Date: 20070531
Docket: A-245-06
Citation: 2007 FCA 210
CORAM: RICHARD
C.J.
LÉTOURNEAU J.A.
PELLETIER
J.A.
BETWEEN:
JAM INDUSTRIES LTD.
Appellant
and
THE PRESIDENT OF THE CANADA
BORDER SERVICES AGENCY
Respondent
REASONS FOR JUDGMENT
PELLETIER J.A.
INTRODUCTION
[1]
This is an
appeal from a decision of the Canadian International Trade Tribunal (CITT) in
which that tribunal upheld the decision of the President of the Canada Border
Services Agency (CBSA) refusing the appellant Jam Industries Ltd.'s (the
appellant) request to classify certain goods under tariff item no. 9948.00.00,
a concessionary tariff item which eliminates or reduces the duties otherwise
payable on goods which come within its terms.
[2]
The goods
which are the object of this dispute are 29 models of keyboard synthesizers,
digital pianos and digital organs (the Keyboard goods), 13 models of non-keyboard
synthesizers (collectively with the Keyboard goods, the Musical Instruments)
and four expansion boards for synthesizers. The issue in this appeal is whether
the Musical Instruments are "articles for use in" automatic data
processing machines (computers) within the meaning of tariff item no.
9948.00.00. The CITT decided that they were not. Having regard to the standard
of review, this Court is not in a position to interfere with that decision.
FACTS
[3]
The
appellant is the importer of the goods in question. The CBSA classified the
goods according to three different tariff items. The Keyboard goods were
classified under tariff item no. 9207.10.00 of the schedule to the Customs
Tariff, the non-keyboard synthesizers were classified under tariff item no.
9209.94.90 while the expansion boards were classified under tariff item no.
8543.89.99 of the Customs Tariff.
[4]
The
appellant asked to have the goods classified under tariff item no. 9948.00.00
so as to obtain the benefit of the preferential tariff. The CBSA declined to
classify the goods as requested, as did the President of that agency when the
question was put before him. The appellant appealed to the CITT pursuant to
subsection 67(1) of the Customs Act, R.S.C., 1985 (2d Supp.),
c. 1 (the Act).
[5]
The CITT
had to construe tariff item no. 9948.00.00 which, in its material parts, reads
as follows:
9948.00.00 Articles for
use in the following:
…
Automatic data
processing machines and units thereof, magnetic or optical readers, machines
for transcribing data onto data media in coded form and machines for processing
such data.
…
Parts and accessories of
the foregoing.
[6]
The phrase
"for use in" is defined at subsection 2(1) of the Customs Tariff:
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"for
use in" whenever it appears in a tariff item, in respect of goods
classified in the tariff item, means that the goods must be wrought or
incorporated into, or attached to, other goods referred to in that tariff
item".
|
«
devant servir dans » ou "devant servir à" Mention dans un numéro
tarifaire, applicable aux marchandises qui y sont classées et qui doivent
entrer dans la composition d'autres marchandises mentionnées dans ce numéro
tarifaire par voie d'ouvraison, de fixation ou d'incorporation. »
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[7]
The
evidence before the CITT was that all the Musical Instruments were MIDI
enabled. MIDI (Musical Instrument Digital Interface) is a protocol by which
musical information can be transferred in digital form between devices which
incorporate the MIDI interface. Those devices can
be other musical instruments or they can be computers. In order for the
transfer to take place, the devices must be connected in some way, usually by
means of a cable, the type of cable varying with the nature of the devices
being connected. The evidence before the CITT established that when the Musical
Instruments were connected to a computer, both the computer and the Musical
Instruments were able to perform tasks which they could not otherwise perform. The
debate before the CITT was whether the Musical Instruments were "for use
in" a computer, or "for use with" a computer.
THE TRIBUNAL'S DECISION
[8]
The CITT's
decision is based upon the meaning to be given to the phrase "for use in".
It began its analysis by examining the statutory definition, quoted above, and
found that the French version of the definition made it clear that the goods
which are "for use in" another product must enter into the
composition of the host goods. This suggests that "for use in" refers
to a relationship like that of a part to the whole.
[9]
The CITT then
referred to its jurisprudence to say that the goods caught by tariff item no. 9948.00.00
"exhibited a special relationship to the host goods", that is, they "complemented
the function of the host goods": Tribunal Reasons, at para. 42. This is a
different conception of "for use in" as it refers to the effect of
the attachment of the goods (increased functionality) rather than to the form
of attachment (incorporation).
[10]
The CITT
then purported to examine the relationship of the Musical Instruments to a
computer to which they might be connected in light of this analysis. It
concluded that the Musical Instruments "… do not contribute to the
function of an automated data processing machine and are not required by
the computer for its operation or the performance of its functions.": Tribunal
Reasons, at para. 44. In fact, the CITT found that the computer complemented
the function of the Musical Instruments, rather than the other way around. Consequently,
the CITT decided that the Musical Instruments were not goods "for use in"
an automated data processing machine within the meaning of tariff item no.
9844.00.00.
[11]
The CITT
summarized its conclusions as follows:
Accordingly, in this case, the Tribunal is
not satisfied that the goods in issue complement the functions of a computer by
virtue of their connection to that computer. Rather, the reverse appears to be
true, i.e. the connection to a computer enables the goods in issue to acquire
additional capability. Through the connection of the MIDI-enabled instrument to
a computer, it is the instrument's functions that are expanded or improved and
not those of the computer.
