Akme Poultry, Butter & Eggs Distributors Inc v. Canada (Public Safety and Emergency Preparedness)

Akme Poultry, Butter & Eggs Distributors Inc v. Canada (Public Safety and Emergency Preparedness)
Court (s) Database
Federal Court Decisions
Date
2023-10-13
Neutral citation
2023 FC 1368
File numbers
T-917-21
Decision Content
Date: 20231013
Docket: T-917-21
Citation: 2023 FC 1368
Ottawa, Ontario, October 13, 2023
PRESENT: The Honourable Mr. Justice Pamel
BETWEEN:
AKME POULTRY, BUTTER & EGGS DISTRIBUTORS INC
Applicant
and
MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS
Respondent
JUDGMENT AND REASONS
I. Overview [1] The Applicant, Akme Poultry, Butter & Eggs Distributors Inc [Akme or the company] is applying for judicial review of a decision dated May 11, 2021 [Decision] by a senior officer for trade compliance [Officer] with the Canada Border Services Agency [CBSA]. The Officer rejected Akme’s duty drawback claims under the Duty Drawback Program [DDP] governed by sections 89 and 113 of the Customs Tariff, SC 1997, c 36, and by the Goods Imported and Exported Refund and Drawback Regulations, SOR/96-42, on the grounds that Akme failed to provide the books and records requested by the CBSA in support of such claims.
[2] The Minister of Public Safety and Emergency Preparedness [Minister] argues that this case is about the CBSA’s broad statutory power to compel production of documents and records from an importer of goods that the CBSA, in its discretion, may require in support of a drawback application under the Customs Act, RSC 1985, c 1 (2nd Supp) [Act], as well as the CBSA’s capability of exercising such powers to inspect any records that may be relevant to the assessment and collection of duties, regardless of having any reasonable grounds to believe that there has been a breach of the Act. However, in my view, that is not what this case is about; nor is the present application for judicial review about whether Akme met the conditions of the DDP so that its drawback application should have been granted. Rather, this case is about the failure of the Officer to engage with central aspects raised by Akme in response to the further demand by the CBSA for the books and records of the company, contrary to what the Supreme Court has again, just recently, reminded us that administrative decision-makers must do if they are to avoid having their decisions set aside (Mason v Canada (Citizenship and Immigration), 2023 SCC 21 [Mason] at para 74). For the reasons that follow, I grant the present application for judicial review.
II. Background [3] Akme is a family-run food processing business headquartered in Saint-Eustache, Quebec which processes domestic poultry and poultry imported from the United States into a variety of processed poultry products, including individually quick frozen marinated chicken breasts. The DDP is a program administered by the CBSA meant to allow the Canadian food processing industry to be competitive, and whose purpose is to incentivize and facilitate trade for the Canadian businesses that participate in it. Section 89 of the Customs Tariff is the basis for the DDP, in particular paragraph 89(1)(d) in this case. There is both a discretionary and a compulsory aspect to the DDP, which represents a benefit or a privilege to those who qualify for the program. Under the DDP, when goods are imported into Canada and re‑exported, or where processed products made using substitute domestic or imported goods [Substitute Goods] that are of the same class as the imported Goods [Goods of the Same Class] are exported, the processor is eligible to obtain a refund of the duties paid on the imported Goods, provided that certain statutory requirements are met.
[4] In the course of its business, Akme processed chicken imported from the United States as well as domestically sourced chicken into processed poultry products that were then exported to the United States. Between December 2017 and February 2018, Akme made 11 duty drawback applications under the DDP representing approximately 45 different transactions, totalling approximately $5.37 million [First Set of drawback claims]. In addition, in June 2019, Akme submitted to the CBSA a further five drawback applications representing five additional transactions [Second Set of drawback claims].
