Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Importers of Jewelry Into Canada Should Look Carefully At Valuation

As discussed in my post yesterday about the Canada Border Services Agency's hit list for post-release national priorities verifications (audits), importers of jewelry will be under a microscope in 2011. The CBSA plans to conduct verifications focusing on valuation for customs duties purposes.

Jewelry and parts of articles of jewelry classified under heading 71.13 are identified to be a focus (other H.S. codes may also be reviewed). The CBSA will semi-randomly select importers. This means that the CBSA will conduct a risk assessment and revenue loss assessment in selecting jewelry importers for verifications. Some importers of jewelry will receive a letter about the CBSA's intention to conduct a verification.

A concern about post-release verifications of jewelry is that the CBSA and the importer can easily disagree on the value of a piece of jewelry. Based on my experience, the CBSA's appraisers issue appraisals far in excess of declared values. What will a willing buyer of jewelry will pay for a piece of jewelry is open to subjective interpretation. The case of Lindsay Lohan and the stolen neckless, while not a customs case, highlights how a piece of jewelry can in reality have a much lower value than a prosecutor/official would believe.

Importers of jewelry, based of my experience, have difficulty with documentary evidence. The CBSA can look at a customs invoice and not understand what was imported. Importers of jewelry do not always keep photographs of each and every piece of jewelry that has been imported. As a result, when the verification officer is conducting a verification, he/she cannot match a description on a customs invoice to a particular piece of jewelry. Valuation in this context is very problematic.

If jewelry imports are determined to be undervalued for customs duties purposes, the CBSA may assess additional customs duties (plus interest and penalties), additional excise tax (plus interest and penalties), GST (on the duties included amount plus interest and penalties) and administrative monetary penalties.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168.

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