CATTANACH,
J.:—These
are
Petitions
of
Right
whereby
the
respective
suppliants
pray,
in
addition
to
other
relief,
the
return
of
certain
goods
which
are
in
possession
of
the
Crown
as
having
been
forfeited
under
the
provisions
of
the
Customs
Act,
R.S.C.
1952,
c.
58.
The
suppliant,
Marun,
prays
the
return
of
a
diamond
of
approximately
seven
carats
mounted
in
a
tie
pin
setting
and
20
small
industrial
diamonds
as
well
as
a
refund
of
$151.80
paid
by
him
upon
the
importation
of
a
quantity
of
industrial
diamonds
on
July
12,
1960.
The
Crown,
by
counterclaim,
seeks
judgment
against
the
suppliant,
Marun,
for
taxes
alleged
to
be
payable
under
Section
30
of
the
Excise
Tax
Act,
R.S.C.
1952,
c.
100,
Section
10
of
the
Old
Age
Security
Act,
R.S.C.
1952,
c.
200,
as
amended
and
Section
23
of
the
Excise
Tax
Act,
on
the
seven
carat
diamond,
a
five
carat
diamond
and
on
the
20
industrial
diamonds.
It
is
conceded
by
the
Crown
that
no
excise
tax
is
exigible
on
the
20
industrial
diamonds
under
Section
23
of
the
Excise
Tax
Act,
The
suppliant,
Minogue,
prays
the
return
of
a
diamond
of
approximately
five
carats.
By
order
the
petitions
were
heard
together.
The
suppliant,
Marun,
is
a
diamond
prospector
who
was
born
in
Yugoslavia,
and
had
few
educational
advantages,
either
in
his
native
country
or
in
Canada.
He
is
not
wholly
proficient
in
the
English
language
but
has
no
great
difficulty
in
understanding
or
being
understood.
In
1959
he
engaged
in
diamond
prospecting
in
British
Guiana
where
he
acquired
prospecting
licences
on
Crown
lands
with
authority
to
stake
claims
upon
and
occupy
such
lands
for
the
purpose
of
mining
for
precious
and
semiprecious
stones.
The
suppliant,
Minogue,
is
the
president
and
manager
of
R.
J.
Minogue
&
Co.,
Limited
and
Packsack
Diamond
Drill,
Limited.
Both
these
companies
carry
on
business
in
North
Bay,
Ontario
as
manufacturers
and
distributors
of
diamond
drill
tools
and
equipment.
The
manufacture
of
the
bits
for
such
equipment
involves
the
use
of
industrial
diamonds
for
cutting
surfaces.
The
suppliants,
respectively,
as
a
consumer
and
producer
of
industrial
diamonds
became
known
to
each
other
through
their
business
relationship
which
ripened
into
a
friendship.
Because
of
their
mutual
business
interest
in
industrial
diamonds,
Marun
and
Minogue
applied
for
and
obtained
the
incorporation
of
a
joint
stock
company,
pursuant
to
the
laws
of
the
Province
of
Ontario
under
the
name
of
Marun-Pakaraima
Diamond
Mining
Company,
Limited,
by
letters
patent
dated
February
16,
1960.
Mr.
Minogue,
personally
and
through
R.
J.
Minogue
&
Co.,
Limited,
made
a
small
contribution
to
the
capital
of
the
company
SO
formed
by
the
purchase
of
shares
of
its
capital
stock
as
did
Mr.
Marun.
At
the
organization
meeting
of
the
company,
which
was
apparently
the
only
meeting
held,
Marun
was
elected
the
president
and
Minogue
the
secretary.
It
was
expected
that
capital
would
be
raised
through
this
company
to
purchase
the
equipment
necessary
to
extend
the
diamond
mining
activities
of
Marun
in
British
Guiana.
In
the
meantime,
Marun
continued
his
mining
activities
in
his
personal
capacity.
In
1960
Marun
mined
160
carats
of
industrial
diamonds,
consisting
of
about
900
pieces
which
he
mailed
on
July
2,
1960
under
a
British
Guiana
export
licence
and
on
which
he
paid
an
export
duty.
Marun
then
returned
to
Canada
and
cleared
this
shipment
through
Customs
in
Toronto
on
July
12,
1960
after
some
difficulty
and
considerable
delay.
He
paid
an
amount
of
$151.80
claimed
by
the
Customs
officials
as
being
exigible
after
first
protesting
that
taxes
were
not
payable.
Mr.
Minogue
was
of
the
Same
opinion
and
subsequently
so
advised
Marun.
However,
at
no
time
subsequent
to
July
12,
1960
did
Marun
make
an
application
for
a
refund
of
the
amount
of
$151.80
paid
by
him
on
the
importation
of
the
industrial
diamonds.
Because
of
this
experience
and
in
order
to
facilitate
the
clearance
of
imported
goods
through
Customs
and
to
be
relieved
of
the
obligation
to
pay
taxes
at
the
time
of
importation,
Marun
as
president
of
Marun-Pakaraima
Diamond
Mining
Company,
Limited,
made
application
on
October
14,
1960
in
the
name
of
the
company
for
a
wholesaler’s
sales
tax
licence
under
the
provisions
of
the
Excise
Tax
Act.
By
letter
dated
October
21,
1960,
the
Department
of
National
Revenue,
Customs
and
Excise,
advised
that
the
business
of
the
company
was
not
substantial
enough
to
warrant
the
issuance
of
a
licence
at
that
time.
Prior
to
this
application
Minogue
had
advised
Marun
that
the
policy
to
be
adopted
by
the
company
should
be
that
industrial
diamonds
be
shipped
to
Canada
by
air
through
a
Customs
broker.
