[2017] 3 F.C.R. 165
A-517-15
2016 FCA 282
Prudential Steel Ltd. and Algoma Tubes Inc. (Appellants)
v.
Bell Supply Company (Respondent)
and
Attorney General of Canada (Intervener)
Indexed as: Prudential Steel Ltd. v. Bell Supply Company
Federal Court of Appeal, Webb, Rennie and de Montigny JJ.A.—Ottawa, June 7 and November 15, 2016.
Anti-dumping — Appeal from Federal Court decision dismissing appellants’ application for judicial review of advance ruling issued by Canada Border Services Agency (CBSA) — Anti-dumping, countervailing duties imposed under Special Import Measures Act (SIMA) on oil country tubular goods originating in, exported from China — Respondents requesting, obtaining advance ruling by CBSA stating such goods undergoing certain work in Indonesia not subject to duties — Federal Court dismissing application for judicial review on basis advance ruling not decision subject to judicial review — Whether advance ruling binding on CBSA — Advance ruling not binding on CBSA — No provision in either Income Tax Act or Excise Tax Act that advance rulings binding on Minister of National Revenue (Minister) — Minister in Woon v. Minister of National Revenue not estopped from assessing in manner contrary to advance ruling — Law as stated in Woon still applicable — Advance rulings not binding on Minister — Duty, authority to assess tax cannot be restricted or modified except by Act of Parliament — While advance ruling indicating final decision made by CBSA, such indication not making advance ruling binding — Nothing in SIMA providing that any advance ruling issued under that statute binding — Self-proclaimed declarations by public agency not changing law, not preventing such agency from performing statutory duty bestowed on it by Parliament — Advance ruling made before goods imported cannot prevent customs officer from exercising discretion under SIMA, s. 56 to make determination as to whether certain imported goods would be subject to anti-dumping, countervailing duties — Finally, appellants not prejudicially affected by issuance of advance ruling — Appeal dismissed.
This was an appeal from a Federal Court decision dismissing the appellants’ application for judicial review of an advance ruling issued by the Canada Border Services Agency (CBSA).
The appellants had requested protection under the Special Import Measures Act (SIMA) from dumped and subsidized oil country tubular goods originating in or exported from China. As a result of several findings by the Canadian International Trade Tribunal, anti-dumping and countervailing duties were imposed on those goods. The respondent requested an advance ruling from the CBSA with respect to whether certain seamless casing and tubing products originating in China but undergoing certain work in Indonesia would be subject to those duties. The CBSA stated that the products would not be subject to the anti-dumping and countervailing duties upon importation into Canada. The Federal Court dismissed the application for judicial review on the basis that the advance ruling was not a decision that was subject to judicial review.
At issue was whether the advance ruling was binding on the CBSA.
Held, the appeal should be dismissed.
The advance ruling was not binding on the CBSA. There is no provision in either the Income Tax Act or the Excise Tax Act that advance rulings will be binding on the Minister of National Revenue (Minister). However, the Canada Revenue Agency (CRA) has confirmed several times that it considers such advance rulings to be binding. There have therefore been very few cases where there is a dispute between a taxpayer and the CRA (or its predecessors). In one such case, Woon v. Minister of National Revenue, there was a question as to whether an advance ruling issued by the CRA’s predecessor to a taxpayer was binding. Even though the taxpayer completed the transactions as described in the advance ruling, the Minister was not estopped from assessing in a manner contrary to the ruling. The law as stated in Woon is still applicable. It would appear that advance rulings are not binding on the Minister who is charged with the duty to assess taxes under section 152 of the Income Tax Act and the authority to assess tax under section 296 of the Excise Tax Act. This statutory duty and statutory discretion cannot be restricted or modified except by an Act of Parliament. Here, even though the advance ruling indicates that a final decision has been made by the CBSA, this does not make the advance ruling binding on the CBSA any more than advance rulings issued in relation to the Income Tax Act and the Excise Tax Act would be binding on the Minister. There is nothing in SIMA providing that any advance ruling issued under that statute will be binding. Self-proclaimed declarations by a public agency cannot change the law and cannot prevent such agency from performing the statutory duty or exercising the statutory discretion that has been bestowed on it by Parliament. Under section 56 of SIMA, a determination by a customs officer that certain imported goods would be subject to anti-dumping and countervailing duties is only made after the goods are imported into Canada. Any advance ruling made before such goods are imported would not be binding on such officer as it cannot prevent such officer from exercising the discretion granted by Parliament to make such determination.
