Appeal AP-2022-042 Akzo Nobel Coatings Ltd. v. President of the Canada Border Services Agency

Order and reasons issued Friday, October 6, 2023

 

TABLE OF CONTENTS

ORDER i

STATEMENT OF REASONS 1

OVERVIEW 1

BACKGROUND 1

ANALYSIS 4

The Tribunal has the authority to hear appeals in the absence of an express section 60 decision in specific circumstances 4

The circumstances do not warrant the Tribunal to take jurisdiction at this point 5

Remarks as to next steps 7

DECISION 7

 

IN THE MATTER OF an appeal filed pursuant to subsection 67(1) of the Customs Act;

AND FURTHER TO a motion filed by Akzo Nobel Coatings Ltd. on April 26, 2023, pursuant to rules 5, 23.1 and 24 of the Canadian International Trade Tribunal Rules, requesting an order to stay the President of the Canada Border Services Agency’s administrative process and directions on procedural matters;

AND FURTHER TO a cross-motion filed by the President of the Canada Border Services Agency on July 14, 2023, pursuant to rule 24 of the Canadian International Trade Tribunal Rules, requesting an order dismissing Akzo Nobel Coatings Ltd.’s motion and appeal for lack of jurisdiction.

BETWEEN
AKZO NOBEL COATINGS LTD.	Appellant
AND
THE PRESIDENT OF THE CANADA BORDER SERVICES AGENCY	Respondent

ORDER

The Canada Border Services Agency’s cross-motion is granted. The Canadian International Trade Tribunal does not have jurisdiction to hear the appeal at this stage of the administrative process. Therefore, Akzo Nobel Coatings Ltd.’s appeal and underlying motion are dismissed.

STATEMENT OF REASONS

OVERVIEW

[1] An appeal was filed by Akzo Nobel Coatings Ltd. (Akzo) with the Canadian International Trade Tribunal pursuant to subsection 67(1) of the Customs Act[1] (Act), concerning the value for duty (VFD) of various goods in the automotive coating and refinishing industry. However, the President of the Canada Border Services Agency’s (CBSA) has not yet issued a decision under section 60 of the Act further re-determining the VFD of the goods in question, and the administrative process before the CBSA is still ongoing.

[2] After the filing of its appeal, Akzo filed a motion requesting a stay order of the CBSA’s administrative process set out under section 60 of the Act, as well as guidance and directions from the Tribunal in moving forward with its appeal. In response, the CBSA filed a cross-motion requesting the dismissal of Akzo’s appeal and underlying motion for lack of jurisdiction.

[3] In essence, Akzo takes issue with the CBSA’s delay in handling its request for further re-determination, which it considers unreasonable and unjustifiable, and requests that the Tribunal intervene in the CBSA’s administrative process and take jurisdiction to hear the appeal in light of the CBSA’s inaction or failure to act without delay.

[4] The CBSA, for its part, claims that the Tribunal does not have the statutory authority to hear the appeal or the motion, considering that the request for further re-determination under section 60 of the Act is still pending before it. According to the CBSA, the facts of this case differ from previous cases where the Tribunal has taken jurisdiction and relies on a number of factors to justify the delay in rendering its decision, notably the COVID-19 pandemic, which significantly impacted the CBSA’s operations, and the nature of valuation appeals being more complex.

[5] These interlocutory motions raise a question of jurisdiction: Is the Tribunal properly seized of the appeal?

[6] For the reasons stated below, the Tribunal has decided to grant the CBSA’s cross-motion. The Tribunal finds that it does not have the jurisdiction to hear the appeal at this stage of the administrative process. Akzo’s appeal has been filed prematurely, and it is therefore dismissed.

[7] Akzo’s underlying motion is also denied. The Tribunal’s decision on the CBSA’s cross-motion is dispositive of Akzo’s motion. Without the Tribunal being properly seized of the appeal, Akzo’s underlying motion and request for a stay order are moot.

