Joyal,
J.:—This
is
an
action
for
debt
instituted
by
the
plaintiff,
Her
Majesty
the
Queen,
against
the
defendant,
Jay
Norris
Canada
Inc.
The
trial
was
heard
in
Montreal
on
January
21
and
22,
1986.
The
debt
in
the
amount
of
$290,480.15
arises
from
an
alleged
shortfall
in
the
customs
duties
and
sales
taxes
imposed
under
the
Customs
Act,
R.S.C.
1970,
c.
C-40,
and
the
Excise
Tax
Act,
R.S.C.
1970,
c.
E-13,
by
reason
of
an
underestimation
of
the
value
for
duty
of
certain
goods
imported
by
the
defendant
between
January
1,
1979
and
September
1,
1981.
The
debt
comprises
a
shortfall
in
duty
of
$140,141.49,
a
shortfall
of
$90,120.23
in
sales
taxes
and
a
penalty
of
$60,218.43
for
a
total
of
$290,480.15.
The
defendant
is
engaged
in
the
direct
mail
business.
It
publishes
a
catalogue
several
times
a
year,
distributes
it
to
several
hundred
thousand
customers
and
fills
the
mail
orders
it
receives.
In
the
preparation
of
its
catalogues,
the
defendant
has
relied
on
the
services
of
a
New
York
based
company
called
CAN-AM
Studios
Inc.
which
provides
photographic
material
and
layouts
on
order.
In
the
course
of
the
period
in
question,
namely
1979-80-81,
these
products
were
regularly
shipped
to
the
defendant
for
use
in
either
a
processed
or
unprocessed
form
in
the
printing
of
its
catalogues.
On
January
15,
1982,
following
an
investigation
by
customs
officers
in
Revenue
Canada,
the
plaintiff
found
that
the
value
for
duty
of
the
imported
goods
had
been
seriously
undervalued.
Over
the
relevant
period
of
time,
invoices
paid
by
the
defendant
to
its
New
York
supplier
totalled
$874,609.14.
During
the
same
period,
the
value
for
duty
declared
by
the
defendant
amounted
to
$9,404.75.
Concurrently,
the
investigation
disclosed
other
shortfalls
in
declared
values
respecting
importation
from
other
suppliers.
On
a
total
of
true
values
of
$126,509.96,
declared
values
were
$120,920.64
representing
undervaluation
of
$14,994.07.
On
the
reappraisal
prepared
by
the
Crown,
there
was
disclosed
a
total
of
$1,001,119.10
of
appraised
values
in
all
imports
as
against
declared
values
of
$120,920.64
resulting
in
an
underestimation
of
$880,198.46.
The
result
was
a
seizure
under
the
Customs
Act,
a
remission
of
the
total
value
of
the
goods,
a
claim
for
the
shortfall
in
duties
and
taxes
and
the
imposition
of
a
penalty,
the
total
amounting
to
$380,494.96.
This
amount
was
adjusted
downward
in
subsequent
months
until
at
the
opening
of
the
trial,
the
Crown
moved
to
amend
its
claim
and
fix
it
at
$290,480.15.
At
the
trial
before
me,
the
defendant
limited
its
defence
to
the
claim
resulting
from
the
importation
of
goods
supplied
by
CAN-AM
Studios
Inc.
In
the
circumstances,
the
claim
by
the
Crown
with
respect
to
the
other
shortfalls
is
confirmed.
With
respect
to
the
importation
from
CAN-AM
Studios
Inc.,
no
issue
was
raised
by
the
defendant
to
question:
1.
that
the
total
value
of
the
invoices
was
$874,609.14;
2.
that
the
goods
had
been
properly
classified
under
the
appropriate
tariff
items
of
the
Customs
Tariff,
R.S.
1970,
c.
C-41;
3.
that
the
amounts
of
the
shortfall
in
duties
and
sales
taxes
were
correctly
calculated;
4.
that
all
procedures
respecting
the
claim
had
been
respected.
