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The penalties for infractions of customslegislation range from $100 to a maximumof $25,000 per infraction based on the type,frequency and severity of infraction. Thepenalties have largely replaced the use ofseizure and ascertained forfeitures asenforcement tools. However, a seizureaction may also be initiated in specificcircumstances such as where goods areprohibited or controlled. Penalties andseizures also do not preclude the possibilityof criminal prosecution, with maximum finesof up to $500,000 and maximum prisonterms of five years.The tariff treatment accorded to goodsunder the Customs Tariff varies accordingto the nature of the items and their countriesof origin. Special tariffs are applicable tocertain goods originating in CommonwealthCaribbean countries, Australia and NewZealand as well as those countriesparticipating in free trade agreements withCanada and certain developing countries.The customs value of imported goods is theprice actually paid or payable for the goodswhen sold for export to Canada. That priceis adjusted for a variety of factors includingtransportation costs, royalty fees, handlingfees and insurance costs, referred to as the“transaction value”. Other methods ofvaluation are available if the transactionvalue cannot be used. There are alsospecial rules that apply when the importerand exporter are related parties.In addition to duties which may be payableunder the Customs Act, the Excise Tax Actrequires importers to pay Harmonized SalesTax ("HST") on the value of imported goods,although some goods are exempted fromHST. Where goods are imported, the tax willgenerally be collected by customs officialsat the time the goods are imported. HSTmay be exigible on imported services. Animporter may be required to “self-assess”such HST where the services are notacquired for the purposes of “commercialactivities” as defined in the Excise Tax Act.Input tax credits on imported goods areavailable to HST registrants to the extentthat the goods are for use in the registrant'scommercial activities. HST rates varyacross provinces. Currently the HST rates inthe Atlantic Provinces are: 15% in NovaScotia, 14% in Prince Edward Island, 13%in New Brunswick and 13% inNewfoundland and Labrador. All importersand exporters must have an Import/Exportaccount number issued by the CanadaRevenue Agency.Import and Export ControlsThe Export and Import Permits Act requiresthat import permits be obtained for certaingoods, such as certain agricultural products,that are subject to import quotas. Otheritems are subject to import restrictionsbased on country of origin, in compliancewith UN Security Council sanctions orunilateral Canadian trade restrictions.Currently, for example, sanctions existagainst imports from North Korea, Iran andSyria, among other countries. The Exportand Import Permits Act also identifiescertain goods which may not be exported(such as goods that could have both acivilian and a military application), andcertain countries to which exports areprohibited, except under the authority ofexport permits. Currently, the only countriesto which exports are completely prohibitedwithout a permit are North Korea andBelarus. The Government of Canada canTrade and Business Conduct Regulation40