Case study: out-of-the-box thinking leads to duty recovery

When it comes to customs compliance, there is no shortage of opportunities to overpay on duty, delay the release of your goods or receive a surprise verification request. This is why partnering with a quality team who knows customs like the back of their hands is essential. Here’s one story out of thousands demonstrating the value of working with knowledgeable trade consultants and yielding a satisfactory result.

So many codes

In these crazy days of the early 2020s where we are seeing inflation, potential recession, and international issues impacting our ability to move goods, tightening up your compliance practice is a useful way to mitigate some of these impacts.

One area commonly fraught with mistakes and inaccuracies is tariff classification, in particular using Harmonized System (HS) codes. 

Sometimes you need the right help

One of our clients, a mid-size retailer based in western Canada, regularly shipped and received goods from several U.S. companies. The nature of their goods required the use of HS codes for classification. Our point of contact was with the company’s Consulting Manager, Meredith.

One day, Meredith received a letter from the Canada Border Services Agency (CBSA) requesting information to verify the accuracy of the HS codes they had used in several customs transactions. When she initially received this letter, she made sure to comply with the request. Yet at that time, Meredith did not share the information with us, the company's customs broker. 

In due course, the CBSA issued their interim report, advising Meredith of several HS codes found in error. They invited her to argue this finding within one month of the date of issuance of the report.

That’s when Meredith called us.

The first thing Meredith did was share the interim report with us. On her instruction, we took no action on the file. Shortly after, our team was provided with a copy of the CBSA’s final report and the associated Detailed Adjustment Statements (DASs), each of which revealed amounts payable to the CBSA. We assisted Meredith by arranging to take care of the DAS payments.

At the same time, our team assisted Meredith in identifying all other affected past transactions of the same, like or similar goods so these could be corrected in accordance with the CBSA report requirements. This included procuring a special report from the CBSA, which listed all customs transactions for the client—including transactions beyond those processed by Cole International.

This information allowed our team to determine which affected non-Cole-processed transactions needed correcting along with the affected transactions processed by Cole International.

The correction process was completed within the timeframe given in the final report and resulted in the issuance of additional DASs. These were then paid by our customs brokers on our client’s behalf.

Now that the conditions of the original trade compliance verification had been met, further investigation revealed that Meredith’s company had the potential to appeal the HS codes determined by the CBSA for specific goods.  

Creative solutions for the win

In situations like these, the team at Cole International excels at providing creative solutions. With some out-of-the-box thinking and the formulation of associated arguments, an appeal was filed with the CBSA to recover a substantial amount of duty. While the appeal took some time to present, and some more time for the CBSA to process, it was successful overall. The amount claimed, which was substantial, was refunded in its entirety, along with any accrued interest. 

As for Meredith and the company, they were grateful to have received the detailed, knowledgeable help we were able to provide. The key takeaway of the story is that the appeal set a precedent for the classification of subject goods, not only to facilitate recovery of amounts previously paid, but to negate the potential for duty payment on all subsequent imports—all of which were a win for Meredith and her company.

If it’s time to tighten up your systems for better customs compliance, connect with our experienced team of professionals today.

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