The
defendant
submitted,
however,
that
the
total
debt
claimed
by
the
Crown
was
improperly
assessed.
The
defendant
specifically
alleged
that
the
value
of
the
imported
goods
should
not
be
determined
by
the
total
of
the
invoices
submitted
by
the
supplier
and
paid
by
the
defendant.
These
invoices
admittedly
covered
the
intrinsic
value
of
the
goods.
A
substantial
portion
of
invoiced
costs,
however,
constituted
something
in
the
nature
of
professional
fees
for
advisory
services
performed
by
the
supplier
over
and
above
the
costs
of
the
actual
goods,
these
services
covered
the
gamut
of
merchandising
and
marketing
know-how
which
the
supplier
had
acquired
over
the
years
and
on
which
the
defendant
relied
not
only
for
the
production
of
its
catalogues
but
for
the
timing
of
their
issue,
their
contents
and
the
selection
from
time
to
time
of
the
specific
goods
advertised
in
them
for
which
on
consultants'
advice,
the
defendant
would
have
assurance
of
a
ready
market.
The
defendant
further
alleged
that
in
all
the
circumstances
of
the
case,
a
penalty
amounting
to
50
per
cent
of
the
shortfall
should
not
be
imposed.
The
undervaluation
of
the
goods,
as
the
several
shipments
of
photographic
materials,
layouts
and
the
like
were
declared
for
certain
purposes,
had
been
done
in
good
faith
and
without
fraudulent
or
misleading
intent.
The
defendant
adduced
evidence
by
the
president
of
CAN-AM
Studios
Inc.
This
witness
confirmed
the
information
he
had
already
disclosed
in
a
letter
to
the
plaintiff
dated
March
30,
1982,
that
although
there
was
no
breakdown
in
the
invoices
between
the
costs
of
goods
and
the
costs
of
consulting
services
supplied
to
the
defendant,
his
own
knowledge
of
the
business
indicated
that
the
artwork
accounted
for
only
20
per
cent
of
total
billings.
Consulting
fees
absorbed
40
per
cent,
payouts
to
copywriters
and
the
like
accounted
for
another
20
per
cent
and
the
balance
was
made
up
of
transportation,
courier
services,
messengers
and
other
costs
of
a
similar
nature.
An
officer
of
the
defendant
also
testified
that
the
kind
of
expertise
on
which
the
defendant
relied
was
essential
to
the
profitable
operation
of
its
business.
Canadians
as
a
whole
have
only
limited
experience
in
the
“direct
mail”
business
and
the
services
required
by
the
defendant
were
unavailable
in
Canada.
It
was
a
tricky
business
and
were
it
not
for
the
expert
guidance
provided
by
its
supplier
from
time
to
time,
its
business
would
have
floundered.
This
witness
looked
upon
the
president
of
the
supplier
company
as
a
“guru”
in
the
field
of
direct
mail.
The
witness
stated
that
although
the
services
were
expensive,
they
were
well
worth
the
expense.
He
further
stated
that
the
profitability
experience
had
deteriorated
since
the
relationships
with
the
supplier
had
been
severed
in
1982
and
the
defendant
was
giving
serious
consideration
to
reinstituting
them.
Two
other
witnesses,
one
the
production
manager
of
the
defendant
and
the
other
an
art
co-ordinator,
confirmed
the
consultative
role
of
the
supplier
and
the
frequent
visits
of
its
president
in
Montreal.
On
the
foregoing
evidence,
I
was
urged
by
counsel
for
the
defendant
to
consider
the
following:
1.
Notwithstanding
the
amount
of
the
invoices,
the
value
of
the
goods
supplied
to
the
defendant
represented
only
55
per
cent
of
the
value
for
duty
assessed
by
the
Crown.
2.
This
was
no
case
for
the
imposition
of
a
penalty.
The
experience
of
undervaluation
was
consistent
throughout
the
period
of
importations.