Both
Marun
and
Minogue
had
been
supplied
with
copies
of
the
Excise
Tax
Act
by
the
Department,
receipt
of
which
»
was
personally
acknowledged
by
each
of
them.
Marun
sold
a
portion
of
the
industrial
diamonds
to
Minogue.
He
gave
some
to
persons
interested
in
them
as
specimens.
The
balance
he
constantly
carried
on
his
person
in
a
plastic
vial
and
during
his
travels
frequently
crossed
the
Canadian
border
with
these
industrial
diamonds
in
his
possession.
One
particular
diamond
was
polished
in
the
expectation
that
it
might
be
raised
to
gem
quality
but
such
experiment
proved
impractical.
In
October,
1960,
Marun
returned
to
British
Guiana.
At
that
time
one
of
the
native
labourers
working
on
Marun’s
mining
claims
found
a
diamond
weighing
27
carats.
The
working
arrangements
were
that
the
finder
was
entitled
to
a
95
per
cent
interest
in
any
stones
found
and
Marun
was
entitled
to
a
5
per
cent
interest
in
stones
found
on
his
claims.
On
a
visit
to
Canada
shortly
after
the
finding
of
this
27
carat
diamond,
Marun
told
Minogue
about
it
expressing
the
view
that
it
was
a
valuable
stone.
It
was
agreed
by
Minogue
and
one
Zouzelka
that
Marun
should
purchase
the
finder’s
95
per
cent
interest
in
the
diamond.
For
this
purpose
Minogue
advanced
$10,000
and
Zouzelka
$5,000.
Marun
thereupon
returned
to
British
Guiana
and
acquired
the
native’s
95
per
cent
interest
in
the
stone
for
$20,000,
the
balance
of
the
purchase
price
over
the
advances
of
$15,000
being
put
up
by
Marun.
The
precise
nature
of
the
arrangements
among
the
three
purchasers
was
not
clear,
that
is
whether
they
became
joint
owners
of
the
diamond
or
whether
Minogue
and
Zouzelka
loaned
the
respective
amounts
of
$10,000
and
$5,000
to
Marun
on
the
security
of
the
diamond.
The
conduct
of
the
parties
was
indicative
of
either
such
relationship
dependent
on
their
mood
at
any
particular
time.
However,
it
was
understood
among
them
that
the
diamond
should
be
sold,
the
three
to
share
in
any
profit
realized
or
to
bear
any
loss
incurred
in
proportion
to
their
contributions,
although
Marun
considered
himself
indebted
to
his
partners
in
the
amounts
advanced
by
them
and
they,
in
turn,
considered
him
so
indebted.
On
January
4,
1961,
Marun
shipped
the
diamond
from
Georgetown,
British
Guiana,
through
the
Royal
Bank
to
its
branch
in
New
York,
U.S.A.
For
this
service
Marun
paid
the
bank
247.14
West
Indian
dollars
including
postage,
export
tax,
commission,
bank
charges
and
insurance.
Minogue,
Zouzelka
and
Marun
then
met
in
New
York
where
they
obtained
release
of
the
diamond.
Marun
immediately
returned
to
British
Guiana
and
Minogue
to
North
Bay
while
Zouzelka
remained
in
New
York
to
negotiate
a
sale
of
the
diamond.
Zouzelka’s
efforts
were
unsuccessful
and
accordingly
he
returned
to
Canada
leaving
the
diamond
in
the
custody
of
Freed
Industrial
Diamond
Corporation
in
New
York.
In
February,
1961,
Freed
Industrial
Diamond
Corporation
shipped
the
diamond
to
Murray
Scheinman,
an
importer
of
and
dealer
in
diamonds
in
Toronto,
Ontario.
Scheinman
was
the
holder
of
an
excise
tax
licence
and
accordingly
no
tax
was
paid
by
him
at
the
time
of
this
importation.
The
diamond
was
placed
on
display
in
a
leading
departmental
store
in
Toronto.
Scheinman
was
not
interested
in
purchasing
the
diamond
himself
nor
did
he
find
a
purchaser
for
it.
On
April
5,
1961
Scheinman
returned
the
diamond
by
registered
mail
to
Freed
Industrial
Diamond
Corporation
in
New
York.
Marun
returned
to
Toronto
shortly
thereafter
when
he
learned
of
these
transactions
and
was
informed
by
Zouzelka
there
was
an
outstanding
account
payable
to
Scheinman
for
his
services
in
the
amount
of
$26
which
Marun
forthwith
paid
without
inquiring
what
was
covered
by
this
account.
He
testified
that
he
thought
it
was
for
‘‘a
service
passing
through
the
Customs
office’’,
In
July
1961
Zouzelka
apparently
became
disillusioned
with
the
deal,
and
being
in
need
of
money,
asked
for
his
money
back.
Marun
paid
him
$1,000
in
cash
and
give
him
a
promissory
note
for
$4,000.
Marun
and
Zouzelka
then
entered
into
an
agreement
by
which
Zouzelka
transferred
his
interest
in
the
diamond
to
Marun,
the
agreement
then
stating
that
Marun
and
Minogue
were
each
owner
of
a
50
per
cent
portion
of
the
total
ownership
in
the
diamond.
Marun
then
undertook
to
dispose
of
the
diamond.
At
the
end
of
August,
1961
he
went
to
New
York
and
picked
up
the
diamond
from
the
Freed
Company
and
took
it
to
Miami,
Florida.
There
a
window
was
cut
in
the
exterior
skin
to
determine
the
quality
of
the
diamond
which
proved
to
be
not
up
to
expec-
tations.
