Ex. C.R. EXCHEQUER COURT OF CANADA 289 BETWEEN : 1955 ACCESSORIES MACHINERY LIMITED APPELLANT; Oct. 13 1956 AND Mar. 6 DEPUTY MINISTER OF NATIONAL REVENUE FOR CUSTOMS AND EXCISE and CANADIAN ELEC-RESPONDENTS. TRICAL MANUFACTURERS' ASSO- CIATION Revenue--Customs and Excise—Electric motor imported as replacement for electric shovel—Whether dutiable under tariff item 445g: "electric motors and complete parts thereof, n.o.p." or item 4227a: "All machinery composed wholly or in part of iron or steel, n.o.p., and complete parts thereof"—Customs Tariff Act, R.S.C. 1952, c. 60, Schedule "A", Tariff items 4427a, 445g—Customs Act, R.S.C. 1952, c. 58, ss. 44, 45. The appellant imported from the United States a motor as a replacement to be installed in an electric shovel. The appraiser classified the motor under tariff item 445g: "Electric motors and complete parts thereof, n.o.p.". The appellant contending it was classifiable under tariff item 427a: "All machinery composed wholly or in part of iron or steel, n.o.p. and complete parts thereof", requested a review by the Deputy Minister who upheld the appraiser. The Tariff Board unanimously dismissed an appeal to it and the present appeal, by leave granted under s. 45 of the Customs Act, is on the question of 73672-1 a
290 EXCHEQUER COURT OF CANADA [1956] 1956 law: "Did the Tariff Board err as a matter of law in deciding that AceE sso a part, namely a 125 h.p. open ball bearing vertical shaft motor for MACHINERY P & H Model 1,50 5-0 c u c b u ic y a nd electric shovel is dutiable under LTD. Tariff item 445g rather than Tariff Item 427a?" v. DEPUTY It was agreed on appeal that the motor was imported for the purpose of MINISTER OF installing it as a replacement motor in an electric shovel and that the NATIONAL electric shovel (in which the imported motor was to be installed) as REVENUE a complete unit would have been classifiable under item 427a and the appellant conceded that if the phrase "not otherwise provided for" did not appear in item 445g it would have been properly classifiable under that item but it contended that while the imported article was an electric motor, item 445g refers only to motors "not otherwise provided for" and that the motor as part of an electric shovel was otherwise :provided for, namely as part of an electric shovel, and therefore within the ambit of "complete parts of the foregoing" in item 427a and that the Tariff Board has misinterpreted the meaning of the phrase by giving it an unwarranted and limiting effect. Held: That the appeal being on a question of law only, the issue was not whether the motor was properly classifiable under Item 445g but whether the Board erred as a matter of law in deciding that it was. Deputy Minister of National Revenue for Customs and Excise v. Parke Davis & Co. [1954] Ex..C.R. 1 at 20. 2. That there was material before the Board from which it could reasonably decide, and it was within its powers to decide as it did, that as Parliament had seen fit to establish an eo nomine classification for electric motors it must have intended to classify such articles in a special category separate and apart from the general and residuary items of machinery or parts thereof in tariff item 427a. APPEAL under the Customs Act from a decision of the Tariff Board. The Canadian Electrical Manufacturers' Association at the hearing of the appeal was added as a party respondent. The appeal was heard before the Honourable Mr. Justice Cameron at Ottawa. G. F. Henderson, Q.C. for the appellant. K. E. Eaton for the Deputy Minister of National Revenue. F. R. Hume, Q.C. for Canadian Electrical Manufacturers' Association. CAMERON J. now (March 6, 1956) delivered the following judgment: This is an appeal from a declaration of the Tariff Board, brought under the provisions of s. 45 of the Customs Act, R.S.Ç. 1952, c. 58. It relates to an importation by the appellant of a 125 h.p. open ball bearing vertical shaft
Ex. C.R. EXCHEQUER COURT OF CANADA 291 motor for P & H Model 1500, 5-cubic yard Electric Shovel, 1956 imported from Milwaukee, U.S.A., under Montreal Cus- ACCESSORIES toms Entry No. 121526-C on February 3, 1954. IN ERY MA LTD The appraiser classified the motor under Tariff Item DEPUTY 445g which reads as follows: MINISTER OF NATIONAL Electric motors, and complete parts thereof, n o p REVENUE The appellant, being of the opinion that the motor should Cameron J. have been classified under Tariff Item 427a, requested the Deputy Minister to review the appraiser's classification. That item is as follows: 427a. All machinery composed wholly or in part of iron or steel, n.o.p., of a class or kind not made in Canada; complete parts of the foregoing. * * * The Deputy Minister on August 10, 1954, made his finding as follows: The electric motor, is, in my opinion, more specifically provided for in Tariff Item 445g than as "complete parts" under Tariff Item 427a, and the departmental ruling is hereby confirmed. From that decision an appeal was taken to the Tariff Board. By its declaration of March 1, 1955, the Board unanimously dismissed the •appeal. Leave to appeal to this Court was granted by Fournier J. on June 27, 1955, on the following question of law: Did the Tariff Board •err as a matter of law in deciding that a part, namely, a 125 h.p. open ball bearing vertical shaft motor, for P & H Model 1500 5-cubic yard Electric Shovel, imported under Montreal Customs Entry No. 121526.