Canadian importers and retailers victims of $16-million tax grab

Federal Government plans unfair retroactive duties on iPods and other electronic goods

TORONTO, May 23, 2013 /CNW/ - A coalition of Canadian importers says the Canada Border Services Agency (CBSA) has misled dozens of Canadian companies for years by inducing them to import MP3 players and other goods into Canada duty-free, all the while planning to later collect millions of dollars in back-duties on the goods, with interest.

"This is about government accountability and transparency, and CBSA is demonstrating neither in this instance," according to Daniel Brock, a lawyer representing the Canadian Importers 9948 Fair Treatment Coalition.

Internal CBSA documents, released under Access to Information, detail a government plan by the CBSA and the Department of Finance to apply retroactive duties on MP3 players (iPods), music CDs, televisions and monitors, computer speakers and other electronic goods, all of which have been admitted into Canada duty free by the CBSA for more than a decade.

The documents contradict recent statements by the federal government reassuring Canadians that MP3 players and other electronics imports are not subject to an "iPod tax".

"The federal government has said a "special tariff relief provision' (Tariff 9948) allows these electronic goods to come into Canada without duty," said Brock.

"In fact, CBSA is denying the tariff relief to MP3 players, music CDs, televisions, television monitors, computer speakers and any other electronic goods because the Agency says that Tariff 9948 does not apply. But it is the story behind the CBSA action that raises disturbing questions," said Brock.

The CBSA is relying on an obscure rule that importers must produce "certificates" from retail consumers ("end-use certificates") or else repay duty waived at the time of import.

However, CBSA internal documents suggest that the CBSA has intended all along to tell importers they could import various electronic goods into Canada duty free, using Tariff 9948 while at the same time planning to deny the tariff relief later and collect the duty retroactively.  In some cases the CBSA expressly told importers that they didn't need end-use certificates.

"We were shocked when the CBSA notified us that we had to pay millions of dollars in retroactive duties on our television imports", says Jacob Herzog, CEO of Curtis International, a Canadian-owned importation company based in Etobicoke, Ontario.

"CBSA directed us through Advance Rulings to import duty-free. The televisions were priced and sold based on this direction.  We cannot now collect millions of dollars from these television sales to pay retroactive import duties," said Herzog.

"The Coalition companies all rely on CBSA to act fairly and provide us with the information we need to respect the law and pay our fair share of import duties," said Ken Buschlen, VP of Finance, Panasonic Canada Inc.

"CBSA issued us authorization to import products duty-free, but now it appears that the CBSA intended to claw back the duties later.  That is plainly unfair," said Buschlen.

"The CBSA knew that importers like Sharp would not have and would not be able to obtain certificates from Canadian consumers for electronic goods," said Ernie Ubriaco, a Customs Consultant for Sharp Electronics of Canada.

"But they told us to import the goods duty free anyway.  Now they want millions in back-duties.  As an importer, it's hard to believe or make sense of this," said Ubriaco.

The Coalition has requested a meeting with Finance Minister Jim Flaherty to discuss its concerns about this unfair action of the CBSA.

The Coalition is asking the federal government to honour the original CBSA rulings, to reverse the retroactive duties on Tariff 9948 imports, and stop demands for end use certificates. Those certificates would contain personal information about how the MP3 players and other electronic goods are used by Canadian consumers.

SOURCE: Canadian Importers 9948 Fair Treatment Coalition

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