Understanding the Three Levels of Customs Infractions

When a person has goods (as distinguished from monetary instruments and conveyances seized at customs, the Canada Border Services Agency (“CBSA“) has established three “levels” or “degrees” of breach for the purpose of determining the penalty. These levels are described in Part 5 Chapter 2 of the Customs Enforcement Manual.

Level 1

Level 1 applies to violations of lesser culpability. It will be applied where a person’s efforts to hide something from CBSA were initial and effectual. It is generally applied to offences of omission rather than commission.

In the context of Non-Report and Inaccurate Information, Level 1 will be applied when:

goods are not reported to CBSA or goods are reported to CBSA but inaccurate information is given concerning acquisition, entitlements, or description;
the goods are not concealed; and
a full disclosure of the true facts concerning the goods is made at the time of discovery.

In the context of Undervaluation, Level 1 is applied when:

goods are reported for a value less than their actual transaction value but no falsified documents were presented; and
full disclosure is made prior to the discovery of documentary evidence.

Level 2

Level 2 applies to violations where the circumstances demonstrate that the individual actively attempted to breach Canadian customs law. It is also applicable to people who repeatedly omit information.

In the context of Non-Report and Inaccurate Information, it will be applied when the circumstances are the same as for level 1, but in addition:

the goods are concealed or disguised;
inaccurate information is given concerning the goods following their discovery; or
the person has been the subject of a previous seizure action.

In the context of Undervaluation, Level 2 is applied when:

no falsified documents were presented however documentary evidence is found, revealing the actual value of the goods is more than reported before full disclosure is made; or
the person has been the subject of a previous enforcement action.

Level 3

Level 3 applies to circumstances where the evidence exists of a more sophisticated scheme involving devices to facilitate the violation or where the individual has been the subject of a previous seizure.

In the context of Non-Report and Inaccurate Information, it will be applied when the circumstances are the same as for level 2, but in addition:

false documents or receipts are presented for the goods;
the goods are concealed within false compartments; or
the person has been subject to previous seizure action.

In the context of Undervaluation, Level 3 is applied when:

falsified documents were presented in an attempt to support the undervaluation; or
the person has been the subject of a previous enforcement action.

Penalties

The following two tables show the penalty amounts for each level.

Non-Report and Inaccurate Information
Good	Level 1	Level 2	Level 3
Clothing, footwear, textiles, towels, bedding, curtains, carpets, jewelry, and watches	30% of value	50% of value	70% of value
All other goods, except alcohol and tobacco	25% of value	40% of value	55% of value

Undervaluation
Good	Level 1	Level 2	Level 3
Clothing, footwear, textiles, towels, bedding, curtains, carpets, jewelry, and watches	30% of undervalued amount	50% of undervalued amount	70% of undervalued amount
All other goods, except alcohol and tobacco	25% of undervalued amount	40% of undervalued amount	55% of undervalued amount

The Customs Enforcement Manual contains several useful examples of undervaluation.

Example A

A traveller declares at primary that he bought a car for $1,000 and does not present a receipt. At the secondary examination, the officer questions the traveller on the purchase. The traveller admits that the car is undervalued, and voluntarily discloses that the actual value is $4,000. This would be a Level 1 violation, and the amount of duty owing (assuming the correct duty had been paid on the $1,000) would be 25% of 3,000.

Example B

A traveller does not declare at secondary that be bought a boat even though it is on the back of his car. The officer finds a receipt in the car’s dashboard for $418,000. This would be a Level 2 violation, and the amount of duty owing would be 40% of $418,000.

To the best of my knowledge, the CBSA Enforcement Manual is not publicly available. However, we have obtained a copy of it through an Access to Information and Privacy Act request and have made it available for purchase on this blog. The price for this document, which is a massive 1,274 pages, is $32.95. Our goal in providing the CBSA Enforcement Manual is to help you save valuable research time, and to provide you with a comprehensive understanding of how the CBSA operates. Please note, however, that this document is current only as of 2012.

http://www.stevenmeurrens.com/wp-content/uploads/CCMPreview.pdf

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