The answer to this question is found in the recent Canadian International Trade Tribunal (“Tribunal”) tariff classification appeal case of Délices de la Forêt Inc. v. President of the Canada Border Services Agency (“CBSA”), AP-2015-018. The issue is this case was whether green and red olives in brine in a glass jar were properly classified pursuant to HS Code 2005.70.10.00 (which is duty free in the Customs Tariff) or HS Code 2005.70.90.00 (which has an 8% MFN duty rate in the Customs Tariff). The olives imported by the appellant were red and green olives of the Cerignola variety, in brine, packaged in a glass jar and originating in Italy.
The H.S. Codes at issue in the case are:
Chapter 20 – Preparations of vegetables, fruit, nuts or other parts of plants
20.05 – Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 20.06.
2005.07 – Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 20.06. – Olives
2005.70.10.00 – Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 20.06. – Olives – Olives sulphured or in brine but not in glass jars; Ripe olives in brine
2005.70.90.00 – Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 20.06. – Olives – Other
The case could have been decided on the basis that the glass jar packaging resulted in H.S. Code 2005.70.10.10 being not applicable. However, the Tribunal focused on whether green olives and red olives are ripe olives. The Tribunal found that red and green olives are not ripe olive. Only black olives are ripe olives and that black olives can be coloured or dyed and still be ripe olives. The Tribunal stated:
“The Tribunal is of the view that the interpretation of the expression “ripe olives” put forward by Délices de la Forêt is not supported by the preponderance of the evidence or in the context of tariff item No. 2005.70.10. On the basis of the evidence, the Tribunal concludes that a ripe olive is an olive that was harvested when it was completely mature or almost mature, which can be noted by the olive’s characteristic black colour.”
The Tribunal accepted the testimony of an expert who opined that:
- a ripe olive is an olive that has reached its full ripeness, not merely its optimal size;
- the olive’s properties change during its ripening on the tree, for example, with respect to the growth of its flesh, its taste and its oil content;
- an easily observable, fundamental marker of an olive’s ripeness is its colour, which changes with each particular stage of the fruit’s ripening;
- three types of olives normally recognized in the food science field: (a) unripe green olives; (b) semi-ripe olives (changing colour, purplish tinge); and (c) ripe, black olives; and
- all three types of olives are used in the industry and that green olives are most frequently used because of, among other things, their resistance to bruising.
Why is this case important? This case presents an example of the cost of not undertaking tariff classification reviewed prior to importing goods from an MFN country. The importer will have to pay customs duty in the amount of 8% of the value for duty of the imported olives plus additional good and services tax plus interest. Depending on the volume of olives that were imported and the number of transactions during the reassessment period, the reassessment could be costly or not.
This case presents a perfect example of the importance of the words in the H.S. Code. A green olive has one H.S. Code and a black olive has a different (and preferable) H.S. Code. An analysis of the words in the H.S. Code provisions is important and often not undertaken. Questions should have been asked about the meaning of the word “ripe” in the H.S. Code. The question that should have been asked by the importer is whether green olives are ripe olives or not? Internet research on olives provides reason to ask questions. One reputable source of information on Cerignola olives indicates that “[b]lack cerignolas or the ripe ones are softer compared to unripe cerignolas which are the green ones. It can be added in a variety of dishes including salads, pastas, and meat dishes.”