In
this
respect,
counsel
noted
that
the
defendant
went
through
some
1,500
customs
entries
annually
and
there
was
no
overt
evidence
indicating
an
intention
on
the
part
of
the
defendant
to
breach
the
Customs
Act.
Further,
the
record
of
proper
and
honest
declarations
on
customs
values
for
substantially
all
other
imported
goods
indicated
an
honest
approach
to
its
dealings
with
Revenue
Canada.
3.
In
the
absence
of
misrepresentation
or
fraud
in
the
customs
declarations,
the
recovery
limit
under
section
46
of
the
Customs
Act
should
be
limited
to
the
two
years
immediately
preceding
the
notice
of
seizure
of
February
15,
1982,
thereby
eliminating
all
shorfalls
accumulated
during
the
1979
importation
year.
On
behalf
of
the
Crown,
witnesses
testified
as
to
the
investigation
conducted
at
the
defendant's
premises
when
Revenue
Canada
was
alerted
to
the
series
of
undervaluations
which
had
taken
place.
By
comparing
all
the
customs
invoices
with
the
commercial
invoices
and
tracing
all
the
defendant's
cancelled
cheques
in
payment
of
them,
they
were
able
to
recapitulate
the
whole
history
of
importation
of
the
goods.
They
also
produced
copies
of
all
the
supplier's
invoices
which,
on
their
face,
provide
a
list
of
goods
supplied
with
no
clear
or
obvious
reference
to
other
services
which
might
have
been
performed
by
the
supplier
to
the
defendant.
They
further
testified
that
in
the
absence
of
any
clear
evidence
as
to
the
fair
market
value
for
the
goods,
the
value
set
down
in
the
commercial
invoices
should
prevail.
I
might
add
here
that
the
witness
who
had
conducted
the
investigation
gave
a
positive
response
on
cross-examination
as
to
whether
the
defendant
and
its
staff
had
provided
full
co-operation
in
the
conduct
of
the
investigation.
On
behalf
of
the
Crown,
counsel
argued
that:
1.
The
valuation
of
the
goods
based
on
the
amount
of
invoices
paid
by
the
defendant
to
its
supplier
represented
the
true
value
of
the
goods
and
should
not
be
disturbed.
2.
In
the
absence
of
any
evidence
of
fair
market
value,
the
price
paid
by
the
defendant
to
its
supplier
was
the
value
for
duty
and
there
should
be
no
adjustment.
3.
The
goods
themselves
reflected
all
the
intangible
values
of
talent,
expertise
and
know-how
of
the
supplier
and
these
values
were
simply
incorporated
into
the
price
and
are
an
integral
element
of
that
price.
4.
The
whole
history
of
the
importation
of
these
goods
and
of
the
values
declared
on
them
by
the
defendant
as
compared
to
the
invoice
values
was
evidence
of
an
unconscionable
attitude
or
culpable
negligence
for
which
a
penalty
is
warranted.
5.
Counsel
for
the
Crown
further
submitted
that
a
spread
between
$10,000
total
declared
value
for
the
goods
as
against
some
$875,000
total
invoiced
costs
was
sufficiently
critical
that
a
prima
facie
case
for
penalty
was
made
out
which
could
only
be
rebutted
by
the
defendant
on
strong
and
credible
evidence.
The
evidence
submitted
by
the
defendant
in
this
respect
fell
short
of
the
mark
and
the
amount
for
penalty
which
the
Crown
had
previously
reduced
by
half
should
not
be
varied.
6.
It
followed,
said
the
Crown,
that
if
the
penalty
be
confirmed,
the
two-year
limitation
provided
in
subsection
46(4)
did
not
apply
to
exclude
the
Crown's
reappraisal
for
the
year
1979
and
to
limit
it
to
the
two
subsequent
years.
I
must
now
make
certain
findings
based
on
the
evidence
before
me.
