Federal Court Decisions

     T-1555-94

     IN THE FEDERAL COURT OF CANADA

     IN THE MATTER OF THE EXCISE TAX ACT

     R.S.C. 1985, c.E-15, AS AMENDED

BETWEEN:

     SIMSON-MAXWELL

     Appellant

     (Plaintiff)

     - vs -

     HER MAJESTY THE QUEEN

     Respondent

     (Defendant)

     REASONS FOR JUDGMENT

     [Delivered from the Bench at Ottawa, Ontario

     on Monday, January 27, 1997]

McGILLIS, J.

         Despite the able argument of counsel for the appellant, I have concluded that the appeal from the decision dated May 17, 1994 of the Canadian International Trade Tribunal ("Tribunal") under section 81.24 of the Excise Tax Act, R.S.C. 1985, c.E-15 ("Act") must be dismissed. In its decision, the Tribunal rejected the appeal of the appellant under section 81.19 of the Act, and refused to grant a refund of Federal Sales Tax, on the basis that parts for standby generators are not exempt from tax under paragraph 1(l) of Part XIII of Schedule III to the Act.

         The relevant statutory provisions for the purposes of the appeal are subsections 51(1) of the Act, as well as subparagraph 1(a)(i) and paragraphs 1(l) and (r) of Part XIII of Schedule III to the Act which read as follows:

51.(1)      The tax imposed by section 50 does not apply to the sale or importation of the goods mentioned in Schedule III, other than those goods mentioned in Part XIII of that Schedule that are sold to or imported by persons exempt from consumption or sales tax under subsection 54(2).

Part XIII of Schedule III to the Act

1.      All the following:

(a) machinery and apparatus sold to or imported by manufacturers or producers for use by them primarily and directly in

(i) the manufacture or production of goods,

...

(l) parts for goods described in paragraphs (a) to (k),

     ...

but not including:

(r) ... stand-by generator and stand-by alternator sets, for the production of electricity for use primarily in a building that normally utilizes electricity supplied by a public or private utility where that building is used primarily for activities other than the manufacture or production of goods.

         In order to support his argument that parts for standby generators are exempt from tax under the statutory scheme, counsel for the appellant submitted that standby generators are goods "described" in subparagraph 1(a)(i) of the Act, despite the fact that they are specifically excluded from the exemption under paragraph 1(r).

         I cannot accept this argument on the basis that it leads to an absurd interpretation of the legislation. Furthermore, the French version of the Act does not support the argument advanced by counsel for the applicant. The French version of subparagraph 1(a)(i) and paragraph 1(l) of Part XIII of Schedule III to the Act reads as follows:

1. Tous les articles suivants:

(a) les machines ou appareils vendus aux fabriquants ou producteurs ou importés par eux pour être utilisés par eux principalement et directement:

(i) soit dans la fabrication ou la production de marchandises;

     ...

(l) les pièces pour des marchandises visées aux paragraphes (a) à (k);

(emphasis added)

         The word "viser", which appears in the French version of paragraph 1(l), is defined in the "Trésor de la Langue Française" dictionary as follows: "s'appliquer à quelqu'un, quelque chose, intéresser, concerner".¹ As a result, the French version of paragraph 1(l) of the Act indicates that only parts for goods to which paragraphs 1(a) to (k) are applicable will benefit from the exemption. However, since standby generators are specifically excluded under the terms of paragraph 1(r) of the Act, subparagraph 1(a)(i) cannot apply to such goods.

         In the circumstances, the appeal must be dismissed. Costs are awarded to the defendant.

OTTAWA

January 29, 1997                          Judge

__________________

¹      Trésor de la Langue Française: Dictionnaire de la Langue du XIX^e et du XX^e Siècle, Gallimond, 1994, tome 16e. See also Le Nouveau Petit Robert, dictionnaire alphabétique et analogique de la langue française.