IN THE MATTER OF an appeal heard on July 11, 2017, pursuant to section 67 of the Customs Act, R.S.C., 1985, c. 1 (2nd Supp.);
AND IN THE MATTER OF a decision of the President of the Canada Border Services Agency, dated October 21, 2016, with respect to a request for re-determination pursuant to subsection 60(4) of the Customs Act.
The appeal is allowed.
64.01 - Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes.
6401.10 - -Footwear incorporating a protective metal toe-cap
- - -Of rubber:
6401.10.19 - - - - -Other
64.06 - Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof.
6406.90 - -Other
6406.90.90 - - - -Other
There are no relevant section notes. The relevant legal notes for Chapter 64 provide as follows:
3. - For the purposes of this Chapter:
(a) - the terms “rubber” and “plastics” include woven fabrics or other textile products with an external layer of rubber or plastics being visible to the naked eye; for the purpose of this provision, account should be taken of any resulting change of colour . . . .
4. - Subject to Note 3 to this Chapter:
(a) - The material of the upper shall be taken to be the constituent material having the greatest external surface area, no account being taken of accessories or reinforcements such as ankle patches, edging, ornamentation, buckles, tabs, eyelet stays or similar attachments;
(b) - The constituent material of the outer sole shall be taken to be the material having the greatest surface area in contact with the ground, no account being taken of accessories or reinforcements such as spikes, bars, nails, protectors or similar attachments.
The relevant explanatory notes to Chapter 64 provide as follows:
With certain exceptions (see particularly those mentioned at the end of this General Note) this Chapter covers, under headings 64.01 to 64.05, various types of footwear (including overshoes) irrespective of their shape and size, the particular use for which they are designed, their method of manufacture or the materials of which they are made.
For the purposes of this Chapter, the term “footwear” does not, however, include disposable foot or shoe coverings of flimsy material (paper, sheeting of plastics, etc.) without applied soles. These products are classified according to their constituent material.
(A) - Footwear may range from sandals with uppers consisting simply of adjustable laces or ribbons to thigh-boots (the uppers of which cover the leg and thigh, and which may have straps, etc., for fastening the uppers to the waist for better support). The Chapter includes:
(1) - Flat or high-heeled shoes for ordinary indoor or outdoor wear.
(2) - Ankle-boots, half-boots, knee-boots and thigh-boots.
(3) - Sandals of various types, “espadrilles” (shoes with canvas uppers and soles of plaited vegetable material), tennis shoes, jogging shoes, bathing slippers and other casual footwear.
(4) - Special sports footwear which is designed for a sporting activity and has, or has provision for, the attachment of spikes, sprigs, stops, clips, bars or the like and skating boots, ski-boots and cross-country ski footwear, snowboard boots, wrestling boots, boxing boots and cycling shoes (see Subheading Note 1 to the Chapter).
Roller-skating or ice-skating boots with skates fixed to the soles, are, however, excluded (heading 95.06).
(5) - Dancing slippers.
(6) - House footwear (e.g., bedroom slippers).
(7) - Footwear obtained in a single piece, particularly by moulding rubber or plastics or by carving from a solid piece of wood.
(8) - Other footwear specially designed to protect against oil, grease, chemicals or cold.
(9) - Overshoes worn over other footwear; in some cases, they are heel-less.
(10) - Disposable footwear, with applied soles, generally designed to be used only once.
. . .
Within the limits of the Chapter itself, however, it is the constituent material of the outer sole and of the upper which determines classification in headings 64.01 to 64.05.
(C) - The term “outer sole” as used in headings 64.01 to 64.05 means that part of the footwear (other than an attached heel) which, when in use, is in contact with the ground. The constituent material of the outer sole for purposes of classification shall be taken to be the material having the greatest surface area in contact with the ground. In determining the constituent material of the outer sole, no account should be taken of attached accessories or reinforcements which partly cover the sole (see Note 4 (b) to this Chapter). These accessories or reinforcements include spikes, bars, nails, protectors or similar attachments (including a thin layer of textile flocking (e.g., for creating a design) or a detachable textile material, applied to but not embedded in the sole).
In the case of footwear made in a single piece (e.g., clogs) without applied soles, no separate outer sole is required; such footwear is classified with reference to the constituent material of its lower surface.
(D) - For the purposes of the classification of footwear in this Chapter, the constituent material of the uppers must also be taken into account. The upper is the part of the shoe or boot above the sole. However, in certain footwear with plastic moulded soles or in shoes of the American Indian moccasin type, a single piece of material is used to form the sole and either the whole or part of the upper, thus making it difficult to identify the demarcation between the outer sole and the upper. In such cases, the upper shall be considered to be that portion of the shoe which covers the sides and top of the foot. The size of the uppers varies very much between different types of footwear, from those covering the foot and the whole leg, including the thigh (for example, fishermen’s boots), to those which consist simply of straps or thongs (for example, sandals).
