A Montreal filmmaker fears that she could lose the centrepiece of a federally subsidized art installation after Canadian customs officers intercepted her material and deemed that it contravened the country's trade sanctions against Iran.

Sadaf Foroughi, an Iranian-born permanent resident, said she tried to explain to a customs agent at Trudeau International Airport that she is an artist and the object had no commercial use.

"I don't care, for me you're an Iranian," the female agent replied, according to Ms. Foroughi.

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She said the agent also told her: "You can stay here until tomorrow, my answer will be the same."

"That was immensely upsetting," Ms. Foroughi said, although she added that other customs agents she dealt with were polite and professional.

Jacqueline Roby, a spokeswoman for the Canada Border Services Agency, said the CBSA cannot comment on the allegations, but its employees are expected to be professional.

"All allegations of improper or illegal behaviour by CBSA employees are taken very seriously and are thoroughly investigated and acted upon accordingly," Ms. Roby said in an e-mail.

She added that the agency "will take the necessary actions called for, from discipline up to and including termination."

As part of a project subsidized by the Canada Council for the Arts, Ms. Foroughi had planned to project videos inside a traditional Iranian peep box known as a shahre farang. The boxes are made of thin tin and have eye-level viewing ports and elaborate ornaments shaped like Oriental buildings with domed towers.

When the peep box arrived in Montreal from Iran at the end of June, Ms. Foroughi was told it was being held back because of Canada's Special Economic Measures Regulations for Iran.

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The government of Prime Minister Stephen Harper, which suspended diplomatic relations with Tehran in September, 2012, expanded sanctions last year to ban all imports from and exports to Iran.

Ms. Foroughi is appealing with the Foreign Affairs Department, and said she is being charged $105 a day for storage.

She said Swissport Canada Handling Inc., the airport cargo handler warehousing her item, has said that after 30 days, it must turn the item over to customs to be destroyed.

"This goes beyond civil servants being zealous – it's an abusive interpretation of the regulations," Ms. Foroughi's lawyer, Vincent Valai, said in an interview.

"I have trouble grasping how they could do this. This poor woman worked for two years to create an object to display for Canadians and now they're saying that not only does she have to pay for storage, but they'll destroy it."

The peep box is not a commercial object but a personal item that should be exempt from the sanctions, Ms. Foroughi and her lawyer argued.

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Ms. Foroughi has twice received grants from the Canada Council for the Arts. She was awarded $12,000 in 2012 and $6,000 in 2010.

She said she was not planning to charge admission to her project, in which videos about women's conditions in Iran and in the West would be projected inside the shahre farang.

A reference letter from the Canada Council for the Arts specifies that she received funds because her project was an independent artwork and not something created for commercial film and television.

When Iran agreed last fall to an interim deal on its nuclear-weapons program, Foreign Affairs Minister John Baird credited the sanctions with forcing Tehran to present a more moderate front.

Mr. Valai said the Department of Foreign Affairs, which introduced the sanctions, should issue interpretation bulletins to help civil servants better understand how to enforce those rules.

Jean-Bruno Villeneuve, a spokesman for the Foreign Affairs Department, confirmed that personal effects are exempted from the sanctions. "Whether or not a specific item counts as an exemption to our sanctions is subject to legal interpretation," he said in an e-mail.

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"Canada will not apologize for standing up for the Iranian people," he added.