R & R Trading Co. Ltd. v. Canada (Minister of National Revenue)

R & R Trading Co. Ltd. v. Canada (Minister of National Revenue)
Court (s) Database
Federal Court Decisions
Date
2006-07-19
Neutral citation
2006 FC 901
File numbers
T-997-01
Notes
Digest
Decision Content
Date: 20060719
Docket: T-997-01
Citation: 2006 FC 901
BETWEEN:
R & R TRADING CO. LTD.
Plaintiff
and
MINISTER OF NATIONAL REVENUE
Defendant
REASONS FOR JUDGMENT
LAYDEN-STEVENSON J.
[1] R & R Trading Co. Ltd. (R&R) imports off-shore steel products for distribution in Canada and the United States. Between 1992 and 1997, it imported Korean steel that was allegedly described in a Canadian International Trade Tribunal (CITT) order and therefore subject to anti-dumping duty.
[2] A Notice of Ascertained Forfeiture was issued to R&R demanding payment in relation to 43 transactions involving unpaid anti-dumping duty. R&R requested ministerial review and was partially successful. The original assessment amount was reduced.
[3] R&R now appeals the Minister’s decision, specifically with respect to 39 of the 43 transactions. For the reasons that follow, the appeal will be allowed in relation to six transactions. In all other respects the appeal will be dismissed.
I. Background
[4] The primary purpose of anti-dumping legislation is to protect Canadian manufacturers and producers. The Special Import Measures Act, R.S. 1985, c. S-15 (SIMA), specifically subsection 41(1), empowers the CITT, after compliance with the antecedent procedural requirements of SIMA, to issue rulings in relation to unfair import competition, affecting Canadian manufacturers, as a result of dumped goods. Dumping is considered an unfair trade practice because imported goods are sold in Canada at a price (the export price) less than the price the goods are sold for in the country of origin (the normal value). The difference between the normal value and the export price is the margin of dumping.
[5] In circumstances where the CITT finds that dumping has caused, is causing or is likely to cause “material injury” to Canadian production of like goods, an anti-dumping duty (equal to the margin of the dumping) is levied on the dumped imports to offset the price advantage the importer enjoys as a result of the dumping. The anti-dumping duties are imposed under SIMA and are collected, managed and enforced under the provisions of the Customs Act, R.S. 1985, c. 1 (2ndSupp.) (Customs Act).
[6] On June 18, 1983, a CITT order imposed anti-dumping duties on Korean-manufactured steel pipe and tubing. In particular, the following steel pipe and tubing was determined to be subject to anti-dumping duty:
carbon steel welded pipe in the nominal size range 12.7 mm to 406.4 mm (1/2+" to 16") inclusive, in various forms and finishes, usually supplied to meet ASTM A53, ASTM A120, ASTM A252, ASTM A589 or AWWA C200-80 or equivalent specifications, including water well casing, piling pipe, sprinkler pipe and fencing pipe, but excluding oil and gas line pipe made to API specifications exclusively originating in or exported from the Republic of Korea
[7] The CITT order was continued without amendment on June 5, 1990 (Review No. RR-89-008) and on June 5, 1995 (Review No. RR-94-004). It was continued again in 2000, but was rescinded in 2005.
[8] On June 14, 1993, a Canada Customs Anti-Dumping and Countervailing Division enforcement officer notified steel importers that Korean API 5L pipe in lengths under 40' would be subject to anti-dumping duty. The rationale underlying this ruling was that shorter lengths were not normally used in the oil and gas industry. Importers supplying documentation to establish that shorter lengths of pipe were to be used for oil and gas line applications would be exempt. The ruling was revised on December 9th of 1993, to substitute 37' for the original 40'.
[9] On December 11, 1997, a Notice of Ascertained Forfeiture was issued to R&R requiring payment of $1,102,839.66. The demand related to 43 transactions with respect to unpaid anti-dumping duty. R&R requested a Notice of Decision under section 129 of the Customs Act on December 11, 1997. The Minister’s decision under section 131 of the Customs Act was issued on March 8, 2001, and confirmed contraventions of the Customs Act in 39 of the 43 transactions. The Minister’s decision reduced the amount of the original assessment and issued a demand for $421,384.24 pursuant to section 133 of the Customs Act. It is the Minister’s decision that is the subject of this appeal.
