Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

What Some People Have In Their Cars When They Cross The Canada-US Border?????

Posted in Border Security, Customs Law

Canada CustomsOn August 26, 2016, the Canada Border Services Agency (“CBSA”) issued a News Release entitled “Rocket launcher and grenades seized in Southern Ontario Region“.  Apparently, in July, two men from Louisiana attempted to cross at the Peace Bridge with an undeclared disposable rocket launcher tube and two undeclared grenades. Eventually, the devices were deemed to be safe and it was determined they were unusable. The rocket launcher and grenades were seized with no terms of release.  The vehicle they were driving was also seized because it contained undeclared prohibited goods.  The driver of the vehicle was required to pay a fine in the amount of $1,500 for the return of the vehicle.  The men were permitted entry into Canada after paying the vehicle terms of release.

It really should go without saying that one should not travel with a rocket launcher in their vehicle.  It is wise to ask a few questions before crossing an international border with any type of weapons.  The laws in Canada are different than in the United States, but we have to think that a rocket launcher and grenades would raise concerns of U.S. law enforcement too.

On August 22, 2016, the CBSA commenced an awareness campaign to inform U.S. travelers that many firearms cannot be imported into Canada (even with a permit).  The CBSA issued a News Release entitled “CBSA recommends leaving your firearms at home when travelling to Canada”. The CBSA warns “Canadian firearm laws are clear – failure to declare any firearm may lead to seizure action, penalty, prosecution in a court of law; and may make you inadmissible to Canada. Your vehicle may also be seized and you will have to pay a penalty to get it back.”

Many U.S. visitors are arrested every year for failure to declare firearms. Please clean our your vehicle before driving to the border because “I forgot that was in there” is not an accepted excuse.  The fines for vehicle release are high.  If you get arrested for failure to declare a prohibited weapon, the personal cost of a criminal record and the legal fees for court appearances are even higher.

BE AWARE: Homeowners and Contractors in Western Canada Will Be Surprised By Antidumping Duties on U.S. Drywall

Posted in Uncategorized

Gypsum BoardMany homeowners and contractors in Western Canada will soon be asking “Why do I have to pay antidumping duties on imports of gypsum board or drywall?” This is because there is ant antidumping case in Canada on gypsum board imported from the United States into Western provinces.

Starting on September 6, 2016, imports of drywall/gypsum board into Western Canada (British Columbia, Alberta, Saskatchewan and Manitoba, and the Yukon and Northwest Territories) will be subject to antidumping duties. This is because CertainTeed filed an antidumping case on gypsum board originating in and/or exported from the United States and the Canadian International Trade Tribunal made preliminary determination of injury on August 5, 2016.  No exclusion was granted for small volumes of drywall imported by homeowners or contractors (sorry, we tried unsuccessfully).

The preliminary antidumping duty rates will be announced by the Canada Border Services Agency (“CBSA”) on September 6th if there is a preliminary determination of dumping (which is expected).  All imports of subject drywall/gypsum board on September 6, 2016 and thereafter until the final determination of duties will be subject to the preliminary duty rate.

The new added expense will come as a surprise to homeowners and contractors who live near the U.S./Canada border.  Just as people are finishing summer renovation projects and summer construction of new residential complexes, the price could double.  The amount of the duties can be at any level (even over 100%).  many individuals are closer to a building supply store on the US side of the border.  Homeowners will have to change their buying habits and drive further for CertainTeed drywall stocked at a Canadian retail store or pay the premium duties at the border.

What will be subject to duties?:

The drywall that is “subject goods” is:

Gypsum board, sheet, or panel (“gypsum board”) composed primarily of a gypsum core and faced or reinforced with paper or paperboard, including gypsum board meeting or supplied to meet ASTM C 1396 or ASTM C 1396M or equivalent standards, regardless of end use, edge-finish, thickness, width, or length.  All dimensions are plus or minus allowable tolerances in applicable standards.

