KORHANI CANADA INC.
PRESIDENT OF THE CANADA BORDER SERVICES AGENCY
Appeal No. AP-2007-008
Decision and reasons issued
Tuesday, November 18, 2008
TABLE OF CONTENTS
IN THE MATTER OF an appeal heard on February 28, 2008, under
subsection 67(1) of the Customs Act, R.S.C. 1985 (2d
Supp.), c. 1;
AND IN THE MATTER OF a decision of the President of the Canada
Border Services Agency, dated March 28, 2007, with respect to a
request for review of an advance ruling, under subsection 60(4) of
the Customs Act.
KORHANI CANADA INC.
THE PRESIDENT OF THE CANADA BORDER SERVICES
The appeal is allowed.
James A. Ogilvy
James A. Ogilvy
Place of Hearing:
Date of Hearing:
February 28, 2008
Ellen Fry, Presiding Member
James A. Ogilvy, Member
Diane Vincent, Member
Counsel for the Tribunal:
Senior Research Officer:
Manager, Registrar Office:
Korhani Canada Inc.
Andrew T. Simkins
President of the Canada Border Services Agency
Director, Juvenile Categories
Sandylion Sticker Designs
Leslie J. Allen
Senior Scientific Advisor
Canada Border Services Agency
Please address all communications to:
Canadian International Trade Tribunal
Standard Life Centre
333 Laurier Avenue West
1. This is an appeal filed by Korhani Canada Inc. (Korhani)
under subsection 67(1) of the Customs Act
decision made on March 28, 2007, by the President of the Canada
Border Services Agency (CBSA) under subsection 60(4).
2. The issue in this appeal
is whether various styles and sizes of interactive play mats (the
goods in issue) are properly classified under tariff item No.
5703.20.10 of the schedule of the Customs
as machine tufted carpets of nylon, as
determined by the CBSA, or should be classified under tariff item
No. 9503.90.00 as other toys, as claimed by Korhani.
3. On June 15, 2006, Korhani submitted a request for an advance
ruling with respect to the tariff classification of the goods in
issue. On September 19, 2006, the CBSA issued an advance ruling
pursuant to paragraph 43.1(1)(c) of the Act and
classified the goods in issue under tariff item No. 5703.20.10 as
machine tufted carpets of nylon.
4. On October 3, 2006, Korhani requested a review of the advance ruling pursuant to
subsection 60(2) of the Act. Korhani requested that the
goods in issue be classified under tariff item No. 9503.90.00 as
On March 28, 2007, the CBSA issued its
decision under subsection 60(4). The CBSA held that the goods in
issue were properly classified under tariff item No. 5703.20.10 as
machine tufted carpets of nylon, thereby affirming its advance
5. On June 25, 2007, Korhani filed the present appeal with the
Canadian International Trade Tribunal (the Tribunal).
6. The Tribunal held a public hearing in Ottawa, Ontario, on
February 28, 2008. Mr. David Hiltz, Director, Juvenile Categories,
at Sandylion Sticker Designs, appeared as a witness for Korhani.
Prior to his employment with Sandylion Sticker Designs, Mr. Hiltz
was employed as the Director of Procurement and Licensing at
Mr. Leslie J. Allen, Senior Scientific
Advisor with the CBSA, appeared as a witness for the CBSA. Mr.
Allen was qualified by the Tribunal as an expert in the analysis of
GOODS IN ISSUE
7. The goods in issue are various styles of interactive play
mats which are part of Korhani’s “K” series of
They are mainly supplied by Misr American
Carpet Mills of Cairo, Egypt,6
and are imported into Canada
8. The goods in issue are made of 100 percent nylon filament
loop pile tufts with an anti-slip gel foam backing and range in
size from 1.0 m x 1.2 m to 1.0 m x 2.0 m. The top surface of the
goods is printed with various designs which divide the mats into
two categories: generic (unlicensed) play mats and licensed play
9. The generic play mats are the “City Life”, “Canadian Tire
City Life” and “Rona Warehouse City Life” play mats. Each play mat
is printed to depict a city setting with features such as roads,
houses, a hospital, a police station and an airport. The “Canadian
Tire City Life” and “Rona Warehouse City Life” play mats also
depict their respective stores in the centre of the mat.