[5] By letter dated August 23, 2019 [August 2019 decision], the CBSA agreed to refund only approximately $1.8 million of Akme’s First Set of drawback claims, finding that the Substitute Goods that were the subject of some of Akme’s claims did not meet the DDP requirements. In particular, the CBSA determined that nine transactions did not meet the Goods of the Same Class requirement, i.e., Akme’s imported Goods and Akme’s Substitute Goods were different products given the differences in the respective descriptions used to identify them in the transaction documentation [Same Class Requirement issue]; in 20 transactions, the CBSA could not determine the origin of the Substitute Goods purchased domestically by Akme [Origin issue]; and in five transactions, the weight of the imported Goods was higher than the weight of the Substitute Goods [Weight issue].
[6] No judicial review was sought of the August 2019 decision. Rather, Akme responded by sending lengthy submissions to the Minister by letter dated November 6, 2019 [November 2019 submissions], requesting that the August 2019 decision in relation to the First Set of drawback claims be overturned and that its drawback applications be accepted. In short, Akme argued, as regards the Same Class Requirement issue, that its Substitute Goods and imported Goods met the Goods of the Same Class requirement; as regards the Origin issue, that the origin of the Substitute Goods was irrelevant to its drawback claims because all of the substitute product was purchased from Canadian slaughterhouses and was thus domestic; and as regards the Weight issue, that it was in fact a non‑issue because it was merely the result of chicken being a natural animal product with possible water retention discrepancies. Along the way, the parties seem to have resolved the Weight issue regarding five of the transactions. However, the Same Class Requirement issue and the Origin issue remained live issues with respect to the First Set of drawback claims; Akme argues that the CBSA never responded to its submissions with respect to those two live issues.
[7] By letter dated February 28, 2020 [February 2020 decision], the Officer rejected Akme’s Second Set of drawback claims, indicating that the applications could not be processed because of certain “omissions that prevent the [CBSA] from processing these requests any further” and that they were thus found invalid. The CBSA detailed the omissions in Akme’s claims and invited the company to resubmit its drawback claims once the specifically identified issues had been resolved and the requested documents had been provided—the additional specific information and documentation were purportedly needed to identify and trace the Imported Goods from importation through any processing, transfers or use of Goods of the Same Class, to the ultimate export or disposition of the goods [the concept of traceability]. Consequently, the Same Class Requirement issue continued to be a live issue in relation to the Second Set of drawback claims; again, no judicial review was sought with respect to the February 2020 decision.
[8] Akme nonetheless continued to pressure the CBSA. Following a series of exchanges between the parties which included further submissions by Akme, on May 22, 2020, the Officer sent Akme a letter [May 2020 decision] confirming the rejection of the Second Set of drawback claims; the Officer stated that after the company’s most recent submissions were reviewed, it was “determined that not all of the information requested [by the CBSA] was submitted.” The Officer underscored that it was incumbent upon Akme to demonstrate “full traceability and compliance with the program requirements, including demonstrating that all program obligations relating to Goods of the Same Class are met.” The Officer continued:
This means that the participant must first clearly identify the goods (individual or by lot, raw material, part, or product, including quantities) under consideration. In addition, the participant must document all necessary information to trace the exported goods back through any processing (including all inputs and outputs) or transfers, to the imported goods or Goods of the Same Class applied. Thus, traceability is the ability to identify and trace the quantity, use and movement of the goods throughout.
Without verifying the traceability of the goods, the Agency is unable to certify whether the claims submitted meet the conditions of the program requirements, and therefore is unable to complete the claim review.
[9] The Officer nonetheless confirmed that “[s]hould Akme wish to resubmit these claims, the following information should be included…” [emphasis added], and went on to identify, amongst other things, copies of purchase orders, commercial invoices, product identification information, a description of various production processes, and a description of how the processes and goods met the Goods of the Same Class conditions for the applied equivalence use. Finally, the Officer specifically requested access to Akme’s “books and records”:
In addition to the above, please note that the CBSA will also require access to specific company books and records to conduct this verification such as:
• the records/log used to track import and export shipments to and from Federally Registered Meat Establishments (required under the Meat Hygiene Manual of Procedures, Canadian Food Inspection Agency (CFIA)).