For greater certainty, the gypsum board considered to be subject goods includes but is not limited to:

i. Abuse-resistant gypsum board offering greater resistance to surface indentation, abrasion and penetration than standard gypsum board.
ii. Eased edge gypsum board, which has a tapered and slightly rounded or beveled factory edge. It may be used as an aid in custom finishing of joints.
iii. Gypsum base for veneer plaster serves as a base for thin coats of hard, high strength gypsum veneer plaster.
iv. Impact-resistant gypsum board offer greater resistance to the impact of solid objects from high traffic and vandalism than standard gypsum board.
v. Mold-resistant gypsum board or Mold and moisture resistant gypsum board has a mold/moisture resistant gypsum core and paper facing that incorporates various methods of preventing the growth of mold and mildew on the board’s surface.
vi. Regular gypsum board (gypsum wallboard) is used as a surface layer on walls and ceilings.
vii. Sag-resistant gypsum board is a ceiling board that offers greater resistance to sagging than regular gypsum products used for ceilings where framing is typically spaced 24 inches.
viii. Type C or Proprietary Type-X gypsum board is available in 1/2 inch and 5/8 inch thicknesses and is required in some fire rated assemblies. Additional additives give this product improved fire resistive properties.
ix. Type X gypsum board is available in 1/2 inch and 5/8 inch thicknesses and has an improved fire resistance made possible through the use of special core additives. Type X gypsum board is used in most fire rated assemblies.

What will not be subject to duties?

The following goods are excluded from the subject goods definition:

(a) gypsum board made to a width of 54 inches (1,371.6 mm);

(b) gypsum board measuring 1 inch (25.4 mm) in thickness and 24 inches (609.6 mm) in width regardless of length (commonly referred to and used as “paper-faced shaft liner”);

(c) gypsum board meeting ASTM C 1177 or ASTM C 1177M (commonly referred to and used primarily as “glass fiber re-enforced sheathing board” but also sometimes used for internal applications for high mold/moisture resistant applications);

(d) double layered glued paper-faced gypsum board (commonly referred to and used as “acoustic board”); and

(e) gypsum board meeting ISO16000 23 for absorption of formaldehyde.

If you require any assistance, please contact Cyndee Todgham Cherniak at 416-307-4168 or email to cyndee@lexsage.com.  If you wish the Canadian International Trade Tribunal to know about the import duty shock, please write to citt-tcce@tribunal.gc.ca or write to us and we will send your comments (keep it clean) to the Tribunal.  There is a possibility that the Tribunal will grant an exclusion in January if this is known to be a problem for individuals living in border communities.  But, they will need to hear from the people who have been affected.

Top10 Mistakes Made By Foreign Producers/Exporters When Completing CBSA Subsidy RFIs

Posted in Trade Remedies

Many-QuestionsAfter the CBSA initiates a countervailing duty investigation, the CBSA issues an exporter request for information (RFI) that must be completed by the exporter of the goods and all factories involved in the manufacture of the goods (if the exporter is not the manufacturer).  The CBSA sets a filing deadline that is between 30-35 days after the initiation of the subsidy investigation.

Top ten mistakes in responding to CBSA questionnaires are:

  1. Waiting too long before hiring a Canadian subsidy specialist.  A Canadian subsidy specialist knows why the CBSA is asking certain questions.  Care must be taken in completing the RFI response.  The goal in completing the RFI response is to receive a 0% subsidy rate or the lowest possible subsidy rate based on the information provided.  Too many exporters do not understand why they are completing the RFI (other than to be able to sell into the Canadian market).
  2. Waiting too long to get started.  In most cases, the subsidy specialist is hired with only a week left before the filing deadline. I have been asked many times to request an extension of time.  However, the CBSA refuses to grant extensions of time.
  3. The exporter fails to dedicate company personnel and other resources to the investigation and the completion of the RFI.  The completion of the RFI is a lot of work.  It is necessary to dedicate a team, which includes senior people knowledgeable about domestic sales, knowledgeable about sales to Canada, knowledgeable about the financial accounting system, knowledgeable about taxes, and knowledgeable about production costs.
  4. The non-confidential version of the RFI response and supporting documentation is prepared at the very end (instead of identifying confidential parts and documents as each RFI is prepared).  As a result, highly confidential information is made public.
  5. The exporter does not contact the factories: Often the exporter of the goods to Canada is a trading company or an agent and not the actual factory that produced the goods.  The CBSA will want to receive a subsidy response from the exporter and the factory if the exporter sells goods manufactured by another person.  If the factory subcontracts some of the production activities to other related or unrelated factories, each factory involved in the manufacture of the finished good will be required to file a subsidy RFI.  As a result, it is very important to identify all the relevant parties at the start of the process of completing RFIs in order to make sure the right number of responses are submitted from the right parties.
  6. The exporter fails to provide English translations of documents.  The CBSA instructions indicate that all RFIs must include a French or English translation (Canada’s official languages).  There are often many attachments to a subsidy RFI, such as tax returns, incorporation documents, loan documents, government grant applications, leases, etc.  It is common for these documents to not be written in English or French.  All attached documents must be translated before being attached to the subsidy RFI response.  The translation process should be started early because many of the documents are very long.
  7. The exporter does not carefully review the subsidy RFI instructions: The Subsidy RFI often has a period of investigation.  Amounts received within the period of investigation must be reported.  Many exporters mistakenly include amounts outside that period and that results in higher subsidy rates.  Since the goal is to have an accurate, but lower amount, it is important to understand what to include and what not to include.
  8. All subsidies received must be identified. Many exporters do not want to provide information about the amount of subsidies they received.  However, this is the purpose of the subsidy investigation.  It is very important to look at the accounting records to identify all inbound payments that could be considered to be subsidies or benefit
  9. No reconciliation is completed: It is important to perform a reconciliation between what is reported in the Subsidy RFI response and what is contained in the accounting records.  The CBSA is going to conduct a verification and will find the discrepancy. The CBSA will be more likely to accept the information provided as valid and correct if you have taken the step to make sure the reconciliation shows a match or any deviance can be explained.  Canadian legal counsel who have been involved in other subsidy cases can perform necessary reconciliations.
  10. Just because the CBSA says it is a subsidy does not make the amount received or benefit is a countervailable subsidy.  A Canadian advisor with knowledge about WTO rules and Canadian law is very useful in reducing the subsidy rate by excluding what is not includable.  Only countervailable subsidies and prohibited subsidies may result in countervailing duties.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com

Canadian International Trade Tribunal Issues Practice Notice On Filing Questionnaire Replies

Posted in Antidumping, Trade Remedies

CITT RoomOn June 10, 2016, the Canadian International Trade Tribunal (“CITT”) issued a Practice Notice entitled “Filing of Questionnaire Replies and Revisions and Issuance of Revised Investigation Report”.  In antidumping and countervailing duty injury inquiries, the CITT issues questionnaires to producers, importers, foreign producers and purchasers.  The CITT compiles the information and data provided by respondents in an Investigation Report.  Parties usually have 22 days to complete the Questionnaires and then there is a period during which the ATSSC staff seek clarifications and corrections. The distribution of the Tribunal’s Record usually occurs on Day 50 for the injury inquiry.  The Investigation Report is finalized just before the Tribunal’s Record is distributed.

The CITT members have noticed that parties are missing the deadline for filing the Questionnaire responses.  Hence, the CITT has issued the Practice Notice.

The Tribunal sets out its requests, which are not Tribunal Rules as they are not in the regulations.

Request 1: Questionnaire respondents shall ensure that their replies to questionnaires are complete and accurate before filing them with the Tribunal. Counsel should review questionnaire replies submitted on behalf of their clients before filing.

Request 2: Responses to questionnaires shall be filed by the due date indicated on the questionnaire.

