MEMORANDUM D11-6-7

Ottawa, December 19, 2001

IMPORTERS' DISPUTE RESOLUTION PROCESS FOR ORIGIN, TARIFF CLASSIFICATION, AND VALUE FOR DUTY OF IMPORTED GOODS

Effective immediately, the attached pages replace the same pages in the previous version of Memorandum D11-6-7 dated May 4, 1998. Paragraph 60, under the section "How to Appeal to the CITT," has been amended to reflect the change of name-from Revenue Canada to Canada Customs and Revenue Agency-as well as the address and facsimile number. These changes have been indicated by a vertical line in the margin.

Memorandum D11-6-7

Ottawa, May 4, 1998

SUBJECT

IMPORTERS' DISPUTE RESOLUTION PROCESS FOR ORIGIN, TARIFF CLASSIFICATION, AND VALUE FOR DUTY OF IMPORTED GOODS

Note: For goods accounted for before January 1, 1998, see Memorandum D11-6-1, Determination/ Re-Determination and Appraisal/Re-Appraisal of Goods.

This Memorandum explains the dispute resolution process for importers who disagree with the Department's determination, re-determination, or further re-determination of the origin, tariff classification, or value for duty of goods accounted for, under section 32 of the Customs Act, or detained because they were, or might be, classified as goods for which importation is prohibited, on or after January 1, 1998. It also contains a copy of the sections of the Customs Act and related regulations that provide the legislative base for this process.

• Guidelines And General Information
  • Terminology
  • The Dispute Resolution Process
    • Formal Departmental Dispute Resolution Process
  • Types Of Decisions Eligible For Dispute Resolution
  • Who Can File A Dispute Notice Under Section 60
  • Basic Requirements To File A Dispute Notice
  • Time Limit For Filing A Dispute Notice
  • Payment Of Duties Or Posting Of Security
  • Preparing And Presenting A Dispute Notice
    • Form And Information Requirements
      • General
      • Special Cases
    • How And Where To File (manner)
  • How The Department Reviews Disputes And Makes Decisions
    • Reviewing The Dispute
    • Issuing The Decision
    • Obtaining Information
  • Payment Or Refund Requirements After A Dispute Decision
  • External Appeals
    • Who Can Appeal?
    • Time Limits
    • How To Appeal To The Citt
    • Refunds Before Citt Or Court Decisions
    • Departmental Decisions For External Appeals
    • Payments And Refunds After Appeal Decisions
  • Disputes Put On Hold
    • Goods Imported By The Same Importer
    • Goods Imported By Another Importer
    • Goods, Issues, Or Business Practices Not Sufficiently Similar
  • Appendix A - Legislation
  • Appendix B - Special Procedure to Challenge National Customs Rulings and Other Forms of Departmental Policy Using the Customs Act
  • Appendix C - Security Requirements
  • Appendix D - Explanation and Supporting Documentation for Importer Origin Disputes Involving a Free Trade Agreement
  • Appendix E - Explanation and Supporting Documentation for Importer Origin Disputes Not Involving a Free Trade Agreement
  • Appendix F - Explanation and Supporting Documentation for Tariff Classification Disputes
  • Appendix G - Explanation and Supporting Documentation for Value for Duty Disputes
  • Appendix H - Customs Regional Offices

GUIDELINES AND GENERAL INFORMATION

1. This document focuses mainly on disputes presented by importers for resolution within the Department under section 60 of the Customs Act. It also provides some basic information about appeals to external dispute resolution bodies, such as the Canadian International Trade Tribunal (CITT).

2. Terms we use in this document and their relationship to the legislative terminology are explained under heading "Terminology." The legislation is presented in Appendix A. All references to sections, subsections, and paragraphs in this Memorandum are from the Customs Act, unless otherwise stated.

3. This Memorandum does not cover the following:

TERMINOLOGY

4. In this Memorandum, we use the following terms to simplify the legislative and other legal language:

THE DISPUTE RESOLUTION PROCESS

5. The Customs Act provides formal ways for resolving certain types of disputes. It states the basic procedures and requirements for settling disputes. It also describes how external decision making bodies settle disputes that are not fully resolved by the Department.

6. The Department may also provide informal methods for dispute resolution, although this Memorandum does not deal with them. These are mainly used when there is no available or required legislated way to resolve a dispute. An example is the administrative review of an NCR described in Memorandum D11-11-1.

