Customs Reporter.
Reminder to all Clients in the Pharmaceutical Industry – It is important that you advise us, as soon as possible, when a new drug is added to or an existing drug is removed from Schedule-F to the Food and Drug Regulations. Goods listed in Schedule-F are zero-rated for GST purposes. Goods not listed in Schedule-F are subject to GST at the prevailing rate of 7%. Exclusion from the schedule could mean they have not been approved for domestic consumption, or they are for OTC (over the counter) sale. Because of the GST implications, it is important that we be made aware of any changes to Schedule-F as soon as possible so that we can amend our data base to properly reflect the tax status of a particular drug or active ingredient. While we are made aware of such changes by way of notices published in the Canada Gazette, in many instances, the notices list the active ingredient while the imported products are identified by a proprietary name. For this reason, it is sometimes difficult for us to make the correct identification for tax purposes. If you anticipate importing a new drug that will be available only by prescription and is or will be listed in Schedule-F, please advise us of both the proprietary name and the name of the active ingredient as it appears in Schedule-F. Doing so will allow us to correctly determine the taxable status of such products, and relieve potential strain on your cash flow due to inappropriate payment of GST.

Novel Food Regulations

The Government of Canada revised the Food and Drug Regulations to incorporate new rules for so-called “novel” foods.

The legislation cited rapid advances in biotechnology and food science as the source for development of a variety of foods previously unavailable in the Canadian market place. The new regulations are designed to safeguard and improve consumer confidence in the food supply chain in Canada. Health Canada provided the following definition of novel foods:

“A substance, including a micro-organism, that does not have a history of safe use as a food.”
“A food that has been manufactured, prepared, preserved or packaged by a process that has not been previously applied, and causes the food to undergo a major change.”
“A food that is derived from a plant, animal or micro-organism that has been genetically modified.”

The Novel Food Regulations require companies to inform Health Canada at least 45 days prior to any of the covered products being advertised or sold to consumers in Canada. There is a pre-notification requirement aimed at providing Canadian consumers with an improved level of protection. Compliance will be monitored on the domestic front and at time of importation.

Health Canada will perform an assessment to ensure that the products are safe. This assessment will include an examination of the development process; comparison of the product characteristics with “traditional” equivalents; evaluation of the nutritional value; and tests to determine potential health risks.

Genetically modified foods will have to comply with new “factual” labeling requirements. Strangely, labeling of genetically engineered food products is not included although many consumer organizations have lobbied for mandatory labeling of such products. Further information is available from the Health Canada website at: www.hc-sc.gc.ca or your usual contact at Russell A. Farrow Limited.

While most importers know that Canada Customs, as of January 1, 1998, is now able to review entries up to four years from date of accounting, it may be news that in some instances, Customs actually has five years in which to do so. If a refund or a correction was filed on a transaction between the 37th and 48th months of the date of accounting then Customs’ review period is extended by one year.

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a Certificate of Origin and this would extend to the letter in question. It is generally accepted that Certificates signed by an officer of the company are considered to have more validity than those signed by, for example, a clerical junior. When an attached list is used, we recommend that the letter also include a reference to the number of pages forming the attachment. The attachment should also be dated. Whether you are importing from, or exporting goods to the United States or Mexico under NAFTA Preferential rates of duty, you will potentially encounter this situation, either directly or indirectly. The Certificate of Origin (completed by the exporter) reflects the source of the information in Field 8 -


Producer. When the exporter IS THE PRODUCER of the goods the field is completed by inserting the word “YES”. When the exporter is NOT THE PRODUCER, the field is completed as follows:
NO – 1 (When (b)(i) above applies);
NO – 2 (When (b)(ii) above applies); or
NO – 3 (When (b)(iii) above applies). Field 3 on the Certificate must record either: a) the full name, address and tax identification number of the producer; b) “Information available upon request”; c) “Same”; or d) “Unknown”.

If you have any questions on this or any other issue, please do not hesitate to contact any of our offices.

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