Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada's CBSA Issues SIMA Detailed Adjustment Statements to Importers of Hex Head Cap Screws

We have been informed by more than one of our clients which import fasteners that the Canada Border Services Agency issued Detailed Adjustment Statements in December 2009 relating of importations of hex head cap screws. The CBSA has assessed SIMA duties at 170% on the basis that the importers did not indicate in Box 32 of the B3 Form that the goods were Code 10 (meaning not subject to antidumping and or countervailing duties.

The problem is that on January 7, 2005, the Canadian International Trade Tribunal made a finding that imports of carbon steel and stainless steel nuts and bolts were not causing material injury and did not threaten to cause injury to the domestic industry and terminated the investigation started in 2004. In 2005, the Canada Border Services Agency issued a Notice to importers indicating that hex head cap screws were not subject to antidumping and/or countervailing duties. Please go to the following for a link to the CBSA's Notice to Importers - http://www.cbsa.gc.ca/sima-lmsi/i-e/ad1308/ad1308nfi-eng.html

This notice to importers was issued after a judicial review of the CBSA's announcement that it would treat carbon steel hex head cap screws from China and Taiwan and stainless steel hex head cap screws from Taiwan, which are subject to an AD/CVD finding dated January 7, 2005, as screws. As a result of the judicial review (which I filed on behalf of the Canadian Fasteners Importers Coalition), the CBSA entered into a settlement agreement to issue the notice that hex head cap screws were not subject to SIMA duties.

As a result, importers have been surprised by the CBSA's Christmas present issued on or about December 16, 2009. The CBSA has assessed the SIMA duties and assessed regular customs duties and goods and services tax with respect to the importations of hex head cap screws.

It is important to address this matter quickly. The steps for addressing the improper assessments are:

1) Notify the CBSA in writing of the error as soon as possible (the Detailed Adjustment Statements give 10 dates from December 16th) and request that the DASs be cancelled;

2) Gather information to demonstrate that the imported goods are hex head cap screws and/or other non-subject goods;

3) Make arrangements for payment because the Special Import Measures Act (Canada) does not provide for posting of security (however, we have been able to make arrangements in special situations). The DASs give until January 15th (or 30 days) for full payment of the amounts assessed and specify that a higher rate of interest will be payable if the amounts are not paid on the due date;

4) Consider filing a judicial review application because part of the assessment may not be resolved under the provisions of SIMA (Notice of Application for Judicial Review to the Federal Court of Canada must be filed within 30 days of the date of the DAS decision); and

5) Consider filing requests for redetermination (a.k.a. appeal) pursuant section 57 of the Special Import Measures Act within 90 days of the date of the DAS decision. It is important to note that SIMA requires 100% of the assessed amount to be paid to perfect the request for redetermination.

While many will say that with respect to the assessment of goods and services tax, an importer may claim an input tax credit, this may not be correct. If the DAS makes a second assessment of the same GST previously paid for which an input tax credit was previously claimed, it may be that the second input tax credit may be disallowed by the Canada Revenue Agency. This will likely occur long after the period for judicial review has expired (30 days after the date of the DAS). If this should occur, the only option would be a remission order.

If you require assistance, please do not hesitate to contact Cyndee Todgham Cherniak at 416-307-4168 or cyndee(at)langmichener.ca

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