Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

Advancement of Expert Testimony Rules Before The Canadian International Trade Tribunal

Posted in Antidumping, Cross-border trade, Customs Law, Legal Developments, origin, tariff classification, valuation

justice statue with sword and scale. cloudy sky in the backgrounOn December 21, 2015 (published on the CITT web-site January 12, 2016), the Canadian International Trade Tribunal (“Tribunal”) issued its tariff classification/refund decision in EMCO Corporation Westlund v. The President of the Canada Border Services Agency (CITT File No. AP-2014-042).  There is an interesting issue hidden in the case – whether a witness qualifies as an expert.  This was a hot topic in Canadian courts in 2015.  it as also a hot topic before the Tribunal.

During the proceedings, EMCO attempted to qualify one of its witnesses as an expert and counsel for the President of the Canada Border Services Agency (“CBSA”) objected on the grounds that the witness “lacked the requisite independence and impartiality due to his vested interest in the outcome of the case”.  In the end, the Tribunal allowed the witness to testify as an expert, but indicated that the evidence was accepted based on the witnesses personal experience (not as an expert).

The Tribunal has interesting analysis concerning expert testimony:

“17. In R. v. Mohan, the Supreme Court of Canada enunciated the following four criteria to consider when assessing the admissibility of expert evidence:

  • relevance;
  • necessity in assisting the trier of fact;
  • absence of any other exclusionary rule of evidence; and
  • a properly qualified expert.

18. In the same decision, the Supreme Court of Canada commented that the purpose of expert witness testimony, especially with respect to scientific matters, is to “. . . furnish the court with scientific information which is likely to be outside the experience and knowledge of a judge or jury. If on the proven facts a judge or jury can form their own conclusions without help, then the opinion of an expert is unnecessary.

19. More recently, the Supreme Court of Canada commented on the issue of the impartiality and independence of expert witnesses in White Burgess Langille Inman v. Abott and Haliburton Co. In sum, the decision holds that, where questions regarding the impartiality or independence of a proposed expert witness are raised, at common law, the witness can be qualified and his or her evidence admitted where the trier of fact is satisfied (1) that the witness is able and willing to provide fair, objective and non-partisan evidence (this is not meant as an onerous threshold) and (2) in the discretion of the trier of fact, that the potential helpfulness of the evidence is not outweighed by the risks associated with it. If the evidence is admitted, the trier of fact assigns it the weight appropriate in the circumstances, including in light of impartiality and independence concerns.

20. At the Tribunal’s request, and in accordance with the approach suggested by the Supreme Court of Canada in White Burgess, Mr. Curro stated, under oath, that he understood that his duty as an expert witness would be to provide fair, objective and unbiased evidence to assist the Tribunal in rendering its decision and that he was able to discharge this duty. The CBSA was then permitted to challenge the proposed expert on this statement and on his qualifications.

21. With respect to the fact that Mr. Curro is an employee of the manufacturer of the goods in issue, the Tribunal noted that, in White Burgess, the Supreme Court of Canada held that “[i]n most cases, a mere employment relationship with the party calling the evidence will be insufficient to [render the evidence of the proposed witness inadmissible].” The Supreme Court of Canada then listed other situations that would be of concern, such as a direct financial interest in the outcome of the litigation or where the expert assumes the role of an advocate for one of the parties.”

The Tribunal was satisfied with Mr. Curro’s attestation and determined that he did not have an interest other than the employment relationship and allowed his expert testimony.  The Tribunal was satisfied that Mr. Curro could provide the degree of independence and impartiality required by the Tribunal.

In the end, EMCO was successful on the tariff classification point and, therefore, was entitled to receive the refunds.  More importantly than the win, there is clarification on the use of experts before the Tribunal.

How To File A Customs Origin Appeal In Canada

Posted in Customs Law, origin, Trade Remedies

iStock_000019169483XSmallIf the Canada Border Services Agency (“CBSA”) has made an error during an origin verification, the importer may file a request for re-determination to appeal the assessment of duties.  In most cases, the CBSA changes the origin from country with which Canada has a free trade agreement (e.g., the United States) to a country with which Canada does not have a free trade agreement (e.g., China) and issues a detailed adjustment statement charging the additional duties and interest resulting from the change in duty rate.