- If the upper consists of two or more materials, classification is determined by the constituent material which has the greatest external surface area, no account being taken of accessories or reinforcements such as ankle patches, protective or ornamental strips or edging, other ornamentation (e.g., tassels, pompons or braid), buckles, tabs, eyelet stays, laces or slide fasteners. The constituent material of any lining has no effect on classification.
. . .
(H) - Boot or shoe bottoms, consisting of an outer sole affixed to an incomplete or unfinished upper, which do not cover the ankle are to be regarded as footwear (and not as parts of footwear). These articles may be finished simply by trimming their top edge with a border and adding a fastening device.
The relevant explanatory notes for tariff item No. 64.01 provide as follows:
This heading covers waterproof footwear with both the outer soles and the uppers (see General Explanatory Note, paragraphs (C) and (D)), of rubber (as defined in Note 1 to Chapter 40), plastics or textile material with an external layer of rubber or plastics being visible to the naked eye (see Note 3 (a) to this Chapter), provided the uppers are neither fixed to the sole nor assembled by the processes named in the heading.
The heading includes footwear constructed to protect against penetration by water or other liquids and would include, inter alia, certain snow-boots, galoshes, overshoes and ski-boots.
Footwear remains in this heading even if it is made partly of one and partly of another of the specified materials (e.g., the soles may be of rubber and the uppers of woven fabric with an external layer of plastics being visible to the naked eye; for the purpose of this provision no account should be taken of any resulting change of colour).
The relevant explanatory notes for heading No. 64.06 provide as follows:
This heading covers:
(A) - The various component parts of footwear; these parts may be of any materials except asbestos.
Parts of footwear may vary in shape according to the types or styles of footwear for which they are intended. They include:
(1) - Parts of uppers (e.g., vamps, toecaps, quarters, legs, linings and clog straps), including pieces of leather for making footwear cut to the approximate shape of uppers.
(2) - Stiffeners. These may be inserted between the quarters and lining, or between the toecap and lining, to give firmness and solidity at these parts of the footwear.
(3) - Inner, middle and outer soles, including half soles or patins; also in-soles for glueing on the surface of the inner soles.
(4) - Arch supports or shanks and shank pieces (generally of wood, leather, fibreboard or plastics) for incorporation in the sole to form the curved arch of the footwear.
(5) - Various types of heels made of wood, rubber, etc., including glue-on, nail-on and screw-on types; parts of heels (e.g., top pieces).
(6) - Studs, spikes, etc., for sports footwear.
(7) - Assemblies of parts (e.g., uppers, whether or not affixed to an inner sole) not yet constituting nor having the essential character of footwear as described in headings 64.01 to 64.05.
. R.S.C., 1985, c. 1 (2nd Supp.) [Act].
. Exhibit AP-2016-038-04, tab 7, Vol. 1.
. Exhibit AP-2016-038-06A, tab 8, Vol. 1.
. Canada is a signatory to the International Convention on the Harmonized Commodity Description and Coding System, which governs the Harmonized System.
. S.C. 1997, c. 36, schedule [General Rules].
. S.C. 1997, c. 36, schedule.
. World Customs Organization, 4th ed., Brussels, 2017.
. World Customs Organization, 6th ed., Brussels, 2017 [Explanatory Notes].
. See Canada (Attorney General) v. Suzuki Canada Inc., 2004 FCA 131 (CanLII) [Suzuki] at paras. 13, 17, where the Federal Court of Appeal interpreted section 11 of the Customs Tariff as requiring that the explanatory notes be respected unless there is a sound reason to do otherwise. The Tribunal is of the view that this interpretation is equally applicable to the classification opinions.
. Canada (Attorney General) v. Igloo Vikski Inc., 2016 SCC 38 (CanLII) [Igloo Vikski] at para. 21.
. Explanatory Notes, Introduction at 1.
. Igloo Vikski at para. 4.
. Igloo Vikski at para. 3; Suzuki at para. 4; Deputy Canada (Minister of National Revenue) v. Yves Ponroy Canada, 2000 CanLII 15801 (FCA).
. While the principles of statutory interpretation may not strictly apply to explanatory notes, which are not legislation passed by Parliament, they can help reconcile diverging versions of the explanatory notes. See for example Unitool Inc. (4 December 2014), AP-2013-060 (CITT) at para. 62. See also, more generally, regarding the interpretation of explanatory notes: Canada (Border Services Agency) v. Decolin Inc., 2006 FCA 417 (CanLII).
. R. v. Daoust  1 SCR 217, 2004 SCC 6 (CanLII). Indeed, both parties agreed that the shared meaning rule can helpfully apply to determine the correct meaning of explanatory note H to Chapter 64 in this case, although they disagreed on the results of the exercise. See Transcript of Public Hearing, 11 July 2017, at 18, 52.
. Prior to the Tribunal’s hearing in this appeal, the Tribunal directed parties to address the French text of explanatory note H to Chapter 64, as well as the bilingual meaning of this note at the hearing.
. Exhibit AP-2016-038-06A at para. 28, Vol. 1.
