Simon's Legal Resources

International Trade - Customs Act

. B. Erickson Manufacturing Ltd. v. Canada (Border Services Agency)

In B. Erickson Manufacturing Ltd. v. Canada (Border Services Agency) (Fed CA, 2023) the Federal Court of Appeal canvassed some Customs Act law, dealing an appeal from the customs tariff to the Canadian International Trade Tribunal - and interpretation of what must be rafts of thick manuals:

III. Nature of the appeal and standard of review

[10] This is a statutory appeal brought under s. 68(1) of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.). This provision permits an appeal from the Tribunal decision to this Court on a question of law.

[11] The appellant submits that several errors of law were made. The standard of review to be applied is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653 at para. 37.

IV. Applicable legal framework

[12] The applicable legal framework was described in detail by the Tribunal in its reasons at paragraphs 11-25 (See also Canada (Attorney General) v. Igloo Vikski Inc., 2016 SCC 38, [2016] 2 S.C.R. 80 at paras. 3-8). The salient principles are summarized below.

[13] Pursuant to s. 10(1) of the Customs Tariff, the classification of imported goods is generally to be determined by the General Rules for the Interpretation of the Harmonized System (General Rules). The General Rules are set out in the Schedule to the Customs Tariff.

[14] Importantly, Rule 1 of the General Rules provides that the classification of goods is determined in accordance with the headings in the tariff, and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the other rules. The provisions referred to in Rule 1 are also set out in the Schedule to the Customs Tariff.

[15] Under s. 11 of the Customs Tariff, regard must be had to Explanatory Notes to the Harmonized Commodity Description and Coding System published by the World Customs Organization.

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B. Did the Tribunal err in law in applying an explanatory note to heading 84.79?

[28] The explanatory notes to heading 84.79 provide, among other things, that heading 84.79 does not apply to articles that are “covered more specifically by a heading in any other Chapter of the Nomenclature.” The Tribunal applied this note and concluded that heading 82.05 was more specific than heading 84.79.

[29] This Court has determined that explanatory notes should be respected “unless there is a sound reason to do otherwise”: Canada (Attorney General) v. Suzuki Canada Inc., 2004 FCA 131, 319 N.R. 299 at para. 13; see also Canada (Attorney General) v. Mattel Canada Inc., 2021 FCA 162 at para. 22.

[30] The appellant submits that the Tribunal erred in law in applying the explanatory note because it is inconsistent with the terms of heading 84.79. The appellant’s submission is reproduced below from its memorandum of fact and law:

23. The Explanatory Note is in fact patently incorrect, as heading 84.79 expressly limits the “residual” aspect of the heading to other headings of Chapter 84, and not the entire Nomenclature:

Machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter.

[31] The question is whether the explanatory note is inconsistent with heading 84.79. The plain meaning of heading 84.79 does not support the appellant’s submission. The heading provides that it is residual to other headings in the same Chapter. It does not state that it is residual only to that Chapter.

[32] The remaining question is whether the appellant’s submission is supported by a contextual or purposive interpretation of heading 84.79. The appellant has not provided a good reason why this would be the case, and in my view it is not the case.

[33] The appellant relies on Rule 1 and suggests that it directs that the classification “must initially be determined with reference only to the headings within a chapter, as well as any applicable Section or Chapter Notes”. I agree that Rule 1 should be applied first, but this does not mean that Rule 1 forecloses the application of an explanatory note that addresses priority between heading 84.79 and headings of other Chapters.

[34] I conclude that the explanatory note is not inconsistent with heading 84.79.

. Atlantic Owl (PAS) Limited Partnership v. Canada (Border Services Agency)

In Atlantic Owl (PAS) Limited Partnership v. Canada (Border Services Agency) (Fed CA, 2022) the Federal Court of Appeal engages in a useful walk-through of administrative and court appeal procedures regarding custom matters (even though it was found that the regime lacked jurisdiction to address their issues):

[1] The appellants appeal before our Court a decision of the Canadian International Trade Tribunal (the Tribunal), dated February 21, 2020 (Appeal no AP-2018-029) dismissing their appeal for lack of jurisdiction.

[2] Pursuant to subsection 68(1) of the Customs Act, R.S.C., 1985, c. 1 (2nd Supp.) (the Act), appeals from the Tribunal to this Court are limited to questions of law (Neptune Wellness Solutions v. Canada (Border Services Agency), 2020 FCA 151; Canada (Attorney General) v. Impex Solutions Inc., 2020 FCA 171; Canada (Border Services Agency v. Danson Décor Inc., 2022 FCA 205). As such, the applicable standard in the present case is correctness (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).

