Customs authorities do issue refunds on duties paid on imported goods under specific conditions.
Importers are encouraged to visit a Canada Border Services Agency (CBSA) office to work hand-in-hand with CBSA officers.
Refund applicants should set up a file, document all discussions with the CBSA and follow up promptly on any questions that CBSA officers have.
What Reasons Justify a Tariff Duty Refund?
Under section 74 of the Customs Act, importers can apply for a refund of tariff duties under any of the following scenarios:
- Imported goods are damaged, destroyed or suffer deterioration from when first shipped to Canada up to the time that a customs officer releases the items.
- The quantity of released goods is less than the quantity for which tariff duties were paid.
- Imported goods turn out to be of inferior quality than the declared items on which duties were paid.
- No claim for free trade preferential tariff treatment was made when the goods were first accounted for to customs.
- A clerical, typographical or similar error was made when duties were first calculated.
- The origin, tariff classification or value for duty for the imported goods was incorrectly determined.
- Imported goods are disposed of before any other use is made of the goods in Canada.
Typically, the CBSA reserves the right to assess refunds on duties that were overpaid or paid in error for any other reason that the authorities prescribe.
What are the Deadlines for Claiming a Refund?
Generally, importers must apply for a refund within four years of the date on which they first accounted for the imported goods with customs. If the imported goods should have been covered under the North American Free Trade Agreement (NAFTA) or are from Chile, the refund claim deadline becomes one year from date of first accounting.
Importer Must Submit a Claim for Refund
In addition to the above claim deadlines, importers should be keenly aware that they are 100% responsible for applying for a refund. The CBSA will not automatically issue a refund payment.
Written notice of the claim refund must be submitted to a customs officer within the prescribed timeframes.
In addition, the claimant must allow an officer reasonable opportunity to examine the imported goods and to verify the reason for the refund claim.
An application for the refund including such evidence in support of the application as may be prescribed must be made to an officer in the prescribed manner and in the prescribed form containing the prescribed information.
The CBSA has strict requirements for applying for a refund, including prescribed forms and procedures.
Again, the best plan is for importers to physically visit the CBSA officer in charge of their files. Working together and keeping proper documentation is the best formula for meeting all legal requirements.
Duties Not to be Refunded
Specific types of duties or taxes will not be refunded.
Examples of non-refundable duties and taxes are as those payable on:
- Luxury items under the Excise Act or Excise Tax Act
- Imported goods suspected of dumping or other unfair pricing practices under the Special Import Measures Act.
Eligible Amounts for Refund Plus Interest
Under section 75 of the Customs Act, the CBSA has the final say in deciding the amount of duty refund. This is another important reason why importers should work collaboratively with customs authorities.
The CBSA does pay interest paid on refunds. Interest calculated on a refund on starts on the 91st day after the day the CBSA receives the refund application and ends on the date a refund is granted.
Trade Lawyers and Customs Brokers Can Help
The application process for customs duty refunds can be highly complex, legalistic and stressful – particularly for novice commercial importers.
Trade lawyers are expert in all aspects of Customs Act and Customs Tariff laws. While expensive, these legal specialists can help importers navigate the trickier points of negotiating tariff duty refunds.
A less expensive option is to work with a licensed customs broker. Customs brokers are legally required to pass professional examinations that focus heavily on the legal provisions of the Customs Act and Customs Tariff.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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