Date: 19990628
Docket: A-878-96
CORAM: DÉCARY J.A.
ROBERTSON J.A.
BETWEEN:
THE DEPUTY MINISTER OF NATIONAL REVENUE
Appellant
- and -
TOYOTA CANADA INC.
Respondent
Heard at Ottawa, Ontario, on Wednesday, June 23, 1999
Judgment rendered at Ottawa, Ontario, on Monday, June 28, 1999
| REASONS FOR JUDGMENT BY: NOËL J.A. |
| CONCURRED IN BY: DÉCARY J.A. |
ROBERTSON
J.A.
Date: 19990628
Docket: A-878-96
CORAM: DÉCARY J.A.
ROBERTSON J.A.
BETWEEN:
THE DEPUTY MINISTER OF NATIONAL REVENUE
Appellant
- and -
TOYOTA CANADA INC.
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1] This is an appeal under section 68 of the Customs Act,1 by the Deputy Minister of National Revenue ("DMNR") from a decision of the Canadian International Trade Tribunal ("CITT" or the "Tribunal") rendered on August 15, 1996. In its decision, the CITT allowed the two appeals of Toyota Canada Inc. ("Toyota Canada") from decisions of the Deputy Minister made under subsection 63(3) of the Act which affirmed the appraisal of the value for duty of vehicles imported into Canada by Toyota Canada. The Tribunal held that a reduction from the price stipulated on the Canada Customs Invoice in both cases was not a rebate or decrease in the price paid or payable for the vehicles at issue, but rather that the lower and final price was the "price paid or payable" for the goods.
[2] The relevant statutory provisions are as follows:
| 46. The value for duty of imported goods shall be determined in accordance with sections 47 to 55.
...
| 48.(1) Subject to subsections (6) and (7), the value for duty of goods is the transaction value of the goods if the goods are sold for export to Canada to a purchaser in Canada and the price paid or payable for the goods can be determined and if ... |
| (4) The transaction value of goods shall be determined by ascertaining the price paid or payable for the goods when the goods are sold for export to Canada and adjusting the price paid or payable in accordance with subsection (5). ... |
| (5) the price paid or payable in the sale of goods for export to Canada shall be adjusted ... |
| (c) by disregarding any rebate of, or other decrease in, the price paid or payable for the goods that is effected after the goods are imported. |
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46. La valeur en douane des marchandises importées est déterminée conformément aux articles 47 à 55.
[...]
48.(1) Sous réserve des paragraphes (6) et (7), la valeur en douane des marchandises est leur valeur transactionnelle si elles sont vendues pour exportation au Canada à un acheteur au Canada, si le prix payé ou à payer est déterminable et si les conditions suivantes sont réunies : [...]
| (4) Dans le cas d"une vente de marchandises pour exportation au Canada, la valeur transactionnelle est le prix payé ou à payer, ajusté conformément au paragraphe (5). [...] |
| (5) Dans le cas d"une vente de marchandises pour exportation au Canada, le prix payé ou à payer est ajusté : [...] |
| (c) compte non tenu des remises ou réductions du prix payé ou à payer effectuées après l"importation des marchandises. |
|
[3] The essence of the CITT decision is as follows:
| |
The evidence clearly shows that, although negotiations between the appellant, TMC [Toyota Motor Corporation] and Mitsui to establish a final selling price usually have not been completed, the marketplace dictates that the vehicles must be imported into Canada. At the time of exportation and, in some cases, not until some two months after importation, the final selling price to the appellant has not yet been agreed upon. As the result, an estimated selling price or a provisional price is used at the time of exportation for purposes of establishing a value for duty. |
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The Tribunal is of the view, on the basis of the evidence, that the "price paid or payable" for the vehicles when sold for export to Canada is the final selling price. The price which appears on the Canada Customs Invoice is not necessarily the actual price paid for the vehicles. The evidence shows that this price is often higher or lower than the provisional price depending on the result of the negotiations between the parties. It is clearly not the intent of the parties that the price which appears on the invoice be the final selling price paid or payable for the vehicles.2 |
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[4] The CITT accepted Toyota Canada"s submission that, based on the pricing process or method in place, the selling price for the vehicles imported was established only once, at the conclusion of this process, that is after Toyota Canada had provided its input into the determination of the selling price. The CITT reasoned that as this process resulted in the establishment of a single selling price, no rebate could be said to result from the price thereby established. |
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[5] At the same time, the Tribunal found that the price used at the time of exportation for purposes of establishing a value for duty was an estimated or provisional selling price. According to the evidence, this price was based on the exporter"s best estimate at the relevant time; it could turn out to be higher or lower and sometimes coincided with the price eventually established by the pricing process.3 |
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[6] In my view, the reasoning of the Tribunal shows that it failed to take into account the time requirements embodied in section 48. In order for an importer to avail itself of the transaction value, it must first show that the price paid or payable for the goods is capable of being determined "when the goods are sold for export to Canada". While there may be good reasons for not reading this provision in too rigid a fashion, it requires as a minimum that the price paid or payable for the goods be capable of determination when the goods are brought into Canada. |
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[7] This is made clear by the other time requirement embodied in section 48; paragraph (5)(c) provides that "any rebate, or other decrease in the price paid or payable for the goods that is affected after the goods are imported" ought to be disregarded. It follows that in order for this paragraph to have any meaning, subsection 48(4) must be read as requiring that the price paid or payable for the goods be capable of determination at the latest when the goods are imported. |
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[8] Here the Tribunal must be taken as having accepted that Toyota"s pricing method allowed for the determination of the price paid or payable for the vehicles at the time of importation since it rendered its decision on the basis that section 48 was applicable. Yet the Tribunal"s reasons strongly suggest that this pricing method may not have allowed for the determination of a price paid or payable for the goods imported for sometime after importation and indeed, in some cases, not until some two months had passed.4 |
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[9] Having regard to the findings that it made, it was not open to the Tribunal to ask itself whether the final price resulted in a rebate under paragraph 48(5)(c) without first deciding if section 48 was applicable at all. Specifically, the Tribunal had to decide whether Toyota"s pricing method allowed for the determination of the "price paid or payable" for the vehicles at the time of importation. |
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[10] If the price submitted on entry was the "price paid or payable" for the vehicles within the meaning of subsections 48(1) and (4) it would necessarily follow from the language of paragraph 48(5)(c) that any reduction in that price brought about after importation as a result of the establishment of the final selling price is to be disregarded. If, however, Toyota"s pricing method does not allow for the determination of the "price paid or payable" at the time of importation, then the value for duty of the imported vehicles falls to be determined by an alternative valuation method.5 |
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[11] As the Tribunal failed to decide a question which it had to decide in order to dispose of the matter before it, I would allow the appeal, set aside the decision, and return the matter to the Tribunal with instructions that it decide the question stated in paragraph [9] of these reasons on the basis of the existing evidence or such additional evidence as the Tribunal may allow and then dispose of the matter as indicated in paragraph [10] of these reasons. |
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[12] As costs were not sought by the appellant, I would make no order in that regard. |
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Joseph T. Robertson J.A." |
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1R.S.C. 1985, c. 1 (2nd Supp.).
2Reasons for Decision of the Tribunal, A.B. Vol. XI at 1850.
3Ibid. The difference in this instance between this price and the actual selling price would have been approximately 2 percent. Appeal Book, Vol. 10 at 1548.
4Ibid.
5See subsection 47(2).
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