T-2084-94
THE DEPUTY MINISTER OF NATIONAL REVENUE
FOR CUSTOMS AND EXCISE
Appellant
- and -
DANNYCO TRADING LTD.
Respondent
REASONS FOR JUDGMENT
GIBSON J.:
These reasons arise out of an appeal pursuant to section 68 of Customs Act1 of a decision of the Canadian International Trade Tribunal (the "Tribunal") dated June 16, 1994, wherein the Tribunal determined that "air diffusers" imported by the Respondent "...should be classified under tariff item No. 8516.90.10 as parts "[o]f the goods of tariff item No. 8516.31.10 or 8516.31.90," being parts of domestic hair dryers."
Section 68 of the Customs Act, at the relevant time, read as follows:
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68. (1) Any of the parties to an appeal under section 67, namely, |
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(a) the person who appealed, |
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(b) the Deputy Minister, or |
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(c) any person who entered an appearance in accordance with subsection 67(2), |
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may, with leave of a judge of the Federal Court, within ninety days after the date a decision is made under section 67, appeal therefrom to that Court on any question of law. |
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(2) The Federal Court may dispose of an appeal by making such order or finding as the nature of the matter may require or by referring the matter back to the Canadian International Trade Tribunal for rehearing. |
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By virtue of section 24 of the Federal Court Act,2 the reference in section 68 to the Federal Court is a reference to the Trial Division.
Leave was granted in accordance with section 68 of the Customs Act by Pinard J. on September 1, 1994 in the following terms:
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leave to appeal is granted on the ground that there is a serious issue to be tried with regard to the distinction which ought to be drawn, in the circumstances, between the terms "parts" and "accessories". |
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The background facts are essentially not in dispute. They may be summarized as follows:
- between March 24, 1992 and February 1, 1993, the respondent imported air diffusers into Canada;
- the imported air diffusers were made of plastic and were designed as an attachment to hair dryers;
- at the time of each importation, the air diffusers were classified under Tariff item No. 3926.90.90 of Schedule I to the Customs Tariff3 as "other articles of plastics";
- the respondent urged that the air diffusers should be classified under Tariff item No. 8516.31.10 as parts of domestic hair dryers and therefore requested, pursuant to paragraph 60(1)(b) of the Customs Act, a re-determination of the tariff classification of the air diffusers. It was determined that the imported goods were properly classified under Tariff item No. 3926.90.90 as other articles of plastics;
- the respondent subsequently requested a further re-determination of the tariff classification of the air diffusers by the Deputy Minister of National Revenue for Customs and Excise pursuant to paragraph 63(1)(a) of the Customs Act;
- on August 26, 1993, the appellant confirmed the classification of the air diffusers under Tariff item No. 3926.90.90;
- on September 15, 1993, the respondent appealed the decision to the Tribunal pursuant to section 67 of the Customs Act ;
- by the decision here under appeal, the Tribunal found in favour of the respondent;
- the parties are in agreement that the classification of goods under Schedule I to the Customs Tariff is to be governed by the General Rules for the Interpretation of the Harmonized System and the Canadian Rules and the Explanatory Notes to the Harmonized Commodity Description and Coding System.
In a brief decision, the Tribunal found:
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The question as to whether the goods in issue are parts or accessories for the purpose of tariff classification has been addressed in many cases. The prevailing view of the Tribunal is that there is no universally applicable test and that each case must be determined on its own merits. Moreover, common trade usage and practice must be considered when determining an issue of this kind. |
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An air diffuser is solely dedicated for use with a hair dryer. It has no other application or use. Air diffusers are essential or integral to hair dryers, permitting the styling of hair in a particular manner. As well, air diffusers are generally imported and sold with hair dryers, typically at no extra charge. In brief, it is the Tribunal's view that the evidence submitted by the appellant's representative clearly establishes that the air diffusers are parts of hair dryers. Having concluded that they are parts, the Tribunal must determine the most appropriate classification for the goods in issue. |
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Applying the General Rules and the Canadian Rules, the Tribunal notes that the terms of heading No. 85.16 do not include parts of the goods mentioned in that heading. As the nomenclature of Schedule I of the Customs Tariff is structured in a hierarchical manner, the air diffusers, as parts of hair dryers, must be included within the terms of heading No. 85.16 to be classified under a tariff item in that heading. In this regard, Note 2(b) to Section XVI of Schedule I to the Customs Tariff ... states that "[o]ther parts, if suitable for use solely or principally with a particular kind of machine, ...are to be classified with the machines of that kind." Consequently, as air diffusers are "parts" of hair dryers and are "suitable for use solely or principally" with hair dryers, they should be included within the terms of heading No. 85.16. Thus, they may be classified under a tariff in that heading. |
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As parts, the air diffusers should be classified in the subheading dedicated to parts of hair dryers. In this regard, the Tribunal finds that the air diffusers should be classified under tariff item No. 8516.90.10 as parts "[o]f the goods of tariff item No. 8516.31.10 or 8516.31.90" and not under tariff item No. 8516.31.10, as claimed by the appellant. As in F.W. Woolworth Co. Limited v. The Deputy Minister of National Revenue for Customs and Excise, the appellant should have argued for the classification of the goods in the subheading dedicated to parts. [Some citations and other references omitted]. |
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The issue then, simply stated, is whether or not the Tribunal erred in law in determining air diffusers to be parts of hair dryers rather than accessories to hair dryers. If the Tribunal so erred, it was not in dispute that the appellant's classification of air diffusers as "other articles of plastics" was appropriate. While certain tariff items provide for the inclusion of parts and accessories under the heading covering the principal article, that is not true in the case of hair dryers. The tariff heading applicable to hair dryers extends only to parts thereof and not to accessories.
