"Fresh cut flowers are on the Canada Border Services Agency’s list of “Verification Priorities"
1) Random Verification: CBSA conducts random reviews of importer's records in a variety of industries for various issues (classification, valuation, origin, etc.). They use these results for many purposes, one of which is to determine their “Verification Priorities" for the year (i.e. where the most 'risk' is).
2) Identified “Verification Priorities": Areas of risk as determined in the random verification results, together with other intelligence information. In other words….where CBSA thinks the most errors are occurring and where the most risk lies.
Fresh cut flowers have been on CBSA's list of Verification Priorities since 2012. They have determined that historically, this was an area non-compliance and continues to be one. The risk is that certain fresh cut flowers are being misclassified as “other" fresh cut flowers (which attract a duty rate of 6%) as opposed to specifically named flowers like Roses (10.5% duty), Carnations (8%), Orchids (10% or 12.5%), Chrysanthemums (8%).
Note: The CBSA further advised in January of 2015, that a verification priority regarding the valuation of fresh cut flowers is also being initiated.
What can you do to avoid audits and penalties by CBSA? Ensure that your commercial invoice clearly and specifically describes what you are importing. The words 'fresh cut flowers' are not enough to properly classify your goods. As you have seen above, many types of flowers are listed individually in the Customs Tariff and must be classified (and duty paid) accordingly. The “other fresh cut flowers" category can only be applied to the types of flowers that are not specifically listed.
What happens if classification errors are discovered in an audit? The CBSA may issue penalties called AMPS (Administrative Monetary Penalty System). CBSA uses AMPS as a means of deterring non-compliance and encouraging compliance. The penalty for misclassified goods can range from:
In addition to monetary penalties, your compliance history with CBSA would be affected and the likelihood of increased examinations and delays at the border are a real possibility.
How can Cole International Inc. help? Cole works diligently every day to ensure that our client's companies are Customs compliant, but CBSA may still chose to conduct an audit. Be assured that Cole's “Audit Response Unit" is ready and able to assist you through a CBSA audit in the event that it happens.
To receive additional relevant and timely information on this and other Customs related topics, please visit our website at: http://www.coleintl.com/ and click on the “GO" button under Electronic Communications.
Source: www.flowerscanadagrowers.com