[10] It seems to me that the quest for an understanding of these reasons, in the absence of basic and essential contextual information, presents an onerous task. Therefore, to furnish context, various topics are identified and discussed in the paragraphs that follow. The content in relation to each of the topics is derived from the evidence adduced during the trial. In view of the number of acronyms used, a glossary of acronyms is attached to these reasons as Schedule “A”.
[11] Also, I should mention that the name of the agency charged with the administration of the Customs Act changes periodically. Canada Border Services Agency (CBSA) is the present entity. However, given the context of this matter, for clarity and convenience, throughout these reasons I will refer to the agency as “Canada Customs”.
II. The Plaintiff
[12] R&R owns several subsidiary companies, one of which is North American Pipe and Steel Limited (NAPS). R&R imports off-shore steel products and, through its subsidiaries, distributes those products to a wide range of customers, from distributors to end-users.
[13] Mr. Earl Ritchie is the president and chief executive officer of R&R. From 1972 until 1985, Mr. Ritchie lived in Korea. He speaks and writes Korean. While in Korea, Mr. Ritchie began sourcing Korean steel pipe for a Canadian company. When the Canadian company ceased operations, Mr. Ritchie started his own business. His Hong Kong-registered company, “Athabasca” was already in existence at that time. Initially, Athabasca purchased Korean steel and exported it primarily to the United States. Eventually, R&R was incorporated in British Columbia whereupon pipe was also exported to Canada. Mr. Ritchie returned to Canada, specifically to British Columbia, in 1985. Athabasca is still an active company and it provides an additional source of credit for the facilitation of R&R business.
[14] In its infancy, R&R employed only three or four people, including Mr. Ritchie and his cousin, David Bagnall, as the accountant. Over the years, R&R grew to its present state and it now has more than 100 employees. During the years in question (1992-1997) it imported, primarily, Korean steel into Canada.
[15] R&R purchased steel from a number of Korean manufacturers. In this proceeding, the relevant exporter companies are: Pusan Steel Pipe Corp. (Pusan), which later became known as SeAH Steel Pipe Corp. (SeAH); Korea Steel Pipe Co. Ltd. (Korea Steel), which later became known as Shin Ho Steel Co. Ltd. (Shin Ho); and Kukje Steel Co. Ltd.. It is important to note that Pusan/SeAH has a United States subsidiary company in Washington called State Pipe and Supply Co. (State Pipe).
III. Steel Pipe and Tubing
[16] Pipe and tubing are discrete tubular products manufactured from steel. When the steel itself is manufactured, a “heat number” is assigned to the “lot” of steel that is produced. If a number of lots are produced during the mill run, each lot will have a unique heat number. The heat number is an important identifier that remains with the steel and attaches to the products that are produced from each specific lot of steel.
[17] Two significant things happen at the time that pipe and tubing are manufactured. First, an inspection certificate, also known as a mill test report (MTR), is issued by the manufacturer. The MTR stipulates the specification to which the pipe or tubing is manufactured and it delineates the results of the various testing processes employed with respect to the product. Second, the specification (of the product) and the heat number (from the steel lot used to produce the pipe or tubing) are stencilled on the pipe or tubing. When the pipe or tubing is too small (narrow) to be stencilled, a tag containing the specification and heat number is attached to the bundles of pipe or tubing.
[18] Although both are tubular products, there are significant general distinctions between pipe and tubing. Pipe is always produced to round cross sections while tubing is produced to round, square or other cross sections for a diversity of mechanical and structural purposes. Small pipe sizes are designated according to the approximate inside diameter referred to as nominal pipe size (NPS). Larger pipe sizes are designated according to the specified outside diameter (OD). Tubing is produced to actual outside/inside diameter tolerances and wall thickness.
[19] The wall thickness of pipe (outside diameter less inside diameter) is referred to by schedules while the wall thickness for tubing is referred to in gauges. Tubing is supplied to specified dimensions (rather than nominal dimensions) and is supplied to tighter dimensional tolerances than those required for pipe. Pipe ends are usually bevelled or threaded to facilitate welding whereas tubing ends are normally plain to enable further cutting.
