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Taxation - Customs and excise - Customs - Tariff classification - Imports - Preferential tariffs - Redetermination and appeals - Appeals - Canadian International Trade Tribunal - Federal Court

Thursday, November 17, 2016 @ 7:00 PM  


Appeal by the Attorney General from three decisions of the Canadian International Trade Tribunal upholding the ability of importers to correct certain declarations in order to obtain more favourable tariff treatment. In the three cases, goods qualifying under the North American Free Trade Agreement (NAFTA) were imported into Canada from the US duty-free using the Most Favoured Nation (MFN) tariff treatment. The importers declared certain tariff classifications for the goods. Later, as a result of CBSA audits, the importers discovered that the tariff classifications they had chosen for the goods were incorrect, and they filed a correction of the tariff classification. They also notified the CBSA of the change to the tariff treatment. The goods went from duty-free classification with MFN treatment to a duty-free classification with NAFTA treatment. The CBSA objected to what the importers had done, claiming that the MFN treatment was not incorrect and therefore could not be changed. The Tribunal saw nothing wrong with what the importers had done finding that the NAFTA tariff treatment was always available to the goods and the change simply maintained the status quo. The Tribunal further found that the CBSA followed a wrong methodology by focusing on a purported correction to tariff treatment and committed an abuse of process by re-litigating a prior decision. The Attorney General appealed the three decisions. It also challenged the Tribunal’s finding that the CBSA committed an abuse of process.

HELD: Appeals dismissed. The Tribunal’s decisions, including its ruling on abuse of process, were reasonable. Section 35.1 of the Customs Act did not limit when an importer could claim NAFTA tariff treatment, but rather set out how an importer could prove the origin of goods. Section 74 of the Customs Act did not provide any general limitation on claims for NAFTA tariff treatment. Section 24 of the Customs Tariff and the Proof of Origin of Imported Goods Regulations did not set out rules limiting when claims for NAFTA treatment could be made. The CBSA committed an abuse of process when it attempted to re-litigate an earlier decision. The CBSA had discontinued its appeal of that decision and following the discontinuance of its appeal, it took administrative positions contrary to it without explanation, justification or action of the sort required.