What is an customs origin verification? A customs origin verification is when the CBSA conducts an audit of an importer to verify that the importer reported the correct origin of the goods on the B3 Customs Coding Form.  When the importer imports goods into Canada, it communicates to the CBSA the origin of the goods and pays the applicable duties and taxes (e.g., goods and services tax, provincial sales tax, excise tax, etc.) based on the applicable duty rate for that country.  For example, most goods from the United States are duty free under NAFTA and the UST rate of duty is applied.  If the goods are actually from China, the Most-Favoured-Nation (“MFN”) rate of duty would apply.

In rare circumstances, the goods at issue are subject to anti-dumping and/or countervailing duties.  If the origin of the goods changes to a Subject Country, antidumping/countervailing duties may be applied in addition to the customs duties.  For example, if aluminum extrusions exported from the United States are determined by the CBSA to have originated in China, the CBSA may apply antidumping and countervailing duties.

If you believe the assessment is incorrect and/or the CBSA misunderstood the facts or ignored relevant facts, you may file a request for re-determination (an appeal).  You must file the request for re-determination within 90 days of the date on the detailed adjustment statement.  Do not miss this deadline.

You file the request for re-determination by completing a B2 “Adjustment Request”.  If there is more than one detailed adjustment statement, you will have to complete more than one form. The B2 form must match with the original B3 “Customs Coding Form”.  The CBSA has one year to review the request for determination and make a decision.

Make sure that you provide reasons for the request for re-determination.  If there isn’t enough room in the B2 “Adjustment Request” form, file an attached schedule.  If you would like to resolve the issues more quickly, put your best arguments forward in a clear and concise manner.  Let the appeals officer understand your point of view and evidence in support of your position.  A common mistake that we see is that the importer has a customs broker file the B2 “Adjustment Request” form without providing clear information for the CBSA to consider.  A mere “you are wrong” is not sufficient to prove your case.

You must pay the amount of duties and interest owing as stated on the detailed adjustment statement or the CBSA may detain future imports of goods – they have ways to make you pay. in the case of anti-dumping and countervailing duties, payment of the duties and taxes owning perfects the appeal.  If the money is not paid, the appeal will be rejected by the CBSA.

If the CBSA does not change their minds about the origin, you may file an appeal with the Canadian International Trade Tribunal (“CITT”) within 90 days of the adverse decision of the CBSA. Do not miss this deadline. The initial appeal to the CITT is relatively simple. You should provide the CITT with sufficient information to identify (1) the appellant, (2) the applicable statutory provisions (e.g., is this a Customs Act or Special Import Measures Act appeal), (3) the date of the CBSA decision being appealed, (4) the detailed adjustment statements at issue and (5) a brief indication of the issues to be decided. This can be done in a letter to the Registrar of the CITT. The notice of appeal or appeal letter must state the appellant’s intentions and be accompanied by a copy of the assessment, reassessment, rejection, decision, determination or re-determination, as the case may be, from which the appeal is launched.

Within 60 days of the filing and acceptance of the appeal, you must file an Appellant’s Brief.  This document must set out all the relevant facts, the law, and arguments.  You must file your supporting evidence that the CITT is to consider.  The Appellant’s Brief takes planning (as you may need expert evidence or test reports).  This document takes time to prepare – good arguments are drafted and redrafted.  Based on our experience, if the Appellant’s Brief can show the Department of Justice lawyer the weaknesses in their case, they may settle prior to having to file the Respondent’s Brief.

You should know the case you wish to present as early as the request for re-determination.  You should have your evidence plan in the works at this stage.  If you wait until the CITT hearing, you may find that the CITT does not accept your evidence.  If you do not make certain arguments in the Appellant’s Brief, you may be precluded from arguing certain points later (e.g. in argument at the hearing).

So, plan your litigation strategy as early as possible and stay organized from the point of the initial verification by the CBSA.  Seek help in preparing written representations and the available arguments.

How To Apply For An Advance Customs Ruling in Canada

Posted in Cross-border deals, Cross-border trade, Customs Law, tariff classification

Which wayMany importers in Canada want to minimize the risk of an assessment of customs duties for getting a tariff classification incorrect.  If an importer or exporter or foreign producer of goods cannot figure out how the Canada Border Services Agency (“CBSA”) would classify a good for customs duty tariff classification purposes, sometimes the best thing to do is to ask them.  The process by which an importer would request the CBSA’s views is by way of an advance tariff classification ruling. An advance tariff classification ruling provides certainty to the importer as to how the CBSA would a classify the good.  However, it should be noted that asking the question of the CBSA opens the importer to the possibility receiving an answer with a higher rate of duty – that is, an answer the importer does not like.

