IN THE MATTER OF an appeal heard on December 4, 2017, pursuant to section 67 of the Customs Act, R.S.C., 1985, c. 1 (2nd Supp.);
AND IN THE MATTER OF a decision of the President of the Canada Border Services Agency, dated March 6, 2017, with respect to a request for review of an advance ruling on tariff classification pursuant to subsection 60(4) of the Customs Act.
The appeal is allowed.
WORKS OF ART, COLLECTORS’ PIECES AND ANTIQUES
. . .
SPECIAL CLASSIFICATION PROVISIONS – COMMERCIAL
. . .
9948.00.00 - Articles for use in the following:
Automatic banknote dispensers; Automatic data processing machines and units thereof, magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data; Automatic word-processing machines; Chart recorders and other instruments for measuring or checking electrical quantities, designed for use with automatic data processing machines; Electronic calculating machines; Magnetic discs; Numerical control panels with built-in automatic data processing machines; Power supplies of automatic data processing machines and units thereof; Process control apparatus, excluding sensors, which converts analog signals from or to digital signals; Video games used with a television receiver, and other electronic games; Parts and accessories of the foregoing.
5. - (A) For the purpose of heading 84.71, the expression “automatic data processing machines” means machines capable of:
(i) Storing the processing program or programs and a least the data immediately necessary for the execution of the program;
(ii) Being freely programmed in accordance with the requirements of the user;
(iii) Performing arithmetical computations specified by the user; and,
(iv) Executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run.
. R.S.C., 1985, c. 1 (2nd Supp.) [Act].
. Exhibit AP-2017-013-12A, Appendix 3 at 40-42, Vol. 1.
. Canada is a signatory to the International Convention on the Harmonized Commodity Description and Coding System, which governs the Harmonized System.
. S.C. 1997, c. 36, schedule [General Rules].
. S.C. 1997, c. 36, schedule [Canadian Rules].
. WCO, 2nd ed., Brussels, 2003 [Classification Opinions].
. WCO, 5th ed., Brussels, 2012 [Explanatory Notes].
. See Canada (Attorney General) v. Suzuki Canada Inc., 2004 FCA 131, at paras. 13, 17, where the Federal Court of Appeal interpreted section 11 of the Customs Tariff as requiring that the Explanatory Notes be respected unless there is a sound reason to do otherwise. The Tribunal is of the view that this interpretation is equally applicable to the Classification Opinions.
. Canada (Attorney General) v. Igloo Vikski Inc., 2016 SCC 38 (CanLII) at para. 21.
. Rules 1 through 5 of the General Rules apply to classification at the heading level. Rule 6 of the General Rules provides that “. . . the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules [i.e. Rules 1 through 5] . . .” and that “. . . the relative Section and Chapter Notes also apply, unless the context otherwise requires.”
. Rule 1 of the Canadian Rules provides that “. . . the classification of goods in the tariff items of a subheading or of a heading shall be determined according to the terms of those tariff items and any related Supplementary Notes and, mutatis mutandis, to the [General Rules] . . .” and that “. . . the relative Section, Chapter and Subheading Notes also apply, unless the context otherwise requires.” Classification opinions and explanatory notes do not apply to classification at the tariff item level.
. Exhibit AP-2017-013-04 at para. 9, Vol. 1.
. The Tribunal has interpreted the last sentence of tariff item No. 9948.00.00 (“Parts and accessories of the foregoing”) as referring to “articles for use in parts and accessories of [a host good]”, as opposed to parts and accessories of host goods. See Jam Industries Ltd. v. President of the Canada Border Services Agency (20 March 2006), AP-2005-006 (CITT) at para. 47, n. 10.
. Exhibit AP-2017-013-04, Appendix 1 at 13-15, Vol. 1; ibid., Appendix 4 at 107-112, Vol. 1; Exhibit AP-2017-013-16A (protected) at 4 and 9-10, Vol. 02.
. Transcript of Public Hearing, 4 December 2017, at 5.
. Apple raised two other arguments. First, Apple argued that the good in issue enhances or complements the iPad by functioning as a stand for typing or viewing videos hands-free. However, a case for a host good does not functionally interact with the latter simply by positioning it for ease of use. See Curve Distribution Services Inc. v. President of the Canada Border Services Agency (15 June 2012), AP-2011-023 (CITT) [Curve] at para. 68. Further, Apple’s reliance on Appeal No. AP-2010-057 for the proposition that such a feature improves the convenience and effectiveness of a host good is misplaced, as that decision concerned whether armband cases were “accessories” for iPod Nanos under heading No. 85.22, not whether they were “for use in” an ADP machine (or a part thereof) under Chapter 99, two classifications entailing wholly separate and distinct tests. Second, Apple argued in the alternative that the good is an accessory under heading No. 84.73 as “[p]arts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 84.69 to 84.72.” This argument too is untenable as (1) heading No. 84.73 excludes “covers, carrying cases and the like”; (2) even if not excluded, heading No. 42.02 (cases with an outer surface of leather) is more specific than heading No. 84.73 and, as such, to be preferred pursuant to Rule 3(a) of the General Rules; and (3) regardless, Apple has already expressly admitted that “[t]he Parties agree . . . [t]he goods are classified in Chapter 1-97, specifically 4202.91.90.” Exhibit AP-2017-013-04 at para. 9, Vol. 1.
. See for example Best Buy Canada Ltd. v. President of the Canada Border Services Agency (27 February 2017), AP-2015-034 (CITT) [Best Buy] at paras. 75-87, citing Entrelec Inc. v. Canada (Minister of National Revenue), 2000 CanLII 16268 (FCA) at para. 4.
. Ubisoft Canada Inc. v. President of the Canada Border Services Agency (28 January 2014), AP-2013-004 (CITT) [Ubisoft] at para. 59.
. Agri-Pack v. Commissioner of the Canada Customs and Revenue Agency (2 November 2004), AP-2003-010 (CITT) at para. 36.
. Exhibit AP-2017-013-12A at para. 41, Vol. 1.
. P.L. Light Systems Canada Inc. v. President of the Canada Border Services Agency (4 November 2011), AP-2008-012R (CITT) [P.L. Light Systems Canada Inc.] at paras. 23-25.
. Exhibit AP-2017-013-21 at 2, Vol. 1A.
. Imation Canada Inc. v. Commissioner of the Canada Customs and Revenue Agency (29 November 2001), AP-2000-047 (CITT) at 4.
. Best Buy at para. 78.
. Ubisoft at para. 59.
. Exhibit AP-2017-013-16A (protected) at 9, Vol. 2; Transcript of Public Hearing, 4 December 2017, at 12-14, 23-24.
. Exhibit AP-2017-013-12A at para. 35, Vol. 1.
. Exhibit AP-2017-013-16A (protected) at 9-10, Vol. 02; Exhibit AP-2017-013-12A, at para. 4 at 3 and Appendix 3 at 40, Vol. 1; Transcript of Public Hearing, 4 December 2017, at 30.
. Ibid. at 6, 8-9 and 28; Exhibit AP-2017-013-16A (protected) at 10, Vol. 2.
. Transcript of Public Hearing, 4 December 2017, at 12-13.
. P.L. Light Systems Canada Inc. at paras. 23-25; Best Buy at para. 78.
. Transcript of Public Hearing, 4 December 2017, at 30.
. Exhibit AP-2017-013-21 at 2, Vol. 1A.
. Transcript of Public Hearing, 4 December 2017, at 12, 31.