AMPS penalties: how the CBSA sizes a penalty on trade data errors, and how to challenge or waive it

What does AMPS penalise on trade data?

The Administrative Monetary Penalty System is the CBSA's civil penalty regime for commercial clients. Section 109.1 of the Customs Act makes a person who fails to comply with a designated provision liable to a penalty of up to CAD 25,000, and the Master Penalty Document lists each contravention the CBSA can assess, with its code, amounts and guidelines. Memorandum D22-1-1 explains how the system runs under CARM.

Most of the Master Penalty Document is about the border: reporting goods, warehouses, seals, carriers. The contraventions that hit an importer after a post-entry audit or a verification are a short group in the "Corrections – Trade Data" category, plus a few on origin proof, records and SIMA coding:

The C350 to C353 group is the one an underpayment finding triggers. Each page says the C08x twin "will not be applied in addition", so a single error draws one or the other, never both. Memorandum D22-1-1 adds that the CBSA will not apply more than one contravention to a single instance of non-compliance.

The penalty is not for the original error. It is for failing to correct it within 90 days after you had reason to believe the declaration was wrong, which is the obligation in section 32.2. That is why the date you had reason to believe decides almost everything about the size.

Which reason to believe applies to each error?

The contravention pages list the kinds of specific information that start the 90 days, and the list decides the counting basis:

• (a) a legislative provision that is clear on its face. The C352 page's example is plastic conveyor belts classified in Chapter 84 although Note 1(a) to Section XVI excludes them.
• (b) a CBSA determination or re-determination addressed to you (not a deemed determination).
• (c) a final tribunal or court decision in which you were a party.
• (d) information from your exporter, supplier or producer, such as a cancelled certificate of origin or a change in the material of a product.
• (e) written CBSA communication addressed to you: an advance ruling, a national customs ruling or a trade compliance verification final report.
• (f) the final report of your own internal audit or of an outside firm auditing you.
• (g) for classification only, knowing that goods no longer meet the condition of a concessionary tariff item they were entered under.

The officer must record each error in the report with what constituted reason to believe for it, so that the next occurrence can be levelled correctly.

How is the first-level penalty counted?

Two bases exist at the first level, and which one you get depends on the criterion and on timing:

"Per issue" covers each good wrongly declared, regardless of how often the error repeats. For classification, a good includes same and similar goods that differ only in size, colour or capacity without changing the tariff item. "Per occurrence" means each CAD that carries the uncorrected error, "per B3 accounting document and not per B3 line", in the words of the C350 page. A CAD with nine lines of the same wrong tariff item is one occurrence.

Two softeners apply only at the first level. Repeated errors caused by a single keystroke or data entry error are capped at CAD 1,000 for the group, if you can show the cause and correct within 90 days of the verification final report. And per-issue treatment is not available where an importer fails to furnish any proof of origin on request.

The caps are per contravention pair. The C352 page says any combination of C082 and C352 penalties at one level may not exceed that level's maximum and includes every penalty from the same audit, examination, verification or monitoring activity. A classification error and an origin error on the same CADs are two pairs with two caps.

When does a penalty go to the second or third level?

Only when the same error comes back on the same goods. A second-level penalty can be applied only to errors on goods that already drew a first-level penalty within the retention period, and the third level only after a second. At both levels the basis is per CAD:

The retention period for all the trade data contraventions is 36 months. Memorandum D22-1-1 says retention periods exist only to decide escalation and run from the date of the last Notice of Penalty Assessment issued against you; once they expire, the same contravention starts again at the first level. Errors found in a later audit that are unrelated to the first penalty also start at the first level. The history is kept per BN15 import account, so one account's record does not affect another under the same business number, and you can view it in the CARM Client Portal.

One line on each C35x page deserves attention from anyone planning a clean-up: second-level penalties "would also apply to all adjustments made by importers where they failed to correct declarations within 90 days of having reason to believe". A late correction is not automatically safe. The voluntary disclosure route exists for exactly that case.

How would the CBSA size a penalty on a set of real lines?

An importer receives a trade compliance verification final report covering two years of CADs. The report records three errors. Amounts and counts are illustrative.

1. Classification, criterion (a). A plastic belt entered under a Chapter 84 item on 48 CADs, where a section note plainly excludes it. Duty is owed on the correct item, so C352 applies.
2. FTA origin, criterion (d). Eight months before the verification, the supplier wrote that its certificate of origin no longer covered one product. The importer kept claiming the preference on 60 CADs and never corrected. Duty is owed, so C350 applies.
3. Value for duty, criterion (f). The importer's own audit report, issued five months earlier, found that a royalty was left out of the value on 10 CADs, and nothing was filed. C353 applies.

Error 1 shows how much timing matters: the same 48 CADs cost CAD 500 or CAD 24,000. Errors 2 and 3 show what an earlier reason to believe does. The 90 days ran from the supplier's letter and from the importer's own report, both long gone, so correcting quickly now does not bring them back to a per-issue basis.

None of this includes the money that was actually owed. The duty, any surtax, the GST on the corrected value and interest at the specified rate (the prescribed rate plus 6% a year, compounded daily under section 3.1 of the Act) are a separate debt, posted to the account through the corrections. If the same belt shows up uncorrected in a second verification within 36 months, each CAD carrying it costs CAD 750, up to CAD 200,000.