• specific detailed ledgers (i.e. vendor, inventories (raw and finished goods), production, sales/transfers etc.); and
• accounts which include production ‘leftovers’ (i.e. scrap or waste certificates, production loss factors, by-product produced); and/or
Note: if by-products are created during the process and that by-product is not exported, a Value Outturn Statement is also required to substantiate the eligible amount of drawback.
• any other documentation which would allow the CBSA to substantiate whether the goods and quantities claimed meet the conditions of the program.
These newly completed or amended K32 Drawback Claim Forms may be resubmitted to the CBSA along with all of the above requested information within the legislative time limits and that claims submitted beyond the these time limits will be rejected.
[Emphasis added.]
[10] The Minister states that the specific list of items and information identified in the May 2020 decision clearly set out the case that Akme had to meet with the resubmissions of its claims, i.e., the information that the resubmissions needed to provide in order for the CBSA to reconsider the rejected claims. In other words, argues the Minister, reconsideration of drawback claims already rejected was conditional upon Akme providing the requested information, and in particular its books and records. That is not to say that Akme could not continue to resubmit its drawback claims for reconsideration, but only that there is no statutory duty to reconsider them and that the CBSA was not obliged to continuously reconsider submissions in respect of drawback claims that it already had rejected.
[11] Akme draws a distinction between the Origin issue and the concept of traceability, and argues that concern over the Origin issue was not expressed by the Officer in either the February 2020 decision or the May 2020 decision and that consequently, from its perspective, the only live issues preventing the resolution of the Second Set of drawback claims up to that point were the Same Class Requirement issue and the general requirement to show traceability. It should also be kept in mind, and as explained by counsel before me, that traceability is not, in itself, a legislative requirement for the DDP; rather, according to Akme, traceability is a concept that the CBSA uses as a mechanism to confirm if the product has been imported and substituted with the new product, which was then exported—in essence, a map of the product’s processing chain from importation to Canada to re‑exportation from Canada.
[12] In any event, by a letter dated September 29, 2020 [September 2020 resubmission], Akme resubmitted its unpaid drawback requests from the First Set and Second Set of drawback claims, compiled as seven claims totalling approximately $4 million—a fresh start so to speak—accompanied by substantial submissions which it states clearly establish “full traceability and compliance with the program requirements, including demonstrating that all program obligations relating to Goods of the Same Class are met.” The submissions provided a purported roadmap in which Akme explained its business model and operations; provided a “walkthrough” of a sample transaction so as to show traceability, with reference to supporting documentation, including Excel spreadsheets; explained its products; reviewed how its imported and domestically purchased substitute chicken complied with the Goods of the Same Class requirement; explained how the CBSA could trace Akme’s products from import/purchase to export/sale; provided a chart of product descriptions for its imported, substitute and exported goods; and responded to the CBSA’s questions and request for information made in the May 2020 decision. The September 2020 resubmission also provided a Q&A table whereby Akme seemingly sets out all of the questions asked and requests made previously by the CBSA in relation to its drawback requests, and provides specific responses. In essence, Akme states that it was looking to fill the gaps of those certain “omissions that prevent the [CBSA] from processing these requests any further” and provided, in its view, a complete package of documents to establish that each of its drawback claims met all of the conditions of the DDP.
[13] According to the CBSA, however, Akme did not provide any new documents; the documents included in the September 2020 resubmission may have been the same documents as those previously submitted, although according to Akme, there were fresh explanations and tools to show that the documents indeed respond to the CBSA’s questions and requests as part of the May 2020 decision. Nor did Akme produce its books and records, although in fairness it may not have been clear to Akme whether, in “requiring access”, the CBSA was actually making a demand for production of the books and records in its May 2020 decision. In any event, Akme argues that the Officer either already had the specific documents that he had requested—and thus his request for them again is an indication of his failure to engage with what Akme had already submitted—or had the relevant information already on hand but in a different format, filed as part of prior submissions, which would allow the Officer to assess any outstanding issues and come to a determination as to whether Akme’s drawback requests met all of the DDP requirements.
