Written by Darrel H. Pearson, Jessica B. Horwitz and Katrina E. Crocker
Under subsection 74(1) of the Customs Act, importers have four years to ask the Canada Border Services Agency (CBSA) for a refund of customs duties. Importers have the option of doing so through a "blanket" request that covers all transactions in issue to avoid unnecessarily bureaucratic and duplicative individual requests for each entry. On March 12, 2020, the Canadian International Trade Tribunal released its decision in Tenneco Automotive Operating Company Inc. v The President of the Canada Border Services Agency (Appeal No. AP-2019-019), providing welcome news to Canadian importers on the time deadlines for filing blanket requests.
According to the CBSA's policy memorandum D17-2-4, corrections filed via blanket request require pre-approval from the CBSA in the form of a Blanket Authorization letter. This application process gives the CBSA an opportunity to scrutinize the importer's proposed blanket correction calculation methodology to ensure it is fair and accurate. The importer must have the blanket approval from CBSA in hand before it is permitted to "file" Form B2 Adjustment Requests on a blanket basis.
This policy has, in practice, meant that the processing of corrections filed via blanket request can be indefinitely delayed because the corrections are only recorded as "filed" on the day of the CBSA's approval rather than the date on which the importer actually filed the request along with applicable supporting materials and forms. This can cause significant timing concerns for importers seeking to correct errors in value for duty, tariff classification, and origin claims under subsection 32.2(1) of the Customs Act within the legislated 90-day period to do so without penalty, or to file refund requests under subsection 74(1) before refund eligibility expires four years after the original date of accounting.
Tenneco Automotive Operating Company Inc. filed a blanket adjustment request with the CBSA in September 2018 for a refund pertaining to a series of import transactions that took place from September to December 2014. By the time the CBSA approved Tenneco's blanket request application―295 days after the filing date―the four-year limitation period had expired for all of the transactions pertaining to the request, and the CBSA denied the requested remedy to Tenneco on that basis.
The Tribunal criticized the CBSA's conduct in this case as "unconscionable" and its administrative policy as "arbitrary," finding that importers should not be penalized for the time it takes a CBSA official to approve a blanket request. Because it is not constrained by legislative deadlines, the CBSA can take unlimited time to approve the blanket refund methodology, thereby running the risk of creating "a Kafkaesque bureaucratic scenario" that, "at its most absurd… incentivizes CBSA officials to withhold approval of the procedure of a blanket refund request until after all of the deadlines for filing individual requests have passed."
Key to meeting the statutory deadline is manifesting the intent to seek the refund. In the Tribunal's view, the intention to file a refund request for each transaction covered by a blanket request is formed, at the latest, on the date the blanket request is filed by the importer with the CBSA. It cautioned the CBSA against imposing any additional limits on the statutory right of importers to file a refund request within four years of the date of the importation of the goods.
The Tribunal noted that while the CBSA retains its discretion to refuse a blanket refund request and proceed with individual requests, the filing of the blanket request within the limitation period will preserve the time limit for filing individual requests.
The CBSA's blanket application procedures have not changed since this decision was released. The decision is encouraging for importers and one might expect it to result in an update to the CBSA's policy. But until this happens, importers must remain cautious when filing corrections on a blanket basis and, where possible, file the request with a sufficient buffer of time prior to expiry of the applicable limitation period to accommodate the possibility administrative processing delays.
For questions or assistance regarding customs corrections, refund requests or assessment appeals, please contact a member of the Bennett Jones International Trade and Investment group.