6572243 CANADA LTD. O/A KWALITY IMPORTS
PRESIDENT OF THE CANADA BORDER SERVICES AGENCY
Appeal No. AP-2010-068
Decision and reasons issued
Friday, August 3, 2012
TABLE OF CONTENTS
IN THE MATTER OF an appeal heard on April 5, 2012, pursuant to
section 67 of the Customs Act, R.S.C. 1985 (2d Supp.), c.
AND IN THE MATTER OF 20 decisions of the President of the Canada
Border Services Agency, dated December 23, 2010, with respect to a
request for re-determination pursuant to subsection 60(4) of the
6572243 CANADA LTD. O/A KWALITY IMPORTS Appellant
THE PRESIDENT OF THE CANADA BORDER SERVICES
The appeal is dismissed.
Jason W. Downey
Jason W. Downey
Place of Hearing: Ottawa, Ontario
Date of Hearing: April 5, 2012
Tribunal Member: Jason W. Downey, Presiding Member
Counsel for the Tribunal: Ekaterina Pavlova
Manager, Registrar Programs and Services: Michel Parent
Registrar Officer: Cheryl Unitt
|6572243 Canada Ltd. o/a Kwality Imports
|President of the Canada Border Services Agency
C.E.O. and Director
Kwality Imports Ltd.
Director, Strategic Office Planning and Interior Design
Design Group Five Partnership
Please address all communications to:
Canadian International Trade Tribunal
333 Laurier Avenue West
1. This is an appeal filed with the Canadian International Trade
Tribunal (the Tribunal) by 6572243 Canada Ltd. o/a Kwality Imports
(Kwality) on March 18, 2011, pursuant to subsection 67(1) of the
2. The appeal concerns 20 decisions of the President of the
Canada Border Services Agency (CBSA) dated December 23, 2010, with
respect to a request for re-determination of the tariff
classification of various models of upholstered sofas, loveseats,
rockers, recliners, chairs and ottomans with wooden
frames2 (the goods in issue), pursuant to subsection
60(4) of the Act.
3. The issue in this appeal is whether the goods in issue are
properly classified under tariff item No. 9401.61.10 of the
schedule to the Customs Tariff3 as other upholstered
seats with wooden frames for domestic purposes, as
determined by the CBSA, or should be classified under tariff item
No. 9401.61.90 as other upholstered seats with wooden
frames, as claimed by Kwality.
4. The parties provided joint submissions containing an agreed
list and description of the goods in issue, including their model
and product names and numbers, suppliers, related original
transactions and invoices.4 The CBSA filed photographs of the goods
in issue, as they were found on Kwality’s website. Kwality provided
photographs showing certain of the goods in issue in various
locations in a hotel setting.
5. The Tribunal held a public hearing in Ottawa, Ontario, on
April 5, 2012. Two witnesses appeared on behalf of Kwality: Mr.
Romy Maggo, C.E.O. and Director, Kwality Imports, and Mr. Antony
Polyzotis, Director, Strategic Office Planning and Interior Design,
Design Group Five Partnership. The Tribunal qualified Mr. Polyzotis
as an expert in interior
6. Although the CBSA had filed an expert witness report, no
expert witness was produced at the hearing.
GOODS IN ISSUE
7. The goods in issue consist of various models of upholstered
sofas, loveseats, rockers, recliners, chairs and ottomans with
8. Mr. Maggo stated that 40 percent of all Kwality’s sales are
for seating products similar to the goods in issue. Its total
annual sales amount to approximately $5 million. Kwality’s client
base comprises about 200 customers located across Canada, most of
which are large-scale wholesalers and distributors, who, in turn,
distribute the goods in issue throughout the retail market.
Kwality’s direct retail sales are said to be limited to a handful
of direct sales to selected customers. Mr. Maggo described
Kwality’s business model as being “B2B”, or, in other words, only
involving sales to wholesalers, distributors and other businesses.
A retail client would not normally be able to buy directly from
Kwality unless they did so through a seller, reseller, wholesaler,
distributor or retail outlet that carried Kwality’s products in its
9. Mr. Maggo claimed that Kwality’s goods are marketed both to
domestic and commercial outlets but was unable to further
substantiate that claim, other than to say that they are
mass-produced, low-ticket “generic” items not intended for any
specific market sector. When asked for the proportion of the goods
in issue that are sold to commercial settings (such as hotels,
restaurants, cafés, bistros, offices or healthcare settings), he
was unable to provide a clear answer, stating that he did not know
who buys these goods from the resellers.