That being said, when an importer applies for an advance tariff classification ruling, the importer is in a position to provide the CBSA with all the good evidence in support of the importer’s best case scenario (that is, the classification that leads to the lower duty rate).  The importer has the opportunity to tell the CBSA what it should think.  in the context of an audit or verification, the CBSA may get ideas in their own minds and it can be more difficult to change their point of view.  In the context on an advance tariff classification ruling, the importer may have a better opportunity to persuade the CBSA (unless the CBSA has considered the issue before and is known to have a different point of view).

The following persons may apply for an advance tariff classification ruling from the CBSA:
An importer in Canada;
A non-resident exporter;
A non-resident producer of the goods in question; or
A person who is authorized to account for the imported goods in question, e.g. a customs lawyer or customs broker.

An advance tariff classification ruling request can be prepared in letter format 9that is ,there isn’t a prescribed form to compete).  The CBSA asks that the advance ruling request include the following information:

  • your name and address;
  • your business number (if applicable);
  • a statement that you are the importer, exporter, producer or authorized representative;
  • the name and telephone number of a contact person who has full knowledge of the request;
  • the principal ports of entry through which the goods will be imported;
  • a statement noting whether the item is, or has been, the subject of a verification of tariff classification, an administrative review or appeal, a judicial or quasi-judicial review, a request for a national customs ruling or other advice, or a request for an advance ruling;
  • whether the goods have previously been imported into Canada;
  • a full description of the goods, including trade names, or their commercial, common or technical designation;
  • the composition of the goods;
  • the process by which the goods are manufactured;
  • a description of the packaging;
  • the anticipated use of the goods;
  • the manufacturer’s product literature;
  • drawings and/or photographs;
  • schematics; and
  • the tariff classification you consider appropriate and your rationale.

In addition, you can provide any evidence that you feel is relevant, including expert’s reports, test results, testimonials, U.S. classification rulings, information from government standards bodies, information from other government bodies who enforce laws governing the goods, statements from the manufacturer, etc.

For more information about what the CBSA expects in an advance tariff classification ruling request, please refer to D-Memorandum D11-11-3.

As a general rule, the CBSA processes the advance tariff classification ruling request within 120 calendar days. If additional information is required, the CBSA will notify you in writing, and you will be given a period of 30 calendar days to provide the required information.

Based on our experience, there is benefit to working with a customs lawyer to prepare the advance ruling request.  It costs a lot more money (and involved more human resources) to appeal an unfavourable ruling to the Canadian International Trade Tribunal.  While this can still happen, the risk of a misunderstanding is reduced if you carefully prepare the advance tariff classification ruling request.  If you obtain a favourable ruling, the savings of customs duties can start sooner.

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

Directors’ And Officers’ Liability For Failure To Obtain An Import Permit

Posted in Cross-border trade, Imports Restrictions
IMPORT red stamp

IMPORT red stamp

The Government of Canada (in particular, Global Affairs Canada, the Canada Border Services Agency, and the Canadian Food Inspection Agency) may pursue directors and officers of a corporation who fail to obtain the required import permits, licenses and certifications. Corporations cannot act on their own.  Individuals make decisions that cause the corporation to take actions.  With respect to imports, individuals take the steps that cause the import to occur.  It may be that an individual makes the decision to not obtain the required import permit, license or certificate.  For example, a good may be on Canada’s Import Control List and officer/director may be prosecuted for failing to obtain an import permit when that officer/director authorized an import of the good in circumstances where a general import permit or exemption does not apply.

It is important to note that many of Canada’s import restrictions relate to textiles and apparel, chemicals, steel, and agricultural products.  Canada also imposes restrictions on imports of firearms, related goods and ammunition.

Section 14 of the Export and Import Permits Act states:

“No person shall import or attempt to import any goods included in an Import Control List except under the authority of and in accordance with an import permit issued under this Act.”

A person does not contravene section 14 of the Export and Import Permits Act if, at the time of importation, the person would have imported the goods under the authority of and in accordance with an import permit issued under the Export and Import Permits Act had they applied for it, and if, after the importation, the permit is issued.

Section 20 of the Export and Import Permits Act states:

“Where a corporation commits an offence under this Act, any officer or director of the corporation who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and is liable on conviction to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted.”