[20] Further distinctions between the two tubular products will become apparent as each of the specifications of the pipe or tubing in issue is addressed. Those products and their specifications, along with the characteristics of each of them are discussed below. It should be mentioned that where reference is made to “random length”, a rough approximation would be: for single random length, 20'; for double random length, 40'; and for triple random length, 60'.
A. API 5L
[21] American Petroleum Industry (API) 5L is the specification that designates pipe which is known as line pipe. The “L” in the designation stands for “line”. It is designed and used primarily for the transmission of oil and gas in the oil and natural gas industries. It is usually ordered in double or triple random lengths in order to minimize welding and thereby reduce the potential for leaks. It is commonly marketed with a bare metal finish. Single random lengths of API 5L would be the exception, rather than the norm, in the oil and gas industry and would normally be specifically ordered for a particular project.
[22] API 5L is similar to ASTM A53, but API 5L is superior. Hence, while API 5L can be used for an ASTM A53 application, the reverse is not ordinarily so. Although used primarily for the conveyance of oil and gas, API 5L has been put to other uses. Mr. Ritchie described a situation where the piling for the Vancouver Convention Centre consisted of “API spec pipe”. API 5L pipe must be able to withstand a high level of pressure with minimum tolerance defect. API 5L specification pipe was not subject to anti-dumping duty unless it was imported in lengths less than 37'.
B. ASTM A53
[23] American Society for Testing and Materials (ASTM) A53 is the designation for pipe that is intended for mechanical and pressure applications. ASTM A53 is used for the transmission of steam, water, gas and air lines. It is a well-known specification and most distributors purchase and stock ASTM A53 as inventory because it can be used for a multitude of applications. The product manufactured to this specification is normally referred to as “standard pipe”. It is commonly ordered in single or double random lengths. It is “black” or hot-dipped galvanized steel pipe (coated with a resistant rust inhibitor) and can be stored outside. It normally has bevelled ends to facilitate end-to-end welding or has threaded and coupled ends to facilitate joining.
[24] The ASTM A53 specification refers to nominal pipe sizes for outside diameters and to schedules for wall thickness. It is similar to API 5L but has less stringent tolerances. ASTM A53 pipe was subject to anti-dumping duty.
C. ASTM A513
[25] American Society for Testing and Materials (ASTM) A513 is the designation for mechanical tubing. While the “uneducated” might look at ASTM A513 and be unable to discern any difference between it and ASTM A53, those involved in the industry would know better. The ASTM A513 designation covers electric-resistance-welded carbon and alloy steel tubing for use as mechanical tubing. It has a multitude of uses, but is not typically used in the transmission of fluids. Rather, it is used in a wide variety of applications where dimensional accuracy, surface finish and/or machinability are important. Many industries (including automotive, agricultural and manufacturing) use mechanical tubing for office equipment, appliances, airplane and axle tubes, shafting, finned tubing and shock absorber tubes.
[26] This specification refers to outside diameters, inside diameters and wall thickness. There are tight tolerances for the outside diameter and the wall thickness (ASTM tables are available with respect to the diameter tolerances). The dimensional tolerances are usually much more stringent for tubing than for pipe.
[27] The product manufactured to the ASTM A513 specification is normally plain-end square cut because it is not very often welded end-to-end. It is usually bare metal or lightly oiled and generally is stored inside. Some of the tubing may be coated with rust-inhibitor paint, but the tubing is not galvanized. ASTM A513 tubing was not subject to anti-dumping duty.
D. ASTM A500
[28] American Society for Testing and Materials (ASTM) A500 is a specification for structural tubing. Products manufactured to this specification are intended for structural applications, not conveyance applications. This specification is used in a wide variety of applications where strength appearance, resistance to bending and resistance to tensional stresses are important. It has more restrictive tolerances than ASTM A53, but less restrictive tolerances than ASTM A513. Some provinces have accepted A500 Grade C with flash removed (flash is the welding bead along the inside seam of the pipe) and wall thickness less than standard for use as well casing. Not all provinces have done so because A500 is generally regarded as a structural tubing rather than a pressure-tested pipe. This product is of limited relevance in this proceeding. It was not subject to anti-dumping duty.