10. The licensed play mats feature characters from ©Disney
(Winnie the Pooh, Cinderella and Cars), Nickelodeon (SpongeBob
SquarePants and Dora the Explorer) and Marvel Comics (Spider-Man).
Each play mat is printed with a map-like setting consisting of
pathway or roadway scenes with licensed characters. The play mats
show various locations relating to the television show, movie, etc.
in which the characters appear.
11. Korhani filed six samples of interactive play mats from its
“K” series as physical exhibits.7
Although these exhibits did
not cover Korhani’s entire range of interactive play mats, Mr.
Hiltz stated that the physical characteristics of the play mats
submitted were indicative of the physical characteristics of all
“K” series interactive play mats.8
Korhani also filed two
additional physical exhibits of goods which were not in issue but
were used for comparative purposes.9
12. The CBSA filed one physical exhibit that was a sample of an
interactive play mat analysed by the CBSA’s Laboratory and
Scientific Services Directorate.10
13. On appeals under
section 67 of the Act concerning tariff classification
matters, the Tribunal determines the proper tariff classification
of the goods in accordance with prescribed interpretative
14. The tariff
nomenclature is set out in detail in the schedule to the
Customs Tariff, which provides a comprehensive list of
goods divided into sections and chapters. Each chapter contains a
list of goods categorized in headings and subheadings and under
tariff items. Sections and chapters may include notes concerning
their interpretation. Sections 10 and 11 of the Customs
Tariff prescribe the approach that the Tribunal must follow
when interpreting the schedule in order to come to the proper
15. Subsection 10(1) of the Customs Tariff reads as
follows: “. . . the classification of imported goods
under a tariff item shall, unless otherwise provided, be determined
in accordance with the General Rules for the Interpretation of the
Harmonized System and the Canadian Rules set out
in the schedule.”
16. The General Rules comprise six rules.
Classification begins with Rule 1, which reads as follows:
“. . . for legal purposes, classification shall be
determined according to the terms of the headings and any relative
Section or Chapter Notes and, provided such headings or Notes do
not otherwise require, according to the following provisions.” If
the Tribunal cannot determine the classification of the goods in
accordance with Rule 1, it must move on to Rule 2, and so
17. Section 11 of the Customs Tariff states the
following: “In interpreting the headings and subheadings, regard
shall be had to the Compendium of Classification Opinions to the
Harmonized Commodity Description and Coding System and the
Explanatory Notes to the Harmonized Commodity Description and
Coding System, published by the Customs Co-operation
Council (also known as the World Customs Organization), as amended
from time to time.” Therefore, unlike section and chapter notes,
the Classification Opinions and the Explanatory
Notes are not binding on the Tribunal in its classification of
imported goods. However, the Federal Court of Appeal has stated
that the Explanatory Notes should be respected unless
there is a sound reason to do otherwise, and it is reasonable to
conclude that the same treatment should apply to the
18. Once the Tribunal has used this process to determine the
heading in which the goods should be classified, the next step is
to determine the proper subheading and tariff item, applying Rule 6
of the General Rules in the case of the former and the
Canadian Rules in the case of the latter.
19. As previously stated, the issue in this appeal is whether
various styles and sizes of interactive play mats are properly
classified under tariff item No. 5703.20.10 as machine tufted
carpets of nylon, as determined by the CBSA, or should be
classified under tariff item No. 9503.90.00 as other toys, as
claimed by Korhani. Consequently, the dispute between the parties
arises at the heading level.
20. The nomenclature of the Customs Tariff which
Korhani claims should apply to the goods in issue reads as
95.03 Other toys; reduced-size (“scale”) models and
similar recreational models, working or not; puzzles of all
. . .
21. The nomenclature of the Customs Tariff which the
CBSA ruled applicable to the goods in issue reads as follows:
57.03 Carpets and other textile floor coverings, tufted,
whether or not made up.
. . .
5703.20 -Of nylon or other polyamides
5703.20.10 - - -Machine tufted
22. As submitted by the parties, the notes relating to Section
XI (which includes Chapter 57) and to Chapter 57 are relevant for
the purposes of determining in which heading the goods in issue are
to be classified.17
23. Note 1(t) to Section XI reads as follows:
1. This Section does not cover:
. . .