In
this
respect,
I
must
bear
in
mind
the
provisions
of
section
248
of
the
Customs
Act
which
read
as
follows:
248.
(1)
In
any
proceedings
instituted
for
any
penalty,
punishment
or
forfeiture
or
for
the
recovery
of
any
duty
under
this
Act,
or
any
other
law
relating
to
the
customs
or
to
trade
and
navigation,
in
case
of
any
question
of,
or
relating
to
the
identity,
origin,
importation,
lading
or
exportation
of
any
goods
or
the
payment
of
duties
on
any
goods,
or
the
compliance
with
the
requirements
of
this
Act
with
regard
to
the
entry
of
any
goods,
or
the
doing
or
omission
of
anything
by
which
such
penalty,
punishment,
forfeiture
or
liability
for
duty
would
be
incurred
or
avoided,
the
burden
of
proof
lies
upon
the
owner
or
claimant
of
the
goods
or
the
person
whose
duty
it
was
to
comply
with
this
Act
or
in
whose
possession
the
goods
were
found,
and
not
upon
Her
Majesty
or
upon
the
person
representing
Her
Majesty.
(2)
Similarly,
in
any
proceedings
instituted
against
Her
Majesty
or
any
officer
for
the
recovery
of
any
goods
seized
or
money
deposited
under
this
Act
or
any
other
such
law,
if
any
such
question
arises,
the
burden
of
proof
lies
upon
the
claimant
of
the
goods
seized
or
money
deposited,
and
not
upon
Her
Majesty
or
upon
the
person
representing
Her
Majesty.
It
follows
from
this
statutory
provision
that
the
burden
of
proof
is
as
light
on
the
plaintiff
as
it
is
heavy
on
the
defendant.
Whatever
the
burden
on
the
plaintiff,
the
evidence
it
submitted
on
its
investigation,
on
all
the
customs
entries,
on
the
invoices
and
on
the
determination
of
the
applicable
tariff
items
and
on
all
the
mathematical
calculations
flowing
from
it
establishes
for
the
plaintiff
a
strong
prima
facie
case.
More
than
that,
the
defendant
does
not
dispute
the
total
amount
of
invoices,
the
tariff
classification
and
the
exigible
duties
and
sales
taxes
thereon.
The
defendant's
case
is
limited
to
varying
the
total
dutiable
value
of
the
imported
goods
so
as
to
account
for
the
consultation
value
in
the
invoices
and
to
eliminating
the
penalty
and
as
a
statutory
consequence,
to
limiting
the
reappraisal
period
to
the
years
1980
and
1981.
I
find
on
the
evidence
adduced
by
the
defendant
that,
notwithstanding
counsel's
able
argument,
the
onus
on
the
defendant
with
respect
to
the
penalty
has
not
been
met.
The
invoices
submitted
over
more
than
two
and
a
half
years
by
the
supplier
to
the
defendant
describe
in
succinct
terms
the
value
ascribed
to
the
various
items
of
artwork
prepared
by
the
supplier
and
which
represent,
in
the
absence
of
anything
else,
the
value
of
this
artwork.
I
might
take
Invoice
No.
1079
of
January
31,
1979
listing
a
"32
page
March
Catalog”
at
$15,524
including
“layout,
type,
copy,
mechanical,
models,
photography,
retouching
and
messenger."
There
is
attached
to
that
invoice
a
list
of
110
photographic
items
appearing
in
the
catalogue
plus
lists
of
illustrations
and
retouching
items.
Invoice
Nos
1080
to
1086
are
for
amounts
between
$120
and
$300
covering
individual
photographs,
single
page
inserts
and
most
of
them
contain
the
notation
"includes:
layout,
copy,
type,
photography,
retouching,
mechanical
and
darkroom.”
Invoice
No.
1188
of
March
31,
1979
is
in
the
amount
of
$10,056.36
and
refers
to
the
"May
1979
Catalog.”