BACKGROUND

[8] The CBSA initiated a trade compliance verification in 2018, pursuant to sections 42 and 42.01 of the Act, regarding Akzo’s declared VFD of imported goods. On June 27, 2019, the CBSA issued a final report on the trade compliance verification.[2]

[9] Pursuant to section 32.2 of the Act, Akzo submitted corrections to its VFD declarations in accordance with the final verification report. These corrections were deemed as re-determinations under paragraph 59(1)(a) of the Act. On September 30, 2019, the CBSA issued its detailed adjustment statements.[3]

[10] On December 27, 2019, Akzo submitted a request for further re-determination regarding the VFD of the goods pursuant to subsection 60(1) of the Act.[4]

[11] In a letter dated February 12, 2020, the CBSA’s Recourse Directorate acknowledged receipt of Akzo’s request, and an officer was assigned to the case.[5]

[12] On July 7, 2021, Akzo sent an email to the CBSA requesting a status update. According to the correspondence on the record, a teleconference took place with the CBSA officer on that date.[6]

[13] On September 24 and October 15, 2021, Akzo sent emails to the CBSA seeking a status update.[7] Akzo said that a teleconference was held with the CBSA’s officer on October 15, 2021.[8] Between January and April 2022, Akzo emailed the CBSA on two occasions to follow up on the status of its request and to verify if additional information was needed.[9] Akzo indicated that on January 27, 2022, a further teleconference with the CBSA’s officer was held.[10]

[14] In two distinct letters dated November 14 and 29, 2022, the CBSA’s Recourse Directorate acknowledged receipt, once again, of Akzo’s request.[11] According to the acknowledgment letters, a different CBSA officer was assigned to the case.[12]

[15] In a letter dated March 8, 2023,[13] the CBSA’s case officer provided an overview of the issues before it and requested that Akzo provide additional information or documentation “[i]n order [to] correctly further re-determine the VFD of the disputed goods”.[14]

[16] On March 10, 2023, Akzo filed its appeal with the Tribunal.[15]

[17] On March 14, 2023, Akzo received a copy of the CBSA’s letter dated March 8, 2023.[16] Akzo responded on March 15, 2023, advising the case officer that an appeal had been filed with the Tribunal.[17]

[18] On March 20, 2023, the CBSA advised Akzo that the administrative process under section 60 of the Act would be held in abeyance pending the outcome of the appeal before the Tribunal.[18] On March 21, 2023, the CBSA reconsidered its decision and informed Akzo that it would no longer be holding the process in abeyance.[19] As a result, the CBSA requested that the additional information outlined in its correspondence dated March 8, 2023, be submitted.

[19] On April 13, 2023, Akzo further requested that the section 60 process be held in abeyance “for the time being until [the parties] have clear directions moving forward.”[20] On the same day, the CBSA further reconsidered its decision and confirmed that it will hold the section 60 process in abeyance pending an order to proceed or the resolution of the matter.[21]

[20] On April 26, 2023, Akzo filed its motion with the Tribunal[22] pursuant to rules 5, 23.1 and 24 of the Canadian International Trade Tribunal Rules (Rules),[23] requesting a stay order of the CBSA’s administrative process set out under section 60 of the Act, as well as guidance and directions from the Tribunal in moving forward with its appeal.

[21] On May 1, 2023, the Tribunal advised the parties that the filing and hearing dates were cancelled, pending the Tribunal’s disposition of the motion, and invited the CBSA to submit its views on the motion.[24]

[22] On July 17, 2023, following multiple extension requests made by the CBSA and granted, for the most part, by the Tribunal,[25] the CBSA filed its answer as well as its cross-motion pursuant to rule 24 of the Rules, requesting the dismissal of Akzo’s appeal and underlying motion for lack of jurisdiction.[26]

[23] On July 28, 2023, Akzo submitted its reply, addressing both the CBSA’s answer and cross-motion.[27]

[24] On August 1, 2023, having filed a cross-motion, the Tribunal provided the CBSA with the opportunity to respond to Akzo’s submissions.[28] The CBSA chose not to file a reply.[29]

ANALYSIS

The Tribunal has the authority to hear appeals in the absence of an express section 60 decision in specific circumstances

[25] The Act establishes an administrative process for persons who are not satisfied with a decision taken by the CBSA or the President of the CBSA regarding the origin, the tariff classification, the VFD or the marking of imported goods.[30] The administrative process enacted by Parliament establishes the steps to follow before an appeal can be lodged with the Tribunal under subsection 67(1), consisting of:

• 1)initial CBSA decisions or deemed determinations under section 58;

• 2)re-determination and further re-determinations by CBSA officials under section 59; and

• 3)additional re-determinations and further re-determinations made by the President of the CBSA under section 60 or 61.