(t) Articles of Chapter 95 (for example, toys, games,
sports requisites and nets);
. . .
24. Note 1 to Chapter 57 reads as follows:
1. For the purpose of this Chapter, the term “carpets and other
textile floor coverings” means floor coverings in which textile
materials serve as the exposed surface of the article when in use
and includes articles having the characteristics of textile floor
coverings but intended for use for other purposes.
25. While Korhani agreed that the goods in issue are made of
nylon filament loop pile tufts with an anti-slip gel foam backing
and are thus prima facie classifiable in heading No. 57.03
as tufted carpets, it argued that, on the basis of Note 1(t) to
Section XI, it is necessary to first determine whether the goods in
issue are considered articles of Chapter 95. In other words, it
submitted that the goods in issue cannot be classified in Section
XI unless it is first determined that they cannot be classified in
Chapter 95. Korhani also submitted that there are no notes to
Section XX (which includes Chapter 95) and that the notes to
Chapter 95 do not exclude the goods in issue from
26. The CBSA took the position that the design of the goods in
issue should not result in their classification in heading No.
95.03 as other toys, as this would be contrary to Note 1 to Chapter
57. The CBSA argued that, even if the goods in issue are intended
for use for other purposes, the application of Note 1 to
Chapter 57 means that they must still be considered textile floor
coverings and should thus be classified in heading No. 57.03 as
27. In the Tribunal’s view, it is clear that Note 1(t) to
Section XI precludes articles of Chapter 95 from being classified
in Section XI (i.e. in Chapters 50 to 63). Although Note 1 to
Chapter 57 is relevant for the purposes of determining whether
goods can be classified in that chapter, it must be interpreted in
a manner that gives effect to Note 1(t) to Section XI.
28. Accordingly, the Tribunal will first determine whether the
goods in issue are articles of Chapter 95 and, in particular,
whether they can be classified in heading No. 95.03 as other toys.
If the Tribunal determines that the goods in issue are in fact such
“other toys”, they will be precluded from classification in
Chapters 50 to 63, and the Tribunal will then determine the proper
classification at the subheading and tariff item levels. If the
Tribunal determines that the goods in issue do not constitute
“other toys”, it will then determine whether they can be classified
in heading No. 57.03.
Are the Goods in Issue
Articles of Chapter 95?
29. Korhani submitted that the Explanatory Notes to
Chapter 95 and heading No. 95.03, the Tribunal’s previous decisions
regarding toys and dictionary definitions of the word “toy”
indicate that toys are objects that children or adults play with to
derive amusement and pleasure. In its view, the goods in issue
satisfy these criteria, as they are designed and marketed as play
surfaces upon which a child can interact with the various printed
designs by positioning toys, such as cars, road signs, action
figures and dolls, along the pathways, roadways or in other
identifiable locations printed on the goods in issue. Korhani also
submitted that, contrary to the CBSA’s contention, the amusement
value derived from the goods in issue is more than visual, as the
goods assist in play with action figures and toys as would a doll
house, a child’s race track or a puppet theatre.
30. The witness for Korhani testified that the goods in issue
were created to provide play value. He indicated that all aspects
of the goods in issue, such as the artwork, the construction, the
size and the scale, were designed to achieve that purpose. Korhani
also made reference to two U.S. classification rulings which, it
submitted, supported its position.18
31. The CBSA submitted that the goods in issue are not toys, but
rather carpets with colourful designs or patterns that appeal to
children and have a soft and comfortable playing surface. It argued
that the visual amusement derived from the goods in issue is no
different from that derived from similar designs printed on
children’s bedding, draperies, headboards/footboards, storage bins,
wallpaper, wall hangings, sleeping bags, light fixtures, etc.