It
contains
a
list
of
40
"chromes
from
art,"
some
14
“Colour
set-ups,’
some
15
retouching
items
and
some
four
"illustrations."
Invoice
No.
1194
of
the
same
date
in
the
amount
of
$27,814.25
lists
some
four
pages
of
"chromes
from
art,’
more
than
three
pages
of
colour
set-ups,
and
three
pages
of
retouching
items.
The
whole
invoice
contains
some
nine
pages.
The
pattern
is
substantially
the
same
in
all
the
invoices
covering
the
period
1979,
1980
and
1981.
The
declared
value
for
1979
was
$1,068.91
as
against
an
invoice
value
of
$527,164.74.
For
1980,
the
spread
was
between
$6,087.84
declared
value
as
against
$273,103.80
invoice
value.
For
1981,
the
spread
was
between
$2,248.00
as
against
$74,340.60.
Over
the
period
covered
by
the
investigation,
the
declared
value
of
the
goods
delivered
by
the
supplier
amounted
to
$9,404.75
as
against
an
invoice
value
of
$874,609.14.
I
add
to
what
might
be
called
a
gross
discrepancy
in
declared
and
invoice
values,
the
discrepancy
in
the
description
of
the
goods
in
the
customs
invoices
and
the
description
of
the
same
goods
in
the
commercial
invoices.
This
is
not
to
suggest
that
a
prima
facie
case
for
penalty
or
for
the
application
of
section
192
of
the
Customs
Act
is
unrebuttable.
The
case
of
The
Queen
v.
Clouston
Foods
Canada
Ltd.
(1982),
4
C.E.R.
167,
is
one
where
Mr.
Justice
Walsh
of
this
Court
found
for
the
importer
and
dismissed
the
claim
for
penalty.
I
only
wish
to
underline
that
the
provisions
of
paragraph
192(1)(c)
must
be
read
in
conjunction
with
subsection
248(1)
of
the
statute
which
imposes
on
an
importer
the
burden
of
proving
that
a
penalty
should
not
be
imposed.
I
should
cite
here
the
observation
of
Mr.
Justice
Addy
also
of
this
Court
in
The
Queen
v.
Mondev
Corp.
Ltd.
(1974),
33
C.P.R.
(2d)
193
at
199:
In
considering
the
meaning
of
the
words
“to
make
out
a
false
invoice”
in
the
context
of
s.
192
of
the
Customs
Act
one
must
consider
the
general
character
of
the
words
creating
other
offences
in
the
same
section.
All
of
these
words
imply
something
fraudulent,
something
furtive
or
an
intention
to
deprive
the
Crown
of
revenue.
From
the
fraudulent
element
contained
in
all
of
these
expressions,
it
appears
that
Parliament
intended
the
word
“false”
to
include
an
element
of
blameworthy
intention
and
did
not
intend
the
word
to
be
merely
synonymous
of
“incorrect”
or
“erroneous”.
It
would
seem,
therefore,
that
in
order
to
result
in
forfeiture
under
s.
192,
there
must
exist
an
intention
on
the
part
of
a
person
to
deprive
the
Crown
of
some
duty.
Altogether
apart
from
s.
248
of
the
Act,
which
relates
to
onus,
the
intention
required
in
s.
192
would
normally
be
implied
by
the
mere
fact
that
the
declaration
as
to
value
was
not
a
true
one,
if
no
evidence
were
led
by
the
defendant
which
would
tend
to
contradict
or
negate
any
wilful
or
improper
conduct
or
intention
on
the
part
of
the
person
importing
the
goods.
In
the
case
at
bar,
although
innocent
intent
and
clerical
error
were
pleaded
in
the
statement
of
defence,
there
was
no
evidence
of
any
kind
adduced
at
trial
as
to
what
the
clerical
error
was
or
where
or
how
it
occurred,
or
to
establish
good
faith
or
lack
of
intention
to
undervalue,
on
the
part
of
the
defendant;
the
mere
statement
that
there
was
a
clerical
error,
without
more,
is
not
sufficient.