Finally, the appellants were not prejudicially affected by the issuance of the advance ruling. The domestic industry would only be adversely affected if the goods in question were actually imported. As well, since the advance ruling is not binding on any CBSA officer who may make the determination under section 56 of SIMA in relation to any imported goods, the officer could impose anti-dumping and countervailing duties when such goods are imported, notwithstanding the advance ruling.
STATUTES AND REGULATIONS CITED
Excise Act, R.S.C., 1985, c. E-14.
Excise Tax Act, R.S.C., 1985, c. E-15, s. 296.
Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 152.
Special Import Measures Act, R.S.C., 1985, c. S-15, s. 56.
CASES CITED
APPLIED:
Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Woon v. Minister of National Revenue, [1951] Ex. C.R. 18, [1950] C.T.C. 263.
CONSIDERED:
Seamless Carbon or Alloy Steel Oil and Gas Well Casing (Re), 2008 CanLII 19749 (C.I.T.T.); Rothmans, Benson and Hedges Inc. v. Canada (Minister of National Revenue), 1998 CanLII 7237, 148 F.T.R. 3 (F.C.); Goldstein v. Canada, [1995] 2 C.T.C. 2036, 96 DTC 1029 (T.C.C.); Sentinel Hill Productions (1999) Corporation v. The Queen, 2007 TCC 742, [2008] 5 C.T.C. 2690.
REFERRED TO:
Seamless Carbon or Alloy Steel Oil and Gas Well Casing (Re), 2013 CanLII 16824 (C.I.T.T.); Oil Country Tubular Goods (Re), 2010 CanLII 19976 (C.I.T.T.); Oil Country Tubular Goods, C.I.T.T., expiry review No. RR-2014-003, order issued March 2, 2015, online: <http://www.citt.gc.ca/en/node/7290>; Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559; R. (Reprotech (Pebsham) Ltd.) v. East Sussex County Council, [2002] UKHL 8, [2003] 1 W.L.R. 348 (H.L.).
AUTHORS CITED
Canada Revenue Agency. Information Circular No. IC70-6R7 “Advance Income Tax Rulings and Technical Interpretations”, April 22, 2016.
Phipson on Evidence, 8th ed. London: Sweet & Maxwell, 1942.
APPEAL from a Federal Court decision (2015 FC 1243) dismissing the appellant’s application for judicial review of an advance ruling issued by the Canada Border Services Agency to the respondent that certain seamless casing and tube products would not be subject to anti-dumping and countervailing duties upon importation into Canada. Appeal dismissed.
APPEARANCES
Jonathan P. O’Hara for appellants.
James McIlroy for respondent.
Kirk Shannon for intervener.
SOLICITORS OF RECORD
McMillan LLP, Ottawa, for appellants.
James McIlroy, Toronto, for respondent.
Deputy Attorney General of Canada for intervener.
The following are the reasons for judgment rendered in English by
[1] Webb J.A.: This is an appeal from the decision of the Federal Court (2015 FC 1243) dismissing the application for judicial review brought by the appellants. The appellants were seeking judicial review of an advance ruling issued by the Canada Border Services Agency (CBSA) to the respondent on December 9, 2013 that certain seamless casing and tube products would not be subject to anti-dumping and countervailing duties upon importation into Canada.
[2] For the reasons that follow, I would dismiss this appeal.
I. Background
[3] The appellants had requested protection under the Special Import Measures Act, R.S.C., 1985, c. S-15 (SIMA) from dumped and subsidized oil country tubular goods (OCTG) originating in or exported from China.
[4] In a finding issued on March 10, 2008 (NQ-2007-001) [Seamless Carbon or Alloy Steel Oil and Gas Well Casing (Re), 2008 CanLII 19749] the Canadian International Trade Tribunal (C.I.T.T.) found that “the dumping and subsidizing of seamless carbon or alloy steel oil and gas well casing [as described in this finding] originating in or exported from the People’s Republic of China … are threatening to cause injury to the domestic industry”. This finding was renewed on March 11, 2013 (RR-2012-002) [2013 CanLII 16824 (C.I.T.T.)].
