Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canadian Tariff Classification Numbers May Differ From U.S. Tariff Classification Numbers

It is not uncommon for U.S. exporters to provide to Canadian importers the H.S. tariff classification number for a good that is the number to be used or was used when the goods enter/entered the United States - and not provide the H.S. tariff classification number for the good according the Customs Tariff (Canada) - which is the correct number. The Customs Tariff is Canadian law. Canadian importers must comply with Canadian law and provide the Canadian tariff classification number to the Canada Border Services Agency (CBSA) on the customs documentation.

The first six digits of a tariff classification number are harmonized at the World Customs Organization and should be the same under Canadian & U.S. law. The last four digits are determined in Canada by Statistics Canada. For this reason, the 10 digit number may not be the same under U.S. and Canadian law.

In addition, Canadian case law and advance customs rulings may be different than U.S. case law and USCBP rulings and technical opinions. This is another area where there is a divergence in tariff classifications.

Many importers do not take the opportunity to review the tariff classification of the goods they import into Canada and, thereby, put themselves at risk of a redetermination and/or administrative monetary penalties. Based on the volume of imports, the cost of tariff classification mistakes can add up quickly. Administrative monetary penalties may be charged on a per transaction basis even if there is no duty loss to Canada (that is, the duty rate does not change or is duty-free).

The assumption that Canadian tariff classification codes are exactly the same as U.S tariff classification codes is not accurate. I have seen this mistake made many times and in most cases the importer blindly accepted information provided by the exporter. Unfortunately, the importer is the party to whom the CBSA looks for accurate information.

The buzz word for 2011 is "traceability". It is critical for importers to get the Canadian tariff classification number correct so that the CBSA can identify risks prior to the shipment reaching the border. It is critical for importers to get the Canadian tariff classification number correct so that the CBSA can stop infringing goods when they get to the Canadian border. It is critical for importers to get the Canadian tariff classification number correct so that Health Canada can notify importers about recalls of unsafe goods. The list goes on.

If you are not sure if the tariff classification numbers you use are correct, please call Cyndee Todgham Cherniak at 416-307-4168.

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