Even
if
proof
of
good
faith
or
of
an
innocent
intent
would
exempt
a
person
from
the
operation
of
s.
192,
it
seems
clear
to
me
that,
once
undervaluation
for
duty
purposes
has
been
established,
the
defendant
would
be
obliged
to
adduce
some
credible
evidence
of
good
faith
and
lack
of
blameworthy
conduct
on
its
part.
[My
emphasis.]
These
comments
were
approved
by
Mr.
Justice
Walsh
and
indeed
were
the
basis
on
which
he
confirmed
the
penalty
imposed
on
the
importer
in
The
Queen
v.
Kay
Silver
Inc.
(1980),
2
C.E.R.
307.
Although
it
was
stated
at
314:
“I
cannot
conclude
that
these
omissions
by
Plaintiff’s
agents
[read
Defendant's
agents]
in
a
few
of
the
declarations
.
.
.
is
indicative
of
a
general
intent
to
defraud
.
.
.,”
His
Lordship
nevertheless
found
for
the
Crown.
I
am
faced
with
the
same
kind
of
situation.
If
I
should
confirm
the
penalty,
it
is
not
on
the
basis
that
the
defendant
is
completely
blameworthy
and
that
its
conduct
was
wanton
throughout.
It
is
only
to
find
that
a
simple
assertion
by
a
defendant
that
he
was
acting
in
good
faith
or
in
ignorance
of
the
law
is
not
sufficient
to
rebut
or
discharge
the
burden
which
a
“false”
declaration
immediately
creates
and
which
subsection
248(1)
enshrines.
I
should
also
add
that
there
are
degrees
of
fault,
culpability,
wilfulness
or
negligence
whenever
a
situation
like
the
present
one
occurs.
It
is
in
evidence
that
at
some
stage
of
the
proceedings
prior
to
trial
and
after
any
number
of
representations
had
been
made
by
the
defendant
at
the
administrative
level,
the
Crown
presumably
found
sufficient
extenuating
circumstances
to
cut
the
original
100
per
cent
penalty
to
50
per
cent.
There
is,
I
am
sure,
some
comfort
from
this,
but
on
the
evidence
before
me,
I
cannot
make
the
situation
any
more
comfortable
for
the
defendant.
The
penalty
being
confirmed,
it
follows
that
the
other
claim
by
the
defendant
that
the
reappraisals
be
limited
to
importations
for
the
years
1980
and
1981
cannot
be
entertained.
There
is
left
the
argument
by
the
defendant
that
I
should
allow
by
way
of
discount
the
value
of
the
professional
consulting
services
provided
by
CAN-
AM
Studios
Inc.
and
which,
according
to
the
defendant's
evidence,
are
incorporated
into
the
invoices
for
goods
delivered.
Such
a
discount
would
reduce
the
value
of
the
goods
with
a
resulting
reduction
in
duties,
taxes
and
penalty.
I
have
reviewed
carefully
the
evidence
of
both
the
president
of
the
supplier
company
and
the
evidence
of
the
defendant's
own
staff.
They
have
all
related
and
mutually
confirmed
the
number
of
consultations,
attendances,
meetings
and
other
relationships
between
the
parties
in
matters
which
were
outside
the
scope
of
the
design,
production
and
delivery
functions
described
in
the
commercial
invoices.
The
secretary-treasurer
of
the
defendant
made
a
point,
to
which
I
have
earlier
referred,
of
the
extent
to
which
he
relied
on
the
savvy
and
experience
of
the
supplier
which
had
nothing
to
do
with
the
artwork
supplied.
Consultations
were
with
respect
to
marketing
techniques,
commercialization
approaches,
content
and
timing
of
catalogue
distribution
and
all
of
the
other
advisory
services
necessarily
involved
in
a
highly
specialized
industry
where
all
competitors
have
highly
imaginative
talents.
