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NAFTA Appeals

11.30.2016

NAFTA Appeals and the CBSA policy

The rules:
Customs Act
Covers corrections and refunds and sets a time limit of 4 years, except for refund claims to apply a NAFTA (or other Free Trade Agreement) which are limited to 1 year.
Appeal Process:
Assessments can be appealed first to the CBSA (Canada Border Services Agency) itself, then to the CITT (Canadian Internaonal Trade Tribunal), then Federal Court of Appeal
The situation:
Goods of US origin are imported under a duty-free classification. The Tariff Treatment used at time of import was Most Favoured Nation (TT 02) because there was no NAFTA Certificate available. The net result was a 0% duty rate.
Subsequently, the CBSA during an audit, reclassifies the imported goods under a classification that attracts duty, even though the goods would have been eligable for duty free status under the NAFTA agreement (with a certificate of origin).
In four seperate cases (three of which were appealed togeather), the CITT ruled that the CBSA had an obligation to allow the importers the right to amend the tariff treatment on a revenue-neutral basis such that the net effect of the reclassificaon and revised tariff treatment was to uphold the duty free entry.
The Atorney General appealed the three cases to the Federal Court of Appeal, where the CITT decision was upheld.

Bottom line:
If any reassessment of classification of US made goods by CBSA, that results in duty owing, the importer is able to apply the NAFTA tariff treatment, making a revenue-neutral import, beyond the one year statute.

References:
Frito-Lay v. President of the Canadian Border Services Agency, Appeal No. AP-2010-002;
Bri-Chem v. President of the Canadian Border Services Agency, Appeal No. AP-2010-017;
Ever Green Ecological Services Inc. v. President of the Canadian Border Services Agency, Appeal No. AP-2014-027;
Southern Pacific Resource Corp. v. President of the Canadian Border Services Agency, Appeal No. AP-2014-028