IN THE MATTER OF an appeal heard by way of written submissions on July 15, 2014, pursuant to section 67 of the Customs Act, R.S.C., 1985, c. 1 (2nd Supp.);
AND IN THE MATTER OF four decisions of the President of the Canada Border Services Agency, dated December 20, 2013, with respect to requests for review of advance rulings on tariff classification pursuant to subsection 60(4) of the Customs Act.
The appeal is allowed.
DAIRY PRODUCE; BIRDS’ EGGS; NATURAL HONEY; EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SPECIFIED OR INCLUDED
. . .
04.06 Cheese and curd.
. . .
0406.20 -Grated or powdered cheese, of all kinds
. . .
- - -Other:
0406.20.91 - - - -Within access commitment
. . .
0406.20.92 - - - -Over access commitment
. . .
MISCELLANEOUS EDIBLE PREPARATIONS
. . .
21.03 Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard.
. . .
. . .
2103.90.20 - - -Mixed condiments and mixed seasonings
. . .
LAIT ET PRODUITS DE LA LAITERIE; OEUFS D’OISEAUX; MIEL NATUREL; PRODUITS COMESTIBLES D’ORIGINE ANIMALE, NON DÉNOMMÉS NI COMPRIS AILLEURS
04.06 Fromages et caillebotte.
0406.20 -Fromages râpés ou en poudre, de tous types
- - -Autres :
0406.20.91 - - - -Dans les limites de l’engagement d’accès
0406.20.92 - - - -Au-dessus de l’engagement d’accès
PRÉPARATIONS ALIMENTAIRES DIVERSES
21.03 Préparations pour sauces et sauces préparées; condiments et assaisonnements, composés; farine de moutarde et moutarde préparée.
2103.90.20 - - -Condiments et assaisonnements, composés
3. 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.
(c) When 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.
. R.S.C., 1985, c. 1 (2nd Supp.) [Act].
. There are four such products that combine cheese and a seasoned breadcrumb mixture in issue. Each product has a specific flavour and was the subject of a separate advance ruling on tariff classification and a separate decision pursuant to subsection 60(4) of the Act. The four advance rulings and decisions under appeal are identical.
. The importation of cheese into Canada is subject to market access commitments in the form of tariff rate quotas. If the quantities of cheese imported are within access commitment (in-quota), they are classified under tariff item No. 0406.20.91 and are subject to low duty rates. If the imported quantities are over Canada’s access commitment, they are classified under tariff item No. 0406.20.92 and are subject to higher duty rates.
. Exhibit AP-2013-055-06B at paras. 5-10, tabs B and C, Vol. 1.
. Exhibit AP-2013-055-09A (protected), tab 5, Vol. 2. While the goods in issue are comprised of two distinct components, the cheese and the seasoned breadcrumbs, the specific ingredients that make up each of these components are different in each case. For example, the cheese component of the rosemary and roasted garlic SKU is comprised of Provolone, Parmesan and Mozzarella; and garlic and rosemary are the main seasoning ingredients of its breadcrumb component. In the case of the “Cheddar, Jack & Bacon” SKU, the cheese component is comprised of a mixture of Cheddar, Monterrey Jack and Provolone, whereas the breadcrumb mixture is seasoned primarily with bacon fat and bits. However, the parties have not submitted that the specific ingredients of each of the goods in issue have any bearing on their tariff classification. As discussed below, it is beyond dispute that the seasoned breadcrumbs in all of the goods in issue would be classified under tariff item No. 2103.90.20 as mixed condiments and mixed seasonings and that their cheese component is itself properly classified under either tariff item No. 0406.20.91 or tariff item No. 0406.20.92 as grated or powdered cheese.
. Exhibit AP-2013-055-06B at paras. 8, 15-16, tabs D, E and J, Vol. 1.
. Exhibit AP-2013-055-06B at paras. 17-19, tabs K and L, 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, 2nd ed., Brussels, 2003 [Classification Opinions].
. World Customs Organization, 5th ed., Brussels, 2012 [Explanatory Notes].
. 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 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.
. Rules 1 through 5 of the General Rules apply to classification at the heading level.
. 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 otherwise requires.”
