Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada Border Services Agency Seizure of Jewerly Poses Appraisal/Valuation Issues

I have many clients who are individuals and business owners who have had their jewelry seized and detained by the Canada Border Services Agency (CBSA) upon return to Canada. In many cases (too many cases) the client has a receipt, but the secondary screening officer does not accept the sales documentation as valid. The CBSA officer believes (often without any probable grounds except the person did not answer questions satisfactorily or 'they looked nervous about something") that the invoice understates the value.

In many cases, the CBSA charges the importer criminally with smuggling or providing a false document and a civil penalty. The CBSA officer often detains the jewelry and assesses a penalty of 30%-70% of a value to be determined. The CBSA then sends the seized jewelry to be appraised. As a result, the effect is serious --- and costly to resolve.

In every case that I have seen, the appraisal exceeds the amount of the invoice. This may be because appraisers are used to overstating the value for insurance purposes. This may be because the appraiser is asking the wrong questions - such as what would a willing buyer pay a willing seller in Canada at a retail (B2C) sale? This may be because the appraiser has not been told to include a trade level adjustment (in the case of a commercial importation). In every case, it is the interest of the CBSA to get as high an appraisal as possible in order to collect more duties (including excise duties), taxes (GST, HST or PST) and penalties. It may be because an appraisal is a guess an exact science.

Anyone in these circumstances should look at the Government of Canada auction web-site for surplus and seized goods - http://crownassets.pwgsc.gc.ca/mn-eng.cfm?snc=wfsav&vndsld=1#topOfCADC. The relevant area to review are "What has sold". Look at (1) jewelry, collectors items, arts and crafts, etc. and (2) seized assets (excluding vehicles). If you look at specific items that have sold, you will find many examples of jewelry that was appraised at one high amount and that sold in the government auction for less than half that value. I recently purchased a jade necklace valued at $50 on the auction site and I paid only $25. You will likely find better examples that are closer to the type of goods that have been seized from you. This is good evidence to present that a government appraisal is incorrect.

If you anticipate in advance that the CBSA may question your documentation on the purchase price of a good outside Canada, then improve your evidence. For example, get an appraisal completed by a reputable firm. Bring any sales promotional documents, such as sales catalogues or store advertisements. If an item was purchased at an auction outside Canada, bring the promotional materials. If your jewelry is a family heirloom, take photos of the jewelry and work with a reputable Canadian appraiser before bringing the goods to Canada.

If you require more assistance in making your arguments to the CBSA, please contact Cyndee Todgham Cherniak at 416-307-4168.

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