There are a number of important points:

1. The Crown can pursue an officer/director even if the Crown has not prosecuted (and the Court has not convicted) the corporation;

2. An officer or director who directed, authorized, assented to, acquiesced in or participated in the commission of the offence may be prosecuted for the offence;

3. Employees are not identified in section 20 of the Export and Import Permits Act, which means that only officers and directors may be pursued personally; and

4. The limitation period in subsection 19(2) of the Export and Import Permits Act (that is, three years after the time when the subject-matter of the complaint arose) applies to prosecutions of officers and directors.

Subsection 19(1) of the Export and Import Permits Act states that:

Every person who contravenes any provision of this Act or the regulation is guilty of
(a) an offence punishable on summary conviction and liable to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding twelve months, or to both; or
(b) an indictable offence and liable to a fine in an amount that is in the discretion of the court or to imprisonment for a term not exceeding ten years, or to both.”

This means that the Crown may elect to pursue a corporation (or officer/director) by way of summary conviction or indictment.  If the Crown pursues the corporation (or officer/director) by way of summary conviction, the maximum penalty is $25,000 and/or imprisonment of no more than 12 months. However, if the Crown pursues the corporation (or officer/director) by way of indictment, the judge has discretion to set a fine in any amount.  The judge cannot impose a term of imprisonment in excess of 10 years.

Canadian importers of food products should also watch the Safe Food For Canadians Act, which was passed in and received Royal Assent in 2012. The Safe Food For Canadians Act consolidates a number of food related laws, including the Meat Inspection Act, the Fish Inspection Act, the Canada Agricultural Products Act and the food labeling provisions of the Consumer Packaging and Labelling Act.  The Safe Food For Canadians Act was to come into force in 2015 and no statement was issued before the federal election.  When and if the Safe Food for Canadians Act comes into effect, more robust offence provisions will also come into effect.  Section 39 of the Safe Food for Canadians Act provides

“A person who contravenes a provision of this Act, other than sections 7 and 9, or a provision of the regulations — or fails to do anything the person was ordered to do by, or does anything the person was ordered not to do by, the Minister or an inspector under this Act other than subsection 32(1) — is guilty of an offence and is liable

(a) on conviction on indictment, to a fine of not more than $5,000,000 or to imprisonment for a term of not more than two years or to both; or
(b) on summary conviction, for a first offence, to a fine of not more than $250,000 or to imprisonment for a term of not more than six months or to both and, for a subsequent offence, to a fine of not more than $500,000 or to imprisonment for a term of not more than 18 months or to both.”

Pursuant to subsection 39(4) of the Safe Food for Canadians Act, any of the person’s directors or officers, or agents or mandataries, who directs, authorizes, assents to or acquiesces or participates in the commission of the offence is a party to the offence and is liable on conviction to the punishment provided for by this Act, even if the person is not prosecuted for the offence.

Due Diligence

Unlike may directors and officer’s liability provisions, there is no due diligence defense in the Export and Import Permits Act for offences committed by the corporation or officer/director.  There is a due diligence defence in the Safe Food For Canadians Act.  An argument may be raised that common law allows for a due diligence defense where the officer/director can show that reasonable care was taken to avoid the commission of an offence.  A failure to obtain an import permit is a strict liability offense. For example, if an officer/director implemented a policy to obtain import permits and underlings failed to follow proper procedures, it may be that the facts would support a due diligence defense.

A due diligence defense is available where a Canadian corporation obtains an import permit for a non-resident and that non-resident commits an offence.  Section 21 of the Export and Import Permits Act states:

“Where a permit under this Act is issued to a person who has applied for it for, on behalf of, or for the use of, another person who is not a resident of Canada and that other person commits an offence under this Act, the person who applied for the permit is, whether or not the non-resident has been prosecuted or convicted, guilty of the like offence and liable, on conviction, to the punishment provided for the offence, on proof that the act or omission constituting the offence took place with the knowledge or consent of the person who applied for the permit or that the person who applied therefor failed to exercise due diligence to prevent the commission of the offence.”

If the officer/director can show that that he/she exercised due diligence to prevent an offence from taking place, he/she should not be convicted (depending on the facts).