10. Mr. Polyzotis said that he would feel comfortable using the
goods in issue in a commercial setting. He explained that comfort
used to be equated with residential settings, but that, more and
more, companies want to provide employees with comfort and
relaxation in their work environment. It would not be unusual to
see comfortable furniture in corporate breakout rooms, since it
helps to stimulate the generation of ideas.
11. Mr. Polyzotis also used the example of a prominent chain of
coffee houses as an example of a company that was replacing stark,
Spartan commercial settings with a more comfortable environment for
its clients and added that comfort is no longer the exclusive
preserve of the private residence.
12. Mr. Polyzotis drew the Tribunal’s attention to the existence
of another manufacturer who historically has produced furniture for
institutional settings but was now replacing the institutional
design of its furniture with a more residential “look and feel”. He
added that this company’s products would typically be ordered for a
commercial setting even though their recliners are similar to the
goods in issue, except for the larger scale of the furniture and
its more resistant fabric.
13. Mr. Polyzotis also alluded to the website of another
manufacturer known to manufacture institutional furniture,
observing that, although their seats have certain attributes that
make them suitable for the health care industry, such as the
antimicrobial treatment of their fabric, heavy-duty castors and the
absence of quilted material on their exterior surfaces (allowing
for easier clean-up), they are domestically styled and designed
with comfort in mind.
14. Mr. Polyzotis stated that, in the past, commercial furniture
typically would have been more expensive than residential
furniture, but this was no longer the case, pricing no longer being
a clear indicator of quality. According to him, there are as many
good quality low-priced items as there are low quality high-priced
items in the marketplace today. However, elsewhere in his
testimony, Mr. Polyzotis contradicted himself by repeatedly using
the phrase “it depends what you want” to denote that, if one were
ready to pay a higher price, quality and durability would most
probably be added as features. Mr. Polyzotis added that specific
industry certification, such as ANSI, BITMA and CSA Green Guard,
are only voluntary standards, to which some manufacturers adhere
to, particularly for government procurement, insurance or marketing
purposes. There was no evidence that the goods in issue meet any
such industry standards.
15. The tariff nomenclature is set out in detail in the schedule
to the Customs Tariff, which is designed to conform to the
Harmonized Commodity Description and Coding System (the Harmonized
System) developed by the World Customs Organization
(WCO).5 The schedule is divided into sections and
chapters, with each chapter containing a list of goods categorized
in a number of headings and subheadings and under tariff items.
16. Subsection 10(1) of the Customs Tariff provides
that the classification of imported goods shall, unless otherwise
provided, be determined in accordance with the General Rules
for the Interpretation of the Harmonized System6 and the
Canadian Rules7 set out in the schedule.
17. The General Rules comprise six rules.
Classification begins with Rule 1, which provides that
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
18. Section 11 of the Customs Tariff provides that, in
interpreting the headings and subheadings, regard shall be had to
the Compendium of Classification Opinions to the Harmonized
Commodity Description and Coding System8 and the
Explanatory Notes to the Harmonized Commodity Description and
Coding System,9 published by the WCO. While
Classification Opinions and Explanatory
Notes are not binding, the Tribunal will apply them unless
there is a sound reason to do otherwise.10
19. The Tribunal must therefore first determine whether the
goods in issue can be classified at the heading level according to
Rule 1 of the General Rules as per the terms of the
headings and any relative section or chapter notes in the
Customs Tariff, having regard to any relevant
Classification Opinions and Explanatory Notes. If
the goods in issue cannot be classified at the heading level
through the application of Rule 1, then the Tribunal must consider
the other rules.11
20. Once the Tribunal has used this approach to determine the
heading in which the goods in issue should be classified, the next
step is to use a similar approach to determine the proper
subheading.12 The final step is to determine the proper
21. In the instant appeal, there is no disagreement about the
classification of the goods in issue at either the heading or the
subheading level. Rather, the dispute is focussed on the tariff
item level. Disputes of this nature are governed by Rule 1 of the
Canadian Rules, which provides as follows:
For legal purposes, the classification of goods in the tariff
items of a subheading or of a heading shall be determined according
to the terms of those tariff items and any related Supplementary
Notes and, mutatis mutandis, to the General Rules for the
Interpretation of the Harmonized System, on the understanding that
only tariff items at the same level are comparable. For the purpose
of this Rule the relative Section, Chapter and Subheading Notes
also apply, unless the context otherwise requires.
