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Certain Televisions Remission Order

Posted April 24, 2014

On April 11, 2014 the "Certain Televisions Remission Order" received assent based on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to section 115 of the Customs Tariff.

The remission is granted to certain listed importers of the duties paid or payable under the Customs Tariff in respect of televisions under tariff heading 85.28 and other similar goods that were imported by them before June 28, 2013 HDTVand for which duty relief under tariff item 9948.00.00 was either denied as a result of a verification conducted by the Canada Border Services Agency (CBSA) during the period beginning on January 1, 2012 and ending on June 27, 2013, or not claimed following such a denial.

Duty free tariff item 9948.00.00 is targeted specifically at certain goods that are “for use in” computers and various other high-technology products. Televisions are otherwise classified in the Tariff under 8528.72.96 00 at the MFN rate of 5%. “Certain televisions” however qualify for the 9948 provision of the Tariff by virtue being an “article for use in... Video games used with a television receiver, and other electronic games.” In fact, this description covers most HDTVs which these days come equipped with a game mode suitable for use with consoles such as Playstation or Xbox. The sticking point here is the “for use in” stipulation that makes application of 9948 effectively dependent on the end use of the imported goods.

Until quite recently, it had been official CBSA classification policy with respect to this tariff item that “importers are expected to provide end-use certificates confirming that the goods were solely used for the purpose for which they were imported.” Enforcement of the end-use requirement by the CBSA was however somewhat erratic. At times it issued rulings to some importers stating “there will be no end use certificates required” while simultaneously pursuing retroactive enforcement actions against other importers based on their failure to provide end use certificates. As a result of this confused state of affairs, some importers simply opted to pay the 5% duty on goods in advance and file re-determination requests claiming they should qualify under 9948, whereas others who imported goods duty-free and were subsequently penalized by the CBSA for failing to provide adequate end-use documentation contested the retroactive assessments.

Bowing to pressure from a vigorous public relations effort by importers and backlash regarding the so-called “iPod Tax” following the 2013 federal budget, last summer the CBSA resolved to modify the record-keeping requirements relating to tariff item 9948.00.00. The “iPod Tax” connection perhaps needs a bit of explanation here. The 2013 budget proposed the elimination of access by a number of high-income, export-competitive countries to Canada’s General Preferential Tariff (GPT) program. Some suggested at the time that because China manufactures much of the world’s electronic goods, the government’s reform of the GPT was the equivalent of an “iPod tax”. The Harper government countered this by stating that such goods would continue to benefit from special tariff-exempt classification under tariff item 9948.00.00.

Rather than administer a cumbersome, thoroughly impractical end-use program involving millions of consumers, the CBSA determined instead to simply allow importers to attest to the contemplated use of the goods. The resulting outcome of this change in policy which is designed to clean up various pending and unresolved disputes in connection with prior administrative and enforcement confusion over the matter is the “Certain Televisions Remission Order” (SOR/2014-88) which refunds and forgives duties owed by 23 importers in the amount of $27 million.