E. Dual Specification
[29] Dual specification refers to a product that meets two or more specifications simultaneously. It is common industry practice for manufacturers to make stock products that will meet two or more specifications in order to increase marketability. This practice, referred to as dual or triple specification, enables the purchaser to resell the product in accordance with any of the individual specifications that have been certified. In addition to “dual specification”, the practice has also been called “dual stencilling” or “dual certification”.
[30] In circumstances involving more than one specification, the manufacturer ensures that the product simultaneously meets all of the requirements of the multiple specifications, stencils the product with the identification marks required by each of the individual specifications already defined/described and issues a single inspection certificate that details the multiple specifications that have been satisfied simultaneously. The practice is viable because the requirements for the multiple specifications are similar. Dual certification for API 5L and ASTM A53 is common.
F. Recertification, Reclassification or Downgrading
[31] These terms were used interchangeably throughout the trial to describe a common industry practice. The practice occurs primarily in two circumstances: (a) there is a deficiency in the production of a product such that it cannot meet the specifications of the intended product but can and does meet the specifications of another product; and (b) circumstances are such that the manufacturer wants to sell off what is left of a product. In either case, the product will likely be downgraded or recertified to facilitate a sale.
IV. Importation of Offshore Pipe
[32] Korean steel products were shipped to R&R. If the vessel arrived in Vancouver, the steel products were unloaded at the Fraser Surrey Docks. However, if the ship arrived in the United States, the steel products were unloaded there and trucked to Canada. In the latter situation, the products entered Canada at the Pacific Highway Crossing port of entry at Surrey, British Columbia.
[33] At the Fraser Surrey Docks, imported goods are unloaded onto the docks and the importer or its agent (a Customs broker) will submit paperwork to Canada Customs in order to obtain customs release of the goods. While on the docks, the goods remain in a “controlled” area. Customs release is necessary to enable the importer to take possession of the goods. The “paperwork” consists of a document known as a cargo “manifest” which includes, among other things, information in relation to the shipper, the vessel, and the goods (description and quantity). Other documents include a commercial invoice, packing list, bill of lading and so on. The “B3”, a Canada Customs coding document, must be completed for release of the goods. The B3 takes its name from its form number. This document indicates a transaction number, a business number to identify the importer, the foreign vendor, the country of origin, the port of entry, whether the importation is an A, B or Type 10 entry, and provides the value of the goods in both foreign and domestic currency. Duties and taxes owing must be paid before the goods will be released.
[34] When a Type 10 entry is processed, the importer can bring goods into Canada, but cannot release them into Canadian consumption. The goods are moved from the docks (a controlled area) to a bonded area. R&R had its own bonded area and it often moved steel products from the docks to its bonded yard. To release the goods into Canadian consumption, a Type 20 entry must be submitted to Customs. Part, or all, of the goods can then be released by Canada Customs. To be clear, a “shipment” that is processed by way of Type 10 entry can be released in segments. Each segment will necessitate the completion of a Type 20 entry. All Type 20 entries must refer to a previous Type 10 entry. Duties and taxes must be paid before the goods listed in a Type 20 entry will be released for Canadian consumption.
[35] Customs officers are not trained in the nuances of steel products. As a result, they rely on the paperwork submitted by the importer or its broker. The software program used by Customs officers for commercial importations is known as ACROSS (Accelerated Commercial Release Operating Support System). Subject to circumstances when a “watch for” (to be discussed shortly) has been issued, in almost all instances, the goods are released on the basis of the paperwork. Only in two to three percent of cases will a physical inspection be conducted. In short, importation (including payment of applicable duties and taxes to Canada Customs) constitutes a self-reporting system.
[36] It is not clear, from the evidence, whether the Type 10 entry applies with respect to importations crossing at the Pacific Highway Crossing port of entry. It is clear that, in all other respects, the circumstances governing the release of the goods are the same. The Form B3 must be completed and submitted in order for the goods to be released. At the border crossing, a trucker will first encounter a primary inspector. The primary inspector is the officer to whom the trucker makes a declaration as to the type of goods, if any, that are being transported. If goods are being imported, the trucker must proceed to the compound where the paperwork is either completed by the trucker or is obtained from the broker. The nature of the package of documentation presented to Canada Customs is the same as that with respect to goods that are unloaded on the docks. Physical inspections may or may not be conducted.