22. The relevant provisions of the Customs Tariff
provide as follows:
MISCELLANEOUS MANUFACTURED ARTICLES
FURNITURE; BEDDING, MATTRESSES, MATTRESS SUPPORTS,
CUSHIONS AND SIMILAR STUFFED FURNISHINGS; LAMPS AND LIGHTING
FITTINGS, NOT ELSEWHERE SPECIFIED OR INCLUDED; ILLUMINATED SIGNS,
ILLUMINATED NAME-PLATES AND THE LIKE; PREFABRICATED
94.01 Seats (other than those of heading 94.02), whether
or not convertible into beds, and parts thereof.
. . .
-Other seats, with wooden frames:
9401.61 - -Upholstered
9401.61.10 - - -For domestic purposes
. . .
9401.61.90 - - -Other
23. There are no
relevant section notes, chapter notes or supplementary notes in
24. Note (A) of the general Explanatory Notes to
Chapter 94 defines the term “furniture” as follows:
For the purposes of this Chapter, the term “furniture”
(A) Any “movable” articles (not included under
other more specific headings of the Nomenclature), which have the
essential characteristic that they are constructed for placing on
the floor or ground, and which are used, mainly with a utilitarian
purpose, to equip private dwellings, hotels, theatres, cinemas,
offices, churches, schools, cafés, restaurants, laboratories,
hospitals, dentists’ surgeries, etc., or ships, aircraft, railway
coaches, motor vehicles, caravan-trailers or similar means of
transport. (It should be noted that, for the purposes of this
Chapter, articles are considered to be “movable” furniture even if
they are designed for bolting, etc., to the floor, e.g., chairs for
use on ships). Similar articles (seats, chairs, etc.) for use in
gardens, squares, promenades, etc., are also included in this
25. The Explanatory Notes to heading No. 94.01 and
subheading No. 9401.61 provide as follows:
Subject to the exclusions mentioned below, this
heading covers all seats (including those for vehicles, provided
that they comply with the conditions prescribed in Note 2 to this
Chapter), for example:
Lounge chairs, arm-chairs, folding chairs, deck chairs, infants’
high chairs and children’s seats designed to be hung on the back of
other seats (including vehicle seats), grandfather chairs, benches,
couches (including those with electrical heating), settees, sofas,
ottomans and the like, stools (such as piano stools, draughtsmen’s
stools, typists’ stools, and dual purpose stool-steps).
Armchairs, couches, settees, etc., remain in this heading even
if they are convertible into beds.
. . .
Subheading Explanatory Notes
Subheadings 9401.61 and 9401.71
“Upholstered seats” are those having a soft layer of, for
example, wadding, tow, animal hair, cellular plastics or rubber,
shaped (whether or not fixed) to the seat and covered with a
material such as woven fabric, leather or sheeting of plastics.
Also classified as upholstered seats are seats the upholstering
materials of which are not covered or have only a white fabric
cover which is itself intended to be covered (known as upholstered
seats “in muslin”), seats which are presented with detachable seat
or back cushions and which could not be used without such cushions,
and seats with helical springs (for upholstery). On the other hand,
the presence of horizontally-acting tension springs, designed to
attach to the frame a steel wire lattice, taut woven fabric, etc.,
is not sufficient to cause the seats to be classified as
upholstered. Similarly seats covered directly with materials such
as woven fabric, leather, sheeting of plastics, without the
interposition of upholstering materials or springs, and seats to
which a single woven fabric backed with a thin layer of cellular
plastics has been applied, are not regarded as upholstered
26. Kwality submitted that the goods in issue are classifiable
under tariff item No. 9401.61.90 as other upholstered
seats with wooden frames on the basis of Rules 1 and 6 of the
General Rules and Rule 1 of the Canadian Rules.
The upshot of Kwality’s argument was that the goods in issue are
used both for domestic and commercial purposes and therefore cannot
be said to be used primarily “for domestic purposes” within the
meaning of tariff item No. 9401.61.10.
27. In support of its position, Kwality relied on the body of
the Tribunal’s decisions applying the phrase “for domestic
purposes”,14 wherein, in order to be classified as
such, goods had to be used primarily for domestic
purposes, since use was allegedly the determining
factor.15 Kwality argued that, since the goods in
issue serve both domestic (i.e. residential) and
commercial markets (such as hotels and offices), they cannot
determinatively be said to be used for domestic purposes and should
therefore fall under “other” upholstered seats with wooden
28. Kwality added that there is no distinction in the physical
characteristics, design or price of the goods in issue so as to
lend them for use in one or other of the domestic or non-domestic
environments.16 Moreover, Kwality referred to the
Tribunal’s decisions in Ro-Na I and Ro-Na II,
which dealt with folding chairs and folding chairs with carrying
bags, respectively, as authority for the proposition that it is not
the physical characteristics, design or price of goods that make
them primarily intended for domestic use.
