Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

Importers of Tires Into Canada To Come Under CBSA Scrutiny

As far as I know, Canada does not have imminent plans to initiate a China-specific safeguard case against tires from China. The Canada Border Services Agency (CBSA) has a different focus. The CBSA has included motor car, bus and lorry tires in its 2011 national priorities for post-release trade compliance verifications.

Any importer into Canada of tires imported under H.S. heading 40.11 may receive a friendly letter from the CBSA informing them that they were lucky enough to be selected for an audit/verification of valuation methods. The importers at the greatest risk of errors are Canadian importers who are related to the foreign exporter and non-resident importers of tires into Canada. This does not mean that other importers will not receive the friendly letter from the CBSA.

The CBSA will look at whether the correct valuation method has been used. The CBSA will look at whether related party importers have made adjustments for subsequent proceeds for management & administrative fees, research & development fees and other amounts paid to related parties. The CBSA will review T106 form to see what types of intercompany payments are made. The CBSA will look at whether payments of royalties, dutiable commissions and assists have been included in price paid or payable calculations. With respect to non-resident importers, the CBSA will look at whether the transaction value applies or whether another method is more appropriate. The CBSA also look at whether the non-resident importer is a purchaser in Canada and whether the transaction used for valuation purposes was a “sale for export" to Canada. There are many other issues that may arise in the context of valuation verifications.

If you are an importer of goods classified under H.S. heading 40.11 into Canada, this is a good time to review your tariff classification and tariff treatments. If you have not yet received a letter from the CBSA about an audit/verification, you may be entitled to make a voluntary disclosure should you find a mistake. If you are entitled to make a voluntary disclosure, you may save the amount that would be charged as penalties if the CBSA finds the mistakes during an audit/verification. In addition, if you make a voluntary disclosure of mistakes that result in an increase in customs duties payable, you save the interest from the date of the voluntary disclosure. In addition, based on my experience, the CBSA has a greater willingness to discuss reasonable payment arrangements when a person makes a voluntary disclosure and does not have the ability to pay the additional customs duties.

For more information, please contact Cyndee Todgham Cherniak, a Canadian customs lawyer, at 416-307-4168.

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