[37] A “watch for” is essentially an “alert”. It is a notice entered into the ACROSS and it serves to alert the primary customs inspectors who will be reviewing the paperwork regarding an imported shipment. The watch for indicates that, if certain conditions exist, it is advisable to examine the goods being imported. The specific content of the watch for depends on the data entered into the software system. The information is inputted by the customs intelligence section. In R&R’s case, a watch for was entered. If the importer number of R&R together with the country of origin (South Korea) was entered into ACROSS (by the primary inspector), the watch for would appear on the computer screen.
[38] Two facts must be noted here. First, the watch for can be over-ridden by the primary customs inspector. Typically, this might occur in circumstances where there is a manpower shortage to conduct the physical inspection, or where a number of shipments have already been referred for inspection and yet another would be impractical because it could not, in any event, be completed. Second, the watch for will pop up on the computer screen only if the watch for information relates to mandatory inputs by the primary inspection officer. This latter situation is best illustrated by reference to the circumstances in relation to R&R. The two-digit code for the country of origin is not a mandatory input for the primary inspector. Consequently, in situations where the country of origin code had not been entered, the watch for did not appear on the screen. In December of 1996, after a $1.25 million dollar shipment for R&R was missed, the watch for was adjusted so that it would appear in all cases when R&R’s importer number was entered.
V. The Agreed Statement of Facts
[39] At the outset of the trial, the parties jointly submitted an agreed statement of facts. It is not necessary to recite all those facts. Some of them relate to the parties’ agreement regarding documents and the presentation format of the various transactions.
[40] The agreed upon facts identify 43 transactions in which R&R imported steel product. All products originated in South Korea and the “true nature of the product is at issue”. There are 39 transactions remaining in issue. No anti-dumping duty was paid with respect to any of the 39 transactions.
[41] The CITT ruling with respect to anti-dumping duties under SIMA applied to pipe coming within the description of the ruling even if it was purchased from State Pipe in Washington (the U.S. subsidiary of Pusan/SeAH), subject to applicable normal values.
[42] The bills of lading (included in Customs entry documents) were completed by the shipping company.
[43] In relation to transaction number 32, the pipe (18 bundles comprised of 998 pieces of 2" pipe described as ASTM 513) was physically inspected by customs officer Bruce Pemberton on June 3, 1996. Mr. Pemberton confirmed that the pipe bore tags describing it as single stencil A53 pipe.
[44] In relation to transaction number 42, the 6 5/8" imported pipe, described in the SeAH MTR (as dual specification), was physically inspected by Customs officer Maria Brosas on February 13, 1997. Ms. Brosas confirmed that the pipe was stencilled as dual specification API 5L/ASTM A53, but was tagged with a single specification of API 5L.
[45] On June 14, 1993, the defendant communicated its determination that API 5L pipe in lengths under 40' would be subject to anti-dumping duty in accordance with the CITT ruling (the short-length API 5L determination). This ruling has been described earlier at paragraph 8 of these reasons. Prior to communicating this ruling, the defendant communicated, orally and in writing, with certain industry players. The plaintiff R&R, philosophically, did not agree with the short-length API 5L determination.
[46] The adjustment of the original determination of the short-length API 5L determination to reduce the threshold from 40' to 37' was the result of R&R’s submission, through its president (Mr. Earl Ritchie), to the effect that single random lengths were less than 37' rather than 40'. Although Mr. Ritchie did not agree that anti-dumping duty should apply to any API 5L pipe, the defendant adjusted the determination to reflect the lower threshold. R&R was provided with notice of the adjustment by letter dated December 9, 1993. R&R did not take any formal steps to appeal or review the adjusted API 5L determination and takes the position that no avenue was available to enable it to do so. R&R did not, on any occasion, engage in a process whereby it provided the defendant with evidence that shorter lengths of API 5L were to be used for oil and gas line applications.
[47] It was in the best interest of a distributor such as R&R to have dual (or triple or quadruple) specifications stencilled on the pipe acquired from its suppliers because it would be more marketable to a wider audience of purchasers. When pipe was marked as API 5L/ASTM A53, it was marketable to customers who were looking for API 5L pipe or to customers who were searching for ASTM A53 pipe. API 5L pipe is a superior grade to ASTM A53 pipe. Pipe made to API 5L grade can be used for ASTM A53 applications although the reverse is not always true, given that API 5L is a superior grade.
