CUSTOMS AND EXCISE
Excise Tax Act
Ss. 81.24, 81.28 Excise Tax Act appeal against Canadian International Trade Tribunal (CITT) decision denying refund of excise tax overpayment—Plaintiff imports vehicles damaged beyond repair, removes salvageable parts, sells remainder to scrap metal shredders—Goods at issue air conditioning systems—Paid $100 excise tax on each air conditioner—Plaintiff’s argument components either so badly damaged cannot function as air conditioner or not economically feasible to salvage, sell—Claimed $129,042 excise tax refund but claim denied on basis vehicles imported potentially roadworthy or useful for sale of parts under tariff items in Customs Tariff—Plaintiff filed notice of objection— Salvage certificate of State from which vehicle imported stamped “for parts only. Vehicle cannot be re‑titled”—Before CITT, plaintiff argued conditions for taxation under Act, Sch. 1, s. 7 not met as (1) goods not air conditioners as described in s. 7; (2) goods not permanently installed as required by s. 7(b); (3) goods in which “air conditioners” found at time of importation not “automobiles”—Tribunal ruled did not matter whether air conditioners functional, actually in use, but on whether designed for that use—Crucial that were designed for use in vehicles, unsuitable for any other application—Found them “permanently installed”—Were designed, installed for life of vehicle—Host items remain vehicles, even if disabled, can no longer serve as conveyances—Appropriate review standard reasonableness simpliciter—Since Act not defining “vehicle”, interpretation principles set forth in Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, approving of text author Driedger’s teaching that words of Act to be read in entire context, in grammatical, ordinary sense harmoniously with scheme of Act, its object and Parliamentary intent, applied—All dictionary definitions of “vehicle” include notion vehicle meant to carry persons or goods—Case law, defendant’s own administrative policy to same effect—Given CITT’s finding of fact “vehicles” at issue can no longer serve as means of conveyance, not “vehicles” within ordinary meaning of word—CITT’s view automobiles lose characterization as such only when no longer recognizable, as when compressed into box‑like form for shredding, disagreed with—Had “vehicles” imported by plaintiff been dismantled in U.S.A. prior to export, no one would consider salvageable parts as vehicles—That dismantling done here not material for tax purposes—In fact, air conditioners imported under tariff item relating to parts, not vehicles—Plaintiff’s argument air conditioners not permanently installed at time of importation as always intended would not be sold as whole but if salvageable would be removed for parts, accepted— Even if designed for permanent installation, once vehicle’s life had run course, importer’s intention could be only to sell pieces—Clear from reading parliamentary debates when tax on air conditioners enacted, purpose to promote energy conservation—Purchaser of air conditioner part for repair purposes has already paid excise tax on vehicle’s air conditioner—While defendant notes plaintiff unable to prove none of air conditioners were sold as a whole, not as parts, ambit of Act could not be expanded with only objective to prevent fraud—Taxation system based on self‑assessment, presumes taxpayers act in good faith and should Minister suspect fraud, Act contains enforcement provisions—Appeal allowed—Excise Tax Act, R.S.C., 1985, c. E‑15, ss. 81.24 (as enacted by R.S.C., 1985 (2nd Supp.), c. 7, s. 38; (4th Supp.), c. 47, s. 52; 2002, c. 8, s. 183), 81.28 (as enacted by R.S.C., 1985 (2nd Supp.), c. 7, s. 38; (4th supp.), c. 47, s. 52; 2002, c. 8, s. 137), Sch. I, s. 7—Customs Tariff, S.C. 1997, c. 36, Sch., s. 87.
Pièces d’auto usagées RTA (1986) Inc. v. Canada (T‑816-04, 2005 FC 771, de Montigny J., order dated 31/5/05, 16 pp.)