Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canaa's CITT Helps Shine Light on What To Do If Disagree With Advance Tariff Classification Ruling of CBSA

On April 16, 2010, the Canadian International Trade Tribunal (CITT) issued a decision in the Globe Electric Company Inc. case (AP-2008-022). The decision itself is not particularly earth-shattering. It relates to a typical tariff classification disagreement between an importer and the Canada Border Services Agency (CBSA).

What is important, and my reason for writing this blog posting, is how the dispute started. Globe Electric Company wrote to the CBSA seeking an advance ruling in respect of a good that they were importing (an outside security light that also had characteristics of a flash light). This advance ruling was not in the context of an audit. The advance ruling was made voluntarily. The importer filed the advance ruling request to say "Do you agree with me that this particular H.S. tariff classification number that I have researched and determined to be the mot appropriate is correct and applies to the good I plan to import and that I should use it on the documents I file with the CBSA (e.g., a B3)".

It is important to highlight the obvious - whenever a voluntary communication goes into the CBSA, there is a risk that they are going to disagree with your analysis. In many on the cases that I see, the importer is not familiar enough with the tariff classification analysis process (or relied on a customs broker) or the advance ruling process and does not seek legal advice (protected by solicitor-client privilege) until after representations are made and the file does not go in the direction they were hoping. Many importers forget that they are communicating with the CBSA who is the border authority. Many importers do not realize that the CBSA acts as a border enforcement agency and it is their job to ensure goods are property classified so that they can collect revenues. In what other contexts does one voluntarily approach a government agency and asked whether they would like to determine that you ate not acting in compliance with the law? Advance rulings are not routine and they are not without potential negative consequences.

In the Globe Electric Company case, the importer's H.S. classification number was rejected by the CBSA and the CBSA determined that a different H.S. tariff classification number applied. This can happen.

Globe Electric Company knew what to do next - they filed a request for a redetermination (some importers think such requests for determination are only available after the issuance of a detailed adjustment statement - not the case).

What happens at this stage too often is that the importer (or the employee who wrote for a ruling without seeking approvals to do so) or his/her advisor (non-lawyer) throws the response to the advance ruling request in a drawer and forgets it ever happened. No one is informed about the difference in opinion and the importer uses the tariff classification number they originally thought was correct. The negative decision is not appealed. Then the CBSA may conduct and audit and take the position that the importer had a "reason to believe" a tariff classification was incorrect. The result is a 4 (or more) year assessment period, additional duties and interest (potentially if the duty rate is different) and administrative monetary (AMPS) penalties.

back to Globe Electric company taking the corect route to "appeal a negative decision - The request for a determination is reviewed by a different CBSA officer who obtains the file of the original decision maker.  It was Globe Electric Company's experience (and is the experience of many importers) that the original CBSA decision was confirmed.

Globe Electric Company again took the correct step by appealing the CBSA's decision to the CITT. Unfortunately, in the end, the CITT sided with the CBSA.

The take aways from this case are:

1) If you apply for an advance ruling and do not agree with the CBSA's decision, file a request for a redetermination of a point of tariff classification, origin or value for duty;

2) If the part of the decision with respect to which the importer disagrees does not relate to tariff classification, origin or valuation, it is possible that an alternative legal remedy must be sought by way of judicial review (which has a 30 day filing deadline);

3) The request for a determination of a point of tariff classification, origin or value for duty must be filed in accordance with the provisions of subsection 60(2) of the Customs Act within 90 days of the date of the decision;

4) Assistance from a lawyer may improve chances of success or may highlight problems with the position taken;

5) If the CBSA confirms their decision, an appeal may be filed with the Canadian International Trade Tribunal (AND the President of the CBSA) pursuant to subsection 67(1) of the Customs Act within 90 days of the decision; and

6) It may take a year or more for the CITT process from filing to decision.

To read a copy of the Globe Electric Company decision, please go to the following link - http://www.citt.gc.ca/appeals/decision/ap2i022_e.asp

 

Leave a Reply

remember my information