Marun
then
decided,
with
the
concurrence
of
Minogue,
that
the
prospects
of
selling
the
diamond
would
be
greater
if
the
diamond
were
cut,
but
Minogue,
whose
ardour
about
the
transaction
had
somewhat
cooled,
in
giving
his
concurrence
reminded
Marun
that
he
still
considered
him
indebted
to
the
extent
of
$10,000.
Marun
took
the
rough
diamond
to
a
Mr.
Berliner,
who
had
been
a
diamond
cutter,
but
no
longer
practised
that
trade,
and
who
recommended
Baumgold
Brothers
of
New
York
as
being
experts
by
whom
the
diamond
was
cut
into
a
7
carat
stone
and
a
5
carat
stone,
the
remainder
of
the
27
carats
becoming
waste.
Marun
took
delivery
of
the
cut
stones
from
Baumgold
Brothers
on
the
morning
of
October
8,
1961
and
immediately
flew
with
them,
in
his
possession
to
Toronto.
At
the
Customs
inspection
at
the
airport
in
Toronto,
Marun
did
not
declare
the
two
diamonds
he
now
had,
nor
the
20
industrial
diamonds
which
were
still
in
his
possession.
He
explained
his
reason
for
failure
to
do
so
as
being
his
belief
that
the
two
cut
diamonds
were
no
longer
commercial
but
that
he
intended
to
display
them
as
specimens
of
what
his
mines
in
British
Guiana
produced
in
order
to
raise
funds
for
further
development.
It
did
not
occur
to
him
to
declare
the
20
industrial
diamonds
upon
which
he
had
paid
duty
on
July
12,
1960.
Marun
telephoned
Minogue
in
North
Bay
to
advise
him
of
his
return
to
Toronto
with
the
two
cut
stones,
arranging
to
meet
Minogue
shortly
thereafter.
The
two
suppliants
did
meet
about
ten
days
later.
In
a
hurried
session
Marun
offered
Minogue
both
the
diamonds
or
his
choice
of
the
larger
or
smaller
one.
Minogue
chose
the
5
carat
stone.
Minogue
stated
that
he
took
the
5
carat
diamond
because
he
had
no
security
for
his
$10,000
advance
to
Marun
and
because
he
felt
he
had
better
facilities
for
its
safe-keeping.
He
was
concerned
about
the
diamond
being
carried
about
by
Marun
without
insurance.
He
gave
Marun
a
handwritten
document
dated
October
25,
1961
stating
that
he
had
a
5
carat
diamond
in
his
possession.
Upon
his
return
to
North
Bay
he
insured
the
5
carat
diamond
for
$3,000.
Meanwhile
Marun
obtained
a
certificate
of
appraisal
for
insurance
purposes
on
the
7
carat
diamond,
the
value
of
which
was
appraised
at
$15,800.
However
he
did
not
insure
the
diamond
because
he
could
not
pay
the
premium.
Instead
he
had
the
diamond
set
in
a
tie
pin
at
a
cost
of
$30
as
a
means
of
safe-keeping
(it
being
under
his
constant
observation)
and
to
display
the
diamond.
\
:
The
diamond
in
this
setting
was
appraised
at
$13,500
for
insurance
purposes
by
the
same
appraiser
who
had
fixed
a
value
of
$15,800
on
the
same
unset
diamond.
Marun
at
the
suggestion
of
Minogue
and
with
his
assistance
attempted
to
borrow
$5,000
on
the
security
of
the
7
carat
diamond
from
the
Toronto-Dominion
Bank,
the
manager
of
which
was
personally
known
to
Minogue,
for
the
purpose
of
buying
equipment
to
conduct
further
mining
operations.
The
manager
expressed
a
willingness
to
make
the
loan
provided
Minogue
joined,
in
signing
a
demand
note.
This
bank
loan
never
materialized
because
in
the
meantime
Royal
Canadian
Mounted
Police
officers,
posing
as
agents
of
a
millionaire
principal,
approached
Marun
purportedly
to
buy
the
diamond.
Marun
was
arrested
on
December
4,
1961
and
charged
with
having
in
his
possession
goods
unlawfully
imported
into
Canada
contrary
to
Section
203
of
the
Customs
Act.
The
7
carat
diamond
in
its
setting
and
20
industrial
diamonds
were
seized
by
the
police.
This
charge
was
dismissed
by
a
police
magistrate
on
January
17,
1962!
and
an
appeal
against
such
acquittal
was
also
dismissed.
On
being
released
on
bail
on
December
4,
1961
Marun
immediately
telephoned
Minogue
advising
him
that
he
had
been
arrested
for
not
declaring
the
diamond
at
Customs
and
that
the
diamond
had
been
seized.
There
was
an
exchange
of
recriminations
with:
Marun,.
in
exculpation,
explaining
to
Minogue
that
because
of
lack
of
funds
he
could
not
stay
in
New
York
to
arrange
proper
customs
documents.
I
might
add
that
Mr.
Minogue
entertained
some
misgivings
about
Mr.
Marun’s
complete
honesty
which
were
since
dispelled
to
his
satisfaction,
but
he
did
take
steps
to
protect
his
interests
as
best
he
could
by
taking
from
Marun,
30.50
carats
of
industrial
diamonds
at
$10
per
carat,
$500
in
cash
and
450
of
shares
held
by
Marun
in
the
Company
and
later
the
5
carat
diamond
in
the
circumstances
before
recited.
The
consent
given
by
him
to
Marun
to
cut
the
27
carat
rough
stone
was
given
in
writing,
which
document
also
stated
that
any
sale
of
the
cut
stones
was
to
be
with
Minogue’s
consent
and
that
the
money
received
was
to
be
divided
evenly
between
them
after
the
deduction
of
expenses.
It
was
again
recited
that
Minogue
and
Marun
were
joint
owners
of
the
stone.
