Date: 20091126
Docket: A-428-08
Citation: 2009 FCA
345
CORAM: EVANS J.A.
SHARLOW J.A.
RYER J.A.
BETWEEN:
HELLY
HANSEN LEISURE CANADA INC.
Appellant
and
THE PRESIDENT OF THE CANADA
BORDER SERVICES AGENCY
Respondent
Heard at Toronto, Ontario, on November
26, 2009.
Judgment delivered from the
Bench at Toronto,
Ontario, on November
26, 2009.
REASONS FOR JUDGMENT OF THE COURT BY: RYER
J.A.
Date: 20091126
Docket: A-428-08
Citation: 2009 FCA 345
CORAM: EVANS
J.A.
SHARLOW
J.A.
RYER
J.A.
BETWEEN:
HELLY HANSEN LEISURE CANADA INC.
Appellant
and
THE PRESIDENT OF THE CANADA
BORDER SERVICES AGENCY
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Toronto, Ontario, on November 26,
2009)
RYER J.A.
[1]
This is an
appeal by Helly Hansen Leisure Canada Inc. (“Helly Hansen”) from a decision
([2008] C.I.T.T. No. 35) of the Canadian International Trade Tribunal (the
“Tribunal”), dated June 2, 2008, which confirmed the decision of the President
of the Canada Border Services Agency (the “CBSA”) with respect to the
classification of certain women’s jackets under the schedule (the “Schedule”)
to the Customs Tariff, S.C. 1997, c. 36 (the “Tariff”).
[2]
The appeal
was brought under subsection 68(1) of the Customs Act, R.S.C. 1985, c. 1
(2nd Supp.) (the “Act”), which permits appeals of decisions of the Tribunal
made under section 67 of the Act on questions of law.
[3]
The
jackets are constructed with an outer shell of plastic material with which a
textile fabric is laminated. The issue is whether those jackets should be
classified under Tariff item No. 6210.300 (other garments made up of fabrics of
heading No. 59.03 of the type described in subheading Nos. 6202.11 to 6202.19)
as found by the CBSA, or under Tariff item No. 3926.20.95 (other articles of
apparel and clothing accessories of plastics combined with knitted or woven
fabrics, bolducs, nonwovens or felt) as asserted by Helly Hansen.
[4]
The
nomenclature of the Tariff that CBSA determined to be applicable to the jackets
and that Helly Hansen asserts to be applicable to the jackets is reproduced in
the appendix to these reasons. Also reproduced in the appendix are the relevant
portions of the General Rules in the schedule and the Section and Chapter
Notes.
[5]
The
Tribunal determined that the classification of the jackets was to be made by
reference to Rule 1 of the General Rules in the Schedule and the applicable
Section or Chapter notes, in particular Note 2 (m) to Chapter 39, Note 1(h) to
Section XI, Note 2(a)(5) to Chapter 59 and a portion of the Chapter 39
Explanatory Notes.
[6]
The
Tribunal also determined that the jackets were required to be classified under
heading No. 59.03, as asserted by the CBSA, unless the textile fabric that was
laminated with the plastic material was “present merely for reinforcing
purposes”.
[7]
In
paragraph 34 of its reasons, the Tribunal determined that “an important
purpose of the textile fabric is to reinforce the plastic component of the
goods in issue” (our emphasis). However, the Tribunal held that because the
fabric was woven with a visual pattern, it was “figured” as contemplated by
Note (d) under the heading “Plastics and textile combinations” in the
Explanatory Notes to Chapter 39. As a result, the Tribunal concluded that the
textile fabric had a function beyond mere reinforcement of the plastic
component. This conclusion was further supported, according to the Tribunal in
paragraph 51 of its reasons, by evidence that
the
appearance and colour of the textile fabric, its waterproof and water-repellent
characteristics, and its role in the drape and visual appeal of the garment are
all clearly of interest to potential buyers.
These findings led the Tribunal to conclude that the textile
fabric that was laminated with the plastic material was not present “merely for
reinforcing purposes” and that the CBSA’s classification of the jackets was
correct.
[8]
The
Tribunal also held that the fact that the CBSA may have given different rulings
with respect to the classification of the similar goods was not relevant and
such rulings were not binding upon it.
[9]
The
standard of review that this Court must apply in relation to the appeal of the
Tribunal’s decision is reasonableness. (See Jam Industries Ltd. v. Canada (Border Services Agency), 2007 FCA 210, 367 N.R. 89.)