[48] The amount originally demanded in the ascertained forfeiture was reduced on appeal to the Minister under section 129 of the Customs Act as a result of a determination that anti-dumping duties were not owing with respect to pipe imported for the following transactions:
Transaction number
Date of Entry
13227-001242505
(#27)
June 29, 1995
13227-001292469
(#29)
November 7, 1995
13227-001438419
(#33)
July 15, 1996
13227-001485601
(#43)
March 4, 1996
[49] The amount originally demanded in the ascertained forfeiture was reduced on appeal to the Minister under section 129 of the Customs Act for the following transactions:
Transaction number
Date of Entry
Reduced Amount
13227-001031214
(#15)
October 28, 1994
$1,568.34
13227-001934251
(#17)
December 5, 1994
$11,881.08
13227-001034990
(#19)
December 7, 1994
$7,725.39
13227-001035218
(#20)
December 7, 1994
$13,551.87
13227-001158547
(#21)
January 9, 1995
$2,249.70
13227-001159651
(#22)
January 24, 1995
$8,607.36
13227-001241401
(#25)
June 13, 1995
$8,476.71
13227-001290775
(#31)
November 28, 1995
$31,736.28
13227-001437463
(#34)
August 14, 1996
$2,815.20
13227-001464194
(#36)
August 27, 1996
$153.42
13227-001441470
(#37)
October 4, 1996
$1,047.57
13227-001465867
(#38)
November 5, 1996
$2,068.86
13227-001485359
(#41)
February 13, 1997
$6,570.96
[50] The changes to the amount originally demanded in the ascertained forfeiture resulted from: (a) the application of “normal values”; and (b) a general reduction of 30% overall (from $601,977.48 to $421,384.24) due to the inconvenience caused by the delay arising from the defendant’s review of the policy regarding GST implications.
[51] “Normal values” are set values based on information provided by a specific manufacturer relating to its manufacturing costs. [Normal value is also referred to as the price at which the goods are sold in the country of origin.] Where the information is accepted by the Minister or the ministerial delegates, normal values reduce or eliminate the anti-dumping duty in relation to goods imported from that particular manufacturer.
[52] Although the plaintiff imported some ASTM A53 pipe for which normal values had been negotiated, those normal values have been properly accounted for in the decision made pursuant to section 131 of the Customs Act. All applicable normal values were properly calculated and applied to the transactions which qualified for normal values, at the adjudications stage, with the following exceptions:
(a) the normal value for 1" pipe in transaction number 17 ought to have been 336,158 Korean won per metric tonne rather than 382,789 won per metric tonne;
(b) the normal value for 1" pipe in transaction number 19 ought to have been 336,158 Korean won per metric tonne rather than 334,563 won per metric tonne.
VI. The Relevant Statutory Provisions
[53] The pertinent provisions of the Customs Act are attached to these reasons as Schedule “B”. Section 7.1 requires that information provided to a Customs officer relating to the importation of goods be true, accurate and complete. Sections 12 and 13 impose a requirement to report goods imported into Canada. Section 17 specifies the duties applicable to imported goods and prescribes the rates and liability in relation to these duties. Subsection 40(1), among other things, imposes an obligation on those who import goods for sale to maintain records in relation to the goods.
[54] Section 124 authorizes the issuance of an ascertained forfeiture and section 127 provides that the resulting debt is final and not subject to review except in accordance with the Act. Subsection 129(1) permits application for ministerial review of the ascertained forfeiture. Section 131 generally describes the Minister’s decision with respect to contravention of the Act. It also contains a strong privative clause stipulating that review of the decision is limited to the extent and manner prescribed by subsection 135(1).
[55] Section 133, paragraph (a) and subsection (1.1) specify the obligations and powers of the Minister in relation to the review. Section 135 provides for an appeal of the Minister’s decision to this court.