-C, February 3, 1954, is dutiable under tariff item 44,5g, rather than tariff item 427a? At the hearing of this appeal, I added the Canadian Electrical Manufacturers' Association as a party- respondent. That association was represented at the hearing before the Tariff Board but due to an inadvertence was not added as a party in the Notice of Appeal. It is entitled by virtue of s-ss. (1) and (2) of s. 45 of the Customs Act to appear on this appeal, and with the consent of its counsel and all parties, it was made a party respondent. It is not in dispute that the motor in issue was imported for the purpose of installing it as a'replacement motor in an electric shovel. It is agreed also that .the •electric shovel (in which the imported motor was to be installed) as . a complete unit would have been classifiable under Item 427a. 73672-1ia
292 EXCHEQUER COURT OF CANADA [1956] 1956 The contention of the appellant is that while the ACCESSORIES imported article is an electric motor, Item 445g refers only MACHINERY LTD. to motors "not otherwise provided for"; that the motor as v. DEPUTY part of an electric shovel is otherwise provided for, namely, MINISTER OF as a part of an electric shovel, and therefore within the NATIONAL ambit of "complete parts of the foregoing" in Item 427a. Cameron J. The decision of the Board is stated as follows: It is the opinion of the Board that the contention of the appellant as to the influence of the "n.o.p." in item 427a is correct: The "not otherwise provided for" does not apply to that portion of the item which follows the semicolon and which reads: "complete parts of the foregoing." Further, it is our opinion that a "part" (incontrovertibly recognizable as such) of or for a machine, which machine itself is classifiable under item 427a, would qualify for the benefits of the item whether or not such part is of a class or kind not made in Canada. Electric motors are in their very nature generally intended to be incorporated in or attached to machinery or equipment. They would, therefore, unless elsewhere provided for, be considered to be parts for such machinery. However, since the legislators have provided for electric motors, eo nomine, in tariff item 445g, we must conclude that this classification is intended to override any "basket" provision such as "parts" in tariff item 427a; otherwise, tariff item 445g is virtually ineffective. As regards the "n.o.p." provision in tariff item 445g, that must be deemed to exclude from that item such electric motors as are elsewhere provided for as motors. It is conceivable that there might come into being an electric motor of such unique shape or design as to make it, for tariff purposes, more specifically a part of a particular machine than an electric motor. n.o.p., but exceptional instances of this 'nature do not, in our opinion, override the general proposition above: that item 445g covers all electric motors not elsewhere specifically provided for as motors. Accordingly, the Appeal is dismissed. It is conced' d by the appellant that if the phrase "not otherwise provided for" did not appear in Item 445g, the imported motor would have been properly classifiable under that item. The 'submission, however, is that the Board misinterpreted 'the meaning of the phrase by giving it an unwarranted and limiting effect. The submission is based on the wording used in the decision, namely, ."as regards the `n.o.p.' provision in Item 445g, that must be deemed to exclude from that item such electric motors as are elsewhere provided for as motors..... That Item 445g covers all electric motors not elsewhere specifically provided for as motors." It is argued. that by their decision they have interpreted Item 445g as if it read "Electric motors, and complete 'parts thereof, not otherwise provided for as