29. Kwality suggested that any evidence of non-domestic use
should lead to an inference that the goods are not
intended “for domestic purposes”, absent compelling evidence to the
contrary. Kwality also referred to prior decisions of the CBSA,
wherein furniture allegedly similar to the goods in issue was
classified under tariff item No. 9401.61.90.17
30. In the alternative, Kwality submitted that, if the Tribunal
was unable to classify the goods in issue on the basis of Rule 1 of
the General Rules, then neither Rule 3(a) nor Rule 3(b)
would be of assistance, and recourse would have to be made to Rule
3(c).18 Rule 3(c) provides that, “[w]hen goods
cannot be classified by reference to Rule 3 (a) or 3 (b), they
shall be classified under the heading which occurs last in
numerical order among those which equally merit consideration”, or,
in this case, tariff item No. 9401.61.90.
31. The CBSA submitted
that the goods in issue should be classified under tariff item No.
9401.61.10, as other upholstered seats with wooden frames for
domestic purposes, on the basis of Rules 1 and 6 of the
General Rules and Rule 1 of the Canadian
32. Citing the Tribunal’s decision in Wal-Mart Canada
Corporation v. President of the Canada Border Services
Agency,19 the CBSA argued that the appellant bears
the initial onus of proving that the CBSA’s tariff classification
decision is incorrect.20
33. The CBSA did not dispute that the body of decided Tribunal
cases had found that the words “for domestic purposes” denoted
goods that were primarily intended for domestic or household use
and that this implied that they must be used in or around the home
or in other domestic settings, or primarily in such settings. The
CBSA emphasized, however, that the word “primarily” does not appear
in the tariff nomenclature.21 Further, the CBSA argued
that, because the Tribunal has recognized that domestic settings
were not restricted to the “four walls” of a private dwelling or
household, they might also include similar locations, such as hotel
34. The CBSA pointed to the factors relied upon by the Tribunal
in the body of its previous decisions for determining whether or
not goods are intended primarily for use in domestic settings,
namely, the characteristics of the goods, their design, pricing and
marketing.23 In this regard, the CBSA noted that the
goods in issue are designed to provide comfortable seating for
extended periods of time, that several models have reclining or
rocking movements that provide an even greater level of comfort and
that others still, such as those designed for home-theaters, even
have matching ottomans. In the CBSA’s submission, the goods in
issue are specifically designed and intended to serve as home
furniture and are priced and marketed accordingly.24
35. The CBSA submitted that the words “for domestic purposes”,
as found in tariff item No. 9401.61.10, do not create an
end-use provision and, therefore, that the goods in issue need not
be used exclusively for domestic purposes. According to the CBSA,
if tariff item No. 9401.61.10 were to be interpreted in the
restrictive manner suggested by Kwality, the words “for domestic
purposes” would be deprived of their meaning, because it could not
be said with any certainty that any seats of subheading
No. 9401.61.10 are used exclusively for domestic
36. The CBSA submitted that the goods in issue are the sort of
recliners, rockers and ottomans26 that provide the comfort
typically associated with household, as opposed to commercial,
37. In the alternative, the CBSA argued that, if the Tribunal
was unable to classify the goods in issue on the basis of Rule 1 of
the General Rules, then they should still be classified
under tariff item No. 9401.61.10 on the basis of Rule
38. The only issue before the Tribunal is whether the goods in
issue are upholstered seats with wooden frames “for domestic
purposes” (within the meaning of tariff item No. 9401.61.10), as
determined by the CBSA, or whether they are “other” upholstered
seats with wooden frames (within the meaning of tariff item No.
9401.61.90), as argued by Kwality.
Burden of Proof
39. The Tribunal notes that, in appeals before it, the appellant
is the party that bears the onus of proving that the CBSA’s tariff
classification of the goods is incorrect.29 In the Tribunal’s
view, Kwality has not met that burden.
40. Kwality anchored its submission on the notion that, because
the goods in issue can be put to multiple uses, including both
domestic and commercial, they are not therefore exclusively used
for domestic purposes, cannot have been intended primarily “for
domestic purposes” and must fall into the residual “other”
category. There are several difficulties inherent in this
41. First, it leads to illogical conclusions: any item having
multiple uses would automatically be assigned to the “other”
category, regardless if it is destined for domestic purposes. This
would strip the term “for domestic purposes” of any meaning,
leaving it as a hollow shell.
