As a result of the Canadian International Trade Tribunal's (CITT) decision in Loblaws, the Canada Border Services Agency's ("CBSA") has released on September 21, 2012 D-Memorandum D10-14-62 "Tariff Classification of Costumes" (the "Memo") which addresses the CBSA interpretation of the tariff classification of costumes. This interpretation is the result of a 15-year battle between importers/retailers and Canadian Customs authorities and will continue to cause some uncertainty for importers/retailers in the near future.

The Memo refers to two CITT cases (Thinkway and Loblaws) and concludes that costumes can be classified in either Chapter 61 (high duty) and Chapter 95 (duty-free) goods. In Loblaws, the CITT was presented durability and re-usability arguments which did not exist in Thinkway. The Loblaws decision was also decided after a US decision (Rubie) which decided that "…textile costumes…generally recognized as not being normal articles of apparel, are classifiable as ‘festive articles'. Paragraphs 9 through 11 of the D-are the re-stated CBSA position which accepts a distinction between, for example, Halloween and high value theatrical and rental costumes.

As will be described below, the conclusion reached in the Memo is not really descriptive of the CITT's position nor is it definitive. If a retailer is importing the pixie costume for the "Dance of the Pixie King" at school, there may be a reasonable claim that it is a duty-free festive article.

But a different dance costume could be yet a different story...

We fear (in the spirit of the Halloween season) that potential disagreements, regarding the durability and re-usability criteria of these imported goods and their consequent duty rates, will continue to haunt us.