Ex. C.R. EXCHEQUER COURT OF CANADA 293 motors." The addition of the words "as motors" is said to 1956 be unwarranted and erroneous. It is also said that the ACCESSORIES MACHINERY declaration of the Board has the effect of eliminating the LTD. phrase "n.o.p." entirely from Item 445g. V. DEPUTY The declaration of the Board in this case follows that MINISTER OF NATIONAL made by it on July 6, 1953 (A-269) on a reference by the REVENUE Deputy Minister under s. 51 •of the former Customs Act. Cameron J. It appears from that declaration that prior thereto it had been the rather general practice of the Customs authorities for duty purposes to segregate electric motors (other than built-in motors) entering Canada as components of (or in connection with) machines and machinery. The opinion of the majority of the Board in that case was that such machines as constituted single physical units are dutiable as entireties without segregation of the motor component, whether such motor was "built-in" or "attached." All the members of •the Board were in agreement with the final clause of that opinion, namely: This is not, of •course, to suggest that motors imported separately for repair or replacement for such machines would be dutiable other than under the tariff item appropriate to the motor, as such. The declaration of the Board in the instant case follows logically from that expressed in the last clause which I have just quoted. What then did the Board mean when it stated that in interpreting the provisions of Item 445g, the "n.o.p." must be deemed "to exclude from that item such electric motors as •are elsewhere provided for as motors". Did it mean that the "n.o.p." provision in that item would be effective only in cases in which other tariff items used the specific words "electric motors", as suggested by counsel for the appellant? If that were so, I would be inclined to agree with him that its use of the words "as motors" would result in drastically limiting the effects of the phrase "not otherwise provided for". It was stated in argument that other than in Item 445g, the specific words "electric motors" appear in but one tariff item. In my opinion, however, that is not the proper meaning to attribute to the Board's use of "as motors". The Board, with a full knowledge of the details of the Customs Tariff, would not have been likely to reach any such conclusion. It seems to me that when one considers the nature of the
294 EXCHEQUER COURT OF CANADA [1956] 1956 problem before the Board, the evidence adduced, the argu- ACCESSORIES ments submitted to them, and their declaration as a whole, MACHINERY LTD. that they meant something quite different than the inter- V. DEPUTY pretation above suggested. MINISTER OF The issue before the Board was, as stated at the outset of NA REVENUE its declaration, to be, "Is the replacement motor imported Cameron J. for installation in an electric shovel, a part of the shovel, or an electric motor `n.o.p.'?" In answering that question, the Board was required to consider the provisions of both Tariff Items 445g and 427a. As the imported article was an electric motor and as an eo nomine classification was provided for "electric motors" in Item 445g, it was logical for them to conclude that the imported article, prima facie at least, would be properly classifiable under that item. The next step to 'be taken was to determine the effect of the addition thereto of "n.o.p." and to determine whether elsewhere in the tariff electric motors were otherwise provided for. That involved, in this case, a direct reference only to Item 427a. In considering the provisions of Item 427a and as noted above, the Board came to the conclusion that the "n.o.p." therein did not apply to "complete parts of the foregoing" and "that a `part' (incontrovertibly recognizable as such) of or for a machine, which machine itself is classifiable under Item 427a, would qualify for the benefits of the item whether or not such part is of a class or kind not made in Canada." Had their conclusion been otherwise on this point, it is clear that the imported electric motor would have been classifiable only under Item 445g as electric motors are named therein and are manufactured in Canada. The Board was also aware that in its declaration dated July 6, 1953 (A-269), it had stated in its majority 'decision that such machines as constitute single physical units are dutiable as entities without segregation of the motor component. It knew, therefore, that had the imported electric motor been imported with and as a part of the electric shovel, the entire entity would have been classifiable under Item 427a. Evidence was submitted to the Board that electric motors are in their very nature generally intended to be incorporated in or attached to machinery or equipment. The