. The CBSA submitted that explanatory note H to Chapter 64 “places no limits on the level of work which would be required to complete or finish the upper, the cost of future components of the upper, or surface area of the upper upon completion relative to the product at the time of importation.” Exhibit AP-2016-038-06A at para. 28, Vol. 1.
. Transcript of Public Hearing, 11 July 2017, at 41.
. Exhibit AP-2016-038-04, tab 14, Vol. 1.
. Canadian Tire Corporation, Limited v. President of the Canada Border Services Agency (12 June 2014), AP-2013-042 at para. 38.
. As the CBSA pointed out, explanatory note H to Chapter 64 shows that there may be situations where a product that may not have full functionality could still be regarded as footwear pursuant to Rule 1. As discussed below, however, the goods in issue do not meet the requirements of explanatory note H.
. Laxus Products Ltd. (11 January 2001), AP-99-117 at 4; Transcript of Public Hearing, 11 July 2017, at 62. The CBSA’s argument regarding what can prima facie be considered footwear on the basis of Laxus Products disregards the full context of that case. The Tribunal in that case dealt with childrens’ slippers, which also met the prima facie definition of a toy. In addition to the elements of the Tribunal’s decision identified by the CBSA, the Tribunal also found that the goods in issue were to be “used indoor”. This highlights the contextual aspect of the Tribunal’s comments in Laxus Products, and the fact that those comments cannot readily be transferred as a test to a case dealing with the classification of components of goods that will eventually be finished into a safety boot. Such a partial reading of the Tribunal’s decision, devoid of its context, cannot support the CBSA’s position.
. Exhibit AP-2016-038-06A at paras. 24-25, Vol. 1.
. Exhibit AP-2016-038-04 at paras. 6-7, Vol. 1.
. Igloo Vikski at para. 21.
. Igloo Vikski at paras. 22-23. In footnote 4 of its reasons, the Supreme Court of Canada makes a comment of particular interest in the context of this case. It reads as follows: “An example of a heading that specifically describes an unfinished good is 64.06 (“Parts of footwear”) . . . .Where a good falls within one of those headings, there would be no need to apply Rule 2, as the heading specifically contemplates the incomplete or composite nature of the goods in question. Rule 1’s direction that the classification of goods should be determined according to the terms of the headings therefore suffices” [emphasis added].
. Specifically, the words “including uppers . . . attached to soles other than outer soles”.
. Atomic Ski Canada Inc. v. Deputy Minister of National Revenue (8 June 1998), AP-97-030 and AP-97-031(CITT) [Atomic Ski] at 6.
. York Barbell Company Limited v. Deputy Minister of National Revenue for Customs and Excise (19 August 1991), AP-90-161 (CITT); Atomic Ski at 6.
. As the Tribunal has already determined that the goods in issue do not constitute footwear, it need not consider this exclusion.
. Rule 2(a) states that “[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article.”
. Renelle Furniture Inc. v. Canada Border Services Agency (23 March 2017), AP-2005-028 (CITT) [Renelle] at para. 18.
. Renelle at para. 22; Outdoor Gear Canada (21 November 2011), AP-2010-060 (CITT) [Outdoor Gear] at para. 41.
. Outdoor Gear at para. 44. In this aspect, the Tribunal reaffirmed earlier decisions in Renelle and Bauer Nike Hockey Inc. v. Deputy M.N.R. (14 February 2001), AP-99-092 (CITT) [Bauer].
. Outdoor Gear at para. 45.
. Bauer at 4-5; Ulextra Inc. v. President of the Canada Border Services Agency (15 June 2011), AP-2010-024 (CITT) at para. 87.
. Outdoor Gear at para. 45. As there is no evidence regarding the marketing of the goods in issue as imported, the Tribunal will not consider this aspect.
. Viessmann Manufacturing Company Inc. v. Deputy Minister of National Revenue (14 November 1997), AP-96-196 to AP-96-198 (CITT) [Viessmann] at 6-7.
. While the insoles could only be added once the boots had been turned into in-line skates, the Tribunal decided that they still had the essential character of a skating boot. The Tribunal also noted that skating boots and in-line skates are two different products in the tariff nomenclature.
. AMI indicated that it produces a leather component in Canada that will be added to the goods in issue after importation in order to make them into a finished product. The cost of this leather component represents between 55% to 60% of the total cost of the boot. The Tribunal notes that, in Viessmann, the Tribunal asked itself whether the value that is added to the goods in issue after importation is of such a considerable proportion as to render “absurd” the claim that the goods as imported have the essential character of the finished or complete goods. The Tribunal is not convinced that the wording used in Viessmann, to the effect that the claim had to be absurd, establishes a test that needs to be met in future cases. The Tribunal, however, does not need to answer this question in the context of this case, given the Tribunal’s finding that the nature and extent of work done to the goods following their importation are sufficient to conclude the goods in issue, at the time of importation, do not have the essential character of footwear.
. Exhibit AP-2016-038-04 at paras. 6-7, Vol. 1.
. Exhibit AP-2016-038-06A at para. 9, Vol. 1.