Relying on the Tribunal’s decision in Regal Confections Inc. v.
the CBSA submitted that, while the goods
in issue may provide visual amusement, this quality alone does not
make them toys. In this respect, it noted that the goods in issue
are not sold as sets with toys, such as cars, road signs or action
figures. The CBSA also made reference to a U.S. classification
ruling in support of its position.20
32. In the Tribunal’s opinion, the Explanatory Notes to
Chapter 95 and heading No. 95.03, as well as dictionary definitions
of the word “toy”, help delineate the scope of application of
heading No. 95.03. The Explanatory Notes to Chapter 95
read as follows: “This Chapter covers toys of all kinds whether
designed for the amusement of children or
adults. . . .” The Explanatory Notes to
heading No. 95.03 are similar and read as follows: “This heading
covers toys intended essentially for the amusement of persons
(children or adults). . . .” The Concise Oxford
Dictionary defines a “toy” as “a plaything, [especially] for a
and the Canadian Dictionary of the
English Language defines a “toy” as “[a]n object for children
to play with.”22
On the basis of the foregoing, the
Tribunal considers that heading No. 95.03 covers objects that
children or adults play with.
33. This view was also held by the Tribunal in Franklin Mint
Inc. v. President of the Canada Border Services
where it considered the play value of an
object as an identifying aspect of it being a toy. In the
Tribunal’s view, such play value can be ascertained by examining
the intended use of the goods as well as their actual use. Factors
that may be taken into consideration for the purposes of
determining the intended use of the goods include the design of the
goods and the manner in which they are marketed, packaged and
34. Korhani’s evidence focussed on such factors. Although the
goods in issue have various themes, each is essentially a floor mat
that depicts either a city setting (e.g. the urban area near a
Canadian Tire store) or a map-like setting consisting of pathway or
roadway scenes with licensed characters (e.g. Winnie the Pooh’s 100
Acre Wood). According to Korhani, the goods in issue are designed
to allow children to interact with the printed designs by
manoeuvring or positioning various toys on the pathways, roadways
or other identifiable locations printed on the goods in issue.
35. At the hearing, Mr. Hiltz testified that the goods in issue
were developed with the specific intent of creating a product that
would provide play value for children between three and six years
Mr. Hiltz further stated Korhani’s intent
with respect to the goods in issue as follows:
. . . In the imaginative play that children have
as part of their growing up process, they simulate and replicate
the situations they see in shows.
It was that imaginative play that we wanted to tap into. Knowing
that, we intentionally set out to make play mats in a fashion that
would have character homes, locations that are frequently viewed in
a series, that would allow children to duplicate that imaginative
So in the case of Spongebob Squarepants, a character or a series
from the successful series from Nickelodeon, he lives under the sea
and has a pineapple home and there is a paddy shack and there are
all kinds of different locations that the characters live and have
So we duplicated that situation, as we did with cars, and so on.
That was a concerted plan to promote that type of product in that
36. Mr. Hiltz testified that, moreover, in order to allow
children to have imaginative play with the goods in issue, the art
elements printed on the goods (e.g. roadways, pathways and other
locations) were created using the scale which is most commonly used
in the toy industry. For example, the Rona Warehouse City Life play
mat, which has various roads leading to a fire station, a heliport,
houses, a construction zone and a police station, and which has a
Rona warehouse as its primary focal point, was specifically
designed to accommodate 1/64th scale vehicles.26
According to Mr. Hiltz, this is a benchmark scale in the toy
industry and is used by Mattel to manufacture its Hot Wheels, which
are sold in the millions.27
37. With respect to the construction of the goods in issue, Mr.
Hiltz explained that a loop pile construction was used in order to
provide a firm surface on which to move vehicles and characters, as
well as to allow for better-defined artwork.28
Hiltz drew a distinction between this type of construction and a
cut pile construction, which was used on the Beautiful
rug that Korhani also carries and that is
not in issue. According to Mr. Hiltz, while such a cut pile
construction results in a more luxuriant and decorative product, it
is not suitable for interactive play, as its high pile does not
define small details very well and does not allow for the easy
movement of vehicles or characters.30
38. Concerning marketing, packaging and advertising, Korhani
filed in evidence product labels and marketing materials for many
of the goods in issue indicating that they are intended for
interactive play. For example, the product label for the “Canadian
Tire City Life” play mat includes the following description: “It’s
a rug. It’s a toy. It’s a game, it’s fun.” 31
addition, the illustration on the label shows children playing with
toy vehicles and characters on the mat. Another example includes
the description of the “City Life” play mat on the Home Depot Web
site, which reads: “Fun rugs with a creative interactive play
Another example is the description of the
“Dora the Explorer” play mat in a Toys “R” Us flyer, which reads:
“Spend hours of family fun time on these large colourful carpeted
The illustration in the flyer shows a
young girl sitting and playing on the mat.
