KIK – Federal Court finds that follow-up correspondence of the taxpayer’s accounting firm resulted in the transformation of a reversible CBSA decision into a reasonable one

Vavilov confirmed that decisions of the CRA (or, in this case, the CBSA) must satisfy requirements of justification, transparency and intelligibility. An adverse CBSA decision on the taxpayer’s request for a ruling that it was entitled to duty drawbacks on its imports did not meet this standard. However, the taxpayer’s accounting firm immediately contacted the officer involved by email for an explanation and made submissions, and as part of further email exchanges the officer clarified why the items were not considered to satisfy the conditions for the drawback. In finding that this email correspondence was effectively part of the decision under judicial review, Norris J stated:

The officer’s responses to the inquiries and further submissions from the applicant’s representatives are part and parcel of the justification for the decision that was given to the applicant. … The officer was not responding to an application for judicial review of the decision, something that had not yet been commenced at the time of the exchanges.

As the decision in this broader context was now rendered reasonable, Norris J declined to reverse it.

Neal Armstrong. Summary of KIK Custom Products Inc v. Canada (Border Services Agency), 2020 FC 462 under Customs Tariff Act, s. 89(1)(a).