. 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.” The Classification Opinions and the Explanatory Notes do not apply to classification at the tariff item level.
. Exhibit AP-2013-055-09B at paras. 39-45, Vol. 1; Exhibit AP-2013-055-06A at paras. 19-26, Vol. 1. While Kraft’s primary position is that the goods in issue should be classified according to Rule 3 (b) of the General Rules, it submitted, in the alternative, that the goods in issue would have to be classified pursuant to Rule 3 (c), if Rule 3 (b) could not be applied.
. Rule 2 (b) of the General Rules, which provides that classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3, also supports this conclusion.
. Exhibit AP-2013-055-06A at para. 35, Vol. 1.
. In this regard, it warrants noting that the explanatory notes to heading No. 21.03 indicate that this heading covers preparations, generally of a highly spiced character, used to flavour certain dishes (meat, fish, salads, etc.) and made from various ingredients (eggs, vegetables, meat, fruit, flours, starches, oil, vinegar, sugar, spices, mustard, flavourings, etc.). The seasoned breadcrumbs in the goods in issue fit this description.
. To the extent that no single component can be said to confer essential character to the goods in issue, then their classification at the heading level cannot be effected under Rule 3 (b) of the General Rules. In that event, the next rule to consider is Rule 3 (c), which provides that goods must be classified in the heading which occurs last in numerical order among those which equally merit consideration.
. These notes provide, inter alia, that the presence of meat, fish, crustaceans, herbs, spices, vegetables, fruit, nuts, vitamins, skimmed milk powder, etc., does not affect classification in heading No. 04.06, provided the goods retain the character of cheese.
. Mon-Tex Mills Ltd. v. Canada (Commissioner of the Customs and Revenue Agency), 2004 FCA 346 (CanLII) [Mon-Tex]; Naturin Canada v. Deputy M.N.R. (14 January 2000), AP-98-108 (CITT); Transilwrap of Canada, Ltd. v. Commissioner of the Canada Customs and Revenue Agency (11 September 2001), AP-2000-018 (CITT) [Transilwrap]; S.C. Johnson & Son, Limited v. President of the Canada Border Services Agency (19 July 2006), AP-2005-015 (CITT).
. In this regard, Kraft noted that it is the use of different seasoned breadcrumbs that creates a different type of meal, in that a consumer would not have a vastly different experience if consuming a mixture of rosemary, garlic, Cheddar and Provolone or consuming a mixture of rosemary, garlic, Monterrey Jack and Colby. A consumer would however have a significantly different experience if consuming a mixture of rosemary, garlic and Cheddar or Provolone or consuming a mixture of chipotle, Cheddar and Provolone.
. Mon-Tex at para. 11.
. Mon-Tex at para. 13.
. (31 August 1992), AP-91-081 and AP-91-223 (CITT) at 2.
. See the description of the goods in issue under the heading “Goods in Issue” and the evidence thereunder, in particular, Exhibit AP-2013-055-06B at paras. 5-9, Vol. 1.
. Exhibit AP-2013-055-06B at para. 10, Vol. 1.
. Exhibit AP-2013-055-06B at paras. 13-14, Vol. 1.
. Exhibit AP-2013-055-06B at paras. 15-16, tab J, Vol. 1.
. Exhibit AP-2013-055-09B at paras. 53, Vol. 1.
. As discussed above, these factors are, at any rate, not determinative, given the nature of the goods in issue.
. In this regard, the Tribunal notes that the dictionary definition of the cooking term “au gratin” filed with the Tribunal indicates that an au gratin dish sometimes, but not always, includes cheese, while it invariably features coating with breadcrumbs. See Exhibit AP-2013-055-06A at para. 58, tab 11, Vol. 1. Accordingly, even if the goods in issue might be used to create an au gratin dish, this does not mean that cheese constitutes their defining or essential characteristic.
. The explanatory notes to heading No. 04.06 provide, inter alia, that “[t]he presence of meat, fish, crustaceans, herbs, spices, vegetables, fruit, nuts, vitamins, skimmed milk powder, etc., does not affect classification [in heading No. 04.06] provided that the goods retain the character of cheese.”