Docket: A-286-13
Citation:
2015 FCA 45
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CORAM:
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DAWSON J.A.
RYER J.A.
BOIVIN J.A.
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BETWEEN:
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CYCLES LAMBERT INC.
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Appellant
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and
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THE PRESIDENT OF THE CANADA BORDER SERVICES AGENCY
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Respondent
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REASONS
FOR JUDGMENT
RYER J.A.
[1]
This is an appeal from a decision of the Canadian
International Trade Tribunal (the “CITT”), dated July 10, 2013 (AP-2011-060 and
reported at 2013 CanLII 47607 (CA CITT)), dismissing an appeal by Cycles
Lambert Inc. under subsection 67(1) of the Customs Act, R.S.C. 1985, c.1
(2d Supp.), from a decision of the President of the Canada Border Services
Agency (the “CBSA”) with respect to the classification of certain bicycle
trainers under the Schedule to Customs Tariff, SC 1997, c. 36 (the “Customs
Tariff”), as informed by The Explanatory Notes to the Harmonized
Commodity Description and Coding System, World Customs Organization, 5th
ed., Brussels 2012, (the “Explanatory Notes”).
[2]
The bicycle trainers, which were imported by the
appellant, are training devices, which when used in combination with a bicycle,
enable the person to ride a bicycle while remaining stationary.
The CBSA Decision
[3]
Upon importation, the CBSA classified the goods
under Tariff Item No. 9506.91.90 as “other articles and
equipment for general physical exercise”. After several requests from
the appellant for a redetermination of the classification of the goods, the
CBSA confirmed this classification. In doing so, it rejected the appellant’s
assertion that the goods should be classified under either Tariff Item No.
8714.99.90, as “other parts and accessories of vehicles
of Heading Nos. 87.11 to 87.13” or under Tariff Item No. 9506.91.10, as “exercise bicycles”.
[4]
Unsatisfied with the decision of the CBSA, the
appellant filed an appeal to the CITT.
[5]
Before the CITT, the appellant put forward two arguments.
First, it argued that the goods in question should have been classified under
Tariff Item No. 9506.91.10, as “exercise bicycles”,
and not under Tariff Item No. 9506.91.90, as “other
articles and equipment for general physical exercise”, as held by the
CBSA. For the purposes of this argument, the appellant admitted that Heading
No. 95.06 applied, and more particularly that Tariff Item No. 9506.91 (under
which both of Tariff Item Nos. 9506.91.10 and 9506.91.90 are found) was
applicable. Secondly, the appellant argued, as an alternative, that the goods
could be classified under Heading No. 87.14, and more particularly under Tariff
Item No. 8714.99.90, as “bicycle accessories”.
[6]
With respect to this alternative argument, the
appellant’s brief to the CITT asserted that the goods met all three of the
conditions in Note III of the Explanatory Notes to Section XVII (“Note
III”), which are required to be fulfilled as a precondition to a classification
of those goods under Heading No. 87.14. Accordingly, the appellant asserted
that the goods should be classified under Tariff Item No. 8714.99.90, as “bicycle accessories”. However, the appellant’s brief
did not contain any argument with respect to how any of the conditions in Note
III should be interpreted or applied.
[7]
The CITT undertook a determination of which
Heading – No. 95.06 or No. 87.14 – should be used to determine the tariff
classification of the goods. It then determined that to be classified under
Heading No. 87.14, the goods must be “parts or accessories
of vehicles” in Heading No. 87.12 and must also meet all three
conditions set out in Note III and the Explanatory Notes to Heading No.
87.14.
[8]
The CITT concluded that it was “tentatively willing to accept” that the goods were “accessories to bicycles” and then went on to consider
whether all of the three conditions in Note III were met.
[9]
The CITT found that the first two of these
conditions were met and then proceeded to consider the third condition, namely,
whether the goods were more specifically included elsewhere in the Customs
Tariff. Specifically, the CITT stated:
67. According to the third condition
of Note (III) and Note (III)(c) of the Explanatory Notes to Section
XVII,51 if the goods in issue are more specifically described in
heading No. 95.06 as articles and equipment for general physical exercise, as
argued by the CBSA, then they will be excluded from coverage under heading, No.