39. Regarding the actual use of the goods in issue, Korhani
filed in evidence reviews of the “City Life” play mat submitted by
parents on the Home Depot Web site which indicate that this
particular product is actually used as a toy. One review read as
follows: “I bought this mat for my youngest son, and now both of my
children get hours of enjoyment out of this
mat. . . . ”34
Another review stated as
follows: “My son plays with his cars on this mat for at least an
hour a day. The mat has a home for every vehicle-airplane,
firetruck, tow-truck and lots of traffic patterns to keep little
minds busy. . . . A real life-saver. This is my
3 1/2 year olds most favourite thing.”35
40. On the basis of the above evidence, the Tribunal is of the
opinion that the goods in issue provide play value and should thus
be considered toys. The evidence clearly demonstrates that the
goods in issue have been both designed and marketed with the
specific intent that they be used by children as objects to play
with. There is also some evidence to confirm that this objective
has in fact been achieved, in that children have actually been
using the goods in issue to play with.
41. In addition to being used as toys, the goods in issue can be
used as carpets in the traditional sense. However, the fact that
the goods in issue may also have a utilitarian function does not,
in the Tribunal’s view, preclude them from being classified as
toys. Because the goods in issue satisfy the terms of heading No.
95.03, Note 1(t) to Section XI automatically precludes them from
classification in heading No. 57.03.
42. Both parties submitted U.S. classification rulings in
support of their positions. The Tribunal notes that these are
administrative rulings by government officials and not decisions by
an independent quasi-judicial body. Further, even if they were such
decisions, since they are drawn from another jurisdiction, they
would not constitute valid jurisprudence in the Canadian context.
Parties are free to use such rulings to support their positions if
they believe that they will be useful in helping to explain their
arguments. However, parties should not expect that the Tribunal
will give them significant weight in its own decisions.
43. In any event, the Tribunal notes that the U.S. ruling
provided by the CBSA concerns the classification of a product that
is different from the goods in issue and is therefore not relevant
to this appeal.36
44. In light of the foregoing, the Tribunal finds that the goods
in issue are properly classified in heading No. 95.03 as other toys
and, by the application of Note 1(t) to Section XI, precluded from
classification in heading No. 57.03.
Classification at the
Subheading and Tariff Item Levels
45. Having determined that the goods in issue are properly
classified in heading No. 95.03, the Tribunal must now turn to the
classification at the subheading and tariff item levels. Heading
No. 95.03 has nine first-level subheadings. However, as eight of
those subheadings pertain to specific types of toys or toy sets
that do not include the goods in issue, the goods in issue must be
classified in the remaining subheading as other toys. Therefore,
pursuant to Rule 6 of the General Rules, the goods in
issue are classified in subheading No. 9503.90.
46. As subheading No. 9503.90 is not further divided at the
tariff item level, the goods in issue are classified under tariff
item No. 9503.90.00.
47. For the foregoing reasons, the Tribunal concludes that the
goods in issue are properly classified under tariff item No.
9503.90.00 as other toys.
48. The appeal is therefore allowed.
. R.S.C. 1985 (2d Supp.), c. 1
. S.C. 1997, c. 36.
. On January 1, 2007, a number of amendments
to the schedule to the Customs Tariff took effect. As a
result of these amendments, goods that were previously classified
under tariff item No. 9503.90.00 were classified under tariff item
No. 9503.00.90. For the purposes of this appeal, the Tribunal will
refer to the tariff nomenclature that was in effect when the CBSA
issued its original advance ruling, i.e. September 19, 2006.
. Transcript of Public Hearing, 28
February 2008, at 7.
. In its brief, Korhani made reference to 11
specific styles of interactive play mats, which had the following
model numbers: K69900, K02016, K02013, K02015, K69902, K02722,
K03549, K02950, K03279, K02560 and K03548. See Tribunal Exhibit
AP-2007-008-4A, at para. 7.
