The Customs Act requires corrections of errors in import declarations – such as a tariff classification, country of origin, or value for duty. Each correction requires the filing of a form B2 adjustment request, which can be an onerous task when multiple corrections are required. The CBSA has an administrative practice that streamlines the procedure for authorized importers by allowing them to file a single blanket adjustment request - a single form with an attached spreadsheet - to process multiple corrections with one form. However, the CITT decision in Worldpac Canada (AP-2014-021) shows that administrative practice does not have the force of law and a taxpayer’s reliance thereon involves risk.
In September 2011, Worldpac needed to make adjustments to its import declarations filed two requests for blanket authorizations. In February 2012, the CBSA issued two blanket authorization letters that allowed Worldpac to file corrections for four years back to March 1, 2008. The authorization letters came with two conditions: a) that they would be cancelled if mutual administrative benefits were not achieved; and (b) that the blanket authorization would not remove or adjust the legislative timelines.
In September and October 2013, Worldpac filed its blanket adjustment refund requests with the CBSA, covering hundreds of corrections for the 2009 year. The CBSA rejected any blanket adjustment refund request that went back more than 4 years from the date of filing (i.e. September and October 2009).
Worldpac took the position that the 4-year deadline ran from the date the blanket authorizations were first granted (i.e. to February 2008), not the date that blanket adjustment requests were filed, and requested a “further re-determination” of the CBSA’s decision. The CBSA declined to even consider the matter. Worldpac appealed to the CITT.
The CITT considered whether the filing of a blanket authorization “somehow” stopped the running of the 4-year limitation period in the Customs Act.
Upon reviewing the applicable legislation, the CITT concluded that there were strict 4-year limits on granting refunds and on issuing re-determinations, and that the Customs Act contained no mechanism to extend or modify these time limits. Thus the blanket authorization, merely an administrative practice, “[could] by no means modify the imperatives set out in the Act.” The blanket authorization letters also confirmed this conclusion in that they specifically cautioned that they did not remove or adjust legislative timelines. The CITT ruled in favor of the CBSA.
This case stands as an important reminder that legislative provisions cannot be modified or varied by administrative practices, and has broader potential applications to other government entities.
Worldpac focussed on the Customs Act and the CBSA, but numerous government entities have administrative practices and guidelines - ranging from reporting forms to instructions on appeal procedures - that are not always supported by legislation. Persons who rely on legislatively unsupported administrative practices put themselves at risk because the courts cannot grant relief except in accordance with legislation. Worldpac is, therefore, an important lesson: always consider legislative provisions and not just administrative practices.
Robert G. Kreklewetz and John G. Bassindale
Millar Kreklewetz LLP, Toronto
A version of this article was publisehd in the July 2016 edition of Canadian Tax Highlights