Ayp (Canada) Inc. v. Canada (Deputy Minister of National Revenue)

Ayp (Canada) Inc. v. Canada (Deputy Minister of National Revenue)
Court (s) Database
Federal Court of Appeal Decisions
Date
2001-05-11
Neutral citation
2001 FCA 148
File numbers
A-57-00
Decision Content
Date: 20010511
Docket: A-57-00
Neutral citation: 2001 FCA 148
CORAM: LINDEN J.A.
EVANS J.A.
SHARLOW J.A.
BETWEEN:
AYP (CANADA) INC.
Appellant
- and -
THE DEPUTY MINISTER OF NATIONAL REVENUE AND
THE COMMISSIONER OF CUSTOMS AND REVENUE
Respondents
-and-
MTD PRODUCTS LIMITED
Respondent
Heard at Toronto, Ontario, Thursday, May 10, 2001
Judgment delivered at Toronto, Ontario,
on Thursday, May 10, 2001
REASONS FOR JUDGMENT OF THE COURT BY: SHARLOW J.A.
Date: 20010511
Docket: A-57-00
Neutral citation: 2001 FCA 148
CORAM: LINDEN J.A.
EVANS J.A.
SHARLOW J.A.
BETWEEN:
AYP (CANADA) INC.
Appellant
- and -
THE DEPUTY MINISTER OF NATIONAL REVENUE AND
THE COMMISSIONER OF CUSTOMS AND REVENUE
Respondents
-and-
MTD PRODUCTS LIMITED
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario
on Thursday, May 10, 2001)
SHARLOW J.A.
This is an appeal from a decision of the Canadian International Trade Tribunal (C.I.T.T.) dated November 9, 1999 that the Deputy Minister had correctly classified certain goods manufactured by the parent company of the appellant as powered mowers under tariff item no. 8433.11.00 (powered mowers for lawns, parks or sports-grounds, with the cutting device rotating in a horizontal plane) rather than under tariff item no. 8701.90.19 (other tractors), as the appellant contended.
It is now well established that the C.I.T.T.'s interpretation and application of tariff classifications will be set aside only if they are unreasonable: see Canada (Deputy Minister of National Revenue) v. Schrader Automotive Inc. (1999), 240 N.R. 381 (C.A.) and the many other decisions of this Court that follow that case.
In this case the C.I.T.T. was required to decide first whether the goods in question fell within the tariff classification description for "tractors". If they were found to be tractors, the appellant would be entitled to succeed because, by virtue of note 1(1) of Section XVI of the Customs Tariff (which includes powered mowers), the classification for powered mowers excludes tractors. However, the C.I.T.T. found the goods not to be tractors and found them to be powered mowers. It followed from that determination that the appeal had to be rejected.
The first question required reference to note 2 to Chapter 87 of Schedule I to the Customs Tariff, which defines "tractors" as follows:
... "tractors" means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilisers or other goods.
The C.I.T.T. interpreted the words "constructed essentially" as follows:
... to construct goods "essentially for" a particular function means that the function in question represents the "essence or nature" of the goods. In the Tribunal's view, this requires that, at a minimum, in the design and construction of the goods in issue, hauling or pushing was to be their principal function.
The C.I.T.T. heard considerable evidence about the design, testing and capability of the goods in issue and concluded that:
... the goods in issue were not designed or constructed so that their principal function or "essence or nature" would be to push or haul attachments.
We are unable to conclude that the C.I.T.T. was unreasonable in its interpretation of the definition of "tractors"or in the application of that interpretation to the facts of this case, based on all of the evidence before it.
It was argued for the appellant that the C.I.T.T.'s interpretation of the definition of "tractors" in this case is not consistent with the interpretation it adopted in prior cases: Marubeni Canada v. D.M.N.R. (14 December 1994), AP-93-311 (C.I.T.T.), Ford New Holland Canada Ltd. v. D.M.N.R. (3 February 1995), AP-93-388 (C.I.T.T.), Steen Hansen Motorcycles Ltd. v. D.M.N.R. (12 May 1997), AP-95-065) and Honda Canada v. D.M.N.R. (11 January 1999), AP-97-11 (C.I.T.T.). The appellant says that in those cases, the C.I.T.T. said that the test for determining whether a machine is "constructed essentially" for a particular function is the capability of the machine, not its actual use. However, in this case, according to the appellant, the C.I.T.T. rendered its decision on the basis of the intended use of the goods instead of their capability.