[3] The appellants argue that the Tribunal erred in interpreting its jurisdiction. We cannot agree. We are all of the view that the Tribunal correctly interpreted its jurisdiction according to the Act.

[4] The appellants imported two remotely operated vehicles (ROVs) into Canada at the same time as a vessel. The only good declared by the appellants was the vessel, the value of the ROVs was included in that of the vessel, and the import duties were calculated accordingly. The appellants then requested to separate these goods on the basis of an alleged classification and valuation error through requests for re-determination of the tariff classification of the ROVs and valuation of the vessel sought a refund of duties under paragraph 74(1)(e) of the Act. These requests were denied by Canada Border Services Agency (CBSA) and the President of the CBSA. The appellants then instituted appeal proceedings before the Tribunal.

[5] The Tribunal reviewed the legislative scheme in which its jurisdiction operates and in accordance with the text of section 67 of the Act, concluded that its jurisdiction is contingent on a prior decision having been rendered by the President of the CBSA (C.B. Powell Limited v. President of the Canada Border Services Agency (11 August 2010), AP-2010-007 and AP-2010-008 (C.B. Powell, CITT), aff’d 2011 FCA 137).

[6] Applying this legal principle to the facts of this case, the Tribunal found that no decision had been made capable of triggering its jurisdiction in relation to the ROVs. Indeed, since there was no declaration made in conformity with the requirements of section 32 of the Act and no determination of the tariff classification of the ROVs, there was no decision made by the President of the CBSA under section 60 of the Act regarding the tariff classification of the ROVs as they were never accounted separately from the vessel. As such, absent a determination of tariff classification, a refund of duties request under paragraph 74(1)(e) of the Act could not be granted for the ROVs. The Tribunal was thus correct in deciding as it did.

[7] As this Court observed in Canada (Border Services Agency) v. C.B. Powell Limited, 2010 FCA 61, [2011] 2 F.C.R. 332 at paragraphs 28-29, the self-reporting scheme under the Act is designed carefully to set up explicit and exacting procedures to deal with the flood of goods that arrive at Canada’s borders, with all the revenue and regulatory matters that entails. The scheme must be given its literal effect and there is no room for courts to ignore the statutory scheme, as the appellants here asks us to do, to remedy possibly harsh consequences in individual cases.

. Canada (Border Services Agency) v. Danson Décor Inc.

In Canada (Border Services Agency) v. Danson Décor Inc. (Fed CA, 2022) the Federal Court of Appeal considers the appeal system unders.68 of the Customs Act:

[13] Consequently, appeals filed pursuant to subsection 68(1) of the Customs Act such as this one are no longer subject to review based on administrative law standards, but rather on appellate standards. I am thus of the view that the assessment of the evidence, and in particular the expert evidence, is beyond the jurisdiction of this Court sitting on appeal of the Tribunal. Since subsection 68(1) grants a statutory right to appeal decisions of the CITT to this Court solely on questions of law, the applicable standard of review is correctness: Vavilov at para. 37. The first issue, therefore, is to examine the grounds of appeal to determine whether they do raise a question of law. As this Court noted in Neptune Wellness Solutions v. Canada (Border Services Agency), 2020 FCA 151, [2020] CarswellNat 4287 (at para. 16), it is not always easy to identify an extricable question of law when it is embedded in a question of mixed fact and law. In order to determine whether an appeal undertaken pursuant to subsection 68(1) of the Customs Act raises an extricable question of law, the Court must strive to identify the "“essential character”" or "“true substance”" of the appeal and the best way to do this is to look at the notice of appeal and, if necessary, to the appellant’s memorandum of fact and law: Canada (Attorney General) v. Impex Solutions Inc., 2020 FCA 171, [2020] CarswellNat 4332 at para. 37; Keurig Canada Inc. v. Canada (Border Services Agency), 2022 FCA 100, [2022] CarswellNat 1814 at para. 17 [Keurig].

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[26] On this last point, as already mentioned, I am of the view that this Court has no jurisdiction to review the assessment of the evidence by the Tribunal. Pursuant to subsection 68(1) of the Customs Act, only questions of law can be raised before this Court. As such, the ultimate question before us is whether the goods have been processed beyond what is permitted by Chapter 25. There is no doubt that expert evidence, and the decision to accept the testimony of an expert or to prefer the testimony of one expert over another, can affect the construction given to a heading by the Tribunal. Yet, unless the Attorney General can identify an extricable error of law, it is not for this Court to reweigh the evidence in order to determine whether the CITT was correct in classifying the goods as it did: Keurig at para. 37.