[5] In another finding issued on March 23, 2010 (NQ-2009-004) [Oil Country Tubular Goods (Re), 2010 CanLII 19976], the C.I.T.T. found that certain OCTG (as described in that finding) originating in or exported from China have caused injury. This finding was renewed on March 2, 2015 (RR-2014-003) [Oil Country Tubular Goods].
[6] As a result of these findings, anti-dumping and countervailing duties were imposed on the goods identified in these findings.
[7] By a letter dated July 29, 2013, the respondent requested an advance ruling from the CBSA with respect to whether certain seamless casing and tubing products that would originate in China but would undergo certain work in Indonesia, would be subject to the anti-dumping and countervailing duties referred to above when imported into Canada.
[8] After receiving the original request and subsequent submissions on September 12, 2013 and October 11, 2013, the CBSA in a letter dated December 9, 2013, first stated a brief summary of its understanding of the facts and then stated:
With this understanding, the CBSA has determined that, for purposes of the Special Import Measures Act, the specific casing and tubing grades and sizes contained in Bell Supply’s advance ruling request of July 29, 2013, and subsequent submissions of September 12, 2013 and October 11, 2013, would be deemed to be seamless casing and tubing products originating in Indonesia and, consequently, would not be subject to anti-dumping duty and countervailing duty upon importation into Canada.
[9] The appellants sought judicial review of this decision by the CBSA. The Federal Court Judge dismissed the application for judicial review on the basis that the advance ruling is not a decision that is subject to judicial review (paragraph 38 of her reasons). This conclusion was based on a decision of the Federal Court in Rothmans, Benson and Hedges Inc. v. Canada (Minister of National Revenue), 1998 CanLII 7237, 148 F.T.R. 3 (Rothmans).
[10] The Federal Court Judge noted that her conclusion that the advance ruling is not a decision that is subject to judicial review was sufficient to dispose of the application. However, she also commented on the interplay between the statutory appeal process under SIMA and the availability of judicial review of a decision made under that statute.
II. Standard of Review
[11] In this case there has been no decision on the merits of the judicial review application as the Federal Court Judge dismissed the application on a preliminary basis without reviewing the decision that was made by CBSA. As a result, in my view, the standard of review as set out in Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559, at paragraphs 45 to 47 is not applicable in this appeal. Rather, the standards of review that are applicable in this appeal are those standards as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. Findings of fact (including inferences of fact) will stand unless it is established that the Federal Court Judge made a palpable and overriding error. For questions of mixed fact and law, the standard of correctness will apply to any extricable question of law and otherwise the standard of palpable and overriding error will apply. An error is palpable if it is readily apparent and it is overriding if it changes the result.
III. Analysis
[12] The determination by the Federal Court Judge that the advance ruling was not a decision that could be subject to judicial review was based on the decision of the Federal Court in Rothmans. In Rothmans the company obtained a ruling under the Excise Act, R.S.C., 1985, c. E-14 and the Excise Tax Act, R.S.C., 1985, c. E-15 that certain products were “cigarettes” and other products were “tobacco sticks”. When Rothmans brought an originating notice of motion to quash this ruling, the Minister of National Revenue brought a motion to strike the notice. The Federal Court allowed the motion and the notice was struck on the basis that the ruling was not a decision. In particular, the Federal Court in Rothmans stated that:
The moving party recognizes that, as a matter of policy, the Department will respect an advance tax ruling. However, the Department’s advance rulings and technical interpretations have no binding legal effect (Owen Holdings Ltd. v. The Queen, [1997] D.T.C. 5401 at 5404 (F.C.A.)) and the Department would not be estopped by its ruling (Woon v. Minister of National Revenue [1950] 50 D.T.C. 871 at 875 (Ex.); Rothmans Ltd., et al. v. Minister of National Revenue, et al. [1976] C.T.C. 332 at 338 (F.C.T.D.)). A taxpayer must prove that it meets the requirements of the legislation on its own terms; the Minister’s tax treatment of its competitors cannot assist it (Ford Motor Co. of Canada Ltd. v. Minister of National Revenue, [1997] 212 N.R. 275 at 289).