[14] Akme also takes the position that its September 2020 resubmission seemingly resolved the Same Class Requirement issue, and points to internal correspondence in the record between CBSA personnel dated February 1, 2021 [February 2021 internal communication] which states that “[w]e maintain our earlier position that from a goods of the same class perspective only, it is our opinion based on the available information that the goods in question have met all of the legislative Drawback Program requirements to qualify for the goods of the same class provision. Therefore, the verification can proceed to determine if all of the other program conditions were met” [emphasis added]. Before me, Akme also noted that the February 2021 internal communication was before the Officer when he rendered the Decision, yet there is no indication that the Officer considered it before rejecting its claims. The Minister takes the position that the February 2021 internal communication was simply an off-the-cuff statement from an individual who was not involved in the file. However, I must agree with Akme that it is nonetheless the only area in the record where the CBSA is seen to somehow engage with the issue of determining whether Akme’s drawback claims meet the Goods of the Same Class requirement.
[15] In any event, on March 11, 2021, the Officer wrote to Akme [March 2021 request], this time specifically requesting the books and records that had been mentioned in the May 2020 decision so as to conduct the verification of the drawback claims. The Officer again noted that Akme had not provided any new documents “in regards to the traceability of the goods in order to determine the origin of the chickens purchased in Canada” [emphasis added], including from two of Akme’s domestic suppliers; this, according to the Minister, went to the Origin issue as regards the substitute chicken purchased in Canada. From what I understood from counsel, it was not enough for Akme to confirm that the substitute chicken was domestically purchased (i.e., purchased by Akme in Canada); rather, the CBSA was looking to determine whether that product was initially Canadian—or foreign—sourced. The letter also indicated that Akme needed to provide the CBSA with “sufficient satisfactory documentation upon request that demonstrates full traceability and compliance with the program requirements, including demonstrating that all program obligations relating to Goods of the Same Class are met.”
[16] Before me, the Minister argued that traceability is not simply about the origin of the domestic chicken, but also about the need for the CBSA to follow and track the movement of the product from, in this case, the purchase of equivalent goods through processing and thereafter out to export; the Minister argues that there are several conditions that Akme had to meet to establish eligibility for the DDP and that evidence of traceability allows the CBSA to follow the product along the processing chain and substantiate Akme’s assertions on having met DDP requirements. In the Minister’s view, and contrary to the position taken by Akme, the March 2021 request did not link traceability solely to the Origin issue, but to all the conditions of the DDP. However, from my perspective, I certainly understand how Akme could have read the March 2021 request as linking the traceability requirement to the Origin issue, with the Officer simply asserting that without verifying the traceability of the goods (i.e., so as to address the Origin issue), the CBSA is “unable to certify whether the claims submitted meet the conditions of the program requirements”.
[17] In any event, the Minister argues that the March 2021 request was Akme’s last chance—last amongst many previous chances—to provide the “books and records” of the company to substantiate Akme’s previously made submissions regarding its compliance with DDP requirements. What is clear, however, is that the March 2021 request does not address Akme’s assertion that all the documents required to determine whether the company had complied with the DDP requirements were in fact received by the CBSA. In particular, the March 2021 request does not address the previous submissions of Akme with respect to either the Same Class Requirement issue (including the February 2021 internal communication) or the Origin issue, nor does it identify any other requirement of the program that was still a live issue needing to be verified by way of traceability, nor does it reference where in previous exchanges one may find its engagement with Akme’s submissions on those issues. According to the Minister, the CBSA did not have to address these aspects, as engagement with Akme’s submissions was fulfilled with the May 2020 decision when the case that Akme had to meet was laid out.
