Date: 19990913
Docket: T-2236-93
BETWEEN:
BROOKS WETSUITS LTD.
PLAINTIFF
- and -
THE MINISTER OF NATIONAL REVENUE
DEFENDANT
REASONS FOR ORDER AND ORDER
CAMPBELL J.
[1] Kayaking is a wet sport. To minimize the detrimental effects of this fact, specialized vessel safety and personal protection equipment has been developed. One such piece of equipment manufactured by the Plaintiff ("Brooks Wetsuits") is a neoprene"sprayskirt", which is a device that a kayaker wears around his or her waist and which, when worn while seated in the cockpit of the kayak, has the primary effect of keeping water out of the vessel. 1
[2] The question in this appeal is whether the neoprene material imported by Brooks Wetsuits between 1988 and 1992, and subsequently used to manufacture kayak sprayskirts, qualifies for duty exemption. The answer to this question depends on accurately defining the purpose of a sprayskirt, and, correspondingly, the correct interpretation and consistent application of the exemption provision applicable during that time period, being Tariff Code 4370 2 which reads as follows:
| [in English] Cellular chloroprene sheets, with a knitted nylon fabric laminated to one or both sides, of Tariff Item No. 4008.11.00 or 5906.91.20, for use in the manufacture of wet suits for diving or water sports, commercial diving dry suits, dry-type exposure suits or accessories therefor. |
| and |
[in French] Feuilles de chloroprène cellulaire, recouvertes de tricot sur un ou deux côtés, des no.s tarifaires 4008.11.00 ou 5906.91.20, devant servir à la fabrication de vêtements non étanches de plongée pour les sports de plongée ou aquatiques, de vêtements étanches de plongée commerciale, de vêtements genre de protection contre le froid ou d"accessoires de ce qui précède.
[3] After a good deal of negotiation and accommodation by both parties about an original duty assessment of $37,714.22, the Defendant ("the Minister") determined that the neoprene material used for the manufacture sprayskirts subsequently sold in Canada did not meet the end use provision of Tariff Code 4370 as an accessory to wet or dry suits, or alternatively, as a "vêtement" or "garment" in the French version of the Tariff Code 4370, but was properly classified as an accessory to a kayak, and, therefore, water sport equipment under Tariff Items 4008.11.00 or 5906.91.20, or both. Brooks Wetsuits disagreed with this result and refused to pay duty in the sum of $3,933.56 arguing that a sprayskirt is indeed a wet suit accessory within the English version, or a "garment" within the French version of Tariff Code 4370.
[4] By agreement, the evidence on the present appeal was tendered by affidavit, with the exception of the fact that Mr. George Brooks, who was Chief Executive Officer of Brooks Wetsuits at the material times, did give evidence at the hearing.
[5] In his clear, concise, and straightforward evidence, Mr. Brooks agreed that the principal use of a sprayskirt is to keep water out of a kayak, but emphasized that it is also a highly desirable personal accessory item to the kayaker when paddling in "northern", that is, cold Canadian waters. In making this point, Mr. Brooks explained that when paddling, a kayaker inevitably ends up with water on the surface of the sprayskirt, and unlike nylon, if the sprayskirt is made of the insulator neoprene, the body of the kayaker is kept warm. Therefore, on this evidence, I find that a sprayskirt has important dual practical uses for kayaking in Canadian waters; it is both a safety device and a personal protection device.
[6] On the evidence it is uncontested that, in other cases, the Minister has interpreted as an "accessory" to a wet suit within the meaning of Tariff Code 4370 a range of items worn by kayakers for their personal protection including: farmer johns/janes, shorty suits, hoods, boots, neoprene socks, gloves, mitts, paddling shorts, vests, and kneepads. 3 I find that this is a correct interpretation of the provision.
[7] Therefore, given my finding that an important use of a sprayskirt is personal protection, to be consistent in the interpretation and application of Tariff Code 4370, I also find that the Minister should have granted the claimed exemption. With respect to the Minister"s failure to do so, counsel for the Minister argues that this is not an error open to correction on appeal. As authority for this point, dealing with a similar appeal provision to the one in the present case, the following passage from MacKay J"s decision in Mattu v. Canada (Minister of National Revenue) (1992), 45 F.T.R. 190 at 197-198 is relied upon:
| Section 135 of the Customs Act does not set out in any detail the requirements or the nature of the appeal that is provided from the decision of the Minister, and those matters were not argued in this appeal. My interpretation of the section is that it provides for a trial de novo in the sense that the court is not limited to consideration of evidence that was before the Minister. At the same time, as in the case of appeals from other administrative decisions or decisions of quasi judicial bodies established by statute this court will not readily vary the decision appealed from unless it is persuaded that the Minister or his agents failed to observe a principle of natural justice or failed to act within his or her statutory discretion, or that the decision is based on an error in law, or is based on a finding of fact that is perverse or capricious or without regard to the evidence before the Minister. |
[8] While I agree with MacKay J. that the Minister"s decision should be granted deference on an appeal such as the one in the present case, clear and convincing proof that a sprayskirt has important use as a personal protection device has been established by what I consider to be "new" evidence on this appeal. Accordingly, as the Minister did not have the benefit of this evidence in reaching a decision, I find that the fair and just result is to allow the appeal on this basis, and I so order.
[9] I also award costs of this appeal to Brooks Wetsuits.
(Sgd.) "Douglas Campbell"
Judge
September 13, 1999
Vancouver, British Columbia
[10]
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-2236-93
| STYLE OF CAUSE: BROOKS WETSUITS LTD |
v. MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: VANCOUVER, BC
DATE OF HEARING: SEPTEMBER 9, 1999
| REASONS FOR ORDER OF CAMPBELL, J. |
DATED: SEPTEMBER 13, 1999
APPEARANCES:
| MR. JAMES L STRAITH FOR THE PLAINTIFF |
| MS. DEBRA CARLSON FOR THE DEFENDANT |
SOLICITORS OF RECORD:
LAKES STRAITH & BILINSKY
| NORTH VANCOUVER, BC FOR THE PLAINTIFF |
SWINTON & COMPANY
| VANCOUVER, BC FOR THE DEFENDANT |
__________________
1 The evidence presented in the present case of the utility of a spray skirt [sic] as a safety accessory is consistent and is well described in an excerpt from the instructional book "Sea Kayaking Basics" [Harrison, Hearst Marine Books, New York, 1993, Affidavit of Candace Breakwell, Exhibit G] as follows: "Regardless of cockpit size, you want a spray skirt that fits securely around the cockpit rim - but is not so taut that it won"t release easily in an emergency - and which you can pull up under your armpits to keep water out of your lap. Indeed, a spray skirt is not an option, but a necessity that transforms a delicate little boat with no freeboard into a seaworthy kayak. They come in a variety of styles, each with their special advantages and disadvantages. All-nylon spray skirts are inexpensive and dry quickly, but they make an infernal crackling sound as you paddle, and they need suspenders to keep them up. Neoprene skirts fit snugly around your trunk, provide a drum-tight deck, are warm and quiet, but are always soggy. A good compromise are skirts that have neoprene decks and nylon uppers. Except on a warm sunny day on quiet and protected waters, you should always wear a spray skirt. Its minimum function is to keep the water that seesaws back and forth on your paddle shaft from drooling into your lap. It won"t be a 20-foot rogue wave but the wake from a boat on your local lake suddenly washing over your deck and filling your cockpit that will make a believer out of you."
2 Customs Tariff, R.S.C. 1985 c.41 (3rd supp.)
3 Affidavit of Plaintiff, paragraph 17.