What to expect if the CBSA calls to verify customs compliance

Source: Canada US
Link: What to expect if the CBSA calls to verify customs compliance

The Canada Border Services Agency (“CBSA”) conducts verifications (also known as audits) to verify compliance with Canadian customs laws.  Importers self-report relevant and detailed information about their imports either directly or through customs brokers.  The CBSA conducts verifications to ensure that the information is correct and that the importer has paid the correct amount of customs duties, excise duties, antidumping/countervailing duties and sales taxes.

There are 3 main types of verifications:

1. valuation verifications;
2. tariff classification verifications; and
3. origin verifications.

All three types of verification follow a similar process or steps.  The steps in a verification are:

1. Pre-verification: The CBSA conducts these steps before you are contacted;
2. Initiation of verification: The CBSA will usually send you a letter outlining the type of verification, the period under review and asking for communications to begin and possibly for information about specific import transactions to be send to the CBSA;
3. Questionnaires: The CBSA will send the importer a questionnaire to complete and submit within 30 days;
4. Questionnaire response: The importer will answer the questionnaire and provide detailed information to the CBSA;
5. Review of questionnaire responses: The CBSA will review the questionnaire responses and ask follow-up questions in the form of a supplemental questionnaire;
6. Site Visit: The CBSA will come to your business for a day, a week or longer to verify the information provided in the questionnaire response and any attachments and will select import transactions to review in greater detail – the CBSA often sends an agenda for the on-site visit;
7. Follow-up:  After the site visit, the CBSA may ask additional questions);
8. Interim Report: The CBSA will issue an interim report with their preliminary findings and will give you 30 days or more to provide additional information or submissions about the legal positions that the CBSA plans to take;
9. Final Report: The CBSA will issue a final report and if non-compliance is found, the CBSA will ask the importer to self-correct within 90 days as the CBSA’s Final Report is considered to be a “reason-to-believe” that the importer has made errors;
10. Self-Correction: The importer will be given 90 days to prepare and send to the CBSA auditor a B2 amend or blanket amend making all the corrections requested by the CBSA in the Final Report;
11. Detailed Adjustment Statement: The CBSA will review the B2 amends and prepare a detailed adjustment statement indicating the amount of duties and taxes owed;
12. Notice of Penalty Assessment: The CBSA will issue a Notice of Penalty Assessment for any administrative monetary penalties determined to be payable as a result of the non-compliance and issues that were identified during the verification; and
13. Appeals: If the importer disagrees with the decisions of the CBSA, the importer may file appeals and/or a judicial review.

For more on what to expect during a CBSA verification, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.