On September 18, 2015, the Canadian International Trade Tribunal (CITT) released three decisions concurrently (collectively referred to as the Bri-Chem trilogy) that instruct the Canada Border Services Agency (CBSA) to apply past CITT decisions interpreting the Customs Act to resolve disputes on the tariff classification, origin and value for duty of imported goods.
The CITT granted the appeals by the importers in the Bri-Chem trilogy on the basis of its previous decision in Frito-Lay and ordered the CBSA to refund duties it improperly assessed on the appellant importers. Of greater significance is the CITT's finding that the CBSA engaged in an abuse of process by deliberately disregarding the CITT's 2013 decision in Frito-Lay. A full discussion of the Bri-Chem trilogy and its ramifications for importers is available on the Bennett Jones website (The Gap, the Trap and the Binding Spring).
Here is what the importing community needs to know about the Bri-Chem trilogy:
- An importer required to correct a tariff classification error that gives rise to dutiability can concurrently correct its tariff treatment declaration to claim duty-free treatment under a free trade agreement. If the goods qualify for duty-free treatment under a free trade agreement, the CBSA is not entitled to disallow a tariff treatment claim that maintains the originally declared duty-free status of the imported goods (the Frito-Lay Rule).
- The CITT's abuse of process finding increases the significance and value of CITT decisions in the resolution of disputes between importers and the CBSA. Unless the CBSA successfully appeals the Bri-Chem trilogy to the Federal Court of Appeal, it will be bound to apply past CITT decisions involving the same questions of law or mixed fact and law to resolve disputes.
- The CITT sent a strong signal that importers who were denied the benefit of the Frito-Lay Rule by the CBSA may be able to obtain refunds for duties improperly paid to the CBSA.
That the CBSA is bound by the CITT's decisions is a welcome statement of law and greatly increases the value of past CITT decisions and certainty in the importing community. But careful analysis is required to determine whether or not a given statement has precedential value. Importers and their service providers are well advised to consult with Canadian trade law counsel, who are trained in the deconstruction of decisions to distill precedents that can reliably inform decisions around customs declarations and the resolution of disputes with the CBSA at an early stage.
Importers should take note of the CITT's stated concerns in the Bri-Chem trilogy that other importers were improperly denied the benefit of the Frito-Lay Rule but did not pursue appeals. Importers who were denied the benefit of the Frito-Lay Rule after January 8, 2013, should consider applying for extensions of time to appeal and recover duties improperly paid to the CBSA. While an importer is normally required to file appeals under the Customs Act within 90 days of the date of the decision, there are rules that allow for an extension of time to file an appeal. Bri-Chem v. President of the Canada Border Services Agency, AP-2014-017 (Bri-Chem); Evergreen Ecological Services Inc. v. President of the Canada Border Services Agency, AP-2014-027 (Evergreen) and Southern Pacific Resource Corp. v. President of the Canada Border Services Agency, AP-2014-028 (Southern Pacific).