Sunday , September Sun , 2011
Compliance News September 2011

 

KWE CANADA COMPLIANCE

 

MEMO  2011.VIII

 

 

1.             @KWECanada. 

               

                KWE Canada can be a valuable source for news and information from the international trade, freight fowarding and Canadian customs brokerage industries. We are "tweeting" on Twitter on a regular basis. Follow us! A Twitter account may be set up easily, within a few minutes. There is no charge. Go to http://twitter.com, enter your name, email address and a password, and click on the SIGN UP  button. Create a profile, giving as much or as little information about yourself as you choose. Then use the search feature to find KWE Canada and "follow" us. Use the search feature as well to find and follow other tweeters on subjects or topics of interest to you.

 

 

2.            BC Repeals its Harmonized Sales Tax

 

                Government by referendum! 55% of the 1.6 million BC citizens who voted, voted to repeal the British Columbia Hamonized Sales Tax (BC HST).  As Gore Vidal has wondered aloud ... in the US 50% of the population does not read a newspaper, ever, and about 50% of the elligible population, only, votes; so the worst fears must be that the 50% who don't read ever end up being the only 50% who vote! 

                One wonders how many of the 55% who voted for repeal knew all of the following: that (1) BC had a provincial sales tax before the coming-into-force of the BC HST; (2) the combined GST and provincial sales tax payable by the consumer before the HST was roughly equivalent to that payable under the HST; (3) consecutive with BC HST repeal, the BC provincial sales tax will be resurrected; (4) effectively, businesses large and small do not pay pay the HST on commercial inputs; and that (5) BC now, with repeal, owes to the Federal Government some 1,600,000,000 $ it was granted to set up the BC HST.

 

 

3.             TRQ Rates of Duty on Wheat and Wheat Products.   

 

                Canada provides for imports of many wheat or wheat products under the Tariff Rate Quota (TRQ) system.  This system establishes limits or threshold quantities ("quota") for wheat or wheat products for the period running from 1 August through 31 July of the next year. During that period—but before the quota is filled—imports are considered to be "under" or "within access" and will be dutiable at a relatively low rate. If the quota becomes filled at any time during the period, imports thereafter are considered to be "over access" and will (usually) attract a much higher rate of duty.  This distinction, between "within" and "over access" is given effect in the Customs Tariff List of Tariff Provisions by providing, for one and the same TRQ wheat commodity or product two different 10 digit classifications, one signifying within access and one over. To know which is the correct classification, it is necessary to know if the quota for the period has been filled at the time the wheat or wheat product is being classified. This information is available on the Department of Foreign Affairs (DFAIT) sub-page for agricultural products .  The quota for 2011/2 for wheat is 226,883 metric tons.  The quota for wheat products for 2011/2 is 123,557 metric tons (equivalent).  Neither quota has been is filled by time of writing, so soon after the 1 August re-set.

 

 

4.            Sections  10(1) and 11 of the Customs Tariff

 

                Before the Canadian International Trade Tribunal (the "Tribunal"), in Loblaws Companies Ltd v. President of the Canada Border Services Agency (AP-2010-022), Loblaws argued that certain knitted or woven synthetic textile Halloween costumes, for children and for adults, should be classified under Heading 95.05 of the Customs Tariff List of Tariff Provisions. Heading 95.05 provides for "[f]estive, carnival or other entertainment articles". The  CBSA maintained the goods were properly classified variously  under  Chapters 61 or 62, as knitted (Chapter 61) or woven (Chapter 62) textile apparel goods.

                Loblaws argued thus despite Chapter 95 Legal Note 1(e), which provides in effect that Heading 95.05 "does not cover" costumes made of textile materials that are classifiable within Chpters 61 or 62.  Pursuant to s. 10(1) of the Customs Tariff "classification" of goods under the List of Tariff Provisions "shall ... be determined in accordance with the General Rules of Interpretation", and the prime rule ("GRI # 1) of the General Rules of Interpretation requires that "classification shall be determined according to the terms of the headings and any relative Section or Chapter [Legal] [N]otes". So Chapter 95 Legal Note 1(e) is directly relevant regarding the classification of goods under Heading 95.05; and it explicitly and (one would have thought unambiguously) disallows classification under Heading 95.05 of costumes made of textile materials which are classifiable within Chapters 61 or 62.

