Reebok Canada v. Deputy M.N.R., Customs and Excise
T-864-94
MacKay J.
30/6/97
16 pp.
Appeal from Canadian International Trade Tribunal (CITT) decision by which payments made by appellant, in accord with exclusive distribution agreements, determined to be part of value for duty of footwear imported into Canada by appellant, and therefore dutiable under Customs Act, s. 48(5)(a)(iv)-Agreements granting Reebok Canada sole and exclusive right and licence to use certain trade marks of Reebok International Inc. and of the Rockport Co., in return for royalties payable to Reebok International Ltd. (RIL US) based on percentage of "net sales price" and to Rockport Co. based on percentage of "gross sales price"-Appeal dismissed-First issue: whether CITT erred in law in interpreting Act, s. 48(5)(a)(iv) by misinterpreting phrase "as a condition of the sale of the goods for export to Canada" as used therein-CITT did not err in its interpretation-Meaning of "condition" depending upon context in which used and general purposes of legislation in question-Royalties required under agreements in question, to RIL and to Rockport, payments within meaning of royalties as defined in s. 48(5)(a)(iv)-Determination consistent with evolving case law in regard to that provision and its predecessor: Polygram Inc. v. The Deputy Minister of National Revenue for Customs and Excise, et al., CITT Appeal Nos. AP-89-151, AP-89-165; Signature Plaza Sport Inc. v. Minister of National Revenue (Customs and Excise) (1990), 32 F.T.R. 287 (F.C.T.D.)-Second issue: Determination of transaction value of goods pursuant to Act, s. 48-Act, s. 48 not requiring determination of actual amount at that time, of importation, or at any other specific time, so long as amount can be determined, as it can herein from record of appellant's payments to RIL US and to Rockport-Payments subsequent to importation of goods, but Department's practice may be to assess duty in relation to transaction value, including estimate at time of importation of royalties payable in relation to goods, subject to subsequent adjustments of duty in relation to amounts of royalties actually paid-Third issue: Interpretation of "royalties and licence fees" in Act, s. 48(5)(a)(iv)-CITT's task thereunder to determine whether payments in issue were within meaning of phrase-CITT did, and did not commit error in doing so-CITT did not err by determining that under Reebok and Rockport agreements royalties provided for were paid for trade marks and constituted royalties within Act, s. 48(5)(a)(iv)-CITT did not err in finding payment "royalties . . . in respect of goods" as provided in Act, s. 48(5)(a)(iv)-CITT implicitly found payments under Reebok and Rockport agreements royalties in respect of goods imported-Agreements described payments as "royalties", paid for benefit derived from sale of goods which bear trade marks, and provision made for payment to be related to net or gross sale prices of goods in question -CITT's decision in this regard clearly not perverse or made without regard to evidence-Fourth issue: Findings of fact by CITT and evidence before it-Inferences and conclusions of fact drawn by CITT in respect of royalties and licence agreements within discretion of CITT on basis of evidence before it-Conclusion commercially sensible and logical on basis of evidence-Customs Act, R.S.C., 1985 (2nd Supp.), c. 1, s. 48(5)(a)(iv).