After
being
advised
by
Marun
on
December
4,
1961
that
the
police
had
seized
the
7
carat
diamond
Minogue
did
not
deliver
the
5
carat
diamond
in
his
possession
to
the
police
or
Customs
officials,
but
on
December
21,
1961
officers
of
the
police
attended
upon
Minogue
at
North
Bay
where
he
delivered
the
5
carat
diamond
to
them
and
accepted
a
receipt
therefor.
A
notice
dated
January
5,
1962
was
received
by
Marun
from
the
Department
of
National
Revenue
advising
that
a
report
of
the
seizure
of
one
diamond
tie
pin
and
20
rough
diamonds
had
been
made
on
December
4,1961
on
the
ground
that
the
said
goods
were
smuggled
or
clandestinely
introduced
into
Canada
and
that
such
goods
were
liable
to
forfeiture.
This
notice
also
pointed
out
that
Marun
had
30
days
to
present
evidence
by
affidavit
in
rebuttal
upon
receipt
of
which
the
matter
would
be
presented
to
the
Minister
for
his
decision
on
the
merits
of
the
case
in
accordance
with
Section
160
of
the
Customs
Act
and
that
such
decision,
would
be
final
unless
that
decision
was
not
accepted
by
Marun.
A
copy
of
Sections
158
to
166
of
the
Customs
Act
was
attached
to
this
notice.
Marun
forwarded
an
affidavit,
pursuant
to
such
notification
stating,
in
part,
that
he
was
willing
to
pay
all
required
duties.
By
letter
dated
September
17,
1962
the
Department
advised
Marun
that
a
decision
had
been
rendered
to
the
effect
that
the
tie
pin
setting
was
released
unconditionally
and
that
the
7
carat
diamond
and
the
20
industrial
diamonds
would
be
released
on
payment
of
$9,710.25,
failing
payment
of
this
amount
within
30
days
the
diamonds
would
be
forfeited.
A
notice
dated
January
23,
1962
similar
to
that
directed
to
Marun
dated
January
5,
1962
was
received
by
Minogue
who
replied
by
letter
dated
February
14,
1962
in
which
he
related
the
circumstances
under
which
he
came
into
possession
of
the
5
carat
diamond.
On
October
26;
1962
Minogue
was
advised
that
the
5
carat
diamond
would
be
released
on
payment
of
$3,817.55,
and
failing
payment
of
this
amount
within
30
days
the
diamond
would
be
forfeited.
Both
suppliants
objected
to
the
foregoing
decisions
and
since
the
goods
were
not
returned
to
them,
launched
the
present
Petitions
of
Right
for
the
relief
above
described.
The
suppliant,
Marun,
refused
to
accept
the
return
of
the
tie
pin
setting
when
delivery
was
proffered
by
officers
of
the
Royal
Canadian
Mounted
Police.
By
virtue
of
Section
248
of
the
Customs
Act,
the
burden
is
on
the
suppliants
to
prove
that
the
Crown
has
no
right,
under
any
provision
of
the
Customs
Act,
to
retain
the
goods
in
its
possession.
There
is
no
doubt
that
the
7
carat
diamond
and
the
5
carat
diamond
are
subject
to
tax
at
the
rate
of
21
per
cent
of
their
value
payable
upon
importation.
A
consumption
or
sales
tax
at
the
rate
of
8
per
cent
is
imposed
by
Section
30
of
the
Excise
Tax
Act
to
which
a
further
tax
of
3
per
cent
is
added
under
the
Old
Age
Security
Act
making
a
total
combined
tax
of
11
per
cent
on
the
sale
price
of
goods
imported
into
Canada
except
those
specifically
exempted.
The
diamonds
in
question
are
not
so
exempted.
While
the
tax
is
payable
on
the
sale
price
the
goods
do
not
have
to
be
sold
to
be
taxable.
Section
29(1)
(f)
of
the
Excise
Tax
Act
defines
‘‘sale
price’’
for
the
purpose
of
determining
the
consumption
or
sales
tax
in
the
case
of
imported
goods
as
being
deemed
to
be
the
duty
paid
value
thereof.
Neither
do
the
goods
have
to
be
subject
to
any
duty
imposed
by
the
customs
tariff
to
be
taxable.
Section
29(1)
(a)
provides:
“29.
(1)
In
this
Part,
(a)
‘duty
paid
value’
means
the
value
of
the
article
as
it
would
be
determined
for
the
purpose
of
calculating
an
ad
valorem
duty
upon
the
importation
of
such
article
into
Canada
under
the
laws
relating
to
the
Customs
and
the
Customs
Tariff
whether
such
article
is
in
fact
subject
to
ad
valorem
or
other
duty
or
not,
plus
the
amount
of
the
Customs
duties,
if
any,
payable
thereon;
.
.
.”?
In
addition
to
the
consumption
or
sales
tax
at
the
rate
of
11
per
cent,
the
two
diamonds
in
question
are
also
subject
to
excise
tax
by
virtue
of
Section
23
of
the
Excise
Tax
Act
as
being
goods
mentioned
in
Schedule
I
thereto
at
the
rate
opposite
the
mentioned
item.
Schedule
I,
Section
9(c)
specifically
mentions
“articles
commonly
or
commercially
known
as
jewellery,
whether
real
or
imitation,
including
diamonds
.
.
.
for
personal
use
or
for
adornment
of
the
person
.
.
.
ten
per
cent.”
It
was
contended
that
the
two
cut
diamonds
in
question
particularly
the
7
carat
diamond
were
not
to
be
used
for
personal
use
or
adornment
of
the
person,
but
were
to
be
used
as
a
specimen
or
sample
indicative
of
the
product
of
the
suppliant
Marun’s
mining
operations
in
British
Guiana.