The advance ruling does not grant or deny a right, nor does it have any legal consequences (see Demirtas v. Canada, [1993] 1 F.C. 602 and Singh v. Canada, (1994), 82 F.T.R., 68 at 71). It does not have the legal effect of settling the matter or purport to do so. It is at the most a non-binding opinion. Moreover, there is no evidence that any tax has been levied on a product corresponding to the prototype of the product in the advance ruling.
[Rothmans, at paragraphs 27 and 28]; (footnote reference numbers have been replaced with the decisions referenced in the footnotes).
[13] Advance rulings are often provided under the Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1 and the Excise Tax Act and are relied upon by taxpayers. The important role that such rulings play was described by Bowman J. (as he then was) in a footnote [No. 10] in Goldstein v. Canada, [1995] 2 C.T.C. 2036 (T.C.C.) (and repeated in Sentinel Hill Productions (1999) Corporation v. The Queen, 2007 TCC 742, [2008] 5 C.T.C. 2690):
I leave aside entirely the question of advance rulings which form so important and necessary a part of the administration of the Income Tax Act. These rulings are treated by the Department of National Revenue as binding. So far as I am aware no advance ruling that has been given to a taxpayer and acted upon has ever been repudiated by the Minister as against the taxpayer to whom it was given. The system would fall apart if he ever did so.
[14] There is no provision in either the Income Tax Act or the Excise Tax Act that advance rulings will be binding on the Minister of National Revenue (Minister). However, the Canada Revenue Agency (CRA) has confirmed that it considers such advance rulings to be binding several times in its circulars and memoranda. This confirmation appears in paragraph 14 of the latest version of Information Circular IC70-6R7 dated April 22, 2016 for rulings issued in relation to the Income Tax Act and paragraph 16 of the latest version of New Memorandum 1.4 dated April 2015 for rulings issued in relation to the Excise Tax Act.
[15] Since the CRA considers such rulings to be binding and since, as noted by Bowman J., the system would fall apart if it did not treat them as binding, cases where there is a dispute between a taxpayer and the CRA (or its predecessors) with respect to whether an advance ruling that had been issued by the CRA (or its predecessors) to that taxpayer is binding on the CRA (or its predecessors) are rare.
[16] One such case is Woon v. Minister of National Revenue, [1951] Ex. C.R. 18, (Woon), where the Exchequer Court held that the Minister was not bound by a ruling that had been given by the Commissioner of Taxation. In particular, at page 24, the Exchequer Court quoted the following excerpt from Phipson on Evidence, 8th ed.:
Estoppels of all kinds, however, are subject to one general rule: they cannot override the law of the land. Thus, where a particular formality is required by statute, no estoppel will cure the defect.
[17] As a result, even though the taxpayer completed the transactions as described in the ruling, the Minister was not estopped from assessing in a manner contrary to the ruling.
[18] In an updated version of the same text (Phipson on Evidence, 18th ed., 2013), after referring to the decision of the House of Lords in R. (Reprotech (Pebsham) Ltd.) v. East Sussex County Council, [2002] UKHL 8, [2003] 1 W.L.R. 348, it is stated at page 118 that:
On the one hand, this decision has undoubtedly strengthened the principle that a public body cannot prevent itself from exercising a statutory discretion, or prevent or excuse itself from performing a statutory duty; on the other hand, however, it is obviously unlikely that any further references to the rules of estoppels will be made in this context.
[19] As a result, it appears that the law as stated in Woon is still applicable. Whether advance rulings issued under the Income Tax Act or the Excise Tax Act are binding is not in issue in this appeal. However, it appears that such rulings would not be binding on the Minister who is charged with the duty to assess tax under section 152 of the Income Tax Act and the authority to assess tax under section 296 of the Excise Tax Act. This statutory duty and statutory discretion that has been granted by Parliament cannot be restricted or modified except by an Act of Parliament.
[20] In this case, the advance ruling provided by the CBSA stated that:
With this understanding, the CBSA has determined that, for purposes of the Special Import Measures Act, the specific casing and tubing grades and sizes contained in Bell Supply’s advance ruling request of July 29, 2013, and subsequent submissions of September 12, 2013 and October 11, 2013, would be deemed to be seamless casing and tubing products originating in Indonesia and, consequently, would not be subject to anti-dumping duty and countervailing duty upon importation into Canada.
