[1] This is an appeal, pursuant to section 68 of the Customs Act, R.S. 1985, c. 1, by Mon-Tex Mills Ltd. (the "appellant"), from a decision of the Canadian International Trade Tribunal (the "CITT") dated September 23, 2000, cited as [2003] CITT 81, which confirms the decision of the Commissioner of Customs as to the classification of certain goods under the Schedule to the Customs Tariff, S.C. 1997, c. 36.

[2] By virtue of section 68 of the Customs Act, this appeal is limited to questions of law. It is well established that the standard of review for tariff classification decisions of the CITT is reasonableness, which means that the decision must stand up to a somewhat probing examination: Minister of National Revenue (Customs & Excise) v. Schrader Automotive Inc. (1999), 240 N.R. 381 at paragraph 4 (C.A.), Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748 at paragraph 56.

[3] At issue is the classification of shower curtain sets which consist of a double swag polyester shower curtain woven from yarns of polyester (a man-made filament), two tie-backs made of material identical to that of the shower curtain, plastic hooks and a vinyl liner (the "goods"). The goods retail for approximately $20.

[4] The shower curtain sets are made up of more than one component. The vinyl lining by itself would be classified as "other household articles of plastics" under tariff item no. 3924.90.00. The double swag polyester curtain by itself would be classified as "other curtains of synthetic fibres" under tariff item no. 6303.92.90. The parties are agreed that the classification of these composite goods should be determined pursuant to Rule 3(b) of the General Rules for the Interpretation of the Harmonized System, which reads as follows:

3. When by application of Rule 2(b) or for any reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

(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. [Emphasis Added]

The specific question before the CITT was whether the goods should be classified as "other curtains of synthetic fibres" under tariff item no. 6303.92.90 as determined by the Commisioner, or "other household articles of plastics" under tariff item no. 3924.90.00, as submitted by the appellant.

[5] Section 11 of the Customs Tariff directs that in interpreting the headings and sub-headings found in the Schedule to the Customs Tariff, regard must be had, inter alia, to the Explanatory Notes to the Harmonized Commodity Description and Coding System. Therefore, Rule 3(b) of the General Rules for the Interpretation of the Harmonized System, quoted above, must be read in the light of Explanatory Note VIII which reads as follows:

(VIII) The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

[6] Thus, the classification of the goods will depend on a determination of their "essential character". The CITT concluded that the goods' decorative aspects were predominant and that consequently, their essential character was to be found in the double swag polyester shower curtain. The relevant passages of the decision, at page 5, are fairly brief and I hereby reproduce them:

The Tribunal is of the view that all shower curtains, be they simple sheets of waterproof material or more complex sets, like the goods in issue, are designed to prevent water from going beyond the shower/bathtub area. A simple examination of the goods in issue clearly shows that it is their fashion elements and decorative nature that distinguishes them from simple vinyl shower liners. The Tribunal was not convinced by the evidence adduced at the hearing that the utilitarian nature of the goods in issue is of greater importance than their decorative properties. Rather, in the Tribunal's view, the evidence on file indicates that, in the packaging and promotional materials of the goods in issue, the emphasis is placed on the design and decorative elements. Indeed, both the packaging and the promotional materials merely mention the vinyl liner as an item that is "included" in the package, which emphasizing the decorative aspects of the outer double swag polyester shower curtain and matching tiebacks. Furthermore, the weight and value of the outer double swag polyester shower curtain are substantially greater than those of the vinyl liner, which remains essentially the same irrespective of the price of the various sets that are before the Tribunal in this appeal. [FOOTNOTES OMITTED]

Accordingly, the Tribunal is of the view that it is the outer double swag polyester shower curtain that gives the whole its essential character. Classification of the goods in issue is, therefore, directed in accordance with that item, which is a good of tariff item no. 6303.92.90.

[7] Mr. Kaylor, on behalf of the appellant, submits that the CITT erred in law in misinterpreting the words "essential character" found in Rule 3(b). He argues that by reason of its finding that the goods were designed to contain water within a certain area, namely the bath or shower, the CITT could not conclude, as it did, that the goods found their essential character in their decorative elements.

[8] This error, according to Mr. Kaylor, results from the CITT's failure to properly interpret the word "essential". Specifically, Mr. Kaylor submits that "essential" means "raison d'être" and that consequently, the search for the essential character of the goods must be one seeking to determine their raison d'être, i.e. the reason for their existence, rather than a search for factors distinguishing the goods from other goods, i.e. from simple vinyl shower liners. Had the CITT searched for the raison d'être of the goods, it would have necessarily, in Mr. Kaylor's submission, found that their essential character was in their water protection elements.

[9] A similar issue was addressed recently by the United States Court of International Trade (the "U.S. Trade Court") in Better Home Plastics Corp. v. United States, at 20 C.I.T. 221; 916 F. Supp. 1265; 1996 Ct. Intl. Trade LEXIS 42; SLIP OP. 96-35, which the appellant submitted to us for consideration. In that case, the factual issues and applicable law were, for all intents and purposes, identical to those in the present matter. At issue was the classification of shower curtain sets consisting of an outer textile curtain, inner plastic magnetic liner and plastic hooks. The U.S. Trade Court concluded that the essential character of the shower curtain sets was its ability to repel water.