I
do
not
accede
to
such
contention
because
in
my
view
the
words
‘‘including
diamonds
for
personal
use
or
for
adornment
of
the
person’’
in
Schedule
I
are
an
extension
of
the
meaning
of
the
word
‘‘jewellery’’
and
refer
to
a
kind
of
goods.
The
evidence
was
clear
there
are
two
kinds
of
diamonds,
industrial
diamonds
and
diamonds
of
gem
quality.
The
two
diamonds
here
in
question
are
of
the
latter
kind
and
therefore
fall
within
the
meaning
of
the
words
in
Schedule
I
and
are
subject
to
the
duty
paid
value
as
defined
by
Section
29(1)
(a)
of
the
Excise
Tax
Act
quoted
above.
Section
56
of
the
Excise
Tax
Act
provides:
“56.
Where
an
excise
tax
is
payable
under
this
Act
upon
the
importation
of
any
article
into
Canada,
the
provisions
of
the
Customs
Act
are
applicable
in
the
same
way
and
to
the
same
extent
as
if
that
tax
were
payable
under
the
Customs
Tariff,
1948,
c.
50,
s.
9.”’
Therefore,
the
taxes
imposed
under
the
Excise
Tax
Act
are
to
be
treated
as
duties
under
the
Customs
Tariff,
It
was
also
submitted
on
behalf
of
the
suppliants
that
the
27
carat
rough
diamond
when
first
imported
by
Scheinman
in
February
1961,
it
was
properly
imported
from
which
it
followed
that
the
two
diamonds
cut
therefrom
when
subsequently
imported
were
tax
free.
The
simple
answer
to
such
contention
is
that
when
the
rough
diamond
was
first
imported
by
Murray
Scheinman,
it
was
imported
under
licence
granted
to
Scheinman
by
the
Minister
under
Sections
33
and
35
of
the
Excise
Tax
Act,
as
a
consequence
of
which
no
tax
was
payable,
nor
was
any
tax
paid,
at
that
time.
Mr.
Scheinman
then
exported
the
rough
diamond
to
New
York
and
being
a
licensed
manufacturer
he
could
do
so
without
being
subjected
to
tax
by
reason
of
Section
44
of
the
Excise
Tax
Act.
However,
it
does
not
follow
that
the
stone
having
been
imported
under
licence
with
no
tax
being
paid,
then
exported,
that
it
can
be
subsequently
reimported,
either
in
identical
or
altered
form,
without
tax
becoming
payable.
Such
a
result
would
be
absurd
and
in
my
opinion,
was
clearly
not
the
intention
of
Parliament.
Section
18
of
the
Customs
Act
imposes
a
clear
obligation
upon
every
person
arriving
in
Canada
to
report
in
writing
to
the
collector
or
proper
officer
at
the
nearest
Customs
House
all
goods
in
his
custody
and
the
quantity
and
values
of
such
goods,
to
answer
all
questions
respecting
such
articles
and
to
make
due
entry
thereof
as
required
by
law.
What
constitutes
due
entry
is
set
out
in
Sections
20,
21
and
47
of
the
Customs
Act
which
consists
of
filing
an
invoice
describing
the
goods,
giving
the
quantity
and
value
thereof
which,
by
Section
21,
is
also
required
to
be
stated
in
the
bill
of
entry
although
such
goods
may
not
be
subject
to
duty.
Section
22
imposes
an
obligation
to
pay
duty
which,
by
Section
56
of
the
Excise
Tax
Act,
includes
taxes
payable
thereunder,
at
the
time
of
entry,
unless
the
goods
are
to
be
warehoused.
Accordingly
there
is
a
threefold
obligation
on
any
person
bringing
goods
into
Canada,
(1)
to
report
the
goods
to
Customs,
(2)
to
make
due
entry
of
them,
and
(3)
to
pay
the
taxes.
None
of
these
obligations
were
carried
out
by
the
suppliant
Marun
when
he
imported
the
two
cut
diamonds
and
the
20
industrial
diamonds
into
Canada
at
the
airport
in
Toronto
on.
October
8,
1961,
from
which
it
follows
that
the
goods
were
unlawfully
imported
on
the
person
of
Marun.
During
the
trial
much
evidence
was
led
to
establish,
and
it
was
argued,
that
the
foregoing
obligations
so
imposed
by
the
Customs
Act
are
more
honoured
in
their
breach
than
in
their
observance.
It
is
quite
true
that
travellers
returning
to
Canada
do
not
declare
in
writing
but
only
verbally
or
on
occasion
not
at
all,
a
great
many
articles
such
as
clothing
and
jewellery
being
worn,
their
suitcases
and
the
like
goods
acquired
in
Canada,
nor
are
they
required
to
do
so
by
Customs
officials
for
the
very
practical
reason
that
every
person
has
these
items
and
they
are
not
subject
to
tax
or
duty
in
any
event.
However,
any
importer
could
readily
distinguish
between
such
items
and
those
acquired
abroad
and
more
particularly
between
such
items
as
two
large
and
valuable
diamonds
which
had
just
been
cut
in
the
United
States
and
it
was
not
established
to
my
satisfaction
that
the
Customs
officials
had
adopted
an
accepted
practice
of
permitting
persons
not
to
declare
items
such
as
these,
nor
can
any
Customs
official
waive
compliance
with
statutory
obligations
upon
an
importer,
nor
is
an
importer
so
relieved
from
the
consequences
of
his
failure
to
comply
with
these
obligations.
I,
therefore,
reject
the
contention
that
under
the
circumstances
the
two
cut
diamonds
and
the
20
industrial
diamonds
were
lawfully
imported.
