Tax & Trade Blog
Landmark Trade Services Case Causing Headaches
The January 2020 Canadian International Trade Tribunal (“CITT”) decision in Landmark Trade Services v. President of the CBSA (Case No. AP-2019-002) was a welcome relief for customs brokers because the CITT held that Landmark (acting as a customs broker for what can loosely be described as a freight-forwarding situation) was not liable as the "importer" of the goods, despite the fact the import documentation described Landmark as the importer and purchaser. Accordingly Landmark would not be on the hook for the additional duty owing from the incorrect tariff classifications used on those import documents.
Over a year later, Landmark's victory has resulted in headaches for businesses that use similar freight-forwarding structures, as the CBSA looks to re-assess them and hold them liable for additional duty on the basis they were the owners of the goods at the time of import. To understand why, one must understand what Landmark was doing.
Landmark served as the customs broker for a number of importations for Landmark Global Inc. (“LGI”) a related US logistics company. LGI was providing its services to various unaffiliated logistics companies who had freight-forwarding/logistics contracts with foreign (mostly US-based) e-commerce vendors who were selling to individual Canadian consumers.
Landmark used its “customs broker non-commercial imports accounts”, and non-consolidated B3 forms to report for and account to the CBSA for the imports, including the payment of duties. Accordingly, Landmark’s name and business number would have been listed as the importer, with the individual Canadian consumers being listed as the consignee of the imports. Landmark was also listed as the Customs Broker and, for reasons which are not clear, as the “purchaser” of the goods.
On review, the CBSA determined that the tariff classifications used on these import transactions were incorrect, and that additional customs duty was owing.
Generally in these circumstances the CBSA would assess the individual Canadian consumers for the additional duty. However, as set out at paragraph 34 of the CITT decision, the CBSA took the position there was “no evidence that the Canadian consumers who purchased the goods in issue knew that they were being imported, that Landmark would account for the goods on their behalf, or that any duties and taxes may be owed.” Accordingly, the CBSA determined that Landmark was the actual importer of the goods, and that Landmark should be liable for the additional duty.
The CBSA issued a Detailed Adjustment Statement (“DAS”) to Landmark accordingly on June 22, 2018. Landmark filed a request for re-determination on the basis it was not the importer, and the CITT heard the case on October 8, 2019.
The CITT considered the situation and stated – in agreement with CBSA – that “the mere fact that someone has put a business number on a B3 Form is not enough to establish that they are the importer and, in fact, that the totality of the matter should be considered to make this determination.”
The CITT reviewed the facts of the transactions and concluded that Landmark was not the importer of the goods, in part because neither Landmark (nor LGI) purchased or took title to the goods or possession of the goods. In coming to its conclusion the CITT expressed no opinion on who was the importer of the goods, leaving that question open.
With Landmark successful at the CITT, it appears that the CBSA is now targeting foreign vendors who use similar freight-forwarding services - on the basis that these foreign vendors were the "owners" of the goods at the time that of import. Foreign vendors who have been assessed by the CBSA as "owners" of the goods should seek legal representation to understand their options. In our recent experience, there may be ways to challenge such assessments -- so all may not be lost for those Landmark clients facing these current CBSA assessments!
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