[21] Simon Duval of the CBSA submitted an affidavit in which he stated that:
4. The opinion provided by the CBSA to Bell Supply Company on December 9, 2013 is not binding on it or any importer, and it does not constitute a final decision. The CBSA provides opinions such as that provided to Bell Supply Company on December 9, 2013 only as a courtesy and on a provisional basis. Only when goods have in fact been imported to Canada does the CBSA make a binding determination as to whether they are subject to anti-dumping or countervailing duties. The CBSA will then require further specific information and verification with respect to the goods in coming to its determination.
[22] In the first sentence, when he indicates that the “opinion … is not binding on it”, it is not clear whether the word “it” is intended to refer to Bell Supply Company or the CBSA. Since he refers to “it or any importer” this sentence could be interpreted as a statement that the “opinion provided by the CBSA to Bell Supply Company … is not binding on [Bell Supply Company] or any importer”. Although he also referred to it as an opinion, on cross-examination on his affidavit Mr. Duval confirmed that if the CBSA was satisfied that the information that had been provided by the respondent was correct and that the respondent satisfied the conditions set out in the letter, that “there would be no duties collected”.
[23] However, even though the advance ruling indicates that a final decision has been made by the CBSA and Mr. Duval indicated that he expected the ruling to be followed by the CBSA, this does not make the advance ruling binding on the CBSA any more than advance rulings issued in relation to the Income Tax Act and the Excise Tax Act would be binding on the Minister.
[24] In this case, the appellants argue that the advance ruling is binding on the CBSA based on the Memorandum D11-11-1 “National Customs Rulings” issued on October 19, 1998. In this memorandum paragraph 9 states that:
9. An NCR is binding on both the Department and the importer as long as all conditions specified in the original request have not changed, subject to any stated qualifications by Revenue Canada, or until the NCR is modified or revoked. It is the responsibility of the importer to advise the Department of any changes to the particulars with respect to an NCR.
[25] In this case there is no live dispute between the respondent and the CBSA with respect to whether the CBSA is bound by the advance ruling. Assuming, without deciding, that this ruling is a National Customs Rulings, it should be noted that there is no provision of SIMA that provides that any advance ruling issued under that statute will be binding. As a result, this statement by the CBSA in its own memorandum is essentially the same as the statements made by the CRA in its published information circular and memorandum that it considers itself to be bound by advance rulings issued in relation to the Income Tax Act or the Excise Tax Act. Such self-proclaimed declarations by a public agency cannot change the law as reflected in Phipson on Evidence and cannot prevent such agency from performing the statutory duty or exercising the statutory discretion that has been bestowed on the agency by Parliament.
[26] Under section 56 of SIMA, a determination by a customs officer that certain imported goods would be subject to anti-dumping and countervailing duties is only made after the goods are imported into Canada. Any advance ruling made before such goods are imported would not be binding on such officer as it cannot prevent such officer from exercising the discretion granted by Parliament to make such determination.
[27] The appellants also argue that they are prejudicially affected by the advance ruling since anti-dumping and countervailing duties are imposed to protect the domestic industry and any decision that such duties would not be imposed on goods that may be imported into Canada would be prejudicial to the domestic industry, if, as a result of a review of that decision, it is found that such duties should be imposed. However, the domestic industry would only be adversely affected if such goods are actually imported. If no such goods are imported, there would be no harm to the domestic industry, even though there is an advance ruling issued by the CBSA that such goods would not be subject to anti-dumping and countervailing duties.
[28] As well, since the advance ruling is not binding on any CBSA officer who may make the determination under section 56 of SIMA in relation to any imported goods, the officer could impose anti-dumping and countervailing duties when such goods are imported, notwithstanding the advance ruling. The appellants would not be prejudiced if the officer did so. Any potential prejudice would only arise if such goods are imported without the imposition of such duties.
[29] As a result, I do not agree with the appellants that the advance ruling was binding on the CBSA or that the appellants were prejudicially affected by the issuance of the advance ruling itself.
[30] I would therefore dismiss the appeal, with costs payable by the appellants to the respondent.
Rennie J.A.: I agree.
de Montigny J.A.: I agree.