Digests

Manufacturiers de Bijoux L.S.M. Ltée v. Canada

A-337-00

2001 FCA 279, Noël J.A.

2/10/01

9 pp.

Appeals and cross-appeals from Trial Judge's decisions appellants not deemed to have manufactured certain jewels, within meaning of Excise Tax Act, ss. 23(11) and 43, other than those they set on behalf of their respective clientele--Five appellants belong, along with Créations Darnel Ltée, to group of companies--Darnel purchased raw materials such as gold and precious stones and sent them to appellants for processing into final product--Jewellers employed by appellants mounted jewels, did settings and sent them to Darnel which, as wholesaler, shipped finished product to one or another of appellants who then sold it to its clients--Darnel issued invoice to whichever appellant made sale and remitted to Minister sales and excise taxes in accordance with price entered on invoice--In addition to retail sale of jewels supplied by Darnel, appellants made repairs and set jewels for their own customers--In February 1991, Minister served notice of assessment on appellants for 1988 and 1989 according to which appellants manufacturing jewels set and mounted at Darnel's request, as well as jewels set and mounted at request of their respective clients--Trial Judge found that appellants were not manufacturers of jewels made at Darnel's request, noting that Darnel continued to be principal contractor, but held that they were manufacturers of jewels set or mounted on behalf of their own clients and that they had to remit taxes payable in this connection--However, he determined that annual value of these transactions less than $50,000 and that appellants therefore exempt from sales tax under Act, s. 54(2)--In regard to excise tax payable on these sales, Trial Judge held that appellants liable for it in accordance with reduced computation set out in applicable administrative circular--Appeals allowed; cross-appeals dismissed--Once the Trial Judge held appellants exempt from sales tax on ground fulfilled requirements of Act, s. 54(2), had to find appellants exempt from excise tax under subsection 64(2), since this exemption operates under same conditions--Cross-appeals should be dismissed since effect of Act, ss. 43, 23(11) to deem any person, whether natural person or corporation, to be manufacturer of jewels that person mounts or sets, and corporation should therefore be deemed manufacturer in so far as it mounts or sets jewels through actions of its employees--Trial Judge found that it was as employees of Darnel that jewellers were setting some jewels at latter's request--Evidence allowed him to reach this conclusion--Excise Tax Act, R.S.C., 1985, c. E-15, ss. 23(11), 43, 54(2), 64(2).