Vol. 150, No. 13 — June 29, 2016


SOR/2016-157 June 17, 2016


Smelted Jewellery Remission Order

P.C. 2016-574 June 17, 2016

His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to section 115 (see footnote a) of the Customs Tariff (see footnote b), makes the annexed Smelted Jewellery Remission Order.

Smelted Jewellery Remission Order

1 Remission is granted to a company set out in column 1 of the schedule in the amount set out in column 2, which represents the amount of custom duties in respect of goods that was paid or is payable under the Customs Tariff, (see footnote 1) including any applicable interest, and for which the company applied for a refund under section 110 of the Customs Tariff.

Coming into Force

2 This Order comes into force on the day on which it is registered.

(section 1)


Column 1


Column 2

Amount (incl. interest)($)


IBB International (Canada) Ltd (869045153RM0001)



Allura Diamonds Limited (139894273RM0001)



Marilena Jewellery Import Ltd. (103518080RM0001)



Frank Damiani Jewellers Limited (101872067RM0001)



Arig-Or Jewellery Inc. (100258359RM0001)



(This statement is not part of the Order.)


The affected companies applied for the refund of duties in good faith, after consulting with the Canada Border Services Agency (CBSA) [also referred to as the Agency] regional officials and asking representatives of CBSA to be present at what was, at the time, considered by both parties to be the destruction of the jewellery in question. Regional officials certified that the smelting of jewellery constituted “destruction” for the purposes of section 109 of the Customs Tariff.

It was subsequently determined that smelted jewellery into bullion did not constitute “destruction” and therefore the customs duties should not have been refunded.


All goods imported into Canada are subject to the provisions of the Customs Act, Customs Tariff (the Tariff), Excise Act, Excise Tax Act and the Special Import Measures Act, by which customs duties and taxes on imported goods are assessed. Sections 109 to 112 of the Tariff contain provisions that provide for the refund of duties paid on goods that were imported into Canada and that were later certified to be “obsolete or surplus goods,” pursuant to section 109 of the Tariff. In particular, paragraph 109(d) defines “obsolete or surplus goods” as goods that are “destroyed in such manner as the Minister of Public Safety and Emergency Preparedness may direct.”

Subparagraph 109(a)(i) of the Tariff states the goods must be found to be “obsolete or surplus” by the importer or owner. CBSA has always interpreted subparagraph 109(a)(i) of the Tariff as giving the importer an absolute and unfettered discretion to find that their goods were “obsolete or surplus goods.” CBSA does not undertake to determine the validity of the declaration of goods as obsolete or surplus; the Agency deems it sufficient for the importer or owner of the goods to make a declaration to this effect.

Following a declaration from the owner or importer of goods that the goods are surplus or obsolete, the Canada Border Services Agency (CBSA) uses all of the other conditions listed in section 109 of the Tariff to determine whether goods subject to the declaration qualify for a refund of duties paid. In addition to the goods being found to be obsolete or surplus by the importer or owner, the goods must also not have been used in Canada; have been destroyed in such manner as directed by the Minister of Public Safety and Emergency Preparedness; and not be damaged before their destruction.

Imported duty-paid goods that are ultimately destroyed or rendered useless are therefore eligible for a drawback (i.e. a refund of duties already paid). CBSA has developed the Obsolete or Surplus Goods Program in order to administer drawback claims made pursuant to the Tariff and the related Refund of Duties on Obsolete or Surplus Goods Regulations, which prescribe the requirements for applying for a refund of duties under section 110 of the Tariff. The Obsolete or Surplus Goods Program allows for a refund of duties paid when imported goods, which have not been used in Canada and are either obsolete or surplus, are destroyed under the direction of a CBSA officer.

The purpose of this program is to assist the Canadian industry to compete by reducing costs on goods which will not enter the domestic market. By allowing the destruction of obsolete or surplus goods, the necessity of exporting imported goods to qualify for a drawback is removed, thereby eliminating the shipping costs related to exporting valueless goods. The cost of destroying obsolete or surplus goods is borne by the importer or owner of the goods.

Thirty-nine times between 2006 and 2012, CBSA certified the purported destruction of imported, duty-paid jewellery that was smelted into bullion and sold domestically. This certification took place by means of a Form E15, Certificate of Destruction/Exportation, completed by the claimant, and signed and approved by a CBSA officer. The smelting of the jewellery was also witnessed by a CBSA officer, and both parties (the companies in question and CBSA) considered the smelting process to have “destroyed” the jewellery.

As a result, 39 drawback claims, totaling $495,232.84, were filed and subsequently paid to 5 importers on the basis that the jewellery being smelted into bullion constituted “destruction” pursuant to paragraph 109(c) of the Tariff. An additional $2,992.56 in outstanding drawback claims has not yet been paid.

CBSA subsequently determined that the smelting of imported jewellery into bullion does not qualify as destruction in accordance with paragraph 109(c) of the Tariff because only the “characteristics” of the jewellery were being destroyed and not the precious metals themselves. Therefore, the drawback claims related to the smelted jewellery should not have been approved, as smelting the jewellery did not constitute destruction. Moreover, the resulting bullion was sold domestically and remained in Canada.


To remit to the companies listed in the schedule to the Order the customs duties payable on qualifying imports of jewellery that was subsequently erroneously certified as “destroyed” by CBSA officials.


The Order remits, to the five companies listed in the schedule, the customs duties paid or payable in respect of importations of jewellery that were erroneously certified as “destroyed” by CBSA officials.

The Order is limited to the 40 claims listed in the schedule to the Order relating to the erroneous certification of smelting as “destruction” of the jewellery in question. This Order simply authorizes the erroneously refunded customs duties already paid to the companies listed in the schedule and, in one case, authorizes the refund of duties for a claim not yet paid.

There is a total amount of $498,225.40 paid or payable under this Order and there are five companies that will be entitled to remission as follows:

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no costs to small business.


The five companies that are the subject of this Order agree that the duties that remain payable as a result of the drawback claims approved in error should be remitted.


The companies in question correctly followed the processes laid out in statute and policy for claiming a refund of customs duties paid on the goods; the CBSA erred by certifying that the smelting of jewellery constituted destruction. Therefore, it would be unjust to revoke the refund of duties that these companies received.

The benefits of the Order are limited to the five companies listed in the schedule who will receive remission of the customs duties payable to an amount not exceeding $498,225.40 ($495,232.84 already paid and an additional $2,992.56 in outstanding drawback claims still to be paid). A total of $498,225.40 will be remitted under the Order.

This approach ensures that the companies that relied in good faith on the CBSA representations with respect to what constituted “destruction” are not penalized financially.

Implementation, enforcement and service standards

The Order grants remission of customs duties payable to the companies listed in the schedule to the Order.


Bradley Jablonski
Trade Incentives Unit
Canada Border Services Agency
222 Queen Street
Ottawa, Ontario
K1A 0L8
Telephone: 613-954-6881
Fax: 613-954-4494
TTY: 1-866-335-3237
Email: Bradley.Jablonski@cbsa-asfc.gc.ca