[18] By letter dated March 26, 2021 [March 2021 submissions], Akme replied to the March 2021 request by referring to its September 2020 resubmission and stating that the CBSA “has already received all documentation required to substantiate that the conditions of the [DDP] as to importation, interchangeability of substitute goods, processing and export have been met” [emphasis added]; the September 2020 resubmission seemingly explained in detail how Akme met the Goods of the Same Class requirement. Admittedly, Akme did not provide the CBSA with any new documents along with the March 2021 submissions. Rather, Akme stated that the CBSA’s request for the books and records of the company is predicated on determining the origin of the Substitute Goods, but that the origin of any substitute product purchased in Canada is irrelevant to the company’s drawback claims because Akme has not requested duty drawbacks in relation to the chicken purchased in Canada, but rather only in relation to product imported into Canada from the United States; according to Akme, the Minister may just as well have requested books and records to establish that the chickens were hatched on a Monday rather than a Wednesday.
[19] In any event, Akme explained that regardless of the relevance of the documentary request, it had attempted to secure the requested origin documents from its Canadian domestic suppliers from whom it had purchased the product, but to no avail. However, from the Minister’s perspective, the Origin issue is not only tied to imported chicken but also to chicken purchased domestically, as it is imperative that the CBSA be able to determine whether the domestically purchased chicken, itself, was sourced elsewhere and had possibly already benefited from the DDP after having been imported from, say, the United States.
[20] From the Minister’s perspective, Akme could have, and should have, simply provided the books and records that the Officer requested; rather, with the September 2020 resubmission and the March 2021 submissions, the company embarked on an arduous attempt to explain to the CBSA that it already had all the documents that it needed to address the claims. In fact, Akme states that its submissions went further than that, in that the company’s submissions actually pointed to where in their application package the Officer would have found many of the documents and much of the information now being requested, but that the request for the “books and records” to ascertain the origin of the Substitute Goods was simply improper under the circumstances as it was irrelevant to their claim.
[21] In the Decision dated May 11, 2021, the Officer rejected Akme’s resubmitted drawback claims solely on the grounds of Akme’s failure to provide the requested “books and records”, without any mention of Akme’s assertion that some of the documents were already in hand and that the CBSA nonetheless already had sufficient documents and information to assess and accept the claims. The Officer indicated that under subsection 40(1) of the Act and paragraph 113(3)(a) of the Customs Tariff, Akme was obliged to “provide the CBSA with the required documentation in order to determine eligibility” and that, in essence, the failure to do so—in this case, the failure to provide the specific books and records requested—justified the rejection of its claims. In other words, Akme’s drawback claims were not rejected because of an expressed failure to meet the identified conditions or requirements of the DDP, but because the company had failed to provide the specific “books and records” requested by the Officer.
III. Analysis A. Preliminary issues [22] As a preliminary matter, the Minister argues that exhibits A, B, C, and E of the affidavit of Spyros Plessas dated January 14, 2022, should be struck as inadmissible because those documents were not before the Officer as part of the drawback claims and were not part of the certified tribunal record under rule 318 of the Federal Courts Rules, SOR/98-106; the corresponding paragraphs 6, 10 to 13, and 15 of the affidavit should be struck on the same basis. I am dismissing the Minister’s request. There is no doubt that, generally, only evidence that is actually before the decision-maker is admissible on judicial review. However, and putting aside that Exhibit E was seemingly before the Officer at the time that he rendered the Decision, the impugned paragraphs and exhibits fall under the “general background” exception—one of the few exceptions to the general rule—as information that might assist the Court in understanding the history and nature of the case before the administrative decision-maker and the issues relevant to judicial review (Delios v Canada (Attorney General), 2015 FCA 117 at paras 41–46; Association of Universities and Colleges of Canada v Canadian Copyright Licensing Agency (Access Copyright), 2012 FCA 22 at para 20). Therefore, I only consider those paragraphs and exhibits as non-argumentative orienting statements; I would say, however, that although the words “[o]nce again, Akme had to resort to legal recourse and sought judicial review of the 2018 Denial” found at paragraph 13 of Mr. Plessas’s affidavit may push this exception to its limit, nothing turns on what may likely be, rightly or wrongly, only an expression of frustration on the part of the affiant.