Ex. C.R. EXCHEQUER COURT OF CANADA 295 Board found that to be 'the fact and so stated in its declara-1956 tion. Notwithstanding the argument of counsel for the ACCESSORIES appellant that that is not always the case, I am not at MAC D ERY liberty in this appeal to disturb any findings of fact made DEruTY by the Board. It was that finding of fact which led to its MINISTER OF conclusion that a declaration that the electric motor was ATIONAL NREVENIIE classifiable as a "part" of machinery under Item 427a wou C l a d m — ero n J. have made Item 445g virtually ineffective. The Board alsoconsidered the nature of the tariff items in question. It will 'be noted that in Item 445g electric motors are classified eo nomine; the term is clear and quite unambiguous. Moreover, it is not subject to any qualifications such as "of a class or kind not made in Canada". It covers all electric motors 'of every sort and kind "n.o.p.". On the other hand, Item 427a is a "basket" or residual item intended to bring within its reach all machinery composed wholly or in part of iron or steel not otherwise provided for. The. Customs Tariff includes a great number of pieces of machinery referred to eo nomine or by reference to their "end-use", but quite 'obviously it would be impossible to specify with particularity each individual item of machinery by name or by end-use. It was therefore necessary to use this type of "basket" item (and also Item 427) so as to include all machines not elsewhere provided for. It is clear from the Board's decision that in solving this problem it came to the conclusion that Parliament in setting up a tariff item for "electric motors"—which are machines in themselves—dealt with them in a specific way by giving them 'an eo nomine classification, thereby removing them from the more general and unspecific designation of "all machinery . . . 'n.o.p., and complete parts of the foregoing". Weighing the specificity of the words "electric motors" in Item 445g against the very general nature of the words "all machinery ... and complete parts of the foregoing" found in Item 427a, the Board concluded that the eo nomine classification in the former was intended to override a "basket" or "catch-all" provision such as "all machinery ... and `parts'." In my opinion the Board, in interpreting the effect to be given to "n.o.p." in Item 445g, came to the conclusion that "electric motors" would not by reason of
296 EXCHEQUER COURT OF CANADA [1956] 1956 the "n.o.p." be excluded from the specific classification of ACCESSORIES "electric motors" unless in other items of the tariff MACHINERY LTD. such words were used as would clearly indicate that v. DEPUT electric motors—that is, machinery providing motion— Y NATIONAL were included therein. That, of course, could be done by REv~ ENuE the use of the specific words "electric motors" as in Item 409q(2) ; or by such words as "including motive power" as Camerons: in Item 410a(ii). In the Board's opinion there was nothing in the words "parts of the foregoing" in Item 427a which in any way pointed directly to "electric motors"; the word "parts" was therefore inadequate to destroy or overcome the eo nomine classification that Parliament h'ad seen fit to confer on "electric motors". That interpretation of the Board's use of "as motors" accorded with the submissions made by counsel for the Minister before it, and reading the declaration as a whole, I think that is what they intended. Counsel for the appellant, however, submits that if the Board's declaration be interpreted in that manner, the result would be that in certain "end use" items where neither "electric motors", "motive power", nor words of similar import are used—but in which it is clear that all the specified machinery is to be put to the named "end use" —electric motors will be excluded. He referred to the case of General Supply Company of Canada v. Deputy Minister of National Revenue, Customs and Excise (1), in which I decided that the "n.o.p." in the item there referred to was apt to exclude therefrom not only an eo nomine classifica- tion, but also "end use" items as well. If the declaration in the instant case was intended to exclude all "end use" items, I would be inclined to think that the Board had placed too limited a meaning on "n.o.p." in Item 445g. I do not think it necessary, however, to consider that point as it was not directly before the Board and need not be determined in . this case. The expression "end use" item is not defined in the Act but as I understand it, it refers to certain tariff items in which special treatment is given to imported goods because of the industry or activity in which they will be used—such as logging, farming and the like. Item 427a is not an "end use" item in the sense that I understand that expression; it is rather a "catch-all" or (1) [1954] Ex. C.R. 340 at 347.
