repair and maintenance work could not be performed in Canada, as the vessels were too large for any domestic dry dock facility.
The remission of the duties payable on the repairs and maintenance done abroad on the M/T Kometik and M/T Mattea will enhance the cost competitiveness of the Hibernia and Terra Nova oil projects and will partially offset the revenues lost during the months these vessels were out of commission. The measure will have no effect on the Canadian ship repair industry given the lack of adequate shipyard facilities to perform this work.
The Shipbuilding Association of Canada was consulted and confirmed that the beams of the M/T Kometik and M/T Mattea are too wide to fit into any Canadian dry dock, and therefore does not oppose duty remission.
Implementation, enforcement and service standards
The Canada Border Services Agency is responsible for the administration of and compliance with customs and tariff legislation and regulations. The Agency will administer the provisions of this Order in the normal course of its administration of customs and tariff-related legislation.
International Trade Policy Division
Department of Finance