Gibson,
J:—In
this
action
the
Crown
claims
from
the
defendant
consumption
or
sales
tax,
old
age
security
tax,
penalty
interest,
and
other
relief
on
the
allegation,
which
is
admitted,
that
during
the
period
June
1,
1967
to
September
30,
1968
the
defendant
sold
or
delivered
to
purchasers
refuse
burners
to
the
value
of
$60,930
which
the
defendant
had
produced
or
manufactured
in
Canada.
The
defendant
claims
an
exemption
from
tax
for
such
sales.
The
amount
of
consumption
or
sales
tax
and
old
age
security
tax
claimed
in
respect
to
these
sales
is
$7,311.60.
The
amount
of
penalty
interest
claimed
is
the
sum
computed
pursuant
to
subsection
48(4)*
of
the
Excise
Tax
Act.
The
defendant
is
a
company
incorporated
under
the
laws
of
the
Province
of
Quebec
with
head
office
and
chief
place
of
business
at
St
Ephrem
in
the
County
of
Beauce,
in
the
Province
of
Quebec
and
is
a
manufacturer
and
distributor
of
wood
working
machinery.
The
defendant
claims
that
the
refuse
burners
which
it
produced
or
manufactured
in
Canada
and
sold
to
purchasers
were
production
or
manufacturing
equipment
covered
by
the
exemption
in
Schedule
III
of
the
Excise
Tax
Act
at
the
relevant
time
and
therefore
not
liable
for
such
tax.
Specifically,
the
defendant
relies
on
paragraphs
1(a)
and
1(d)*
of
Part
XIII
of
Schedule
III
of
the
said
Act.
A
representation
of
the
type
of
refuse
burner
sold
and
delivered
to
the
purchasers
by
the
defendant
was
illustrated
in
Exhibit
1.
It
is
a
brochure
of
the
defendant.
(5)
The
Minister
may,
before
or
after
the
day
prescribed
by
subsection
(3),
specify
in
writing
a
later
day
for
the
filing
of
a
return
or
the
payment
of
the
tax
or
any
portion
thereof;
and
where
the
Minister
has
specified
a
later
day
(a)
no
penalty
shall
accrue
or
be
deemed
to
have
accrued
under
subsection
(4)
prior
to
such
later
day
in
respect
of
default
in
payment
of
the
tax
or
portion
thereof
for
the
payment
of
which
the
later
day
was
specified;
and
(b)
failure
to
pay,
on
or
before
the
later
day,
the
tax
or
portion
thereof
for
the
payment
of
which
a
later
day
was
specified
constitutes
a
default
for
the
purposes
of
subsection
(4).
48.
(4)
Sous
réserve
du
paragraphe
(5),
à
défaut
de
paiement
de
la
taxe,
ou
de
toute
partie
de
celle-ci,
exigible
en
vertu
des
Parties
IV,
V
ou
VI
dans
le
délai
prescrit
par
le
paragraphe
(3),
it
doit
être
versé,
en
sus
du
montant
en
souffrance,
une
amende
égale
aux
deux
tiers
pour
cent
du
montant
en
souffrance
à
l’égard
de
chaque
mois
ou
fraction
de
mois
pendant
lequel
de
défaut
de
paiement
se
continue.
(5)
Le
Ministre
peut,
avant
ou
après
la
date
prescrite
par
le
paragraphe
(3),
fixer,
par
écrit,
une
date
postérieure
pour
la
production
d’une
déclaration
ou
le
paiement
de
la
totalité
ou
d’une
partie
de
la
taxe;
et,
lorsque
le
Ministre
a
fixé
une
date
postérieure,
a)
nulle
peine
ne
court
ou
n’est
réputée
avoir
couru
selon
le
paragraphe
(4)
avant
ladite
date
postérieure
quant
au
défaut
de
paiement
de
la
totalité
ou
d’une
partie
de
la
taxe
pour
le
paiement
de
laquelle
la
date
postérieure
a
été
fixée;
et
b)
l’omission
de
payer,
au
plus
tard
à
la
date
postérieure,
la
totalité
ou
une
partie
de
la
taxe
pour
le
paiement
de
laquelle
une
date
postérieure
a
été
fixée,
constitue
un
défaut
pour
les
objets
du
paragraphe
(4).
48.