Request 3: Where revisions to questionnaire replies are necessitated by follow-ups from staff of the Canadian International Trade Tribunal Secretariat (the Secretariat), questionnaire respondents shall provide the revisions by the deadlines provided by the staff of the Secretariat.

Request 4: The Tribunal informs parties of the late filing procedures and asks parties to follow the procedures.

The Tribunal also provides information about its procedures:

Information 1: Any revision to a questionnaire response filed within 10 calendar days of the distribution of Tribunal exhibits (the date of which will have been indicated in the notice commencing the proceedings) will not be included in the Investigation Report that is distributed with the exhibits.

Information 2: Revisions not in response to follow-ups from staff of the Secretariat received after this cut-off date will not be accepted and not put onto the record except in exceptional circumstances and with leave of the Tribunal.

Information 3: Rather than issuing ongoing revisions to the Investigation Report, in whole or in part, as revised information trickles in throughout the course of the proceedings, only a single Revised Investigation Report will be issued. This version will consolidate all revisions accepted up until then and will be issued shortly after receipt of the reply submissions of the parties supporting the proceedings. This will occur a week or so before the date the hearing is schedule to commence.

Information 4: Counsel and parties will have an opportunity to address any matters arising from the Revised Investigation Report during the matters arising phase of the Tribunal’s proceedings and at the hearing.  This will occur within the week before the hearing is scheduled to commence.

Most parties to the proceeding who are not represented by counsel may not be aware of the new Practice Notice, which is posted on the CITT’s web-site.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

Canada Initiates Antidumping Case Against Concrete Reinforcing Bar From Several Countries

Posted in Antidumping, Trade Remedies

Globe with financial papersOn August 19, 2016, the Canada Border Services Agency announced an antidumping investigation against concrete reinforcing bar (also known as rebar) from Republic of Belarus, Chinese Taipei, the Hong Kong Special Administrative Region of the People’s Republic of China, Japan, the Portuguese Republic and the Kingdom of Spain.  In 2014, provisional antidumping duties were imposed on rebar from China, Korea and Turkey (and the Canadian International Trade Tribunal  (CITT) issued an injury determination in 2015).

Timeline:

There are two separate proceedings.  The CITT Conducts a Preliminary Injury Inquiry within the first 60 days.  See our recent post on What is a Preliminary Interest Inquiry? In the Preliminary Injury inquiry, the CITT looks at whether the complaint discloses a reasonable indication of injury.  Normally, the CITT will consider issues on (1) scope, (2) classes of goods and (3) evidentiary issues.  Since this is a regional case, arguments about test for regional cases and whether this is an appropriate regional case will likely be very relevant.  Companies should participate early and raise relevant issues with the CITT.

The CBSA conducts a Preliminary Dumping investigation within the first 90 days (the period overlaps with the CITT Preliminary injury inquiry).

The CBSA’s timeline of important dates is as follows:

September 9, 2016 – CBSA: Importer responses to CBSA Requests for Information are due

September 26, 2016 – CBSA: Exporter responses to CBSA Requests for Information are due (no extensions are granted)

November 17, 2016 – CBSA issues preliminary dumping determination (unless the CBSA extends by up to 45 days)

January 5, 2017 – CBSA: Closing of the Record Date

January 12, 2017 – CBSA: Case arguments due from all parties

January 19, 2017 – CBSA: Reply submissions are due

February 15, 2017 – CBSA issued final determination

If you require any assistance, please contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee@lexsage.com.

Other articles we have written concerning Canada’s antidumping regime:

Top 10 Mistakes Make By Exporters When Completing Antidumping Requests For Information

Who is the Exporter for Special Import measures Act (SIMA) Purposes?