We do not accept the appellant's argument on this point. In the prior decisions of the C.I.T.T., as in this one, the C.I.T.T. was required to apply a legal definition to proven facts, taking into account both the intended function and actual function of the goods in question. We do not accept that the C.I.T.T. in this case departed or intended to depart from its prior jurisprudence as to the interpretation of the definition of "tractors".
The appellant also argued that in determining the second question, whether the goods in question were powered mowers, the C.I.T.T. in this case took a novel view of the following explanatory notes to heading no. 8433 (relating to powered mowers):
This heading also covers lawn mowers, known as riding lawn mowers, consisting of three or four wheeled basic machine fitted with a driving seat and having a permanently attached cutter, i.e. one which is removed only for repair or maintenance.
The evidence in this case is that the grass cutters are not permanently attached to the machines in issue. However, the C.I.T.T. held that the quoted explanatory note was not sufficient to exclude those goods from heading no. 8433, because the note is non-exhaustive. In prior decisions, the C.I.T.T. suggested, based on the same explanatory note, that permanent attachment of the grass cutter is an essential element of this classification. However, those statements must be read in the context of the evidence of the particular cases. In our view, the C.I.T.T.'s decision in this case should be regarded more as elaborating its previous jurisprudence in the light of the facts of this case than as contradicting its previous decisions.
It is our view that the decision of the C.I.T.T. that the goods in issue are powered mowers is reasonable. It would not be rendered unreasonable, or subject to a higher standard of review, even if it were inconsistent with prior decisions of the C.I.T.T. The C.I.T.T. is not bound by its previous decisions.
Nor are we persuaded that the appellant was prejudiced when the C.I.T.T., prior to the hearing in this case, sent counsel for the appellant a copy of the Honda decision and invited submissions. Counsel for the appellant says that he was misled into believing that the C.I.T.T. would not depart from any of the points of statutory interpretation stated in the Honda case. It is not uncommon for tribunals to provide litigants with recent decisions that may be relevant. There is nothing unfair in that practice, even if it leads counsel to make unwarranted assumptions. The letter from the C.I.T.T. in this case did not preclude the appellant from presenting any evidence or argument it chose.
For these reasons, this appeal will be dismissed with costs.
"Karen R. Sharlow"
J.A.
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: A-57-00
STYLE OF CAUSE: AYP (CANADA) INC.
Appellant
- and -
THE DEPUTY MINISTER OF NATIONAL REVENUE AND THE COMMISSIONER OF CUSTOMS AND REVENUE
Respondents
-and-
MTD PRODUCTS LIMITED
Respondent
DATE OF HEARING: THURSDAY, MAY 10, 2001
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR JUDGMENT
OF THE COURT BY: SHARLOW J.A.
DELIVERED FROM THE BENCH AT TORONTO, ONTARIO ON THURSDAY, MAY 10, 2001.
APPEARANCES BY: Mr. Neil E. Bass
For the Appellant
Ms. Anne M. Turley
For the Respondents
Mr. Michael A. Kelen
For the Respondent
SOLICITORS OF RECORD: Neil E. Bass
Barrister & Solicitor
116 Mulholland drive
Thornhill, Ontario
L4J 7T8
For the Appellant
...2/
SOLICITORS OF RECORD: Department of Justice
(Cont'd) Civil Litigation Section
2299-284 Wellington Street
Ottawa, Ontario
K1A 0H8
For the Respondents
Michael A. Kelen
Barrister & Solicitor
Suite 400, 99 Bank Street
Ottawa, Ontario
K1P 6B9
For the Respondent
FEDERAL COURT OF APPEAL
Date: 20010511
Docket: A-57-00
BETWEEN:
AYP (CANADA) INC.
Appellant
- and -
THE DEPUTY MINISTER OF NATIONAL
REVENUE AND THE COMMISSIONER OF
CUSTOMS AND REVENUE
Respondents
-and-
MTD PRODUCTS LIMITED
Respondent
REASONS FOR JUDGMENT
OF THE COURT