The
fact
that
the
suppliant,
Marun,
was
acquitted
by
a
police
magistrate
of
a
charge
that,
without
lawful
excuse,
he
was
in
possession
of
goods
unlawfully
imported
into
Canada,
namely,
a
diamond
tie
pin,
contrary
to
Section
203
of
the
Customs
Act,
which
acquittal
was
sustained
on
appeal,
is
not
res
judicata
in
his
favour
of
the
fact
that
the
goods
had
not
been
illegally
imported
and
cannot
be
invoked
by
him
in
the
present
case.
See
Rex
V.
Bureau,
[1949]
S.
CR.
367
at
374.
The
suppliant,
Marun,
in
his
petition
prays
the
refund
of
$151,80
paid
by
him
upon
the
importation
of
a
quantity
of
industrial
diamonds
on
July
12,
1960.
Section
46
of
the
Excise
Tax
Act
provides
that
a
refund
of
any
tax
imposed
thereunder
may
be
granted
where
the
tax
was
paid
in
error,
but
by
subsection
(5)
of
Section
46
no
refund
shall
be
paid
unless
application
in
writing
is
made
for
the
same
by
the
person
entitled
thereto
within
two
years
of
the
time
when
any
such
refund
first
became
payable.
Since
no
application
for
refund
was
ever
made
by
the
suppliant,
Marun,
as
required
by
Section
46,
(supra)
as
a
condition
precedent
thereto,
it
follows,
without
the
necessity
of
deciding
the
question
whether
the
goods
were
properly
taxable
and
whether
the
tax
was
paid
in
error,
that
the
suppliant
is
not
entitled
to
a
refund
of
the
amount
of
$151.80
as
prayed
in
his
Petition
of
Right.
I
am
satisfied
that
the
20
industrial
diamonds
found
in
the
possession
of
Marun
and
seized
were,
in
fact,
pieces
remaining
from
the
900
imported
by
him
on
July
12,
1960
upon
which
taxes
had
been
paid.
However,
Marun
did
not
report
such
goods
as
required
by
Section
18
of
the
Customs
Act
and
was
in
technical
breach
thereof.
While
Section
18
imposes
the
duties
previously
outlined
upon
persons
arriving
in
Canada
and
having
with
them
goods,
whether
dutiable
or
not,
the
section
does
not
state
the
consequences
of
the
failure
of
such
persons
to
fulfill
such
duties.
The
consequences
are
found
in
other
provisions
of
the
Customs
Act.
Section
190(1)
(a)
and
(c)
is
as
follows:
..‘-‘190.
(1)
If
any
person
(a)
smuggles
or
clandestinely
introduced
into
Canada
any
goods
subject
to
duty
under
the
value
for
duty
of
two
hundred
dollars
;
(c)|,
in
any
way
attempts
to
defraud
the
revenue
by
avoiding
the
payment
of
the
duty
or
any
part
of
the
duty
on
any
goods
of
whatever
value
;
such
goods
if
found
shall
be
seized
and
forfeited,
or
if
not
found
but
the
value
thereof
has
been
ascertained,
the
person
so
offending
shall
forfeit
the
value
thereof
as
ascertained,
such
forfeiture
to
be
without
power
of
remission
in
cases
of
offences
under
paragraph
(a).”
Section
178(1)
and
(2)
reads
in
part,
as
follows
:
“178.
(1)
Where
the
person
in
charge
or
custody
of
any
article
mentioned
in.
paragraph
(b)
of
section
18
has
failed
to
comply
with
any
of
the
requirements
of
that
section,
all
the
articles
mentioned
in
paragraph
(b)
of
that
section
in
the
charge
or
custody
of
such
person
shall
be
forfeited
and
may
be
seized
and
dealt
with
accordingly.
(2)
If
the
articles
so
forfeited
or
any
of
them
are
not
found,
the
owner
at
the
time
of
importation
and
the
importer,
and
every
other
person
who
has
been
in
any
way
connected
with
the
unlawful
importation
of
such
articles
shall
forfeit
a
sum
equal
to
the
value
of
the
articles,
and,
whether
such
articles
are
found
or
not,
.
.
.”
Section
183
reads
as
follows
:
“183.
If
any
goods
are
unlawfully
imported
on
the
person,
or
as
baggage,
or
among
the
baggage
of
any
one
arriving
in
Canada,
on
foot
or
otherwise,
such
goods
shall
be
seized
and
forfeited.
’
’
Section
203
reads
as
follows:
“203.
(1)
If
any
person,
whether
the
owner
or
not,
without
lawful
excuse,
the
proof
of
which
shall
be
on
the
person
accused,
has
in
possession,
harbours,
keeps,
conceals,
purchases,
sells
or
exchanges
any
goods
unlawfully
imported
into
Canada,
whether
such
goods
are
dutiable
or
not,
or
whereon
the
duties
lawfully
payable
have
not
been
paid,
such
goods,
if
found,
shall
be
seized
and
forfeited
without
power
of
remission,
and,
if
such
goods
are
not
found,
the
person
so
offending
shall
forfeit
the
value
thereof
without
powers
of
remission.
’
’
Of
the
sections
above
quoted
only
Sections
190
and
203
require
the
presence
of
a
mens
rea
on
the
part
of
the
person
importing
or
retaining
the
imported
goods.
There
is
no
question
that
the
suppliant,
Marun,
by
his
failure
to
comply
with
the
positive
duties
imposed
by
Section
18
falls
precisely
within
the
language
of
Section
183
quoted
above.
Similarly
so,
the
actions
of
the
suppliant,
Marun,
in
importing
the
7
carat
and
5
carat
diamonds
also
bring
him
within
the
operation
of
Section
178.