CBSA Has Revised The D-Memorandum On The Anti-dumping/Countervailing Duty Redetermination Process

CITT Finds Reduction Or Elimination of Rebar AD/CVD Duties Not In Public Interest

ACE Allows For Stricter Customs Enforcement

Posted in Aerospace & Defence, Agriculture, Antidumping, Border Security, Controlled Goods Program, Corporate Counsel, Criminal Law, Cross-border deals, Cross-border trade, Customs Law, Export Controls & Economic Sanctions, Exports, Legal Developments, Trade Agreeements, Trade Remedies

Originally Published by the Journal of Commerce in August 2016

In the face of its recent reorganization and enhanced computer system, it was really only a matter of time before the trade community started to see Customs and Border Protection (“CBP”) better organize its enforcement efforts, and now the first tangible step has been publicly disclosed.

When the concept for the Centers for Excellence and Expertise was rolled out, it was logical to expect that CBP would combine the enhanced computer capabilities of the Automated Commercial Environment with information developed from the industry focused CEEs. That meant, we would eventually see CBP relying on computer analytics and internal expertise to help the agency pinpoint where to focus its enforcement efforts. Over the years, we had seen those with the most experience retire. CBP and Immigration and Customs Enforcement seemed to lose their ability to make serious fraud cases. Yes, criminal cases for trade fraud, involving for example for antidumping and export license violations, continued to be brought, but it has been a long time since we have heard about a really significant civil penalty. Sure, some smaller fish got caught, and many of them did some really dumb things. Others who got caught just plain cheated. Now, however, CBP has launched a round of “informed compliance” letters, which are really warning letters to the trade community.

The current priority trade issues for CBP are: (1) Antidumping and Countervailing Duty; (2) Import Safety; (3) Intellectual Property Rights; (4) Textiles/Wearing Apparel; and (5) Trade Agreements. In the recent past, that list also included: (a) Agriculture products; (b) Penalties; and (c) Revenue.

CBP has known for years that importers regularly make duty deferral claims, whether by way of free trade agreement, Generalized System of Preference, or other claims which carry with them a zero rate of duty and, when audited years later, cannot support those claims. CBP didn’t need ACE or the CEEs to tell them that. What these new tools do, however, provide is a more concentrated focus on given industries and specific importers. Put another way, these powerful tools now allow CBP to do a better job to identify and rank the likely levels of non-compliance.

What transpired earlier this month is Regulatory Audit publicized a project whereby importers that CBP thinks may not be compliant were sent letters which included a series of CBP’s Informed Compliance publications, on such topics as value, classification, reasonable care and the like. Recipients were encouraged to review their transactions, identify instances of non-compliance and file prior disclosures. While making clear that no importer is required to file a prior disclosure, the letters go on to make clear that, having been notified of possible non-compliance, if not cured by a prior disclosure, and any violations are later found, seizure and penalty action is possible. While not able to say seizure and penalty would actually happen, since the initiation of any enforcement action turns on the facts of that situation, Regulatory Audit has said it will now recommend penalty action when non-compliance is found. Of course, how this really changes from current practice remains to be seen. Current practice has been to notify the importer that unless he agrees to pay what the auditors think is due, the auditors are left with no choice but to recommend a penalty action be initiated.  Pulling the noose tighter around the allegedly non-compliant importer’s proverbial neck, recipients of these warning letters are requested to acknowledge receipt by returning a signed copy of the letter.

Regulatory Audit has come right out and said those who were sent the informed compliance letters are likely candidates for an audit of some sort. There is also the suggestion that the formality with which the company is sent the letter is an indicator of how serious the importer is as an audit candidate, with those receiving the letter by call or email being seen as somewhat less of a risk than those who receive the letter by mail only. Whether that indicator is accurate remains to be seen. While full-blown Focused Assessments remain rare, CBP has developed other more abbreviated means to test importer operations. The most typical of these is a quick audit, sometimes now called an audit survey. Given that Focused Assessments often go on for many months (years?), Regulatory Audit has been conducting these quick audits for some time. They are designed to allow CBP auditors to check specific transactions, figure out whether the risk which was thought to exist does exist, and if not to exit relatively quickly, in weeks instead of months.