[23] In addition, although Akme seeks in its notice of application that, inter alia, the Court set aside the notices of penalty assessments made against it, the parties confirmed before me that no such notices have been issued against the company.
B. Standard of review [24] As to the Decision itself, the parties agree that the standard of review applicable to the merits of the Decision is that of reasonableness; the determinative issue is whether the Officer provided reasons that are responsive to the central issues raised by Akme in its submissions and that are transparent, intelligible and justified (Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov] at paras 15, 81, 94, 127 and 128).
C. The reasonableness of the Decision [25] I have set out the relevant statutory and regulatory provisions in the Annex to my decision. I should also mention that Akme raises a number of issues, any one of which the company argues renders the Decision unreasonable. However, given my decision regarding the paucity of the Officer’s engagement with, and the Officer’s lack of responsiveness to, the central issues raised by the company in its submissions, I do not see it necessary to deal with those other issues.
[26] The thrust of the Minister’s argument relates to his broad powers under the Act to require access to and to examine an importer’s records, and the obligation on the part of the importer to retain records for that purpose; the powers are broad because, argues the Minister, the regime established by the Act, the Customs Tariff and the trade incentive programs they provide for is based on a voluntary, self-reporting customs system, and the effectiveness of such a system depends on the importer’s legal obligation to maintain adequate books and records and on the Minister’s power to verify compliance with legislation through inspection, audit or examination of these records (Martineau v Minister of Revenue et al, [2004] 3 SCR 737 at paras 25 and 26). The Minister compares and contrasts sections 230, 231.1 and 231.2 of the Income Tax Act, RSC 1985, c 1 (5th Supp) [ITA], with sections 40, 42 and 43 of the Act, and argues that similar obligations exist with respect to taxpayers maintaining records—in the context of tax audits, argues the Minister, the Supreme Court of Canada has found that the Minister of National Revenue has broad powers for the administration and enforcement of the ITA, and must be capable of exercising those broad powers to inspect any records by auditing and examining those records that may be relevant to the assessment and collection of taxes, regardless of having any reasonable grounds to believe that there has been a breach of the ITA (R v McKinlay Transport Ltd, [1990] 1 SCR 627 at 648–650; R v Jarvis, 2002 SCC 73 at paras 47–53).
[27] In administering the DDP, argues the Minister, the CBSA relies on importers’ financial records to ensure compliance with subsection 89(1) of the Customs Tariff, and the maintenance of books and records would not assist in monitoring compliance with the Act if the Minister was not able to consult those books and records; in fact, adds the Minister, an importer who seeks to take advantage of a trade incentive program under the Act loses the right to exclude an inquiry by the Minister for the purpose of verifying compliance with the program (Canada (Minister of National Revenue) v Redeemer Foundation, 2006 FCA 325 at paras 31 and 39 (aff’d in Redeemer Foundation v Canada (National Revenue), 2008 SCC 46)). Accordingly, Akme necessarily had to provide the books and records that would allow the CBSA to trace each import transaction through any processing, transfer or use of Goods of the Same Class, and ultimately to the exportation of the same quantity of goods as the quantity of goods that was originally imported. Such records had to be presented in a manner that would allow the CBSA to perform a detailed audit and determine the amount of duties to be refunded (Imported Goods Records Regulations, SOR/86-1011, s 4 [Regulations]).
