Applicant imported futon covers from China, which came with three closed sides and zipper. In Canada, applicant inserted mattress into cover, closed zipper and punched plastic jiffies through (tufting) and then exported packaged futon mattresses and frames to United States. Applicant paid customs duty on cover and requested same condition ruling. Respondent found futon covers met “same condition status” under s. 303(6) North American Free Trade Agreement as re-packaging did not materially alter goods. As such, respondent found s. 113 of Customs Tariff (Can.), applied and applicant was entitled to full duty relief. Respondent partially paid drawbacks to applicant, but then initiated audit and found tufting did not qualify for same condition treatment because it changed goods from futon cover to completed mattress. In impugned decisions, respondent demanded return of drawback payments. Application for judicial review of decisions demanding return of drawback payments. Application granted. Section 114 of Tariff only applied to payments mistakenly made, whereas applicant was eligible at time of payment. Respondent entitled to review decision under s. 90. However, it was principle of statutory interpretation that, absent clear wording granting respondent power to retroactively vary certificate granting relief that was validly issued, respondent was not entitled to reassess applicant under second same condition ruling. Indeed, Tariff explicitly provided possibility of retroactive orders in other places. First ruling was not product of misrepresentation or error, rather respondent simply decided on different interpretation. Thus, decisions were unreasonable and incorrect.
Dorel Industries Inc. v. Canada (Border Services Agency) (Feb. 24, 2014, F.C., Yves de Montigny J., File No. T-1024-12) 237 A.C.W.S. (3d) 939.