(4)
Sous
réserve
du
paragraphe
(5),
à
défaut
de
paiement
de
la
taxe,
Representatives
of
several
of
the
purchasers
of
these
refuse
burners
gave
evidence.
These
purchasers
were
operators
of
saw
mill
factories.
Their
evidence
was
that
this
type
of
refuse
burner
was
installed
on
a
permanent
foundation
usually
about
50
to
100
feet
from
the
main
factory
which
produced
the
end
product
of
the
saw
mill,
namely
wood
or
lumber;
that
conveyors
carried
the
waste
from
the
saw
mill
operations
during
its
various
stages
to
such
burners;
and
that
the
burners
incinerated
the
waste
into
ashes.
Their
evidence
also
was
that
it
was
necessary
to
have
such
a
burner
at
a
saw
mill
factory
in
the
sense
that
it
was
economically
essential.
The
witness
Mr
Jean
Paul
Gagnon,
the
president
of
E
Gagnon
et
Fils
Limitée
stated
that
many
years
ago,
when
the
factory
of
this
company
was
much
smaller,
it
operated
without
a
burner
of
this
type,
by
disposing
of
waste
by
carrying
it
away
in
other
fashions;
but
today,
with
a
larger
factory,
these
methods
were
not
practical.
The
evidence
generally
established
also
that
at
the
present
time
there
exists
no
more
economical
and
practical
way
to
dispose
of
waste
during
the
various
stages
of
production
or
manufacture
in
a
saw
mill
factory
than
by
having
and
using
a
refuse
burner.
In
argument
counsel
for
the
defendant
conceded
that
to
succeed
in
this
action
the
defendant
had
to
bring
itself
within
the
exemption
provisions
of
paragraph
1(a)
in
that
it
was
impossible
to
bring
itself
within
the
provisions
of
paragraph
1(d).
This
was
so
because
to
be
within
the
exempting
provisions
of
paragraph
1(d)
the
defendant
would
have
had
to
prove
that
this
particular
type
of
refuse
burner
was
“equipment
sold
to
or
imported
by
manufacturers
or
producers
for
use
by
.
.
.
[it]
in
carrying
refuse
or
waste
from
machinery
and
apparatus
.
.
(italics
mine);
and
this
was
impossible.
Instead,
in
all
the
subject
cases
the
evidence
established
that
the
refuse
was
carried
to
this
type
of
refuse
burner
and
there
incinerated.
As
to
paragraph
1(a)
of
Part
XIII,
Schedule
III,
the
defendant
submitted
that
a
broad
construction
should
be
put
on
it
and
that
the
important
words
employed
were
“machinery
and
apparatus”
and
“manufacture
or
production”;
that
the
fact
that
the
defendant
could
have
used
something
else
was
irrelevant;
that
it
was
too
narrow
an
interpretation
to
consider
the
words
in
the
subsection
“directly
in
the
manufacture
or
production
of
goods”
in
relation
to
the
time
sequence;
that
instead
what
should
be
considered
were
the
things
that
contributed
to
the
end
result,
that
is
the
manufacture
or
production
of
lumber;
that
the
word
“directly”
should
not
be
used
in
the
sense
of
“to
the
exclusion
of”;
and
that
what
should
be
considered
was
the
saw
mill
factory
operation
as
a
whole,
from
which
it
should
be
concluded
that
without
such
a
type
of
refuse
burner
to
dispose
of
waste
such
a
factory
could
not
operate
at
any
of
the
various
stages
of
manufacture,
culminating
in
the
production
of
lumber.
Counsel
for
the
plaintiff
submitted
that
the
key
word
in
paragraph
1(a)
was
“directly”
(in
the
manufacture
or
production);
that
“directly”
does
not
mean
“essential”
(conceding
that
these
refuse
burners
are
economically
essential
to
operate
a
saw
mill
factory);
that
“directly”
in
this
subsection
is
in
contradistinction
to
“collateral”;
that
during
the
various
stages
of
operation
in
a
saw
mill
factory
waste
comes
off
which
can
be
disposed
of
in
many
ways
but
in
any
event,
wood
is
the
end
product
that
is
manufactured
or
produced
and
that
wood
would
be
that
end
product
whether
or
not
any
of
these
factories
referred
to
in
evidence
employed
a
refuse
burner
of
this
type;
that
such
a
refuse
burner
is
an
advantage
to
the
big
operator
but
it
does
not
cause
them
to
manufacture
or
produce
the
end
product,
namely,
wood;
and
that
a
saw
mill
factory
can
get
rid
of
the
waste
in
other
ways,
even
though
at
the
present
time
the
employment
of
a
refuse
burner
such
as
was
referred
to
in
the
evidence
is
the
most
economical
way.