[26] The Tribunal’s jurisdiction is rooted in subsection 67(1) of the Act, which provides that the Tribunal may hear appeals from decisions of the President of the CBSA made under section 60 or 61 of the Act. Subsection 67(1) of the Act reads as follows:

67 (1) A person aggrieved by a decision of the President made under section 60 or 61 may appeal from the decision to the Canadian International Trade Tribunal by filing a notice of appeal in writing with the President and the Canadian International Trade Tribunal within ninety days after the time notice of the decision was given.

[27] Only section 60 of the Act is relevant in the matter at hand, which provides as follows:

60 (1) A person to whom notice is given under subsection 59(2) in respect of goods may, within ninety days after the notice is given, request a re-determination or further re-determination of origin, tariff classification, value for duty or marking. The request may be made only after all amounts owing as duties and interest in respect of the goods are paid or security satisfactory to the Minister is given in respect of the total amount owing.

…

(4) On receipt of a request under this section, the President shall, without delay,

(a) re-determine or further re-determine the origin, tariff classification or value for duty;

(b) affirm, revise or reverse the advance ruling; or

(c) re-determine or further re-determine the marking determination.

[28] Given that the Tribunal’s jurisdiction is contingent on a prior decision having been made by the CBSA under section 60 or 61, the absence of such decision deprives the Tribunal of jurisdiction under subsection 67(1).[31]

[29] The Federal Court of Appeal has nevertheless recognized that CBSA “non-decisions” or refusals to exercise jurisdiction under the Act may constitute “decisions” that could be appealed to the Tribunal under subsection 67(1) of the Act.[32] The Federal Court of Appeal has also approved of the Tribunal’s statement that implied decisions could be made at the same time as express decisions and that the former could be the subject of the Tribunal’s jurisdiction in the normal course of deciding the latter.[33] The determination of whether such a situation is present in a given appeal was described by the Court as a “factual” one.[34]

[30] Moreover, the Tribunal, in two decisions, Frito-Lay and Wolseley, found that the CBSA’s failure to respond on a timely basis or to act without delay, as is required under subsection 60(4) of the Act, amounted, in the circumstances of those cases, to “non-decisions” or “negative decisions” that can be appealed to the Tribunal under subsection 67(1).[35]

[31] In particular, the Tribunal held, in Wolseley, that the determination of whether the “without delay” requirement has been breached will depend on the particular facts of each case as well as the scheme of the Act.[36]

[32] In the matter at hand, the CBSA did not make any express decision under section 60 of the Act. The Tribunal therefore has to decide whether, despite the absence of such a decision, it has jurisdiction to hear this appeal. More specifically, in this matter, the Tribunal must determine whether there was a failure by the CBSA to act “without delay” resulting in a deemed negative decision, having regard to the circumstances of the case.

The circumstances do not warrant the Tribunal to take jurisdiction at this point

[33] Despite having concerns about the time the CBSA is taking to make a decision, and as sympathetic as the Tribunal may be to Akzo’s interest in getting a clear response to its request for further re-determination, the Tribunal is not prepared to take jurisdiction at this stage of the administrative process. In the Tribunal’s view, there are mitigating factors that may explain the CBSA’s delay in handling the request. The facts of this case are also different from those in Frito-Lay and Wolseley.

