Date: 19990113
Docket: A-905-97
CORAM: STRAYER J.A.
LÉTOURNEAU J.A.
ROBERTSON J.A.
BETWEEN:
NIKE CANADA LTD.
Appellant
AND:
THE DEPUTY MINISTER OF NATIONAL REVENUE
Respondent
Heard at Ottawa, Ontario, Thursday, December 10, 1998
Judgment delivered at Ottawa, Ontario, Wednesday, January 13, 1999
REASONS FOR JUDGMENT BY: LÉTOURNEAU J.A.
CONCURRED IN BY: STRAYER J.A.
ROBERTSON J.A.
Date: 19990113
Docket: A-905-97
CORAM: STRAYER J.A.
LÉTOURNEAU J.A.
ROBERTSON J.A.
BETWEEN:
NIKE CANADA LTD.
Appellant
AND:
THE DEPUTY MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
[1] This appeal pursuant to section 68 of the Customs Act (Act) was heard at the same time as the appeal in The Deputy Minister of National Revenue and Mattel Canada Inc.1 and raises the same legal issue, that is to say whether the royalties paid by the appellant to Nike Ireland Ltd. can be said to have been paid as a condition of the sale of goods for export to Canada within the meaning of subparagraph 48(5)(a)(iv) of the Act2.
[2] For the reasons given in the Mattel Canada Inc. case and in view of the findings by the Canadian International Trade Tribunal (Tribunal) that it was not persuaded that the unrelated off-shore manufacturers would not have sold goods to the appellant without the royalties having been paid to Nike Ireland, that the obligation to pay the royalties arises from a separate agreement unrelated to the sale for export of the goods, that the appellant possessed and used its independent ability to obtain product of its own to a significant degree, that the appellant sourced 20 percent of its goods directly from domestic sources and that there was very little control by the licensor over the manufacturer, the appeal should be allowed with costs and the decision of the Tribunal rendered on October 10, 1997 should be set aside.
"Gilles Létourneau"
J.A.
"I agree,
B.L. Strayer J.A."
"I agree
J.T. Robertson J.A."
__________________1 F.C.A., Appeal no. A-291-97, decision rendered on January 13, 1999.
2 (5) The price paid or payable in the sale of goods for export to Canada shall be adjusted (a) by adding thereto amounts, to the extent that each such amount is not already included in the price paid or payable for the goods, equal to ... (iv) royalties and licence fees, including payments for patents, trade-marks and copyrights, in respect of the goods that the purchaser of the goods must pay, directly or indirectly, as a condition of the sale of the goods for export to Canada, exclusive of charges for the right to reproduce the goods in Canada,