The fact these informed compliance letters are being sent (by whatever means of delivery) tells us all that CBP is finally starting to use data from ACE, along with internal expertise, to fine-tune one of the means by which it is evaluating risk and non-compliance.

The timing of these warning letters could also be telling. At the beginning of each fiscal year, Regulatory Audit rolls out a National Audit Plan which details the companies it plans to audit in that fiscal year. As we all know, the fiscal year for the federal government starts on October 1st. It is not unreasonable to think that if a company received a warning letter in August and no prior disclosure is filed by late September, the auditors will eventually come calling!

By way of reminder, the industries on which the CEEs focused are Electronics; Pharmaceuticals, Health & Chemicals; Petroleum, Natural Gas & Minerals; Apparel, Footwear & Textiles; Agriculture & Prepared Product; Automotive & Aerospace Center; Base Metals; Consumer Products & Mass Merchandising; Industrial & Manufacturing Materials; and Machinery. While not every importer is each CEE is high-risk, there are certainly patterns which can be identified. For example, the industries the U.S. has typically protected with high duty rates and complicated import requirements are steel and steel products, footwear, textiles and apparel, and auto and auto parts. Add to that whether you are importing from a country subject to an antidumping case, one in which the rule of law is less well developed that in the U.S. or deal in products where classification is complex to name  a few key factors, and you can quickly start to figure out how much risk do your import transactions carry with them?  If you are not accurately and completely stating your goods and their cost on your invoices, you are certainly going to be in a lot of trouble!

If you have received one of these informed compliance letters, it is best to conduct a thorough review and make sure your transactions are compliant. It is also important that any such review take place under the benefit of the attorney-client privilege, so make sure your management and legal team know what is going on before any transactions are reviewed and once they are reviewed, make sure to document what was done and on what the final decisions were based.

Canadian Athletes Do Not Have To Pay Customs Duties And Border GST On Their Medals

Posted in Customs Law, GST/HST

Olympic MedalsCanadian Olympians returning home from the Rio Olympics (or any athletic competition for that matter) do not have to pay customs duties and goods and services tax (“GST”) on their medals.  No customs duties are payable under Harmonized System (H.S.) Code 98.17, which covers “medals, trophies and other articles (not including usual merchantable products nor medals, trophies or prizes which are regularly presented by organizations or business companies to their members, employees or representatives), which have been bestowed or awarded by persons or organizations abroad as marks of honour or distinction, or which have been won abroad in competitions”.

The importation any item covered by HS Code 98.17 is also not subject to border GST.  It is considered to be a non-taxable importation.

That being said, Canadian athletes must declare the medals on their E311 Declaration Card (the CBSA Form completed on the airplane). Canadian athletes must declare a value for duty for the medals and all other goods received abroad.  The exchanges of Olympics uniforms (even if given as a gift) and all purchases abroad and/or goods received abroad must be declared to the CBSA and a combined value for duty provided.  Where you do not know the value for duty, you are required to make an accurate statement of value. As a result, it is important to ask a few questions and put a reasonable value on the goods.  Don’t forget to covert the value into Canadian dollars. Unfortunately (and to my surprise actually), the Canada Border Services Agency does not have a published D-Memorandum or Customs Notice on this topic.  Hint, hint – it is time for the CBSA to write one and post it to aid our athletes.

Many CBSA officers have not been watching the Olympics or other athletic competition.  While there is a lot of Canadian pride for the athletes, some people (including CBSA officers) are bad with names.  If you wear your medals across the border, it helps the CBSA officers identify the medal winners (although not a requirement). Most CBSA officers will be happy to receive the importation paperwork and process it.

A big thank you to all Canadian athletes.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.