That
witness
ascribed
the
role
of
the
supplier
in
this
respect
as
having
been
essential
to
its
financial
success.
He
went
so
far
as
to
say
that
he
was
contemplating
going
back
to
the
supplier
to
renew
their
relationship.
I
must
say
in
this
regard
that
such
evidence
appears
plausible.
It
is
not
the
kind
of
self-serving
assertion
which
immediately
raises
eyebrows.
One
may
well
imagine
that
by
the
nature
of
the
products
or
goods
which
incorporate
so
many
intangible
values
reflected
in
the
cost,
there
might
also
exist
intangible
values
which
are
not
accumulated
in
the
cost
but
which
were
nevertheless
incorporated
directly
or
by
inference
in
the
total
invoice
price.
If
I
should
find
credibility
in
this
respect,
it
is
not
because
great
weight
should
be
given
to
mere
self-serving
assertions.
It
is
because
the
assertion
rests
upon
some
firm
objective
evidentiary
base.
I
had
occasion
in
an
earlier
case
to
suggest
that
if
an
assertion
is
directly
or
indirectly
confirmed
by
or
is
consistent
with
overt
and
objective
fact,
the
two
together
may
make
for
persuasive
if
not
conclusive
evidence.
Such
is
the
case
before
me
when
scrutinizing
the
mass
of
invoices
submitted
by
the
supplier
during
the
period
of
January
1979
to
September
1981.
The
item
“PRESS
OK”
contained
in
many
of
them
was
described
as
personal
attendances
by
the
supplier’s
president
on
matters
specifically
related
to
the
clearing
of
particular
catalogue
issues.
On
this
evidentiary
base,
the
assertions
of
the
defendant
carry
more
weight
and,
in
my
view,
I
should
respond
to
the
issue
raised.
In
doing
so,
however,
I
must
bear
in
mind
that
the
kind
of
expertise
in
the
“direct
mail”
business
attributable
to
the
supplier
is
substantially
the
kind
of
expertise
reflected
in
the
price
it
charges
to
its
customer
for
the
goods.
The
kind
of
commercial
artwork
supplied
incorporates
the
accumulation
of
talent,
experience,
techniques
and
know-how.
The
value
of
the
end
product
cannot
be
limited
to
the
cost
of
the
basic
material,
whether
films,
transparencies,
illustrations,
drawings
or
layout.
I
will
agree
with
counsel
for
the
Crown
that
the
invoice
prices
disclosed
in
the
evidence
establish
a
good
prima
facie
case
that
such
prices
represent
the
true
value
of
the
goods
for
customs
purposes.
The
Crown
is
on
strong
ground
in
that
respect.
Any
finding
favourable
to
the
importer
and
establishing
a
base
for
adjustment
would
have
to
be
on
the
basis
that
the
consultations
and
other
services
included
in
an
invoice
price
are
effectively
unrelated
to
the
product
but
have
nevertheless
found
themselves
incorporated
in
the
invoice
price.
To
make
a
finding
on
any
other
base
would
make
it
an
open
season
for
importers
of
similar
goods
to
discount
their
invoice
prices
at
will.
Concurrently,
in
directing
one's
mind
to
the
principles
underlying
the
Customs
Act
and
to
any
enquiry
by
this
Court
to
determine
a
proper
value
for
duty,
regard
must
be
had
to
the
provisions
of
subsections
42(1)
and
(2)
of
the
Act.
Paragraph
42(1)(b)
provides
that
the
money
value
of
any
so-
called
royalty,
rent
or
charge
for
use
of
any
machine
or
goods,
not
applicable
in
the
country
of
origin
but
charged
to
the
importer,
is
added
to
the
value
of
the
goods
for
duty
purposes.
Similarly,
subsection
42(2)
adds
to
such
value
for
duty
the
money
value
of
any
special
arrangement
between
importer
and
exporter
because
of
the
exportation
or
intended
exportation
or
the
right
to
a
territorial
franchise
to
the
importer.