42. It is a trite rule of statutory interpretation that every
word in an enactment has a sensible reason for being there and must
be given a meaning.30 Moreover, the Tribunal must always strive
to interpret the words and expressions used in the tariff schedule
in a manner that promotes inherent coherence and
consistency.31 The Tribunal has previously held that the
phrase “for domestic purposes” should be interpreted
43. Second, because the words “for domestic purposes” do not
create an end-use provision, actual use of the goods in issue is
not the dispositive factor to be considered for classification
purposes. The end-use requirement was eliminated when the current
wording of the tariff item came into force. Previously the tariff
item read “of a kind used for domestic
purposes”33 [emphasis added] It is the intended, and
not actual, use that matters.
44. Third, in the Tribunal’s body of past
decisions,34 evidence of items being
primarily intended for domestic purposes created a
rebuttable presumption in favor of classification under tariff item
No. 9401.61.10. However, the Tribunal has never accepted
evidence of mere occasional or potential use in a non-domestic
situation, as is the case here, as being sufficient to rebut the
45. Based on the testimony of the witnesses, the documentation
produced concerning the goods in issue, the sales and promotional
material (including the online material and retail sellers’
catalogues in CD format), the pictures showing the goods in
domestic settings and the Tribunal’s review of the remaining
evidence (including descriptions of the goods that included phrases
such as “comfortable and relaxing”), the Tribunal finds that the
goods in issue are primarily used for household purposes but can
incidentally also be used in commercial settings calling for
46. All that Kwality has proven is that the goods in issue can
be suitable for commercial purposes involving low-priced or low-end
items, if at all. (An example of a low-priced requirement would be
for discount hotels, where there is a high turnover of furniture.
An example of a low-end requirement would be chairs for coffee
shops, where minimally comfortable seating is required.)
47. There are no decisions of the courts or of the Tribunal
interpreting the meaning of “for domestic purposes” other than to
apply the phrase to the facts of each case35. In
the end, therefore, whether or not the goods in issue are intended
“for domestic purposes” is a question of mixed law and fact and
will vary according to the facts of the case. The Tribunal is of
the view that, in this case, the characteristics, design, pricing
and marketing of the goods in issue will be indicative of their
proper tariff classification.36
Design and Physical
48. Mr. Maggo testified that the goods in issue are low-ticket,
mass-produced “very generic commoditized sort[s] of
products”.37 According to Mr. Maggo, no differences
exist in the manufacturing, design or characteristics38 of the
goods in issue, whether they are intended for residential or
49. As mentioned, Mr. Polyzotis testified that he “would feel
very comfortable” using the goods in issue in a commercial
environment. In his view, they are “crossover products”, in that
they are equally acceptable in both the commercial and residential
realms. According to Mr. Polyzotis, “[t]he differentiation [between
residential and commercial furniture] would be based on
cost and aesthetics”40 [emphasis added].
50. Mr. Polyzotis expressed the view that the comfort and look
of residential furniture are no longer exclusively reserved for
residential spaces. He testified that the commercial and
institutional look have traditionally been associated with
utilitarian, strictly functional pieces of furniture.41 He
stated that today’s commercial furniture is much more comfortable
than it has been traditionally, in order to provide a sense of ease
and familiarity to commercial spaces akin to that found in the
home, and added that this approach has been adopted in various
corporate and institutional settings.42 With respect to the
size of the furniture, Mr. Polyzotis affirmed that
“. . . if something is
over-scaled . . . it would most likely be
geared toward a commercial
space . . . .”43
51. Kwality adduced evidence that recliners, rockers or ottomans
specifically destined for commercial settings would have additional
attributes that distinguish them from products primarily intended
for domestic use.
52. As an example to illustrate this point, reference was made
to products from the Knightsbridge Furniture Company, such as the
York Standard Manual Recliner and the Butler Manual Recliner (both
of these goods not being at issue here). The first product is said
to be equipped with a “heavy duty castor supplied as standard”,
while the second is “treated with Hygiene+ antimicrobial lacquer to
eliminate infection control issues” and benefits from the “non
quilted seat and one piece back [which] allow easy
53. Kwality also referred to the website for Dor-Val Mfg. Ltd.
(a manufacturer whose products, again, are not at issue), which was
introduced into evidence in an attempt to indicate that products
intended for commercial and institutional settings are larger, use
different fabrics and cater to a design aesthetic other than that
of the goods in issue.45
54. The Tribunal is of the view that commercial products,
including those with a “residential look”, will have specific
characteristics that set them apart from those intended for
domestic purposes, namely, durability and low-maintenance, higher
price, larger sizes, antibacterial treatments and other
specifications that will vary depending on particular uses.
