The right to make a customs or Special Import Measures Act (“SIMA”) appeal is very different than the right to make similar income tax or GST appeals.  Unlike income tax or GST, appeals for customs and SIMA cases can ONLY be made once full payment of ALL amounts assessed has been made to the government!

This unfair situation is presenting problems for Canadian commercial importers who want to fight their Canada Border Services Agency (“CBSA”) customs and SIMA assessments but lack the financial ability to do so.   The issue is especially severe in the case of SIMA assessments, where the amounts being levied by CBSA can sometimes exceed two or three times the total value of the imported goods themselves – and add up to 10 or 20 times the profit margin that the importer expected to earn from these import transactions.

Unfortunately, a recent Federal Court of Appeal (“FCA”) decision has signalled that this situation is not going to change in the near-term – meaning that importers that want to uphold their rights will need to come up with strategies to pay or secure these customs and SIMA assessments, and then seek legal advice to challenge the assessment.

Legislative Background

Customs and SIMA appeals are governed by the Customs Act and Special Import Measures Act, respectively.   Income tax appeals are governed by the provisions of the Income Tax Act, while GST appeals are governed by the Excise Tax Act (“ETA”).  As noted above, the former two pieces of legislation take a “pay-to-play” approach, requiring full payment of all amounts assessed before appeals are permitted:  for example, see section 60 of the Customs Act.  This is problematic because there are many reasons why commercial importers might disagree with customs or SIMA assessments, and want to have them reviewed either by the CBSA internally (under the CBSA’s Redetermination Process) or judicially by the Canadian International Trade Tribunal (“CITT”).

Customs appeals are often necessary when commercial importers disagree with the decisions of CBSA regarding the treatment of their imported goods.  Disputes can arise as to the proper tariff classification (tariff class) afforded to the imported goods (which determines the rates of duty that apply to the goods on import to Canada).  Disputes can also involve the customs valuation (value for duty) of the goods when imported, or the “origin” of the goods (as goods from certain countries have higher rates of duty (tariff schedules) that other countries.

SIMA appeals are often necessary where CBSA determines that the goods imported are the subject of special anti-dumping and/or countervailing duties (collectively, “ADD”), imposed by the SIMA in situations where there are allegations that certain countries are selling goods into the Canadian marketplace at subsidized prices, or at prices that are below market value.

Prairies Tubulars Decision

The FCA’s decision in Prairies Tubulars (2015) Inc. v CBSA was the first opportunity for the FCA to consider the constitutionality of this important “pay-to-play” issue.  Prairies Tubulars imported and sold “oil country tubular goods” (“OCTG”) to drilling companies in Alberta’s oil and gas industry.   It was assessed anti-dumping duties in of some $19 million and wanted to appeal.  However, faced with the $19 million assessment, Prairie Tubulars neither paid the duties nor sought a re-determination, taking the position that it could not pay the outstanding duties and was therefore unable to pursue an administrative appeal to the CBSA.  Instead, Prairies Tubulars made a judicial review application to the Federal Court.

Unfortunately, the FCA ultimate found that the “pay-to-play” regime was constitutional, and that Prairie Tubulars, in acting the way it did, effectively lost its right of appeal on the matters.


Canada’s “pay-to-play” system is extremely unpalatable for commercial importers.  Regrettably, this system is here to stay, and Canadian importers have no choice but to pay or secure customs and SIMA assessments, and then engage capable counsel to appeal those matters substantively.

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