Many 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 classify the good. However, it should be noted that asking the question of the CBSA opens the importer to the possibility of 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 of 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 (that is, there isn’t a prescribed form to complete). 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 involves 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.