Formal Departmental Dispute Resolution Process

7. The following flow chart outlines the types of decisions eligible for formal dispute resolution within the Department. It also identifies external organizations which settle disputes that are not fully resolved within the Department.

TYPES OF DECISIONS ELIGIBLE FOR DISPUTE RESOLUTION

8. Each of the following types of decisions are eligible for dispute resolution under section 60:

9. Under section 60, importers cannot directly challenge an NCR or departmental policy as it applies to their imports. However, having imported in accordance with the policy, an importer may challenge it by using the special procedure explained in Appendix B.

WHO CAN FILE A DISPUTE NOTICE UNDER SECTION 60

10. A person to whom the Department has given a notice of decision under section 43.1 or subsections 57.01(1) or 59(2), may file a dispute notice.

11. Under subsection 59(2), the Department notifies one of the following people of its subsections 32.2(3), 58(1), 59(1), 74(1.1), or 74(4) decision:

12. Any of these people may file a dispute notice under subsection 60(1). Throughout this Memorandum, we use the word importer to refer to any of these people or their agents.

Note: In the case of a preferential tariff treatment under a free trade agreement, the Department also gives notice of the decision under subsection 59(2) to the person who has completed and signed the certificate of origin related to the goods. This may be the exporter or the producer of the goods. This person may also file a dispute notice under subsection 60(1). See Memorandum D11-4-17 for further information about these "exporter" disputes.

13. The Department gives notice of a section 43.1 decision to the person who applied for the advance ruling. It gives a notice of a subsection 57.01(1) marking determination to the importer, exporter, and producer of the goods. Each of these people may file a dispute notice under subsection 60(2). For information about these types of disputes, please refer to Memoranda D11-4-16 and D11-3-2, respectively.

BASIC REQUIREMENTS TO FILE A DISPUTE NOTICE

14. An importer who wants to file a dispute notice must:

15. The Department has the authority to reject a dispute notice which does not meet any of these basic requirements.

16. When the Department returns a dispute notice to an importer for a reason other than the expiry of a time limit requirement, the importer can present payment, security, or a revised notice to the Department within the time limit.

TIME LIMIT FOR FILING A DISPUTE NOTICE

17. An importer must file a dispute notice within 90 days after the date a decision notice is given. The legislation does not give departmental officials any discretion to extend the time limit. The Department will reject dispute notices presented after the time limit.

18. The Department considers a dispute notice to be filed on the date it is:

19. To calculate the 90-day time limit for filing, day one is the day following the date that the Department gives its decision notice under section 43.1, or subsections 57.01(1) or 59(2). The date that the Department gives a notice is the date it is mailed (usually the date appearing on the notice).

20. When the last day of the time limit falls on a day that the appropriate customs office is not open for business, the final day for filing the dispute notice is the next business day.

PAYMENT OF DUTIES OR POSTING OF SECURITY

21. Importers cannot file dispute notices under subsection 60(1) until they have paid all the duties, including the goods and services tax (GST), or posted security. The Department will reject dispute notices when importers have not paid these sums, or have not posted security, for the goods at issue.

22. If importers choose to post security, the security must generally accompany the dispute notice. For information about posting security, please refer to Appendix C.

PREPARING AND PRESENTING A DISPUTE NOTICE

23. Importers must submit dispute notices in the form, manner, and with the information prescribed by the Minister or his or her authorized designate. The requirements for disputes filed under subsection 60(1) are described below.

Form and Information Requirements

General

24. To challenge a decision in a notice given under subsection 59(2), an importer must complete and submit a dispute notice. This notice generally consists of Form B2, Adjustment Request, and supporting material. It has to include the details of the importation, the reasons supporting the importer's position, and a reference to the decision being contested. (For instructions on the coding and completion of Form B2 for disputes involving individual or multiple transactions, see Memorandum D17-2-1, Coding of Adjustment Request Forms.) Exceptional cases are described under the heading "Special Cases" below.

25. To resolve an issue in dispute efficiently and effectively, the Department requires:

26. For most disputes, the "Explanation" field of Form B2 is not large enough to permit a complete explanation. In these situations, a separate submission that provides a full explanation must be attached to the form. In the "Explanation" field, the following should be written: "See attached submission or explanation." The attached submission should fully and clearly state the rationale for the importer's position, including any supporting facts and arguments. It should also explain why the importer considers the decision under dispute to be incorrect. See Appendices D through G for more information on preparing the explanation and supporting documents for disputes concerning origin, tariff classification, and value for duty.

