If 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 owing 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.