Date: 20000914
Docket: A-755-98
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
ENTRELEC INC.
APPELLANT
(Plaintiff)
AND
THE DEPUTY MINISTER OF NATIONAL REVENUE
RESPONDENT
(Defendant)
REASONS FOR JUDGMENT
(Delivered from the Bench
at Montreal on September 14, 2000)
[1] We have not been convinced that the Canadian International Trade Tribunal (Tribunal) erred in its interpretation of the words "for use in" found in Code 2101 of Schedule II of the Customs Tariff R.S.C. 1985, c.41 (3rd supp.). The provision reads:
Articles (other than goods of the tariff item Nos. enumerated below) for use in:
| 2101 The goods of tariff item No: |
...9032.89.20.
Articles (autres que les marchandises des nos tarifaires énumérées ci-dessous) devant servir aux marchandises des nos tarifaires:
| 2101 Les marchandises des nos tarifaires: |
...9032.89.20.
[2] In determining whether the appellant's goods in issue qualified for the benefits of Code 2101 which provides for the duty-free entry of articles for use in the goods of tariff item No. 9032.89.20, the Tribunal took into account the definition given to these words in s.4 of the Act. The section reads:
4. The expression "for use in", wherever it occurs in a tariff item in Schedule I or a code in Schedule II in relation to goods, means, unless the context otherwise requires, that the goods must be wrought into, attached to or incorporated into other goods as provided for in that tariff item or code.
4. Les expressions « devant servir dans » et « devant servir à » , mentionnées en regard d'un numéro tarifaire de l'annexe I ou d'un code de l'annexe II, signifient que, sauf indication contraire du contexte, les marchandises en cause entrent dans la composition d'autres marchandises par voie d'ouvraison, de fixation ou d'incorporation, selon ce qui est indiqué en regard de ce numéro ou code.
[3] It concluded that the definition required an "actual use" of the articles subsequent to importation in order to benefit from Code 2101, that is to say that these articles, as provided in s.4, "must be wrought into, attached to or incorporated into" the goods for which a tariff item is claimed.
[4] While it is true that the words "for use in" (in French "devant servir dans" or "devant servir à" rather than "servant à") would normally refer to the intended use of the importer, the definition in s.4 ascribes to them a meaning which is specific and different from the usual one. By stating that the imported goods "must be" (in French "entrent") wrought into, attached to or incorporated into other goods, the definition requires, as the Tribunal properly found, that there be an actual as opposed to an intended connection between the imported components and the goods in which they are used.
[5] The Tribunal also made a finding of fact based on the evidence adduced before it, namely that the goods in issue could be used in goods other than those of tariff item No. 9032.89.20. More specifically, it found that the articles in issue could also be used in goods of tariff item no. 85.37 which includes programmable controllers while the Code 2101 duty-free claim made by the appellant is with respect to the intended use of these articles in a process control apparatus. We can only interfere with such finding if it was based on a palpable and overriding error.
[6] We need not enter into a detailed explanation of the differences between programmable controllers and a process control apparatus. Suffice it to say that Mr. Turnbull, who is an expert in these matters, prepared and explained a list he had drawn up in which he described non-process control uses for each of the items in issue.
[7] Moreover, Mr. Turnbull also testified that the items in question were fairly generic. He proceeded to explain the various potential applications of items such as "terminal blocks" and "relays" in goods other than process control apparatus. This testimony, in our view, afforded the Tribunal a reasonable basis for concluding that the goods in question could have other uses and applications than process control. However, this is not the end of the matter as the duality of applications or uses does not prevent the goods from qualifying under Code 2101 as long as evidence of use in conformity with the requirements of that provision is adduced. It is in this respect that the appellant submitted that the Tribunal made a palpable and overriding error when it concluded that the appellant failed to show some actual use in process control. At pages 18 and 19 of its decision, the Tribunal wrote:
| In the Tribunal's view, the appellant, in the present case, does not qualify for the benefits of Code 2101 because it did not show that some of the goods in issue were actually used in process control apparatus ... Indeed, the respondent's officials explained to the appellant the kind of evidence that they needed to establish end use. Such evidence could have included end-use certificates, purchase orders, sales invoices or other document that clearly related to the goods in issue. However, such evidence was never provided. |
(emphasis added)
[8] The appellant introduced before the Tribunal three kinds of evidence: end-use certificates from customers, testimonies of two executives of the appellant and project diagrams. The testimonies of the two executives related to the five project diagrams which they asserted provided evidence of some actual use of the goods in issue in process control apparatus of the same kind as those covered by item 9032.89.20. Counsel for the respondent conceded that the diagrams related to the goods in issue and, therefore, that there was some evidence of actual use of these goods in process control apparatus. However, he argued that the use related to only a small portion of the imported goods and, consequently, the evidence was not probative. In addition, the Tribunal also recognized at page 12 of its decision that one executive, Mr. Menager, explained how the goods in issue were used in the process control applications.
[9] In these circumstances, one must conclude that the "actual use of some of the goods in issue" test adopted by the Tribunal was met. Perhaps, the appellant could have provided more evidence of actual use of the goods in issue. But it cannot be said that, in the words of the Tribunal, "some" evidence was not presented to that effect.
[10] We are in no position to determine what the Tribunal would have done had it taken notice of the evidence before it. We can only return the matter to it for a new adjudication on the appellant's claim on the basis that there was evidence that some of the goods in issue were actually used in process control apparatus.
[11] For these reasons, the appeal will be allowed with costs, the decision of the Tribunal set aside and the matter will be referred back to the Tribunal for a redetermination of the appellant's claim to the benefits of Code 2101 in conformity with these reasons.
GILLES LÉTOURNEAU
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