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

Pet Toys Are Not Classified For Customs Purposes The Same As Humans’ Toys in Canada

Posted in Customs Law, tariff classification

IMG_5238Even though I am amused at my puppy playing with her toys, the Canada Border Services Agency (“CBSA”) does not classify pet toys under H.S. Code 95.03 unless there is an identical toy for humans.  In Pet Valu Canada Inc v D/MNR (CITT File No. AP-97-017 and AP-97-053, AP-97-102, and AP-97-118) (which is an old case), the Canadian International Trade Tribunal (“CITT”) dismissed the appellant’s argument that pet toys were classified under H.S. Code 95.03, which covers “[o]ther toys; reduced-size (“scale”) models and similar recreational models, working or not; puzzles of all kinds.”  This is important because humans’ toys are duty free under H.S. Code 95.03 and pet toys may be subject to duties if they are manufactured in a country subject to the MFN rate of duty (depending on the correct tariff classification).

The pet (dogs and cats) toys at issue in the Pet Valu case included items such as:

• a “Soft Bite Floppy Disc” designed to be used interactively in play with a dog;

• “Soft Bite” and plush-type toys;

• a “Clutch Ball”;

• certain rope-like articles used for tugging between a pet and a human;

• “Tuff Bite” chew toys; and

• “Feline Flyers,” which consist of a plastic wand attached to a length of string with a feather or fabric attached to the end, and a similar product called a “Kitty Kaster.”

The CITT looked at the World Customs Organization (WCO) Explanatory Notes for Heading 95.03:

“This heading covers toys intended essentially for the amusement of persons (children or adults). However, toys which, on account of their design, shape or constituent material, are identifiable as intended exclusively for animals, e.g., pets, do not fall in this heading, but are classified in their own appropriate heading.

La présente position comprend les jouets destinés essentiellement à l’amusement des personnes (enfants ou adultes). Par contre, les jouets qui, par leur conception, leurs formes ou leurs matières constitutives, sont reconnaissables comme étant exclusivement destinés aux animaux, les jouets pour animaux familiers, par exemple, ne sont pas classés dans la présente position, mais suivent leur régime propre.”

The CITT determined that H.S. Heading 95.03 contemplated toys for humans and not pet toys.  It is important to note that the WCO Explanatory Notes continue to state “[t]his group covers toys intended essentially for the amusement of persons (children or adults). However, toys which, on account of their design, shape or constituent material, are identifiable as intended exclusively for animals, e.g., pets, do not fall in this heading, but are classified in their own appropriate heading.”

The CBSA had classified the pet toys under the following HS Classifications:

39.26 Other articles of plastics and articles of other materials of heading Nos. 39.01 to 39.14.

3926.90 -Other

3926.90.90 —Other

4110.00.00 Parings and other waste of leather or of composition leather, not suitable for the manufacture of leather articles; leather dust, powder and flour.

5609.00.00 Articles of yarn, strip or the like of heading No. 54.04 or 54.05, twine, cordage, rope or cables, not elsewhere specified or included.

63.07 Other made up articles, including dress patterns.

6307.90 -Other

6307.90.99 —-Of other textile materials

6701.00 Skins and other parts of birds with their feathers or down, feathers, parts of feathers, down and articles thereof (other than goods of heading No. 05.05 and worked quills and scapes).

6701.00.90 —Other

The CITT accepted these classifications, except where it could be shown that an identical toy was available for sale to humans – these items could be classified under H.S. Code 95.03.

It is clear that in Canada, depending on the type of pet toy, one of the above H.S. Codes may apply or another H.S. Code.  There isn’t a single H.S. Code for pet toys – making tariff classification a complicated task.

How To File A Customs Valuation Appeal In Canada

Posted in Customs Law, valuation

Gavel and Scales of JusticeIf the Canada Border Services Agency (“CBSA”) has made an error during a valuation verification, the importer may file a request for re-determination to appeal the assessment of duties.  In most cases, the CBSA changes the value for duty from a lower number to a higher value and issues a detailed adjustment statement charging the additional duties and interest.

What is a valuation verification? A valuation verification is when the CBSA conducts an audit of an importer to verify that the importer reported the correct value for duty (that is, value of the goods) on the B3 Customs Coding Form.When the importer imports goods into Canada, it communicates to the CBSA the value of the goods and pays the applicable duties and taxes (e.g., goods and services tax, provincial sales tax, excise tax, etc.) based on the reported value for duty.

For customs law purposes, the methods of customs valuation, in descending order of precedence, are:

  1. Transaction Value of Goods
  2. Transaction Value of Identical Goods
  3. Transaction Value of Similar Goods
  4. Deductive Value
  5. Computed Value
  6. Residual Method

These valuation methods are applied in this heirarchical order – meaning that if the transaction value method does not apply, the next step is to determine if the transaction value of identical goods method applies.  When none of methods 1-5 apply, the residual methods is used in a flexible manner.