After
carefully
considering
this
matter,
I
am
of
the
opinion
that
the
key
word
in
the
English
version
of
paragraph
1(a)
of
Part
XIII
of
schedule
III
of
the
Excise
Tax
Act
is
“directly”
(in
the
manufacture
or
production
of
goods)
or
“directement”
(dans
la
fabrication
ou
la
production
de
marchandises)
in
the
French
version
of
the
statute.
In
determining
the
meaning
of
the
word
“directly”
or
the
word
“directement”
in
this
item
of
Schedule
III
no
usage
of
the
trade
was
proved.
The
ordinary
meaning
of
these
words
then
must
prevail;
and
in
this
case
the
use
of
dictionaries
will
assist
if
not
guide
exclusively.
In
an
unreported
decision
of
the
Tariff
Board
(concerning
an
item
referred
to
as
an
“environmental
control
system
in
a
mine”),
the
Board
used
a
dictionary
definition
of
the
word
“directly”
in
this
item
of
Schedule
III
in
reaching
its
conclusion
in
appeal
numbered
919
entitled
The
Foundation
Company
of
Canada
Limited
and
Canadian
Corn-
stock
Limited,
carrying
on
business
as
a
joint
venture
under
the
name
and
style
of
Foundation
Comstock
Joint
Venture
and
the
said
The
Foundation
Company
of
Canada
Limited
and
Canadian
Comstock
Limited
v
Deputy
Minister
of
National
Revenue
for
Customs
and
Excise.
The
Tariff
Board
Reasons
in
part
read:
Dealing
with
paragraph
(a)
[ie,
paragraph
1(a)
of
Part
XIII
of
Schedule
III
of
the
Excise
Tax
Act],
the
issue
depends
on
what
is
meant
by
the
word
“directly”.
Both
counsel
for
the
appellants
and
for
the
respondent
attributed
the
same
meaning
to
the
word
“directly”
and
that
is,
the
meaning
“immediately”,
in
the
sense
of
without
the
intervention
of
a
medium
or
agent
as
given
in
‘the
Oxford
English
Dictionary,
1933,
Volume
III.
However,
counsel
for
the
appellants
argued
that
the
environmental
control
system
did
so
function,
in
the
manufacture
or
production
of
electricity,
whereas
counsel
for
the
respondent
argued
that
the
system
did
not
so
function.
As
mentioned
earlier
there
is
no
question
that
the
environmental
control
system
is
essential
to
the
successful
operation
of
the
project;
one
could
say
it
is
essential
to
the
production
of
electricity
for
this
project
but
there
are
many
things
which
may
be
essential
to
the
manufacture
or
production
of
goods
but
which
are
not
used
“directly”
in
the
manufacture
or
production
of
the
goods.
The
Board
agrees
with
the
argument
put
forward
by
counsel
for
the
respondent
that
the
use
of
the
word
“directly”
in
the
legislation
implies
that
there
may
also
be
things
used
indirectly
in
such
manufacture
or
production.
The
manufacture
or
production
of
the
electricity
would
seem
to
take
place
in
the
turbines,
generators
and
transformers.
Undoubtedly,
without
the
circulation
of
the
conditioned
air
these
pieces
of
equipment
could
not
be
expected
to
function
properly
in
this
installation,
but
the
Board
does
not
consider
that
the
circulation
of
this
conditioned
air
is
“directly”
involved
in
the
manufacture
or
production
of
electricity
in
the
turbines,
generators,
or
transformers.
However,
the
evidence
of
the
witness
for
the
appellants
on
this
aspect
dealt
more
particularly
with
the
return
of
the
conditioned
air
through
the
shafts
containing
the
isolated
phase
bus
ducts.
Electricity
passing
through
the
ducts
generates
heat
and
it
is,
therefore,
necessary
to
cool
these
ducts.