87.14, even if they are identifiable as accessories for bicycles. [footnote not
reproduced]
68. In order to determine which
heading more specifically describes the goods, the first step is to confirm
whether the goods are classifiable in heading No. 95.06.52 To be
covered by that heading, the goods must be (1) articles or equipment (2) for
general physical exercise, gymnastics, athletics, other sports (including
table-tennis) or outdoor games (3) not specified elsewhere in Chapter 95.
Footnote 52. The Tribunal notes Cycles
Lambert’s admission in support of its alternative argument that it “… does not
dispute the applicable chapter (95), heading (95.06) or the subheading
(9506.91)”, Tribunal Exhibit AP-2011-060-09A at para 25). However, the
Tribunal has examined the applicability of heading No. 95.06 for the purposes
determining whether it covers the goods more specifically than heading No
87.14.
[Emphasis added]
[10]
In paragraphs 87, 93 and 94 of its reasons, the
CITT found that the goods fall within the more general meaning of “other exercising apparatus”, as contemplated by Note
(A) of the Explanatory Notes to Heading No. 95.06, and concluded that
the goods are “equipment for general physical exercise”
under Heading No. 95.06, and more particularly, “cycling
or other exercising apparatus”, under that Heading.
[11]
The final determination made by the CITT was
that the goods were classified under Tariff Item 9506.91.90, as “other equipment for general physical exercise”, and
not under Tariff Item 9506.91.10, as “exercise
bicycles”. Having made that determination, the CITT dismissed the
appeal.
Relevant Provisions
[12]
The provisions of the Customs Tariff and
the Explanatory Notes that are relevant to this appeal are reproduced in
the appendix to these reasons.
Issue
[13]
Before this Court, the parties disagreed with
respect to the formulation of the issue. The respondent framed the issue as whether
the CITT’s classification of the goods under Tariff Item 9506.91.90 was
reasonable in light of its reasons and outcome.
[14]
In marked contrast, the appellant framed the
issue in terms of procedural fairness, alleging that the CITT failed to execute
a “duty” to “more
specifically decide” that goods were more specifically described in
Heading No. 95.06 than in Heading No. 87.14. Additionally, at the hearing,
counsel for the appellant argued that the appeal also should be allowed on the
basis of another breach of procedural fairness, asserting that the CITT gave no
reasons that indicated why the goods were more specifically described in
Heading No. 95.06 than in Heading No. 87.14.
Standard of Review
[15]
A proper appreciation of the nature of the
issues before the Court is important because the nature of an issue is relevant
to the determination of the standard of review that must be applied by the
Court when it considers that issue.
[16]
Issues of procedural fairness are typically
reviewed on the standard of correctness. Thus, a failure of a tribunal to
execute a “duty” that has been imposed upon it,
including a “duty” to issue reasons for its
decision could well give rise to issues of procedural fairness. However, in my
view, the issues that are raised by the appellant cannot be so characterized.
[17]
The appellant has not provided any authority for
the assertion that the CITT has a “duty” to
undertake a comparative analysis of whether the goods were more specifically
described in one or the other of Heading Nos. 87.14 and 95.06. In my view, this
issue is more properly characterized as one of determining the appropriate
interpretation of the words “more specifically included
elsewhere in the Nomenclature” in Note III(C).
[18]
So characterized, this issue is simply one of
interpretation of the Customs Tariff and the Explanatory Notes. As
such, it should be reviewed on the standard of reasonableness. (See Canada (Border Services Agency) v. Euro-Line Appliances, 2014 FCA 208, [2014]
F.C.J. No. 981.)