Undervaluation of Goods Can Lead to Criminal Charges And Conviction In Canada

Posted in AMPs, Criminal Law, Cross-border deals, Cross-border trade, Customs Law, Legal Developments, origin, tariff classification, valuation

Customs Building (XL)On August 5, 2016, the Canada Border Services Agency (“CBSA”) posted on the CBSA web-site a News Release entitled “Dartmouth store owner charged for falsifying documents and undervaluing shipments”. This News Release should cause Canadian business owners who import goods and/or general counsel of companies that import goods to ask important questions:

  • “Is my import paperwork accurate, true and complete?”
  • “If I am audited, will the CBSA have an problems with my paperwork?”
  • “When was the last time i looked at my customs documentation to ensure that the import paperwork accurately reflects the value of the goods?”
  • “Do I now what information is being provided to the customs broker in order to properly declare the value and contents of each shipment?”
  • “Who in my import company is providing information to the customs broker and have I adequately supervised that person enough to know correct information is being provided?”

If an business owner/general counsel cannot answer these questions, it is time for an internal compliance review of customs documentation in order to identify under-valuations; failures to add to value for duties royalties, assists, subsequent proceeds, etc.; overvaluation; errors in tariff classifications,; errors in origin statements; descriptions of goods; etc. Most business owners believe that if errors have been made, the CBSA will issue a monetary penalty (e.g., a Detailed Adjustment Statement and AMPs Notice of Penalty) rather than anything more serious.  Think again and read the CBSA News Release below carefully.

The News Release stated:

“Canada Border Services Agency (CBSA) announced today that on July 21, 2016, Kelly Elizabeth Wall, of Bedford, Nova Scotia, pled guilty in Dartmouth Provincial Court to two charges under the Customs Act. One charge was under section 12(1) for non-report and one under section 153(a) for making false statements.

A CBSA investigation determined that between May 2008 and July 2014, Kelly Wall undervalued 32 commercial shipments to her store “Encore Décor Ltd” in Dartmouth which imported and sold household accessories such as bedding and curtains. Wall used fictitious invoices to account for less cargo than was imported and undervalued the cargo that was being reported. The total undervaluation was $340,882.73.  It is also alleged that on 16 of the importations Wall forged the CBSA Cargo Control Documents by changing the number of pallets and weight to a lesser quantity to better match the invoices.

Wall was sentenced to a fine of $15,000 on each count ($30,000 in total) and is required to amend 32 commercial accounting documents which will recover approximately $77,000 in evaded duty and taxes.

Quick Facts

  • All commercial goods must be reported to the CBSA whether you transport it yourself or have a carrier transport it for you.
  • All goods entering Canada, regardless of mode, must be reported to the CBSA and may be subject to a more in-depth exam.
  • Failure to declare goods and other Customs Act violations may lead to seizure and/or prosecution in a court of law.

Quotes

“Every importer is required to accurately report all goods being imported into Canada.  The Canada Border Services Agency will continue to prosecute those who purposely evade duties and taxes. ”
– Gina Kennedy, Acting Director, Enforcement and Intelligence Division, Atlantic Region”

This story from a smaller urban center in Nova Scotia was not picked up by many news outlets.  In the Halifax Metro, an article was written entitled “Dartmount store owner fined for falsifying documents and undervaluing shipments”.  The reporter had contacted the CBSA and quoted Blair MacDonald as saying:

  • “I’ve not seen a commercial case where someone is only declaring their shipments on the average of less than 20 per cent”
  • “We do see people will low ball their shipments. I’ve never seen it to this extent. This is one of the more significant under-valuations that I’ve ever seen and I’ve been doing this for a lot of years.”
  • “When I started comparing manifests she presented to us … if I see eight, it had (actually been) 18; the ones that say nine, it was 19; if it was 21, she deleted the two and changed the number one to a seven.”
  • “This is the first time in my career I’ve ever seen anybody alter, forge, a customs manifest.”

It is important to remember that in the case of Ms. Wall, the CBSA was looking at 32 shipments over a 7 year period of time.  Many businesses can have 32 shipments in one day or in one week or in one month.