Some
of
the
conditioned
air
from
the
power-house
area
is
returned
through
the
shafts
containing
the
isolated
phase
bus
ducts
and
acts
as
a
coolant;
if
these
ducts
were
not
so
cooled
they
would
fail
due
to
the
extreme
heat
generated.
The
question
then
is,
is
the
cooling
action
of
the
conditioned
air,
manufacturing
or
producing
electricity
directly?
A
narrow
interpretation
of
the
words,
manufacturing
or
producing,
could
lead
to
the
conclusion
that
the
cooling
action
does
neither.
The
cooling
action
simply
makes
it
possible
for
the
ducts
to
convey
low
voltage
electricity
from
the
generator
to
the
primary
transformers.
However,
even
if
the
cooling
action
were
part
of
the
manufacturing
or
production
of
the
electricity
it
would
seem
to
be
indirectly
used
rather
than
directly.
In
an
examination
of
the
legal
publications
on
interpretation
of
words,
it
is
interesting
to
note
that
in
The
Earl
of
Jowitt’s
Dictionary
of
English
Law
(1959)
—
the
word
“direct”
is
defined
as
being.
‘‘opposite
to
collateral”.
In
this
sense,
it
would
seem
that
the
equipment
in
issue
must
be
adjudged
to
be
“collateral”
to
the
main
apparatus
for
the
production
of
electricity.
Therefore,
under
this
definition,
it
is
not
“directly”
involved
in
the
production
of
goods,
to
wit:
electricity.
In
any
event,
the
use
of
some
of
the
returning
air
as
a
coolant
is
incidental
to
the
main
function
of
the
environmental
control
system
which
is
simply
to
create
an
atmosphere
in
the
excavated
areas
in
which
equipment
and
personnel
could
operate.
The
Board
declares
that
such
a
function
is
neither
for
use
in
the
“prevention
of
accidents”,
nor
for
use
“directly”
in
the
manufacture
or
production
of
electricity.
Accordingly,
the
appeal
is
dismissed.
The
words
“directly”,
“direct”
and
“directement”
are
expressed
in
the
following
terms
in
these
dictionaries:
The
Random
House
Dictionary
of
the
English
Language,
The
Unabridged
Edition,
1966
—
directly
adv.
1.
in
a
direct
line,
way,
or
manner;
straight.
.
.
.
Worcester’s
Dictionary,
Unabridged,
1888
—
DIRECTLY,
ad.
1.
In
a
direct
manner;
rectilinearly.
“Directly
downwards.”
Woodward.
2.
In
a
direct
manner;
not
by
implication
or
circumlocution.
.
.
.
The
Concise
Oxford
Dictionary,
4th
edition,
1958
—
direct,
a.
&
adv.
Straight,
not
crooked-(ly)
or
round
about,
(the
—
road;
went
—
to
heaven;
—
action,
exertion
of
pressure
on
the
community
by
strikes
instead
of
on
Parliament
by
votes
to
force
political
measures
on
the
Government;
—
ray,
not
reflected
or
refracted;
—
shot,
hit,
without
ricochet);
(Astron.)
proceeding
from
W.
to
E.,
not
retrograde;
(of
descent)
lineal(ly),
not
collateral(ly);
(of
argument)
following
uninterrupted
chain
of
cause
&
effect
etc.;
.
.
.
The
Dictionary
of
English
Law,
Earl
Jowitt,
1959
—
Direct,
an
epithet
for
the
line
of
ascendants
and
descendants
in
genealogical
succession,
opposed
to
collateral.
.
.
.
Black’s
Law
Dictionary,
revised
4th
edition,
1968
—
DIRECTLY.
In
a
direct
way
without
anything
intervening;
not
by
secondary,
but
by
direct,
means.
Clark
v
Warner,
85
Okl.
153,
204
P.
929,
934;
Olsen
v
Standard
Oil
Co.,
198
Cal.
20,
204
P.
390,
396.
Dictionnaire
Alphabétique
et
Analogique
de
la
Langue
Française,
Paul
Robert,
960
—
DIRECTEMENT.
adv.
(XIV&s.;
de
direct,
et
ment).
1°
D’une
manière
directe;
en
droite
ligne,
sans
détour.
V.
Droit
(tout
droit).
Le
train
va
directement
à
.
.
.
.
Aller
directement
au
but.
