Canada: Importers Must Pay Customs Assessments In Canada To Perfect Appeal

Last Updated: June 28 2017
Article by Cyndee Todgham Cherniak

We were asked recently whether a non-resident importer could ignore paying a Canadian customs detailed adjustment statement ("DAS") and continue to import goods into Canada (just thumb their noses up at the Canadian government). The answer provided is that a non-resident importer (and a Canadian resident importer) should not consider something so foolish. Under Canadian law, the Canada Border Services Agency ("CBSA") may detain imported goods if the importer has an unpaid debt for previous imports, may seize the goods, and sell the goods if the debt remains unpaid. Simply put, the importer could lose import privileges if they do not pay a DAS. Consequently, the answer to the question is that importers should pay the amount of any DAS or enter into a payment arrangement with the CBSA (and the Canada Revenue Agency ("CRA") which is the Canadian governmental authority that collects such amounts). Based on our experience, the CBSA/CRA usually ask for payments to be made in full within 6 months, but we have negotiated payment arrangements over longer periods of time.

We were then asked if an importer could file a customs appeal (called a request for re-determination) for a tariff classification, origin or valuation issue without paying the amount of the DAS. The answer to that question is also "No". Subsection 60(1) of the Customs Act provides as follows:

"A person to whom notice is given under subsection 59(2) in respect of goods may, within ninety days after the notice is given, request a re-determination or further re-determination of origin, tariff classification, value for duty or marking. The request may be made only after all amounts owing as duties and interest in respect of the goods are paid or security satisfactory to the Minister is given in respect of the total amount owing."

What this means is that an importer (or other person entitled to file a request for re-determination) must pay the amount of any DAS in full or enter into a payment arrangement with the CBSA/CRA in order to perfect the appeal. If the amount is not paid within 90 days of the date of the DAS, the request for re-determination will be rejected. We have seen the CBSA return the DAS in the mail when payment had not been made (in this case, the importer strategically paid one DAS in full to perfect an appeal and could not afford to pay all the DASs).

We were then asked if the importer could decide later (after the 90 day request for re-determination deadline) whether to pay the amount of the DAS. This happens all the time. The CBSA takes collections actions and detains new imports by the importer. At this time, the importer realizes the importance of paying the DAS. The payment of the DAS gets paid so that the CBSA will allow future imports (and Canadian customers who have ordered and paid for goods can receive those goods).

However, this wait-and-see approach has a risk. When the importer is past the 90 day deadline for the request for re-determination, the importer may not be able to challenge the merits of the assessment (and recover the amount paid) without seeking an extension of time to file the request for re-determination. Pursuant to section 60.1 of the Customs Act, the importer may seek an extension of time from the President of the CBSA. The President has discretion to grant an extension of time (but it is not granted as of right). Subsection 60.1(4) of the Customs Act sets out the conditions that the requester must satisfy:

"No application may be granted unless:

  1. the application is made within one year after the expiry of the time set out in section 60; and
  2. the person making the application demonstrates that:

    1. within the time set out in section 60, the person was unable to act or to give a mandate to act in the person's name or the person had a bona fide intention to make a request,
    2. it would be just and equitable to grant the application, and
    3. the application was made as soon as circumstances permitted."

The President will not accept as a valid reason for the delay in filing the request for re-determination that the importer did not want to pay the DAS. Such a reason would not demonstrate a bona fide intention to make the request. The President may accept that the person needed time to raise the money to pay the DAS, but would have to provide evidence of attempts to raise the money before the 90 day deadline expired.

It is important to note that any amount of customs duties imposed under the Customs Act or assessed by way of a DAS as owning is a debt due to Her Majesty. The CBSA may take collection action under the Customs Act and/or the Customs Tariff for such customs duties (and other Canadian import taxes, duties, levies, charges, etc.) debts.

More information may be found on the LexSage website, such as:

What is a Detailed Adjustment Statement?

How to file a Customs Origin Appeal in Canada

How to file a Customs Valuation Appeal In Canada

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.

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