The best advice I can give business owners and general counsel is to conduct an internal investigation and look carefully at all the paperwork in a number of transactions.  Hire a lawyer to help you because a lawyer will conduct the review under solicitor-client privilege.  If problems are located, develop plans to make a voluntary disclosure and correct the entries.  You may have to explain to the CBDA how the errors occurred.  But, that could lead to a better result than if you let the CBSA find serious problems during a verification/audit.  Honesty could prevent the commencement of a criminal investigation. Don’t delay in asking a few important questions.

For more information about voluntary disclosures, please go to www.lexsage.com.  We have posted a number of articles about customs matters.  Recent articles that may be helpful are:

What is a No-Names Voluntary Disclosure?

What Every Importer Should Know About Canada’s Customs Duties Reassessment Policy

Canada’s Voluntary Disclosure Policy Has Been Revised

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.

Know the Rules: Canada Border Services Agency NEXUS Membership Program Guidelines

Posted in NEXUS

nexussmRecently, the Canada Border Services Agency (CBSA) retired the revised NEXUS Membership Guide (BSF5095) in favour of a NEXUS program page on the CBSA website.

NEXUS card holders should review the rules of the NEXUS program in order to avoid problems at the Canadian border.  The rules are strictly enforced.  If you break any rule, even a small little rule, you will have your NEXUS card confiscated for 7 years and may never be allowed back in the NEXUS program.  As a result, it is important to review this document carefully in order to understand what the CBSA expects of you when you cross the border.

The CBSA enforces the NEXUS rules under a ZERO TOLERANCE policy.  Any infraction, no matter how small, shifts a trusted traveler into the untrustworthy category.

  • If you have commercial goods and you use the NEXUS lane, you are out of the program.
  • If you forget to report any item (even a $1 chocolate bar), you are out of the program.
  • If you get a new passport or driver’s license and do not update your information, you may be out of the program.
  • If you move residences and do not update your address, you may be out of the program.
  • If you fail to answer any question accurately, you are out of the program.

There is no pardon process.  There is no leniency for carelessness or lack of knowledge.

Also, remember that your NEXUS pass expires automatically after 5 years.  Check the date of issue on the back of the card and renew your NEXUS card before it expires.  If you use the NEXUS lane with an expired card, you have broken a rule and may not be renewed for another 5 years.  You may be out of the program.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

This article was originally published on www.lexsage.com. Republished with permission.

Canada’s Tariff Treatments (as at August 1, 2016)

Posted in Cross-border trade, Customs Law

Canada does not have a single customs duty or tariff rate for all imports. Over the years, Canada has entered into a number of preferential trading arrangements (e.g., NAFTA) and international agreements (e.g., WTO) that set preferential tariff rates.

The following table sets out Canada’s tariff rate categories under the Customs Tariff (Canada) and the Canada Border Services Agency reporting codes as at August 1, 2016:

Tariff Treatment Category Abbreviation CBSA Reporting Code
Most-Favoured-Nation (MFN) MFN 2
General Tariff GT 3
Australia Tariff AUT 4
New Zealand Tariff NZT 5
Commonwealth Caribbean Countries Tariff  CCCT 7
Least Developed Countries Tariff LDCT 8
General Preferential Tariff GPT 9
United States Tariff UST 10
Mexico Tariff MT 11
Mexico-United States Tariff MUST 12
Canada-Israel Agreement Tariff CIAT 13
Chile Tariff CT 14
Costa Rica Tariff CRT 21
Iceland Tariff IT 22
Norway Tariff NT 23
Switzerland-Lichtenstein Tariff SLT 24
Peru Tariff PT 25
Colombia Tariff COLT 26
Jordan Tariff JT 27
Panama Tariff PAT 28
Honduras Tariff HNT 29
Korea Tariff KRT 30

 

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.

This article was originally published on www.lexsage.com. Republished with permission.