Ex. C.R. EXCHEQUER COURT OF CANADA 297 "basket" item, there being no reference therein to the 1956 ultimate use to which the "machinery" will be put. ACCESSORIES MACHINERY After considering with great care the argument submitted LTD. by Mr. Henderson, counsel for the appellant, I am unable DEPUTY to reach the conclusion that the Board was in error in MINISTER OF NATIONAL deciding as it did, namely, that the electric motor imported REVENUE should be classified as dutiable under Tariff Item 445g. Cameron J. In considering an appeal to this Court from a declaration of the Tariff Board, it is always 'necessary to keep in mind the distinction between the duties cast on the Board in deciding which item of the tariff is applicable to the goods imported, and those placed on this Court when hearing an appeal from such a declaration. The distinction was noted by the President of this Court in Deputy Minister of National Revenue for Customs and Excise v. Parke Davis & Co. Ltd. (1) . The appeal to this •Court being on a question of law only, the issue is not whether the imported motor was properly classifiable under item 445g, but whether the Board erred as a matter of law in deciding that it was. As stated in the Parke Davis case, "If there was material before the Board from which it could reasonably decide as it did, this Court should not interfere with its decision even if it might have reached a different conclusion if the matter had been originally before it." In my opinion there was material before the Board from which it could reasonably have decided as it did. It attributed special weight to the fact that Parliament had seen fit to establish an eo nomine classification for "electric motors" and reached the conclusion that Parliament must therefore have intended to classify such articles in a special category, separate and apart from the general and residuary items of machinery or parts therefor in Item 427a. In a somewhat difficult problem, the Board was endeavouring to ascertain from the words used in the Customs Tariff what was the true intent of the items, as they were required to do by s. 2(2) of the Customs Act, R.S.C. 1952, c. 58, which is as follows: 2(2). All the expressions and provisions of this Act, or of any law relating to the Customs, shall receive such fair and liberal construction and interpretation as will best ensure the protection of the revenue and the attainment of the purpose for which this Act or such law was made, according to its true intent, meaning and spirit. (1) [1954] Ex. C.R. 1 at 20.
298 EXCHEQUER COURT OF CANADA [1956] 1956 It seems to me that it was within their powers to deter- ACCESSORIES mine on the material before them that the attainment of MACHINERY LTD. the purpose for which a special tariff item relating to electric motors was established and the protection of the DEPUTY MINISTER of revenue would be best ensured by deciding as they did. NAL REVEN IIE To interpret the limiting provisions of the "n.o.p." in Item 445g, as I think they have done, has the result of retaining Camerons. the effectiveness of that item instead of rendering it "virtually ineffective" as the Board stated would have been the case had it decided otherwise. Its interpretation of the "n.o.p." in that item does not result in eliminating it from the item itself, as suggested by counsel for the appellant, but allows it to be effective in cases where, in other items, it is clear that electric motors are intended to be included. Examples of the former may be found in Item 409q(2)— "Electric motors incorporated in or attached to ... agricultural implements or agricultural machinery"—and in Item 410a(ii)—"Trucks or tractors, self-propelled, mounted on wheels or endless tracks, including motive power ..." A further argument was submitted to the Board by counsel for the Minister, namely, that the electric motor which was imported was by itself "Machinery, composed wholly or in part of iron or steel;" and since electric motors were provided for eo nomine in Item 445g, the presence of the "n.o.p." provisions in Item 427a excluded the motor from the latter item. The Board did not refer to that submission in its declaration and I do not know, therefore, what weight, if any, it placed thereon. A similar argument was submitted to me on the appeal. There is perhaps much to be said in favour of that submission. Electric motors are undoubtedly "machinery composed wholly or in part of iron or steel" and are manufactured in Canada. The Board might perhaps have reached the same conclusion on the basis of that submission, but in view of my finding on the main point in dispute, I do not find it necessary to consider it or the other submissions made by counsel for the Minister. For these reasons my answer to the question of law submitted is "No". The appeal therefore fails and will be dismissed.
Ex. C.R. EXCHEQUER COURT OF CANADA There remains only the question of costs. In accordance with the principles established by the President of this Court in The Goodyear Tire and Rubber Co. of Canada Ltd., et al. v. The T. Eaton Co. Ltd., et al. (1), lant will be required to pay only one set of costs, namely, M those of the Deputy Minister, counsel for whom had the REVEN main conduct of the case against the appellant. The other Cameron J. respondent will pay its own costs. 299 1956 ACCESSORIES MACITDNEBY the appel- D PUTY INISTER of N E — Judgment accordingly.
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