Date:
20110906
Docket: A-324-10
Citation: 2011 FCA 242
CORAM: BLAIS
C.J.
EVANS
J.A.
DAWSON J.A.
BETWEEN:
CANADIAN TIRE
CORPORATION LIMITED
Appellant
and
PRESIDENT OF
THE CANADA BORDER SERVICES AGENCY
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Ottawa, Ontario, on September 6,
2011)
DAWSON J.A.
[1]
Canadian
Tire Corporation Ltd. (Canadian Tire) is appealing a decision of the Canadian
International Trade Tribunal (CITT) as to the tariff classification of personal
flotation devices (PFDs) imported by Canadian Tire. The decision of the CITT is
cited as AP-2009-019.
[2]
The
PFDs in question are made to fit children weighing from 20 to 90 lbs. They have
a front zipper and two plastic snap buckles. The outer layer of each PFD is
made of a laminated textile material, which itself consists of a layer of
neoprene between two layers of polyester fabric. The neck panel and two front
panels of the PFDs consist of this laminated textile material sewn to contain
loose cellular plastic sheets. These plastic sheets provide the PFDs with their
buoyancy. The back panel of each PFD consists solely of the laminated textile
material.
[3]
The
CITT found that the PFDs are properly classified under heading 63.07 as “[o]ther
made up articles, including dress patterns,” and then under subheading
6307.20 and tariff item 6307.20.00 as life-jackets. The CITT rejected Canadian
Tire’s assertion that the goods should be classified under tariff item
No. 3926.90.90.
[4]
The
standard of review to be applied to the CITT’s interpretation of the Customs
Tariff, and to its application of the tariff to the facts of the case, is
reasonableness (see, for example, Helly Hansen Leisure Canada Inc. v. Canada
(Border Services Agency), 2009 FCA 345, 397 N.R. 323 at paragraph 9).
[5]
The
CITT began its analysis by noting that, according to Rule 1 of the General
Rules:
[…]
the Tribunal must
first determine whether the goods in issue can be classified according to the
terms of the headings and in which tariff heading the goods in issue can be
classified according to the terms of the heading and any relevant section or
chapter notes in the Customs Tariff.
[6]
Once
the CITT had determined the correct heading, the next step would be to
determine the proper subheading and tariff item.
[7]
The
parties agreed that the PFDs met the common definition of life-jackets, and
that life-jackets and PFDs closely resemble each other. An expert witness
testified that the main distinction between the two is that life-jackets are
more buoyant and are used where higher performance is required; visually,
though, the two are indistinguishable.
[8]
Canadian
Tire focused its argument upon the explanatory notes to Chapter 63, the
relevant parts of which read as follows:
The classification of articles in this
sub-Chapter is not affected by the presence of minor trimmings or accessories
of furskin, metal (including precious metal), leather, plastics, etc.
Where, however, the presence of these
other materials constitutes more than mere trimming or accessories, the
articles are classified in accordance with the relative Section or Chapter
Notes (General Interpretative Rule 1), or in accordance with other General
Interpretative Rules as the case may be.
[9]
The
CITT rejected Canadian Tire’s argument that this explanatory note
precluded the classification of the PFDs pursuant to Rule 1, writing that:
On the contrary, the Explanatory Notes
to Chapter 63 expressly reaffirm that, where such articles consist of materials
that are more than mere accessories, classification shall be “determined
according to the terms of the headings and any relative Section or Chapter
Notes”, as contemplated by Rule 1 of the General Rules, or in
accordance with other rules if applicable.
[10]
Only
if classification could not be resolved on the basis of Rule 1 could the CITT
move on to Rule 2.
[11]
The
CITT found that the plastic sheets contained in the PFDs were more than mere
accessories, but this did not preclude the application of Rule 1. The CITT saw
no reason to deviate from the explanatory notes’ inclusion of life-jackets
within heading 63.07. The explanatory notes did not limit the classification of
goods as “life-jackets” based on the materials from which those
goods were made. Nor was there any indication in the Customs Tariff or
explanatory notes that life-jackets were to be classified according to the
material that provided them with their buoyancy.
[12]
Having
determined that the PFDs were classifiable in heading 63.07, the CITT moved to
examine heading No. 39.26. Note 2(p) to Chapter 39 excluded the “Goods of
Section XI”, meaning that goods classified in heading 63.07 were excluded
from classification under heading No. 39.26. There was only one applicable
heading (63.07), so Rule 1 was sufficient to determine the classification of
the PFDs.
[13]
Having
classified the goods at the heading level, the CITT classified the PFDs under
sub-heading 6307.20 (life-jackets and life-belts) and under tariff item
6307.20.00 since PFDs are “the same goods as ‘life-
jackets’.”
[14]
Relying
upon the explanatory notes to Chapter 63, Canadian Tire argues that heading
63.07 does not include goods that incorporate plastic to an extent that goes
beyond mere trimming or accessories. However, the explanatory notes do not
state that the presence of significant amounts of plastic in goods
automatically precludes their classification under the sub-Chapter. The
explanatory notes only require that when plastic or other materials are present
as more than mere trimmings or accessories, that presence must be taken into
account when the goods are classified.
[15]
The
Tribunal took this into account when it based its decision on heading 63.07 and
the explanatory notes which state that life-jackets and life-belts are included
within heading 63.07. The evidence is that, like the PFDs in issue here,
inherently buoyant life-jackets derive their buoyancy from non-textile
components, and that PFDs and life-jackets are functionally similar.
[16]
Neither
6307.20.00 nor the explanatory notes limit life-jackets and life-belts to those
that are made from only textiles.
[17]
On
the basis of the plain wording of tariff item 6307.20.00 and the explanatory
notes’ inclusion of life-jackets, and the evidence, we have not been
persuaded that the CITT’s reasoning or the outcome is unreasonable.
[18]
This
appeal will be dismissed with costs.
“Eleanor R.
Dawson”
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