It
was
contended
on
behalf
of
the
suppliant,
Minogue,
that
the
words,
‘‘in
the
charge
or
custody
of
such
person
shall
be
forfeited
and
dealt
with
accordingly”
render
this
section
applicable
only
if
the
goods
were
found
in
the
custody
or
possession
of
the
person
who
failed
to
comply
with
Section
18
when
the
goods
were
imported.
In
my
view
such
is
not
the
proper
interpretation
of
the
section.
If
the
person
importing
the
goods
fails
to
comply
with
Section
18,
the
goods
are
forfeited
if
found
and
it
matters
not
where
they
are
found.
The
language
of
the
section
does
not
require
that
the
goods
be
found
in
the
custody
of
that
particular
person.
The
forfeiture
under
Sections
178
and
183
is
automatic
and
occurs
immediately
upon
the
unlawful
importation
by
virtue
of
Section
2(1)
(q)
of
the
Customs
Act
reading
as
follows:
“2.
(1)
In
this
Act,
or
in
any
other
law
relating
to
the
Customs,
(q)
‘seized
and
forfeited’,
‘liable
to
forfeiture’
or
‘subject
to
forfeiture’,
or
any
other
expression
that.
might
of
itself
imply
that
some
act
subsequent
to
the
commission
of
the
offence
is
necessary
to
work
the
forfeiture,
shall
not
be
construed
as
rendering
any
such
subsequent
act
necessary,
but
the
forfeiture
shall
accrue
at
the
time
and
by
the
commission
of
the
offence,
in
respect
of
which
the
penalty
of
forfeiture
is
imposed;
..
.’’
The
forfeiture
is
not
brought
about
by
any
act
of
the
Customs
officials
or.
officers
of
the
Department,
but
it
is
the
legal
un-
escapable
consequence
of
the
unlawful
importation
of
the
goods
by
the
suppliant,
Marun.
The
goods
thereupon
became
the
property
of
the
Crown
and
no
act
by
any
officer
of
the
Crown
can
undo
that
forfeiture.
Therefore,
any
defect,
if
such
existed,
in
the
notifications
and
procedure
adopted
by
the
Department
under
Sections
150
and
158
are
not
material.
I
am
not
convinced
that
the
suppliant,
Marun,
by
his
action
in
failing
to
comply
with
the
provisions
of
Section
18
of
the
Customs
Act,
does
not
fall
within
the
four
corners
of
Section
190(1)
(c)
of
the
Customs
Act
above
quoted.
The
section
contemplates
the
presence
of
a
mens
rea
which
I
find
was
present
despite
the
acquittal
of
Marun
on
a
criminal
charge
under
such
section
by
a
police
magistrate.
From
the
evidence
adduced
it
is
clear
that
Marun,
being
a
diamond
prospector,
had
imported
industrial
diamonds
on
July
12,
1960
and
had
paid
duty
on
them.
He
was,
therefore,
familiar
with
the
requisite
Customs
procedure.
The
company
incorporated
by
him
and
Minogue
had
decided,
as
a
matter
of
policy,
that
industrial
diamonds
mined
in
South
America
should
be
shipped
to
Canada
by
air
through
a
Customs
broker.
There
was
a
discussion
of
such
policy
between
Marun
and
Minogue
and
it
was
Minogue’s
advice
to
Marun
that
such
method
of
importation
should
be
followed.
Marun,
as
president
of
the
company,
applied
for
a
licence
under
the
Excise
Tax
Act
to
permit
the
importation
without
payment
of
tax
at
that
time,
which
licence
was
not
granted.
Marun,
when
arrested
on
December
4,
1961
did
not
tell
the
police
about
the
5
carat
diamond
in
Minogue’s
possession,
but
he
did
telephone
Minogue
and
explained
that
he
had
been
unable
to
stay
in
New
York
to
complete
documentation
for
Customs
importation
because
of
lack
of
funds.
It
follows
logically,
because
he
was
without
funds
at
that
time,
he
imported
the
diamonds
without
paying
the
tax
which
he
must
have
known
was
payable.
I
cannot
accept
as
credible
the
suggestion
that
since
Marun
had
paid
an
account
of
$26
to
Scheinman,
he
therefore
believed
that
duty
had
been
paid
on
the
diamonds.
As
to
the
5
carat
diamond
found
in
the
possession
of
the
suppliant,
Minogue,
it
follows
that
such
stone
was
forfeited
under
Sections
178
and
183
when
unlawfully
imported
by
Marun
who
could
not
divest
the
property
in
the
Crown
by
delivering
the
5
carat
stone
to
Minogue
no
matter
how
innocent
Minogue
was.
Section
203
of
the
Act
does
not
mean
that
if
a
possessor
of
goods
unlawfully
imported
has
a
lawful
excuse,
then
the
goods
are
not
forfeited
under
other
provisions
of
the
Customs
Act.
In
Smith
v.
Goral,
[1952]
3
D.L.R.
328,
the
plaintiff
purchased
a
motor
car
from
the
defendant
who
had
purchased
it
from
a
third
party.
The
motor
car
was
seized
by
the
Crown
from
the
plaintiff
as
forfeit
under
the
Customs
Act
for
unlawful
importation
into
Canada
without
payment
of
custom
duty.
None
of
the
parties
knew
of
the
claim
for
duty
and
all
were
innocent
of
the
unlawful
importation.
The
plaintiff
sought
to
recover
the
purchase
price
relying
on
the
implied
warranties
under
the
Ontario
Sale
of
Goods
Act.
The
plaintiff
succeeded
because
under
Section
2(1)
(q)
of
the
Customs
Act,
the
forfeiture
occurred
at
the
time
the
car
was
unlawfully
imported
as
a
consequence
of
the
commission
of
the
Customs
offence.
