CITT clears way for possible refunds of downward price adjustments

In Canada, the basis for customs valuation affecting imported goods centers on the rules and methods included in the World Trade Organization’s Valuation Agreement. The agreement provides that a value for duty must be established on imported goods under one of six valuation methods.

The most common of the methods is the transaction value method. According to this method, valuation is based on the price in a sale for export to the importing country, with some adjustments.

In a recent Canadian International Trade Tribunal (CITT) decision (AP-2012-067), concerning the treatment of rebates or price reductions made after importation. The CITT ruled that in certain situations, where a written agreement was in effect between a purchaser and vendor at time of importation to later reduce the price of the goods, that an importer may be eligible to pursue a refund of duties.

It is important to note, that in circumstances where an agreement in writing to later reduce the price paid for the goods made after the goods have been imported would not be eligible for a refund of duties.

Canada Border Services Customs Notice 15-001 provides additional information concerning the treatment of downward price adjustments in value for duty calculations.