On May 27, 2011, the Canadian International Trade Tribunal (CITT) issued its decision in Danson Decor Inc. v. The President of the Canada Border Services Agency (AP-2009-066) in which it sided an importer who sought a refund of duties paid when it used an incorrect tariff classification. The goods that the importer imported were bows (yes, the bows that one puts on wrapped gifts). The importer wanted to change its classification to H.S. Code 95.05. This H.S. Code covers "festive, carnival or other entertainment articles, including conjuring tricks and novelty jokes". The most-favoured-nation (MFN) duty rate for H.S. Code 95.05 is 0%.
The importer made a request for a refund pursuant to subsection 74(1) of the Customs Act. The CBSA denied the refund and the case went to the CITT.
The CITT's decision is helpful and potentially broad in its application. To use H.S.Code 95.05, the imported goods:
- must ... be either festive, carnival or other entertainment articles
- must be sold in connection with a seasonal business
- may include articles used for a feast, a festival, holidays or other joyous occasions, such as a birthday or a wedding
The CITT made the following important statement:
"[t]he Tribunal considers that note (A)(1) of the Explanatory Notes to heading No. 95.05 does not indicate that the only festive decorations covered by heading No. 95.05 are those used to decorate rooms or tables. On the contrary, while this note indicates that festive decorations of this sort are included in the broad category of festive, carnival or other entertainment articles, it does not contain language that suggests that the scope of the phrase “festive articles” or “festive decorations” is limited to one class or kind of decorations. In fact, the list of festive decorations specifically mentioned is followed by “etc.”, which signals that other decorative items may be included."
This case is important because the CBSA is targeting importers who use H.S. Code 95.05 because the CBSA feels that it is used improperly to evade duties. The irony is that grumpy customs officers get to determine what is and what is not "festive" or a "novelty joke".
To obtain a copy of the Danson Decor case, please go to the following link - http://www.citt.gc.ca/appeals/decision/ap2j066_e.asp