Executive Summary: Key Legal and Evidentiary Issues

• Classification of a Kershaw branded folding knife as a "prohibited weapon" under tariff item no. 9898.00.00 of the Customs Tariff was the central dispute.

• The Canadian International Trade Tribunal erroneously shifted the burden of proof to the Canada Border Services Agency to disprove the applicability of exclusions listed in the tariff item.

• Paragraph 152(3)(d) of the Customs Act unambiguously places the burden of proof on the person challenging the classification, not on the Crown.

• Procedural fairness concerns raised by the Tribunal regarding the President's duty to inform the respondent about possible exclusions were found to be flawed.

• The Tribunal's attempt to distinguish the precedent in Canada (Border Services Agency) v. Miner was deemed inconsequential by the Federal Court of Appeal.

• Despite three opportunities throughout the classification proceedings, the respondent never provided evidence or submissions regarding any applicable exclusion.

The importation dispute and classification of the knife

This case arose from the importation of a Kershaw branded folding knife by B. Cooper into Canada. The Canada Border Services Agency classified the knife as a "prohibited weapon" under tariff item no. 9898.00.00 of the Schedule to the Customs Tariff, S.C. 1997, c. 36. Cooper challenged this classification through a redetermination process before the President of the Canada Border Services Agency, and subsequently appealed to the Canadian International Trade Tribunal.

The Tribunal's original decision

The Canadian International Trade Tribunal, in its October 2, 2024 decision (AP-2022-039), heard Cooper's appeal de novo. The Tribunal was satisfied that the knife was a "prohibited weapon." However, the Tribunal was troubled by what it described as an "apparent incongruence" — the fact that similar goods were apparently openly advertised and sold in Canada, notably through e-commerce. To address this concern, the Tribunal granted the appeal in part, ruling that the Agency bore the onus of establishing that the knife did not qualify for any of the exclusions set out in tariff item no. 9898.00.00. The Tribunal further held that procedural fairness required the President to inform the respondent that he could possibly qualify for an exclusion. In the absence of an adequate record to underpin a decision, the Tribunal remitted the matter to the Agency for it to determine, "on appropriate grounds," whether any of the exclusions applied.

The burden of proof under the Customs Act

The Federal Court of Appeal found the Tribunal's decision on the burden of proof to be "fundamentally flawed." Paragraph 152(3)(d) of the Customs Act provides that in any proceeding under the Act, the burden of proof in any question relating to compliance with the Act's provisions lies on the person, other than Her Majesty, who is a party to the proceeding, and not on Her Majesty. The Court emphasized that this rule is subject to only one exception, set out in subsection 152(4) of the Act, which concerns instances where a person is accused of an offence under the Act and which had no application in this case. The Court also noted that subsection 152(1) of the Act separately provides that the burden of proof of the importation or exportation of goods lies on Her Majesty, reinforcing the principle that when Parliament intended Her Majesty to bear the burden, it said so explicitly. Accepting the Tribunal's position would have meant that every time a tariff item contained an exclusion, exemption, or exception, the burden would shift to Her Majesty — an outcome the Court called "untenable" given the clear and unambiguous wording of the provision.

The Tribunal's misapplication of the Miner precedent

The Tribunal had attempted to distinguish the Federal Court of Appeal's earlier decision in Canada (Border Services Agency) v. Miner, 2012 FCA 81, by arguing that Miner only dealt with the first of the two steps of the "prohibited weapon" classification analysis — whether the goods met the definition of a prohibited weapon — and did not address the second step concerning exclusions. The Court of Appeal rejected this distinction as inconsequential, because it was premised on the erroneous view that paragraph 152(3)(d) somehow shifts the burden of proof at the second step of the analysis. The Court reaffirmed that a person challenging the classification of goods under tariff item no. 9898.00.00 bears the onus of proving that the goods do not meet the definition of a "prohibited weapon" or, alternatively, that one of the exclusions applies to their case.

Procedural fairness and the respondent's missed opportunities

On the question of procedural fairness, the Court held that when an administrative tribunal proceeds de novo, this may provide sufficient relief for any procedural defects that may have occurred before the administrative decision maker below. What matters, from a procedural fairness standpoint, is the procedure before the Tribunal, not the procedure before the President or the Agency. The Court further noted that, as pointed out in Miner, if the Tribunal had any concerns as to whether the information provided by either party required substantiation, it was free to require any party to furnish further information. It could have required further information on whether any of the exclusions applied, but it did not. The exclusions were not set out in some obscure guideline or soft-law instrument; they were clearly listed in tariff item no. 9898.00.00, a piece of legislation. The classification proceedings were all about that tariff item. There was nothing preventing Cooper from claiming that an exclusion applied to his case. He did not, despite having had three opportunities to do so.

The ruling and outcome

The Federal Court of Appeal allowed the appeal brought by the President of the Canada Border Services Agency. Rather than referring the matter back to the Tribunal for a rehearing, the Court rendered the decision itself, concluding that in the circumstances of this case, the outcome was inevitable. The knife at issue was classified under tariff item no. 9898.00.00 as a "prohibited weapon." The President of the Canada Border Services Agency was the successful party. No costs were awarded, as the appellant was not claiming its costs given that the appeal was uncontested — Cooper, despite having filed a notice of appearance, did not participate in the appeal. No specific monetary amount was at issue or awarded in this decision, as the matter concerned tariff classification rather than a damages claim.