. In certain rare instances, the goods in
issue have been manufactured elsewhere in order to meet customer
deadlines. See Transcript of Public Hearing, 28 February
2008, at 61, 73.
. Exhibit A-1: “Cars Interactive Play Rug”,
model No. K03548; Exhibit A-2: “Pooh’s Trail Play Mat”, model
No. K03549; Exhibit A-3: “Canadian Tire City Life Play Rug”,
model No. K69902; Exhibit A-4: “City Life Play Mat”, model No.
K69900; Exhibit A-5: “Rona Warehouse City Life Play Mat”, model No.
K02722; and Exhibit A-6: “SpongeBob SquarePants Play Mat”,
model No. K02560.
. Transcript of Public Hearing, 28
February 2008, at 78.
. Exhibit A-7: “Disney Princess Beautiful
Aurora Mat”, model No. K02903; Exhibit A-8: “Breyer Stablemates
Play Mat”, model No. 59230.
. Exhibit B-1: “SpongeBob Interactive Play
Mat”, model No. K02013.
. S.C. 1997, c. 36, schedule [General
. S.C. 1997, c. 36, schedule.
. Rules 1 through 5 of the General
Rules apply to classification at the heading level (i.e. to
four digits). Pursuant to Rule 6 of the General Rules,
Rules 1 through 5 are applicable to classification at the
subheading level. Similarly, the Canadian Rules make Rules
1 through 5 of the General Rules applicable to
classification at the tariff item level.
. World Customs Organization, 2d ed.,
Brussels, 2003 [Classification Opinions].
. World Customs Organization, 3d ed.,
Brussels, 2002 [Explanatory Notes].
. In Canada (Attorney General) v.
Suzuki Canada Inc., 2004 FCA 131 (CanLII), the Federal Court
of Appeal stated as follows: “. . . the Explanatory
Notes are intended by Parliament to be an interpretative guide to
tariff classification in Canada and must be considered within that
context. To satisfy their interpretative purpose, and to ensure
harmony within the international community, the Explanatory Notes
should be respected unless there is a sound reason to do
otherwise. . . . Expert evidence can, in some
circumstances, provide such a reason. However, even in a case where
the Tribunal could reasonably choose not to apply the Explanatory
Notes, it does not have the authority to rewrite or ignore such
Notes by redefining their terms.”
. The Tribunal notes that an amendment to
Note 1 to Chapter 95, which took effect on January 1, 2007, could
potentially have an impact on the classification of the goods in
issue after this date. However, while advance rulings are
prospective in nature, the Tribunal will not consider this
amendment in the context of the present appeal as the decision
under appeal was made on the basis of the legislation in force when
the advance ruling was issued (i.e. September 19, 2006). This is
clear from the CBSA’s March 28, 2007, decision, which states that
“. . . [the] decision is based on the 2006 Tariff of
the Harmonized Schedule (HS) as it relates to the date of the
disputed Advance Ruling . . . .”
. Tribunal Exhibit AP-2007-008-4A, tab
. (25 June 1999), AP-98-043, AP-98-044
and AP-98-051 (CITT).
. Tribunal Exhibit AP-2007-008-6A, tab
. Ninth Edition, s.v. “toy”.
. S.v. “toy”.
. (13 June 2006), AP-2004-061 (CITT).
. Transcript of Public Hearing,
28 February 2008, at 10, 71.
. Ibid. at 11-12.
. Ibid. at 29.
. Ibid. at 30.
. Ibid. at 12, 54.
. Exhibit A-7: Disney Princess Beautiful
Aurora Mat, model No. K02903.
. Transcript of Public Hearing,
28 February 2008, at 54-55.
. Tribunal Exhibit AP-2007-008-17A, tab
. Tribunal Exhibit AP-2007-008-4A, tab
. The product is described as a rug
having a cut pile surface and featuring a check design and the Walt
Disney character and the words “Mickey Mouse”. There is no
indication that there are any interactive elements printed on the
rug. See Tribunal Exhibit AP-2007-008-6A, tab 7.