55. The Tribunal observed no such characteristics in the goods
in issue. It is true that Mr. Polyzotis testified that there was no
distinction in physical or design characteristics based on
anticipated use in domestic or non-domestic settings. However, as
mentioned above, he contradicted himself by admitting that “you get
what you pay for” in the commercial environment, in terms of added
features, such as size and durability. Moreover, the literature
filed concerning other furniture manufacturers clearly indicates
that commercial seats are distinguished by defining
characteristics, including their size and durability; none of these
features was demonstrated to be present with the goods in
56. Mr. Maggo testified that the price of the goods in issue is
identical regardless of whether the goods are sold to residential
or commercial customers. The evidence on the record established
that the goods in issue are “high volume, low ticket, mass produced
57. Mr. Maggo stated that Kwality’s direct commercial sales
represent a “significant amount” of its business but was unable to
give an account of what this actually represents. In fact he did
not provide any details of specific outlets, market segments,
accounts or even B2B resellers with a more commercially inclined
clientele, which could have substantiated his claim.
58. The Tribunal did not either find it particularly credible
that, with annual sales of $5 million (or $20 million in total
since 2008), which, at a given of 40 percent of its total business,
should theoretically amount to sales of $8 million for the goods in
issue, Kwality did not produce evidence for sales to the commercial
market for more than $5,000. In other words, the Tribunal does not
find Mr. Maggo’s evidence to the effect that price is not a factor
in differentiating between the domestic and commercial market
sectors to be either credible or compelling.
59. Mr. Polyzotis was of the view that price may be
indicative of quality, but not necessarily so, and that different
categories of furniture attract different prices, but that in the
end it is customer budgets and, to some extent, design factors that
direct purchasing decisions. As already mentioned, he repeatedly
contradicted himself by admitting that “you get what you pay for”
when it comes to commercial furniture. He used, as an illustration,
a discount hotel chain, which might in effect “borrow” (through
low-cost purchases) furniture destined for a household setting
versus a luxury hotel, which would likely order high-end custom
furniture and thereby pay a price premium; this, in fact, is a
distinction between both markets.
60. Similarly, Kwality produced evidence that, in an office
environment, certain domestic qualities, such as comfort and
relaxation, are sometimes sought after in order to stimulate the
generation of ideas on the part of the office staff. Again, to make
the investment attractive in an environment where affordability and
profit are closely related, the price of the furniture could
certainly be of importance. The Tribunal is however of the view
that the mere fact that the goods in issue may be used in an office
environment does not denude them of their inherent domestic
qualities. On the contrary, the very purpose of placing them in an
office is a clear attempt to imitate and draw upon those very
61. Kwality’s website, like other materials filed on the record,
showed the goods in issue in purely domestic, or home, settings,
and this is how they were identified.47 The goods in issue
are marketed towards individuals, at low, entry-level price points.
As mentioned above, they are designed for the domestic market, and
there is nothing to make them particularly suited for the
62. In Ro-Na I, the issue was whether certain folding
chairs were intended “for domestic purposes” or commercial
purposes. The Tribunal found that their primary purpose was to be
used in a commercial environment. They were larger (by two inches)
than domestic chairs, stronger (with welded joints, rather than
rivets) and cost more ($38 versus $10). In addition, their
marketing materials were aimed at the commercial market. Moreover,
since they were inherently uncomfortable and not useful for sitting
in for extended periods of time, they were unsuitable for domestic
use. That case stands in stark contrast to the instant appeal, in
which all the indicia point towards domestic purposes.
63. In Canadian Tire, the issue was whether or not the
goods (heat guns) were primarily used for domestic purposes. In the
face of evidence of “significant use of the goods in issue
for commercial purposes” [emphasis added], the Tribunal found that
the evidence failed to establish that they were primarily intended
for domestic purposes. In the instant appeal, the converse is true.
There is significant evidence that the goods in issue are intended
for domestic purposes, but no such significant use in commercial
settings was shown.
64. It is not merely because Kwality, in its business model,
sells some of the goods to the commercial market that they would
lose their domestic quality as such. Evidence of such occasional
use in other non-domestic settings does not shift the onus to prove
the correct classification back to the CBSA.
