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Canadian Customs Audit Targets: 
CBSA Releases H2 2016 Verification
Priorities

On July 7, 2016, the Canada Border Services Agency (“CBSA”) released “Tariff Compliance Verifications – July 2016”.  What are “Tariff Compliance Verifications”? Tariff compliance verifications are CBSA customs audits during which the CBSA ensures that importers are using the proper tariff classification (HS Code) numbers when completing import documentation.

The Tariff Compliance Verifications – July 2016 identifies tariff classification, origin and valuation targets of the CBSA for the random and mandatory verifications that will take place in the second half of 2016.  There will still be other verification of importers of other “not listed” imported goods.  However, the document released by the CBSA is a “heads up” to importers and a “helpful” nudge to review one’s import paperwork carefully.

In this document, the CBSA provides useful information that helps importers assess their risk of a reassessment.  The CBSA indicates which verification targets were previously listed by them and the compliance rates discovered by the CBSA.  The CBSA also states the amount of money the CBSA has collected in respect to the targeted items. For example, the CBSA informs that $1,142,773 has been collected as a result of prior verifications relating to preparations and pastrycooks’ products – who would have thought that would be a big problem area?  With respect to disposable and protective gloves, the non-compliance rate was at 92%.  Importers who use the HS code for disposable gloves and protective gear should be asking themselves if they have made the same mistakes as others.

Any importer who imports a targeted item could be the subject of a verification audit by the CBSA.  If the CBSA finds non-compliance, the importer will be assessed duties, taxes and possibly administrative monetary penalties.  For this reason, if you import one of the listed items, review your paperwork and make corrections before the CBSA calls.

The listed tariff classification trade
compliance priorities in alphabetical
order are:

• air brakes and parts thereof (HS Code Subheading 8607.21) (new)
• articles of apparel and clothing (HS Code Heading 39.26)
• articles or iron and steel (HS Code Heading 73.26)
• articles of plastics (HS Subheading 3926.90)
• batteries (HS Codes 98506.10.10 and 8506.50.10)
• bicycle parts (HS Code Heading 87.14)
• cell phone cases (HS Code Headings 39.26, 42.02, and 85.17) (new)
• cereals (HS Code Heading 10.08)
• chemical products (HS Code Heading 38.08)
• coconut milk from Asian countries (HS Codes 1106.30.00, 2008.19.90, and 2106.90.10.90)
• dexatrins and other modified starches (HS Code 3505.10.900)
• disposable and protective gloves (HS Codes 3926.20.10 and 4015.19.10)
• curling irons (HS Code 8516.32.10)
• footwear (HS Codes 6403.59.20 and 6403.99.30)
• furniture for non-domestic purposes (H.S. Codes Headings 94.01 and 94.03)
• gazebos (HS Code 9406.00.90.20)
• geophysical and oceanographic instruments (HS Code Heading 90.15)
• hair extensions (HS Code 6703.00.00)
• hair dryers and electric smoldering irons (HS Code Heading 85.16)
• handkerchiefs, towels and related paper products (HS Code Heading 48.18) (new)
• interchangeable tools (HS Code Heading 82.07) (new)
• live plants (HS Code Heading 06.02) (new)
• machinery for public works (HS Codes 8479.10.00)
• mountings, fittings and similar articles (HS Code Heading 83.02) (new)
• parts for power trains (HS Code Heading 87.08)
• parts for use with machinery of Chapter 84 (HS Code Heading 84.31)
• parts of lamps (HS Code Heading 94.05)
• pasta (HS Code Heading 19.02)
• polyurethanes in primary forms (HS Code 3909.50.00)
• prepared meat and swine (HS Code Heading 16.02) (new)
• special purpose motor vehicles (HS Code 8705.90.90.90)
• seaweed (HS Codes 1212.21.00 and 1212.29.00)
• spectacle lenses (HS Codes 9001.40.10 ad 9001.50.10)
• stone table and counter tops (HS Code 9403.90.00) (new)
• tubes, pipes and hoses (HS Code Heading 39.17)
• vices and clamps (HS Code Heading 82.05)

The listed valuation trade compliance priorities are:

• apparel (HS Chapters 61 and 62)
• preparations and pastrycooks’ products (HS Chapter 19)

The listed origin trade compliance priorities are:

• t-shirts (HS Code Heading 61.09)
• jewelry (HS Codes 7113.11.90, 7113.19.90 and 7113.20.90)

The January 2016 verification
priorities were:

The listed tariff classification trade compliance priorities are:

• tubes, pipes and hoses
• parts of lamps
• pasta
• hair dryers
• electric smoldering irons
• curling irons
• spectacle lenses
• furniture for non-domestic purposes
• palm oil
• safety headgear
• seaweed
• dextrins and other modified starches
• disposable and protective gloves
• wheel rims and spokes
• coconut milk from Asian countries
• batteries
• gazebos
• apparel samples
• bags of polymers and ethylene
• footwear ($30 or more per pair)
• hair extensions
• machinery for public works
• sacks and bags under tariff item 9903.00
• special purpose motor vehicles
• polyurethanes in primary forms
• parts for power trains
• generating sets
• geophysical and oceanographic instruments
• cereals
• articles of apparel and clothing accessories
• bicycles parts
• articles of plastic
• articles of iron and steel
• vices and clamps
• parts for use with machinery (Chapter 84)
• chemical products

The listed valuation trade compliance priorities are:

• apparel
• footwear
• preparations and pastrycook’s products

The listed origin trade compliance priorities are:

• t-shirts
• jewelry

In July 2015, the CBSA’s verification priorities were:

• pickled vegetables
• curling irons
• spectacle lenses
• furniture for non-domestic purposes
• palm oil
• safety headgear
• seaweed
• dextrins and other modified starches
• disposable and protective gloves
• wheel rims and spokes
• coconut milk from Asian countries
• batteries
• gazebos
• apparel samples
• bags of polymers and ethylene
• footwear ($30 or more per pair)
• hair extensions
• machinery for public works
• sacks and bags under tariff item 9903.00
• special purpose motor vehicles
• polyurethanes in primary forms
• parts for power trains
• generating sets
• geophysical and oceanographic instruments
• cereals
• articles of apparel and clothing accessories
• bicycles parts
• articles of plastic
• articles of iron and steel
• vices and clamps
• parts for use with machinery (Chapter 84)

The listed valuation trade compliance priorities are:

• apparel
• footwear
• preparations and pastrycook’s products

The listed origin trade compliance priorities are:

• t-shirts
• jewelry

Consider whether you are at risk of a verification letter from the CBSA and whether you may benefit from making a voluntary correction or voluntary disclosure.

For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.

This article was originally published on www.Canada-USBlog.com. Republished with permission.