                Based on its reading of, among others, Thinkway Trading Corp v DMNR (AP-95-080) and Shaklee Canada Inc v The Queen [1985] 1 F.C. 593, and its reading of the Explanatory Note to Heading 95.05, Loblaws argued that in order for textile apparel goods to be classified under Chapters 61 or 62, those goods must have a utilitarian—rather than a purely "festive"—purpose. It argued that, as a result, the exclusion set out under Chapter 95 Legal Note 1(e) does not contemplate the non-utilitarian Halloween costumes in question; and so that Heading 95.05 does in fact and law provide for the Loblaws' knitted or woven synthetic textile Halloween costumes. 

                The Tribunal found in favour of Loblaws.

                Whatever the merits of this decision, in arriving at it the CITT seems to have equated the authority of the actual legal provisions of the Customs Tariff List of Tariff Provisions (in this case Chpter 95 Legal Note 1(e)) with the authority of the Explanatory Notes (in this case the Explanatory Note to Heading 95.05). This is a dangerous tendency. In effect it refuses to read ss 10(1) and 11 noscitur a sociis—with the former requiring "classification" under the actual legal framework of the law and the latter requiring only that "regard" be had with respect to that classification.  There is an implied hierarchy if these provisions are both read, and in order. The  hierarchy is such that the actual framework of the law (in the first instance, the terms of the headings and any relevant Section and Chapter Legal Notes) cannot just be a crucible through which the classifyer narrows his or her focus and finds the relevant Explanatory Notes! 

                The distinction between utilitarian and non-utilitarian textile apparel does exist in the case law and in the Explanatory Notes, as Loblaws argued; but it does not exist explicitly in Customs Tariff List of Tariff Provisions—that is, in the headings or the Section or Chapter Legal Notes. On the other hand the distinction between textile apparel goods and all other goods does exist, explicitly, in the actual Customs Tariff List of Tariff Provisions in many, many places.

                This for good reason: the Customs Tariff is a law regulating commerce and, among other things, setting various rates of duty on the import of various different products and commodities.  It is properly interpreted as such. In Canada high rates of duty are set on textile apparel articles, so classified, to protect our vulnerable textile and apparel manufacturing industries. From a commercial perspective, that is, while there is only a de minimis distinction between making "utilitarian" clothing and making non-utiliarian clothing, there is a huge and important distinction between our dying textile industries and most of our other, more robust, industries. The "festive" articles industry in Canada either doesn't exist or does not need protection—goods properly classified under heading 95.05 are duty free.  But the Canadian textile/apparel industry needs protection badly and, with Loblaws Companies Ltd v. President of the Canada Border Services Agency, has lost still more of it.

 

 

5.            Customs Notice 11-004. 

 

                Effective 1 September, 2011, customs brokers submitting release requests of 250 invoice lines or fewer must transmit those requests EDI.

 

 

6.            Canada-Columbia Free Trade Agreement. 

 

                The Canada-Columbia Free Trade Agreement came into force on 15 August, 2011.

 

 

7.             Health Canada Presentation on theCanada Consumer Product Safety Act. 

 

                See KWE Compliance Memo nos 2010.VIII, 2010.XII and 2011.II. .Health Canada has developed a presentation to help everyone become familiar with the new Act and its regulations, and the various requirements, restraints, penalties, etc. flowing therefrom. Visit http://www.hc-sc.gc.ca/cps-spc/legislation/acts-lois/ccpsa-lcspc/indust/ppt-eng.php

 

 

8.            eManifest Portal. 

 

                Starting 29 August, 2011, the eManifest Portal will be available for transport and logistics providers who are obliged to transmit eManifest data but who do not have a direct CBSA EDI hook up. The Portal is windows/web based  and just about anyone with a computer and an internet connection can set up an account on the Portal and use it to transmit data.