27. The Department may return a dispute notice, along with supporting material:

28. Time limits are not protected when the Department returns dispute notices.

29. Where importers are unable, for good reason, to complete the explanation or to obtain all the required supporting documents, they may ask for a specific and reasonable period of time to complete the submission. However, the importer must still file the dispute notice within the 90-day time limit and make the submission as complete and accurate as that time limit permits (e.g., all the relevant fields on Form B2 must be filled in).

30. To make this request, the importer has to ask for a specific amount of time to complete the submission in the "Explanation" field of Form B2. In that field, or in the accompanying submission, the importer must also:

31. If the manager of the Appeals Unit considers this request to be vague or unreasonable, he or she will contact the importer to establish a shorter, more reasonable time frame.

32. To help process all adjustments more efficiently, the Department requires that importers submit a section 60 dispute notice on a separate Form B2 from their section 32.2 correction(s) or subsection 74(1) refund application(s) when the section 60 adjustment is for a different line than the other adjustment(s). However, when a section 60 dispute notice and another adjustment request relate to the same line, only one Form B2 should be used.

Special Cases

33. To challenge an NCR or a policy when the Department has not given a notice of decision under subsection 59(2), see the requirements set out in Appendix B.

34. Before filing a dispute notice using a blanket Form B2, an importer should discuss the best way to prepare it with the regional Appeals Unit. In addition to meeting the requirements described in Memorandum D17-2-1, it is important to discuss how to:

35. An importer may use a letter rather than Form B2 to dispute the tariff classification of goods prohibited importation because they are classified as offensive weapons under tariff item No. 9898.00.00 or as obscene under tariff item No. 9899.00.00. A letter must provide:

Note: For other requirements for goods classified as obscene, see Memorandum D9-1-1, Jurisprudence and Revenue Canada's Interpretative Policy for the Administration of Tariff Item No. 9899.00.00 on Goods Deemed to be Obscene Under Subsection 163(8) of the Criminal Code.

36. To request a "self-adjustment" for a trade area (i.e., origin, tariff classification, or value for duty) that has already been self-adjusted when there does not appear to be a "real dispute" between the importer and the Department, an importer may mark "self-adjustment type" in the "Explanation" field of Form B2 filed under section 60. He or she must also identify the relevant reference source (e.g., Customs Notice No. xxx, CITT appeal No. xxx) and provide sufficient information to link the imported goods to the policy or decision identified. (A request like this might arise, for example, when a policy change is published in a Customs Notice or other form, or there is a decision by the CITT or a court which overturned departmental policy, after the original self-adjustment.) This request must, of course, be made within the 90-day time limit. (For more information, see paragraphs 37 through 39 of Memorandum D11-6-6.)

37. Importers who file dispute notices do not need to provide attachments that duplicate those that they have already submitted in the same region. However, the importer must indicate in the "Explanation" field of Form B2 that the relevant supporting evidence is attached to a previous Form B2 and identify its adjustment number.

How and Where to File (Manner)

38. An importer must:

39. The Department considers dispute notices delivered by courier, where a receipt is provided, to be delivered in person.

40. The Minister may in the future authorize importers to file their dispute notices electronically, as long as they meet certain conditions.

41. An importer may present a dispute notice, addressed to the Appeals Unit, to any customs office in the region where the goods were released or detained, unless the Department directs the importer in writing to do otherwise. However, an importer who received goods by mail may file a dispute notice in any customs office in Canada.

42. An importer must present two copies of Form B2, plus a third copy when posting security.

HOW THE DEPARTMENT REVIEWS DISPUTES AND MAKES DECISIONS

Reviewing the Dispute

43. An appeals officer reviews all the material, facts, and arguments submitted by the importer. The officer also reviews the reasons for the departmental decision in dispute, and other relevant information. The officer determines whether further information or consultation is required and evaluates all points in relation to the relevant law and policy.

44. Sometimes an appeals officer will need further information. The officer may specify a reasonable time limit, often 30 days, for the submission of this information. More time may be given when necessary. For example, more time may be needed to get origin information.