65. Even if Kwality had established that the domestic and
commercial markets were equal in importance, which it clearly has
not done, the onus would still not shift to the CBSA to disprove
its classification. Another importer might import identical goods
and sell them exclusively to the domestic market. Kwality had to
prove, on a preponderance of evidence, that the goods in issue are
intended for use in the commercial market. By Mr. Maggo’s
own admission, Kwality cannot attest as to what is the ultimate
destination of the goods.
66. Accordingly, the Tribunal is of the view that Kwality has
failed to demonstrate that its marketing or advertising of the
goods in issue is aimed at commercial, rather than domestic,
67. In summary, in the instant case, it is clear that the goods
in issue possess none of the additional qualities needed to make
them suitable or destined for the commercial market. Rather, their
generic construction, greater comfort, lower price points and
targeted marketing approach make them particularly attractive to
domestic buyers. The fact that other market segments, to some
extent, effectively “borrow” such goods from the domestic market
does not as such change their overall nature.
68. On the basis of Rule 1 of the General Rules and
Rule 6 of the Canadian Rules, the goods in issue are
properly classified under tariff item No. 9401.61.10 as other
upholstered seats with wooden frames for domestic purposes.
69. For the foregoing reasons, the appeal is dismissed.
1 . R.S.C. 1985 (2d Supp.), c. 1
2 . Tribunal Exhibit AP-2010-068-03A at paras.
3, 7, 26; Tribunal Exhibit AP-2010-068-05A at paras. 3-5; Tribunal
Exhibit AP-2010-068-11A, tab A.
3 . S.C. 1997, c. 36.
4 . Tribunal Exhibit AP-2010-068-11A, tab A;
Tribunal Exhibit AP-2010-068-11B (protected), tab B.
5 . Canada is a signatory to the
International Convention on the Harmonized Commodity
Description and Coding System, which governs the Harmonized
6 . S.C. 1997, c. 36, schedule [General
7 . S.C. 1997, c. 36, schedule.
8 . World Customs Organization, 2d ed.,
Brussels, 2003 [Classification Opinions].
9 . World Customs Organization, 5th ed.,
Brussels, 2012 [Explanatory Notes].
10 . See Canada (Attorney General) v.
Suzuki Canada Inc., 2004 FCA 131 (CanLII) at paras. 13, 17,
where the Federal Court of Appeal interpreted section 11 of the
Customs Tariff as requiring that 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 Classification Opinions.
11 . Rules 1 through 5 of the General
Rules apply to classification at the heading level.
12 . Rule 6 of the General Rules
provides that “. . . the classification of goods in
the subheadings of a heading shall be determined according to the
terms of those subheadings and any related Subheading Notes and,
mutatis mutandis, to the above Rules [i.e. Rules 1 through
5] . . .” and that “. . . the
relative Section and Chapter Notes also apply, unless the context
13 . Rule 1 of the Canadian Rules
provides that “. . . the classification of goods in
the tariff items of a subheading or of a heading shall be
determined according to the terms of those tariff items and any
related Supplementary Notes and, mutatis mutandis, to the
[General Rules] . . .” and that
“. . . the relative Section, Chapter and Subheading
Notes also apply, unless the context otherwise requires.”
Classification Opinions and Explanatory Notes do
not apply to classification at the tariff item level.
14 . Tribunal Exhibit AP-2010-068-03A at
paras. 35-59, tabs A, B, C, D, E, F; Black & Decker Canada
Inc. v. Deputy M.N.R. (16 December 1992), AP-90-192 (CITT)
[Black & Decker]; Costco Canada Inc. v.
Commissioner of the Canada Customs and Revenue Agency (11
January 2001), AP-2000-015 [Costco]; Alliance Ro-Na
Home Inc. v. Commissioner of the Canada Customs and Revenue
Agency (17 September 2002), AP-2001-065 (CITT)
[Ro-Na I]; Alliance Ro-Na Home Inc. v.
Commissioner of the Canada Customs and Revenue Agency (25 May
2004), AP-2003-020 (CITT) [Ro-Na II]; Canadian Tire
Corp. Ltd. v. President of the Canada Border Services Agency
(2 November 2007), AP-2006-038 (CITT) [Canadian Tire];
Evenflo Canada Inc. v. President of the Canada Border Services
Agency (19 May 2010), AP-2009-049 (CITT) [Evenflo];
Transcript of Public Hearing, 5 April 2012, at 109-11.
15 . Canadian Tire.
