Canadian Importers say Retroactive "iPod Tax" Enforcement is Undermining Essential Government Service that Importers Rely Upon.

TORONTO, June 4, 2013 /CNW/ - Canadian importers say a secret plan by Canada Border Services Agency (CBSA) to impose retroactive duties on MP3 players (iPods) and other electronic goods is undermining an essential government program that helps importers follow complex customs rules.

"The problem goes beyond new taxes on iPods and other electronic goods," said Daniel Brock, a lawyer advising the Canadian Importers 9948 Fair Treatment Coalition ("9948 Coalition"). "CBSA is contradicting its own legally binding directions to Canadian importers. CBSA actions threaten all importers who rely on CBSA Advance Rulings and look for certainty and reliability in the administration of the Canadian border."

For more than 7 years, Canadian importers have relied on Advance Rulings from CBSA that told them it was ok to import iPods, televisions and television monitors, computer speakers, music CDs and other electronic goods duty-free into Canada.

In 2012, without a change in the law or Regulations, and without warning, CBSA suddenly demanded $16 million in back-duties on iPods and other electronics from Canadian importers who had dutifully complied with CBSA's original Advance Rulings.

"As a small importer in Canada, Coby trusts and relies on CBSA's guidelines and approvals for our importing and overall business activities," said Daniel Song, VP of Operations at Coby Electronics Corp.

"If this unfair 'look-back' liability on our previously approved duty-free imports is not reversed, then the entire duty system becomes suspect and future Advance Rulings questionable," said Song.

CBSA actively encourages Canadian importers to request Advance Rulings on future imports of goods into Canada to clarify how the goods should be classified and what duties should be paid.

"Sharp has to rely on Advance Rulings from the CBSA. It allows the company to make decisions and set prices for its imported goods," said Ernie Ubriaco, a consultant for Sharp Electronics of Canada. "What the CBSA is doing is not only unfair, it changes the rules in mid-game and makes it impossible for importers to plan or make sound business decisions," said Ubriaco.

Once an Advance Ruling is issued by CBSA, it is legally binding.  Failure to follow an Advance Ruling can lead to penalties or the seizure of imported goods.

Last year, CBSA issued more than 3 thousand Advance Rulings on all types of goods imported into Canada for sale to consumers or for use by businesses.

"The Advance Rulings for Tariff Classification program was implemented to provide certainty and predictability to importers, exporters, and producers," said John Preston, President of Dominion Customs Consultants.  "It is an essential tool used by the trading community allowing them to determine how goods will be treated by the CBSA when imported into Canada," said Preston.

The 9948 Coalition has requested a meeting with Finance Minister Jim Flaherty to discuss the concerns of Canadian importers about this unfair retroactive enforcement action by the CBSA.

The 9948 Coalition is asking the federal government to honour the original CBSA Advance Rulings, to reverse the retroactive duties on Tariff 9948 imports, and stop demands for invasive 'end use' certificates from Canadian consumers.

BACKGROUNDER #1
Highlights of Advance Rulings for
Tariff Classification Program

The CBSA describes the purpose of Advance Rulings for Tariff Classification as follows:

• Advance Rulings ensure that the tariff classification is deemed correct by the CBSA, and the ruling is binding until it is revoked or amended;

• Advance Rulings are meant to provide "consistent" guidance for importers with respect to applications based on "facts and circumstances that are identical in all material respects"

• Advance Rulings provide certainty to the importer, or his or her representative, as to how goods are to be classified and thereby facilitates the documentation requirements for clearing goods at the border;

• Advance Rulings must include "the tariff classification number and the reasons why (the tariff classification) was selected" and,

• There are situations where the CBSA will not issue a ruling, including where it is not possible to determine all the material facts; and when the request is hypothetical.

For additional information:

http://cbsa-asfc.gc.ca/import/ar-da/

http://www.cbsa-asfc.gc.ca/publications/dm-md/d11/d11-11-3-eng.html

SOURCE: Canadian Importers 9948 Fair Treatment Coalition

Claudia Feldkamp
Fasken Martineau LLP.
416-868-3435
[email protected]