The Concise Oxford Dictionary of Current English4 defines "part" in part in the following terms:
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... 1. some but not all of a thing or number of things. 2. an essential member or constituent of anything... 3. a component of a machine etc. ... |
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The same dictionary defines "accessory" in part as follows:
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... 1. an additional or extra thing. 2. ...a small attachment or fitting.... |
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and the adjectival form, in part as follows:
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...additional; contributing or aiding in a minor way; disposable... |
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Similar though not identical definitions appear in Webster's Ninth New Collegiate Dictionary.5
The evidence before the Tribunal indicated that, at the relevant time, air diffusers were rarely integrated into hair dryers. Air diffusers were sometimes sold separately from hair dryers but were often sold in combination with hair dryers. Estimates of 60 and 85% of hair dryers being sold in combination with air diffusers were given. The evidence indicated that air diffusers were not essential to the function of hair drying with a hair dryer but were virtually essential to hair styling and to controlled hair drying. The evidence indicated that increased power and heat generated with modern hair dryers made the use of an air diffuser desirable, if not entirely essential, to achieve hair drying through use of a hair dryer in a way that would not result in a "mess". That being said, only two examples were provided before the Tribunal of air diffusers that were fully integrated in a non-detachable manner into hair dryers. While the evidence contained brief mention of air diffusers as a safety element in conjunction with a hair dryer because of the increased heat generated by modern hair dryers, the safety factor was not in any sense emphasized.
In The Deputy Minister of National Revenue for Customs and Excise v. General Supply Company of Canada Limited6 Cameron J. wrote:
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It is clear, therefore, that there was material before the Board, which indicated that in some part of the trade at least, angledozers were considered to be "accessories" to tractors. It was a matter for the Board to determine whether that evidence should be accepted rather than that which would lead to a contrary conclusion. It was also for the board to determine on the evidence if the relationship of the angledozer to the tractor was that of a subsidiary adjunct and therefore an accessory to the tractor within the dictionary definition of accessory. |
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In Philips Electronics Ltd. v. The Deputy Minister of National Revenue, Customs and Excise7, a classification matter before the Tribunal dealing with television converters, the Tribunal, in concluding that television converters were parts to television receivers, wrote:
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Although the television can operate without a converter by increasing the number of channels a television is capable of receiving, a converter contributes directly to the main function of a television receiver, that being the reception of audio-visual signals. It does not perform a separate or ancillary function. Further indication of the integral role played by converters in the functioning of television receivers is the fact that converters are now built into the receivers. Television receivers, today, are not manufactured without the built-in capability that is contained in the goods in issue in this appeal. |
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In Robert Bosch (Canada) Ltd. v. The Deputy Minister of National Revenue for Customs and Excise8, the Tariff Board concluded:
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The true test of whether an article can properly be considered to be a part of goods when parts thereof are mentioned in the tariff item depends on whether it is committed for use with such goods. Whether it is so committed for use with the goods will depend in each case upon the scope of the description of the goods. An article that can be used with goods other than those described is regarded as not so committed and one that has no use other than with such goods and is necessary for their function is committed for use with them. |
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On the evidence that was before the Tribunal in this matter, it was clearly established that the sole use of air diffusers was in conjunction with hair dryers. Whether or not they could be said to be committed for use with hair dryers, in the terms of the Bosch decision, turns solely on whether or not they were "necessary" to the function of hair dryers. The evidence before the Tribunal clearly indicated that the original function of hair dryers, that of drying hair, was in evolution. To an increasing degree, the function of hair dryers was moving towards an emphasis on hair styling from mere hair drying. But, once again on the evidence before the Tribunal, the evolution had not been completed to the degree evident in the Philips Electronics decision where the Tribunal found that television receivers were no longer manufactured without the built-in capability of television converters.
Against the jurisprudence and dictionary definitions of "part" and "accessory", I conclude that the Tribunal erred in law in determining that, at the relevant time, air diffusers were "parts" of hair dryers. The evolution in the function of hair dryers had not, on the evidence before the Tribunal, reached that state that it could be said that air diffusers were "necessary" to the function of hair dryers. As such, it could not be said that air diffusers were committed for use with hair dryers despite the fact that their sole use was in conjunction with hair dryers. Put another way, the function of hair dryers had not evolved to the point where air diffusers were an essential element or constituent of hair dryers or a component of hair dryers. Rather, they remained an additional or extra thing, dispensable, in the underlying objective of hair dryers, the drying of hair. Generally speaking, they remained an attachment or fitting and were manufactured as such. Again, generally speaking, they were not integrated in the manufacture of hair dryers into the hair dryers themselves. As such, they remained accessories.
On the basis of the foregoing analysis, this appeal will be allowed. The decision of the Tribunal will be set aside and a declaration will be issued that the imported air diffusers to which this appeal relates should be classified under tariff item No. 3926.90.90 of Schedule I to the Customs Tariff.
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Judge
Ottawa, Ontario
April 28, 1997
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1 R.S.C. 1985, c. 1 (2nd Supp.), as amended.
2 R.S.C. 1985, c. F-7
3 R.S.C. 1985, c. 41 (3rd Supp.)
4 R. E. Allen, ed., Concise Oxford Dictionary of Current English, 8th ed. (Oxford: Clarendon Press, 1990)
5 Webster's Ninth New Collegiate Dictionary (Markham: T. Allen, 1983).
6 [1956] Ex. C.R. 248.
7 [1992] C.I.T.T. No. 73 (QL)
8 (1995), 10 T.B.R. 110
STYLE OF CAUSE: THE DEPUTY MINISTER OF NATIONAL REVENUE FOR CUSTOMS AND EXCISE v.
DANNYCO TRADING LTD.
REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE GIBSON DATED: APRIL 28, 1997
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