Had the importer filed errors 2 and 3 as section 32.2 corrections with a voluntary disclosure request before the verification notification letter, Memorandum D11-6-4 would have waived the penalties and cut the interest to the prescribed rate. That is CAD 30,000 of the CAD 30,500.

What if the error did not change the duty?

The C080 to C083 group covers corrections that would leave no duty owing: an origin claim that was wrong but where the MFN rate is also free, a classification moved between two free items, a value error on a free line. The amounts, levels and caps are the same as for C350 to C353. The correction still has to be made within 90 days, because section 32.2(1)(a) and (2)(a) require the correction itself, not only the payment. An audit that only looks for money misses these.

When is the penalty due, and what does interest add?

The Notice of Penalty Assessment (form E650) is issued in the CARM Client Portal and becomes payable on the day it is served. Memorandum D22-1-1 ties AMPS penalties to the billing cycle: for most accounts, the 18th of one month to the 17th of the next, with payment due 10 weekdays after the 17th. Memorandum D17-1-5 defines weekdays as "Monday to Friday, inclusive of holidays", so a statutory holiday does not push the date back. Prescribed interest starts the day after that due date if the penalty is unpaid. An unpaid penalty is a debt to the Crown, and the memorandum warns it can lead to suspension of your ability to do business with the CBSA.

Interest on the duties found in the verification is different and usually larger. It runs at the specified rate from the day after the original amount became payable, which on a two-year-old CAD is a long time.

How do you challenge or waive an AMPS penalty?

There are four routes, each with its own window:

1. Correction, section 127.1. Within 90 days after the assessment, a designated officer may cancel a penalty where there was no contravention, or reduce it where the amount was wrong. The AMPS page lists the typical grounds: wrong client, wrong level (for example a second-level penalty where the first was cancelled), a clerical error in a quantity or currency, information sent after the penalty, proof that payment was made on time. You ask the issuing office or file through the portal.
2. Minister's decision, section 129. Within 90 days after the notice was served, you can request a decision of the Minister through the portal or in writing to the CBSA Recourse Directorate. Payment is not required first. Memorandum D22-1-1 says the time can be extended up to one year after the 90 days (section 129.1) if you could not act in time or had a bona fide intention to ask, it would be just and equitable, and you applied as soon as circumstances permitted. A Minister's decision can be taken to the Federal Court within 90 days under section 135.
3. Penalty Reinvestment Agreement. Memorandum D22-1-1 describes this formal agreement, set out in full in Memorandum D22-1-2: the CBSA can reduce a penalty partly or fully where the same amount is invested in fixing the systems that caused the errors, with a defined fix, timeline and validation.
4. Waiver, section 3.3. The Minister may waive or cancel penalties and interest, but subsection 3.3(1.1) says this does not apply while the section 127.1 or 129 routes are open. D11-6-4 is the policy for it, including voluntary disclosure.

Ask the correction route first when the count is wrong. Errors in the number of CADs, a per-occurrence count where the criterion supported per-issue, a second level applied to unrelated goods, and a missed keystroke cap are all arithmetic, and arithmetic is what section 127.1 is for. Confirm the route with a licensed customs broker or trade counsel before you file.

How does this differ from a US penalty?

A US penalty under 19 U.S.C. 1592 is sized from the culpability level and the loss of revenue, as a multiple of the duty lost; how CBP sizes a Section 1592 penalty walks through that. An AMPS penalty on Canadian trade data ignores the size of the underpayment and counts goods or CADs. A CAD 40 duty error repeated on 50 CADs and a CAD 40,000 error on 50 CADs draw the same CAD 25,000 cap at the first level. Importers who run both countries' audits from one finding list should size the two exposures separately.

How do you size your own exposure before the CBSA does?

1. Pull four years of CADs from the broker's accounting export, line level, with the CAD number, release date, tariff item, tariff treatment, value for duty and SIMA fields.
2. Group findings into issues. One issue is one good (with its same and similar goods) and one type of error. Count the CADs, not the lines, that carry each issue.
3. Date the reason to believe for each issue. Look for supplier letters, rulings addressed to you, earlier CBSA determinations and your own audit reports. Each one that is more than 90 days old moves that issue to per-CAD counting.
4. Check your AMPS history in the CARM Client Portal for the same goods in the last 36 months. Any first-level penalty there makes the next one second level.
5. Correct and disclose. Errors still inside 90 days go in as ordinary section 32.2 corrections. Errors past 90 days go in with a voluntary disclosure request, before any verification notification letter arrives.

TariffSense reads CAD/B3 lines and broker accounting exports, checks each line against the measures in force on its release date, and groups findings by good and by error type with the CADs they appear on, which is the count an AMPS penalty uses. Your broker or your own filer makes the corrections. See the post-entry audit page for what goes in and what comes back, and the Canadian post-entry audit guide for what to check on each line.

What should you do next on your own entries?

List every finding from your last audit with the date you first had specific information about it. Anything inside 90 days, correct now. Anything older, correct with a voluntary disclosure request before a verification notification letter can arrive, and check whether the goods are on the CBSA's current verification priorities. If you hold goods under a SIMA measure, check the SIMA fields as well; SIMA anti-dumping duties on past entries covers that separate route.