Often related importers run into difficulties when the transaction value is not applicable and another method results in a higher value for duty. The assessment is raised with resident to the duty and taxes payable on the higher value.

If you believe the assessment is incorrect and/or the CBSA misunderstood the facts or ignored relevant facts, you may file a request for re-determination (an appeal).  You must file the request for re-determination within 90 days of the date on the detailed adjustment statement.  Do not miss this deadline. While there are exceptional circumstances that would allow a late filed request for re-determination, it is best to not have to prove that you meet the limited criteria.

You file the request for re-determination by completing a B2 “Adjustment Request”.  If there is more than one detailed adjustment statement, you will have to complete more than one form. The B2 form must match with the original B3 “Customs Coding Form”.  The CBSA has one year to review the request for determination and make a decision.

Make sure that you provide reasons for the request for re-determination.  If there isn’t enough room in the B2 “Adjustment Request” form, file an attached schedule.  If you would like to resolve the issues more quickly, put your best arguments forward in a clear and concise manner.  Let the appeals officer understand your point of view and evidence in support of your position.  A common mistake that we see is that the importer has a customs broker file the B2 “Adjustment Request” form without providing clear information for the CBSA to consider.  A mere “you are wrong” is not sufficient to prove your case.

You must pay the amount of duties and interest owing as stated on the detailed adjustment statement or the CBSA may detain future imports of goods – they have ways to make you pay.

If the CBSA does not change their minds about the valuation, you may file an appeal with the Canadian International Trade Tribunal (“CITT”) within 90 days of the adverse decision of the CBSA. Do not miss this deadline. The initial appeal is relatively simple. An appeal can be in the form of a letter to the CITT.  You should provide the CITT with sufficient information to identify (1) the appellant, (2) the applicable statutory provisions, (3) the date of the CBSA decision being appealed, (4) the detailed adjustment statements at issue and (5) a brief indication of the issues to be decided. This can be done in a letter to the Registrar of the CITT. The notice of appeal or appeal letter must state the appellant’s intentions and be accompanied by a copy of the assessment, reassessment, rejection, decision, determination or re-determination, as the case may be, from which the appeal is launched.

However, within 60 days, you must file an Appellant’s Brief.  This document must set out all the relevant facts, the law, and arguments.  You must file your supporting evidence that the CITT is to consider.  The Appellant’s Brief takes planning (as you may need expert evidence).  This document takes time to prepare – good arguments are drafted and redrafted.  Based on our experience, if the Appellant’s Brief can show the Department of Justice lawyer the weaknesses in their case, they may settle prior to having to file the Respondent’s Brief.

You should know the case you wish to present as early as the request for re-determination.  You should have your evidence plan in the works at this stage.  If you wait until the CITT hearing, you may find that the CITT does not accept your evidence.  If you do not make certain arguments in the Appellant’s Brief, you may be precluded from arguing certain points later (e.g. in argument at the hearing).

So, plan your litigation strategy as early as possible and stay organized from the point of the initial verification by the CBSA.  Seek help in preparing written representations and the available arguments.

Government of Canada Is Considering Increase to Imports By Mail/Courier Threshold

Posted in Cross-border trade, Customs Law
IMPORT red stamp

IMPORT red stamp

Glen McGregor of the Ottawa Citizen may have an inside scoop – he says the Government of Canada is considering increasing the Postal Imports Remission Order and the Courier Imports Remission Order thresholds of $20.00.  In an article published on January 14. 2016 entitled “Government mulls waiving taxes and duties on smaller-value online purchases“, McGregor writes:

“The Liberal government is considering changes to Canada’s strict import rules to exempt more goods purchased online from duties and sales taxes.

Under the current system, duty and taxes apply to shipped products valued at $20 or more, the “de minimis” threshold that hasn’t been updated since 1985.”

The Postal Imports Remission Order and the Courier Imports Remission Order provide for the remission of customs duties and excise taxes paid or payable on goods imported by mail or courier, and having a value for duty not exceeding $20.  A remission is that the government foregoes revenue – the duties and taxes are essentially waived.  The good news about remission orders is that they can be approved without tabling legislation in the House of Commons or the Senate.  It can happen rather quickly.