Therefore,
the
seller
had
no
title
to
the
car
when
he
sold
it,
although
it
was
not
physically
seized
until
later.
The
purpose
of
Section
203
is
clearly
to
protect
a
person
who
innocently
comes
into
possession
of
unlawfully
imported
goods
and
without
means
of
knowing
they
were
unlawfully
imported,
from
prosecution
and
the
possible
liability
to
a
penalty
equal
to
the
value
of
the
goods
and
imprisonment,
but
certainly
not
to
vest
title
to
unlawfully
imported
goods
in
such
person.
I
now
turn
to
the
counterclaim
of
the
Crown
for
judgment
for
the
amount
of
taxes
payable
upon
the
importation
of
the
7
carat
diamond,
the
5
carat
diamond
and
the
20
industrial
diamonds
against
the
suppliant
Marun.
Under
Section
36
of
the
Customs
Act
the
value
for
duty
shall
be
the
fair
market
value,
at
the
time
when
and
place
from
which
the
goods
were
shipped
directly
to
Canada,
of
like
goods
when
sold
to
purchasers
who
at
the
same
trade
level
as
the
importer,
namely
the
price
at
which
Marun,
the
importer,
could
have
purchased
the
7
and
5
carat
stones
in
New
York
on
October
8,
1961.
There
was
evidence
adduced
by
expert
witnesses
as
to
the
value
of
the
7
carat
diamond
and
the
5
carat
diamond.
I
disregard
the
evidence
of
the
per
carat
valuations
of
the
diamonds
in
their
rough
state,
i.e.,
the
27
carat
rough
diamond,
for
the
reason
that
an
accurate
appraisal
of
the
cut
diamonds
could
not
be
made
in
the
original
state.
Similarly,
I
disregard,
as
being
unrealistic,
the
valuation
for
insurance
purposes
and
for
the
purpose
of
a
bank
loan
of
the
7
carat
diamond
at
$15,800
and
$13,500
and
the
insurance
value
of
$3,000
on
the
5
carat
diamond.
An
appraiser
called
by
the
suppliant
Marun
gave
a
value
of
between
$2,800
and
$3,500
for
the
7
carat
stone
and
between
$2,000
and
$2,500
for
the
5
carat
stone.
À
witness
called
by
the
Crown
estimated
the
retail
value
of
the
7
carat
stone
as
being
between
$7,000
and
$10,000
and
the
5
carat
stone
as
being
between
$4,000
and
$6,000.
The
wholesale
values
were
estimated
by
this
witness
as
between
$600
to
$800
per
carat
for
the
7
carat
stone
being
an
amount
between
$4,200
and
$5,600
and
the
5
carat
stone
at
an
amount
between
$2,400
to
$2,600.
This
witness
fixed
the
price
in
Canada
in
1963.
He
stated
that
the
New
York
price
would
be
the
same
after
allowing
for
exchange
and
that
in
1961
the
prices
would
be
10
per
cent
less.
It
was
apparent
that
the
diamonds
were
of
inferior
colour
and
marred
by
flaws.
Therefore
the
market
for
them
would
be
extremely
limited.
The
suppliant,
Marun,
being
a
producer
of
diamonds
would
deal
at
the
wholesale
level.
Accordingly,
I
would
fix
the
value
for
duty
of
the
7
carat
stone
at
$3,200
and
of
the
5
carat
stone
at
$2,300.
The
respondent
is,
therefore,
entitled
to
judgment
against
the
suppliant
Marun
in
the
amount
of
$1,156.75
which
I
arrive
at
by
calculating
the
tax
payable
at
21
per
cent
on
the
aforesaid
values
and
a
tax
at
11
per
cent
on
the
value
of
$25
for
the
industrial
diamonds.
The
respondent
is
also
entitled
to
the
costs
of
the
counterclaim.
It
was
submitted
by
counsel
for
the
suppliant,
Marun,
that
to
declare
the
diamonds
forfeited
and
also
to
exact
the
tax
payable
thereon
constitutes
cruel
and
harsh
treatment
contrary
to
the
Canadian
Bill
of
Rights,
S.C.
1960,
c.
44,
and
that
it
is
not
fair
for
the
Crown
to
retain
the
diamonds
if
the
suppliant
pays
the
tax
thereon.
Section
2
of
the
Canadian
Bill
of
Rights
reads
in
part
as
follows
:
.
.
no
law
of
Canada
shall
be
construed
or
applied
so
as
to
(b)
impose
or
authorize
the
imposition
of
cruel
and
unusual
treatment
or
punishment.”
It
will
be
observed
that
the
pertinent
words
of
the
section
are
4i
cruel
and
unusual
treatment’’.
The
fact
that
the
Customs
Act
provides
that
goods
unlawfully
imported
are
forfeit
to
the
Crown
without
power
of
remission
and
that
the
person
who
unlawfully
imported
such
goods
is
liable
for
the
tax
payable
thereon,
does
not
constitute
‘‘unusual
treatment’’.
Therefore
the
Canadian
Bill
of
Rights
cannot
be
invoked
as
an
aid
to
the
interpretation
of
the
Customs
Act
to
reach
a
contrary
result.
For
the
foregoing
reasons,
the
suppliant,
Minogue,
is
not
entitled
to
the
relief
sought
in
his
Petition
of
Right
herein
and
Her
Majesty
the
Queen
is
entitled
to
costs.
Similarly,
the
suppliant,
Marun,
is
not
entitled
to
the
relief
sought
in
his
Petition
of
Right
and
Her
Majesty
the
Queen
is
entitled
to
costs.
Judgment
accordingly.
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