[19]
In this appeal, the issue with respect to the
CITT’s reasons is, in my view, more properly one of the adequacy of those
reasons. As stipulated by the Supreme Court of Canada in Newfoundland and
Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011
SCC 62, [2011] 3 S.C.R. 708, at paragraph 22, where there are reasons, there is
no issue of a breach of the duty of procedural fairness. In such circumstances,
to use the words of Abella, J., at paragraph 16, the issue is whether “[…] the reasons allow the reviewing court to understand why
the tribunal made its decision and permit it to determine whether the
conclusion is within the range of acceptable outcomes […]”. In
undertaking our review on this basis, it is my view that the applicable
standard of review is reasonableness.
[20]
To conclude, the employment of the
reasonableness standard, as stated in Dunsmuir v. New Brunswick, 2008
SCC 9, [2008] 1 S.C.R. 190, at paragraph 47, requires this Court to consider
the “justification, transparency and intelligibility”
of the CITT’s reasoning and whether its “[…] decision
falls within a range of possible, acceptable outcomes which are defensible in
respect of the facts and law”.
Analysis
[21]
The focal point in the appeal is whether the
CITT reasonably interpreted and applied Note III(C) in its classification of
the goods in issue under the Customs Tariff.
[22]
The appellant asserts that the CITT had made
findings that the goods were “prima facie”
classifiable as “bicycle accessories” under
Heading No. 87.14. The appellant also states that the CITT found that those
goods were classifiable as “cycling or other exercising
apparatus” under Heading No. 95.06. The appellant then says that having
made those findings of equivalence of tariff classification, the CITT was
required to balance or weigh them to determine which of the two competing and
equivalent classifications “more specifically”
(my emphasis) covered the goods. In other words, according to the appellant, a
comparative analysis was required.
[23]
In my view, those assertions are flawed. First,
I am unable to discern anywhere in the reasons of the CITT that it made a
finding that the goods were “prima facie”
classifiable as “bicycle accessories” under
Heading No. 87.14. Contrary to the appellant’s assertion, paragraph 58 of the
CITT’s reasons does not say that. In that paragraph, the CITT states that it
was “tentatively willing to accept that the goods in
issue could be considered as ‘accessories’ to bicycles” (my emphasis). This
tentative conclusion was necessary to enable the CITT to then undertake a consideration
of the three conditions in Note III, each of which was required to be fulfilled
before the goods could be considered to be “bicycle
accessories” under Heading No. 87.14.
[24]
Having found that the first two of those
conditions were met, the CITT then proceeded to deal with the third condition
in Note III(C), namely, whether the goods were “more
specifically included elsewhere in the Nomenclature”.
[25]
The appellant acknowledges that the CITT posed
the right question to itself in terms of whether the goods in question are more
specifically included elsewhere in the Customs Tariff, but says
that the CITT erred by not answering the question, or by not undertaking the
comparative analysis that it alleges the CITT was required to undertake. In my
view, the CITT made no such error.
[26]
The CITT dealt with the application of this
condition by asking itself whether the goods were “classifiable
in Heading No. 95.06”. The CITT answered this question affirmatively,
finding in paragraphs 87, 93 and 94 of its reasons, that the goods were “equipment for general physical exercise” under
Heading No. 95.06.
[27]
Having made this finding, the CITT went on to
determine which Tariff Item under Heading No. 95.06 was applicable. It
concluded that the goods fell under Tariff Item No. 9506.91.90, as “other equipment for general physical exercise”, and
not under Tariff Item No. 9506.91.10, as “exercise
bicycles”. Having made this finding, the CITT dismissed the appeal.
[28]
Thus, the appellant says, there was no
determination that the goods were more specifically described in Heading
No. 95.06 than in Heading No. 87.14. While it is true that the CITT made no
express findings as to the superior comparative specificity of Heading No.
95.06 over Heading No. 87.14, in my view, the absence of such an express
finding is insufficient to validate the appellant’s argument.
[29]
The question that I must address is that which
was enunciated in Newfoundland Nurses, namely whether the reasons will
allow me to understand why the CITT made its decision, so that I can then
determine whether that decision is within the range of acceptable outcomes.
[30]
In my view, the answer to this question requires
me to consider whether the CITT made an interpretation of the words “more specifically included elsewhere in the Nomenclature”
in Note III(C), and if so, whether that interpretation was reasonable. I note
that the CITT and the appellant used the words “more
specifically described” rather than “more
specifically included”. In my view, this is a distinction without a
difference and I accept the two formulations as interchangeable for the
purposes of this appeal.