With respect to the application of the reasonableness standard, the Supreme
Court of Canada stated at paragraph 47 of its reasons in Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008
SCC 9:
A court
conducting a review for reasonableness inquires into the qualities that make a
decision reasonable, referring both to the process of articulating the reasons
and to outcomes. In judicial review, reasonableness is concerned mostly with
the existence of justification, transparency and intelligibility within the
decision-making process. But it is also concerned with whether the decision
falls within a range of possible, acceptable outcomes which are defensible in
respect of the facts and law.
[10]
In this
appeal, Helly Hansen argues that the Tribunal erred in law by not considering
the purpose of the presence of the textile fabric and specifically that the
Tribunal ignored the “overwhelming evidence that the jackets were designed not
for fashion purposes including drape or visual appeal, but rather for the
performance characteristics” (appellant’s factum paragraph 27). In our view,
these arguments cannot be accepted.
[11]
The
Tribunal interpreted Note 2(a)(5) to Chapter 59 as requiring the exclusion from
Heading 59.03 of a textile fabric laminated with plastic unless the textile
fabric is present only for the purpose of reinforcing the plastic material. In
our view, this interpretation is reasonable.
[12]
The
Tribunal then went on to determine whether the presence of the textile fabric
served only to reinforce the plastic material or whether it had other
functions. Accordingly, it cannot be said that the Tribunal failed to consider
whether the presence of the textile fabric served a single or multiple
purposes.
[13]
In making
its determination on this issue, the Tribunal considered the evidence of the
witnesses put forward by both parties. The Tribunal did not accept the evidence
of Helly Hansen’s witnesses or accord to their evidence the weight that Helly
Hansen would have liked. However, that does not indicate that the Tribunal
ignored evidence of Helly Hansen’s witnesses.
[14]
The
Tribunal’s evidentiary findings to the effect that the textile fabric was
“figured”, in the sense that it had a decorative pattern produced by the weave,
clearly indicate that it concluded that there was a purpose for the presence of
the textile fabric other than merely to reinforce the plastic material. In our
view, having regard to the evidence that was put before the Tribunal, that
conclusion was reasonable.
[15]
Relying on
section 6 of the Tariff Classification Advance Ruling Regulations,
SOR/2005-256, Helly Hansen also argued that the Tribunal should be bound by
prior rulings that were given by the CBSA in circumstances which Helly Hansen believes
to be sufficiently similar to those under consideration. That provision reads
as follows:
Advance
Ruling
6. An
officer shall give consistent advance rulings with respect to applications for
advance rulings based on facts and circumstances that are identical in all material
respects.
[16]
In our
view, that provision applies to the officer who gives advance rulings, not to
the Tribunal. The determination by the Tribunal of whether the CBSA erred in
any particular decision cannot be dependent upon prior decisions of the CBSA. In
this case, the Tribunal was required to base its decision upon its assessment
of the applicable law, and was not bound by prior CBSA decisions. In reaching
its decision on this basis, the Tribunal committed no error.
[17]
Finally,
Helly Hansen argues that the Tribunal erred by not considering Rule 3(b) of the
General Rules in the Schedule. In reaching its decision, the Tribunal found
that the classification of the jackets could be made on the basis of Rule 1
alone. And, as previously noted, we have not been persuaded that any error on
the part of the Tribunal has been made out in that regard. Accordingly, given
the cascading nature of the General Rules in the Schedule (see Agri Pack
v. Canada (Customs and Revenue Agency), 2005 FCA 414 at paragraph
14, 345 N.R. 1), it was not necessary for the Tribunal to have regard to any
Rule other than Rule 1.
[18]
In
conclusion, we have not been persuaded that the Tribunal made any error of law
in reaching its decision that Helly Hansen’s jackets were properly classified
under Tariff item No. 6210.30.00 (other garments made up of fabrics of heading
No. 59.03 of the type described in subheading Nos. 6202.11 to 6202.19). Accordingly,
the appeal will be dismissed with costs.
"C. Michael Ryer"
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-428-08
An
appeal from the Order of the Canadian International Trade Tribunal (CITT),
dated June 2, 2008, in CITT File No.: AP-2006-054
STYLE OF CAUSE: HELLY
HANSEN LEISURE CANADA INC. v.
THE PRESIDENT OF THE CANADA
BORDER SERVICES AGENCY
PLACE OF HEARING: TORONTO,
ONTARIO
DATE OF HEARING: NOVEMBER 26, 2009
REASONS FOR JUDGMENT OF THE
COURT BY: (EVANS, SHARLOW & RYER JJ.A.)
DELIVERED FROM THE BENCH BY: RYER J.A.
APPEARANCES:
|
Riyaz Dattu
|
FOR
THE APPELLANT
|
|
Derek Rasmussen
|
FOR
THE RESPONDENT
|
SOLICITORS
OF RECORD:
|
Osler, Hoskin & Harcourt LLP
Toronto, Ontario
|
FOR THE APPELLANT
|
|
John H. Sims, Q.C.