VII. Common Ground
[56] It is common ground that the objectives of the Customs Act are to regulate, oversee and control cross-border movements of people and goods. The attainment of those objectives depends on the effectiveness of the self-reporting system created by or imposed by the Customs Act. Ascertained forfeiture is a civil collection mechanism. It is an administrative process that is intended to provide a timely and effective means of enforcing the Customs Act. It is purely economical. see: Martineau v. Minister of National Revenue, [2004] 3 S.C.R. 737.
[57] The parties agree that the burden of proof in relation to the payment of duties and compliance with the Act is on the plaintiff, R&R. see: Customs Act, section 152 and Mercier v. Canada (Minister of National Revenue) (2004), 258 F.T.R. 309 (F.C.). There is consensus that the matter is to be addressed de novo. In the circumstances of this particular matter, the parties jointly submit that no deference is owing to the Minister. Apparently, the evidence is such that it is impossible to define, with any degree of accuracy, what was or was not before the Minister when the section 131 decision was made. Accordingly, both parties request that the court decide the matter afresh.
[58] It is also common ground that the court’s jurisdiction in this matter is restricted to deciding whether there was a contravention of the Customs Act. The calculation of duties and the issue of penalties, if any, are beyond the parameters of a determination regarding “contravention”. Consequently, any issue taken by the plaintiff regarding the application of the normal values and the applicable Korean won (as outlined above) is beyond this jurisdiction. In any event, this particular issue was not explored during the trial or in argument.
VIII. Concession
[59] R&R concedes that the assessed portion of the shipment in transaction number 32 is subject to anti-dumping duty. Therefore, while there were initially 39 transactions in issue, the number is now 38.
[60] R&R has not suggested that the imported goods in issue could have been found or that the seizure of the goods would have been anything other than impractical in the circumstances. I take this silence as an indication that R&R does not dispute that the conditions with respect to ascertained forfeiture, as delineated in section 124 of the Act, were satisfied.
IX. The Transactions
[61] Each of the parties has placed the various transactions in categories. R&R has proposed four categories. Three of its proposed categories contain two sub-categories and the other contains three sub-categories. The Minister has three proposed categories; one of them has two sub-categories.
[62] My review of the evidence, more particularly the submissions in relation to the evidence, revealed that the transactions delineated in R&R’s submissions total 41 rather than 38 (transaction 32 having been conceded at the conclusion of the trial). After cross-referencing the transaction numbers with R&R’s proposed categories, it became apparent that R&R had included transactions 5, 7, 24 and 26 in two separate categories. The transactions are listed under “Document Errors”, more specifically, the sub-category “MTRs Not Corrected”. The same transactions are listed under the category “Dual Specification”, more particularly, the sub-category “Purchases from Korea”. Although this discovery ought to have resolved the problem, R&R was then left with 37 rather than 38 transactions.
[63] Further searching revealed an absence of any reference to transaction 30 in R&R’s submissions. To complicate matters, I could not locate any reference to this transaction in the examination-in-chief of any of R&R’s witnesses. Mr. Ritchie was questioned regarding transaction 30 during cross-examination (transcript, pp. 387, 388). Having thoroughly reviewed the documentation, I am satisfied that transaction 30 can be included within the category entitled “Dual Specification Pipe”.
[64] To be clear and to alleviate any further confusion, transactions 27, 29, 33 and 43 do not form any part of this appeal. R&R received a favourable ministerial decision with respect to these transactions. As previously noted and, at the risk of redundancy, transaction 32 has been conceded.
[65] Having considered the proposed categories of both parties, I am satisfied that the remaining 38 transactions can appropriately be dealt with under the defendant’s proposed categories. If R&R has raised additional arguments in relation to specific transactions, they will be addressed. Accordingly, I will address the following general categories: Dual Specification Pipe; Short Length Pipe and Experts’ Reports on the A513 Specification.
G. Dual Specification Pipe
[66] Ordinarily, Korean dual specification pipe is subject to anti-dumping duties. However, in circumstances where the Korean manufacturer has established normal values, the situation can be different. Established normal values will result in either elimination or reduction of the anti-dumping duty.
[67] The nature of dual specification pipe has been discussed earlier. I accept as a fact that the production of dual specification pipe is a common practice in the industry. The expert report of metallurgist Frank Christensen, the evidence of the plaintiff’s expert, Victor Marks, and the evidence of the defendant’s expert, Michel Seguin, is consistent in this respect.