16 . Tribunal Exhibit AP-2010-068-03A at
paras. 27-32; Tribunal Exhibit AP-2010-068-03B (protected), tabs 5,
6, 7, 8.
17 . Tribunal Exhibit AP-2010-068-03A at
paras. 33, 34; Tribunal Exhibit AP-2010-068-03B (protected), tabs
18 . Tribunal Exhibit AP-2010-068-03A at
para. 61. Rules 3(a) and 3(b) of the General Rules provide
When by application of Rule 2 (b) or for any other reason, goods
are, prima facie, classifiable under two or more headings,
classification shall be effected as follows:
(a) The heading which provides the most specific description
shall be preferred to headings providing a more general
description. However, when two or more headings each refer to part
only of the materials or substances contained in mixed or composite
goods or to part only of the items in a set put up for retail sale,
those headings are to be regarded as equally specific in relation
to those goods, even if one of them gives a more complete or
precise description of the goods.
(b) Mixtures, composite goods consisting of different materials
or made up of different components, and goods put up in sets for
retail sale, which cannot be classified by reference to Rule 3 (a),
shall be classified as if they consisted of the material or
component which gives them their essential character, insofar as
this criterion is applicable.
19 . (13 June 2011), AP-2010-035 (CITT)
[Wal-Mart] at para. 35; Tribunal Exhibit AP-2010-068-05A
20 . Tribunal Exhibit AP-2010-068-05A at
paras. 63-67, tab 10.
21 . Transcript of Public Hearing,
5 April 2012, at 131.
22 . Ro-Na I; Costco;
Ro-Na II; Evenflo; Tribunal Exhibit
AP-2010-068-05A at paras. 26-31, tabs 11, 12, 13, 14.
23 . Tribunal Exhibit AP-2010-068-05A at
paras. 31, 32-42, 43-45, 46-52.
24 . Tribunal Exhibit AP-2010-068-05A at
paras. 32-52, tab 10. The CBSA referred to Wal-Mart at
25 . Transcript of Public Hearing,
5 April 2012, at 145.
26 . Tribunal Exhibit AP-2010-068-05A, tab
27 . Unlike the goods in issue, the folding
chairs in Ro-Na I and Ro-Na II
offer temporary seating, which is often done in circumstances
outside of the house. They are not designed for sitting for any
extended period of time and do not offer the same look, comfort,
stability, ergonomics, fire safety, etc., that one would expect of
a domestic seat.
28 . Tribunal Exhibit AP-2010-068-05A at
29 . Unicare Medical Products Inc. v.
Deputy M.N.R.C.E. (21 June 1990), 2437, 2438, 2485, 2591 and
2592 (CITT); Wal-Mart.
30 . Ruth Sullivan, Statutory
Interpretation, 2d ed. (Toronto: Irwin Law, 2007) at 184.
31 . Evenflo at para. 69.
32 . Black & Decker at 3-4;
Costco at 4; Ro-Na I at 5; Ro-Na II at
33 . See Costco.
34 . Costco at 4; Ro-Na I
at 5; Ro-Na II at para. 16; Evenflo at para.
35 . Ro-Na II at paras. 12-14.
36 . Partylite Gifts Ltd. v.
Commissioner of the Canada Customs and Revenue Agency (16
February 2004), AP-2003-008 (CITT).
37 . Transcript of Public Hearing,
5 April 2012, at 11-12.
38 . In this respect, Mr. Maggo relied on
several letters from suppliers filed on the record. Tribunal
Exhibit AP-2010-068-03B (protected), tab 5; Transcript of In
Camera Hearing, 5 April 2012, at 6-10.
39 . Transcript of Public Hearing,
5 April 2012, at 11, 25
40 . Transcript of Public Hearing,
5 April 2012, at 60-61.
41 . Mr. Polyzotis stated the following:
“When we say institutional, they seem to be very utilitarian,
functional pieces of furniture or seating that really is just there
for a functional basis. It’s easy to maintain, it’s easy to clean,
it’s easy to take care of but not aesthetically the most pleasing.”
Transcript of Public Hearing, 5 April 2012, at 67.
42 . Transcript of Public Hearing,
5 April 2012, at 61-67, 78, 105-106.
43 . Transcript of Public Hearing,
5 April 2012, at 87.
44 . Tribunal Exhibit AP-2010-068-24, tab
45 . Transcript of Public Hearing,
5 April 2012, at 68.
46 . Transcript of Public Hearing,
5 April 2012, at 11.
47 . Tribunal Exhibit AP-2010-068-05A, tabs