[31]
It is true that the CITT did not specifically
enunciate an interpretation of these words and frankly, it would have been
preferable if it had done so. However, it is my view that the CITT implicitly
interpreted those words as meaning that goods in question will be “more specifically included elsewhere in the Nomenclature”
if it determines that those goods are classified in or under another Heading in
the Customs Tariff.
[32]
This interpretation is evident from the fact
that the CITT undertook an analysis of whether the goods fell under Heading No.
95.06 and, having found that to be the case, it dismissed the appeal.
[33]
By this reasoning, the CITT must be taken to
have concluded that the comparative analysis urged by the appellant was not
necessary. Parenthetically, I observe that the record is not clear that the
appellant’s suggested comparative approach was ever put before the CITT.
[34]
Having concluded that the reasons reveal that
the CITT made its decision based upon the implicit interpretation of Note
III(C) referred to above, I must now consider the reasonableness of that
interpretation.
[35]
Where, as here, this Court concludes that a
tribunal has made a decision based upon an implicit interpretation of a
provision in formulating its decision, of necessity, the ability of the Court
to assess the “justification, transparency and
intelligibility” of that implicit interpretation is somewhat curtailed. Nonetheless,
this Court is obligated to show deference to the CITT’s decision, which
according to paragraph 12 of Newfoundland Nurses, “[…] requires ‘a respectful attention to the reasons offered
or which could be offered in support of a decision’.” Moreover, the fact
that there may be an alternative interpretation of Note III(C) does not
inevitably lead to the conclusion that it is to be preferred over the
interpretation made by the CITT, albeit implicitly in this instance. (See Newfoundland Nurses at paragraph 17 and McLean v. British Columbia (Securities
Commission), 2013 SCC 67, [2013] 3 S.C.R. 895, at paragraph 33,
where the majority of the Court confirmed that deference is to be shown to a
tribunal’s interpretation of its home statute).
[36]
Here, the appellant asserts that “more specifically included elsewhere” must be
interpreted as requiring a specific comparative analysis of the potentially
competing provisions. In effect, the appellant is asserting that its
interpretation of this language is the correct one, and of necessity, no other
interpretation is open to the Court. Yet, the appellant offered no authority
for its assertion.
[37]
In contrast, the CITT implicitly interpreted
this language as simply meaning that the goods in question will be “more specifically included elsewhere in the Nomenclature”,
for the purposes of Note III(C), if it determines that those goods are
classified in or under another Heading in the Customs Tariff.
[38]
Thus, the Court has two interpretations of Note
III(C) that, in my view, without more, can be regarded as reasonable. However,
in the circumstances of this appeal, the Court is required to show deference to
the interpretation that has been made by the CITT, having regard to its
established expertise in the area of Customs Tariff classifications. I
say “without more” to leave open the possibility
of a different outcome if, in future, a court is presented with more fulsome
arguments with respect to the interpretation of Note III(C).
[39]
It is now necessary for me to consider whether
the CITT’s decision to classify the goods in question under Heading No. 95.06,
rather than Heading No. 87.14, falls within a range of acceptable outcomes.
[40]
In the circumstances, the appellant asserted
that the outcome should be a classification of the goods under Heading No.
87.14, rather than Heading No. 95.06, in effect positing that there were two
potential outcomes or decisions that the CITT could have reached.
[41]
Based upon the interpretation of Note III(C)
that was implicitly used by the CITT, and that I have found to be reasonable,
the goods in question did not satisfy that condition. Therefore the goods could
not be classified under Heading No. 87.14. It follows that the other
classification of the goods – under Heading No. 95.06 – was the only one that
the CITT could have made, and therefore, must be an acceptable outcome.
Disposition
[42]
For these reasons, I would dismiss the appeal
with costs.
“C. Michael Ryer”
“I agree.
Eleanor R.
Dawson”
“I agree.
Richard Boivin”
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