[68] Mr. Ritchie also acknowledged the existence and prevalence of dual specification pipe and went to great lengths to explain, in his view, why Korean clerical staff preparing MTRs would erroneously record a product as dual specification (rather than single). Dual specification products are not subject to anti-dumping duties in the United States. Hence, according to Mr. Ritchie, R&R ordered single specification pipe and when it received MTRs certifying the pipe as dual specification, it was the result of clerical error. He claimed that the Korean employees were so accustomed to entering dual specifications for the United States exportations (comprising over 90% of the total market) that the recording of dual specifications was virtually automatic.
[69] Another point should be noted here. Mr. Ritchie was adamant that he was not interested in incurring anti-dumping duty. He maintained that when R&R received dual stencilled pipe from Korea, it was kept in R&R’s bonded area and was shipped out to the United States. The only exception was in relation to dual stencilled pipe imported from Pusan (SeAH) because of his understanding that there were normal values in place with respect to Pusan. Mr. Ritchie acknowledged that he did not have specific information as to the extent of those normal values and that he made no inquiries of Canada Customs in this regard. As it happens, and as Mr. Ritchie is now aware, Pusan did not have established normal values for all dual spec pipe.
[70] Similarly, the evidence is also clear that when dual specification pipe was transported into Canada from State Pipe (Pusan’s or SeAH’s United States subsidiary), Mr. Ritchie was operating under the same mistaken belief that normal values applied to all Pusan/SeAH pipe. Notwithstanding, R&R consistently reported the pipe, to its customs broker, as single rather than dual specification. The documentation presented to Canada Customs reflected that information and contained a declaration that the pipe was single specification.
[71] Now, at the conclusion of the trial, R&R concedes that there are transactions where the MTR certifies the pipe as dual specification and R&R cannot establish that the pipe is not dual stencilled. Those transactions arise in relation to purchases from State Pipe. R&R therefore admits that the pipe is dual stencilled. Additionally, R&R concedes that there are purchases from Korea Steel that have dual specification MTRs. The inconsistencies, in other documents, are not such that R&R can establish, on a balance of probabilities, that the dual specification is the result of a document error. Hence, it admits that the pipe is dual stencilled.
[72] These concessions relate to transactions 5, 7, 24, 26, 28, 34, 35, 37, 39, 40 and 42. I add transaction 30 to that list because it also relates to dual specification pipe from Pusan/SeAH via State Pipe. As a result of the concessions, the argument previously advanced by R&R under its proposed category “Document Errors”, sub-category “MTRs Not Corrected” is no longer of any relevance.
[73] R&R, however, takes the position that dual specification pipe is not subject to anti-dumping duty because “dual pipe has been made to API 5L specification exclusively” and as a result is “excluded under the CITT order”. The rationale underlying this argument is as follows:
(a) the anti-dumping order excludes “oil and gas line pipe made to API specifications exclusively” (R&R’s emphasis). CITT has deliberately selected the word “made”. R&R submits that “made” means “manufactured”. Because API 5L and ASTM A53 are different specifications and API 5L is superior, dual specification pipe will have been made to API 5L specification only and will therefore include any lesser specifications (such as ASTM 53);
(b) the use of the phrase “oil and gas line pipe” does not assist in the definition. The evidence establishes that “oil and gas line pipe” is a common reference to pipe manufactured to the API 5L specification. The wording would, however, exclude oil and gas line pipe that might be made to some other specification (e.g. if ASTM set up a specification for line pipe it would not qualify for this exemption);
(c) the pipe is stencilled at the mill, but the stencilling is not part of the manufacturing process. The pipe has already been manufactured to a particular specification at the stencilling stage. The stencil is simply the specification by which the manufacturer elects to market the pipe. This may be the specification to which the pipe was made or manufactured or it may be some lesser specification depending on which market is likely to achieve a sale;
(d) the word “exclusively” means that if API creates a specification that is the same as an existing ASTM specification or if ASTM creates a specification that is the same as an existing API specification, so that the products could be used interchangeably, anti-dumping duty is imposed on API. At that stage the API pipe and the other pipe named in the dumping order (it need not be A53 but could be A120 or other named pipe) could be used interchangeably and the