[28] The Minister argues that the CBSA can request any document that it, and not Akme, believes is necessary in order to assess a drawback claim, as long as such a request relates to the “administration and enforcement” of the Act; the Minister points to paragraph 113(3)(a) of the Customs Tariff, which provides that, for the purposes of granting a drawback claim pursuant to subsection 113(1), a drawback application “must be supported by such evidence as the [Minister] may require” [emphasis added]. According to the Minister, this ties in to subsection 40(1) of the Act, which requires that every person “who imports goods or causes goods to be imported…shall keep…any records in respect of those goods…and shall, where an officer so requests, make them available to the officer…” [emphasis added]. Subsection 40(2) of the Act reads: “If, in the opinion of the Minister, a person has not kept records in accordance with subsection (1), the Minister may request that person to comply with that subsection in respect of the records.”
[29] The Minister also points to subsection 2(1) of the Regulations in support of his position that every person who is required by subsection 40(1) of the Act to keep records of commercial goods must keep all records that relate to a specific list of items enumerated in that subsection of the Regulations. In any event, states the Minister, sections 42 and 43 of the Act—which admittedly relate to the Minister’s audit powers—empower the Minister to require any person to provide any record for any purpose related to the administration or enforcement of the Act. Consequently, it is for the Officer, and not Akme, to decide what information and documents must be produced in order for a drawback claim to be accepted, and the failure to produce such documents alone is justification for the rejection of such claims.
[30] Akme concedes that the CBSA enjoys a broad power to request production of documents for the further administration of the Act. However, it states that the breadth of the Minister’s statutory power is nonetheless subject to the parameters set out by the Supreme Court in Vavilov; the argument that Akme is making in its submissions to the Officer and before me is that subsection 40(1) of the Act only requires an importer to maintain records of imported goods, and not of domestically sourced goods, which make up the Substitute Goods in this case, that are relevant to the company’s duty drawback applications. The Minister reads subsection 40(1) of the Act more broadly, as referring to records for all goods of an importer: not just with respect to imported products, but also with respect to domestically sourced goods. That is of course a debatable issue, one which the Officer seems to have conveniently avoided with the rendering of his Decision. In fact, argues Akme, the Officer never addressed any of the issues raised by Akme in relation to the documents requested, to wit, that the request for the “books and records” in relation to the origin of the Substitute Goods was irrelevant to the company’s drawback claims and thus untethered to any statutory purpose; that the Officer was already in possession of some of the documents that he was requesting or at least had the information being requested, although in a different format; or that Akme had already provided all the documentation required to substantiate the outstanding issue of the Goods of the Same Class requirement.
[31] Akme states that subsection 2(1) of the Regulations is of little assistance to the Minister in the present context, as the requirement set forth therein is nonetheless tied to subsection 40(1) of the Act, and thus is limited to records relating to imported goods and does not cover those related to domestically sourced goods. In addition, Akme argues that sections 42 and 43—provisions which the Minister accepts relate to his audit powers—are also of little assistance, as we are not dealing here with a situation where the Minister is auditing Akme and compelling production of documents and records in support thereof.
[32] Akme argues that the Officer is under a statutory duty to assess the company’s application for duty drawbacks, and where there has already been evidence of substantial documentary disclosure (here, over 3,000 pages of documentation addressing each of the legislative requirements under the DDP and over 40 pages of explanatory submissions), there has to be a connection between the further and continual request for documentation and the purpose of that request. Akme argues that the Officer had a duty to justify his decision to reject the company’s claims, and in doing so, was required to address the central aspects of Akme’s arguments as to the appropriateness of his request for the books and records; any discretion to request documents in the context of reviewing an application under the DDP pursuant to paragraph 113(3)(a) of the Customs Tariff cannot be arbitrarily exercised.