[34] The present case offers some similarities with Frito-Lay or Wolseley, previously cited. First, there has been a delay in the CBSA’s decision-making process as, at the time of the filing of the notice of appeal with the Tribunal (March 10, 2023), 1,170 days had elapsed since Akzo had submitted its request for a further re-determination under subsection 60(1) of the Act (December 27, 2019). Second, the record seems to indicate little information or status report provided by the CBSA once the request under section 60 was acknowledged. Finally, there was no indication provided to Akzo that a decision was imminent prior to the filing of the notice of appeal.[37]

[35] However, there are key differences between the present case and the two cases mentioned above that favour a finding that there has not been a failure by the CBSA to act “without delay” at this point. A key differentiation is the inherent complexity and intricacy of VFD matters, which often involve complex facts. The VFD regime under the Act provides for alternative computation methods involving a myriad of calculations and adjustments required to determine the VFD of imported goods that first need to be assessed by the CBSA.[38] As indicated by the Federal Court, “[d]etermining value is a more complex legal problem than might appear at first blush.”[39] Furthermore, evidence on the record also indicates a willingness on the part of the CBSA to arrive at a decision and a commitment to speed things up.

[36] Another point of differentiation is the fact that Akzo’s request for further re-determination may have been affected by the COVID-19 pandemic. Akzo’s request for further re-determination was submitted a little under three months before the pandemic was declared, and the CBSA acknowledged receipt of the request a little under a month prior to that point of time.[40]

[37] Akzo argued, in response to the CBSA’s cross-motion, that considerations related to the COVID-19 pandemic and to the CBSA’s administrative burden and workload are not relevant. The Tribunal disagrees with Akzo’s argument. The Tribunal, in Wolseley, specifically indicated that, in considering whether the “without delay” has been breached, the Tribunal will take into account the particular facts of each case, including “the needs of the [appellant] and the operational requirements of the CBSA”.[41] The Tribunal therefore finds merit in the argument that the pandemic could have possibly impacted the effectiveness of government operations, including the CBSA’s administrative processes. That said, the pandemic cannot validly explain the entirety of the CSBA’s delay, but it can plausibly account for some of it.

[38] While the Tribunal appreciates that Akzo is impatient with the processing delays that were incurred so far and that it felt the need to exert all available pressure to see progress towards the making of a decision, the Tribunal cannot find, for the reasons discussed above, that there was a “non-decision”, a “negative decision”, or any other “decision” made by the CBSA under subsection 60(4) of the Act.

[39] The Tribunal believes that the proper administration of and access to justice would be best served if the CBSA’s administrative process were brought to its conclusion. This would not only allow the CBSA to appraise and determine the VFD of the imported goods as intended by Parliament, but it would also enable both parties to identify the real issues that are in dispute and also facilitate the quickest means of resolving any issues (precisely those pertaining to calculations and adjustments of the VFD mentioned above). In the Tribunal’s view, proceeding in this fashion would not be prejudicial to Akzo if it were to be completed within the next months.

[40] For these reasons, the Tribunal grants the CBSA’s cross-motion, and dismisses Akzo’s appeal for lack of jurisdiction.

[41] The Tribunal’s decision on the CBSA’s cross-motion consequently disposes of Akzo’s motion. Without being properly seized of the appeal, Akzo’s underlying motion and request for a stay order is moot.

Remarks as to next steps

[42] The Tribunal encourages Akzo to provide, as soon as possible, the information requested by the CBSA in its letter dated March 8, 2023. The Tribunal also acknowledges the CBSA’s willingness and commitment to actively resume the section 60 process and render a decision within five to six months of receiving the outstanding information.[42] The Tribunal encourages the CBSA to commit to this timeline. Past that timeline, if the CBSA has not yet made its decision under subsection 60(4) of the Act, Akzo may file a new notice of appeal with the Tribunal, if it still deems appropriate.

[43] Alternatively, at the end of the CBSA’s administrative process, and when the CBSA makes its decision under subsection 60(4) of the Act, Akzo may file a new notice of appeal with the Tribunal.

DECISION

[44] The Canada Border Services Agency’s cross-motion is granted. The Canadian International Trade Tribunal does not have jurisdiction to hear the appeal at this stage of the administrative process. Therefore, Akzo’s appeal and underlying motion are dismissed.