Is it better to seek permission or ask for forgiveness after the fact?
When it comes to imports of goods into Canada that may be subject to anti-dumping duties, it is better to seek an advance ruling from the Canada Border Services Agency (“CBSA”). If you import goods and the CBSA believes that the goods are within the product description of an anti-dumping order, the CBSA may issue a detailed adjustment statement (“DAS”) (an assessment). If the CBSA issues a DAS, the importer must pay the full amount of the DAS in order to perfect a request for re-determination (an appeal). If the amount of the DAS has not been paid in full at the 90 day limitation period for the appeal, the CBSA will not accept the request for re-determination. We have seen requests for re-determination (in the form of adjustment requests) returned to the importer or their advisor.
In many cases, the rate of anti-dumping duty applicable to imports under the all others rate is over 100%. We have met many importers who did not mark up the price of the imports in an amount that exceeded the anti-dumping duty rate. They just cannot afford the assessed amount in the DAS.
Sometimes, the CBSA does not issue the DAS for two years and they issue two years worth of DASes. If the importer has imported a lot of the goods at issue, the amount of anti-dumping duties payable, plus additional goods and services tax plus interest calculated from the date of the importations amounts to significant money.
Also, there is no guarantee that if the importer appeals the DAS (after a failed request for re-determination) to the Canadian International Trade Tribunal (“CITT”) that the CITT will accept arguments that the goods are not within the scope of an anti-dumping order.
To avoid an unexpected and significant financial liability, it is best to ask the CBSA for an advance ruling on whether particular goods are subject to an anti-dumping order. The question may be whether specific goods fit within a product description (that is, is it a subject good). For example, is an aluminum baluster in retail packaging within the CITT’s anti-dumping order against aluminum extrusions from China. There has been a case on this one and the CITT determined that finished aluminum balusters in retail packaging were aluminum extrusions within the product definition in the Aluminum Extrusions anti-dumping and countervailing duty order.
The question may also relate to whether a particular good originates in a subject country. For example, are certain screws that are further manufactured in the United States subject to the anti-dumping and countervailing duty order against carbon steel fasteners from China and Taiwan. There has been a case on this one and the CITT determined that the term “originates” is not defined in the Special Import Measures Act and has a very broad meaning. The CITT held in Ideal Roofing Company Limited and Havelock Metal Products Inc. that:
“In the absence of a statutory regime for determining origin in the context of SIMA, the Tribunal finds that the CBSA’s submission to rely on the dictionary definition of the term “originating” is most appropriate for the case at hand and most consistent with the past practice of the Tribunal in the context of SIMA. Specifically, the Tribunal will rely on the Canadian Oxford Dictionary which defines the term “origin” as “. . . a beginning, cause, or ultimate source of something . . . that from which a thing is derived, a source or a starting point . . .” and “originate” as “. . . begin, arise, be derived, takes its origin . . . .”
The CBSA will consider advance ruling requests and issue binding rulings. The importer has the opportunity to provide the relevant facts for consideration by the CBSA and include product samples. While it may take a while to get an answer from the CBSA, the importer has better control over their financial liability by working with the CBSA where there may be questions raised. It is better for importers to acknowledge the risk of a potential future disagreement than avoiding the question and hoping for the best.