45. The Department tries to resolve a dispute within 180 days after a dispute notice is filed. However, a decision on a dispute may be delayed when, for example:

Issuing the Decision

46. The Department notifies the importer, and any agent acting for that person, of the decision on a dispute. When origin is verified, notice of the decision will also be sent to the person who signed the certificate of origin.

47. The Department generally prepares a Detailed Adjustment Statement (DAS) to inform an importer of the Deputy Minister's decision regarding a dispute, as well as the reasons supporting that decision. The DAS also indicates the amount of any refund or demand for payment.

48. When the Department issues an NCR, letter, or memorandum explaining the reasons for a decision on a dispute, the DAS itself may not contain all the reasons for the decision. In this case, the DAS will make specific reference by date and reference number to the relevant NCR, letter, or memorandum.

Obtaining Information

49. The Department acknowledges receipt of a dispute notice. It also identifies a departmental contact person, and how he or she may be reached.

50. An importer may inquire about the status of a dispute by contacting the Appeals Unit in the appropriate regional customs office. (See Appendix H for a list of the regional customs offices handling disputes.) When inquiring, it is important for the importer to indicate:

PAYMENT OR REFUND REQUIREMENTS AFTER A DISPUTE DECISION

51. The Department's decision may result in:

52. When the Department owes the importer a refund of customs duties, it must pay this amount, plus any interest, within 30 days after the date the decision is mailed (generally the date on the notice). The Department will mail the cheque to the address in the "mail to" box on Form B2. If this box has not been completed, the Department will send both the cheque and the DAS to the importer of record. (The Department, or in certain cases a provincial authority, sends GST rebates in the form of refunds separately from the customs duties and interest. Alternatively, the rebate may be made by way of credit.)

53. When importers owe the Department additional duties, including GST, they must pay the amount of duties owing, plus any interest, within 30 days after the date of the decision. If payment is not made within 30 days, the Department will send the importer a notice of arrears. The Department may take lien action for the amount demanded against any goods imported or reported for export at any time after the arrears notice has been sent. (The Department may also take other action.)

54. If importers intend to appeal externally and the outstanding duties have not been paid, they must advise the Appeals Unit at the regional office before the 30-day payment period expires. That unit will then request a delay in lien action. If the importer fails to file the appeal and post satisfactory security (see Appendix C) within 90 days after the section 60 decision was made, the Department may proceed with collection action. (It is important to note that even though an importer may file an appeal and be granted a delay in lien action, interest is calculated and payable on any duties not paid by the end of the 30-day period.)

55. Memorandum D11-6-5, Interest and Penalty Provisions: Determinations/Re-Determinations, Appraisals/Re-Appraisals, and Duty Relief, explains how interest is applied and calculated when a refund is due or additional duties are assessed by the Department. It also explains what happens when security has been posted.

EXTERNAL APPEALS

Who Can Appeal?

56. A person who is aggrieved by a decision made by the Deputy Minister under sections 60 or 61 can appeal that decision. In most cases, the appeal is made to the CITT. (In the case of prohibited goods classified under tariff item No. 9899.00.00, the appeal is made to the appropriate provincial court. The names of the courts are listed in section 71.)

57. Parties to a CITT appeal are:

58. Any of these parties can appeal the CITT decision to the Federal Court of Appeal on any question of law.

Time Limits

59. Notices of appeal to the CITT, the provincial court of jurisdiction, or the Federal Court of Appeal must be filed no later than 90 days after the date of the decision being appealed.

How to Appeal to the CITT

60. The importer must send written notices of appeal to the:

61. Importers should consult the CITT about its rules of procedure if they are not familiar with them.

Refunds Before CITT or Court Decisions

62. Under subsection 69(1), importers can post security to obtain a refund of all or part of the duties and interest paid on goods when they file an appeal. This refund excludes the GST. It also excludes any interest that was paid for duties not paid in accordance with subsection 32(5) or section 33. (Thus, the amount of security may exclude these amounts.)

Departmental Decisions for External Appeals

63. The Department issues a decision under section 61 after the CITT or a court issues its decision. This gives a re-determination or further re-determination of the origin, tariff classification, or value for duty of imported goods. It also indicates whether either party owes any money.

Payments and Refunds After Appeal Decisions

64. See the earlier heading "Payment or refund requirements after a dispute decision" for information on departmental refunds to appellants or payments owed by appellants to the Department.