[33] According to Akme, it has met all of the legislative requirements so as to benefit from the DDP; however, the CBSA is refusing to engage with its submissions and assess its documents, or to identify the gaps so that they can be rectified, yet relentlessly continues to ask for more documents. According to Akme, what we are witnessing, in essence, is a petulant CBSA not following its past practice of identifying which conditions of the DDP have been met and which remain outstanding and thus giving the claimant an idea of the case that it needs to meet; refusing to exercise the statutory authority delegated to it by the Act; and abdicating the role assigned to it by Parliament by refusing to properly assess the company’s submissions and to analyze the documents provided by Akme in support of its drawback claims. In short, from the company’s perspective, the CBSA has failed to grapple with the information and documents already provided by Akme in support of its drawback claims, or to engage in the central aspects of Akme’s response to the CBSA’s request for further documentation; rather, it simply continues to stick its head in the sand and plough forward with a request for more and more documents. From the company’s perspective, the Officer appears to have been searching for spurious grounds to avoid having to review the company’s substantial submissions, with the single‑minded view of disqualifying Akme’s drawback claims; the CBSA’s continual requests for documents are simply not based on a rational chain of analysis (Vavilov at paras 85 and 103), inter alia, because such requests relate to an issue—the Origin issue—which is not germane to Akme’s drawback claims. We must keep in mind that in its March 2021 submissions, Akme argues that the origin of the substitute chicken is irrelevant and that the request for documents to verify the origin of the substitute chicken is thus unreasonable, and that issue—which is central to Akme’s position—was never addressed by the Officer. As the Decision fails to address, and engage in any way with, the key issues that the company raised in its response to the CBSA’s request for additional documentation, it is neither transparent, nor intelligible, nor justified, according to Akme.
[34] The company also argues that nothing in the text of subsections 89(1) and 113(3) of the Customs Tariff or subsection 40(1) of the Act grants the CBSA discretion to refuse claims based solely on a failure to provide records of domestically sourced goods upon request. In the end, Akme argues that it no longer knows what case it has to meet; from the company’s perspective, it is on an endless merry-go-round with the CBSA in seeking reimbursement of about $4 million of duties that it has already paid and that it has a right to receive under the prevailing statutory provision, yet the CBSA keeps moving the goalposts on them by continually seeking more and more documents without reviewing what has already been submitted by the company.
[35] From the Minister’s perspective, the issues raised by Akme were somehow addressed in the March 2021 request when the Officer stated that “[a] review of the documentation and explanation provided with the re-submission…we have notice [sic] that no new documents were presented…. Without verifying the traceability of the goods, the CBSA is unable to certify whether the claims submitted meet” the DDP requirements. In any event, argues the Minister, he has the right to seek substantiation or corroboration of the information already provided by Akme, and while not necessarily disputing the information submitted by Akme, the Minister argues that he has the authority to corroborate the information submitted by a claimant via the books and records of the company, in particular the accounting records, especially where, as is the case here, discrepancies have been raised within the documents that were submitted. Here, argues the Minister, the CBSA required the additional documents because the documents that Akme had previously submitted did not allow the CBSA to make such a determination; the Minister cites Gugliotti v Canada (Citizenship and Immigration), 2017 FC 71 [Gugliotti] at paragraphs 36 to 37 for the proposition that a party can expect the reconsideration of its application to be denied if it fails to provide information requested by a decision-maker to assess the reliability of previously filed evidence.
[36] First of all, I do not read the March 2021 request as the Minister is suggesting. There is no explanation, in response to Akme’s submissions, as to why the Origin issue is relevant when Akme has not requested duty drawbacks in relation to chicken purchased in Canada. Also, whether or not Akme was correct in its argument regarding the Origin issue, it seems to me that the company was entitled to a response on the issue from the CBSA as it was directly tied to the Officer’s request for the books and records of the company, the non-delivery of which was the sole reason for the rejection of the company’s applications and the issuance of the Decision. The reasoning behind the simple request for documents without further substantiation, notwithstanding the submissions of Akme, cannot be found to be internally coherent. The Officer’s reasoning is simply that the CBSA requested documents, that Akme did not provide them, and that thus, the dismissal of the claim was justified. I find this approach untenable. As Vavilov makes clear, “[r]easons that ‘simply repeat statutory language, summarize arguments made, and then state a peremptory conclusion’ will rarely assist a reviewing court in understanding the rationale underlying a decision