On July 11, 2016, the Canada Border Services Agency
(“CBSA”) announced their audit priorities for the second
half of 2016. One of the priorities for tariff
classification verifications is “parts of lamps. Parts
of lamps were first announced as a verification priority in
2015. The CBSA takes the position that parts of lamps are
classified in HS Code Heading 94.05. This issue is relevant because
the MFN rate of duty under the Customs Tariff for lamps and
accessories is generally between 5-7%. Certain other H.S.
Codes used by importers has duty free rates.
The CBSA gets support from recent Canadian International Trade
Tribunal (“CITT”) cases such as:
In Liteline, the CITT stated when
finding the LED lights were lamps and the appropriate HS tariff
classification to be heading 94.05:
“These classification opinions support the
Tribunal’s view that heading No. 85.43 is appropriate for the
classification of certain lamp components, be they based on LED
technology or otherwise. The goods described in the classification
opinions are components of lamps and lighting fittings, i.e. they
are light bulbs. However, the goods in issue are the lamps
themselves and, as such, are not described by the classification
opinions. The classification opinions deal with LED bulbs
(classified in heading No. 85.43, just as filament bulbs would be
classified in heading No. 85.39) and do not deal with complete
fixtures and lamps such as the goods in issue which belong
specifically in heading No. 94.05.”
“It was uncontested that the goods in issue emit light and
are used for the illumination of rooms. As such, they are properly
considered to be lamps or lighting fittings.”
In Ulextra, the CITT stated in respect
of certain ceiling-mounted recessed lighting fittings when finding
the appropriate HS tariff classification was heading 94.05:
“The Tribunal is of the view that, even if the goods in
issue were to be considered incomplete articles, that is,
incomplete lighting fittings or fixtures as presented at
importation, they would retain the essential character of complete
lighting fittings of heading No. 94.05 and would remain classified
as such by application of Rule 2 (a) of the General Rules. Indeed,
the purpose of the goods in issue is to produce light for room
illumination, and, at the time of importation, the goods in issue
comprise the two essential components that are necessary for them
to perform this function, namely, the lamp-holder/socket and the
The Tribunal notes that Ulextra agrees that these two components
are indispensable to enable light to be produced. Moreover, the
Tribunal accepts the CBSA’s argument that, as imported, the
goods in issue have all the essential characteristics of lighting
fittings, particularly in view of the fact that they could function
without the presence of a trim and that bulbs are generally not
included when one purchases a lighting fitting or a lamp. In sum,
having carefully examined the evidence, the Tribunal is of the view
that the goods in issue can be viewed as having the
“essential character” of complete lighting fittings
because they are recognizable or identifiable as lighting
The Tribunal therefore finds that the goods in issue are
lighting fittings or, at a minimum, incomplete lighting fittings
that have the essential character of complete or finished lighting
fittings. As such, they are properly classified in heading No.
94.05 and, in particular, applying Rule 6 of the General Rules and
Rule 1 of the Canadian Rules, under tariff item No. 9405.10.00 as
other electric ceiling or wall lighting fittings.”
It is important to know about these cases and the CBSA’s
position. Many importers are facing large assessments.
Anyone importing LED lights using an HS Code other than 94.05
should ask whether they are at risk of being a CBSA target.
the answer is likely to be “yes”. If you make a
voluntary disclsoure before you are contacted by the CBSA, you may
avoid AMPs penalties. You will have to pay an assessment.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Over the past year, we have watched the Canadian dollar drop relative to its U.S. counterpoint impacting Canadian businesses. U.S. goods and services are now more expensive, U.S. sales make a premium and errors when recording foreign exchange transactions can cost you more money.
We use a risk based approach to audit a company's year-end financial statements, but the term " risk based audit approach" can sound like the latest in business buzzwords similar to holistic, innovative and mission critical.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).