These
provisions
make
it
clear
that
the
price
charged
by
the
seller
to
the
buyer
of
imported
goods
and
reflected
in
the
invoices
is
not
necessarily
determinative
of
the
value
for
duty
when
the
evidence
discloses
that
such
price
represents
an
undervaluation.
Conversely,
however,
the
price
should
be
no
more
determinative
of
the
value
for
duty
when
the
evidence
discloses
an
overvaluation.
A
court's
enquiry
must
always
put
ostensible
values
to
evidentiary
tests
so
that,
pursuant
to
section
102
of
the
statue,
the
“true
amount
of
customs
duties"
may
be
determined.
I
have
indicated
before
that
the
defendant's
statements
of
other
duties
or
services
having
been
performed
by
its
supplier
are
buttressed
by
the
fact
that
many
invoices
disclose
in
an
overt
and
objective
manner
a
pattern
of
services
which
are
unrelated
to
the
value
for
the
goods
and
which
should
not
be
incorporated
in
their
price.
There
are
in
that
regard
specific
items
set
out
in
these
invoices
which
provide
a
quick
dollar
value.
I
find
as
a
fact
that
there
were
other
such
unrelated
services
performed
which
were
incorporated
in
the
price
of
the
goods.
The
defendant
estimates
these
unrelated
services
at
45
per
cent
of
the
total
invoice
prices
charged
to
it.
The
supplier's
evidence
is
that
on
a
sort
of
internal
cost
accounting
estimate,
these
unrelated
services
would
comprise
some
75
per
cent
of
the
total
invoice
prices.
I
must
discount
these
estimates
by
a
considerable
margin.
As
far
as
the
supplier
is
concerned,
its
costs
breakdown
is
of
little
relevance
to
the
determination
of
value
for
customs
duty
purposes.
As
for
the
defendant's
estimate,
there
is
very
little
objective
evidence
to
support
it
at
the
rate
suggested.
The
Court
must
therefore
make
its
own
determination
of
the
measure
of
the
“unrelated”
services
to
include
those
specifically
itemized
and
those
deemed
to
be
incorporated
in
the
invoice
price.
My
determination
must
take
into
account
the
special
relationships
between
supplier
and
importer
involving
a
quantum
of
costs
which
cannot
be
mathematically
established
or
on
which
extrapolation
on
hard
data
cannot
be
made.
I
must
also
consider
the
very
nature
of
the
goods
sold
and
the
difficulty
in
quantifying,
analyzing
or
indeed,
justifying
according
to
industrial
accounting
methods
the
higher
or
lower
intangible
values
of
such
unrelated
services
as
have
been
incorporated
in
the
invoice
prices.
Finally,
I
must
consider
at
all
times
that
by
the
very
nature
of
the
relationships
involving
a
mix
of
expertise
relating
to
the
artwork
sold
and
which
is
properly
a
component
of
its
value
and
of
expertise
relating
to
the
more
strategic,
tactical
and
marketing
needs
of
the
importer,
no
calculated
money
values
may
be
established.
One
must
deal
with
proportions
or
percentages.
In
this
regard,
and
on
the
circumstances
related
to
me
and
on
the
narrow
ground
of
evidence
which
I
have
indicated,
I
would
fix
that
proportion
at
15
per
cent
of
the
total
invoice
prices
paid
by
the
defendant
to
its
New
York
supplier.
The
balance
represents
the
value
for
duty.
I
should
leave
it
to
the
parties
to
agree
on
the
consequent
adjustments
to
the
total
debt
claimed
by
the
Crown
and
to
advise
the
Court
so
that
the
resulting
amounts
may
be
incorporated
in
the
formal
judgment.
I
should
remain,
in
the
meantime,
seized
of
the
matter.
The
plaintiff
is
entitled
to
costs.
Judgment
accordingly.
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