[10] Even though the U.S. Trade Court recognized the "desirable decorative characteristics" of the shower curtain sets, it had no hesitation in affirming that it was the plastic liner which provided the indispensable property of preventing the outflow of water and that that characteristic constituted the essential character of the goods. The United States Customs sought judicial review of the decision and, in a unanimous judgment, the United Stated Court of Appeals for the Federal Circuit, at 119 F.3d 969; 1997 U.S. App. LEXIS 17629, dismissed the challenge. At pages 971 and 972 of its decision, the Court made the following remarks:

The Court of International Trade carefully considered all of the facts, and, after a reasoned balancing of all the facts, concluded that Better Home Plastics offered sufficient evidence and argument to overcome the presumption of correctness. The court concluded that the indispensable function of keeping water inside the shower along with the protective, privacy and decorative functions of the plastic liner, and the relatively low cost of the sets all combined to support the decision that the plastic liner provided the essential character of the sets. Contrary to the argument offered by the United States, we are not persuaded that the court erred in looking to analogous areas of law concerning "indispensability" for guidance in analyzing "essential character." The court's decision did not rely solely, or even hinge, on the indispensability of the water-retaining function. The decision was substantially based on the importance of the other functions as well as the cost of the entire set. Therefore, we see no error in the court's ultimate conclusion of essential character in this case. As a result, we also see not error in this case in the court's refusal to reject the essential character rest in favour of the default rule of GRI 3(c).

[11] The CITT was obviously not bound to follow the Better Home decision. However, the approach taken by the U.S. Trade Court is, in my view, instructive with respect to the determination that must be made. Specifically, the case highlights the fact that the purpose of the relevant inquiry is not merely to weigh the various elements of Explanatory Note VIII against one another, but rather to determine the essence or fundamental nature of the goods.

[12] The following definitions of the word "essential" found in dictionaries are helpful in understanding the meaning of the words "essential character". Webster's New World Dictionary, 2^nd College ed., defines the word "essential" as follows:

1. of or constituting the intrinsic fundamental nature of something; basic; inherent [an essential difference].

The Shorter Oxford English Dictionary, Oxford University press, fifth edition 2002 p.860, defines it as:

A. adj. 2. of or pertaining to a thing's essence.

5. constituting or forming part of a thing's essence; fundamental to its composition.

The New Oxford Dictionary of English, Clarendon Press - Oxford 1998 p.628, defines it as:

Fundamental or central to the nature of something or someone.

And Le Robert Dictionnaire de la langue française, Dictionnaire le Robert Paris 1992, p.144, defines it as:

I Adj.A didact:3. Littér: Qui appartient à l'essence. les caractères, les attributs essentiels d'un objet. öCaractéristique, constitutif, intrinsèque.

B. Cour.: 2. sans compl. (opposé à secondaire).Qui est le plus important öPrincipal. Les traits, les caractères essentiels.

[13] All of these definitions emphasize the fact that to be essential, a characteristic must pertain to the essence of something. It must be fundamental. Thus, the CITT's mission, if I can characterize the CITT's task in that fashion, was to determine the fundamental nature of the goods in issue.

[14] In this case, there were two competing theories. The appellant argued that the essential character of the goods was determined by the practical function of the vinyl liner, which prevented water from leaving the shower/bathtub area. The Commissioner argued that the essential character of the goods was determined by the decorative function of the polyester curtain.

[15] The CITT found as a fact that the goods were designed to prevent water from leaving the shower/bathtub area. That would be consistent with the conclusion that the raison d'être or fundamental nature of the goods is to prevent the outflow of water. However, the CITT reached the opposite conclusion, which was that the essential character of the goods was determined by their decorative function.

[16] It is possible to imagine a case in which the decorative elements of a useful consumer product, even one as inexpensive as this one, are so predominant that it would be reasonable for the CITT to conclude that the product is primarily decorative even though it also happens to be useful. If the CITT believed this to be such a case, it was incumbent on the CITT to provide a cogent explanation for reaching that conclusion. It might have been helpful, for example, to understand precisely why the CITT believes that this case compelled a different result than the Better Homes case. However, a careful review of the reasons and the record discloses no basis upon which the CITT could reasonably reach the conclusion it did. In these circumstances, I am unable to find that the decision of the CITT was reasonable.

[17] I would allow this appeal with costs, set aside the decision of the CITT and, making the order that the CITT should have made, allow the appeal from the Commissioner's determination.

"M. Nadon"

J.A.

"I agree.

Marshall Rothstein"

"I agree.

K. Sharlow"

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-579-03

STYLE OF CAUSE: MON-TEX MILLS LTD. v.

THE COMMISSIONER OF THE CANADA CUSTOMS

AND REVENUE AGENCY

PLACE OF HEARING: Ottawa, Ontario.

DATE OF HEARING: August 31, 2004

REASONS FOR JUDGMENT: Nadon J.A.

CONCURRED IN BY: Rothstein J.A.

Sharlow j.A.

DATED: October 15, 2004

APPEARANCES:

Mr. Michael Kaylor

FOR THE APPELLANT

Mr. Jean-Robert Noiseux

Mr. Yannick Landry

FOR THE RESPONDENT

SOLICITORS OF RECORD:

Lapointe Rosenstein - Montreal, Quebec

FOR THE APPELLANT

Morris Rosenberg, Deputy Attorney General of Canada

FOR THE RESPONDENT

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Mon-Tex Mills Ltd. v. Canada (Commissioner of the Customs and Revenue Agency), 2004 FCA 346

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