Words and Phrases - "manufacture"
15 May 2001 External T.I. 2001-0071085 F - FABRICATION AU CANADA
A corporation actively carries on a business of marketing, developing, designing, manufacturing and selling clothing and also develops its own clothing trademarks. All these operations are carried out entirely in Canada by its employees, except for the manufacture of the garments, which is carried out entirely by unrelated companies located abroad, who own such garments until delivered to the corporation at the ship.
CCRA indicated that if the corporation exercises extensive control from beginning to end over the content, design and physical qualities of the goods and is substantially involved in those aspects, the product development, design and conception activities are activities carried out in connection with manufacturing operations, but they would not be carried out in connection with manufacturing operations in Canada since a very significant portion of the manufacturing and processing activities is carried on outside Canada.
Biltrite Tire Co. v. The King, [1937] S.C.R. 364, 1 D.T.C. 360
The taxpayer purchased in bulk lots, by the pound, old and worn-out motor vehicle tires and put them through a process of repair, treatment (including being pressed and partially cooked in a boiler) and retreading, and sold the retreaded tires. Throughout the process the sidewall of the tire was not dismantled or destroyed, the numerical identification of the original tire was not destroyed, the name of the manufacturer of the original tire was still clearly marked upon its sidewalls. In finding that the restored sales when sold fell to be treated as “goods produced or manufactured” by the taxpayer under s. 86 (1) (a) of the Special War Revenue Act (R.S.C. 1927, c. 179) and were “tires manufactured or produced” by it under s. 80, Kerwin J stated (at pp. 366-7, SCR):
[I]f the appellant had purchased an old or worn-out tire which had already been treated by the vendor in the manner described above, down to and including the cutting off of the old tread…[and] then… had purchased from a third party the rubber preparation and had applied the latter and continued with the subsequent steps, could it be suggested that the article in its final condition had not been produced or manufactured by the appellant? The definitions of the words “manufacture” and “produce” as nouns or verbs, in the standard dictionaries, clearly indicate that such proceedings would constitute the appellant a manufacturer or producer. And the mere fact that the appellant has itself performed the defined operations on the old tire cannot exclude it from the operation of the section.
…It is suggested that the old or worn-out tire did not lose its identity qua tire and that, therefore, the appellant could not be said to have manufactured or produced a tire. However, when one bears in mind the various steps taken by appellant and particularly the state of the article when the tread was removed, it would appear that appellant cannot be any less the manufacturer of a tire because it started with something that had once been a usable tire than if, as suggested in the preceding paragraph, it had commenced with two substances purchased from different sources.
The Queen v. York Marble, Tile and Terrazzo Ltd., [1968] S.C.R. 140, [1968] CTC 44, 68 DTC 5001
The respondent imported “greyish, non-descript” slabs of raw marble (sometimes as long as 16 feet) and, after finishing them, installed them in buildings as subcontractor. The finishing work included matching slabs so that the veining would match, grouting voids, rodding weakened slabs, gluing broken slabs, grinding, rough and fine polishing, cutting and finishing the edges. In finding that the finished slabs were “goods produced or manufactured in Canada” within the meaning of s. 30(1)(a) of the Excise Tax Act, R.S.C. 1952, Spence J stated (at p. 145, and quoting in the first sentence from M.N.R. v. Dominion Shuttle Co. Ltd. (1933), 72 C.S. 15 (Que. S.C.)):
“manufacture is the production of articles for use from raw or prepared material by giving to these materials new forms, qualities and properties or combinations whether by hand or machinery”. (The italics are my own.) ...[T]he finished marble slabs which left the respondent’s plant had by work, both by hand and machinery, received new form, new quality and new properties.
After noting (at p. 146) the finding in Gruen Watch Company of Canada Ltd. v. A.G. (Canada), 1950 CanLII 77 (ON SC), [1950] C.T.C. 440 that “the simple operation of putting a watch movement into a watch case is [not] ‘manufacturing’ a watch in the ‘ordinary, popular and natural sense’ of the word, but… the plaintiffs ‘produced’ watches,” Spence J stated (at p. 147):
if I had any doubt that the various procedures taken by the respondent in reference to the marble slabs resulted in the manufacture of a piece of marble, I would have no doubt that those procedures did result in the production of a piece of marble.
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| Tax Topics - Statutory Interpretation - Similar Statutes/ in pari materia | Customs Tariff legislation was in pari materia to the Excise Tax Act | 411 |
Royal Bank of Canada v. Deputy Minister of National Revenue for Customs and Excise, 81 DTC 5301, [1982] CTC 183, [1981] 2 S.C.R. 139
The taxpayer was a bank which also was the landlord of the Royal Bank Centre in Toronto. In that capacity, it operated emergency electricity generators at the buildings for approximately 100 hours per year (consisting of 50 hours of testing and 50 hours of power interruption). In accepting the taxpayer's submission that the taxpayer's purchases of generators were exempt from sales tax under the Excise Tax Act as "machinery and apparatus sold to...manufacturers or producers for use by them directly in...the manufacture or production of goods," McIntyre J state (at pp. 143-4):
There is no definition of manufacturing or manufacture in the Act, but I accept a definition given by Spence J. in R. v. York Marble, Tile and Terrazzo Ltd...where he said, at p. 145:
For the present purposes, I wish to note and to adopt one of the definitions cited by the learned judge, [Archambault J. in Minister of National Revenue v. Dominion Shuttle Company Limited (1933), 72 Que. S.C. 15] i.e., that “manufacture is the production of articles for use from raw or prepared material by giving to these materials new forms, qualities and properties or combinations whether by hand or machinery”.
...I conclude that the appellant is performing the act of manufacturing electricity by the use of the generators... .