DISPUTES PUT ON HOLD

65. To protect time limits, an importer may need to file dispute notices which cannot or should not be processed until a decision on another dispute is resolved. The importer or the Department may be waiting for a decision by the CITT or a court, or in some cases by the Deputy Minister, on an earlier dispute of the same or another importer involving the same issue. (This occurs only where the Department previously issued a notice under subsection 59(2) with respect to the trade area being resolved externally. In other cases the importer may make a correction or apply for a refund at a later date.)

66. Importers may request, therefore, that their disputes be put on hold when waiting for that other decision. To do so, the goods covered on the dispute notice to be held must be:

those goods which are the subject of the earlier dispute.

67. To request that a dispute notice be put on hold, an importer must submit Form B2 in the usual way and write in the "Explanation" field:

68. Except for the special cases described in paragraph 37 in this Memorandum, this dispute notice must still include a complete explanation.

Goods Imported by the Same Importer

69. An importer who is waiting for a decision by the CITT or a court on an importation may not need to file dispute notices (or other adjustment requests) for entries occurring after the entry of the goods before the CITT or the court. This applies when the origin, tariff classification, or value for duty on the later entries can be determined in the same manner as the goods under appeal. Paragraph 61(1)(c) allows the Department to issue decisions, at its own initiative, for goods of these later entries. For further information, see Memorandum D11-6-3.

70. If the importer is uncertain about whether the Department considers the goods, issues, or business practices to be sufficiently similar, it is the responsibility of the importer to file a dispute notice within the time limit.

71. Paragraph 61(1)(c) applies only to later entries related to goods before the CITT or a court. It does not apply to later entries related to a dispute before the Deputy Minister. Therefore, an importer waiting for a decision on a subsection 60(1) request must continue to file timely dispute notices for all importations which are covered by subsection 59(2) decision notices. (Where applicable, corrections or refund applications may generally be filed later for importations which have not been verified.)

Goods Imported by Another Importer

72. Importers may ask that their dispute notices be put on hold until a dispute of another importer is decided. When the Department agrees to put disputes on hold, importers must still continue to file timely dispute notices for all importations covered by subsection 59(2) decision notices. Also, interest continues to accumulate on unpaid duties during the period dispute notices are on hold. (Importers must use the self-adjustment provisions described in Memorandum D11-6-6 for importations which do not have subsection 59(2) decision notices for the trade area they seek to have adjusted.)

73. To avoid filing numerous dispute notices while waiting for the final resolution of another importer's CITT or Federal Court appeal, an importer may ask the Department to issue a decision on the dispute notice covering the earliest importation. This would allow the importer to appeal that (adverse) decision to the CITT and have later importations covered by paragraph 61(1)(c). Importers need not file dispute notices for transactions covered by that paragraph (see Memorandum D11-6-3).

74. Importers who have filed appeals against adverse decisions could then ask the CITT to put their appeals on hold until the appeal of the other importer is decided. Alternatively, importers could ask the CITT to join their appeals with the earlier appeal. Once the first appeal is decided, importers and the Department could decide how best to deal with the outstanding appeals before the CITT and subsequent importations.

Goods, Issues, or Business Practices Not Sufficiently Similar

75. When the Department considers goods, issues, or business practices not to be sufficiently similar to put a dispute on hold, it issues its decision in the usual way.

Appendix A - Legislation

Appendix B - Special Procedure to Challenge National Customs Rulings and Other Forms of Departmental Policy Using the Customs Act

Appendix C - Security Requirements

Appendix D - Explanation and Supporting Documentation for Importer Origin Disputes Involving a Free Trade Agreement

Appendix E - Explanation and Supporting Documentation for Importer Origin Disputes Not Involving a Free Trade Agreement

Appendix F - Explanation and Supporting Documentation for Tariff Classification Disputes

Appendix G - Explanation and Supporting Documentation for Value for Duty Disputes

Appendix H - Customs Regional Offices

REFERENCES

ISSUING OFFICE -

LEGISLATIVE REFERENCES -

HEADQUARTERS FILE -

SUPERSEDED MEMORANDA "D" -

OTHER REFERENCES -

SERVICES PROVIDED BY THE DEPARTMENT ARE AVAILABLE IN BOTH OFFICIAL LANGUAGES.

THIS MEMORANDUM IS ISSUED UNDER THE AUTHORITY OF THE DEPUTY MINISTER OF NATIONAL REVENUE.

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