Cf.
Aller
(ne
pas
aller
par
quatre
chemins),
but
(aller
droit
au
but);
couper
(couper
par
le
plus
court).
2°
Sans
intermédiaire.
V.
Immédiatement.
Ces
deux
pièces
communiquent
directement
(Cf.
Conque,
cit.
4).
Etre
directement
en
rapport
avec
quelqu’un.
(Cf.
Altération,
cit.
2;
bora,
cit.;
comportement,
cit.
4).
Ce
qui
se
rapporte
directement
à
la
question
(Cf.
Concret,
cit.
2).
Témoigner
directement
de
quelque
chose
(Cf.
Main
:
tenir
de
première
main).
Etre
directement
mis
en
cause
(Cf.
Cause,
cit.
53).
Produire
directement
(Cf.
Commerce,
cit.
1,
convertir,
cit.
12).
Agir
directement
(Cf.
Antitoxine,
cit.
1;
conflit,
cit.
7;
curare,
cit.).
Exercer
directement
son
action
sur
.
.
.
(Cf.
Avion,
cit.
4).
S’adresser
directement
à
quelqu’un
..
.
.
Nouveau
Petit
Larousse,
1968
—
DIRECTEMENT
adv.
De
façon
directe.
DIRECT,
E
adj.
(lat.
directus).
Droit,
sans
détour
:
voie
directe.
Sans
intermédiaire
:
rapport
direct.
Se
dit
d’un
train
qui
entre
deux
stations
principales
ne
s’arrête
à
aucune
station
intermédiaire.
Qui
a
lieu
de
père
en
fils
:
succession
en
ligne
directe.
Astron.
et
Mécan.
Se
dit
du
sens
d’un
mouvement
opposé
au
mouvement
des
aiguilles
d’une
montre.
Complément
direct,
complément
introduit
directement
sans
l’intermédiaire
d’une
préposition.
(Ex.
:
aimez
vos
PARENTS;
il
SE
lave;
je
veux
PARTIR.)
Tir
direct,
tir
pour
lequel
le
pointage
de
l’arme
sur
l’objectif
se
fait
à
vue.
Harrap’s
Standard
French
and
English
Dictionary,
1944
—
direct
.
l.a.
(a)
.
.
.
2.
adv.
(Aller)
directement,
tout
droit.
To
dispatch
goods
direct
to
s.o.,
expédier
des
marchandises
directement
à
qn.
/
shall
communicate
with
you
d.,
je
vous
écrirai
directement.
ly.
I.
adv.
(a)
(Aller,
conduire)
directement,
tout
droit,
sans
détours.
To
go
d.
to
the
point,
aller
droit
au
fait.
Le
sens
des
mots
“direct”
et
“directement”,
qui
convient
dans
ce
cas,
est
le
sens
usuel
(ou
courant)
et
celui
que
donnent
les
dictionnaires
cités
supra,
c’est-à-dire
le
sens
de
“sans
détour”.
Ce
sens
est
opposé
à
“collatéral”
ou
“intermédiaire”,
c’est-à-dire,
le
même
sens
que
dans
les
dictionnaires
de
Earl
Jowitt
et
de
Black
cités
supra.
In
my
view
therefore,
using
the
said
dictionaries
of
definitions
to
assist
and
also
considering
the
matter
from
a
practical
common
sense
point
of
view,
in
determining
the
ordinary
meaning
of
the
words
in
said
paragraph
1(a)
in
relation
to
the
subject
matter
of
this
case,
these
subject
refuse
burners
are
not
machinery
or
apparatus
sold
by
the
defendant
to
these
purchaser
manufacturers
for
use
by
them
directly
in
the
manufacture
or
production
of
wood.
It
follows
therefore,
that
the
defendant
has
not
satisfied
the
onus
of
proving
that
these
refuse
burners
are
items
within
the
said
Schedule
III.
The
result
therefore
is
that
the
judgment
will
go
against
the
defendant
for
the
sum
of
$7,311.60
together
with
the
amount
of
penalty
interest
computed
pursuant
to
section
48
of
the
Excise
Tax
Act
and
for
this
purpose
the
parties
may
agree
on
the
proper
sum,
but
failing
agreement,
the
matter
may
be
spoken
to.
The
plaintiff
is
also
entitled
to
costs.
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