Deputy
Attorney General of Canada
|
FOR THE RESPONDENT
|
APPENDIX
Relevant Provisions in the
List of Tariff Provisions
…
39.26 Other
articles of plastics and articles of other materials of headings 39.01 to
39.14.
…
3926.20 -Articles
of apparel and clothing accessories (including gloves, mittens and mitts)
…
3926.20.95 ----Other
articles of apparel and clothing accessories, of plastics combined with knitted
or woven fabrics, bolducs, nonwovens or felt
…
39.26 Other
articles of plastics and articles of other materials of headings 39.01 to
39.14.
…
3926.20 -Articles
of apparel and clothing accessories (including gloves, mittens and mitts)
…
3926.20.95 ----Other
articles of apparel and clothing accessories, of plastics combined with knitted
or woven fabrics, bolducs, nonwovens or felt
…
59.03 Textile
fabrics impregnated, coated, covered or laminated with plastics, other than
those of heading 59.02.
…
62.02 Women’s
or girls’ overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets),
wind-cheaters, wind-jackets and similar articles, other than those of heading
62.04.
-Overcoats,
raincoats, car-coats, capes, cloaks and similar articles:
…
6202.11.00 --Of
wool or fine animal hair
…
6202.12.00 --Of
cotton
…
6202.13.00 --Of
man-made fibres
…
6202.19.00 --Of
other textile materials
…
62.10 Garments,
made up of fabrics of heading 56.02, 56.03, 59.03, 59.06 or 59.07.
…
6210.30.00 -Other
garments, of the type described in subheadings 6202.11 to 6202.19.
…
Notes to Chapter 39 of the
List of Tariff Provisions
…
2. This Chapter does
not cover:
…
(m) Goods of
Section XI (textiles and textile articles);
…
Notes to Section XI of the
List of Tariff Provisions
1. This Section does
not cover:
…
(h) Woven,
knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered
or laminated with plastics, or articles thereof, of Chapter 39;
...
Notes to Chapter 59 of the
List of Tariff Provisions
…
2. Heading 59.03
applies to:
(a) Textile
fabrics, impregnated, coated, covered or laminated with plastics, whatever the
weight per square metre and whatever the nature of the plastic material
(compact or cellular), other than:
…
(5) Plates,
sheets or strip of cellular plastics, combined with textile fabric, where the
textile fabric is present merely for reinforcing purposes (Chapter 39); or
…
Explanatory
Notes to Chapter 39 of the List of Tariff Provisions
…
Plastics and textile
combinations
Wall or ceiling coverings
which comply with Note 9 to this Chapter are classified in heading 39.18.
Otherwise, the classification of plastics and textile combinations is
essentially governed by Note 1 (h) to Section SI, Note 3 to Chapter 56 and Note
2 to Chapter 59. The following products are also covered by this Chapter:
…
(d) Plates,
sheets and strip of cellular plastics combined with textile fabrics (as defined
in Note 1 to Chapter 59), felt or nonwovens, where the textile is present
merely for reinforcing purposes.
In this respect, unfigured,
unbleached, bleached or uniformly dyed textile fabrics, felt or nonwovens, when
applied to one face only of these plates, sheets or strip, are regarded as
serving merely for reinforcing purposes. Figured, printed or more elaborately
worked textiles (e.g., by raising) and special products, such as pile fabrics,
tulle and lace and textile products of heading 58.11, are regarded as having a
function beyond that of mere reinforcement.
Plates, sheets and strip of
cellular plastics combined with textile fabric on both faces, whatever the
nature of the fabric, are excluded from this Chapter (generally heading 56.02,
56.03 or 59.03).
…
Relevant Provisions of the
General Rules for the Interpretation of the Harmonized System and the Tariff
1. The
titles of Sections, Chapters and sub-Chapters are provided for ease of
reference only; for legal purposes, classification shall be determined
according to the terms of the headings and any relative Section or Chapter
Notes and, provided such headings or Notes do not otherwise require, according
to the following provisions.
2.
…
(b) Any
reference in a heading to a material or substance shall be taken to include a
reference to mixtures or combinations of that material or substance with other
materials or substances. Any reference to goods of a given material or
substance shall be taken to include a reference to goods consisting wholly or
partly of such material or substance. The classification of goods consisting of
more than one material or substance shall be according to the principles of
Rule 3.
3.
…
(b) Mixtures,
composite goods consisting of different materials or made up of different
components, and goods put up in sets for retail sale, which cannot be
classified by reference to Rule 3 (a), shall be classified as if they consisted
of the material or component which gives them their essential character,
insofar as this criterion is applicable.
…
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