Annual report March 31, 2022 - Customs and excise appeals

The Tribunal hears and decides on a range of appeals of decisions of the President of the Canada Border Services Agency (CBSA) and the Minister of National Revenue.

1) Appeals filed under the Customs Act

Appeals filed under the Customs Act relate to a range of issues, the most common of which include the:

• appropriate classification of imports according to the Canadian Customs Tariff;
• appropriate manner in which to calculate the value for duty imposed on imports;
• determination of where imports originated before they entered Canada; and
• importation of prohibited goods (such as weapons).

2) Appeals filed under the Special Import Measures Act

Appeals filed under the Special Import Measures Act (SIMA) relate to two key issues:

• whether the CBSA should have applied anti-dumping and/or countervailing duties to certain imports; and
• whether the CBSA properly calculated the margin of dumping or amount of subsidy for certain imports.

3) Appeals filed under the Excise Tax Act

Appeals filed under the Excise Tax Act relate to an assessment or a determination of excise tax. Excise taxes are levied on certain petroleum products, heavy automobiles and air conditioners designed for automobiles. There were no appeals filed under this mandate in 2021-22.

4) Extensions of time

Under the Customs Act, a person may apply to the Tribunal for an extension of time to file a request for a re-determination or a further re-determination with the CBSA. The Tribunal may grant such an application after the CBSA has refused an application or when 90 days have elapsed after the application was made and the person has not been notified of the CBSA’s decision. A person may also apply to the Tribunal for an extension of time within which to file a notice of appeal.

Under the Excise Tax Act, a person may apply to the Tribunal for an extension of time in which to serve a notice of objection with the Minister of National Revenue or file a notice of appeal with the Tribunal. During the fiscal year, the Tribunal issued only one order granting an extension of time, under the Customs Act.

Appeals received, heard and scheduled

To ensure timely access to justice, the Tribunal schedules hearings immediately upon receipt of an appeal.

During the fiscal year, the Tribunal received 50 appeals. Seventy-four appeal cases were outstanding at the end of the fiscal year. Of that number, 41 were in abeyance at the request of the parties, often because parties are attempting to negotiate a settlement or are awaiting the outcome of another related appeal before the Tribunal. The remaining 33 matters were all actively progressing in accordance with normal case-management milestones towards their scheduled hearing date.

Appeals activity in 2021-22

Sample of noteworthy decisions under the customs and excise appeals mandate

Western Alliance Tubulars Ltd. and Victoria International Tubular Corporation, and Algoma Tubes Inc., Prudential Steel ULC and Tenaris Global Services (Canada) Inc. (EA-2019-006 and EA-2019-007)

These were the first appeals of this kind. In 2017, SIMA was amended to provide interested parties with the ability to ask the CBSA to verify whether goods fall within the scope of trade remedy measures that are in force. Interested stakeholders that may ask the CBSA for a scope ruling include importers, exporters, foreign producers, Canadian domestic industries, or any other person who has a substantial interest in a matter. This compliance measure strengthens Canada’s trade remedies regime by providing additional certainty and predictability to stakeholders as to whether SIMA duties apply to a good or not. The 2017 amendments also provide for a right of appeal of the CBSA’s scope decisions to the Tribunal.

In this matter, domestic producers sought to verify whether certain imported insulated tubing (IT) and vacuum-insulated tubing (VIT) were of the same description as the goods that fell within the scope of the oil country tubular goods (OCTG) originating in or exported from China that were covered by the Tribunal’s finding in inquiry NQ-2009-004. The CBSA had determined that they did not. The appellants challenged that finding at the Tribunal. The Tribunal ruled that the goods did indeed fall within the scope of goods subject to the Tribunal’s finding in inquiry NQ-2009-004 and, therefore, that they are subject to duty.

The Tribunal considered the physical characteristics and technical specifications of the goods in issue, their uses, their channels of distribution and their promotional material and documentation. The Tribunal found that the goods in issue met the main governing features of the description of the NQ-2009-004 goods, namely tubing meeting American Petroleum Institute (API) specification 5CT or an equivalent standard. The Tribunal also found that IT/VIT were used to perform the same fundamental task as non-insulated OCTG, i.e. to convey fluids in downhole wells.

Pier 1 Imports (U.S.), Inc. (AP-2019-047)

This appeal related to a decision concerning the value for duty of decorative home furnishings and accessories. For several years, the CBSA had accepted that goods imported by Pier 1 Imports (U.S.), Inc. (Pier 1) be valued for purposes of duty calculation purposes based on a mutually agreed valuation methodology that had settled previous litigation. The agreement provided that Pier 1 had to advise the CBSA of any material change in its circumstances. Further to a verification, the CBSA determined that Pier 1 underwent a material change in corporate operations that ought to have been notified to the CBSA. As a result, the CBSA revised the applicable valuation methodology and the duty payable for transactions spanning four years. The appeal concerned the applicability of the earlier agreement and the proper valuation methodology.

The Tribunal determined that an earlier agreement is not enforceable by the Tribunal and, instead, that a flexible or modified application of the computed value method was the most appropriate method of valuation (as provided by section 53 of the Customs Act).

Withings Inc. (AP-2020-003)

At issue was whether body cardio Wi-Fi smart scales and body analyzers were properly classified as “[p]ersonal weighing machines, including baby scales; household scales”, as determined by the CBSA, or whether they should be classified as “[o]ther instruments and apparatus”, as submitted by Withings Inc. The appeal was dismissed.

The Tribunal found that the goods in issue were subject to Note 3 to Section XVI of the Customs Tariff, which directs that multi-function machines and composite machines be classified according to their principal function. A similar provision is found under Note 7 to Chapter 84 of the Customs Tariff. The Tribunal was satisfied that the goods in issue were multi-function machines capable of measuring and tracking various body composition elements but that they were first and foremost personal weighing devices. The Tribunal found that the goods were not instruments and apparatus for physical or chemical analysis, as the evidence revealed that they were not high-precision instruments and apparatus of the types described in the explanatory notes to the heading describing such goods.

Amcor Flexibles Capsules Canada Inc. (AP-2020-023)

At issue was whether various models of plastic disc-shaped bottle cap liners were properly classified as “other articles of plastics”, as determined by the CBSA, or whether they should be classified as “gaskets”, as submitted by Amcor Flexibles Capsules Canada Inc. The appeal was allowed.

In this matter, the Tribunal did not consider it appropriate to apply the shared meaning rule of statutory interpretation as it did not see a discrepancy between the ordinary meanings of the English term “gaskets” and the French term “joints”. The Customs Tariff provided little or no guidance to assist in defining the scope of the term “gaskets” or “joints”. Therefore, the Tribunal turned to the ordinary meaning of the terms. The Tribunal found that the terms “gaskets” and “joints” identify a good that is a piece of material, which is used as a joint and that serves as a seal to make a joint fluid-tight or leakproof, as was the case for the goods in issue.