[Tribunal Reasons, at
para. 45.]
[12]
As for the
expansion boards, the CITT held that the reference to "parts and
accessories of the foregoing" in tariff item no. 9844.00.00 was a
reference to the items listed in the tariff item, and not a reference to the
goods which were to be used in the listed items. Consequently, the CITT's position
was that the expansion boards would not fall under the concessionary tariff
because they were not "for use in" parts or accessories of computers,
but rather they were parts and accessories for the Musical Instruments.
[13]
In the
end, the CITT rejected the appeal from the decision of the President of the
CBSA.
STANDARD OF REVIEW
[14]
The
appellant appeals to this Court pursuant to subsection 68(1) of the Act which
provides as follows:
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68. (1) Any of the
parties to an appeal under section 67, namely,
(a) the person
who appealed,
(b) the
President, or
(c) any person
who entered an appearance in accordance with subsection 67(2),
may, within ninety
days after the date a decision is made under section 67, appeal therefrom to
the Federal Court of Appeal on any question of law.
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68. (1) La décision
sur l'appel prévu à l'article 67 est, dans les quatre-vingt-dix jours suivant
la date où elle est rendue, susceptible de recours devant la Cour d'appel
fédérale sur tout point de droit, de la part de toute partie à l'appel, à
savoir :
a)
l'appelant;
b) le
président;
c) quiconque
a remis l'acte de comparution visé au paragraphe 67(2).
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[15]
The
appellant is limited to an appeal on a question of law. It says that the
question of law is the interpretation of the term "for use in" as set
out in subsection 2(1) of the Customs Tariff.
[16]
Matters
of interpretation of the Customs Tariff are questions of law which, due
to the CITT's extensive expertise in tariff classification, can only be
reviewed on a standard of reasonableness simpliciter: Agri Pack v. Canada (Customs
and Revenue Agency),
2005 FCA 414, 345 N.R. 1 (F.C.A.), at para. 24 (Agri Pack).
[17]
In Canada (Director of Investigation
and Research, Competition Act) v. Southam Inc., [1997] 1 S.C.R. 748, at para. 56, the
Supreme Court of Canada stated that an unreasonable decision is one that:
56 … in the main, is not supported by
any reasons that can stand up to a somewhat probing examination. Accordingly, a
court reviewing a conclusion on the reasonableness standard must look to see
whether any reasons support it. The defect, if there is one, could presumably
be … in the logical process by which conclusions are sought to be drawn from it
… An example of the latter kind of defect would be a contradiction in the
premises or an invalid inference.
ANALYSIS
[18]
At the
hearing before us, the appellant and the respondent appeared to agree that the
CITT's own jurisprudence established that the test of whether a good was "for
use in" another good was whether it was "physically connected and are
functionally joined" to that other good. This formulation is taken from the Tribunal's previous decision
in Agri-Pack v. Canada (Customs and Revenue Agency), [2004] C.I.T.T. No. 129, affirmed on
appeal in Agri Pack.
[19]
The
appellant argued that the CITT changed the test by adding new elements to the
original test which made it unduly restrictive, specifically, its insistence
that the functional connection must enhance the functionality of the "host"
item, the computer, rather than that of the thing attached to the computer, in
this case the Musical Instrument. The appellant's argument, in the end, was that
it was an error of law for the CITT to depart from its own jurisprudence as to
the application of the phrase "for use in" as it appears in tariff
item no. 9948.00.00.
[20]
The difficulty with
that argument is that,
even if the CITT has departed from its own prior jurisprudence, that fact alone
does not prove that the decision in issue here is unreasonable, and does not
give rise to a distinct ground of judicial intervention. In Domtar Inc. v Québec (Commission
d’appel en matière de lésions professionnelles), [1993] 2 S.C.R. 756, the
Supreme Court held that a conflict in the interpretation of a single provision
by different tribunals, or differing interpretations of a single provision by
different panels of the same tribunal, is not an independent ground of judicial
review: see para. 83, 93. If the language of the statute is capable of supporting each
interpretation, then both can stand.
[21]
Despite
the fundamental interest of litigants in the consistency of administrative
decision-making and the predictability of outcomes which such consistency
provides, the Supreme Court found that the risk of inconsistent decisions was
the price to be paid for the legislature's choice to have certain questions
decided by administrative agencies rather than by the Courts:
94. If Canadian administrative
law has been able to evolve to the point of recognizing that administrative
tribunals have the authority to err within their area of expertise, I think
that, by the same token, a lack of unanimity is the price to pay for the decision-making
freedom and independence given to the members of these tribunals. Recognizing
the existence of a conflict in decisions as an independent basis for judicial
review would, in my opinion, constitute a serious undermining of those
principles.
[Domtar,
at para. 94.]
[22]
In the result, the conflict
within the CITT's jurisprudence does not justify this Court's intervention. The
CITT's conclusion that in order to be classified under tariff item no. 9948.00.00,
the goods in question must complement the function of an automated processing
device (a computer), rather than the other way round, is not illogical and is a
reasonable interpretation of the phrase "for use in". As such, the
CITT's conclusion is not unreasonable and is therefore immune from review by this
Court.
[23]
I would
therefore dismiss the appeal with costs to the respondent.
"J.D. Denis
Pelletier"
"I
agree,
J. Richard J.A."
"I
agree,
Gilles Létourneau J.A."
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