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CUSTOMS AND EXCISE - Customs - Tariff classification - Imports

Monday, November 16, 2020 @ 9:09 AM  

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Appeal by the Attorney General from a decision of the Canadian International Trade Tribunal regarding the tariff classification of disposable shoe covers imported by the respondent. The Tribunal classified the goods as other articles of apparel and accessories, of plastics combined with nonwovens, as opposed to the tariff applicable to other made up articles, including dress patterns, of other textile materials, as determined by the taxing authority. The goods in issue were composed of a layer of thermally bonded spunbond polypropylene, a textile, laminated on one side to a sheet of chlorinated polyethylene, a plastic. These goods were designed to be worn over shoes and had applications in clean rooms, food processing, real estate, health care, construction, manufacturing, energy and research and development. The Tribunal held that the shoe covers had to be classified according to their constituent material. Being of the view that the plastic layer of the goods played an important role in providing traction, durability and protection from water to the shoe covers, it found that this layer constituted more than a mere trimming or accessory. After concluding that the constituent material of the goods in issue, a nonwoven laminated with plastics, the Tribunal determined that the goods came within the purview of the tariff for other articles of apparel and clothing accessories, of plastics combined with nonwovens. The appellant argued the Tribunal’s interpretation of Note 8(a) as preventing the use of Chapter 56 in the assessment of the goods’ constituent material was fundamentally flawed.

HELD: Appeal allowed. The Tribunal’s decision was set aside, and the matter was remitted to a different panel of the Tribunal for redetermination. The Tribunal’s approach to the interpretation of Note 8(a) was incorrect in law as it prevented the application of Chapter 56 to the constituent material of the goods because the goods themselves were made up within the meaning of Note 7. The Tribunal conflated two distinct steps of the classification analysis and failed, as a result, to draw a distinction between the determination of the goods’ constituent material on the one hand, and the goods’ classification on the other. A proper analysis of whether the goods in issue were of other textile materials, as contemplated by Chapter 63, required an assessment of whether the material from which these goods were made could be classified as a textile in Chapter 56. The Tribunal’s error in interpreting Note 8(a) vitiated the remainder of its analysis. The Tribunal also erred in law in not considering Note 1 to Chapter 39 which provided a specific order in which materials and, by extension, goods, were to be assessed. The Tribunal did not properly dismiss the appellant’s proposed characterization of the goods’ constituent material as a textile before finding that the goods were made of plastics. In so doing, it failed to apply Note 1 to Chapter 3.

Canada (Attorney General) v. Impex Solutions Inc., [2020] F.C.J. No. 999, Federal Court of Appeal, D.G. Near, Y. de Montigny and R. LeBlanc JJ.A., October 15, 2020. Digest No. TLD-November162020002