Whether the Liberal Government will increase the threshold to $100, $200 or $400 (or at all) is yet to be seen. The amount of revenue to the government would decrease in the remission orders thresholds increase.  That being said, the administrative burden of reducing the paperwork burden would decrease.  Whether or not there would be a cost savings from the reduced paperwork may depend on Canada Border Services Agency officers reducing ranks or hours worked.

The change will be beneficial to online retailers, such as Amazon and eBay.  I know that I would be grateful for duty-free purchases from Peace Love World – but the  threshold would need to be $400 for me to benefit.

Importers Of Tires Into Canada Must Comply With Safety Rules

Posted in Cross-border deals, Cross-border trade, Customs Law, Transportation

Brand new tires stacked up and isolated on white background

On January 11, 2016, the Canada Border Services Agency (“CBSA”) issued D-Memorandum D19-12-2 “Importation of Tires”, which sets out Canada’s border rules on the importation of tires.  Canada wants only safe tires imported for the purpose of sale in Canada.  Canada wants safe tires on the roads in Canada.

D-Memo D-19-12-2 contains 2 Appendices.  Appendix A applies to tires (new or used) imported for the purpose of resale  Appendix B applies to tires imported for personal or corporate fleet use.

If tires do not meet the requirements of Appendix A, the CBSA will not release the tires from customs clearance.  The CBSA will detain the tires until the proper documentation is provided.  Importers of tires for the purpose of resale must have proper approvals from Transport Canada.

The CBSA imposes requirements on the importation of (a) new on-road passenger vehicles, trucks, motorcycle, trailer or multi-purpose vehicles; and (b) used truck tires imported for retreading from countries other than the US.  The following data elements to be included in your electronic release package are:

(a) Manufactures name;
(b) Name, telephone number, postal code and email address of the company
(c) Brand name;
(d) Tire type/size and the quantity of tires of that size designation and type imported;
(e) Tire compliance indicator;
(f)Import reason code.

Used tires (including tires on imported vehicles) must be cleaned of any soil.  This means that the vehicle, including the tires (and tire treads) must be power-washed prior to loading into a shipping container destined for Canada.  Upon arrival at Canada, the tires will be inspected by the Canadian Food Inspection Agency (“CFIA”)  for soil and plant debris.  If the CFIA discovers soil or debris, the tires will be refused entry into Canada and the shipment will be returned.

If corporation is the importer and does not comply with the importation safety requirements rules for tires, it may be fined up to $250,000 for a summary conviction offense and fined up to $2 Million for an offense on indictment.  individuals face fines of between $4000 and $20,000.

What Are The Canada Border Services Agency’s 2016 Verification Priorities?

Posted in Cross-border trade, Customs Law, origin, tariff classification, valuation

Shipping Container Above Stacked OthersIs your import company going to be audited by the Canada Border Services Agency (“CBSA”) in 2016?  It is hard to predict whether you will be the lucky person to host the CBSA at your business.  The chances increase exponentially if you import one of the goods that the CBSA has listed as a priority.  In January 2016, the CBSA listed its priorities for verifications.  We have been seeing increased random verifications of importers of the priority goods.

The listed tariff classification trade compliance priorities are:

  • tubes, pipes and hoses
  • parts of lamps
  • pasta
  • hair dryers
  • electric smoldering irons
  • curling irons
  • spectacle lenses
  • furniture for non-domestic purposes
  • palm oil
  • safety headgear
  • seaweed
  • dextrins and other modified starches
  • disposable and protective gloves
  • wheel rims and spokes
  • coconut milk from Asian countries
  • batteries
  • gazebos
  • apparel samples
  • bags of polymers and ethylene
  • footwear ($30 or more per pair)
  • hair extensions
  • machinery for public works
  • sacks and bags under tariff item 9903.00
  • special purpose motor vehicles
  • polyurethanes in primary forms
  • parts for power trains
  • generating sets
  • geophysical and oceanographic instruments
  • cereals
  • articles of apparel and clothing accessories
  • bicycles parts
  • articles of plastic
  • articles of iron and steel
  • vices and clamps
  • parts for use with machinery (Chapter 84)
  • chemical products

The listed valuation trade compliance priorities are:

  • apparel
  • footwear
  • preparations and pastrycook’s products

The listed origin trade compliance priorities are:

  • t-shirts
  • jewelry

If you import any of these goods or think the CBSA may think your goods are included in the above lists, you should conduct an internal review and potentially make a voluntary disclosure before the CBSA selects you for a trade compliance verification.

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