The Canada Border Services Agency (CBSA) has announced that Provisional Duties are now payable on imports of certain upholstered domestic seating originating in or exported from China and Vietnam, released from Customs on or after May 5, 2021.
Subsequent to the CBSA determination, the CITT gave notice on May 6, 2021, that it had initiated an inquiry to determine whether the dumping and subsidizing of the above-mentioned goods have caused injury or retardation or are threatening to cause injury to domestic producers as determined under the Special Import Measures Act.
Upholstered domestic seating is usually classified under HS numbers: 9401.40.00.00, 9401.61.10.10, 9401.61.10.90, 9401.71.10.10 & 9401.71.10.90. Please note that these HS classifications are provided for convenience of reference only. Refer to the product definition provided in the CITT Notice of Commencement of Inquiry for authoritative details, including exclusions regarding the subject goods.
The preliminary determination details including provisional duty rates, CBSA Officer names and contact information are found in CBSA’s Notice of Preliminary Determination.
Further details concerning the injury inquiry as well as the inquiry schedule are found in the CITT Notice of Commencement of Inquiry.
Additional information about these investigations is contained in a Statement of Reasons, which will be available within 15 days on the CBSA’s website.
The goods subject to this SIMA Measure are defined as:
Upholstered seating for domestic purposes originating in or exported from the People’s Republic of China and the Socialist Republic of Vietnam, whether motion (including reclining, swivel and other motion features) or stationary, whether upholstered with a covering of leather (either full or partial), fabric (including leather substitutes) or both, including, but not limited to seating such as sofas, chairs, loveseats, sofa beds, day beds, futons, ottomans, stools and home theatre seating (HTS).
a) Stationary (i.e. non-motion) seating upholstered only with fabric (rather than leather), even if the fabric is a leather‑substitute (such as leather like or leather‑look polyurethane or vinyl)
b) dining table chairs or benches (with or without arms) that are manufactured for dining room end‑use, which are commonly paired with dining table sets
c) upholstered stools with a seating height greater than 24 inches (commonly referred to as “bar stools” or “counter stools”), with or without backs, and/or foldable
d) seating manufactured for outdoor use (e.g. patio or swing chairs)
e) bean bag seating and
f) foldable or stackable seating
Excluding:
For greater certainty, the product definition includes:
a) Upholstered motion seating with reclining, swivel, rocking, zero gravity, gliding, adjustable headrest, massage functions or similar functions
b) seating with frames constructed from metal, wood or both
c) seating produced as sectional items or parts of sectional items
d) seating with or without arms, whether part of sectional items or not and
e) foot rests and foot stools (with or without storage)
As noted in CBSA’s memoranda D10-15-30, the term “for domestic purposes” is not defined in the Customs Tariff and therefore it’s application follows decisions issued by the Canadian International Trade Tribunal (CITT). The CITT has established that the intended use, rather than the actual use, of furniture is the test to determine whether or not furniture is classified in “for domestic purposes” tariff items. The Tribunal has also established that “for domestic purposes” should be given “a broad enough interpretation to include products that are used primarily in a domestic setting”.
This includes goods primarily intended for use in a domestic setting, i.e. in and around the home (e.g., a single family house, an apartment, a condominium, a cottage or motorhome). For greater certainty “for domestic purposes” does not include goods primarily for business or commercial purposes nor goods primarily intended for any purpose away from the home, e.g. camping, sporting, performances or other recreational events.
Importers have the option of posting a security bond sufficient to cover the determined amount of provisional duty payable. The security bond must be issued by a financial institution or acceptable bonding company, which is approved by the Government of Canada.
Information regarding the posting of security bonds in lieu of provisional duties levied under SIMA is found in Customs memorandum D1-7-1, Posting Security for Transacting Bonded Operations.
If, within 90 days after making a preliminary determination, the CBSA determines that, respect of any goods of a particular exporter, the goods have not been dumped or subsidized, or the margin of dumping or the amount of subsidy is insignificant, or if the CITT finds that the imports were not causing injury to the Canadian industry, any provisional duty paid or security posted will be refunded.
If the CBSA makes a final determination that the goods have been dumped or subsidized, and the CITT finds that the imports are causing injury, the amount of provisional duty owing or paid is reviewed by the CBSA to determine the final amount of duty owing. Where the importer has not paid provisional duty or posted security within the prescribed time, interest applies to the provisional duties owing.
Additional information regarding the application of provisional duties is available in Customs memorandum D14-1-7, Assessment and Payment of Duties Under the Special Import Measures Act.
Please refer to the Upholstered Domestic Seating case in the Measures in Force for additional details.